ANNUAL RE P O R T - Sagar Cements Annual... · 2020. 8. 10. · SAGAR CEMENTS LIMITED NOTICE Notice...

2 0 0 8 - 2 0 0 9

8 th TROAN PN EU RLA

Board of Directors 4

Notice 5

Directors' Report 8

Annexure 13

Sagar Cement Auditors' Report 30

Balance Sheet 33

Profit & Loss Account 34

Schedules Forming part of Balance Sheet and Profit and Loss Account 35

Cash Flow Statement 49

Balance Sheet Abstract 50

Sagar Power Board of Directors 51

Sagar Power Notice 52

Directors' Report 53

Auditors' Report 56

Balance Sheet 59

Profit and Loss Account 60

Schedules Forming part of Balance Sheet and Profit and Loss Account 61

Cash Flow Statement 69

Balance Sheet Abstract 70

Consolidated Auditors' Report 71

Consolidated Balance Sheet 72

Consolidated Profit and Loss Account 73

Schedules to the Consolidated Balance Sheet and Profit and Loss Account 74

Consolidated Cash Flow Statement 88

Sagar Cements Annual Report 2008-2009 3

INDEX

BOARD OF DIRECTORS

COMPANY SECRETARY

AUDITORS

COST AUDITORS

BANKERS

REGISTERED OFFICE

FACTORY

Shri O.Swaminatha Reddy Chairman – Independent & Non Executive

Shri S.Veera Reddy Managing Director

Shri K.Thanu Pillai Independent & Non Executive

Shri P.Rajeswara Rao APIDC Nominee

Dr.S.Anand Reddy Joint Managing Director

Shri S.Sreekanth Reddy Executive Director

Shri V.V.S.Ravindra IDBI Nominee & Independent

Shri Werner C.R.Poot Non Executive

Shri R.Soundararajan

Corporate Office:

Shri M.S.A.Narayana Rao Group President

Shri M.V.Subba Rao Senior Vice President

Shri K.Ganesh Vice President - Projects

Shri K.Vijay Vardhan Rao Vice President - Mktg.

Shri P.Venkat Reddy Chief General Manager - Finance

Shri P.S. Prasad Chief General Manager - Mktg.

Site:

Shri N.Krishna Reddy Senior Vice President - Works

Shri K.V.Ramana General Manager - Mines

Shri.O.Anji Reddy General Manager - Elec. & Instrnt.

Shri S.Venkateshwarlu General Manager - P & QC

M/s.P.Srinivasan & Co.,

Chartered Accountants

2-2-18/18/5,

C-31, Near Ahobhila Mutt, DD Colony,

Hyderabad - 500 013

M/s.Narasimha Murthy & Co.,

Cost Accountants

104, Pavani Estates, Y.V.Rao Mansion

Himayathnagar

Hyderabad - 500 029

State Bank of Hyderabad,

State Bank of India

Punjab National Bank

IDBI Bank Limited

8-2-472/B/2, Road No.1, Banjara Hills

Hyderabad - 500 034. Tel: 040-23351571

Mattampally, Via Huzurnagar, Nalgonda District,

Andhra Pradesh 508 204. Tel: 08683-247039

SENIOR MANAGEMENT TEAM

Sagar Cements Annual Report 2008-20094

BOARD OF DIRECTORS

SAGAR CEMENTS LIMITED

NOTICE

Notice is hereby given that the 28th Annual General Meeting of the Members of the Company will be held at 3.30 p.m. on Thursday the 17th September, 2009 at Hotel Golkonda, Masab Tank, Hyderabad – 500 028, to transact the following business:

1. To receive, consider and adopt the Audited Profit and Loss Account for the year ended 31st March, 2009 and the Balance Sheet as at that date together with the Reports of the Board of Directors and Auditors thereon.

2. To declare dividend.

3. To appoint a Director in place of Dr.S.Anand Reddy, who retires by rotation and being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Shri K.Thanu Pillai, who retires by rotation and being eligible, offers himself for re-appointment.

5. To appoint Auditors for the company to hold office from the conclusion of the Annual General Meeting till the conclusion of the next Annual General Meeting and to fix their remuneration.

NOTES:

A Member entitled to attend and vote at the Meeting is entitled to appoint a Proxy to attend and vote instead of himself / herself and the proxy to be so appointed need not be a Member of the Company. However, proxies in order to be effective must be lodged with the company at its Registered Office not less than 48 hours before the commencement of the Meeting.

The details required to be given under Clause 49 of the Listing Agreement with the Stock Exchanges in respect of Item No.3 and 4 are given in the annexure, which forms part of this Notice.

Register of Members and the Share Transfer Books of the company will remain closed during the period from 11th September 2009 to 17th September, 2009 (both days inclusive).

Members holding shares in physical form are requested to inform the Company or its Registrars about the change, if any, in their addresses.

Pursuant to Section 205 of the Companies Act, 1956, all unclaimed/unpaid dividends up to the financial year ended 31st March 1995 had been transferred to the General Revenue Account of the Central Government. Shareholders, who have not yet en-cashed their dividend warrants for the said period, are requested to forward their claims in the prescribed Form No.II under the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978 to:

Office of the Registrar of Companies

Kendriya Sadan

Sultan Bazaar

Koti

Hyderabad

INDEX


NOTICE

Consequent upon the amendment of Section 205A of the Act and the introduction of Section 205C by the Companies

(Amendment) Act, 1999, the un-claimed dividends for the financial year ended 31st March, 1996 onwards and up to the financial

year ended 31st March, 2001 were duly transferred to the Investors Education and Protection Fund set up by the Government

of India.

Members who have not yet en-cashed their dividend warrants in respect of the dividend declared for the financial years ended

31st March, 2005 and 2006 and the two interim dividends paid and later confirmed as final dividend for the year ended 31st

March, 2007 and the interim and the final dividend paid for the year ended 31st March, 2008 are requested to make their claims

to the Company.

Dividend for the year 2008-09, if declared at the meeting, will be payable to those members whose names appear on the

Company’s Register of Members on 17th September, 2009.

By Order of the Board

R.Soundararajan

Company Secretary

23rd July, 2009

Registered Office:

8-2-472/B/2, Road No.1

Banjara Hills

Hyderabad – 500 034, A.P.

Section 109A of the Companies Act, 1956 provides for Nomination by the shareholders of the Company in the prescribed

Form No.2B and the shareholders are requested to avail this facility.


Annexure to the Notice of the 28th Annual General Meeting

Details of Directors seeking re-appointment at the Annual General Meeting

(Pursuant to Clause 49 of the Listing Agreement)

Name of the Director Dr.S.Anand Reddy Shri K. Thanu Pillai

Date of birth 10th June, 1964 14th May, 1935

Experience in specific functional areas Marketing and Project Management Banking and Finance

Qualification M.B.B.S. MBA, CAIIB

Directorships in other Sagar Power Limited., State Bank of Travancore

Public Limited Companies Amareswari Cements Ltd., BSCPL Infrastructure Ltd.,

Satwik Drugs Ltd., LVS Power Ltd.,

Sagar Priya Housing and Sathavahana Ispath Ltd.,

Industrial Enterprises Ltd. Bollineni Castings & Steel Ltd.,

Amar Biotech Ltd.,

Aishu Projects Ltd.,

Bollineni Developers Ltd.,

BSCPL Realty Ltd.,

BSCPL Infra Projects Ltd.

Membership of Audit / Member – Audit Committee Member of Audit Committee of:

Shareholders / Investors of Sagar Power Ltd State Bank of Travancore

Grievances Committees of BSCPL Infrastructure Limited

other Public Limited Companies Sathavahana Ispath Limited

LVS Power Limited

No. of shares held in

Sagar Cements Limited 584950 Nil

Inter-se relationship with other Related to Shri S.Veera Reddy, Not related to any of the

Directors of the Company Managing Director and directors of

Shri S.Sreekanth Reddy, Sagar Cements Limited.Executive Director


DIRECTORS’ REPORT

Dear Members

Financial Results

Your Directors are pleased to present their Twenty Eighth Report together with the audited accounts of the Company for the

year ended 31st March, 2009.

