UltraTech Cement LimitedBOARD OF DIRECTORS(as on 7th July, 2006)Mr. Kumar Mangalam Birla, ChairmanMrs. Rajashree BirlaMr. R. C. BhargavaMr. G. M. DaveMr. Y. M. DeosthaleeMr. Y. P. GuptaDr. S. MisraMr. V. T. MoorthyMr. J. P. NayakMr. S. RajgopalMr. D. D. RathiManager & CEOMr. S. MisraChief Financial OfficerMr. K. C. BirlaCompany SecretaryMr. S. K. ChatterjeeExecutivesMr. O. P. Puranmalka Group Executive President &Chief Marketing OfficerMr. S. K. Maheshwari Group Executive President &Chief Manufacturing OfficerMr. V. Shukla Chief People OfficerCement WorksMr. A. K. Jain Unit Head, Awarpur(Maharashtra)Mr. K. Y. P. Kulkarni Unit Head, Kovaya(Gujarat)Mr. J. Kumar Unit Head, Hirmi(Chhattisgarh)Mr. A. K. Pillai Unit Head, Narmada Cement(Gujarat)Mr. C. S. Reddy Unit Head, Tadipatri(Andhra Pradesh)Corporate Finance Division

Mr. J. Bajaj Joint President (Finance)Mr. M. B. Agarwal Vice President (F&C)AuditorsS. B. Billimoria & Co., Chartered Accountants, MumbaiG. P. Kapadia & Co., Chartered Accountants, MumbaiSolicitorsAmarchand & Mangaldas & Suresh A. Shroff & Co.,Advocates & Solicitors, MumbaiThe Chairman’s Letter to Shareholders ............................................................................................................... 3Management Discussion and Analysis .................................................................................................................. 8Report on Corporate Governance......................................................................................................................... 15Shareholder Information ........................................................................................................................................ 24Social Report .......................................................................................................................................................... 33Environment Report .............................................................................................................................................. 35Directors’ Report to the Shareholders .................................................................................................................. 37Auditors’ Report ..................................................................................................................................................... 44Balance Sheet ......................................................................................................................................................... 48Profit and Loss Account ........................................................................................................................................ 49

Cash Flow Statement ............................................................................................................................................. 50Schedules ................................................................................................................................................................. 51Statement Relating to Subsidiary Companies ...................................................................................................... 69Consolidated Financial Statements ......................................................................................................................... 70Subsidiary Companies Reports and Accounts ...................................................................................................... 87REGISTERED OFFICE: B Wing, Ahura Centre, 2 Floor, Mahakali Caves Road, Andheri (East), Mumbai 400 093CONTENTS(3)Dear Fellow Shareholders,India as a Nation has come of age. With agreat measure of pride, we see our countryrise up the ranks of the powers that be inthe global economy. We have grabbed theworld’s attention and imagination. For thethird consecutive year, our GDP has recordeda near 8 per cent growth - among the highestin the world. To sustain the current growthrate and to push it closer to double-digitlevels year after year, the Government seemscommitted to an aggressive agenda foreconomic reforms. While economic reformsprovide a strong structural foundation forfuture growth, these are undeniablysupported by substantive productivityimprovements and an overall positivemindset. These developments at the macrolevel portend well for your Company.Your Company’s performance has been good.While the turnover at Rs. 3,299 crores asTHE CHAIRMAN’SLETTER TO

SHAREHOLDERS(4)against Rs. 2,607 crores reflects a 27% rise, its net profit at Rs. 230 crores, compared toRs. 3 crores has been indeed impressive. I am also pleased to inform you that NarmadaCement Company Limited was amalgamated with your Company with effect from1st October, 2005.To improve productivity as also to address the issue of rising energy costs, your Company hasearmarked a capex of Rs. 1,424 crores which will be spent over the next three years. Of thisRs. 844 crores is towards installation of captive power plants at your Company’s Units inGujarat and Chhattisgarh. Your Company will also invest in de-bottlenecking and costefficiencies. Improving efficiencies, leveraging logistics benefits, higher use of alternativefuels and a thrust on value-added product mix, including blended cement will translate intohigher earnings for your Company as we go forward.Your Company is pursuing profitable growth throughenhanced capital productivity, improved plantperformance, customer focus, cost optimisation andprudent financial management. I believe all this willhave a salutary effect on your Company’s future andwe can all look ahead to both, top-line and bottomlinegrowth.The Government’s focus to infrastructuredevelopment as well as the boom in the housingsector augurs well for your Company.Your Company is pursuingprofitable growth throughenhanced capital productivity,improved plant performance,customer focus, cost optimisationand prudent financialmanagement. I believe all thiswill have a salutary effect on your

Company’s future and we can alllook ahead to both, top-line andbottom-line growth.(5)The overriding reason behind our success has been our strikingly sharper accent on people.We look upon them as our core asset, much more critical than our physical assets or financialassets. I value their contribution in building aculture of meritocracy.The Aditya Birla Group: Building A MeritocracyOur vision, as you are aware, is to be a premiumglobal conglomerate, with a clear focus at eachbusiness level, and our vision is to deliver superiorvalue to all our stakeholders. Implicitin our Vision Statement, is our global ambition,which necessarily implies accelerated growth to reach global-sized capacities and services.We are on course.Meritocratic organizations are built on the strong foundation of values and not on the quicksands of opportunism. For us, our values – Integrity, Commitment, Passion, Seamlessnessand Speed – reflect the soul of our organization. To develop a common indepth understandingof what these values connote in our context, and how they should be our guiding light in thebusiness decisions we take as well as the manner in which we conduct ourselves, we rolled outValues Workshops. In more than 373 Workshops, over 8,236 colleagues across managementcadre committed to ensure that these values become a part of their everyday life.Talent Management and strengthening of the talent pool in building leadership across theGroup is a key priority. Employees identified as high-caliber management talent are putThe overriding reason behind oursuccess has been our strikinglysharper accent on people. We

look upon them as our core asset,much more critical than ourphysical assets or financial assets.I value their contribution inbuilding a culture of meritocracy.(6)through our Development Assessment Centre.Here, the talent pool is assessed by an externalagency to validate our ratings on the potential ofthe employee to scale up to a new responsibilitylevel.Gyanodaya, our management learning institute,has repositioned itself to align more closely withbusiness requirements. The focus is very clearlyon business and functional programmes, keepingin view the competencies required at every career stage. More than 1,000 managers across theGroup have been through the portals of Gyanodaya this year.The Gyanodaya Virtual Campus, which is our e-Learning Programme, has also increased itsreach manifold. As of today, we have 5,000 e-learners in our Group, with a course completionrate of 88%, while the world benchmark hovers around 65%. For a large number of engineersand CAs, we have tied up with Universitas 21 to provide an opportunity for these talentedpeople to do a full-time e-MBA. As of today, 46 employees have completed 165 courses in 11subjects in the last 1 year. Soon enough, they will earn their MBA degree while continuingon their jobs.With a view to provide for systematic and structured processes for career growth, the jobanalysis and evaluation process was started 4 years ago. While Managers from across businesseshave been involved at various stages of the process, more than 100 managers have beenMeritocratic organizationsare built on the strong foundationof values and not on the

quick sands of opportunism.For us, our values –Integrity, Commitment, Passion,Seamlessness and Speed – reflectthe soul of our organization.(7)trained as job analysts and another 100 have been trained as job evaluators. This exercisecovered all management level jobs across India. Over 5,000 jobs are already evaluated, resultingin the formation of 11 distinct job bands.To reward and motivate our people and to ensure internal equity and external competitiveness,we have been using a performance merit grid and linking rewards to performance.A performance-linked variable pay has been introduced for all management executives. Theseinitiatives have led to the successful institutionalisation of the Compensation Review andPerformance Management Process.These, to my mind, are significant steps towards building a more competitive and a worldclassorganization.Best regards,Yours sincerely,25th July, 2006 Kumar Mangalam Birla(8)MANAGEMENT DISCUSSION AND ANALYSISOVERVIEWThe Cement Industry is a part of the Construction Sector, which represents 6% of the country’s GDP. TheConstruction Sector is growing at 15 % p.a. and attracts 40% of the overall investment in the economy.The Cement Sector is, consequently, showing signs of growing at a faster rate than the 8% CAGR recordedover the past 2 decades. The principal demand drivers have been housing, roads and government expenditure.It is expected that renewed corporate investment in capacity creation and government spending on infrastructure

will likely accelerate the demand for cement. The per capita consumption of cement in India is just 125 kgs,which is modest when compared to neighbouring countries in East Asia. For instance, the comparable figure is- 366 kgs in Thailand, 606 kgs in Malaysia, 626 kgs in China and as much as 1,216 kgs in South Korea.The medium term prospects for the Cement Sector in India are satisfactory, as demand and supply are expectedto be in balance, with another 2 years before the next cycle of new capacity enters the market. However, theindustry is vulnerable to volatility in energy prices as this represents nearly two-thirds of the total cost ofoperations, including logistics. The position is aggravated by a growing shortfall on supplies of indigenous coalagainst linkages, the rising price of imported fuels, and the short term impact of restrictions imposed on theloads traditionally carried by trucks.The Company has a capacity of 17 million tpa comprising 5 integrated Cement Plants, supported by 5Grinding Units and 3 Terminals, one of which is located in Sri Lanka. The Company has focused on improvingPlant productivity as a means of mitigating inflationary pressures. It has also endeavoured to address escalatingpower costs by investing in Captive Thermal Power Plants at its 2 major Plants in Kovaya, (Gujarat) andHirmi, (Chattisgarh); introduction of alternative fuels; greater reliance on rail and sea transport and anexpected reduction in the average lead distance to markets.BUSINESS & FINANCIAL PERFORMANCE REVIEWMerger of subsidiaryA Scheme of Amalgamation of Narmada Cement Company Limited (NCCL) with the Company was approvedby the Board for Industrial and Financial Reconstruction (BIFR) at its hearing held on 15th May, 2006.Pursuant to the BIFR Order, NCCL stands amalgamated with the Company with effect from 1st October, 2005(the Appointed Date). The Effective Date of the Scheme is 1st June 2006. NCCL is now a Division of theCompany. NCCL’s results are incorporated in the accounts of the Company for the period from 1st October,

2005 to 31st March, 2006 and hence the current year’s results are not strictly comparable with those of theprevious year.Capacity UtilisationFY06 FY05 % changeover FY05Installed capacity (Mn.TPA):Clinker 14.44 13.03 11Cement 17.00 15.50 10Production (Mn. Mt):Clinker 12.73 12.36 3Cement 13.33 12.11 10— clinker capacity utilisation 93% 95%— effective capacity utilisation@ 89% 91%@ effective capacity utilisation: cement production + clinker sold.(9)Unprecedented floods in Gujarat together with extended shutdowns at the Company’s plant at Kovaya, Gujaratresulted in lower capacity utilisation at 89% compared to 91% in the previous year. However, cement productionincreased from 12.11 Mn. Mt. in FY05 to 13.33 Mn. Mt. registering a growth of 10 %.Sales VolumeFY06 FY05 % changeover FY05Sales Volume (Mn. Mt):Domestic – Cement 12.77 11.68 9Clinker 0.20 0.04Exports – Cement 1.46 0.84 74Clinker 1.12 2.61 (57)Domestic sales volume grew by 9% on par with the Industry growth - from 11.72 Mn. Mt to 12.97 Mn. Mt inFY06. Cement export volumes registered a growth of 74% from 0.84 Mn. Mt in FY05 to 1.46 Mn. Mt in FY06.The export mix saw a growth in cement, which constitutes 57% of the total exports.Sales Realisation (Net of Excise Duty)FY06 FY05 % changeover FY05Average Realisation (Rs./MT) 2,122 1,718 24

Domestic – Cement 2,123 1,750 21Exports – Cement 2,133 1,928 11– Clinker 1,632 1,324 23Domestic Cement realisation rose by 21% from Rs. 1,750 pmt to Rs. 2,123 pmt. Export prices have also seen anincrease with cement realisation improving by 11% from Rs.1,928 pmt to Rs. 2,133 pmt and clinker realisationimproving by 23% from Rs.1,324 pmt to Rs. 1,632 pmt. This helped in mitigating the rising energy andmaintenance costs.A view of the Andhra Pradesh Cement Works.(10)Financial Highlights:Rs. in croresFY06 FY05 % ChangeNet Turnover 3,299 2,607 27Domestic 2,809 2,093 34Exports 490 514 (5)Other Income 37 21 76Total Expenditure 2,745 2,256 22Operating Profit (PBIDT) 591 372 59Operating Margin (%) 18 14Interest 90 107 (16)Gross Profit (PBDT) 502 265 89Depreciation 216 222 (3)Profit Before Tax and Diminution 286 43Diminution in Value of Investment (EI) — 77Profit Before Tax / (Loss) 286 (34)Current Tax 57 32 81Deferred Tax (5) (68) (93)Fringe Benefit Tax 4 —Net Profit after Total Tax and EI 230 3Net TurnoverThe net turnover increased by 18% after adjustment for traded volumes and a change in the treatment offreight following the introduction of VAT.Other IncomeOther income increased from Rs. 21.07 crores in the previous year to Rs.37.00 crores on account of dividend

received from UltraTech Ceylinco (Pvt) Ltd., a subsidiary of the Company and dividend earned on temporarysurplus funds invested in Debt- linked Dividend Schemes of reputed Mutual Funds. The Company has writtenback Rs.11 crores excess provision made in earlier years.Operating Profit (PBDIT) & MarginOperating profit increased by 59% from Rs.371.90 crores in FY05 to Rs.591.26 crores in FY06. This was despitethe substantial increase in power, maintenance, employee and logistics costs, viz.- Power costs increased by 11% on account of higher price of naphtha required for the operation of captivepower plant at the Company’s plant in Gujarat,- Stores & spares and repairs & maintenance expenditure increased from Rs.210.28 crores toRs.246.76 crores due to extended shutdowns across all the plants,- Employee costs were higher following a revision in the compensation structure,- Logistics costs were higher given the increase in freight rate and change in the treatment of freightfollowing introduction of VAT.Despite the increases, the operating margin improved from 14% in FY 05 to 18% in FY06.(11)InterestThe interest cost was down by 16% from Rs.106.88 crores in FY05 to Rs.89.64 crores in FY06. This wasachieved as a result of repayment / pre-payment of high coupon borrowings and substituting them with lowercoupon borrowing, leading to a savings of Rs.13 crores. Prudent working capital management also broughtdown interest costs on working capital borrowing.DepreciationDepreciation at Rs.216.03 crores in FY06 was lower compared to Rs.221.78 crores in FY05; there was additionaldepreciation of Rs.18.34 crores in previous year for prior period adjustment.Income TaxCurrent tax increased from Rs.31.55 crores to Rs.57.00 crores, mainly on account of higher taxable income and

lower tax deprecation. The Current tax rate continues to remain high despite the benefit of carry forward ofaccumulated tax losses of Rs. 176 crores of NCCL.The Company has also created Deferred Tax liability for addition in the block on account of amalgamation ofNCCL. During the previous year, the deferred tax credit was higher on account of reduction in income taxrates in Finance Bill FY05. However, there was a reduction in deferred tax liability of Rs.4.75 crores againstRs.68.00 crores in previous year.The Company has provided Rs.3.58 crores towards Fringe Benefit Tax.Net ProfitNet profit was Rs. 229.76 crores as compared to Rs. 2.85 crores in the previous year after providingRs.76.84 crores towards permanent diminution in value of investment towards its investments in NCCL.Captive Jetty at Gujarat Cement Works.(12)Cash Flow StatementRs in CroresFY06Sources of CashCash from operations 517.61Non-operating Cash flow 6.84Decrease in working capital 34.02Total 558.47Uses of CashNet increase in investments 147.92Net capital expenditure 216.16Decrease in debts 88.04Dividend 10.66Interest 92.32Increase in cash and cash equivalent 3.37Total 558.47Sources of CashCash from operationsCash from operations was higher at Rs 517.61 crores in FY06 as against Rs 371.67 crores in FY05.Non Operating Cash Flow

Non Operating Cash Flow includes interest earned on deposit with statutory authorities/dividend income fromsubsidiary and short term investments.Decrease in Working CapitalThe working capital has decreased by Rs. 34.02 crores. The liabilities and provisions increased by Rs.78.21crores, while current assets increased by Rs.44.19 crores resulting in reduction of working capital by Rs.34.02crores.Uses of CashNet increase in investmentsThe Company has invested its temporary surplus funds in Debt linked - Dividend schemes of reputed MutualFunds.Net Capital ExpenditureThe capital expenditure of Rs. 216.16 crores was on account of modernisation / replacement of existing assetsand adjustment of amalgamation of NCCL.Decrease In DebtsThe Company raised Rs. 189 crores long term debts and repaid Rs. 167 crores, resulting in increase of Rs.22crores in long term borrowings. Sales tax deferment loan increased by Rs. 27.93 crores. There was furtherreduction in short term borrowings by Rs. 137.86 crores.The Company enjoys AA+ and P1+ for its long term and short term debts from CRISIL.(13)DividendThe Company has paid Rs.10.66 crores as dividend to its shareholders including corporate tax on dividend ofRs.1.33 crores. For the Current year, the Board has recommended a dividend of Rs.1.75 per share, entailing aoutflow of Rs.24.85 crores including corporate tax on dividend of Rs. 3.06 crores. This accounts for 10.8 % ofnet profit for FY06.CAPITAL EXPENDITURE PLANThe Company has earmarked a capex of Rs.1,424 crores which will be spent over the next three years toimprove productivity and to address the issue of rising energy costs. Of this Rs.844 crores is towards installation

of captive power plants at the Company’s Units in Gujarat and Chhattisgarh and the balance towardsde-bottlenecking and cost efficiencies.CONSOLIDATED PERFORMANCERs in CroresFY06 FY05* % ChangeNet Turnover 3,384 2,701 25Operating Profit (PBIDT) 607 379 60Interest 90 109 (18)Gross Profit (PBDT) 517 270 92Depreciation & Amortisation of Goodwill 231 249 (7)Profit Before Tax and Diminution 286 20Diminution in Value of Investment (EI) — 77Profit Before Tax /(Loss) 286 (57)Current Tax & Fringe Benefit Tax 63 33Deferred Tax (4) (37)Net Profit before Minority interest 227 (52)Minority Interest 2 1Net Profit after Minority Interest 225 (53)*Includes figures of UltraTech Ceylinco Pvt Limited for part of the yearThe consolidated turnover increased by 25% to Rs.3,384 crores from Rs.2,701 crores in the previous year,because of improved Domestic and Exports realisation. The interest cost was lower by 18% to Rs.90 crores.Net profit before tax increased to Rs.286 crores in FY06 from Rs. (57) crores in FY05.MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATION FRONT,INCLUDING NUMBER OF PEOPLE EMPLOYEDIndustrial relations at the Company’s plants remained cordial. The Company has restructured its remunerationstrategy to be on par with the industry. It has also introduced a Variable Pay Scheme to reward employees visà-vis their performance as well as the performance of the Company.The total number of employees in the Company as on 31st March, 2006 was 3,266 employees (3,160 employees).(14)RISK MANAGEMENTThe Company is aware of the risks associated with the business. It regularly analysis the risks and takes

corrective action for managing / mitigating the same. Moreover, the Company has engaged the services of areputed consultant to undertake an exhaustive exercise for further identifying risks and taking adequate measuresfor strengthening risk management.Foreign Exchange RiskThe Company’s Policy is to hedge its long-term foreign exchange risk as well as short-term exposures withinthe defined parameters. Currently, the Company has long term foreign exchange liability of Rs.89.23 crores.The short term exposures are covered from time to time. The Company’s aggregate exports stood atRs.490.25 crores and imports at Rs.243.11 crores in FY06. As exports exceed imports, the Company hassuitably hedged the difference.Interest Rate RiskThe Company is open to interest rate fluctuations on its Rupee denominated borrowings. It uses a judiciousmix of fixed and floating rate debts within the stipulated parameters.Internal Control System and their adequacyThe Company has an appropriate internal control system commensurate with the size of its operations. Extensiveinternal audit supplements the internal control system.CONCLUSIONOptimising efficiencies, leveraging logistics benefits, higher use of alternative fuels and a thrust on value-addedproduct mix, including blended cement will translate into higher earnings for the Company as we go forward.CAUTIONARY STATEMENTStatement in this “Management Discussion and Analysis” describing the Company’s objectives, projections, estimates, expectationsor predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual resultscould differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operationsinclude global and Indian demand supply conditions, finished goods prices, feed stock availability and prices, cyclical demand andpricing in the Company’s principal markets, changes in Government regulations, tax regimes, economic developments within India

and the countries within which the Company conducts business and other factors such as litigation and labour negotiations. TheCompany assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of anysubsequent development, information or events or otherwise.(15)REPORT ON CORPORATE GOVERNANCEGovernance PhilosophyThe Aditya Birla Group is committed to the adoption of the best governance practices and their adherence inspirit. Our governance practices stem from an inherent desire to provide full disclosure of material information.Our governance philosophy rests on five basic tenets viz., Board accountability to the Company and shareholders,strategic guidance and effective monitoring by the Board, protection of minority interests and rights, equitabletreatment of all shareholders as well as superior transparency and timely disclosure.In line with this philosophy, UltraTech Cement Limited, continuously strives to adopt the best governanceand disclosure practices. Revised Clause 49 of the Listing Agreement with stock exchanges which deals withCorporate Governance is applicable to your Company with effect from 1stJanuary, 2006 and your Company iscompliant with its provisions. The details of compliance are as follows:I. BOARD OF DIRECTORS• Composition and provisions as to Board and CommitteesThe Board should have an optimum combination of executive and non-executive directors with not lessthan 50% of the Board comprising non-executive directors. Further, at least one-third of the Board shouldcomprise of independent directors if the Chairman is non-executive and at least half of the Board shouldbe independent in case of an executive Chairman. Also a Director shall not be a member in more than 10committees or act as Chairman of more than five committees across all companies in which he is adirector.Your Company’s Board comprises of 11(eleven) directors, all of whom are non-executive. Of these, 4(four) are

independent directors. The details of the directors with regard to outside directorships, committee positions as well asattendance at board/ general meetings are as follows:Director Executive/ No. of Outside No. of Outside No. of Board Attended AttendedNon-Executive/ Directorships Held2 Committee Meetings Last LastIndependent1 Positions Held3 AGM@ EGM#Public Private Member Chairman Held AttendedMr.Kumar Mangalam Birla Non-Executive 12 10 1 - 5 2 Yes YesMrs. Rajashree Birla Non-Executive 6 10 - - 5 5 - -Mr. R.C. Bhargava Independent 11 2 5 3 5 5 - YesMr. G. M. Dave* Independent 5 - 5 - 5 N.A. N.A. N.A.Mr. Y.M. Deosthalee Non-Executive 8 1 3 - 5 3 Yes -Mr. A.R. Gandhi* Independent 7 - 2 2 5 1 - -Mr. Y.P. Gupta Independent 4 - - 3 5 - - -Dr. S. Misra Non-Executive 5 1 1 - 5 3 Yes YesMr. V.T. Moorthy Non-Executive 1 - - - 5 5 - YesMr. J.P. Nayak Non-Executive 9 1 2 4 5 4 Yes YesMr. S. Rajgopal UTI Nominee,Independent 1 - - - 5 5 Yes YesMr. D.D. Rathi Non-Executive 6 2 1 - 5 5 Yes -* At the Board meeting held on 7th July, 2006, Mr. G.M. Dave was appointed Additional Director andMr. A. R. Gandhi resigned from the Board.@ Annual General Meeting (AGM) held on 24th August, 2005 at Birla Matushri Sabhagar, 19, New Marine Lines,Mumbai 400 020.# Extraordinary General Meeting (EGM) held on 20th February, 2006 at Birla Matushri Sabhagar, 19, New MarineLines, Mumbai 400 0201. Independent Director means a director defined as such under Clause 49 of the Listing Agreement.2. Excluding Directorship in foreign companies and companies under Section 25 of the Companies Act, 1956.3. Only two Committees viz. the Audit Committee and the Shareholders’ / Investor Grievance Committee are considered.4. No Director is related to any other Director on the Board, except for Mr. Kumar Mangalam Birla andMrs. Rajashree Birla, who are son & mother respectively.(16)

• Non Executive Directors’ compensation and disclosureAll fees/compensation, (except sitting fees) paid to non-executive directors, including independent directors,shall be fixed by the Board of Directors and shall require shareholders’ approval. The shareholders’ resolutionshall specify the limits for the maximum number of stock options that can be granted to non-executivedirectors, including independent directors.Details of sitting fees paid to the Directors for attending Board meetings during the year under review are as follows:Name of Director Sitting fees paid(Rs.)Mr. Kumar Mangalam Birla 40,000Mrs. Rajashree Birla 100,000Mr. R.C. Bhargava 100,000Mr. Y.M. Deosthalee 60,000Mr. A.R. Gandhi 20,000Mr. Y.P. Gupta —Dr. S. Misra 60,000Mr. V.T. Moorthy 100,000Mr. J.P. Nayak 80,000Mr. S. Rajgopal 100,000Mr. D.D. Rathi 100,000Apart from sitting fees for attending Board/Committee meetings, no other fees/compensation is paid to the Directors.Your Company does not have any stock option scheme for its Directors and employees.• Other provisions of the Board and CommitteesThe Board shall meet at least four times a year, with a maximum time gap of four months between anytwo meetings. The minimum information to be made available to the Board should be as prescribed inAnnexure IA of Clause 49 of the Listing Agreement.Your Company’s Board plays a primary role in ensuring good governance and functioning of your Company. TheBoard consists of professionals from diverse fields and has vast experience in their respective areas. The Board’srole, functions, responsibility and accountability are clearly defined. Members of the Board have complete freedom

to express their views on agenda items and can discuss any matter at the meeting with the permission of theChairman. The Board guides the management in achieving its goals and creating value for all stakeholders. Apartfrom the matters statutorily required to be placed before the Board, the working of all Units of your Company arealso placed before the Board.The details of Board meetings held during FY2005-2006 are as outlined below:Date of Board Meeting City No. of Directors Present23rd April, 2005 Mumbai 923rd July, 2005 Mumbai 922nd October, 2005 Mumbai 626th December, 2005 Mumbai 621st January, 2006 Mumbai 8(17)• Code of ConductThe Board shall lay down a Code of Conduct for all Board members and senior management of thecompany. The Code of Conduct shall be posted on website of the company. All Board members and SeniorManagement personnel shall affirm compliance with the code on an annual basis. The Annual Report ofthe company shall contain a declaration to this effect signed by the CEO.The Board of Directors of your Company have laid down a Code of Conduct (‘the Code’) applicable to all BoardMembers and Senior Management personnel of your Company. A declaration from the CEO of your Company tothe effect that all Board Members and Senior Management personnel of your Company have affirmed compliancewith the Code, forms a part of this Report. The Code has been posted on the website of your Company –www.ultratechcement.comDECLARATIONAs provided under Clause 49 of the Listing Agreement with the Stock Exchanges, the Board Members and the SeniorManagement Personnel have affirmed compliance with the Code of Conduct for the year ended 31st March, 2006.Mumbai S.Misra30th June, 2006 Manager & CEO

II. AUDIT COMMITTEEA qualified and independent Audit Committee shall be set up and should meet at least four times in a year.The Audit Committee shall have minimum three directors as members, with two-thirds of its membersbeing independent directors. All members of Audit Committee shall be financially literate and at least onemember shall have accounting or related financial management expertise. The Chairman of the AuditCommittee shall be an independent director and shall be present at Annual General Meeting to answershareholder queries. The Company Secretary shall act as the secretary to the Committee.Your Company has an Audit Committee at the Board level which acts as a link between the Management, theStatutory and Internal Auditors and the Board of Directors and oversees the financial reporting process. All theMembers of the Audit Committee are financially literate and Independent Directors. Mr.R.C.Bhargava is theChairman of the Committee. During the year, the Audit Committee met 5 times to deliberate on various matters.The meetings were held on 23rd April, 2005; 23rd August, 2005; 22nd October, 2005; 21st January, 2006 and21st February, 2006. The details of the attendance and sitting fees paid are as follows:Name of Audit No. of meetings Sitting Fees paidCommittee Member Held Attended (Rs.)Mr. R.C. Bhargava 5 5 100,000Mr. G.M. Dave* 5 N.A. N.A.Mr. A.R. Gandhi* 5 — —Mr. S. Rajgopal 5 5 100,000* Mr. A. R. Gandhi ceased to be a Member of the Audit Committee with effect from 7th July, 2006.Mr. G. M. Dave was inducted as a Member of the Audit Committee from that date.1. Mr.D.D.Rathi, Director of your Company and Wholetime Director & Chief Financial Officer ofGrasim Industries Limited and Mr.K.C.Birla, Chief Financial Officer of your Company are permanent

invitees to the Audit Committee. The Statutory, Internal as well as the Cost Auditors of your Company arealso invited to the Audit Committee Meetings.(18)2. Mr.S.K.Chatterjee, Company Secretary, acts as the Secretary to the Committee.The Audit Committee has the following powers:1. To investigate any activity within its terms of reference,2. To seek information from any employee,3. To obtain outside legal or other professional advice,4. To secure attendance of outsiders with relevant expertise, if it considers necessary.The role of the Audit Committee includes the following:1. Oversight of the company’s financial reporting process and the disclosure of its financial information toensure that the financial statement is correct, sufficient and credible,2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement orremoval of the statutory auditor and the fixation of audit fees,3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.4. Reviewing, with the management, the annual financial statements before submission to the Board forapproval, with particular reference to:a. Matters required to be included in the Director’s Responsibility Statement to be included in theBoard’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956,b. Changes, if any, in accounting policies and practices and reasons for the same,c. Major accounting entries involving estimates based on the exercise of judgment by management,d. Significant adjustments made in the financial statements arising out of audit findings,e. Compliance with listing and other legal requirements relating to financial statements,f. Disclosure of any related party transactions,g. Qualifications in the draft audit report.5. Reviewing, with the management, the quarterly financial statements before submission to the Board for

approval.6. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internalcontrol systems.7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal auditdepartment, staffing and seniority of the official heading the department, reporting structure coverage andfrequency of internal audit.8. Discussion with internal auditors any significant findings and follow up there on.9. Reviewing the findings of any internal investigations by the internal auditors into matters where there issuspected fraud or irregularity or a failure of internal control systems of a material nature and reportingthe matter to the Board.10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as wellas post-audit discussion to ascertain any area of concern.11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,shareholders (in case of non payment of declared dividends) and creditors, if any.The Audit Committee reviews the following information:1. Management Discussion and Analysis of financial condition and results of operations,2. Statement of significant related party transactions (as defined by the Audit Committee), submitted bymanagement,3. Management letters / letters of internal control weaknesses issued by the statutory auditors, if any,4. Internal audit reports relating to internal control weaknesses, and5. The appointment, removal and terms of remuneration of the Chief Internal Auditor.(19)III. SUBSIDIARY COMPANIESAt least one independent director on the Board of Directors of the holding company shall be a director onthe Board of Directors of a material non-listed Indian subsidiary company. The Audit Committee of the

listed holding company shall also review the financial statements, in particular, the investments made bythe unlisted subsidiary company. The minutes of the Board meetings of the unlisted subsidiary companyshall be placed at the Board meeting of the listed holding company. The management should periodicallybring to the attention of the Board of Directors of the listed holding company, a statement of all significanttransactions and arrangements entered into by the unlisted subsidiary company.Your Company does not have any material non-listed Indian Subsidiary Company. The Audit Committee reviewsthe financial statements of the unlisted subsidiary companies. The minutes of the Board meetings as well asstatement of all significant transactions of the unlisted subsidiary companies are placed before the Board of yourCompany for their review.IV. DISCLOSURES(A) Basis of related party transactionA statement in summary form of transactions with related parties in the ordinary course of business,details of material individual transactions with related parties that are not in the normal course ofbusiness and details of material individual transactions with related parties that are not on an arm’slength basis is required to be placed before the Audit Committee.Your Company places all the aforesaid details before the Audit Committee periodically.Particulars of related party transactions are listed out in Note no. 14 of Part B of Schedule 21 to theAccounts. However, all these transactions are on normal commercial arm’s length basis.(B) Disclosure of Accounting treatmentYour Company has followed all relevant Accounting Standards while preparing the financial statements.(C) Risk ManagementThe company shall lay down procedures to inform Board members about the risk assessment andminimisation procedures. These procedures shall be reviewed to ensure that executive management

controls risk through means of a properly defined framework.Your Company is aware of the risks associated with the business. It regularly analysis the risks and takescorrective action for managing/mitigating the same. Your Company has developed a risk management policy.(D) Proceeds from public issues, right issues, preferential issues etc.If any capital is raised through an issue, the company needs to disclose to the Audit Committee, theuses / applications of funds on a quarterly basis. Further, on an annual basis, the company shallprepare a statement of funds utilised for purposes other than those stated in the offer document/prospectus/notice and place it before the Audit Committee. This statement shall be certified by theStatutory Auditors of the company.During the year under review, your Company did not raise any funds by way of public, rights, preferentialissues etc.(20)(E) Remuneration of Directors and details of Directors’ shareholding– The company needs to disclose all pecuniary relationship or transactions of the non-executivedirectors vis-à-vis the company.Apart from sitting fees that are paid to the Directors for attending Board / Committee meetings, nosignificant material transactions have been made with the non-executive Directors vis-à-vis the Company.– The Company shall disclose the number of shares and convertible instruments held bynon-executive directors in the annual report.Details of Directors shareholding in the Company are as follows:Name of Director No. of SharesMr. Kumar Mangalam Birla 400Mrs. Rajashree Birla 400Mr. R.C. Bhargava —Mr. G.M. Dave —Mr. Y.M. Deosthalee 1,702Mr. A.R. Gandhi 485Mr. Y.P. Gupta —Dr. S. Misra —

Mr. V.T. Moorthy 420Mr. J.P. Nayak 1,276Mr. S. Rajgopal —Mr. D.D. Rathi —(F) Management– As part of the Directors’ Report or as an addition thereto, a Management Discussion and AnalysisReport should form part of the Annual Report to the shareholders.The Management Discussion and Analysis Report forms part of the Annual Report and is in accordancewith the requirements laid out in Clause 49 of the Listing Agreement.– Senior management shall make disclosures to the Board relating to all material financial andcommercial transactions, where they have personal interest, that may have a potential conflictwith the interest of the company at large (for e.g. dealing in company shares, commercial dealingswith bodies, which have shareholding of management and their relatives etc.)No material transaction has been entered into by your Company with the Promoters, Directors or theManagement, their subsidiaries or relatives etc., that may have a potential conflict with interests of yourCompany.(G) Shareholders– In case of the appointment of a new director or re-appointment of a director the shareholdersmust be provided with the details of DirectorsDetails of the Directors seeking appointment / re-appointment at the ensuing AGM are provided in theNotice convening the AGM.– Quarterly results and presentations made by the company to analysts shall be put on company’swebsite, or shall be sent in such a form so as to enable the stock exchange on which the companyis listed to put it on its own website.Press Releases and financial results are made available on the website of your Company(www.ultratechcement.com) and also that of the Aditya Birla Group (www.adityabirla.com).

