Annual Report - Binani Industries - 2009-2010

BINANI INDUSTRIES LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

TO
THE SHAREHOLDERS

Your Directors present the Forty Seventh Annual Report of the Company
together with the Audited Statement of the Accounts for the year ended 31st
March, 2010.


1. Financial Performance

(Rs in Lakhs)
Particulars Year Year
ended ended
31.03.2010 31.03.2009

Sales/Profit on sale of fixed
assets, investments/other Income 5,104 5,118

Profit before, Depreciation,
Interest, extraordinary Items and
Taxation. 2,216 2,859

Provision for Depreciation 27 33

Profit before Interest, extraordinary
Items and Taxation 2,189 2,826

Interest and Financial Charges 524 702

Profit before Exceptional items
and Taxation 1,665 2,124

Provision for Taxation including
Deferred Tax and Fringe Benefit
Tax - 13

Profit after Tax but before
extraordinary items 1,665 2,111

Extra ordinary Items - 1,266

Profit for the year 1,665 3,377

APPROPRIATIONS/ADJUSTMENTS

Transfer to General Reserve (167) (350)
Proposed Dividend (888) (888)
Tax on Dividend NIL Nil
(Loss) brought forward from last year (3,975) (6,464)

Adjusted with credit balance of
General Reserve 167 350

(Loss) carried to balance sheet (3,198) (3,975)

Previous years' figures have been regrouped/reclassified wherever
necessary.

1.1 Review of Operations

The Company being a holding company has no manufacturing activities. Its
main source of income is Dividend from its Subsidiaries and income earned
by providing Management and support services to all its Subsidiaries in the
areas of Accounts, Finance, Treasury, Audit, Forex/Commodity, Risk
Management, Purchase, Taxation, Corporate Strategy, Media Services, Project
Management, etc. During the year under review, Company received from its
Subsidiary, Binani Cement Limited, dividend income of Rs. 2,768 Lakhs and
Management Services fee from all its subsidiaries aggregating to Rs. 2,300
Lakhs. During the year, the Company earned a Net Profit of Rs. 1,665 Lakhs,
compared to Rs. 3,377 Lakhs in the previous year. Out of the profit of Rs.
1,665 Lakhs, Rs. 167 Lakhs has been transferred to General Reserve.

1.2 Future Prospects

The Company's flagship Subsidiary, Binani Cement Limited (BCL) has done
exceptionally well and is expected to maintain the exceptional performance
in the coming years as well. Binani Zinc Limited (BZL) has also done
reasonably well and has earned a Net profit of Rs.169 lakh. As the LME
prices has increased gradually during the year and has now become stable,
it is expected that BZL's performance in the coming years will be
reasonable. Goa Glass Fibre Limited (GGFL) has not done well and has
incurred losses during the year. This was mainly due to dumping of Glass
Fibre Products by China in the Country. Besides, submitting representation
to the Government of India to levy Anti Dumping Duty on the Glass Fibre
products, Company has taken remedial measures to improve both the
production and sales of glass fibre products and also measures to reduce
costs. With the above measures, it is expected to pull out itself from the
present situation, in the coming years.

2. SUBSIDIARIES

We present below a brief report on the operations of Company's major
subsidiaries:

2.1. BINANI CEMENT LIMITED (BCL)

2.1.1 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.

2.1.2 Financial Performance

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

Rs. in Lakhs
Particulars 2009-10 2008-09 % Change

Sales & Other Income 1,87,216 1,50,270 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

2.1.3 Review of Operations

During the year under review, the company surpassed all previous bests in
all areas and continue to maintain its growth path. 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 power generation was 2,449.07 lac KWh (net)
compared to 1,876.39 lac KWh in 2008-09. Profit before Tax was the highest
ever at 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
increase sales volumes, low coal price and higher net realization.

2.1.4 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 in power, road, port and urban
infrastructure;

* Increase in rural demand driven by National Rural Employment Guarantee
Act (NREGA);

* 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;

2.1.5 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'10. 22.3 MW Captive
Power Plant (Unit II) commissioned in the month of June 2009.

Further, to achieve enhanced capacity upto 8,000 TPD from Kiln II and to
enable the use of Pet coke, following modifications in the plant are under
progress:

* Upgradation 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 is expected to be completed by June'10.

