Birla Institute of Technology and Science

Pilani

Academic Session

Jan’2014 – May’ 2014

MBA C416 – Corporate Finance and Taxation

Submitted to: Mr Rajan Pandey

Submitted by: Bhawna Goel Sachin Soni Dipesh Joshi

Prateek Singh Bapna Ankita Dey

CEMENT INDUSTRY IN INDIA

Introduction

India's potential in infrastructure is vast and cement plays a vital role in the growth and

development of the nation. India is the second largest producer of cement in the world. The

cement industry has been expanding on the back of increasing infrastructure activities and

demand from housing sector over the past many years.

India's cement sector had clocked a 5.6 per cent growth in 2012–13 and projects a growth of

5–6 per cent in the next fiscal, which would be supported by an expected increase in demand

from the rural sector and tier II and tier III cities, as per India Ratings and Research report. An

investment allowance for infrastructure projects of Rs 100 crore (US$ 16.05 million) and above

has also been announced by the Government.

In addition, cement production in India is expected to touch 407 million tonnes (MT) by 2020.

Market Size

Cement consumption in India is expected to rise by 8–9 per cent over the next year, taking the

estimated cement consumption in 2013–14 to about 280–285 MT, from around 260 MT in the

2012–13 fiscal, as per the Cement Manufacturers Association (CMA).

The cement industry may continue to witness a steady market for the better half of the year

with fresh capacity of 20 MT going on stream in 2014, taking the industry capacity to 370 MT.

The Indian cement sector is expected to witness positive growth in coming years, with demand

set to increase at compound annual growth rate (CAGR) of more than 8 per cent during 2013–

14 to 2015–16, according to RNCOS report titled, ‘Indian Cement Industry Outlook 2016’.

The cement and gypsum products sector in India has attracted foreign direct investments (FDI)

worth US$ 2,879.95 million between April 2000 to November 2013, according to data

published by the Department of Industrial Policy and Promotion (DIPP).

Production

Cement production increased at a compound annual growth rate (CAGR) of 9.7 per cent to 272

million tonnes (MT) over FY06–13.

Demand

Housing sector accounts for 64 per cent of the total cement demand.

Consumption

The domestic cement consumption is expected to increase at a CAGR of 10.2 per cent during

FY11-17.

Market Concentration

UltraTech Cement, a major player in India, accounted for 15.0 per cent of the total market share

in terms of installed capacity in 2011.

Government Initiatives

The housing segment accounts for a major portion of the total domestic demand for cement in

India. The Government of India (GoI) is strongly focused on infrastructure development to

boost economic growth and plans to increase investment in infrastructure to US$ 1 trillion in

the 12th Five Year Plan (2012–17). During the Plan, the industry is estimated to add a capacity

of 150 MT.

An EAC under the Ministry of Environment, Go I, has given its approval to India Cements to

double its capacity and set up a 40 megawatt (MW) power plant at one of its facilities in Tamil

Nadu at a cost of Rs 810 crore (US$ 130.01 million). The proposed expansion project will

come up at Dalavoi in Ariyalur district.

Giving impetus to the market, the Goa State Pollution Control Board (GSPCB) has signed a

memorandum of understanding (MoU) with Vasavdatta Cement, a company with its plant in

Karnataka. The firm would use the plastic waste collected by the state agencies and village

panchayats from Goa as fuel for its manufacturing plant.

Road Ahead

India has the capacity to become the world's third largest construction market by 2025 and a

US$ 1 trillion market, according to a study by Global Construction Perspectives and Oxford

Economics.

The focus of the government on strengthening infrastructure, promotion of low-cost affordable

housing, etc., is expected to drive cement demand.

With the ever-increasing industrial activities, real estate, construction and infrastructure, in

addition to the onset of various Special Economic Zones (SEZs) being developed across the

country, there is a continuous demand for cement.

Moreover, major cement manufacturers in India are also increasingly using alternate fuels,

especially bioenergy, to fire their kilns. The step will not only help to reduce production costs

of cement companies, but is also proving effective in reducing emissions.

PRISM CEMENT

OVERVIEW

Prism Cement Limited is one of India’s leading integrated Building Materials Company, with

a wide range of products from cement, ready-mixed concrete, tiles, and bath products to

kitchens. The company has three Divisions, viz. Prism Cement, H & R Johnson (India), and

RMC Readymix (India). The equity shares of the company are listed on the Bombay and

National Stock Exchanges.

Name Designation Status

1 Mr. Rajesh Kapadia Chairman Independent

Non-executive

2 Mr. Rajan Raheja Director Non-independent

Non-executive

3 Mr. Vijay Aggarwal Managing Director Non-independent

Executive

4 Mr. Satish Raheja Director Non-independent

Non-executive

5 Mr. Akshay Raheja Alternate Director to Mr. Satish Raheja Non-independent

Non-executive

6 Mr. Ganesh Kaskar Executive Director - HRJ Non-independent

Executive

7 Mr. James Brook Director Independent

Non-executive

8 MS. Ameeta Parpia Director Independent

Non-executive

9 Mr. S. Ramnath Executive Director - Cement Non-independent

Executive

10 Mr. V. M. Panicker Executive Director - RMC Non-independent

Executive

DIVISIONS

The company comprises of three divisions.

Prism Cement

H & R Johnson (India)

RMC Readymix (India)

Prism Cement

Prism Cement commenced production at its Unit I in August, 1997 and Unit II in December,

2010. It manufactures Portland Pozzolana Cement (PPC) with the brand name 'Champion' and

Ordinary Portland Cement (OPC). It has the highest quality standards due to efficient plant

operations with automated controls. It caters mainly to markets of UP, MP and Bihar, with an

average lead distance of 425 kms from its plant at Satna, MP. It has a wide marketing network

with about 3,300 dealers serviced from 163 stocking points.