(21)– Share Transfer and Shareholder / Investor Grievance CommitteeA Shareholders’ Grievances Committee under the chairmanship of a non-executive director shallbe formed to specifically look into the redressal of shareholder and investors complaints liketransfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc. To expeditethe process of share transfers, the Board of the company shall delegate the power of share transferto an officer or a committee or to the registrar and share transfer agents. The delegated authorityshall attend to share transfer formalities at least once in a fortnight.Your Company has a “Share Transfer and Shareholder / Investor Grievance Committee” at the Boardlevel, under the Chairmanship of a non-executive, independent director. The Committee looks into issuesrelating to share / debentureholders, including transfer/transmission of shares/debentures, issue of duplicateshare/debenture certificates, non-receipt of dividend, Annual Report, shares after transfers and delays intransfer of shares. The Committee meets to review the status of investor grievances, dematerialisation /rematerialisation of shares and debentures as well as systems and procedures followed to track investorcomplaints and suggest measures for improvement from time to time. During the year the Committee meton 23rd April, 2005 and 22nd October, 2005.The composition of the Committee, meetings held and attended and the sitting fees paid are as follows:Name of Member No. of meetings Sitting Fees paidHeld Attended (Rs.)Mr. R. C. Bhargava 2 2 40,000Dr. S. Misra 2 1 20,000Mr. D. D. Rathi 2 2 40,000Mr.S.K.Chatterjee, Company Secretary, acts as Secretary to the Committee and is also the ComplianceOfficer.The Company’s shares are compulsorily traded and delivered in the dematerialised form in all Stock

Exchanges. The equity shares of the Company have been admitted with National Securities DepositoryLimited and Central Depository Services (I) Limited bearing ISIN No. INE481G01011.To expedite the transfer in the physical segment, necessary authority has been delegated by your Board toOfficers of your Company, to approve issue of share/debenture certificates, approve transfer/transmissionof shares / debentures, consolidation, sub-division, split of share/debenture certificates etc. Details of sharetransfers/transmissions approved by the Directors and Officers are placed before the Board.Details of complaints received, number of shares transferred during the year, time taken for effecting thesetransfers and the number of share transfers pending are furnished in the “Shareholder Information” sectionof this Annual Report.- Details of non-compliance by the Company, penalties, strictures imposed on the company bystock exchanges or SEBI or any other statutory authority, on any matter relating to capitalmarkets, during the year.There has been no instance of non-compliance by the Company on any matter related to capital marketsduring the year under review and hence no strictures /penalties have been imposed on the Company by thestock exchanges or the Securities and Exchange Board of India (SEBI) or any statutory authority.(22)Adoption of non-mandatory compliances(a) A half-yearly declaration of financial performance of your Company including summary of thesignificant events has been sent to each household of shareholders.(b) The statutory financial statements of your Company are unqualified.Apart from the above, your Company has constituted a Finance Committee of the Board. TheCommittee is authorised to exercise all powers and discharge all functions relating to working capitalmanagement, foreign currency contracts, operation of bank accounts and matters relating to excise,

sales tax, income tax, customs and other judicial or quasi judicial authorities. The Committeecomprises of the following Directors - Mr. R.C. Bhargava, Dr. S. Misra and Mr. D.D. Rathi.V. CEO/CFO CERTIFICATIONThe Manager & CEO and the CFO have certified to the Board that:1. They have reviewed the balance sheet and profit and loss account (consolidated and unconsolidated),and all its schedules and notes to accounts, as well as the cash flow statement;2. Based on their knowledge, information and belief, these statements do not contain any untrue statementof a material fact or omit to state a material fact that might be misleading with respect to thestatements made;3. Based on their knowledge, information and belief, the financial statements and other financialinformation included in this Report present a true and fair view of the Company’s affairs for the periodpresented in this Report and are in compliance with the existing accounting standards, applicable lawsand regulations;4. To the best of their knowledge, information and belief, no transactions entered into by the Companyduring the year are fraudulent, illegal or violative of the Company’s Code of Conduct;5. They are responsible for establishing and maintaining internal controls for financial reporting andhave evaluated the effectiveness of the internal control systems of the Company pertaining to financialreporting;6. They have disclosed, based on their most recent evaluation, wherever applicable, to the Company’sAuditors and the Audit Committee of the Company’s Board of Directors all significant deficiencies inthe design or operation of internal controls, if any, of which they are aware and the steps taken orproposed to be taken to rectify the deficiencies;They have indicated to the Auditors and the Audit Committee:

a) Significant changes in the Company’s internal control over financial reporting during the year;b) all significant changes in accounting policies during the year, if any, and that the same have beendisclosed in the notes to the financial statements;c) any fraud, whether or not material, that involves management or other employees who have asignificant role in the Company’s internal control system over financial reporting.(23)– Whether special resolutions passed in the above mentioned General Meetings: YesThe following resolutions were passed as special resolutions:(A) At the EGM held on 20th February, 2006:i. approval to the Scheme of Amalgamation of Narmada Cement Company Limited(NCCL) with yourCompany.ii. approval to the Board to issue and allot equity shares of the Company to the members of NCCL.(B) At the AGM held on 11th October, 2004:i. alteration of the Articles of Association of your Company.ii. change in name of your Company.Whether any special resolution passed last year through postalballot – details of voting pattern NoPerson who conducted the postal ballot exercise N.A.Whether any special resolution is proposed to be conducted through postal ballot N.A.Procedure for postal ballot N.A.VII. MEANS OF COMMUNICATIONQuarterly resultsWhich newspapers normally published inNewspaper Cities of PublicationBusiness Standard All editionsLoksatta MumbaiAny website, where displayed www.ultratechcement.comwww.adityabirla.comWhether the Company Website displaysAll official news releases YesPresentation made to Institutional Investors/Analysts NoGeneral Shareholder Information Part of this annual report

VI. GENERAL BODY MEETINGSDetails of General MeetingsYear Type Location Date Time2006 EGM Birla Matushri Sabhagar, 20th February, 2006 3.00 pm19, New Marine Lines,Mumbai – 400 0202005 AGM Birla Matushri Sabhagar, 24th August, 2005 2.00 pm19, New Marine Lines,Mumbai – 400 0202004 AGM Birla Matushri Sabhagar, 11th October, 2004 2.00 pm19, New Marine Lines,Mumbai – 400 0202003 AGM L & T House, Ballard Estate, 30th May, 2003 11.00 amMumbai– 400 001(24)SHAREHOLDER INFORMATION1. Annual General Meeting- Date and Time : 28th August, 2006 at 2.00 pm- Venue : Birla Matushri Sabhagar,19, New Marine Lines,Mumbai – 400 0202. Financial Calendar- Financial reporting for the quarter ended 30th June, 2006 : End July,2006- Financial reporting for the half year ending 30th September, 2006 : End October,2006- Financial reporting for the quarter ending 31st December, 2006 : End January,2007- Financial reporting for the year ending 31st March, 2007 : End April,2007- Annual General Meeting for the year ending 31st March, 2007 : End July/August, 20073. Dates of Book Closure : 17th August, 2006 to28th August, 2006(both days inclusive)4. Dividend Payment Date : On or after 28th August, 20065. Registered Office : UltraTech Cement Limited“B” Wing, Ahura Centre,2nd Floor, Mahakali Caves Road,Andheri (East),Mumbai 400093.Tel.: (022) 66917800

Fax: (022) 66928109Email:sharesutcl@adityabirla.comWeb: www.ultratechcement.comwww.adityabirla.com6. (a) Listing Details :Equity Shares Non Convertible Debentures1. Bombay Stock Exchange Limited 1. Bombay Stock Exchange LimitedPhiroze Jeejeebhoy Towers Phiroze Jeejeebhoy TowersDalal Street, Mumbai 400001. Dalal Street, Mumbai 400001.2. National Stock Exchange of India Limited 2. National Stock Exchange of India Limited“Exchange Plaza” “Exchange Plaza”Bandra-Kurla Complex Bandra-Kurla ComplexBandra (East), Mumbai 400051. Bandra (East), Mumbai 400051.Note: Listing fees for the year 2006-07 has been paid to the Bombay Stock Exchange Limited and the NationalStock Exchange of India Limited.(25)(b) Overseas Depository for GDRs : Citibank N. A.Depository Receipt Services111, Wall Street,New York; NY-10043 USATel: +12126577808Fax: +12126575398(c) Domestic Custodian of GDRs : Citibank N.A.Custody ServicesRamnord House77, Annie Besant Road,Worli, Mumbai – 400 025Tel: (022) 2497 8066Fax: (022) 2497 80607. Stock Code:Stock Code Reuters BloombergBombay Stock Exchange Limited 532538 ULTC.BO UTCEM INNational Stock Exchange of India Limited ULTRACEMCO ULTC.NS NUTCEM IN8. Stock Price Data:Bombay Stock Exchange Limited National Stock Exchange of India LimitedHigh Low Close Avg. Vol. High Low Close Avg. Vol.

(In Rs.) (In Rs.) (In Rs.) (In Nos) (In Rs.) (In Rs.) (In Rs.) (In Nos)Apr-05 377.85 331.25 333.40 47,596 379.70 331.00 334.15 73,536May-05 367.00 315.10 324.90 39,828 368.30 315.00 325.55 60,377Jun-05 358.50 314.00 352.45 72,480 359.45 295.40 353.70 121,283Jul-05 430.00 348.00 380.75 91,970 415.00 347.00 381.60 133,293Aug-05 448.40 375.00 439.05 117,163 448.80 370.05 438.00 157,311Sep-05 495.00 406.00 466.30 59,730 498.00 425.00 466.00 92,972Oct-05 475.00 381.00 398.15 41,600 473.00 380.00 399.85 52,377Nov-05 477.05 403.00 450.00 34,284 477.80 400.00 450.20 57,260Dec-05 464.50 415.00 427.15 44,894 464.20 344.95 427.45 63,241Jan-06 539.90 421.00 518.55 50,800 538.00 420.10 518.20 81,520Feb-06 565.00 498.20 560.50 51,136 566.00 499.05 561.45 59,501Mar-06 689.00 562.50 684.45 71,952 689.80 560.15 683.05 97,305(26)9. Stock Performance:10. Stock Performance and Returns :Absolute Returns (In %)(In Percentage) 1 Year 3 Years 5 YearsUltraTech 93.1 - -BSE Sensex 73.7 270.7 213.0NSE Nifty 67.1 247.8 196.3Annualised Returns (In %)(In Percentage) 1 Year 3 Years 5 YearsUltraTech 93.1 - -BSE Sensex 73.7 54.7 25.6NSE Nifty 67.1 51.5 24.311. Registrar and Transfer Agent : Sharepro Services (India) Pvt. Ltd.(For share transfers and other communication Satam Estate, 3rd Floor,relating to share certificates, Above Bank of Baroda,dividend and change of address) Cardinal Gracious Road, Chakala,Andheri (East), Mumbai 400099.Tel: (022) 2821 5168 / 2834 8218Fax : (022) 2837 5646Email: sharepro@vsnl.com12. Share Transfer system :Share transfer in physical form are registered and returned within a period of 15 days from the date ofreceipt, if the documents are clear in all respects. Officers of the Company have been authorised to approve

transfers upto 5,000 shares in physical form under one transfer deed. One Director jointly with one Officerof the Company have been authorised to approve transfers exceeding 5,000 shares under one transfer deed.6080100120140160180200Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06Sensex UltraTech Nifty(Indexed)(27)The Registrar & Transfer Agent attend to investor grievances in consultation with the Secretarial Departmentof the Company.2005-06 2004-05Transfer Period No. of No. of % No. of No. of %(in days) transfers shares transfers shares1 – 15 1,722 55,565 48.68 25,602 860,561 96.1916 – 20 969 32,782 28.73 594 17,294 2.2321 – 30 791 25,786 22.59 419 13,043 1.58Total 3,482 114,133 100.00 26,615 890,898 100.00Number of pending share transfers : 109 transfers for 4,271 shares pending asas at 31st March, 2006 registered notices to sellers have been issued.13. Investor Services:Complaints received during the yearNature of complaints 2005-06 2004-05Received Cleared Received ClearedRelating to Transfer, Transmission, 45 45 31 31Dividend, Interest, Demat & Rematand Change of address etc.Legal proceedings on share transfer issues, if any: There are no major legal proceedings relating to transferof shares.

14. Distribution of Shareholding as on 31st March :2006 2005No. of Equity No. of % of No. of % of No. of % of No. of % ofshares held share share shares share share share shares shareholders holders held holding holders holders held holding1 – 100 251,388 88.21 8,194,014 6.59 283,334 89.03 9,101,068 7.32101 – 200 19,563 6.87 2,907,473 2.34 21,008 6.60 3,116,206 2.51201 – 500 9,588 3.36 3,043,010 2.45 9,727 3.06 3,064,914 2.46501 – 1000 2,744 0.96 1,971,619 1.58 2,606 0.82 1,846,556 1.481001 - 5000 1,428 0.50 2,672,952 2.15 1,339 0.42 2,397,253 1.935001-10000 99 0.04 696,917 0.56 80 0.03 546,816 0.4410001 & above 169 0.06 104,912,636 84.33 122 0.04 104,325,808 83.86Total 284,979 100.00 124,398,621 100.00 318,216 100.00 124,398,621 100.00(28)15. Category of Shareholding as on 31st March :2006 2005Category No. of % of No. of % of No. of % of No. of % ofshare share shares share share share shares shareholders holders held holding holders holders held holdingPromoters &Persons Acting inConcert 2 0.00 63,542,320 51.08 2 0.00 63,542,320 51.08Mutual Funds & UTI 55 0.02 4,027,732 3.24 69 0.02 4,757,670 3.83Banks, FI’s andInsurance Companies 125 0.04 7,830,531 6.29 148 0.05 9,871,096 7.94FIIs 144 0.05 9,327,078 7.50 158 0.05 9,154,348 7.36GDRs 2 0.00 732,132 0.59 2 0.00 1,111,658 0.89Corporates 2,413 0.85 17,937,048 14.42 2,495 0.79 16,151,940 12.98NRIs/OCBs 3,442 1.21 805,924 0.65 3,609 1.13 611,758 0.49Indian Public 278,796 97.83 20,195,856 16.23 311,733 97.96 19,197,831 15.43Total 284,979 100.00 124,398,621 100.00 318,216 100.00 124,398,621 100.0016. Dematerialisation of Shares and Liquidity : 95.31% of outstanding equity have been dematerialised ason 31st March, 2006. Trading in equity shares of theCompany is permitted only in the dematerialised form witheffect from 5th April, 1999, as per notifications issued bySecurities and Exchange Board of India (SEBI).

17. Details on use of public funds obtained : Not Applicablein the last three years18. Outstanding GDRs/Warrants and : 732,132 GDRs are outstanding as on 31st March, 2006.Convertible Bonds Each GDR represents one underlying equity share.There are no warrants / convertible bonds outstanding asat the year end.(29)19. Plant Locations :Andhra Pradesh Awarpur GujaratCement Works Cement Works Cement WorksBhogasamudram Tadipatri, P.O. Awarpur Cement Project Kovaya -365541,Anantapur District, Taluka: Korpana, Taluka - Rajula,Andhra Pradesh 515 415 Dist. Chandrapur Dist - Amreli,Tel: 08558-288841 Maharashtra 442 917 GujaratFax: 08558-288821/31 Tel: 07173-266322 Tel: 02794-283056Fax: 07173-266339 Fax: 02794-283007Hirmi Jafrabad Cement Works ArakkonamCement Works Village: Babarkot,Taluka:Jafrabad Cement WorksPost Hirmi Dist. Amreli, Gujarat 365 540 Chitteri Village,Taluka Simga, Dist. Raipur, Tel: 02794-245356 District Vellore,Chhattisgarh Fax: 02794-245110 Arakkonam 631 003,Pin 493 195 Tamil NaduTel: 07726-281269 Tel: 04177-329504Fax: 07726-281268 Fax: 04177-233585Jharsuguda Magdalla Cement Works Ratnagiri Cement WorksCement Works Magdalla Port, Dumas Road MIDC Industrial Estate, Zadgaon BlockNear Dhutra Railway Station, Surat, Gujarat 395 007 Ratnagiri, Maharashtra 415 639P.O. Arda 768 202 Tel: 0261-2721318 Tel: 02352-223679Dist. Jharsuguda, Orissa Fax: 0261-2726952 Fax: 02352-221807Tel: 06645-283161Fax: 06645-283108West Bengal Cement WorksNear EPIP Plot, Muchipara,Post: Rajbandh, Durgapur 713 212Tel: 0343-2533029Fax: 0343-253335820. Investor Correspondence Registered Office:

‘B’ Wing, Ahura Centre,2nd Floor, Mahakali Caves Road,Andheri (East), Mumbai 400 093Tel: (022) 66917800Fax: (022) 66928109Email: sharesutcl@adityabirla.comkamalrathi@adityabirla.comRegistrar & Transfer Agent:Sharepro Services (India) Pvt. Ltd.,Satam Estate, 3rd Floor,Above Bank of Baroda,Cardinal Gracious Road, Chakala,Andheri (East), Mumbai 400 099Tel: (022): 2821 5168 / 2834 8218Fax: (022): 2837 5646Email: sharepro@vsnl.com(30)22. Other useful information for shareholders :Unpaid/Unclaimed DividendsDividend warrants in respect of the year ended 31st March, 2005 have been despatched to the shareholdersat the addresses registered with the Company. Those shareholders who have not yet received the dividendwarrants may please write to the Company or its Registrar & Transfer Agent for further information in thisbehalf. Shareholders who have not encashed the warrants are requested to do so by getting them revalidatedfrom the Registered Office of the Company or the Registrar & Transfer Agent.ECS FacilityCompany is providing facility of “Electronic Clearing Service” (ECS) for payment of dividend to shareholders.Shareholders are requested to provide details of their bank account for availing ECS facility. Further ECSfacility is also available to the beneficial owners of shares in demat form. Those desirous of availing theECS facility may provide their mandate to the Company in writing, in the form attached with the AGMNotice.Share Transfer / Dematerialisation

1. Share transfer requests are acted upon within 15 days from the date of their receipt. In case noresponse is received from the Company within 30 days of lodgement of transfer request, the lodgershould immediately write to the Company or its Registrar & Transfer Agent with full details so thatnecessary action could be taken to safeguard interest of the concerned against any possible loss /interception during postal transit.2. Dematerialisation requests duly completed in all respects are normally processed within 7 days fromthe date of their receipt.3. Equity Shares of the Company are under compulsory demat trading by all investors, with effect from5th April 1999. Considering the advantages of scripless trading, shareholders are requested to considerdematerialisation of their shareholding so as to avoid inconvenience in future.21. Per Share Data :2005-06 2004-05Net Earning (Rs. Crs.) @ 229.76 79.69Cash Earning (Rs. Crs.) @ 441.04 233.47EPS (Rs.) @ 18.46 0.23EPS Growth (%) 7926 (93)CEPS (Rs.) @ 35.43 18.77Dividend Per Share (Rs.) 1.75# 0.75Dividend Payout on net profits (%) 9.48 11.71Book Value Per Share (Rs.) 83.40 85.78Price to Earning* 37.08 1541.52Price to Cash Earnings* 19.32 18.89Price to Book Value* 8.21 4.13* Based on Stock Price as on 31st March@ Before exceptional items# Recommended by Board for approval of Shareholders at ensuing Annual General Meeting.(31)4. The equity shares of the Company have been admitted with the National Securities DepositoryLimited (NSDL) and Central Depository Services (I) Limited (CDSL) bearing ISIN No. INE481G01011.

Correspondence with the CompanyShareholders / Beneficial Owners are requested to quote their Folio No. / DP & Client ID Nos. as the casemay be, in all correspondence with the Company. All correspondence regarding shares & debentures of theCompany should be addressed to the Company’s Registrar & Transfer Agent.Non-Resident ShareholdersNon-resident members are requested to immediately notify:-• Indian address for sending all communications, if not provided so far;• Change in their residential status on return to India for permanent settlement;• Particulars of their NRE Bank Account with a bank in India, if not furnished earlier.Others1. In terms of the Regulations of NSDL & CDSL, the Bank Account details of Beneficial Owners ofShares in demat form will be printed on the dividend warrants as furnished by the DepositoryParticipants. The Company will not entertain any request for change of bank details printed on theirdividend warrants. In case of any changes in your bank details please inform your DP immediately.2. Shareholders holding shares in physical form are requested to notify to the Company, change in theiraddress / pin code number and Bank Account details promptly in writing, under the signatures of sole /first joint holder. Beneficial Owners of shares in demat form are requested to send their instructionsregarding change of name, change of address, bank details, nomination, power of attorney, etc. directlyto their DP as the same are maintained by the DPs.3. To prevent fraudulent encashment of dividend warrants, members are requested to provide their BankAccount Details (if not provided earlier) to the Company (if shares held in physical form) or to DP(if shares held in demat form), as the case may be, for printing of the same on their dividend warrants.4. In case of loss / misplacement of shares, investors should immediately lodge a FIR / Complaint with

the Police and inform the Company along with original or certified copy of FIR / Acknowledged copyof Police Complaint.5. For expeditious transfer of shares, shareholders should fill in complete and correct particulars in thetransfer deed. Wherever applicable, registration number of Power of Attorney should also be quoted inthe transfer deed at the appropriate place.6. Shareholders are requested to keep record of their specimen signature before lodgement of shares withthe Company to obviate possibility of difference in signature at a later date.7. Shareholders of the Company who have multiple accounts in identical name(s) or holding more thanone share certificate in the same name under different ledger folio(s) are requested to apply forconsolidation of such folio(s) and send the relevant share certificates to the Company.8. Section 109A of the Companies Act, 1956 extends nomination facility to individuals holding sharesin physical form in companies. Shareholders, in particular, those holding shares in single name, mayavail of the above facility by furnishing the particulars of their nominations in the prescribed NominationForm which can be obtained from the Company or its Registrar & Transfer Agent or send theirrequest for the said form to sharesutcl@adityabirla.com/kamalrathi@adityabirla.com.9. Shareholders are requested to give us their valuable suggestions for improvement of our investorservices.(32)AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCETo the Members ofUltraTech Cement LimitedWe have examined the compliance of conditions of Corporate Governance by UltraTech Cement Limited forthe year ended on March 31, 2006 as stipulated in clause 49 of the Listing Agreement of the said Companywith the Stock Exchange.

The compliance of the conditions of Corporate Governance is the responsibility of the Management. Ourexamination was limited to procedures and implementations thereof, adopted by the Company for ensuring thecompliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinionon 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 therepresentations made by the Directors and the Management, we certify that the Company has complied withthe conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.We state that such compliance is neither an assurance as to the future viability of the Company nor theefficiency or effectiveness with which the Management has conducted the affairs of the Company.For G.P.Kapadia & Co.Chartered AccountantsAtul B. DesaiPartner(Membership No.30850)Place : MumbaiDate : 12th July, 2006(33)Making a DifferenceThe philosophy of caring, giving, developing and empowering an under-served people is part of ourGroup’s DNA. It is a common stream that flows through the veins of all our Group Companies.Your Company’s Social Projects in India’s hinterland are carried out under the aegis of the AdityaBirla Centre for Community Initiatives and Rural Development, led by Mrs. Rajashree Birla, yourDirector. These Social Projects are in sync with felt needs of the communities and goes in tandemwith the Group’s Social Vision which is “to make a qualitative difference to the lives of the weakersections of society in proximity to our plants and in doing so improve the human development index

of our nation.”For the year 2005-06, your Company’s work encompassed nearly six lacs people. A summary of ourinvolvement is as indicated.Health Care• Medical camps were conducted in host communities and villagers medically examined and providednecessary treatment. Treatment for cataract, tuberculosis, pre and post natal care for women weresome of the areas covered,• AIDS awareness camps generated greater awareness,• Pulse Polio programmes and provision of safe drinking water were some of the other health careinitiatives.Education• Balwadis, promoting Government’s mid-day meal schemes in schools, disbursing merit scholarships(girl students in particular),conducting literacy classesunder Adult EducationScheme, science fairs,popularising Bal SanskarKendras were some of theprogrammes conducted foreducating the people in thevillages surrounding yourCompany’s plants.SOCIAL REPORTBalwadi(34)Sustainable Livelihood• Agriculture through farm-based programmes, training of farmers, setting up of vermi-compostunits, seed multiplication and intercropping, animal immunisation, water harvesting by erectingcheck-dams and roof-water harvesting benefited farmers around your Company’s plants.Women Self-Help Groups• Tailoring training centres,distribution of sewing

machines, formation ofself-help groups and otherincome generating activitiessuch as agarbatti making,mushroom cultivation, blanketweaving, knitting andearthworm cultivationprovided sustainable means oflivelihood to women.Women engaged in gainful employmentSocial Welfare• Mass marriage programme for scheduled caste couples, exhibition and training on balanced dietand food preservation for women and girl students, awareness drive on Knowledge, Attitude andPractices, were conducted to increase women empowerment.Infrastructure• Your Company also contributed towards infrastructure development, construction of health carecentres and facilities for the under-served communities, including construction of low cost toilets.In these humanitarian endeavours, your Company partners with the Government, District Authorities,Village Panchayats and other like-minded NGOs, and above all the communities, who seek to serve.We believe only through collective efforts can we usher in a more equitable society. Your Board andyour Company’s employees are committed to this process.(35)ENVIRONMENT REPORTEnvironment conservation – A way of lifeWe believe in sustainable development. For us this translates into meeting today’s needs withoutjeopardising the needs of future generations. For us this means understanding that the earth’s resourcesare finite and that as far as possible, using these sparingly and in a responsible manner makes greaterbusiness sense.We subscribe to the triple-bottom line accountability. So we regard social, economic and environmental

responsibility as integral elements that drive business. We believe these are interdependent andequally important to our success as a Corporate.At all of your Company’s Plants at Awarpur and Ratnagiri in Maharashtra, Kovaya, Jafrabad andMagdalla in Gujarat, Hirmi in Chhattisgarh, Arakkonam in Tamil Nadu, Tadipatri in AndhraPradesh, Jharsuguda in Orissa and Durgapur in West Bengal, we adopt clean technologies andprocesses that combine both economic progress and sustainable environment. Our plants are ISO14001 Environment Management Systems Certified and adhere to OHSAS 18001 standards.Professional Environment Auditors such as Det Norske Veritas, the State Pollution Control Board’scertified auditors and Environmental Systems Auditors conduct an in-depth environmental audit onour plants. Their Audit Reports validate our commitment to environmental conservation.Lush green surroundings around your Company’s Unit(36)State-of-the-art automated industrial Effluent Treatment Plants (ETP) operate across all of yourCompany’s manufacturing units. The treated effluent inclusive of treated sewage thrown up by theplants is recycled and is used for horticulture and irrigation.To prevent air borne dust particles from escaping into the atmosphere, equipment like the state-ofthe-art, highly efficient reverse air Bag House, Electrostatic Precipitators and Jet Pulse Filters are wellin place. The dust collected is fully recycled into the system. Continuous stack monitoring instrumentsare installed in Kiln bag house, cooler and cement mills stack for online monitoring of stack emission.Interlocking of all drives connected to pollution control unit has been provided to avoid emission incase of failure of pollution control equipment.We use a blending technology that gives us the flexibility to use low-grade limestone without

effecting the desired cement attributes in our cement mix. This aids in preserving natural resources.Water in the cement plant is recycled and used for cooling the mills in the plant. Also, surfaceminers which are environment friendly are used for limestone excavations, thus eliminating drillingand blasting operations.Your Company is increasingly resorting to alternative fuels, such as pet coke which is a by-product ofoil refineries and helps in use of low grade limestones, to save on natural resources. Power savinginitiatives such as installation of Raw Mill Belt Bucket elevator, modification of Raw Mill Separatorcone and installation of Lub oil separator Heat Recovery Unit are implemented across the variousplants.Your Company is also implementing a Waste Heat Co-generation Plant at one of its Unit’s utilisingthe cooler waste heat gases.Alongside, educating and sensitising all of our stakeholders on the need to conserve natural resourcesis an ongoing process. We solicit suggestions from our employees at all levels on how to better ourenvironment protection measures.Given the acute water shortage that we face in the hinterland, we have begun several rain-waterharvesting projects. We have collected rain-water in the lower benches of some of our captivelimestone mines. Effective water recharging projects have been implemented. We have createdseveral water bodies in the catchment areas for rain-water storage and ground water recharging.There is an additional upside as these projects help provide water to communities that live close toour Plants.Large scale plantations in the mines, plants, colonies and surrounding areas provide a lush greencover and are a reflection of our respect for the environment.Your Directors and all of your Company’s employees are totally committed to sustainable development.

(37)DIRECTORS’ REPORT TO THE SHAREHOLDERSDear Shareholders,Your Directors are pleased to present the 6th Annual Report alongwith the Audited Accounts of your Companyfor the year ended 31st March, 2006.FINANCIAL RESULTS(Rs. in Crores)2005-06 2004-05Gross Turnover 3,785.29 3,057.92Gross Profit 501.62 265.02Less: Depreciation 216.03 221.78Profit before Tax & Diminution 285.59 43.24Provision for diminution — 76.84Profit/(Loss) before Tax 285.59 (33.60)Tax expenses 55.83 (36.45)Profit after Tax 229.76 2.85Add:Balance brought forward from Previous Year 10.11 17.92Surplus available for Appropriation 239.87 20.77Appropriation:Debenture Redemption Reserve 9.45 —General Reserve 25.00 —Proposed Dividend 21.79 9.33Corporate Tax on Dividend 3.06 1.33Balance transferred to Balance Sheet 180.57 10.11(The accounts for the year under review include the performance of the erstwhile Narmada Cement Company Limited (NCCL) for the period1st October, 2005 to 31st March, 2006 and are therefore not comparable with the previous years’ figures)For the year under review, your Company earned revenues of Rs.3,299.45 crores compared to Rs.2,606.90 croresin the previous year. After providing for Interest of Rs.89.64 crores (Rs.106.88 crores) and Depreciation ofRs.216.03 crores (Rs. 221.78 crores), the Profit before Tax stood at Rs.285.59 crores (Rs.43.24 crores). Profitbefore tax and provision for diminution in value of investments Rs.NIL (Rs76.84 crores) stood atRs.285.59 crores {(Rs.33.60 crores)}.Profit after tax stood at Rs.229.76 crores (Rs2.85 crores).

