Annual Report - JK Lakshmi Cement - 2009-2010

JK LAKSHMI CEMENT LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

TO
THE MEMBERS

The Directors have pleasure in presenting the 70th Annual Report together
with the Audited Accounts of the Company for the year ended 31st March
2010.



The Company is observing this year as the Birth Centenary Year to pay
humble respects to late Lala Lakshmipat Singhania (1910-1976), who had been
a great Visionary and Key Architect of JK Organisation. He believed in the
philosophy of inclusive growth encompassing all sections of the Society.
The Company's best ever all round performance this year is a befitting
tribute to the great Founder.

FINANCIAL RESULTS:

Rs. in Crore
2009-10 2008-09

Sales & Other Income 1653.36 1410.19
Profit before Interest & Depreciation 433.92 316.70
Profit before Depreciation 410.90 295.79
Profit after Tax 241.13 178.59
Surplus brought forward 102.07 77.11
Amount available for appropriation 343.20 255.70
Appropriations
- Debenture Redemption Reserve 28.07 -
- Dividend 35.78 28.63
(incl. tax on Dividend)
Interim @20% - 14.31
Proposed final @30% - 21.47
Total @50% - 35.78
- General Reserve 175.00 125.00
- Surplus carried to Balance Sheet 104.35 102.07
343.20 255.70

SUB-DIVISION OF SHARES:

As approved by the Shareholders at their meeting held on 5th December 2009,
the face value of the Equity Shares of the Company has been reduced from
Rs. 10/- to Rs. 5/- each w.e.f. 18th December 2009. The present share
capital of the Company, therefore comprises of 12,23,58,924 fully paid
Equity Shares of Rs. 5 each amounting to Rs. 61.18 Crore.

DIVIDEND:

During the year 2009-10, the Company paid an interim dividend of Rs. 2 per
Equity Share of Rs. 10 each (20%) in November 2009. Your Directors are
pleased to recommend a final dividend of Rs. 1.50 per Equity Share of Rs. 5
each (30%) on the Equity Share Capital of Rs. 61.18 crore, thus making a
total dividend of 50% for the year 2009-10. The Dividend outgo for the
current fiscal would amount to Rs. 35.78 crore (inclusive of dividend
distribution tax of Rs. 5.20 crore) as against Rs. 28.63 crore of the
previous year.

OPERATIONS:

During the year 2009-10, the Company has achieved a sales turnover of Rs.
1644 crore, against Rs. 1404 crore in the previous year, an increase of
17%. The Company's Production and Sales have recorded a significant growth
of 14% over the previous year. This compares well with the 10% growth
recorded by the cement industry in the country as also Company's own growth
of 11% in the previous year. Capacity utilization was also higher at 96%
compared to industry's 85%. Your Company has consciously been following a
policy of steady growth in production for last several years. It is
heartening to see that the Company has been able to grow at a CAGR rate of
11.7% over last four years as compared to industry's 8.9%.

The Company continued its on-going effort to increase all-round efficiency
and reduce cost. The Company was able to reduce its fuel consumption to 85
Kg/MT from 89 Kg/MT and power from 80 Kwh/MT to 79 Kwh/MT during the year.

The Company's Split Grinding Unit of 5.5 lac MT set up and commissioned at
Kalol in Gujarat, had its first full year working this year. It is a matter
of great satisfaction that this Grinding Unit achieved 101% capacity
utilization. This helped the Company in not only rationalizing its logistic
cost but also increased its reach and proximity to the markets.

It is heartening that the Company could achieve highest ever Operating
Profit (PBIDT) at Rs. 434 crore as compared to Rs. 317 crore in the
previous year, a growth of 37%.

EXPANSIONS:

Your Directors are happy to report that during the year, steady progress
has been made in all the on-going expansion and other projects to enhance
the cement production capabilities. The current year of FY 2010-11 would
witness completion of several projects in hand with aggregate capital
expenditure of Rs. 271 crore. Clinker capacity will go up by 0.3 Million
MT, power capacity by 30 MW - 12 MW Waste Heat Recovery and 18 MW of
Thermal, thus raising the total power capacity to 66 MW. The Company has
also been able to tie up additional power of 21 MW at rates substantially
below the JVVNL rates. This alongwith enhanced captive power capacity will
help the Company generate additional revenues.

