Dalmia Cement (Bharat) Ltd.

Annual Report 2007-08

InsideManagement Discussion & Analysis 24

Directors' Report 38

Corporate Governance Report 45

Standalone Financials 58

Consolidated Financials 87

Letter from Vice Chairmen 02

Key Financial Highlights 04

Directors’ Profile 06

Session with the Managing Director 10

Accelerating Growth 14

Today's successful businesses have set a clear goal for themselves. They continuously focus on creating and delivering value to their stakeholders. Something that can only be measured in terms of company's strategic relevance to its stakeholders.

The last few years have seen Dalmia Cement (Bharat) Ltd. (DCBL) move from strength to strength. Our revenues have more than doubled; volumes have grown; and brand awareness has improved considerably. All of this has been made possible by an astute business plan, careful execution and extensive market mapping.

This is also a result of back-breaking efforts put in by our 3300 employees, all of whom have not just believed in the DCBL story, but also in its culture of excellence, and in the future that it is walking fast towards...

To us, growth is a sustained activity. Our achievements in the past year are just the stepping stones towards the future that we have envisioned for the Company and its stakeholders.

This past year has seen strategic restructuring keeping in view our future goals. We have launched large scale projects in cement, accepted key business challenges, explored diversification opportunities, took initiatives towards organization building and brought about process and system improvements.

Accelerating Growth

01

Evening view of our cement plant at Dalmiapuram

Dear Shareholder,

Financial Year 2008 was a year of challenges and accomplishments for your Company. On many counts, it was a landmark year as the accelerated growth momentum continued for a major part of the year. As a proof of economy with sound fundamentals, India achieved a GDP growth rate which is amongst the best in the global arena.

Having clocked over 9% growth in the preceding two years, India has again logged a GDP growth of 9% in FY 2008 . With a CAGR of 8.8% in the past 5 years, our belief is that the economy shall continue to grow at a higher CAGR in the coming 5 years.

With an accelerated rate of GDP growth, improving infrastructure, rising per capita income and overall consumption and burgeoning success of small and medium enterprises, Indian economic growth momentum is further going to establish its importance globally. The bottleneck though, could be the rising inflation and interest costs and the over dependence on imported petroleum products. The government, with the participation of concerned institutions and private organisations is taking effective steps to address these concerns.

Letter from Vice Chairmen

02

The India growth story is being augmented by both manufacturing and services sectors. Manufacturing sector has consistently grown at 9%. This coupled with 12% growth in services sector has led to a veritable construction boom across the country. Over a sustainable period of three years, growth of the construction sector has outpaced that of the GDP.

This boom has been beneficial for cement industry. In the last five years, the Indian cement industry had added 49 MnTPA capacities and its production has grown by 60 MnTPA, registering a CAGR of 6% and 9% respectively. Going forward, we firmly believe that cement demand will grow at a double digit CAGR on a long term basis even though yearly growth numbers may be a bit volatile.

From being a highly fragmented and a bit localised industry some decades ago, cement industry is registering rapid transition into a more consolidated industry with key players making pan India manufacturing and sales presence. As the anticipated demand growth looks promising in medium to long term, cement players are investing heavily in rapidly expanding capacities.

Having been in the industry for almost seven decades, your Company has envisaged the future of cement industry much in advance and undertook capacity addition program in the year gone by. After adding 2 MnTPA capacity at its plant at Dalmiapuram, it initiated Greenfield expansion in Andhra Pradesh and Tamil Nadu. Having identified the southern region (in context of demand supply situation) amongst the most promising areas and leveraging its brand strength amongst customers, your Company will be amongst the frontrunners to benefit from the booming cement demand in years to come. Construction and developmental activity at both these projects is in full swing and we expect the same to be completed well within the stipulated time. To expand its footprint from Southern region towards Eastern India, your Company acquired 21.7% stake in the equity capital of OCL India Ltd., consequent upon amalgamation of it’s subsidiary, Dalmia Cement (Meghalaya) Limited.

Other area of your Company's operation – Sugar is also expected to witness a sweeter time ahead. Sugar production in the current sugar season of 2007-08 is expected to be 25 MnT after sitting on the record production in previous fiscal which led to lower realisations. This is likely to continue in coming years as the availability of sugar cane is expected to reduce on account of reduced acreage of cultivation. Based on these macro parameters, we envisage the domestic sugar prices to firm up. Value added segments of power co-generation and distillery from the by products shall add to the bottom line of integrated players like your Company.

Let us now share with you your Company's excellent financial performance for FY 2008, highlights of which are given below.

?Net Revenue from your Company's operations increased by 50% to Rs.14,807 million.

?Profit before depreciation, interest and taxes (PBDIT) increased by 56% to Rs. 6,334 million.

?Profit before tax (PBT) grew by 46% to Rs. 4,341 million.

?Profit after tax (PAT) grew by 52% to Rs. 3,472 million.

These are creditable results in the distinctly different economic environments of your Company's two dominant business segments, cement and sugar, both of which are cyclical plays. The entire credit goes to the Company fraternity for their untiring efforts in making this possible. Needless to say, we are grateful to all our stakeholders for their faith and trust reposed in us.

03

Jai Hari Dalmia Yadu Hari Dalmia

Key Financial Highlights

Particulars

Total Income Rs. Mn 4,017 4,743 6,506 11,426 16,452

Operating Profit (PBDIT) Rs. Mn 789 785 1,603 4,054 6,334

Cash Profits Rs. Mn 433 535 1,267 3,403 4,673

Profits before Tax (PBT) Rs. Mn 309 357 1,089 2,964 4,341

Profit after Tax (PAT) Rs. Mn 254 309 848 2,289 3,472

Share Capital Rs. Mn 77 77 77 85 162

Reserves & Surplus Rs. Mn 3,407 3,507 4,199 7,449 11,310

Loan Funds Rs. Mn 2,825 4,988 6,832 10,146 15,833

Gross Block Rs. Mn 7,049 7,691 10,446 16,971 18,830

Net Current Assets Rs. Mn 1,783 2,130 2,199 1,752 4,536

Operating Profit Margin 20% 17% 25% 35% 39%

Net Profit Margin 6% 7% 13% 20% 21%

Return on Average Net Worth 7% 9% 22% 39% 37%

Debt Equity Ratio x 0.81 1.39 1.60 1.35 1.38

Interest coverage x 2.1 2.6 5.6 6.5 4.8

Current Ratio x 2.89 2.38 1.93 1.35 1.68

#EPS (fully diluted) Rs. 4.27 4.91 11.78 29.18 42.87 #Cash EPS (fully diluted) Rs. 7.29 8.52 17.60 43.40 57.70

Dividend per share Rs. 5* 5* 2 3 4

Dividend Rate 50% 50% 100% 150% 200%

Share Price Rs. 287.9* 392.0* 264.5 361.3 284.8

Market Capitalization Rs. Mn 2,203 2,999 10,119 15,438 23,020

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Clinker

Cement

1,04

3

1,29

3

1,15

1 1,40

5

1,26

2 1,56

9

2,00

5

2,73

7

2,44

4

3,29

4

FY 04

CEM

ENT

& C

LIN

KER

PR

OD

UC

TIO

N

(�000T)FY 05 FY 06 FY 07 FY 08

89

73 84

108

246

FY 04

SU

GA

R P

RO

DU

CTI

ON

(�000T)FY 05 FY 06 FY 07 FY 08

*Face Value Rs 10 per share, split to Rs 2 per share in FY 06. #Based on shares at year end.outstanding

04

Year at a Glance

Revenue Mix

5%

18%

77%

Cement (Rs. 11,322 mn.)

Sugar (Rs. 2,720 mn.)

Others (Rs. 765 mn.)

Sugar Revenue Mix

Sugar

Power Co-generation

Distillery

4%

61%

35%

Cement Geographic Mix

Tamil Nadu

Kerala

KarnatakaOthers

4%

60%

27%

9%

FY 07FY 08

11,4

26

16,4

52

TOTAL INCOME

(Rs Mn)

92,4

82

141,

151

FY 07FY 08

SUGAR SALES VOLUMES

(T)

2,28

9

3,47

2

FY 07FY 08

PROFIT AFTER TAX

(Rs Mn)

2,71

3

3,26

5

FY 07FY 08

CEMENT SALES VOLUMES

('000T)

05

Mr. Pradip Kumar Khaitan, 67, has been associated with the cement

industry for over 41 years. He was co-opted as a Director of the Company

in 1996. He holds an LL.B. degree from the University of Calcutta. As a

partner of Khaitan & Co., Solicitors and Advocates, he has extensive

experience in legal and commercial matters. He is a Director of several

leading public limited companies in India.

Chairman and Non-Executive Director

Pradip Kumar Khaitan

Mr. J. H. Dalmia, 63, holds a B.E. degree in electrical engineering from

Jadavpur University and a Master's degree in electrical engineering from

the University of Illinois, Urbana Champagne. He has more than 36 years

of experience cutting across various industries which includes wide

knowledge and experience of refractory, sugar and cement businesses.

Mr. J.H. Dalmia has vast experience in research and development having

personally received several patents for the Company's businesses and

has been instrumental in establishing the Company’s research and

development efforts more than 20 years ago.

Vice-Chairman

Jai Hari Dalmia

Mr. Y. H. Dalmia, 60, holds a B.Com (Hon) degree from Delhi University

and is a Fellow Member of the Institute of Chartered Accountants of India.

He has more than 35 years of experience in the cement industry. Mr. Y.H.

Dalmia has served as President of the Cement Manufacturers Association

and is a known figure in the cement industry.

Vice-Chairman

Yadu Hari Dalmia

Directors' Profile

06

Mr. Mridu Hari Dalmia, 66, is a gold medallist in chemical engineering from

Jadavpur University. He was co-opted as a Director of the Company in

2005. In his present capacity he is the President and CEO of OCL having

been associated with the Company since 1970. He brings with him wealth

of over 38 years of experience in the cement industry and has led the

Group in various sectors in national and international operations. He has

held leadership positions in various Indian business associations and has

been associated with various industry organisations in the past including

those as Managing Committee member of the Federation of Indian

Chambers of Commerce and Industry, President of Indian Refractories

Manufacturers Association, Cement Manufacturers Association and

National Council for Cement and Building Materials. Currently he is a

member of the Management Committee and the Expert Committee on

Direct Taxes of the Associated Chambers of Commerce and Industry.

Non-Executive Director

Mridu Hari Dalmia

Mr. Puneet Dalmia, 35, holds a B.Tech. degree from the Indian Institute of

Technology, Delhi and is a gold medalist from the Indian Institute of

Management, Bangalore in strategy and marketing. He has eleven years

of experience in the industry having started his career as the co-founder

and Chairman of one of the most profitable e-recruitment websites in India,

JobsAhead.com, which was later acquired by Monster.com, a Nasdaq-

listed multinational company. Mr. Puneet Dalmia conceptualized the

growth strategy and governance architecture for the Company to focus on

its core businesses and is spearheading the growth plans for the group.

Managing Director

Puneet Dalmia

Mr. Gautam Dalmia, 40, holds B.S. and M.S. degrees in electrical

engineering from Columbia University. He has 15 years of experience in

the cement and sugar industries. He was part of the team that led the

diversification of the Company into sugar business in 1994. He was

personally responsible for implementing a new strategy to turnaround the

sugar business. He has led the effort to design and implement the

Company’s integrated sugar, ethanol and cogeneration business. He is

directly responsible for managing the sugar business and is leading all

operations and execution of cement projects besides providing leadership

to the commercial functions for the group.

Joint Managing Director

Gautam Dalmia

07

Directors' Profile

Mr. Nil Ratan Khaitan, 71, holds an LL.B. degree from the University of

Calcutta. He has over 22 years of experience in the cement industry. He

was co-opted as a Director of the Company on August 24, 1979. He is an

advocate by profession and has extensive experience in legal, taxation

and commercial matters. He holds directorships in two public companies,

namely, Universal Conveyor Belting Limited and Jay Cylinders Limited.

Independent Non-Executive Director

Nil Ratan Khaitan

Mr. M. Raghupathy, 71, holds an M.A. degree in Economics from Madras University, with Statistics as the special subject. He was Co-opted as a Director of the Company in 1997. He is the Chairman of the Audit Committee and Shareholders' Committee of the Company. He joined the Indian Administrative Service (IAS) in 1960 and has held various positions in the Government of Tamilnadu such as Deputy Secretary to Government in the Revenue Department, Collector of Salem District, Director of Rural Development, Managing Director of TamilNadu Dairy Development Corporation, Commissioner of Animal Husbandry Department, Commissioner & Secretary to Government of TamilNadu in various departments like Transport, Housing and Urban Development, Agriculture (as Agriculture Production Commissioner) & Textiles, Principal Commissioner of Land Administration, Land Reforms and Revenue departments of the Government of Tamilnadu, Chairman of Thiruvalluvar Transport Corporation Limited, Chairman of the Tamilnadu Transport Development Finance Corporation, Chief Electoral Officer of Government Of Tamilnadu, Principal Vigilance Commissioner and Principal Commissioner of Revenue Administration. He has over 11 years of experience in the cement industry.

Independent Non-Executive Director

M. Raghupathy

Mr. J. S. Baijal, 77, holds an M.A. degree in economics from Allahabad University. A senior fellow in Harvard University, USA, he joined the Indian Administrative Service (IAS) in 1954 and has held the posts of Secretary, Finance, Government of Orissa; Joint Secretary to the Government of India, Ministry of Finance, Department of Economic Affairs; Director of National Fertilizers Limited, IFFCO; Minister Economic, Embassy of India, Washington D.C.; Chairman of the Industrial Development Corporation of Orissa; Officer on Special Duty with the Reserve Bank of India; Secretary, Irrigation & Power, Government of Orissa; Additional Secretary to the Government of India, Health & Family Welfare; Additional Secretary to the Government of India, Ministry of Finance, Department of Economic Affairs; Ex-officio Director of the Mineral & Metals Trading Corporation of India Limited, ONGC Limited, and Punjab National Bank; Secretary to the Government of India, Planning Commission; and Executive Director, World Bank, International Finance Corporation, and International Development Association, Washington. After his retirement, he has held positions as Director of HDFC Bank Limited, before being appointed as a Director of the Company on May 31, 1999. He is a Trustee of Morgan Stanely Mutual Fund since 1994 and has over eight years of experience in the cement industry.

Independent Non-Executive Director

J. S. Baijal

08

Mr. N.Gopalaswamy, 76, holds a B.Sc. degree in chemistry from Madras

University and a B.E. degree in chemical engineering from Annamalai

University. Having joined the company in 1980 he was co-opted as a

Whole-time Director in 1989. He is a member of the Institute of Industrial

Engineers, USA, the Indian Institution of Industrial Engineering, the Indian

Institute of Chemical Engineering, and the Institution of Engineers (India).

Having held the position of President for 25 years, since last year, he is a

Council Member of the Tiruchirapalli Productivity Council. He has over 40

years of experience in the cement industry. He ceased to be a Whole-time

Director of the Company and was appointed as an Additional Director with

effect from 1-8-2007.

Non-Executive Director

N. Gopalaswamy

Mr. Donald Peck, 54, holds an M.A. degree and a doctorate in economic

history from Oxford University. He was nominated as a Director of the

Company in July, 2006. Mr. Peck's expertise lies in emerging markets

investing, both in the equity investment/fund management business,

experience in which was acquired by him when he was with International

Finance Corporation in Washington and prior to that in the investment

banks of Lloyds Bank and Morgan Grenfell. He joined CDC Capital

Partners and was responsible for helping it to develop its equity investment

business and setting up its fund management business worldwide. He

went on to become a Director in 1999. Having run the CDC/Actis private

equity business in India from 1995 to 2007, Mr Peck became one of the

senior founding partners in Actisin 2004.

Independent Non-Executive Director

Donald Peck

Mr. T. Venkatesan, 55 years, Whole-time Director, is a B.A. (Economics) and a fellow member of the Institute of Chartered Accountants of India. He brings with him a rich experience of over 28 years having commenced his career with Thiru Arooran Sugars Limited in the finance and accounts department. He has worked with reputed companies such as Eicher Tractors Limited, Triveni Engineering Limited and the Aditya Birla group. In his previous assignment with the Sterlite Group, he was instrumental in spearheading the expansion from 180 KTPA to 400 KTPA, as CEO for Sterlite Industries' copper business. In addition he was also holding additional charge as CEO and director on the Board of Vedanta Alumina Limited and has successfully implemented a Rs. 5000 crores project in the State of Orissa. His expertise lies in accelerating growth and building organisational capability to ensure delivery of business goals. In his present capacity he is responsible for operations and future growth of cement segment.

Whole Time Director

T. Venkatesan

09

What is the vision of your company in global business environment?

Globally, India is the second largest producer in both our lines of business, second to China in cement and second to Brazil in sugar. Considering the low per capita consumption of cement in India and the energy based opportunity in sugar business, India is a high growth market for the two industries.

While we are leveraging the best of knowledge, technology and practices available globally; our growth will be dictated by the manner in which the Indian economy is going to unfold. We at Dalmia Cement have utmost faith in the India growth story. We have participated for almost seven decades in the nation building activity and have grown consistently over these years gaining traditional wisdom in these markets.

To us the single most important challenge is to build scale in both the businesses. Our mid term aim is to break into top five producers in both our businesses. While we are chasing the capacity build program in cement, we are also practicing strict discipline on return on capital employed. We aspire to attain profitable growth. This discipline on returns restrains us from pursuing every possible opportunity and helps us identify and grab opportunities which will help us outperform the industry and create greater stakeholders' return on sustainable basis.

In sugar business we follow the integrated model, which helps us manage the market vagaries better. Ethanol and Power enhance the profitability in good times and protect bottom-lines in down cycles. We consider our ability to access high yield variety sugarcane as the foremost focus of our sugar business. Going beyond rhetoric development work with farmers in our region, our recovery is amongst the best in the industry and our endeavour is to consistently enhance accessing high quality cane.

With the third generation of the family taking the anchoring role, we are making conscious efforts to bring about a cultural shift in the way our businesses will be managed. We are fast transiting from 'family run' to 'family owned, professionally managed' company with designated heads for the two main business lines. We are empowering people to take appropriate decisions at various levels. Many platforms for interaction are being created whereby employees can communicate and discuss ideas openly; cutting across the hierarchy.

Session with the Managing Director

10

What are the value systems of your company? Why do you think they are important for any organisation?

How do you view your company's performance in FY 2008?

How are your two Greenfield expansion projects in Andhra Pradesh and Tamil Nadu progressing?

At Dalmia Cement, we are committed “to constantly create value for our stake-holders” while practicing integrity. In our endeavour to create a forward marching DCBL, we have adopted a set of values which will govern all our actions, create differentiation and make us a respectable employer for leaders of tomorrow. Forming the very basis of our vision, these values are Learning, Pursuit of Excellence, Speed and Teamwork.

Learning: The world around us is continuously evolving and changing. Past knowledge is becoming obsolete at a pace faster than ever before. In order to excel and propel us to greater heights, our leaders must possess child like curiosity and humility to learn from anyone at any level.

Pursuit of excellence: Competing in a global environment, we aspire to set and surpass global benchmarks on key value drivers. We will continuously inculcate the habit of taking impossible challenges before creating possible solutions. Our channels of communication are open across hierarchy to allow for free flow of knowledge and innovation.

Speed: In the fast changing competitive business environment, the big may not necessarily beat the small but fast will definitely lead the slow. We choose our professional leaders to carry on the entrepreneurial culture, based on their passion for growth. We empower them to take quick decisions taking due cognizance of the possible risks involved.

Teamwork: We believe that sustainable growth can not be achieved by an individual but is an outcome of collaborative efforts and ideas of a group. We create options for people to network across businesses, locations and functional teams to achieve excellence. At Dalmia Cement, we encourage people to display high level of mutual trust and respect for colleagues.

FY 2008 was an exciting year of performance at Dalmia Cement (Bharat) Limited. Results were pretty satisfactory across multiple areas of financial performance, operational efficiency, project implementation and organisational transformation. I can see the passion of our people to achieve results quickly across various performance metrics. The Year’s financial performance reflects improved operational efficiency of our company as is depicted below.

?Gross sales of Rs. 16,908 million, registered an impressive year on year growth of 51%.

?Profit before tax grew by 46% to reach Rs. 4,341 million.

?Net Profit grew by 52% to reach Rs. 3,472 million.

?In cement, we achieved over 20% volume growth backed by high 94% capacity utilisation.

?As for sugar, the three plants ran on enhanced capacity for the first full financial year andderived benefits from volume growth of 128% in production and 53% in sales.

Of the two Greenfield projects, Cudappa plant of 2.25MnTPA Cement capacity at Andhra Pradesh is expected to be commissioned in second half of CY2008. The main plant and machinery had been ordered well in time in financial year 2007. Major achievement of the group has been the construction of Pre Heater tower with a height of over 139 meters within 10 months, against an industry standard of 12-14 months.

For an equivalent cement capacity project in Ariyalur, Tamil Nadu; the group now has requisite expertise and the methodologies for achieving its target of commissioning in first half of CY2009.

The company is facing challenges in terms of skilled manpower across managerial and operational levels but we are confident of project completion well within time lines and costs.

11

There are diverse opinions on Indian cement sector's prospects. How does your company see the sector in near future?

In the fast paced competitive environment, one national agenda being ignored is that of community development. What are your views on this issue?

We believe in India growth story. And hence we are making significant investments in India. Being an emerging markets frontrunner, India is expected to remain an attractive cement destination. MNCs and Indian Cement players are responding to the increased demand opportunity in the country by expanding capacities. In our view, capacity expansion will bear a significant mark in India's development considering that the sector employs 70,000 people directly and almost 10 million people indirectly.

Demand for cement is growing consistently. For the quantum of housing units, hotels, malls, SEZs and office space needed; kilometers of roads/rail tracks/metros to be constructed & renovated across highways and hinterland; industrial expansion in key sectors including steel and power; scope of improvement in port and aerodrome network; we see a favourable demand supply situation for cement manufacturers in times to come, with some volatility, here and there.

Indian cement industry is expected to be on fast track of consolidation. Players with smaller capacities and localised presence will be dominated by national players having capacities in excess of 20 MnTPA. Hence it is imperative for smaller companies to grow at a rapid pace and have national presence to be amongst significant players in the industry.

At Dalmia Cement, we are responsible for carrying on the traditional legacy of inclusive growth for all. Our commitment to be a good corporate citizen with conscience has two focus areas of community development and concern for environment.

On community development front, we focus on providing basic education and healthcare to the communities we operate in. Our educational initiatives benefit thousands of students pursuing their primary and secondary education. We also have investments in Industrial Training Institutes that prepare workers on technical skills required for getting better job opportunities. Our plants have been set up in villages which did not even have basic economic or social infrastructure. The Company has consistently invested to uplift these areas in both aspects.

As for our environment protection, we follow the best practices towards controlling emission, water conservation and efficient energy consumption. The company has used technology and appropriate structures to reduce dust emissions. The company ensures zero chemical discharges through water treatment plants, using recycle water for plantation. Initiatives for afforestation and plantation have been undertaken at our cement manufacturing plant to contribute towards a greener environment.

Realising that much more needs to be done, the company has plans to allocate upto 2% of its annual profits to Dalmia Foundation to undertake CSR activities across all its regional facilities.

12

Bankers

AXIS Bank LimitedBank of IndiaBNP ParibasCanara BankCorporation BankICICI Bank LimitedIndian BankPunjab National BankState Bank of IndiaState Bank of TravancoreUnion Bank of IndiaYES Bank Limited

Head Office

11th & 12th Floors, 'Hansalaya'15, Barakhamba RoadNew Delhi 110001

Registered OfficeDalmiapuram 621 651District Tiruchirapalli(Tamilnadu)

AuditorsStatutory : S.S. Kothari Mehta & Co.Internal : KPMG & Axis Risk Consulting

Services Pvt. Ltd.

Company Information

13

The next ten years will be critically important for India. As it progresses towards becoming one of the largest economies in the world, its new passport to success will be infrastructure development.

The demand for cement in India is expected grow at a CAGR of 10% between FY2007 and FY2010. South India's share in the all-India consumption of Cement is about thirty percent. It also has between 30 to 33 percent of the country's installed cement capacity. In this region, which has been the focus of DCBL, the growth in demand during the next five years is expected to be in double digits.

The magnet shows south...

14

It may be added that the Southern region enjoys amongst the highest realizations in the country on account of favorable cement demand supply scenario.

The states which account for about 60% of the off take in the South, namely Andhra Pradesh and Tamil Nadu are likely to grow in teens, driven by government projects, SEZs, Infrastructure projects, and IT Parks.

Thus, DCBL's already commissioned 2 MnTPA brownfield expansion, as well as the upcoming 4.5 MnTPA Greenfield projects under implementation are favorably timed. By responding to the demand escalation with rapid expansion, the Company is well-poised to achieve higher sales volume in its core markets in Southern India.

15

Aerial view of our cement plant at Dalmiapuram

DCBL, being in a cyclical industry such as Cement, where the demand-supply position alternates between deficit and glut over a period of time, has diversified into Sugar, Ethanol and Power industries. In recent past, it tripled its capacity in Sugar to 22500 TCD at three locations in state of Uttar Pradesh.

Diversified for stability

16

It also set up a 80 KLPD Ethanol plant next to one of its Sugar plants. It has installed 79 MW cogeneration power plants across the three Sugar units for captive consumption & export of surplus power. DCBL has access to power for its Cement plants from thermal power plant and wind farm in South. These measures help to mitigate the risk during a downside period in the Cement industry's cycles.

The consistency in its corporate performance is adequately reflected in its track record over the years of growth with profitability.

17

Integrated Sugar Plant at Jawaharpur

Importance of people as assets can not be undermined in any organization, and especially in a company embarking on an accelerated growth path. With increasing scale of operations, people capacity and capabilities need to be enhanced at an equally rapid pace. We follow a rigorous selection procedure across operational and managerial cadre so that we attract talent which matches our value systems.

People, Performance and Progress.

