Annual Report - Binani Cement - 2009-2010

BINANI CEMENT LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

Dear Shareholders,

Your Directors have pleasure in presenting the Fourteenth Annual Report of
the Company along with the Audited Financial Statements for the financial
year ended 31st March, 2010.


FINANCIAL RESULTS

The financial results for the year ended 31st March, 2010 are summarised
below:

Rs. in Lakhs

Particulars 2009-10 2008-09 Increase %

Net Sales and Other Income 187,216 150,270 25%
Operating Costs 128,038 119,631
EBIDTA 59,178 30,639 93%
Interest & Financial Charges 7,850 7,152
Cash Profit 51,327 23,487 119%
Depreciation and Amortisation 9,166 8,031
Profit Before Tax 40,800 15,456 164%
Profit After Tax 28,192 10,867 159%


DIVIDEND

Keeping in view the overall excellent performance of your Company and the
future expansion plans, your Directors recommend a Dividend of 35% i.e.
Rupees Three and paisa Fifty only per equity share of Rs. 10/- each.

OPERATIONAL PERFORMANCE

Your Company during the year 2009-10 has achieved the highest ever
production of 52.80 lacs MT and sold 52.95 lacs MT of cement as against
42.92 lacs MT and 42.43 lacs MT respectively in the previous year. Increase
in production is mainly contributed by full year operations at the Neem Ka
Thana Grinding Unit and commissioning of 4th Cement Mill at Binanigram in
December 2009.

Against the backdrop of sustained growth in cement demand supported by the
various stimulus measures introduced by the Government of India, made it
possible for the Company to achieve the highest ever Sales . The net sales
for the year under review rose to Rs. 1,851 Crores as compared to Rs. 1,490
Crores in the previous year registering a remarkable growth of 24%.

The sustained price of the cement during the year under review, increased
sales volume coupled with softening of Coal price in international market
during the first three quarters resulted in higher net realisations by your
company which ultimately contributed in achieving the highest ever profit
before tax of Rs. 408.00 Crores, an increase of 164% over the previous
year.

The Cement Production and Captive Power generation details are as under:

Production 2009-10 2008-09

Cement (Lacs MT) 52.80 42.92
Power Generation - Lacs kWh)* 2,449.07 1,876.39

*Excluding trial generation in 2009-10.

INVESTMENTS IN OVERSEAS COMPANIES

During the year under review the Company has invested in 100% of the paid
up Equity Share Capital of Bhumi Resources (Singapore) Pte Limited, a
special purpose vehicle registered in Singapore for holding investments in
Coal Mines in Indonesia.

PROJECT OVERVIEW :

Expansion Projects / Railway Sidings

Binanigram unit :

During the year, the 4th Cement Mill of 110 TPH capacity was commissioned
in December 2009. Packing plant expansion by installation of fifth packer
and four additional truck loaders completed in January 2010. 22.3 MW
Captive Power Plant (Unit II) commissioned in the month of June 2009.

Further to achieve enhanced capacity upto 8000 TPD from Kiln II and to
enable the use of Pet Coke, following modifications in the plant are under
progress :

* Up-gradation of existing Pre-heater fans.

* Modification of Raw Mill-II separator.

* Building construction for installation of pre-crushing system for
reduction of feed size.

Up-gradation of wagon loading system is being undertaken by introducing
third loading point with four additional wagon loaders. This will reduce
rake loading time increase dispatches through railway resulting in savings
in costs.

Proposed expansion of railway yard by adding fifth line for clinker / coal
/ gypsum handling.

Neem Ka Thana unit :

Wagon unloading for clinker with wagon tippler started in the month of
September 2009. Balance work of railway siding is under progress, expected
to be completed by April 2010. Work of 132 KVA power line is in progress
and expected to be completed by June 2010.

Overseas Projects

Shandong Binani Rong'An Cement Co. Ltd, China (SBRCC)

SBRCCL , China plant capacity is being expanded from the present 0.5 MTPA
to 3.00 MTPA. Land has been acquired and necessary Government permissions
from the Republic of China have been received . The Order for the plant and
machinery has been placed on the local Chinese Company on a turnkey basis.
Contract for civil construction has also been awarded. The project is
expected to be commissioned in the first half of 2011.

Binani Cement Factory LLC, Dubai (BCFLLC).