The Company has undertaken execution of yet another Split Grinding unit of
0.55 Million MT in the State of Haryana which is expected to get
operational by December 2011. This will raise the Company's existing cement
production capacity from 4.70 Million MT to 5.30 Million MT per annum.

As reported last year, the Company is actively pursuing new Greenfield
Cement Plant at Durg in the State of Chattisgarh, with an annual capacity
2.7 Million MT. All important statutory clearances have been obtained and
land acquisition is nearing completion. The total capital expenditure for
this project is expected to be about Rs. 1200 crore. With the completion of
Durg Plant, your Company would attain a total cement capacity of 8 Million
MT and will make the Company multi-locational operating in different
regions.

Possibility of further expansion is being explored in other locations to
enable the Company to make stronger footprint in the cement industry.

OUTLOOK:

The growth in the cement consumption during FY 2009-10 is an ample
testimony to revival of the Indian economy despite the global economic slow
down. The cement consumption grew at 10.2% thereby reaching a double digit
mark after a gap of three years. The portends for continuous growth in
demand are good as not only the Central Government but different State
Governments are laying greater thrust on infrastructure projects, road
networking and housing facilities, especially the affordable housing for
the masses. Cement Industry has taken proactive measures for expanding the
capacities to meet the emerging situation. During the three year period, FY
2007-08 to 2009-10 the industry has already added nearly 80 Million MT
capacity of which about 35 Million MT was added in the previous financial
year of 2009-10 alone. Most of the companies have drawn plans for further
capacity expansion.

The medium to long term outlook of cement industry is promising as it is
bound to grow with a healthy correlation to the economic growth of the
country. With Indian economy poised to grow at 8-8.5% or above, the cement
consumption is likely to remain on a double digit track growth for some
years to come. However, with the capacity creation materializing in
bunches, the risk of over capacity looms large on the sector having
possible adverse impact on the capacity utilization and prices in the
immediate next 2-3 years. The industry additionally will have to grapple
with the issue arising out of increase in the cost of inputs, especially
the cost of fuel and energy which have been rising unabated for last few
months. The other major challenges which the industry would face relate to
the logistics for movement of these increasing quantities, especially by
rail which has unfortunately not kept pace of growth in its network in line
with the growing industrial requirements.

DIRECTORS:

Shri Pradip Roy has been nominated by IDBI on the Board w.e.f. 6th June
2009 in place of its earlier Nominee Director, Ms. Amita Narain. The Board
of Directors place on record its sincere appreciation of the valuable
services rendered by Ms. Amita Narain during her tenure of office.

Shri N.G. Khaitan, Dr. Raghupati Singhania and Shri S.K. Wali, retire by
rotation at the forthcoming Annual General Meeting of the Company and being
eligible, offer themselves for re-appointment.

SUBSIDIARY COMPANY:

Requisite particulars of Hansdeep Industries and Trading Company Limited, a
wholly-owned subsidiary of the Company, pursuant to Section 212 of the
Companies Act 1956 are appended.

AUDITORS:

M/s. Lodha & Co., Chartered Accountants, Auditors of the Company, retire
and are eligible for re-appointment. The Auditors have confirmed that they
have undergone the peer review process of the Institute of Chartered
Accountants of India (ICAI) and hold a valid certificate issued by the
Peer Review Board' of ICAI. The observations of the Auditors in their
Report on Accounts read with the relevant notes are self-explanatory.

COST AUDIT:

Audit of the Cost Accounts of the Company relating to Cement' for the year
ended 31st March 2010 will be conducted by the Cost Auditors and Cost Audit
Report will be submitted to the Ministry of Company Affairs, Government of
India.

CORPORATE GOVERNANCE:

Your Company endeavors to have the highest standards of Corporate
Governance in its operations. In line with the Company's strong commitment
to Corporate Governance and with a view to achieve still higher levels in
governance, a Corporate Governance Committee of Directors has been
constituted during the year. Pursuant to Clause 49 of the Listing Agreement
with the Stock Exchanges, Management Discussion and Analysis, Corporate
Governance Report and Auditors' Certificate regarding compliance of the
conditions of Corporate Governance are made a part of this Annual Report.