18

Each group has exhibited capability to deliver up to the challenges and performed well, accomplishing operational and process improvements of the growing Company. Various annual awards have been instituted to recognize exemplary performers across all locations and levels.

Whether in carving out career and development plans to take them forward in work and life or tying up with global institutes such as Indian Institute of Management, Ahmedabad and Centre for Creative Leadership for upgrading their skills and knowledge; the focus is on strengthening individual assets so that they not only contribute towards the growth of the Company but also spur a culture of excellence in society at large.

19

Customer acceptance of quality is an important aspect of building market-share and DCBL's brands have upheld customer confidence in the markets in which they are currently available.

Stronger Brand Strength

20

The Company has a formidable reputation for its specialty Cements for niche applications. Both the range of products manufactured and the brand support activities regularly undertaken, play a significant role in maintaining a positive and substantial mind-share for DCBL's brands.

Each niche brand has a strong back up both at retailer and distribution levels. Regular brand promotions have ensured loyalty and acceptance of DCBL's brands amongst a growing base of quality and brand-conscious customers.

21

As a concerned corporate, we are conscious of our responsibilities towards the communities in whose midst our manufacturing and business operations are conducted. Our community development initiatives are undertaken to improve the quality of life of people in the surrounding areas. Notable thrust areas of some of these initiatives are education, community development and cultural enrichment.

Our might to empower communities

22

Cane crop ready for harvesting

In education for the young, the company endeavours to provide for basic study material, midday meals and even entire school infrastructure. It also runs an industrial training institute for up-skilling and providing vocational training for the workers.

For the development of the farming community around its sugar business, DCBL helps farmers with superior farming techniques to aid them to increase their farm output and thereby their income. From extending loans to farmers, to organising experience and knowledge sharing fairs, it all forms part of the company’s CSR activities.

To enrich cultural lives of the communities the company strives to host annual festivals, provides for festivities during the season, sponsors dramas and music programmes.

Through these efforts DCBL has endeavored to maintain a harmonious relationship with the environment and its social surroundings by adding value to the bio-system of which it is an integral part.

23

Afforestation in mining area Afforestation in mining area

Indian Economy Overview

What proved to be a challenging year for the global economies turned out to be a year of manifestation of might for the Indian economy. While there were increased global uncertainties and fear of slow down of the US economy with crude oil prices reaching all time highs, Indian Economy maintained its growth momentum in FY 2008.

According to the data released by the Central Statistical Organisation, Indian Economy has posted GDP growth of 9%. As per the said report, manufacturing registered growth of 8.8%, agriculture 4.5% and construction 9.8%. Services, contributing almost 63% to the GDP recorded another year of double digit growth.

Despite the overall pressure of global uncertainties and the inflation reaching beyond 7%, this GDP growth is a true reflection of the sound fundamentals and the maturity of our economy. We, at Dalmia Cement, believe that our economy will sustain its growth momentum over the next three to five years.

Management Discussion and Analysis

24

Financial Highlights

The sustained macro economic performance of the country also benefitted the company with its cement operations scaling further to higher levels both in terms of revenues and earnings. The success story of the Company continued this year with the robust all round performance in its operations.

(Rs. Million)

Gross Sales 11,176 16,908 51%Net Sales 9,865 14,807 50%Total Income 11,433 16,481 44%PBT 2,966 4,394 48%PAT (including Share of Profit from Associates) 2,290 3,688 61%

The Company posted Consolidated Gross Sales of Rs. 16,908 million in FY 2008, up from Rs. 11,176 million in the previous year, depicting a growth of 51%. Consolidated Profit after Tax improved to Rs. 3,688 million this year from Rs. 2,290 million, up 61% (after taking into account the share of profit from associates of Rs. 184 million).

Consolidated Financial Highlights FY 2007 FY 2008 Growth

25

Railway siding view of Dalmiapuram Plant

6,33

4

4,05

4

FY 07FY 08

EBITDA

(Rs Mn)

Stand alone Net Sales in FY 2008 were up from Rs. 9,865 million to Rs. 14,807 Million for the Company. EBITDA for the Company grew from Rs. 4,054 million to Rs. 6,334 million, depicting a growth of 56%.

Share of contribution at Net Sales level of each business to the total net sales has not changed much over last year. However, EBITDA contribution from the cement business has significantly improved, as is evident from the table above.

The net sales of cement business grew by 49% to Rs. 11,322 million in FY 2008. Net Sales from the integrated sugar business of the Company increased to Rs. 2,720 million in FY 2008, up 61%. Net Sales from other businesses, which include magnesite and refractory amongst others, were up from Rs. 556 million in FY 2007 to Rs. 765 million.

In the Earnings Before Interest, Tax and Depreciation, huge surge was witnessed in cement and integrated sugar businesses in FY 2008 as compared to previous year. Cement EBITDA has grown last year on account of higher volumes as well as improved realisations taking margins to 44% from 37% last year. Sugar business EBITDA improved due to profitability contribution from the co-generation unit.

Stand Alone Financial Highlights FY 2007 FY 2008 Growth % Mix % Mix (FY 2007) (FY 2008)

Net Sales*Cement 7,620 11,322 49% 77% 77%Sugar 1,689 2,720 61% 17% 18%Others 556 765 38% 6% 5%

9,865 14,807 50% 100% 100%EBITDA*

Cement 2,830 5,063 79% 70% 80%Sugar 207 373 80% 5% 6%Others 1,017 898 -12% 25% 14%

4,054 6,334 56% 100% 100%

PAT 2,289 3,472 52% 100% 100%

(Rs. Million)

* Cement includes Wind-Farm: Sugar includes Co-generation and Distillery unit financials.

2,07

7 2,49

6

2,31

1

2,98

13,48

2

3,54

7

3,63

3 4,14

5

NET SALES

(Rs Mn)Q1Q2Q3Q4

FY 07FY 08

44%

37%

FY 07FY 08

CEMENT EBITDA M

ARGIN

S

(%)

26

Cement Business

Industry

Indian Cement industry added 23 MnTPA (Million Tonne Per Annum) to its installed capacity in FY 2008 to take it to 189 MnTPA, showing a year on year growth of 14% with utilizations improving to 96% for the same period. Production grew by just over 8% over the last fiscal to reach 168 MnTPA. Cement consumption In India registered an encouraging double digit growth of 10 % backed by a similar growth in the Construction activity. Southern states of Andhra Pradesh, Karnataka, Kerala & Tamil Nadu accounted for almost 30% of the All India Domestic Demand of 164 MnTPA.

However, per capita cement consumption in India is still very low at around 130 kg against the world average of 260 kg and China at 450 kg. This underlines the tremendous scope for growth of the Indian cement industry in the long term.

Cement Operations

Cement operations contribute 77% to the revenues of the company. The plants are currently at a single location in Dalmiapuram, District Trichy in Tamil Nadu, which falls in the southern region of India where cement demand in last one year has grown 10% year on year, which is at almost the same rate as the country.

The Company services the southern states of Tamil Nadu, Kerala and Karnataka. Revenue contribution from Tamil Nadu in FY 2008 is 60% while Kerala and Karnataka contribute 27% and 9% respectively. Balance 4% contribution is from other areas.

There has been a notable growth in capacity utilization of cement business which has increased from 78% in FY 2007 to 94% in FY 2008. This is on account of brown field expansion of 2 MnTPA that was undertaken in FY 2007 which yielded the benefit of enhanced operations for the entire year.

The company with its continued zest to improve efficiency and benefit from economies of scale worked ceaselessly to optimise cost. While efficiency was reflected in better performance in terms of cement and clinker production and capacity utilizations, margins improved with higher realizations and better cost management.

The installed capacity of the company stands at 3.5 MnTPA at its Dalmiapuram plant. In order to take advantage of the growing domestic demand for cement, two new cement plants at Cuddapah (Andhra Pradesh) and Ariyalur (Tamil Nadu) of 2.25 MnTPA each are being set up. The commissioning of these will take the installed capacity of the company to 8 MnTPA, an increase of 129%. To expand its footprint in Southern region Rs 1,550 crore of capital expenditure has been outlined in these two upcoming cement plants. The Greenfield project at Cuddapah in Andhra Pradesh is expect? d to be commissioned in second half of CY 2008 and the one in Ariyalur (Tamil Nadu) will be operational within first half of CY 2009.

To mitigate the increase in energy costs, the company uses its wind mills with 16 MW capacity at Muppandal in Tamil Nadu. This ensures generation of inexpensive and eco-friendly captive power supply to its plant through the State grid route. Existing thermal power capacity of Dalmia is 27MW which in near term would increase to 45 MW this year.

The viability of locations plays a pivotal role in the economics of cement manufacturing. It is determined by certain factors such as proximity to raw material, availability of continuous power supply and distance to market. With plants located in close proximity to the raw material, the freight and transportation costs are also kept at lower level resulting in higher productivity and better net realizations.

Capacity Production Utilization%

81.4%84.3% 79.1%

94.0%96.0%

144

151

160

166

189

118

128

142

155

168

2004 2005 2006 2007 2008

IND

IAN

CEM

ENT

IND

US

TRY

(Mn T)

Sour

ce: C

MA

Estim

ates

63%

80%

75%

95%

94%

101%

85%

97%

CAPACITY U

TILIS

ATIO

N

(%)Q1Q2Q3Q4

FY 07FY 08

27

2726 29

99

3545

3558

2655 27

86

3232 35

43

NET SALES R

EALIS

ATIO

NS

(Rs/T)Q1Q2Q3Q4

FY 07FY 08

The Company continued to enjoy goodwill in its market place and its brands such as Dalmia Superroof and Vajram continued to be preferred products and commanded premium over other products in the market. The most prominent aspect of company's market is its significant presence in infrastructure applications which includes cement used for constructing airstrips, oil wells and railway sleepers. The Company's oil well cement is the first cement in the country to receive the prestigious American Petroleum Institute (API) certification. It is used for cementing the walls of on-shore and off-shore oil wells of ONGC, Reliance and other oil exploration companies.

Outlook

Realty will continue to play a major role as the development of commercial space including malls, hotels, SEZs will go on full swing. Residential realty has seen a slight moderation in demand as the cost and availability of retail finance has adversely impacted its growth. This slowdown is momentary. Recommended pay hike of government employees by the Sixth Pay Commission and the otherwÿse rising prosperity of the Indian middle class segment with improved economic conditions will drive the growth momentum of the retail realty sector.

Going forward, dedicated rail freight corridor, rapid expansion of airport network to cover tier II & III cities, ongoing up-gradation of important ports and airports, slew of capacity expansion in steel, power and other manufacturing sectors and 2010 Commonwealth Games to be held in Delhi will all continue to augment the growth momentum in key infrastructure areas. The country is likely to double its infrastructure spending over the next five years towards creating and modernising its infrastructure and sustaining its growth momentum.

In light of above and based on the last 3 year CAGR of 10% in cement demand, the Company estimates that the industry shall continue to see double digit demand growth.

The Cement Manufacturers Association estimates addition of over 75 MnTPA capacity spread across India, in next two years. This would take the country's cement capacity to over 260 MnTPA, to meet its rising demand growth. The Company would endeavour to maintain its market share in its core geographies and expand network in its new market, State of Andhra Pradesh.

77%

66%

FY 07FY 08

PPC

(%)

1.39

1.30

FY 07FY 08

Cement Clinker Ratio

28

Sugar Business

Industry

India continues to remain the largest consumer of sugar followed by China, Brazil and USA. In fact consumption in above countries is growing at a rate higher than the world average. Consequently these topographies are expected to play a pivotal role in global sugar trade in coming years.

Sugar is now perceived as an energy crop owing to derivation of ethanol which is increasingly being used as a mixture in petrol. With rising crude prices but softer sugar prices, Brazil has been increasingly diverting the sugarcane juice for manufacture of ethanol. Currently about 55-56 % of the total sugarcane production of Brazil is used for manufacturing ethanol.

The Indian Sugar industry is the country's second largest agro processing industry with an estimated production of 27 MnT (Million Tonnes) in the 2007-08 sugar season. This sector is a key driver of rural development, supporting India's economic growth. The industry, in the past two to three seasons has shown respectable growth in terms of quantities produced. This was primarily on account of good climatic conditions, remunerative sugar cane prices, setting up of new production capacities and on time payments to farmers. The cane acreage grew by 4.4% in 2007-08 across India and by 7% in UP where the company operates its three units.

In FY 2008, sugar prices remained slightly soft as production in India was at 28.3 MnT in sugar season 2006-07. Delayed commencement of crushing on account of uncertainty in cane prices and lower per hectare yield of sugar cane has moderated production estimates for the season. Crushing days reduced significantly in 2007-08 season and is expected to favourably impact the realisations.

1417

.5

12.7

18.5

19.3

19.6

22.7

28.3

26.1

25.5

ProductionOfftake (incl exports)

2004 2005 2006 2007e 2008e

INDIAN SUGAR INDUSTRY

(Mn T)

13,1

08

13,0

95

13,3

75

14,0

72

Q1�08

SU

GA

R S

ALE

S R

EALI

SA

TIO

NS

(Rs/T)Q2�08 Q3�08 Q4�08

29

Sour

ce: I

SMA,

Indu

stry

Est

imat

es

Sugar Operations

Dalmia embarked on the manufacture of sugar in the mid-nineties and set up its first unit at Ramgarh (Distt. Sitapur) U.P. The installed capacity at the time of diversifying into sugar business was 2500 TCD (tonnes cane crushing per day), which has been expanded to 7500 TCD. From a single sugar-manufacturing unit the Company has now grown to three operational units with total installed capacity of 22500 TCD leading to sugar manufacturing of about 300,000 TPA. With co-generation capacity of 79MW and distillery capacity of 80 KL per day, it is a forward integrated sugar manufacturing set up.

The sale of sugar accounts for more than 10% of Company's revenues and it aims to build deep capabilities in this segment. The sugar manufacturing plants incorporate state-of-the-art technology that ensures high productivity and efficiency, across all plants. Due to emphasis on quality throughout the processes, the Company produces high quality sugar both in terms of grain size and colour, which leads to better realizations.

In this challenging business environment of huge sugar stocks and high administered sugarcane prices, the Company's sugar business performance is noteworthy.

Sugar

Sugar production and cane crushed has grown substantially in FY 2008 as compared to the previous year. Sugar production grew by 128% to 2.46 lac tons in FY 2008. Crushed cane increased by 142% to 24.45 lac tons. Volumes jumped due to the fact that two new sugar plants at Jawarharpur and Nigohi started operating at full scale in FY 2008. Though sugar recovery rate in FY 2008 was at 10.06%, the business saw 53% growth in sales volumes at 1.41 lac tones.

Co-generation

The Cogeneration plants at three locations Ramgarh, Jawaharpur and Nigohi with total installed capacity of 79 MW started operating at full scale last year. Power generated during FY 2008 was 299 million units and gross Power exported during the year was 201 million units. Cogeneration is major contributor to top and bottom line of business and it helped to pull up sugar contribution in the overall Company revenues and profits.

Distillery

Distillery plant at Jawaharpur (U.P.) with capacity of 80 KLPD too is now operational and contributing to the top-line of the Company. Distillery Production in FY 2008 touched 9557 KL and sales volume during this period was at 7490 KL

Being highly regulated, the performance of the sugar industry in India is largely dependent on Government policies and regulations. This year, free level of buffer stock of 20 million tonnes for free sale was released by the Government and it has impacted the realizations. Sugar prices which had fallen to historically low levels during last year have only recently shown slight signs of recovery.

2445

1009

20072008

CANE C

RUSHED

(�000 T)

13,4

60

16,7

66

20072008

SUGAR SALES R

EALIS

ATIO

NS

(Rs.T)

30

Outlook

This season, it is expected that sugar production would be lower in the range of 25-26 MnT against the earlier estimates of 30-31 MnT and this should bode well for sugar realisations to inch upwards.

The industry has been under tremendous pressure on various issues of cane sourcing, cane pricing and lower sugar realisations. Thorat Commission was set up by the Central Government to look into various aspects of sugar industry including cane prices, reservation of cane area, dispensing with monthly release mechanism, abolishing of levy sugar and distance criteria between the factories. The industry is hopeful that the issues would be resolved in a manner that is beneficial to all stakeholders.

Going forward the shift of sugar towards manufacture of ethanol would be crucial for the volume of sugar available for international market. Within our country, the government's fiat that with effect from 1st Oct'08, oil marketing companies will have to blend 10 per cent ethanol with petrol from existing 5% will provide value-addition to the sugar by-product, molasses. This will open up further opportunities for your company.

The overall financial position of the company continued to be healthy and promising. The snapshot of the financial performance of the company in FY 2008 vis-à-vis its performance in FY 2007 is presented below.

(Rs. Millions)

Net Sales from Operations 9,865 14,807 50%Other Income 1,561 1,645 5%

Total Income 11,426 16,452 44%

Material Costs adjusted for change in stocks 2,237 2,806 25%Salaries & Wages 486 849 75%Other Expenses 5,188 7,592 46%

Total Expenditure 7,911 11,247 42%

Profit before Depreciation and Tax (PBDT) 3,515 5,205 48% Depreciation 551 864 57%Profit before Tax (PBT) 2,964 4,341 46% Taxes 675 869 29%

Profit After Tax (PAT) 2,289 3,472 52%

The company witnessed increased turnover on account of growth in volumes in cement as well as sugar units. Improved realisations along with change in product mix led to higher profitability.

Total Expenses before Depreciation and Tax for the company are Rs. 11,247 Million, up from Rs. 7,911 Million last year. Power and Fuel costs are the highest contributor to the expenses of the company in FY 2008, at Rs. 2,887 million. Raw Material costs at Rs. 2,806 million are close to 25% of the expenditure. Freight & transportation charges along with Repairs & Maintenance contributed another 15% to the costs. Salaries and Wages contribute only 8% to the costs of the company at Rs. 849 million. Interest cost was 10% of expenses.

Financial Performance

Stand Alone Financials FY 2007 FY 2008 Growth

6%

28%

5%

10%

7%

18%

FY 2007

Raw Material

Salaries

Power & Fuel

Repair & Mtc

Freight &Trsptn

Interest

Others

26%

31

8%

25%

5%

10%

10%

16%

FY 2008

26%

Raw Material

Salaries

Power & Fuel

Repair & Mtc

Freight &Trsptn

Interest

Others

Depreciation was higher at Rs. 864 Million on account of addition in gross assets from Rs. 16,971 million to Rs. 18,830 million at end of FY 2008.

Tax expense too has gone up, from Rs. 675 Million to Rs. 869 Million primarily on account of increase in current tax. Fringe Benefit Tax constitutes a small element of overall taxs at 2.2%.

Balance Sheet (Rs. Million)

SHAREHOLDERS’ FUNDSShare Capital 85 162Reserves and Surplus 7,449 11,310

7,534 11,472LOAN FUNDS

Secured Loans 9,306 10,501Unsecured Loans 840 5,332

10,146 15,833

DEFERRED TAX 1,293 1,630

18,973 28,935

FIXED ASSETSGross Block 16,971 18,830Less: Depreciation 4,700 5,582

Net Block 12,271 13,248Capital work-in-progress (including capital advances) 1,165 5,013

13,436 18,261

INVESTMENTS 3,785 6,138

Current AssetsInventories 1,975 4,916Sundry Debtors 821 1,051Cash and Bank balances 1,038 870Loans and Advances 2,921 4,332

6,755 11,169

Less: Current Liabilities and ProvisionsCurrent Liabilities 4,453 5,483Provisions 550 1,150

5,003 6,633

NET CURRENT ASSETS 1,752 4,536

18,973 28,935

As at 31.3.2007 As at 31.3.2008

32

Capital Structure

The Company’s equity capital increased to Rs. 162 million as on March 31, 2008 comprising 8,08,43,643 equity shares (4,27,28,693 shares) of Re. 2 each (fully paid up) on account of warrant conversion.

During the FY 2002, the Company had issued 76,51,621 Non-Convertible Debentures of Rs.10/-each along with detachable tradeable warrants. The holders of these warrants had the option to subscribe to Ordinary Shares of the Company (5 Ordinary Shares of Rs.2 each) at Rs. 23.76 per Share upon the call option being exercised by the Board of Directors on or before September 11, 2008, in terms of the Letter of Offer dated June 26, 2001. During the year, the Board of Directors have exercised the call option in respect of such warrants and called upon all the existing warrant holders to submit their applications for conversion of the warrants held by them into Ordinary Shares of the Company. Warrant holders holding 76,22,990 warrants exercised the option and consequently the Company allotted 3,81,14,950 Ordinary Shares of Rs.2/- each fully paid-up.

Reserves & Surplus

The Company’s reserves and surplus increased to Rs. 11,310 million in FY 2008. During the year under review, Share Premium Reserve has increased by Rs. 830 million, Debenture Redemption Reserve by Rs. 108 million while Revaluation Reserve has reduced by Rs. 62 million. General Reserve too increased by Rs. 350 million.

Loan Profile

The borrowed funds of the Company increased to Rs. 15,833 million in FY 2008. Secured loans at Rs. 10,501 million comprise 66% of the total loans. Average cost of funds of the Company is over 9% per annum.

Capital Employed

The capital employed by the Company in the business increased by 54% from Rs. 17,680 million in FY 2007 to Rs. 27,305 million in FY 2008. The Company’s Net fixed assets as a proportion of total capital employed were at 67% at the end of the year.

Gross Block and Depreciation

The 11% increase in gross block of the Company can be attributed to the installation of new plant and machinery of Rs. 1,640 million during the year. The Company continued to upgrade its infrastructure and technology across all its manufacturing facilities. It provided depreciation of Rs. 864 million for FY 2008. Capital Work in progress including the two green field cement projects is Rs. 5,013 million.

33

Investments

Cumulative investments of the Company at Rs 6,138 million include investments of Rs 2,000 million towards acquisition of 21.7% shares of de-merged OCL India Ltd.

Sundry Debtors

The debtors of the Company increased to Rs. 1,051 million in FY 2008, of which only 4% amounting to Rs. 47 million are more than six months old.

Loans and Advances

Loans and Advances comprised 39% of the Company’s current assets. Loans and Advances made by the Company were up at Rs. 4,332 million in FY 2008 due to increase in advance income tax payments and increased MODVAT credit availability on the new projects.

Your Company’s human resources continue to be its biggest asset. Carrying on the legacy of almost seven decades, the Company has endeavoured to always be a people-centric organisation. In the recent years, the Company has shifted from a family operated setup to a professionally managed one. The Company’s talented pool of over 3300 executives and workers is leading its growth plans through capacity expansion projects and improved systems and processes.

The Company believes that its ability to attract, train, reward and retain its human resources will play a critical role in its future success. This challenge is being addressed through several structured initiatives. The Company has also instituted a Variable Pay Plan and Performance Management System for evaluation purposes.

As always, the Company continued to enjoy healthy and mutually respectful industrial relations this year with excellent support from its trade unions.

Keeping pace with the ambitious expansion program and to bring in standardization at all levels of operations through IT, the company decided to migrate its existing Business Application into industry standard SAP, ECC 6.0 suite. In the first phase, core business modules of Finance, Costing, Sales and Distribution, Materials Management, Production Planning and Quality module of the SAP suite are being implemented. During the year the Company implemented industry specific ERP for its sugar units.

The Company took a major step in moving out its Data Centre from its own location to a Level 3 Data Centre so as to provide the Company world class hosting and bandwidth on demand facilities. During the year it invested in third party multi-engine SPAM and virus protection services for improving its existing email services across all locations.

The Company continued with expansion of its fully capable multi-service Voice / Video / Data IT network for new locations, Ariyalur, Cuddapah and Hyderabad by seamlessly integrating them with existing domain. All the current locations country-wide enjoy same level of point to multi-point video conferencing facilities in addition to integrated data network.

Human Resources

Information Technology

34

The company is also imparting extensive training to its employees to ensure smooth implementation of SAP operations.

The company has a robust system for identification of key risks to the business, assessment of the possible impact and formulating strategies to mitigate such risks in an appropriate manner. Such risks could arise as a result of the industry, environment, regulation, nature of operations and the company’s growth plans into the future. Given below is a brief on the underlying risks.

Market and Competition Risk

The company is aware that cement and sugar are commodities and, therefore, inherently cyclical in nature. Fluctuations in the demand supply gap in the future can have significant impact on the realisations and on the competitive scenario. The Company’s objective therefore is to understand measure and monitor these risks regularly, and take appropriate measures to minimise their impact.

The Company has taken several initiatives to mitigate the market risks associated with its operations. The cement business, over the years, has continuously invested in creating strong brands which have led to significant increase in market share in relevant markets. This has helped the Company to command a premium on its products, even in relatively adverse market conditions. The company has further initiated a detailed micro-market analysis to foresee the demand supply situation in different markets.

In the sugar business, the newly commissioned industrial alcohol/ethanol manufacturing capability will allow the Company to realise new business opportunities and, to that extent, insulate it from the sugar cycle. Its power generation capacity of 79 MW is also generating revenues by selling excess power to Uttar Pradesh Power Corporation Limited.

Regulatory Risk

There is a fair amount of regulatory control exercised by the Government on both the businesses i.e. Cement and Sugar. The cement sector has seen changes in the excise duty structure during FY 2008. However, the company has been able to pass on the impact of such duty structure changes to the user to some extent and have been able to sustain the bottom-line impact.

The sugar business has seen some impact as a result of the cane prices administration and withdrawal of incentives available to new units set up in the State of Uttar Pradesh. However, the company has been able to sustain reasonable profitability through its diversification into the Power Cogeneration and Ethanol businesses which have opened new avenues for the company to derisk the cyclical nature of Sugar business. Given the situation of unprecedented rise in crude prices worldwide, the company sees a big opportunity here.

Risks and Concerns

35

Project Execution Risk

The company is expanding its production capacities with a view to cater to the growing demand of cement in domestic market. The company is currently executing two green-field cement projects one in Cuddapah (Andhra Pradesh) and second at Ariyalur (Tamil Nadu). Project execution is largely dependent on varied factors as timely delivery of capital equipments by suppliers, timely completion of work by contractors etc. Adherence to their envisaged commissioning date and allocated budget poses a challenge in light of rising steel prices, huge demand for capital goods engineering and scarcity of reputed and experienced contractors in the construction industry.