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
3.0 MTPA. Land has been acquired and necessary Government permission from
the Republic of China have been received. Orders for the plant and
machinery have 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 the neighbouring
Middle East Countries and in Africa. To capitalize on the demand of Cement
in Africa 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.

2.1.6 Future Plans

Cement Project at Sutrapada, Dist, Junagad in Gujarat

The Company proposes to set up a Greenfield Cement plant of 2.5 million
tonnes per annum capacity.

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

Lignite Project at Nimbri-Chandawatan Dist. Nagaur, Rajasthan

The Government of India allocated lignite Block in Dist-Nagaur, Rajasthan
on 7th February, 2007 for use of lignite as raw material captively for
power generation. 64 Ha 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.

2.1.7 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.

The 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 review the adequacy and effectiveness of internal control
system and suggest improvement for strengthening them, from time to time.

2.1.8 Opportunities/Risks/Threats/Concerns

Opportunities

Despite second largest producer of Cement in the world after China, India's
per capita consumption of Cement is very low to about 130 Kg per year, much
lower than the 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 its participation 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 bottomline of
the Company in the coming years.

2.1.9 Recognition & Rewards

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

NCCBM instituted National Award 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 and Indian Achievers Award for Quality Excellence for
entrepreneurship development leading to economic growth that greatly
contributes to generate long term opportunities for the communities.

2.1.10 Corporate Social Responsibility

As a responsible corporate, the 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 programme 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 deforestation, provision of
training to Adivasis on stitching of traditional dresses which can be sold
to consumers through cooperative societies and cattle & poultry
development. The programme will not only improve life style of target
villagers but also cater to their financial needs.

Besides, the 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
at Pindwara.

2.1.11 Human Relations/Industrial Relations

Employees of the Company are the key assets and the 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 programmes being organized
from time to time. The 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.

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.

2.1.12 Subsidiaries of Binani Cement Limited

Shandong Binani Rong An Cement Company Ltd. China (SBRCC)

Shandong Binani Rong An Company Ltd. is a Company incorporated under the
laws of peoples Republic of China. At present, the Company has facilities
for manufacture of 0.5 milion TPA Cement at Shandong Province of China
which is being expanded by a further 2.5 Million TPA.

Binani Cement Factory LLC, Dubai (BCFLLC)

Binani Cement Factory LLC is a Company incorporated under the laws of
United Arab Emirates. The Company has facilities for the manufacture of 2
MTPA of Cement grinding capacity.

Krishna Holdings Pte Ltd., Singapore (KHL)

KHL is an investment Company incorporated in Singapore. The Company holds
50% investment in KHL. The balance 50% is held by MHL.

Mukundan Holdings Limited, BVI (MHL)

MHL is an investment Company incorporated in British Virgin Islands. MHL is
a wholly-owned subsidiary of the Company. MHL holds 49% shares in Binani
Cement Factory LLC, Dubai.

Murari Holdings Limited, BVI (MUHL)

Mu HL is an investment Company incorporated in British Virgin Islands for
holding 51% of the beneficial interest in the paid up share capital of
BCFLLC. Mu HL is a wholly-owned subsidiary of the Company.

Bhumi Resources (Singapore) Pte. Ltd., Singapore (BRSL)

BRSL is a Company incorporated in Singapore for acquisition of Coal Mines
in Indonesia, Coal being a critical raw material for energy for the
Company. BRSL is a wholly owned subsidiary of the Company.

2.2. BINANI ZINC LIMITED (BZL)

2.2.1 Industry Overview

The demand for zinc in India is estimated at approximately 550 KT.
Compounded Annual Growth Rate (CAGR) for zinc metal in India was around 8%
over the last 5 years. Galvanizing sector accounts for more than 60% of
consumption. The fastest growing segments are structural galvanizing & die
casting.

Indian demand is expected to grow at 10% over the next 3 years driven by
transportation, consumer durables and construction sector. Per capita
consumption of zinc in India is also very low compared to developed
countries.

The average zinc price in the London Metal Exchange (LME) during 2009-10
was approximately US$ 1,934/MT. Import duty on zinc stands at 5%. The
import duty on concentrate continues to remain at 2%. With the increase in
demand for zinc and the continuity in buoyant Zinc Metal Price in the LME,
the Company is expected to do well in the coming years.

2.2.2 Review of Operations

The company outperformed targets on all major parameters this year.
Production of zinc metal recorded the highest ever of 35,552 MT compared to
30,443 MT in the previous year. The previous highest production of 32,624
MT was achieved in 2006-07. Plant capacity utilization was at a high of
93%. Overall, the operational efficiencies and recoveries has shown
substantial improvement.