CONSERVATION OF ENERGY ETC.:

Pursuant to Section 217(1)(e) of the Companies Act 1956 read with the
Companies (Disclosure of Particulars in the Report of Board of Directors)
Rules 1988, particulars of energy conservation, technology absorption,
foreign exchange earnings and outgo are annexed and forms part of the
Annual Report.

PARTICULARS OF EMPLOYEES:

Information in accordance with the provisions of Section 217(2A) of the
Companies Act 1956 read with the Companies (Particulars of Employees) Rules
1975 regarding employees is given in Annexure B to the Directors' Report.
However, as per the provisions of Section 219(1)(b)(iv) of the Companies
Act 1956, the Annual Report is being sent to all shareholders of the
Company excluding the aforesaid information. Any shareholder interested in
obtaining such particulars may write to the Secretary at the Company's New
Delhi Office.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 217(2AA) of the Companies Act 1956
and based on the confirmations received from the concerned officers, the
Directors state that:

* in the preparation of the Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures in the financial statement;

* the accounting policies have been selected and applied consistently and
judgements and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of the
financial year and of the Profit & Loss of the Company for the financial
year ended 31st March 2010;

* proper and sufficient care has been taken for maintenance of adequate
accounting records in accordance with the provisions of the said Act for
safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities; and

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

ACKNOWLEDGEMENTS:

Your Directors wish to thank and acknowledge the Financial Institutions,
Banks, Government authorities, dealers, suppliers, business associates and
the Company's valued customers for their assistance and cooperation and the
esteemed Shareholders for their continued trust and support.

The Directors also wish to acknowledge the committed and dedicated team of
JK Lakshmi whose unstinted hard work, efforts and ideas have taken the
Company on a path of steady growth and development.

On behalf of the Board of Directors

HARI SHANKAR SINGHANIA
Chairman
Place: New Delhi
Date : 18th May, 2010

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

a) Conservation of Energy:

M/s. JK Lakshmi Cement Ltd. took following major initiatives with an
intention to conserve energy and reduce fuel and power consumption.

* Installation of new Six stage Preheater in Kiln I.

* Installation of Baffle Plates in Kiln II Preheater down comer duct to
reduce pressure.

* Installation of VFD in Reverse Air Bag House Fan of Kiln II & III.

* Installation of PTFE Bags in Cement Mill to reduce pressure drop.

* Interconnecting of Compressors for optimized running.

* Optimization of compressed air operating pressure of down comer water
spray system for Kiln II & Kiln III.

* Interconnecting of Cooler blaster compressors for reduction in pressure.

b) Technology absorption, adaptation and innovation by technology
adaptation

All the above improvements have been completed and the technologies have
been fully absorbed and the plant is performing at its optimum capacity.

c) Research and Development

During the year, the Company has spent Rs. 0.31 crore. This is equivalent
to 0.02% of the turnover.

d) Exports, Foreign Exchange Earnings and Outgo Rs. in crore

i) Foreign Exchange earned Nil
ii) Foreign Exchange used 85.06
(CIF value of Imports of Fuel, stores and spares,
capital goods, consultancy, know-how fee etc.)

PARTICULARS OF CONSERVATION OF ENERGY:

Particulars Unit 2009-10 2008-09

A. POWER AND FUEL CONSUMPTION

1. Electricity

(a) Purchased:
Units (Kwh in Lacs) 1075.45 748.47
Total amount (Rs. in crore) 51.76 34.94
Rate/Unit (Rs. ) 4.81 4.67

(b) Own Generation:
(i) Through Diesel Generators:
Units (Kwh in Lacs) 113.56 26.60
Units Per Litre of Furnance Oil/LDO (kwh) 3.56 3.06
Furnance Oil/LDO - Cost/Unit (Rs. ) 6.69 7.19