Your Directors are also pleased to inform you that your Company crossed a milestone on 28th January, 2009 when it successfully

commenced the production at its expanded plant of 2.35 million tones capacity per annum, transforming itself into a large

cement plant. This expansion was implemented at a cost of around Rs.2000/- per M.T. cement capacity as against the prevailing

norm of Rs.4,000/- per M.T. capacity. This was accomplished by effective utilization of the infrastructure available at the existing

plant and by resorting to procurement of capital equipments needed for the expansion from different sources at competitive

rates instead of sourcing all of them through a single package on a turn-key basis. Production at the plant is getting stabilized and

the full benefit of the expanded capacity is expected to flow from the year 2009-10.

A summarized financial performance of your company during the year under review is given below:

Rs. In lakhs

Sales 33427 27462

Other Income 80 100

Total Income 33507 27562

Profit before Depreciation, Financial Charges and Tax 5986 5759

Less : Depreciation 1872 413

Financial Charges 1590 3462 340 753

Profit before Tax 2524 5006

Less: Net provision for Income-tax 878 1910

Profit after Tax 1646 3096

Add: Profit brought forward from previous years 5327 2939

Profit available for appropriation 6973 6035

Appropriations:

Proposed Dividend 385 340

Corporate Dividend Tax 61 58

Transfer to General Reserve 400 310

Total Appropriation 846 708

Balance carried to Balance Sheet 6127 5327

Description 2008-09 2007-08

Total 6973 6035


DIRECTORS’ REPORT

Dividend

Production and Sales Performance

Share Capital

Future Outlook

Financial results achieved by your Company on a satisfactory note amidst adverse conditions, have enabled your Board to recommend a dividend @ Rs. 2.50 (25%) per share on its equity shares for the year ended 31st March, 2009.

The performance of your company in terms of production and sale of cement / clinker is given below:

2008-09 2007-08 2008-09 2007-08

Production 737710 520710 431250 282242

Sales 307152 252536 415835 282443

Sale of Traded Cement - - 225650 266277

The increase in the production was on account of the expanded capacity becoming operational, though partially, during the year

under review. The year also saw a marginal increase of Rs.63/- and Rs.126/- in the average sales realisation per tonne of clinker and

packed cement respectively.

During the year under report, your Board allotted 6,65,000 equity shares of Rs.10/- each at a premium of Rs.72/- per share against similar number of warrants offered for conversion and made a further allotment of 10,00,000 equity shares on a preferential basis at a premium of Rs.690/- per share, as a result of both of which, the paid up share capital stood increased to Rs.15,00,23,000 as on 31st March, 2009. With the conversion of the warrants mentioned above, all the 18,50,000 warrants previously issued to the promoter group in accordance with the approval given by the shareholders at their 25th Annual General Meeting have been converted into equity shares as contemplated in the terms of their issue.

The funds mobilized on allotment of the above shares have been fully spent for the intended purpose.

Disproving the fears expressed over the prospects of the cement industry in the current scenario of economic slow down, the industry ended the financial year 2008-09 on a somewhat satisfying note. Concerned with the global meltdown which is impacting the core sectors in India with all its attendant ill effects, the government is also according the utmost importance to the urban development and improvement in the infrastructure in a big way. With the increased spending by the Government on these growth drivers, there is unlikely to be any slow down in the demand for cement in the near future, which augurs well for the industry and your company.

As the members are aware, your Company has entered into a Joint Venture with Vicat S.A. of France to set up a green field cement plant of 5.5 million ton capacity at Chatrasala Village in Chincholi Taluk, Gulbarga District of the Karnataka State. The implementation of this project, being carried out through Vicat Sagar Cement Private Limited, a special purpose vehicle formed for the purpose, is in progress.

Though at present there is a lull in the global demand for cement, your Board nevertheless believes that as the world economy stabilizes and construction activity picks up across the countries, the demand for cement will also get a boost at the global level. Encouraged by this, your Company is drawing up plans to expand its operations beyond the country and is more particularly eying for opportunities for growth through appropriate modes in African and Gulf regions.

Particulars Clinker Cement


Subsidiary Company

Corporate Governance

Internal Control Systems

Insurance

Particulars of Employees

Industrial Relations

Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo:

Pollution Control

Documents and Information pursuant to Sec.212 of the Companies Act, 1956 in respect of Sagar Power Limited, a subsidiary of your Company, have been provided as attachment to the Balance Sheet, together with the consolidated financial statements. The performance of this subsidiary would have been much better, but for the fact that one of its two units had become almost non-operational during the year under review due to non-release of water to the relevant canal to facilitate the completion of the on-going construction of an aqua-duct across the canal. In order to reduce its dependence exclusively on hydel power generation, this subsidiary has plans to diversify its activities into other modes of power generation and has already made a modest beginning by setting up a wind mill power unit of 1.65 MW capacity in Theni District of Tamil Nadu, in technical association with Vestas, a world leader in the wind mill technology. It is hoped that this will lead to the setting up of a few more similar projects over a period of time.

Your Company has complied with all the mandatory provisions of the Corporate Governance prescribed under Clause 49 of the Listing Agreement with the Stock Exchanges. A separate report detailing such compliance together with the mandatory Certificate obtained from the Statutory Auditors in connection therewith is included as part of the Annual Report.

Your Company has adequate internal control systems in all areas of its operations both at its plant at Mattampally and at its Registered Office in Hyderabad. Effectiveness of these systems is periodically reviewed for possible improvement.

All the properties of the Company have been adequately insured.

Particulars of employees required to be furnished in this Report pursuant to Sec.217 (2A) of the Companies Act, 1956 are given in the annexure.

Company continues to enjoy cordial relationship with all its personnel at the Plant, Office and on the field.

The particulars required under Sec.217 (1) (e) of the Companies Act, 1956 have been provided in the annexure, which forms part of the Report.

As the shareholders are aware, your Company has an ESP system in place at its plant, which keeps the pollution within the acceptable levels.


Directors

Audit Committee

Remuneration Committee

Investment Committee

In compliance with Sec.256 of the Companies Act, 1956, Dr. S.Anand Reddy and Shri K.Thanu Pillai will be retiring by rotation at the ensuing Annual General Meeting and these retiring directors are eligible for re-appointment.

The Audit Committee of the Board, constituted pursuant to Sec.292 (A) of the Companies Act, 1956 read with Clause 49 of the Listing Agreement, consists of the following directors as its members as on 23rd July, 2009:

Shri O.Swaminatha Reddy Chairman of the Committee (Non-Executive and Independent Director)

Shri K.Thanu Pillai Member (Non-Executive and Independent Director)

Shri V.V.S.Ravindra Member (Independent Director – IDBI Nominee)

Shri P.Rajewara Rao Member (Non-Executive and Nominee of APIDC)

Company Secretary is the Secretary of the Committee. The Committee had met four times during the year ended 31st March, 2009 and, inter-alia, reviewed the quarterly financial results of the Company.

The Remuneration Committee of the Board, constituted pursuant to Schedule XIII to the Companies Act 1956 read with Clause 49 of the Listing Agreement has the following Non-Executive / Independent Directors as its members:

Shri K.Thanu Pillai Chairman - Non-Executive and Independent Director

Shri O.Swaminatha Reddy Member – Non-Executive and Independent Director

Shri P.Rajeswara Rao Member – Non-Executive and Non-Independent

This Committee met once during the year to recommend a suitable remuneration to the Managing and other Whole-Time Directors of the company and these recommendations were later approved by the shareholders.

With a view to evaluating investment opportunities available to the Company from time to time, your Board has constituted an Investment Committee, which has the following directors as its members:

Shri O.Swaminatha Reddy Chairman

Shri S.Veera Reddy Member

Shri K.Thanu Pillai Member


Auditors

Directors’ Responsibility Statement

Management Discussion and Analysis Report

Acknowledgment

Shareholders are requested to appoint Auditors to the Company to hold office from the conclusion of its ensuing Annual General Meeting until the conclusion of its next Annual General Meeting. Messrs. P.Srinivasan & Co., Chartered Accountants, the present Auditors of your Company will be holding their office up to the ensuing Annual General Meeting and are eligible for re-appointment. The Audit Committee of the Board has recommended their re-appointment and the retiring auditors have also confirmed that their re-appointment, if made by the shareholders, would be in accordance with the limits specified in Sub Section (1B) of Section 224 of the Companies Act, 1956.

