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Updated:30 Sep, 2014, 15:57 PM IST

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Updated:30 Sep, 2014, 15:59 PM IST

DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS

Dear Members,

We are pleased to present the Annual Report of the Company for the year 2013.

1. INDIAN ECONOMY

A Year of Challenges

Slowing growth, rising inflation and the depreciating rupee marked the onset of 2013 setting in motion a challenging year for the Indian economy. Growth rate continued to slide despite attempts by the government to stem the tide with a host of traditional and innovative measures. Efforts were further constrained due to global headwinds.

To boost investor confidence, the Cabinet Committee on Investments approved infrastructure projects entailing huge investments.

However, given the weak start, we expect that real GDP growth would average at 4.5–5% in 2013–14.

FLAT GROWTH FOR CEMENT INDUSTRY

The cement industry witnessed flat growth in 2013 due to several reasons – a prolonged monsoon that extended until the festive season, natural calamities (floods and cyclone) that hit many parts of India and low demand due to financial crunch and slowdown in realty and infrastructure sectors.

In the first half of 2013, industry demand was slow due to fall in construction activity and a virtual halt in government spending. During the second half, the early arrival of the monsoon compared with the previous year did not augur well.

The cement industry also faced rising costs, high interest rates, land acquisition and clearance issues. An overall weak macro environment and ban on sand mining continued to worry the industry.

Increase in freight rates for several commodities has had a cascading impact on the cement industry. An increase in freight rates for coal and cement drove up transportation cost as well as the landed cost of imported goods. Moreover, the rupee's weakness against the U.S. dollar and other global currencies prevented India from taking advantage of the decline in commodity prices in the world market.

Over the past few years, the cement industry witnessed huge capacity addition (almost 90 million tones on the available supply basis), which substantially increased the gap between demand and supply and consequently lowered capacity utilization.

We expect demand to gradually revive over 2014 and 2015 with a new government and recovery in construction activity.

2. FINANCIAL RESULTS 2013

AT A GLANCE (STAND ALONE RESULTS):

Cement production decreased by 3% to reach 20.96 million tonnes, from 21.62 million tonnes while clinker production decreased to 14.27 million tonnes, 10% down from 15.81 million tonnes in year 2012.

Domestic cement sales volume continued with sluggish demand by recording a decrease of 2% at 20.94 million tonnes from 21.31 million tonnes in year 2012. Cement exports decreased to 0.10 million tonnes from 0.12 million tonnes in year 2012. Clinker sales (including exports) were up at 0.56 million tonnes from 0.55 million tonnes in 2012.

Net sales at Rs. 9,087 crores were 6% lower than that of previous year's Rs. 9,675 crores. Average sales realisation decreased by around 4% at Rs.4,208 per tonne against approx Rs.4,400 per tonne in 2012.

Total (operating) expenses for the year 2013 increased by 2% over that of year 2012.

The Company achieved an absolute EBITDA of Rs. 1651 crores in year 2013. This is lower by 33% over the corresponding Rs. 2473 crores of the year 2012.

Profit before tax at Rs. 1,514 crores was down by 20% over corresponding figure of Rs. 1902 crores for year 2012.

Net Profit at Rs. 1,295 crores was down by 0.2% over corresponding figure of Rs. 1297 crores for the year 2012.

3. DIVIDEND

The Company has paid an interim dividend of 70% (Rs. 1.40 per share) during the year. The Directors are pleased to recommend a final dividend of 110% (Rs.2.20 per share). Thus the aggregate dividend for the year 2013 works out to 180% (Rs.3.60 per share) and the total payout will be Rs.648.37 crores, including dividend distribution tax of Rs.92.71 crores. This represents a payout ratio of 50%.

4. MARKET DEVELOPMENTS

The Company's domestic cement sales in 2013 declined by 1.7% to 20.94 million tonnes as compared to 21.31 million tonnes achieved in 2012. Total cement sales (including exports) declined by 1.8% to 21.04 million tonnes as compared to 21.43 million tonnes achieved in 2012.

REGION–WISE SALES VOLUME / GROWTH

In the North region, domestic cement sales of the Company declined by 1.7% to 8.64 million tonnes in 2013 compared to 8.79 million tonnes in 2012.

In the East region, the Company achieved sales of 4.21 million tonnes of cement in the domestic market, registering a decline of 0.2% over the previous year sales of 4.22 million tonnes.

In the West & South region, the Company's domestic cement sales in 2013 declined by 2.5% to 8.09 million tonnes as compared to 8.30 million tonnes achieved in 2012.

Cement exports in 2013 reduced further to 0.10 million tonnes as compared to 0.12 million tonnes in 2012.

GROWING THE DISTRIBUTION FOOTPRINT

The Company continues to develop and leverage its large and able network of around 8,500 dealers and 27,000 retailers across India. Their reach and penetration helps the Company in core rural and semi–urban markets across the country. This, coupled with the strong brand equity and efficient channel management, has significantly helped the Company to withstand severe competition in an over–supplied market.

The Company's network of ports, bulk cement terminals and captive ships on the west coast has supported a sustainable and strong market position in Mumbai, Surat and Cochin. The Mangalore Bulk Cement Terminal that commenced its commercial operations in 2013 will further strengthen the Company's position and enhance its footprint in the South region.

ENHANCING OUR SYSTEMS

The Company embarked on the Marketing and Commercial Excellence (MaCX) programme to further sharpen its marketing, sales and distribution functions. This ambitious programme is part of the comprehensive Holcim Leadership Journey (HLJ), announced by Holcim management across the globe to deliver gains and create value in a competitive environment over the next few years. MaCX aims to supplement in–house skills with global expertise of Holcim and that of advisory firms, to revamp customer interfacing functions by focusing on core value levers. This is an investment to future proof the Company and to promote an environment of innovation and excellence.

5. COST DEVELOPMENTS

During the year 2013, the economy witnessed upward movement in overall cost structure and volatile foreign exchange rates. However, the Company implemented cost optimisation initiatives which helped in containing inflationary impact to some extent.