The company also achieved a record zinc metal sales of 35,843 MT as against
the previous year's sales of 29,390 MT. Sale of Cadmium metal was also an
all time high at 71,416 kg against last year sale of 34,570 kg.

The company has successfully commissioned the Jarofix plant as a permanent
solution to the solid waste disposal and effectively resolving all
environmental concerns in this area.

The successful commissioning of the fine zinc dust plant has helped to
significantly reduce operating costs and improve plant efficiencies. The
company is also in the process of identifying markets for high quality zinc
dust.

(Rs. in Lakhs)
Particulars 2009-10 2008-09

Net Sales & other Income 39,528 28,509
EBIDTA 2,512 1,316
Cash Profit 1,726 420
Profit before Tax 505 (315)
Profit after Tax 169 (228)

2.2.3 Future Plans

The company is going forward with its plans with regard to offtake
agreements and financial participation in mines Located in Australia.

The company hopes to increase its presence in the die-casting alloy segment
and plans to bring other value added products into the market.

With availability of raw material assured in the long term at competitive
terms, the company plans to increase capacity to higher scale and has
already commenced activities towards this end.

2.2.4 Strengths/Opportunities/Threats/Risks/Concerns

The major external factors that can have a significant bearing on the
company's performance are -

a) Fluctuation in zinc prices;

b) Enhanced metal supply in market;

c) Availability of raw material.

The company has drawn up a comprehensive plan to mitigate the perceived
threats.

Price Fluctuation - Prices are expected to remain volatile in the coming
year also. However, the company has a hedging mechanism in place to
safeguard itself from wide fluctuations in zinc price.

Market - The company has expanded its spread in the country and caters to a
large customer base of small and medium customers. The Company has a good
brand image owing to its consistent product quality, which continues to
attract customers.

Raw material availability - The company has already entered into contracts
with suppliers for around 50% of its raw material requirements for the
years 2010-11 and 2011-12. The Company's process of acquiring Deri, Ambaji
and Basantgarh Mines in Rajasthan through its wholly owned subsidiary,
R.B.G. Minerals Industries Limited is in the final stage. Further, the
Company has also finalized and executed terms for investment in high
quality Zinc Mines in Australia. Towards achieving this objective, the
company has incorporated a wholly-owned subsidiary in Australia, namely, BZ
Minerals (Australia) Pty Ltd.

The above measures is expected to ensure continued availability of critical
raw material, Zinc Concentrate, for the Company in the near future.

2.2.5 Human Resources/Industrial Relations

Industrial relations during the year was cordial. During the year, the
company entered into a 4-year productivity based Long Term Settlement (LTS)
with the recognised trade unions. Safety, Occupational Health and
Environment (SHE) topped the agenda of the company employees.

Focused training programmes on topics/areas assessed were undertaken
principally for knowledge and skill upgradation of operatives, Management
Development, and other focus areas for specific target groups. Average time
spent on learning & development this year rose to 6.35 man days per
employee.

2.2.6 Corporate Social Responsibility

Corporate Social Responsibility is all-pervasive, mainly through the
launch-pad of Ghanshyam Binani Occupational Health Centre (GBHC) and
Ghanshyam Binani Community Hall. GBHC. in partnership with Indian Medical
Association and National Safety Council, conducted 2 State Level First
Aiders training programmes this year; thus completing a total of 10 batches
and training a total of 360 industrial employees across industries in
Kerala. GBHC serves the community, employees and their family members
through Health Talks, Multi-Speciality Medical Camps and Medical
Specialists' Camps. GBHC continued to be recognised as 'Centre of Public
Health Importance' this year also. The company's association with
Government Hospital, Binanipuram continued this year also.

Ghanshyam Binani Community Hall (GBCH) has grown into a major hub for
several social, educational, cultural interventions for the community and
also helped facilitate services by certain Government Departments.

This year also, Company's partnership interventions continued for the
Binanipuram Government High School students, where the SSLC students bagged
100% results; thus repeating history in the fourth year in succession.