The company has set up a dedicated and experienced Project Management and Commercial Team supported by experienced advisors and consultants. Further, the company believes in partnering well with its vendors and contractors thereby enabling the company to get priority in executing projects on time and better costs. Further, there exists a strong review mechanism at each level to ensure timely support for completion of the projects.

Raw Material Risk

Access to raw materials like limestone and coal is critical to the cement business of the Company. Further, FY 2008 has seen unprecedented increase in coal and gypsum prices which has led to significant increase in the variable cost for the industry. The company has initiated a process to augment its limestone reserves to ensure uninterrupted supply of raw material to the plants and is also evaluating alternate sources of fuel. Further, the company is maintaining reasonable inventories and has sufficient order booking to ensure smooth operations.

Shortage of sugarcane poses similar risks for the sugar business. Sugarcane is a perishable item, and the Government controls its price as well as the area allotted to sugar units for growing cane. The Company has engaged proactively with sugarcane farmers and has been able to significantly augment the area under cane for the new sugar units. Further, significant work is being done by the business to increase the yield per hectare of cane thereby making it lucrative for the farmers to grow cane instead of other options like wheat and paddy.

36

Currency risk

The Company’s exposure to currency risk arises out of the import of coal for its cement plants and project equipment imports for its Greenfield projects. The Company continuously monitors exchange rate movements and hedges major transactions in foreign currency by taking forward contracts in the currency market, as considered appropriate.

The Company has robust and adequate internal audit and control systems. The company has a strong and robust internal audit function and has a co-sourcing arrangement with reputed audit firms including the Big Fours. Every unit is subject to a quarterly internal audit as per the Audit plan approved by the Audit Committee of the Board.

The internal audits are conducted with a view to periodically evaluate adequacy of internal control systems in all spheres of the company’s operations namely financial, operations, compliance and projects. The audit plan is constantly reviewed to evaluate the risks posed by new ventures, polices and the environment and accordingly modified to provide reasonable assurance to the management on key risk areas regarding the effectiveness and efficiency of operations, reliability of financial reports, and compliance to applicable laws and regulations. There also exists a robust mechanism to ensure timely identification and reporting of fraud and negligence within the Company. The Internal Audit Head reports independently to the Audit Committee of the Board which is headed by a Non-Executive Director thereby ensuring fair amount of independence of the function and transparency of the process. The Committee meets every quarter to review the progress of the internal audit initiatives, significant audit observations and the action plans. Details on the composition and functions of the Audit Committee can be found in the chapter on Corporate Governance of the Annual Report.

Certain statements in this management discussion and analysis describing the Company’s objectives, projections, estimates and expectations may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Forward looking statements are identified in this report, by using the words ‘anticipates’, ‘believes’, ‘expects’, ‘intends’ and similar expressions in such statements.

Although we believe our expectations are based on reasonable assumptions, these forward-looking statements may be influenced by numerous risks and uncertainties that could cause actual outcomes and results to be materially different from those expressed or implied. Some of these risks and uncertainties have been discussed in the section on ‘risks and concerns’. The Company takes no responsibility for any consequence of decisions made based on such statements and holds no obligation to update these in the future.

Internal Control Systems

Cautionary Statement

37

The Directors have pleasure in submitting the Annual Report and Audited Statements of Account of the Company for the styear ended 31 March 2008.

(Rs. Million)

2007-08 2006-07

Net Sales Turnover 14807 9865

Profit before interest, depreciation and tax (EBITDA) 6334 4054Less: Interest 1129 540

Profit before depreciation and tax (PBDT) 5205 3514Less: Depreciation 864 551

Profit before tax (PBT) 4341 2963Provision for current tax (net of MAT credit) 513 100Provision for deferred tax 337 563Fringe Benefit tax 19 11

Profit after tax (PAT) 3472 2289Add:

(i) Surplus brought forward 3482 1755 (ii) Transfer from Debenture Redemption Reserve - 7 (iii) Transfer from Reserve for Bad & Doubtful Debts - 17

Profit available for appropriation 6954 4068

APPROPRIATIONS:General Reserve 350 300Debenture Redemption Reserve 108 139Interim/Proposed Dividend 323 128Dividend Distribution tax thereon 55 19Balance carried forward 6118 3482

6954 4068

Your Directors had disbursed an interim dividend of 125 per cent amounting to Rs. 2.50 per equity share of face value of Rs.2/- each in February 2008. In addition to the interim dividend, your Directors have decided to recommend a final dividend of 75% amounting to Re. 1.50 per equity share of the face value of Rs. 2/- each, thus making the total dividend payout for the year Rs. 4/- per equity share on increased capital as against Rs. 3/- per share last year.

Your Directors exercised the call option in respect of the detachable tradeable warrants issued by the Company in September, 2001 along with the 6% Non-Convertible Secured Redeemable Debentures of Rs. 10/- each issued to the Shareholders on a Rights basis. Out of the 76,51,621 outstanding warrants, warrant holders holding 76,22,990 warrants opted for conversion of the warrants and were allotted 3,81,14,950 Equity Shares of Rs. 2/- each, which have been listed on the Stock Exchanges.

As a gesture of goodwill, your Directors have decided to permit the remaining warrant holders to opt for conversion of the outstanding warrants into equity shares of the Company and have addressed letters to each one of them to apply for the conversion of warrants held by them.

Please refer to the chapter on Management Discussion and Analysis for a detailed analysis of the performance of the Company during 2007-08. In addition, working results for key businesses have been provided as an annexure to this report (Annexure - A).

FINANCIAL RESULTS

DIVIDEND

SHARE CAPITAL

OPERATIONS AND BUSINESS PERFORMANCE

Directors’ ReportFor The Year Ended 31st March, 2008

38

CORPORATE GOVERNANCE

LISTING OF SHARES

INDUSTRIAL RELATIONS

EMPLOYEES' PARTICULARS

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE TRANSACTIONS

SUBSIDIARIES

FIXED DEPOSITS

DIRECTORS

The Company's corporate governance practices have been detailed in a separate chapter in this document. The Auditors certificate on the compliance of Corporate Governance Code embodied in Clause 49 of the Listing Agreement is attached as annexure and forms part of this Report.

thIn terms of the resolution passed by the Shareholders in the Annual General Meeting held on 27 September 2003, the Company applied for delisting of its securities from dealings on the Calcutta Stock Exchange. The Company's shares have since been delisted from the Calcutta Stock Exchange. The Company's shares continue to be listed on the Madras Stock Exchange, National Stock Exchange and Bombay Stock Exchange.

The industrial relations during the year under review remained harmonious and cordial. The Directors wish to place on record their appreciation for the excellent cooperation received from all employees at various units of the Company.

The statement giving particulars of employees who were in receipt of remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, 1956 read with the Rules and Notifications made thereunder, is annexed. However, in terms of Section 219(1)(b)(iv) of the Companies Act, 1956 the Report and Accounts are being sent to the Shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining copy of the same may write to the Company Secretary at the Registered Office.

A statement giving details of Conservation of Energy, Technology Absorption and Foreign Exchange transactions, in accordance with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, forms a part of this report as Annexure - B.

Dalmia Cement (Meghalaya) Limited, a subsidiary of your Company, got amalgamated with OCL India Limited pursuant to the orders of the Gauhati High Court vide order dated 15-10-2007.

The Company has obtained exemption from the Central Government under Section 212(8) of the Companies Act, 1956, from attaching the Annual Reports of its subsidiaries vide letter No. 47/125/2008-CL-III dated 18-3-2008.

Accordingly, the Directors' Report and audited accounts of the Companies Subsidiaries, Kanika Investment Limited, Ishita Properties Limited, Shri Rangam Properties Limited, Geetee Estates Limited, D.I. Properties Limited, Avnija Properties Limited, Hemshila Properties Limited, Himshikhar Investment Limited, Arjuna Brokers & Minerals Limited, Shri Radha Krishna Brokers & Holdings Limited, Shri Rangam Brokers & Holdings Limited, Dalmia Minerals & Properties Limited, Seeta Estates & Brokers Limited, Sri Kesava Mines & Minerals Limited, Sri Shanmugha Mines & Minerals Limited, Sri Subramanya Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Madhava Minerals & Properties Limited, Sri Dhandauthapani Mines and Minerals Limited, Eswar Cements Private Limited, Sri Madhusudana Mines and Properties Limited, Sri Trivikrama Mines and Properties Limited, Dalmia Sugar Ventures Limited and Dalmia

stCement Ventures Limited for the year ended 31 March 2008 are not being enclosed with this annual report. Any Member desiring to inspect the detailed Annual Reports of any of the aforementioned subsidiaries may inspect the same at the Head Office of the Company and that of the subsidiaries concerned. In event a Member desires to obtain a copy of the Annual Report of any of the aforementioned subsidiaries, he may write to the Registered Office of the Company specifying the name of the subsidiary whose annual report is required. The Company shall supply a copy of such Annual Report to such Member.

stThe total amount of deposits remaining due for payment and not claimed by the depositors as on 31 March 2008 was Rs. 9.30 lakhs in respect of 14 depositors, out of which deposit amounting to Rs. 0.61 lakhs in respect of 1 depositor has since been paid.

Shri Jai H. Dalmia, was appointed as Vice-Chairman, of the Company effective 1-4-2007 in terms of the Resolution which was confirmed by the Shareholders by means of a Postal Ballot, the results of which were declared in March, 2007.

The following Directors retire by rotation at the ensuing Annual General Meeting:.

1. Shri M.H. Dalmia;2. Shri N. Khaitan; and3. Shri J.S. Baijal

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Shri N. Gopalaswamy ceased to hold office as a Whole-time Director of the Company on 31-7-2007. Considering the service rendered by Shri Gopalaswamy during his tenure as a Whole-time Director, the Board co-opted him as an

stAdditional Director effective 1 August, 2007. The Company has received a Notice from a Shareholder as required under the provisions of Section 257 of the Companies Act, 1956 to the effect that he intends to propose the name of Shri N. Gopalaswamy to be appointed as a Director of the Company liable to retire by rotation.

stShri T. Venkatesan, was appointed as a Whole-time Director effective 1 November, 2007. The appointment of thShri T. Venkatesan was confirmed by the Shareholders in the Extra-ordinary General Meeting held on 18 January, 2008.

Shareholdings in the Company by its Directors as at 31-3-2008, are as under:

Name of the Director No. of Shares of each held

Shri N. Khaitan 6,665

Shri Jai H. Dalmia 16,35,010

Shri Y.H. Dalmia 6,02,380

Shri Gautam Dalmia 6,77,290

Shri Puneet Dalmia 7,42,055

Shri N. Gopalaswamy 6,665

Shri T. Venkatesan 1,800

OCL India Limited has become an associate of the Company upon the amalgamation of the Company's subsidiary, Dalmia Cement (Meghalaya) Limited with OCL India Limited effective 1-7-2007, and consequent allotment of shares by OCL India Limited to the extent of 21.71% of its issued and paid-up capital.

In compliance with the Accounting Standard 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year 2007-08.

As required under clause 49 of the Listing Agreement, the CEO/CFO's Report on the Accounts is attached.

In terms of the provisions of Section 217(2AA) of the Companies Act, 1956 your Directors declare that:

a) in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no departures have been made there from;

b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that 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 of the Company for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

d) the Directors had prepared the annual accounts on a going concern basis.

M/s. S.S. Kothari Mehta & Co., Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. As required under Section 224 of the Companies Act, 1956, the Company has obtained from them a certificate to the effect that their re-appointment, if made, would be in conformity with the limits prescribed in the said Section.

For and on behalf of the Board

Place : New DelhindDated : 22 May, 2008

CHAIRMAN

Rs. 2/-

CONSOLIDATED FINANCIAL STATEMENTS

CEO/CFO REPORT ON ACCOUNTS

DIRECTORS RESPONSIBILITY STATEMENT

AUDITORS

40

ANNEXURE - A

2007-08 2006-07 2005-06

CEMENT DIVISION ('000 MT)Clinker Production 2444 2055 1262Cement Production 3294 2737 1569Cement Sales and Self Consumption 3265 2713 1577

SUGAR DIVISION ('000 MT)Cane Crushed 2445 1009 817Sugar Production 246 108 84Sugar Sales 141 93 99Molasses Production 127 49 41

MAGNESITE DIVISION ('000 MT)Refractory Products production 27 31 22Refractory Products Sales and Self Consumption 31 27 26

REFRACTORIES DIVISION ('000 MT)Production 38 30 29Sales and Self Consumption 37 30 29

ELECTRONICS DIVISION (Million units)Chip Capacitors Production 1.6 4.2 6.4Chip Capacitors Sales 1.6 4.0 8.1Chip Resistors Production 0.9 1.7 3.3Chip Resistors Sales 1.1 1.6 3.4

WIND FARMInstalled Capacity (MW) 16.5 16.5 16.5Production (Million Units) 27 30 25Plant Load Factor 19.7% 22.0% 18.4%

GOVAN TRAVELSBusiness Handled (Rs. million) 215 265 288

CO-GENERATIONInstalled Capacity (MW) 79 54 -Production (Million Units) 299 20 -

ANNEXURE - B

A. CONSERVATION OF ENERGY

(a) Energy Conservation measures taken:

i) Dry Fly-ash addition increased by 4% in PPC reducing heat consumption.ii) Replacement of ESP Fan in Polysius Kiln by high efficiency Fans.iii) Cone nozzle head modified in CVRM I HAG in order to eliminate oil firing along with coal firing.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy:

i) Retrofitting of Cooler Vent Fans in KHD Kiln and FLS Kiln with high efficiency Fans.ii) Installation of rotopactor for pre-grinding clinker for feeding to Ball Mills.iii) Installation of Fly-ash Drier to increase percentage of Fly-ash in PPC resulting in power saving and Mill

throughput.

WORKING RESULTS

PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO AND EARNINGS

41

(c) Impact of measures taken already and proposed vide (a) and (b) above are aimed at:

i) Enabled the Company to save electrical energy and thermal energy as compared to previous levels.

(d) Total energy consumption and consumption per unit of production as per Form “A” attached.

B. TECHNOLOGY ABSORPTION

Efforts made in technology absorption as per Form “B” attached.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services, and export plans:

i) Magnesite/Refractories: Ramming Mix, and Magnesia Carbon Bricks, were exported. Efforts continued to explore possibilities of exports to Gulf, African and Asian Countries by making business visits and supplying materials for field trials.

(b) Total foreign exchange used and earned during the year:

i) Used: Rs. 2098.23 million ii) Earned: Rs. 102.70 million

(Form of Disclosure of Particulars with respect to Conservation of Energy)

2007-08 2006-07

A. POWER AND FUEL CONSUMPTION

1. ELECTRICITY:a) Purchased:

Units (KWH in million) 241.3 202.3Total Amount (Rs. million) 606.1 500.3Rate/Unit (Rs.) 2.51 2.47

b) Own Generation:i) Through Diesel Generator:

Units (KWH in million) 10.4 10.1KWH per Litre of HSD/FO 3.91 3.89Rate/Unit (Rs.) 6.18 6.50

ii) Through Co-Gen Plant:Units (KWH in million) 61.8 4.0Total amount (Rs. Million) 241.2 13.1Rate/Unit (Rs.) 3.90 3.25

iii) Through Steam Turbine:(Generated out of own bagasse consumption)Units (KWH in million) 7.0 26.2

2. COAL-SLACK / STEAM - GRADES B TO E, LIGNITE AND COKE BREEZEQuantity ('000 MT) 424 375Total Cost (Rs. million) 1855.0 1329.8Average Rate (Rs. / MT) 4349 3551

3. FURNACE OIL INCLUDING (LSHS & HSD)Quantity (KL) 12230 13058Total Amount ( Rs. million) 257.2 260.3Average Rate (Rs. / KL) 21027 19933

4. OTHERS/INTERNAL GENERATIONQuantity (Lakh MT) 0.31 1.18Total Amount (Rs. million) 12.6 59.5Average Rate (Rs. / MT) 400 506

FORM 'A’

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B. CONSUMPTION PER UNIT OF PRODUCTION:

PRODUCT CEMENT DEAD BURNT MAGNESITE

Standard 2007-08 2006-07 Standard 2007-08 2006-07 If any If any

Electricity (Units/MT) 74 77 83 84Furnace Oil (including LSHS) (Litres/MT) 0.86 1.30 204 216Coal (Kgs. / MT) 95 106 NIL NIL

PRODUCT SUGAR MgO-CARBON BRICKS

Standard 2007-08 2006-07 Standard 2007-08 2006-07 If any If any

Electricity (Units/MT) 283 291 253 241Diesel Oil (including LSHS) (KL/MT) N.A. N.A. 37 35

PRODUCT REFRACTORIES

Standard 2007-08 2006-07 If any

Electricity (Units/MT) N.A. N.A.Furnace Oil (including LSHS) (Ltr./MT) 0 0.29Coal (Kgs./ MT) 129.70 158.63

(Form of Disclosure of Particulars with respect to Absorption)

1. Specific areas in which R&D is carried out by the Company:

a) Increasing the availability of CVRM II by carrying out design modifications in Mill feeder.

b) Increasing the flow of pre-heater CVRM II Mill Fan by tipping of the Impeller.

c) Development of Magnesia Alumina Spinel Brick was completed and used in our Rotary Kiln and small cement Rotary Kiln at Dalmiapuram. Free samples were sent to Qatar National Cement Company for evaluation in their small cement Rotary Kiln and the results are awaited.

d) Development of Tundish Spray Mix of different grades was completed. Evaluation through paid trials is in progress. Good potential exists for sale to Steel Plants. Outlet to use low MgO Dead Burnt Magnesite also.

e) Field evaluation of Wear Resistant Ceramic Plates is continuing in Chutes, Pipes, Ducts with objective of enhancing life in wear prone areas.

f) Due to non supply of Chrome ore by monopolistic sources in current year development of Chrome free Ramming Mixes was commenced with field trials in few induction furnaces. A few customers have accepted the new Ramming Mix as a substitute. More field trials are continuing.

g) A special Ramming Mix was developed and supplied to Mishra Dhatu Nigam Limited for melting and refining super alloys in Electric Arc Furnace.

2. Benefits derived as a result of the above R&D:

Availability and production from CVRM II has increased.

Extra production in Kiln and saving in power charges achieved.

Production of niche products, enhancement of product range, diversification of market and increased turnover. Also to offer price and performance wise superior products to customers to enable them to reduce their specific consumption.

FORM “B”

RESEARCH AND DEVELOPMENT (R&D)

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3. Future plans of action:

a) Development of Spinel based Ramming Mixes for non ferrous alloys melting.

4. Expenditure on R&D:

(Rs. Million)

a) Capital Nil

b) Recurring 0.1

c) Contribution/Expenditure on Research and Development -

d) Total 0.1

e) Total R&D Expenditure as a percentage of turnover Negligible

Above excludes material and other costs.

1. Efforts in brief, made towards technology absorption, adaptation and innovation:

a) Use of debricking and brick lining machines for Kiln refractory work was implemented.

b) Use of cross belt analyser for quality control of raw materials.

2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution, etc.:

The total Kiln stoppage days for refractory repairs have come down significantly. Consistent quality of raw materials and usage of different sources of limestone was made possible by use of Analyser. The Company as a result of the above efforts, has made improvement in the product quality and saved energy resulting into cost savings. Considerable improvement in the life of expensive spare parts as a result of introduction of statistical control charts.

3. No technology has been imported for the last five years.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

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Report on Corporate Governance

Company's Philosophy on Corporate Governance

Board of Directors

DCB (Dalmia Cement (Bharat) Limited) believes in and remains committed to good Corporate Governance. The spirit of corporate governance has remained imbibed in the company's business philosophy since its inception. This philosophy is shaped by the values of transparency, professionalism and accountability. Today, your company's corporate governance practices are driven by strong Board oversight, timely disclosures, transparent accounting policies and high levels of integrity in decision-making.

In India, corporate governance standards for listed companies are regulated by the Securities and Exchange Board of India (SEBI) through Clause 49 of the listing agreement of the Stock Exchanges. The stipulations mandated by Clause 49 became applicable to your company in March 2001 and have been fully complied with since then. SEBI, through circulars

th th thdated 29 October 2004, 29 March 2005 and 8 April 2008, has revised Clause 49 and mandated listed companies to comply with the revised Clause 49.

This chapter, along with the chapters on Management Discussion and Analysis and Additional Shareholders Information, reports on DCB's compliance with the Clause 49.

Composition of the BoardstAs on 31 March 2008 the company's Board comprised twelve members - five executive Directors and seven non-

executive Directors, of which four are independent. The Chairman of the Board of Directors is a non-executive Director. The composition of the Board is in conformity with Clause 49 of the listing agreement, which stipulates that if the Chairman is non-executive, and is not related to the promoters or persons occupying management positions at the Board level or at one level below the Board one-third of the Board should be independent, or else, 50 per cent of the Board should comprise independent Directors.

Number of Board Meetingsth th th thThe Board of Directors met five times during the year on 11 May, 2007, 18 May, 2007, 28 July, 2007, 26 October, 2007

thand 25 January, 2008. The maximum gap between any two meetings was less than 4 months.

Directors' Attendance Record and Directorships Held

As mandated by the Clause 49, none of the Directors are members of more than ten Board level Committees nor are they Chairman of more than five Committees in which they are members. Table 1 gives the details of the composition of the Board and attendance.

Table 1: Composition of the Board of Directors

Attendance Particulars No. of other Directorships and Committee memberships/

chairmanships

Number of Last Other Committee CommitteeBoard Meetings AGM Directorships Memberships Chairmanships

Name of the Directors Category @

Held Attended

Mr. P.K. Khaitan, Chairman Non-Executive 5 5 No 14 6 1Mr. N. Khaitan Independent 5 5 No 2 None NoneMr. J.S. Baijal Independent 5 5 No 2 None NoneMr. M. Raghupathy Independent 5 4 Yes None None NoneMr. N. Gopalaswamy** Non-Executive 5 4 Yes 7 None NoneMr. M. H. Dalmia Non-Executive 5 3 No 2 None NoneMr. Donald M. Peck Independent 5 5 No 5 1 NoneMr. Y.H. DalmiaVice - Chairman Executive 5 5 No 2 None NoneMr. Jai H. Dalmia#Vice - Chairman Executive 5 5 No 3 None NoneMr. Gautam DalmiaJoint Managing Director Executive 5 4 No 5 None NoneMr. Puneet DalmiaManaging Director Executive 5 5 No 3 None NoneMr. T. Venkatesan* Executive 1 1 No None None None

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st# Appointed to the Board with effect from 1 April, 2007 st* Appointed as Whole-time Director with effect from 1 November, 2007.

st ** Appointed as an additional Director with effect from 1 August, 2007 on ceasing to be a Whole-time Director.@ The Directorships held by the Directors do not include Directorship of foreign companies and private limited companies.

Shri M.H. Dalmia, Shri J.H. Dalmia and Shri Y.H. Dalmia are brothers; Shri Gautam Dalmia is the son of Shri J.H. Dalmia and Shri Puneet Dalmia is the son of Shri Y.H. Dalmia.

As mandated by the revised Clause 49, the independent Directors on DCB's Board:

vApart from receiving Director's remuneration, do not have any material pecuniary relationships or transactions with the company, its promoters, its Directors, its senior management or its holding company, its subsidiaries and associates which may affect independence of the Director.

vAre not related to promoters or persons occupying management positions at the Board level or at one level below the Board.

vHave not been an executive of the company in the immediately preceding three financial years.

vAre not partners or executives or were not partners or executives during the preceding three years of the:

• Statutory audit firm or the internal audit firm that is associated with the company.• Legal firm(s) and consulting firm(s) that have a material association with the company.• Are not material suppliers, service providers or customers or lessors or lessees of the company,

which may affect independence of the Director.• Are not substantial shareholders of the company i.e. do not own two percent or more of the block of

voting shares.

Information Supplied to the Board

The Board has complete access to all information with the company. The agenda and papers for consideration of the Board are circulated at least three days prior to the date of the Board meeting. Adequate information is circulated as part of the agenda papers and also placed at the meeting to enable the Board to take an informed decision. Inter-alia, the following information is regularly provided to the Board as a part of the agenda papers well in advance of the Board meetings or is tabled in the course of the Board meeting.

vAnnual operating plans & budgets and any update thereof.

vCapital budgets and any updates thereof.

vQuarterly results for the company and operating divisions and business segments.

vMinutes of the meetings of the Audit Committee and other Committees of the Board.

vInformation on recruitment and remuneration of senior officers just below the level of Board, including the appointment or removal of Chief Financial Officer and Company Secretary.

vMaterially important show cause, demand, prosecution notices and penalty notices.

vFatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.

vAny material default in financial obligations to and by the company, or substantial non-payment for goods sold by the company.

vAny issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which, may have passed strictures on the conduct of the company or taken an adverse view regarding another enterprise that can have negative implications on the company.

vDetails of any joint venture or collaboration agreement.

vTransactions that involve substantial payment towards goodwill, brand equity or intellectual property.

vSignificant labour problems and their proposed solutions. Any significant development in human resources / industrial relations front like signing of wage agreement, implementation of voluntary retirement scheme, etc.

vSale of material nature of investments, subsidiaries, assets, which is not in the normal course of business.

vQuarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material.

vNon-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer, etc.

The Board periodically reviews compliance reports of all laws applicable to the company, prepared by the company as well as steps taken by the company to rectify instances of non-compliances.

46

Remuneration Paid To Directors

The compensation payable to the Executive Directors is decided by the Remuneration Committee constituted by the Board of Directors. The details of remuneration paid, during the year, to the executive Directors and the non-executive Directors is presented in Table 2.

