UltraTech Cement Limited BOARD OF DIRECTORS (as on 7th July, 2006) Mr. Kumar Mangalam Birla, Chairman Mrs.

Rajashree Birla Mr. R. C. Bhargava Mr. G. M. Dave Mr. Y. M. Deosthalee Mr. Y. P. Gupta Dr. S. Misra Mr. V. T. Moorthy Mr. J. P. Nayak Mr. S. Rajgopal Mr. D. D. Rathi Manager & CEO Mr. S. Misra Chief Financial Officer Mr. K. C. Birla Company Secretary Mr. S. K. Chatterjee Executives Mr. O. P. Puranmalka Group Executive President & Chief Marketing Officer Mr. S. K. Maheshwari Group Executive President & Chief Manufacturing Officer Mr. V. Shukla Chief People Officer Cement Works Mr. A. K. Jain Unit Head, Awarpur (Maharashtra) Mr. K. Y. P. Kulkarni Unit Head, Kovaya (Gujarat) Mr. J. Kumar Unit Head, Hirmi (Chhattisgarh) Mr. A. K. Pillai Unit Head, Narmada Cement (Gujarat) Mr. C. S. Reddy Unit Head, Tadipatri (Andhra Pradesh) Corporate Finance Division

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

Cash Flow Statement .......................................................................................................... ................................... 50 Schedules .......................................................................................................... ....................................................... 51 Statement Relating to Subsidiary Companies ...................................................................................................... 69 Consolidated Financial Statements ........................................................................................................ ................. 70 Subsidiary Companies Reports and Accounts ...................................................................................................... 87 REGISTERED OFFICE: B Wing, Ahura Centre, 2 Floor, Mahakali Caves Road, Andheri (East), Mumbai 400 093 CONTENTS (3) Dear Fellow Shareholders, India as a Nation has come of age. With a great measure of pride, we see our country rise up the ranks of the powers that be in the global economy. We have grabbed the worlds attention and imagination. For the third consecutive year, our GDP has recorded a near 8 per cent growth - among the highest in the world. To sustain the current growth rate and to push it closer to double-digit levels year after year, the Government seems committed to an aggressive agenda for economic reforms. While economic reforms provide a strong structural foundation for future growth, these are undeniably supported by substantive productivity improvements and an overall positive mindset. These developments at the macro level portend well for your Company. Your Companys performance has been good. While the turnover at Rs. 3,299 crores as THE CHAIRMANS LETTER TO

SHAREHOLDERS (4) against Rs. 2,607 crores reflects a 27% rise, its net profit at Rs. 230 crores, compared to Rs. 3 crores has been indeed impressive. I am also pleased to inform you that Narmada Cement Company Limited was amalgamated with your Company with effect from 1st October, 2005. To improve productivity as also to address the issue of rising energy costs, your Company has earmarked a capex of Rs. 1,424 crores which will be spent over the next three years. Of this Rs. 844 crores is towards installation of captive power plants at your Companys Units in Gujarat and Chhattisgarh. Your Company will also invest in debottlenecking and cost efficiencies. Improving efficiencies, leveraging logistics benefits, higher use of alternative fuels and a thrust on value-added product mix, including blended cement will translate into higher earnings for your Company as we go forward. Your Company is pursuing profitable growth through enhanced capital productivity, improved plant performance, customer focus, cost optimisation and prudent financial management. I believe all this will have a salutary effect on your Companys future and we can all look ahead to both, top-line and bottomline growth. The Governments focus to infrastructure development as well as the boom in the housing sector augurs well for your Company. Your Company is pursuing profitable growth through enhanced capital productivity, improved plant performance, customer focus, cost optimisation and prudent financial management. I believe all this will have a salutary effect on your

Companys future and we can all look ahead to both, top-line and bottom-line growth. (5) The overriding reason behind our success has been our strikingly sharper accent on people. We look upon them as our core asset, much more critical than our physical assets or financial assets. I value their contribution in building a culture of meritocracy. The Aditya Birla Group: Building A Meritocracy Our vision, as you are aware, is to be a premium global conglomerate, with a clear focus at each business level, and our vision is to deliver superior value to all our stakeholders. Implicit in our Vision Statement, is our global ambition, which necessarily implies accelerated growth to reach global-sized capacities and services. We are on course. Meritocratic organizations are built on the strong foundation of values and not on the quick sands of opportunism. For us, our values Integrity, Commitment, Passion, Seamlessness and Speed reflect the soul of our organization. To develop a common indepth understanding of what these values connote in our context, and how they should be our guiding light in the business decisions we take as well as the manner in which we conduct ourselves, we rolled out Values Workshops. In more than 373 Workshops, over 8,236 colleagues across management cadre committed to ensure that these values become a part of their everyday life. Talent Management and strengthening of the talent pool in building leadership across the Group is a key priority. Employees identified as high-caliber management talent are put The overriding reason behind our success has been our strikingly sharper accent on people. We

look upon them as our core asset, much more critical than our physical assets or financial assets. I value their contribution in building a culture of meritocracy. (6) through our Development Assessment Centre. Here, the talent pool is assessed by an external agency to validate our ratings on the potential of the employee to scale up to a new responsibility level. Gyanodaya, our management learning institute, has repositioned itself to align more closely with business requirements. The focus is very clearly on business and functional programmes, keeping in view the competencies required at every career stage. More than 1,000 managers across the Group have been through the portals of Gyanodaya this year. The Gyanodaya Virtual Campus, which is our e-Learning Programme, has also increased its reach manifold. As of today, we have 5,000 e-learners in our Group, with a course completion rate of 88%, while the world benchmark hovers around 65%. For a large number of engineers and CAs, we have tied up with Universitas 21 to provide an opportunity for these talented people to do a full-time e-MBA. As of today, 46 employees have completed 165 courses in 11 subjects in the last 1 year. Soon enough, they will earn their MBA degree while continuing on their jobs. With a view to provide for systematic and structured processes for career growth, the job analysis and evaluation process was started 4 years ago. While Managers from across businesses have been involved at various stages of the process, more than 100 managers have been Meritocratic organizations are built on the strong foundation of values and not on the

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

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

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

Domestic Cement 2,123 1,750 21 Exports Cement 2,133 1,928 11 Clinker 1,632 1,324 23 Domestic Cement realisation rose by 21% from Rs. 1,750 pmt to Rs. 2,123 pmt. Export prices have also seen an increase with cement realisation improving by 11% from Rs.1,928 pmt to Rs. 2,133 pmt and clinker realisation improving by 23% from Rs.1,324 pmt to Rs. 1,632 pmt. This helped in mitigating the rising energy and maintenance costs. A view of the Andhra Pradesh Cement Works. (10) Financial Highlights: Rs. in crores FY06 FY05 % Change Net Turnover 3,299 2,607 27 Domestic 2,809 2,093 34 Exports 490 514 (5) Other Income 37 21 76 Total Expenditure 2,745 2,256 22 Operating Profit (PBIDT) 591 372 59 Operating Margin (%) 18 14 Interest 90 107 (16) Gross Profit (PBDT) 502 265 89 Depreciation 216 222 (3) Profit Before Tax and Diminution 286 43 Diminution in Value of Investment (EI) 77 Profit Before Tax / (Loss) 286 (34) Current Tax 57 32 81 Deferred Tax (5) (68) (93) Fringe Benefit Tax 4 Net Profit after Total Tax and EI 230 3 Net Turnover The net turnover increased by 18% after adjustment for traded volumes and a change in the treatment of freight following the introduction of VAT. Other Income Other income increased from Rs. 21.07 crores in the previous year to Rs.37.00 crores on account of dividend

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

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

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

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

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

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

independent directors. The details of the directors with regard to outside directorships, committee positions as well as attendance at board/ general meetings are as follows: Director Executive/ No. of Outside No. of Outside No. of Board Attended Attended Non-Executive/ Directorships Held2 Committee Meetings Last Last Independent1 Positions Held3 AGM@ EGM# Public Private Member Chairman Held Attended Mr.Kumar Mangalam Birla Non-Executive 12 10 1 - 5 2 Yes Yes Mrs. Rajashree Birla Non-Executive 6 10 - - 5 5 - Mr. R.C. Bhargava Independent 11 2 5 3 5 5 - Yes Mr. G. M. Dave* Independent 5 - 5 - 5 N.A. N.A. N.A. Mr. Y.M. Deosthalee Non-Executive 8 1 3 - 5 3 Yes Mr. A.R. Gandhi* Independent 7 - 2 2 5 1 - Mr. Y.P. Gupta Independent 4 - - 3 5 - - Dr. S. Misra Non-Executive 5 1 1 - 5 3 Yes Yes Mr. V.T. Moorthy Non-Executive 1 - - - 5 5 - Yes Mr. J.P. Nayak Non-Executive 9 1 2 4 5 4 Yes Yes Mr. S. Rajgopal UTI Nominee, Independent 1 - - - 5 5 Yes Yes Mr. D.D. Rathi Non-Executive 6 2 1 - 5 5 Yes * At the Board meeting held on 7th July, 2006, Mr. G.M. Dave was appointed Additional Director and Mr. A. R. Gandhi resigned from the Board. @ Annual General Meeting (AGM) held on 24th August, 2005 at Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 400 020. # Extraordinary General Meeting (EGM) held on 20th February, 2006 at Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 400 020 1. Independent Director means a director defined as such under Clause 49 of the Listing Agreement. 2. Excluding Directorship in foreign companies and companies under Section 25 of the Companies Act, 1956. 3. Only two Committees viz. the Audit Committee and the Shareholders / Investor Grievance Committee are considered. 4. No Director is related to any other Director on the Board, except for Mr. Kumar Mangalam Birla and Mrs. Rajashree Birla, who are son & mother respectively. (16)