DIVIDENDYour Directors have recommended a dividend of Rs. 1.75 per share and seek your approval for the same. Thecash outgo on account of the dividend to be paid to the shareholders will be Rs. 24.85 crores (includingdividend tax) vis-a-vis Rs.10.66 crores in the previous year.REVIEW OF OPERATIONSDuring the year under review, your Company’s aggregate sales volumes recorded a growth of 2.5 %, increasingfrom 15.17 MMT in the previous year to 15.55 MMT. Realisation was also up by 23.50 %. The exports mix sawa rising share of cement, which constitutes 57% of exports.Lower clinker exports and extended shutdowns at your Company’s plants have resulted in lower effectivecapacity utilisation at 89% compared to 91% during the previous year. Unprecedented floods in Maharashtraand Gujarat, which constitute around 50% of your Company’s domestic market, constrained the performanceof your Company during the second quarter of the year under review.(38)Increase in power and freight costs also had an adverse impact on the operating costs at your Company’s plants.To address the issue of increasing power costs, your Directors have approved the setting up of captive thermalpower plants at your Company’s Units in Kovaya (Gujarat) and Hirmi (Chhattisgarh). These are expected tobe commissioned by March, 2008. Once commissioned, these power plants will lead to reduced power cost.To optimise freight costs, your Company continuously revisits its despatch mix of rail, road and water ways.CORPORATE DEVELOPMENTAt a hearing held on 15th May, 2006, the Board for Industrial and Financial Reconstruction (BIFR) approvedthe Scheme for the Amalgamation of NCCL with your Company (the Scheme). The Scheme was madeeffective from 1st June, 2006.The entire undertaking of NCCL is transferred to your Company with effect from 1st October, 2005, theAppointed Date for the Scheme. The financial statements of your Company for the year under review include

that of NCCL for the period 1st October, 2005 to 31st March, 2006. The financial statements for the priorperiod, i.e from 1st April, 2005 to 30th September, 2005 are included in your Company’s Consolidated FinancialStatements for the year under review.In terms of the Scheme, your Company’s shareholding in NCCL has been cancelled. The remaining minorityshareholders of NCCL have been allotted 87,258 equity shares of Rs.10/- each, credited as fully paid-up of yourCompany in the ratio of 1(one) equity share of Rs.10/- each, of your Company, for every 18 (eighteen) equityshares of Rs.10/- each in NCCL.RESEARCH AND DEVELOPMENTYour Company’s research and development efforts are aimed towards conservation of energy and materialsdevelopment. Your Company is evaluating the use of Mineralisers and Fused Slags, apart from optimising ESP/Plant performance.HUMAN RESOURCESWe fully recognise that people are the lifeline of our Organisation. Hence we invest heavily in people, peopleprocessesand in skill development. In the Chairman’s letter, Group-wide initiatives to build a meritocracyhave been detailed. All these processes, such as Values Workshop, talent management, job analysis andevaluation and performance management, among others, have been implemented at your Company as well.Continuous learning is a thrust area. At Gyanodaya, our Management Learning Institute, several executivesunderwent training programmes that helped build new competencies and hone current competencies.To strengthen the Performance Management Process, Performance Management Workshops have been conductedbased on Corporate H.R. guidelines, to cover all Management staff at various locations. Perfomance Championshave been identified to strengthen the process.Common HR Policies evolved in the Cement Business facilitate movement of people for career growth.CORPORATE GOVERNANCE

A separate section on Corporate Governance, in line with Clause 49 of the Listing Agreement with the stockexchanges, forms a part of this Report.The relevant Certificate dated 12th July, 2006 from your Company’sStatutory Auditor is annexed and forms part of this Report.SUBSIDIARY COMPANIESIn terms of Section 212 of the Companies Act, 1956, the Accounts alongwith the Report of Directors and theAuditors’ Report of your Company’s subsidiaries viz. Dakshin Cements Limited (Dakshin) and UltraTechCeylinco (Pvt) Ltd. (UltraTech Ceylinco) are annexed to this Report.In keeping with the provisions of Accounting Standard 21 (AS 21) and Clause 32 of the Listing Agreement,the duly audited Consolidated Financial Statements have been prepared after considering the financial statementsof your Company’s subsidiaries viz. NCCL (for the period 1st April, 2005 to 30th September, 2005), Dakshinand UltraTech Ceylinco.(39)FINANCEYour Company continues to enjoy the AA+/Stable rating from CRISIL.During the year under review, your Company raised long term foreign currency loans aggregatingUSD 20 million (Rs. 89 crores) by way of External Commercial Borrowings. Your Company also raisedRs.100 crores by way of privately placed debentures.During the year under review, the net repayment of debt was Rs. 167 crores. On account of repayment of highcost debts and better working capital management, interest costs came down by 16% compared to the previousyear.Your Company has not invited or renewed deposits from the public/shareholders in accordance withSection 58A of the Companies Act, 1956.PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956Information on conservation of energy, technology absorption and foreign exchange earnings and outgo,stipulated under Section 217(1)(e) of the Companies Act, 1956 is set out in a separate statement, as an

Annexure to this Report.The particulars of employees, required under Section 217(2A) of the Companies Act, 1956 are given as anAnnexure to this Report.DIRECTORS’ RESPONSIBILITY STATEMENTYour Directors wish to inform you that the Audited Accounts for the year under review are in conformity withthe requirements of the Companies Act, 1956 and the Accounting Standards. The financial statements reflectfairly the form and substance of transactions carried out during the year under review and reasonably presentyour Company’s financial condition and results of operations.Your Directors confirm that:(i) in the presentation of the Annual Accounts, applicable accounting standards have been followed;(ii) the accounting policies have been consistently applied and reasonable, prudent judgement and estimatesare made so as to give a true and fair view of the state of affairs of your Company as at 31st March, 2006 andof the profit for the financial year ended 31st March, 2006;(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and forpreventing and detecting frauds and other irregularities;(iv) the Annual Accounts of your Company have been prepared on a going concern basis.DIRECTORSMr. Girish M. Dave was appointed as an Additional Director by the Board at the meeting held on 7th July, 2006,to hold office till the conclusion of the ensuing Annual General Meeting. A notice in writing proposing hisappointment as Director pursuant to Section 257 of the Companies Act, 1956 has been received from aMember.Mr. A. R. Gandhi resigned from the Board of your Company with effect from 7th July, 2006. The Board placeson record its appreciation for the services rendered by Mr. Gandhi during his tenure as a member of the Board.

Mr. R.C.Bhargava, Mr. D. D. Rathi and Dr. S. Misra retire from office by rotation and being eligible, offerthemselves for re-appointment.A brief resume, expertise and details of other directorships of these Directors are attached along with theNotice for the ensuing Annual General Meeting.(40)AUDITORSM/s S.B. Billimoria & Co., Chartered Accountants, Mumbai and M/s G.P. Kapadia & Co., CharteredAccountants, Mumbai were appointed Joint Statutory Auditors of your Company from the conclusion of theprevious Annual General Meeting until the conclusion of the ensuing Annual General Meeting.M/s S. B. Billimoria & Co. and M/s G.P. Kapadia & Co., being eligible, offer themselves for re-appointment.The Board proposes the re-appointment of M/s S.B. Billimoria & Co. Chartered Accountants, Mumbai andM/s G.P. Kapadia & Co. Chartered Accountants, Mumbai as Joint Statutory Auditors of your Companybased on the recommendation of the Audit Committee, to hold office from the conclusion of the ensuingAnnual General Meeting until the conclusion of the next Annual General Meeting.The Board proposes the appointment of M/s. Haribhakti & Co., Chartered Accountants, Mumbai as theBranch Auditors of your Company’s Units at Jafrabad and Magdala in Gujarat and Ratnagiri in Maharashtra,based on the recommendation of the Audit Committee, to hold office from the conclusion of the ensuingAnnual General Meeting until the conclusion of the next Annual General Meeting. In terms of the provisionsof the Companies Act, 1956, the Board also seeks your approval for the appointment of Branch Auditors inconsultation with your Company’s Statutory Auditors, for any other Branch / Unit of your Company, whichmay be opened / acquired in future, in India or abroad.Resolutions seeking your approval on these items are included in the Notice convening the Annual GeneralMeeting.

COST AUDITORPursuant to the provisions of Section 233B of the Companies Act, 1956, your Directors have appointedM/s N.I. Mehta & Co., Cost Accountants, Mumbai as the Cost Auditors to conduct the Cost Audit of yourCompany for the financial year ending 31st March, 2007, subject to the approval of the Central Government.APPRECIATIONYour Directors place on record their appreciation of the assistance and guidance provided by the variousMinistries, the Central and State Governments and all Regulatory Bodies. Your Directors also thank thefinancial institutions and banks for their support.Your Directors also acknowledge the commitment and contribution of your Company’s employees .Your involvement as shareholders is greatly valued. Your Directors look forward to your continuing support.For and on behalf of the BoardMumbai Kumar Mangalam Birla7th July, 2006 Chairman(41)Statement u/s 217(1) (e) of the Companies Act, 1956A. CONSERVATION OF ENERGYa) Energy Conservation Measures taken— Installation of VSD panels— Installation of belt bucket elevator for feeding Raw Meal into silo— Modification of Cyclone inlet— Installation of LRS— Optimisation of Plant lighting— Flat belts in Cement mill Areab) Additional investments and proposals being implemented for reduction of consumption of energy— Installation of VSD panels— Installation of Variable Speed Drives— Replacement of Preheater fans with energy saving PH fans— Usage of Humicool fills for P&V systemc) Impact of measures at (a) and (b) above for reduction of energy consumption and consequentimpact on the cost of production of goods

The proposals stated above shall result in reduction in power consumption and correspondingreduction in the cost of productiond) Total energy consumption and energy consumption per unit of production as per FORM-AB. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATIONS1. Efforts in brief, made towards technology absorption, adaptation and innovation:• Participation in national and international conferences• Imparting training to personnel by foreign technicians and Indian experts in variousmanufacturing techniques2. Benefits derived as a result of the above efforts:• Improvement in existing processes and reducing consumption of scarce raw materials and fuel• Cost reduction• Market Leadership3. Information regarding technology imported during the last 5 years : NilFORM - BForm for disclosure of particulars with respect to absorptionA. RESEARCH AND DEVELOPMENT (R&D)1. Specific areas in which R&D carried out by the CompanyEvaluation of use of• Mineralisers• Nonferrous sludge as additive• Fused slag• Flue dust as additive• Increased use of Fly Ash Content in PPC without affecting quality• Use of CFD technique for optimising ESP Performance2. Benefits derived as a result of the above R&DThe above initiatives have resulted in Energy Conservation , reduction in relative cost ofProduction and reduction in Emission levels3. Future plan of action• Commercialisation of alternative fuels• Optimisation of chemistry of raw mixRs. in Crores4. Expenditure on R&D 2005-06 2004-05a. Capital Expenditure 0.58 0.49

b. Recurring Expenditure 5.18 2.77c. Total expenditure 5.76 3.26d. Total R& D expenditure as % of turnover 0.15 0.10C. FOREIGN EXCHANGE EARNINGS AND OUTGOThe information on foreign exchange earnings and outgo is contained in Schedule 22(6) and (5) of theAccounts.ANNEXURE TO THE DIRECTORS’ REPORT(42)FORM ATOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER UNIT OF PRODUCTIONA. Power and Fuel Consumption :Current Year Previous Year2005-06 2004-051. Electricity(a) PurchasedUnit 000 Kwh 423050 288469Total Amount Rs. Crores 169.64 122.00Rate/unit Rs. 4.01 4.23(b) Own generation**(i) Through Diesel generatorUnit 000 Kwh 305267 291512Units(Kwh) per Ltr. of fuel oil 4.15 4.10Cost/Unit Rs. 4.27 3.61(ii) Through Steam Turbine/GeneratorUnit 000 Kwh 256036 318523Units(Kwh) per kg of coal 0.76 0.89Cost/Unit Rs. 1.41 1.32(iii) Through Steam Turbine/GeneratorUnit 000 Kwh 292707 306873Units(Kwh) per kg of Naphtha 4.89 4.41Cost/Unit Rs. 5.28 4.632. Coal (Slack,Steam & ROM including lighting Coal)For Co-generation of Steam & PowerQuantity Tonnes 335008 357065Total Cost Rs. Crores 29.36 37.17Average rate Rs./Tonnes 876 1041For Process in Cement PlantsQuantity Tonnes 1981134 1912353

Total Cost Rs. Crores 407.98 395.03Average rate Rs./Tonnes 2059 20663. Furnace Oil (Including Naphtha)Quantity K. Ltrs 159240 171897Total amount Rs. Crores 256.82 222.62Average rate Rs./K. ltr 16128 129514. Light Diesel Oil (LDO)Quantity K. Ltrs 1508 1004Total amount Rs. Crores 4.03 1.87Average rate Rs./K. ltr 26710 186795. High Speed Diesel Oil (HSD)Quantity K. Ltrs 288 293Total amount Rs. Crores 0.89 0.67Average rate Rs./K. ltr 31004 22700B. Consumption per unit of production:Product : CementElectricity # Kwh 88.70 86.98Furnace oil Ltr 0.22 0.26Coal Tonne 0.134 0.132** Excludes Auxillary & Wheeling# Excludes non production power consumption(Current year figures include that of NCCL for the period 1st October, 2005 to 31st March, 2006 and are therefore notcomparable with previous year figures)For and on behalf of the BoardMumbai Kumar Mangalam Birla7th July, 2006 Chairman(43)ANNEXURE TO THE DIRECTORS’ REPORTINFORMATION U/S 217 (2A) OF THE COMPANIES ACT,1956, READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES,1975 (AS AMENDED) AND FORMING PART OF THEDIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2006(A) EMPLOYED THROUGHOUT THE FINANCIAL YEAR UNDER REVIEW AND WERE IN RECEIPT OF REMUNERATION FOR THE FINANCIAL YEAR IN THE AGGREGATE OF NOT LESSTHAN Rs.24,00,000/- P.A.Sl. Name Age Qualification Designation Date of Experience Gross Particulars of Last Employment,

No Yrs Commencement as on Remuneration Employer, Last Post, No.of Yrs.of Employment 31-03-2006 (Rs.)1 Bajaj J. 40 B.Com, ACA Jt. President 01-04-2005 17 yrs 3,174,350 Grasim Industries Limited(Finance) Jt. President, 15 yrs 7 months2 Birla K. C. 47 B.Com, FCA Chief Financial 06-07-2004 21 yrs 4,374,324 Grasim Industries LimitedOfficer Jt. President, 19 yrs 3 months3 Chakravarthy S. 58 BE (Mech) President 01-04-2004 35 yrs 2,494,192 Larsen & Toubro LimitedVice President,19 yrs 6 months4 Jain A. K. 61 BE (Mech) President 01-04-2004 38 yrs 2,613,696 Larsen & Toubro LimitedVice President,9 yrs 3 months5 Misra S.# 58 BA (Hons) Manager & CEO 06-07-2004 38 yrs 18,409,337 Grasim Industries LimitedBusiness Head (Cement),5 yrs 2 months6 Razdan D. 59 MA, Dip. In Senior Executive 01-04-2004 37 yrs 3,729,551 Larsen & Toubro LimitedMarketing Management, President Executive Vice President,Dip in Basic Management 9 yrs 6 months7 Reddy C. S. 60 B.Tech (Mech) President 01-04-2004 36 yrs 3,011,923 Larsen & Toubro LimitedVice President,8 yrs 8 months8 Shukla V. 52 MA (PM & IR) Chief People Officer 03-01-2005 27 yrs 3,208,717 Saurashtra Cement Limited -Corp. DirectorHRD, Q & Com -9 yrs 7 months(B) EMPLOYED FOR PART OF THE FINANCIAL YEAR UNDER REVIEW AND WERE IN RECEIPT OF REMUNERATION AT THE RATE OF NOT LESS THAN Rs. 2,00,000/- PER MONTHSl. Name Age Qualification Designation Date of Date of Experience Gross Particulars of Last Employment,

No Yrs Commencement of Cessation of As on Remuneration Employer, Last Post, No.of Yrs.Employment Employment 31-03-2006 (Rs.)1 Kapoor B. 60 BA, MBA Vice President - 01-04-2004 14-10-2005 35 yrs 2,224,532 Larsen & Toubro LimitedMarketing (East) Vice President,10 yrs, 10 months2 Mayekar M. M. 36 B.Com Supervisor 01-04-2004 30-04-2005 16 yrs 205,775 Larsen & Toubro LimitedAssistant, 9 yrs 11 months3 Prasad H.S. 58 B.A. Assistant Manager 01.04.2004 30.04.2005 37 Yrs 238,832 Larsen & Toubro Ltd.Asst.Manager , 21 Yrs4 Muralidharan V. M. 60 B.Sc, DMIT Senior Executive 01-04-2004 28-02-2006 38 yrs 5,716,965 Larsen & Toubro LimitedPresident EVP - 19 yrs 3 months1 Remuneration received includes salary with allowances, bonus & ex-gratia, performance linked payment, Contribution to Provident and Superannuation Fund, reimbursement of cash perks , LTA andvalue of amenities provided as per Income Tax Rules.2 Employment is non-contractual in all the above cases subject to one month/three month’s notice from either side depending upon the office held by the employee, except in the case marked by (#).3 None of the above employees is a relative of any Director of the Company.For and on behalf of the BoardMumbai Kumar Mangalam Birla7th July, 2006 Chairman(44)TO THE MEMBERS OF ULTRATECH CEMENT LIMITED1. We have audited the attached Balance Sheet of ULTRATECH CEMENT LIMITED as at 31st March, 2006,the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date,both annexed thereto. These financial statements are the responsibility of the Company’s Management. Ourresponsibility 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. These

Standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by the Management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Governmentin terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on thematters specified in paragraphs 4 and 5 of the said Order.4. Further to our comments in the Annexure referred to in paragraph 3 above :a) We have obtained all the information and explanations, which to the best of our knowledge and beliefwere 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 asappears from our examination of those books;c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report arein agreement with the books of account;d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in compliance with the Accounting Standards referred to in Section 211(3C) ofthe Companies Act, 1956;e) In our opinion and to the best of our information and according to the explanations given to us, thesaid accounts give the information required by the Companies Act, 1956 in the manner so requiredand 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 31st March, 2006;

ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on thatdate andiii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended onthat date.5. On the basis of the written representations from the directors as on 31st March, 2006, taken on record bythe Board of Directors, we report that none of the directors is disqualified as on 31st March, 2006 frombeing appointed as a director under Section 274(1)(g) of the Companies Act, 1956.For S. B. BILLIMORIA & CO. For G.P. KAPADIA & CO.Chartered Accountants Chartered AccountantsNALIN M. SHAH ATUL B. DESAIPartner Partner(Membership No.15860) (Membership No.30850)Mumbai, 7th July, 2006AUDITORS’ REPORT(45)ANNEXURE TO THE AUDITORS’ REPORT( R e f e r r e d t o i n p a r a g r a p h 3 o f o u r r e p o r t o f e v en d a t e )(i) The nature of the Company’s business/activities during the year is such that clauses (x), (xii), (xiii),(xiv), (xviii) and (xx) of CARO are not applicable.(ii) In respect of its fixed assets:(a) The Company has maintained proper records showing full particulars, including quantitative detailsand situation of fixed assets.(b) Some of the fixed assets were physically verified during the year by the Management in accordancewith a programme of verification, which in our opinion provides for physical verification of all thefixed assets at reasonable intervals. According to the information and explanations given to us, nomaterial discrepancies were noticed on such verification.(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part ofthe fixed assets of the Company and such disposal has, in our opinion, not affected the going

concern status of the Company.(iii) In respect of its inventories:(a) As explained to us, inventories were physically verified during the year by the Management atreasonable intervals.(b) In our opinion and according to the information and explanations given to us, the procedures ofphysical verification of inventories followed by the Management were reasonable and adequate inrelation 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 hasmaintained proper records of its inventories and no material discrepancies were noticed on physicalverification.(iv) According to the information and explanations given to us, the Company has not or taken granted securedor unsecured loans to/from companies, firms or other parties covered in the Register maintained underSection 301 of the Companies Act, 1956.(v) In our opinion and according to the information and explanations given to us, there are adequate internalcontrol systems commensurate with the size of the Company and the nature of its business for thepurchases of inventory and fixed assets and for the sale of goods. We have not observed any majorweaknesses in such internal controls.(vi) To the best of our knowledge and belief and according to the information and explanations given to us,there were no contracts or arrangements that needed to be entered in the Register maintained underSection 301 of the Companies Act, 1956.(46)(vii) In our opinion and according to the information and explanations given to us, the Company has notaccepted deposits in terms of the provisions of Sections 58A and 58AA or any other relevant provisions ofthe Companies Act, 1956.(viii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the

nature of its business.(ix) We have broadly reviewed the books of account and records maintained by the Company relating to themanufacture of cement, pursuant to the order made by the Central Government for the maintenance ofcost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. We have, however, not made adetailed examination of the records with a view to determining whether they are accurate or complete.(x) In respect of Statutory dues:(a) According to the information and explanations given to us, the Company has generally been regularin depositing undisputed statutory dues, including Provident Fund, Investor Education and ProtectionFund, Employees’ State Insurance, Income-Tax, Sales-Tax, Wealth Tax, Service Tax, Custom Duty,Excise Duty, Cess and any other material statutory dues with the appropriate authorities during theyear.(b) According to the information and explanations given to us, no undisputed amounts payable inrespect of the aforesaid dues were outstanding as at 31st March, 2006 for a period of more then sixmonths from the date they became payable.(c) According to the information and explanations given to us, details of disputed Sales Tax, IncomeTax, Customs Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been depositedas on 31st March, 2006 on account of any dispute are given below:Name of Statute Nature of the dues Amount Period to which Forum where dispute(Rs. in Crs.) the amount relates is pending(Assessment years)Sales Tax Act Sales Tax and interest 16.36 1994-1995 Supreme Court12.52 1985-2004 Tribunal (s)13.32 1999-2000, Appellate Authorities2001-20043.38 1998-2004, Assessing Officers

2005-2006Central Excise Act Excise Duty, penalty 1.00 1994-1995, Supreme Courtand interest 2000-200615.04 1994-2004 Tribunal (s)1.88 1996-2005 Appellate AuthoritiesCustoms Act Custom Duty and 30.41 2002-2006 Tribunal (s)penalty 1.19 2002-2004 Assessing OfficersLand Revenue Act Surface Rent and 2.58 1987-2006 Supreme Courtinterest 0.59 2003-2006 Assessing Officers(xi) In our opinion and according to the information and explanations given to us, the Company has notdefaulted in the repayment of dues to financial institutions, banks and debenture holders.ANNEXURE TO THE AUDITORS’ REPORT(47)(xii) In our opinion and according to the information and explanations given to us, the terms and conditions ofthe guarantees given by the Company for loans taken by others from a bank, are not prima facie prejudicialto the interests of the Company.(xiii) To the best of our knowledge and belief and according to the information and explanations given to us, inour opinion, term loans availed by the Company were, prima facie, applied by the Company during the yearfor the purposes for which the loans were obtained, other than temporary deployment pending application.(xiv) According to the information and explanations given to us, and on an overall examination of the BalanceSheet of the Company, funds raised on short term basis have, prima facie, not been used during the year forlong term investment.(xv) According to the information and explantations given to us and the records examined by us, securities/charges have been created in respect of the debentures issued.(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, nofraud on or by the Company was noticed or reported during the year.For S. B. BILLIMORIA & CO. For G.P. KAPADIA & CO.Chartered Accountants Chartered AccountantsNALIN M. SHAH ATUL B. DESAI

Partner Partner(Membership No.15860) (Membership No.30850)Mumbai, 7th July, 2006ANNEXURE TO THE AUDITORS’ REPORT(48)BALANCE SHEET AS AT MARCH 31, 2006Rs. in CroresPreviousSchedules YearSOURCES OF FUNDSShareholders’ FundsShare Capital 1A 124.40 124.40Share Capital Suspense 1B 0.09 —Reserves and Surplus 2 913.78 942.731,038.27 1,067.13Loan FundsSecured Loans 3 1,221.93 1,253.35Unsecured Loans 4 229.90 278.031,451.83 1,531.38Deferred Tax Liabilities (Net) 576.96 581.71TOTAL 3,067.06 3,180.22APPLICATION OF FUNDSFixed AssetsGross Block 5 4,605.38 4,304.29Less : Depreciation 2,068.21 1,755.39Net Block 2,537.17 2,548.90Capital Work-in-Progress 141.03 48.182,678.20 2,597.08Investments 6 172.39 184.79Current Assets, Loans and AdvancesInventories 7 379.57 283.71Sundry Debtors 8 172.55 171.95Cash and Bank Balances 9 61.60 56.26Loans and Advances 10 158.80 325.73772.52 837.65Less:Current Liabilities & ProvisionsCurrent Liabilities 11 516.87 415.43Provisions 12 39.18 23.87556.05 439.30

Net Current Assets 216.47 398.35TOTAL 3,067.06 3,180.22Accounting Policies and Notes on Accounts 21 & 22In terms of our report attached. KUMAR MANGALAM BIRLAChairmanFor S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO. S. MISRA RAJASHREE BIRLAChartered Accountants Chartered Accountants Manager & CEO R. C. BHARGAVAY. M. DEOSTHALEENALIN M. SHAH ATUL B. DESAI K. C. BIRLA S. MISRAPartner Partner Executive President & CFO J. P. NAYAKS. RAJGOPALS. K. CHATTERJEE D. D. RATHIMumbai, July 7, 2006 Company Secretary Directors(49)PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2006Rs. in CroresPreviousSchedules YearINCOMEGross Sales 3,785.29 3,057.92Less : Excise Duty 485.84 451.02Net Sales 3,299.45 2,606.90Interest & Dividend Income 13 6.99 3.70Other Income 14 30.01 17.37Increase / (Decrease) in Stocks 15 39.12 20.913,375.57 2,648.88EXPENDITURERaw Materials Consumed 16 282.25 265.34Manufacturing Expenses 17 1,205.15 1,060.83Purchase of Finished Products 265.32 193.93Payments to and Provisions for Employees 18 92.26 72.96Selling, Distribution, Administration and Other Expenses 19 939.33 683.92Interest 20 89.64 106.88Depreciation 216.03 221.783,089.98 2,605.64Profit Before Tax Expenses and Diminution 285.59 43.24Less: Provision for Diminution in Value of Investment — 76.84

Profit/(Loss) Before Tax Expenses 285.59 (33.60)Income Tax ExpensesProvision for Current Tax (including provision for 57.00 31.55Wealth Tax Rs.0.07 Crore (Previous Year Rs. 0.02 Crore),and interest of Rs. 0.35 Crore (Previous Year Nil))Deferred Tax (4.75) (68.00)Fringe Benefit Tax 3.58 —Profit After Tax 229.76 2.85Balance brought forward from Previous Year 10.11 17.92Profit Available for Appropriation 239.87 20.77AppropriationsProposed Dividend 21.79 9.33Corporate Dividend Tax 3.06 1.33Debenture Redemption Reserve 9.45 —General Reserve 25.00 —Balance Carried to Balance Sheet 180.57 10.11239.87 20.77Basic and Diluted Earnings per Equity Share (in Rs.) 18.46 0.23Face Value Per Equity Share (in Rs.) 10.00 10.00Weighted Average Number of Equity Shares (in Nos.) 124,485,879 124,398,621Accounting Policies and Notes on Accounts 21 & 22In terms of our report attached. KUMAR MANGALAM BIRLAChairmanFor S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO. S. MISRA RAJASHREE BIRLAChartered Accountants Chartered Accountants Manager & CEO R. C. BHARGAVAY. M. DEOSTHALEENALIN M. SHAH ATUL B. DESAI K. C. BIRLA S. MISRAPartner Partner Executive President & CFO J. P. NAYAKS. RAJGOPALS. K. CHATTERJEE D. D. RATHIMumbai, July 7, 2006 Company Secretary Directors(50)Rs. in CroresA Cash Flow from Operating Activities: March 31, 2006 March 31, 2005Profit Before Tax 285.59 43.24Adjustments for:Depreciation 216.03 221.78

Miscellaneous Expenditure Written off — 15.52Provision for Doubtful Debts and Advances / (Written back) (2.81) 2.81Bad Debts Written off 0.17 4.65Credit Balances Written back (9.60) (0.55)Interest & Dividend Income (6.99) (3.70)Interest Expense 89.64 106.88Unrealised Foreign Exchange Loss 0.79 15.86(Profit)/ Loss on Sale of Fixed Assets (0.21) 0.17(Profit)/ Loss on Sale of Current Investments (0.08) —Operating Profit Before Working Capital Changes 572.53 406.66Adjustments for:(Increase)/decrease in Inventories (43.05) (60.54)(Increase)/decrease in Sundry Debtors (11.92) 0.97(Increase)/decrease in Loans and Advances 10.78 (27.40)Increase/(decrease) in Liabilities and Provisions 78.21 52.72Cash Generated from Operations 606.55 372.41Current Taxes paid (51.89) (34.99)Fringe Benefit Tax Paid (3.03) —Net Cash from Operating Activities 551.63 337.42B Cash Flow from Investing Activities:Purchase of Fixed Assets (217.29) (69.30)Sale of Fixed Assets 1.13 0.45(Increase) / decrease in Current Investments (148.00) (23.54)Profit on Sale of Current Investments 0.08 —Loans/deposits with Subsidiaries — 1.51Interest and Dividend Received 6.84 3.70Net Cash used in Investing Activities (357.24) (87.18)C Cash Flow from Financing Activities:Proceeds from Issue of Share Capital — (0.51)Repayment of Long Term Borrowings (167.33) (612.00)Proceeds from Long Term Borrowings 217.15 549.63Repayment of Short Term Borrowings (Net) (137.86) (57.75)Interest Paid (92.32) (108.16)Dividend Paid (9.33) (6.22)Corporate Dividend Tax (1.33) (0.80)Net Cash used in Financing Activities (191.02) (235.81)Net Increase in Cash and Cash Equivalents (A + B + C) 3.37 14.43Cash and Cash Equivalents at the Beginning of the Year 56.26 41.83Cash and Cash Equivalents transferred from NCCL as on 1.10.05 1.97 —

Cash and Cash Equivalents at the End of the Year 61.60 56.26Notes:1. Cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 issued bythe Institute of Chartered Accountants of India.2. Purchase of fixed assets includes movements of capital work in progress between the beginning and the end of the year.3. Previous year’s figures regrouped/ recasted wherever necessary.CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006In terms of our report attached. KUMAR MANGALAM BIRLAChairmanFor S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO. S. MISRA RAJASHREE BIRLAChartered Accountants Chartered Accountants Manager & CEO R. C. BHARGAVAY. M. DEOSTHALEENALIN M. SHAH ATUL B. DESAI K. C. BIRLA S. MISRAPartner Partner Executive President & CFO J. P. NAYAKS. RAJGOPALS. K. CHATTERJEE D. D. RATHIMumbai, July 7, 2006 Company Secretary Directors(51)SCHEDULESRs. in CroresPreviousSCHEDULE 1A YearSHARE CAPITALAuthorised130,000,000 Equity Shares of Rs. 10 each 130.00 130.00Issued, Subscribed and Paid up 124.40 124.40124,398,621 Equity Shares of Rs. 10 each fully paid-upOf the above, 99,521,437 equity shares of Rs. 10 each issuedas fully paid-up for acquiring the Cement business pursuant toScheme of Arrangement without payment being received in cash(58,464,717 shares are held by Grasim Industries Limited(Holding Company), {Prev. Year - 58,464,717} and 5,077,603 sharesare held by Samruddhi Swastik Trading & Investment Limited(Subsidiary Company of Grasim Industries Limited),{Prev.Year - 5,077,603}).124.40 124.40

SCHEDULE 1BSHARE CAPITAL SUSPENSE87,258 Equity shares of Rs. 10 each to be issued as fully paid-up pursuant to 0.09 —the Scheme of Amalgamation without payment being received incash. (See Note B1)0.09 —SCHEDULE 2RESERVES & SURPLUS Rs. in CroresBalance *Balance Additions Deduction/ Balanceas at on Merger during Adjustments as at31st As on the during 31stMarch, 05 01.10.05 year the year March, 06Capital Reserve 24.87 0.15 — — 25.02Cash Subsidy Reserve 0.10 — — — 0.10Debenture Redemption Reserve 129.43 — 9.45 — 138.88General Reserve 778.22 (234.01) 25.00 — 569.21Surplus as per Profit & Loss Account 10.11 — 229.76 (59.30) 180.57942.73 (233.86) 264.21 (59.30) 913.78Previous Year 950.54 — 2.85 (10.66) 942.73*See Note B 1SCHEDULE 3SECURED LOANSNon-Convertible Debentures (See Note B 8a) 1,018.55 999.75Other Loans: (See Note B 8b)Loans from Financial Institutions — 5.82Foreign Currency Loan 89.23 79.50Loans from Banks:Cash Credit / Working Capital Borrowings from Banks Secured byHypothecation of Stocks and Book debts 14.15 68.28Other Loans (See Note B 8b) 100.00 100.001,221.93 1,253.35(52)SCHEDULESRs. in CroresPreviousSCHEDULE 4 YearUNSECURED LOANSShort Term Loans from Banks — 76.06Sales Tax Deferment Loan 229.90 201.97