(ii) Through Steam Turbine/Generators
Units (Kwh in Lacs) 2435.36 2395.77
Units Per Kg of Fuel (kwh) 2.15 1.76
Fuel Cost/Unit (Rs. ) 2.09 2.91

2. Fuel (Pet Coke/Coal)
Quality (Grade) A to D A to D

(a) Used in Calcining Raw Meal
Quantity (MT) 391631 359799
Total Cost (Rs. in crore) 175.12 196.19
Average Cost (Rs./MT) 4472 5453

(b) Used in Steam Turbine/Generators
Quantity (MT) 113077 135978
Total Cost (Rs. in crore) 50.81 69.73
Average Cost (Rs/MT) 4494 5128

3. Other Internal Generation - -

B. CONSUMPTION PER UNIT OF PRODUCTION:

Electricity Kwh./MT 79 80
Fuel (Pet Coke/Coal) Kg./MT 85 89

MANAGEMENT DISCUSSION AND ANALYSIS:

OVERVIEW:

* Growth of 14% in Production (including clinker for sale) at 45.73 lac MT
against 40.20 lac MT in 2008-09.

* Gross turnover at Rs. 1644 crore, an increase of 17% over Rs. 1404 crore
in 2008-09.

* Capacity utilization of 96% as against Industry Avg. of 85%.

* PBDT for the year Rs. 411 crore as against Rs. 296 crore in 2008-09, a
growth of 39%.

* Profit after Tax Rs. 241 crore against Rs. 179 crore in 2008-09,
registering a growth of 35%.

INDUSTRY SCENARIO:

The strong growth in the index of country's industrial output for the year
2009-10 at 10.4% as against 2.8% in the previous year validates that the
Indian economy is firmly on the growth path aided both by investments and
consumption. The industrial growth has been broad based with the core
sector doing particularly well. Indian Cement Industry, the second largest
after China, recorded a healthy growth of 10.2% in 2009-10 as against 8.3%
in the previous financial year. The cement consumption touched the double
digit mark after a gap of three years mainly driven by increase in the
spend on infrastructure as also revival in the housing demand, especially
in the Tier II and III cities.

The Planning Commission's Working Group on Cement Sector had indicated a
cement capacity requirement of nearly 300 million MT by the year 2011 -
2012, the terminal year of the 11th Five Year Plan. The current installed
capacity of the Indian cement industry is about 254 million MT. During the
year under review industry had added about 35 million MT which represents
16% growth over the previous year's capacity. Cement Industry has largely
been ploughing back its profit to invest in building up of fresh capacities
aggressively and is likely to reach the target capacity earlier.

Cement Industry also experienced a decline in its energy and fuel costs
during the year which are two of its major operating costs. This was a
pleasant fall out of declining oil prices in the international markets
during the first nine months of the year. However, the stability in the
fuel prices seemed to be a short lived phenomenon and prices have started
rising from the last quarter and are already ruling at levels higher than
the average of 2008-09.

The growth in the industry had its flip sides too. The infrastructure
support required by the cement industry, especially the availability of
railway wagons, quality power, etc., could not keep pace with the
industry's growth. Railway's share in cement loading is on decline and
dispatches in many parts of the country suffered on this account. The
Government partially rolled back in March 2010 the excise duty cut allowed
as part of stimulus measures announced in 2008-09.

Cement continues to be one of the highest taxed commodity in the country.
Total levies and taxes, including excise duty, state taxes, VAT, royalty on
limestone, coal, electricity duty, etc. combined work out to 60% or more of
the ex-factory cement price. It is important to note that abatement on
excise duty is given on all the manufactured items where the excise duty is
levied on the basis of Maximum Retail Price (MRP), even in the case of
white cement this principle is being followed. Though excise duty is levied
on MRP basis in case of grey cement of all the varieties the government has
so far not acceded to the industry's request for granting abatement. NCAER
had recommended an abatement of 55% on excise duty for cement industry.

COMPANY'S PERFORMANCE:

Capacity enhancement project undertaken in the previous financial year was
stabilized in a short time and helped the Company to shore up its volume by
14%. The timely shift in Company's marketing focus to infrastructure
segment and its emphasis on semi-urban and rural markets helped the Company
to achieve capacity utilization of 96% against average capacity utilization
of 85% in the Indian Cement Industry and 88% in our marketing zone.