Table 2: Details of remuneration paid to Directors for 2007-08 (Rs. Million)

Name of the Director Category Sitting Salary and Retirement Commission TotalFees Perquisites Benefits @

Mr. P.K. Khaitan Non-Executive 0.100 - - 0.452 0.552

Mr. N. Khaitan Independent 0.270 - - 0.452 0.722

Mr. J.S. Baijal Independent 0.270 - - 0.452 0.722

Mr. M. Raghupathy Independent 0.160 - - 0.452 0.612

Mr. M. H. Dalmia Non-Executive 0.060 - - 0.452 0.512

Mr. N. Gopalaswamy # Non-Executive 0.040 6.463 8.732 0.285 15.520

Mr. Donald M. Peck Independent 0.110 - - 0.452 0.562

Mr. Jai H. Dalmia ## Executive - 4.240 0.580 22.000 26.820(Vice - Chairman)

Mr. Y.H. Dalmia Executive - 4.620 0.580 22.000 27.200(Vice - Chairman)

Mr. Gautam Dalmia Executive - 4.060 0.580 18.000 22.640(Joint Managing Director)

Mr. Puneet Dalmia Executive - 5.020 0.580 18.000 23.600(Managing Director)

Mr. T. Venkatesan* Executive - 2.350 0.297 - 2.647(Whole-time Director)

st# Was Whole-time Director upto 31 July, 2007 and thereafter was appointed as an ordinary Director.st ## Appointed to the Board with effect from 1 April, 2007

st * Appointed to the Board with effect from 1 November, 2007@ Commission paid on net profit only

Retirement benefits comprise the company's contribution to provident fund and superannuation fund. The payment of retirement benefits is being made by the respective fund(s). In addition to the above the Company also contributes, on actuarial valuation basis, amounts to the Gratuity Fund towards gratuity of its employees including the Whole-time Director, Vice - Chairmen, Managing Director and Joint Managing Director. The Company has not provided any stock options to the employees at the Board level.

stMr. N. Gopalaswamy, Executive Director, was appointed for a period of three years with effect from 1 August 2004 and he ceased to hold office on 31-7-2007. The appointments of Mr. Y.H. Dalmia, Vice - Chairman, Mr. Gautam Dalmia, Joint Managing Director and Mr. Puneet Dalmia, Managing Director have been made for a period of five years effective

th16 January 2007. The appointments of Mr. Jai H. Dalmia, Vice - Chairman, has been made for a period of five years with steffect from 1 April 2007 and that of Mr. T. Venkatesan, Whole-time Director has been made for a period of three years with

steffect from 1 November 2007. No severance fees is payable to any of aforementioned persons in respect of their cessation.

The company has also paid an amount of Rs. 9.28 million (including Rs. 4.78 million towards out-of-pocket expenses) to M/s. Khaitan & Co., Solicitors and Advocates (a firm in which Mr. P.K. Khaitan is a Partner), for the professional services rendered by them for their/ their representatives appearances and opinions on various matters and also for appearances of other Advocates/Senior Advocates engaged by them in defending legal cases on behalf of the Company.

DCB’s Board has laid down a code of conduct for all Board members and designated senior management of the company. The code of conduct is available on the website of the company www.dalmiacement.com. All Board members and senior management personnel have affirmed compliance with the Code of Conduct. A declaration signed by the Chief Executive Officer (CEO) to this effect is enclosed at the end of this report.

Risk Management

DCB has a risk management framework in place. Under this framework the management identifies and monitors business risks on a continuous basis, and initiates appropriate risk mitigation steps as and when deemed necessary. DCB has established procedures to periodically place before the Board the risk assessment and minimisation procedures being followed by the company and steps taken by it to mitigate those risks through a properly defined framework.

Code of Conduct

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Committees of the Board

The company has five Board-level Committees - Audit Committee, Remuneration Committee, Committee for Borrowings, Share Allotment Committee and Shareholders Grievance Committee.

All decisions pertaining to the constitution of Committees, appointment of members and fixing of terms of service for Committee members is taken by the Board of Directors. Details on the role and composition of these Committees, including the number of meetings held during the financial year and the related attendance, are provided below:

a) Audit Committee

stAs on 31 March 2008, the Audit Committee comprises three members Mr. M. Raghupathy, Chairman, Mr. J.S. Baijal and thMr. N. Khaitan all of whom are independent Directors. The Audit Committee met four times during the year on 11 May,

th th th2007, 28 July, 2007, 26 October, 2007 and 24 January, 2008. The time gap between any two meetings was less than four months. The details of the Audit Committee are given in Table 3.

Table 3 : Attendance record of DCB's Audit Committee

Name of Members Category Status No. of Meetings

Held Attended

Mr. M. Raghupathy Independent Chairman 4 4Mr. J. S. Baijal Independent Member 4 4Mr. N. Khaitan Independent Member 4 4

The Officer responsible for the finance function, the head of internal audit and the representative of the statutory auditors, internal auditors and cost auditors are regularly invited by the Audit Committee to its meetings. Mr. K.V. Mohan, Company Secretary, is the secretary to the Committee.

All members of the Audit Committee have requisite accounting and financial management expertise while Mr. M. Raghupathy, Chairman of the Committee, has accounting and financial management expertise. The Chairman of

ththe Audit Committee attended the Annual General Meeting (AGM) held on 26 June 2007 to answer shareholders queries.

The functions of the Audit Committee of the company include the following:

• Oversight of the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible

• Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees

• Approval of payment to statutory auditors for any other services rendered by the statutory auditors

• Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:

- Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956

- Changes, if any, in accounting policies and practices and reasons for the same- Major accounting entries involving estimates based on the exercise of judgment by management- Significant adjustments made, if any, in the financial statements arising out of audit findings- Compliance with listing and other legal requirements relating to financial statements- Disclosure of any related party transactions- Qualifications, if any, in the draft audit report

• Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.

• Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems.

• Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

• Discussion with internal auditors on significant findings and follow up there on.

• Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

• Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

48

• To look into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors.

• Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

The Audit Committee is empowered, pursuant to its terms of reference, to:

• Investigate any activity within its terms of reference and to seek any information it requires from any employee

• Obtain legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise, when considered necessary.

The company has systems and procedures in place to ensure that the Audit Committee mandatorily reviews:

• Management discussion and analysis of financial condition and results of operations.

• Statement of significant related party transactions (as defined by the Audit Committee), submitted by management

• Management letters / letters of internal control weaknesses issued by the statutory auditors.

• Internal audit reports relating to internal control weaknesses.

• The appointment, removal and terms of remuneration of the Chief Internal Auditor.

• Whenever applicable, the uses/applications of funds raised through public issues, rights issues, preferential issues by major category (capital expenditure, sales and marketing, working capital, etc), as part of the quarterly declaration of financial results.

• If applicable, on an annual basis, statement certified by the statutory auditors, detailing the use of funds raised through public issues, rights issues, preferential issues for purposes other than those stated in the offer document/prospectus/notice.

The Audit Committee is also apprised on information with regard to related party transactions by being presented:

• A statement in summary form of transactions with related parties in the ordinary course of business.

• Details of material individual transactions with related parties which are not in the normal course of business.

• Details of material individual transactions with related parties or others, which are not on an arm’s length basis along with management’s justification for the same.

b) Remuneration Committee stAs on 31 March 2008, the Remuneration Committee comprised Mr. N. Khaitan, Mr. J.S. Baijal and Mr. Donald M. Peck,

th thall independent Directors. The Committee met twice during the year on 5 November, 2007 and 25 January, 2008. All the Directors attended/participated in the meetings.

c) Shareholders Grievance Committee

The Shareholders Committee comprises Mr. M. Raghupathy, (Independent Director) as its Chairman, andMr. N. Gopalaswamy (Non-Executive Director) as its member. The terms of reference to this Committee is to look into and redress the complaints received from investors, in coordination with the Company’s Registrars and Share Transfer Agent. The Committee did not meet at any time during the year. During the year, 133 complaints were received from investors and all of them were resolved in time to the satisfaction of the concerned investors. At the close of the year there were no cases pending in respect of share transfers. Table 4 gives the details:

Table 4: Nature of complaints received and attended to during 2007- 08

Nature of Complaint Pending as Received Answered Pending as st ston 1 April during the during the on 31 March

2007 year year 2008

1. Transfer / Transmission / Duplicate Nil 9 9 Nil

2. Non-receipt of Dividend/interest/Redemption Warrants Nil 69 69 Nil

3. Non-receipt of securities/electronic credits Nil 53 53 Nil

4. Complaints received from: -- Securities and Exchange Board of India Nil 1 1 Nil

- Stock Exchanges Nil Nil Nil Nil

- Registrar of Companies/ Department of Company Affairs Nil Nil Nil Nil

5. Others Nil 1 1 Nil

Total Nil 133 133 Nil

The names and designations of the Compliance Officers are as follows: -

• Mr. K.V. Mohan, Company Secretary; and• Mr. L.V. Ganapathiraman, Deputy General Manager (Costing)

The Board of Directors has delegated the powers of approving the transfer of shares/debentures to senior executives of the Company.

49

d) Committee for Borrowings

The Board has constituted a Committee comprising Mr. N. Khaitan, Mr. J.S. Baijal and Mr. P.K. Khaitan for maintaining oversight on emergent matters arising in the day-to-day working of the Company. The Committee met six times during the

th th th th thyear on 5 September, 2007, 24 September, 2007, 11 October, 2007, 27 December, 2007, 11 February, 2008 and st21 March, 2008. Details of the Committee are given in Table 5 below. The particulars of attendance of the Directors is set

out in Table 5 hereunder: -

Table 5: Attendance record of Committee for Borrowings

Name of Members Category Status No. of Meetings

Held Attended

Mr. N. Khaitan Independent Chairman 6 6Mr. J.S. Baijal Independent Member 6 6Mr. P.K. Khaitan Non-Executive Member 6 NIL

e) Share Allotment Committee

th The Board of Directors in their Meeting held on 26 October, 2007 decided to exercise the “call option” for conversion of th the 76,51,621 outstanding tradeable Warrants issued by the Company through the Rights Letter of Offer dated 26 June,

th 2001 and gave requisite Notice in the newspapers dated 10 November, 2007 giving 60 days time to the Warrant holders to opt for conversion of Warrants. Notices in this regard were also sent to the individual Warrant holders by Post. The Board constituted a Share Allotment Committee, - comprising Shri N. Khaitan and Shri J.S. Baijal, both non-executive Directors -, for the purposes of allotment of shares consequent upon the conversion of Warrants. The Company received options in respect of 76,22,990 Warrants from the holders thereof opting for conversion of the Warrants held by them into Equity Shares of the Company and the Share Allotment Committee allotted 3,81,14,950 Equity Shares of Rs. 2 each in

ththe capital of the Company in their Meeting held on 24 January, 2008. The new Equity Shares have since been listed on the Stock Exchanges.

With a view to give another opportunity to those Warrant holders, who had not opted for conversion of the Warrants held by them into Equity Shares of the Company, the Board has allowed such Warrant holders to send in their options for conversion.

Subsidiary Companies

Clause 49 defines a “material non-listed Indian subsidiary” as an unlisted subsidiary, incorporated in India, whose turnover or net worth (i.e. paid up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year.

stAs on 31 March 2008, under this definition, DCB does not have a 'material non-listed Indian subsidiary'.

Shares and Convertible Instruments held by non-executive Directors

stTable 6 gives details of the shares and convertible instruments held by the non-executive Directors as on 31 March 2008.

Table 6: Details of the shares and convertible instruments held by the non-executive Directors

Name of the Director Category Number of Number of convertible shares held instruments held

Mr. P.K. Khaitan Non-Executive Nil Nil Mr. N. Khaitan Independent 6665 Nil Mr. J.S. Baijal Independent Nil NilMr. M. Raghupathy Independent Nil NilMr. M. H. Dalmia Non-Executive Nil NilMr. N. Gopalaswamy Non-Executive 6665 NilMr. Donald M. Peck Independent Nil Nil

Management Discussion and Analysis

Annual Report has a detailed report on Management Discussion and Analysis.

Management

50

Disclosures

Related party transactions in the ordinary course of business have been disclosed at Note No. 22 of Schedule 19 B to the financial statements in the Annual Report. No transactions were made that had the possibility of injuring the Company's interests. The Company complied with the regulatory requirements on capital markets. No penalties/strictures have been imposed against it.

The Company has complied with the requirements of Section 205C of the Companies Act, 1956 and all amounts due to be credited to the Investor Education & Protection Fund have been duly credited within the time specified under the said section.

Disclosure of Accounting Treatment in Preparation of Financial Statements

DCB has followed the guidelines of accounting standards laid down by the Institute of Chartered Accountants of India (ICAI) in preparation of its financial statements.

Details of Non-Compliance by the Company

DCB has complied with all the requirements of regulatory authorities. No penalties/strictures were imposed on the company by stock exchanges or SEBI or any statutory authority on any matter related to capital market during the last three years.

Code for Prevention of Insider-Trading Practices

In compliance with the SEBI regulation on prevention of insider trading, the company has instituted a comprehensive code of conduct for its management and staff. The code lays down guidelines, which advises them on procedures to be followed and disclosures to be made, while dealing with shares of company, and cautioning them of the consequences of violations.

CEO/ CFO certification

The CEO and CFO certification of the financial statements for the year is enclosed at the end of the report.

Reappointment/Appointment of Directors

Pursuant to the Articles of Association of DCB, at every Annual General Meeting of the Company, one-third of the rotational Directors retire by rotation or if their number is not three or a multiple of three, the number nearest to one-third retire from office.

Accordingly, at the ensuing Annual General Meeting Mr. M.H. Dalmia, Mr. N. Khaitan and Mr. J.S. Baijal, Directors of the Company retire by rotation.

st On vacation of his office as Whole-time Director effective 31 July, 2007, Mr. N. Gopalaswamy was co-opted as an st additional Director on the Board of Directors of the Company, effective 1 August, 2007, by the Board of Directors in its

thMeeting held on 28 July 2007 and his appointment is to be confirmed by the Shareholders in the forthcoming Annual General Meeting.

Means of Communication with Shareholders

The Board of Directors of the Company approves and takes on record the unaudited financial results in the format prescribed by the Stock Exchanges within one month of the close of every quarter and such results are published in three financial newspapers, viz., Business Standard, Economic Times and Business Line, and one Regional Newspaper, Dinamani, within the stipulated time. The Company also publishes its annual audited results in these newspapers within the stipulated period.

As required under Clause 51 of the Listing Agreement all the data related to quarterly and annual financial results, shareholding pattern, etc., is provided to the web-site www.sebiedifar.nic.in within the time frame prescribed in this regard. All the details required to be forwarded to the Stock Exchanges are being sent by the Company from time to time.

General Body Meetings

Table 7 gives the details of the last three Annual General Meetings (AGMs).

Table 7 : Details of last three AGMs

Financial year Date Time Location

th2006-07 26 June 2007 10.30 a.m. Community Centre, Dalmiapuram Dist. Tiruchirapalli, Tamil Nadu - 621651.th2005-06 26 June 2006 10.30 a.m. Community Centre, Dalmiapuram Dist. Tiruchirapalli, Tamil Nadu - 621651. th2004-05 29 August 2005 10.30 a.m. Community Centre, Dalmiapuram Dist. Tiruchirapalli, Tamil Nadu - 621651.

Shareholders

51

The details of Special Resolutions in respect of the last three Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) are given in Table 8.

Table 8: Details of Special Resolutions passed in last three General Meetings

Date of Meeting Type of Meeting Particulars

th18 January 2008 EGM • Authorising the Board to institute an Employees Stock Option Plan so as to give options convertible into not more than 16 lakhs Equity Shares of Rs. 2/- each in the capital of the Company;

• Authorising payment of special annuity to Shri N. Gopalaswamy, ex-Whole-time Director; and

• Authorising payment of commission on profits to the Non-Wholetime Directors of the Company upto 1% of the net profits in the aggregate for a period of five years commencing from the accounting year to end on 31-3-2008; and

• Appointment of Shri T. Venkatesan as a Whole-time Director of the Company for a period of three years effective 1-11-2007.

(The above resolutions were adopted unanimously)th26 June 2007 AGM • Authorising payment of commission on profits to the Non-Wholetime

Directors of the Company upto 1% of the net profits of the Company subject to a maximum of Rs. 20 lakhs in the aggregate for a period of two years commencing from the accounting year to end on 31-3-2008.

(The above resolution was adopted unanimously)th26 June 2006 AGM • Authorising the Board to invest in securities of other companies to the

extent of Rs.115 Crores over and above the free reserves of the company.

• Authorising the Board to issue securities to the extent of Rs. 7,000 Million and also to secure the issue if made in form of borrowings.

(The above Resolutions were adopted unanimously)th12 April, 2006 EGM • Authority to the Board to issue and allot 44,70,588 Equity Shares

of Rs. 2/- each in the capital of the company on preferential basis to Boron India Limited and Boron South Asia Limited at a premium of Rs. 260.43 per equity share. (The above Resolution was adopted unanimously)

nd22 February 2006 EGM • Authorising the Board to issue securities to the extent of Rs. 7,000 Million and also to secure the issue if made in form of borrowings.

(The above Resolution was adopted unanimously)th17 October 2005 EGM • Increase in Authorised Capital from Rs. 20 crores to Rs. 40 crores.

• Authority to the Board to issue and allot against each existing Warrant 5 Equity Shares of Rs. 2/- each.

(The above Resolutions were adopted unanimously)

Postal Ballot

stDuring the year ended 31 March 2008, the Board decided to approach the Shareholders to seek their consent, by way of a postal ballot, on one occasion. The Board approved the Notice for the Postal Ballots sought and appointed a Scrutinizer, namely, Mr. R. Venkatasubramanian, Practising Company Secretary, No. 12 - S.A.N. Office & Shopping Complex, 28 - Main Road, Sirudaiyur, Lalgudi - 621601, who conducted this exercise in accordance with law.

The Postal Ballot was for the purposes of seeking the consent of the Members with regard to Special Resolution under section 81(1A)(a) read with sections 292(1)(a), 292(1(b) and 292(1)(c) conferring an authority to the Board of Directors of the Company to issue securities to persons other than the existing shareholders of the Company to the extent of Rs. 12,000 million and to secure the same if made by way of borrowings. The Resolution was passed with requisite majority. Necessary intimation relating to the voting by Postal Ballot has been sent to all the Stock Exchanges where the Company's shares are listed.

52

Compliance

Additional Shareholder Information

Mandatory Requirements

DCB is fully compliant with the applicable mandatory requirements of the revised Clause 49.

Adoption of Non-Mandatory Requirements

Although it is not mandatory, a Remuneration Committee of the Board is in place. Details of the Remuneration Committee have been provided under the Section 'Remuneration Committee'.

Annual General Meeting

thDate : 25 July, 2008Time : 10.30 a.m.Venue : Community Centre Premises,

Dalmiapuram -621651 Dist. Tiruchirapalli, Tamil Nadu

Financial Calendar

st stFinancial year : 1 April, 2008 to 31 March, 2009

stFor the year ended 31 March, 2009, results will be announced on :

• First quarter: By end July, 2008• Second quarter: By end October, 2008 • Third quarter: By end January, 2009• Fourth quarter: By end May, 2009

Book Closure

th thThe dates of book closure are from 16 July, 2008 to 25 July 2008 inclusive of both days.

Dividend Payment

The Board declared an interim dividend of Rs. 2.50 per equity share of Rs. 2/- each, which was paid on February 22, 2008. Members holding shares as on February 15, 2008 were entitled to receive the dividend.

stThe final dividend of Rs. 1.50 per equity share will be paid on or after 1 August, 2008, subject to approval by the shareholders at the Annual General Meeting.

Listing

Listing on Stock Exchanges in respect of the Equity Shares is as under:

a) The Madras Stock Exchange Limited,Exchange Building, Post Box No. 183, 11, Second Line Beach, CHENNAI - 600001.

b) Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal Street, MUMBAI - 400001.

c) The National Stock Exchange of India Limited,Exchange Plaza, 5th Floor, Plot No. C/1, G - Block,Bandra Kurla Complex, Bandra (East), MUMBAI - 400051

The Privately placed Non-Convertible Debentures are listed on WDM Segment of the National Stock Exchange of India Limited. Listing fees for the year 2008-09 has been paid to all the above Stock Exchanges.

Stock Codes

Bombay Stock Exchange : Code No. 500097National Stock Exchange : Code DALMIACEMISIN (for Dematerialised Shares) : INE495A01022

(Besides the above the Privately Placed Debentures have also been dematerialised)

53

Stock Market Data

Table 1, 2, Chart A and Chart B gives details

Table 1: High, lows of company's shares for 2007-08 at BSE and NSE

BSE NSE

Month High Low Close High Low Close

April, 2007 380.00 334.70 343.00 380.00 335.00 344.65May, 2007 369.90 320.05 323.20 364.00 320.00 322.55June, 2007 335.00 296.20 330.30 336.00 290.50 330.25July, 2007 399.80 319.50 373.75 394.75 321.00 371.65August, 2007 376.90 350.00 362.75 379.00 325.00 363.65September, 2007 398.00 355.90 388.00 396.00 351.25 387.30October, 2007 545.75 370.00 499.90 549.00 367.00 502.05November, 2007 538.00 425.00 487.15 550.00 415.25 487.30December, 2007 620.00 460.10 536.55 579.00 495.00 537.60January, 2008 575.00 335.00 441.00 580.00 340.00 445.20February, 2008 479.95 336.00 365.25 460.00 345.00 366.35March, 2008 370.00 261.00 283.70 380.00 241.25 284.75

Table 2: Stock Performance over past 5 years

% of Change in

Company's Share Sensex Nifty Company in

comparison with

BSE NSE Sensex Nifty

2007-08 -22 -21 20 24 -42 -45

2 years 7 8 39 39 -32 -31

3 years 267 263 141 133 126 130

5 years 1000 1039 413 384 587 655

Chart A: DCB's Share Performance versus BSE Sensex

Note: Share prices and Sensex indexed to 100 as on 1st working day of the financial year 2007-08, i.e. April 2, 2007

May

-07

180.00

160.00

140.00

120.00

100.00

80.00

DALMIA SENSEX

60.00

40.00

20.00

0.00

Jun-

07

Jul-0

7

Aug

-07

Sep

-07

Oct

-07

Nov

-07

Dec

-07

Jan-

08

Feb

-08

Mar

-08

Apr

-07

54

Chart B: DCB's Share Performance versus NIFTY

Distribution of Shareholding

Table 3 and 4 lists the distribution of the shareholding of the equity shares of the company by size and by ownership class stas on 31 March 2008.

Table 3: Shareholding pattern by size

No. of Equity No. of % of No. of % of Shares held Shareholders Shareholders Shares held Shareholding

1-500 7233 66.69 1120581 1.39

501-1000 1347 12.42 1024814 1.27

1001-2000 1111 10.24 1663034 2.06

2001-3000 383 3.53 970499 1.20

3001-4000 189 1.74 683068 0.84

4001-5000 109 1.00 492388 0.61

5001-10000 239 2.20 1668365 2.06

10001 and above 237 2.18 73220894 90.57

Total 10848 100.00 80843643 100.00

Table 4: Shareholding Pattern by ownership

Particulars No. of % of No. of % of Shareholders Shareholders Shares held Shareholding

Promoters 73 0.67 44346190 54.85

Central/State Governments 4 0.04 128155 0.16

Financial Institutions 26 0.24 1809752 2.24

Mutual Funds 1 0.01 2500 0.01

Foreign Institutional Investors 19 0.17 1772912 2.19

Insurance Companies 2 0.02 1245421 1.54

Bodies Corporate 398 3.66 10470080 12.95

Overseas Body Corporates 5 0.05 6220806 7.69

Foreign Corporate Bodies 2 0.02 4470588 5.53

NRI/Foreign Nationals 95 0.88 145002 0.18

Individuals/Others 10223 94.24 10232237 12.66

Total 10848 100.00 80843643 100.00

Note: Share prices and NIFTY indexed to 100 as on 1st working day of the financial year 2007-08, i.e. April 2, 2007

May

-07

200.00

180.00

160.00

140.00

120.00

100.00

80.00

60.00

40.00

20.00

0.00

DALMIA SENSEX

Jun-

07

Jul-0

7

Aug

-07

Sep

-07

Oct

-07

Nov

-07

Dec

-07

Jan-

08

Feb

-08

Mar

-08

Apr

-07

55

Dematerialisation of Shares

st As on 31 March 2008, over 49% shares of the company were held in the dematerialised form.

Outstanding GDRs/ADRs/Warrants/Options

The company has issued 76,51,621 Warrants convertible into 5 equity shares of Rs. 2/- each at a maximum price of Rs.23.764 per share. These Warrants are convertible into equity shares upon a call option being exercised by the Board of Directors of the Company by giving 60 days notice in leading newspapers or 11 September, 2008, whichever is earlier.

During the year under review, the Board of Directors of the Company had exercised the call option and had called upon all the existing warrant holders to submit their applications for conversion of the warrants held by them into equity shares of the Company. Warrant holders holding 76,22,990 warrants exercised the option for conversion of warrants held by them into equity shares and allotment of 3,81,14,950 equity shares was made against convesion of the warrants. The Board has decided to give a further opportunity to the warrant holders holding the balance 28,631 warrants to convert their warrants into shares and the same is in process.

Details of Public Funding Obtained in the last three years

NIL

Registrar and Transfer Agent

For Equity Shares:

Karvy Computershare Private Limited,Plot Nos. 17 to 24, Vittal Rao Nagar, Madhapur,HYDERABAD - 500081.

For Privately Placed Debentures:

Share Department having address at the Registered Office or at the address of the Registrar and Transfer Agents, M/s. Karvy Computershare Private Limited (for dematerialised form only) at the above address.

Share Transfer System

The share transfers in the physical form are presently processed by the Registrars and Transfer Agents and returned within a period of 30 days. The company's Equity Shares are tradable in dematerialised form since August, 2000. Under the dematerialised system, the Shareholder can approach a Depository Participant (DP) for getting his shares converted from physical form to dematerialised form. The DP will generate a request for the dematerialisation, which will be sent by him to the Company's Registrars and Transfer Agents. On receipt of the same the shares will be dematerialised..

Registered Office Address:

Dalmia Cement (Bharat) Limited

Dalmiapuram -621651,

Dist. Tiruchirapalli, Tamil Nadu

Phone: 04329 - 235131

Fax: 04329 235111

PLANT LOCATIONS

Cement Plants:

Dalmiapuram (Tamil Nadu)

Dalmiapuram -621651, Dist.