229.90 278.03SCHEDULE 5FIXED ASSETS Rs. in CroresPARTICULARS GROSS BLOCK DEPRECIATION NET BLOCKAs at Assets Additions Deductions/ As at As at Cum. Dep For the Deductions/ Upto As at As at31.3.05 transferred Adjustments 31.3.06 31.3.05 on assets year Adjustments 31.3.06 31.3.06 31.3.05from NCCL transferred01.10.05 from NCCL01.10.05Freehold land 66.97 — 2.56 — 69.53 — — — — — 69.53 66.97Leasehold land 16.32 3.71 0.06 — 20.09 3.89 0.64 0.49 — 5.02 15.07 12.43Buildings 448.06 16.70 3.82 0.02 468.56 120.05 4.92 12.88 (0.20) 138.05 330.51 328.01Railway sidings 159.35 — 0.31 — 159.66 52.40 — 7.51 — 59.91 99.75 106.95Plant & machinery 3,461.45 168.19 112.29 22.58 3,719.35 1,474.96 112.52 181.76 19.66 1,749.58 1,969.77 1,986.49Furniture & fixtures 66.44 4.21 9.67 2.47 77.85 38.00 3.06 5.22 1.86 44.42 33.43 28.44Jetty 76.63 3.97 — — 80.60 61.11 0.33 3.97 — 65.41 15.19 15.52Vehicles 9.07 0.52 1.09 0.94 9.74 4.98 0.42 1.01 0.59 5.82 3.92 4.09Total 4,304.29 197.30 129.80 26.01 4,605.38 1,755.39 121.89 212.84 21.91 2,068.21 2,537.17 2,548.90Previous year 4,275.84 — 45.17 16.72 4,304.29 1,547.94 — 218.49 11.04 1,755.39Add: Capital work-in-progress 141.03 48.182,678.20 2,597.08NOTES : Rs. in CroresA) Depreciation for the year 212.84Add: Obsolescence 3.19Depreciation as per Profit & Loss Account 216.03B) 1. Leasehold Land includes Mining Rights.2. Cost of Leasehold Land includes Rs. 6.09 Crores (Previous year Rs 6.09 Crores) for which the lease agreementhas not been executed.3. Cost of Plant and Machinery includes Rs. 29.89 Crores (Previous year Rs. 29.89 Crores) relating to railway

wagons given on operating lease to the Railways under “Own Your Wagon Scheme”.4. Fixed Assets include assets of Rs. 123.64 Crores (Previous Year Rs. 121.44 Crores) not owned by the Company.5. Fixed Assets amounting to Rs. 26.72 Crores (Previous Year Rs. 26.72 Crores) are held on Co-ownership withother Company.6. The title deeds of some of the immovable properties transferred pursuant to the Scheme of Arrangement are yetto be transferred in the name of the Company.(53)SCHEDULESRs. in CroresSCHEDULE 6 PreviousINVESTMENTS - At Cost YearLONG TERMGovernment and Trust Securities -Unquoted — —(Rs. 10,000, Previous Year Rs.10,000)Pledged as Security DepositShares in Subsidiary Companies- UnquotedFully paid-up Equity Shares of Rs. 10 eachNIL Narmada Cement Company Limited(Previous Year 69,803,293) — 237.3950,000 Dakshin Cements Limited (Previous Year - 50,000) 1.21 1.21Fully paid-up Equity Shares of Sri Lankan Rupee 10 each40,000,000 UltraTech Ceylinco (Pvt.) Ltd.(Previous Year 40,000,000) 23.03 23.0324.24 261.6324.24 261.63Less: Provision for Diminution in Value of Investment — 76.8424.24 184.79CURRENT - UnquotedUnits of Debt Schemes of Mutual Funds:Description No. of Units Face Value Amounta) Liquid Scheme - Dividend Plan:UTI Mutual Fund 2,672,257 10 4.66LIC Mutual Fund 4,566,339 10 5.00DSP Merill Lynch Mutual Fund 80,602 1,000 8.06Birla Sunlife Mutual Fund 18,039,391 10 18.07Tata Mutual Fund 29,937 1,000 3.00

Prudential ICICI Mutual Fund 2,000,335 10 2.00Kotak Mahindra Mutual Fund 1,840,311 10 2.25b) Fixed Maturity Plan - Dividend Plan:Birla Sunlife Mutual Fund 19,984,026 10 20.00UTI Mutual Fund 15,047,759 10 15.05Prudential ICICI Mutual Fund 10,017,937 10 10.02Kotak Mahindra Mutual Fund 10,000,000 10 10.00HSBC Mutual Fund 10,000,000 10 10.00DSP Merill Lynch Mutual Fund 10,000,000 10 10.00Standard Chartered Mutual Fund 10,038,500 10 10.04LIC Mutual Fund 10,000,000 10 10.00Tata Mutual Fund 5,000,000 10 5.00ING Vysya Mutual Fund 5,000,000 10 5.00148.15 —172.39 184.79Note: No. of Units of various Mutual Funds - Debt Schemes purchased and redeemed during the year are as follows:(A) Liquid Schemes (Dividend Plan)- Birla Sunlife Mutual Fund - 525,358,908; Prudential ICICI Mutual Fund - 187,226,161;SBI Mutual Fund - 128,532,270; LIC Mutual Fund - 177,912,670; UTI Mutual Fund - 21,031,805; DSP Merill LynchMutual Fund - 1,659,168; HDFC Mutual Fund - 9,034,877; Kotak Mahindra Mutual Fund - 61,620,366; JM MutualFund - 7,567,514; Standard Chartered Mutual Fund - 51,394,861; HSBC Mutual Fund - 957,845; Franklin TempletonMutual Fund - 109,995; Tata Mutual Fund - 1,504,009.(B) Floating Rate Schemes (Dividend Plan)- Prudential ICICI Mutual Fund - 9,998,700; UTI Mutual Fund - 9,931,966;LIC Mutual Fund - 16,660,920.(C) Short Term Schemes (Dividend Plan)- Prudential ICICI Mutual Fund - 9,141,353; Franklin Templeton MutualFund - 91,708.(54)Rs. in CroresSCHEDULE 7 PreviousINVENTORIES YearStores & Spare parts, Packing Material, Fuels and Scrap 201.02 165.41Raw Materials 12.74 9.36Work-in-progress 105.97 59.35Finished Goods 59.84 49.59

379.57 283.71SCHEDULE 8SUNDRY DEBTORSExceeding six months:Good and Secured 8.87 1.86Good and Unsecured 1.69 1.50Doubtful and Unsecured 1.56 —12.12 3.36Less: Provision for Doubtful Debts 1.56 —10.56 3.36Others:Good and Secured 89.56 48.74Good and Unsecured 72.43 119.85161.99 168.59172.55 171.95SCHEDULE 9CASH AND BANK BALANCESCash Balance on Hand 0.11 0.15Bank Balance with Scheduled Banks:In Current Accounts 61.39 56.11In Fixed Deposits Accounts 0.10 —61.60 56.26SCHEDULE 10LOANS & ADVANCESSecured & Considered GoodLoan against mortgage of House Property 2.23 3.07UnsecuredConsidered Good:Loans and Advances receivable from Subsidiary Company 0.34 179.81Deposits and Balances with Government and other Authorities(including accrued interest ) 31.40 26.16Advances recoverable in cash or in kind or for value to be received 124.83 113.26Advance Income Tax (Net of Provision) — 3.43Considered Doubtful:Advances recoverable in cash or in kind from- Subsidiary — 2.81- Others 0.22 —156.79 325.47Less: Provision for doubtful loans and advances 0.22 2.81

156.57 322.66158.80 325.73SCHEDULES(55)SCHEDULESRs. in CroresPreviousSCHEDULE 11 YearCURRENT LIABILITIESSundry CreditorsSmall Scale Industries 0.78 0.60(To the extent identified with available information)Parent Companies & Fellow Subsidiaries 4.09 —Others 313.26 222.67318.13 223.27Security and Other Deposits 78.52 32.97Advances from Customers 42.38 25.16Amount transferable to Investor Education andProtection Fund, when dueUnpaid Dividend 0.21 0.10Other Liabilities 43.16 96.77Interest accrued but not due on loans 34.47 37.16516.87 415.43SCHEDULE 12PROVISIONSProvision for Contingency — 3.56Provision for Retirement Benefits 12.11 9.66Provision for Tax (Net of Advance Tax) 2.22 —Proposed Dividend 21.79 9.33Corporate Dividend Tax 3.06 1.3139.18 23.87SCHEDULE 13INTEREST & DIVIDEND INCOMEInterest (Gross) on others 1.28 3.60(Tax Deducted at Source Rs. 0.11 Crore,(Previous Year Rs. 0.62 Crore))Dividend from Current Investments 2.22 0.10Dividend from a Subsidiary 3.49 —6.99 3.70SCHEDULE 14

OTHER INCOMELease Rent 3.93 4.60Insurance Claim 0.19 —Profit on Sale of Fixed Assets (Net) 0.21 —Profit on Sale of Current Investments (Net) 0.08 —Exchange Rate Difference (Net) 1.00 —Unclaimed Credit Balances Written Back 0.81 0.20Excess Provisions Written Back (Net) 11.60 0.35Miscellaneous Income/ receipts 12.19 12.2230.01 17.37(56)SCHEDULESRs. in CroresPreviousYearSCHEDULE 15INCREASE / (DECREASE) IN STOCKSClosing StockWork-in-progress 105.97 59.35Finished Goods 59.84 49.59165.81 108.94Opening stockWork-in-progress 59.35 44.07Finished Goods 49.59 41.31Add: Stock transferred from NCCL as on 1.10.05 21.13 —130.07 85.38Add: Increase / (Decrease) in Excise Duty on Stocks 3.38 (2.66)Increase / (Decrease) in Stocks 39.12 20.91SCHEDULE 16RAW MATERIALS CONSUMEDOpening Stock 9.36 7.21Add: Stock transferred from NCCL as on 1.10.05 1.57 —Purchase and Incidental Expenses 284.06 267.49294.99 274.70Less: Closing Stock 12.74 9.36282.25 265.34SCHEDULE 17MANUFACTURING EXPENSESConsumption of Stores, Spare Parts, Components and Packing Materials 225.27 186.29

Power & Fuel Consumed 910.11 823.12Hire Charges of Plant & Machinery and others 4.73 2.59Repairs to Plant & Machinery 48.19 35.36Repairs to Buildings 3.54 1.86Repairs to Others 13.31 11.611,205.15 1,060.83SCHEDULE 18PAYMENTS TO AND PROVISIONS FOR EMPLOYEESSalaries, Wages and Bonus, etc. 69.26 54.09Contribution to and Provisions for Provident and Other Funds 9.40 6.12Welfare Expenses 13.60 12.7592.26 72.96(57)SCHEDULESRs. in CroresPreviousYearSCHEDULE 19SELLING, DISTRIBUTION, ADMINISTRATIONAND OTHER EXPENSESCommission paid to Distributors and Selling Agents 7.94 8.40Cash Discount 26.73 20.79Freight, Handling and Other Expenses 763.08 478.99Advertisements & Sales Promotion 46.24 67.65Insurance 8.65 7.95Rent (including Lease Rent) 8.79 9.67Rates and Taxes 12.33 13.56Stationery, Printing, Communication Expenses 7.76 7.39Travelling and Conveyance 18.28 15.08Legal and Professional charges 17.97 12.59Bad Debts and Advances Written Off 0.17 6.38Provision for Doubtful Debts and Advances — 1.08Directors’ Fees 0.11 0.14Power (other than related to manufacturing activity) 1.18 0.60Exchange Rate difference (Net) — 0.23Loss on Sale of Fixed Assets (Net) — 0.17Miscellaneous Expenses 20.10 33.25939.33 683.92SCHEDULE 20INTEREST

On Debentures and Fixed Loans 83.53 95.78On Others loans 6.11 11.1089.64 106.88(58)SCHEDULESSCHEDULE 21ACCOUNTING POLICY AND NOTES ON ACCOUNTSA Significant Accounting Policies:1. Basis of Accounting:The financial statements are prepared under the historical cost convention on an accrual basis and in accordancewith the applicable mandatory Accounting Standards.2. Fixed Assets:Fixed assets are stated at cost (including other expenses related to acquisition and installation).3. Foreign Currency Transactions:Foreign currency transactions are accounted for at the rates prevailing on the date of the transaction. Foreigncurrency balances outstanding as at the year end are restated at the year end rate, however, foreign currencytransactions / balances covered by forward contracts are valued at the spot rate at the inception of the contract. Thepremia arising on such forward contracts is amortised as an expense or income over the life of the contract. Exchangedifferences relating to fixed assets acquired from a country outside India are adjusted to the cost of the asset. Anyother exchange difference is dealt with in the Profit and Loss Account.4. Treatment of expenditure during construction period:Expenditure during construction period is included under Capital Work in Progress and the same is allocated to therespective Fixed Assets on the completion of its construction.5. Investments:Current investments are carried at lower of cost or fair value. Long term investments are stated at cost afterdeducting provisions made for any other than temporary diminution in the value.6. Inventories:Inventories are valued at lower of cost and net realisable value. The cost is computed on weighted average basis.

Finished goods and work-in-progress include cost of conversion and other costs incurred in bringing the inventoriesto their present location and condition. Obsolete, defective and unserviceable stocks are duly provided for.7. Leases:a) In respect of lease transactions entered into prior to April 1, 2001, lease rentals of assets acquired are charged tothe Profit & Loss Account.b) Lease transactions entered into on or after April 1, 2001:i) Assets acquired under leases where the Company has substantially all the risks and rewards of ownership areclassified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fairvalue or the present value of minimum lease payments and a liability is created for an equivalent amount.Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constantperiodic rate of interest on the outstanding liability for each period.ii) Assets acquired under leases where a significant portion of the risks and rewards of ownership are retainedby the lessor are classified as operating leases. Lease rentals are charged to the Profit & Loss Account onaccrual basis.iii) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis overthe lease term.(Also refer to policy on Depreciation & Amortisation)8. Depreciation & Amortisation:Depreciation is charged in the Accounts on the following basis:i) Depreciation on original cost is provided on straight-line basis at the rates prescribed in Schedule XIV to theCompanies Act, 1956 except in following.:a) Motor Cars at 14.14 % per annum.b) Motor Cars given to employees as per Company Scheme at 17 % per annum.c) Personal Computers & Laptops given to employees as per Company Scheme at 31 % per annum.(59)SCHEDULES

ii) Assets acquired up to September 30, 1987, are depreciated at the rates computed under Section 205(2)(b) of theCompanies Act, 1956 pursuant to rates of depreciation prescribed in Income Tax Rules from time to time.iii) The value of leasehold land and mining lease is amortised over the period of the lease.iv) Assets not owned by the Company are amortised over a period of five years.v) Expenditure incurred on Jetty is amortised over the period of the relevant agreement such that the cumulativeamortisation is not less than the cumulative rebate availed by the Company.vi) In respect of the amounts capitalised during the year on account of foreign exchange fluctuation depreciation isprovided prospectively over the residual life of the assets.vii) Depreciation on additions/deductions is calculated pro-rata from/to the month of additions/deductions.9. Retirement Benefits:Provisions for/contributions to retirement benefits schemes are made as follows:a) Provident fund on actual liability basis.b) Superannuation/Pension schemes on the basis of actual liability/actuarial valuation done at the year end.Superannuation is funded with an approved fund.c) Gratuity based on actuarial valuation done at the year end. Gratuity is funded with an approved fund.d) Leave encashment benefit on actuarial valuation basis done at the year end.10. Interest:The difference between the face value and the issue price of ‘Discounted Value Non Convertible Debentures’, beingin the nature of interest, is charged to the Profit and Loss Account, on a compound interest basis determined withreference to the yield inherent in the discount.11. Borrowing Costs:Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalisedas part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset thatnecessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are

recognised as an expense in the period in which they are incurred.12. Provision for Current & Deferred Tax:Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period and inaccordance with the provisions as per the Income Tax Act, 1961. Deferred Tax resulting from “timing difference”between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted orsubstantively enacted as on the balance sheet date. The Deferred Tax asset is recognised and carried forward only tothe extent that there is a reasonable certainty except for carried forward losses and unabsorbed depreciation which isrecognised on virtual certainty that the assets will be realised in future.13. Sales:a) Sales are accounted on despatch of products.b) Export sales are accounted on the basis of date of bill of lading.14. Provisions, Contingent Liabilities and Contingent Assets:Provision involving substantial degree of estimation in measurement are recognised when there is a present obligationas a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are notrecognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financialstatements.15. Use of estimates:The preparation of financial statements in conformity with the generally accepted accounting principles requiresestimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date offinancial statements and the reported amounts of revenues and expenses during the reported period. Differencebetween the actual results and estimates are recognised in the period in which the results are known or materialise.B. Notes on Accounts1. Merger of Narmada Cement Company Limiteda. Pursuant to the Scheme of Amalgamation (the Scheme) u/s 18(1)(c ) and other applicable provisions of SickIndustrial Companies (Special Provisions) Act, effective from October 1, 2005 (the Appointed Date), Narmada

Cement Company Limited (“NCCL” ), has been merged in the Company. The Scheme, is approved by BoardSCHEDULE 21 (Contd.)(60)SCHEDULESfor Industrial and Financial Reconstruction, New Delhi, on May 15, 2006 and has effective from June 1, 2006(the Effective Date). NCCL business was of manufacturing and sales of clinker and cement.b. In terms of the Scheme, all the assets and liabilities of NCCL have been transferred and stand vested with theCompany with effect from the Appointed Date. Further, from the Appointed Date, NCCL carried on all itsbusiness and activities for the benefit of and in trust for the Company and thus, all the profit or income accruingor arising to NCCL, or expenditure or losses arising or incurred by NCCL shall be treated as the profits orincomes or expenditure or losses of the Company. The Scheme has accordingly been given effect to in theseaccounts.c. The Amalgamation has been accounted for under the “Pooling of Interests” method as prescribed by AccountingStandard 14 on –“Accounting for Amalgamation” issued by the Institute of Chartered Accountants of India.Accordingly, the assets, liabilities and reserves of NCCL have been taken over at their book values as on theAppointed Date, as specified in the Scheme of Amalgamation.In terms thereof, the difference between the consideration, being shares issuable to minority shareholders ofNCCL, of Rs.0.09 crore for the amalgamation, and the book values of the net liability acquired of Rs. 73.22crores, after adjusting the carried value of the investments of the Company in NCCL for Rs. 160.55 crores , istreated as -i. Capital Reserve of Rs. 0.15 crore to Capital Reserves of the Company;ii. The debit balance of Rs.234.01 crores (including debit balance in Profit and Loss Account of Rs. 144.76crores) transferred to debit of General Reserve of the Company.d. In consideration of the above, 87,258 Equity Shares of Rs. 10 each of the Company are to be issued to the

minority shareholders of NCCL in the ratio of 1 (one) fully paid-up Equity Share of Rs.10/- each of theCompany for every 18 (eighteen) fully paid-up equity shares of Rs.10/- each held in NCCL. Pending allotment,an amount of Rs 0.09 crore has been shown under the Share Capital Suspense Account as at March 31, 2006.These shares were subsequently allotted on June 14, 2006.e. In terms of the Scheme, the Equity Shares when issued and allotted by the Company shall rank pari-passu in allrespects with the existing Equity Shares of the Company. Accordingly, the appropriation for the proposeddividend includes dividend on 87,258 Equity Shares.Rs. in CroresPreviousYear2. Contingent Liabilities not provided for in respect of:Claims not acknowledged as debts in respect of matters in appeals:(a) Sales-tax liability 50.92 31.47(b) Excise duty 27.10 19.02(c) Royalty on Limestone/ Marl 29.68 13.53(d) Customs 30.12 —(e) Others 15.63 9.543. The Ministry of Textiles, vide its orders dated June 30, 1997 and July 1, 1999 has deleted cement from the list ofcommodities to be packed in Jute bags under the Jute Packaging (Compulsory Use in Packing Commodities) Act1987. In view of this, the Company does not expect any liability for non-despatch of cement in Jute bags in respectof earlier years.4. Estimated amount of contracts remaining to be executed on capital account and not provided (net of advances) Rs.531.97 crores (Previous year Rs. 55.74 crores)5. During the previous year, an amount of Rs. 19.48 crores was charged to the Profit & Loss Account to align theaccounting policy with regard to deferred revenue expenditure with the holding company (Grasim Industries Limited).The additional charge in the previous year on account of this was Rs.12.60 crores.6. Depreciation for the year ended March 31, 2006 and March 31, 2005 includes Rs. 4.20 crores and Rs. 18.34 crores,

respectively, related to earlier years.7. Derivative InstrumentsForward Exchange Contracts are not intended for trading or speculative purposes, but for hedge purposes. TheCompany’s policy is to establish the amount of currency required or available at the settlement date of payables andSCHEDULE 21 (Contd.)(61)receivables. The following are the outstanding Forward Exchange Contracts entered into by the Company as onMarch 31, 2006:Currency Amount Buy/Sell Cross CurrencyUS Dollar 2 Million Sell RupeesPurpose : To hedge net foreign exchange exposure in respect of highly probable forex transaction.In accordance with the above policy all Foreign currency exposures that are not hedged by a derivative instrumentsor otherwise : NIL8a) Secured Non-Convertible Debentures Rs. in CroresPreviousYeari) Fixed Rate Non Convertible Debentures (NCDs)1. 12.00% NCDs (Redeemable at par on December 22, 2006 ) 50.00 50.002. 12.60% NCDs (Redeemable at par on September 17, 2006 ) 26.00 26.003. 8.25% NCDs (Redeemable at par on September 2, 2012 ) 65.00 65.004. 8.40% NCDs (Redeemable at par on July 22, 2007 ) 45.00 50.005. 8.30% NCDs (Redeemable at par on September 2, 2012 ) 25.00 25.006. 8.09% NCDs (Redeemable at par on July 25, 2007 ) 40.00 45.007. 10.80% NCDs (Redeemable at par on May 10, 2005 ) — 50.008. 6.00 % NCDs (Redeemable at par on March 12, 2009 ) 225.00 225.009. 11.75 % NCDs (Redeemable at par on January 11, 2006 ) — 22.0010. Step up interest NCDs (Redeemable at par on September 16, 2012 ) 25.00 25.0011. 6.65% NCDs (Redeemable at par on April 30, 2013 ) 5.00 5.0012. 5.78 % NCDs (Redeemable at par on May 11, 2009 ) 150.00 150.0013. 6.25% NCDs (Redeemable at par on June 25, 2009 ) 150.00 150.0014. 6.70% NCDs (Redeemable at par on June 16, 2008 ) 50.00 —ii) Floating Rate Debentures1. MIBOR Linked NCDs (Redeemable at par on August 1, 2007 ) 100.00 100.00

2. 1 year GoI Security Linked NCDs (Redeemable at par on June 16, 2008 ) 50.00 —iii) Discounted Value DebenturesIssued as zero coupon at YTM of 6.80%(Carrying amount Rs 12.55 cores , previous year Rs 11.75 crores,Redeemable at par on April 30, 2013) 20.00 20.00The Company retains the options to purchase the Debentures in the secondary market, and cancel, hold, orreissue the same at such price and on such terms as the Company may deem fit or as permitted under theCompany Law. Debentures repurchased have not been kept live for reissuance as at March 31, 2006.The Non Convertible Debentures are secured by way of first charge, having pari passu Rights, on theCompany’s immovable/ movable properties (save and except book debts and inventory).b) The other loans are secured by a first mortgage and charged with Company’s immovable properties at certainlocations and/ or by hypothecation of movables at those locations (save and except book debts and inventory) bothpresent and future, having pari passu rights, subject to prior charges, on specific assets in favour of the Company’sBankers:i) Rs. 50.00 Crores (Previous year Rs. 50.00 Crores) from CITI Bank N.A.ii) Rs. 50.00 Crores (Previous year Rs. 50.00 Crores) from IDBI Bank Ltd.iii) Rs. 89.23 Crores (Previous year NIL) ECB from SBI Singaporeiv) Rs Nil (Previous year Rs. 5.82 Crores) from IDBI Ltd.v) Rs Nil (Previous year Rs. 79.50 crores) from HDFC Ltd.SCHEDULE 21 (Contd.)SCHEDULES(62)9. Sundry creditors include overdue amounts (mainly unclaimed) of Rs. 0.06 crore (Previous year Rs. 0.05 crore)(including interest of Rs.77,804 , (Previous Year Rs. 49,753)) payable to Small Scale and Ancillary industrial units.Total outstanding dues of small scale industrial undertakings have been determined to the extent such parties havebeen identified on the basis of information available with the Company.List of Small Scale Industrial Undertakings to whom the Company owes money for more than 30 days as at March

31, 2006:1 Kabra Engineering 7 Kaveri Ultra Polymer Limited2 Jayshree Electorn Pvt. Limited 8 Surya Deep Alloy Casting3 Shah Alloys 9 Al – Aqmar Trading Company4 Namitter Industries 10 RS Enterprises5 Noble Rubber Industries 11 Thejo Engineering Services Pvt. Limited6 Mahavir Industries10. Disclosure as per clause 32 of the listing agreement – loans in the nature of Inter Corporate Deposits (ICD) andTrade Credit given to Subsidiaries :Name of Subsidiary Company Amount Outstanding Maximum BalanceOutstanding during the yearRs. in Crores Rs. in CroresNarmada Cement Company Limited — 190.70(upto 30.09.2005)UltraTech Ceylinco (Pvt.) Limited 18.49 20.63Dakshin Cements Limited 0.11 0.11There is no repayment schedule and interest on these ICDs is deferred.11. Auditors’ remuneration (excluding service tax) and expenses charged to the accounts:Rs. in Croresa) Statutory Auditors: 2005-06 2004-05Audit fees 0.24 0.20Tax audit fees 0.03 0.03Certification fees 0.14 0.08Expenses reimbursed 0.02 —b) Cost Auditors:Audit fees 0.02 0.02Expenses reimbursed (Rs. 12,555 previous year Rs. Nil)12. Manager & Chief Executive Officer’s remuneration:Rs. in Crores2005-06 2004-05Salary 1.56 1.13Contribution to Provident Fund & Other Funds* 0.15 0.11Perquisites 0.13 0.10* Excluding Contribution to Gratuity Fund and provision for leave encashment as separate figures cannot be quantified.13. Segment ReportingThe Company has one business segment ‘cement’ as its primary segment. The Company’s operations are solely

situated in India.Rs. in CroresRevenue 2005-06 2004-05Net Sales:Domestic 2,809.20 2,092.54Export 490.25 514.36Total 3,299.45 2,606.90SCHEDULE 21 (Contd.)SCHEDULES(63)SCHEDULES14. Disclosure of related parties / related party transactions:a) List of related partiesName of the Related Party Nature of RelationshipGrasim Industries Ltd. (Grasim) Holding CompanySun God Trading & Investment Ltd. Fellow SubsidiarySamruddhi Swastik Trading & Investment Ltd. (SSITL) Fellow SubsidiaryShree Digvijay Cement Co. Ltd. (SDCCL) Fellow SubsidiaryNarmada Cement Company Ltd. (NCCL) Subsidiary (upto 30.09.2005)UltraTech Ceylinco (Pvt.) Ltd. (UCPL) SubsidiaryDakshin Cements Ltd. (DCL) Wholly owned subsidiaryKey Management Personnel (KMP)Mr S. Misra, Manager & CEO of the Companyb) Disclosure of related party transactions: Rs. in CroresSl. Nature of Holding Fellow TotalNo. Transaction Company Subsidiaries Subsidiaries KMPGrasim NCCL DCL UCPL SSITL SDCCL1 Sale of Goods 206.39 — — 95.80 — — — 302.19(2.76) — — (53.77) — — — (56.53)2 Purchase of Goods 170.31 88.87 — — — — — 259.18(6.31) (184.92) — — — — — (191.23)3 Purchase / lease/ — — — — — — — —Rent of fixed assets (0.19) — — — — — — (0.19)4 Transfer of 0.13 — — — — — — 0.13fixed assets — — — — — — — —5 Rendering of 0.04 — — — — — — 0.04Services (0.02) — — (2.24) — — — (2.26)6 Receiving of 13.66 — — — 0.12 — 1.84 15.62Services (1.24) — — — — — (1.34) (2.58)7 Interest & other

income received/ — — — 3.49 — — — 3.49receivable — (2.81) — — — — — (2.81)Less : provided for — — — — — — — —— (2.81) — — — — — (2.81)8 Letter of Comfort — — — — — — — —given to Bank — (30.00) — — — — — (30.00)Outstanding Balance as on March 31,2006 Rs in CroresSl. Nature of Holding FellowNo. Transaction Company Subsidiaries Subsidiaries KMP TotalGrasim NCCL DCL UCPL SSITL SDCCLLoans & Advances — — 0.11 0.23 0.09 0.00 0.50 0.93(0.18) (182.54) (0.08) — — — (0.50) (183.30)Debtors 0.43 — — 18.26 — — — 18.69(0.23) — — (7.67) — — — (7.90)Creditors 0.45 — — — — — — 0.45(1.44) — — — — — — (1.44)Other Liabilities 4.08 — — — — — — 4.08— — — — — — — —Figures in brackets are pertaining to the previous year.SCHEDULE 21 (Contd.)(64)SCHEDULESSCHEDULE 21 (Contd.)15. LeasesOperating Leases:i) The Company has taken various plant and machinery under cancellable operating leases. These lease agreementare generally renewed on expiry.ii) (a) The Company has taken on non-cancellable operating leases certain assets, the future minimum leasepayments in respect of which, as at March 31, 2006 are as follows:Rs. in CroresMinimum Lease Payments Payable 2005-06 2004-05i. not later than 1 year 0.40 1.70ii. later than 1 year and not later than 5 years 0.50 2.88iii. later than 5 years — —Total Minimum Lease Payable 0.90 4.58(b) The lease agreements provide for an option to the Company to renew the lease period at the end of the

non-cancellable period. There are no exceptional / restrictive covenants in the lease agreements.iii) The rental expense in respect of operating leases was Rs. 0.79 crore (Previous Year Rs. 3.00 crores).iv) Contingent rent recognised in the Profit and Loss Account: Rs. 3,379 (Previous year Rs. 34,305).16. Deferred Tax Assets and Liabilities as on March 31, 2006 are as under: Rs. in CroresParticulars Deferred Tax Current Year Deferred Tax(assets)/liabilities charge/(credit) (assets)/liabilitiesas at 01.04.2005 as at 31.03.2006Deferred Tax Assets:Provision allowed under tax on payment basis (13.13) 3.70 (9.43)(13.13) 3.70 (9.43)Deferred Tax Liabilities:-Accumulated Depreciation 587.17 (8.45) 578.72Miscellaneous expenditure — — —(to the extent not written-off or adjusted)Payments allowed under tax not expensedin books 7.67 — 7.67594.84 (8.45) 586.39Net Deferred Tax Liability 581.71 (4.75) 576.9617. The following expenses are included in the different heads of expenses in the Profit & Loss Account :Rs. in CroresParticulars 2005-06 2004-05Stores & Spares Consumed 52.82 60.19Royalty & Cess 76.46 68.80Power & Fuel Consumed 0.78 0.06Repairs to Machinery 19.06 20.80Repairs to Building 0.42 0.42Repairs to Other Assets 0.10 0.81Rates & taxes 2.68 1.81Lease Rent 2.62 1.50Professional fees 0.06 0.87Hire charges-Plant & Machinery 4.05 16.2318. All the amounts in rupees have been rounded off to crores with lacs in decimals as approved under Section 211 (1)of the Companies Act, 1956. Figures of Rs.50,000 or less have been shown at actuals in brackets.

