OBJECTIVES OF STUDY :

To study ACC cement market including market size and composition , market growth .

To analyze latest trends & oppurtunities

To study policies of government related to cement industry

To analyze the cement production and capacity utilization

To trace out current scenario of demand and supply

To analyze market share of ACC cement in INDIAN market

EXECUTIVE SUMMARY

.

Scope:

The scope of the project undertaken was:

Study of identification of working capital requirement of company.

.

Analysis of the findings and observations of the study.

Recommendations based on observations

Limitation of the Project:

The project report is based on secondary sources of information only.

The data collected at an earlier date and thus the Present situation could be

different.

Research Methodology:

The theoretical part of the report is based solely on secondary information. The most

important sources for this part are reports and journals.

Secondary data:

Books

Internet

Articles

Magazines

Newspapers

INTRODUCTION

THE INDIAN CEMENT INDUSTRY

The Indian Cement industry date back to 1914, with first unit was set-up at

Porbandar with a capacity of 1000 tones. Currently the Indian cement industry with a

total capacity of about 170 m tones (excluding mini plants) in has surpassed

developed nations like USA and Japan and has emerged as the second largest

market after China. Although consolidation has taken place in the Indian cement

industry with the top five players controlling almost 50% of the capacity, the

remaining 50% of the capacity remains pretty fragmented. Per capita consumption has

increased from 28 kg in 1980-81 to 115 kg in 2005. In relative terms, India’s average

consumption is still low and the process of catching up with international averages

will drive future growth. Infrastructure spending (particularly on roads, ports and

airports), a spurt in housing construction and expansion in corporate production

facilities is likely to spur growth in this area. South-East Asia and the Middle East are

potential export markets. Low cost technology and extensive restructuring have made

some of the Indian cement companies the most efficient across global majors. Despite

some consolidation, the industry remains somewhat fragmented and merger and

acquisition possibilities are strong. Investment norms including guidelines for foreign

direct investment (FDI) are investor-friendly. All these factors present a strong case

for investing in the Indian market.

Now, the Indian cement industry is on a roll. Riding on increased activity in

real estate, cement production has registered a growth of 9.28 per cent in April, 2010,

at 14 million tones as against 11.41 million tones in the corresponding period a year

ago.

During the Tenth Plan, the industry, which is ranked second in the world in

terms of production, is expected to grow at 10 per cent per annum adding a capacity

of 40-52 million tones, according to the annual report of the Department of Industrial

Policy and Promotion (DIPP). The report reveals that this growth trend is being driven

mainly by the expansion of existing plants and using more fly ash in the production of

cement.

MAJOR PLAYERS IN CEMENT INDUSTRY:

Shree Cement:

Shree Cements Ltd. is a Rajasthan based company, located at Beawer. The company has installed capacity of 6.825 mn tones per annum in Rajasthan. For the last 18 years, it has been consistently producing many notches above the nameplate capacity. The company retains its position as north India’s largest single-location manufacturer. Shree’s principal cement consuming markets comprise Rajasthan, Delhi, Haryana, Punjab, Uttar Pradesh and Uttranchal. Shree manufactures Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC). Its output is marketed under the Shree Ultra Ordinary Portland Cement’ and ‘Shree Ultra Red Oxide jung rodhak Cement’ brand names.

Ambuja Cement:

GACL was set up in 1986 with 0.7 million tones. The capacity has grown 25 times

since then to 18.5 million tones. GACL exports as much as 15 percent of its

production. Thirty five per cent of the company’s products transported are by sea

which is the cheapest mode. It has earned the reputation of being the lowest cost

producer in the cement industry. Ambuja cement one of GACL’s well established

brands. The company plans to increase capacity by 3-4 million tones in the near

future.

ACC Cement:

Being formed in 1936, ACC has a capacity of 22.40 million ( including 0.53 million

tones of Damodar Cement and Slag and 0.96 million tones of Bargarh Cement ).

ACC Super is one of the company’s well established brands. It is planning to expand

the capacity of its wholly-owned subsidiary Damodar cement and Slag at Purulia in

West Bengal. This is aimed at increasing its presence in the eastern region.

ACC was the largest player with a capacity of 22.4 million tones per annum

( including 0.525 mn tones per annum of its subsidiary Damodar Cement).

The Aditya Birla Group:

The Aditya Birla Group is the world’s eighth largest cement producer. The first

cement plant of Grasim, the flagship of the Aditya Birla Group, at Jawad in Madhya

Pradesh went on Stream in 1985. In total, Grasim has five integrated grey cement

plants and six ready-mix concrete plants. The company is India’s largest white cement

producer with a capacity of 4 lakh tones. It has one of the world’s largest white

cement plant at Kharia Khangar (Raj.) Shree Digvijay Cement, a subsidiary of

Grasim, which was acquired in 1998, has its integrated grey cement plant at Sikka

(Gujrat). Finally Grasim acquired controlling stake in Ultra Tech Cement Limited

(Ultra Tech), the demerged cement business of L&T. Grasim has a total capacity of

31 million tones and eyeing to increase it to 48 MT by FY 09. Grasim has a portfolio

of national brands which include Birla Supar, Birla Plus, Birla White and Birla Ready

mix and also regional brands like Vikram Cement and Rajshree Cement.

Binani Cement:

A fierce competitor with a 2.2 MTPA plant is located at Binanigram, Pindwara, a

village in Sirohi in the state of Rajasthan. It’s a tough nut player which is outside

CMA (Cement Manufacturer’s Association) and is prime reason for driving prices

low in market. Offers a good quality product at cheap rates and has very good brand

image. Sales are focused in the North India, Gujarat and Rajasthan markets. Holds

around 14% of Rajasthan market.

JK Cement:

An entrenched competitor that has brands across the price spectrum with JK

Nembahera leading the pack. Also operates in the white cement market with Birla as

its only competitor. It lost significant market when Ambuja came to Rajasthan.

CEMENT

Cements are of two basic types- gray cement and white cement. Grey cement is

used only for construction purposes while white cement can be put to a variety of

uses. It is used for mosaic and terrazzo flooring and certain cements paints. It is used

as a primer for paints besides has a variety of architectural uses. The cost of white

cement is approximately three times that of gray cement. White cement is more

expensive because its production cost is more and excise duty on white cement is also

higher. Shree cement does not manufacture white cement at present.

Pozzolona used in the manufacture of Portland cement is burnt clay of flyash

generated at thermal power plants. PPC is hydraulic cement. PPC differs from OPC

on a number of counts. Pozzolona during manufacturing consumes lot of hydration

heat and forms ‘cementious gel’. Reduced heat of hydration leads to lesser shrinkage

cracks. An additional gel formation leads to lesser pores in concrete or mortar. It also

minimizes problem of leaching and effloresce

GREY WHITE

Portland Pozzolona Cement

(PPC)

Ordinary Portland cement

THE CEMENT INDUSTRY STRUCTURE

Presently the total installed capacity of Indian Cement Industry is more than

175 mn tones per annum, with a production around 168 mn tones . The whole cement

industry can be divided into Major cement plants and Mini cement plants.

Major Cement Plants:

 Plants : 140

 Typical installed capacity 

 Per plant : Above 1.5 mntpa

 Total installed capacity : 170 mntpa

 Production 07-08: 161 mntpa

 All India reach through multiple plants

 Export to Bangladesh, Nepal, Sri Lanka, UAE and  Mauritius

 Strong marketing network, tie-ups with customers, contractors

 Wide spread distribution network . 

 Sales primarily through the dealer channel

Mini Cement Plants:

 Nearly 300 plants & Located in Gujarat, Rajasthan, MP mainly

 Typical capacity < 200 tpd

 Installed capacity around 9 mn. Tones

 Production around : 6.2 mn tones 

 Mini plants were meant to tap scattered limestone reserves. However most set up

in AP

 Most use vertical kiln technology

 Production cost / tonne - Rs. 1,000 to 1,400 

 Presence of these plants limited to the state

 Infrastructural facilities not the best

CHARACTERISTICS OF CEMENT INDUSTRY

This section describes the basic economic characteristics of the cement

industry by following the classical approach which consists of successively examining

demand, supply and market structure. On the basis of these characteristics are

described the main economic stakes in the sector.

Demand & Market

Demand in the cement industry is typically that of an activity which is mature,

cyclical and with low price elasticity. It is also characterized by a high degree of

horizontal differentiation in terms of location and a low degree of vertical

differentiation in terms of quality.

Cement is an homogeneous product. Most of its sales concern about half a

dozen commercial varieties, of which Portland cement is by far the leader. No brand

name exists, so that one supplier’s products can easily be substituted for another.

Cement is, however, an experience good; its quality is guaranteed by standards with

which the supplier has to comply. These standards are often national but in most cases

the products of one country can easily be approved in neighbouring countries.

Standards therefore do not constitute trade barriers as such, even if they may hinder

trade.

The demand for cement is geographically widely dispersed and corresponds

roughly to population density. Although cement is an upstream industry, it differs

from other basic industries such as aluminium, steel or glass, for which demand id

concentrated both geographically and in terms of the number of customers. In the

cement industry demand is by, by contrast, dispersed in multiple zones of

consumption, each of which comprises numerous customers. Geographical factors

thus determine the structure of the market.

a) Maritime Model b) Land Model

The above figure adapted from Tanguy (1987), illustrates this phenomenon. On

the left, producers compete on a major market; on the right, each producer is

relatively isolated on its natural market. These two extreme cases – called the

maritime and the land model, respectively, by Dumez and Jeunemaitre (2000), as well

as all the possible intermediate forms, constitute the playing field of the cement

industry. The traditional playing field is the land model, but the maritime model takes

over when communication over vast distances becomes possible.

Supply

Two economic considerations are important a priori in structuring supply in a market

characterized by strong horizontal differentiation:

The trade-off between fixed costs and transport costs which, depending on the

economic size of the factories, gives an initial idea of the density of the

network of production units covering the territory, in relation to the density of

demand

The level of investment costs and the life-span of facilities which determine

the rigidity and the duration of the network.