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

to express their views on agenda items and can discuss any matter at the meeting with the permission of the Chairman. The Board guides the management in achieving its goals and creating value for all stakeholders. Apart from the matters statutorily required to be placed before the Board, the working of all Units of your Company are also placed before the Board. The details of Board meetings held during FY2005-2006 are as outlined below: Date of Board Meeting City No. of Directors Present 23rd April, 2005 Mumbai 9 23rd July, 2005 Mumbai 9 22nd October, 2005 Mumbai 6 26th December, 2005 Mumbai 6 21st January, 2006 Mumbai 8 (17) Code of Conduct The Board shall lay down a Code of Conduct for all Board members and senior management of the company. The Code of Conduct shall be posted on website of the company. All Board members and Senior Management personnel shall affirm compliance with the code on an annual basis. The Annual Report of the company shall contain a declaration to this effect signed by the CEO. The Board of Directors of your Company have laid down a Code of Conduct (the Code) applicable to all Board Members and Senior Management personnel of your Company. A declaration from the CEO of your Company to the effect that all Board Members and Senior Management personnel of your Company have affirmed compliance with the Code, forms a part of this Report. The Code has been posted on the website of your Company www.ultratechcement.com DECLARATION As provided under Clause 49 of the Listing Agreement with the Stock Exchanges, the Board Members and the Senior Management Personnel have affirmed compliance with the Code of Conduct for the year ended 31st March, 2006. Mumbai S.Misra 30th June, 2006 Manager & CEO

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

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

approval. 6. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems. 7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. 8. Discussion with internal auditors any significant findings and follow up there on. 9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. 10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. 11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors, if any. The Audit Committee reviews the following information: 1. Management Discussion and Analysis of financial condition and results of operations, 2. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management, 3. Management letters / letters of internal control weaknesses issued by the statutory auditors, if any, 4. Internal audit reports relating to internal control weaknesses, and 5. The appointment, removal and terms of remuneration of the Chief Internal Auditor. (19) III. SUBSIDIARY COMPANIES At least one independent director on the Board of Directors of the holding company shall be a director on the Board of Directors of a material non-listed Indian subsidiary company. The Audit Committee of the

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

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

Mr. V.T. Moorthy 420 Mr. J.P. Nayak 1,276 Mr. S. Rajgopal Mr. D.D. Rathi (F) Management As part of the Directors Report or as an addition thereto, a Management Discussion and Analysis Report should form part of the Annual Report to the shareholders. The Management Discussion and Analysis Report forms part of the Annual Report and is in accordance with the requirements laid out in Clause 49 of the Listing Agreement. Senior management shall make disclosures to the Board relating to all material financial and commercial transactions, where they have personal interest, that may have a potential conflict with the interest of the company at large (for e.g. dealing in company shares, commercial dealings with bodies, which have shareholding of management and their relatives etc.) No material transaction has been entered into by your Company with the Promoters, Directors or the Management, their subsidiaries or relatives etc., that may have a potential conflict with interests of your Company. (G) Shareholders In case of the appointment of a new director or re-appointment of a director the shareholders must be provided with the details of Directors Details of the Directors seeking appointment / re-appointment at the ensuing AGM are provided in the Notice convening the AGM. Quarterly results and presentations made by the company to analysts shall be put on companys website, or shall be sent in such a form so as to enable the stock exchange on which the company is listed to put it on its own website. Press Releases and financial results are made available on the website of your Company (www.ultratechcement.com) and also that of the Aditya Birla Group (www.adityabirla.com).

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

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

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

a) Significant changes in the Companys internal control over financial reporting during the year; b) all significant changes in accounting policies during the year, if any, and that the same have been disclosed in the notes to the financial statements; c) any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control system over financial reporting. (23) Whether special resolutions passed in the above mentioned General Meetings: Yes The following resolutions were passed as special resolutions: (A) At the EGM held on 20th February, 2006: i. approval to the Scheme of Amalgamation of Narmada Cement Company Limited(NCCL) with your Company. ii. approval to the Board to issue and allot equity shares of the Company to the members of NCCL. (B) At the AGM held on 11th October, 2004: i. alteration of the Articles of Association of your Company. ii. change in name of your Company. Whether any special resolution passed last year through postal ballot details of voting pattern No Person who conducted the postal ballot exercise N.A. Whether any special resolution is proposed to be conducted through postal ballot N.A. Procedure for postal ballot N.A. VII. MEANS OF COMMUNICATION Quarterly results Which newspapers normally published in Newspaper Cities of Publication Business Standard All editions Loksatta Mumbai Any website, where displayed www.ultratechcement.com www.adityabirla.com Whether the Company Website displays All official news releases Yes Presentation made to Institutional Investors/Analysts No General Shareholder Information Part of this annual report

VI. GENERAL BODY MEETINGS Details of General Meetings Year Type Location Date Time 2006 EGM Birla Matushri Sabhagar, 20th February, 2006 3.00 pm 19, New Marine Lines, Mumbai 400 020 2005 AGM Birla Matushri Sabhagar, 24th August, 2005 2.00 pm 19, New Marine Lines, Mumbai 400 020 2004 AGM Birla Matushri Sabhagar, 11th October, 2004 2.00 pm 19, New Marine Lines, Mumbai 400 020 2003 AGM L & T House, Ballard Estate, 30th May, 2003 11.00 am Mumbai 400 001 (24) SHAREHOLDER INFORMATION 1. Annual General Meeting - Date and Time : 28th August, 2006 at 2.00 pm - Venue : Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 400 020 2. Financial Calendar - Financial reporting for the quarter ended 30th June, 2006 : End July,2006 - Financial reporting for the half year ending 30th September, 2006 : End October,2006 - Financial reporting for the quarter ending 31st December, 2006 : End January,2007 - Financial reporting for the year ending 31st March, 2007 : End April,2007 - Annual General Meeting for the year ending 31st March, 2007 : End July/August, 2007 3. Dates of Book Closure : 17th August, 2006 to 28th August, 2006 (both days inclusive) 4. Dividend Payment Date : On or after 28th August, 2006 5. Registered Office : UltraTech Cement Limited B Wing, Ahura Centre, 2nd Floor, Mahakali Caves Road, Andheri (East), Mumbai 400093. Tel.: (022) 66917800

Fax: (022) 66928109 Email:sharesutcl@adityabirla.com Web: www.ultratechcement.com www.adityabirla.com 6. (a) Listing Details : Equity Shares Non Convertible Debentures 1. Bombay Stock Exchange Limited 1. Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers Phiroze Jeejeebhoy Towers Dalal Street, Mumbai 400001. Dalal Street, Mumbai 400001. 2. National Stock Exchange of India Limited 2. National Stock Exchange of India Limited Exchange Plaza Exchange Plaza Bandra-Kurla Complex Bandra-Kurla Complex Bandra (East), Mumbai 400051. Bandra (East), Mumbai 400051. Note: Listing fees for the year 2006-07 has been paid to the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited. (25) (b) Overseas Depository for GDRs : Citibank N. A. Depository Receipt Services 111, Wall Street, New York; NY-10043 USA Tel: +12126577808 Fax: +12126575398 (c) Domestic Custodian of GDRs : Citibank N.A. Custody Services Ramnord House 77, Annie Besant Road, Worli, Mumbai 400 025 Tel: (022) 2497 8066 Fax: (022) 2497 8060 7. Stock Code: Stock Code Reuters Bloomberg Bombay Stock Exchange Limited 532538 ULTC.BO UTCEM IN National Stock Exchange of India Limited ULTRACEMCO ULTC.NS NUTCEM IN 8. Stock Price Data: Bombay Stock Exchange Limited National Stock Exchange of India Limited High Low Close Avg. Vol. High Low Close Avg. Vol.

(In Rs.) (In Rs.) (In Rs.) (In Nos) (In Rs.) (In Rs.) (In Rs.) (In Nos) Apr-05 377.85 331.25 333.40 47,596 379.70 331.00 334.15 73,536 May-05 367.00 315.10 324.90 39,828 368.30 315.00 325.55 60,377 Jun-05 358.50 314.00 352.45 72,480 359.45 295.40 353.70 121,283 Jul-05 430.00 348.00 380.75 91,970 415.00 347.00 381.60 133,293 Aug-05 448.40 375.00 439.05 117,163 448.80 370.05 438.00 157,311 Sep-05 495.00 406.00 466.30 59,730 498.00 425.00 466.00 92,972 Oct-05 475.00 381.00 398.15 41,600 473.00 380.00 399.85 52,377 Nov-05 477.05 403.00 450.00 34,284 477.80 400.00 450.20 57,260 Dec-05 464.50 415.00 427.15 44,894 464.20 344.95 427.45 63,241 Jan-06 539.90 421.00 518.55 50,800 538.00 420.10 518.20 81,520 Feb-06 565.00 498.20 560.50 51,136 566.00 499.05 561.45 59,501 Mar-06 689.00 562.50 684.45 71,952 689.80 560.15 683.05 97,305 (26) 9. Stock Performance: 10. Stock Performance and Returns : Absolute Returns (In %) (In Percentage) 1 Year 3 Years 5 Years UltraTech 93.1 - BSE Sensex 73.7 270.7 213.0 NSE Nifty 67.1 247.8 196.3 Annualised Returns (In %) (In Percentage) 1 Year 3 Years 5 Years UltraTech 93.1 - BSE Sensex 73.7 54.7 25.6 NSE Nifty 67.1 51.5 24.3 11. Registrar and Transfer Agent : Sharepro Services (India) Pvt. Ltd. (For share transfers and other communication Satam Estate, 3rd Floor, relating to share certificates, Above Bank of Baroda, dividend and change of address) Cardinal Gracious Road, Chakala, Andheri (East), Mumbai 400099. Tel: (022) 2821 5168 / 2834 8218 Fax : (022) 2837 5646 Email: sharepro@vsnl.com 12. Share Transfer system : Share transfer in physical form are registered and returned within a period of 15 days from the date of receipt, if the documents are clear in all respects. Officers of the Company have been authorised to approve

transfers upto 5,000 shares in physical form under one transfer deed. One Director jointly with one Officer of the Company have been authorised to approve transfers exceeding 5,000 shares under one transfer deed. 60 80 100 120 140 160 180 200 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Sensex UltraTech Nifty (Indexed) (27) The Registrar & Transfer Agent attend to investor grievances in consultation with the Secretarial Department of the Company. 2005-06 2004-05 Transfer Period No. of No. of % No. of No. of % (in days) transfers shares transfers shares 1 15 1,722 55,565 48.68 25,602 860,561 96.19 16 20 969 32,782 28.73 594 17,294 2.23 21 30 791 25,786 22.59 419 13,043 1.58 Total 3,482 114,133 100.00 26,615 890,898 100.00 Number of pending share transfers : 109 transfers for 4,271 shares pending as as at 31st March, 2006 registered notices to sellers have been issued. 13. Investor Services: Complaints received during the year Nature of complaints 2005-06 2004-05 Received Cleared Received Cleared Relating to Transfer, Transmission, 45 45 31 31 Dividend, Interest, Demat & Remat and Change of address etc. Legal proceedings on share transfer issues, if any: There are no major legal proceedings relating to transfer of shares.