The project for expanding the capacity for Cement Grinding from 1.2 MTPA to
2.00 MTPA has been completed during the year. But the construction industry
in Dubai suffered a serious setback in the 2nd half of 2009 resulting in a
slump in the demand of cement and the price of Cement also fell sharply.
The construction industry in Dubai is not expected to improve in the near
future but there is substantial demand of cement in neighbouring middle
east countries and in Africa. To capitalize on the demand of Cement in East
African and other neighbouring countries, the Company plans to set up
marketing offices through its subsidiaries. Further, the Company is setting
up a 1.00 MTPA cement grinding unit at Mauritius.

FUTURE PLANS

Cement Project at Sutrapada, District Junagad in Gujarat

The Company proposes to set up a Greenfield Cement plant of 2.5 million
tonnes per annum capacity at Sutrapada which is proposed to be funded
through a mix of debt and internal accruals.

Orders for the long delivery major equipments and the engineering of the
project have been initiated. No further progress could be made as the
Company's application for the lease of mines and government land for the
plant are held up pending revision of the mining guidelines by Government
of Gujarat. Although, the Government of Gujarat has announced the new
mining guidelines, the notification of ML blocks for Saurashtra is yet to
be finalized.

Lignite Project at Nimbri Chandrawatan in District. Nagaur, Rajasthan

The Government of India allocated lignite block in District :Nagaur,
Rajasthan on 7th February, 2007 for use of lignite as raw materials
captively for power generation. 64 Hectare of private land has been
acquired by the Company for the project. Most of the Government clearances
for the setting up of the project have been obtained. Site location for 120
MW Power plant has been finalized. The project is expected to be completed
by March 2011.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the Listing Agreement, a Management Discussion and
Analysis is annexed to this report.

CORPORATE GOVERNANCE

Your Company is committed to maintaining the good Corporate Governance
practices. Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, a separate section on Corporate Governance together with a
certificate from the Company's Auditors confirming compliance is set out in
the Annexure C and D forming part of this report. Further a declaration on
the Code of Conduct signed by the Wholetime Director of the Company is
given as Annexure E.

AUDIT COMMITTEE

The Company has complied with the requirements of Section 292A of the
Companies Act, 1956 and Clause 49 of the Listing Agreement with Stock
Exchanges. The Audit Committee comprises of 3 independent Directors and one
non executive Director. The details regarding the Audit Committee are
provided in details in the Corporate Governance Report.

BOARD OF DIRECTORS

In accordance with Article 100 of the Articles of Association of the
Company, Mr. S.Padmakumar, Dr. V. C. Shah and Mr. V. Subramanian retire by
rotation and being eligible, offer themselves for reappointment.Binani
Cement Limited (Subsidiary of Binani Industries Limited) 9

Mr. P. Acharya, Wholetime Director, was promoted as Chief Executive Officer
of the Company with effect from 1st July, 2009 with increase in
remuneration. The proposal for the payment of increased remuneration to the
Wholetime Director has been placed before you for approval.

During the year Mr. Sanjai Vohra and Mr. Shishir Jain, Nominee Directors of
JP Morgan Special Situations (Mauritius) Limited resigned as Directors of
the Company with effect from 20th July, 2009.

AUDITORS

M/s Haribhakti & Co and M/s Kanu Doshi Associates, Chartered Accountants,
the joint Statutory Auditors of the Company, retire at the conclusion of
the ensuing Annual General Meeting and are eligible for reappointment. The
retiring Auditors have given their consent for re-appointment. The Company
has received a certificate under Section 224(1) of the Companies Act, 1956
from the Auditors that their appointment, if made, will be in accordance
with the limits as specified as per Section 224(1) of the Companies Act,
1956 and the proposal has been placed before you for approval.

AUDITORS' OBSERVATIONS

The Auditors in their report on standalone and consolidated accounts have
made one observation and comments of Directors against the said observation
is mentioned below:

Observations on Consolidated accounts

The Accounting year of the Overseas subsidiaries ends on 31st December,
2009 while the accounting year of the holding company ends on 31st March,
2010. During the period 1st January, 2010 to 31st March, 2010 the holding
company has paid application money for investment in capital of subsidiary
- pending allotment and granted loans to subsidiary companies but due to
different accounting periods the same could not be eliminated on
consolidation. However, in Note 2(ix) and (x) of Schedule 15 to notes on
consolidated accounts the Company has explained how the significant amounts
advanced towards investments and loans by the holding company have been
broadly utilized by the overseas subsidiaries.