Major Demand Drivers: Infrastructure & construction sector the major demand drivers. Some demand

determinants

 Economic growth

 Industrial activity

 Real estate business

 Construction activity

 Investments in the core sector

Growth in mortgage business in retail housing

Higher surplus income of household

Opportunities: Growth in the housing sector

Central road fund established for national  highways and railway over bridges

to provide the necessary impetus

Expansion plans, Greenfield projects on the anvil

Demand – supply balance expected in the next 12 – 15 months

Encouraging trend in demand due to pick-up in rural housing demand and industrial

revival

Industry likely to grow at 8-10% in the next few years

Newer capacities in future

S.W.O.T. Analysis for Acc Cements

Strengths

Focused strategy Lowest cost producer of cement in north India A secure source of raw materials High penetration in Govt. projects Largest single plant capacity in India Acc power plant , which is producing electricity enough for Ras plant

Weaknesses

Less dealer incentives as compared to its competitors Color of the cement has not been perceived greatly, green color was preferred

the most Poor advertising and brand promotion

Opportunities

Real estate boom will lead to increased demand International expansion Demand from Pakistan side Reduction in customs duties Government’s thrust on infrastructure and tax incentives on housing loans

Threats

Increased competition from domestic as well as international players Rising input (oil) prices Sales highly dependent on monsoons Growth of counterfeits

ACC COMPANY PROFILE:

ACC – INDIA’S first name in cement .ACC Ltd is India's foremost manufacturer of cement and concrete. The company is engaged in the manufacture of cement and ready-mixed concrete. They manufacture a range of portland cement for general construction and special applications. In addition, they also offer two products namely, bulk cement and ready mix concrete. The company's operations are spread throughout the country with 16 modern cement factories, more than 40 Ready mix concrete plants, 20 sales offices, and several zonal offices. Their subsidiaries include ACC Concrete Ltd, Bulk Cement Corporation (India) Ltd, ACC Mineral Resources Ltd, Lucky Minmat Ltd, National Limestone Co Pvt Ltd and Encore Cements & Additives Pvt Ltd. ACC Ltd was incorporated on August 1, 1996 as The Associated Cement Companies Ltd. The company was formed by merger of ten existing cement companies. In the year 1944, they established India's first entirely indigenous cement plant at Chaibasa in Bihar. In the year 1956, they established bulk cement depot at Okhla, Delhi. In the year 1965, the company established Central Research Station at Thane. In the year 1973, they acquired The Cement Marketing Company of India. In the year 1978, they introduced energy efficient precalcinator technology for the first time in India. In the year 1982, the company commissioned their first 1 MTPA plant in the country at Wadi, Karnataka. In the year 1982, the company incorporated Bulk Cement Corporation of India, a joint venture with the Government of India. In the year 1993, they started commercial manufacture of Ready Mixed Concrete at Mumbai. In the year 1999, they commissioned captive power plants at the Jamul and Kymore plants in Madhya Pradesh. The house of TATA was intimately associated with the company upto 1999. In the year 1999, the Tata group sold their 7.2% stake in the company to Ambuja Cement Holdings Ltd, a subsidiary of Gujarat Ambuja Cements Ltd and in the year 2000, Tata group sold their remaining stake in the company to Gujarat Ambuja Cements Ltd. In the year 2001, the company commissioned a new plant of 2.6 MTPA capacity at Wadi, Karnataka. In the year 2003, IDCOL Cement Ltd becomes a subsidiary of the company, which was renamed as Bargarh Cement Ltd during the year 2004. In the year 2004, the company was named as Consumer Superbrand by the Superbrands Council of India, becoming the only cement company to get this status. In the year 2005, the company completed the modernization and expansion project at Chaibasa in Jharkhand, replacing old wet process technology with a new 1.2 MTPA clinkering unit, together with a captive power plant of 15 MW. In the year 2006, the subsidiary companies Damodhar Cement & Slag Ltd, Bargarh Cement Ltd and Tarmac (India) Ltd merged with the company. Also, the name of the company was changed from The Associated Cement Companies Ltd to ACC Ltd with effect from September 1, 2006. In the year 2007, the company commissioned wind energy farm in Tamilnadu. In July 2007, the company sold their entire shareholding in their wholly owned subsidiary ACC Nihon Castings Ltd at a consideration of Rs 30 crore to V N Enterprises Ltd of Hindustan Udyog Group. In the year 2008, the ready mixed concrete business was hived off to a new subsidiary called ACC Concrete Ltd. They acquired 40% stake in Alcon Cement Company Pvt Ltd to strengthen their presence in Goa. Also, they acquired 12.41% equity shares of Bulk Cement Corporation (India) Ltd from IDBI Bank Ltd, thereby increasing their shareholding in the said subsidiary company to 94.65%. In March 2008, the company sold their wholly owned subsidiary, ACC Machinery Company Ltd for a consideration of Rs 45 crore. In July 7, 2008, they inaugurated ACC Cement Technology Institute at Jamul. In the year 2009, the company commissioned one 15 MW CPP as a part of Bargarh plant expansion. The additional captive power generating capacity of 50 MW in Wadi, 15 MW in Bargarh and 25 MW in Chanda is

scheduled to be commissioned and stabilized in 2010. They inaugurated new Grinding plant of capacity 1.60 million tonnes at Thondebhavi in Karnataka. During the year, the company acquired 100% equity stake in National Limestone Company Pvt Ltd, making it as a wholly owned subsidiary of the company. Also, they acquired 100% equity stake in Encore Cements & Additives Pvt Ltd which has a slag grinding plant in Vishakhapatnam in coastal Andhra Pradesh. Consequently, ECAPL became a wholly owned subsidiary of the company with effect from January 28, 2010. In September 2009, the company installed and commissioned a coal washery in Jamul. Also, the company is in the process of commissioning a coal washery in the Bargarh plant in 2010. In January 4, 2010, Kudithini Cement Grinding Plant was inaugurated in Karnataka with a capacity of 1.1 MTPA of Portland Slag Cement. In April 2010, the company commissioned a 2.5-MW wind energy farm near Satara, Maharashtra, at a cost of Rs 13 crore. The wind farm has two 1.5-MW turbines. The power from the wind farm will be supplied through a wheeling arrangement to the company's Thane Complex and Bulk Cement Corporation (India) Ltd, a subsidiary company at Kalamboli, near Mumbai. The company entered into an agreement with the promoters of Asian Concrete & Cement Pvt Ltd to acquire a 45% equity stake in that company. This transaction would be concluded in the first quarter of 2010. The new clinkering line at Chanda in Maharashtra and a new 25 MW captive power plant, being built at a cost of around Rs 1450 crores is expected to be completed by the third quarter of 2010 and this will increase the cement grinding capacity by 3 MTPA.

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's operations are spread throughout the country with 16 modern cement factories, more than 40 Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a workforce of about 9,000 persons and a countrywide distribution network of over 9,000 dealers.

Since inception in 1936, the company has been a trendsetter and important benchmark for the cement industry in many areas of cement and concrete technology. ACC has a unique track record of innovative research, product development and specialized consultancy services. The company's various manufacturing units are backed by a central technology support services centre - the only one of its kind in the Indian cement industry.

ACC has rich experience in mining, being the largest user of limestone. As the largest cement producer in India, it is one of the biggest customers of the domestic coal industry, of Indian Railways, and a considerable user of the country’s road transport network services for inward and outward movement of materials and products.

Among the first companies in India to include commitment to environmental protection as one of its corporate objectives, the company installed sophisticated pollution control equipment as far back as 1966, long before pollution control laws

came into existence. Today each of its cement plants has state-of-the art pollution control equipment and devices.

ACC plants, mines and townships visibly demonstrate successful endeavours in quarry rehabilitation, water management techniques and ‘greening’ activities. The company actively promotes the use of alternative fuels and raw materials and offers total solutions for waste management including testing, suggestions for reuse, recycling and co-processing.

ACC has taken purposeful steps in knowledge building. We run two institutes that offer professional technical courses for engineering graduates and diploma holders which are relevant to manufacturing sectors such as cement. The main beneficiaries are youth from remote and backward areas of the country.

ACC has made significant contributions to the nation building process by way of quality products, services and sharing expertise. Its commitment to sustainable development, its high ethical standards in business dealings and its on-going efforts in community welfare programmes have won it acclaim as a responsible corporate citizen. ACC’s brand name is synonymous with cement and enjoys a high level of equity in the Indian market. It is the only cement company that figures in the list of Consumer SuperBrands of India.

The Directors hereby present the Seventy Fourth Annual Report together with the auditedaccounts, for the year ended December 31, 2009. The Management Discussion and Analysis hasalso been incorporated into this report.

1. PREAMBLE - 2009

The year 2009 would be marked as an important year for the Indian cement industry. Whenthe year began, the Indian economy was in a recession amidst the global slowdown that wasstill prevailing. The cement industry then faced the prospects of a substantial cementcapacity addition with no sign that demand would grow significantly. However, theforecasts were belied - demand was robust, capacity creation was delayed, cement plantsachieved higher capacity utilization and market prices were favourable. With commodityprices including fuel remaining subdued, most cement manufacturers were able to recordgood financial performances in 2009.

The cement industry posted a steady growth of about 10.3% during the year under review.Overall cement despatches in 2009 were approximately 195 million tonnes, up from 177million tonnes in 2008. Growth was registered across all regions, led by rapiddevelopments in infrastructure and a stable housing sector. The demand-supply scenario wasgenerally at balance with high levels of capacity utilization in most of the regions. In2009, capacity additions of the order of 26.88 million tonnes went on stream. There wassome delay in the materialization of fresh capacity addition which helped ease thepressure on selling prices. The industry’s cost profile improved on account of lowerprocurement prices of coal and other commodities.

All of the above conditions had a favourable collective impact on overallprofitability.

ACC’s installed capacity rose to 26 million tonnes per annum at the close of theyear as compared to 23 million tonnes at the end of 2008. The Company continued with itsstrict control over costs, while taking proactive measures to conserve cash resourceswhich are reflected in the fact that the Company has negative net financial debt evenafter spending Rs. 1561 crores as capital expenditure.

2. HIGHLIGHTS OF PERFORMANCE/EVENTS

• Total consolidated income for the year 2009 was Rs. 8,725 crore, an increase of9% as compared to Rs. 7,974 crore in 2008.

• Consolidated profit before exceptional items and tax for the year 2009 was Rs.2,251 crore against Rs. 1,582 crore in the 2008, an increase of 42%.

• Consolidated profit after tax for the year 2009 was Rs. 1,564 crore as againstRs. 1,100 crore in 2008, an increase of 42%.

• The expansion project of the Bargarh Plant was substantially completed duringthe year. The satellite grinding units which were set up as a part of Wadi expansionprogramme at Thondebhavi in Chikballapur District and Kudithini in Bellary District inKarnataka were also partly commissioned during the last quarter of 2009.

• There was substantial progress during the year under review in thecompany’s on-going projects at Wadi and Chanda, which are slated for completion inthe first half of 2010.

• Work was started on a project to set up a 2.5 MW wind energy farm inMaharashtra.