H & R Johnson (India)

H & R Johnson (India) Established in 1958, H & R Johnson (India) is the pioneer of ceramic

tiles in India. Over the past five decades, HRJ has added various product categories to offer

complete solutions to its customers. Today, HRJ enjoys the reputation of being the only entity

in India to offer end-to-end solutions of Tiles, Sanitaryware, Bath Fittings and Kitchens. In

ceramic / vitrified tiles, HRJ along with its Joint Ventures and subsidiaries has a capacity of

over 54 million m2 per annum spread across 9 manufacturing plants across the country which

is the largest in India.

RMC Readymix (India)

RMC Readymix (India) is one of India's leading ready-mixed concrete manufacturers, set-up

in 1996. RMC currently operates 88 ready-mixed concrete plants in 37 cities/towns across the

Country. Further, the Division has been able to secure new positions in its existing markets

which will help it to maintain its growth. RMC has also ventured into the Aggregates business

and operates large Quarries and Crushers. At present, RMC has 8 Quarries across the country.

RMC has been at the forefront in setting high standards for plant and machinery, production

and quality systems and product services in the ready-mixed concrete industry.

COMPANY BACKGROUND

Industry Name Cement

House Name Raheja Group

Collaborative Country Name N.A.

Joint Sector Name N.A.

Year Of Incorporation 1992

Year Of Commercial Production N.A.

COMPANY HISTORY

YEAR EVENTS

1992 The Company was incorporated under the name and style of Karan

Cement Limited on 26th March, by Dr. B.V Raju and his associates.

1993

A Joint Venture Agreement has been executed on 16th April, between Mr.

Rajan Raheja, F.L. Smidth & Co., A/S, Denmark and The Industrialization

Fund for Developing Countries, Denmark for promoting a project for

setting up and operating a 2 million tonnes per annum cement plant by the

Company.

1994

The name of the Company was subsequently changed to Prism Cement

Limited and a fresh Certificate of Incorporation consequent on change of

name was obtained on 15th September.

The Company is presently engaged in setting up a 2 million tonnes per

annum cement plant near Satna in Madhya Pradesh.

The Company is installing Generating Power Sets of 12 MVA capacity.

The Company has obtained the Madhya Pradesh Pollution Control Board's

clearance and the Site Environment clearance from the Industries

Department, Government of Madhya Pradesh for establishing the plant at

the selected site.

The Company has allotted 3,50,00,000 No. of Equity Shares of Rs. 10

each for cash at par to Promoters, their business associates and to the

Directors and friends.

1995

The Company made its maiden public issues of 7,87,60,000 equity shares

of Rs. 10/- each, at par, aggregating Rs. 7,876 lakhs and 37,00,000 13.5%

secured redeemable partly convertible debentures (PCD) of Rs. 250/- each,

at par, aggregating Rs. 9,250 lakhs in the month of January.

The Company has tied up its full requirement of term loans of Rs. 24,300

lakhs with financial institutions and banks. The Company has signed a

foreign currency loan agreement with International Finance Corporation,

Washington and a Rupee term loan Agreement with The Industrial Credit

and Investment Corporation of India Limited.

1996

The Company has signed loan agreements with all Financial

Institution/Banks who have sanctioned term loans.

It is proposed to issue up to 1,66,70,000 Equity Shares of Rs.10/- each for

cash at a price to be determined as per SEBI guidelines or at par,

whichever is higher, on preferential basis to the Indian promoters and/or

their relatives, group/associate Companies, whether such persons are

members of the Company or not, as may be deemed appropriate by the

Board.

1997

The company, jointly promoted by the Rajan Raheja group, F L Smidth &

Co of Denmark and the industrialization fund for Developing Countries,

Denmark, is believed to have the largest single kiln cement plant in the

country.

The company proposes to cater mainly to north and central India. It has set

up a central marketing office at Allahabad in Uttar Pradesh (UP), which is

supported by regional offices at Satna, Varanasi (UP) and Delhi. Besides,

it has also set up area offices and depots at all major towns of UP, MP and

Bihar.

As on September 22, 121 issuers have entered into agreements with NSDL

to get their securities dematerialized.

1998

Prism Cements of the Raheja group, which owns a two million tpa cement

plant at Satna in Madhya Pradesh, in setting up another plant of similar

capacity at Kottapadu village in Kurnool district of Andhra Pradesh.

The Madhya Pradesh-based group has chosen to set up the plant in

Kurnool district, keeping in view the large limestone deposits the district

possesses.

1999 Prism Cement is all set to ride the boom in the cement industry.

The Company will introduce a new product by January 2000 and will also

plan to expand our operations in southern India by 2002.

The company has improved its capacity utilization from 33 per cent to 70

per cent, reduced its power consumption and costs and tightly

consumption and costs and tightly monitored the freight cost.

The company's performance in the second quarter will not be impressive

as the plant was shut for 20 days in September for maintenance and the

demand was also depressed owing to the monsoons.

2000

The Board of Directors of the company has decided, subject to necessary

approvals, to increase authorized capital from Rs. 300 crores to Rs. 400

crores made of 40 crores equity shares of Rs. 10/- each and Issue of equity

shares at a price as per SEBI Guidelines or at par, whichever is higher, by

way of private placement, preferential or by a combination thereof to the

Indian promoters and/or their group/associate companies.

The Company increase in authorized capital from Rs 300 crores to Rs. 325

crores.

The Company has allotted 4,11,45,000 No. of equity shares of Rs 10 each

at par to Mr. Rajan Raheja, promoter, by converting the existing loan

amounting to Rs 41,14,50,000 advanced by him to the company.

Prism Cements Ltd. will allot 1,37,000 No. of equity shares at par to its

Indian promoter, Rajan Raheja.

2001 The company has allotted 1,37,000 No. of equity shares of the face value of

Rs 10 each at par to Mr Rajan Raheja.

2003 Appoints Mr. M. Chabbra as the Managing Director of the company.

2004 Company's shares delisted from Delhi Stock Exchange & Hyderabad Stock

Exchange.

2006

Prism Cements Ltd has appointed Mr. Akshay R. Raheja as Additional

Director w.e.f. October 30, 2006.

Prism Cement Ltd has informed that Mr. Ramen Ray Mandal has resigned

as Nominee of ICICI Bank Ltd on the Board of Directors of the Company

w.e.f. December 14, 2006.