During the year, the Company has won the following National, Regional and
State Level awards and accolades:

* Green Tech Environment Excellence Award in minerals and mining sector -
2009,

* CII - Leadership & Excellence Award in Environment, Health & Safety under
the Manufacturing Sector' in the country - 3rd position

* Excellence Award - 2009 from the Kerala State Pollution Control Board,
among large-scale industries

* Indian Institute of Metals Non-Ferrous Best Performance Award - First
Prize amongst the Large Integrated Production' organisations in the
country.

2.3. GOA GLASS FIBRE LIMITED (GGFL)

2.3.1 Industry Overview

The glass fibre market is expected to grow at 13% CAGR and potential by
2013-2014 is~1,00,000 MT/pa. The key drivers for growth of the industry are
Infrastructure, Automobile, Wind Energy and Building Construction sectors.
The industry in India is currently being dominated by cheaper imports from
China. These Chinese imports cater to 60% of the Indian Industry demand of
Glass Fibre. This has resulted in lower sales revenue and lower
realizations of domestic producers.

2.3.2 Review of operations

Operations

During the year under review, the Company has undertaken furnace rebuild
with capacity enhancement to 16,000 MTPA from previous level of 10,300
MTPA.This rebuild operation took place from 10th April 2009 to 27th August
2009 and commercial production commenced from 28th August 2009. Production
during the year was 7,210 MT. The operations have shown continuous
improvement since the furnace rebuild.

Sales

During the year, Company sold 8,290 MT with a revenue of Rs. 57.83 crore as
compared to sale of 8,899 MT and revenue of Rs. 70.88 crore in the previous
year.

Financials

(Rs. in Lakhs)
Particulars 2009-10 2008-09

Gross Sales & Related Income 5,783 7,088
EBIDTA (857) 1,544
Cash Profit/(Loss) (1,552) 952
Net Profit/(Loss) after Tax (2,519) 100

2.3.3 Future Prospects

The Company has initiated several steps to increase both the production and
sale of Glass Fibre products. Some of the steps are:

- Immediate liquidation of inventory to improve sales and reduce inventory
carrying cost;

- Looking at opportunities for manufacture and sale of value added
products;

- Introduction of ditrect sale concept to be in close touch with the
customers and reduce the intermediary cost;

- Overall reduction in costs on all fronts.

With the above measures, it is expected that the Company will come out of
its present position of making losses and look forward to a better days
ahead.

2.3.4 Strength/Opportunity/Threats/Risks/Concerns

Strengths

The Company has a committed and relatively young work force with best HR
initiatives. The flagship product Chopped Strand Mat (CSM) of the Company
is well accepted in the Global Market.

Weakness

The Company's main weakness is the scale of operation which is low and an
absence of a robust manufacturing technology. The Company has a limited
product range with a relatively high dependency on CSM.

Opportunities

There are many opportunities in the product portfolios especially Direct
Roving related Weave Products for specialized and critical applications.
Tie up with OEM's provide another opportunity to the Company to increase
reach and end-use of product.

Threats

The major threat is appearing to be the bulk import of Chinese product
which is seen to be eroding the sales volumes and realization of domestic
producers.

2.3.5 Human Resources/Industrial Relations

Industrial relations continued to be harmonious with the active
participation of the union in all the programmes and the long term
settlement negotiation has been successfully completed during the year.
Further successfully achieved in extending lay off to the period of 60 days
during furnace rebuild shut down on mutually agreed terms between
management and recognized union. Various training programmes were
identified in technical and behavioural trades as an employee development
initiative.

2.3.6 Corporate Social Responsibility

As a part of corporate social responsibility, educational program with
respect to safety, health and environment was organized in nearby village
Colvale where we also conducted free medical camps.

2.4. BT COMPOSITES LIMITED (BTCL)

2.4.1 Financial Performance

(Rs. in Lakhs)
Particulars 2009-10 2008-09

Net Sales and Other Income 453.32 725.33
Profit before Depreciation &
Amortisation and Interest 35.30 28.64
Net Loss before Extraordinary Items and Tax (38.57) (42.87)
Net Profit / (Loss) for the year (38.57) (44.39)
Loss carried to Balance Sheet (1,047.04) (1,008.47)

2.4.2 Review of Operations

During the year under review, the products manufactured by the Company were
very well received in the markets. The Sales and operating Income was at
Rs. 453.32 Lakhs compared to Rs.725.33 Lakhs achieved in the previous year.
The Production of SMC Moulded Products during the year was lower at 205 MT
as compared to 383 MT in the last year. Sales of SMC Moulded Products was
lower at 215.15 MT as compared to 412.65 MT in the last year

In spite of lower sales and production, the EBIDTA was higher at Rs.
35.30Lakhs compared to Rs. 28.64 Lakhs last year which was due to higher
value addition for the Company's finished products.