14. Distribution of Shareholding as on 31st March : 2006 2005 No. of Equity No. of % of No. of % of No. of % of No. of % of shares held share share shares share share share shares share holders holders held holding holders holders held holding 1 100 251,388 88.21 8,194,014 6.59 283,334 89.03 9,101,068 7.32 101 200 19,563 6.87 2,907,473 2.34 21,008 6.60 3,116,206 2.51 201 500 9,588 3.36 3,043,010 2.45 9,727 3.06 3,064,914 2.46 501 1000 2,744 0.96 1,971,619 1.58 2,606 0.82 1,846,556 1.48 1001 - 5000 1,428 0.50 2,672,952 2.15 1,339 0.42 2,397,253 1.93 5001-10000 99 0.04 696,917 0.56 80 0.03 546,816 0.44 10001 & above 169 0.06 104,912,636 84.33 122 0.04 104,325,808 83.86 Total 284,979 100.00 124,398,621 100.00 318,216 100.00 124,398,621 100.00 (28) 15. Category of Shareholding as on 31st March : 2006 2005 Category No. of % of No. of % of No. of % of No. of % of share share shares share share share shares share holders holders held holding holders holders held holding Promoters & Persons Acting in Concert 2 0.00 63,542,320 51.08 2 0.00 63,542,320 51.08 Mutual Funds & UTI 55 0.02 4,027,732 3.24 69 0.02 4,757,670 3.83 Banks, FIs and Insurance Companies 125 0.04 7,830,531 6.29 148 0.05 9,871,096 7.94 FIIs 144 0.05 9,327,078 7.50 158 0.05 9,154,348 7.36 GDRs 2 0.00 732,132 0.59 2 0.00 1,111,658 0.89 Corporates 2,413 0.85 17,937,048 14.42 2,495 0.79 16,151,940 12.98 NRIs/OCBs 3,442 1.21 805,924 0.65 3,609 1.13 611,758 0.49 Indian Public 278,796 97.83 20,195,856 16.23 311,733 97.96 19,197,831 15.43 Total 284,979 100.00 124,398,621 100.00 318,216 100.00 124,398,621 100.00 16. Dematerialisation of Shares and Liquidity : 95.31% of outstanding equity have been dematerialised as on 31st March, 2006. Trading in equity shares of the Company is permitted only in the dematerialised form with effect from 5th April, 1999, as per notifications issued by Securities and Exchange Board of India (SEBI).

17. Details on use of public funds obtained : Not Applicable in the last three years 18. Outstanding GDRs/Warrants and : 732,132 GDRs are outstanding as on 31st March, 2006. Convertible Bonds Each GDR represents one underlying equity share. There are no warrants / convertible bonds outstanding as at the year end. (29) 19. Plant Locations : Andhra Pradesh Awarpur Gujarat Cement Works Cement Works Cement Works Bhogasamudram Tadipatri, P.O. Awarpur Cement Project Kovaya -365541, Anantapur District, Taluka: Korpana, Taluka - Rajula, Andhra Pradesh 515 415 Dist. Chandrapur Dist - Amreli, Tel: 08558-288841 Maharashtra 442 917 Gujarat Fax: 08558-288821/31 Tel: 07173-266322 Tel: 02794-283056 Fax: 07173-266339 Fax: 02794-283007 Hirmi Jafrabad Cement Works Arakkonam Cement Works Village: Babarkot,Taluka:Jafrabad Cement Works Post Hirmi Dist. Amreli, Gujarat 365 540 Chitteri Village, Taluka Simga, Dist. Raipur, Tel: 02794-245356 District Vellore, Chhattisgarh Fax: 02794-245110 Arakkonam 631 003, Pin 493 195 Tamil Nadu Tel: 07726-281269 Tel: 04177-329504 Fax: 07726-281268 Fax: 04177-233585 Jharsuguda Magdalla Cement Works Ratnagiri Cement Works Cement Works Magdalla Port, Dumas Road MIDC Industrial Estate, Zadgaon Block Near Dhutra Railway Station, Surat, Gujarat 395 007 Ratnagiri, Maharashtra 415 639 P.O. Arda 768 202 Tel: 0261-2721318 Tel: 02352-223679 Dist. Jharsuguda, Orissa Fax: 0261-2726952 Fax: 02352-221807 Tel: 06645-283161 Fax: 06645-283108 West Bengal Cement Works Near EPIP Plot, Muchipara, Post: Rajbandh, Durgapur 713 212 Tel: 0343-2533029 Fax: 0343-2533358 20. Investor Correspondence Registered Office:

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

1. Share transfer requests are acted upon within 15 days from the date of their receipt. In case no response is received from the Company within 30 days of lodgement of transfer request, the lodger should immediately write to the Company or its Registrar & Transfer Agent with full details so that necessary action could be taken to safeguard interest of the concerned against any possible loss / interception during postal transit. 2. Dematerialisation requests duly completed in all respects are normally processed within 7 days from the date of their receipt. 3. Equity Shares of the Company are under compulsory demat trading by all investors, with effect from 5th April 1999. Considering the advantages of scripless trading, shareholders are requested to consider dematerialisation of their shareholding so as to avoid inconvenience in future. 21. Per Share Data : 2005-06 2004-05 Net Earning (Rs. Crs.) @ 229.76 79.69 Cash Earning (Rs. Crs.) @ 441.04 233.47 EPS (Rs.) @ 18.46 0.23 EPS Growth (%) 7926 (93) CEPS (Rs.) @ 35.43 18.77 Dividend Per Share (Rs.) 1.75# 0.75 Dividend Payout on net profits (%) 9.48 11.71 Book Value Per Share (Rs.) 83.40 85.78 Price to Earning* 37.08 1541.52 Price to Cash Earnings* 19.32 18.89 Price to Book Value* 8.21 4.13 * Based on Stock Price as on 31st March @ Before exceptional items # Recommended by Board for approval of Shareholders at ensuing Annual General Meeting. (31) 4. The equity shares of the Company have been admitted with the National Securities Depository Limited (NSDL) and Central Depository Services (I) Limited (CDSL) bearing ISIN No. INE481G01011.

Correspondence with the Company Shareholders / Beneficial Owners are requested to quote their Folio No. / DP & Client ID Nos. as the case may be, in all correspondence with the Company. All correspondence regarding shares & debentures of the Company should be addressed to the Companys Registrar & Transfer Agent. Non-Resident Shareholders Non-resident members are requested to immediately notify: Indian address for sending all communications, if not provided so far; Change in their residential status on return to India for permanent settlement; Particulars of their NRE Bank Account with a bank in India, if not furnished earlier. Others 1. In terms of the Regulations of NSDL & CDSL, the Bank Account details of Beneficial Owners of Shares in demat form will be printed on the dividend warrants as furnished by the Depository Participants. The Company will not entertain any request for change of bank details printed on their dividend warrants. In case of any changes in your bank details please inform your DP immediately. 2. Shareholders holding shares in physical form are requested to notify to the Company, change in their address / pin code number and Bank Account details promptly in writing, under the signatures of sole / first joint holder. Beneficial Owners of shares in demat form are requested to send their instructions regarding change of name, change of address, bank details, nomination, power of attorney, etc. directly to their DP as the same are maintained by the DPs. 3. To prevent fraudulent encashment of dividend warrants, members are requested to provide their Bank Account Details (if not provided earlier) to the Company (if shares held in physical form) or to DP (if shares held in demat form), as the case may be, for printing of the same on their dividend warrants. 4. In case of loss / misplacement of shares, investors should immediately lodge a FIR / Complaint with