2007 The Company has recommended dividend of 10% on Equity shares of Rs.

10/- each.

2008 Company has declared an interim dividend of 10%.

Company has Received National Energy Conservation Award – 2008

2009

Company has recommended a final dividend of Re 0.50/- per equity share

of Rs 10/- each, in addition to the interim dividend of Re 1/- per share paid

in October 2008.

2010 Company has announced that it has acquired the remaining 50 per cent stake

in Milano Bathroom Fittings (MBF) for an undisclosed sum.

2011

The Company has signed an Agreement for Mining, Development and

Operation of its Sial Ghogri Coal Block near Chhindwara, Madhya Pradesh

with M/s. India Resources Ltd, Australia and its wholly owned Indian

subsidiary IRL Coal India Pvt. Ltd.

H & R Johnson (India) acquires 50% stake in Small Tiles Private Ltd.

2012

H&R Johnson (HRJ), a division of Prism Cement Ltd has forayed into

engineered marble and quartz business with an investment of Rs 50 crore

for the manufacturing of the new product line.

The Company has recommended a Dividend of Rs. 0.50 per share.

LISTING DETAILS

Key Dates

Year Ending Month Mar

AGM Date (Month) Jun

Book Closure Date

(Month) Jun

Listing Information

Face Value Of Equity

Shares 10

Market Lot Of Equity

Shares 1

BSE Code 500338

NSE Code PRISMCEM

BSE Group N.A.

Sensex No

Nifty No

BSE-100 No

BSE-200 No

S&P CNX 500 Yes

CNX Midcap No

CNX FMCG No

Listing On

Listed On The Stock Exchange, Mumbai, National Stock Exchange of

India Ltd.

TOP PUBLIC SHAREHOLDERS

Shareholding belonging to the category: "Public and holding more than 1% of the Total No.

of Shares"

No. Name of the Shareholder Total Shares

held

Shares as % of Total

No. of Shares

1 Prism Trust 12,351,600 2.45

2 HDFC Standard Life Insurance Company

Ltd 9,138,421 1.82

3 National Westminster Bank PLC as Trustee

of the Jupiter India Fund 7,978,598 1.59

4 ICICI Prudential Discovery Fund 6,215,431 1.23

5 Reema Business Services Pvt Ltd 5,610,000 1.11

Total 41,294,050 8.2

BALANCE SHEET

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths 12 mths 12 mths 12 mths 9 mths

Sources Of Funds

Total Share Capital 503.36 503.36 503.36 503.36 298.25

Equity Share Capital 503.36 503.36 503.36 503.36 298.25

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 586.35 645.21 704.47 666.14 363.40

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Networth 1,089.71 1,148.57 1,207.83 1,169.50 661.65

Secured Loans 1,149.52 854.49 925.47 743.20 0.00

Unsecured Loans 132.00 184.46 244.37 58.37 0.00

Total Debt 1,281.52 1,038.95 1,169.84 801.57 0.00

Total Liabilities 2,371.23 2,187.52 2,377.67 1,971.07 661.65

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths 12 mths 12 mths 12 mths 9 mths

Application Of Funds

Gross Block 3,181.61 2,932.62 2,785.75 1,783.13 733.39

Less: Accum. Depreciation 1,172.19 1,019.47 898.97 792.00 340.69

Net Block 2,009.42 1,913.15 1,886.78 991.13 392.70

Capital Work in Progress 83.94 66.42 57.44 621.23 109.16

Investments 378.24 390.00 354.31 326.67 203.81

Inventories 467.41 427.28 371.29 274.24 76.90

Sundry Debtors 477.86 346.36 264.62 211.08 0.00

Cash and Bank Balance 37.48 53.51 59.57 51.35 20.86

Total Current Assets 982.75 827.15 695.48 536.67 97.76

Loans and Advances 595.53 517.21 340.52 164.47 71.17

Fixed Deposits 0.00 3.35 0.43 1.15 5.01

Total CA, Loans & Advances 1,578.28 1,347.71 1,036.43 702.29 173.94

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 1,635.24 1,460.74 901.60 621.59 167.87

Provisions 43.41 69.02 55.69 48.66 50.09

Total CL & Provisions 1,678.65 1,529.76 957.29 670.25 217.96

Net Current Assets -100.37 -182.05 79.14 32.04 -44.02

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 2,371.23 2,187.52 2,377.67 1,971.07 661.65

Contingent Liabilities 423.56 218.95 162.77 479.05 552.54

Book Value (Rs) 21.65 22.82 24.00 23.23 22.18

PROFIT & LOSS STATEMENT

Mar ‘13 Mar ‘12 Mar ‘11 Mar ‘10 Mar ‘09

12 mths 12 mths 12 mths 12 mths 9 mths

Income

Sales Turnover 4,768.47 4,845.61 3,564.45 2,992.89 722.65

Excise Duty 0.00 342.50 200.18 157.51 93.45

Net Sales 4,768.47 4,503.11 3,364.27 2,835.38 629.20

Other Income 7.15 -7.64 26.40 -3.73 8.45

Stock Adjustments 23.83 33.49 25.01 27.92 -3.73

Total Income 4,799.45 4,528.96 3,415.68 2,859.57 633.92

Expenditure

Raw Materials 2,231.69 2,175.78 1,676.59 1,293.61 124.61

Power & Fuel Cost 750.25 719.03 428.20 308.54 174.58

Employee Cost 258.93 222.99 172.80 134.88 27.42

Other Manufacturing Expenses 0.00 160.60 101.76 97.10 24.45

Selling and Admin Expenses 0.00 865.05 602.21 473.18 92.43

Miscellaneous Expenses 1,291.46 113.82 84.43 51.64 10.60

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Total Expenses 4,532.33 4,257.27 3,065.99 2,358.95 454.09

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths 12 mths 12 mths 12 mths 9 mths