The Company has carried out various process improvements to upgrade the
quality of the products. Efforts have been put in upgrading the raw
material selection and testing procedures to ensure consistency and
reliability of supplies.

Company is also exploring the possibility of exporting the Company's
products and in this process has initiated steps on export market
development.

2.4.3 Future Prospects

The company has been able to focus on Public Health Engineering (PHE) in
the states of Orissa and MP. These are large prospects for SMC (GRP) Panel
Tanks.

The Company has been able to achieve good results of RCC/Steel tank
conversions to SMC (GRP) Panel Tanks in the SC Railways. The Company is
focusing on replicating this case study in other Railway zones i.e. North
Frontier Railways, Eastern Railways, etc., with the success achieved in
DMRC and the Commonwealth Games Project, the company is also focusing on
upcoming Metro rail Projects such as Bangalore, Mumbai and Chennai.

Large Projects in the Power & Industrial are being focused on through tie-
ups with Water Treatment Contractors.

2.5. WADA INDUSTRIAL ESTATE LIMITED (WIEL)

2.5.1 Financial Results

(Rs in Lakhs)
Particulars 2009-10 2008-09

Other Income 0.71 0.71
Loss before extraordinary item and tax (19.36) (22.77)
Loss brought forward from last year (402.56) (379.79)
Balance Carried to Balance Sheet (421.92) (402.56)

2.5.2 Review of Operation

The Company is evaluating various options for developing the available land
for commercial activities.

During the year under review, the Company earned Income of Rs.0.71 lakhs as
compared to Income of Rs.0.71 lakhs earned in the previous year. During the
year, the Company has incurred a loss of Rs.19.36 lakhs compared to a Loss
of Rs.77 lakhs in the previous year.

2.6. ESS VEE ALLOYS PRIVATE LIMITED (ESS VEE) - (Wholly Owned Subsidiary of
Binani Zinc Limited)

2.6.1 Financial Performance

(Rs in Lakhs)
Particulars 2009-10 2008-09

Sales (Net) 91.42 135.09
Profit/(Loss) before Tax (7.57) (4.87)
Net Profit/(Loss) after Tax (7.24) (3.46)
Balance of Profit/(Loss) b/f 17.11 20.58
Balance Carried to Balance Sheet 9.88 17.12

2.6.2 Business Review

During the year the production and sales were as follows:

Kgs.
Particulars 2009-10 2008-09
Production
Zinc Alloys 75,776 1,30,546
Aluminium Alloys & dross 763 1,312
Sales
Zinc Alloys 75,710 1,32,051
Aluminium Alloys & dross - 4,191

The Board of Directors reviewed the progress of the operation of the
Company and expressed concern about the performance.

2.7. R.B.G. Minerals Industries Limited - (Wholly Owned Subsidiary of
Binani Zinc Ltd.)

2.7.1 Review of Operations

The present status of Deri, Basantgarh and Ambaji mines are as follows:

Deri Mine

In the last Annual Report it was reported that after revaluation of assets
through Indian Bureau of Mines, the mine will be transferred to the
Company. Necessary application for transfer of mine was submitted to the
Authority in July, 2009. It is expected that after completion of certain
formalities with respect to the waiver of interest, etc., the Mining lease
will be signed by the Company shortly.

Basantgarh Mine

All requisite formalities including execution of Mining lease with the
Company has been completed. The mining operations of Basantgarh Mine will
commence only after transfer of other mines viz. Ambaji and Deri mines,
which are under process to the Company.

Ambaji Mine

In the last Annual Report it was reported that GMDC had invited a Global
tender from International Consultants for revaluation of Ambaji Mine
assets. On completion of the formalities, GMDC agreed that the operations
of the Ambaji Mine would be conducted as a Joint Sector with the Company
and transfer the mining lease to the Joint Sector on approval. In March
2010, GMDC approved the Joint Venture proposal and also for setting up of
Beneficiation Plant based on Ambaji, Deri and Basantgarh Mining Lease. GMDC
has awarded the work of asset valuation of Ambaji Mine to Indian Bureau of
Mines (Government of Undertaking).The Joint Venture proposal will be
submitted to the Government for approval once the valuation is completed.