COST AUDIT

Audit of Cost Accounts of the Company relating to Cement for the plants at
Binanigram and Neem Ka Thana for the year ended 31st March, 2010 will be
audited by Cost Auditors, M/s K. G. Goyal & Co., Jaipur, Cost Accountants
and Cost Audit Report will be submitted to the Ministry of Corporate
Affairs, Government of India. Approval of the Central Government for the
reappointment of M/s K. G. Goyal & Co, Jaipur, Cost Accountants as Cost
Auditors for the year 2010-11 is being obtained.

CONSOLIDATED FINANCIAL STATEMENTS

As required by Accounting Standard -AS -21 on Consolidated Financial
Statements issued by the Institute of Chartered Accountants of India, the
audited consolidated financial statements of the Company and its
subsidiaries except Bhumi Resources (Singapore ) Pte Limited whose first
accounting year ends on 31st December, 2010 are attached.

SUBSIDIARY ACCOUNTS

Krishna Holdings Pte Limited (KHL) and Shandong Binani Rong'An Cement
Company Limited (SBRCCL) subsidiary of Krishna Holdings Limited are
subsidiaries of your Company. Further your Company has invested in Mukundan
Holdings Limited and Murari Holdings Limited, 100% subsidiary formed in
British Virgin Islands. Mukundan Holdings Limited (MHL) and Murari Holdings
Limited (MuHL)have further invested in 100% of the holdings of Binani
Cement Factory LLC, Dubai. The Company has made further investment in
Murari Holdings Limited and Mukundan Holdings Limited during the year. The
Company has further invested in 100% wholly owned subsidiary M/s Bhumi
Resources (Singapore ) Pte Limited and since the first accounting year of
Bhumi Resources (Singapore ) Pte Limited ends on 31.12.2010 no financial
statements are drawn and hence the accounts are not furnished.

As required under Section 212 of the Companies Act, 1956 the Statement
pursuant to Section 212 of the Companies Act, 1956 relating to the
subsidiaries i.e Krishna Holdings Pte Limited,Singapore, Mukundan Holdings
Limited, British Virgin Islands, Murari Holdings Limited, British Virgin
Islands, Shandong Binani Rong'An Cement Company Limited, China and Binani
Cement LLc, Dubai are annexed to this report. The Company has been granted
exemption by the Ministry of Corporate Affairs from attaching the accounts
of subsidiaries to the Annual Report for the year 2009-10.

Bhumi Resources (Singapore) Pte Limited was incorporated on 26th October,
2009 and its first accounting period will end of 31st December, 2010. The
Company became wholly owned subsidiary on 26th October, 2009. In the
absence of any financial statements of the Company as on 31st March, 2010
the financial statements have not been considered for consolidation.

DIRECTOR'S RESPONSIBILITY STATEMENT

In accordance with Section 217(2AA) of the Companies Act, 1956, the
Directors, to the best of their knowledge and belief and according to the
information and explanation obtained by them, state that:

a) in the preparation of the Annual Accounts for the year ended March 31,
2010 , the applicable Accounting Standards have been followed and proper
explanation relating to material departures, if any, have been
furnished;

b) accounting policies as listed in Schedule 15 to the financial statements
have been selected, consistently applied and prudent judgments and
estimates have been made so as to give true and fair view of the state of
affairs of the Company as on 31.03.2010 and of the profit of the Company
for the year ended on that day;

c) proper and sufficient care for the maintenance of adequate records in
accordance with the provisions of the Companies Act, 1956 has been taken so
as to safeguard the assets of the Company and to prevent and detect fraud
and other irregularities;

d) the annual accounts for the year ended March 31, 2010 have been prepared
on a going concern basis.

PARTICULARS UNDER SECTION 217

* Energy Conservation, Technology Absorption, Foreign Exchange Earnings &
Outgo :

Statement of particulars as required 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 regarding conservation of
energy, technological absorption, foreign exchange earnings and outgo are
annexed as Annexure A and form part of this report

* Particulars of Employees:

The statement of particulars of employees as required under Section 217(2A)
of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975 as amended is annexed as Annexure B

STOCK EXCHANGES - COMPLIANCES OF LISTING AGREEMENTS

The Company has paid the listing fee for the year 2010-11 to both the Stock
Exchanges. As required by the listing agreements with the Stock Exchanges
and AS -21, Consolidated Accounts and Auditors Report thereon have been
annexed forming part of the Annual Report.