Operating Profit 259.97 279.33 323.29 504.35 171.38

PBDIT 267.12 271.69 349.69 500.62 179.83

Interest 190.31 170.40 105.73 52.52 3.54

PBDT 76.81 101.29 243.96 448.10 176.29

Depreciation 159.80 147.28 113.30 89.85 24.31

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax -82.99 -45.99 130.66 358.25 151.98

Extra-ordinary items 0.00 0.00 0.00 1.85 0.00

PBT (Post Extra-ord Items) -82.99 -45.99 130.66 360.10 151.98

Tax -23.51 -15.98 34.87 107.20 55.75

Reported Net Profit -59.48 -30.01 95.79 251.05 96.23

Total Value Addition 2,300.64 2,081.49 1,389.40 1,065.34 329.48

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 0.00 25.17 49.10 105.41 44.75

Corporate Dividend Tax 0.00 4.08 8.36 17.91 7.60

Per share data (annualised)

Shares in issue (lakhs) 5,033.57 5,033.57 5,033.57 5,033.57 2,982.50

Earning Per Share (Rs) -1.18 -0.60 1.90 4.99 3.23

Equity Dividend (%) 0.00 5.00 10.00 25.00 15.00

Book Value (Rs) 21.65 22.82 24.00 23.23 22.18

CASH FLOW STATEMENT

Mar

'13

Mar

'12

Mar

'11

Mar

'10

Mar

'09

12

months

12

months

12

months

12

months

9

months

Net Profit Before Tax -82.99 -45.99 130.66 358.25 151.98

Net Cash From Operating Activities 235.85 248.55 253.76 367.34 104.86

Net Cash (used in)/from

Investing Activities -272.14 -215.22 -435.76 -556.56 -60.34

Net Cash (used in)/from Financing

Activities 16.52 -37.71 189.62 195.63 -36.55

Net (decrease)/increase In Cash and

Cash Equivalents -19.77 -4.38 7.62 6.41 7.97

Opening Cash & Cash Equivalents 52.00 59.89 52.28 45.87 12.89

Closing Cash & Cash Equivalents 32.23 55.51 59.90 52.28 20.86

COMPETITION

Name Last Price

Market

Cap.

(Rs. cr.)

Sales

Turnover Net Profit Total Assets

UltraTech Cement 2,202.10 60,390.70 20,174.94 2,655.43 19,697.50

Ambuja Cements 214.60 33,186.12 9,160.35 1,294.57 9,514.69

ACC 1,336.65 25,122.34 11,168.94 1,095.76 7,824.84

Shree Cements 5,847.55 20,371.24 5,590.25 1,003.97 4,821.03

Ramco Cements 218.45 5,198.44 3,863.45 403.65 4,351.90

Birla Corp 305.25 2,350.59 2,602.96 269.82 3,625.31

India Cements 73.40 2,254.69 4,613.62 163.55 6,843.64

Prism Cement 41.70 2,099.00 4,768.47 -59.48 2,371.23

Dalmia Bharat 252.80 2,052.47 190.60 41.33 541.59

J. K. Cement 251.25 1,756.92 2,911.97 233.55 2,839.19

JK Lakshmi

Cement 122.95 1,446.75 2,054.95 175.74 2,398.75

Rain Industries 40.50 1,362.20 70.72 15.30 496.90

OCL India 181.90 1,035.02 1,817.29 156.39 1,717.70

Orient Cement 49.20 1,007.95 1,501.52 161.67 803.00

Heidelberg Cement 44.35 1,005.03 1,393.22 -40.73 1,877.46

KCP 32.55 419.64 699.71 30.46 683.67

Mangalam Cement 141.20 376.92 706.04 77.37 703.32

Andhra Cement 6.30 184.92 -- -20.68 935.96

Burnpur Cement 10.20 66.44 94.02 3.17 120.30

Guj Sidhee Cement 16.70 60.38 445.71 40.31 143.32

Barak Vally

Cement 7.50 16.62 108.88 -0.23 142.82

INDUSTRY OUTLOOK

The Indian cement industry is the second largest market after China. Indian cement production

capacity is expected to rise to 349.6Mt in the current fiscal year (FY13) from 336.1Mt reached

in the last fiscal. It had a total capacity of about 300 million tonnes (MT) as of financial year

ended 2010-11, the figure is expected to double to reach almost 550 million tonnes by 2020,

as per estimates by the Cement Manufacturers Association (CMA). As of 2011, there were 137

large and 365 mini cement plants in India. Consolidation has taken place with the top three

players alone controlling almost 35% of the capacity. However, the balance capacity still

remains quite fragmented.

In India, cement demand emanates from four key segments — housing, accounting for 67%;

infrastructure for 13%; commercial construction for 11%; and industrial sector for 9%. The

cement industry has evolved in the form of clusters across the country due to the location of

limestone reserves in certain states. Presently, there are seven clusters, namely the Satna cluster

in Madhya Pradesh; Chandrapur in north Andhra Pradesh and Maharashtra; Gulbarga in north

Karnataka and east Andhra Pradesh; Chanderia in south Rajasthan, Jawad and Neemuch in

Madhya Pradesh; Bilaspur in Chattisgarh; Yerraguntla in south Andhra Pradesh and Nalgonda

in central Andhra Pradesh.

Despite the fact that the Indian cement industry has grown at a commendable rate in the last

decade, registering a growth of nearly 9% to 10%, the per capita consumption still remains

substantially poor when compared with the world average. While China registered the highest

per capita cement consumption in 2010 of about 1,380 kg, India stood much lower at 230 kg.

This underlines the tremendous scope for growth in the Indian cement industry in the long

term.

Cement, being a bulk commodity, is a freight intensive industry and transporting it over long

distances can prove to be uneconomical. This has resulted in cement being largely a regional

play with the industry divided into five main regions viz. north, south, west, east and the central

region. With capacity addition taking place at a faster rate as compared to demand, prices have

remained southbound, especially in the last one year. Nevertheless, considering the

government’s thrust on infrastructure, long term demand remains intact.