Ambaji Mine Land Acquisition

The conversion of the land purchased/acquired for industrial purposes is in
process. Though part of the land has been converted for industrial use,
other part is yet to be converted for which, efforts are being made to
expedite the conversion for industrial use.

Environment Clearance

Necessary environment clearance from Ministry of Environment & Forest
(MoEF) has been obtained. Sample analysis conducted by the National
Institute of Occupational Health (NIOH) reveals that lead level in mother's
milk, children blood and soil are comparable with the values reported
around the world.

Plant Construction

A consolidated bid document was issued on September 11, 2009 for supply of
equipment, detailed engineering, supervision of erection of critical
equipment and commissioning of 2000 tpd, lead, copper, zinc ore
beneficiation plant. The plant is expected to be completed in two phases
within 15 months from the date of financial closure.

Water Dam

Revised proposal for 23.81 Hectares submitted to DFO, Sirohi on May 31,
2008 for forest diversion with all requisite details. The necessary NOC is
awaited.

2.7.2 Joint venture proposal of India Resources Ltd. (IRL)

i. Joint Venture proposal between India Resources Limited, Australia (IRL),
Crown Mining Private Ltd., New Delhi (CMPL), and the Company (R.B.G) was
signed on April 21, 2009. In the said agreement, RBG will acquire 51% share
in Crown Mining after incurring Rs.5.14 crore as Farm in Expenditure.

ii. It appears that after the signing of Joint Venture Shareholders
Agreement, there has been some differences between IRL, CMPL and RBG. The
differences are being sorted out to take the agreement forward.

2.7.3 Setting up Zinc Refinery

Refeasibility study was conducted for building a Zinc Refinery at Pit head
which will be reviewed depending upon the progress of the mining venture.

2.8. BINANI ENERGY PVT.LIMITED - (Wholly Owned Subsidiary of Binani Zinc
Ltd.)

2.8.1 Financial Performance

(Rupees)
Particulars 2009-10 2008-09

Interest Income/Sales 18,918 11,148
Profit/(Loss) before Tax 12,772 3,903
Profit/(Loss) after Tax 8,825 2,697
Balance Carried to Balance Sheet 2,41,491 2,32,666

2.8.2 BUSINESS REVIEW AND CHANGE OF NAME

Your Board is evaluating various options to undertake business relating to
generation and/or distribution of electricity.

3. Dividend

In view of the overall performance, prospects and income earned during the
year, your Directors recommend a dividend @ 30% (Rs. 3/- per Equity Share
of Rs. 10/- each), the outgo on dividend will be Rs. 888 Lakhs.

4. Directors

In accordance with Article 100 of the Articles of Association of the
Company, Mr. Braj Binani and Mr. S. Padmakumar, Directors retire by
rotation at the forthcoming Annual General Meeting and being eligible,
offer themselves for reappointment. Your Directors recommend re-appointment
of Mr. Braj Binani and Mr. S.Padmakumar as Directors on the Board of the
Company.

5. Auditors' Observations

Observations made in the Auditor's Report on the Accounts of the Company
(Standalone Account) are dealt with in the Notes to accounts at appropriate
place and are self explanatory.

The management response to the Auditors observations in the consolidated
Balance Sheet in respect of Binani Zinc Limited and Binani Cement Limited
are given below in the same seriatim.

5.1 Binani Zinc Limited (BZL)

Observations on standalone accounts

Responses of the Directors to the comments of the Auditors in their report
on Financial Statements are as follows:

Regarding the disputed increase in power tariff, as clarified in Note No.
6B (ii) of Schedule 16 (Notes to Consolidated Accounts), which is pending
before the Hon'ble Supreme Court, the management is of the view that the
Company has a strong case in view of a favourable decision taken in an
identical case and hence no provision has been considered necessary for the
interest amount of Rs. 3,287.81 Lakhs.

Regarding the pre-82 tariff concession, as clarified in Note No. 6B (iii)
of Schedule 16 (Notes to Consolidated Accounts), the management is of the
firm view that the Company is entitled to the concession which is sub-
judice and hence no provision has been considered necessary.

5.2 Binani Cement Limited (BCL)

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 4. 2 (b) (ix) and (x) of Schedule 16 to
notes of consolidated accounts the Company has explained how the
significant amounts advancedtowards investments and loans by the holding
company have been broadly utilized by the overseas subsidiaries.