MAJOR COST MOVEMENTS:

i) Cost of major raw material, fly ash, increased by 7 % on per tonne basis. However, strategy to change in mix of gypsum resulted in cost decrease by 2% on per tonne basis. Overall, the absolute raw material cost decreased by approx. 6% over the previous year including the impact of lower volumes.

ii) Power and fuel costs account for approximately 26% of the total operating cost of the Company. Coal cost for kiln and captive power plants reduced by 8% and 10% respectively, due to reduced usage of imported coal and also substitution of high cost coal by pet coke usage. Besides, there was increased usage of Alternate fuels by 3% over the usage for the year 2012.

Cost of grid power continued its upward movement with per kwh rate increasing by approximately 22% over the previous year. In 2013, captive power generation which supports 66% of the total power requirements of the Company, reduced by 10%.

Overall, the reduction in dependence on grid, increase usage of captive power and reduction in fuel prices have helped the Company in registering a decrease of 11% in absolute cost of power and fuel as compared to the year 2012.

iii) Freight and forwarding cost works out to 30% of total operating costs. During the year, the same hardened by 6% on per tonne basis over the year 2012 due to an increase in diesel prices.

iv) The cost of packing bags went up by around 14%, driven by increase in PP granule prices.

COST MITIGATION MEASURES /

EFFICIENCY IMPROVEMENT INITIATIVES:

i) Keeping in line with the corporate philosophy, focus on production of fly ash based PPC was maintained.

ii) The Company launched its first fully automatic one million tonne capacity terminal in Mangalore. This will help the Company in reducing the negative seasonality effect of the Company's Gujarat plant. Besides, the logistic costs will be reduced as there will be an opportunity to optimise by using the same vessel for both Mangalore and Cochin terminals in one trip. It will also help the Company enhance its footprint in the southern part of India.

With the launch of this terminal, all states along the country's west coast are covered by Ambuja Bulk Cement Terminals.

iii) The new Ulwe channel at Panvel, Navi Mumbai was successfully made operational during the year. This will lead to handling of higher cargo and thus result in savings in coastal freight cost.

iv) A mechanised wagon loading system at Farakka was put to use during the year. This helps in reducing loading charges while loading cement from truck to rake as well as reduction in the transportation cost from packing plant to railway siding.

v) With the introduction of the SCOPE (Supply Chain Optimisation Project for Excellence)

project, a supply chain excellence initiative, the Company is trying to derive operational efficiencies in logistics. This is targeted by improvisation in direct despatches to customers by undertaking fleet optimisation measures such as installation of Radio Frequency Identification (RFID), Global Positioning System (GPS) on trucks to monitor movement and improving turnaround time etc.

vi) The efforts by the Company for the usage of cost efficient fuel mix are part of the 'GEO 20' project which will be operational in the first half of year 2014. Here, as a result of handling, storing and processing of waste materials, the Company will be able to ensure more usage of Greener Fuels thereby reducing energy cost.

6. EXPANSION PROJECTS AND NEW INVESTMENTS

The Company took up several projects to serve its customers in a more efficient, cost–effective, reliable and environment–friendly manner, while bolstering its market Dosition in the industrv.

CAPACITY EXPANSION DURING THE YEAR

The new Bulk Cement Terminal (BCT) at Mangalore commissioned this year will help the Company expand its footprint in the southern markets of India.

EFFICIENCY IMPROVEMENT MEASURES:

Getting better at being the best The Company focused on consolidation and optimisation of its existing capacities in all the three regions. Capital investments kept flowing in during the year, to ensure the highest standards of safety in order to meet the Company policies of 'Zero Harm', clean and energy efficient infrastructure, cost efficient and environment–friendly material handling systems and process optimisation.

Achievements at a glance

i) A Waste Heat Recovery (WHR) plant at Rabriyawas with an approved investment of Rs. 75 crores is being installed to bring efficiency in fuel utilisation, optimise power costs and meet our Renewable Power Obligation.

ii) In order to strengthen logistics capability and extend its reach to customers, a new railway siding project has been initiated at the Rabriyawas unit in Rajasthan. The total project cost is Rs.250 crores. So far 40% work of the Railway Project is completed and our timelines for completion are within the second quarter of 2016.

iii) An automatic wagon loading system constructed at the Farraka unit in West Bengal built at a cost of approximately Rs.32 crores was completed and made operational during the year. This system will reduce cost and improve efficiency of material handling.

Upcoming Capacities and Investments

i) A new brown–field expansion project was announced in 2011 at Sankrail grinding unit in the eastern region comprising a roller press and related logistics. The project is underway, with extended scope to include advanced technical specifications. It is slated to cost Rs. 325 crore and aimed for completion by 2016. So far, equipment orders have been placed and civil work is in progress. This project would add 0.80 million tonne grinding capacity to the unit, along with other facilities.

ii) Significant cement capacity addition of approximately 4.50 million tonnes with associated clinkerisation capacity of 2.17 million tonnes is coming up at the proposed integrated plant at Marwar Mundwa, Nagaur district in Rajasthan with cement capacity of 1.5 MTPA; and with similar capacity grinding units at Osara (M.P.) and Dadri (U.P.), the total project cost is estimated at Rs.3500 crores. Environmental clearances for the project were acquired but kept in abeyance for Marwar Mundwa by the MoEF. Part of the mining land is already in possession and the rest is under an advanced stage of acquisition. The Company is also in the process of tying–up water sources required for construction and operations. Full–fledged construction work is expected to commence in the latter part of 2014.

iii) Last year, the Company had taken up 13 new ambitious projects at different locations worth Rs. 272 crores to optimise and enhance efficiency. These projects have a quick payback of two and half years to four years. Work is progressing well and most are likely to be completed in the first half of 2014.

iv) A new brown–field expansion project to set up a roller press at a cost of Rs. 70 crore at the Rabriyawas unit in Rajasthan, will add 0.80 million tonne grinding capacity in the first half of 2014.

The year 2014 will see capital expenditure worth Rs.802 crores, over and above the Rs.725 crores investment made in 2013. The entire proposed expenditure would be financed by internal accruals.

ACHIEVING SUSTAINABILITY OBJECTIVES WITH 'GREENER' ENERGY

Keeping the planet green through cement Ambuja envisions being the most sustainable Company in the cement industry and draws heavily on Holcim's sustainability policy on CO2 and energy, eco–efficient products, atmospheric emissions, sustainable construction, etc. The strategic stress on environmentally–friendly and cost–effective resources resulted in the establishment of the Geocycle department to focus on Alternative Fuels and Raw Material (AFR).