3. FINANCIAL RESULTS

Consolidated StandaloneRs Crore Rs Crore

2009 2008 2009 2008Sale of products and services (net of excise duty) and other income 8725.41 7974.28 8268.31 7571.58

Profit after exceptional items and before tax 2250.70 1624.82 2294.39 1736.60

Provision for Tax (686.79)

(525.17)

(687.66)

(523.81)

Profit after Tax 1563.91 1099.65 1606.73 1212.79Balance brought forward from previous year 2357.25 2057.37 2477.91 2064.89Profit available for appropriations 3921.16 3157.02 4084.64 3277.68Appropriations :Interim Dividend 187.70 187.65 187.70 187.65Proposed Dividend 244.06 187.68 244.06 187.68Dividend Distribution Tax 73.38 63.79 73.38 63.79General Reserve 350.00 350.00 350.00 350.00Debenture Redemption Reserve 25.00 10.00 25.00 10.00Previous Year Dividend - 0.02 - 0.02Amortisation Reserves 0.65 0.63 0.65 0.63Balance carried forward to the next year’s account 3040.37 2357.25 3203.85 2477.91

4. DIVIDEND

In August 2009, your Company had paid an interim dividend of Rs. 10 per equity share,involving an outgo (including the dividend distribution tax) of Rs. 219.60 crore. YourDirectors are now pleased to recommend a final dividend of Rs. 13 per equity share of Rs.10 each. The total dividend for the year 2009 would accordingly be Rs. 23 per equity shareas against Rs. 20 per equity share for the year ended December 31, 2008.

The total dividend outgo for the current fiscal would amount to Rs. 505.14 crore,including dividend distribution tax of Rs. 73.38 crore, as against Rs. 439.12 crore,including dividend distribution tax of Rs. 63.79 crore in the previous year.

5. ECONOMIC SCENARIO AND OUTLOOK

After the global financial slowdown witnessed in 2008, culminating in the expensivebailout for banks and insurance companies notably in USA, there has been a perceptibleimprovement in the outlook for the global economy. The expansion of output in emergingmarket economies, particularly Asia, was the principal driver of this development. Tradeis recovering and financial market conditions are improving. Notwithstanding theconfidence exuded by the financial sector, there are concerns that the recovery may as yetbe fragile, as the economies of developed countries, particularly USA, continue to lagwith high unemployment, low consumer spending and depressed housing markets.

The Indian economy fared better than most developed economies, although its growth wasa bit muted. The performance of the industrial sector has markedly improved. Fundingconstraints eased with ample liquidity and a benign interest regime prevailed during amajor part of the year. Capital inflows revived as India became a preferred destinationfor both portfolio and direct investment. The country is now exhibiting signs ofresurgence, despite contraction in exports and a subnormal monsoon in 2009. Governmentexpects the GDP growth to be around 7% in the Financial Year 2009-2010, which is animprovement over the forecast of 6 - 6.5 % growth made in the beginning of the fiscalyear.

However, there are still areas that cause concern. Agricultural output may decline as aresult of the weak monsoon and inflationary pressures, particularly of food prices, couldhamper growth prospects for 2010. Bank credit growth continues to be sluggish. Governmentfiscal deficit is expected to reach record levels. Nevertheless, the overall economicoutlook is generally favourable, though mixed, with some concern of an escalatinginflationary pressure.

6. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES

In 2010, we expect additional capacity of about 70 million tonnes to materialize, morethan half of which is coming up in South West India. Despite a growing demand for cement,these capacity additions may create surpluses in some parts of the country. The prices ofmajor inputs for cement viz. coal, slag, gypsum, fly ash and petroleum products havestarted rising, and are likely to harden in 2010 pushing up manufacturing and distributioncosts. The availability of the aforesaid raw materials also continues to pose challenges.Supply of railway wagons is likely to worsen during the course of the current yearaffecting cement despatches to some markets.

Government’s continued thrust on infrastructure and its stimulus packages to boostrural and other sectors are likely to accelerate construction activity. It is, therefore,expected that the demand for cement will grow steadily in the next few years. The demandfrom the individual house builder segment is also likely to remain strong. Consequently,we expect the cement industry to maintain a steady growth impetus of 9 to 10% in 2010 andin the near future.

7. CEMENT BUSINESS – PERFORMANCE AT A GLANCE

2009 2008 Change %Production-million tonnes 21.37 20.83 2.6Sales volume-million tonnes* 21.52 21.01 2.4Sales value – Rs crore 8027.19 7282.87 10.2EBITDA % 32.3% 25.5%

* includes sale to ACC Concrete Limited and trading sales

8. YEAR OF BUILDING ORGANIZATIONAL CAPABILITIES

Duirng the year under review, the Company focussed its attention on buildingorganizational capabilities.

Several initiatives were taken to keep costs under check and improve productivitythereby enhancing cost competitiveness to help combat intense competition emerging in themarketplace.

The Company aggressively pursued the utilization of alternative fuels.

It leveraged on its surplus captive generation capability and maximized the sale ofsurplus power. Steps were taken to usher in sales and marketing excellence, besidesstrengthening the dealer network. The Company adopted and assimilated a series of bestpractices from Holcim that would prepare it to meet the demands of growth and competition.

ACC Company maximized cash generation by reducing its working capital build-up and byspending its capex budget judiciously.

9. ENERGY RESOURCES Captive Power Plants

Steam based Captive Power Plants (CPP) play a vital role in improving our costcompetitiveness and providing quality power to our plants. In 2009, gross generation ofpower by our CPPs was 1733 million kwh which was 14% higher than the gross generation of1517 million kwh in 2008. This helped increase the share of power from CPPs in total powerconsumption for cement production, from 64% in 2008 to 70% in 2009. The sale of surpluspower from CPP after meeting the requirements of cement plants increased three times, from32 million kwh in 2008 to 113 million kwh in 2009.

During the year under review, the Company commissioned one 15 MW CPP as a part ofBargarh plant expansion. Additional captive power generating capacity of 50 MW in Wadi, 15MW in Bargarh and 25 MW in Chanda is scheduled to be commissioned and stabilized in 2010.With this increased captive generation, we expect our dependence on grid power to go downfurther.

Wind Power

The wind farms in Tamil Nadu and Rajasthan performed well and generated 39 million Kwhof power in 2009 against 27 million Kwh in 2008. The Company is setting up a 2.5 MW windfarm in Maharashtra at a cost of about Rs. 13 crore which is slated to be commissionedduring March 2010.

Coal Washery

The Company installed and commissioned a coal washery in Jamul in September 2009 toaddress deterioration in the quality of indigenous coal. The plant has since stabilizedand washed coal obtained from this plant has shown a favourable impact on the quality andcost of clinker. Encouraged by these results, the Company is commissioning a coal washeryin the Bargarh plant in 2010.

10. ALTERNATIVE FUELS & RAW MATERIALS

The Company registered a substantial increase in the usage of Alternative Fuels and RawMaterials (AFR) through the co-processing route. The major focus was on industrial wastesthis year in addition to strengthening the on-going initiatives on commodities andagro-wastes. This enabled the AFR Business to record savings of Rs. 40.8 crores during theyear as against Rs. 22.8 crores in 2008, marking an increase of 79%.

The AFR business increased its portfolio and has successfully co-processed 27 differenttypes of industrial waste streams at our plants. The clientele of our Waste ManagementServices was widened and agreements in this regard were signed with renowned companiesfrom chemical, FMCG, footwear, pharmaceuticals, food and beverages sectors.

11. MODERNISATION / EXPANSION / NEW PROJECTS

A major part of the Bargarh expansion project was completed and the Vertical RollerMill and Captive Power Plant were commissioned during 2009. The next phase of the plant isexpected to be commissioned during the first quarter of 2010, after which the cementgrinding capacity of Bargarh will stand enhanced to 2.1 million tonnes.

The first phase of the programme to increase the cement grinding capacity by 3 milliontonnes per annum of capacity in Karnataka was completed with the launch of two newsatellite grinding units. These are the Thondebhavi grinding plant in ChikballapurDistrict near Bangalore with a capacity of 1.6 million tonnes per annum and the Kudithinigrinding plant in Bellary District with a capacity of 1.1 million tonnes per annum. Theremaining phase of the New Wadi Expansion Project for creation of additional clinkeringcapacity in Karnataka, including additional captive power plants of 2 x 25 MW capacity,are expected to be completed by mid 2010.

The new clinkering line at Chanda in Maharashtra and a new 25 MW captive power plant,being built at a cost of around Rs. 1450 crores is expected to be completed by the thirdquarter of 2010 and this will increase the cement grinding capacity by 3 MTPA.

The total installed capacity of ACC stood at 26 million tonnes as on January 1, 2010.After completion of the Chanda and the Wadi expansion projects, ACC’s installedcapacity would reach 30.5 MTPA by December 2010.

12. ACQUISITIONS

With a view to enhance its limestone reserves in Rajasthan, the Company acquired a 100%equity stake in National Limestone Company Private Limited (NLCPL) making it a whollyowned subsidiary of your Company. NLCPL has limestone leases and reserves in SikarDistrict in Rajasthan.

ACC Company also acquired 100% equity stake in Encore Cements & Additives PrivateLimited (ECAPL). Consequently, ECAPL has become a wholly owned subsidiary of your Companywith effect from January 28, 2010. ECAPL has a slag grinding unit in Visakhapatnam, whichwill help ACC strengthen its market presence in coastal Andhra Pradesh.

ACC Company entered into an agreement with the promoters of Asian Concrete &Cement Private Ltd. (Asian Cement) to acquire a 45% equity stake in that company. Thistransaction would be concluded in the first quarter of 2010. Asian Cement has a 0.3million tonne cement grinding plant in the Solan District of Himachal Pradesh, and is inthe process of setting up an additional 1 million tonne grinding facility adjacent to theexisting plant.

13. OVERSEAS BUSINESS

The contract with Yanbu Cement Company, Saudi Arabia, for management and operation ofits cement plants crossed 30 years of successful operation and is valid until February2011.

The contract with Mugher Cement Enterprises, Ethiopia, an Ethiopian Governmententerprise for providing project engineering and consultancy services for setting up a3000 TPD greenfield clinkering line, along with a satellite grinding and packing plant, isprogressing satisfactorily and is being renewed till December 2010.

14. CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABLE DEVELOPMENT

Corporate social responsibility :

Today we define Corporate Social Responsibility as the way a company balances its economic, social and environmental objectives while addressing stakeholder expectations and enhancing shareholder value.

But ACC has undertaken social volunteering practices almost from its inception, – long before the term corporate social responsibility was coined. The company’s earliest initiatives in community development date back to the 1940's in a village on the outskirts of Mumbai while the first formal Village Welfare Scheme was launched in 1952. The community living around many of our factories comprises the weakest sections of rural and tribal India with no access to basic amenities.