6. Auditors

The Statutory Auditors, M/s. Kanu Doshi Associates, Chartered Accountants,
hold office upto the conclusion of the forthcoming Annual General Meeting
and have offered themselves for reappointment. They have confirmed that, if
reappointed, their appointment will be within the limits prescribed under
Section 224(1B) of the Companies Act, 1956. Your Directors recommend their
re-appointment as Statutory Auditors of the Company.

7. Subsidiary Companies

The Statement pursuant to Section 212 of the Companies Act 1956 relating to
Company's subsidiaries and stepdown subsidiaries viz.Binani Cement Limited,
Goa Glass Fibre Limited, Binani Zinc Limited, BT Composites Limited, Ess
Vee Alloys Pvt. Limited, Wada Industrial Estate Limited, R.B.G. Minerals
Industries Limited, Binani Energy Pvt. Limited, Binani Cement Factory LLC,
Dubai, Shandong Binani Rong An Cement Co. Ltd., China, Krishna Holding Pte.
Limited Singapore, Mukundan Holdings Limited, Murari Holdings Limited,
Bhumi Resources (Singapore) Pte Ltd.,Sankalp Holdings Limited and Abhinav
Holdings Ltd. are annexed to this report.

The Audited Accounts of the aforesaid Companies along with the report of
the Board of Directors and the Auditors Report thereon which are required
to be attached with the Annual Report of the Company have not been attached
as the Department of Corporate Affairs, Government of India have granted
exemption to the Company from attaching the aforesaid documents of the
aforesaid subsidiaries pursuant to Section 212(8) of the Companies Act,
1956. Bhumi Resources(Singapore) Pte Ltd. which was incorporated on 26th
October, 2009 and its first Accounting period will end on 31st December,
2010. In the absence of Financial Statement of BRSL as on 31st March, 2010,
the financial statement have not been considered for consolidation and
therefore not attached.

8. Particulars under Section 217 of the Companies Act,1956

The Statement of particulars under Section 217(1) (e) relating to
Conservation of Energy and Technology Absorption and activities relating to
Exports etc. are not applicable to the Company. Details of foreign exchange
earnings and outgo are annexed to this report. The Statement of particulars
of employees under Section 217 (2A) of the Companies Act, 1956 read with
Companies(Particulars of Employees) Rules, 1975 (as amended) is annexed
herewith and form part of this report.

9. Corporate Governance

In accordance with Clause 49 of the Listing Agreement, your Company has
ensured continued compliance of Corporate Governance requirements during
the financial year. Your Company lays strong emphasis on Transparency and
Independent supervision to increase various stakeholders' value.

The Report on Corporate Governance for the financial year 2009-2010 is
given as a separate Section titled 'Corporate Governance Report'. As
required under the said Clause, a Certificate from the Statutory Auditors
of the Company has been obtained. The Certificate is appended herewith and
form part of this Report.

10. Management Discussions & Analysis

The Management Discussion and Analysis form part of this Report.

11. Fixed Deposit

During the year, your Company has neither invited nor accepted/renewed
deposits from the public within the meaning of Sections 58A, 58AA and other
applicable provisions of the Companies Act, 1956.

12. Directors' Responsibility Statement

In accordance with Section 217 (2AA) of the Companies Act, 1956 the
Directors state that:

a) in the preparation of the annual accounts, all 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 16 to the financial statements
have been selected and consistently applied and prudent judgments and
estimates have been made so as to give a true and fair view of the state of
affairs of the Company as on 31st March, 2010 and of the Profit of the
Company for the Accounting Year ended on that day.

c) proper and sufficient care for the maintenance of adequate accounting
records has been taken in accordance with the provisions of this act so as
to safeguard the assets of the Company and to prevent and detect fraud and
other irregularities and the annual accounts have been prepared on a going
concern basis.

d) the annual accounts have been prepared on a going concern basis.

13. Internal Control System and their Adequacy

The Company and all its subsidiaries have adequate internal control systems
which are evaluated periodically by the Internal Auditors and the systems
are adequate commensurating with the operations of each of the Companies.

14. Acknowledgement

Your Directors acknowledge the assistance and co-operation received from
the concerned departments of the State and Central Government, Financial
Institutions, Banks, Customers, Selling Agents, Dealers, Distributors,
Employees at all levels and the Shareholders.

For and on behalf of the Board
Place : Mumbai Braj Binani
Date : 23rd April, 2010 Chairman