Given the high potential for growth, quite a few foreign transnational companies have

displayed their interest in the Indian markets. Already, while companies like Lafarge,

Heidelberg and Italicementi have made a couple of acquisitions, Holcim has increased its stake

in domestic companies Ambuja Cements and ACC to gain full control. Considering the long

term growth story, fair valuations, fragmented structure of the industry and low gearing,

another wave of consolidation would not come as a surprise.

PROSPECTS

The growth of the Indian economy has slowed down in recent times on account of the rising

inflation, high interest rates, high prices of commodities and fuels. The growth prospects of the

cement industry are closely linked to the growth of the overall economy and the real estate and

construction sector in particular. The importance of the housing sector in cement demand can

be gauged from the fact that it consumes almost 60-70% of the country’s cement. If the

slowdown in real estate persists for an extended period, it would impact the growth in

consumption of cement.

In such a case, the small and medium-sized cement players would be the worst hit. Despite the

overcapacity situation weighing on the cement industry, several major capacity additions are

expected in the next few years. Hence, the supply overhang is likely to persist for at least 2-3

years. This will keep a constant pressure on cement realizations. On the demand front, the

cement industry is likely to maintain its growth momentum and continue growing at around

8% to 9% in the medium to long term. Government initiatives in the infrastructure sector and

the housing sector are likely to be the main growth drivers.

In the Union Budget 2011-12, the government restructured the excise duty on cement in a way

that would effectively increase the tax incidence on the cement industry. However, certain

initiatives chalked out to benefit the user industries would in turn boost demand for cement.

Custom duties on key inputs such as pet coke and gypsum were also reduced which would

provide some marginal relief against the rising costs of inputs.

ECONOMIC GROWTH WITH CEMENT SECTORS

The Role of Cement Industry in India GDP is significant in the economic development of the

country. The cement industry in India is one of the oldest sectors in India. The industry is driven

by the immense growth in the housing sector, the infrastructure development, and construction

of transportation systems. An increased outflow in infrastructure sector, by the government as

well as private builders, has raised a significant demand of cement in India. It is the key raw

material in construction industry. Also, it has highly influenced those bigger companies to

participate in the growing sector. At least 125 plants set up by the big companies in India with

about 300 other small scale cement manufacturers, to fulfill the growing demand of cement.

Being one of the vital industries, the cement industry contributes to the nation’s socioeconomic

development. The sum total utilization of cement in a year indicates the country’s economic

growth.

The demand of cement in year 2012-2013 is expected to increase by 50 million tons despite of

the recession and decline in demand of housing sector. Against India’s GDP growth of 7%, the

experts have estimated the cement sector to grow by 9 to 10 % in the current financial year.

Major Indian cement manufacturers and exporters have all made huge investments in the last

few months to increase their production capability. This heralds an optimistic outlook for

cement industry. The housing sector in India accounts for 50 % of the cement’s demand. And

the demand is expected to continue. With the constant effort made by cement manufacturers

and exporters, India has become the second largest cement producer in the world. Madras

Cement Ltd., Associated Cement Company Ltd (ACC), Ambuja Cements Ltd, Grasim

Industries Ltd, and J.K Cement Ltd. are among few renowned names of the major Indian

cement companies. In India, the Department of Industrial Policy and Promotion (DIPP), under

the Ministry of Commerce and Industry, is the nodal agency for the development of cement

industries, that is, it is involved in monitoring their performance at regular intervals and

suggesting suitable policy incentives, as per the requirement. The Department is responsible

for formulation and implementation of promotional and developmental measures for growth of

entire industrial sector in general and of some selected industries like cement, light engineering,

leather, rubber, light machine tools, etc. in particular. It is involved in framing and

administering overall industrial policy and foreign direct investment (FDI) policy as well as

promoting FDI inflow into the country. It plays an active role in investment promotion through

dissemination of information on investment climate and opportunities in India as well as by

advising prospective investors about various policies and procedures.

Director’s Report

To the Shareholders,

The Directors present the Twenty-first Annual Report together with the audited Accounts of the Company for the

year ended March 31, 2013.

FINANCIAL RESULTS

(Rs.Crores)

2012-13 2011-12

Sales of products and services 5,123.67 4,821.74

Other operating income 25.80 23.87

5,149.47 4,845.61

Less : Excise duty 381.00 340.90

Total Revenue from Operations 4,768.47 4,504.71

Other income 5.53 4.99

Total Revenue 4,774.00 4,509.70

Expenditure 4,858.61 4,552.89

Loss before exceptional items and

Tax

(84.61) (43.19)

Exceptional items 1.62 (2.80)

Loss before Tax (82.99) (45.99)

Tax expenses 23.51 15.98

Loss for the year (59.48) (30.01)

Add : Dividend on own shares held

through Trust

0.62 -

Balance brought forward 445.54 531.80

Profit available for appropriation 386.68 501.79

Appropriations :

Transfer to Debenture Redemption

Reserve

29.44 27.00

Dividend - 25.17

Distribution Tax on Dividend - 4.08

Balance carried to Balance Sheet 357.24 445.54

OPERATIONS

The gross sales and other income for the year ended March 31, 2013 was Rs. 5,155.00 crores as against Rs. 4,850.60

crores for the previous year. The Company incurred a loss before tax of Rs. 82.99 crores and net loss of Rs. 59.48

crores during the year ended March 31, 2013 as against loss before tax of Rs. 45.99 crores and net loss of Rs. 30.01

crores during the year ended March 31, 2012, primarily due to depressed markets, increased power and fuel costs,

higher freight charges and subdued realisations.

For the year ended March 31, 2013, the consolidated net loss of the Company and its subsidiary companies

amounted to Rs. 62.47 crores as against a net loss of Rs. 18.44 crores for the previous year.

FINANCE

The Company has repaid loans of Rs. 491.71 crores during the year and tied-up fresh loans of Rs. 803.50 crores to

finance, inter alia, its ongoing long term working capital and capital expenditure during the year. The total

borrowings of the Company stood at Rs. 1,609.30 crores as on March 31, 2013.

The loans were used for the purpose that they were sanctioned for by the respective banks/financial institutions.