Tiruchirapalli, Tamil Nadu

Village Tamaraikulam - 621705

Dist. Ariyalur, Tamil Nadu

Village Chinnakormerla - 516434,

Mylavaram Mandal, Dist. Cuddapah

Andhra Pradesh.

Magnesite Plant:

Dalmia Magnesite Corporation

Salem (Tamil Nadu) Vellakkalpatti,

P.O. Karuppur, Salem 636012.

Wind Farm:

Dalmia Wind Farm

Muppandal (Tamil Nadu)

Aralvaimozhy 629301

District Kanyakumari (Tamil Nadu)

Sugar Plants :

Dalmia Chini Mills (Unit : Ramgarh)

Village Ramgarh - 261403,

Tehsil Misrikh,

District Sitapur, (Uttar Pradesh)

Dalmia Chini Mills (Unit : Jawaharpur)

Village Jawaharpur - 261403,

Tehsil Sitapur Sadar, District Sitapur

(Uttar Pradesh)

Dalmia Chini Mills (Unit : Nigohi)

Village Kuiyan, Post Areli 242407,

Tehsil Tilhar, District Shahjahanpur

(Uttar Pradesh)

Electronics Division

Dalmia Cement (Bharat) Limited

Plot No. 53, 54A, Electronics City,

Hosur Road, Bangalore - 560100

Karnataka

Address for Correspondence

Dalmia Cement (Bharat) Limited

Shares Department

DALMIAPURAM 621651

Dist. Tiruchirapalli, Tamil Nadu

Phone: 04329 - 235131

Fax: 04329 235111

56

To

The Board of Directors,Dalmia Cement (Bharat) LimitedRegistered Office: Dalmiapuram - 621651District Tiruchirapalli, Tamil Nadu

Dear Sirs,

1. We have reviewed the Balance Sheet, Profit and Loss account and all its Schedules and Notes on Accounts, as well stas the Cash Flow Statements as at 31 March, 2008 and certify that to the best of our knowledge and belief:

1) These Statements do not contain any materially untrue statement or omit any material fact or contain Statements that might be misleading;

2) These Statements read together present a true and fair view of the Company's Affairs and are in compliance with existing Accounting Standards, applicable laws and regulations.

2. We further certify that, to the best of our knowledge and belief, no transactions have been entered into by the Company during the year which are fraudulent, illegal or violative of the Company's Code of Conduct.

3. We accept responsibility for establishing and maintaining internal controls and that we have evaluated the effectiveness of the internal control systems of the Company and we have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.

4. We have indicated to the Auditors and the Audit Committee:

(i) Significant changes in internal control during the year;

(ii) Significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and

(iii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company's internal control systems.

Place : New Delhi Somnath Patil Puneet DalmiaDated : 22.5.2008 Chief Financial Officer Chief Executive Officer

AUDITOR'S CERTIFICATE ON CORPORATE GOVERNANCE

The Members,Dalmia Cement (Bharat) Limited

We have examined the compliance of conditions of Corporate Governance by Dalmia Cement (Bharat) Limited, for the year ended 31st March, 2008, as stipulated in clause 49 of the Listing Agreement of the said Company with Stock Exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to state that as per the records maintained by the Company, there were no investor grievances remaining unattended/pending for more than 30 days.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For S. S. Kothari Mehta & Co. Chartered Accountants

Place : New Delhi (CA J. Krishnan)Dated: 22.05.2008 Partner

Membership No.84551

57

Auditors' Report To The Members of Dalmia Cement (Bharat) Limited

st 1. We have audited the attached balance sheet of DALMIA CEMENT (BHARAT) LIMITED, as at 31 March, 2008, and also the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(iii) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

st(v) On the basis of written representations received from the directors, as on 31 March, 2008 and taken on record st by the Board of Directors, we report that none of the directors is disqualified as on 31 March, 2008 from being

appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

st(a) in the case of the balance sheet, of the state of affairs of the Company as at 31 March, 2008;

(b) in the case of the profit and loss account, of the profit for the year ended on that date; and

(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

For S. S. Kothari Mehta & Co. Chartered Accountants

Place : New Delhi (CA J. Krishnan)Dated : 22.05.2008 Partner

Membership No.84551

58

AnnexureRe: Dalmia Cement (Bharat) Limited

Referred to in paragraph 3 of our report of even date,

1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

2. As explained to us, all the fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification.

3. In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

4. The inventories of the Company have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

5. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

6. On the basis of our examination of the records of inventories, in our opinion, the Company has maintained proper records of inventories and as explained to us, the discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

7. The Company has not granted or taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

8. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have we been informed of any instance of a continuing failure to correct major weaknesses in the aforesaid internal control procedures.

9. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions made in pursuance of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

10. In our opinion and according to the information and explanations given to us, these contracts or arrangements represent fees for professional services rendered aggregating to Rs.9.28 million which appear reasonable.

11. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of sections 58A, 58AA and any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.

12. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

13. We have broadly reviewed the books of account maintained by the Company pursuant to the Order made by the Central Government of India for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the cement and sugar units and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed examination of such records. The Company is not required to maintain any cost records under section 209(1) (d) of the Companies Act, 1956, in respect of activities carried out at the other units of the Company.

14. According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, service tax, wealth-tax, customs duty, excise duty, cess and other statutory dues applicable to it.

15. According to the records of the Company examined by us and the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, customs duty and excise

stduty were outstanding, as at 31 March, 2008 for a period of more than six months from the date they became payable.

16. According to the records of the Company examined by us and the information and explanations given to us, there are no dues of sales tax, service tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute, other than the following:-

59

Name of the Statute Nature of Dues AmountRs. Millions amount relates dispute is pending

Central Excise Act, 1944 Disallowance of Cenvat Credit Region Bench

Central Excise Act, 1944 Demand on 0.08 Season 2002-03 Asstt. reprocessed loss Season 2003-04 Commissioner,of Brown Sugar Sitapur

Central Excise Act, 1944 Disallowance of 48.72 Sept.'04 to Feb.'06 CESTAT, SouthernCenvat Credit on Regional BenchCapital Goods

Tamil Nadu General Differential tax for 0.47 1997-98, 1998-99 STAT, MaduraiSales Tax Act, 1959 non-acceptance of & 1999-00

Form XVII for purchase

Tamil Nadu General Entry Tax 26.97 Aug.'05 to Mar.'08 Madurai Bench,Sales Tax Act, 1959 Madras High Court

Kerala General Assessment 6.85 2003-04, 2004-05 Dy. CommissionerSales Tax Act, 1963 demand addl. (App.), Ernakulam

1% on turnover

Mines and Minerals Royalty on 2.77 30.05.1982 to Supreme Court (Regulation & Patta Lands 31.12.1991 of IndiaDevelopment) Act, 1957

The Employees PF Contribution 0.32 July' 86 to July' 89 Madras High CourtProvident Fund and Misc. Provisions Act, 1952

Coal Mines Cess Charges 1.28 April 2005 Dy Commissioner, (Conservation & CustomsDevelopment) Act, 1974

Tamil Nadu Electricity Taxation on 13.44 Oct.'92 to Sep.'99 High Court, Madras (Taxation on consumption of Consumption) Act, 1962 self-generated

energy using Furnace Oil as fuel

17. The Company does not have accumulated losses as at the close of the financial year. The Company has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

18. According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

19. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

20. In our opinion, the Company is not a chit fund/nidhi/mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

21. The Company has maintained proper records of the transactions and contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

22. In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

23. According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

Period to which the Forum where

7.23 Oct. '01 to Apr. '02 CESTAT, Southern

60

24. According to the information and explanations given to us and on the basis of an overall examination of the balance sheet of the Company, in our opinion, generally, there are no funds raised by the Company on short-term basis, which have been used for long-term investment.

25. During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

26. According to the information and explanations given to us, the Company has not issued any debentures during the year.

27. During the period covered by our audit report, the Company has not raised any money by public issue.

28. During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

29. The other provisions of the Order do not appear to be applicable for the year under report.

For Chartered Accountants

Place : New Delhi (CA J. Krishnan)Dated: 22.05.2008 Partner

Membership No.84551

S. S. Kothari Mehta & Co.,

To

The Board of Directors,Dalmia Cement (Bharat) LimitedRegistered Office: Dalmiapuram – 621651District TiruchirapalliTamil Nadu

Dear Sirs,

I do hereby certify that the all the Members of the Board of Directors of the Company and the Senior Management Personnel have affirmed their compliance with the Code of Conduct laid down by the Board of Directors of the Company in their Meeting held on 26-7-2005.

This certificate is being given in compliance with the requirements of Clause 49 (I) (D) (ii) of the Listing Agreement entered into with the Stock Exchanges.

Place : New Delhi Puneet DalmiaDated: 22.05.2008 Chief Executive Officer

61

Balance Sheet of Dalmia Cement (Bharat) Limited as at 31st March, 2008

Schedule As at 31.3.2008 31.3.2007

I. SOURCES OF FUNDS1. SHAREHOLDERS' FUNDS

a) Share Capital 1 161.69 85.46 b) Reserves and Surplus 2 11309.74 7449.37

11471.43 7534.83

2. LOAN FUNDSa) Secured Loans 3 10500.70 9306.26b) Unsecured Loans 4 5332.66 839.60

15833.36 10145.86

3. DEFERRED TAX 5 1630.18 1292.98

28934.97 18973.67

II. APPLICATION OF FUNDS 1. FIXED ASSETS

a) Gross Block 18829.83 16970.77b) Less: Depreciation 5582.59 4699.26

c) Net Block 6 13247.24 12271.51d) Capital work-in-progress (including capital advances) 5012.99 1164.80

18260.23 13436.31

2. INVESTMENTS 7 6138.27 3785.61

3. CURRENT ASSETS, LOANS AND ADVANCESa) Inventories 8 4915.99 1975.38

b) Sundry Debtors 9 1050.59 820.81c) Cash and Bank balances 10 870.37 1037.65d) Loans and Advances 11 4331.98 2921.23

11168.93 6755.07

Less: Current Liabilities and Provisionsa) Current Liabilities 12 5483.09 4453.61b) Provisions 13 1149.37 549.71

6632.46 5003.32

Net Current Assets 4536.47 1751.75

4. DEFERRED REVENUE EXPENDITURE 14 - -

28934.97 18973.67

Significant Accounting Policies and Notes to Accounts 19

As per our report of even date attachedFor S.S. Kothari Mehta & Co.,Chartered Accountants

Gautam Dalmia(CA J. Krishnan) K.V. Mohan Somnath Patil Puneet DalmiaPARTNER COMPANY SR. EXECUTIVE DIRECTOR DIRECTORS

SECRETARY (FINANCE)

Place : New DelhindDated : this the 22 day of May, 2008

As at

Rs. Million

62

Profit and Loss Account of Dalmia Cement (Bharat) Limited for the year ended 31st March, 2008

Schedule 2007-08 2006-07

I N C O M ESales (Gross) 16908.00 11175.92Less: Excise Duty 2101.32 1311.19Net Sales 14806.68 9864.73Other Income 15 1645.54 1560.88

16452.22 11425.61

E X P E N D I T U R E(Increase)/Decrease in Stocks 16 (1895.12) (178.78)Raw Materials consumed 4663.81 2403.50Purchases 37.62 12.25Salaries, Wages and Benefits to Employees 17 848.66 486.26Other Expenses 18 7592.25 5187.78Depreciation 921.99 621.64Less: Transferred from Revaluation Reserve 57.96 70.89

864.03 550.75

12111.25 8461.76

Profit before Tax 4340.97 2963.85Provision for Taxation :

Current Tax 513.40 330.10MAT credit entitlement - (229.90)Deferred Tax 337.20 563.00Fringe Benefits Tax 18.85 11.31

869.45 674.51

Profit after Tax 3471.52 2289.34Add: Excess Provision written back - 0.13Add: Surplus brought forward from previous year 3481.98 1755.62Less: Loss transferred on amalgamation of Dalmia Sugars Limited - (1.90)Add: Transfer from Reserve for Bad & Doubtful Debts - 17.47Add: Transfer from Debenture Redemption Reserve - 7.50

Surplus available for appropriation 6953.50 4068.16

APPROPRIATIONSGeneral Reserve 350.00 300.00Debenture Redemption Reserve 107.50 138.75Dividend:

Interim Dividend 202.11 85.46Proposed Dividend 121.27 42.73Dividend Distribution tax thereon 54.96 19.24

378.34 147.43Balance carried to Balance Sheet 6117.66 3481.98

6953.50 4068.16

Earnings per Share (Face Value of Rs. 2/- per share) (Refer Note B-8 of Schedule 19) Basic Rs. 69.70 Rs. 53.95Diluted Rs. 69.51 Rs. 29.18

Significant Accounting Policies and Notes to Accounts 19

As per our report of even date attachedFor S.S. Kothari Mehta & Co.,Chartered Accountants

Gautam Dalmia(CA J. Krishnan) K.V. Mohan Somnath Patil Puneet Dalmia

PARTNER COMPANY SR. EXECUTIVE DIRECTOR DIRECTORSSECRETARY (FINANCE)

Place : New DelhindDated : this the 22 day of May, 2008

Rs. Million

63

SCHEDULESSchedule Nos. 1 to 19 forming part of the Balance Sheet as at 31st March, 2008 and the Profit and Loss Account for the year ended on that date.

Rs. Million

As at31.3.2008 31.3.2007

SCHEDULE 1-SHARE CAPITALAuthorised11,46,31,160 (7,65,16,210) Ordinary Shares of Rs. 2 each 229.26 153.03 8,53,68,840 (12,34,83,790) Unclassified Shares of Rs. 2 each 170.74 246.97

400.00 400.00

Issued and Subscribed8,08,43,643 (4,27,28,693) Ordinary Shares of Rs. 2 each fully paid up 161.69 85.46

Note:1. Of the above Shares:

(i) 66,51,410 Shares were allotted as fully paid-up pursuant to arrangements/scheme of conversion, without payments being received in cash; and

(ii) 2,76,31,245 Shares were allotted as fully paid-up by way of Bonus Shares by capitalisation of Reserves.

2. During the year 2001-02, the Company had issued 76,51,621 Non-Convertible Debentures of Rs.10/-each along with detachable tradeable warrants. The holders of these warrants had the option to subscribe to Ordinary Shares of the Company (5 Ordinary Shares of Rs.2 each) at Rs. 23.764 per Share upon the call option being exercised by the Board of Directors or on 11-9-2008, whichever is earlier in terms of the Letter of Offer dated 26th June, 2001. During the year, the Board of Directors have exercised the call option in respect of such warrants and called upon all the existing warrant holders to submit their applications for conversion of the warrants held by them into Ordinary Shares of the Company. Warrant holders holding 76,22,990 warrants exercised the options and consequently the Company allotted 3,81,14,950 Ordinary Shares of Rs.2/- each fully paid-up. The Board has decided to give another opportunity to the warrant holders holding the balance 28,631 warrants to convert their warrants into shares.

SCHEDULE 2 - RESERVES AND SURPLUS

Rs. Million

As at Additions Deductions As at31.3.2007 31.3.2008

Capital Reserve 3.50 - - 3.50*

Revaluation Reserve 785.33 - 62.37 722.96

Realised Revaluation Reserve 0.58 0.03 - 0.61

Share Premium Account 1165.16 829.53 - 1994.69

General Reserve 1639.07 350.00 - 1989.07

Debenture Redemption Reserve 373.75 107.50 - 481.25

Surplus in Profit and Loss Account 3481.98 6117.66

7449.37 11309.74

* Out of above, Rs.1.50 Million is secured by a second charge on all fixed assets of the Company's Sugar unit.

As at

64

Rs. Million

SCHEDULE 3 - SECURED LOANS

A. FROM BANKS

(i) Term Loan secured by whole of the movable properties (except book debts) of Wind Farm and Sugar units

(ii) Rupee Loan secured by first joint mortgage of all immovable properties and first charge by way of hypothecation of all movables (except book debts) of Wind Farm unit subject to prior charges created in favour of Bankers. The above charges rank pari-passu on inter-se basis with other chargeholders

(iii) Rupee Loan secured by first joint mortgage of all immovable properties and first charge by way of hypothecation of all movables (except book debts) of Sugar unit subject to prior charges created in favour of Bankers. The above charges rank pari-passu on inter-se basis with other chargeholders

(iv) Term Loan secured by hypothecation of all the movable fixed assets of Cement and Magnesite units on first pari passu basis with other term lending banks / institutions

(v) Term Loan secured by hypothecation of plant and machinery and other movable tangible assets installed at the Cement and Magnesite units on first pari-passu basis with other chargeholders

(vi) Term Loan secured by hypothecation of all the fixed assets of Cement and Magnesite units on first pari passu basis with other term lending banks/ institutions

(vii) Term Loan secured by hypothecation of all the fixed assets of Cement and Magnesite units on first pari passu basis with other term lending banks/ institutions

(viii) Rupee Loan secured by first joint mortgage of all immovable properties and first charge by way of hypothecation of all movables (except book debts) of Sugar unit subject to prior charges created in favour of Bankers. The above charges rank pari-passu on inter se basis with other chargeholders

(ix) Term Loan secured by first pari passu charge on land and building and hypothecation of plant and machinery of sugar and co-generation units at Jawaharpur and Nigohi, distillery at Jawaharpur and co-generation unit at Ramgarh

(x) Term Loan secured by first pari passu charge on machinery, land and building of sugar and co-generation units at Jawaharpur and Nigohi, distillery at Jawaharpur and co-generation unit at Ramgarh with other banks

(xi) Loan against hypothecation of vehicle

(xii) Term Loan secured by residual charge on the movable and immovable fixed assets of the Sugar units

(xiii) Cash Credit secured by hypothecation of inventories and other current assets in favour of the participating Banks ranking pari-passu on inter-se basis

Carried Over

- 66.67

- 100.00

66.60 133.30

750.00 750.00

750.00 750.00

243.00 243.00

500.00 500.00

- 7.18

2000.00 2000.00

700.00 700.00

0.63 0.88

308.10 -

1514.55 220.74

6832.88 5471.77

As at31.3.2007

As at31.3.2008

65

As at As at31.3.2008 31.3.2007

Rs. Million

Brought forward

B. PRIVATELY PLACED DEBENTURES

Non - Convertible Debentures

Secured by a first charge on the movable properties of Cement and Magnesite Units and Jamnagar Property. Redeemable in three yearly equal instalments after the expiry of fourth, fifth and sixth year from the date of allotment

Non - Convertible Debentures

Secured by a first charge on the movable properties of Cement and Magnesite Units and Jamnagar Property. Redeemable in three yearly equal instalments after the expiry of fifth, sixth and seventh year from the date of allotment

Non - Convertible Debentures

Secured by a first charge on whole of the movable properties of Cement and Magnesite Units (except book debts) and Jamnagar Property. Redeemable in three yearly instalments in the ratio of 30:30:40 after the expiry of eighth, ninth and tenth year from the deemed date of allotment

Non - Convertible Debentures

Secured by a first pari-passu charge on all the movable and immovable properties of Cement and Magnesite Units (except stock and book debts) and Jamnagar Property. Redeemable in three yearly instalments in the ratio of 30:30:40 after the expiry of eighth, ninth and tenth year from the deemed date of allotment

Non - Convertible Debentures

Secured by a first pari-passu charge on all the movable and immovable properties of Cement and Magnesite Units (except stock and book debts) and Jamnagar Property. Redeemable in three yearly instalments in the ratio of 30:30:40 after the expiry of eighth, ninth and tenth year from the deemed date of allotment

Non - Convertible Debentures

Secured by mortgage and charge on first pari-passu basis on all the immovable and movable assets excluding current assets both present and future of the Company's sugar Units at Jawaharpur and Nigohi. Redeemable in three equal yearly instalments after the expiry of eighth, ninth and tenth year from the date of first disbursement

C. FROM GOVERNMENT OF INDIA

Secured by exclusive second charge on movable and immovable property of the sugar unit at Ramgarh

6832.88 5471.77

333.33 500.00

400.00 400.00

800.00 800.00

500.00 500.00

500.00 500.00

1000.00 1000.00

3533.33 3700.00

134.49 134.49

10500.70 9306.26

66

SCHEDULE 4 - UNSECURED LOANS

A. Fixed Deposits 31.22 35.94Add: Interest accrued and due on above 2.08 2.99

33.30 38.93

B. Other LoansInterest-free Sales Tax Loan 793.55 793.55From Housing Development Finance Corporation Limited (against bank guarantee) 5.81 7.12From Banks 4500.00 -

5299.36 800.67

5332.66 839.60

SCHEDULE 5 - DEFERRED TAX

Deferred Tax assets/liabilities are attributable to the following items:-LiabilitiesDepreciation 1663.41 1323.08Others - 7.11

1663.41 1330.19

AssetsVoluntary retirement expenses 13.84 17.04Expenses allowable for tax purposes when paid 19.39 20.17

33.23 37.21

Net 1630.18 1292.98

As at As at31.3.2008 31.3.2007

Rs. Million

SCHEDULE 6 - FIXED ASSETS Rs. Million

GROSS BLOCK DEPRECIATION NET BLOCK

Description of Assets 31.3.2007 ions 31.3.2008 year @ 31.3.2008 31.3.2008 31.3.2007

Owned Assets:

Land 443.13 96.88 0.01 540.00 - - 540.00 443.13

Land (Leasehold) 5.75 - - 5.75 0.06 0.80 4.95 5.01

Buildings 1665.15 202.66 15.77 1852.04 72.96 557.96 1294.08 1172.53

Plant and Machinery 14024.20 1640.45 99.52 15565.13 794.35 4776.77 10788.36 10017.32

Railway Sidings 27.06 9.76 - 36.82 1.35 12.06 24.76 16.35

Vehicles 45.54 9.71 4.71 50.54 6.70 25.59 24.95 22.86

Furniture and Fixtures 47.32 18.59 0.78 65.13 7.90 34.44 30.69 20.55

Other Assets 81.74 13.47 11.67 83.54 8.07 54.84 28.70 23.59

Owned Assets Leased out:

Buildings 27.68 - - 27.68 2.35 6.54 21.14 23.49

Plant and Machinery 603.20 - - 603.20 37.07 113.59 489.61 526.68

16970.77 1991.52 132.46 18829.83 930.81 5582.59 13247.24 12271.51

Previous year 10445.77 6623.12 98.12 16970.77 625.31 4699.26 12271.51

Notes:1. Land includes certain lands under acquisition, the proceedings for which are presently stayed by the Order of the appropriate High Courts.2. There are no registered title deeds for the Company's flats/accommodation in multistoreyed buildings in National Capital Territory of Delhi.3. Revaluation of the fixed assets was done on the basis of a valuation certificate issued by a Chartered Engineer.4. @ includes depreciation charged to other heads Rs. 8.82 Million (Rs.3.67 Million).