Production & Sales:

With this increased sales of 45.9 lac MT, the Company's gross turnover grew
by 17% to Rs. 1644 cr. As against Rs. 1404 cr. recorded during the previous
year 2008-09. The Company made efforts to achieve quantum increase in
volume with only marginal increase in the resources.

No. of Employees & Turnover per Employee:

Stabilisation of Kalol Grinding Unit helped the Company to penetrate
further in its natural market of Gujarat whereby the Company could increase
its sale by nearly 20% in this market during the year. This unit also
enabled the Company to have a stronger brand positioning in the market and
also to nearly double its sale of bulk cement.

The clinker capacity utilization of 99% was achieved during the year. Due
to lower availability of covered wagons, however, higher sales of clinker
was resorted to, viz. 4.16 lac MT as against 3.21 lac MT in the previous
year. The covered wagon availability became increasingly scarce and the
Company, therefore, took urgent steps to refine its open wagon loading
operation, both at loading and unloading points. Greater quantity was
transported by road resulting in higher logistic costs during the year.
Steps were also taken to help our transport network to enlarge their
captive fleet of trucks by short term part financing of their margin money.
This would enable the Company in the long term to insulate itself from the
vagrancies of truck availability.

Continues Improvement in Power efficency parameters:

Company achieved distinct improvement in its fuel and power efficiencies.
Its fuel consumption reduced to 85 Kg/ MT as against 89 Kg/MT in the
previous year while power consumption was lower at 79 Kwh/MT as against 80
Kwh/ MT. The above was possible by a dedicated Energy Cell which
continuously monitored the critical process parameters and brought about
required improvement in operations.

The marketing strategy and the action plan of the Company was discussed and
formulated with the business partners so that business associates were in
sync with the marketing objectives and targets. The Company was also quick
to respond to the growing demand in some of the states of North. The
Company could achieve over 53% growth in UP. The Brand Building exercises
during the year included mega events with the brand ambassador held in the
key markets, Company's dealer loyalty programme titled 'Champs' and its
unique consumer scheme which became a benchmark for others to bring their
own versions. The Company was able to increase its dealer network to over
2200 from a level of 2000 in the previous year and consolidate its position
in the rural markets. The new dealer network is mostly based in Tier III
and IV cities. Company's two value added initiatives, viz. RMC and POP made
further progress by recording an increase of 34% and 36% respectively.
Further growth in these areas is under focus.

FINANCIAL MANAGEMENT:

The Company continues to enjoy highest possible Short-term Rating of PR1+
for its Commercial Paper programme of Rs. 50 Crore and for its short-term
NCDs. Based on the consistently improving financial health and strong
financial fundamentals of the Company, Credit Analysis and Research Limited
(CARE) has during the year upgraded its long-term Rating from A+ to AA- for
its entire long-term borrowings. These rating shall certainly enable the
Company to raise short-term as well as long-term resources on more
competitive interest rates.

The Company continues to gainfully deploy its yearly cash surplus into tax
efficient instruments with a view to maximize its overall effective
returns. The Net Debt to Equity Ratio of the Company has consistently been
improving year after year as is reflected in the following table:

Year Net Debt to Equity Ratio

2006-07 1.32
2007-08 0.55
2008-09 0.37
2009-10 0.20

HUMAN RESOURCE DEVELOPMENT:

Quality of Leadership is critical for Business Excellence. Over the last
several years the quality of leadership at Senior Management levels has
been improved and also a strong 'Leadership Pipeline' is built at all
levels upto frontline. We have identified talent through globally
benchmarked Assessment and Development Centres. Their leadership
competencies were then developed by formulating and implementing
'Individual Development Plans'. These plans included Mini MBA programmes,
360 Degree Feedback, participation in customized IIM Management programmes,
outbound experiential training programmes and job rotation in some cases.
Excellent results have been experienced out of some rotations which were
seemingly in altogether different functions. Some of the senior leaders are
still undergoing a year long Executive Coaching Programme to improve their
Leadership Bandwidth.