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

The compliance of the conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementations thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, and the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company. For G.P.Kapadia & Co. Chartered Accountants Atul B. Desai Partner (Membership No.30850) Place : Mumbai Date : 12th July, 2006 (33) Making a Difference The philosophy of caring, giving, developing and empowering an underserved people is part of our Groups DNA. It is a common stream that flows through the veins of all our Group Companies. Your Companys Social Projects in Indias hinterland are carried out under the aegis of the Aditya Birla Centre for Community Initiatives and Rural Development, led by Mrs. Rajashree Birla, your Director. These Social Projects are in sync with felt needs of the communities and goes in tandem with the Groups Social Vision which is to make a qualitative difference to the lives of the weaker sections of society in proximity to our plants and in doing so improve the human development index

of our nation. For the year 2005-06, your Companys work encompassed nearly six lacs people. A summary of our involvement is as indicated. Health Care Medical camps were conducted in host communities and villagers medically examined and provided necessary treatment. Treatment for cataract, tuberculosis, pre and post natal care for women were some of the areas covered, AIDS awareness camps generated greater awareness, Pulse Polio programmes and provision of safe drinking water were some of the other health care initiatives. Education Balwadis, promoting Governments mid-day meal schemes in schools, disbursing merit scholarships (girl students in particular), conducting literacy classes under Adult Education Scheme, science fairs, popularising Bal Sanskar Kendras were some of the programmes conducted for educating the people in the villages surrounding your Companys plants. SOCIAL REPORT Balwadi (34) Sustainable Livelihood Agriculture through farm-based programmes, training of farmers, setting up of vermi-compost units, seed multiplication and intercropping, animal immunisation, water harvesting by erecting check-dams and roof-water harvesting benefited farmers around your Companys plants. Women Self-Help Groups Tailoring training centres, distribution of sewing

machines, formation of self-help groups and other income generating activities such as agarbatti making, mushroom cultivation, blanket weaving, knitting and earthworm cultivation provided sustainable means of livelihood to women. Women engaged in gainful employment Social Welfare Mass marriage programme for scheduled caste couples, exhibition and training on balanced diet and food preservation for women and girl students, awareness drive on Knowledge, Attitude and Practices, were conducted to increase women empowerment. Infrastructure Your Company also contributed towards infrastructure development, construction of health care centres and facilities for the under-served communities, including construction of low cost toilets. In these humanitarian endeavours, your Company partners with the Government, District Authorities, Village Panchayats and other like-minded NGOs, and above all the communities, who seek to serve. We believe only through collective efforts can we usher in a more equitable society. Your Board and your Companys employees are committed to this process. (35) ENVIRONMENT REPORT Environment conservation A way of life We believe in sustainable development. For us this translates into meeting todays needs without jeopardising the needs of future generations. For us this means understanding that the earths resources are finite and that as far as possible, using these sparingly and in a responsible manner makes greater business sense. We subscribe to the triple-bottom line accountability. So we regard social, economic and environmental

responsibility as integral elements that drive business. We believe these are interdependent and equally important to our success as a Corporate. At all of your Companys Plants at Awarpur and Ratnagiri in Maharashtra, Kovaya, Jafrabad and Magdalla in Gujarat, Hirmi in Chhattisgarh, Arakkonam in Tamil Nadu, Tadipatri in Andhra Pradesh, Jharsuguda in Orissa and Durgapur in West Bengal, we adopt clean technologies and processes that combine both economic progress and sustainable environment. Our plants are ISO 14001 Environment Management Systems Certified and adhere to OHSAS 18001 standards. Professional Environment Auditors such as Det Norske Veritas, the State Pollution Control Boards certified auditors and Environmental Systems Auditors conduct an in-depth environmental audit on our plants. Their Audit Reports validate our commitment to environmental conservation. Lush green surroundings around your Companys Unit (36) State-of-the-art automated industrial Effluent Treatment Plants (ETP) operate across all of your Companys manufacturing units. The treated effluent inclusive of treated sewage thrown up by the plants is recycled and is used for horticulture and irrigation. To prevent air borne dust particles from escaping into the atmosphere, equipment like the state-oftheart, highly efficient reverse air Bag House, Electrostatic Precipitators and Jet Pulse Filters are well in place. The dust collected is fully recycled into the system. Continuous stack monitoring instruments are installed in Kiln bag house, cooler and cement mills stack for online monitoring of stack emission. Interlocking of all drives connected to pollution control unit has been provided to avoid emission in case of failure of pollution control equipment. We use a blending technology that gives us the flexibility to use low-grade limestone without

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

(37) DIRECTORS REPORT TO THE SHAREHOLDERS Dear Shareholders, Your Directors are pleased to present the 6th Annual Report alongwith the Audited Accounts of your Company for the year ended 31st March, 2006. FINANCIAL RESULTS (Rs. in Crores) 2005-06 2004-05 Gross Turnover 3,785.29 3,057.92 Gross Profit 501.62 265.02 Less: Depreciation 216.03 221.78 Profit before Tax & Diminution 285.59 43.24 Provision for diminution 76.84 Profit/(Loss) before Tax 285.59 (33.60) Tax expenses 55.83 (36.45) Profit after Tax 229.76 2.85 Add: Balance brought forward from Previous Year 10.11 17.92 Surplus available for Appropriation 239.87 20.77 Appropriation: Debenture Redemption Reserve 9.45 General Reserve 25.00 Proposed Dividend 21.79 9.33 Corporate Tax on Dividend 3.06 1.33 Balance transferred to Balance Sheet 180.57 10.11 (The accounts for the year under review include the performance of the erstwhile Narmada Cement Company Limited (NCCL) for the period 1st October, 2005 to 31st March, 2006 and are therefore not comparable with the previous years figures) For the year under review, your Company earned revenues of Rs.3,299.45 crores compared to Rs.2,606.90 crores in the previous year. After providing for Interest of Rs.89.64 crores (Rs.106.88 crores) and Depreciation of Rs.216.03 crores (Rs. 221.78 crores), the Profit before Tax stood at Rs.285.59 crores (Rs.43.24 crores). Profit before tax and provision for diminution in value of investments Rs.NIL (Rs76.84 crores) stood at Rs.285.59 crores {(Rs.33.60 crores)}.Profit after tax stood at Rs.229.76 crores (Rs2.85 crores).

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

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

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

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

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

COST AUDITOR Pursuant to the provisions of Section 233B of the Companies Act, 1956, your Directors have appointed M/s N.I. Mehta & Co., Cost Accountants, Mumbai as the Cost Auditors to conduct the Cost Audit of your Company for the financial year ending 31st March, 2007, subject to the approval of the Central Government. APPRECIATION Your Directors place on record their appreciation of the assistance and guidance provided by the various Ministries, the Central and State Governments and all Regulatory Bodies. Your Directors also thank the financial institutions and banks for their support. Your Directors also acknowledge the commitment and contribution of your Companys employees . Your involvement as shareholders is greatly valued. Your Directors look forward to your continuing support. For and on behalf of the Board Mumbai Kumar Mangalam Birla 7th July, 2006 Chairman (41) Statement u/s 217(1) (e) of the Companies Act, 1956 A. CONSERVATION OF ENERGY a) Energy Conservation Measures taken Installation of VSD panels Installation of belt bucket elevator for feeding Raw Meal into silo Modification of Cyclone inlet Installation of LRS Optimisation of Plant lighting Flat belts in Cement mill Area b) Additional investments and proposals being implemented for reduction of consumption of energy Installation of VSD panels Installation of Variable Speed Drives Replacement of Preheater fans with energy saving PH fans Usage of Humicool fills for P&V system c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods

The proposals stated above shall result in reduction in power consumption and corresponding reduction in the cost of production d) Total energy consumption and energy consumption per unit of production as per FORM-A B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATIONS 1. Efforts in brief, made towards technology absorption, adaptation and innovation: Participation in national and international conferences Imparting training to personnel by foreign technicians and Indian experts in various manufacturing techniques 2. Benefits derived as a result of the above efforts: Improvement in existing processes and reducing consumption of scarce raw materials and fuel Cost reduction Market Leadership 3. Information regarding technology imported during the last 5 years : Nil FORM - B Form for disclosure of particulars with respect to absorption A. RESEARCH AND DEVELOPMENT (R&D) 1. Specific areas in which R&D carried out by the Company Evaluation of use of Mineralisers Nonferrous sludge as additive Fused slag Flue dust as additive Increased use of Fly Ash Content in PPC without affecting quality Use of CFD technique for optimising ESP Performance 2. Benefits derived as a result of the above R&D The above initiatives have resulted in Energy Conservation , reduction in relative cost of Production and reduction in Emission levels 3. Future plan of action Commercialisation of alternative fuels Optimisation of chemistry of raw mix Rs. in Crores 4. Expenditure on R&D 2005-06 2004-05 a. Capital Expenditure 0.58 0.49

b. Recurring Expenditure 5.18 2.77 c. Total expenditure 5.76 3.26 d. Total R& D expenditure as % of turnover 0.15 0.10 C. FOREIGN EXCHANGE EARNINGS AND OUTGO The information on foreign exchange earnings and outgo is contained in Schedule 22(6) and (5) of the Accounts. ANNEXURE TO THE DIRECTORS REPORT (42) FORM A TOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER UNIT OF PRODUCTION A. Power and Fuel Consumption : Current Year Previous Year 2005-06 2004-05 1. Electricity (a) Purchased Unit 000 Kwh 423050 288469 Total Amount Rs. Crores 169.64 122.00 Rate/unit Rs. 4.01 4.23 (b) Own generation** (i) Through Diesel generator Unit 000 Kwh 305267 291512 Units(Kwh) per Ltr. of fuel oil 4.15 4.10 Cost/Unit Rs. 4.27 3.61 (ii) Through Steam Turbine/Generator Unit 000 Kwh 256036 318523 Units(Kwh) per kg of coal 0.76 0.89 Cost/Unit Rs. 1.41 1.32 (iii) Through Steam Turbine/Generator Unit 000 Kwh 292707 306873 Units(Kwh) per kg of Naphtha 4.89 4.41 Cost/Unit Rs. 5.28 4.63 2. Coal (Slack,Steam & ROM including lighting Coal) For Co-generation of Steam & Power Quantity Tonnes 335008 357065 Total Cost Rs. Crores 29.36 37.17 Average rate Rs./Tonnes 876 1041 For Process in Cement Plants Quantity Tonnes 1981134 1912353