ACKNOWLEDGEMENT

Your Board of Directors places on record its sincere appreciation for the
continued co-operation and support received from the Holding Company,
Banks, Financial Institutions and other term lenders, various State and
Central Government agencies, valued Customers, Dealers, Distributors,
Market Organisers, Suppliers, Contractors and all who have directly or
indirectly contributed in the success of your Company.

Your Directors also take this opportunity to appreciate the committed and
dedicated services of the employees and contract workers at all levels,
which have largely contributed to the present growth of the Company.

By Order of the Board
For Binani Cement Limited

Braj Binani
Chairman
Place : Mumbai
Date : 23rd April, 2010.

ANNEXURE A TO THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2010

PARTICULARS UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956

[A] CONSERVATION OF ENERGY

a) Energy conservation measures taken

Cement Plant, Binanigram

1. Installed energy saving module in coal mill 2 fine coal transport
circuit screw conveyor (L92.SC1).

2. In cooling tower of Unit 1 existing fan (02 nos.) metallic blades
replace with FRP blades.

3. Installed energy efficient drum motors in packing plant.

4. Installed additional capacitor banks in Unit 2 bag house and cement mill
substation.

5. Replacement of 70 W Street Lights with CFL to reduce energy consumption
and increase the illumination.

6. Installed 100 KVA servo voltage stabilizers to maintain constant
lighting voltage of Unit 2 bag house and kiln, cooler substation area.

7. To reduce pumping cost of waste water to colony plantation by changing
pipe line layout to transport water through gravity.

8. Installed variable speed drive in Cement mill no 3 sepax dedusting fan.

9. Modified PID control in Kiln no 2 ESP fan to maintain cooler hood draft
by speed regulation against damper control.

10. Construction of new road from Amli mine to LS crusher to reduce lead
subsequent reduction in diesel consumption.

11. Construction of Water tank on hill which saves pumping cost to overhead
tank in mines office and workshop.

12. Optimized dedusting in coal firing system in Kiln 2 by blocking 2 no
jet pulse filter.

CGU, Neem ka Thana

1. Blower for nip trap hopper removed in fly ash system.

2. Jet pulse filter and Screw conveyor at discharge of ESP removed in
cement mill.

3. Cement silo aeration blower 2 nos motor changed from 18.5 kw to 15 kw
and shifted to blower house for smooth and dust free operation.

4. Installed compact fluorescent lamp (CFL) at public locations and
residences.

5. Installed automatic power factor controller to control power factor on
LT side.

6. HP pumps for mill inlet and outlet continuously run with mill. Modified
the DCS logic. Now pumps run for 15 min only as per design manual.

Thermal Power Plant

1. Soft water for CPP-2 and 3 in normal operation is transferred directly
from water treatment plant to cooling tower without using pump.

2. In CPP-2 Air cooled condenser two nos. metallic blade fan replaced with
high efficiency FRP blade fan.

3. In normal operation of CPP-2 and 3, DM water is transfer to condensate
receiver tank by vacuum resulting DM water pump stopped and thereby
electrical energy saving.

b) Additional investment and proposals, if any, being implemented for
reduction of consumption of energy. Cement plant

1. Replacement of cooling water pumps with higher energy efficient pumps.

2. Installing secondary crusher and LNV technology in separator with
additional mill inlet air duct for production increase and better energy
efficiency in Raw mill 2.

3. Replacement of existing pre-heater fans in Kiln 2 with higher capacity
fans for higher production.

4. Techno -economic feasibility study of shifting intermediate diaphragm
towards first chamber in Cement mill 3/4.

5. Provision of enhancement of mining operations by procure high capacity
machine.

6. Installation of energy saving insulating bricks in Kiln 2.

7. To upgrade silo feed bucket elevator of CM 2 to match increased feed
rate of mill.

Measures to improve efficiency-

1. Installation of acoustic horns to dislodge coating from pre-heater fans
impeller.

2. Development of substitutes for imported and original equipment spares to
reduce spares cost and dependability on OEMs.