Pursuant to Section 217 (2AA) of the Companies Act, 1956, we state:

(i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material developments;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the company for the period;

(iii) that the directors had taken proper and sufficient care 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) that the directors had prepared the annual accounts on a going concern basis.

In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report is given in the Annexure, to form part of the Annual Report.

Your Directors wish to place on record their appreciation of the valuable co-operation extended to the Company by its bankers, Sate and Central Government Authorities. They thank the Distributors, Dealers, Consignment Agents, suppliers and other business associates of your Company for their continued support. Your Board also takes this opportunity to place on record its appreciation of the contributions made by the employees at all levels and last but not least, of the continued confidence reposed by you in the Management.

For and on behalf of the Board

Hyderabad O.Swaminatha Reddy

23rd July, 2009 Chairman


Annexure 1

Global Scenario:

National Scenario:

Management Discussion and Analysis

Local, national, regional and global entities, involved in the manufacture and movement of cement and clinker, are the

constituents of the global cement industry. The industry is a dynamic one, responding to changes in multitude of

variables – including macro-economic growth, housing sector booms, public spending levels, trade protectionism, and

transportation costs - prevailing in the respective countries. The cement capacity is dominated at global level by a

handful of multinational companies, whose presence is increasingly felt in growing Indian, Chinese , Middle East and

Latin American markets, as a result of which the cement sector has become even more globalised in recent years. Due

to this, the international trade in cement and clinker has now become more dynamic.

Irrespective of the economic policy followed by the individual countries for their development, the need for housing

and continued thrust by the governments of the respective countries on the investments in infrastructure

development are expected to drive the global demand for cement in the next two decades atleast.

India witnessed the beginning of manufacture of cement in an organized manner in the year 1914 when the The Indian

Cement Company Limited commenced its manufacture of cement at its plant at Porbunder in Gujarat. Since then, the

Industry has come a long way to reach the current position of being the second largest producer of cement in the

world, next to China. During this period, the Industry had crossed several milestones and equally faced many

upheavals too, witnessing in the process total control, followed by partial de-control and finally complete de-control,

paving the way for opening up of the market for cement producers.

There are nearly 125 large cement plants and more than 300 small cement plants currently operating in the country.

This industry has also made tremendous strides in technological up-gradation and assimilation of latest technology to

produce different types of cement like Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC),

Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting

Portland Cement, White Cement etc. Presently, more than 90 per cent of the total capacity in the industry is based on

modern and environment-friendly dry process technology. The induction of advanced technology has also helped the

industry immensely to conserve energy and fuel and to save materials substantially. The Industry has a strong capacity

base and produces quality cement which meets the global standards. Investment norms including guidelines for foreign

direct investment (FDI) into the cement industry are investor-friendly. These positive developments have paved the

way for entry of multinational companies like Holcim, Cimpor (of Portugese), CRH Plc, Vicat S.A. of France into the

Indian cement industry, which has also attracted the attention of global Investors and fund managers like Blackstone,

Fidelity, ABN Amro, HSBC, Nomura Asset Management Fund and Emerging Market Fund. This trend will gain further

strength as the industry is set to witness a faster growth with huge investments planned in the Indian Infrastructure

both by government and private sector, booming housing construction and expansion in corporate production

facilities.


Annexure

Company Scenario:

Opportunities and threats:

Outlook

Risk Management:

The year 2008-09 was a momentous one for us at Sagar Cements for more than one reason. It was during this year,

that the Company expanded its capacity to 2.35 million tones, transforming itself from being a mini cement plant into

a major cement plant. The expansion was completed within a record time, making optimum use of infrastructure and

other facilities available at the plant and at the minimum cost. The expanded Plant employs vertical roller mill

technology and IKN pendulum cooler. FLSmidth Automation’s QCX / Robolab system has been installed in the plant

and Sagar Cements is one of the first few Indian companies to implement such a system. This would ensure the best

quality in lab operations to facilitate high product quality which would optimize overall plant operation. The

production from the expanded plant is picking up and it is expected to fully stabilize during the year 2009-10.

Apart from this, during the year 2008-09, Sagar Cements entered into a Joint Venture with Vicat S.A. a cement major

and the flagship company of the globally known Vicat Group of France, to set up a green field cement plant of 5.5

million tonne capacity at Chatrasala Village of Chincholi Taluk in Gulbarga District of Karnataka State. A separate

entity under the name ‘Vicat Sagar Cement Private Limited’ has been formed for the purpose, in the equity capital of

which Sagar and Vicat Group will be holding 49% and 51% respectively. The implementation of this project having

since been set in motion, the acquisition of land for the project is nearing completion.

Main drivers for the growth in demand for cement being road and housing projects, the increased spending by the

Government on infrastructure projects and the expected revival of the real estate sector would ensure no let up in

the demand for cement, not withstanding the capacity expansion being seen in the industry. This augurs well for Sagar

Cements, which, with its expanded capacity, is poised to grab the opportunities available in the above scenario.

The growth traction in the cement industry is strongly related to the overall economic strength of the country. The

recent GDP growth estimates are signs of come back and reflective of a stabilizing macro environment. The massive

budget outlay towards infrastructure is expected to spur several infrastructure projects and absorb increased

capacities. Sagar Cements is operationally strong and poised to benefit from a demand positive situation and will

continue to focus on maintaining good plant performance and optimizing efficiencies. In view of these, the outlook for

the Company remains quite bright.

External risks and concerns:

· High transportation and energy cost.

· More than 50 % of the inputs are controlled by the Government leaving little scope for the industry to have

control over them.

· Non-availability of quality coal in sufficient quantity.

· Newer entrants to the industry and consequent capacity addition.

· Global economic slowdown.


Internal risks:

Internal Control System and its adequacy:

Financial performance with respect to the operational performance:

The Company attaches utmost importance to the assessment of internal risks and the management thereof in all its

dealings. It strives to identify opportunities for enhancing the enterprise value, keeping the need to minimize the risks

associated with them. Every proposal of significant nature is screened and evaluated for the risks involved and then

approved at different levels in the organization before implementation. Major investment proposals are placed before

the Investment Committee of the Board, which evaluate them from all aspects including the risks involved, and makes

appropriate recommendation.

With a view to overcoming the risk of dependence upon any particular marketing segment or region, the Company

has recently launched an aggressive advertisement campaign in the visual media to reach a wider section of its ultimate

consumers and the feed back received is quite encouraging. As the cement industry is witnessing rapid additions to its

capacity, in order to mitigate the risk associated with it, Sagar Cements is looking for growth opportunities in other

Asian and African countries where infrastructure spending is set to get a boost.

The Company has adequate system to manage the financial risks of its operations. The system is implemented through

imposition of checks and balances on extending credit to the customers, internal audit periodically carried out

through an external audit firm, proper appraisal of major capital expenditure, adherence to the budget covering all

areas of its operations and by insurance coverage for the company’s facilities.

As far as the management of legal risks, the Company has adequate system to keep track of due compliance with

applicable laws and whenever the Company foresees any legal risk in the issue involved, it seeks the benefit of wisdom

of eminent lawyers in the areas concerned before acting upon these issues.

The Board of Directors is fully satisfied with the adequacy of the internal control system in force in all major areas of

operations of the Company. The effectiveness of the System is reviewed periodically for its further improvement.

The financial highlights of the Company for the year 2008-09 as compared to the year 2007-08 are given below:

Rs. In lakhs

Total Income 33507 27562

PBIDT 5985 5759

Depreciation 1872 413

Financial Charges 1590 340

PBT 2524 5006

PAT 1646 3096

EPS (Rs.) 11.48 23.70

Particulars 2008-09 2007-08


Production and Sales performance of the Company is summarized below:

2008-09 2007-08 2008-09 2007-08

Production 737710 520710 431250 282242

Sales 307152 252536 415835 282443

Sale of Traded Cement - - 225650 266277

As the Company considers Man Power as one of its most important assets, developing functional competencies of its

human resources continues to be one of its key focus areas. Accordingly, need based training in relevant areas is

arranged at different levels and senior managers are also encouraged to attend seminars and conferences of the

professional bodies as part of updating their skills. The Company continues to enjoy excellent industrial relations. As

of date, the Company has 359 employees on its rolls.

The views and statements expressed or implied in this Management Discussions and Analysis are based on available

information, assessments and judgments. They are subject to alteration. The Company’s actual performance may

differ due to national or international ramification, Governmental Regulations and policies, tax laws and other

unforeseen factors over which the Company has no control.