Total Cost Rs. Crores 407.98 395.03 Average rate Rs./Tonnes 2059 2066 3. Furnace Oil (Including Naphtha) Quantity K. Ltrs 159240 171897 Total amount Rs. Crores 256.82 222.62 Average rate Rs./K. ltr 16128 12951 4. Light Diesel Oil (LDO) Quantity K. Ltrs 1508 1004 Total amount Rs. Crores 4.03 1.87 Average rate Rs./K. ltr 26710 18679 5. High Speed Diesel Oil (HSD) Quantity K. Ltrs 288 293 Total amount Rs. Crores 0.89 0.67 Average rate Rs./K. ltr 31004 22700 B. Consumption per unit of production: Product : Cement Electricity # Kwh 88.70 86.98 Furnace oil Ltr 0.22 0.26 Coal Tonne 0.134 0.132 ** Excludes Auxillary & Wheeling # Excludes non production power consumption (Current year figures include that of NCCL for the period 1st October, 2005 to 31st March, 2006 and are therefore not comparable with previous year figures) For and on behalf of the Board Mumbai Kumar Mangalam Birla 7th July, 2006 Chairman (43) ANNEXURE TO THE DIRECTORS REPORT INFORMATION U/S 217 (2A) OF THE COMPANIES ACT,1956, READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES,1975 (AS AMENDED) AND FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2006 (A) EMPLOYED THROUGHOUT THE FINANCIAL YEAR UNDER REVIEW AND WERE IN RECEIPT OF REMUNERATION FOR THE FINANCIAL YEAR IN THE AGGREGATE OF NOT LESS THAN Rs.24,00,000/- P.A. Sl. Name Age Qualification Designation Date of Experience Gross Particulars of Last Employment,

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

No Yrs Commencement of Cessation of As on Remuneration Employer, Last Post, No.of Yrs. Employment Employment 31-03-2006 (Rs.) 1 Kapoor B. 60 BA, MBA Vice President - 01-04-2004 14-10-2005 35 yrs 2,224,532 Larsen & Toubro Limited Marketing (East) Vice President, 10 yrs, 10 months 2 Mayekar M. M. 36 B.Com Supervisor 01-04-2004 30-04-2005 16 yrs 205,775 Larsen & Toubro Limited Assistant, 9 yrs 11 months 3 Prasad H.S. 58 B.A. Assistant Manager 01.04.2004 30.04.2005 37 Yrs 238,832 Larsen & Toubro Ltd. Asst.Manager , 21 Yrs 4 Muralidharan V. M. 60 B.Sc, DMIT Senior Executive 01-04-2004 28-022006 38 yrs 5,716,965 Larsen & Toubro Limited President EVP - 19 yrs 3 months 1 Remuneration received includes salary with allowances, bonus & exgratia, performance linked payment, Contribution to Provident and Superannuation Fund, reimbursement of cash perks , LTA and value of amenities provided as per Income Tax Rules. 2 Employment is non-contractual in all the above cases subject to one month/three months notice from either side depending upon the office held by the employee, except in the case marked by (#). 3 None of the above employees is a relative of any Director of the Company. For and on behalf of the Board Mumbai Kumar Mangalam Birla 7th July, 2006 Chairman (44) TO THE MEMBERS OF ULTRATECH CEMENT LIMITED 1. We have audited the attached Balance Sheet of ULTRATECH CEMENT LIMITED as at 31st March, 2006, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. These

Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above : a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit; b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006;

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

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

nature of its business. (ix) We have broadly reviewed the books of account and records maintained by the Company relating to the manufacture of cement, pursuant to the order made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. (x) In respect of Statutory dues: (a) According to the information and explanations given to us, the Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-Tax, Sales-Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues with the appropriate authorities during the year. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2006 for a period of more then six months from the date they became payable. (c) According to the information and explanations given to us, details of disputed Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited as on 31st March, 2006 on account of any dispute are given below: Name of Statute Nature of the dues Amount Period to which Forum where dispute (Rs. in Crs.) the amount relates is pending (Assessment years) Sales Tax Act Sales Tax and interest 16.36 1994-1995 Supreme Court 12.52 1985-2004 Tribunal (s) 13.32 1999-2000, Appellate Authorities 2001-2004 3.38 1998-2004, Assessing Officers

2005-2006 Central Excise Act Excise Duty, penalty 1.00 1994-1995, Supreme Court and interest 2000-2006 15.04 1994-2004 Tribunal (s) 1.88 1996-2005 Appellate Authorities Customs Act Custom Duty and 30.41 2002-2006 Tribunal (s) penalty 1.19 2002-2004 Assessing Officers Land Revenue Act Surface Rent and 2.58 1987-2006 Supreme Court interest 0.59 2003-2006 Assessing Officers (xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions, banks and debenture holders. ANNEXURE TO THE AUDITORS REPORT (47) (xii) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from a bank, are not prima facie prejudicial to the interests of the Company. (xiii) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained, other than temporary deployment pending application. (xiv) According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, funds raised on short term basis have, prima facie, not been used during the year for long term investment. (xv) According to the information and explantations given to us and the records examined by us, securities/ charges have been created in respect of the debentures issued. (xvi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year. For S. B. BILLIMORIA & CO. For G.P. KAPADIA & CO. Chartered Accountants Chartered Accountants NALIN M. SHAH ATUL B. DESAI

Partner Partner (Membership No.15860) (Membership No.30850) Mumbai, 7th July, 2006 ANNEXURE TO THE AUDITORS REPORT (48) BALANCE SHEET AS AT MARCH 31, 2006 Rs. in Crores Previous Schedules Year SOURCES OF FUNDS Shareholders Funds Share Capital 1A 124.40 124.40 Share Capital Suspense 1B 0.09 Reserves and Surplus 2 913.78 942.73 1,038.27 1,067.13 Loan Funds Secured Loans 3 1,221.93 1,253.35 Unsecured Loans 4 229.90 278.03 1,451.83 1,531.38 Deferred Tax Liabilities (Net) 576.96 581.71 TOTAL 3,067.06 3,180.22 APPLICATION OF FUNDS Fixed Assets Gross Block 5 4,605.38 4,304.29 Less : Depreciation 2,068.21 1,755.39 Net Block 2,537.17 2,548.90 Capital Work-in-Progress 141.03 48.18 2,678.20 2,597.08 Investments 6 172.39 184.79 Current Assets, Loans and Advances Inventories 7 379.57 283.71 Sundry Debtors 8 172.55 171.95 Cash and Bank Balances 9 61.60 56.26 Loans and Advances 10 158.80 325.73 772.52 837.65 Less: Current Liabilities & Provisions Current Liabilities 11 516.87 415.43 Provisions 12 39.18 23.87 556.05 439.30

Net Current Assets 216.47 398.35 TOTAL 3,067.06 3,180.22 Accounting Policies and Notes on Accounts 21 & 22 In terms of our report attached. KUMAR MANGALAM BIRLA Chairman For S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO. S. MISRA RAJASHREE BIRLA Chartered Accountants Chartered Accountants Manager & CEO R. C. BHARGAVA Y. M. DEOSTHALEE NALIN M. SHAH ATUL B. DESAI K. C. BIRLA S. MISRA Partner Partner Executive President & CFO J. P. NAYAK S. RAJGOPAL S. K. CHATTERJEE D. D. RATHI Mumbai, July 7, 2006 Company Secretary Directors (49) PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2006 Rs. in Crores Previous Schedules Year INCOME Gross Sales 3,785.29 3,057.92 Less : Excise Duty 485.84 451.02 Net Sales 3,299.45 2,606.90 Interest & Dividend Income 13 6.99 3.70 Other Income 14 30.01 17.37 Increase / (Decrease) in Stocks 15 39.12 20.91 3,375.57 2,648.88 EXPENDITURE Raw Materials Consumed 16 282.25 265.34 Manufacturing Expenses 17 1,205.15 1,060.83 Purchase of Finished Products 265.32 193.93 Payments to and Provisions for Employees 18 92.26 72.96 Selling, Distribution, Administration and Other Expenses 19 939.33 683.92 Interest 20 89.64 106.88 Depreciation 216.03 221.78 3,089.98 2,605.64 Profit Before Tax Expenses and Diminution 285.59 43.24 Less: Provision for Diminution in Value of Investment 76.84

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

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

Cash and Cash Equivalents at the End of the Year 61.60 56.26 Notes: 1. Cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 issued by the Institute of Chartered Accountants of India. 2. Purchase of fixed assets includes movements of capital work in progress between the beginning and the end of the year. 3. Previous years figures regrouped/ recasted wherever necessary. CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006 In terms of our report attached. KUMAR MANGALAM BIRLA Chairman For S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO. S. MISRA RAJASHREE BIRLA Chartered Accountants Chartered Accountants Manager & CEO R. C. BHARGAVA Y. M. DEOSTHALEE NALIN M. SHAH ATUL B. DESAI K. C. BIRLA S. MISRA Partner Partner Executive President & CFO J. P. NAYAK S. RAJGOPAL S. K. CHATTERJEE D. D. RATHI Mumbai, July 7, 2006 Company Secretary Directors (51) SCHEDULES Rs. in Crores Previous SCHEDULE 1A Year SHARE CAPITAL Authorised 130,000,000 Equity Shares of Rs. 10 each 130.00 130.00 Issued, Subscribed and Paid up 124.40 124.40 124,398,621 Equity Shares of Rs. 10 each fully paid-up Of the above, 99,521,437 equity shares of Rs. 10 each issued as fully paid-up for acquiring the Cement business pursuant to Scheme of Arrangement without payment being received in cash (58,464,717 shares are held by Grasim Industries Limited (Holding Company), {Prev. Year - 58,464,717} and 5,077,603 shares are held by Samruddhi Swastik Trading & Investment Limited (Subsidiary Company of Grasim Industries Limited), {Prev.Year - 5,077,603}). 124.40 124.40