An ambitious project, named 'Geo20' has been taken up by the Company last year, which involves a capital investment of Rs. 200 crores. The project that is meant to substitute costlier traditional fossil fuels with Alternative Fuels (AF), is nearing completion and slated to be operational at all of our integrated plants by end of 2014. Holcim is actively supporting our efforts by making available its global experience and technical expertise in the area of clean and green technology and burning all sorts of waste materials without the corresponding release of harmful gases and CO2 in the air. Holcim's rich experience in this area has helped to devise innovative ways of sourcing.

During 2013, the Company increased its use of Greener Fuels in its kilns from 1.4% in 2012 to 3.65% in 2013. The Company is determined to achieve higher thermal energy substitution rates in the coming years.

7. OUTLOOK

REFORMS FOR AN ECONOMIC REVIVAL

The Economic Outlook

Economic growth accelerated to 4.8% in the second fiscal quarter from 4.4% in the first due to higher output in both industry and agriculture and a rebound in exports. However, it is less likely that we will see a complete turnaround in the economy as the domestic demand remains weak and both consumption and investment continue to grow sluggishly. We expect growth to remain soft in the first quarter of year 2014 owing to delayed investment announcements in the run–up to general elections. Further, it is expected to be supported by export recovery and likely sustained growth in capital expenditure after the second quarter of FY2014, once political stability has been re–established.

We expect the Indian economy to grow at 5% during year 2014 and driven by India's strong economic fundamentals – high saving and investment rates, rapid workforce growth, a quickly expanding middle class, and the start of a shift from low–productivity agriculture to high–productivity manufacturing. However, given the country's large external financing needs, domestic expansion will be affected by the global availability of capital.

Economic growth could exceed our forecasts if the Administration's reform efforts are sustained, infrastructural development accelerates and the government enjoys success in its bid to develop a labour–intensive manufacturing sector in India.

The Cement Industry Outlook

In the period 2011 to 2013 cement consumption grew at an average of 4% compared to the golden period of 2008–2010, when consumption grew at a CAGR of 8%. The multiplier of cement demand growth to GDP growth not only declined below one in 2011 to 2013 but also lost its relevance.

Balancing growth with economic reforms Mid–term outlook appears challenging in the current scenario. However, there are reasons to assume it will be more positive with a potential towards 6–7% growth per annum after 2015 provided the new central government pushes economic reforms.

We expect the capacity utilization rate of the industry to improve gradually from current 73% to ~80% by 2018 given the slowdown in pace of capacity addition and gradual recovery in cement demand.

Cement demand emanates from four key segments –housing which accounts for 67% of cement demand, infrastructure (13%), commercial construction (11%) and industrial construction (9%). Economic reforms announced by the Government and RBI, including the expected lowering of interest rates in 2013, will surely boost sentiment and rejuvenate the economy.

Long–term growth prospects

The cement industry is looking for an up–cycle backed by an increase in rural consumption and recovery in infrastructure activity after a muted growth for the last three years. Recent government measures to fast–track infrastructure projects ahead of general elections that are just around the corner; construction activity is expected to pick up steam leading to strong demand for cement.

Long–term growth prospects for cement demand are favourable, riding on the back of a growing economy and the impetus provided to the housing and infrastructure construction activities in the

12th Five–Year Plan period (2012–17). The total investment in infrastructure sectors in the 12th Five Year Plan is estimated to be Rs 56 lakh crores (one trillion USD).

8. RISKS AND AREAS OF CONCERNOH&S – OPERATIONAL HEALTH & SAFETY

OH&S is given top priority within the organisation. The Company aims to achieve 'Zero Harm' through the implementation of formal directives, improvement in logistics flow and visible leadership by line management. Plant workers/ contractors and our own management staff have put in every effort to imbibe and ensure safety in their day–to­day activities.

VULNERABLE DEMAND

Demand for cement is closely related to overall economic development and tends to vary across States within the country, depending on the level of industrialisation and infrastructure development. Fall in demand has been a concern for both the industry and the organisation but with strong economic fundamentals, we are hopeful to see a revival of demand in the near to medium term.

RISING COMPETITION

Domestic and global cement majors are strengthening their production bases across India to mitigate the location risk associated with cement operation but at the same time this has also led to a rise in additional capacity. With decrease in exports, there is consistent pressure on the Company to beat competition. The Company counts on its resources and various other marketing and service elements that will help the organization stay afloat and deliver improved performance.

LOGISTICS COST

Logistics is another area of concern for the industry and distribution cost is one of the major costs for the industry. The industry has witnessed a rise in movement of cement through the sea route to optimise distribution cost. Ambuja is continuously working towards strengthening their distribution network along the coast of India, while at the same time concurrently trying to bring down distribution and logistics costs.

ENERGY COST

Energy is one of the major expenses faced by the cement industry and it is constantly working towards reducing its traditional energy consumption through measures such as use of greener fuels, setting up captive power plants and increasing the production of blended cements. Energy Activation across Regional Network (EARN), is an in–house initiative that Ambuja has embarked upon, to build a lean energy culture across the Company.

9. HUMAN RESOURCESPROGRESSIVE PRACTICESFOR A TRANSFORMING ORGANISATION

The Human Resource function at Ambuja strives to provide the 'People Edge' to business through continuous process improvement and innovation. Our people strategy, systems and processes are aimed at making the Company an employer of choice with sustainable talent by attracting, retaining and developing talent in the organisation and working on concrete actions plans to enhance employee engagement. This is in perfect alignment with the Company's vision of being the most s us tainable and co mpe titive c ompany in the industry.

RECRUITING THE BEST TALENT

To keep pace with the competitive, dynamic business environment that we operate in, a structured Campus Recruitment process with a long term perspective was created to help in the induction of Management Trainees and Graduate Engineer Trainees from the best Business and Engineering Schools in India.

KEY RESULT AREAS (KRAS): RAISING THE BAR

The people processes have been designed to completely involve managers and employees to raise levels of performance through ownership and responsibility. Competency and Key Result Area (KRA) based Performance Management System (PMS) constitute our persistent effort to build an achievement–oriented culture. Periodic discussions through dialogues on work performance against the set KRAs help focus not only on individual performance, but also on work processes, resources and other issues that may have had a bearing on performance. Continuous efforts are made to enhance manpower productivity by creating and manning an optimised organisation structure and ensuring the right fit and skills in benchmarking the best in the industry.