As at Additions Deduct- As at For the Upto As at As at

67

SCHEDULE 7 - INVESTMENTS

Long TermGovernment and Trust Securities (unquoted) 0.02 0.02 @@ 0.04Unit Trust of India - 6.75% Tax Free Bonds (quoted) 0.98 1.59 1.59Units of Mutual Funds - Debt based schemes (quoted) 6.00 6.00 @@ 543.00Units of Mutual Funds - Balanced schemes (quoted) 32.74 41.92 @@ 22.73Units of Urban Infrastructure Opportunities Fund (Fully Paid-up - Unquoted) 110.00 110.00 @@ 55.00

Equity Shares of Joint Stock CompaniesFully paid-up:

Unquoted:Kanika Investment Limited ** 4.20 23.20 23.20Ishita Properties Limited ** 0.50 12.99 12.99Shri Rangam Properties Limited ** 2.50 2.50 @@ 2.49Avnija Properties Limited ** 1500.00 1506.39 @@ 2.49Geetee Estates Limited ** 0.50 0.50 0.50D.I. Properties Limited ** 2.50 2.50 @@ 2.49Hemshila Properties Limited ** 2.50 2.50 @@ 2.49Himshikhar Investment Limited ** 4.50 44.50 44.50Shri Radha Krishna Broker & Holdings Ltd. ** 0.50 0.50 0.50Dalmia Minerals & Properties Ltd. ** 0.50 0.50 0.50Seeta Estates & Brokers Limited ** 0.50 0.50 0.50Shri Rangam Brokers & Holdings Limited ** 0.50 0.50 0.50Arjuna Brokers & Minerals Limited ** 0.50 0.50 0.50Sri Keshava Mines & Minerals Limited ** 0.50 0.50 0.50Sri Swaminatha Mines & Minerals Limited ** 0.50 0.50 0.50Sri Shanmugha Mines & Minerals Limited ** 0.50 0.50 0.50Sri Madhava Minerals & Properties Limited ** 0.50 0.50 0.50Sri Subramanya Mines & Minerals Limited ** 0.50 0.50 0.50Eswar Cements Private Limited ** 16.08 32.65 32.65Sri Trivikrama Mines & Properties Limited ** 0.50 0.50 0.50Sri Dhandauthapani Mines & Minerals Ltd ** 0.50 0.50 0.50Sri Madhusudana Mines & Properties Ltd ** 0.50 0.50 0.50Dalmia Cement (Meghalaya) Limited ** ^^ - - @@ 0.50Dalmia Sugar Ventures Limited ** 0.50 0.50 @@ -Indus League Clothing Limited - - @@ 27.26Dalmia Electrodyne Technologies (P) Limited 0.49 17.50 17.50Bajaj Auto Limited ^ 0.05 2.33 @@ -Bajaj Finserv Limited ^ 0.03 2.25 @@ -Assam Bengal Cement Company Limited (under liquidation) @ ((250)) ((144)) ((144))Asian Refractories Limited (under liquidation) ((200)) ((200)) ((200))Haryana Financial Corporation ((2500)) ((2500)) ((2500))

1656.81 175.56Quoted:Reliance Industries Limited - - @@ 1196.89Reliance Communications Limited 4.37 460.55 @@ 204.92Reliance Natural Resources Limited - - @@ 25.21Indian Petrochemicals Corporation Limited - - @@ 3.75Reliance Capital Limited - - @@ 3.90Reliance Energy Limited ((120)) 0.01 @@ 197.12Ranbaxy Laboratories Limited - - @@ 14.48Mangalore Refinery & Petrochemicals Limited - - @@ 1.31

Face Value As at As at31.3.2008 31.3.2007

Rs. Million

68

Face Value As at As at31.3.2008 31.3.2007

Bharat Forge Limited - - @@ 15.90Jai Corp Limited 0.24 195.76 @@ 3.41Cadila Healthcare Limited 0.18 - -Mukand Limited - - @@ 9.41Century Textiles & Industries Limited @ - - @@ 31.58Larsen & Toubro Limited - - @@ 1.45JSW Steel Limited - - @@ 54.15Wockhardt Limited 0.05 3.89 3.89Gujarat Ambuja Cement Limited - - @@ 108.33Reliance Petroleum Limited - - @@ 1.00Thiru Arooran Sugars Limited @ - - @@ 23.51Lakshmi Machines Limited - - @@ 26.58Oswal Chemicals & Fertilizers Limited - - @@ 39.59Mahanagar Telephone Nigam Limited - - @@ 1.97Polyplex Corporation Limited 2.15 27.16 @@ 9.72Mysore Cements Limited @ 27.89 140.12 140.12Dena Bank - - @@ 55.82UTI Bank Limited - - @@ 141.86Bajaj Holdings & Investment Limited ^ 0.05 5.96 @@ 104.42Hindalco Industries Limited - - @@ 43.35Gujarat Flourochemicals Limited 0.73 201.04 @@ 101.17Balkrishna Industries Limited 0.65 43.95 @@ 38.28Sterlite Industries (India) Limited - - @@ 45.20Essar Shipping Limited - - @@ 34.32Gujarat State Petronet Limited - - @@ 46.59Asian Paints Limited - - @@ 2.39ACC Limited @ 1.00 70.39 @@ 52.88Gail India Limited - - @@ 10.13Industrial Development Bank of India Limited - - @@ 19.79Punjab Tractors Limited - - @@ 8.03Sunshield Chemicals Limited 2.31 6.54 6.54Siemens Limited - - @@ 50.99JB Chemicals & Pharmaceuticals Limited 0.18 7.02 7.02Essel Propack Limited 0.20 6.54 @@ 1.63Tata Steel Limited - - @@ 20.18Poddar Pigments Limited 1.67 7.17 7.17Twenty First Century Printers Limited 0.25 1.83 @@ -All Cargo Global Logistics Limited 1.68 173.26 @@ -BGR Energy Systems Limited 0.12 5.66 @@ -Cords Cable Industries Limited 1.00 13.50 @@ -DCW Limited 2.20 33.07 @@ -Future Capital Holdings Limited 0.20 15.45 @@ -Gitanjali Gems Limited 0.33 9.78 @@ -Gokaldas Exports Limited 0.06 2.87 @@ -Madras Cements Limited @ 0.26 101.32 @@ -Mundra Port & Economic Zone Limited 0.11 4.90 @@ -Reliance Power Limited 0.05 2.45 @@ -Sharyans Resources Limited 3.71 85.96 @@ -Simplex Infrastructures Limited 0.44 146.73 @@ -SRF Limited 2.55 44.32 @@ -OCL India Limited *** @ ^^ 24.71 2000.50 @@ -Tata Consultancy Services Limited 0.00 3.62 3.62

3821.32 2919.57

Rs. Million

69

Partly paid-up: (quoted)Hindalco Industries Limited - - @@ 67.47

Preference Shares of Joint Stock CompaniesFully paid-up: (unquoted)

Avnija Properties Limited ** - - @@ 0.01Geetee Estates Limited ** - - @@ ((850))D.I. Properties Limited ** - - @@ 0.01Shri Rangam Properties Limited ** - - @@ 0.01Hemshila Properties Limited ** - - @@ 0.01Raghuram Cements Limited @ 18.74 500.00 @@ -

500.00 0.04Fully paid-up Shares of Co-operative Societies (unquoted) 0.01 0.01 0.01Property Rights in Holiday Resorts (unquoted) 0.60 0.60 0.60

6138.27 3785.61

Book Value Market ValueQuoted 3870.82 3381.50Unquoted 2267.45 -

Notes:There is no investment in companies under the same management. @ Trade Investments** Subsidiary Companies*** Associate Company^ Shares received in accordance with scheme of demerger of Bajaj Auto Limited in the ratio of 1:1.^^ Shares of OCL India Limited received upon merger of Dalmia Cement (Meghalaya) Limited in the ratio of 61:100.@@ Includes purchases during the year - Face value Rs. 15219.05 Million, Cost Rs. 28147.57 Million and net of sales during the

year - Face value Rs. 14163.81 Million, Cost Rs.25794.91 Million.

Face Value As at As at31.3.2008 31.3.2007

As at As at31.3.2008 31.3.2007

SCHEDULE 8 - INVENTORIES(As certified by the Management)

Stores, Spares etc.On hand 715.88 371.05In transit 485.76 16.62

1201.64 387.67

Loose Tools 0.77 0.61

Raw MaterialsOn hand 290.67 257.34In transit 70.18 2.48

360.85 259.82

Material in Process 197.44 73.54

Stock-in-Trade 3155.29 1253.74

4915.99 1975.38

Rs. Million

Rs. Million

70

As at As at31.3.2008 31.3.2007

SCHEDULE 9 - SUNDRY DEBTORS

a) Debts over six monthsConsidered goodSecured 26.96 7.59Unsecured 20.26 28.27Considered doubtful 15.13 11.46Less: Set off from Provision for Bad and Doubtful Debts 15.13 11.46

- -

47.22 35.86

b) OthersConsidered goodSecured 645.71 467.05Unsecured 357.66 317.90

1003.37 784.95

1050.59 820.81

SCHEDULE 10 - CASH AND BANK BALANCESCash on hand 14.27 13.06Cheques on hand 8.15 0.77Remittances-in-transit - 2.12Balances with Scheduled Banks

Current Accounts 703.00 932.59Fixed Deposit Accounts 141.49 87.44

844.49 1020.03Balances with Other Banks in Current Accounts * 3.46 1.67

870.37 1037.65

*Balances with

Avadh Gramin Bank 0.21 0.03Zila Sahakari Bank Limited 0.81 1.13Lucknow Kshetriya Gramin Bank 1.74 0.51Baroda Paschimi Uttar Pradesh Gramin Bank 0.70 -

SCHEDULE 11 - LOANS AND ADVANCES

LoansSecured - Considered good

Employees * 5.80 11.25Unsecured - Considered good

Employees * 5.98 0.06Subsidiary Companies ** (Interest-free) 523.97 527.51Others 17.29 20.22

547.24 547.79

Advances recoverable in cash or in kind or for value to be received (Unsecured)

Considered good * 1314.79 864.06Considered doubtful 1.92 1.92Less: Set off from Provision for Bad and Doubtful Debts 1.92 1.92

- -

1314.79 864.06

Rs. Million

71

Income-tax paidMAT Credit entitlement 229.90 229.90Deposits and Balances with Government Departmentsand Other Authorities 1208.71 836.75(Unsecured-Considered good)

4331.98 2921.23

* includes :(a) Due from Officers of the Company 2.16 1.64(b) Maximum amount due from Officers at any time during the year 2.23 1.97

** Due from Subsidiaries :(a) Ishita Properties Limited 49.85 49.85(b) Hemshila Properties Limited 7.12 7.12(c) Geetee Estates Limited 10.49 10.49(d) D.I. Properties Limited 7.71 7.71(e) Himshikhar Investment Limited 3.35 2.37(f) Sri Trivikrama Mines & Properties Limited 14.24 -(g) Dalmia Minerals & Properties Limited 12.20 13.07(h) Arjuna Brokers & Minerals Limited 2.14 2.14(i) Shri Rangam Brokers & Holdings Limited 1.65 1.65(j) Shri Rangam Properties Limited 7.83 7.30(k) Seeta Estates & Brokers Limited 14.52 14.52(l) Shri Radha Krishna Brokers & Holdings Limited 15.57 15.57(m) Avnija Properties Limited - 8.02(n) Eswar Cements Private Limited 281.65 307.31(o) Sri Dhandauthapani Mines & Minerals Limited 17.68 3.44(p) Sri Kesava Mines & Minerals Limited 13.34 13.34(q) Sri Madhava Minerals & Properties Limited 14.52 13.62(r) Sri Madhusudana Mines and Properties Limited 12.47 12.29(s) Sri Shanmugha Mines & Minerals Limited 13.05 12.90(t) Sri Swaminatha Mines & Minerals Limited 12.00 12.00(u) Sri Subramanya Mines & Minerals Limited 12.59 12.80

SCHEDULE 12 - CURRENT LIABILITIES

Sundry Creditors:Micro, Small and Medium Enterprises 11.96 0.25Others 4677.72 4024.65

4689.68 4024.90Advances from Customers 85.81 81.00Directors' Commission payable 83.00 1.00Unclaimed Dividend * 17.11 14.26Matured Fixed Deposits and interest thereon * 0.93 0.78Other Liabilities 461.37 220.90Interest accrued but not due on Loans 145.19 110.77

5483.09 4453.61

* There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund.

SCHEDULE 13 - PROVISIONS

For Taxation 956.39 448.89Proposed Dividend 121.27 42.73Pension and other Staff benefits 41.48 41.21Impairment of Assets 9.62 9.62Others 20.61 7.26

1149.37 549.71

1025.54 431.48

As at As at31.3.2008 31.3.2007

Rs. Million

72

SCHEDULE 14 - DEFERRED REVENUE EXPENDITURE

(To the extent not written off or adjusted)

Payments under Voluntary Retirement SchemeAs per Last Balance Sheet - 6.74

Less: Amount charged to the Profit and Loss account - 6.74

- -

2007-08 2006-07

SCHEDULE 15 - OTHER INCOME

Income from Travel Agency business{Tax deducted at source Rs.1.22 Million (Rs. 1.16 Million)} 14.81 13.95

Income from Other Investments

Dividend from Long Term Investment 22.38 26.81

Interest from Banks and Others (Gross)

{Tax deducted at source Rs. 3.18 Million (Rs. 0.44 Million)} 29.06 6.70

Profit on Sale of Fixed Assets 3.84 6.00

Profit on Sale of Investments (Long Term) 1959.83 1470.39

Less: Loss on sale of Investments (Long Term) 608.27 141.08

1351.56 1329.31

Miscellaneous Receipts 223.89 178.11

1645.54 1560.88

SCHEDULE 16 - (INCREASE) / DECREASE IN STOCKS

Opening Stock:Finished 1253.74 1009.49Process 73.54 100.69

1327.28 1110.18Closing Stock:

Finished 3155.29 1253.74

Process 197.44 73.54

3352.73 1327.28

(2025.45) (217.10)

Add/(Less): Excise duty variation on opening/ closing stock 130.33 38.32

(Increase) / Decrease in Stocks (1895.12) (178.78)

SCHEDULE 17- SALARIES, WAGES AND BENEFITS TO EMPLOYEES

Salaries and Wages

{After allocating Rs.242.52 Million (Rs. 197.85 Million) to other accounts} 677.44 351.38Payments under Voluntary Retirement Scheme 15.81 33.38Contribution to Provident and Other Funds 75.33 49.90Bonus 9.48 0.42Workmen and Staff Welfare Expenses 70.60 51.18

848.66 486.26

As at As at31.3.2008 31.3.2007

Rs. Million

73

SCHEDULE 18 - OTHER EXPENSES

Power and Fuel 2887.49 2061.68

Processing Charges 188.10 113.60

Packing Materials 621.94 497.27

Consumption of Stores and Spare Parts

{After allocating Rs. 663.11 Million to other accounts (Rs. 345.95 Million)} 11.28 13.02

Repairs and Maintenance

Machinery 506.30 311.98

Buildings 58.21 71.44

Others 23.21 12.13

587.72 395.55

Rent 10.79 5.39

Rates and Taxes 22.92 24.64

Insurance 18.73 31.49

Travelling 62.94 31.56

Advertisement and Publicity 42.83 57.77

Freight, Transportation and Other Charges 1173.06 814.75

Commission paid to Other Selling Agents 30.89 5.11

Rebate, Discount and Allowances 7.51 0.88

Interest

On Term loans 644.94 212.35

On Borrowings from Banks and Others 182.19 53.86

On Debentures 302.01 273.43

1129.14 539.64

Directors' Sitting Fees 1.01 0.78

Non-Executive Directors' Commission 3.00 1.00

Charity and Donation 43.81 9.79

Assets written off 7.87 11.27

Loss on sale of Fixed Assets 0.62 1.08

Bad Debts written off 0.08 2.25

Miscellaneous Expenses 740.52 569.26

7592.25 5187.78

2007-08 2006-07

Rs. Million

74

SCHEDULE 19 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

1. Accounting Convention

The financial statements are prepared under historical cost convention (except for certain fixed assets, which are revalued) on a going concern basis and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

2. Fixed Assets

(i) Land, Buildings, Plant and Machinery and Railway Sidings at Dalmiapuram , Salem , Mumbai, Ballabhgarh and Delhi added prior to 01.04.2001 have been stated at revalued figures. All other fixed assets have been stated at cost (net of cenvat, where applicable). All significant costs incidental to the acquisition of the fixed assets are capitalised.

(ii) Expenditure during construction period including trial run expenses net of revenue earned and interest on borrowings for projects till commencement of commercial production are capitalised.

3. Excise Duty

Excise duties recovered are included in the gross sale value of products .

4. Employee Benefits

(i) Defined Contribution Plan:

Employee benefits in the form of the Company's contribution to provident fund, pension scheme, superannuation fund and ESI are considered as defined contribution plan and charged to the profit and loss account of the year when the contribution to the respective funds are due.

(ii) Defined Benefit Plan:

Retirement benefits in the form of gratuity and leave encashment are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation as at the date of the Balance Sheet using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognised on a straight line basis over the average period until the amended benefits become vested. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(iii) The expenditure on voluntary retirement schemes is charged to the Profit and Loss account in the year in which it is incurred.

5. Inventories

(i) Finished stocks are valued at weighted average cost or net realisable value, whichever is lower. In the case of Dead Burnt Magnesite Dust stocks to the extent these are considered saleable, valuation is done at raw materials cost plus packing charges or net realisable value, whichever is lower. By-products are valued at net realisable value.

(ii) Process stocks are valued at cost or net realisable value, whichever is lower.

(iii) Stores, Spares and Raw Materials on hand are valued at weighted average cost or net realisable value, whichever is lower and those in transit at cost.

6. Investments

Long-term Investments are stated at cost and Current Investments are stated at cost or fair value, whichever is lower. Provision for diminution in value of Long-term Investments is made to recognise a decline, other than temporary, in the value of investments.

7. Revenue Recognition

Revenue is recognised on accrual basis except for cash subsidies and coal quality rebates which are accounted for on the basis of final ascertainment of revenue.

8. Depreciation

(I) Depreciation on major classifications of "plant and machinery" at Salem and Dalmiapuram (excluding earth moving machinery) and on all fixed assets at Ballabhgarh, Wind Farm Unit, Bangalore Works and Dalmia

75

Chini Mills (Sugar Units) is provided on straight-line method at the rates prescribed in Schedule XIV to the Companies Act,1956. In respect of the remaining fixed assets, depreciation is provided for on diminishing balance method at the rates prescribed in Schedule XIV to the Companies Act,1956.

(ii) Depreciation on amount added on revaluation of fixed assets is transferred from Revaluation Reserve.

(iii) Cost of leasehold land is amortised over the period of the lease.

9. Research and Development

Revenue expenditure on Research and Development is charged in the year in which it is incurred. Expenditure which results in creation of assets is included in Fixed assets and depreciation is provided on such assets at the applicable rates.

10. Foreign Currency Transactions

Foreign currency transactions are accounted at the equivalent rupee value earned/ incurred on the date of the transaction. Year-end balances in respect of loan taken for acquisition of fixed assets and current assets / liabilities are accounted for at the exchange rates prevailing at the year-end. The resultant gain or loss is taken credit for or charged to the profit and loss account.

11. Deferred Revenue Expenditure

Expenditure incurred under the Voluntary Retirement Scheme of the Company till 31-3-2003 is treated as deferred revenue expenditure and amortised over a period of five years.

12. Impairment of Assets

Impairment losses, if any, are recognised in accordance with the accounting standard issued in this regard by The Institute of Chartered Accountants of India.

13. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable. Contingent liabilities are shown by way of Notes to Accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable. Contingent assets are not recognised in the Accounts.

14. Expenses and Income pertaining to Cement and Sugar Works are allocated as required under the respective Cost Accounting Record Rules.

B. NOTES TO ACCOUNTS

As at As at 31.3.2008 31.3.2007

1. Claims against the Company not acknowledged as debts 215.74 189.79

2. Other money for which the Company is contingently liable including Guarantees given of Rs.320 Million (Rs.400 Million) 492.43 606.92

3. Uncalled Liability on Partly Paid up Shares/ Units - 84.25

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 6130.30 3644.78

5. Loans falling due for repayment within one year:

Secured 911.75 241.82Unsecured 4513.56 10.89

2007-08 2006-07

6. Amount paid to Auditors:a) Statutory Auditor

i) Audit Fee 1.25 0.80ii) For Tax Audit and Other services 1.26 0.99iii) For Expenses 0.64 0.33

b) Cost Auditori) Audit Fee 0.09 0.06

ii) For Expenses 0.02 0.02

Rs. Million

76

7(a) Computation of profits under Section 349 of the Companies Act, 1956 for calculating commission payable to Directors:

Profit as per Profit and Loss Account 4340.97Add: i) Non-Executive Directors' Commission 3.00

ii) Directors' Sitting Fees 1.01iii) Loss on Sale of Fixed Assets 0.62iv) Bad debts written off 0.08v) Provision for doubtful debts/ advances 3.67vi) Whole-time/ Managing Directors' remuneration 118.11

126.494467.46

Less: i) Profit on Sale of Fixed Assets 3.84ii) Profit on Sale of Investments (net) 1351.56

1355.40Net profit for calculating Directors' Commission 3112.06Maximum Commission payable to:Non-Executive Directors @ 1% on Rs.3112.06 Million 31.12Executive Directors @ 6% on Rs.3112.06 Million 186.72Commission paid to:Non-Executive Directors 3.00Executive Directors 80.00

(b) Details of Remuneration to Whole-time Director/ Managing Directors:Salaries 22.44 4.86Perquisites 4.31 1.71Contribution to Provident Fund, Superannuation Fund and other Funds 11.36 0.84

Commission 80.00 -

118.11 7.41

8. Earnings per Share (EPS) as per Accounting Standard - 20:Profit after tax 3471.52 2289.34Weighted average no. of equity shares (face value of Rs. 2 each)Basic 4,98,10,159 4,24,34,737

Diluted -after considering potential equity shares upon conversion of warrants (refer Note 2 to Schedule - 1) 4,99,45,752 7,84,67,603Earnings per shareBasic (Rs.) 69.70 53.95Diluted (Rs.) 69.51 29.18

9. Prior period expenses amounting to Rs Nil (Rs. Nil) and prior period income amounting to Rs. 5.06 Million (Rs.2.97 Million) representing excess provision written back and credited to Miscellaneous Receipts, have been accounted for under the relevant heads of account.

10. In the opinion of the Board and to the best of their knowledge and belief, the value on realisation of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet.

11. The Company is a lessor in respect of certain items of buildings, plant and machinery etc. The said fixed assets have been given on an operating lease for a period of 10 years. The lease is non-cancellable by the lessee and the lease rental in respect of the said lease is Rs. 22.05 Million per annum. The lease rentals recognised in the accounts for the year is Rs. 22.05 Million and no contingent rent has been recognised in this regard.

12. Disclosure of Sundry Creditors under Current Liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006”. There are no delays in payments to Micro and Small Enterprises as required to be disclosed under the Act.

Rs. Million

2007-08 2006-07

77

13. Particulars of Foreign currency exposures that are not hedged by derivative instruments or otherwise are as under: USD 17.47 Million equivalent to Rs.701.66 Million, JPY 5.84 Million equivalent to Rs.2.37 Million, EURO 14.91 Million equivalent to Rs.947.22 Million, GBP 0.04 Million equivalent to Rs.3.07 Million, CHF 0.01 Million equivalent to Rs.0.37 Million (Previous year USD 11.29 Million equivalent to Rs.483.08 Million, JPY 10 Million equivalent to Rs 3.60 Million).

14. Detailed particulars regarding opening and closing stock, purchases, sales and consumption:

I. Opening and Closing Stock of goods traded in and produced

Class of goods Opening Stock Closing Stock

Quantity Value Quantity ValueRs. Million Rs. Million

Cement ('000 Tonnes) 37.26 77.55 65.32 154.46(14.31) (26.26) (37.26) (77.55)

Refractory products ('000 Tonnes) 9.79 83.21 5.97 55.33(5.80) (50.12) (9.79) (83.21)

Sugar ('000 Tonnes) 72.45 1006.30 177.23 2718.92(57.43) (850.81) (72.45) (1006.30)

Multilayer Ceramic Chip Capacitors (Lakh Nos.) 7.09 0.35 7.11 0.54(5.04) (0.22) (7.09) (0.35)

Refractories etc. ('000 Tonnes) 3.10 28.57 3.47 34.11(3.66) (31.45) (3.10) (28.57)

Power-Banked (Million Units) - - 6.50 15.96(-) (-) (-) (-)

Industrial Alcohol ('000 KL) - - 2.07 45.65(-) (-) (-) (-)

Others 57.76 130.32(50.63) (57.76)

2007-08 2006-07

Quantity Value Quantity ValueRs. Million Rs. Million

II. Purchase of goods traded in:

Class of goodsSugar ('000 Tonnes) - - 0.60 12.20Others 37.62 0.05

37.62 12.25

III. Sales of goods traded in and produced (including Excise duty)*

Class of goods

Cement ('000 Tonnes) 3264.89 13047.28 2713.07 8624.47Refractory Products ('000 Tonnes) 30.56 326.97 26.92 288.94Sugar ('000 Tonnes) 141.15 2021.72 93.31 1642.07Multilayer Ceramic Chip Capacitors (Lakh Nos.) 16.18 1.64 40.25 2.00Refractories etc. ('000 Tonnes) 37.41 504.93 30.12 321.18Power (Million Units) 222.01** 682.70 43.19 149.07Industrial Alcohol ('000 KL) 7.49 136.74 - -Others 186.02 148.19

16908.00 11175.92

* includes Self Consumption Rs.155.50 Million (Rs.157.01 Million)** excludes captive consumption 31.85 Million Units, intra-unit Power transfers 65.28 Million Units.

78

IV. Consumption of Raw Materials / Components:

2007-08 2006-07

Quantity Value Quantity ValueRs. Million Rs. Million

Limestone ('000 Tonnes) 3576.57 496.25 3083.90 446.37Gypsum ('000 Tonnes) 166.49 160.61 124.44 50.90Raw Magnesite ('000 Tonnes) 55.71 97.86 70.43 118.29Sugar Cane ('000 Tonnes) 2445.36 3300.70 1009.25 1399.96Fly Ash ('000 Tonnes) 734.00 292.86 484.23 185.05Others 315.53 202.93

4663.81 2403.50

15. Detailed quantitative information about goods produced :

Licensed Installed Actual Capacity Capacity* Productionper annum per annum

Cement ('000 Tonnes) N.A. 3500.00 3293.74(N.A.) (3500.00) (2736.57)

Refractory Products ('000 Tonnes) N.A. 79.50 26.75(N.A.) (79.50) (30.95)

Multilayer Ceramic Chip (Lakh Nos.) N.A. 1200.00 16.20Capacitors (N.A.) (1200.00) (42.29)

Chip Resistors (Lakh Nos.) N.A. 1000.00 0.94(N.A.) (1000.00) (16.70)

Sugar ('000 Tonnes) N.A. 22.50** 245.94(N.A.) (22.50)** (107.73)

Refractories etc. # ('000 Tonnes) N.A. N.A. 37.80(N.A.) (N.A.) (29.56)

Power (Million Units) N.A. 95.52 $ 325.70 (N.A.) (70.52) $ (49.96)

Industrial Alcohol ('000 KL) 80.00## 80.00## 9.56(-) (-) (-)

* As certified by the Management and accepted by the Auditors.** Sugarcane crushed in Tonnes per day.# Production on job-work basis.## Capacity in KL per day.$ MW per hour

(Rs. Million)

2007-08 2006-07

16. (a) Value of Imports calculated on C.I.F. basis:

Raw Materials and Components 170.56 217.79Stores and Spare Parts 1513.46 787.90Capital Goods 350.63 584.60

(b) Expenditure in Foreign Currency:Professional Fees, Consultation Fee and Interest 48.31 58.74Others 15.27 6.27

17. Earnings in Foreign Exchange:

Export of Goods 102.70 74.62

79

18. Details regarding imported and indigenous materials consumed during the year:

IMPORTED INDIGENOUS

Value Percentage Value Percentage Value of totalto total to total consumption

Rs. Million consumption Rs. Million consumption Rs. Million

Raw Materials 127.79 2.74 4536.02 97.26 4663.81(116.31) (4.84) (2287.19) (95.16) (2403.50)

Stores, Spare Parts and Components 58.42 8.66 615.97 91.34 674.39(40.51) (11.29) (318.46) (88.71) (358.97)

19. As per Accounting Standard (AS) - 15 “ Employee Benefits”, the disclosures of employee benefits as defined in the Accounting standard are given below:

(a) Defined Contribution Plans :-The Company has recognised an expense of Rs. 45.95 Million towards the defined contribution plan.