3. Installation of fire resistant belt conveyors for alternate fuel feeding
to eliminate fire hazards.

4. Installation of fixture for burner pipe adjustment to reduce time for
burner pipe alignment.

5. Installation of lathe of large swing over bed to extend in-house
facility to execute large size machining jobs and reduce breakdown time.

6. Installation of new oil centrifuging machine to recondition / clean the
hydraulic oils / roller lubrication oils.

7. Upgradation of Kiln no 1 shell scanner to improve monitoring for
refractory life.

8. Upgradation of Kiln no 1 feed solid flow feeder no 1 to avoid breakdown
and better accuracy.

Thermal Power Plant

1. Replacement of existing ACC fan blade with aerodynamic high efficiency
blades (six numbers in phase I).

2. Installation of pneumatic ash conveying system for Air pre heater of
Boiler 1

3. Installation of sonic soot blower on CPP 2 boiler (Phase 1) thereby
reduction in flue gas temperature by 5 oC.

4. Design and Installation of Water cooled Bed ash cooler for CPP-3.
Improved boiler efficiency.

5. Installation of dust suppression system for CPP 1 coal feeding hopper.

6. Installation of dust suppression system for Coal Tippler.

7. Installation of common cooling water pump for CPP-2 and CPP-3.

c) Impact of the measures at a) and b) above for reduction of energy
consumption and consequent impact on the cost of production of goods.

Cement Plant : Due to various energy conservation measures, there was
saving in power and fuel consumption.

Thermal Power Plant : Due to various energy conservations measures , there
was less internal energy consumption in plant.

d) Total energy consumption and Energy consumption per unit of Production:

Please refer Form A attached

[B] TECHNOLOGY ABSORPTION

a. TECHNOLOGY ABSORPTION - ADAPTATION AND INNOVATION

Not Applicable

b. TECHNOLOGY ABSORPTION - RESEARCH AND DEVELOPMENT

Not Applicable

[C] FOREIGN EXCHANGE EARNING AND OUTGO

a. Activites relating to exports, initiatives taken to increase exports,
development of new export market for products and services and export plan

During the year, the Company has not exported Clinker and Cement since the
prices in the domestic market were more remunerative than export. The
company will explore avenues to export its products in the future as and
when exports become remunerative.

Rs./Lakhs
b. TOTAL FOREIGN EXCHANGE USED AND EARNED

Foreign Exchange Earnings Nil
Foreign Exchange Outgo*
Loan Repayment 656.04
Coal 29,432.75
Stores and Spares 1,546.88
Interest 288.71
Other Expenses 100.25
Capital Expenses 2,042.04

* Excluding Investment i/ Loan to overseas subsidiaries.

FORM A

Form as per Section 217(1)(e) read with Companies (Disclosure of
Particulars in the report of Board of Directors) Rules, 1988 and forming
part of the Directors Report for the year ended 31st March, 2010.

CONSERVATION OF ENERGY

Total Energy Consumption and Energy Consumption per Unit of Production.

For the year ended
31/03/2010 31/03/2009
A. Power & Fuel Consumption

1. Electricity

a. Purchased

Unit (KWh) 139032090 166051173
Total Cost (Rs. Lakhs) 6352.41 7314.28
Cost/Unit Rs. 4.57 4.40

b. Own Generation

Unit (KWh) 244906539 187638951
Cost of HSD/LDO Consumed (Rs. Lakhs) 67.13 60.27
Cost of Coal Consumed (Rs. Lakhs) 5928.71 8553.28
Cost of Lignite Consumed (Rs. Lakhs) 59.91 309.57
Cost of Pet Coke Consumed (Rs. Lakhs) 1498.75 52.69
Cost of Fuel Consumed (Rs. Lakhs) 7554.50 8975.80
(Coal, Lignite,HSD/LDO)
Cost/Unit Rs. 3.08 4.78

2. Fuel Consumption

a. Coal-Imported
(Steam Non-coking)
(Used in Kiln for
Clinker Production)

Quantity (M.T.) 537397 531714
Total Cost (Rs. Lakhs) 26558.06 35798.00
Cost/Unit Rs. 4941.98 6732.50

b. Pet Coke (Used in Kiln
for Clinker Production)

Quantity (M.T.) 3081 452
Total Cost (Rs. Lakhs) 184.83 25.07
Cost/Unit Rs. 5999.23 5546.21

c. Alternative Fuel -
(Used in Kiln for
Clinker Production)