Considerable emphasis was laid this year on improving Employee Engagement
activities such as Coffee with MD, Dinner with Chief Executive (W), Young
Executive's Meet, Shaam Ki Mulakaat', etc. as a part of strategy to
motivate and retain our workforce. Specially designed training programmes
were conducted on Innovation and Creativity, Supply Chain Management drawn
from Mumbai Dabbawala' studies, Feedback Skills, Building High Performance
Team, etc.

INTERNAL CONTROL SYSTEM:

The Company has a well established internal control framework covering all
functional areas. It includes internal audits, independent review of
control system by statutory auditors, review mechanism by the Audit
Committee and periodic review by the management. The internal audit
encompasses well defined annual programme of audit and procedures to test
the adequacy and effectiveness of the internal controls laid down by the
management. In addition, a well defined management information system
exists for critical inputs which adds to effective control and decision
making.

The Company's Internal Audit Department comprising of professionals with
vast experience, conduct internal audit across all the offices, factories
and key verticals, as per the approved audit plan. In addition, services of
external auditors are also engaged for audit of the dumps and other
critical areas under advice of the Audit Committee.

These internal control processes are reviewed by the Audit Committee of the
Company comprising of four Directors, three of whom are independent. The
said Committee ensures effectiveness and adequacy of the internal audit
functions by holding discussions with the executive management on
reliability of the financial and operational information, statutory
compliances, safeguard of assets from unauthorized use and losses,
execution of transactions with proper authorization and as per the laid
down policies of the Company. Significant findings of the statutory and
internal auditors are reported to the said Committee and management
explanation thereto are deliberated and discussed with the auditors.

The Company also has a sound risk management mechanism in place touching
upon the entire spectrum of the business with a focus on identifying and
mitigating enterprise risk.

CORPORATE SOCIAL RESPONSIBILITY:

As a responsible corporate citizen, the Company accords significant
importance to Corporate Social Responsibility (CSR). In the last year, the
thrust areas for CSR were education, health, water conservation,
environment conservation and community development.

During the year, the Company has provided further momentum to Integrated
Family Welfare Programme - Naya Savera', which now covers 50,000 people in
nearby villages. Zero maternal mortality and considerable reduction in
infant mortality rates have been achieved in the villages covered under the
project.

With a special focus on the education of tribal ladies and children in the
Sirohi District, the Company continues to impart them basic education in
arithmetic and proficiency in reading and writing in Hindi and English.
Further, to encourage the spirit of excellence and to uplift the local
population, meritorious children are awarded with scholarships.

The Company has adopted ITI Sirohi and decided to upgrade the existing
courses for fitter, electrician and electronics as also start new courses
in diesel mechanic, draftsmen and AC refrigeration. Renovation of the
Centre has been started.

In addition, sensitising the employees and the population in the
neighbourhood villages of the plant on health safety and environment issues
is one of the basic planks of Company's policy towards its Corporate Social
Responsibility. Towards this end, the Company organises a number of free
medical camps, health melas, video shows, etc. besides making available
regularly basic door-step healthcare services to the villagers and
medicines from Company run dispensary.

Some other initiatives on CSR include like laying of approach roads,
building/renovating schools, provision of drinking water etc. for the
growth and development of the surrounding villages. Water is scarce in some
of the nearby villages. The Company has adopted a village named Adarsh'
and provided it a separate water pipeline from the main water supply of the
Company. Apart from this, hand pumps have been dug in nearby villages and
special water tanks are being provided during summer season to locals who
suffer hardship due to acute water shortage.

RECOGNITIONS & AWARDS:

It is a matter of pride for Team JK Lakshmi that its Managing Director,
Smt. Vinita Singhania, was elected unanimously as the President of Cement
Manufacturers Association in October 2009. She has the distinction of being
the first woman President of this important body of cement manufacturers.

The Company has received number of awards in the field of Quality, HR,
Environment and Productivity.