FIXED DEPOSITS

Out of the total 10,968 deposits of Rs. 37.01 crores from the public and the shareholders as at March 31, 2013, 418

deposits amounting to Rs. 0.89 crores had matured and had not been claimed as on that date. Since then, 19 of these

deposits aggregating to Rs. 0.04 crores have been claimed.

During the year, the Company has transferred a sum of Rs. 0.05 crores to the Investor Education and Protection Fund

in compliance with Section 205C of the Companies Act, 1956 which represents unclaimed fixed deposits and interest

thereon.

DIRECTORS

The Board at its Meeting held on January 24, 2013 has, subject to the requisite approvals, re-appointed Mr. Vijay

Aggarwal as Managing Director and Mr. Ganesh Kaskar as Executive Director of the Company for a period of three

years with effect from March 3, 2013, upon terms and conditions mentioned at Item Nos. 6 and 7 read with the

Explanatory Statement of the accompanying Notice of the ensuing Annual General Meeting.

In accordance with the requirements of the Companies Act, 1956 and the Articles of Association of the Company,

Mr. Rajesh G. Kapadia, Mr. Akshay R. Raheja and Ms. Ameeta A. Parpia retire by rotation at the forthcoming

Annual General Meeting and being eligible, have offered themselves for re-appointment.

As required, the requisite details of Directors seeking re-appointment are included in this Annual Report. The

Company has received requisite approvals from the Central Government for excess remuneration of Rs. 6.54 crores

paid to both the Managing Directors and the Executive Director of the Company, due to non-availability of profits

for the year 2011-12.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, relating to Directors''

Responsibility Statement, the Directors, to the best of their knowledge and belief and according to the information

and explanations obtained by them, confirm that :

1. in preparation of the Annual Accounts for the year ended March 31, 2013, the applicable Accounting Standards

have been followed and there has been no material departure;

2. they have 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 as on March

31, 2013 and of the loss of the Company for the year ended on that date;

3. they have taken proper and sufficient care to the best of their knowledge for the maintenance of adequate

accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the

Company and for preventing and detecting fraud and other irregularities;

4. they have prepared the accounts for the year ended March 31, 2013 on a going concern basis.

PARTICULARS OF EMPLOYEES

Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 and the rules thereunder, the particulars

are given in the statement which forms part of this Report. However, as per provisions of Section 219(1)(b)(iv) of

the Companies Act, 1956, the Directors'' Report is being sent to all the shareholders excluding the aforesaid

information. Any shareholder interested in obtaining a copy of the statement may write to the Company''s Registered

Office at Hyderabad or to its Corporate Office at Mumbai.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

EARNINGS AND OUTGO

The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo

as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars

in the Report of Board of Directors) Rules, 1988, is given in Annexure ''A'' forming part of this Report.

CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance

together with a certificate from the Company''s Auditors confirming compliance is set out in the Annexure forming

part of this Report.

AUDITORS

The Statutory Auditors, M/s. N. M. Raiji & Co., Chartered Accountants, hold office until the conclusion of the

ensuing Annual General Meeting and have given their consent for re-appointment. A certificate from the Statutory

Auditors has been received to the effect that their re-appointment, if made, would be within the prescribed limits

under Section 224(1B) of the Companies Act, 1956.

The Branch Auditors, M/s. Borkar & Muzumdar, Chartered Accountants, who retire at the conclusion of the ensuing

Annual General Meeting, have sent a letter expressing their unwillingness to be re-appointed as Branch Auditors of

the H & R Johnson (India) and RMC Readymix (India)

Divisions of the Company. The audit for the said Divisions will henceforth be carried out by the Statutory Auditors

of the Company.

As per the requirement of the Central Government and pursuant to Section 233B of the Companies Act, 1956 and

the Rules thereunder, the Company''s Cost Records for the year ended March 31, 2013 are being audited/ reviewed

by Cost Auditors, M/s. N. I. Mehta & Co. The Cost Audit Report for the year ended March 31, 2012 was filed within

the stipulated due date.

SUBSIDIARY AND JOINT VENTURE COMPANIES

During the year under review, the Company''s subsidiaries and joint venture companies performed satisfactorily.

Subsidiaries

- Raheja QBE General Insurance Company Limited (RQBE), the general insurance subsidiary, continued its strategy

of focusing on specialist lines and making its presence in new markets during the year under review. RQBE booked

a gross written premium of Rs. 28.37 crores and earned an investment income of Rs. 18.65 crores for the year ended

March 31, 2013. After requisite adjustments and tax provisions, the profit for the year ended March 31, 2013 was

Rs. 9.15 crores.

- Silica Ceramica Private Limited has performed below expectations during the year on account of acute power

shortage and non-availability of Natural Gas in Andhra Pradesh. During the year, the Company has increased its

stake in this subsidiary from 97.5% to 97.8%.

- H. & R. Johnson (India) TBK Limited, the wholly- owned subsidiary of the Company in the field of tile, bath and

kitchen retailing has taken further steps to increase its geographical coverage. Its joint ventures have opened House

of Johnson showrooms in Hyderabad, Guntur, Warangal, Nagpur and Bellary during the year taking the total number

of showrooms to 21 as at March 31, 2013.

- Milano Bathroom Fittings Private Limited (MBF), the wholly-owned subsidiary of the Company manufacturing

bathroom fittings and accessories, has performed satisfactorily during the year. The Company has further subscribed

to 10,000 equity shares of MBF at Rs. 600 each during the year under review.

- Lifestyle Investments PVT Limited (LIPL), an overseas wholly-owned subsidiary, received a dividend income of

£ 751,276 from Norcros PLC during the year. LIPL redeemed 21,85,805 Class ''A'' Preference Shares and 6,14,195

Class ''B'' Preference Shares held by the Company during the year.

- RMC Readymix Porselano (India) Limited is a wholly-owned subsidiary of the Company. Joint Ventures (JV)

- Ardex Endura (India) Private Limited (AEIPL), JV with the German group Ardex which manufactures and markets

tile adhesives, grouts, flooring, waterproofing and allied products has performed satisfactorily during the year.

AEIPL is in the process of setting-up another manufacturing plant in Ramanagara District in Karnataka which is

likely to be operational in FY 2014.