Quantity (M.T.) 12732 10832
Total Cost (Rs. Lakhs) 305.08 163.47
Cost/Unit Rs. 2396.29 1509.16

d. Lignite-(Used in Captive
Power Plant)

Quantity (M.T.) 3638 13799
Total Cost (Rs. Lakhs) 59.91 309.57
Cost/Unit Rs. 1646.85 2243.34

e. Coal-Imported
(Steam Non-coking)
(Used in Captive
Power Plant)

Quantity (M.T.) 129333 94602
Total Cost (Rs. Lakhs) 5928.71 6466.36
Cost/Unit Rs. 4584.07 6835.35

f. Coal-Indegenous
(Steam Non-coking)
(Used in Captive
Power Plant)

Quantity (M.T.) - 49658.07
Total Cost (Rs. Lakhs) - 2086.92
Cost/Unit Rs. - 4202.57

3.a.HSD/LDO-(Used in
Kiln for Clinker
Production)

Quantity (Litre) 491658 460048
Total Cost (Rs. Lakhs) 155.09 151.43
Average Rate Rs. 31.54 32.92

b. HSD/LDO-(Used in
Captive Power Plant)
Quantity (Litre) 212077 183109
Total Cost (Rs. Lakhs) 67.13 60.27
Average Rate Rs. 31.65 32.91

B. Consumption per
ton of Production

Electricity Coal, Lignite, Pet Coke HSD/LDO
(KWh/MT of Cement) & Alternative Fuel (Ltr./ Kg. of clinker)
(Kg./MT of Clinker)
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

74.36 74.93 0.13 0.13 0.11 0.11

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY OVERVIEW:

The Cement Sector is expected to grow by 9-10% in the Financial Year 2010-
11 compared to India's expected GDP of 8.5% . The housing and construction
sector generates 50% of the overall demand of Cement in the country and the
demand is expected to continue in the coming years as well. But the
expected capacity additions, increased cost of raw material, fuel and
logistics, proposed service tax on housing sector and gradual withdrawal of
stimulus package granted to the Cement Industry will have pressure on
margins in the coming years.

COMPANY'S PERFORMANCE

1. FINANCIAL PERFORMANCE

The financial performance for the year ended 31st March, 2010 is summarized
below:

Rs. in lacs
2009-10 2008-09 % Increase

Sales & Other Income 187,216 150,270 25
EBIDTA 59,178 30,639 93
Cash Profit 51,327 23,487 119
Profit Before Tax 40,800 15,456 164
Profit After Tax 28,192 10,867 159

2. OPERATIONS:

During the year under review the Company surpassed all previous bests in
all areas and continue to maintain its growth path. The Company produced
52.80 lac MT of Cement compared to 42.92 lac MT in the previous year, an
increase of 23%. Sales was 52.95 lac MT compared to 42.43 MT in the
previous year, an increase of 25%. Captive Generation of power was 2,449.07
Lac KWh ( Net) compared to 1,876.39 Lac KWh in 2008-09. Profit before tax
was the highest ever of Rs. 40,800 Lakhs an impressive growth of 164%
compared to Rs. 15,456 Lakhs during 2008-09. The higher profit could be
achieved mainly due to increased sales volumes, low coal price and higher
net realisation.

FUTURE OUTLOOK:

Growth in domestic cement demand is expected to remain strong, given the
revival in the housing sector, continued Government spending on the rural
infrastructure and gradual increase in the number of infrastructure
projects being executed by the private sector. The trend in demand growth
seen during the last five years is expected to continue over the medium
term. Further, with Government targeting 8-10% GDP growth rate, cement
demand should grow at 9-10% over the next few years.

The key drivers of Cement Industry in India are:

* Buoyant real estate market in non metro cities.

* Increase in infrastructure spending on power, road, port and urban
infrastructure.

* Increase in rural demand driven by National Rural Employment Guarantee
Scheme (NREGS).

* Low-cost housing in urban and rural areas under schemes like Jawaharlal
Nehru National Urban Renewal Mission (JNNURM) and Indira Aawas Yojana

* Favourable interest rates and tax benefits on housing.

* Domestic Industrial growth and major expansion plans announced across
different segments.