19. Additional information required under Part II of Schedule VI to the Companies Act, 1956 (as certified by theExecutives of the respective Divisions) is as per Schedule 22.(65)SCHEDULESSCHEDULE 22ADDITIONAL INFORMATION UNDER PART II OF SCHEDULE VI TO THE COMPANIES ACT, 19561. CAPACITIES & PRODUCTION:Product Unit Installed capacity* Actual production2005-06 2004-05 2005-06 2004-05Cement (Lakh tonnes) 170.00 155.00 133.33 121.14Licensed capacity not indicated due to abolition of industrial licenses as per Notification No. 477 (E) dated July 25,1991 issued under The Industries (Development and Regulation) Act, 1951.* As Certified by the Management and accepted by the Auditors.2. TURNOVER:2005-06 2004-05Product Unit Quantity Value Quantity ValueRs. in Crores Rs. in CroresCement Lakh tonnes 142.35 3,091.33 125.23 2,250.50Clinker Lakh tonnes 13.18 207.94 26.48 356.33Others 0.18 0.07Total 3,299.45 2,606.903. INVENTORY:As at 31.03.2006 As at 31.03.2005Product Unit Quantity Value Quantity ValueRs. in Crores Rs. in CroresCement Lakh tonnes 3.14 59.84 2.65 47.67Clinker (Trading) Lakh tonnes — — 0.14 1.924. RAW MATERIALS, STORES, SPARE PARTS:a) Raw Materials Consumed:2005-06 2004-05Product Unit Quantity Value Quantity ValueRs. in Crores Rs. in CroresLimestone* Lakh tonnes 183.09 143.40 177.78 143.55Slag Lakh tonnes 2.50 7.85 3.95 12.12Gypsum Lakh tonnes 5.12 58.53 4.52 40.59Fly Ash Lakh tonnes 12.70 29.30 10.24 26.87Others 43.17 42.21

Total* 282.25 265.34* Including Royalty & Cess on limestone and other related overheads.b) Purchase of Finished Goods:2005-06 2004-05Class of goods Unit Quantity Value Quantity ValueRs. in Crores Rs. in CroresCement Lakh tonnes 9.54 232.19 4.78 108.12Clinker Lakh tonnes 2.36 33.02 6.68 85.74Others 0.11 0.07Total 265.32 193.93(66)SCHEDULE 22 (Contd.)c) Value of imports (on CIF basis): Rs. in Crores2005-06 2004-05Fuel, stores and spares 229.50 258.93Capital goods 13.61 0.90d) Value of imported and indigenous raw materials, spare parts and stores consumed:2005-06 2004-05Value % Value %Rs. in Crores Rs. in CroresRaw materialsImported 0.69 0.2 — —Indigenous 281.56 99.8 265.34 100.0Total 282.25 100.0 265.34 100.02005-06 2004-05Value % Value %Rs. in Crore Rs. in CroreStores & sparesImported 29.19 10.0 30.31 12.0Indigenous 248.90 90.0 216.17 88.0Total 278.09 100.0 246.48 100.05. EXPENDITURE IN FOREIGN CURRENCY:Rs. in Crores2005-06 2004-05Freight/ Despatch / Demurrage 54.18 51.54Commission — 0.26Advertising 0.01 4.86Service fees 0.77 1.23Interest 3.70 5.80

Other matters 3.13 1.636. EARNING IN FOREIGN EXCHANGE:Rs. in Crores2005-06 2004-05Export of goods {Including Rs. 460.66 Crores(Rs. 493.72 Crores) on FOB basis} 490.25 514.36Professional fees 2.06 1.97Other receipts 10.47 16.62SCHEDULES(67)SCHEDULE 22 (Contd.)7. DIVIDEND REMITTED IN FOREIGN CURRENCY TO NON-RESIDENT SHAREHOLDERS:2005-06 2004-05No. Gross No. Grossof Shares Amount of of Shares Amount ofShareholders Held Dividends Shareholders Held DividendsEquity 3669 9576564 Rs 0.72 crore 4015 9257969 Rs 0.46 croreDividend remitted in the year 2005-06 is pertaining to 2004-05 and dividend remitted in 2004-05 is pertaining to2003-04, respectively.8. Previous year’s figures have been regrouped and rearranged wherever necessary to confirm to this year’s classification.In view of the amalgamation of NCCL with the Company with effect from October 1, 2005, the figures of thecurrent year are not comparable with those of the previous year.Signatures to Schedules ‘1’ to ‘22’KUMAR MANGALAM BIRLAChairmanS. MISRA RAJASHREE BIRLAManager & CEO R. C. BHARGAVAY. M. DEOSTHALEEK. C. BIRLA S. MISRAExecutive President & CFO J. P. NAYAKS. RAJGOPALS. K. CHATTERJEE D. D. RATHIMumbai, July 7, 2006 Company Secretary DirectorsSCHEDULES(68)

ADDITIONAL INFORMATION UNDER PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956Balance Sheet Abstract and General Business ProfileI Registration DetailsRegistration No. 1 1 - 1 2 8 4 2 0 State Code 1 1Balance Sheet Date 3 1 - 0 3 - 0 6II Capital raised during the year (Amount in Rs. Thousands)Public Issue Right IssueN I L N I LBonus Issue Private PlacementN I L 8 7 3III Position of Mobilisation and Development of Funds (Amount in Rs. Thousands)Total Liabilities Total Assets3 6 2 3 1 0 6 0 3 6 2 3 1 0 6 0Source of Funds Paid-Up-Capital Reserve & Surplus1 2 4 4 8 5 9 9 1 3 7 8 3 8Secured Loans Unsecured Loans1 2 2 1 9 2 2 1 2 2 9 9 0 1 1Application of Funds Net Fixed Assets Investments2 6 7 8 2 0 2 4 1 7 2 3 8 7 4Net Current Assets Miscellaneous Expenditure2 1 6 4 7 1 2 N I LIV Performance of Company (Amount in Rs. Thousands)Turnover Total Expenditure3 7 8 5 2 8 8 3 3 4 9 9 6 9 6 3+/- Profit / (Loss) Before Tax +/- Profit/(Loss) After Tax+ 2 8 5 5 9 2 0 + 2 2 9 7 6 1 3Earning per share (Rs.) Dividend rate %1 8 . 4 6 1 7 . 5 0V Generic Names of Principal product of the CompanyItem Code 2 5 2 3 2 9 . 0 1Product Description P O R T L A N D C E M E N TKUMAR MANGALAM BIRLAChairmanS. MISRA RAJASHREE BIRLAManager & CEO R. C. BHARGAVAY. M. DEOSTHALEEK. C. BIRLA S. MISRAExecutive President & CFO J. P. NAYAK

S. RAJGOPALS. K. CHATTERJEE D. D. RATHIMumbai, July 7, 2006 Company Secretary Directors(69)Name of the Subsidiary Company Dakshin UltraTechCements CeylincoLimited (Pvt) Limited1 Financial year of the subsidiary company ended on March 31, 2006 March 31, 20062 Holding Company’s Interesta) Number of Shares fully paid 50,000 40,000,000b) Extent of holding 100% 80%Rs. Crores Rs. Crores3 Net aggregate amount of Profit/(Loss) of thesubsidiary, so far as they concern members of theUltraTech Cement Limitedi) for the financial year of the subsidiarya) Dealt with in the account of the — —holding companyb) Not dealt with in the accounts of the — 8.42 *holding companyii) for the previous financial years ofthe subsidiary since it became the holding company’s subsidiarya) Dealt with in the account of the — —holding companyb) Not dealt with in the accounts of the — 3.90 #holding company4 As the financial year of the subsidiary companies — —coincide with the financial year of the holding company,Section 212(5) of the Companies Act, 1956 is not applicable.* converted Re. 1 = Sri Lankan Rupees 2.29# converted Re. 1 = Sri Lankan Rupees 2.27Note: Narmada Cement Company Limited (NCCL) was amalgamated with the Company with effect fromOctober 1, 2005 and was not a subsidiary at the end of the financial year of the Company.KUMAR MANGALAM BIRLAChairmanS. MISRA RAJASHREE BIRLAManager & CEO R. C. BHARGAVA

Y. M. DEOSTHALEEK. C. BIRLA S. MISRAExecutive President & CFO J. P. NAYAKS. RAJGOPALS. K. CHATTERJEE D. D. RATHIMumbai, July 7, 2006 Company Secretary DirectorsSTATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES(70)AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF ULTRATECH CEMENT LIMITED ON THECONSOLIDATED FINANCIAL STATEMENTS OF ULTRATECH CEMENT LIMITED AND ITSSUBSIDIARIES.1. We have examined the attached Consolidated Balance Sheet of ULTRATECH CEMENT LIMITED(“the Company”) and its subsidiaries, which together constitute “the Group”, as at 31st March 2006, theConsolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for yearended on that date, both annexed thereto. These financial statements are the responsibility of theCompany’s Management. Our responsibility is to express an opinion on these financial statements basedon our audit.2. We conducted our audit in accordance with the auditing standards generally accepted in India. Thesestandards require that we plan and perform the audit to obtain reasonable assurance whether thefinancial statements 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 includesassessing the accounting principles used and significant estimates made by the Management, as well asevaluating the overall financial statements. We believe that our audit provides a reasonable basis forour opinion.3. We did not audit the financial statements of two subsidiaries, whose financial statements reflect total assets

of Rs. 0.18 crores as at 31st March, 2006 and total revenues of Rs. 110.62 crores for the year ended on thatdate. These financial statements have been audited by other auditors whose report has been furnished to us,and our opinion, insofar as it relates to the amount included in respect of the subsidiaries, is based solely onthe report of the other auditors.4. The financial statements also reflect total assets of Rs. 46.44 crores as at 31st March, 2006, total revenues ofRs. 159.66 crores and net cash flows amounting to Rs. 5.61 crores for the year then ended relating to onesubsidiary, which has been consolidated on the basis of the unaudited financial statements, which have beensubjected to limited review by their auditors.5. We report that the consolidated financial statements have been prepared by the Company, in accordancewith the requirements of Accounting Standard 21 (Consolidated Financial Statements), issued by theInstitute of Chartered Accountants of India and on the basis of the separate audited financial statements ofthe Company and the separate unaudited accounts of two subsidiaries and the audited accounts of onesubsidiary, which have been included in the consolidated financial statements.6. Based on our audit and on consideration of report of other auditor on separate financial statements and onthe other financial information of the components, and to the best of our information and according to theexplanations given to us, we are of the opinion that the attached consolidated financial statements, subjectto the amounts relating to the subsidiary referred to in paragraph 4 above being consolidated on the basis ofAUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS(71)their unaudited financial statements, give a true and fair view in conformity with the accounting principlesgenerally accepted in India:a. in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at

31st March, 2006;b. in the case of the Consolidated Profit and loss Account, of the profit of the Group for the year ended onthat date andc. in the case of the Consolidated Cash Flow Statement, of the case flows of the Group for the year endedon that date.For S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO.Chartered Accountants Chartered AccountantsNALIN M. SHAH ATUL B. DESAIPartner Partner(Membership No. 15860) (Membership No. 30850)Mumbai, 7th July, 2006(72)CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2006Rs. in CroresPreviousSchedules YearSOURCES OF FUNDSShareholders’ FundsShare Capital 1A 124.40 124.40Share Capital Suspense 1B 0.09 —Reserves and Surplus 2 916.88 849.281,041.37 973.68Loan FundsSecured Loans 3 1,222.09 1,259.94Unsecured Loans 4 229.90 278.031,451.99 1,537.97Minority Interest 4.75 4.08Deferred Tax Liabilities (Net) 577.55 581.71TOTAL 3,075.66 3,097.44APPLICATION OF FUNDSFixed AssetsGross Block 5 4,633.75 4,530.13Less : Depreciation 2,074.46 1,879.36Net Block 2,559.29 2,650.77Capital Work-in-Progress 141.17 49.652,700.46 2,700.42Goodwill 10.45 152.98Investments 6 148.15 —

Current Assets, Loans and AdvancesInventories 7 386.79 333.48Sundry Debtors 8 162.05 174.52Cash and Bank Balances 9 68.39 60.16Loans and Advances 10 158.84 152.53776.07 720.69Less:Current Liabilities & ProvisionsCurrent Liabilities 11 518.75 452.02Provisions 12 40.72 24.65559.47 476.67Net Current Assets 216.60 244.02Miscellaneous Expenditure 13 — 0.02(to the extent not written off or adjusted)TOTAL 3,075.66 3,097.44Accounting Policies and Notes on Accounts 22In terms of our report attached. KUMAR MANGALAM BIRLAChairmanFor S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO. S. MISRA RAJASHREE BIRLAChartered Accountants Chartered Accountants Manager & CEO R. C. BHARGAVAY. M. DEOSTHALEENALIN M. SHAH ATUL B. DESAI K. C. BIRLA S. MISRAPartner Partner Executive President & CFO J. P. NAYAKS. RAJGOPALS. K. CHATTERJEE D. D. RATHIMumbai, July 7, 2006 Company Secretary Directors(73)CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2006Rs. in CroresPreviousSchedules YearINCOMEGross Sales 3,885.49 3,184.18Less : Excise Duty 501.54 483.19Net Sales 3,383.95 2,700.99Interest & Dividend Income 14 3.71 4.19Other Income 15 28.11 18.55

Increase / (Decrease) in Stocks 16 40.23 21.233,456.00 2,744.96EXPENDITURERaw Materials Consumed 17 324.31 320.42Manufacturing Expenses 18 1,285.41 1,224.66Purchase of Finished Products 176.45 9.01Payments to and Provisions for Employees 19 98.06 94.66Selling, Distribution, Administration andOther Expenses 20 965.16 717.26Interest 21 90.07 109.33Depreciation 220.41 229.52Amortisation of Goodwill on Consolidation 10.17 19.003,170.04 2,723.86Profit/(Loss) Before Tax Expenses & Impairment 285.96 21.10Less: Profit of a Subsidiary till Acquisition Date — 0.76Less: Impairment of Goodwill — 76.84Profit/(Loss) Before Tax Expenses 285.96 (56.50)Provision for Current Tax 59.78 32.50Deferred Tax (4.16) (36.89)Fringe Benefit Tax 3.64 —Profit / (Loss) After Tax 226.70 (52.11)Minority Interest 1.60 1.28Profit/ (Loss) After Minority Interest 225.10 (53.39)Adjustment due to Merger 101.56 —Balance Brought Forward from Previous Year (67.77) (3.72)Profit / (Loss) Available for Appropriation 258.89 (57.11)AppropriationsProposed Dividend 21.79 9.33Corporate Dividend Tax 3.06 1.33Debenture Redemption Reserve 9.45 —General Reserve 25.00 —Balance carried to Balance Sheet 199.59 (67.77)258.89 (57.11)Basic and Diluted Earnings Per Equity Share (in Rs.) 18.08 (4.29)Face Value Per Equity Share (in Rs.) 10.00 10.00Weighted Average Number Of Equity Shares (in Nos.) 124,485,879 124,398,621Accounting Policies and Notes on Accounts 22In terms of our report attached. KUMAR MANGALAM BIRLAChairman

For S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO. S. MISRA RAJASHREE BIRLAChartered Accountants Chartered Accountants Manager & CEO R. C. BHARGAVAY. M. DEOSTHALEENALIN M. SHAH ATUL B. DESAI K. C. BIRLA S. MISRAPartner Partner Executive President & CFO J. P. NAYAKS. RAJGOPALS. K. CHATTERJEE D. D. RATHIMumbai, July 7, 2006 Company Secretary Directors(74)CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006Rs. in CroresA Cash Flow from Operating Activities: March 31, 2006 March 31, 2005Profit before tax 285.96 21.10Adjustments for:Depreciation 220.41 229.52Amortisation of Goodwill on Consolidation 10.17 19.00CWIP Written Off — 3.10Miscellaneous Expenditure written off 0.02 32.23Provision for Doubtful Debts and advances 1.79 0.27Bad Debts Written-off 0.17 4.65Credit Balances written back (9.65) (0.55)Interest & Dividend Income (3.71) (1.34)Interest Expense 90.07 109.30Unrealised Foreign Exchange (Gain)/Loss 0.79 15.89(Profit)/ Loss on Sale of Fixed Assets (0.21) 0.18Profit on Sale of Investments (0.08) —Operating profit before working capital changes 595.73 433.35Adjustments for:(Increase)/decrease in Inventories (53.31) (59.45)(Increase)/decrease in Sundry Debtors 10.51 2.55(Increase)/decrease in Loans and Advances (10.09) (32.15)(Increase)/decrease in Miscellaneous Expenditure not Written Off — (0.03)Increase/(decrease) in Liabilities and Provisions 77.28 38.28Cash generated from Operations 620.12 382.55Current Taxes paid (52.90) (36.12)Fringe Benefit Tax Paid (3.09) —Net Cash from Operating Activities (A) 564.13 346.43

B Cash Flow from Investing Activities:Purchase of Fixed Assets (221.58) (70.33)Sale of Fixed Assets 1.35 0.47(Increase) / decrease in Current Investments (148.00) (23.54)Profit on Sale of Investments 0.08 —Loans/deposits with Subsidiaries — 1.51Interest and Dividend Received 3.56 1.37Net cash used in Investing Activities (B) (364.59) (90.52)C Cash Flow from Financing Activities:Proceeds from Issue of Share Capital — (0.51)Repayment of Long Term Borrowings (167.33) (617.55)Proceeds from Long Term Borrowings 217.15 549.63Repayment of Short Term Borrowings (136.60) (57.80)Interest paid (92.75) (110.63)Dividend Paid (10.20) (6.22)Corporate dividend tax (1.33) (0.80)Net cash used in Financing Activities (C) (191.06) (243.88)Net increase in cash and cash equivalents (A + B + C) 8.48 12.03Cash and cash equivalents at the beginning of the year 60.16 48.13Effect of exchange rate on consolidation of Foreign Subsidiary (0.25) —Cash and cash equivalents at the end of the year 68.39 60.16Notes:1. Cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 issued by theInstitute of Chartered Accountants of India.2. Purchase of fixed assets includes movements of capital work in progress between the beginning and the end of the year.3. Previous year’s figures regrouped/ recasted where ever necessary.In terms of our report attached. KUMAR MANGALAM BIRLAChairmanFor S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO. S. MISRA RAJASHREE BIRLAChartered Accountants Chartered Accountants Manager & CEO R. C. BHARGAVAY. M. DEOSTHALEENALIN M. SHAH ATUL B. DESAI K. C. BIRLA S. MISRAPartner Partner Executive President & CFO J. P. NAYAKS. RAJGOPALS. K. CHATTERJEE D. D. RATHI(75)

Rs. in CroresPreviousSCHEDULE 1A YearSHARE CAPITALAuthorised130,000,000 Equity Shares of Rs. 10 each 130.00 130.00130.00 130.00Issued, Subscribed and Paid up124,398,621 Equity Shares of Rs. 10 each fully paid-up124.40 124.40124.40 124.40SCHEDULE 1BSHARE CAPITAL SUSPENSE87,258 Equity Shares of Rs. 10 each fully paid-up to be issued. 0.09 —0.09 —SCHEDULE 2RESERVES & SURPLUS Rs. in CroresBalance *Adjustment Additions Deduction/ Balanceas at due to during Adjustments as at31st Merger the during 31stMarch, 05 with NCCL year the year March, 06Capital Reserve 25.02 — — — 25.02Cash Subsidy Reserve 0.10 — — — 0.10Debenture Redemption Reserve 129.43 — 9.45 — 138.88General Reserve 762.50 (234.01) 25.00 — 553.49Exchange Variation Reserve** — — (0.20) — (0.20)Surplus as per Profit & Loss Account (67.77) 101.56 225.10 (59.30) 199.59849.28 (132.45) 259.35 (59.30) 916.88Previous Year 928.94 — (64.05) (15.61) 849.28* See Note B 2** Exchange Variation Reserve has been created for Exchange Variation loss in Opening Equity Share Capital and Reserve& Surplus of UltraTech Ceylinco (Pvt.) Ltd.SCHEDULE 3SECURED LOANSNon-Convertible Debentures 1,018.55 999.75Other Loans:Loans from Financial Institutions — 5.82Foreign Currency Loan 89.23 79.50Loans from Banks:

Cash Credits / Working Capital Borrowings from Banks Secured byHypothecation of Stocks and Book Debts. 14.31 74.87Other Loans 100.00 100.001,222.09 1,259.94SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS(76)SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTSSCHEDULE 4 Rs. in CroresUNSECURED LOANS PreviousYearShort Term Loans from Banks — 76.06Sales Tax Deferment Loan 229.90 201.97229.90 278.03SCHEDULE 5FIXED ASSETS Rs. in CroresPARTICULARS GROSS BLOCK DEPRECIATION NET BLOCKAs at Additions Deductions/ As at As at For the Deductions/ Upto As at As at31.03.05 Adjustments 31.03.06 31.03.05 year Adjustments 31.03.06 31.03.06 31.03.05Freehold Land 68.73 2.56 — 71.29 — — — — 71.29 68.73Leasehold Land 19.98 0.06 0.02 20.02 4.83 0.58 — 5.41 14.61 15.15Buildings 466.41 3.82 0.04 470.19 125.04 13.15 (0.20) 138.39 331.80 341.37Railway Sidings 159.35 0.31 — 159.66 52.40 7.51 — 59.91 99.75 106.95Plant & Machinery 3,658.28 112.38 22.89 3,747.77 1,589.29 185.54 19.73 1,755.10 1,992.67 2,068.99Furniture & Fixtures 71.08 9.70 2.51 78.27 41.21 5.42 1.94 44.69 33.58 29.87Jetty 76.63 — — 76.63 61.11 3.97 — 65.08 11.55 15.52Vehicles 9.67 1.23 0.98 9.92 5.48 1.05 0.65 5.88 4.04 4.194,530.13 130.06 26.44 4,633.75 1,879.36 217.22 22.12 2,074.46 2,559.29 2,650.77Previous year 4,473.06 73.83 16.76 4,530.13 1,660.20 230.23 11.07 1,879.36ADD: CAPITAL WORK-IN-PROGRESS 141.17 49.652,700.46 2,700.42NOTE: Rs. in Crores

Depreciation for the year 217.22Add: Obsolescence 3.19Depreciation as per Profit & Loss Account 220.41SCHEDULE 6 Rs. in CroresINVESTMENTS - At Cost PreviousLONG TERM YearGovernment and Trust Securities -Unquoted — —(Rs. 10,000, Previous Year Rs.10,000)Pledged as Security DepositCURRENT - UnquotedInvestment in Debt Schemes of Various Mutual Funds 148.15 —148.15 —Note: No. of Units of Various Mutual Funds - Debt Schemes purchased and redeemed during the year 1219735096.SCHEDULE 7INVENTORIESStores & Spare Parts, Packing Material, Fuels and Scrap 201.02 192.90Raw Materials 12.74 10.57Work-in-progress 105.97 68.38Finished Goods (Includes transit stock of Rs. 4.38 Crores, Previous year Nil) 67.06 61.63386.79 333.48(77)SCHEDULE 8 Rs. in CroresSUNDRY DEBTORS PreviousYearExceeding six months:Good and Secured 8.90 3.62Good and Unsecured 1.70 1.75Doubtful and Unsecured 3.02 1.5313.62 6.90Less: Provision for Doubtful Debts 3.02 1.4710.60 5.43Others:Good and Secured 79.02 69.50Good and Unsecured 72.43 99.59151.45 169.09162.05 174.52SCHEDULE 9CASH AND BANK BALANCES

Cash Balance on Hand 0.20 0.26Bank Balance with Scheduled Banks:In Current Accounts 61.41 59.01In Fixed Deposits Accounts 6.78 0.8968.39 60.16SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTSSCHEDULE 10LOANS & ADVANCESSecured & Considered Good— Loan against mortgage of House Property 2.23 3.07UnsecuredConsidered Good:Deposits and Balances with Government and other Authorities(including accrued interest ) 31.65 29.68Advances Recoverable in Cash or in Kind or for Value to be Received 124.96 116.00Advance Income Tax (Net of Provision) — 3.78Considered Doubtful:Advances Recoverable in Cash or in Kind 0.22 0.22156.83 149.68Less: Provision for Doubtful Loans and Advances 0.22 0.22156.61 149.46158.84 152.53SCHEDULE 11CURRENT LIABILITIESSundry Creditors 318.28 248.02Security and Other Deposits 78.82 34.45Advances from Customers 42.38 25.38Unpaid Dividend 0.21 0.10Other Liabilities 44.59 106.91Interest Accrued but not Due on Loans 34.47 37.16518.75 452.02(78)SCHEDULE 12 Rs. in CroresPROVISIONS PreviousYearProvision for Contingency — 3.56Provision for Retirement Benefits 12.22 10.45Provision for Income Tax (Net of Advance Tax) 3.65 —

Proposed Dividend 21.79 9.33Corporate Dividend Tax 3.06 1.3140.72 24.65SCHEDULE 13MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Deferred Revenue Expenditure — 0.02— 0.02SCHEDULE 14INTEREST & DIVIDEND INCOMEInterest (Gross) on others 1.49 4.09(Tax Deducted at Source Rs.0.11 Crore, Previous Year Rs. 0.62 Crore)Dividend from Current Investments 2.22 0.103.71 4.19SCHEDULE 15OTHER INCOMELease Rent 3.93 4.60Profit on Sale of Current Investments (Net) 0.08 —Insurance Claim 0.47 0.10Profit on Sale of Fixed Assets (Net) 0.21 —Exchange Rate Difference (Net) 1.23 —Unclaimed Credit Balances Written Back 0.81 0.20Excess Provisions Written Back (Net) 8.84 0.36Miscellaneous Income/ receipts 12.54 13.2928.11 18.55SCHEDULE 16INCREASE / (DECREASE) IN STOCKSClosing StockWork-in-progress 105.97 68.38Finished Goods 62.68 61.62168.65 130.00Opening stockWork-in-progress 68.38 56.83Finished Goods 61.62 48.23130.00 105.06Add: Increase / (Decrease) in Excise Duty on Stocks 1.58 (3.72)Increase / (Decrease) in Stocks 40.23 21.23SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS(79)

SCHEDULE 17 Rs. in CroresRAW MATERIALS CONSUMED PreviousYearOpening Stock 13.04 8.93Purchase and Incidental Expenses 324.01 322.06337.05 330.99Less: Closing Stock 12.74 10.57324.31 320.42SCHEDULE 18MANUFACTURING EXPENSESConsumption of Stores, Spare Parts & Components andPacking Materials 243.42 223.84Power & Fuel Consumed 967.44 940.95Hire Charges of Plant & Machinery and others 5.45 4.01Repairs to Plant & Machinery 51.14 40.85Repairs to Buildings 3.80 2.34Repairs to Others 14.16 12.671,285.41 1,224.66SCHEDULE 19PAYMENTS TO AND PROVISIONS FOR EMPLOYEESSalaries, Wages and Bonus, etc. 73.97 61.41Contribution to and Provisions for Provident and Other Funds 9.82 6.79Welfare Expenses 14.27 14.57Voluntary Retirement Scheme — 11.8898.06 94.66SCHEDULE 20SELLING, DISTRIBUTION, ADMINISTRATION AND OTHER EXPENSESCommission paid to Distributors and Selling Agents 8.27 8.69Cash Discount 26.73 20.79Freight, handling and other expenses 778.28 499.87Advertisements & Sales Promotion 49.39 68.13Insurance 9.14 9.05Rent (including Lease Rent) 8.93 9.83Rates and Taxes 12.67 14.46Stationery, Printing, Communication Expenses 8.14 7.84Travelling and Conveyance 18.89 15.74Legal and Professional charges 18.55 13.17Bad Debts and Advances Written Off 0.17 6.38Provision for Doubtful Debts and Advances 1.79 1.58

Capital Work in Progress Written Off — 3.10Directors’ Fees 0.11 0.14Power (other than related to manufacturing activity) 1.18 0.90Exchange Rate difference (Net) — 0.23Loss on Sale of Fixed Assets (Net) — 0.75Miscellaneous Expenses 22.92 36.63965.16 717.26SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS(80)SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTSRs. in CroresPreviousYearSCHEDULE 21INTERESTOn Debentures and Fixed Loans 83.53 95.78On Others loans 6.54 13.5590.07 109.33SCHEDULE 22ACCOUNTING POLICY AND NOTES ON ACCOUNTSA. Significant Accounting Policies:1. Basis of Accounting:The financial statements are prepared under the historical cost convention on an accrual basis and in accordancewith the applicable mandatory Accounting Standards.2. Fixed Assets:Fixed assets are stated at cost (including other expenses related to acquisition and installation).3. Foreign Currency Transactions:Foreign currency transactions are accounted for at the rates prevailing on the dates of the transactions/ convertedat contracted rate. Foreign currency assets and liabilities covered by forward contracts are stated at the forwardcontract rates while those not covered are restated at year end rate. Premium in respect of forward contracts isrecognised over the life of contracts. Exchange differences relating to fixed assets acquired from a country outside

India are adjusted to the cost of the asset. Any other exchange difference is dealt with in the profit and lossaccount.4. Treatment of expenditure during construction period:Expenditure during construction period is included under Capital Work in Progress and the same is allocated tothe respective Fixed Assets on the completion of its construction.5. Investments:Current investments are carried at lower of cost or fair value. Long term investments are stated at cost afterdeducting provisions made for any other than temporary diminution in the value.6. Inventories:Inventories are valued at lower of cost and net realisable value. The cost is computed on weighted average basis.Finished goods and work-in-progress include cost of conversion and other costs incurred in bringing the inventoriesto their present location and condition. Obsolete, defective and unserviceable stocks are duly provided for.7. Leases:a) In respect of lease transactions entered into prior to April 1, 2001, lease rentals of assets acquired are chargedto the Profit & Loss Account.(81)SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTSb) Lease transactions entered into on or after April 1, 2001:i) Assets acquired under leases where the Company has substantially all the risks and rewards of ownershipare classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of thefair value or the present value of minimum lease payments and a liability is created for an equivalentamount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain aconstant periodic rate of interest on the outstanding liability for each period.ii) Assets acquired under leases where a significant portion of the risks and rewards of ownership areretained by the lessor are classified as operating leases. Lease rentals are charged to the Profit & Loss

Account on accrual basis.iii) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basisover the lease term.(Also refer to policy on Depreciation & Amortisation)8. Depreciation & Amortisation:Depreciation is charged in the Accounts on the following basis:i) Depreciation on original cost is provided on straight-line basis at the rates prescribed in Schedule XIV to theCompanies Act, 1956 except in following.a) Motor Cars at 14.14 % per annumb) Motor Cars given to employees as per Company Scheme at 17 % per annum.c) Personal Computers & Laptops given to employees as per Company Scheme at 31 % per annum.ii) Assets acquired up to September 30, 1987, are depreciated at the rates computed under Section 205(2)(b) ofthe Companies Act, 1956 pursuant to rates of depreciation prescribed in Income Tax Rules from time totime.iii) The value of leasehold land and mining lease is amortised over the period of the lease.iv) Assets not owned by the Company are amortised over a period of five years.v) Expenditure incurred on Jetty is amortised over the period of the relevant agreement such that the cumulativeamortisation is not less than the cumulative rebate availed by the Company.vi) In respect of the amounts capitalised during the year on account of foreign exchange fluctuation depreciationis provided prospectively over the residual life of the assets.vii) Depreciation on additions/deductions is calculated pro-rata from/to the month of additions/deductions.9. Retirement Benefits:Provisions for/contributions to retirement benefits schemes are made as follows:a) Provident fund on actual liability basis.b) Superannuation/Pension schemes on the basis of actual liability/actuarial valuation done at the year end.Superannuation is funded with an approved fund.

c) Gratuity based on actuarial valuation done at the year end. Gratuity is funded with an approved fund.Gratuity in respect of a subsidiary is accrued based on local laws.d) Leave encashment benefit on actuarial valuation basis done at the year end.(82)SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS10. Interest:The difference between the face value and the issue price of ‘Discounted Value Non Convertible Debentures’,being in the nature of interest, is charged to the Profit and Loss Account, on a compound interest basis determinedwith reference to the yield inherent in the discount.11. Borrowing Costs:Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset arecapitalised as part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset isan asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowingcosts are recognised as an expense in the period in which they are incurred.12. Provision for Current & Deferred Tax:Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period andin accordance with the provisions as per the Income Tax Act, 1961. Deferred Tax resulting from “timing difference”between book and taxable profit for the year is accounted for using the tax rates and laws that have been enactedor substantively enacted as on the balance sheet date. The Deferred Tax asset is recognised and carried forwardonly to the extent that there is a reasonable certainty except for carried forward losses and unabsorbed depreciationwhich is recognised on virtual certainty that the assets will be realised in future.13. Sales:a) Sales are accounted on despatch of products.b) Export sales are accounted on the basis of date of bill of lading.14. Provisions, Contingent Liabilities and Contingent Assets:

Provision involving substantial degree of estimation in measurement are recognised when there is a presentobligation as a result of past events and it is probable that there will be an outflow of resources. ContingentLiabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosedin the financial statements.15. Use of Estimates:The preparation of financial statements in conformity with the generally accepted accounting principles requiresestimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date offinancial statements and the reported amounts of revenues and expenses during the reported period. Differencebetween the actual results and estimates are recognised in the period in which the results are known or materialise.B. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Principles of consolidation(a) The Consolidated Financial Statements (CFS) comprise of the financial statements of UltraTech CementLimited and its subsidiaries as at 31.03.2006, which are as under:Name of the Company Country of % Shareholding &Incorporation Voting PowerNarmada Cement Company Limited(NCCL) (Upto 30.09.2005) India 97.80%Dakshin Cements Limited India 100%UltraTech Ceylinco (Private) Limited Sri Lanka 80%(b) The financial statements of the parent company and its subsidiaries have been consolidated on a line-by-linebasis by adding together the book values of like items of assets, liabilities, income and expenses, aftereliminating intra-group balances and the unrealised profits/ losses on intra-group transactions, and are presentedto the extent possible, in the same manner as the Company’s separate financial statements.2. Narmada Cement Company Limited, the subsidiary company was amalgamated with the holding company witheffect from October 1, 2005. Unaudited financial statements for the period April 1, 2005 to Sept 30, 2005 are

considered for consolidation, which have, however, been subjected to limited review by its auditor.(83)SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTSThe reporting financial year for UltraTech Ceylinco (Pvt) Limited is for 15 months ended March 31, 2006.However, unaudited financial statements for the year ended March 31, 2006 are made and considered forconsolidation, which have been subjected to limited review by its auditor.3. Merger of Narmada Cement Company Limiteda. Pursuant to the Scheme of Amalgamation (the Scheme) u/s 18(1)(c ) and other applicable provisions of SickIndustrial Companies (Special Provisions) Act, effective from October 1, 2005 (the Appointed Date) NarmadaCement Company Limited (“NCCL” ), has been merged in the Company. The Scheme, is approved by Boardfor Industrial & Financial Reconstruction, New Delhi, on May 15, 2006 and has been made effective fromJune 1, 2006 (the effective date). NCCL business was of manufacturing and sale of clinker and cement.b. In terms of the Scheme, all the assets and liabilities of NCCL have been transferred and stand vested with theCompany with effect from the Appointed Date. Further, from the Appointed Date, NCCL carried on all itsbusiness and activities for the benefit of and in trust for the Company and thus, all the profit or incomeaccruing or arising to NCCL, or expenditure or losses arising or incurred by NCCL shall be treated as theprofits or incomes or expenditure or losses of the Company. The Scheme has accordingly been given effect toin these accounts.c. The amalgamation has been accounted for under the “Pooling of Interests” method as prescribed by AccountingStandard 14 on –”Accounting for Amalgamation” issued by the Institute of Chartered Accountants of India.Accordingly, the assets, liabilities and reserves of NCCL have been taken over at their book values as on theAppointed Date, as specified in the Scheme of Amalgamation.