Corporate social responsibility policy:

“The Company shall continue to have among its objectives the promotion and growth of the national economy through increased productivity, effective utilization of material and manpower resources and continued application of modern scientific and managerial techniques, in keeping with the national aspiration; and the Company shall continue to be mindful of its social and moral responsibilities to consumers, employees, shareholders, society and the local community.

In pursuance of the above objective, ACC acknowledges the importance of the concept of inter-dependence of all sections of society. In particular, its focus revolves around the community residing in the immediate vicinity of its Cement Plants and Mines where it seeks to actively assist in improving the quality of life and making this community self-reliant. In line with its abiding concern for preservation of the ecological balance and safeguarding the health of the community, ACC has always actively demonstrated its firm resolve to protect the environment

Mindful of its great tradition, ACC is deeply committed to enhancing its reputation and respect built over the years in industry and society for its professional style of management based on philosophy of the best in business ethics.”

The Company released a web update for the year 2008 to its first SustainableDevelopment (SD) Report published in the preceding year. The year saw a continued thrustto deepen SD participation across different functions and plants of the organisation.

As regards Corporate Social Responsibility (CSR), the Company continued to engage withthe local community around its operations, with a view to consolidating its trust byencouraging active involvement of the community in various development and welfareschemes. Each of our plants has now formulated its own CSR policy and strategy based onsite requirements, keeping in line with the corporate CSR policy and execution strategy.

An important approach used in this regard was the creation of Community AdvisoryPanels, comprising groups of local residents, and the use of these panels to promotelarger involvement of the local communities in the development of their respectivevillages. The panels play a major role in finalizing the execution strategy for communityprogrammes at each plant location. Involving the local community in the execution of theirown development process, in this manner, ensures its sustainability which in turn securesa common thread of trust from the community towards the Company.

ACC’s Public Private Partnership (PPP), for the upgradation of seven Governmentrun Industrial Training Institutes (ITI’s), continued to be a thrust area with theobjective of improving the quality of training, leading to better employability of theseITI trainees.

During the year 2009, various processes were set up to measure the performance of theseITIs and also capability building workshops were organized, with the objective of makingthe partnered ITI’s into Centres of Excellence. The workshops were attended bythe principals of these ITI’s, along with a coordinator from ACC, to help improve thecourse curriculum of these ITI’s.

15. OCCUPATIONAL HEALTH & SAFETY (OH&S)

Special emphasis was placed on Occupational Health and Safety. Many significantinitiatives were undertaken during the year, to improve safety standards and to make theorganization a safe place to work. A series of actions were defined to secure a sea changein the management of OH&S at an operational level through the OH&S TransformationPlan, which was developed by integrating actions from various sites. The objective was toinstitute actions that target all critical activities and to accelerate implementation ofthe OH&S standards related to such activities.

In order to bring in significant improvement in managing the safety of contract workmenin our operations, a major initiative called "Suraksha Bandhan" was launched.The key areas of focus in this initiative are the implementation of advanced safetymanagement standards and processes, improved contractor safety management capabilities,building skills of contractors’ supervisors and workmen and a zero tolerance forviolations. The initiative is significant as it demonstrates ACC’s commitment to itsOH&S vision of "No Harm anywhere to anyone associated with ACC".

16. HUMAN RESOURCES

In 2009, ACC launched several new programmes and strengthened existing Human ResourceProcesses that favourably impacted its employees, judging by the results of an annualsurvey of Employees.

Enabling Employee Communication

The "Accelerate" Portal for employees which was introduced in 2008 to a smallgroup of employees was well received and found to facilitate employee communication acrosslevels and locations on a wide variety of issues. Encouraged by this, the Company went onto launch the portal in Hindi with access provided to all employees through kiosksinstalled at all locations. In the next step, the portal will be simultaneously offered inmajor regional languages. This platform is also being deployed for employee self-servicefacilities.

Strategic Talent Management (STM)

A transparent and efficient system for managing talent has been conceptualized and isunder implementation. The new Strategic Talent Management programme will help create ablueprint for development of talent in the organization by introducing effective measuresto identify companywide talent, build adequate strength for future needs throughsuccession planning for critical positions while creating a healthy balance betweeninternal and external talent in the organization.

Special Change Management initiatives for Shop Floor Associates

During the year under review, ACC launched a number of transformation initiatives thatinvolve shop floor associates and was directed at developing greater team working skillsamongst them and overall manufacturing excellence.

Innovate To Excel

This is a special platform to encourage change and innovation at the workplace. Crossfunctional teams across various plants, sales units and functional departments areencouraged to work on an innovative idea/project. The teams then compete at unit andregional levels and finally the winning teams participate in a competitive presentation oftheir project at the corporate level.

Employee Learning and Development

The Company continues to place great emphasis on enhancement of skills and capabilitiesof its employees and on imparting required training for meeting customers’requirements. This includes internal and external training workshops, courses andseminars. The training process has been designed to suit the specific needs of the Companyand also attain all round employee development and growth. Through the ACC Academy atThane, ACC Cement Technology Institute at Jamul and the Sumant Moolgaonkar TechnicalInstitute at Kymore, various training programmes were continued to be imparted to improvethe skill sets of employees and enhance the technical talent pool of the Company.

Employee Relations were cordial across all Plants and offices of ACC during the year.

17. FINANCE

ACC Company retained its "AAA" rating by CRISIL for its long-termnon-convertible debenture and bank loan for working capital. In October 2009, ACC Companyborrowed Rs. 300 crore through non-convertible debentures having a five-year maturity atan all inclusive cost of 8.45% per annum.

As on 31st December, 2009, the Company’s debt equity ratio stood at a comfortablelevel of 0.09:1.

18. SHARE CAPITAL

During the year, the Company allotted 58,473 equity shares of the face value of Rs.10/- each, consequent to the exercising of Stock Options by its employees.

Details of the Employees’ Stock Option Scheme, as required under the SEBIguidelines, are set out in Annexure ‘C’ to the Directors’ Report.

19. FIXED DEPOSITS

ACC Company had discontinued its fixed deposit schemes in the financial year2001-2002, and as on December 31, 2009, the total amount of fixed deposits matured andremaining unclaimed was Rs. 17.53 lakhs.

20. PERFORMANCE OF SUBSIDIARY COMPANIES

20.1 ACC Concrete Limited

Ready Mixed Concrete (RMX) business remains a strategically important channel forcement, which the Company will continue to strengthen. In 2009, this wholly ownedsubsidiary company, managed the challenges of a slowdown in the RMX market which was dueto reduced demand from the real-estate sector in the main metros and cities, where most ofthe Company’s RMX plants are located. During this period, the Company focused onconsolidation of its existing facilities, by seeking to grow volumes from the existingcapacity as well as from dedicated on-site project solutions.

The numbers of available operating plants increased to 44, from 38 in 2008, ascommitted capital projects were completed and dedicated site, plants and collaborationopportunities were realised.

Sales volumes in 2009 grew by 6.5% with turnover decreasing marginally to Rs. 513 crorefrom Rs. 515 crore, due to market pressure on selling prices. Raw material unit pricesalso increased in 2009, but these were more than compensated by better mixed designoptimisation resulting in an overall reduction in the specific raw material costs.

EBITDA losses of this business were considerably reduced by 65%, from Rs. 74 crore toRs. 26 crore, through systematic management of overhead costs and productivity.

ACC Concrete Limited is well placed to grow and add value to the group, going forwardas the market regains momentum, as a result of Government’s infrastructure programmeand renewed confidence in the real estate sector.

20.2 Bulk Cement Corporation (India) Limited (BCCI)

ACC holds 94.65% of the equity of this Company. BCCI handled 8.15 lakh tonnes of bulkcement during the year, as compared to 7.60 lakh tonnes in the previous year. The loss forthe year 2009, increased to Rs 1.08 crore from Rs 0.53 Crore in the previous year, mainlydue to a reduction in railway freight rebate.

20.3 Lucky Minmat Limited

This wholly owned subsidiary company was fully operational during the year 2009 and thetotal limestone production for the year was 1.10 lakh tonnes. The company has incurred aloss of Rs. 15.43 lakh for the year 2009, as compared to a loss of Rs. 22.23 lakh for theprevious year.

20.4 National Limestone Company Private Limited

This wholly owned subsidiary company was acquired in April 2009. The company hasincurred a loss of Rs. 6 lakh for the year. The operations are to commence in 2010.

20.5 ACC Mineral Resources Limited (AMRL)

Formerly known as The Cement Marketing Company of India Limited, ACC Mineral ResourcesLimited (AMRL) is a wholly owned subsidiary that now serves as a special purpose vehiclefor our coal ventures. AMRL has signed agreements with Madhya Pradesh State MiningCorporation Limited for the development of four coal blocks through four associatecompanies. which have since been incorporated.

20.6 Audited Statements of accounts of the Company’s subsidiaries

As required under Section 212 of the Companies Act 1956, the audited statements ofaccounts, along with the report of the Board of Directors relating to the Company’ssubsidiaries viz. ACC Concrete Limited, Bulk Cement Corporation (India) Limited, LuckyMinmat Limited, National Limestone Company Private Limited and ACC Mineral ResourcesLimited, together with the respective Auditors’ Reports thereon for the year endedDecember 31, 2009 are annexed.

22. INTERNAL CONTROL SYSTEMS AND THEIR

ADEQUACY

The Internal Audit Department functions independently, monitors and evaluates theefficacy and adequacy of internal control systems in the Company, and their compliancewith operating systems, accounting procedures and policies at all the Company’slocations, including its subsidiaries. Every quarter, the Audit Committee of the Board ispresented with the audit findings and connected issues, if any, together with animplementation tracker which highlights management action taken on past audit issues.

ACC Company has also implemented a well-structured Internal Control System (ICS) andthe internal and external audit periodically tests all the defined controls to ensure fullcompliance.

23. BUSINESS RISK MANAGEMENT

ACC Company has implemented a Business Risk Management (BRM) process thatsystematically identifies risks and opportunities. The BRM process supports the ManagingCommittee in strategic decision making. The process is robust and is a rolling exercise,with a consistent annual review at the regional level and at the corporate level, toexamine and evaluate risks and opportunities. A detailed mind mapping of the risks iscarried out, so as to identify the root cause of the particular risk, to enable theManagement to take effective steps to address / mitigate such risks. The risks are plottedon a likelihood matrix and then integrated into the annual business plans as well as theaudit plan of the Company, as relevant.

The following is an analysis of the Company’s key business risks and mitigationplans:

Fuels Risks

ACC Company is a major consumer of coal for producing cement at various locations. Therelease of coal and allocation of quantities of coal, are entirely dependent upon thedemand from all sectors and is in control of the Government of India. To ensure the timelyavailability of coal, your Company has taken steps to acquire coal blocks, to enter intomedium term firm contracts and also to the possibility of using alternate fuels in placeof coal.