PROJECT OVERVIEW:

Expansion Projects/Railway Sidings:

Binanigram unit:

During the year, the 4th Cement Mill of 110 TPH capacity was commissioned
in December 2009. Packing plant expansion by installation of fifth packer
and four additional truck loaders completed in January, 2010. 22.3 MW
Captive Power Plant (Unit II) commissioned in the month of June 2009.

Cement Production:

Further to achieve enhanced capacity upto 8000 TPD from Kiln II and to
enable the use of Pet coke, following modifications in the plant are under
progress:

* Up-gradation of existing Pre-heater fans.

* Modification of Raw Mill-II separator.

* Building construction for installation of pre-crushing system for
reduction of feed size.

Up-gradation of wagon loading system is being undertaken by introducing
third loading point with four additional wagon loaders. This will reduce
rake loading time increase dispatches through railway resulting in savings
in costs.

Proposed expansion of railway yard by adding fifth line for clinker / coal
/ gypsum handling.

Neem Ka Thana unit:

Wagon unloading for clinker with wagon tippler started in the month of
September 2009. Balance work of railway siding is under progress, expected
to be completed by April 2010. Work of 132 KVA power line is in progress
and expected to be completed by June 2010.

Overseas Projects:

Shandong Binani Rong'An Cement Co. Ltd., China (SBRCC):-

SBRCCL , China plant capacity is being expanded from the present 0.5 MTPA
to 3.00 MTPA. Land has been acquired and necessary Government permissions
from the Republic of China have been received . The Order for the plant and
machinery has been placed on the local Chinese Company on a turnkey basis.
Contract for civil construction has also been awarded. The project is
expected to be commissioned in the first half of 2011.

Binani Cement Factory LLC, Dubai (BCFLLC):-

The project for expanding the capacity for Cement Grinding from 1.2 MTPA to
2.00 MTPA has been completed during the year. But the construction industry
in Dubai suffered a serious setback in the 2nd half of 2009 resulting in a
slump in the demand of cement and the price of Cement also fell sharply.
The construction industry in Dubai is not expected to improve in the near
future but there is substantial demand of cement in neighbouring middle
east countries and in Africa. To capitalize on the demand of Cement in East
African and other neighbouring countries, the Company plans to set up
marketing offices through its subsidiaries. Further, the Company is setting
up a 1.00 MTPA cement grinding unit at Mauritius.

FUTURE PLANS:

Cement Project at Sutrapada, District Junagad in Gujarat:-

The Company proposes to set up a Greenfield Cement plant of 2.5 million
tonnes per annum capacity at Sutrapada which is proposed to be funded
through a mix of debt and internal accruals.

Orders for the long delivery major equipments and the engineering of the
project have been initiated. No further progress could be made as the
Company's application for the lease of mines and government land for the
plant are held up pending revision of the mining guidelines by Government
of Gujarat. Although, the Government of Gujarat has announced the new
mining guidelines, the notification of ML blocks for Saurashtra is yet to
be finalized.

Lignite Project at Nimbri Chandrawatan in Dist. Nagaur, Rajasthan:-

The Government of India allocated lignite block in District :Nagaur,
Rajasthan on 7th February, 2007 for use of lignite as raw materials
captively for power generation. 64 Hectare of private land has been
acquired by the Company for the project. Most of the Government clearances
for the setting up of the project have been obtained. Site location for 120
MW Power plant has been finalized. The project is expected to be completed
by March 2011.

INTERNAL CONTROL SYSTEM:

The management maintains adequate internal controls commensurate with the
nature and size of operations of the Company, which is designed to provide
reasonable assurance that assets are safe-guarded, transactions are
correctly executed and recorded in accordance with managements'
authorization, applicable accounting standards and selected accounting
policies which are being applied consistently. The company's SAP Software
at its works and in marketing functions is working satisfactorily. To
further strengthen the internal controls and integration, the Company is in
the process of implementing plant maintenance and Human Capital Management
(HCM) and payroll system. Also to document the procedures the Company is in
the process of preparation of SOP document.

Your company's internal control system provides high level of system based
checks and controls. Regular internal audits and checks ensure that
responsibilities are executed efficiently. The Audit Committee of the Board
of Directors reviews the adequacy and effectiveness of internal control
system and suggest improvement for strengthening them from time to
time.