SCHEDULE 1B SHARE CAPITAL SUSPENSE 87,258 Equity shares of Rs. 10 each to be issued as fully paid-up pursuant to 0.09 the Scheme of Amalgamation without payment being received in cash. (See Note B1) 0.09 SCHEDULE 2 RESERVES & SURPLUS Rs. in Crores Balance *Balance Additions Deduction/ Balance as at on Merger during Adjustments as at 31st As on the during 31st March, 05 01.10.05 year the year March, 06 Capital Reserve 24.87 0.15 25.02 Cash Subsidy Reserve 0.10 0.10 Debenture Redemption Reserve 129.43 9.45 138.88 General Reserve 778.22 (234.01) 25.00 569.21 Surplus as per Profit & Loss Account 10.11 229.76 (59.30) 180.57 942.73 (233.86) 264.21 (59.30) 913.78 Previous Year 950.54 2.85 (10.66) 942.73 *See Note B 1 SCHEDULE 3 SECURED LOANS Non-Convertible Debentures (See Note B 8a) 1,018.55 999.75 Other Loans: (See Note B 8b) Loans from Financial Institutions 5.82 Foreign Currency Loan 89.23 79.50 Loans from Banks: Cash Credit / Working Capital Borrowings from Banks Secured by Hypothecation of Stocks and Book debts 14.15 68.28 Other Loans (See Note B 8b) 100.00 100.00 1,221.93 1,253.35 (52) SCHEDULES Rs. in Crores Previous SCHEDULE 4 Year UNSECURED LOANS Short Term Loans from Banks 76.06 Sales Tax Deferment Loan 229.90 201.97

229.90 278.03 SCHEDULE 5 FIXED ASSETS Rs. in Crores PARTICULARS GROSS BLOCK DEPRECIATION NET BLOCK As at Assets Additions Deductions/ As at As at Cum. Dep For the Deductions/ Upto As at As at 31.3.05 transferred Adjustments 31.3.06 31.3.05 on assets year Adjustments 31.3.06 31.3.06 31.3.05 from NCCL transferred 01.10.05 from NCCL 01.10.05 Freehold land 66.97 2.56 69.53 69.53 66.97 Leasehold land 16.32 3.71 0.06 20.09 3.89 0.64 0.49 5.02 15.07 12.43 Buildings 448.06 16.70 3.82 0.02 468.56 120.05 4.92 12.88 (0.20) 138.05 330.51 328.01 Railway sidings 159.35 0.31 159.66 52.40 7.51 59.91 99.75 106.95 Plant & machinery 3,461.45 168.19 112.29 22.58 3,719.35 1,474.96 112.52 181.76 19.66 1,749.58 1,969.77 1,986.49 Furniture & fixtures 66.44 4.21 9.67 2.47 77.85 38.00 3.06 5.22 1.86 44.42 33.43 28.44 Jetty 76.63 3.97 80.60 61.11 0.33 3.97 65.41 15.19 15.52 Vehicles 9.07 0.52 1.09 0.94 9.74 4.98 0.42 1.01 0.59 5.82 3.92 4.09 Total 4,304.29 197.30 129.80 26.01 4,605.38 1,755.39 121.89 212.84 21.91 2,068.21 2,537.17 2,548.90 Previous year 4,275.84 45.17 16.72 4,304.29 1,547.94 218.49 11.04 1,755.39 Add: Capital work-in-progress 141.03 48.18 2,678.20 2,597.08 NOTES : Rs. in Crores A) Depreciation for the year 212.84 Add: Obsolescence 3.19 Depreciation as per Profit & Loss Account 216.03 B) 1. Leasehold Land includes Mining Rights. 2. Cost of Leasehold Land includes Rs. 6.09 Crores (Previous year Rs 6.09 Crores) for which the lease agreement has not been executed. 3. Cost of Plant and Machinery includes Rs. 29.89 Crores (Previous year Rs. 29.89 Crores) relating to railway

wagons given on operating lease to the Railways under Own Your Wagon Scheme. 4. Fixed Assets include assets of Rs. 123.64 Crores (Previous Year Rs. 121.44 Crores) not owned by the Company. 5. Fixed Assets amounting to Rs. 26.72 Crores (Previous Year Rs. 26.72 Crores) are held on Co-ownership with other Company. 6. The title deeds of some of the immovable properties transferred pursuant to the Scheme of Arrangement are yet to be transferred in the name of the Company. (53) SCHEDULES Rs. in Crores SCHEDULE 6 Previous INVESTMENTS - At Cost Year LONG TERM Government and Trust Securities -Unquoted (Rs. 10,000, Previous Year Rs.10,000) Pledged as Security Deposit Shares in Subsidiary Companies- Unquoted Fully paid-up Equity Shares of Rs. 10 each NIL Narmada Cement Company Limited (Previous Year 69,803,293) 237.39 50,000 Dakshin Cements Limited (Previous Year - 50,000) 1.21 1.21 Fully paid-up Equity Shares of Sri Lankan Rupee 10 each 40,000,000 UltraTech Ceylinco (Pvt.) Ltd. (Previous Year 40,000,000) 23.03 23.03 24.24 261.63 24.24 261.63 Less: Provision for Diminution in Value of Investment 76.84 24.24 184.79 CURRENT - Unquoted Units of Debt Schemes of Mutual Funds: Description No. of Units Face Value Amount a) Liquid Scheme - Dividend Plan: UTI Mutual Fund 2,672,257 10 4.66 LIC Mutual Fund 4,566,339 10 5.00 DSP Merill Lynch Mutual Fund 80,602 1,000 8.06 Birla Sunlife Mutual Fund 18,039,391 10 18.07 Tata Mutual Fund 29,937 1,000 3.00

Prudential ICICI Mutual Fund 2,000,335 10 2.00 Kotak Mahindra Mutual Fund 1,840,311 10 2.25 b) Fixed Maturity Plan - Dividend Plan: Birla Sunlife Mutual Fund 19,984,026 10 20.00 UTI Mutual Fund 15,047,759 10 15.05 Prudential ICICI Mutual Fund 10,017,937 10 10.02 Kotak Mahindra Mutual Fund 10,000,000 10 10.00 HSBC Mutual Fund 10,000,000 10 10.00 DSP Merill Lynch Mutual Fund 10,000,000 10 10.00 Standard Chartered Mutual Fund 10,038,500 10 10.04 LIC Mutual Fund 10,000,000 10 10.00 Tata Mutual Fund 5,000,000 10 5.00 ING Vysya Mutual Fund 5,000,000 10 5.00 148.15 172.39 184.79 Note: No. of Units of various Mutual Funds - Debt Schemes purchased and redeemed during the year are as follows: (A) Liquid Schemes (Dividend Plan)- Birla Sunlife Mutual Fund 525,358,908; Prudential ICICI Mutual Fund - 187,226,161; SBI Mutual Fund - 128,532,270; LIC Mutual Fund - 177,912,670; UTI Mutual Fund - 21,031,805; DSP Merill Lynch Mutual Fund - 1,659,168; HDFC Mutual Fund - 9,034,877; Kotak Mahindra Mutual Fund - 61,620,366; JM Mutual Fund - 7,567,514; Standard Chartered Mutual Fund - 51,394,861; HSBC Mutual Fund - 957,845; Franklin Templeton Mutual Fund - 109,995; Tata Mutual Fund - 1,504,009. (B) Floating Rate Schemes (Dividend Plan)- Prudential ICICI Mutual Fund - 9,998,700; UTI Mutual Fund - 9,931,966; LIC Mutual Fund - 16,660,920. (C) Short Term Schemes (Dividend Plan)- Prudential ICICI Mutual Fund - 9,141,353; Franklin Templeton Mutual Fund - 91,708. (54) Rs. in Crores SCHEDULE 7 Previous INVENTORIES Year Stores & Spare parts, Packing Material, Fuels and Scrap 201.02 165.41 Raw Materials 12.74 9.36 Work-in-progress 105.97 59.35 Finished Goods 59.84 49.59

379.57 283.71 SCHEDULE 8 SUNDRY DEBTORS Exceeding six months: Good and Secured 8.87 1.86 Good and Unsecured 1.69 1.50 Doubtful and Unsecured 1.56 12.12 3.36 Less: Provision for Doubtful Debts 1.56 10.56 3.36 Others: Good and Secured 89.56 48.74 Good and Unsecured 72.43 119.85 161.99 168.59 172.55 171.95 SCHEDULE 9 CASH AND BANK BALANCES Cash Balance on Hand 0.11 0.15 Bank Balance with Scheduled Banks: In Current Accounts 61.39 56.11 In Fixed Deposits Accounts 0.10 61.60 56.26 SCHEDULE 10 LOANS & ADVANCES Secured & Considered Good Loan against mortgage of House Property 2.23 3.07 Unsecured Considered Good: Loans and Advances receivable from Subsidiary Company 0.34 179.81 Deposits and Balances with Government and other Authorities (including accrued interest ) 31.40 26.16 Advances recoverable in cash or in kind or for value to be received 124.83 113.26 Advance Income Tax (Net of Provision) 3.43 Considered Doubtful: Advances recoverable in cash or in kind from - Subsidiary 2.81 - Others 0.22 156.79 325.47 Less: Provision for doubtful loans and advances 0.22 2.81

156.57 322.66 158.80 325.73 SCHEDULES (55) SCHEDULES Rs. in Crores Previous SCHEDULE 11 Year CURRENT LIABILITIES Sundry Creditors Small Scale Industries 0.78 0.60 (To the extent identified with available information) Parent Companies & Fellow Subsidiaries 4.09 Others 313.26 222.67 318.13 223.27 Security and Other Deposits 78.52 32.97 Advances from Customers 42.38 25.16 Amount transferable to Investor Education and Protection Fund, when due Unpaid Dividend 0.21 0.10 Other Liabilities 43.16 96.77 Interest accrued but not due on loans 34.47 37.16 516.87 415.43 SCHEDULE 12 PROVISIONS Provision for Contingency 3.56 Provision for Retirement Benefits 12.11 9.66 Provision for Tax (Net of Advance Tax) 2.22 Proposed Dividend 21.79 9.33 Corporate Dividend Tax 3.06 1.31 39.18 23.87 SCHEDULE 13 INTEREST & DIVIDEND INCOME Interest (Gross) on others 1.28 3.60 (Tax Deducted at Source Rs. 0.11 Crore, (Previous Year Rs. 0.62 Crore)) Dividend from Current Investments 2.22 0.10 Dividend from a Subsidiary 3.49 6.99 3.70 SCHEDULE 14