Particulars Clinker (MTs) Cement (Mts)

Material developments in Human Resources / Industrial Relations, including number of employees:

Cautionary Statement

Annexure 2

Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956

Designation Managing Director Joint Managing Director Executive Director Group President

Age 73 years 45 years 37 years 64 years

Remuneration received (Rs.) 10264654 8943585 7732661 419355

Nature of employment Contractual Contractual Contractual Contractual

Nature of duties General Management General Management General Management General Management

Qualification - M.B.B.S. B.E. (I & P) B.E. Hons. (Mechanical)

Experience (Years) 49 18 13 44

Date of Commencement ofEmployment 13-07-1991 21.11.1992 26.6.2003 29.01.2009

Last Employment held Nil Nil Nil President (Works), NCL Industries Limited

Shri S.Veera Reddy, Dr.S.Anand Reddy and Shri S.Sreekanth Reddy are related to each other.

Name of the Employee Shri S.Veera Reddy Dr.S.Anand Reddy Shri S.Sreekanth Reddy Shri M.S.A.Narayana Rao


ANNEXURE -3

FORM A

A. POWER AND FUEL CONSUMPTION

B. CONSUMPTION PER UNIT OF PRODUCTION

FORM B

1. Research and Development

2. Technology absorption, adaptation and innovation:

Foreign Exchange Earnings and Outgo:

(Forming part of the Directors’ Report)

[ Pursuant to Rule 2 of the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 ]

Form for disclosure of particulars with respect to Conservation of Energy

1. Electricity

a) Purchased Units 701.12 lakhs 397.99 lakhs

Total Amount (Rs.) 2366.62 lakhs 1371.33 lakhs

Rate / Unit (Rs.) 3.38 per unit 3.45 per unit

b) Own Generation (Units) 0.76 lakhs 1.56 lakhs

Units / Ltr. Of Diesel Oil 3.24 units 3.60 units

Rate / Unit (Rs.) 10.78 per unit 10.42 per unit

2. Coal (C & D Grade used as fuel in kiln)

Quantity 179541 MTs 106430 MTs

Total Cost (Rs.) 5160.63 lakhs 2427.43 lakhs

Average Rate (Rs.) 2874.35 2281.00

Products - OPC - 431250 282242

Electricity - (in KWH) 140.00 110.01 90.79

Coal (MT) - (For Clinker) 0.28 0.243 0.204

[See Rule 2][Pursuant to Rule 2 of the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988]

Form for disclosure of particulars with respect to Technology Absorption, Research and Development:

Collaborates with the National Council for Cement and Building Materials for R & D activities.

The company has successfully commissioned a project to add an additional 1.75 MTPA cement capacity, employing the vertical roller mill technology and IKN pendulum cooler. FLSmidth Automation’s QCX / Robolab system has been installed at the plant and Sagar Cements is one of the first few Indian companies to implement this system. This will ensure the best quality in lab operation to facilitate high product and quality which would optimize overall plant operation.

Earnings : NilOutgo : Rs.5,64,42,319/-

Particulars Current Year Previous Year

1.04.2008 to 1.04.2007 to

31.03.2009 31.03.2008

Particulars Standards Current Year Previous Year


Report on Corporate Governance

1. Company’s philosophy on code of governance:

2. Board of Directors:

Composition:

Meetings held:

Board Procedure:

Code of Conduct:

Sagar Cements believes that adherence to good corporate practice leads to transparency in its operations and

improvement in the quality of its relations with all its stakeholders.

The Board of Directors has an optimum combination of Executive and Non-Executive Directors and its composition is in

conformity with Clause 49 of the Listing Agreement entered into with the Stock Exchanges. All the Directors have made

the requisite disclosures regarding directorships and Committee positions held by them in other Companies.

Following was the composition of the Board as on 31st March 2009:

1 Shri O.Swaminatha Reddy, Chairman Independent & Non-Executive

2 Shri S.Veera Reddy, Managing Director Non-Independent & Executive

3 Dr.S.Anand Reddy, Joint Managing Director‘ Non-Independent & Executive

4 Shri S.Sreekanth Reddy, Executive Director Non-Independent & Executive

5 Shri K.Thanu Pillai Independent & Non-Executive

6 Shri Werner C.R.Poot Non-Independent & Non-Executive

7 Shri V.V.S.Ravindra (IDBI Nominee) Independent & Non-Executive

8 Shri P.Rajeswara Rao(APIDC Nominee) Non-Executive & Non-Independent

The Board had met seven times during the financial year 2008-09 and held its meetings on 10-04-2008, 23-06-2008,

23- 07-008, 24-09-2008, 25-10-2008, 17-12-2008 and on 30-01-2009.

Board Meetings are convened taking into consideration the business requirements, statutory and regulatory compliance.

The Agenda, backed by adequate background information, is circulated in advance to all the members of the Board, to

enable them to take an informed decision on the matters covered in the agenda for the respective meetings.

The Company has adopted a Code of Conduct for all its Directors and Senior Executives and the same is available on the

Company's website, www.sagarcements.in.

Sl No. Name of the Director Category of Directorship


1

2

3

4

5

6

7

8

Shri O.Swaminatha Reddy

Shri S.Veera Reddy

Dr.S.Anand Reddy

Shri S.Sreekanth Reddy

Shri K.Thanu Pillai

Shri Werner C.R.Poot (w.e.f. 24-09-2008)

Shri V.V.S.Ravindra

Shri P.Rajeswara Rao

7

5

7

6

7

3

5

6

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

4

5

5

1

10

1

1

4

As

Cha

irm

an

4

1

4

1

4

1

2

1

1

2

3

1

No. o

f B

oar

d M

eetings

att

ended

Whet

her

atte

nded

the

last

AG

M h

eld o

n 2

4-0

9-20

08

No o

f m

embe

rship

of th

e B

oar

ds

As

Mem

ber

No. o

f C

om

mitte

e M

ember

ship

s

As

Cha

irm

an

As

Mem

ber

Sl N

o.

Nam

e of th

e D

irec

tor

Note: Only Public Limited Companies, their Audit Committees and Investors’ Grievance Committees have been considered for the above purpose.

Shareholding of Non-Executive Directors:

As on 31st March, 2009, none of the Non-Executive Directors was holding any shares in the Company.

Attendance of Directors and their other directorships:

The names of the Directors, their attendance at the seven Board Meetings held during the financial year 2008-09 and at the last Annual General Meeting as also the number of their directorships, Committee Memberships as on 31st March, 2009, have been given below:


3. Audit Committee:

Composition as on 31st March, 2009

Terms of reference:

Meetings held:

Attendance at the meetings of the Audit Committee:

4. Remuneration Committee:

Composition of the Committee:

Shri O.Swaminatha Reddy Chairman

Shri K.Thanu Pillai Member

Shri P.Rajeswar Rao Member

Shri O.Swaminatha Reddy, a Chartered Accountant, is a Financial Consultant. Shri K.Thanu Pillai, M.B.A.,CAIIB, has retired

from State Bank of Hyderabad as its Managing Director. Shri P.Rajeswara Rao, D.G.M., A.P. Industrial Development

Corporation, is a nominee director of the said Institution. The composition of the Committee is in conformity with Clause

49(ii) (A) of the Listing Agreement. The Chairman of the Committee was present at the last Annual General Meeting.

Terms of reference of the Audit Committee include all items listed in Clause 49(ii) (D) of the Listing Agreement.

The Audit Committee, which had met four times during 2008-09, held its meetings on 23-06-2008, 23-07-2008, 25-10-2008

and on 30-01-2009 in the said year.

Shri O.Swaminatha Reddy 4

Shri K. Thanu Pillai 4

Shri P.Rajeswara Rao 3

Pursuant to Schedule XIII to the Companies Act, 1956 read with Clause 49 of the Listing Agreement, the Board has

constituted a Remuneration Committee with the terms of reference as mentioned in the said Clause.

Shri K.Thanu Pillai Chairman

Shri O.Swaminatha Reddy Member

Shri P.Rajewara Rao Member

During the year 2008-09, the Committee met once on 10th April, 2008 whereat, after reviewing the managerial

remuneration, it made appropriate recommendations to the Board, which were later approved by the Board/Shareholders.