OPPORTUNITIES/THREATS/RISKS/CONCERNS:

Opportunities:-

Despite being second largest producer of Cement in world after China,
India's per capita consumption of Cement is very low to about 130 kg per
year, much lower than global average of about 355 kg, leaving large room
for growth. The Company with its brand image, large dealer network and
being a major player in Rajasthan and Gujarat will continue participating
in this growth. Industry will receive a further boost by increased
Government and Private Sector spending on infrastructure..

Threats, Risks and Concerns:

Large capacity additions, increasing cost of inputs, gradual withdrawal of
stimulus granted to Industry, inflation and upward trend in interest rates
may have pressure on margins in the medium term affecting the bottom-line
of the Company in the coming years.

RECOGNITION AND AWARDS:

During the year 2009-10, your Company received following awards /
recognitions :

NCCBM instituted National Awards for Energy Efficiency in Indian Cement
Industries in recognition of the Best Electrical Energy & the Best Thermal
Energy Performance for the year 2007-08 and

National Quality Excellence Award 2008-09 in Indian Cement Industries in
recognition towards its excellence in the field of Quality Management.

ITC CII Sustainability Award 2009 for significant contribution in the field
of environment, society and economics.

Greentech Environment Excellence Gold Award 2009 in recognition of its
exemplary initiatives in Environment Management.

CII Godrej Green Business Centre, Hyderabad instituted National Award for
Excellence in Water Management 2009 and Energy Management 2009 for
excellent water efficient unit and Energy Efficient unit.

Certificate of Merit for 2007-08 for Productivity Improvements in
recognition of company's sustained initiatives towards productivity
improvements.

Certificate of Excellence - Best Employer Award Competition 2008 in
recognition of company's excellence towards maintaining good Employee-
Employer Relationship for the year 2008.

All India Business & Community Foundation (AIBCF) instituted Udyog Bharati
Award 2009 & Indian Achievers Award for Quality Excellence for
entrepreneurship development leading to economic growth that greatly
contributes to generate long term opportunities for the communities.

SOCIAL RESPONSIBILITY AND COMMUNITY DEVELOPMENT:

As a responsible corporate, your Company continues to adopt best CSR
practices. In the recent past the Company has joined hands with M/s RBKS,
an NGO for initiating an Integrated Village Development Program titled
'Life Skill Education to Community' covering 5 of the nearby adivasi
villages viz. Amli, Thandiberi, Malap, Sabela and Varli. The joint venture
is aimed at achieving the objective of provision of food and shelter,
closed toilets, use of smokeless stoves, to motivate the villagers towards
plantation with a view to divert them from de-forestation, Provision of
training to adivasis on stitching of traditional dresses which can be sold
to consumers through cooperative societies and cattle and poultry
development. The programme will not only improve life style of target
villagers but also cater to their financial needs.

Apart from above your Company continues to provide necessary support to
economically backward people of the adjoining villages through various
community development, education and health care programmes. These include
providing donation / contributions, small constructions, repairing works,
etc. Drinking water is being also supplied to local people in the summer.

The Binani Ladies Club regularly contributes towards community development
and charities through distribution of school uniforms, books, clothes to
needy tribal people and blankets, mattresses and pillows to Adivasi hostel,
Pindwara.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

Employees of the Company are the key assets and your company continuously
strives towards the development of its employees, to upgrade their skills
and to boost the motivation levels of its human resources through various
mechanisms. This reflects in the fact that on an average 3.70 man days per
person have been spent on training during the year under review.

Employees are motivated and team spirit strengthened through various
departmental quality circles and other awareness programs being organized
from time to time. Your company continues to maintain healthy working
environment and cordial industrial relations throughout the year.

In order to encourage total employees involvement in the production
process, Company has introduced 'Employee of the Month' scheme, which
inspire employees to be innovative.Binani Cement Limited (Subsidiary of
Binani Industries Limited) 19

The efforts put in by employees at all levels have contributed to the
excellent performance of the Company. Employee /Industrial Relations have
been cordial during the year.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the
company's objective, estimates, projections, expectations or predictions
may be forward looking statements within the meaning of applicable laws and
regulations.

Your Company's actual results, performance or achievements could differ
materially from those expressed in or implied from such forward looking
statements. Important factors that could influence the Company's operations
include input availability and prices, demand and pricing of finished goods
in the Company's principal markets, changes in government regulations, tax
laws, economic developments within the country and other incidental

factors.