(b) Defined Benefit Plans - as per actuarial valuation on 31st March, 2008 :-

Rs. Million

Particulars Gratuity Leave Encashment

Funded Non-Funded

I Expenses recognised in the Profit and Loss Account for the year ended 31st March , 20081. Current Service Cost 13.32 5.072. Interest Cost 9.43 1.963. Expected return on plan assets (10.05) -4. Net Actuarial (Gain)/ Loss 30.84 (3.89)5.. Total Expense 43.54 3.14

II Net Asset/(Liability) recognised in the Balance Sheet as at 31st March, 20081. Present value of obligation as at year-end 149.97 27.582. Fair value of plan assets as at year-end 115.36 -3. Funded status {( Surplus/(Deficit)} (34.61) (27.58)4. Net Asset/(Liability) as at 31st, March, 2008 (34.61) (27.58)

III Change in obligation during the year ended 31st March, 20081. Present value of Obligation at the beginning of the year 117.88 24.442. Current Service Cost 13.32 5.073. Interest Cost 9.43 1.964. Actuarial (Gain)/Loss (30.84) (3.89)5. Benefits Paid (21.49) -6. Present Value of Obligation as at year- end 149.97 27.58

IV Change in Assets during the year ended 31st March, 20081 Plan assets at the beginning of the year 103.70 -2. Expected return on plan assets 10.05 -3. Employer's Contribution 23.11 -4. Benefits paid (21.49) -5. Plan assets at the end of the year 115.36 -

V The Major categories of plan assets as percentage of total planQualifying Insurance Policy 100% -

VI Actuarial Assumptions :1. Discount Rate 8% 8%2. Expected rate of return on plan assets 9.69% -3. Mortality Table LIC (1994-96) LIC (1994-96)

duly modified duly modified4. Salary Escalation 7% 7%

80

20. Segment reporting, as required by Accounting Standard-17, is as below:Rs. Million

Segment Cement Sugar Power Others Total

Revenue

Gross Revenue 13152.34 2720.73 1295.67 2444.34 19613.08(8738.10) (1837.15) (192.80) (2197.59) (12965.64)

Less: Inter/ Intra Segment Revenue 448.71 610.83 1059.54(87.76) (-) (87.76)

Less: Excise Duty 1825.60 196.31 - 79.41 2101.32(1149.04) (105.71) (-) (56.44) (1311.19)

Total Revenue 11326.74 2075.71 684.84 2364.93 16452.22(7589.06) (1643.68) (192.80) (2000.07) (11425.61)

Profit/(Loss) 4573.47 -366.29 246.29 215.06 4668.53(2338.46) (95.13) (84.29) (-22.00) (2495.88)

Less: Interest 1129.14(539.64)

Add: Other unallocable income 801.58net of unallocable expenditure (1007.61)

4340.97(2963.85)

Assets 9683.47 7398.64 2925.69 3152.93 23160.73(8334.52) (5553.41) (2172.72) (2304.55) (18365.20)

Liabilities 2982.98 2686.32 14.27 1365.17 7048.74(2114.08) (2304.49) (0.19) (306.42) (4725.18)

Depreciation 450.64 250.79 160.34 69.04 930.81(450.55) (76.59) (46.00) (52.17) (625.31)

Capital Expenditure 425.23 319.01 854.96 392.32 1991.52(1833.69) (2985.88) (1780.18) (23.37) (6623.12)

Note: Revenue in respect of captive power consumption produced from co-generation plant has been arrived at based on the rates at which the same would have been purchased from State Electricity Board.

21. Preoperative expenditure capitalised as a part of fixed assets and carried forward is as under:Rs. Million

2007-08 2006-07

Carried forward as part of Capital Work in Progress 32.68 -Expenditure incurred during the year:

Staff Costs 52.96 55.17Administrative Expenses 36.74 51.53Freight and Cartage 5.19 2.77Interest and Commitment Charges 25.60 81.68Miscellaneous Expenses 41.11 132.86Stores Consumption 9.69 51.85

Sub- Total 171.29 375.86

Income earned during the year:Exchange Fluctuation 17.21 -Interest and Other income 1.39 -

Sub-Total 18.60 -

Grand Total 185.37 375.86

Capitalised as part of:Plant and Machinery 53.01 313.01Buildings 4.61 30.17

Total 57.62 343.18

Carried forward as part of Capital Work in Progress 127.75 32.68

81

22. Related Party Disclosure, as required by Accounting Standard-18 is as below:

A. Relationships:

(i) Subsidiaries of the Company:

Kanika Investment Limited, Ishita Properties Limited, D.I. Properties Limited, Geetee Estates Limited, Avnija Properties Limited, Shri Rangam Properties Limited, Hemshila Properties Limited, Himshikhar Investment Limited, Dalmia Minerals & Properties Limited, Shri Radha Krishna Broker & Holdings Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers & Holdings Limited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals & Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines & Minerals Limited, Sri Trivikrama Mines and Properties Limited, Sri Dhandauthapani Mines and Minerals Limited, Sri Madhusudana Mines and Properties Limited, Eswar Cements Private Limited, Dalmia Sugar Ventures Limited (w.e.f.13.08.07), Dalmia Cement (Meghalaya) Limited (upto 30.06.07) and Dalmia Cement Ventures Limited (w.e.f.10.12.07 and up to 30.03.08)

(ii) Sub- Subsidiary of the Company :Dalmia Cement Ventures Limited (w.e.f. 31.03.08)

(iii) Associate of the Company :OCL India Limited (w.e.f. 01.07.07)

(iv) Key Management Personnel of the Company :

Shri J.H.Dalmia - Vice-Chairman, Shri Y.H.Dalmia - Vice-Chairman , Shri Gautam Dalmia - Joint Managing Director , Shri Puneet Dalmia - Managing Director, Shri N. Gopalaswamy - Whole time Director (up to 31.07.07) and Shri T. Venkatesan - Whole time Director (w.e.f . 01.11.07).

(v) Promoters of the Company:Shri J.H. Dalmia and Shri Y.H. Dalmia

(vi) Relatives of Key Management Personnel / Promoters:

Shri V.H. Dalmia, Shri J.H.Dalmia (HUF), Smt. Kavita Dalmia, Shri Y.H.Dalmia (HUF), Smt. Bela Dalmia, Shri Gautam Dalmia, Shri Gautam Dalmia (HUF), Smt. Anupama Dalmia, Shri Puneet Dalmia, Smt. Avantika Dalmia, Kumari Shrutipriya Dalmia, Kumari Sukeshi Dalmia, Kumari Vaidehi Dalmia, Kumari Sumana Dalmia, Kumari Avanee Dalmia, Mst. Priyang Dalmia, Shri M.H.Dalmia, Smt. Abha Dalmia, Shri R.H.Dalmia, Smt. Visalam Gopalaswamy (up to 30.06.07) and Smt. Kala Venkatesan (w.e.f. 01.11.07).

(vii) Enterprises controlled by the Promoters/ Key Management Personnel of the Company :

Rama Investment Company Private Limited, Puneet Trading & Investment Company Private Limited, Kavita Trading & Investment Company Private Limited, Sita Investment Company Limited, Mayuka Investment Limited, Ankita Pratisthan Limited, Himgiri Commercial Limited, Valley Agro Industries Limited, Shri Nataraj Ceramic and Chemical Industries Limited, Shri Chamundeswari Minerals Limited, Shree Nirman Limited, Keshav Power Private Limited, Avanee and Ashni Securities Private Limited, OCL Iron & Steel Limited, Landmark Property Development Company Limited, ZipAhead.Com Limited, Alirox Abrasives Limited, Sukeshi Trust, Vaidehi Trust, Sumana Trust, Shrutipriya Dalmia Trust, Priyang Trust, Avanee Trust and Raghu Hari Dalmia Parivar Trust.

Note: The persons mentioned in (v), (vi) and (vii) above constitute a 'Group' pursuant to Regulation 3(1)(e)(i) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

B. The following transactions were carried out with the related parties in the ordinary course of business:

Rs. Million

Nature of Subsidiary Sub- Associate Key Relatives of Key TotalTransaction Companies Subsidiary Management Key Management

Personnel/ Management Personnel/ Promoters Personnel/ Promoter

Promoters controlled enterprises

Sale of goods 9.92 19.21 29.56 58.69and services (0.27) (-) (39.13) (39.40)

Purchase of goods 475.89 475.89and services (419.30) (419.30)

82

Rent payment 0.58 1.04 1.62(0.58) (-) (0.58)

Rent Receipt (including 22.08 22.08Lease Rent) (22.06) (22.06)

Interest on Fixed - -Deposits (0.03) (0.03)

Receipt of Security - -deposit (107.50) (107.50)

Refund of Security 66.60 66.60deposit (66.60) (66.60)

Loans given 140.36 140.36(472.31) (472.31)

Loans received back 143.93 143.93(0.90) (0.90)

Loans taken 1694.00 1694.00(-) (-)

Loans refunded 1694.00 1694.00(-) (-)

Purchase of 32.35 32.35Fixed Assets (-) (-)

Purchase of 3348.54 3348.54Investments (34.65) (34.65)

Sale of Investments 0.54 0.54(46.55) (46.55)

Interest received 5.65 5.65(-) (-)

Interest paid 42.71 42.71(-) (-)

Salary and Perquisites 121.11 0.34 121.45(7.41) (13.59) (21.00)

Outstanding Balances as at year- end:

Security deposit 466.80 466.80received (533.40) (533.40)

Loans receivable 523.97 523.97(527.51) (527.51)

Amounts receivable 4.37 1.90 0.07 6.34(-) (-) (0.02) (0.02)

Amounts payable 9.51 9.51(-) (-)

23. (a) Previous year figures have been regrouped/ rearranged wherever considered necessary.(b) Figures less than Rs. Five thousand which are required to be shown separately have been shown at actuals

in double brackets.(c) Figures in brackets pertain to previous year.

Rs. Million

Nature of Subsidiary Sub- Associate Key Relatives of Key TotalTransaction Companies Subsidiary Management Key Management

Personnel/ Management Personnel/ Promoters Personnel/ Promoter

Promoters controlled enterprises

83

24. Information pursuant to Part IV of Schedule VI to the Companies Act 1956:

As per our report of even date attachedFor S.S. Kothari Mehta & Co., Chartered Accountants

Balance Sheet Abstract and Company’s General Business Profile

I. Registration Details:

Registration No. State Code

Balance Sheet Date

II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Rights Issue

Bonus Issue Private Placement

III. Position of mobilisation and deployment of funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

Sources of Funds:

Paid up Capital Reserves and Surplus

Secured Loans Unsecured Loans

Application of Funds:

Net Fixed Assets Investments

Net Current Assets

(considering deferred tax liability) Miscellaneous Expenditure

Accumulated Losses

IV. Performance of the Company (Amount in Rs. Thousands)

Turnover Total Expenditure

Profit before tax Profit after tax

Earning per Share Dividend Rate

V. Generic names of three principal products/services of Company (as per monetary terms)

Product

Item Code (ITC Code)

Product

Item Code (ITC Code)

Gautam Dalmia(CA J. Krishnan) K.V. Mohan Somnath Patil Puneet DalmiaPARTNER COMPANY SR. EXECUTIVE DIRECTOR DIRECTORS

SECRETARY (FINANCE)

Place : New DelhindDated : this the 22 day of May, 2008

60 0 4 0 1 8

NN

N I

I I

L

L

N I L

N I L

L

9 0 5 7 6 0

1 . 0 33 . 2 0 0 8

2 8 9 3 4 9 7 0 2 8 9 3 4 9 7 0

1 6 1 6 9 0

1 0 5 0 0 7 0 0

1 1 3 0 9 7 4 0

5 3 3 2 6 6 0

1 4 8 0 6 6 8 0

4 3 4 0 9 7 0

6 9 . 7 0

1 0 4 6 5 7 1 0

3 4 7 1 5 2 0

2 0 0 %

1 18 82 6 60 2 23 730 0

2 9 0 6 2 9 0

C E M E N T R E F R A C T O R Y

2 5 2 3 2 9 6 9 0 2 2 0

S U G A R

1 7 0 1 1 1

84

Cash Flow Statement for the year ended 31st March, 2008Rs. Million

2007-08 2006-07

Cash Flow from operating activities :

Net profit before tax 4,340.97 2,963.85

Adjustments for :

Depreciation (net) 872.85 554.42

Dividend income (22.38) (26.81)

Interest (net) 1,100.08 532.94

Deferred Revenue Exp. Written off - 6.74

Profit on sale of investments (1,351.56) (1,329.31)

Profit/loss on sale of fixed assets 4.65 6.35

Operating profit before working capital changes 4,944.61 2,708.18

Adjustments for working capital changes :

Inventories (2,940.61) (58.56)

Trade and other receivables (1,046.47) (1,136.38)

Trade payables 995.33 2,426.30

Cash generated from operations 1,952.86 3,939.54

Exceptional Item - Transfer of Loss on amalgamation of Subsidiary - (1.90)

Direct taxes paid (618.81) (395.63)

Net cash from operating activities 1,334.05 3,542.01

Cash Flow from investing activities :

Purchase of fixed assets (5,828.23) (6,133.14)

Sale of fixed assets 75.95 18.01

Purchase of investment (24,643.18) (11,185.95)

Investment in Subsidiaries (net) (3,504.39) (34.65)

Sale of investment 27,146.47 10,517.13

Dividend received 22.38 26.81

Interest received 29.06 6.70

Net cash used in investing activities (6,701.94) (6,785.09)

Cash Flow from financing activities :

Proceeds from secured loans 1,194.44 2,933.15

Proceeds from unsecured loans 4,498.69 397.49

Fixed deposits from public (5.63) (16.56)

Proceeds from issue of shares 905.76 1173.21

Interest paid (1,106.20) (610.87)

Dividend paid (244.84) (161.98)

Corporate dividend tax (41.61) (22.71)

85

Net cash from financing activities 5,200.61 3,691.73

Net change in cash & cash equivalents (167.28) 448.65

Cash & cash equivalents (opening balance) 1,037.65 589.00

Cash & cash equivalents (closing balance) 870.37 1,037.65

Change in cash & cash equivalents (167.28) 448.65

As per our report of even date attachedFor S.S. Kothari Mehta & Co.,Chartered Accountants

Gautam Dalmia(CA J. Krishnan) K.V. Mohan Somnath Patil Puneet DalmiaPARTNER COMPANY SR. EXECUTIVE DIRECTOR DIRECTORS

SECRETARY (FINANCE)

Place : New DelhindDated : this the 22 day of May, 2008

2007-08 2006-07

Rs. Million

86

Auditor's Report to the Board of Directors of Dalmia Cement (Bharat) Limited on the Consolidated Financial Statements

We have examined the attached consolidated balance sheet of Dalmia Cement (Bharat) Limited (the Company) and its subsidiaries (collectively referred to as “the Group”) as at 31st March, 2008, and also the consolidated profit and loss account and the consolidated cash flow statement for the year ended on that date annexed thereto. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets of Rs.2548.31 million as at 31st March, 2008 and total revenues of Rs.76.60 million for the year ended on that date. We did not audit the financial statements of the associate in which the share of profit of the Group is Rs.183.98 million. These financial statements have been audited by other auditors whose report(s) have been furnished to us, and our opinion is based solely on the report of the other auditors.

We report that the consolidated financial statements have been prepared by the Company's management in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements and Accounting Standard (AS) 23, Accounting for Investments in Associates in Consolidated Financial Statements issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of Dalmia Cement (Bharat) Limited, its subsidiaries and associate included in the consolidated financial statements.

On the basis of the information and explanations given to us and on the consideration of the separate audit reports on individual audited financial statements of Dalmia Cement (Bharat) Limited and its aforesaid subsidiaries and associate, in our opinion, the consolidated financial statements together with the notes thereon give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the consolidated balance sheet, of the consolidated state of affairs of the Group as at 31st March, 2008;

b) In the case of the consolidated profit and loss account, of the consolidated results of operations of the Group for the year ended on that date; and

c) In the case of the consolidated cash flow statement, of the consolidated cash flows of the Group for the year ended on that date.

For S.S.Kothari Mehta & Co. Chartered Accountants

(CA J. Krishnan) Partner

Membership No.84551

Place : New Delhi Dated: 22.05.2008

87

Consolidated Balance Sheet of Dalmia Cement (Bharat) Limited as at 31st March, 2008

Schedule As at 31.3.2008 31.3.2007

I. SOURCES OF FUNDS1. SHAREHOLDERS' FUNDS

a) Share Capital 1 161.69 85.46b) Reserves and Surplus 2 11552.81 7468.96

11714.50 7554.42

2. MINORITY INTEREST 44.99 -

3. LOAN FUNDSa) Secured Loans 3 10500.70 9306.26b) Unsecured Loans 4 5332.66 839.60

15833.36 10145.86

4. DEFERRED TAX 5 1630.18 1292.98

29223.03 18993.26

II. APPLICATION OF FUNDS 1. FIXED ASSETS

a) Gross Block 19377.47 17481.68b) Less: Depreciation 5583.42 4700.02

c) Net Block 6 13794.05 12781.66d) Capital work-in-progress (including capital advances) 5107.37 1165.63

18901.42 13947.29

2. INVESTMENTS 7 4811.67 3728.64

3. CURRENT ASSETS, LOANS AND ADVANCESa) Inventories 8 4915.99 1975.38

b) Sundry Debtors 9 1050.59 820.81c) Cash and Bank balances 10 2373.08 1119.00d) Loans and Advances 11 3835.86 2419.63

12175.52 6334.82

Less: Current Liabilities and Provisionsa) Current Liabilities 12 5495.07 4453.72b) Provisions 13 1170.98 564.06

6666.05 5017.78

Net Current Assets 5509.47 1317.04

4. MISCELLANEOUS EXPENDITURE 14 0.47 0.29

Significant Accounting Policies and Notes to Accounts 19

As per our report of even date attachedFor S.S. Kothari Mehta & Co.,Chartered Accountants

Gautam Dalmia(CA J. Krishnan) K.V. Mohan Somnath Patil Puneet DalmiaPARTNER COMPANY SR. EXECUTIVE DIRECTOR DIRECTORS

SECRETARY (FINANCE)Place : New Delhi

ndDated : this the 22 day of May, 2008

As at

29223.03 18993.26

Rs. Million

88

Consolidated Profit and Loss Account of Dalmia Cement (Bharat) Limited for the year ended 31st March, 2008

Schedule 2007-08 2006-07 I N C O M ESales (Gross) 16908.00 11175.92Less: Excise Duty 2101.32 1311.19Net Sales 14806.68 9864.73Other Income 15 1673.81 1567.64

16480.49 11432.37E X P E N D I T U R E(Increase)/Decrease in Stocks 16 (1895.12) (178.78)Raw Materials consumed 4663.81 2403.50Purchases 37.62 12.25Salaries, Wages and Benefits to Employees 17 849.01 486.50Other Expenses 18 7567.90 5192.27Depreciation 922.06 621.73Less: Transferred from Revaluation Reserve 57.96 70.89

864.10 550.8412087.32 8466.58

Profit before Tax 4393.17 2965.79Provision for Taxation :

Current Tax 533.51 331.25MAT Credit entitlement - (229.90)Deferred Tax 337.20 563.00Fringe Benefits Tax 18.85 11.31

889.56 675.66Profit after Tax before Share of Profit in Associate 3503.61 2290.13Add : Share of Profit In Associate 183.98 -Profit after Tax 3687.59 2290.13Add: Excess Provision written back - 0.13Add: Surplus brought forward from previous year 3495.71 1766.86Add: Transfer from Reserve for Bad & Doubtful Debts - 17.47Add: Transfer from Debenture Redemption Reserve - 7.50Less : Balance of Profit & Loss Account adjusted on

amalgamation of erstwhile Subsidiary Companies 3.67 -Surplus available for appropriation 7179.63 4082.09

APPROPRIATIONSGeneral Reserve 350.00 300.00Reserve Fund 0.97 0.20Debenture Redemption Reserve 107.50 138.75Dividend:

Interim Dividend 202.11 85.46Proposed Dividend 121.27 42.73Dividend Distribution tax thereon 54.96 19.24

378.34 147.43Balance carried to Balance Sheet 6342.82 3495.71

7179.63 4082.09Earnings per Share (Face Value of Rs. 2/- per share) Basic Rs. 74.03 Rs. 53.97Diluted Rs 73.83 Rs. 29.19

Significant Accounting Policies and Notes to Accounts 19As per our report of even date attachedFor S.S. Kothari Mehta & Co.,Chartered Accountants

Gautam Dalmia(CA J. Krishnan) K.V. Mohan Somnath Patil Puneet DalmiaPARTNER COMPANY SR. EXECUTIVE DIRECTOR DIRECTORS

SECRETARY (FINANCE)Place : New Delhi

ndDated : this the 22 day of May, 2008

Rs. Million

89

Schedules to the Consolidated AccountsSchedule Nos. 1 to 19 forming part of the Balance Sheet as at 31st March, 2008 and the Profit and Loss Account for the year ended on that date.

As at31.3.2008 31.3.2007

SCHEDULE 1 - SHARE CAPITALAuthorised11,46,31,160 (7,65,16,210 ) Ordinary Shares of Rs. 2 each 229.26 153.038,53,68,840 (12,34,83,790) Unclassified Shares of Rs. 2 each 170.74 246.97

400.00 400.00

Issued and Subscribed8,08,43,643 (4,27,28,693) Ordinary Shares of Rs. 2 each fully paid up 161.69 85.46

Note:1. Of the above Shares:

(i) 66,51,040 Shares were allotted as fully paid-up pursuant to arrangements/scheme of conversion, without payments being received in cash; and

(ii) 2,76,31,245 Shares were allotted as fully paid-up by way of Bonus Shares by capitalisation of Reserves.

2. During the year 2001-02, the Company had issued 76,51,621 Non-Convertible Debentures of Rs.10/-each along with detachable tradeable warrants. The holders of these warrants had the option to subscribe to Ordinary Shares of the Company (5 Ordinary Shares of Rs.2 each) at Rs. 23.764 per Share upon the call option being exercised by the Board of Directors or on 11-9-2008, whichever is earlier in terms of the Letter of Offer dated 26th June, 2001. During the year, the Board of Directors have exercised the call option in respect of such warrants and called upon all the existing warrant holders to submit their applications for conversion of the warrants held by them into Ordinary Shares of the Company. Warrant holders holding 76,22,990 warrants exercised the options and consequently the Company allotted 3,81,14,950 Ordinary Shares of Rs. 2/- each fully paid up. The Board has decided to give another opportunity to the warrant holders holding the balance 28,631 warrants to convert their warrants into shares.

SCHEDULE 2 - RESERVES AND SURPLUS

Rs. Million

As at Additions Deductions As at31.3.2007 31.3.2008

Capital Reserve 3.50 14.64 - 18.14*

Revaluation Reserve 785.33 - 62.37 722.96

Realised Revaluation Reserve 0.58 0.03 - 0.61

Share Premium Account 1165.16 829.53 - 1994.69

General Reserve 1639.27 350.00 - 1989.27

Reserve Fund 5.66 0.97 3.56 3.07

Debenture Redemption Reserve 373.75 107.50 - 481.25

Surplus in Profit and Loss Account 3495.71 6342.82

7468.96 11552.81

* Out of above, Rs.1.50 Million is secured by a second charge on all fixed assets of the Company's Sugar unit.