The Chairman of the Committee attended the last Annual General Meeting held on 24th September, 2008.

Name Status in the Committee

Name of the Director No. of meetings attended

Name of the Director Status

of the Director


Remuneration policy:

Remuneration to Non-Executive Directors:

5 Shareholders’ / Investors’ Grievances Committee:

Non-Executive Directors are not in receipt of any remuneration other than the sitting fee of Rs.10,000/- for each meeting of the

Board and Committees thereof attended by them.

Sitting fees payable to the nominee directors are paid directly to the Institutions they represent. Details of sitting fees paid to the

non-executive directors during the year 2008-09 are given below:

1 Shri O.Swaminatha Reddy 130000

2 Shri K.Thanu Pillai 130000

3 Shri P.Rajeswara Rao (APIDC Nominee) 100000

4 Shri V.V.S.Ravindra (IDBI Nominee) 50000

5 Shri Werner C.R.Poot 30000

Total 440000

Remuneration to the Executive Directors (Managing Director and Whole time Directors):The Company pays remuneration to its Managing Director and other Whole time Directors by way of salary and perquisites, which are fixed components and by way of commission, which is a variable component. Remuneration is paid in accordance with the applicable provisions of the Companies Act, 1956 and within the overall limit approved by the shareholders of the Company.

Details of remuneration paid / payable to the Executive (Whole-time) Directors for the financial year 2008-09:

Salary 3600000 3012500 2108333

Perquisites 2428904 1852260 1640578

Commission 3601250 3601250 3601250

Contribution to Superannuation fund 634500 477575 382500

Total 10264654 8943585 7732661

The Investors Grievances Committee of the Board, constituted in accordance with Clause 49 of the Listing Agreement, has the following directors as its members:

Shri P.Rajeswara Rao Chairman

Dr.S.Anand Reddy Member

Shri R.Soundararajan, Company Secretary, is the compliance officer for the above purpose. Based on the information obtained from the Registrars, the Company had received 94 complaints from the investors during the year 2008-09 and all these complaints, being routine in nature, were redressed in the normal way by the Registrars. There were no complaints pending as on 31st March, 2009. In view of these and also of the fact that all requests for transfer of shares held in physical forms were swiftly approved by the officials of the Company in terms of the authorization given to them by the Board, the need for convening a meeting of the Grievances Committee was not felt during the year 2008-09.

Sl.No. Name of the Director Sitting Fee (Rs.)

Particulars Shri S.Veera Reddy Dr.S.Anand Reddy Shri S.Sreekanth Reddy

Managing Director Joint Managing Detector Executive Director


6. General Body Meetings:

Details of Special Resolutions passed at the previous AGM through Postal Ballot:

7. Disclosures:

i. Related Party Transactions:

The details of the time, venue and the date of the last three Annual General Meetings of the Company are given below:

27th AGM 24th September 2008 4.00 p.m. Hotel Golkonda,Masab Tank,Hyderabad - 500028

26th AGM 24th September 2007 12.00 Noon Hotel Golkonda,Masab Tank,Hyderabad - 500028

25th AGM 28th September 2006 4.00 p.m. Hotel Golkonda,Masab Tank,Hyderabad - 500028

Details of Special Resolutions passed in the above said Annual General Meetings are given below:

At the 27th AGM held on 24th September, 2008, one Special Resolution for re-appointment of Shri S.Sreekanth Reddy as a Executive (Whole-time) Director and two Special Resolutions for enhancement in the remuneration payable to Shri S.Veera Reddy, Managing Director and Dr.S.Anand Reddy, Joint Managing Director, were passed.

At the 26th AGM held on 24th September, 2007, three Special Resolutions were passed, viz., one resolution for re-appointment of Dr.S. Anand Reddy as the Executive Director and two resolutions for increasing the remuneration payable to Shri S.Veera Reddy, M.D. and Shri S.Sreekanth Reddy, Whole time Director.

At the 25th AGM held on 28th September 2006, three Special Resolutions were passed for the following purposes:

1. For re-appointment of Shri S.Veera Reddy as Managing Director and for payment of remuneration to him for holding the said office.

2. For increasing the Authorized Share Capital from Rs.14 Crores to Rs.22 crores and for making consequential amendments to the relative Clause / Article in the Memorandum and Articles of Association of the Company.

3. For seeking approval U/s. 81(1A) of the Companies Act, 1956 to issue 18,50,000 Convertible Warrants of Rs.82/- each on a preferential basis.

In addition to the above, the Company held an Extraordinary General Meeting on 23rd July, 2008, whereat the shareholders passed a special resolution according their consent U/s. 81(1A) of the Companies Act, 1956 to issue 10,00,000 equity shares of Rs.10/- each on a preferential basis to M/s. Vicat S.A. and or to any of its subsidiaries or affiliates, at a premium of Rs.690/- per share.

No Resolution was passed through Postal Ballot at the last (27th) Annual General Meeting.

Full disclosures of related party transactions as per the Accounting Standard 18 issued by the ICAI are given under note No.9 of Schedule 23 to the Annual Accounts. Most of these transactions were entered into with the Company’s subsidiary Sagar Power Limited (for purchase of power), and its other associate companies namely Amereswari Cements Limitef (for sale of clinker and purchase of cement) and Panchavati Polyfibres Limited (for purchase of packing bags). These transactions, intended to further the interest of the Company, were entered into after due negotiation based, inter-alia, on business expediency, company’s own interest and legal requirements.

There were no materially significant transactions with Directors, their relatives or the Management that may have potential conflict with the interests of the Company at large. The Register of Contracts maintained under Sec.301 of the Companies Act, 1956, containing transactions in which Directors are deemed to be interested, is placed before each meeting of the Board. All related party transactions are also reviewed by the Audit Committee of the Board.

AGM Date Time Venue


ii. Statutory compliance, Penalties and Strictures:

iii. Compliance with Mandatory requirements and adoption of Non-Mandatory requirements:

8. Means of Communication:

Quarterly results:

Newspapers in which the results were published:

Website where displayed:

Presentation made to Institutional Investors and Financial Analysts:

Management Discussion and Analysis Report:

There has been no instance of non-compliance by the Company on any matter related to capital market during the last three years or any penalties imposed or strictures passed on the Company by the Stock Exchanges, SEBI or other statutory authorities relating to capital market.

The Company has implemented the mandatory requirements of Clause 49 of the Listing Agreement.

Regarding non-mandatory requirements, the Company has constituted a Remuneration Committee pursuant to Clause 49 of the Listing Agreement read with Schedule XIII to the Companies Act, 1956, to recommend a suitable remuneration to the Board members. Other non-mandatory requirements will be taken up for implementationin due course.

As part of compliance with Clause 41 of the Listing Agreement, the Company furnishes its quarterly financial results to the Stock Exchanges where its shares have been listed, followed by publication in the newspaper in accordance with the said Clause.

Details of newspapers in which quarterly results were published for the financial year 2008-09 are given below:

30th June, 2008 24-07-2008 Financial Express and Andhra Prabha

30th September, 2008 26-10-2008 “

31stDecember, 2009 31-01-2009 “

31st March, 2009 18-06-2009 “

The Quarterly Results and Shareholding pattern of the Company are periodically posted on the SEBI EDIFAR website(www.sebiedifar.nic.in).

Excepting the occasions when the Company had to respond in a general way to the queries now and then received from investors / analysts regarding the affairs of the company, there were no specific presentations made to any of them during the year 2008-09.

The Annual Report of the Company contains the Management Discussion and Analysis.

Quarter ended Date of Publication Name of the news papers carrying the publication


9. General Shareholder information:

a. Annual General Meeting:

b. Financial Y ear: 1st April to 31st March

c. Book Closure Dates: From 11th September, 2009 to 17th September, 2009 (both days inclusive).

d. Dividend payment date:

e. Listing on Stock Exchanges:

f. Stock and ISIN Codes for the Company’s shares:

g. Market price details:

Date & Time 3.30 p.m. on Thursday, the 17th September, 2009.Venue: Hotel Golkonda, Masab Tank, Hyderabad - 500028

Board of Directors have recommended a dividend @ Rs.2.50 (25%) per share for declaration at the ensuing Annual General Meeting, as dividend for the year 2008-09 and the same will be paid to the shareholders within 30 days of the declaration.