Projects Risks

ACC Company is executing large CAPEX projects to set up new cement manufacturingfacilities, where the Company is exposed to risks of timely completion and costcompetitiveness. ACC has initiated semi-turnkey projects approach to reduce the time andcosts for completion of large projects and has also restructured the project organisation.

Compliance Risks

ACC Company is exposed to significant risks due to non-compliance with variousstatutes and regulations including Competition Act. The Company is mitigating these risksthrough regular reviews of legal compliance, through internal as well as externalcompliance audits and training to relevant employees. The Company has set up the processesto mitigate the environmental compliance risks such as investments in pollution abatementequipment, monitoring of ambient air quality, and construction of environmental labs.

People risks

Retaining the existing talent pool and attracting new manpower are major risks in thisrespect. The Company has initiated various measures such as rollout of strategic talentmanagement system and integration of learning activities in order to retain talent.

The above key risks, along with all other risks and their mitigation plans as well asopportunities assessed by the Management, are built into the rolling business plans of theCompany.

24. AWARDS

The Council for Fair Business Practices (CFBP) conferred on ACC Limited, the 2008Jamnalal Bajaj Award for Fair Business Practices in the category, Large ManufacturingEnterprises. The citation states that the award is an acknowledgement of ACC’scommitment towards customer satisfaction and communication, employee motivation,environment protection, CSR, legal compliance and its business practices that ensuresustainable development and promote social equity.

ACC Directors have pleasure in informing that the Company’s Annual Report andAccounts for the year 2008 has been adjudged winner of the Gold Shield in the category,Manufacturing and Trading Enterprises by The Institute of Chartered Accountants of India.Winning this coveted award is a testament to your Company’s prudent accountingpractices, quality of financial statements and the transparency and fair disclosure ofinformation to all stakeholders.

25. ENHANCING SHAREHOLDER VALUE

The Company’s strategic vision statement accords a very singular position to valuecreation. The Company’s operations are guided and aligned towards maximizingshareholder value. New projects for capacity expansion and cost reduction exercises arecontinuously taken up to achieve growth in sales and improvement in profitability.

26. DIRECTORS’ RESPONSIBILITIES

To the best of their knowledge and belief and according to the information andexplanations obtained by them, ACC Directors make the following statement in terms ofSection 217(2AA) of the Companies Act, 1956:

a) that in the preparation of the annual accounts for the year ended December 31, 2009,the applicable accounting standards have been followed along with proper explanationrelating to material departures, if any,

b) that such accounting policies as mentioned in Note 1 of the Notes to the Accountshave been selected and applied consistently, and judgments and estimates have been madethat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as on December 31, 2009, and of the profit of the Company for the yearended on that date,

c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records, in accordance with the provisions of the Companies Act, 1956, forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities,

d) the annual accounts have been prepared on a going concern basis.

27. AUDIT & ACCOUNTS

The Company’s Auditors M/s S R Batliboi & Associates, Chartered Accountants,who retire at the ensuing Annual General Meeting are eligible for reappointment. They haveconfirmed their eligibility under Sec. 224 of the Companies Act, 1956 for reappointment asauditors of the Company. As per the requirement of the Central Government and pursuant toSec 233B of the Companies Act, 1956, your Company carries out an audit of cost recordsrelating to cement every year. Subject to the approval of the Central Government, theCompany has appointed M/s N I Mehta & Co. to audit the cost accounts for the financialyear 2009.

28. PEER REVIEW

During the year, the Company received a letter from Securities and Exchange Board ofIndia (SEBI), informing that a peer review would be undertaken in respect of the"Limited Review" undertaken by the Statutory Auditors for the third quarter ofthe financial year 2009 and the Audited Statement of Accounts for the year ended December31, 2008. Pursuant thereto, BSR & Co., Chartered Accountants conducted the aforesaidpeer review.

29. CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate sectionon corporate governance practices followed by the Company, together with a certificatefrom the Company’s Auditors confirming compliance, is set out in the Annexure formingpart of this report.

30. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements prepared in accordance with Accounting StandardAS21 –Consolidated Financial Statements of the Group form part of this report. Thenet worth of the Group as on December 31, 2009 is Rs. 5868.97 crore as against Rs. 4823.12crore, as at the end of the previous year.

31. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

The particulars of conservation of energy, technology absorption and foreign exchangeearnings and outgo in accordance with the provisions of Sec 217(1)(e) of the CompaniesAct, 1956, read with the Companies (Disclosure of Particulars in the Report of the Boardof Directors) Rules, 1988, are given in Annexure ‘A’ to the Directors’Report.

32. PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217(2A) of the Companies Act,1956, read with the Companies (Particulars of Employees) Rules 1975 as amended, regardingemployees is given in Annexure ‘B’ to the Directors’ Report.

33. ACKNOWLEDGEMENT

ACC Directors would like to acknowledge and place on record their sincere appreciationof all stakeholders – shareholders, banks, dealers, vendors and other businesspartners for the excellent support received from them during the year. Your Directorsrecognize and appreciate the efforts and hard work of all the employees of the Company andtheir continued contribution to its progress.

34. CAUTIONARY STATEMENT

Statements in the Directors’ Report and the Management Discussion & Analysisdescribing the Company’s objectives, expectations or forecasts may be forward-lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Company’s operations include global and domestic demand and supplyconditions affecting selling prices of finished goods, input availability and prices,changes in government regulations, tax laws, economic developments within the country andother factors such as litigation and industrial relations.

ANNEXURE ‘A’ TO DIRECTORS’ REPORT (Para 31)

Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure ofparticulars in the Report of Board of Directors) Rules 1988.

A: CONSERVATION OF ENERGY

(a) Energy conservation and efficiency improvement measures were undertaken invarious areas of the cement plants:

• Optimisation of crusher resulting in operation of one crusher to cater torequirement of two raw mills, thereby stopping the other crusher at Kymore plant.

• Replacement of higher KW motors by optimum capacity energy efficient motors andcommissioning of Variable Voltage Variable Frequency Drives (VVVFD) for variousapplications across ACC plants.

• Use Grid Rotor Resistance control for speed, thereby eliminating damper controlof SEPEX FAN at Bargarh and Kymore plants.

• Replacement of raw mill main drive with high efficiency motor at Gagal plant.

• Installation of new screw compressor to replace multiple reciprocatingcompressors. Installation of microprocessor based multi-step automation control forvarious reciprocating compressors to optimise the operating pressure within narrow band atGagal plant.

• Installation of automatic maximum demand controller with Time of Day settings tolimit the peak demand to permissible limits at Bargarh plant.

• Conversion of pneumatic conveying to mechanical conveying for 6 cement mills atJamul plant.

• ACC Cement House was renovated into a Green Building with many energy savinginitiatives, which has reduced the air conditioning as well as lighting load. The projecthas been registered under the Leadership in Energy and Environmental Design (NewConstruction & Major renovation category) under Indian Green Building Council (IGBC),and will be India’s first ‘renovated green building’. Apart from being aGreen Building Project, Cement House Mumbai has been also awarded highest rating of"Five Star" by Bureau of Energy Efficiency, Government of India.

• Various initiatives were taken at Thane complex to reduce electricityconsumption, like installation of energy savers for air conditioners, regulations onoperating time for the air conditioners etc.

• Energy Audit was conducted at Jamul, Gagal and Tikaria plants and compressed airaudit was conducted for Lakheri, Wadi, Kymore and Bargarh plants.

• Capacitor banks were installed at Motor Control Centre’s (MCC’s),Power Ccntrol Centre’s (PCC), and individual loads across all ACC plants to improvethe power factor.

Green power –

• The Wind Farm installed at Rajasthan generated 14.04 million units of greenenergy during 2009 as compared to 3.78 million units generated during 2008.

• The Wind Farm installed at Tamilnadu generated 25.3 million units of greenenergy during 2009 as compared to 23.4 million units generated during 2008.

Alternative fuels –

In 2009 the Alternative Fuels and Raw Materials business has recorded savings of Rs.40.8 Crores as against Rs. 22.8 Crores in 2008. This was achieved by co-processing 77,800tonnes of Industrial waste as compared to 12,900 tonnes in 2008.

(b) Additional Proposals being implemented for further conservation of energy

• Installation of Programmable Logic Controller (PLC) system and closed circuitingof cement mill is in progress at Damodhar plant.

• At Gagal, Waste Heat Recovery Boiler is planned during 2010 to supplement theGrid Power.

• Installation of VVVFD’s are planned for additional drives identified during2009 across ACC plants.

(c) Impact of the above measures for reduction of energy consumption and consequentimpact on cost of production -

The measures stated in points (a) and (b) above would further improve the thermal andelectrical energy efficiency of the Plants. Year 2009 saw a reduction of 2.45% inElectrical Energy over 2008.

Form A

Power and Fuel Consumption

Current Year Previous Year

Lakh Units(Kwh)@

Total Cost (Rs

Lakhs)

Rs. Per

Unit

Lakh Units(Kwh)

Total Cost (Rs

Lakhs)

Rs. Per

Unit

1. Electricitya) Purchased 5840 21971 3.76 6812 25868 3.80b) Own Generationi) Through DG 45 723 16.01 129 1294 10.00ii) Through SteamTurbine/Generator* 17721 43874 2.48 15437 47627 3.09

 

Current Year Previous Year

Quantity Total Cost

Average Rate Quantity Total

CostAverage

Rate(Lakh

Tonnes)(Rs.