It is our endeavour to consistently facilitate the learning of employees to enable a continuous business transformation, and hence employee development is focused at different stages of the employee life–cycle from recruitment to retention. Through this process of continued learning, the Company intends to boost strategic behaviour and capabilities so as to sustainably achieve the Company's objectives and outcomes. Our training and development initiatives are directed at enriching leadership, behavioural, functional and technical skills as well as bringing about a change in the attitude, knowledge and skill of employees. Through various leadership and management development programmes conducted in association with premier business schools based in India and abroad, we continue to focus on creating leaders across levels and in the early stages of an employee's career. A separate organisational intervention was launched last year to develop a sustainable pool of leaders, equip them with essential leadership skills and competencies in creating a coaching culture.

Structured talent reviews across levels supported by individualised development plans and cross–functional and cross–location assignments have helped develop wholesome leadership skills. All development efforts show good results with more and more senior positions being filled internally, while maintaining a healthy external talent intake. Thus, succession planning has helped to create a talent pipeline for key positions and a strong growth avenue for our deve loping leaders. Renewed focus is also being given to the career path and movement as a critical component of talent development.

Employee engagement surveys conducted in the recent past to gauge the pulse of the organisation, recorded 98% participation. Feedback from the survey has translated to action planning and implementation and now been institutionalised within the Company.

Ambuja's people processes has been appreciated and recognised. The Company bagged the CII National HR Award 2013 for "Strong Commitment for HR Excellence".

10. SUSTAINABILITY AND ENVIRONMENT

SUSTAINABILITY – A WAY OF LIFE

We continued to progress on our path towards Sustainable Development in line with our vision to be the most sustainable and competitive Company in our industry.

Our Sustainability framework comprising Sustainability Steering Committees continued to assess Sustainability risks and opportunities both at the unit and corporate levels and monitor the various sustainability initiatives. Enhancing the focus on embedding sustainability at the highest level, it has been made a regular item in our Board Meeting Agendas. In requirement of the newly introduced Clause 55 of SEBI, we have released our first Business Responsibility Report (BRR) as a part of the Annual Report for 2012. The Company continues to take on initiatives aimed at low carbon emissions, water positive, use of alternative fuel, renewable energy, bio–mass, plastic reuse, etc.

We released our 6th Corporate Sustainable Development Report covering our Sustainability endeavours for the year 2012. The report is aligned with Global Reporting Initiative (GRI) G3 guidelines for A+ Level of reporting, having been "Assured" by an independent certifying agency. We have responded to the Metal & Mining Sector Supplement of the GRI while reporting on our Sustainability performance to our stakeholders. Like last year, this year's report too has been accorded the GRI check for A+ level by Global Reporting Initiative, Netherlands.

We continue to focus on developing our renewable energy portfolio in line with Renewable & Clean Energy Roadmap till 2020. In 2012, 330 KV of solar energy has been installed at Bhatapara, in addition to the existing 7.5 MW of wind energy commissioned at Kutch, Gujarat, the year before last. A 6.5 MW Waste Heat Recovery–based power generation system is being installed and is slated to be operational by 2014.

STEPPING LIGHTLY ON OUR CARBON FOOTPRINT

The Company is currently monitoring and reporting CO2 emissions as per the World Business Council for Sustainable Development's (WBCSD) Cement Sustainability Initiative (CSI) protocol. We have been able to reduce our Green House Gas emissions by over 26% taking 1990 as the reference year. To reduce the carbon footprint and avoid the use of natural resources, we continue to produce fly ash–based cement as our major product. The Company is one of the co–chairs of CSI India and has been part of the Working Group that released the Low Carbon Technology Road Map for Indian Cement Industry.

A LEGACY OF SUSTAINABILITY HONOURS

For the third year in a row, we bagged the CII Sustainability Award in recognition of our endeavours in streamlining Corporate Sustainability within our operations. In 2013, we were recognised in the category of commendation for 'significant achievement' similar to the previous year. Further, we achieved Gold Level in the Sustainability Plus rating conducted by the CII in 2012 where 100 largest companies (by market cap and market share) were rated along ESG indicators by CII for the Sustainability Plus rating.

PROACTIVE ENVIRONMENT MANAGEMENT

The Company ensured availability of Continuous Emission Monitoring Systems (CEMS) at all the nine kiln stacks above 95% round the year for online monitoring of all vital pollution parameters. Apart from this, trainings were also conducted on emission monitoring, biodiversity and water management to build capacities for environmentally responsible operations,

Three of our grinding units have attained certifications to the Energy Management System as per ISO 50001:2011. The Rabriyawas plant has become the first integrated unit in Ambuja to implement the international standard. This was also our first pilot conducted at a plant to estimate Scope 3 emissions (limited) emanating from our operations.

The Company has taken steps to ensure it meets its commitments under the PAT scheme and RPO–REC obligations. Further, we are anticipating emission standards to be notified for SO2 & NOx emissions. We are taking all steps to monitor and control our emissions so that we can meet the requirements of the new standards as and when they are notified.

11. CORPORATE SOCIAL RESPONSIBILITY (CSR)

BEING A GOOD NEIGHBOUR

Ambuja Cement Foundation celebrated two decades of work with the host communities where it has been involved in development with a spending of well over 2% of Profit before Tax (PBT). The programmes at the Foundation successfully address community needs in a sustainable manner.

CONSERVING THE EARTH'S MOST PRECIOUS RESOURCE

Water resource management has changed the landscape of Kodinar (Gujarat) which is marked by saline water and the water scarce region of Rajasthan. Innovative projects involving the revival of traditional water conservation – roof rain water harvesting, building check dams and customised irrigation methods – has ensured water availability for domestic and agricultural use, winning the FICCI "Water Award" under 'Community Initiative, Industry' category. External auditors also declared Ambuja as water positive and it is now hoped that each one of our Ambuja sites would raise their bar on water sustainability.