- Sentini Cermica Private Limited, the mid-segment glazed floor tile JV Company in Andhra Pradesh has performed

satisfactorily during the year.

- Antique Marbonite Private Limited, the vitrified tile JV Company in Gujarat, has performed satisfactorily during

the year. The JV''s wholly- owned subsidiary, Antique Minerals Private Limited, has set-up a manufacturing plant

for engineered marble and quartz. The quartz plant was operationalised during the year.

- Spectrum Johnson Tiles Private Limited, the mid- segment wall tiles JV Company in Gujarat, has performed

satisfactorily during the year.

- Small Johnson Floor Tiles Private Limited (SJFTPL), mid-segment floor tiles JV Company in Gujarat, has

performed below expectations during the year on account of low capacity utilisation. SJFTPL is in the process of

upgrading its product-mix towards more value-added products in line with market demand.

The financial data of the subsidiaries has been furnished along with the statement pursuant to Section 212 of the

Companies Act, 1956 forming part of the Annual Report. Further, pursuant to the applicable Accounting Standard

(AS - 21) issued by the Institute of Chartered Accountants of India, the Company has presented the consolidated

financial statements which include the financial information relating to its subsidiaries and forms part of the Annual

Report. The Company shall provide a copy of the Annual Report and other related information of its subsidiary

companies as required under Section 212 of the Companies Act, 1956 to the shareholders of the Company and the

subsidiaries upon their written request. These documents will also be available for inspection at the registered office

of the Company and the registered offices of the respective subsidiary companies during working hours up to the

date of the Annual General Meeting.

ACKNOWLEDGEMENTS

The Directors thank the shareholders, various Central and State Government departments/agencies, banks and other

business associates for their valuable service and continued support during the year under review. The Board also

takes this opportunity to express its sincere appreciation of the contribution and dedicated work of all the employees

of the Company.

For and on behalf of the Board of Directors

Place : Mumbai RAJESH G. KAPADIA

Date : May 9, 2013 Chairman

AUDITOR’S REPORT

1. Report on the Financial Statements

We have audited the accompanying financial statements of PRISM CEMENT LIMITED ('the Company'), which

comprise the Balance Sheet as at March 31, 2013, and the Profit and Loss Statement and Cash Flow Statement for

the year then ended, and a summary of significant accounting policies and other explanatory information.

2. Management's Responsibility for the Financial Statements

Management of the Company is responsible for the preparation of these financial statements that give a true and fair

view of the financial position, financial performance and cash flows of the Company in accordance with the

Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (the Act). This

responsibility includes the design, implementation and maintenance of internal control relevant to the preparation

and presentation of the financial statements that give a true and fair view and are free from material misstatements,

whether due to fraud or error.

3. Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit

in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those

standards require that we comply with ethical requirement and plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial

statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of

material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,

the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial

statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes

evaluating the appropriateness of accounting policies used and reasonableness of the accounting estimates made by

the management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us and based on the

consideration of the reports received from the branch auditors referred in para 5 below, the financial statements give

the information required by the Act in the manner so required and give a true and fair view in conformity with the

accounting principles generally accepted in India :

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

(ii) In the case of the Profit and Loss Statement, of the loss for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

5. Other Matter

H & R Johnson (India) and RMC Readymix (India) divisions of the Company have been audited separately by branch

auditors appointed by the Company. The branch auditors' reports provided to us have been considered for overall

reporting for the Company.

6. Report on Other Legal and Regulatory Requirements

(i) As required by the Companies (Auditor's Report) order, 2003 issued by the Central Government of India in terms

of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement of the matters

specified in paragraph 4 and 5 of the said order.

(ii) Further to our comments in the Annexure referred to in Paragraph 6 (i) above, as required by section 227(3) of

the Act, we report that;

a. we have obtained all the information and explanation which to the best of our knowledge and belief were

necessary for the purpose of our audit;

b. 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;

c. the Balance Sheet, Profit and Loss Statement and Cash Flow statement dealt with by this report are in agreement

with the books of account;

d. in our opinion, the Balance Sheet, Profit and Loss Statement and Cash Flow Statement dealt herewith comply

with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

e. on the basis of the written representations received from the Directors and taken on records by the Board of

Directors, none of the Director is disqualified, as at the balance sheet date, from being appointed as a Director in

terms of section 274(1)(g) of the Companies Act, 1956;

f. since the Central Government has not issued any notification as to the rate at which the cess is to be paid under

section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner

in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 6 (i) of the Auditors Report of even date of PRISM CEMENT LIMITED for the year ended

March 31, 2013

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and

situation of its fixed assets.

(b) According to the information and explanations given to us, the Company has formulated a programme of

verification by which all the assets of the Company are being verified in a phased manner over a period of three

years, which in our opinion, is reasonable having regard to the size of the Company and nature of its assets. No

material discrepancies were noticed on verification conducted during the year as compared with the book records.

(c) Fixed assets disposed off during the year were not substantial to affect Going Concern Assumption.

(ii) (a) Inventories have been physically verified during the year by the Management. In our opinion, the frequency

of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical

verification of inventories followed by the Management were reasonable and adequate in relation to the size of the

Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper

records of inventory. The discrepancies noticed on physical verification as compared to the book records were not

material and have been properly dealt with in the books of account.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or parties

covered in the register maintained under Section 301 of the Companies Act, 1956.

(iv) 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 purchases of

inventories and fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed

any major weakness in the internal control system.

(v) To the best of our knowledge and belief and according to the information and explanations given to us :

(a) The particulars of contracts or arrangements referred to in Section 301 that need to be entered in the Register

maintained under the said section have been so entered.

(b) Where such transaction is in excess of Rs. five lacs during the year in respect of any party, the transactions have

been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant

time.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with

the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under with regard

to the deposits accepted from the public. We are informed by the Management that no order has been passed by the

Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal

in this regard.

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

(viii) According to the information and explanations given to us, the Central Government has prescribed maintenance

of cost records under Section 209(1)(d) of the Companies Act, 1956 for the products manufactured by the Company.