* Award for Best Professionally managed company having turnover > Rs. 500
Crores was conferred to JK Lakshmi Cement Ltd as well as Best Artisans
award was conferred to 7 members of Production , Mechanical &
Instrumentation Departments of JK Lakshmi Cement by Construction Industry
Development Council, New Delhi.

* National Award for Quality Excellence in Indian Cement Industry -
'Second Best Quality Excellence for the year 2007-08' and Environmental
Excellence in Limestone Mines- 'Second Best for the year 2008-09'
instituted by National Council for Cement & Building Materials, Ballabgarh.

* National Award for Excellence in Energy Management 2009 - 'Energy
Efficient Unit' awarded by Confederation of Indian Industry (CII),
Hydrabad.

* 'Certificate of Merit - Best Employer Award 2008' awarded by Employers
Association of Rajasthan , Jaipur.

* 'Productivity Excellence Award 2008' awarded by Rajasthan State
Productivity Council, Jaipur .

* At the Chapter Convention on Quality Circles 2009 organized by Quality
Circle Forum of India, Rajsmand Chapter, Quality Circles of J K Lakshmi
Cement won the following awards

a. Par Excellent award : Prakash Quality Circle (Electrical Dept.) Hand
pump installed at Adarsh Village

b. Par Excellent Award : Think Quality Circle (Instrumentation Dept.)

c. Excellent Award : Hari Om Quality Circle (Mining Dept.)

d. Distinguished Award : Utkarsh Quality Circle (Prod. & Q C Deptt)

* Our 4 Quality Circles also won awards at the National Convention on

Quality Circles (NCQC 2009) organized at Bangalore in December 2009.

a. Excellent : Hari Om Quality Circle (Mining Dept.)

b. Excellent : Prakash Quality Circle (Electrical Dept.)

c. Excellent : Think Quality Circle (Instrumentation Dept.)

d. Distinguished Award : Utkarsh Quality Circle (Prod. & Q C Deptt)

Contributions of Mrs Vinita Singhania, Managing Director, has also been
recognized by way of various awards.

* 'Achievement award as an Industry Doyen' instituted by Construction
Industry Development Council, New Delhi (Established by the Planning
Commission,Govt. of India) and the Construction Industry.

* 'Golden Peacock Women Business Leadership Award 2010' instituted by
Institute of Directors, New Delhi & World Council for Corporate Governance,
U.K.

* 'Outstanding Business Woman Award 2009' instituted by PHD Chamber of
Commerce & Industry, New Delhi.

RISK, CONCERNS AND OUTLOOK:

The next 2-3 years are expected to be a challenging period for the cement
industry. It has to weather challenges of volatility in the fuel prices,
infrastructure support and the temporary down cycle causing pressure on
prices due to substantial capacities being added. The Company with its
track record of efficient operations, continuous growth in its capacity
with minimal capex and its impeccable brand positioning is all poised to
meet the situation amicably.

Expansion plans of the Company have been timed in a manner to avoid
substantial addition during the down cycle period. Volume stability with
productivity, efficiency improvement and cost reduction would form the
bedrock for operations during such time. Enhancement of the Company's
captive power capacity would make it selfsufficient to meet its
requirements and also contain its power cost further. Company would counter
the rising fuel cost through the smart purchasing and negotiation skills
and try to keep its impact to minimum. Efforts made in the area of rural
marketing, loyalty programmes for channel partners, deeper penetration in
natural markets would also help the Company partially mitigate the expected
pressure from pricing, in the coming period. The transporters would be
encouraged to further augment their captive fleet to tackle the emerging
logistic challenges. The Company's enhanced organizational capabilities and
sound strategies would enable it emerge stronger and claim the rightful
place in the ever growing cement industry.

CAUTIONARY STATEMENT:

'Management Discussion and Analysis Report' contains forward looking
statements, which may be identified by the use of words in that direction
or connoting the same. All statements that address expectation or
projections about the future, including, but not limited to statements
about the Company's strategy for growth, product development, market
position, expenditures and financial results are forward looking
statements.

The Company's actual results, performance or achievement could thus differ
materially from those projected in any such forward looking statements. The
Company assumes no responsibility to publicly amend, modify or revise any
forward looking statements, on the basis of any subsequent development,
information or events.