SOWING THE SEEDS OF DEVELOPMENT

Krishi Vigyan Kendra (KVK) at Ambujanagar (managed by the Foundation) is much sought after by farming communities for the latest and best technologies in agriculture. KVK also conducts regular meetings, training programmes and other extension programmes to disseminate information. Ambujanagar has also introduced weather insurance protecting the farmers from unforeseen weather conditions.

Better Cotton Initiative (BCI) is being implemented in five states to grow cotton in a sustainable manner and through eco– friendly methodologies. Through this initiative, farmers are able to sell their produce at a better rate without any middlemen. In 2013, the Foundation was conferred with the "Best NGO Award" by the Northern India Cotton Association Ltd. Livelihoods like animal husbandry are encouraged. In Darlaghat, women are trained as pashu swasthya sevikas (PSS) and learn the latest techniques in animal care. The work of the PSS is complemented by cattle camps and immunisations programmes conducted regularly.

MEETING THE CHALLENGES OF EMPLOYMENT

The Skill and Entrepreneurship Development Institutes (SEDI) at the Foundation tries to bridge the gap between drop–out or undertrained youth and high demand by industry of skilled personnel. SEDI provides relevant skill training to youth through the courses held at 16 centres established across India; and have to date transformed the lives of over 11,000 youth through wage employment encouraging them to become entrepreneurs. These 45 courses are designed specific to the requirement of that region and also incorporates sessions on soft skill development. Today, SEDI courses are affiliated to the National Council of Vocational Training and Modular Employment Scheme of Central Government.

CHAMPIONING HEALTH

To ensure round–the–clock health services in the far flung rural areas, sakhis (village health functionaries) are provided home–based neo natal care for the numerous mothers and children across locations. Their services are complemented by regular health checks by doctors and health camps. Ambuja Cements also works extensively towards the prevention of HIV & AIDS in and around its plants and locations and works towards reducing stigma on those affected by it. Programmes are held with truckers and workers raising awareness; counselling sessions are also organised in some locations; 10 Targeted Intervention projects are implemented in collaboration with the state AIDS Control Societies and four health care centres established in partnership with Apollo Tyres Foundation.

EDUCATION

Nurturing The Nation's Talent

The Company has been promoting education through the non–profit Ambuja Vidya Niketan Trust (AVNT), to provide educational facilities through its schools in each of its five integrated plants. The schools provide education to the wards and dependants of Ambuja employees as well as children of nearby villages.

In addition, educational intervention is done by the Foundation through Balmitras (members from the community and trained by the Foundation) who are appointed to help children enjoy studies and understand subjects like math, science and English using varied teaching and learning methods. Training is also provided to school teachers for better teaching methodologies. Innovations like using sport for life skills and e–learning methodologies have been used in schools to make curriculum interesting for children. In locations where children are either drop–outs or not going to school at all, the Foundation has introduced non–formal education centres to aid students to enter the mainstream education system.

The Foundation also runs the Ambuja Manovikas Kendra (AMK), a special school for mentally challenged children in Ropar, Punjab. With 100 children on its rolls, the school works to improve the quality of life of children with mental disabilities. A range of activities and programmes at AMK help them grow as independent and productive individuals. The children at AMK once again did us proud by winning the "Overall Championship Trophy" in Punjab State Special Olympics 2013, for the eighth time in a row. The institution was also adjudged the "Best Institution in Sports". In the past one year, the school has extended its services to children who cannot travel to school through its Home Base Rehabilitation Programme.

Stakeholders In Creating A Difference The Foundation ensures Stakeholder Engagement where all programmes are decided after a detailed deliberation. Well–defined processes ensure that all stakeholders are involved to identify key concerns

by the community and Community Engagement Plans are implemented the subsequent year. Meanwhile, the Community Advisory Panel established in locations comprise of Company and community leaders. It is a platform to discuss issues faced by the community and achieve a consensus to implement programmes for them.

All programmes are rigorously monitored through the Social Engagement Scorecard which through detailed group discussions and interviews with community representatives maintains a score on activities and programmes of the Foundation. In 2013, all locations scored between 75% to 100%, reflecting positive reviews.

Active Volunteer Engagement programmes has ensured employees become a part of the development journey of the communities along with the Foundation by actively engaging in volunteering – participating in activities like cleaning beaches, painting anganwadis, planting saplings, participating in community projects on health, safety, HIV & AIDS, skill training, school activities etc. So far, 2,000 Ambuja's volunteers have clocked in over 26,000 hours through their participation in activities.

12. OCCUPATIONAL HEALTH AND SAFETY (OH&S)

WORKING TOWARDS 'ZERO HARM' FOR OUR PEOPLE

Our OH&S journey of 2013 was mixed –achievements and incidents that highlighted both our strengths and areas of improvement. Going forward, there is a need to capitalise on our strong points and work on development areas to ensure utmost efficiency to prevent future incidents.

Safety is one of our core values and part of the Company's vision statement. We are committed to strive for 'Zero Harm' and firmly believe safety as one of the most important primary criteria for us to achieve the goal of being the 'Most Sustainable and Competitive' Company.

LEARNING FROM THE PAST

As part of a structured approach and setting up the OH&S objectives, the Company has reviewed its past performance. Situations have been assessed and learning incorporated – we believe all incidents are preventable especially if we can alter our mindset and behaviour.

Some key focus action areas include an increase in the visible leadership in OH&S by the Front Line Management. To achieve this objective, we have kick–started a new initiative 'We Care' – a holistic approach to safety that encompasses all connected with Ambuja – across different levels of management, within and outside locations including third party contractors. As part of this initiative, two concepts –Model Safety Zone and Safety Ambassador – have been launched that will help engage and connect with all people onsite and establish common objectives between OH&S and line teams.

Meanwhile, all operational sites have taken one OH&S wave based on the targeted Fatality Prevention Element (FPE). These include working at height, isolation and lockout, vehicle and traffic safety, machine guarding, lifting and supporting loads and hot work.

A formal OH&S management system, aligned with the Holcim OH&S Pyramid System and other directives, has been established over the past few years across the organisation. FPEs are implemented across all sites and quality of implementation assessed through an external certifying agency. Peer Reviews are scheduled and conducted within Ambuja and also with ACC.