Company’s shares have been listed on the National Stock Exchange Ltd., and Bombay Stock Exchange Ltd. There are no dues against listing fee payable to these exchanges.

ISIN Code and Codes for the Company’s shares on the above said Exchanges are as below:

National Stock Exchange SAGCEM

Bombay Stock Exchange 502090

ISIN INE229C01013

High and Low prices for the shares during the Financial Year 2008-09 as traded on the Bombay Stock Exchange Limited and National Stock Exchange of India are given below along with the SENSEX and NIFTY at the close of the relevant month:

Market price data for the Company’s shares

High Low SENSEX High Low NIFTY

April, 2008 390.00 310.00 17287.00 394.65 310.00 5165.90

May 415.00 335.10 16415.00 416.00 333.50 4870.10

June 421.45 345.00 13461.00 412.50 342.15 4040.55

July 373.95 320.00 14355.00 380.00 321.00 4332.95

August 365.90 326.20 14564.00 380.00 320.25 4360.00

September 347.80 230.00 12860.00 365.00 231.00 3921.20

October 260.00 85.10 9788.00 255.00 88.45 2885.60

November 135.75 94.50 9092.00 136.50 96.00 2755.10

December 169.70 96.95 9647.00 175.80 98.20 2959.15

January, 2009 152.50 119.05 9424.00 156.95 122.40 2874.80

February 140.00 111.00 8891.00 141.00 113.00 2763.65

March 157.45 125.50 9708.00 156.00 130.00 3020.95

Name of the Stock Exchange Scrip Code

Month In BSE In NSE


h. Sagar Cements Shares’ Price movements during the year 2008-09 as compared with Sensex:

Sagar Cements Shares’ Price movements during the year 2008-09 as compared with NIFTY

i. Registrar and Transfer Agents:

Karvy Computershare (P) LimitedPlot No.17-24, Vittalrao NagarMadhapur,Hyderabad – 500081Tel:91 40 23420815-22Fax: 91 40 23420814e-mail: [email protected]@karvy.comwebsite: karvycomputershare.com


6000400

3505000

300

2504000

200

150

3000

100

50

2000

1000

00Apr-08 May June July Aug Sept Oct Nov Dec Jan-09 Feb Mar

SCL NIFTY

20000400.00

18000350.00

16000300.00

14000250.00 12000

200.00 10000

150.00 8000

100.006000

50.004000

2000

00.00Apr-08 May June July Aug Sept Oct Nov Dec Jan-09 Feb Mar

SCL SENSEX

j. Share Transfer System:

k. Distribution of shareholding as on 31st March 2009:

All proposals for transfer of shares held in physical form are scrutinized by the Share Transfer Agents of the Company and, subject to the same being found to be in order, are approved jointly by the Joint Managing Director and the Company Secretary, who, for administrative convenience and speedy approvals, have been delegated with the necessary authority for the purpose by the Board of Directors.

50 and less 52800 0.35 1829 19.90

51 to 100 535237 3.57 5421 58.98

101 to 200 146823 0.98 794 8.64

201 to 300 81658 0.54 288 3.13

301 to 500 173033 1.15 377 4.10

501 to 1000 196642 1.31 238 2.59

1001 to 5000 387920 2.59 177 1.93

5001 to 10000 179548 1.20 25 0.27

10001 to 20000 232434 1.55 14 0.15

20001 to 50000 213685 1.42 8 0.09

50001 to 100000 151044 1.01 2 0.02

More than 100000 12651476 84.33 18 0.20

Categories of Shareholding as on 31st March, 2009:

Promoter Group - Individuals 5380110 35.86

Promoter Group - Corporates 1244785 8.30

Mutual Funds 589824 3.93

Banks 4350 0.03

FII 808040 5.39

Foreign Corporate Body 1000000 6.67

Corporate Bodies 4104074 27.36

Individuals 1855353 12.35

NRIs 15764 0.11

Distribution No. of % to the No. of % to the Shares total shares Holders total number

of holders

Total 15002300 100 9191 100

Category Shares %

Total 15002300 100.00



Trading in the shares of the Company has to be in the electronic form only. The Company has subsisting agreements with NSDL and CDSL for the purpose. The ISIN number for the company’s shares is-INE229C01013. Shares representing 76% of the share capital were kept in dematerialized form as on 31st March, 2009 as detailed below:

In Demat Form

In physical form With NSDL With CDSL Total

Shares % Shares % Shares % Shares %

3530323 24 10512517 70 959460 6 15002300 100

There are no outstanding GDR / ADR / Warrants or any other convertible instruments.

MattampallyVia: HuzurnagarNalgonda DistrictAndhra Pradesh – 508204

Company SecretarySagar Cements LimitedRegistered Office:8-2-472/B/2, Road No.1Banjara HillsHyderabad – 500034Tel. 040 – 23351571Fax: 040 – 23356573e-mail: [email protected]

l) Dematerialization of Shares and liquidity:

m. Details of outstanding GDR / ADR / Warrants or any other convertible instruments:

n. Plant Location:

o. Address for investors related correspondence:

DECLARATION

I, S.Veera Reddy, Managing Director of Sagar Cements Limited, hereby declare that all the

members of its Board of Directors and its senior management personnel have affirmed their

compliance with the Code of Conduct for the year ended 31st March, 2009.

Hyderabad S.Veera Reddy16th June, 2009 Managing Director


CERTIFICATE

To

The MembersSagar Cements LimitedHyderabad

We have examined the compliance of conditions of Corporate Governance by Sagar Cements Limited, for the year ended on 31st

March, 2009, as stipulated in Clause 49 of the Listing Agreement of the said company with Stock Exchange.

The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination was limited

to procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of Corporate

Governance. It is neither an audit nor an expression of opinion on the financial statements of the company.

In our opinion and to the best of the information and according to the explanation given to us, we certify that the company has

complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We state that no investor grievances are pending for a period exceeding one month against the company as per the records

maintained by the Investors Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or

effectiveness with which the management has conducted the affairs of the company.

For P. Srinivasan & Co.,Chartered Accountants

Hyderabad K. Ranganathan16th June, 2009 Partner

M.No.10842


AUDITORS’ REPORTTo

The MembersSagar Cements LimitedHyderabad

We have audited the attached Balance Sheet of Sagar Cements Limited as at 31st March, 2009 and the Profit and Loss Account for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the company’s management.. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. In our opinion, proper books of accounts as required by law have been kept by the company so far as appears from our examination of those books;

c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the Directors as on 31st March, 2009 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2009 from being appointed as a director in terms of Clause (g) of Sub Section (1) of Section 274 of the Companies Act, 1956;

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

i. in case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009;

ii. in the case of the Profit and Loss Account, of the Profit for the year ended on that date; and

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



M.No.10842


SAGAR CEMENT AUDITORS’ REPORT

ANNEXURE TO THE AUDITORS’ REPORT

Annexure referred to in paragraph 1 of our Report

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

2. Some of the fixed assets were physically verified during the year by the management in accordance with the programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such physical verification.

3. As per information and explanations given by the management during the year, the company has not disposed off a substantial part of its fixed assets and the going concern assumption of the company is not affected.

4. As explained to us, inventories were physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

6. In our opinion and according to the information and explanations given to us, the company has maintained proper records of inventory and the discrepancies noticed on physical verification as compared to book records were not material and have been appropriately dealt with in the books of account.

7. According to the information and explanations given to us, during the year, the company has not granted or taken any loans, secured to / from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

8. As the company has not granted or taken loans to / from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956, the clause relating to rate of interest and other terms and conditions of loans given or taken by the company, secured or unsecured, which are prima facie prejudicial to the interest of the company is not applicable to the company.

9. As the company has not taken loans from / granted to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956, the clause relating to the regular payment of principal amount and interest is not applicable to the company.

10. As the company has not taken loans from or granted to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956, the clause relating to steps taken for recovery / payment of the principal and interest on overdue amount of more than one lakh, is not applicable to the company.

11. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control.

12. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

13. In our opinion and according to the information and explanations given to us, the company has not entered into contracts or arrangements exceeding Rs.5 lakhs in value with companies in which directors are interested as listed in the register maintained under Section 301 of the Companies Act, 1956.


14. The company has not accepted deposits from the public during the year.

15. In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the management have been commensurate with the size of the Company and the nature of its business.