OTHER INCOME Lease Rent 3.93 4.60 Insurance Claim 0.19 Profit on Sale of Fixed Assets (Net) 0.21 Profit on Sale of Current Investments (Net) 0.08 Exchange Rate Difference (Net) 1.00 Unclaimed Credit Balances Written Back 0.81 0.20 Excess Provisions Written Back (Net) 11.60 0.35 Miscellaneous Income/ receipts 12.19 12.22 30.01 17.37 (56) SCHEDULES Rs. in Crores Previous Year SCHEDULE 15 INCREASE / (DECREASE) IN STOCKS Closing Stock Work-in-progress 105.97 59.35 Finished Goods 59.84 49.59 165.81 108.94 Opening stock Work-in-progress 59.35 44.07 Finished Goods 49.59 41.31 Add: Stock transferred from NCCL as on 1.10.05 21.13 130.07 85.38 Add: Increase / (Decrease) in Excise Duty on Stocks 3.38 (2.66) Increase / (Decrease) in Stocks 39.12 20.91 SCHEDULE 16 RAW MATERIALS CONSUMED Opening Stock 9.36 7.21 Add: Stock transferred from NCCL as on 1.10.05 1.57 Purchase and Incidental Expenses 284.06 267.49 294.99 274.70 Less: Closing Stock 12.74 9.36 282.25 265.34 SCHEDULE 17 MANUFACTURING EXPENSES Consumption of Stores, Spare Parts, Components and Packing Materials 225.27 186.29

Power & Fuel Consumed 910.11 823.12 Hire Charges of Plant & Machinery and others 4.73 2.59 Repairs to Plant & Machinery 48.19 35.36 Repairs to Buildings 3.54 1.86 Repairs to Others 13.31 11.61 1,205.15 1,060.83 SCHEDULE 18 PAYMENTS TO AND PROVISIONS FOR EMPLOYEES Salaries, Wages and Bonus, etc. 69.26 54.09 Contribution to and Provisions for Provident and Other Funds 9.40 6.12 Welfare Expenses 13.60 12.75 92.26 72.96 (57) SCHEDULES Rs. in Crores Previous Year SCHEDULE 19 SELLING, DISTRIBUTION, ADMINISTRATION AND OTHER EXPENSES Commission paid to Distributors and Selling Agents 7.94 8.40 Cash Discount 26.73 20.79 Freight, Handling and Other Expenses 763.08 478.99 Advertisements & Sales Promotion 46.24 67.65 Insurance 8.65 7.95 Rent (including Lease Rent) 8.79 9.67 Rates and Taxes 12.33 13.56 Stationery, Printing, Communication Expenses 7.76 7.39 Travelling and Conveyance 18.28 15.08 Legal and Professional charges 17.97 12.59 Bad Debts and Advances Written Off 0.17 6.38 Provision for Doubtful Debts and Advances 1.08 Directors Fees 0.11 0.14 Power (other than related to manufacturing activity) 1.18 0.60 Exchange Rate difference (Net) 0.23 Loss on Sale of Fixed Assets (Net) 0.17 Miscellaneous Expenses 20.10 33.25 939.33 683.92 SCHEDULE 20 INTEREST

On Debentures and Fixed Loans 83.53 95.78 On Others loans 6.11 11.10 89.64 106.88 (58) SCHEDULES SCHEDULE 21 ACCOUNTING POLICY AND NOTES ON ACCOUNTS A Significant Accounting Policies: 1. Basis of Accounting: The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with the applicable mandatory Accounting Standards. 2. Fixed Assets: Fixed assets are stated at cost (including other expenses related to acquisition and installation). 3. Foreign Currency Transactions: Foreign currency transactions are accounted for at the rates prevailing on the date of the transaction. Foreign currency balances outstanding as at the year end are restated at the year end rate, however, foreign currency transactions / balances covered by forward contracts are valued at the spot rate at the inception of the contract. The premia arising on such forward contracts is amortised as an expense or income over the life of the contract. Exchange differences relating to fixed assets acquired from a country outside India are adjusted to the cost of the asset. Any other exchange difference is dealt with in the Profit and Loss Account. 4. Treatment of expenditure during construction period: Expenditure during construction period is included under Capital Work in Progress and the same is allocated to the respective Fixed Assets on the completion of its construction. 5. Investments: Current investments are carried at lower of cost or fair value. Long term investments are stated at cost after deducting provisions made for any other than temporary diminution in the value. 6. Inventories: Inventories are valued at lower of cost and net realisable value. The cost is computed on weighted average basis.

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

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

recognised as an expense in the period in which they are incurred. 12. Provision for Current & Deferred Tax: Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period and in accordance with the provisions as per the Income Tax Act, 1961. Deferred Tax resulting from timing difference between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The Deferred Tax asset is recognised and carried forward only to the extent that there is a reasonable certainty except for carried forward losses and unabsorbed depreciation which is recognised on virtual certainty that the assets will be realised in future. 13. Sales: a) Sales are accounted on despatch of products. b) Export sales are accounted on the basis of date of bill of lading. 14. Provisions, Contingent Liabilities and Contingent Assets: Provision involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements. 15. Use of estimates: The preparation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reported period. Difference between the actual results and estimates are recognised in the period in which the results are known or materialise. B. Notes on Accounts 1. Merger of Narmada Cement Company Limited a. Pursuant to the Scheme of Amalgamation (the Scheme) u/s 18(1)(c ) and other applicable provisions of Sick Industrial Companies (Special Provisions) Act, effective from October 1, 2005 (the Appointed Date), Narmada

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

minority shareholders of NCCL in the ratio of 1 (one) fully paid-up Equity Share of Rs.10/- each of the Company for every 18 (eighteen) fully paid-up equity shares of Rs.10/- each held in NCCL. Pending allotment, an amount of Rs 0.09 crore has been shown under the Share Capital Suspense Account as at March 31, 2006. These shares were subsequently allotted on June 14, 2006. e. In terms of the Scheme, the Equity Shares when issued and allotted by the Company shall rank pari-passu in all respects with the existing Equity Shares of the Company. Accordingly, the appropriation for the proposed dividend includes dividend on 87,258 Equity Shares. Rs. in Crores Previous Year 2. Contingent Liabilities not provided for in respect of: Claims not acknowledged as debts in respect of matters in appeals: (a) Sales-tax liability 50.92 31.47 (b) Excise duty 27.10 19.02 (c) Royalty on Limestone/ Marl 29.68 13.53 (d) Customs 30.12 (e) Others 15.63 9.54 3. The Ministry of Textiles, vide its orders dated June 30, 1997 and July 1, 1999 has deleted cement from the list of commodities to be packed in Jute bags under the Jute Packaging (Compulsory Use in Packing Commodities) Act 1987. In view of this, the Company does not expect any liability for nondespatch of cement in Jute bags in respect of earlier years. 4. Estimated amount of contracts remaining to be executed on capital account and not provided (net of advances) Rs. 531.97 crores (Previous year Rs. 55.74 crores) 5. During the previous year, an amount of Rs. 19.48 crores was charged to the Profit & Loss Account to align the accounting policy with regard to deferred revenue expenditure with the holding company (Grasim Industries Limited). The additional charge in the previous year on account of this was Rs.12.60 crores. 6. Depreciation for the year ended March 31, 2006 and March 31, 2005 includes Rs. 4.20 crores and Rs. 18.34 crores,

respectively, related to earlier years. 7. Derivative Instruments Forward Exchange Contracts are not intended for trading or speculative purposes, but for hedge purposes. The Companys policy is to establish the amount of currency required or available at the settlement date of payables and SCHEDULE 21 (Contd.) (61) receivables. The following are the outstanding Forward Exchange Contracts entered into by the Company as on March 31, 2006: Currency Amount Buy/Sell Cross Currency US Dollar 2 Million Sell Rupees Purpose : To hedge net foreign exchange exposure in respect of highly probable forex transaction. In accordance with the above policy all Foreign currency exposures that are not hedged by a derivative instruments or otherwise : NIL 8a) Secured Non-Convertible Debentures Rs. in Crores Previous Year i) Fixed Rate Non Convertible Debentures (NCDs) 1. 12.00% NCDs (Redeemable at par on December 22, 2006 ) 50.00 50.00 2. 12.60% NCDs (Redeemable at par on September 17, 2006 ) 26.00 26.00 3. 8.25% NCDs (Redeemable at par on September 2, 2012 ) 65.00 65.00 4. 8.40% NCDs (Redeemable at par on July 22, 2007 ) 45.00 50.00 5. 8.30% NCDs (Redeemable at par on September 2, 2012 ) 25.00 25.00 6. 8.09% NCDs (Redeemable at par on July 25, 2007 ) 40.00 45.00 7. 10.80% NCDs (Redeemable at par on May 10, 2005 ) 50.00 8. 6.00 % NCDs (Redeemable at par on March 12, 2009 ) 225.00 225.00 9. 11.75 % NCDs (Redeemable at par on January 11, 2006 ) 22.00 10. Step up interest NCDs (Redeemable at par on September 16, 2012 ) 25.00 25.00 11. 6.65% NCDs (Redeemable at par on April 30, 2013 ) 5.00 5.00 12. 5.78 % NCDs (Redeemable at par on May 11, 2009 ) 150.00 150.00 13. 6.25% NCDs (Redeemable at par on June 25, 2009 ) 150.00 150.00 14. 6.70% NCDs (Redeemable at par on June 16, 2008 ) 50.00 ii) Floating Rate Debentures 1. MIBOR Linked NCDs (Redeemable at par on August 1, 2007 ) 100.00 100.00