Lakhs) (Rs./Tonne) (Lakh Tonnes)

(Rs. Lakhs) (Rs./Tonne)

2. Coal (for Kiln)** 22.44 86430 3852 22.89 84628 3697

* Includes WTG generation

** Does not include other fuel/alternative fuels used in Kiln Above are at gross level

Consumption Per Unit of Production

@ Standard Current Year Previous Yeara) Electricity Kwh/T *CementWet Process 89-105Semidry / Dry process 98-110 85 87b) Furnace Oil KLtrs/TCement - - -c) Coal for KilnK.cal/Kg of clinkerWet process 1350Semidry / Dry process 720-990 746 754

@ Source: Publication of Confederation of Indian Industries

* Excludes non-process power consumption

(B) TECHNOLOGY ABSORPTION

Research & Development

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

a) Improving quality of blended cement through innovative process utilizing industrialby-products

b) Conservation of resources through use of low-grade limestone for cement manufacture

c) emissions Development of application Oriented Cements with decreased Specific CO2

d) Enhanced absorption of blending materials

e) Process / product design improvements

f) Development of new products or discovering new methods of analysis

g) Productivity research for increased efficiency in use of resources

h) Recycling of wastes and research for efficient use of scarce materials

i) Characterization of Industrial wastes and looking into possibilities of environmentfriendly co-processing of wastes in cement manufacture leading to thermal substitution andconservation of natural resources

j) Beneficiations of raw materials and fuels

2. Benefits derived as result of above R & D

a) Effective use of marginal quality raw materials and fuels with improved clinkerquality

b) Increased absorption of blending materials in blended cements

c) Effective replacement of the costlier natural Gypsum by cheaper (by-product) Phosphogypsum without affecting the quality of cement

d) Maintain a lead position in all the market clusters of the country

e) Enhanced fuel efficiency

3. Future plan of action

a) Exploratory research work on the above specific areas

b) Focus on development of products aimed at enhancing use of cement in variousapplications

c) Use of waste / by-products in cement manufacture as alternative materials

d) Improve product quality particularly with respect to long term durability andreduction in its cost of manufacture

4. Expenditure on R & D Rs Lakhsa. Capital 37b. Recurring (Gross) 325c. Total 362d. Total R&D expenditure as percentage of total turnover 0.05%5. Foreign Exchange Earnings & Outgo Rs LakhsForeign exchange earned 5561Foreign exchange used 4217

 

MILESTONES:

MILESTONES  

1936 Incorporation of The Associated Cement Companies Limited on August 1, 1936.

1936 First Board Meeting of The Associated Cement Companies Limited held at Esplanade House, Mumbai on November 10, 1936.

1937 With the transfer of the 10th company to ACC, viz. Dewarkhand Cement Company, the formation of ACC is complete on October 23, 1937.

1944 ACC’s first community development venture near Bombay

1947 India’s first entirely indigenous cement plant established at Chaibasa in Bihar

1952 Village Welfare Scheme launched

1955 Sindri cement works used the waste product calcium carbonate sludge from fertilizer factory at Sindri.

1956 Bulk Cement Depot established at Okhla, Delhi

1957 Technical training institute established at Kymore, Madhya Pradesh.

1957 Katni Refractories

1961 Blast furnace slag from TISCO used at the Chaibasa Unit to manufacture Portland Slag Cement for the first time in India.

1961 Manufacture of Accocid Cement, which resists the corrosive action of acids and chemicals.

1961 Oilwell Cement manufactured at ACC Shahabad Cement Works in Karnataka for cementation of oilwells upto a depth of 6,000 feet.

1961 Manufacture of Hydrophobic (waterproof) cement at ACC Khalari Cement Works in Bihar.

1962 Manufacture of Accoproof, a waterproofing additive.

1965 ACC’s Central Research Station (CRS) established at Thane

1965 Manufacture of Portland Pozzolana Cement.

1965 Manufacture of Calundum, a High Alumina Binder; Firecrete, Low Density Alumina Castables and High Alumina Refractory Cement.

1968 Advent of computers in ACC for data processing and designing management information and control systems.

1968 ACC supplied and commissioned one-million-tonne iron ore pelletising plant ordered by TISCO

1971 Manufacture of Whytheat Castables A, K, C and Cal-Al-75

1973 Take-over of The Cement Marketing Company of India (CMI)

1977 ACC receives ASSOCHAM first national award for the year 1976 instituted for outstanding performance in promoting rural and agricultural development activities.

1978 Introduction of the energy efficient precalcinator technology for the first time in India. Full scale commercial production based on MFC technology at Wadi in 1979.

1979 ACC wins international contract for operation and management of a new one million tonne cement plant at Yanbu-Ras Biridi in Saudi Arabia.

1982 Commissioning of the first 1 MTPA plant in the country at Wadi, Karnataka.

1984 ACC achieves a breakthrough in import substitution by developing and supplying a special G type of oil well cement to ONGC.

1987 ACC develops a new binder for use at sub-zero temperatures, which is successfully used in the Indian expedition to Antarctica.

1992 Incorporation of Bulk Cement Corporation of India, a joint venture with the Government of India.

1993 ACC starts the commercial manufacture of Ready Mixed Concrete at Mumbai.

1995 ACC selected as Most Respected Company in India by Business India.

1998 Commissioning of the 0.6 MTPA cement grinding unit at Tikaria, Uttar Pradesh.

1999 Commissioning of captive power plants at the Jamul and Kymore plants in Madhya Pradesh.

1999 Tata group sells 7.2% of its stake in ACC to Ambuja Cement Holdings Ltd, a subsidiary of Gujarat Ambuja Cements Ltd. (GACL)

2000 Tata Group sells their remaining stake in ACC to the GACL group, who with 14.45% now emerge as the single largest shareholder of ACC.

2001 Commissioning of the new plant of 2.6 MTPA capacity at Wadi, Karnataka plant, the largest in the country, and among the largest sized kilns in the world.

2002 ACC wins PHDCCI Good Corporate Citizen Award

2003 IDCOL Cement Ltd becomes a subsidiary of ACC

2004 IDCOL Cement Limited is renamed as Bargarh Cement Limited (BCL).

2004 ACC raises US $ 100 million abroad through Foreign Currency Convertible Bonds (FCCB’s) for US$ 60 million and Global Depository Shares (GDS’s) for US $ 40 million. Both offerings are listed on the London Stock Exchange.

2004 ACC named as a Consumer Superbrand by the Superbrands Council of India, becoming the only cement company to get this status.

2004 GreenTech Safety Gold and Silver Awards awarded to Madukkarai Cement Works and Katni Refractory Works by Greentech Foundation for outstanding performance in Safety Management System.

2005 ACC receives the CFBP Jamnalal Bajaj Uchit Vyavahar Puraskar Certificate of Merit – 2004 from Council For Fair Business Practices.

2005 Holcim group of Switzerland enters strategic alliance with Ambuja Group by acquiring a majority stake in Ambuja Cements India Ltd. (ACIL) which at the time held 13.8 % of the total equity shares in ACC. Holcim simultaneously makes an open offer to ACC shareholders, through Holdcem Cement Pvt. Limited and ACIL, to acquire a majority shareholding in ACC. Pursuant to the open offer, ACIL’s shareholding in ACC increases to 34.69 % of the Equity share capital of ACC.

2005 Commissioning of Modernisation and Expansion project at Chaibasa in Jharkhand, replacing old wet process technology with a new 1.2 MTPA clinkering unit, together with a captive power plant of 15 MW.

2005 Financial accounting year of the company changed to calendar year January-December

2006 Subsidiary companies Damodhar Cement & Slag Limited, Bargarh Cement Limited and Tarmac (India) Limited merged with ACC

2006 ACC announces new Workplace policy for HIV/AIDS

2006 Change of name to ACC Limited with effect from September 1, 2006 from The Associated Cement Companies Limited.

2006 ACC receives Good Corporate Citizen Award 2005-06 from Bombay Chamber of Commerce and Industry

2006 New corporate brand identity and logo adopted from October 15, 2006

2006 ACC establishes Anti Retroviral Treatment Centre for HIV/AIDS patients at Wadi in Karnataka– the first ever such project by a private sector company in India.

2007 ACC partners with Christian Medical College for treatment of HIV/AIDS in Tamil Nadu

2007 Sumant Moolgaokar Technical Institute completes 50 years and reopens with new curriculum

2008 Ready mixed concrete business hived off to a new subsidiary called ACC Concrete Limited.

2008 ACC Cement Technology Institute formally inaugurated at Jamul on July 7.

2008 First Sustainable Development Report released on June 5.

2008 ACC wins CNBC-TV18 India Business Leader Award in the category India Corporate Citizen of the year 2008

2008 Project Orchid launched to transform our Corporate Office, Cement House into a green building.

2009 ACC received the Jamanalal Bajaj "Uchit Vyavahar Puraskar" of Council for Fair Business Practices

2009 ACC is allotted coal blocks in Madhya Pradesh and West Bengal.

2009 ACC's new Grinding plant of capacity 1.60 million tonnes inaugurated at Thondebhavi in Karnataka.

2010 Kudithini Cement Grinding Plant inaugurated in Karnataka on January 4, 2010 with a capacity of 1.1 MTPA of Portland

Slag Cement.

2010 ACC acquires 100 percent of the financial equity of Encore Cements & Additives Private Limited which is a slag grinding plant in Vishakhapatnam in coastal Andhra Pradesh. This company became a wholly-owned subsidiary of ACC in January 2010.

AWARDS & ACCOLADES 

ACC was the first recipient of ASSOCHAM’s first ever National Award for outstanding performance in promoting rural and agricultural development activities in 1976. Decades later, PHD Chamber of Commerce and Industry selected ACC as winner of its Good Corporate Citizen Award for the year 2002. Over the years, there have been many awards and felicitations for achievements in Rural and community development, Safety, Health, Tree plantation, afforestation, Clean mining, Environment awareness and protection.

Awards received in 2010Awards received in 2009Awards received in 2008Awards received in 2007 & 2006

Other prominent awards won by us over the years comprise some coveted ones conferred by organisations of repute.

Awards & Accolades 

Indira Priyadarshini Vrikshamitra Award --- by The Ministry of Environment and Forests for "extraordinary work" carried out in the area of afforestation.

FICCI Award --- for innovative measures for control of pollution, waste management & conservation of mineral resources in mines and plant.

Subh Karan Sarawagi Environment Award - by The Federation of Indian Mineral Industries for environment protection measures.

Drona Trophy - By Indian Bureau Of Mines for extra ordinary efforts in protection of Environment and mineral conservation in the large mechanized mines sector.

Indira Gandhi Memorial National Award - for excellent performance in prevention of pollution and ecological development

Excellence in Management of Health, Safety and Environment : Certificate of Merit by Indian Chemical Manufacturers Association

Good Corporate Citizen Award - by PHD Chamber of Commerce and Industry

FIMI National Award - for valuable contribution in Mining activities from the Federation of Indian Mineral Industry under the Ministry of Coal.

Rajya Sthariya Paryavaran Puraskar - for outstanding work in Environmental Protection and Environment Performance by the Madhya Pradesh Pollution. Control Board.

National Award for Fly Ash Utilisation - by Ministry of

ACC honoured with FE-EVI Green Business Leadership Award 2009-10 The Financial Express-EVI Green Business Leadership Award 2009-2010 was conferred on ACC for being the 'Best Performer' in the cement category. This award is an acknowledgement of ACC's commitment towards its environmental friendly initiatives in the country.

 

OCCUPATIONAL HEALTH & SAFETY : :

 

Occupational Health & Safety (OHS) is a vital part of ACC’s journey towards Sustainable development. Safety Audits are being carried out in ACC since 1995 by National Safety Council based on the 5 Star Auditing System of British Safety Council. There is a continuous effort to measure and improve Safety Management Systems to avoid accidents.