16. In our opinion and according to the information and explanations given to us, the company has made and maintained accounts and records prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956. However, we have not carried out any detailed examination of such records.

17. According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales tax, wealth-tax, customs duty, excie duty, cess and other statutory dues applicable to it.

18. The company has no accumulated losses and it has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

19. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

20. The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

21. The company is not a chit fund or nidhi or mutual benefit fund / society and hence the provisions of Clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

22. The company is not dealing in or trading in shares, securities, debentures and other investments and hence the provisions of Clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

23. As the company has not given any guarantee for loans taken by others from banks or financial institutions, the provisions of Clause 4 (xv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

24. In our opinion, the term loans taken by the company have been applied for the purpose for which they were raised.

25. According to the information and explanations given to us and on an over all examination of the balance sheet of the company, we report that no funds raised on short term basis have been used for long term investment. No long term funds have been used for short term assets.

26. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

27. According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

28. During the year, the company has not raised monies by public issue.

29. According to the information and explanations given to us and the books and records examined by us, no fraud on or by the company has been noticed or reported during the year.



M.No.10842


SAGAR CEMENTS LIMITED

BALANCE SHEET AS AT 31ST MARCH, 2009

Particulars Schedules Current Year Previous Year

Total 4655965094 3348430355

Total 4655965094 3348430355

Sources of Funds

Shareholders’ Funds

Loan Funds

Application of Funds

Fixed Assets

Less: Current Liabilities and Provisions

Share Capital 1 150023000 138826001

Reserves and Surplus 2 1772198694 914330729

1922221694 1053156730

Secured Loans 3 2402646531 2037988482

Unsecured Loans 4 5922844 3424906

Creditors for Capital Goods 123088375 138756712

2531657750 2180170100

Deferred Income Tax Liability 202085650 115103525

5

Gross Block 4343135291 1420708575

Less : Depreciation 628488107 441263112

Net Block 3714647184 979445463

Capital Work-in Progress 77709674 2058964089

Investments 6 177999300 27999300

Current Assets, Loans and Advances

Inventories 7 425331984 75049179

Sundry Debtors 8 249294641 53882367

Cash and Bank Balances 9 112203882 68648429

Loans and Advances 10 474205199 463206151

1261035706 660786126

Liabilities 11 501513396 215577629 Provisions 12 73913374 163186994

575426770 378764623

Net Current Assets 685608936 282021503

In Rs.

As per our report of even date attached For and on behalf of the Board

Chartered Accountants Managing Director Joint Managing Director

Partner Executive Director Company Secretary

Hyderabad16th June, 2009

For and on behalf of

P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand Reddy

K.Ranganathan S.Sreekanth Reddy R.Soundararajan


BALANCE SHEET

In Rs.

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009

Particulars Schedules Current Year Previous Year

Income

Expenditure

Profit Before Tax

Income From Operations 13 3342733929 2746183129

Less : Excise Duty 277281816 208619519

Net Income 3065452113 2537563610

Other Income 14 7999332 9959497

Raw Materials Consumed 15 191759097 130220264

Manufacturing Expenses 16 832797932 439992942

Salaries and Wages 17 103189122 71246873

Purchase of Cement 643718392 728469448

Value Added Tax and Other Taxes 18 365218708 306130579

Administration and Other Expenses 19 78100739 77546815

Adjustment for Stocks 20 (52186470) (1559068)

Selling and Distribution Expenses 21 312299380 219570251

Interest and Financial Charges 22 158988253 34009081

Depreciation 5 187224994 41345740

252341298 500550182

Provision for:

Less: Fringe Benefit Tax 1430947 1098199

Less: Current Tax 28600447 159308174

Add: Provision for Income Tax Earlier Years 3995701 0

Add: Minimum Alternate Tax Credit Eligible for Set Off 25243113 0

Less: Deferred Tax/(Asset) Liability 86982125 30587418

Profit After Tax 164566593 309556391

Balance brought forward from Previous Year 532700165 293901416

Profit available for Appropriation 697266758 603457807

Appropriations:



Transfer to General Reserve 40000000 30955639

Balance carried to Balance Sheet 612688130 532700166

Basic and Diluted Earnings Per Share 11.48 23.70

Accounting Policies and Notes on Accounts 23

Total 3073451445 2547523107

Total 2821110147 2046972925

Total 697266758 603457807


As per our report of even date attached For and on behalf of the Board

Chartered Accountants Managing Director Joint Managing Director

Partner Executive Director Company Secretary

Hyderabad16th June, 2009

For and on behalf of

P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand Reddy

K.Ranganathan S.Sreekanth Reddy R.Soundararajan

PROFIT & LOSS ACCOUNT

SCHEDULES

Particulars Current Year Previous YearSchedule 1 Share Capital Authorized

Schedule 2 Reserves and Surplus Capital Reserve

Surplus as per Profit and Loss Account

Schedule 3 Secured Loans Term Loans

Schedule 4 Unsecured Loans

2,00,00,000 Equity shares 200000000 200000000 20,00,000 Preference Shares 20000000 20000000

Issued, Subscribed and Paid up 1,50,02,300 Equity shares of Rs.10/- each (Previous Year: 1,33,37,300) 150023000 133373000 Share Application Money 0 5453001

*400 Equity shares of Rs.10/- each were issued for consideration other than cash

Balance as per last account 3498687 3498687 General Reserve Balance as per last account 65705766 34750127 Add: Amount Transferred from Profit and Loss Account 40000000 30955639 Total 105705766 65705766 Share Premium Account Balance as per last account 312426110 266706110 Add : Amount received on preferential issue 737880001 45720000 Total 1050306111 312426110

Balance as per last account 532700166 293901416 Add : Amount Transferred from Profit and Loss account 79987964 238798750 Total 612688130 532700166

Andhra Pradesh State Financial Corporation 82635381 133164327 State Bank of India 425886118 424146670 State Bank of Hyderabad 471510884 392633843 IDBI Bank Ltd. 950000019 902197393 L & T Finance Ltd. 61923609 52994400 Total 1991956011 1905136633 Cash Credit From State Bank of Hyderabad 202341521 77344167 Punjab National Bank 26390687 31640405 State Bank of India 98907117 23867277 IDBI Bank Ltd 83051195 0 Total 410690520 132851849

Hire Purchase Loans 5922844 3424906

Total 220000000 220000000

Total 150023000 138826001

Grand Total 1772198694 914330729

Grand Total 2402646531 2037988482

Total 5922844 3424906


SCHEDULES FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

In Rs.

1La

nd10

0283

529

8040

472

0108324001

00

00

108324001

1002

8352

9

2B

uild

ings

1169

9775

365

5930

179

0772927932

4866

3179

019

0181

0967681288

705246644

6833

4574

3Pla

nt &

Mac

hine

ry73

6459

688

2000

7783

090

2737237997

2637

2186

20

7863

7846

342359708

2394878289

4727

3782

6

4Pla

nt &

Mac

hine

ry [

DG

Set

s]27

9666

000

027966600

1584

3489

064

1855

16485344

11481256

1212

3111

5El

ectr

ical

Ins

talla

tions

2081

7391

216

7800

294

0375974206

3964

6514

034

2977

2873944242

302029964

1685

2739

8

6Fu

rnitur

e &

Fix

ture

s10

9482

4321

0667

20

13054915

3892

532

015

3442

65426958

7627957

7055

711

7O

ffice

Equ

ipm

ent

8704

962

2622

816

011327778

4730

153

079

6091

5526244

5801534

3974

809

8C

om

pute

rs22

8340

3567

4025

30

29574288

7563

621

065

1543

514079056

15495232

1527

0414

9Veh

icle

s45

2297

6184

2947

725

3168

451127554

3132

1691

1252

522

4128

577

34197746

16929808

1390

8071

10O

ther

Equ

ipm

ent

1431

1009

272

5099

280

215620020

2588

0072

042

9074

4968787521

146832499

1172

3002

0

Pre

vious

Yea

r Fi

gure

s84

1575

961

5945

9962

815

4670

141420708575

4063

8722

364

6985

141

3457

40441263112

979445463

4351

8873

8

To

tal

1420

7085

7529

2495

8400

2531

684

4343135291

4412

6311

312

5252

218

8477

516

628488107

3714647184

9794

4546

3

In R

s.