We have broadly reviewed the books of account maintained and in our opinion; prima facie, the prescribed accounts

and records have been made and maintained by the Company. We have not, however, made a detailed examination

of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations provided to us, the Company is generally regular in depositing

undisputed statutory dues including Provident fund, Investor Education and Protection Fund, Income Tax, Sales Tax,

Wealth Tax, Service Tax, Custom duty, Excise duty, cess and other applicable statutory dues with the appropriate

authorities. No undisputed statutory dues payable were in arrears as at March 31, 2013, for a period of more than six

months from the date they became payable.

(b) According to the information and explanations given to us, the details of statutory dues which have not been

deposited with the concerned authorities on account of dispute are given below :

Nature of dues Period to Forum where dispute is pending Amount

which the involved

amount

relates (Rs. in

Crores)

Excise Duty &

Service Tax 1997 - 2002 Custom, Excise & Service Tax

Appellate Tribunal 0.33

2006 - 2012 Commissioner of Appeal 0.08

1997-1998, CESTAT 0.11

2001-2002,

2003-2004

2006-2011 CESTAT 8.06

2006 - 2012 Joint Commissioner 0.24

2007 - 2012 Commissioner 0.76

2005-2012 CESTAT 18.71

2007 - 2011 Additional Commissioner 0.07

2011 - 2012 Deputy Commissioner ##

2007 - 2011 Commissioner (Appeals) 0.17

2011 - 2012 Commissioner 0.98

2005-2011 CESTAT 0.02

2007 - 2011 Joint Commissioner 0.02

2007-2011 CESTAT 0.56

2010 - 2012 Comm. of Central Excise (Appeals) 0.21

2011 - 2012 Asst. Commissioner of Central Excise 0.02

2006-2009 CESTAT 0.04

2006 - 2011 Asst. Commissioner of Central

Excise 0.02

Sales Tax

(Central &

State) 2000 - 2006 High Court of Chhattisgarh 7.56

2009 - 2011 High Court of Madhya Pradesh 0.53

1999 - 2002 Sales tax Appellate Tribunal 0.21

2004 - 2005 Sales tax Appellate Tribunal 0.18

1999 - 2002 Sales tax Appellate Tribunal 0.29

2005 - 2007 Appellate Deputy Commissioner of

Commercial Tax 0.09

2005 - 2006 Deputy Commissioner of Sales Tax 0.20

2002 - 2004 Appeal filed with DC appeal 0.02

2007 - 2008, Deputy Commissioner (Appeals) 0.02

2009 - 2010,

2011 - 2012

2008 - 2009 Deputy Commissioner of

Commercial Tax 0.16

2002 - 2005 Appellate Commissioner 0.07

Service Tax January 2005 Appellate Tribunal 0.45

July 2007

VAT on Freight 2012 - 2013 High Court of Madhya Pradesh 4.37

Uttar Pradesh

Commercial 1998 - 1999 High Court of Uttar Pradesh 0.08

Tax

Madhya Pradesh 2004 - 2005, Appeal filed before Tribunal 0.28

Commercial Tax 2005 - 2006,

2007 - 2008,

2008 - 2009

2008 - 2009, Appeal filed before Addl.

Commissioner 0.28

2009 - 2010

Madhya Pradesh

Entry Tax 2001 - 2002 High Court of Madhya Pradesh 0.14

2007 - 2013 High Court of Madhya Pradesh 31.44

2006 - 2007 The Supreme Court 0.18

Uttar Pradesh

Entry Tax 2003 - 2010 High Court of Uttar Pradesh 3.86

Entry Tax 2008 - 2009 Deputy Commissioner (Appeals) 0.02

Cess on Land 1990 - 1991 Tehsildar Court 0.41

to

2003 - 2004

Energy

Development

Cess 2000 - 2006 The Supreme Court 11.90

Royalty on

Limestone 1996 - 2011 The Supreme Court 22.87

mining

Income Tax 2006 - 2007, Commissioner of Income Tax - Appeal 3.71

2007 - 2008,

2008 – 2009

Royalty on

Mining Minerals 2007 - 2010 Appellate Authority, Mines &

Geology Department 0.05

## denotes amount less than Rs. 50,000/-

(x) The Company does not have accumulated losses as at March 31, 2013 and has not incurred any cash losses

during the current financial year or in the immediately preceding year.

(xi) According to the information and explanations given to us, the Company has not defaulted in repayment of dues

to any financial institutions, banks or debenture holders.

(xii) According to the information and explanations given to us, the Company has not granted loans and advances

on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund or a nidhi/ mutual benefit fund/society. The provisions of clause 4(xiii) of the

Order, therefore, are not applicable to the Company.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares,

securities, debentures and other investments. The Company, however, has made short-term investments in units of

Mutual Funds during the year. The Company has maintained proper records of the transactions in respect of its

investments in Mutual Fund units. The said investments are held in the name of the Company.

(xv) According to the information and explanations given to us, the Company has given a guarantee of Rs. 108.54

Crores for loans taken by one of its wholly owned subsidiaries from bank. In our opinion, the terms and conditions

of the guarantee are, prima facie, not considered prejudicial to the interest of the Company as it is given for the

wholly owned subsidiary.

(xvi) In our opinion and according to the information and explanations given to us, the Company has raised term

loans during the year which have been applied for the purposes for which they were raised.

(xvii) In our opinion and according to the information and explanations given to us, and on an overall examination

of the Balance Sheet of the Company, we report that funds raised on short- term basis have not been utilized for long

term investment.

(xviii) According to the information and explanations given to us, 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.

(xix) According to the information and explanations given to us and the records examined by us, securities have

been created in respect of the debentures issued and outstanding at the year end.

(xx) During the year, the Company has not raised any money by way of a public issue.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, we

report that no fraud on or by the Company has been noticed or reported, during the year.

For N. M. RAIJI & CO.

Chartered Accountants

Firm Registration No.: 108296W

J. M. GANDHI

Partner

Membership No.: 37924

Place : Mumbai

Date : May 9, 2013