We have an Apex OH & S Committee headed by the Managing Director. This committee oversees implementation of our OH & S policy Each of our plants and manufacturing units have Professional Doctors and medical facilities for continuous monitoring and observation of workplace hygiene and occupational health.

The following are some OH & S initiatives at our plants:

 OH & S brochures, signages, posters and mailers used extensively  Monthly Safety Gate Meetings held at all our plants.  Safety Audit and TPM Audits carried out annually  Safety Professionals meets twice a year to discuss and share  knowledge on

Safety Statistics and implementation of safety  measures at each unit.  Safety Observation Tours (SOT) conducted weekly by all line  managers  Behavioral Safety Training programmes for workers at all plants

ACC was the first recipient of ASSOCHAM’s first ever National Award for outstanding performance in promoting rural and agricultural development activities in 1976. Decades later, PHD Chamber of Commerce and Industry selected ACC as winner of its Good Corporate Citizen Award for the year 2002. Over the years, there have been many awards and felicitations for achievements in Rural and community development, Safety, Health, Tree plantation, afforestation, Clean mining, Environment awareness and protection.

Awards received in 2010Awards received in 2009Awards received in 2008Awards received in 2007 & 2006

Other prominent awards won by us over the years comprise some coveted ones conferred by organisations of repute.

Awards & Accolades 

Indira Priyadarshini Vrikshamitra Award --- by The Ministry of Environment and Forests for "extraordinary work" carried out in the area of afforestation.

FICCI Award --- for innovative measures for control of pollution, waste management & conservation of mineral resources in mines and plant.

Subh Karan Sarawagi Environment Award - by The Federation of Indian Mineral Industries for environment protection measures.

Drona Trophy - By Indian Bureau Of Mines for extra ordinary efforts in protection of Environment and mineral conservation in the large mechanized mines sector.

Indira Gandhi Memorial National Award - for excellent performance in prevention of pollution and ecological development

Excellence in Management of Health, Safety and Environment : Certificate of Merit by Indian Chemical Manufacturers Association

Good Corporate Citizen Award - by PHD Chamber of Commerce and Industry

FIMI National Award - for valuable contribution in Mining activities from the Federation of Indian Mineral Industry under the Ministry of Coal.

Rajya Sthariya Paryavaran Puraskar - for outstanding work in Environmental Protection and Environment Performance by the Madhya Pradesh Pollution. Control Board.

National Award for Fly Ash Utilisation - by Ministry of

 Incident investigations for all incidents including near misses (with  potential for injuries). The findings and recommendation are  shared across the company

FIVE CARDINAL RULES FOR SAFETY

1. Do not override or interfere with any safety provision nor allow anyone else to override or interfere with them.

2. Personal Protection Equipment (PPE) rules, applicable to agiven task, must be adhered to at all times.

3. Isolation and Lock Out procedures must always be followed.4. No person may work if under the influence of alcohol or

drugs.5. All the injuries and incidents must be reported

Particulars Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Mar-05INCOME :            

Sales Turnover 8,724.24

8,234.02

7,848.32

6,453.07

3,717.18

4,539.35

Excise Duty 781.58 1,068.23 967.66 736.09 539.71 651.95

Net Sales 7,942.66

7,165.79

6,880.66

5,716.98

3,177.47

3,887.40

OUR OH & S POLICY

We manage our activities in a responsible manner to avoid causing any harm to the health and safety of our employees, contract

personnel and visitors.

We apply OH&S standards and guidelines; provide the necessary resources, training and education and measure performance for

continuous improvement.OUR OH & S VISION

“NO HARM ANYWHERE TO ANYONE ASSOCIATED WITH ACC”

“NO HARM” means:No fatalities

No disabling InjuriesNo Lost Time Injuries

No Medical treatment InjuriesNo First Aid Injuries

No Occupational Illness

“ANYONE” means:Employees

Contractors personnel on siteReady-mix drivers on job

Third party contractors on siteVisitors to ACC site

Other Income 261.44 337.57 390.60 326.77 392.27 109.37Stock Adjustments 28.74 0.33 6.93 -32.29 45.26 53.44

Total Income 8,232.84

7,503.69

7,278.19

6,011.46

3,615.00

4,050.21

EXPENDITURE :            

Raw Materials 984.67 886.48 861.04 1,272.49 918.34 1,326.3

8Power & Fuel Cost

1,539.65

1,598.96

1,243.63 430.98 299.52 348.48

Employee Cost 363.75 412.99 349.68 325.24 195.25 220.67Other Manufacturing Expenses

654.06 655.85 600.20 496.22 323.39 376.25

Selling and Administration Expenses

1,653.63

1,597.36

1,638.95

1,326.94 845.31 915.47

Miscellaneous Expenses 295.97 281.31 275.46 210.65 118.51 133.70

Less: Pre-operative Expenses Capitalised

0.00 0.00 0.00 0.00 0.00 0.00

Total Expenditure

5,491.73

5,432.95

4,968.96

4,062.52

2,700.32

3,320.95

Operating Profit

2,741.11

2,070.74

2,309.23

1,948.94 914.68 729.26

Interest 104.63 39.96 73.87 75.19 66.19 96.32

Gross Profit 2,636.48

2,030.78

2,235.36

1,873.75 848.49 632.94

Depreciation 342.09 294.18 305.07 254.25 164.37 188.82Profit Before Tax

2,294.39

1,736.60

1,930.29

1,619.50 684.12 444.12

Tax 673.30 510.47 472.75 386.98 63.94 45.50Fringe Benefit tax 0.90 9.00 8.22 5.85 6.00 0.00

Deferred Tax 13.46 4.34 10.73 -5.17 70.00 20.23Reported Net Profit

1,606.73

1,212.79

1,438.59

1,231.84 544.18 378.39

Extraordinary Items -1.71 28.90 157.61 134.70 235.12 22.44

Adjusted Net Profit

1,608.44

1,183.89

1,280.98

1,097.14 309.06 355.95

Adjst. below 0.00 0.00 0.00 0.00 6.92 0.00

Net Profit P & L Balance brought forward

2,477.91

2,064.89

1,248.94 462.72 134.90 164.78

Statutory Appropriations 0.00 0.00 0.00 0.00 0.00 0.00

Appropriations 880.79 799.77 622.64 445.62 223.28 408.27P & L Balance carried down

3,203.85

2,477.91

2,064.89

1,248.94 462.72 134.90

Dividend 431.76 375.33 375.02 280.92 147.61 124.97Preference Dividend 0.00 0.00 0.00 0.00 0.00 0.00

Equity Dividend % 230.00 200.00 200.00 150.00 80.00 70.00

Earnings Per Share-Unit Curr

81.59 61.16 73.20 63.60 37.79 20.19

Earnings Per Share(Adj)-Unit Curr

81.59 61.16 73.20 63.60 37.79 20.19

Book Value-Unit Curr 320.11 262.28 221.08 167.63 115.63 89.36

(Rs. in Crores)

Balance Sheet(Rs. in Crores)

Particulars Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Mar-05SOURCES OF FUNDS :            

Share Capital 187.94 187.88 187.83 187.48 184.72 178.74

Reserves Total 5,828.20

4,739.85

3,964.78

2,955.16

1,951.21

1,418.45

Total Shareholders Funds

6,016.14

4,927.73

4,152.61

3,142.64

2,135.93

1,597.19

Secured Loans 550.00 450.00 266.03 720.96 950.12 1,141.07

Unsecured Loans 16.92 32.03 40.38 195.02 226.05 368.00

Total Debt 566.92 482.03 306.41 915.98 1,176.17

1,509.07

Total Liabilities 6,583.06

5,409.76

4,459.02

4,058.62

3,312.10

3,106.26

APPLICATION OF FUNDS :            

Gross Block 6,826.27

5,835.67

5,464.07

4,816.25

4,628.64

4,094.14

Less : Accumulated Depreciation

2,667.98

2,365.97

2,149.35

1,893.76

1,722.29

1,576.67

Less:Impairment of Assets 0.00 0.00 0.00 0.00 0.00 0.00

Net Block 4,158.29

3,469.70

3,314.72

2,922.49

2,906.35

2,517.47

Lease Adjustment 0.00 0.00 0.00 0.00 0.00 0.00

Capital Work in Progress

2,156.21

1,602.86 649.19 558.42 215.68 354.28

Investments 1,475.64 679.08 844.81 503.54 293.75 279.14

Current Assets, Loans & Advances

           

Inventories 778.98 793.27 730.86 624.13 600.95 542.38Sundry Debtors 203.70 310.17 289.29 213.96 199.17 190.54

Cash and Bank 746.38 984.24 743.48 620.17 102.79 57.32

Loans and Advances 565.41 671.95 439.41 462.98 518.25 423.47

Total Current Assets

2,294.47

2,759.63

2,203.04

1,921.24

1,421.16

1,213.71

Less : Current Liabilities and Provisions

           

Current Liabilities

2,060.34

1,801.79

1,555.02

1,025.01 914.10 774.38

Provisions 1,091.88 963.93 666.27 502.28 316.77 200.91

Total Current Liabilities

3,152.22

2,765.72

2,221.29

1,527.29

1,230.87 975.29

Net Current Assets -857.75 -6.09 -18.25 393.95 190.29 238.42

Miscellaneous Expenses not written off

0.00 0.00 0.00 0.94 6.41 12.41

Deferred Tax Assets 149.14 132.24 104.90 106.23 90.56 53.82

Deferred Tax Liability 498.39 468.03 436.35 426.95 390.94 349.28

Net Deferred Tax -349.25 -335.79 -331.45 -320.72 -300.38 -295.46

Total Assets 6,583.14

5,409.76

4,459.02

4,058.62

3,312.10

3,106.26

Contingent Liabilities 359.25 313.94 225.08 244.20 205.58 150.26

December 1, 2010

ACC Media Release - Cement Production and Despatches in November 2010

Our cement production and despatch figures for the month of November 2010 are as follows: November– 2010  Cement production 1.76 million tonnesCement despatches 1.74 million tonnesNovember– 2009  Cement production 1.68 million tonnesCement despatches 1.66 million tonnesCumulative  January – November 2010  

Cement production 19.31 million tonnesCement despatches 19.24 million tonnesJanuary – November 2009  Cement production 19.51 million tonnesCement despatches 19.47 million tonnes

 

R Nand KumarHead – Corporate Communications

Top

November 1, 2010

ACC Media Release - Cement Production and Despatches in October 2010

Our cement production and despatch figures for the month of October 2010 are as follows: October– 2010  Cement production 1.98 million tonnesCement despatches 1.92 million tonnesOctober– 2009  Cement production 1.71 million tonnesCement despatches 1.69 million tonnesCumulative  January – October 2010  Cement production 17.55 million tonnesCement despatches 17.51 million tonnesJanuary – October 2009  Cement production 17.83 million tonnesCement despatches 17.81 million tonnes

 

R Nand KumarHead – Corporate Communications

Support to national Sport

ACC has had an old and close association with the game of cricket. From the 1950’s to the 70’s, many cricket legends were employees of ACC during their active cricket careers. This was in the days before cricketers became like the superstars they are today. ACC was then among the few companies which went out of its way to

employ young cricketers, including budding young Ranji Trophy hopefuls. ACC joined hands with the Confederation of Indian Industry to sponsor India’s National Boxing team at the Athens Olympics in 2004 and the Commonwealth Games. ACC also sponsors and supports other sports at National, regional and local levels such as inter-regional Badminton championships, youth soccer and Rural Sports Meets.