Sch

ed

ule

5F

ixed

Ass

ets

Sl.

No.

Des

crip

tion

Gro

ss B

lock

Dep

reci

atio

nN

et B

lock

As

At

31-M

ar-2

008

As

At

31-M

ar-2

008

As

At

31-M

ar-2

008

As

At

31-M

ar-2

009

As

At

31-M

ar-2

009

Add

itio

ns /

A

dju

stm

ents

D

urin

g T

he Y

ear

Tran

sfer

s /

Adju

stm

ents

D

urin

g T

he Y

ear

Ded

uctions

/

Adju

stm

ents

D

urin

g T

he Y

ear

For T

he Y

ear

Up

To31

-Mar

-200

9


Schedule 6

Investments (Unquoted)

26,000 Equity Shares of Rs. 10/- each in Panchavati Polyfibres Ltd. Fully Paid-up at cost 260000 260000

500 Equity Shares of Rs. 10/- each in Sagar Priya Investments and Finance Ltd. 5000 5000

27,72,430 Equity Shares of Rs. 10/- each in Sagar Power Limited 27724300 27724300

1,50,00,000 Equity Shares of Rs. 10/- each in VICAT Sagar Cement Private Limited 150000000 0

National Saving Certificates 10000 10000

Stores and Spares 117967772 43987425

Raw Materials 22518196 7109270

Coal 131050933 16190287

Packing Materials 8942454 1635482

Goods In Transit 86685101 145657

Work in Progress 29846561 4223884

Finished Goods 28320967 1757174

Debtors over Six Months 14686067 7216941

Other Debtors 234608574 46665426

Cash on Hand 1465647 859786

Current Account 57575810 19390247

Deposit Account 53162425 48398396

Advances recoverable in cash or in kind or for value

to be received (Unsecured and considered good)

Advance to Suppliers 245272656 60323450

Balances with Excise Authorities 70366650 215546379

Advance to Others 60117015 21309972

Deposits to Others 63046691 14970370

Prepaid Expenses 6469112 3526558

Advance payment of Income Tax 28933075 147529422

Total 177999300 27999300

Total 425331984 75049179

Total 249294641 53882367

Total 112203882 68648429

Total 474205199 463206151

Schedule 7

Inventories

Schedule 8

Sundry Debtors

Schedule 9

Cash and Bank Balances

Schedule 10

Loans and Advances

In Rs.


In Rs.


Schedule 11

Current Liabilities

Sundry Creditors

For Materials 196089161 9159356

For Stores & Spares 28225248 6233298

For Expenses 70091262 78251661

For Other Liabilities 71300333 24932967

Interest Accrued But not Due 13427520 2733984

Deposits / Advances from Selling Agents, Stockist and Others 122379872 94266363



Taxation 28600447 145610412

Fringe Benefit Tax 1433075 1194591

Sale of Cement 1556834246 1007392452

Sale of Cement - Second Sale 924834578 1046780926

Sale of Clinker 861065105 692009751

Dividend (From Subsidiary Company) 2798430 5544860

Interest Received 4560470 1345545

Others 640432 3069092

Limestone 99081207 81261444

Laterite 27503168 13955319

Iron Ore 31878493 17595047

Gypsum 32651898 16042857

Slag 0 70841

Dolamite 292661 42311

Fly ash 351670 1252445

Total 501513396 215577629

Total 73913374 163186994

Total 3342733929 2746183129

Total 7999332 9959497

Total 191759097 130220264

Schedule 12

Provisions

Schedule 13

Income From Operations

Schedule 14

Other Income

Schedule 15

Raw Materials Consumed



Schedule 16

Manufacturing Expenses

Consumption of Stores and Spares 47488933 39659079

Fuel Expenses

Coal 516062944 242742547

Power 231601858 135291093

Total 747664802 378033640

Buildings 862757 807603

Plant and Machinery 31662898 12841889

Vehicles 1663564 1216480

Others 3454978 7434251

Total 37644197 22300223

Salaries, Wages, Allowances, Amenities, Bonus and Ex-gratia 92161514 61148197

Contribution to Provident Fund and other Funds 5373930 3785324

Staff and Workmen Welfare Expenses 5653678 6313352

Value Added Tax 362146566 302299416

Entry Tax 88743 8922

Service Tax 2983399 3822241

Repairs and Maintenance

Schedule 17

Salaries and Wages

Schedule 18

Taxes

Grand Total 832797932 439992942

Total 103189122 71246873

Total 365218708 306130579


In Rs.


Schedule 19

Administration and Other Expenses

Administrative Expenses

Directors’ Remuneration and Perquisites 26940901 37601604

Printing and Stationery 1460999 1122533

Legal and Professional Charges 8481606 8082128

Insurance 5812871 2347687

Directors’ Traveling Expenses 2090481 802943

Traveling Expenses and Conveyance 7992991 4947883

Total 52779849 54904778

Audit Fees 150000 150000

Tax Audit Fees 50000 72628

Certification Work 68500 55000

Reimbursement of Expenses 10709 2090

Total 279209 279718

Audit Fees 75000 50000

Reimbursement of Expenses 0 2910

Total 75000 52910

Rent 2055100 1274000

Rates, Taxes and Licenses 4205403 2109983

Miscellaneous Expenses 9294080 9240493

Loss on Sale of Asset 103286 5194532

Postage & Telephones 2797274 1706548

Office Maintenance 2639725 1750544

Wealth Tax 89832 206140

Testing Fees 653813 262289

Security Services 3128168 564880

Total 24966681 22309409

Auditor’s Remuneration

Statutory Auditors

Cost Auditors

Other Expenses

Grand Total 78100739 77546815

In Rs.



Schedule 20

Adjustment for Stocks

Work-in-Process

Opening Stock 4223884 1787742

Less : Closing Stock 29846561 4223884

Total (25622677) (2436142)

Finished Goods

Opening Stock 1757174 2634248

Less : Closing Stock 28320967 1757174

Total (26563793) 877074

Consumption of Packing Materials 48630252 31118067

Transportation Charges 200593685 146440740

Advertisement Expenses 25565259 1018713

Selling Expenses 37510184 39103798

Bad Debts Written Off 0 1888933

Interest on Term Loan 103850773 15419703

Interest on Working Capital 38128768 11487752

Other Financial Charges 17008712 7101626

Grand Total (52186470) (1559068)

Total 312299380 219570251

Total 158988253 34009081

Schedule 21

Selling and Distribution Expenses

Schedule 22

Interest and Financial Charges


In Rs.

Schedule 23

NOTES FORMING PART OF ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES

a) Accounting Assumptions:

The financial statements are prepared under the historical cost convention on the basis of a going concern on an accrual basis and they comply with the mandatory accounting standards referred to in Section 211 (3C) of the Companies Act, 1956.

Fixed assets are accounted at cost of acquisition inclusive of inward freight, duties, taxes, incidentals related to acquisition and pre-operational expenditure till commissioning of the asset. Capital work-in-progress comprises outstanding advances paid to acquire fixed assets, and the cost of fixed assets that are not yet ready for their intended use at the balance sheet date.

Sales are recognized on dispatch of goods to customers and it includes excise duty and Value Added Tax on sale.

Income and expenses in foreign currencies are converted at exchange rate prevailing on the date of transaction. Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the Balance sheet date. Exchange differences on translation of monetary items for purchase of machinery are included in the cost of such assets.

Long term investments, including investments in subsidiary company, are stated at cost. Provision is made where there is a permanent fall in valuation of Long term investments.

Depreciation has been provided as per the rates given in Schedule XIV to the Companies Act, 1956. Depreciation is charged on Plant & Machinery at straight-line method and on all other assets at written down value method.

Inventories including work-in-progress are valued at lower of cost or market value. The cost is calculated on weighted average method. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity.

Stocks in transit are valued at cost.

Short term employee benefits are charged off at the undiscounted amount in the year in which the related services is rendered.

Payments to the defined contribution retirement benefit schemes are charged as an expense as they fall due.

b) Fixed Assets:

c) Revenue recognition:

d) Foreign currency transactions:

e) Investments:

f) Depreciation:

g) Inventories:

h) Employee Benefits:

Short term benefits:

Long term benefits:


For defined benefit scheme, Company provides for gratuity, a defined benefit retirement plan (the “Gratuity Plan”) covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment,

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