In terms thereof, the difference between the consideration, being shares issuable to minority shareholders ofNCCL, of Rs.0.09 crore for the amalgamation, and the book values of the net liability acquired of Rs. 73.22crores, after adjusting the carried value of the investments of the Company in NCCL for Rs. 160.55 crores, istreated as -i. Capital Reserve of Rs. 0.15 crore to Capital Reserves of the Company;ii. The debit balance of Rs.234.01 crores (including debit balance in Profit and Loss Account of Rs. 144.76crores) transferred to debit of General Reserve of the Company. The balance in Profit & Loss Accountin CFS was adjusted for the followings :1. The losses of NCCL were recognised in consolidated financial statements upto September 30, 2005by way of line – by – line consolidation ;2. Amortisation of goodwill arising on consolidation ;3. Unamortised balance of the goodwill of NCCL arising on consolidation adjusted to reserves onamalgamation.d. In consideration of the above, 87,258 Equity Shares of Rs. 10 each of the Company are to be issued to theminority shareholders of NCCL in the ratio of 1 (one) fully paid-up Equity Share of Rs.10/- each of theCompany for every 18 (eighteen) fully paid-up equity shares of Rs.10/- each held in NCCL. Pending allotment,an amount of Rs 0.09 crore has been shown under the Share Capital Suspense Account as at March 31, 2006.These shares were subsequently allotted on June 14, 2006.e. In terms of the Scheme, the Equity Shares when issued and allotted by the Company shall rank pari-passu inall respects with the existing Equity Shares of the Company. Accordingly, the appropriation for the proposeddividend includes dividend on 87,258 Equity Shares.4. Notes on Accounts of the financial statement of the Company and all the subsidiaries are set out in theirrespective financial statements.5. Goodwill:Goodwill represents the difference between the Group’s share in the net worth of the subsidiaries, and the cost of

acquisition at each point of time of making the investment in the subsidiaries. For this purpose, the Group’s shareof net worth is determined on the basis of the latest financial statements prior to the acquisition after makingnecessary adjustments for material events between the date of such financial statements and the date of respectiveacquisition. Goodwill on NCCL is amortised upto September 30, 2005 the balance unamortised portion ofgoodwill is adjusted to General Reserve as explained in Note 3.(84)SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTSGoodwill arising out of an acquisition of equity stake in subsidiaries is amortised in equal amounts over a period of10 years from the date of first acquisition. In the event of cessation of operations of the subsidiaries, the unamortisedgoodwill is written off fully.During the year Rs. 10.17 crores ( Previous year Rs. 18.99 crores) was amortised from goodwill.6. Reserve shown in the consolidated balance sheet represents the Group’s share in the respective reserves of theGroup companies.7. Contingent Liabilities not provided for in respect of:Claims not acknowledged as debts in respect of matters in appeals:Rs. in CroresPreviousYear(a) Sales-tax liability 50.92 32.75(b) Excise duty 27.10 20.29(c) Royalty on Limestone/ Marl 29.68 13.53(d) Customs 30.12 —(e) Others 15.63 11.838. Estimated amount of contracts remaining to be executed on capital account and not provided (net of advances)Rs. 531.97 crores (Previous year Rs.58.08 crores).9. The Ministry of Textiles, vide its orders dated June 30, 1997 and July 1, 1999 has deleted cement from the listof commodities to be packed in Jute bags under the Jute Packaging (Compulsory Use in Packing Commodities)

Act 1987. In view of this, the company does not expect any liability for non-dispatch of cement in Jute bags inrespect of earlier years.10. Segment reportingThe Group has only one business segment ‘cement’ as primary segment and its operations are solely situated inIndia. The secondary segment is geographical, which is as under:Rs. in CroresRevenue 2005-06 2004-05Net Sales:Domestic 2830.40 2127.43Export 553.55 573.56Total 3383.95 2700.9911. Disclosure of related parties / related party transactions:a) Names of the related parties with whom transactions were carried out during the year and description ofrelationship:Name of the Related Party Nature of RelationshipGrasim Industries Limited (Grasim) Holding CompanySun God Trading & Investment Ltd. Fellow SubsidiarySamruddhi Swastik Trading & Investment Ltd. (SSITL) Fellow SubsidiaryShree Digvijay Cement Co. Ltd. (SDCCL) Fellow SubsidiaryOthersKey Management Personnel (KMP) and their relativesMr. S. Misra, Manager & CEO of the CompanyMr. V. M. Muralidharan, Manager of NCCL (upto 30.09.2005)(85)SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTSSCHEDULE 22 (Contd.)b) Disclosure of related party transactions:Rs. in CroresSl. No. Nature of Transaction Grasim SSITL SDCCL KMP Total1 Sale of Goods 206.39 — — — 206.39(2.76) — — — (2.76)2 Purchase of goods 170.31 — — — 170.31(11.27) — — — (11.27)3 Purchase / lease/Rent — — — — —of fixed assets (0.19) — — — (0.19)4 Transfer of fixed assets 0.13 — — — 0.13

— — — — —5 Rendering of Services 0.04 — — — 0.04(0.02) — — — (0.02)6 Receiving of Services 13.66 0.12 — 1.92 15.70(1.24) — — (1.34) (2.58)Outstanding Balance as on 31st March1 Debtors 0.43 — — — 0.43(0.23) — — — (0.23)2 Loans & Advances — 0.09 0.00 0.50 0.59(0.18) — — (0.50) (0.68)3 Creditors 0.45 — — — 0.45(1.44) — — — (1.44)4 Other Liabilities 4.08 — — — 4.08— — — — —Figures in brackets are pertaining to the previous year.12. LeasesOperating Leases:i) The Company has taken various plant and machinery under cancellable operating leases. These leaseagreement are generally renewed on expiry.ii) (a) The Company has taken on non-cancellable operating leases certain assets, the future minimum leasepayments in respect of which, as at March 31, 2006 are as follows:Rs. in Crores2005-06 2004-05Minimum Lease Payments Payablei. not later than 1 year 0.40 1.77ii. later than 1 year and not later than 5 years 0.50 3.04iii. later than 5 years — —Total Minimum Lease Payments 0.90 4.81(b) The lease agreements provide for an option to the Company to renew the lease period at the end ofthe non-cancellable period. There are no exceptional / restrictive covenants in the lease agreements.(iii) The rental expense in respect of operating leases was Rs. 0.83 crore (Previous year Rs. 3.07 crore).(iv) Contingent rent recognised in the Profit and Loss Account: Rs. 3,379 (Previous year Rs. 34,305).(86)13. Deferred Tax Assets and Liabilities as on March 31, 2006 are as under:

Rs. in CroresParticulars Deferred Tax Current Year Deferred Tax(assets)/ Charge/(Credit) (assets)/liabilities as at liabilities as at01.04.2005 31.03.2006Deferred Tax Assets:-Provision allowed under tax on payment basis (13.13) 3.66 (9.47)Unabsorbed Losses — (5.96) (5.96)(13.13) (2.30) (15.43)Deferred Tax Liabilities:-Accumulated Depreciation 587.17 (1.86) 585.31Miscellaneous expenditure — — —(to the extent not written-off or adjusted)Payments allowed under tax not expensed in books 7.67 — 7.67594.84 (1.86) 592.98Net Deferred Tax Liability 581.71 (4.16) 577.55Deferred tax asset is recognised on account of unabsorbed losses after taking into account the current performanceof the subsidiary.14. Auditors’ remuneration (excluding service tax) and expenses charged to the accounts:Rs. in Croresa) Statutory Auditors: 2005-06 2004-05Audit fees 0.27 0.24Tax audit fees 0.03 0.03Certification fees 0.14 0.08Expenses reimbursed 0.02 0.00b) Cost Auditors:Audit fees 0.02 0.02Expenses reimbursed (Rs. 12,555 previous year Rs. 7620)15. Depreciation for the year ended March 31,2006 and March 31,2005 includes Rs 4.20 crores and Rs 18.34 croresrespectively related to earlier years.16. Figures pertaining to the subsidiary companies have been reclassified wherever necessary to bring them in linewith the Company’s financial statements.17. Previous year’s figures have been regrouped and rearranged wherever necessary to confirm to this year’sclassification. In view of the amalgamation of NCCL with the Company with effect from October 1, 2005, the

figures of the current year are not comparable with those of the previous year.Signatures to Schedules ‘1’ to ‘22’ KUMAR MANGALAM BIRLAChairmanS. MISRA RAJASHREE BIRLAManager & CEO R. C. BHARGAVAY. M. DEOSTHALEEK. C. BIRLA S. MISRAExecutive President & CFO J. P. NAYAKS. RAJGOPALS. K. CHATTERJEE D. D. RATHICompany Secretary DirectorsMumbai, July 7, 2006SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS(87)NARMADA CEMENT COMPANY LIMITEDDIRECTORS’ REPORTDear Shareholders,Your Directors present the Annual Report and the Audited Accounts for the yearended 30th September 2005.2004 – 05 2003 – 04(Rs. crore) (Rs. crore)Gross Turnover 277.66 205.06Profit / (Loss) beforedepreciation and taxes 26.94 (19.96)Depreciation on fixed assets 6.42 6.67Profit / (Loss) before tax 20.52 (26.63)Provision for tax:Deferred tax (net) 0.00 (31.51)Fringe benefit tax 0.06 0.00Profit / (Loss) after tax 20.46 (58.14)Add: Balance brought forwardfrom the previous year (173.39) (115.25)Balance to be carried forward (152.93) (173.39)Your Directors do not recommend any dividend for the financial year under review.PERFORMANCESales, production and profitability

Sales and other income for the financial year under review were Rs. 243.60 crore asagainst Rs. 181.69 crore for the previous year which showed an increase of 34%.Clinker production at the Company’s Jafrabad Works was 14.07 lakh metric tonnesas against 13.45 lakh metric tonnes during 2003-04. Cement and clinker dispatchesduring 2004-05 were higher at 15.23 lakh metric tonnes, which showed an increaseof 16% over 13.18 lakh metric tonnes achieved during the previous year.The Company reported a Profit before tax of Rs. 20.52 crore for the year 2004-05 asagainst a loss of Rs. 26.63 crore for the previous year.Review of operationsThe Company continued its ongoing efforts to improve the efficiency of its plantsthrough better utilization of available facilities.Market scenarioThe cement industry saw an encouraging growth in demand during the year. Demandcontinued to be good both in Gujarat and Maharashtra States. The prices showedsigns of improvement during the second half of the current year. However, incertain markets, the prices remained low for most part of the current year.Future demand for cement would depend upon Governments’ investment plans invarious infrastructure projects as envisaged in the Budget.CAPITAL EXPENDITUREAs at 30th September 2005, the gross fixed assets stood at Rs. 202.66 crore and thenet fixed assets at Rs. 80.78 crore.REFERENCE TO BIFRSince the accumulated losses as at end September 2003 eroded the entire net worthof the Company, a reference was made to the Board for Industrial and FinancialReconstruction (BIFR) as per the provisions of Section 15 (1) of the Sick Industrial

Companies (Special Provisions) Act, 1985. The application has been acknowledgedby BIFR and a case has been registered. BIFR is yet to appoint an OperatingAgency to proceed further in the matter.DEPOSITSThe Company has not invited / renewed deposits from the public / shareholders inaccordance with section 58A of the Companies Act, 1956. No deposits due to bepaid have remained unpaid.AUDITORS’ REPORTThe Auditors’ Report to the Shareholders does not contain any qualifications.DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors’ confirm that:(i) in preparation of the Annual Accounts, the applicable Accounting Standardshave been followed along with proper explanation relating to materialdepartures, if any;(ii) they have selected the accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end ofthe financial year under review and for the profit and loss of the Companyfor that period;(iii) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;(iv) they have prepared the Annual Accounts on a going concern basis.INDUSTRIAL RELATIONSIndustrial relations continued to be cordial during the year.DIRECTORSIn accordance with the provisions of the Companies Act, 1956 and the Articles ofAssociation of the Company, Shri Sanjeev Bafna retires from the Board of Directorsby rotation and is eligible for re-appointment.COST AUDIT

The Central Government vide its Order No. 52/295/CAB-88 (CLB) had directedthat a Cost Audit be carried out every financial year in respect of clinker andcement. The Company will make an application to the Central Government forappointment of Shri V. V. Deodhar, Cost Accountant as Cost Auditors of theCompany for the financial year October 2005 to September 2006.AUDITORSM/s. Haribhakti & Co., Chartered Accountants, who are the Auditors of theCompany, hold office until the conclusion of the forthcoming Annual GeneralMeeting and are recommended for re-appointment.DISCLOSURE OF PARTICULARSInformation as per the Companies (Disclosure of particulars in the report of Boardof Directors) Rules, 1988 relating to conservation of energy, technology absorption,foreign exchange earnings and outgo is given in Annexure ’A’ forming part of thisreport.PARTICULAR OF EMPLOYEESThere were no employees covered under the provisions of Section 217 (2A) of theCompanies Act, 1956 read with the Companies (Particulars of Employees) rules,1975.ACKNOWLEDGEMENTThe Directors wish to place on record their appreciation for the co-operation andassistance received by the Company from the concerned Ministries of Governmentof India, various Departments of Government of Gujarat and Maharashtra, Banksand Financial Institutions. The Directors also wish to thank all the employees ofthe Company for their active participation and co-operation.The Directors wish to record their special thanks to the esteemed shareholders forreposing their confidence in the Company.For and on behalf of the Board,

V. M. MuralidharanK. C. Birla DirectorsSanjeev BafnaPlace : MumbaiDated : 8th November, 2005}(88)NARMADA CEMENT COMPANY LIMITEDFORM – B (RULE 2)Form for disclosure of particulars with respect to absorption.A. RESEARCH AND DEVELOPMENT (R&D)1. Specific areas in which R&D carried out by the Company:NA2. Benefits derived as a result of the above R&D:NA3. Future plan of action:NA4. Expenditure on R&D: (Rs. lakhs)Current Year Previous Year2004 - 05 2003 – 04a) Capital expenditure - -b) Recurring expenditure - -c) Total expenditure - -d) Total R&D expenditureas % of turnover - -B. TECHNOLOGY ABSORPTION, ADAPTATION ANDINNOVATIONS1. Efforts in brief, made towards technology absorption, adaptationand innovation:• Imparting training to personnel in various manufacturingprocesses.2. Benefits derived as a result of the above efforts:• Cost reduction.3. Information regarding technology imported during the last 5 years:a) Technology imported Nob) Year of import NAc) Has technology been fully absorbed NAd) If not fully absorbed, areas wherethis has not taken place,reasonstherefore and future plans of action. NA

C. FOREIGN EXCHANGE EARNINGS AND OUTGO(Rs. lakhs)Current Year Previous Year2004 - 05 2003 – 04Foreign exchange earned 320 NilForeign exchange used 238 248ANNEXURE ‘A’ TO THE DIRECTORS’ REPORTINFORMATION AS PER THE COMPANIES (DISCLOSURE OFPARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES,1988 AND FORMING PART OF THE DIRECTORS’ REPORT FOR THEYEAR ENDED 30th SEPTEMBER 2005.A) CONSERVATION OF ENERGYa) Energy conservation measures taken:• Improvement in Plant Run factor and Reliability.• Process optimization.b) Additional investments and proposals, if any, being implementedfor reduction of consumption of energy:• Installation of Belt Bucket Elevator in Kiln feed.c) Impact of measures at (a) and (b) above for reduction of energyconsumption and consequent impact on the cost of production ofgoods:• Reduction in specific power consumption.• Reduction in heat consumption.d) Total energy consumption and energy consumption per unit ofproduction as per FORM – A.FORM – A (RULE 2)Current Year Previous Year2004-05 2003-04A POWER AND FUELCONSUMPTION1 Electricity:a) PurchasedUnit ‘000 kWh 70464 50420Total amount Rs. lakhs 3787 2811Rate / Unit Rs. 5.37 5.58b) Own GenerationThrough DieselGenerator

Unit ‘000 kWh 49351 54314Units (kWh) perLtr. of fuel oil 4.14 3.68Cost / Unit Rs. 3.98 3.612 Coal – For processin Cement PlantsQuantity Tonnes 181725 189199Total cost Rs. lakhs 6160 4659Average rate Rs./Tonne 3390 24623 Furnace Oil(FO / HFO)Quantity K. Ltrs 11929 11994Total amount Rs. lakhs 1355 918Average rate Rs./K. Ltrs 11359 76504 Light DieselOil (LDO)Quantity K. Ltrs 344 2657Total amount Rs. lakhs 86 482Average rate Rs./K. Ltrs 24997 181395 High SpeedDiesel Oil (HSD)Quantity K. Ltrs 591 464Total amount Rs. lakhs 171 109Average rate Rs./K. Ltrs 28926 23465B CONSUMPTION PER UNIT OF PRODUCTIONProduct: CementElectricity# kWh 93.63 91.89Coal Tonne 0.13 0.14# excludes non production power consumption(89)NARMADA CEMENT COMPANY LIMITEDAUDITORS’ REPORTAUDITORS’ REPORT TO THE MEMBERS OF NARMADA CEMENTCOMPANY LIMITED1. We have audited the attached Balance Sheet of Narmada CementCompany Limited (“the Company”) as at September 30, 2005 and alsothe Profit & Loss Account and the Cash Flow Statement of the Companyfor the year ended on that date annexed thereto, which we have signedunder reference to this report. These financial statements are the

responsibility of the Company’s management. Our responsibility is to expressan opinion on these financial statements based on our audit.2. We conducted our audit in accordance with auditing standards generallyaccepted in India. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statementsare free of material misstatements. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles usedand significant estimates made by the management, as well as evaluatingthe overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.3. As required by the Companies (Auditors’ Report) Order, 2003 as amendedby the Companies (Auditors’ Report) (Amendment) Order, 2004 (together“the order”) issued by the Central Government of India in terms of Section227 (4A) of the Companies Act 1956 (the ‘Act’), and on the basis of suchchecks of the books and records as we considered appropriate and accordingto the information and explanations given to us, we give in the Annexurea statement on the matters specified in paragraphs 4 and 5 of the saidOrder, to the extent applicable to the Company.4. Further to our comments in the Annexure referred to in paragraph 3above, we report that:a) we have obtained all the information and explanations to the bestof our knowledge and belief were necessary for the purpose of ouraudit;b) in our opinion, proper books of account as required by law havebeen kept by the Company so far as appears from our examinationof those books;c) the Balance Sheet, Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement with the booksof account;d) in our opinion, the Balance Sheet, Profit and Loss Account andCash Flow Statement comply with the Accounting Standards referredto in Section 211 (3C) of the Act to the extent they are applicableto the Company;e) on the basis of the written representation received from the directorsof the Company as on 30th September 2005, and taken on record bythe Board of Directors of the Company, we report that none of thedirectors is disqualified as on 30th September 2005 from being

appointed as directors in terms section 274 (1)(g) of the Act;f) In our opinion and to the best of our information and according tothe explanations given to us, the said financial statements togetherwith the notes thereon and attached thereto, give the informationrequired by the Act, in the manner so required, and give a true andfair view in conformity with the accounting principles generallyaccepted in India:(i) in the case of the Balance Sheet, of the state of affairs of theCompany as at 30th September, 2005;(ii) in the case of the Profit and Loss Account, of the profits ofthe Company for the year ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows ofthe Company for the year ended on that date.For HARIBHAKTI & CO.Chartered AccountantsPlace : Mumbai CHETAN DESAIDate : 8th November, 2005 PartnerMembership No. 17000ANNEXURE TO THE AUDITOR’S REPORTAnnexure referred to in Paragraph 3 of the Auditor’s Report of even date tothe members of Narmada Cement Company Limited on the accounts for theyear ended September 30, 2005.Fixed Assets:1. The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.2. We have been informed that fixed assets have been physically verified bythe management according to the regular programme of periodicalverification in phased manner. The discrepancies noticed on such physicalverification were not material.3. The Company has not disposed off substantial part of its fixed assets duringthe year.Inventory:4. We are informed that the inventory has been physically verified by themanagement during the year at reasonable intervals.5. The procedures of physical verification of inventory followed by themanagement are reasonable and adequate in relation to size of the Companyand the nature of its business.

6. The Company has maintained proper records of inventory. We are informedthat the discrepancies noticed on verification between the physical stocksand the book records were not material and have been properly dealt within the books of accounts.Loans and Advances:7. We are informed that the Company has not taken / granted loans from / tocompanies, firms or other parties registered under section 301 of the Act,during the year.Internal Controls:8. There are adequate internal control procedures commensurate with thesize of the Company and the nature of its business for the purchase ofinventory and fixed assets, and for the sale of goods. During the course ofour audit we have not observed any continued failure to correct majorweaknesses in internal controls.Transactions with parties under section 301 of the Act:9. According to the information and explanation given to us by themanagement, there are no transactions that need to be entered in theregister maintained under section 301 of the Act.Fixed Deposits:10. According to the information and explanations given to us, the Companyhas not accepted any deposits under the provisions of Sections 58A and58AA of the Act or the rules framed thereunder.Internal Audit:11. In our opinion, the Company has an adequate internal audit systemcommensurate with the size of the Company and the nature of its business.Cost Records:12. We have broadly reviewed the books of account maintained by theCompany pursuant to the Rules made by the Central Government for themaintenance of cost records under Section 209(1)(d) of the Act. We areof the opinion that prima-facie, the prescribed accounts and records havebeen maintained. However, we have not made a detailed examination ofthese records with a view to determine whether they are accurate orcomplete.Statutory Dues:13. According to the books and records of the Company as produced andexamined by us in accordance with generally accepted auditing practicesin India and also based on management representation, the Company is(90)NARMADA CEMENT COMPANY LIMITED

generally regular in depositing undisputed statutory dues including ProvidentFund, Investor Education and Protection Fund, Income Tax, Sales Tax,Service Tax, Excise Duty, Custom Duty, Cess and any other statutory dueswith the appropriate authorities.14. According to the information and explanations provided to us, noundisputed amounts payable in respect of Provident Fund, InvestorEducation and Protection Fund, Income Tax, Sales Tax, Service Tax,Custom Duty, Excise Duty, Cess and any other statutory dues wereoutstanding as at 30th September 2005 for a period of more than six monthsfrom the date they became payable.15. As at 30th September 2005, according to the information and explanationsprovided to us, there are no dues of sales tax, income tax, custom duty,service tax, excise duty or cess which have not been deposited on accountof any dispute except as follows:Name of Nature of Amount Period to Forum whereStatute Dues (Rs. Lakhs) the amounts which disputerelates is pendingSales Tax Sales Tax 126.92 1998-1999 AppellateLaws Authority –Tribunal level0.31 1994-1995 DeputyCommissionerCentral Excise 119.22 1997-2004 AppellateExcise Act, Duty Authority –1944 UptoCommissioners /RevisionalAuthorities Level6.99 2002-2003 AppellateAuthority –Tribunal levelCustoms Customs 934.88 2003-2004 AppellateAct, 1962 Duty Authority –Upto Commissioners/RevisionalAuthorities levelMineral Interest 130.91 Various Years Geologist-AmreliConcession on Royalty

RulesLand Land 44.13 Various Years RevenueRevenue Revenue Department-Act Governmentof GujaratPotentially Sick Company:16. The accumulated losses of the Company at the year-end exceeds fiftypercent of its networth. The Company has incurred cash profits during theyear covered by our audit and cash losses in the immediately precedingfinancial year.Repayment of Dues:17. The Company has not defaulted in repayment of dues to bank.Guarantees Given:18. According to the information and explanations provided to us, theCompany has not given any guarantee for loans taken by others frombanks or financial institutions.Sources and Application of Funds:19. On the basis of review of utilization of funds, which is based on an overallexamination of the balance sheet of the Company and related informationas made available to us and as represented to us by the management, nofunds raised on short basis have been used for long term purpose.Fraud:20. Based upon the audit procedures performed and the information andexplanations provided to us by the management, we report that no fraudon or by the Company has been noticed or reported during the course ofour audit.Other Clauses:21. Following clauses of Paragraph 4 of Companies (Auditors Report) Order,2003 are not applicable to the Company and hence the same are notreported upon:-Clause (xii), Clause (xiii), Clause (xiv), Clause (xvi), Clause (xviii), Clause(xix) and Clause (xx).For HARIBHAKTI & CO.Chartered AccountantsPlace : Mumbai CHETAN DESAIDate : 8th November, 2005 PartnerMembership No. 17000(91)

NARMADA CEMENT COMPANY LIMITEDBALANCE SHEET AS AT 30TH SEPTEMBER, 2005As at 30-09-2005 As at 30-09-2004Schedules Rs lakhs Rs lakhs Rs lakhsSOURCES OF FUNDS:SHAREHOLDERS’ FUNDS:Share Capital 1 7138.64 7138.64Reserves and Surplus 2 15.23 15.237153.87 7153.87Loan FundsSecured Loans 3 769.52 1013.33Unsecured Loans 4 13208.41 13208.4113977.93 14221.74TOTAL 21131.80 21375.61APPLICATION OF FUNDSFixed AssetsGross Block 5 19730.13 19727.76Less : Depreciation 12188.90 11564.38Net Block 7541.23 8163.38Capital Work-in-Progress 536.29 11.728077.52 8175.10Current Assets, Loans and AdvancesInventories 6 5281.33 4670.78Sundry Debtors 7 1945.44 864.74Cash and Bank Balances 8 197.36 261.58Other Current Assets 0.15 0.13Loans and Advances 9 1137.77 684.378562.05 6481.60Less:Current Liabilities & ProvisionsCurrent Liabilities 10 9906.83 9741.57Provisions 11 77.15 61.179983.98 9802.74Net Current Assets (1421.93) (3321.14)Profit & Loss Account 12 14476.21 16521.65TOTAL 21131.80 21375.61Accounting Policies andNotes on Accounts 21PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 30TH SEPTEMBER, 2005

2004-05 2003-04Schedules Rs lakhs Rs lakhs Rs lakhsINCOMEGross Sales 27765.86 20505.56Less : Excise Duty 3530.78 2463.90Net Sales 24235.08 18041.66Interest & Dividend Income 13 2.81 3.22Other Income 14 121.77 124.39Increase / (Decrease) in Stocks 15 (357.32) 751.1124002.34 18920.38EXPENDITURERaw Material Consumed 16 1781.48 1611.32Manufacturing Expenses 17 14853.13 12416.15Clinker Transportation &Handling Expenses 2337.58 1388.59Payments to andProvisions for Employees 18 867.95 2236.25Selling, Distribution, Administrationand Other Expenses 19 1349.52 1961.22Interest 20 118.83 1299.08Miscellaneous ExpenditureWritten Off — 3.61Depreciation 641.99 667.3421950.48 21583.56Profit/(Loss) before Tax 2051.86 (2663.18)Provision for Tax:Net Deferred Tax — 3150.80Fringe Benefit Tax 6.42 —Profit/(Loss) after Tax 2045.44 (5813.98)Balance brought forward from Previous Year (17338.42) (11524.44)Balance carried to Balance Sheet (15292.98) (17338.42)Basic and diluted earnings per equity share (in Rs.) 2.87 (8.15)Face value per equity share (in Rs.) 10.00 10.00Number of equity shares 71373950 71373950Accounting Policies andNotes on Accounts 21}As per our separate report attached.For HARIBHAKTI & CO. V. M. MURALIDHARANChartered Accountants

K. C. BIRLA DirectorsCHETAN DESAIPartner SANJEEV BAFNAMumbaiDated : 8th November, 2005 KAMAL RATHI Company Secretary}As per our separate report attached.For HARIBHAKTI & CO. V. M. MURALIDHARANChartered AccountantsK. C. BIRLA DirectorsCHETAN DESAIPartner SANJEEV BAFNAMumbaiDated : 8th November, 2005 KAMAL RATHI Company Secretary(92)NARMADA CEMENT COMPANY LIMITEDSCHEDULES(Rs Lakhs)SCHEDULE 1 As at As at30-09-2005 30-09-2004SHARE CAPITALAuthorised75000000 (75000000) Equity shares of Rs. 10 each 7500.00 7500.00500000 (500000) Redeemable cumulative preferenceshares of Rs. 100/- each 500.00 500.008000.00 8000.00Issued and Subscribed71398700 (71398700) Equity shares ofRs. 10 each fully paid-up 7139.87 7139.87Paid-up71373950 (71373950) Equity shares ofRs. 10 each fully paid-up 7137.40 7137.40Forfeited Equity Shares 1.24 1.247138.64 7138.64NOTE:Aggregate shares held by UltraTech Cement Limited (Holding Company)69803293 (69752898) Equity shares of Rs. 10/- each fully paid.SCHEDULE 2RESERVES & SURPLUS(Rs. lakhs)

Balance Additions Deduction/ Balanceas at 30th during Adjustments as at 30thSeptember, 04 the year during the year September, 05Capital Reserve 15.23 — — 15.23General Reserve* 816.77 — 816.77 —832.00 — 816.77 15.23Previous year 2393.60 — 2378.37 15.23*(Rs.816.77 Lakhs deducted as per Contra in Profit & Loss Account)SCHEDULE 3 As at As at30-09-2005 30-09-2004SECURED LOANSCash Credits secured by hypothecation of stocks andbook debts of the Company 769.52 1013.33769.52 1013.33SCHEDULE 4UNSECURED LOANSInter corporate deposits 13208.41 13208.41(Due within one year Rs.13208.41 Lakhs(Rs. 8838.16 Lakhs))13208.41 13208.41SCHEDULE 5FIXED ASSETS (Rs lakhs)Particulars GROSS BLOCK DEPRECIATION NET BLOCKAs at Additions Deductions As at Upto For the Deductions Upto As at As at30-09-04 30-09-05 30-09-04 Year 30-09-05 30-09-05 30-09-04Freehold Land 176.15 — — 176.15 5.77 0.60 — 6.37 169.78 170.38Leasehold Land 194.68 — — 194.68 48.02 9.61 — 57.63 137.05 146.66Buildings 1669.55 — — 1669.55 450.62 41.46 — 492.08 1177.47 1218.93Plant and Machinery 17204.31 11.70 — 17216.01 10726.11 558.34 — 11284.45 5931.56 6478.20Furniture and Fixtures &Office Equipments 427.83 0.21 6.79 421.25 285.11 27.60 6.79 305.92 115.33 142.72Vehicles 55.24 6.03 8.78 52.49 48.75 4.38 10.68 42.45 10.04 6.49Total 19727.76 17.94 15.57 19730.13 11564.38 641.99 17.47 12188.90 7541.23 8163.38Previous Year 19638.74 89.02 — 19727.76 10897.04 667.34 — 11564.38Add: Capital work-in-progress 536.29 11.728077.52 8175.10