ACC's Communication on Progress 2009

ACC Limited is proud to be a signatory to the UN Global Compact. Each year, since 2007, we have communicated our progress against the 10 UN Principles.

ACC clearly understands that UN Global Compact is both a policy platform and a practical framework for organizations that are committed to sustainability and responsible business practices.

We publish a full Sustainable Development Report every two years and provide regular updates on our progress in our Sustainable Development Report via our corporate website.

We believe that it is our responsibility to uphold the UN Global Compact and its 10 Principles. For our long term future and that of our stakeholders, it is in our mutual interests that we have created a world in which our business will grow and thrive.

Our activity around human and labour rights, environmental responsibility and business integrity is described in detail in our printed Sustainable Development Report 2009. It is also available on our Corporate Website www.acclimited.com. Over here we are providing an index against the ten principles, illustrating our approach and giving progress highlights from 2009.

This index below explains how our own principles reflect those of the Global Compact and provides page number to the Sustainable Development Report pages that describe how we implement these principles in our business.

Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and

Principle 2: make sure that they are not complicit in human rights abuses.

ACC understands and accepts that as a responsible business enterprise it has the responsibility to uphold human rights at the workplace and within its sphere of influence.

Our Code of Business Principles states: “We conduct our operations with honesty, integrity and openness, and with respect for the human rights and interests of our employees.”

ACC recognizes that it has a responsibility to uphold human rights in the workplace. At the workplace, human rights typically take the form of non-discrimination and diversity in personnel practices, professional development that aids employability, and work life balance programmes that support a healthy balance between professional and private life.

ACC protects human rights in the community through contributions to poverty alleviation and increasing levels of education.

Labour Standards

Principle 3: Businesses should uphold the freedom

ACC does not use forced labour and we work with suppliers and business partners to ensure they do not use forced labour either. We respect people’s rights to have

of association and the effective recognition of the right to collective bargaining;

Principle 4: the elimination of all forms of forced and compulsory labour;

Principle 5: the effective abolition of child labour; and

Principle 6: the elimination of discrimination in respect of employment and occupation.

employee representation, including their right to join unions and we do not tolerate harassment. During 2009 our permanent full time employees numbered 8,916 out of which 61% are engaged under bargainable category. 25% of our management staff belongs to the minority groups.Also, an important approach to motivate employees has been through addressing the information needs of employees and providing regular feedback to them by creating a robust internal communication system. One element of this was the “Accelerate” intranet Portal for employees first introduced in 2008 to a limited group of employees. It provides information useful to all employees on various policies, procedures and functions. Personal remuneration and performance details are made available with password protection. A unique feature is the portal’s discussion board which encourages employees to communicate their views, voice their grievances and make valuable suggestions.

Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges;

Principle 8: undertake initiatives to promote greater environmental responsibility; and

Principle 9: encourage the development and diffusion of environmentally

ACC is committed to continuously improve its environmental performance and provide positive contributions to its business. "Quarry to Lorry" is a motto that encapsulates our concern for environmental conservation. It is integrated into all activities of our value chain. Environment management has always been an essential and distinct function in the company's organisation structure. We continue to implement various initiatives to conserve natural resources and to prevent pollution.

ACC is an active member of the TERI-BCSD (Business Council for Sustainable Development) India. In addition to its

friendly technologies.

active participation in the Stakeholder Discussion Forums to promote a Cement Sustainability Initiative (CSI) in India, it also championed along with five other member companies of the Business Council a Corporate Action Plan on Climate Change complementing theGovernment of India’s National Action Plan on Climate Change (NAPCC). The task force led by Mr. Sumit Banerjee, Managing Director focuses on the business role in the National Solar Mission and National Mission for Enhanced Energy Efficiency. ACC has been a pioneer in the manufacture and promotion of blended cements. Today nearly 90 % of ACC’s production is made up of blended cements, well ahead of the industry average of 75 %.

In the year 2009 ACC utilized over 6.5 million tonnes of alternative materials consisting of marble slurry, chemical gypsum, granulated slag, fly ash, lime sludge, chemical sludge etc. The consumption of alternative raw materials in the year 2009 increased by 45% compared to the year 2008.

The Indian cement industry is being recognized for efforts in lowering its carbon footprint. This include measures such as promoting green cement, modernization and adoption of new technology, process improvements, steps to achieve greater thermal and electrical energy efficiency, the pursuit of renewable energy, alternative fuels and raw materials, optimizing transportation costs and leads and striving for cost-competitiveness.

Anti-Corruption

Principle 10: Businesses should

Our Code of Business Conduct & Ethics clearly mentions behaviorus expected of individuals and actions to be taken in case of non-adherence. Each

work against corruption in all its forms, including extortion and bribery.

permanent employee of the Company has been given a copy of this Code of Business Conduct & Ethics and has agreed to adhere to all the clauses in it. The Company’s Internal Audit Department follows a well structured risk assessment approach to draw up its Annual Internal Audit plan. This risk assessment is conducted every year and includes all business processes and all units. Potential fraud risk areas, their probability and impact are a vital input for the risk assessment. A Fraud Risk Management (FRM) Policy was adopted with effect from January 1, 2009. A Fraud Risk Management committee was constituted with the Company Secretary as its chairman and the Head Legal and Chief Internal Auditor as members to review and take appropriate action on all suspected cases of fraud/misconduct. Any person with knowledge of any incident of misconduct/ fraud can communicate to the committee through a dedicated e-mail and hotline or by written letter, with assured confidentiality. FRM awareness programmes are conducted companywide by displaying posters at prominent locations in the units, screensavers on all company computers and workshops for management staff covering all business units of ACC comprising 16 plants, 20 sales units, 3 regional offices, Corporate Office and ACC Thane. In all a total of 2,064 management staff employees (64%) attended these workshops. The rest of the employees have been communicated the FRM policy and related presentations through e-mail. Corruption: There were 2 incidents in which employees were dismissed or disciplined for corruption. There were no instances where a contract with business partners was not renewed

due to violation related with corruption.

Conservation of heritage structures

The services of ACC’s Concrete experts have often been utilized in the restoration of several national heritage buildings across the country - such as sections of the Chhatrapati Shivaji Terminus (formerly Victoria Terminus) at Mumbai, the J N Petit and David Sassoon Libraries in Mumbai, churches in Goa, palaces and royal mansions in Mysore and Hyderabad and other old structures in the country.

The historic Vijayraghavgarh fort in Madhya Pradesh was recently restored under ACC’s patronage. This is not a core business of the company but an act of corporate volunteering by way of sharing knowledge and expertise.

Disaster Relief

ACC and its employees make timely contribution to help in any national disaster. This is done both at the corporate level, by local units and employees. Apart from the Kargil cause, collective contributions by way of cash, food and clothing has been sent to help victims of calamities such as the Latur earthquake, Himachal Pradesh floods, Orissa cyclone, Gujarat earthquake, Tsunami and floods in Maharashtra.

Healthcare ACC takes pride in providing various forms of medical assistance to the families of our employees and also to all those living in surrounding villages. Each factory has a medical center with full-

fledged doctors and the latest of basic equipment. Mobile medical services are provided in the vicinity and regular medical camps are held to eradicate diseases, offer medical help, treatment and preventive care.

ACC has come out to provide support to state and national health initiatives such as the eradication of malaria, dengue fever and the dreaded HIV.

Education Education is imparted not only to children of ACC employees but also more importantly to children from rural areas who do not have access to any medium of information or education. ACC schools maintain high standards and are open to other children of the vicinity. Often these schools are the most preferred centers of learning in the district and adjoining areas. Wherever possible, ACC provides funds and infrastructure to help set up local schools, colleges and centers for learning and education.

Community & Rural Welfare Our community development activities revolve around the under-privileged community that lives in the immediate vicinity of our cement plants and is thus more dependent on us. The range of our activities begins with extending educational and medical facilities and goes on to cover vocational guidance and supporting employment-oriented and income-generation projects like agriculture, animal husbandry, cottage industries by developing local skills, using local raw materials and helping create marketing outlets.

Central procurement :

At all our cement factories we share our amenities and facilities with members of the local community. This includes sharing education and medical facilities, sports and recreation. Wherever possible we share access to Bore Wells, drinking water and the usage of colony roads.

ACC has a countrywide spread of 14 modern cement plants. This large network of manufacturing units consumes a wide spectrum of inputs – about 60,000 different items ranging from Coal, Gypsum, Slag, Packaging material (bags), Refractories, Steel, Grinding Media, Electrodes, Cables, Bearings, Conveyor Belts, Spares of various mechanical, electrical and instrumentation equipment, Mining Equipment and their spares and explosives.

ACC has a vendor base of more than 6000 suppliers spread across the country.

A team of professionals at Corporate, Regions and Plant Level manages the procurement function. The function is organized so as to derive maximum value for the company through economies of scale from central pooling and procurement of some inputs at the corporate level while meeting individual operational requirements at plant level. The Procurement function comprises a Central procurement team at the corporate office for the requirement of major inputs for the operations of cement plants.

Code of conduct

ACC treats its vendors as business associates. All vendors are treated with respect and dignity. Our vendor base includes reputed

manufacturers and trusted brand names, usually the leading 3-4 vendors of their particular industry segment who are technically and financially sound and have the intrinsic capacity to supply material of desired quality and on time. ACC prefers vendors who demonstrate good corporate citizenship and promote sustainable development.

Adequate care is taken to ensure transparency in procurement processes. Our procurement policy has a clearly defined code of practice for procurement conduct and encourages fair and open competition in markets.

Questionnaire

How is cement produced ?Cement manufacturing is the basic processing of selected and prepared mineral raw materials to produce the synthetic mineral mixture (clinker) that can be ground to a powder having the specific chemical composition and physical properties of cement."

What is the weight of each ACC cement bag ?How many bags of cement produced daily ?How many people are employee in this company ?What are the health and safety measures for workers ?What is the storage system for cement bags ?