Each plant has taken steps to ensure no recurrence of fatal incidents and appropriates steps taken at sites. To reduce Risk Exposure, several actions were initiated through increasing interface between departments, developing a road map to implement Contractor Safety Management (CSM) activity, initiating process for integration of OH&S requirements during the planning and execution of a shutdown, conducting Risk Assessments during shutdown; Safety audits and analysis to ensure safety while handling coal; and a structural integrity survey by the Company's technical arm, Techport. Meanwhile, Risk–specific and Competency–based trainings are conducted as per requirements of targeted FPEs and other OH&S directives.

In addition, the Company is making continuous efforts to reduce OH&S risks through the integration of OH&S requirements with other business processes.

13. PURCHASE OF SHARES IN HOLCIM INDIA PVT. LTD. (HIPL) AND AMALGAMATION OF HIPL WITH THE COMPANY

A SYNERGY THAT WILL PROMOTE GREATER DEVELOPMENT

The Company's promoter, Holcim has proposed a restructuring exercise with a view to simplify its investment structure as well as unlock synergies in the operations of two of its subsidiaries in India –Ambuja and ACC. Under this exercise, the Company will acquire 24% equity shares of Holcim India Pvt. Ltd. (HIPL) from Holderind Investments Limited (Holderind) for a consideration of approximately Rs. 3,500 crores and HIPL will then amalgamate with the Company. Upon completion of the amalgamation, the Company will hold 50.01% equity shares in ACC and consequently, ACC and all its subsidiaries will become the subsidiary of Ambuja. Holderind will hold 61.39% equity shares in Ambuja.

Over the last few years, both Companies have been working on a common platform for technical support, major procurement and IT functions. However, there are many areas where synergies are yet to be unlocked. This amalgamation will help realise these synergies. This process along with the alignment of critical back–end functions will help both Companies improve their competitive position in the current challenging market.

The proposal was extensively debated and deliberated by the Independent Directors. On being satisfied that the proposal of restructuring is in the interest of the Company and its stakeholders, they recommended the same to the Board. The Board of Directors has taken an independent view over the restructuring proposal and the scheme of amalgamation and has reached the conclusion that these are in the overall interests of all stakeholders.

The Scheme of Amalgamation was to be approved by the Stock Exchanges as well as SEBI. In terms of their approval, the Company has sought the approval of Public Shareholders (i.e. excluding Promoter and Promoter Group Shareholders) through Postal Ballot for two separate resolutions i.e. approval for the acquisition of 24% shares of HIPL and approval of the Scheme of Amalgamation.

The Directors are pleased to inform that both resolutions were passed with requisite majority of Public Shareholders.

Subsequently, the Scheme of Amalgamation has also been approved by the requisite majority of Shareholders as required under Section 391(2) of the Companies Act, 1956, at the Court Convened Meeting of the Equity Shareholders held on 23rd November, 2013.

Both Ambuja and HIPL have filed the Scheme of Amalgamation with the Hon'ble High Courts at Gujarat and Delhi respectively for their final approval. These petitions have yet to be heard by the Hon'ble Courts.

14. EMPLOYEE STOCK OPTION SCHEME

During the year, the Company has not granted any fresh stock option to its employees.

CUMULATIVE DISCLOSURE

The particulars as on 31st December 2013 as required to be disclosed pursuant to Clause 12 of SEBI (Employees Stock Option Scheme) Guidelines 1999, in respect of past ESOS are as follows:

15. NEW COMPANIES ACT, 2013

The historic Companies Act, 2013 which replaces more than five decades old Companies Act, 1956 was passed by the Parliament. Subsequent to receiving the President's Assent, the Ministry of Corporate Affairs notified 98 sections and also put up various Rules under the new Act for the public comment. The objective behind the 2013 Act is lesser Government approvals and enhanced self–regulations coupled with emphasis on corporate democracy. The 2013 Act delinks the procedural aspects from the substantive law and provides greater flexibility in Rules making to enable adaptation to the changing economic environment. T his will le ad to improved c ompliance and accountability from the corporate sector and will provide further transparency in the disclosure.

16. CORPORATE GOVERNANCE

The Company has complied with the corporate governance requirements as stipulated under the listing agreement with the stock exchanges. A separate section on corporate governance, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report.

CORPORATE GOVERNANCE VOLUNTARY GUIDELINES:

The majority of the Corporate Governance Voluntary Guidelines, 2009, stand complied while complying with the requirements under the Companies Act, 1956, the Listing Agreement, and the Company's own governance policies.

17. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report for the year ended 31st December, 2013 as stipulated under clause 55 of the Listing Agreement is annexed and forms part of the Annual Report.

18. INTERNAL CONTROL SYSTEM

The Company has documented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws, and regulations, safeguarding of assets and economical and efficient use of resources.

The formalised systems of control facilitate effective compliance as per Clause 49 of the Listing Agreement, and article 728 (a) of the Swiss Code of Obligations applicable to the Holcim Group.

The Company's Internal Audit department tests, objectively and independently, the design and operating effectiveness of the internal control systems to provide a credible assurance about their adequacy and effectiveness to the Board and the Audit Committee. The Internal Audit function assesses the effectiveness of controls to provide an objective and independent opinion on the overall governance processes within the Company, including the application of a systematic risk management framework.

The scope and authority of the Internal Audit activity are well defined in the Internal Audit Charter, approved by the Audit Committee. Internal Audit plays a key role by providing an assurance to the Board of Directors and value adding consultancy service to business operations.

19. MANAGING THE RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESSPRACTICES

The Business Responsibility Report for the year ended 31st December, 2013 as stipulated under clause 55 of the Listing Agreement is annexed and forms part of the Annual Report.

18. INTERNAL CONTROL SYSTEM

The Company has documented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial

Protecting our strongest product: Ambuja Integrity

Fraud and corruption–free work culture has been the part of the Company's DNA all along. In view of the potential risk of fraud and corruption due to rapid growth and geographical spread of operations, the Company has put even greater emphasis to address this risk. To meet this objective a comprehensive Fraud Risk Management Policy (FRMP) almost akin to whistle–blower policy has been laid down. More details on FRMP have been given in the Corporate Governance Report.

Corruption: The one area we aim for zero In furtherance to the Company's philosophy of conducting business in an honest, transparent and ethical manner, the Board has laid down the Anti–Bribery and Corruption Directives (ABCD) as part of the Company's Code of Business Conduct and Ethics. As a Company, we take a zero–tolerance approach to bribery and corruption and we are committed to acting professionally and fairly in all our business dealings.