NOTE:- 1. Amount of Rs.3.94 lakhs appearing in depreciation deductions is towards excess depreciation provided in earlier years2. Capital work in progress includes Capital Advances to suppliers of Rs. 59.69 lakhs.(93)NARMADA CEMENT COMPANY LIMITEDSCHEDULE 6 (Rs Lakhs)As at 30-09-2005 As at 30-09-2004INVENTORIESStores & Spare parts,Packing Material and Fuels 3012.13 2100.07Raw Materials 156.66 145.63Finished Goods 355.71 231.27Process Stock 1756.83 2193.815281.33 4670.78SCHEDULE 7SUNDRY DEBTORSExceeding six months:Good and Unsecured 7.79 21.86Doubtful and Unsecured 193.61 8.62201.40 30.48Less: Provision for DoubtfulDebts 193.61 8.627.79 21.86Other: Good and Unsecured 1937.65 842.881945.44 864.74SCHEDULE 8CASH AND BANK BALANCESCash balance on hand 1.72 1.90Bank Balance with Scheduled Banks:On Current accounts 184.07 240.94On Dividend Account — 7.17On Fixed Deposits accounts 10.00 10.00On Other Accounts 1.57 1.57197.36 261.58SCHEDULE 9LOANS & ADVANCESUnsecuredConsidered Good:Advances recoverable in cash or

in kind or for value to be received 643.59 203.98Advance Income-tax and taxdeducted at source 15.93 16.03Advance and Deposits withRailways, GovernmentBodies and Others 478.25 464.361137.77 684.37Considered doubtful:Advances recoverable incash or in kind 22.00 22.001159.77 706.37Less: Provision for doubtfulloans and advances 22.00 22.001137.77 684.37SCHEDULE 10CURRENT LIABILITIESSundry CreditorsSmall Scale Industries 16.12 17.97(To the extent identified withavailable information)Others 8026.06 8249.248042.18 8267.21Security and Other Deposits 98.80 104.10Advances from customers 99.87 49.83Amount transferable toInvestor Education andProtection Fund, when due- Unclaimed amount on account ofredemption of preference shares 0.37 0.37- Unclaimed dividend — 7.17Other Liabilities 1593.37 1203.82Pension payable under VoluntaryRetirement-cum-Pension scheme 72.24 109.079906.83 9741.57SCHEDULE 11 (Rs Lakhs)As at 30-09-2005 As at 30-09-2004PROVISIONSProvision for Leave Encashment 73.66 59.45Provision for Taxation — 1.72Provision for FBT 3.49 —

77.15 61.17SCHEDULE 12Profit and Loss AccountProfit and Loss Account(Debit Balance) 15292.98 17338.42Less :General Reserve deductedas per Contra 816.77 816.7714476.21 16521.652004-05 2003-04SCHEDULE 13INTEREST & DIVIDENDINCOMEInterest (Gross) 2.81 3.22(Tax Deducted at Source Rs.46494,Previous year Rs.61133)2.81 3.22SCHEDULE 14OTHER INCOMEInsurance Claim 32.96 17.98Provision written back 7.66 —Profit on sale of assets 0.24 —Miscellaneous Income/ receipts 80.91 106.41121.77 124.39SCHEDULE 15INCREASE / (DECREASE) IN STOCKSClosing StockFinished Goods 355.71 231.27Process Stock 1756.83 2193.812112.54 2425.08Opening stockFinished Goods 231.27 75.88Process Stock 2193.81 1357.492425.08 1433.37Add: Increase / (Decrease) inExcise Duty on Stocks (44.78) 240.60Increase / (Decrease) in Stocks (357.32) 751.11SCHEDULE 16RAW MATERIALS CONSUMEDOpening Stock 145.63 121.88Purchase and Incidental Expenses 1792.51 1635.07

1938.14 1756.95Less: Closing Stock 156.66 145.631781.48 1611.32SCHEDULES(94)NARMADA CEMENT COMPANY LIMITEDSCHEDULE 17 (Rs Lakhs)2004-05 2003-04MANUFACTURING EXPENSESConsumption of Stores, Spare Partsand Components, PackingMaterials and Incidental Expenses 1991.03 2100.17Power & Fuel Consumed 12053.28 9598.95Hire Charges of Plant & Machineryand others 145.88 78.33Repairs to Plant & Machinery 487.18 508.12Repairs to Buildings 42.02 39.78Repairs to Others 133.74 90.8014853.13 12416.15SCHEDULE 18PAYMENTS TO AND PROVISIONSFOR EMPLOYEESSalaries, Wages and Allowances 667.39 625.35Contribution to and Provisions forProvident and Other Funds 54.78 50.79Welfare Expenses 145.78 172.00VRS, VRPS & other schemes written-off — 1388.11867.95 2236.25SCHEDULE 19SELLING, DISTRIBUTION,ADMINISTRATION ANDOTHER EXPENSESCommission paid to Distributors andSelling Agents 42.86 26.59Freight, handling and other expenses 480.38 131.15Advertisements & Publicity 1.61 5.58Insurance 93.61 104.03Rent (including Lease Rent) 17.55 19.86Rates and Taxes 74.32 64.39Stationery, Printing, Postage and

Telephone Expenses 27.89 22.01Travelling and Conveyance 26.18 31.80Legal and Professional charges 83.25 64.04Bad Debts Written Off 0.20 34.19Provision for Doubtful Debts 193.61 8.62Loss on Sale of Fixed Assets 0.93 —Inventory Obsolescence — 843.11Capital Work-in-Progress Written off — 309.90Settlement Charges 109.42 —Other Miscellaneous Expenses 197.71 295.951349.52 1961.22SCHEDULE 20INTERESTOn Cash Credit 71.79 142.86On Inter Corporate Deposits — 823.29On Other Accounts 47.04 332.93118.83 1299.08SCHEDULE 21SIGNIFICANT ACCOUNTING POLICIESI. Basis of AccountingThe Company maintains its accounts on accrual basis following the historicalcost convention, in compliance with the Accounting Standards specified tobe mandatory by the Institute of Chartered Accountants of India and therelevant provisions of the Companies Act, 1956.II. Fixed Assets and DepreciationFixed assets are stated at original cost less accumulated depreciation.Depreciation in respect of all assets is provided on straight line basis at therates prescribed in Schedule XIV to the Companies Act, 1956. Leaseholdland / land under mining lease are amortized over the period of lease /expected mining deposits. No depreciation is charged on Freehold land nothaving mining deposit.III. InventoriesInventories are valued at lower of cost or estimated net realisable value.Cost of raw materials is determined on weighted average basis.Material-in-process includes related overheads and cost of finished goodsincludes related overheads and excise duty paid/payable on such goods.IV. Revenue RecognitionRevenue is recognised only when there is no significant uncertainty as tomeasurability / collectibility of the amounts. Sales are accounted on dispatch

of products and sales value is net of discount on sales and includes exciseduty.V. Retirement BenefitsProvisions for / contributions to retirement benefit schemes are made asfollows:a) Provident fund on actual liability basis.b) Gratuity based on actuarial valuation.c) Superannuation on actual liability basis.d) Leave encashment benefit on retirement on actuarial valuation basis.VI. Foreign Currency TransactionsForeign currency transactions are accounted for at the rates prevailing on thedate of transaction. Foreign currency assets and liabilities outstanding at theclose of the financial year are restated at the contracted and / or appropriateexchange rates at the close of the year. The gain or loss due to decrease /increase in Rupee liability on account of fluctuations in the rate of exchangeis adjusted to the cost of assets if it relates to acquisition of fixed assets and ischarged to Profit and Loss account in other cases.VII. LeasesAssets acquired under leases where a significant portion of the risks andrewards of ownership are retained by the lessor are classified as operatingleases. Lease rentals are charged to the Profit & Loss Account on accrualbasis.VIII. Taxes on IncomeTax on income for the current period is determined on the basis of taxableincome and tax credits computed in accordance with the provisions of theIncome Tax Act, 1961, and based on expected outcome of assessments/appeals.Deferred tax is recognised on timing differences between the accountingincome and the taxable income for the year, and quantified using the taxrates and laws enacted or substantively enacted as on the Balance Sheetdate.Deferred tax assets are recognised and carried forward to the extent thatthere is a reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realised.IX. Contingent LiabilitiesDepending on facts of each case and after due evaluation of relevant legalaspects, claims against the Company not acknowledged as debts are provided

or disclosed as contingent liabilities. In respect of statutory matters, contingentliabilities are provided or disclosed only for those demand(s) that are contestedby the Company.SCHEDULES(95)NARMADA CEMENT COMPANY LIMITED1. Cash Credit facility from the Bank is secured by way of a charge byhypothecation of stocks, stores, book debts, movable properties of theCompany and by equitable / legal mortgage of immoveable properties situatedat Babarkot village in Jafrabad.2. Future liability on account of pension payable under the Voluntary Retirementcum Pension Scheme / Employee Separation Scheme introduced earlier,amount to Rs.72.24 lakhs (Rs. 109.07 lakhs).3. Details of contingent liabilities not provided for in the books in respect ofthe following:Rs. lakhs30.9.2005 30.9.2004a. Counter guarantees given by theCompany to Bankers againstguarantees issued by them. 98.55 17.78b. Estimated amount of Contractsremaining to be executed onCapital Account and not provided for (gross). 269.17 8.80Amount net of advances. 209.48 8.80c. Other claims against the Company notacknowledged as debts. 225.53 50.49d. Disputed demands / matters in appealsin respect of notices received fromCentral Excise / Customs / Sales Taxauthorities, and are pending for disposal. 1188.32 266.754. In respect of Small Scale Industries, the Company owes a sum of Rs. 16.12lakhs (Rs. 17.97 lakhs) as at 30th September, 2005. Total outstanding duesof small scale industrial undertakings have been determined to the extentsuch parties have been identified on the basis of information available withthe Company.

The names of the small scale industry to whom the company owes monies formore than 30 days as at 30th September, 2005 are:1. Sea Linkers2. Multiple Fabric Company Ltd.5. Related Party relationships / transactions warranting disclosures under AS-18issued by the Institute of Chartered Accountants of India are as under:(i) Names and relationship of the transacting parties:Holding CompanyUltraTech Cement Limited (holds 97.80 per cent of the Equity Capitalas at 30th September, 2005).Other related parties –Subsidiary Companies of UltraTech Cement LimitedDakshin Cements Limited, UltraTech Ceylinco (Private) Limited.Holding Company of UltraTech Cement LimitedGrasim Industries Limited(ii) Nature and volume of transactions:Rs. lakhs2004-05 2003-04UltraTech Cement Limited – Holding Company1 Sales 20399.05 13558.112 Purchases —2.1 Raw materials 0.14 1.152.2 Stores & Spares — 13.992.3 Power & Fuel 5682.39 5074.703 Interest & other finance charges — 1152.314 Share capital 6980.33 6975.295 Unsecured loans – ICDs 13208.41 13208.416 Current assets - Sundry Debtors 1702.27 374.167 Current liabilities - Sundry Creditors 6696.29 6467.25Grasim Industries Limited (Holding Companyof UltraTech Cement Limited)Sea Freight 461.28 350.21No amounts have been written off or written back in the year inrespect of debts due from or to the above parties.(iii) Related party relations are identified by the Company and relied uponby the auditors.6. The Company has taken on operating lease certain assets costing Rs. 27.97

lakhs (Rs. 27.97 lakhs), the future lease obligation against which is Rs. 20.07lakhs (Rs. 26.91 lakhs) as at 30th September, 2005; break up of which is asunder-Rs. lakhs30.9.2005 30.9.2004not later than one year 7.24 7.16Later than one year but not later than five years 12.83 19.75Later than five years Nil Nil7. Basic and Diluted Earning per share having Face value of Rs. 10/- each isRs. 2.87 (previous year Rs. (8.15)). The calculation is based on Profit afterTax Rs. 2045.44 lakhs as divided by weighted average number of equityshares as at 30th September, 2005 of 713.74 lakhs.8. Deferred Tax Assets/ liabilitiesa. The details of deferred tax assets and liabilities are as under:Rs. lakhsAs at For the Year As at30.09.2004 2004-05 30.09.2005Deferred tax assetsCarried forward business loss 4636.62 (953.10) 3683.52Unabsorbed tax depreciation 2785.54 (544.79) 2240.75Expenditure disallowed u/s 43B — 24.53 24.53Voluntary retirement schemes 274.67 (150.59) 124.08Total 7696.83 (1623.95) 6072.88Deferred tax liabilityDifference between tax andbook depreciation 2023.74 (177.12) 1846.62Total 2023.74 (177.12) 1846.62Net Deferred Tax Assets 5673.09 (1446.83) 4226.26b. Working of Deferred Taxes is based on Assessment Orders whereassessments are complete and on Return of Income in other cases.c. Deferred Tax Assets and Liabilities have not been recognized during thecurrent year.9. Figures for the previous year have been regrouped or rearranged wherevernecessary to make them comparable with those for the current year.10. Figures in brackets are for the previous year.11. Additional information pursuant to provisions of paragraph 3 and 4 of Part IIof Schedule VI to the Companies Act, 1956:2004-05 2003-04Quantity Rs Lakhs Quantity Rs Lakhs

Lakh MT Lakh MTa. Sale of GoodsCement 8.61 19143.00 6.13 13454.44Clinker 6.62 8622.86 7.05 7051.12Total 27765.86 20505.56b. Details of Raw Materials consumptionLime Stone 19.96 1328.19 19.13 1234.89Gypsum 0.45 178.31 0.28 97.49Pozzolona 0.46 111.60 0.25 52.50Others 163.38 226.44Total 1781.48 1611.32NOTES FORMING PART OF ACCOUNTSSCHEDULES NOTES FORMING PART OF ACCOUNTS(96)NARMADA CEMENT COMPANY LIMITEDc. Capacities and Production:Figures in Lakh TonnesUnit Licensed Capacity * Installed Capacity # Actual ProductionPer annum Per annum2004-05 2003-04 2004-05 2003-04 2004-05 2003-04Cement 10 10 15 15 15.30 13.27* As certified by the Management and accepted by Auditors, this being a technical matter.# Includes 6.62 Lakh Tonnes (7.05 Lakh Tonnes) of clinker produced and sold.d. Inventories:Quantity in Lakh Tonnes & Rs. in lakhsOpening Stock As At Closing Stock As At30.9.2004 1.10.2003 30.9.2005 30.9.2004Qty Rs Qty Rs Qty Rs Qty RsCement 0.13 231.27 0.04 75.88 0.18 355.71 0.13 231.27e. Auditors remuneration and expenses charged to the accounts:Rs. Lakhs2004-05 2003-04Audit fees 3.58 3.03Tax audit fees 0.66 0.66Other services 0.96 0.30Expenses reimbursed 0.04 0.05Total 5.24 4.04f. Payments in Foreign Currency Rs. Nil (Rs. Nil)

g. Value of Imports (C.I.F. basis)Components and Spare Parts 237.58 248.88Fuel 6110.37 4264.41Total 6347.95 4513.29h. Value of Imported and Indigenous Raw Materials, Spare Parts and Stores Consumed:2004-05 2003-04Value % Value %Rs. Lakhs Rs. LakhsRaw MaterialsImported — — — —Indigenous 1781.48 100.00 1611.32 100.00Total 1781.48 100.00 1611.32 100.00Stores & SparesImported 237.58 16.33 248.88 13.75Indigenous 857.73 83.67 1245.39 86.25Total 1095.31 100.00 1534.27 100.00i Earning in Foreign Currency (Export of Goods on F.O.B. Basis) Rs. 320.24 Lakhs (Rs. Nil)SCHEDULES(97)NARMADA CEMENT COMPANY LIMITED}12. Additional information pursuant to provisions of Part IV of Schedule VI to the Companies Act, 1956.BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE:I. Registration DetailsRegistration No : 19626State Code : 11Balance Sheet Date : 30.09.2005II. Capital Raised during the Year (Amount in Rs Thousands)Public Issue : NilRights Issue : NilBonus Issue : NilPrivate Placement : NilIII. Position of Mobilisation & Deployment of Funds (Amount in Rs Thousands)Total Liabilities : 2113180Total Assets : 2113180

Sources of FundsPaid up Capital : 713864Reserves & Surplus : 1523Secured Loans : 76952Unsecured Loans : 1320841Deferred Tax Liabilities : NilApplication of FundsNet Fixed Assets : 807752Investments : NilDeferred Tax Assets : NilNet Current Assets : (142193)Misc. Expenditure : NilAccumulated Losses : 1447621IV. Performance of the Company(Amount in Rs Thousands)Turnover : 2400234Total Expenditure : 2195048Profit Before Tax : 205186Provision for Taxes : 642Provision for Deferred Taxes (net) : NilProfit After Tax : 204544Earning Per Share : 2.87Dividend Rate (%) : NilV. Generic Name of Principal Product of the CompanyItem Code : 252329.01Product Description : Other Grey Portland CementV. M. MURALIDHARANK. C. BIRLA DirectorsKAMAL RATHI SANJEEV BAFNAPlace: Mumbai Company SecretaryDated: 8th November, 2005SCHEDULES(98)NARMADA CEMENT COMPANY LIMITEDCASH FLOW STATEMENT FOR THE YEAR ENDED 30TH SEPTEMBER, 2005Year ended Year ended30-09-2005 30-09-2004Rs. lakhs Rs. lakhsA. Cash flow from Operating Activities :

Profit/(Loss) Before Tax & Extraordinary Items 2051.86 (2663.18)Adjustment for :Depreciation 641.99 667.34Capital Work-In-Progress written off — 309.90(Profit)/Loss on Sale of Asses (Net) 0.68 —Interest Expenses 118.83 1309.54Interest Income (2.81) (3.22)Operating Profit Before Working Capital Changes 2810.55 (379.62)Adjustment for :(Increase)/Decrease in Trade & Other Receivables (1534.12) (452.00)(Increase)/Decrease in Inventories (610.55) 1.19(Increase)/Decrease in Miscellaneous Expenditure not written off — 1951.18Increase/(Decrease) in Trade Payables 165.26 (414.97)Leave Encashment 14.21 12.55Provision For Tax (1.72) —Sub Total (1966.92) 1097.94Cash Generated from Operations 843.63 718.32Fringe Benefit Tax Paid 2.93 —Net Cash from Operating Activities (A) 840.70 718.32B. Cash flow from Investing ActivitiesNet Purchase of Fixed Assets (542.50) 1.24Sale of Fixed Assets (2.59) —Interest Received 2.81 3.22Net Cash Used in Investing Activities (B) (542.28) 4.46C. Cash flow from Financing ActivitiesRepayment from Long-Term and other borrowings (243.81) 641.59Interest Paid (118.83) (1309.55)Net Cash Used in Financing Activities (C) (362.64) (667.96)Net Increase /(Decrease) in Cash & Cash Equivalents (A+B+C) (64.22) 54.82Cash & Cash Equivalents at the beginning of the year 261.58 206.76Cash & Cash Equivalents at the end of the year 197.36 261.58Notes:1. Cash flow statement has been prepared under the Indirect method as set out in Accounting Standard -3 issued by theInstitute of Chartered Accountant of India.2. Purchase of fixed assets includes movements of capital work in progress between the beginning and the end of the year3. Previous year figure regrouped/recasted wherever necessary

As per our separate report attachedFor HARIBHAKTI & CO. V. M. MURALIDHARANChartered Accountants K. C. BIRLASANJEEV BAFNACHETAN DESAIPartner DirectorsKAMAL RATHICompany SecretaryPlace : Mumbai :Dated : 8th November, 2005(99)DAKSHIN CEMENTS LIMITEDDIRECTORS’ REPORTTo The Members,Dakshin Cements LimitedYour Directors present the Thirteenth Annual Report of yourCompany together with Audited Accounts for the year ended 31stMarch 2006.FINANCIAL RESULTSDuring the year under review, your Company did not carry on anybusiness activities and accordingly no Profit and Loss Account hasbeen prepared.CAPITAL EXPENDITUREDuring the year under review, your Company did not incur anycapital expenditure.FIXED DEPOSITSYour Company has not accepted any fixed deposit during the yearending 31st March, 2006.DIRECTORS’ RESPONSIBILITY STATEMENTAs required under Section 217 (2AA) of the Companies Act,1956 your Directors confirm that:i) in the preparation of Annual Accounts, the applicableaccounting standards have been followed;ii) the Directors have selected such accounting policies and madejudgments and estimates that are reasonable and prudent soas to give a true and fair view of the state of affairs of thecompany as at 31st March, 2006;iii) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956 for

safeguarding the assets of the company and for preventingand detecting the fraud and other irregularities; andiv) the Directors have prepared the annual accounts on a goingconcern basis.AUDITORS’ REPORTThere are no adverse comments, observation or reservation in theAuditors Report on the Annual Accounts of the Company.The Notes to the Accounts referred to in the Auditors Report areself explanatory and therefore do not call for any further commentsfrom the Directors.PARTICULARS OF EMPLOYEES.Section 217(2A) of Companies Act, 1956 read with the Companies(Particulars of Employees) Rules, 1975 do not apply to yourCompany as none of its employees are covered under its provisions.CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION, FOREIGN EXCHANGE EARNINGS &OUTGODuring the year under review, your Company did not carry anycommercial / business activity and accordingly particulars underconservation of energy, technology absorption, foreign exchangeearnings & outgo have not been provided.AUDITORSM/s G.P. Kapadia & Co., Chartered Accountants, Mumbai theexisting Auditors will retire at the ensuing Annual General Meetingof your Company. They being eligible to be re-appointed haveexpressed their willingness to be re-appointed as the StatutoryAuditors of your Company for the financial year 2006-07. Aresolution seeking your approval for their re-appointment has beenincluded in the Notice convening the Annual General Meeting.ACKNOWLEDGEMENTThe Board of Directors wish to place on record their appreciationfor the support and co-operation extended by UltraTech CementLimited, the Auditors and the Bankers of the Company.For and on behalf of the Board of DirectorsK.C. BIRLADEEPAK RAZDAN DirectorsM.R. PRASANNAPlace: MumbaiDate: April 18, 2006}

(100)DAKSHIN CEMENTS LIMITEDAUDITORS’ REPORTWe have audited the attached Balance Sheet of Dakshin CementsLimited as at 31st March, 2006. No Profit and Loss Account hasbeen prepared as the Company has not carried out any activities.These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit.We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.In accordance with the provisions of Section 227 of the CompaniesAct, 1956, we report that:1. As the Company has carried out no activities during the year,the requirement by the Companies (Auditor’s Report) Order,2003 issued by the Central Government of India in terms ofSection 227(4A) of the Companies Act, 1956, is notapplicable.2. Further to our comments in paragraph 1 above, we reportthat:(a) we have obtained all the information and explanations,which to the best of our knowledge and belief werenecessary for the purposes of our audit;(b) in our opinion, proper books of account as required bylaw have been kept by the Company so far as appearsfrom our examination of those books;(c) the balance sheet dealt with by this report is in agreementwith the books of account;(d) in our opinion, the balance sheet dealt with by thisreport, complies with the accounting standards referredto in Section 211(3C) of the Companies Act, 1956, tothe extent applicable;

(e) on the basis of written representations received fromthe directors as on 31st March, 2006, and taken onrecord by the Board of Directors, we report that none ofthe directors is disqualified as on 31st March, 2006 frombeing appointed as a director in terms of Section274(1)(g) of the Companies Act, 1956; and(f) in our opinion and to the best of our information andaccording to the explanations given to us, the saidbalance sheet read together with the significantaccounting policies and other notes appearing inSchedule 5, gives the information required by theCompanies Act, 1956, in the manner so required andgive a true and fair view in conformity with theaccounting principles generally accepted in India, of thestate of Company’s affairs as at 31st March, 2006.G. P Kapadia &CoChartered Accountantsby the hand ofATUL B. DESAIPartner(Membership No 30850)Mumbai,April 18, 2006(101)DAKSHIN CEMENTS LIMITEDBALANCE SHEET AS AT 31st March, 2006As at As at31st March, 2006 31st March,2005Schedules Rupees Rupees Rupees RupeesI. SOURCES OF FUNDS:SHARE HOLDERS’ FUNDSShare Capital 1 500,000 500,000Loan Funds — —500,000 500,000II. APPLICATION OF FUNDS:Fixed Assets 2Gross block — —Less : Depreciation — —Net block — —Capital Work in progress — —Incidental Expenditure pending

allocation / capitalisation 1,390,738 1,390,738 1,197,776 1,197,776Current Assets, Loans and Advances 3 361,165 202,546361,165 202,546Less : Current Liabilities and Provisions 4 1,289,297 (928,132) 937,716 (735,170)Miscellaneous Expenditure(to the extent not written off or adjusted) 37,394 37,394500,000 500,000Notes on Accounts 5As per our report attached.For G.P. Kapadia & CoChartered Accountantsby the hand ofATUL B. DESAI K. C. BIRLA DEEPAK RAZDAN M. R. PRASANNAPartner Director Director DirectorMembership No. 30850Mumbai, April 18, 2006(102)DAKSHIN CEMENTS LIMITEDSchedules forming part of the Balance SheetAs at As at31st March, 31st March,2006 2005Schedule - 1 Rupees RupeesSHARE CAPITALAuthorised500,000 Equity shares of Rs 10 each 5,000,000 5,000,000Issued and subscribed50,000 Equity shares of Rs 10 eachfully paid (All the shares are held byUltraTech Cement Limited,the holding company) 500,000 500,000Schedule - 2FIXED ASSETSGross block — —Less : Depreciation — —Net block — —Capital work in progress — —Incidental Expenditure pending allocation/capitalisation 1,390,738 1,197,776

1,390,738 1,197,776Schedule - 3CURRENT ASSETS, LOANS AND ADVANCESCash and Bank BalancesCash on Hand 241 241Balance with Scheduled Bankon current account 200,305 200,305200,546 200,546Loans and AdvancesUnsecured, considered goodadvances recoverable in cashor in kind or for value to bereceived 160,619 2,000Total 361,165 202,546Schedule - 4CURRENT LIABILITIES ANDPROVISIONSLiabilitiesDue to UltraTech Cement Limited(The Holding Company) 1,101,840 755,769Due to Others 171,187 171,187Other liabilities 16,270 10,760Total 1,289,297 937,716Schedule - 5NOTES ON ACCOUNTS1. Significant Accounting Policies :The Company maintains its accounts on accrual basis following the historicalcost convention in accordance with generally accepted accounting principles(“GAAP”) and in compliance with the accounting standards referred to inSection 211 (3C) and other requirements of the Companies Act, 1956, to theextent applicable.2. As the Company has not yet started commercial operation no, Profit & LossAccount has been prepared. The statement showing the unallocated, preoperativeexpenditure incurred up to 31st March, 2006 is shown inSchedule - 2.3. The pre-operative expenditure as under pending allocation will be allocated to

appropriate fixed assets on commencement of commercial production:Incidental expenditure pending allocation / capitalisationAs at As at31st March, 31st March,2006 2005Rupees RupeesTravelling and conveyance 134,629 134,629Subscription 1,000 1,000Survey expenses 90,750 90,750Testing charges 8,000 8,000Consultancy Charges 2,500 2,500Auditors’s remuneration 57,670 52,160Printing & Stationery 3,764 3,764Office expenses 2,745 2,745Bank charges 325 325Directors sitting fees 7,500 7,500Filing fees 33,770 28,270Royalty/dead rent 757,192 575,240Legal fees 262,000 262,000Interest 7,008 7,008Miscellaneous expenses 21,885 21,885Total 1,390,738 1,197,7764. Contingent liabilities - Nil.5. Previous year figures have been regrouped wherever necessary.Signature to Schedule 1 to 5As per our report attached.For G.P. Kapadia & CoChartered Accountantsby the hand ofATUL B. DESAI K. C. BIRLA DEEPAK RAZDAN M. R. PRASANNAPartner Director Director DirectorMembership No. 30850Mumbai , April 18, 2006(103)DAKSHIN CEMENTS LIMITEDBalance Sheet abstract and Company’s General Business Profile1 Registration DetailsRegistration No. 0 1 - 0 1 6 0 0 2 State Code 0 1Balance Sheet Date 3 1 - 0 3 - 0 62 Capital raised during the year (Amount in Rs. Thousands)

Public Issue Rights IssueN I L N I LBonus Issue Private PlacementN I L N I L3 Position of Mobilisation and Development of funds (Amount in Rs. Thousands)Total Liabilities Total Assets1 7 8 9 1 7 8 9Sources of Funds :Paid up Capital Reserves & Surplus5 0 0 N I LSecured Loans Unsecured LoansN I L N I LApplication of Funds : Net Fixed Assets Investments1 3 9 1 N I LNet Current Assets Miscellaneous Expenditure( 9 2 8 ) 3 7Accumulated LossesN I L4 Performance of the Company (Amount in Rs. Thousands)Turnover (including other income) Total ExpenditureN I L N I L+ - Profit / (Loss) before Tax + - Profit / (Loss) after TaxN I L N I LPlease Tick Appropriate box + for Profit, - for lossEarnings per Share (Rs.) Dividend Rate (%)N A N A5 Generic Names of Three Principal Products/Services of the Company (as per monetary terms)No Activities during the yearK. C. BIRLA DEEPAK RAZDAN M. R. PRASANNADirector Director DirectorMumbai, April 18, 2006U l t r a T e c h C e y l i n c o ( P v t ) L t d(104)The Directors of UltraTech Ceylinco (Pvt) Ltd have pleasure inpresenting to the members their report for the 15 month periodended 31st March 2006.PRINCIPAL ACTIVITYThe principal activity of the Company is carrying on business of

importers, exporters, distributors warehousemen, wholesalers,retailers and dealers of cement and to establish storage terminalsand other facilities for the bagging and distribution of bulk cement.MESSAGE FROM THE CEOThe performance during the 15 month period of our JV was thebest ever since the inception.The Company distributed 0.539 MMT of cement against 0.470MMT. This has given 16% growth as against market growth of12% which has resulted in increase in market share to 13%.The sales and other income for the financial year under reviewwere Rs.4346 M as against Rs.3209 M during the same period lastyear which has given us a growth of 35%. The profit after providingtax for the period was Rs.242 M as against the profit of Rs.224M.The performance for the year was much better than previous year,mainly due to increase in the quantity sold, better price realizationand continuous efforts in the cost reduction activities and betterproductivity.Looking in to the present scenario and the efforts announced bythe government to invite more FDI, infra structure facilities suchas power and road, we are expecting performance even better thanlast year. GDP expected to remain 6%.We have taken enormous efforts in the brand awareness afterchanging our brand name last year and the coming year, specialsteps will be taken for brand building exercises.PROFIT & LOSS ACCOUNT15 months ended Year ended31.03.2006 31.12.2004Note SLR SLRTurnover 1 4,349,045,969 2,497,995,777Cost of Sales (3,842,782,316) (2,199,030,298)Gross Profit 506,263,653 298,965,479Other Operating Income 2 4,894,446 3,941,188Administrative expenses (57,094,226) (37,377,999)Distribution cost (91,140,962) (37,097,940)Other operating expenses 3 (63,637,579) —Profit from Operations 4 299,285,332 228,430,728Financing cost 5 31,700,606 (44,066,582)Profit before Taxation 330,985,938 184,364,146Income tax expense 6 (88,195,671) (11,048,273)Profit for the year 7 242,790,267 173,315,873

Earnings per share 3.88 3.47DIRECTORATEThe names of the Directors of the Company as at date are givenunder Corporate Information.There have been no change in the directorate during the yearunder review.RETIREMENT BY ROTATION AND/OR OTHERWISEBy virtue of provisions contained in the Articles of Association ofthe Company, the Directors are not subject to Retirement byRotation.CHANGE IN FINANCIAL YEARThe Board decided to change the financial year of the Companyfrom 31st March in order to be in line with the financial year ofthe parent company, viz. UltraTech Cement Limited and as suchthe accounts contained herein reflect the financial status of theCompany for the 15 month period ended 31st March 2006.DIVIDENDThe Directors do recommend a first and final dividend of 20% tothe ordinary shareholders of the Company registered as on the dateof the Annual General Meeting.DIRECTORS’ INTERESTS IN CONTRACTSThe Directors of the Company have no direct and indirect interestin any contract or proposed contract of the Company, except thosespecified in Note 20 to the financial statement, which have beendisclosed and declared at meetings of the Directors in accordancewith section 203 of the Companies Act No.17 of 1982.AUDITORSThe Accounts for the year under review have been audited byMessrs KPMG Ford, Rhodes, Thornton & Company, CharteredAccountants, who retire and being eligible offer themselves forre-appointment for the year 2006/2007.The Directors do recommend their re-appointment.BY ORDER OF THE BOARDSgd.(Authorised Signatory)INTERNATIONAL CONSULTANCY AND CORPORATESERVICES (PVT) LTDSECRETARIES FOR ULTRATECH CEYLINCO (PVT) LTD22nd May 2006.ColomboU l t r a T e c h C e y l i n c o ( P v t ) L t d