As at

Rs. Million

90

Rs. Million

SCHEDULE 3 - SECURED LOANS

A. FROM BANKS

(i) Term Loan secured by whole of the movable properties (except book debts) of Wind Farm and Sugar units

(ii) Rupee Loan secured by first joint mortgage of all immovable properties and first charge by way of hypothecation of all movables (except book debts) of Wind Farm unit subject to prior charges created in favour of Bankers. The above charges rank pari-passu on inter-se basis with other chargeholders

(iii) Rupee Loan secured by first joint mortgage of all immovable properties and first charge by way of hypothecation of all movables (except book debts) of Sugar unit subject to prior charges created in favour of Bankers. The above charges rank pari-passu on inter-se basis with other chargeholders

(iv) Term Loan secured by hypothecation of all the movable fixed assets of Cement and Magnesite units on first pari passu basis with other term lending banks/ institution

(v) Term Loan secured by hypothecation of plant and machinery and other movable tangible assets installed at the Cement and Magnesite units on first pari-passu basis with other chargeholder

(vi) Term Loan secured by hypothecation of all the fixed assets of Cement and Magnesite units on first pari passu basis with other term lending banks/ institutions

(vii) Term Loan secured by hypothecation of all the fixed assets of Cement and Magnesite units on first pari passu basis with other term lending banks/ institutions

(viii) Rupee Loan secured by first joint mortgage of all immovable properties and first charge by way of hypothecation of all movables (except book debts) of Sugar unit subject to prior charges created in favour of Bankers. The above charges rank pari-passu on inter-se basis with other chargeholder

(ix) Term Loan secured by first pari passu charge on land and building and hypothecation of plant and machinery of sugar and co-generation units at Jawaharpur and Nigohi, distillery at Jawaharpur and co-generation unit at Ramgarh

(x) Term Loan secured by first pari passu charge on machinery, land and building of sugar and co-generation units at Jawaharpur and Nigohi, distillery at Jawaharpur and co-generation unit at Ramgarh with other bank

(xi) Loan against hypothecation of vehicle

(xii) Term Loan secured by residual charge on the movable and immovable fixed assets of the Sugar unit

(xiii) Cash Credit secured by hypothecation of inventories and other current assets in favour of the participating Banks ranking pari-passu on inter-se basis

Carried over

- 66.67

- 100.00

66.60 133.30

750.00 750.00

750.00 750.00

243.00 243.00

500.00 500.00

- 7.18

2000.00 2000.00

700.00 700.00

0.63 0.88

308.10 -

1514.55 220.74

6832.88 5471.77

As at As at31.3.2008 31.3.2007

91

As at As at31.3.2008 31.3.2007

Rs. Million

Brought forward

B. PRIVATELY PLACED DEBENTURES

Non - Convertible Debentures

Secured by a first charge on the movable properties of Cement and Magnesite Units and Jamnagar Property. Redeemable in three yearly equal instalments after the expiry of fourth, fifth and sixth year from the date of allotment

Non - Convertible Debentures

Secured by a first charge on the movable properties of Cement and Magnesite Units and Jamnagar Property. Redeemable in three yearly equal instalments after the expiry of fifth, sixth and seventh year from the date of allotment

Non - Convertible Debentures

Secured by a first charge on whole of the movable properties of Cement and Magnesite Units (except book debts) and Jamnagar Property. Redeemable in three yearly instalments in the ratio of 30:30:40 after the expiry of eighth, ninth and tenth year from the deemed date of allotment

Non - Convertible Debentures

Secured by a first pari-passu charge on all the movable and immovable properties of Cement and Magnesite Units (except stock and book debts) and Jamnagar Property. Redeemable in three yearly instalments in the ratio of 30:30:40 after the expiry of eighth, ninth and tenth year from the deemed date of allotment

Non - Convertible Debentures

Secured by a first pari-passu charge on all the movable and immovable properties of Cement and Magnesite Units (except stock and book debts) and Jamnagar Property. Redeemable in three yearly instalments in the ratio of 30:30:40 after the expiry of eighth, ninth and tenth year from the deemed date of allotment

Non - Convertible Debenture

Secured by mortgage and charge on first pari-passu basis on all the immovable and movable assets excluding current assets both present and future of the Company's sugar Units at Jawaharpur and Nigohi. Redeemable in three equal yearly instalments after the expiry of eighth, ninth and tenth year from the date of first disbursement

C. FROM GOVERNMENT OF INDIA

Secured by exclusive second charge on movable and immovable property of the sugar unit at Ramgarh

6832.88 5471.77

333.33 500.00

400.00 400.00

800.00 800.00

500.00 500.00

500.00 500.00

1000.00 1000.00

3533.33 3700.00

134.49 134.49

10500.70 9306.26

92

As at As at31.3.2008 31.3.2007

Rs. Million

SCHEDULE 4 - UNSECURED LOANS

A. Fixed Deposits 31.22 35.94Add: Interest accrued and due on above 2.08 2.99

33.30 38.93

B. Other LoansInterest-free Sales Tax Loan 793.55 793.55From Housing Development Finance Corporation Limited (against bank guarantee) 5.81 7.12From Banks 4500.00 -

5299.36 800.67

5332.66 839.60

SCHEDULE 5 - DEFERRED TAX

Deferred Tax assets/liabilities are attributable to the following items:-LiabilitiesDepreciation 1663.41 1323.08Others - 7.11

1663.41 1330.19

AssetsVoluntary retirement expenses 13.84 17.04Expenses allowable for tax purposes when paid 19.39 20.17

33.23 37.21

Net 1630.18 1292.98

SCHEDULE 6 - FIXED ASSETS (Rs. Million)

GROSS BLOCK DEPRECIATION NET BLOCK

Description of Assets 31.3.2007 ions 31.3.2008 year @ 31.3.2008 31.3.2008 31.3.2007

Owned Assets:

Goodwill 23.82 6.00 - 29.82 - - 29.82 23.82Land 929.07 129.49 1.89 1056.67 - - 1056.67 929.07Land (Leasehold) 5.75 - - 5.75 0.06 0.80 4.95 5.01Buildings 1666.30 202.66 15.77 1853.19 73.03 558.79 1294.40 1172.92Plant and Machinery 14024.20 1640.45 99.52 15565.13 794.35 4776.77 10788.36 10017.32Railway Sidings 27.06 9.76 - 36.82 1.35 12.06 24.76 16.35Vehicles 45.54 9.71 4.71 50.54 6.70 25.59 24.95 22.86Furniture and Fixtures 47.32 18.59 0.78 65.13 7.90 34.44 30.69 20.55Other Assets 81.74 13.47 11.67 83.54 8.07 54.84 28.70 23.59

Owned Assets Leased out:

Buildings 27.68 -- -- 27.68 2.35 6.54 21.14 23.49Plant and Machinery 603.20 -- -- 603.20 37.07 113.59 489.61 526.68

17481.68 2030.13 134.34 19377.47 930.88 5583.42 13794.05 12781.66

Previous year 10620.74 6959.06 98.12 17481.68 625.40 4700.02 12781.66

Notes:1. Land includes certain lands under acquisition, the proceedings for which are presently stayed by the Order of the appropriate High Courts.2. There are no registered title deeds for the Company's flats/accommodation in multistoreyed buildings in National Capital Territory of Delhi.3. Revaluation of the fixed assets was done on the basis of a valuation certificate issued by a Chartered Engineer.4. @ includes depreciation charged to other heads Rs. 8.82 Million (Rs.3.67 Million).

As at Additions Deduct- As at For the Upto As at As at

93

SCHEDULE 7 - INVESTMENTS

Long Term

Government and Trust Securities (unquoted) 0.02 0.02 0.04

Unit Trust of India - 6.75% Tax Free Bonds ( quoted) 0.98 1.59 1.63

Units of Mutual Funds - Debt based schemes ( quoted) 44.91 77.72 566.68

Units of Mutual Funds - Equity based schemes ( quoted) 0.59 0.59 3.53

Units of Mutual Funds - Balanced schemes ( quoted) 32.74 41.92 22.73

Units of Realty / Infrastructure Fund (Fully Paid up unquoted) 110.00 110.00 63.98

Equity Shares of Joint Stock Companies

Fully paid-upIn Associates

OCL India Limited* ( quoted) 24.71 2184.48 -In Others

Quoted 54.75 1820.99 2956.53

unquoted 0.98 73.75 44.76

Partly paid-up ( quoted) - - 67.47

Preference Shares of Joint Stock Companies

Fully paid up ( unquoted) 18.74 500.00 -

Partly paid up Debentures of Joint Stock Companies (unquoted) - - 0.68

Fully paid-up Shares of Co-operative Societies (unquoted) 0.01 0.01 0.01

Property Rights in Holiday Resorts ( unquoted) 0.60 0.60 0.60

4811.67 3728.64

Book Value Market Value

Quoted 3943.31 3464.13

Unquoted 684.38 -

* The carrying amount of Investment includes goodwill of Rs.1195.49 Million arising on acquistion.

Face Value As at As at31.3.2008 31.3.2007

Rs. Million

As at As at31.3.2008 31.3.2007

SCHEDULE 8 - INVENTORIES

(As certified by the Management)

Stores, Spares etc.On hand 715.88 371.05In transit 485.76 16.62

1201.64 387.67

Loose Tools 0.77 0.61

Raw MaterialsOn hand 290.67 257.34In transit 70.18 2.48

360.85 259.82

Material in Process 197.44 73.54

Stock-in-Trade 3155.29 1253.74

4915.99 1975.38

Rs. Million

94

As at As at31.3.2008 31.3.2007

SCHEDULE 9 - SUNDRY DEBTORS

a) Debts over six monthsConsidered goodSecured 26.96 7.59Unsecured 20.26 28.27Considered doubtful 15.13 11.46Less: Set off from Provision for Bad and Doubtful Debts 15.13 11.46

- -

47.22 35.86

b) OthersConsidered goodSecured 645.71 467.05Unsecured 357.66 317.90

1003.37 784.95

1050.59 820.81

SCHEDULE 10 - CASH AND BANK BALANCESCash on hand 14.27 13.06Stamps in hand 0.04 -Cheques on hand 14.85 0.77Remittances-in-transit - 2.12Balances with Scheduled Banks

Current Accounts 1242.66 967.41Fixed Deposit Accounts 1097.80 133.97

2340.46 1101.38

Balances with Other Banks in Current Accounts * 3.46 1.67

2373.08 1119.00

*Balances with

Avadh Gramin Bank 0.21 0.03Zila Sahakari Bank Limited 0.81 1.13Lucknow Kshetriya Gramin Bank 1.74 0.51Baroda Paschimi Uttar Pradesh Gramin Bank 0.70 -

SCHEDULE 11 - LOANS AND ADVANCES

LoansSecured - Considered good

Employees * 5.80 11.25Unsecured - Considered good

Employees * 5.98 0.06Others 17.29 20.22

23.27 20.28

Advances recoverable in cash or in kind or for value to be received (Unsecured)

Considered good * 1314.83 882.94Considered doubtful 1.92 1.92Less: Set off from Provision for Bad and Doubtful Debts 1.92 1.92

- -1314.83 882.94

Rs. Million

95

Income-tax paid 1048.64 433.82MAT Credit entitlement 229.90 229.90Deposits and Balances with Government Departments and Other Authorities(Unsecured Considered good) 1213.42 841.44

3835.86 2419.63

* Includes:

(a) Due from Officers of the Company 2.16 1.64(b) Maximum amount due from Officers at any time during the year 2.23 1.97

SCHEDULE 12 - CURRENT LIABILITIES

Sundry Creditors

Micro, Small and Medium Enterprises 11.96 0.25 Others 4677.86 4024.76

4689.82 4025.01

Advances from Customers 85.81 81.00Directors' Commission payable 83.00 1.00Unclaimed Dividend * 17.11 14.26Matured Fixed Deposits and interest thereon * 0.93 0.78Other Liabilities 473.21 220.90Interest accrued but not due on Loans 145.19 110.77

5495.07 4453.72

* There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund.

SCHEDULE 13 - PROVISIONS

For Taxation 977.93 451.13Proposed Dividend 121.27 42.73Pension and other Staff benefits 41.50 41.22Impairment of Assets 9.62 9.62Others 20.66 19.36

1170.98 564.06

SCHEDULE 14 - MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)

Deferred Revenue ExpenditurePayments under Voluntary Retirement SchemeAs per Last Balance Sheet - 6.74Less: Amount charged to the Profit and Loss account - 6.74

- -

Preliminary and Pre-operative expenses 0.47 0.29

0.47 0.29

As at As at31.3.2008 31.3.2007

Rs. Million

96

SCHEDULE 15 - OTHER INCOME

Income from Travel Agency business{Tax deducted at source Rs.1.22 Million (Rs. 1.16 Million)} 14.81 13.95

Income from Other InvestmentsDividend from Long Term Investment 22.58 27.73

Interest from Banks and Others (Gross){Tax deducted at source Rs.10.63 Million (Rs. 0.79 Million)} 57.08 8.24

Profit on Sale of Fixed Assets 3.84 6.00

Profit on Sale of Investments ( Long Term ) 1959.87 1476.63Less: Loss on sale of Investments (Long Term) 608.27 143.02

1351.60 1333.61

Miscellaneous Receipts 223.90 178.11

1673.81 1567.64

SCHEDULE 16 - (INCREASE) / DECREASE IN STOCKS

Opening Stock:Finished 1253.74 1009.49Process 73.54 100.69

1327.28 1110.18Closing Stock:

Finished 3155.29 1253.74Process 197.44 73.54

3352.73 1327.28

(2025.45) (217.10)

Add/(Less): Excise duty variation on opening/ closing stock 130.33 38.32

(Increase) / Decrease in Stocks (1895.12) (178.78)

SCHEDULE 17 - SALARIES, WAGES AND BENEFITS TO EMPLOYEES

Salaries and Wages

{After allocating Rs.242.52 Million (Rs. 197.85 Million) to other accounts} 677.74 320.95

Payments under Voluntary Retirement Scheme 15.81 33.38Contribution to Provident and Other Funds 75.33 49.90Bonus 9.48 0.42Workmen and Staff Welfare Expenses 70.65 81.85

849.01 486.50

SCHEDULE 18 - OTHER EXPENSES

Power and Fuel 2887.49 2061.68Processing Charges 188.10 113.60Packing Materials 621.94 497.27Consumption of Stores and Spare Parts

{After allocating Rs. 663.11 Million to other accounts (Rs. 345.95 Million)} 11.28 13.02

Repairs and Maintenance

Machinery 506.30 311.98Buildings 58.21 71.44Others 23.21 12.13

587.72 395.55

2007-08 2006-07

Rs. Million

97

Rent 10.21 4.81Rates and Taxes 30.99 24.79Insurance 18.73 31.49Travelling 62.94 31.56Advertisement and Publicity 42.83 57.77Freight, Transportation and Other Charges 1173.06 814.75Commission paid to Other Selling Agents 30.89 5.11Rebate, Discount and Allowances 7.51 0.88Interest

On Term loans 644.94 212.35On Borrowings from Banks and Others 139.48 53.86On Debentures 302.01 273.43

1086.43 539.64

Directors' Sitting Fees 1.01 0.78Non-Executive Directors' Commission 3.00 1.00Charity and Donation 43.81 9.79Assets written off 7.87 11.27Loss on sale of Fixed Assets 0.62 1.08Bad Debts written off 0.08 2.25Miscellaneous Expenses 751.39 574.18

7567.90 5192.27

SCHEDULE 19 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

1. Accounting Convention

The financial statements are prepared under historical cost convention (except for certain fixed assets, which are revalued) on a going concern basis and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

2. Principles of Consolidation

(i) The consolidated financial statements relate to Dalmia Cement (Bharat) Limited ('the Company'), its subsidiary companies and associate company. The consolidated financial statements have been prepared on the following basis.

- The financial statements of the Company and its subsidiary companies have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses in accordance with Accounting Standard (AS) -21. “Consolidated Financial Statements'' issued by the Institute of Chartered Accountants of India.

- The excess of cost to the Company of its investment in the subsidiary companies over equity is recognised in the financial statements as goodwill.

- Minority interest's share of net assets of consolidated subsidiaries is identified and presented in the consolidated balance sheet separate from liabilities and equity of the Company's shareholders.

- In case of associates, where the Company holds more than 20% of equity, investments in associates are accounted for using the equity method in accordance with Accounting Standard ( AS) -23. “Accounting for investments in associates in consolidated financial statements “ issued by the Institute of Chartered Accountants of India.

- The difference between the cost of investment in the associates and the share of net assets at the time of acquisition of shares in the associates is identified in the financial statements as Goodwill or Capital Reserve as the case may be.

- The consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the Company's separate financial statements.

Rs. Million

2007-08 2006-07

98

(ii) The subsidiary companies considered in the consolidated financial statements are:

Name of the Company Country of % voting power held stincorporation as at 31 March,2008

Kanika Investment Limited (KIL) India 100%

Ishita Properties Limited (IPL) India 100%

Hemshila Properties Limited (HPL) India 100%

Avnija Properties Limited (APL) India 100%

Geetee Estates Limited (GEL) India 100%

D.I. Properties Limited (DPL) India 100%

Shri Rangam Properties Limited (SRPL) India 100%

Himshikhar Investment Limited (HIL) India 100%

Seeta Estates & Brokers Limited (SEBL) India 100%

Shri Rangam Brokers & Holding Limited (SRBHL) India 100%

Shri Radha Krishna Brokers & Holding Limited (SRKBHL) India 100%

Dalmia Minerals & Properties Limited (DMPL) India 100%

Arjuna Brokers & Minerals Limited (ABML) India 100%

Sri Kesava Mines & Minerals Limited (SKMML) India 100%

Sri Madhava Minerals & Properties Limited (SMMPL) India 100%

Sri Shanmugha Mines & Minerals Limited (SHMML) India 100%

Sri Swaminatha Mines & Minerals Limited (SWMML) India 100%

Sri Subramanya Mines & Minerals Limited (SUMML) India 100%

Sri Trivikrama Mines & Properties Limited (STMPL) India 100%

Sri Dhandauthapani Mines & Minerals Limited (SDMML) India 100%

Sri Madhusudana Mines & Properties Limited (MMPL) India 100%

Eswar Cements Private Limited (ECPL) India 100%

Dalmia Sugar Ventures Limited ( DSVL) India 100%

Dalmia Cement Ventures Limited ( DCVL ) (subsidiary of Avnija Properties Limited) India 88.93%

(iii) The associate company considered in the consolidated financial statements is :

Name of the Company Country of % voting power held stincorporation as at 31 March,2008

OCL India Limited ( OCL) India 21.71%

3. Other Significant Accounting Policies

These are set out in the notes to accounts under “Significant Accounting Policies” of the financial statements of the Company, KIL, IPL, HPL, APL, GEL, DPL, SRPL, HIL, SEBL, SRBHL, SRKBHL,DMPL, ABML, SKMML, SMMPL, SHMML, SWMML, SUMML, STMPL, SDMML, MMPL, ECPL, DSVL, DCVL and OCL.

B. OTHER NOTES TO ACCOUNTS

1. These are set out in the notes to accounts of the financial statements of the Company, KIL, IPL, HPL, APL, GEL, DPL, SRPL ,HIL, SEBL,SRBHL, SRKBHL, DMPL, ABML, SKMML,SMMPL, SHMML, SWMML, SUMML, STMPL, SDMML, MMPL, ECPL, DSVL , DCVL and OCL.

2. Previous year figures have been regrouped/rearranged wherever considered necessary.

As per our report of even date attachedFor S.S. Kothari Mehta & Co.,Chartered Accountants

Gautam Dalmia

(CA J. Krishnan) K.V. Mohan Somnath Patil Puneet Dalmia

PARTNER COMPANY SR. EXECUTIVE DIRECTOR DIRECTORSSECRETARY (FINANCE)

Place : New DelhindDated : this the 22 day of May, 2008

99

Cash Flow from operating activities : Net profit before tax 4,393.17 2,965.79 Adjustments for : Depreciation (net) 872.92 554.51 Dividend income (22.58) (27.73) Interest (net) 1029.35 531.40 Miscellaneous Expenditure Written off/ Incurred (0.18) 6.48 Profit / loss on sale of investments (1,351.60) (1,333.61) Profit/loss on sale of fixed assets 4.65 6.35 Operating profit before working capital changes 4,925.73 2,703.19 Adjustments for working capital changes : Inventories (2,940.61) (58.50) Trade and other receivables (1,031.19) (1,375.75) Trade payables 995.16 2,427.91 Cash generated from operations 1,949.09 3,696.85 Adjustment for Reserves / P&L account balance on amalgamation of erstwhile subsidiaries (7.23) - Direct taxes paid (640.38) (396.80) Net cash from operating activities 1,301.48 3,300.05

Cash Flow from investing activities : Purchase of fixed assets (5,960.39) (5,866.80) Sale of fixed assets 77.83 18.02 Purchase of investment (26,694.12) (11,199.31) Sale of investment 27,146.67 10,512.28 Dividend received 22.58 27.73 Interest received 57.08 8.24 Net cash used in investing activities (5,350.35) (6,499.84)

Cash Flow from financing activities : Proceeds from issue of share capital 905.76 1,173.21 Proceeds from issue of shares to Minorities 59.63 - Proceeds from secured loans 1,194.44 2,933.15 Proceeds from unsecured loans 4,498.69 397.49 Fixed deposits from public (5.63) (16.56) Interest paid (1,063.49) (610.87) Dividend paid (244.84) (161.98) Corporate dividend tax (41.61) (22.71) Net cash from financing activities 5,302.95 3,691.73

Net change in cash & cash equivalents 1,254.08 491.94 Cash & cash equivalents (opening balance) 1,119.00 627.06 Cash & cash equivalents (closing balance) 2,373.08 1,119.00 Change in cash & cash equivalents 1,254.08 491.94

As per our report of even date attachedFor S.S. Kothari Mehta & Co.,Chartered Accountants

Gautam Dalmia(CA J. Krishnan) K.V. Mohan Somnath Patil Puneet DalmiaPARTNER COMPANY SR. EXECUTIVE DIRECTOR DIRECTORS

SECRETARY (FINANCE)Place : New Delhi

ndDated : this the 22 day of May, 2008

2007-08 2006-07

Rs. Million

stCONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH ,2008

100

101

stSTATEMENT ATTACHED TO BALANCE SHEET AS AT 31 MARCH, 2008 PURSUANT TO SECTION 212

OF THE COMPANIES ACT, 1956

Subsidiary Companies Kanika Ishita Avnija Hemshila Geetee

Investment Properties Properties Properties Estates

Limited Limited Limited Limited Limited

1. Financial year ending 31-3-2008 31-3-2008 31-3-2008 31-3-2008 31-3-2008

2. Date from which it became a subsidiary 6-8-79 25-9-95 4-7-96 4-7-96 4-7-96

3. Holding Company’s interest in the share capital 100% 100% 100% 100% 100%

4. The net aggregate amount of the subsidiary’s

profits less losses, so far as it concerns the

members of the Holding Company and is not

dealt with in the Holding Company’s accounts:

(a) For the year ended 31-3-2008 ( Rs.) 24,36,604 2,69,329 2,75,98,969 9,829 60

(b) For the previous financial years since it

became Company’s Subsidiary ( Rs.) 75,98,509 19,82,655 3,11,570 2,92,614 29,848

5. The net aggregate amount of the subsidiary’s profits less

losses, so far these profits are dealt with in the Holding

Company’s accounts

(a) For the year ended 31-3-2008 ( Rs.) Nil Nil Nil Nil Nil

(b) For the previous financial years since it became

Company’s Subsidiary ( Rs.) 9,36,651 Nil Nil Nil Nil

Subsidiary Companies D.I. Shri RangamProperties Properties Investment Brokers & Minerals &

Limited Limited Limited Minerals Properties Limited Limited

1. Financial year ending 31-3-2008 31-3-2008 31-3-2008 31-3-2008 31-3-2008

2. Date from which it became a subsidiary 4-7-96 10-1-97 10-1-97 30-08-05 30-8-05

3. Holding Company’s interest in the share capital 100% 100% 100% 100% 100%

4. The net aggregate amount of the subsidiary’s profits less

losses, so far as it concerns the members of the Holding

Company and is not dealt with in the Holding Company’s

accounts :

(a) For the year ended 31-3-2008 ( Rs.) (-) 3,986 (-) 8,330 24,14,813 (-) 3,939 (-) 3,839

(b) For the previous financial years since it

became Company’s Subsidiary ( Rs.) 3,18,183 2,24,926 21,72,277 (-) 43,470 (-) 43,255

5. The net aggregate amount of the subsidiary’s profits less

losses, so far these profits are dealt with in the Holding

Company’s accounts :

(a) For the year ended 31-3-2008 ( Rs.) Nil Nil Nil Nil Nil

(b) For the previous financial years since it became

Company’s Subsidiary ( Rs.) Nil Nil NIl NIl Nil

Himshikhar Arjuna Dalmia

Subsidiary Companies Shri Rangam Shri Radha Seeta Estates Sri Kesava Sri ShanmughaBrokers & Krishna Brokers & & Brokers Mines & Minerals Mines & Minerals

Holdings Limited Holdings Limited Limited Limited Limited

1. Financial year ending 31-3-2008 31-3-2008 31-3-2008 31-3-2008 31-3-2008

2. Date from which it became a subsidiary 30-8-05 30-8-05 30-8-05 10-02-06 10-02-06

3. Holding Company’s interest in the share capital 100% 100% 100% 100% 100%

4. The net aggregate amount of the subsidiary’s profits

less losses, so far as it concerns the members of the

Holding Company and is not dealt with in the Holding

Company’s accounts:

(a) For the year ended 31-3-2008 ( Rs.) (-) 3,739 (-) 3,939 (-) 9,900 5,150 (-) 3,839

(b) For the previous financial years since it became

Company’s Subsidiary (Rs.) (-) 43,245 (-) 43,470 (-) 43,995 (-) 45,360 (-) 45,050

5. The net aggregate amount of the subsidiary’s profits less

losses, so far these profits are dealt with in the Holding

Company’s accounts :

(a) For the year ended 31-3-2008 ( Rs.) Nil Nil Nil Nil Nil

(b) For the previous financial years since it became

Company’s Subsidiary (Rs.) Nil Nil Nil Nil Nil

Sri Mines & Mines & Minerals & Mines & Mines and

Minerals Minerals Properties Properties Properties Limited Limited Limited Limited Limited

1. Financial year ending 31-3-2008 31-3-2008 31-3-2008 31-3-2008 31-3-2008

2. Date from which it became a subsidiary 10-2-06 10-2-06 10-2-06 26-09-06 04-10-06

3. Holding Company’s interest in the share capital 100% 100% 100% 100% 100%

4. The net aggregate amount of the subsidiary’s

profits less losses, so far as it concerns the

members of the Holding Company and is not

dealt with in the Holding Company’s accounts :

(a) For the year ended 31-3-2008 ( Rs.) (-) 3,739 (-) 3,739 (-) 3,939 1,002 (-) 6,268

(b) For the previous financial years since it became

Company’s Subsidiary (Rs.) (-) 45,050 (-) 45,050 (-) 45,050 (-) 40,732 (-) 40,732

5. The net aggregate amount of the subsidiary’s profits less

losses, so far these profits are dealt with in the Holding

Company’s accounts:

(a) For the year ended 31-3-2008 ( Rs.) Nil Nil Nil Nil Nil

(b) For the previous financial years since it became Company’s Subsidiary (Rs.) Nil Nil Nil Nil Nil

Subsidiary Companies Sri Subramanya Sri Swaminatha Sri Madhava Sri Trivikrama Madhusudana

102

103

Subsidiary Companies Sri Dhandauthapani Eswar Cements Dalmia Sugar Dalmia Cement Mines and Private Limited Ventures Limited Ventures Limited

Minerals Limited

1. Financial year ending 31-3-2008 31-3-2008 31-3-2008 31-3-2008

2. Date from which it became a subsidiary 04-10-06 01-11-06 13-08-07 10-12-07

3. Holding Company’s interest in the share capital 100% 100% 100% 88.93%

4. The net aggregate amount of the subsidiary’s profits less losses, so far as it concerns the members of the Holding Company and is not dealt with in the Holding Company’s accounts:

(a) For the year ended 31-3-2008 ( Rs.) 769 Nil (-) 1,97,474 Nil

(b) For the previous financial years since it became Company’s Subsidiary (Rs.) (-) 40,732 Nil Nil Nil

5. The net aggregate amount of the subsidiary’s profits less losses, so far these profits are dealt with in the Holding Company’s accounts:

(a) For the year ended 31-3-2008 ( Rs.) Nil Nil Nil Nil

(b) For the previous financial years since it became Company’s Subsidiary (Rs.) Nil Nil Nil Nil

Gautam Dalmia K.V. Mohan Somnath Patil Puneet Dalmia COMPANY SR. EXECUTIVE DIRECTOR DIRECTORS

SECRETARY (FINANCE)

Place : New DelhindDated : this the 22 day of May, 2008

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