To spread awareness about the Company's commitment to conduct business professionally, fairly and free from bribery and corruption, training and awareness workshops were conducted through an independent consulting firm wherein more than 1,700 employees participated and got trained. Apart from this face–to–face training, over 3,500 employees were also given online ABCD training through a web–based application tool during 2013.

In order to further spread awareness about ABCD, face–to–face training workshops will also be conducted during the current year for select vendors, based on their risk profile and business relationship with the Company.

These above policies and its implementation are closely monitored by the Audit and Compliance Committees of Directors and reviewed by the Board at regular intervals.

20. DIRECTORS

CESSATION

Some people are irreplaceable Mr Paul Hugentobler, representative of Holcim (the Company's Promoter), has conveyed his decision to step down from the Board and will cease to be a Director w.e.f. 7th February, 2014.

Mr Hugentobler joined the Board in May 2006 as Holcim's Nominee when Holcim took over the management control of the Company. Over the last eight years, he played a key role in providing valuable guidance and expert advice on all facets of the cement business.

The Board placed on record its appreciation for the valuable services rendered by Mr Hugentobler.

RETIREMENT BY ROTATION

In accordance with the provisions of Article 147 of the Articles of Association of the company, (i) Mr Nasser Munjee (ii) Mr Rajendra Chitale and (iii) Dr Omkar Goswami will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer themselves for re–appointment. The Board recommends their re–appointment.

APPOINTMENT

A company that offers growth even at the top Mr Ajay Kapur and Mr Bernard Terver have been appointed as Additional Directors under Section 260 of the Companies Act, 1956 to hold office up to the date of the ensuing Annual General Meeting and being eligible, have offered themselves for appointment. Additionally, Mr Ajay Kapur has also been appointed as the Dy. Managing Director & CEO of the Company for a period of three years w.e.f. 1st August, 2013.

(i) Mr. Ajay Kapur

Mr Kapur, aged 48 years, is an Economics Graduate from St. Xavier's College, and completed his MBA from S omaiya I nstitute of Management Studies and Research (SIMSR) – both from the University of Mumbai. He has also completed the Wharton Advanced Management Program from the University of Pennsylvania, USA. He joined the Company in 1993 from Citibank, and for the first eight years was the Executive Assistant to the then Managing Director, Mr N.S. Sekhsaria. Among several areas, his main focus that time was on Marketing Strategies, Brand and Promotion,Logistics Management and Commercial issues. In 2007, he was made all India Head – Marketing and Commercial Services at Corporate Office and was also inducted as Executive Committee member. In the year 2009, he was made Business Head of West & South region. Mr Kapur was elevated to the post of CEO in May, 2012. The Board of Directors

have appointed Mr Kapur as an Additional Director w.e.f. 25th July, 2013 and also as Dy. Managing Director & CEO w.e.f. 1st August, 2013.

(ii) Mr Bernard Terver

Mr Terver, aged 62 years, is a French national. He concluded his studies at the Ecole Polytechnique in Paris in 1976. After beginning his career in the steel industry, in 1977 he moved to cement producer CEDEST, which was taken over by Holcim France in

1994. In 1999, Bernard Terver became CEO of Holcim Colombia and in 2003 he was appointed Area Manager for the Andes nations, Central America and the Caribbean. Since October 2008, he has been CEO of Holcim US and effective November 2010 CEO of Aggregate Industries US. Mr Terver was appointed Area Manager and member of senior management of Holcim Ltd, with effect April 1, 2010. From September 2012, he was appointed as member of the Executive Committee and effective January, 2013 has been bestowed the responsibility for the Africa, Middle East and the Indian Subcontinent (comprising India, Sri Lanka and Bangladesh) region of Holcim.

The Board of Directors recommends their appointment. Further details about these Directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.

21. DIRECTORS' RESPONSIBILITY

Pursuant to Section 217 (2AA) of the Companies Act, 1956 as amended, the Directors confirm that: i) In preparation of the financial statements, the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) Appropriate accounting policies have been selected and applied consistently. Judgments and estimates made are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31st December, 2013, and of the statement of profit and loss and cash flow of the company for the period ended 31st December, 2013.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The financial statements have been prepared on a going concern basis.

22. AUDITORS

STATUTORY AUDITORS

M/s. S. R. Batliboi & Co. LLP, the Statutory Auditors of the Company, will retire at the ensuring Annual General Meeting and are eligible for re–appointment. M/s. S. R. Batliboi & Co., LLP have expressed their unwillingness to get re–appointed as the Statutory Auditors of the company.

The Board, based on the recommendation of the Audit Committee, recommends the appointment of M/s. SRBC & Co. LLP as the Statutory Auditors of the company, for whom the company has received a notice u/s. 225 read with Section 190 of the Companies Act, 1956, from a shareholder seeking their appointment in place of M/s. S. R. Batliboi & Co. LLP. M/s. SRBC & Co. LLP have confirmed that their appointment, if made, shall be within the limits of Section 224(1B) of the Companies Act, 1956.

The Auditors have informed that M/s S.R. Batliboi & Co. LLP and M/s. SRBC & Co. LLP are part of the same group.

COST AUDITORS AND COST AUDIT REPORT

Pursuant to section 233B(2) of the Companies Act 1956, the Board of Directors on the recommendation of the Audit Committee appointed M/s. P.M. Nanabhoy & Co. Cost Accountants, as the Cost Auditors of the Company for the Financial Year 2014. M/s. P.M. Nanabhoy & Co. have confirmed that their appointment is within the limits of the Section 224 (1B) of the Companies Act, 1956 and have also certified that they are free from any disqualifications specified under Section 233B(5) read with Section 224 sub–section (3) or sub–section (4) of Section 226 of the Companies Act 1956.

The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and arm's length relationship with the Company. Pursuant to Cost Audit (Report) Rules 2001, the Cost Audit Report for the financial year 2012 was filed on 6th May, 2013 vide SRN No.S21001375 on the Ministry of Corporate Affairs website.

23. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

The Company has transferred a sum of Rs. 123.36 lacs during the financial year 2013 to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956. The said amount represents unclaimed dividends which were lying with the Company for a period of seven years from their respective due dates of payment. Prior to transferring the aforesaid sum, the Company has sent reminders to the shareholders for submitting their claims for unclaimed dividend.

24. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, is required to be given pursuant to Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto marked Annexure – I, and forms part of this report.

25. PARTICULARS OF EMPLOYEES

The information required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, in respect of the employees of the Company, is provided in the Annexure forming part of this Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the members and others entitled thereto, excluding the aforesaid Annexure. The Annexure is available for inspection by the members at the Registered Office of the Company during business hours on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent.

26. SUBSIDIARY COMPANIES

Ministry of Corporate Affairs, Government of India, vide its circular dated 8th February, 2011 has exempted companies from attaching the Annual Reports and other particulars of its subsidiary companies along with the Annual Report of the Company required u/s 212 of the Companies Act 1956. Therefore, the Annual Reports of the subsidiary companies viz. (1) Chemical Limes Mundwa Pvt. Ltd. (2) M.G.T. Cements Pvt. Ltd. (3)

Kakinada Cements Ltd. (4) Dang Cement Industries Pvt. Ltd. (5) Dirk India Pvt. Ltd. and (6) Dirk Pozzocrete (MP) Pvt. Ltd. are not attached with this Annual Report. However, a statement giving certain information as required vide aforesaid circular dated 8th February 2011 is included in Consolidated Financial Statements.

The financial statements of the subsidiary C o m p an i e s are ke p t fo r i ns p e c ti o n b y the shareholders at the Corporate (Head) Office of the Company. The Company shall provide free of cost, the copy of the financial statements of its subsidiary companies to the shareholders upon their request.

27. CONSOLIDATED FINANCIAL

STATEMENTS

As stipulated by Clause 32 of the listing agreement with the stock exchanges, the consolidated financial statements have been prepared by the Company in accordance with the applicable Accounting Standards issued by The Institute of Chartered Accountants of India. The audited consolidated financial statements together with Auditors' Report form part of the Annual Report.

The consolidated net profit of the Company and its subsidiaries amounted to Rs. 1278.57 crores for the corporate financial year ended on 31st December, 2013 as compared to Rs. 1294.57 crores on a standalone basis.

Promising Brand' at the Asian Brand & Leadership Summit – Dubai 2013, held in August, 2013. The award was received by Ambuja's Dy. MD & CEO Mr Ajay Kapur, who was voted as 'Asia's Most Promising Leader'.

(c) Ambuja Cement Foundation bagged the first prize in the 'Community Initiatives by Industry' category at the FICCI Water Awards 2013 by Deputy Chairman, Planning Commission Montek Singh Ahluwalia at the Federation House, New Delhi in August 2013.

(d) The Foundation also bagged two more National Awards for Excellence in Water Management –'Excellent Water Management Initiatives' for work done at Marwar Mundwa, Rajasthan and Excellence in Water Management 2012 for Rabriyawas Unit under "Within the Fence" category.

28. EQUAL OPPORTUNITY EMPLOYER

The Company has always provided a congenial atmosphere for work to all sections of the society. It has provided equal opportunities of employment to all without regard to their caste, religion, colour, marital status and sex.

29. AWARDS AND ACCOLADES

Recognition for constant innovation

(a) Ambuja won the prestigious CII ITC Sustainability Award for the third year in a row. It won the award for 'Significant Achievement on journey towards Sustainable Development' under Large Industry category.

At the same award ceremony, Ambuja's two integrated units – MCW and Bhatapara – also won the CII ITC Sustainability Awards in Individual Plant category for 'Strong Commitment for proving commitments; adopting appropriate policy and processes'.

Promising Brand' at the Asian Brand & Leadership Summit – Dubai 2013, held in August, 2013. The award was received by Ambuja's Dy. MD & CEO Mr Ajay Kapur, who was voted as 'Asia's Most Promising Leader'.

(c) Ambuja Cement Foundation bagged the first prize in the 'Community Initiatives by Industry' category at the FICCI Water Awards 2013 by Deputy Chairman, Planning Commission Montek Singh Ahluwalia at the Federation House, New Delhi in August 2013.

(d) The Foundation also bagged two more National Awards for Excellence in Water Management –'Excellent Water Management Initiatives' for work done at Marwar Mundwa, Rajasthan and Excellence in Water Management 2012 for Rabriyawas Unit under "Within the Fence" category.

e) Maratha Cement Works was awarded the IPE–Asia Pacific HRM Congress Awards 2013 under category 'Organization with Innovative HR Practices', for its innovative and good HR practices.

(f) The 4th National HR Excellence Award

Confluence 2013' by the Confederation of Indian Industries (CII) held in New Delhi on 24th September where Ambuja Cements Limited bagged the recognition award for exhibiting 'Strong Commitment to HR Excellence'.

(g) MCW unit bagged the Safety Award in the Gold category in Cement Sector at the 12th Annual Greentech Safety Award 2013.

(h) Ambuja Cements Ltd won the ET NOW Talent

and HR Leadership Award 2013 for Best Talent Management and the Global HR Excellence Awards 2013 for Organization with Innovative HR Practices by World HRD Congress.

(i) Ambujanagar unit won the 12th Greentech Silver Award in Cement sector category.

(j) RKBA Limestone Mine at Ambujanagar was awarded the prestigious RIO TINTO Health & Safety Award for 2012–2013. The award was presented by the Union Minister of Mines, Dinsha J. Patel.

30. CAUTIONARY STATEMENT

Statements in the Directors' Report and the Management Discussion and Analysis describing the Company's objectives, expectations or predictions, may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include: global and domestic demand and supply conditions affecting selling prices, new capacity additions, availability of critical materials and their cost, changes in government policies and tax laws, economic development of the country, and other factors which are material to the business operations of the Company.

31. ACKNOWLEDGEMENTS

The true wealth of Ambuja: Our people and partners

Your Directors take this opportunity to express their deep sense of gratitude to the banks, Central and State governments and their departments and the local authorities for their continued guidance and support.

We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Ambuja family. To them goes the credit for the Company's achievements. And to you, our Shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the board of Ambuja Cements Limited

N. S. Sekhsaria Chairman

Mumbai

6th February, 2014