(105)REPORT OF THE AUDITORSTO THE MEMBERS OF ULTRATECH CYCLINCO (PVT)LTDWe have audited the Balance Sheet of Ultratech Ceylinco (Pvt)Ltd, as at 31st March, 2006 and the related Statements of Income,Changes in Equity and Cash Flow for the period then ended,together with the Accounting Policies and Notes thereon.Respective Responsibilities of Directors and AuditorsThe Directors are responsible for preparing and presenting thesefinancial statements in accordance with the Sri Lanka AccountingStandards. Our responsibility is to express an opinion on thesefinancial statements, based on our audit.Basis of OpinionWe conducted our audit in accordance with the Sri Lanka AuditingStandards, which require that we plan and perform the audit toobtain reasonable assurance about whether the said financialstatements are free of material misstatements. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the said financial statements, assessing the accountingprinciples used and significant estimates made by the Directors,evaluating the overall presentation of the financial statements, anddetermining whether the said financial statements are preparedand presented in accordance with the Sri Lanka AccountingStandards. We have obtained all the information and explanationswhich to the best of our knowledge and belief were necessary forthe purposes of our audit. We therefore believe that our auditprovides a reasonable basis for our opinion.OpinionIn our opinion, so far as appears from our examination, theCompany maintained proper books of account for the period endedat 31st March, 2006 and to the best of our information and accordingto the explanations given to us, the said Balance Sheet and relatedStatements of Income, Changes in Equity and Cash Flow and theAccounting Policies and Notes thereto, which are in agreementwith the said books and have been prepared and presented inaccordance with the Sri Lanka Accounting Standards, provide theinformation required by the Companies Act No.17 of 1982 andgive a true and fair view of the Company’s state of affairs as at 31stMarch, 2006, and of its profit and cash flows for the period then

ended.Directors’ Interests in Contracts with the CompanyAccording to the information made available to us, the Directorsof the Company were not directly or indirectly interested in anycontracts with the Company during the period ended 31st March,2006, other than those disclosed in Note 20 to these financialstatements.For KPMG FORD, RHODES, THORNTON & CO.,Chartered AccountsColombo, 10th April, 2006U l t r a T e c h C e y l i n c o ( P v t ) L t d(106)}Balance Sheet as at 31st March, 200631-03-2006 31-12-2004ASSETS Note SLR INR SLR INRNon-current assetsLeasehold land 8 29,837,744 12,936,934 31,229,484 13,059,626Property, plant and equipment 9 480,312,872 208,252,199 509,864,608 213,216,496510,150,616 221,189,133 541,094,092 226,276,122Current assetsInventories 10 217,476,820 94,292,759 99,439,959 41,584,058Trade receivables 11 178,863,243 77,550,834 94,953,140 39,707,749Other receivables 12 34,837,876 15,104,872 41,760,447 17,463,491Prepayments and advances 1,625,318 704,699 4,642,337 1,941,344Cash and cash equivalents 13 176,768,213 76,642,479 111,721,220 46,719,868609,571,470 264,295,643 352,517,103 147,416,511TOTAL ASSETS 1,119,722,086 485,484,776 893,611,195 373,692,633EQUITY AND LIABILITIESEquityShare capital 14 500,000,000 216,788,068 500,000,000 209,091,289Accumulated profit 48,832,190 21,172,472 (93,958,077) (39,291,560)548,832,190 237,960,540 406,041,923 169,799,729Non-current liabilitiesRetirement benefit obligations 15 2,536,750 1,099,874 1,970,700 824,112Deferred Taxation 16 13,543,162 5,871,992 — —16,079,912 6,971,866 1,970,700 824,112Current liabilities

Trade payable 17 429,393,891 186,174,944 418,829,981 175,147,401Other payables 18 41,277,942 17,897,131 41,596,004 17,394,724Income tax payable 47,232,196 20,478,753 — —Accrued expenses 12,529,725 5,432,590 2,963,216 1,239,095Bank overdraft 24,376,230 10,568,952 22,209,371 9,287,572554,809,984 240,552,370 485,598,572 203,068,792TOTAL EQUITY AND LIABILITIES 1,119,722,086 485,484,776 893,611,195 373,692,633The figures in INR is converted at the rate of: 2.3064=102.9/44.615 2.3913=104.5/43.7The Directors are responsible for the preparation and presentation of these Financial Statement.The Accounting Policies and Notes annexed form an integral part of the Financial StatementSigned for and on behalf of the Board,D. J. L. B. KotelawalaS. MisraA. R. Gunawardena DirectorsK. C. BirlaD. RazdanU l t r a T e c h C e y l i n c o ( P v t ) L t d(107)Income Statement for the period ended 31st March, 200615 months ended Year ended31.03.2006 31.12.2004Note SLR INR SLR INRTurnover 1 4,349,045,969 1,897,216,356 2,497,995,777 1,105,992,994Cost of sales (3,842,782,316) (1,676,365,234) (2,199,030,298) (973,625,387)Gross profit 506,263,653 220,851,122 298,965,479 132,367,608Other operating income 2 4,894,446 2,135,140 3,941,188 1,744,969Administrative expenses (57,094,226) (24,906,635) (37,377,999) (16,549,189)Distribution cost (91,140,962) (39,759,093) (37,097,940) (16,425,193)Other operating expenses 3 (63,637,579) (27,761,090) — —Profit from operations 4 299,285,332 130,559,444 228,430,728 101,138,195Financing income /(cost) 5 31,700,606 13,182,868 (44,066,582) (23,769,002)Profit before taxation 330,985,938 143,742,312 184,364,146 77,369,193

Income tax expense 6 (88,195,671) (38,474,247) (11,048,273) (4,891,647)Profit for the period 242,790,267 105,268,065 173,315,873 72,477,546Earnings per share - Annualised (Rs) 7 3.88 3.47The figures in INR is converted at the rate of: 2.29233 = ((99.65+102.9)/2)/((43.745+44.615)/2) 2.2586=((96.7+104.5)/2)/((45.38+43.7)/2)Statement of Changes in Equityfor the Period Ended 31st March, 2006Share Capital Accumulated Profit TotalSLR SLR SLRBalance as at 1st January 2004 500,000,000 (167,273,950) 332,726,050Profit for the year — 173,315,873 173,315,873Dividend paid — (100,000,000) (100,000,000)Balance as at 31st December 2004 500,000,000 (93,958,077) 406,041,923Profit for the period — 242,790,267 242,790,267Dividend paid — (100,000,000) (100,000,000)Balance as at 31st March 2006 500,000,000 48,832,190 548,832,190U l t r a T e c h C e y l i n c o ( P v t ) L t d(108)Cash Flow Statement for the period ended 31st March, 200615 months ended Year ended31-03-2006 31-12-2004SLR INR SLR INRCash flows from operating activitiesProfit from operations 299,285,332 130,559,445 228,430,728 101,138,195Adjustments for :Depreciation on property, plant and equipment 32,594,483 14,218,931 26,196,089 11,598,375Amortisation of leasehold land 1,391,740 607,129 1,113,392 492,957Provision for retiring gratuity 781,925 341,105 678,725 300,507Exchange Difference — 1,210,567 — (2,199,267)Provision for bad and doubtful debts — — 6,115,476 2,707,640(Gain)/loss on translation of foreign currency 27,542,516 12,015,075 — —(Gain)/loss on disposal of property, plant and equipment (122,793) (53,567) (334,915) (148,284)Operating profit before working capital changes 361,473,203 158,898,685 262,199,495 113,890,123(Increase)/decrease in inventories (118,036,861) (51,492,089) 28,283,367 12,522,521

(Increase)/decrease in trade and other receivables. (73,970,513) (32,268,702) 249,937,195 110,660,230Increase/(decrease) in trade and other payables 33,355,519 14,550,923 (256,645,753) (113,630,458)Cash generated from operations 202,821,347 89,688,817 283,774,304 123,442,416Interest paid (1,727,148) (753,446) (53,694,177) (23,773,212)Dividends paid (100,000,000) (43,623,737) (100,000,000) (44,275,215)Income tax paid (40,963,475) (17,869,798) (11,048,273) (4,891,647)Retiring gratuity paid (215,875) (94,173) — —Net cash flow from operating activities 59,914,850 27,347,663 119,031,854 50,502,342Cash flows from investing activitiesPurchase and construction of property, plant and equipment (3,567,450) (1,556,255) (1,140,075) (504,771)Interest received 5,885,238 2,567,361 9,627,595 4,262,638Proceeds from sale of property, plant and equipment 647,496 282,462 844,022 373,693Net cash flow from investing activities 2,965,284 1,293,568 9,331,542 4,131,560Net Increase/(Decrease) in Cash & Cash Equivalents 62,880,134 28,641,231 128,363,396 54,633,902Cash and Cash Equivalents at the beginning of the year 89,511,849 37,432,296 (38,851,547) (17,201,606)Cash and Cash Equivalents at the end of the year 152,391,983 66,073,527 89,511,849 37,432,296Cash and Cash Equivalents as at year endCash in hand 2,126,822 922,139 2,250,214 941,000Cash at bank 174,641,391 75,720,340 109,471,006 45,778,868Bank overdraft (24,376,230) (10,568,952) (22,209,371) (9,287,572)152,391,983 66,073,527 89,511,849 37,432,296U l t r a T e c h C e y l i n c o ( P v t ) L t d(109)Notes to the Accounts for the period ended31st March, 200615 months ended Year ended31.03.2006 31.12.2004SLR INR SLR INR1 TURNOVER

Turnover - Cement 4,349,045,969 1,897,216,356 2,497,995,777 1,105,992,9942 OTHER OPERATING INCOMEIncome from storage and handling 4,892,772 2,134,410 3,580,268 1,585,171Scrap sales 1,000 436 2,130 943Gain on disposals of fixed assets — — 334,915 148,284Lab service income 674 294 23,875 10,5714,894,446 2,135,140 3,941,188 1,744,9693 OTHER OPERATING EXPENSESLoss on disposal of property,plant & equipment 122,793 53,567 — —NSL Assessment 30,777,179 13,426,155 — —Promotion expense 32,737,607 14,281,368 — —63,637,579 27,761,090 — —4 PROFIT FROM OPERATIONSProfit from operations is stated after charging all expenses including the followingDirectors’ emoluments 1,615,883 704,909 1,540,712 682,154Auditors’ remuneration 340,000 148,321 265,000 117,329Depreciation and amortisation ofleasehold land 33,986,222 14,826,060 27,309,481 12,091,331Provision for bad and doubtful debts — — 6,115,476 2,707,640Donation 3,075,000 1,341,430 — —Staff cost Note 2.1 24,960,565 10,888,731 23,592,012 10,445,4142.1 Staff cost— Salaries and related costs 21,003,690 9,162,594 20,763,721 9,193,182— Defined contribution plancost-EPF and ETF 3,174,950 1,385,032 2,149,566 951,725— Defined benefit plancost-Retiring gratuity 781,925 341,105 678,725 300,50724,960,565 10,888,731 23,592,012 10,445,4145 FINANCING INCOME /(COST)Interest on overdrafts andtemporary facilities (1,727,148) (753,446) (23,736) (10,509)Interest on loans — — (13,911,111) (6,159,174)Interest income 5,885,238 2,567,361 9,627,595 4,262,638Gain/(loss) on translation offoreign currency 27,542,516 12,015,073 (39,759,330) (21,861,957)31,700,606 13,828,988 (44,066,582) (23,769,002)6 INCOME TAX EXPENSE

Income tax on profits 74,466,343 32,485,001 11,048,273 4,891,647Transferred to / (from) deferred tax 13,543,162 5,908,033 — —Social Responsibility Levy 186,166 81,213 — —88,195,671 38,474,247 11,048,273 4,891,647The Company is liable to income tax at the corporate rate of 32.5%.Income tax on business incomeProfit before tax 330,985,938 144,388,434 184,364,146 81,627,622Disallowable expenses 38,681,048 16,874,118 28,133,630 12,456,224Allowable expenses (17,163,590) (7,487,399) (3,299,709) (1,460,953)Total statutory income 352,503,396 153,775,153 209,198,067 92,622,893Tax loss brought forward fromprevious years claimed (123,376,188) (53,821,303) (73,219,323) (32,418,012)Assessable income 229,127,208 99,953,850 135,978,744 60,204,881Allowable Investment tax allowance — — (101,984,058) (45,153,661)Taxable income 229,127,208 99,953,850 33,994,686 15,051,220Tax liability @ 32.5% 74,466,343 32,485,001 11,048,273 4,891,647Income tax on profit 74,466,343 32,485,001 11,048,273 4,891,647As per the provisions of Inland Revenue (Amendment) Act No.12 of 2004, with effect from the yearof assessment 2004/2005, the brought forward tax loss (other than any capital loss) which could beclaimed in arriving at the Assessable Income is restricted to 35% of the total statutory income for theyear.The tax loss of the Company brought forward from the year of assessment 2004/2005 was SLR546,634,533 and the Company claimed SLR 123,376,188 during the year of assessment 2005/2006.The tax loss carried forward for the year of assessment 2006/2007 is SLR 423,258,345.7 EARNINGS PER SHAREThe calculation of the basic earnings per ordinary share is based on the profits attributable to theordinary shareholders divided by weighted average number of shares in issue during the year.31.03.2006 31.12.2004Net profit attributable to theordinary shareholders (Rs.) 242,790,267 105,268,065 173,315,873 72,477,546

Number of ordinary shares in issue 50,000,000 50,000,000 50,000,000 50,000,000Basic earnings per ordinary share-Annualised (Rs.) 3.88 1.69 3.47 1.458 LEASEHOLD LANDCost 38,946,767 16,886,389 38,946,767 16,286,859Cumulative amortisationAs at the beginning of the year 7,717,283 3,346,030 6,603,891 2,761,632Charge for the year 1,391,740 603,425 1,113,392 465,601Balance at the end of the year 9,109,023 3,949,455 7,717,283 3,227,233Written down value 29,837,744 12,936,934 31,229,484 13,059,626Leasehold land is amortised over the lease period of 30 years.9 PROPERTY, PLANT AND EQUIPMENT - Refer next page10 INVENTORIESNaked cement 101,389,289 43,959,976 74,468,382 31,141,380Bags 1,414,783 613,416 2,480,974 1,037,500Stores and spares 13,599,995 5,896,633 11,143,741 4,660,118Goods-in-transit 101,072,753 43,822,734 11,346,862 4,745,060217,476,820 94,292,759 99,439,959 41,584,05811 TRADE RECEIVABLESTrade receivables 212,433,856 92,106,250 128,523,755 53,746,395Provision for bad anddoubtful debts (33,570,613) (14,555,416) (33,570,615) (14,038,646)178,863,243 77,550,834 94,953,140 39,707,74912 OTHER RECEIVABLESReceivable from AES 14,592,200 6,326,830 14,592,200 6,102,204GST recoverable — — 3,948,807 1,651,322Larsen and Toubro Ltd — — 13,876,834 5,803,050VAT recoverable 5,718,088 2,479,227 — —Economic service charge recoverable 14,401,724 6,244,244 8,162,404 3,413,375Others 125,864 54,571 1,180,202 493,54034,837,876 15,104,872 41,760,447 17,463,49113 CASH AND CASH EQUIVALENTSCash in hand 2,126,822 922,139 2,250,214 941,000Cash at bank 174,641,391 75,720,340 109,471,006 45,778,868176,768,213 76,642,479 111,721,220 46,719,86814 SHARE CAPITALAuthorised100,000,000 Ordinary Shares

of SLR 10/- each 1,000,000,000 433,576,136 1,000,000,000 418,182,579Issued and fully paid50,000,000 Ordinary sharesof SLR 10/- each 500,000,000 216,788,068 500,000,000 209,091,28915 RETIREMENT BENEFIT OBLIGATIONSProvision for retiring gratuityAs at the beginning of the year 1,970,700 854,448 1,291,975 523,605Provision for the year 781,925 339,024 678,725 300,5072,752,625 1,193,472 1,970,700 824,112Payments made during the year (215,875) (93,598) — —Balance at the end of the year 2,536,750 1,099,874 1,970,700 824,11216 DEFERRED TAX LIABILITIESAs at the beginning of the year — — — —Provision for the year 13,543,162 5,871,992 — —Balance at the end of the year 13,543,162 5,871,992 — —17 TRADE PAYABLESUltraTech Cement Ltd 426,341,744 184,851,606 410,653,650 171,728,202Other trade payables 3,052,147 1,323,338 8,176,331 3,419,199429,393,891 186,174,944 418,829,981 175,147,40118 OTHER PAYABLESRetention money from contractors 10,409,883 4,513,477 10,671,546 4,462,655Value added tax payable — — 13,280,066 5,553,492Debtors deposit 6,252,393 2,710,888 4,257,388 1,780,365Withholding tax payable 177,929 77,146 76,107 31,827Economic service charge payable 8,147,719 3,532,657 4,572,876 1,912,297Due to Larsen and Toubroon account of AES 9,376,525 4,065,437 — —Others 6,913,493 2,997,526 8,738,021 3,654,08841,277,942 17,897,131 41,596,004 17,394,72431.03.2006 31.12.2004SLR INR SLR INRU l t r a T e c h C e y l i n c o ( P v t ) L t d(110)NOTES TO THE ACCOUNTSProperty, plant and equipmentBUILDING PLANT & OFFICE LAB COMPUTER ELECTRICAL HT POWER FURNITURE MOTOR MOTOR TOTAL

MACHINERY EQUIPMENT EQUIPMENT EQUIPMENTINSTALLATION LINE & FITTING VEHICLE CYCLESCostBalance as at 01-01-05 37,574,084 489,473,995 2,472,008 2,039,822 4,604,506 71,748,890 1,167,013 1,459,706 1,782,971 1,405,162 613,728,157Additions during the period — — 409,511 — 1,257,010 — — 41,513 — 1,859,416 3,567,450Disposals during the period — — (161,473) — (721,359) — — — — (989,600) (1,872,432)Balance as at 31-03-06 37,574,084 489,473,995 2,720,046 2,039,822 5,140,157 71,748,890 1,167,013 1,501,219 1,782,971 2,274,978 615,423,175DepreciationBalance as at 01-01-05 5,907,107 78,346,914 1,686,144 1,515,460 2,488,042 11,482,240 233,403 945,857 625,224 633,158 103,863,549Charge for the period 1,878,704 24,473,700 484,511 380,521 926,242 3,587,445 58,351 282,881 318,388 203,740 32,594,483Disposals during the period — — (160,795) — (630,368) — — — — (556,566) (1,347,729)Balance as at 31-03-06 7,785,811 102,820,614 2,009,860 1,895,981 2,783,916 15,069,685 291,754 1,228,738 943,612 280,332 135,110,303Written down valueAs at 31-03-06 29,788,273 386,653,381 710,186 143,841 2,356,241 56,679,205 875,259 272,481 839,359 1,994,646 480,312,872As at 01-01-05 31,666,977 411,127,081 785,864 524,362 2,116,464 60,266,650 933,610 513,849 1,157,747 772,004 509,864,608DESCRIPTION COST ADDITIONS/DEDUCTION COST DEPRECIATION W.D.VAS AT 1-1-2005 FOR THE PERIOD AS AT 31-03-2006 AS AT 1-1-2005 Additions Disposals AS AT 31-03-2006 AS AT 31-03-2006 AS AT 31-12-2004SLR INR SLR INR SLR INR SLR INR SLR INR SLR INR Ex-dif (INR) SLR INR SLR INR SLR INRBUILDING 37,574,084 15,712,827 — 578,399 37,574,084 16,291,226 5,907,107 2,470,249 1,878,704 819,561 — — 85,932 7,785,811 3,375,742 29,788,273 12,915,484 31,666,977 13,242,578PLANT &

MACHINERY 489,473,995 204,689,497 — 7,534,746 489,473,995 212,224,243 78,346,914 32,763,315 24,473,700 10,676,342 — — 1,140,908 102,820,614 44,580,565 386,653,381 167,643,679 411,127,081 171,926,183OFFICEEQUIPMENTS 2,472,008 1,033,751 248,038 145,596 2,720,046 1,179,347 1,686,144 705,116 484,511 211,362 (160,795) (70,145) 25,094 2,009,860 871,427 710,186 307,920 785,864 328,635LAB EQUIPMENTS 2,039,822 853,018 — 31,400 2,039,822 884,418 1,515,460 633,739 380,521 165,997 — — 22,316 1,895,981 822,052 143,841 62,366 524,362 219,279COMPUTERS 4,604,506 1,925,524 535,651 303,125 5,140,157 2,228,649 2,488,042 1,040,456 926,242 404,061 (630,368) (274,990) 37,512 2,783,916 1,207,040 2,356,241 1,021,610 2,116,464 885,068ELECTRICALINSTALLATION 71,748,890 30,004,136 — 1,104,471 71,748,890 31,108,606 11,482,240 4,801,673 3,587,445 1,564,978 — — 167,206 15,069,685 6,533,856 56,679,205 24,574,751 60,266,650 25,202,463H T POWER LINE 1,167,013 488,025 — 17,964 1,167,013 505,989 233,403 97,605 58,351 25,455 — — 3,438 291,754 126,498 875,259 379,491 933,610 390,419FURNITURE &FITTINGS 1,459,706 610,424 41,513 40,469 1,501,219 650,893 945,857 395,541 282,881 123,403 — — 13,807 1,228,738 532,751 272,481 118,141 513,849 214,883MOTOR VEHICLES 1,782,971 745,607 — 27,446 1,782,971 773,054 625,224 261,458 318,388 138,893 — — 8,777 943,612 409,128 839,359 363,926 1,157,747 484,150MOTOR CYCLE 1,405,162 587,614 869,816 398,762 2,274,978 986,376 633,158 264,776 203,740 88,879 (556,566) (242,795) 10,686 280,332 121,545 1,994,646 864,831 772,004 322,839TOTAL 613,728,157 256,650,423 1,695,018 10,182,379 615,423,175 266,832,802 103,863,549 43,433,927 32,594,483 14,218,931 (1,347,729) (587,930) 1,515,675 135,110,303 58,580,603 480,312,872 208,252,199 509,864,608 213,216,496U l t r a T e c h C e y l i n c o ( P v t ) L t d(111)19 Related party transactionsThe Company’s transactions with its related Companies are as follows.31-03-2006 31-12-2004SLR INR SLR INR

UltraTech Cement Ltd— Import of cement 2,190,341,157 955,508,656 776,381,327 343,744,500— Import of spares for machinery 3,753,121 1,637,252 494,732 219,044Amount payable as at the balance sheet date 426,341,744 184,851,606 410,653,650 171,728,202Larsen & Toubro Ltd ( until 28th June 2004)— Import of cement — — 861,034,377 381,224,819— Import of spares for machinery — — 652,348 288,828Ceylinco Developers (Pvt) Ltd— Sale of Cement — — 558,000 247,056— Amount Receivable as at the Balance Sheet date — — 232,398 97,185Ceylinco Homes International Ltd.— Sale of Cement 3,038,791 1,325,634 3,481,250 1,541,331— Amount Receivable as at the Balance Sheet date 249,790 108,303 326,041 136,345International Consultancy & Corporate Services (Pvt) Ltd— Secretarial services 323,437 141,095 246,040 108,935Ceylinco Insurance Company Ltd— Insurance Services 15,056,015 6,567,996 6,787,344 3,005,111— Commission on Sales 987,895 430,957 263,880 116,833— Professional services — — 25,000 11,069— Amount payable as at the balance sheet date 43,677 18,937 511,387 213,853Ceylinco CISCO Security Transport & Allied Services (Pvt) Ltd— Cash Transportation services 431,250 188,127 273,700 121,181Ceylinco Internet Services Ltd— E-Mail & Internet Services 15,812 6,898 12,885 5,70520 DIRECTORS’ INTEREST IN CONTRACTSNo director of the Company is directly or indirectly interested in any contract with the Company other than the following:Mr. Ajith Gunawardena a Director of the company is also a director of following companies.Ceylinco Developers (Pvt) LtdCeylinco International Trading Company Ltd.Mr.J.L.B.Kothalawala and Mr.A.R.Gunawardena are Directors of the Company are also Directors of the following Companies.Ceylinco Insurance Company LtdCeylinco Developers (Pvt) LtdCeylinco Homes International LtdInternational Consultancy & Corporate Services (Pvt) Ltd

Mr.J.L.B.Kothalawala a Director of the Company is also a Director of the following CompanyCeylinco CISCO Securities Transport & Allied Services (Pvt) LtdMr Saurabh Misra, Mr Kailash Chand Birla, Mr.M.R.Prasanna and Mr Deepak Razdan are directors of the Company.Mr Kiran Redkar is a alternative director for Mr Deepak Razdan.21 CAPITAL COMMITMENTSThere were no capital commitments as at the balance sheet date which requires disclosure in the accounts.22 EVENTS OCCURRING AFTER THE BALANCE SHEET DATENo circumstances have arisen since the balance sheet date which would require adjustments to or disclosure in the financial statements.23 CONTINGENT LIABILITIESThere are no contingent liabilities as at the balance sheet date which would require adjustments or disclosure in the accountsU l t r a T e c h C e y l i n c o ( P v t ) L t d(112)ACCOUNTING POLICIES1. CORPORATE INFORMATION• Domicile and Legal FormLarsen and Toubro Ceylinco (Pvt) Ltd was incorporated on 29th August1997 as a Private limited liability Company and domiciled in Sri Lanka.Consequence to the change in the major shareholder of theCompany, the Company was renamed as UltraTech Ceylinco (Pvt) Ltdon 11 March 2005.• Principal Business ActivitiesThe Company imports naked cement from India and markets it in SriLanka in 50kg bags and in bulk form.• The Name of the Parent Enterprise and The Ultimate Parent EnterpriseThe shareholding of the Company at the Balance Sheet date is as follows.UltraTech Cement Limited 80%Ceylinco Insurance Company Ltd 18%Ceylinco International Trading Ltd 2%Accordingly, UltraTech Cement Ltd incorporated in India is the UltimateParent Company.• Number of EmployeesNumber of employees as at the end of the period-62 (2004 — 58)1.1 Statement of ComplianceThe financial statements have been prepared in accordance with the

accounting standards issued by the Institute of Chartered Accountant ofSri Lanka (ICASL), and the requirements of the Companies Act No. 17of 1982.1.2 Basis of PreparationThe financial statements are presented in Sri Lankan Rupees and preparedon the historical cost basis. The Accounting Policies are consistent withthose used in the previous year.1.3 Foreign Currency TransactionsTransactions in foreign currencies are translated to rupees at the foreignexchange ruling at the date of the transaction. Monetary assets andliabilities denominated in foreign currencies at the balance sheet dateare translated to rupees at the foreign exchange rate ruling at that date.Foreign exchange differences arising on translation are recognised in theincome statement. Non-monetary assets and liabilities denominated inforeign currencies, which are stated at historical cost, are translated torupees at the foreign exchange rate ruling at the date of the transaction.2. ASSETS AND BASES OF THEIR VALUATIONS2.1 Property, Plant & Equipment2.1.1 Leasehold PropertyLease hold Property located at 81/11/1, New Nuge Road, Peliyagoda hasbeen sub leased for a period of 30 years from East West Properties Limitedwho have taken on lease the said premises for a period of 99 years fromthe Urban Development Authority.The sub-lease rentals and related expenses are amortised on a yearlybasis as per the schedule of the agreement2.1.2 Owned AssetsItems of Property, Plant and Equipment are stated at cost less accumulateddepreciation. Where an item of Property, Plant and Equipment comprisesmajor components having different useful lives, they are accounted foras separate items of Property, Plant and Equipment.2.1.3 Subsequent ExpenditureExpenditure incurred to replace a component of an item of Property,Plant and Equipment that is accounted for separately, is capitalised withthe carrying amount of the component being written off. Othersubsequent expenditure is capitalised only when it increases the futureeconomic benefits embodied in the item of Property, Plant andEquipment. All other expenditure is recognised in the income statementas an expense as incurred.2.1.4 DepreciationDepreciation is charged on a straight-line basis over the estimated useful

lives of the assets. No depreciation is charged in the year of purchaseand full depreciation is charged in the year of disposal.The estimated useful lives are as follows.ASSET No. Of YearsBuilding 25Plant and Machinery 25Lab Equipment 06Electronic Installation 25Office Equipment 06Motor Cars 07Motor Cycles 10HT Power line 25Computers 06Furniture & Fittings 062.2 InventoriesInventories are stated at the lower of cost and net realisable value. Netrealisable value is the estimated selling price in the ordinary course ofbusiness, less the estimated costs and selling expenses.The cost of inventory is based on the FIFO cost price principle andincludes expenditure incurred in acquiring the inventories and bringingthem to their existing location and condition.2.3 Trade and Other ReceivableTrade and other receivable are stated at the amounts estimated to berealised. Provisions have been made in the accounts where necessary forbad and doubtful debts.2.4 Cash and Cash EquivalentsCash and cash equivalents comprise cash balance and short-term highlyliquid investments that are readily convertible to known amounts of cash.For the purpose of Statement of Cash Flow, cash and cash equivalentsare presented net of bank overdraft.3. LIABILITIES AND PROVISIONSAll known liabilities have been accounted in preparing the financial statements.3.1 Classification of LiabilitiesLiabilities classified as current liabilities on the Balance Sheet date arethose, which fall due for payment on demand within one year fromBalance Sheet date. Non-current liabilities are those balances that falldue for payment after one year from the Balance Sheet date.3.2 Retirement Benefit Plans3.2.1 Defined Benefit Plan

Provisions have been made in the accounts for retiring Gratuity payableunder the Payment of Gratuity Act, No. 12 of 1983 and it is providedfrom the first year of service for all employees in conformity with SLAS16 (Retirement Benefit Costs). However, according to the Act, liabilityto an employee arises on completion of five years service. The liability isnot externally funded nor is it actuarially valued.3.2.2 Defined Contribution PlansContributions to Employees Provident Fund and Employees Trust Fundare recognised as an expense in the Income Statement as incurred.4. Revenue RecognitionRevenue is generally accounted for on accrual basis and is recognised as follows:4.1 On sale of goods all significant risks and rewards of ownership have beentransferred to the buyer, which normally occurs on delivery of the goods.4.2 Interest income on short-term investment is accounted on cash basis.5. Borrowing CostBorrowing costs are recognised as an expense in the year in which they areincurred, except to the extent where borrowing costs that are directly attributableto the acquisition, construction or production of a qualifying asset that take asubstantial period of time to get ready for intended use or sale is capitalised aspart of that asset.6. Taxation6.1 The liability to taxation has been computed according to the provisionsof the Inland Revenue Act No. 38 of 2000 and amendments thereto.6.2 Deferred tax is provided using the liability method, providing for timingdifferences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for taxation purpose.7. Cash FlowThe Cash Flow Statement has been prepared using the Indirect method.Prominent Aditya Birla Group Companies / JVs in IndiaThe Aditya Birla Group enjoys a leadership position in all the sectors in which it operatesI UltraTech Cement Limited & its associates_ UltraTech Cement Limited : CementSubsidiaries- Dakshin Cements Limited : Cement- UltraTech Ceylinco (Pvt) Ltd. : Cement

_ Grasim Industries, its other subsidiaries & JVsGrasim Industries Limited (holding Company) : Viscose Staple Fibre, Cement,Sponge Iron, Chemicals, TextilesFellow Subsidiaries- Samruddhi Swastik Trading And Investments Limited : Investment- Shree Digvijay Cement Company Limited : Cement- Sun God Trading And Investments Limited : InvestmentJoint Ventures- AV Cell Inc., : Pulp- AV Nackawic Inc., : Pulp- Idea Cellular Limited : TelecomII Others_ Aditya Birla Nuvo Limited & its subsidiariesAditya Birla Nuvo Limited : Viscose Filament Yarn, Garments,Carbon Black, Fertilisers, Textiles(Spun Yarn & Fabrics), Insulator(Domestic Marketing),Financial ServicesSubsidiaries- Aditya Birla Telecom Limited : —- BGFL Corporate Finance Private Limited : Corporate Services- Birla Global Asset Finance Company Limited : Retail Finance Company- Birla Insurance Advisory Services Limited : Non-life Insurance Advisory Services- Birla Sun Life Insurance Company Limited : Life Insurance- Laxminarayan Investment Limited : Investment- Madura Garments Exports Limited : Contract manufacturing ofgarments- PSI Data Systems Limited : Software Services- TransWorks Information Services Limited : Business Process OutsourcingJoint Ventures- Birla NGK Insulators Private Limited : Insulators- Birla Sunlife Asset Management Company Limited : Investment / Mutual Fund- Birla Sunlife Distribution Company Limited : Investment Advisory- Birla Sunlife Trustee Company Limited : Trustee of Birla Mutual Fund- Idea Cellular Limited : Telecom_ Hindalco Industries Limited & its subsidiariesHindalco Industries Limited : Aluminium, Copper

Subsidiaries- Indian Aluminium Company Limited : Aluminium Foil- Bihar Caustic And Chemicals Limited : Caustic Soda, Liquid Chlorine,Hydrochloric Acid_ Essel Mining & Industries Limited : Iron and Manganese Ore Mining,Noble Ferro Alloys, Nitrogenproduction_ TANFAC Industries Limited : Fluorine Products INFOMEDIA INDIA LIMITED