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

31, 2006: 1 Kabra Engineering 7 Kaveri Ultra Polymer Limited 2 Jayshree Electorn Pvt. Limited 8 Surya Deep Alloy Casting 3 Shah Alloys 9 Al Aqmar Trading Company 4 Namitter Industries 10 RS Enterprises 5 Noble Rubber Industries 11 Thejo Engineering Services Pvt. Limited 6 Mahavir Industries 10. Disclosure as per clause 32 of the listing agreement loans in the nature of Inter Corporate Deposits (ICD) and Trade Credit given to Subsidiaries : Name of Subsidiary Company Amount Outstanding Maximum Balance Outstanding during the year Rs. in Crores Rs. in Crores Narmada Cement Company Limited 190.70 (upto 30.09.2005) UltraTech Ceylinco (Pvt.) Limited 18.49 20.63 Dakshin Cements Limited 0.11 0.11 There is no repayment schedule and interest on these ICDs is deferred. 11. Auditors remuneration (excluding service tax) and expenses charged to the accounts: Rs. in Crores a) Statutory Auditors: 2005-06 2004-05 Audit fees 0.24 0.20 Tax audit fees 0.03 0.03 Certification fees 0.14 0.08 Expenses reimbursed 0.02 b) Cost Auditors: Audit fees 0.02 0.02 Expenses reimbursed (Rs. 12,555 previous year Rs. Nil) 12. Manager & Chief Executive Officers remuneration: Rs. in Crores 2005-06 2004-05 Salary 1.56 1.13 Contribution to Provident Fund & Other Funds* 0.15 0.11 Perquisites 0.13 0.10 * Excluding Contribution to Gratuity Fund and provision for leave encashment as separate figures cannot be quantified. 13. Segment Reporting The Company has one business segment cement as its primary segment. The Companys operations are solely

situated in India. Rs. in Crores Revenue 2005-06 2004-05 Net Sales: Domestic 2,809.20 2,092.54 Export 490.25 514.36 Total 3,299.45 2,606.90 SCHEDULE 21 (Contd.) SCHEDULES (63) SCHEDULES 14. Disclosure of related parties / related party transactions: a) List of related parties Name of the Related Party Nature of Relationship Grasim Industries Ltd. (Grasim) Holding Company Sun God Trading & Investment Ltd. Fellow Subsidiary Samruddhi Swastik Trading & Investment Ltd. (SSITL) Fellow Subsidiary Shree Digvijay Cement Co. Ltd. (SDCCL) Fellow Subsidiary Narmada Cement Company Ltd. (NCCL) Subsidiary (upto 30.09.2005) UltraTech Ceylinco (Pvt.) Ltd. (UCPL) Subsidiary Dakshin Cements Ltd. (DCL) Wholly owned subsidiary Key Management Personnel (KMP) Mr S. Misra, Manager & CEO of the Company b) Disclosure of related party transactions: Rs. in Crores Sl. Nature of Holding Fellow Total No. Transaction Company Subsidiaries Subsidiaries KMP Grasim NCCL DCL UCPL SSITL SDCCL 1 Sale of Goods 206.39 95.80 302.19 (2.76) (53.77) (56.53) 2 Purchase of Goods 170.31 88.87 259.18 (6.31) (184.92) (191.23) 3 Purchase / lease/ Rent of fixed assets (0.19) (0.19) 4 Transfer of 0.13 0.13 fixed assets 5 Rendering of 0.04 0.04 Services (0.02) (2.24) (2.26) 6 Receiving of 13.66 0.12 1.84 15.62 Services (1.24) (1.34) (2.58) 7 Interest & other

income received/ 3.49 3.49 receivable (2.81) (2.81) Less : provided for (2.81) (2.81) 8 Letter of Comfort given to Bank (30.00) (30.00) Outstanding Balance as on March 31,2006 Rs in Crores Sl. Nature of Holding Fellow No. Transaction Company Subsidiaries Subsidiaries KMP Total Grasim NCCL DCL UCPL SSITL SDCCL Loans & Advances 0.11 0.23 0.09 0.00 0.50 0.93 (0.18) (182.54) (0.08) (0.50) (183.30) Debtors 0.43 18.26 18.69 (0.23) (7.67) (7.90) Creditors 0.45 0.45 (1.44) (1.44) Other Liabilities 4.08 4.08 Figures in brackets are pertaining to the previous year. SCHEDULE 21 (Contd.) (64) SCHEDULES SCHEDULE 21 (Contd.) 15. Leases Operating Leases: i) The Company has taken various plant and machinery under cancellable operating leases. These lease agreement are generally renewed on expiry. ii) (a) The Company has taken on non-cancellable operating leases certain assets, the future minimum lease payments in respect of which, as at March 31, 2006 are as follows: Rs. in Crores Minimum Lease Payments Payable 2005-06 2004-05 i. not later than 1 year 0.40 1.70 ii. later than 1 year and not later than 5 years 0.50 2.88 iii. later than 5 years Total Minimum Lease Payable 0.90 4.58 (b) The lease agreements provide for an option to the Company to renew the lease period at the end of the

non-cancellable period. There are no exceptional / restrictive covenants in the lease agreements. iii) The rental expense in respect of operating leases was Rs. 0.79 crore (Previous Year Rs. 3.00 crores). iv) Contingent rent recognised in the Profit and Loss Account: Rs. 3,379 (Previous year Rs. 34,305). 16. Deferred Tax Assets and Liabilities as on March 31, 2006 are as under: Rs. in Crores Particulars Deferred Tax Current Year Deferred Tax (assets)/liabilities charge/(credit) (assets)/liabilities as at 01.04.2005 as at 31.03.2006 Deferred Tax Assets: Provision allowed under tax on payment basis (13.13) 3.70 (9.43) (13.13) 3.70 (9.43) Deferred Tax Liabilities:Accumulated Depreciation 587.17 (8.45) 578.72 Miscellaneous expenditure (to the extent not written-off or adjusted) Payments allowed under tax not expensed in books 7.67 7.67 594.84 (8.45) 586.39 Net Deferred Tax Liability 581.71 (4.75) 576.96 17. The following expenses are included in the different heads of expenses in the Profit & Loss Account : Rs. in Crores Particulars 2005-06 2004-05 Stores & Spares Consumed 52.82 60.19 Royalty & Cess 76.46 68.80 Power & Fuel Consumed 0.78 0.06 Repairs to Machinery 19.06 20.80 Repairs to Building 0.42 0.42 Repairs to Other Assets 0.10 0.81 Rates & taxes 2.68 1.81 Lease Rent 2.62 1.50 Professional fees 0.06 0.87 Hire charges-Plant & Machinery 4.05 16.23 18. All the amounts in rupees have been rounded off to crores with lacs in decimals as approved under Section 211 (1) of the Companies Act, 1956. Figures of Rs.50,000 or less have been shown at actuals in brackets.

19. Additional information required under Part II of Schedule VI to the Companies Act, 1956 (as certified by the Executives of the respective Divisions) is as per Schedule 22. (65) SCHEDULES SCHEDULE 22 ADDITIONAL INFORMATION UNDER PART II OF SCHEDULE VI TO THE COMPANIES ACT, 1956 1. CAPACITIES & PRODUCTION: Product Unit Installed capacity* Actual production 2005-06 2004-05 2005-06 2004-05 Cement (Lakh tonnes) 170.00 155.00 133.33 121.14 Licensed capacity not indicated due to abolition of industrial licenses as per Notification No. 477 (E) dated July 25, 1991 issued under The Industries (Development and Regulation) Act, 1951. * As Certified by the Management and accepted by the Auditors. 2. TURNOVER: 2005-06 2004-05 Product Unit Quantity Value Quantity Value Rs. in Crores Rs. in Crores Cement Lakh tonnes 142.35 3,091.33 125.23 2,250.50 Clinker Lakh tonnes 13.18 207.94 26.48 356.33 Others 0.18 0.07 Total 3,299.45 2,606.90 3. INVENTORY: As at 31.03.2006 As at 31.03.2005 Product Unit Quantity Value Quantity Value Rs. in Crores Rs. in Crores Cement Lakh tonnes 3.14 59.84 2.65 47.67 Clinker (Trading) Lakh tonnes 0.14 1.92 4. RAW MATERIALS, STORES, SPARE PARTS: a) Raw Materials Consumed: 2005-06 2004-05 Product Unit Quantity Value Quantity Value Rs. in Crores Rs. in Crores Limestone* Lakh tonnes 183.09 143.40 177.78 143.55 Slag Lakh tonnes 2.50 7.85 3.95 12.12 Gypsum Lakh tonnes 5.12 58.53 4.52 40.59 Fly Ash Lakh tonnes 12.70 29.30 10.24 26.87 Others 43.17 42.21

Total* 282.25 265.34 * Including Royalty & Cess on limestone and other related overheads. b) Purchase of Finished Goods: 2005-06 2004-05 Class of goods Unit Quantity Value Quantity Value Rs. in Crores Rs. in Crores Cement Lakh tonnes 9.54 232.19 4.78 108.12 Clinker Lakh tonnes 2.36 33.02 6.68 85.74 Others 0.11 0.07 Total 265.32 193.93 (66) SCHEDULE 22 (Contd.) c) Value of imports (on CIF basis): Rs. in Crores 2005-06 2004-05 Fuel, stores and spares 229.50 258.93 Capital goods 13.61 0.90 d) Value of imported and indigenous raw materials, spare parts and stores consumed: 2005-06 2004-05 Value % Value % Rs. in Crores Rs. in Crores Raw materials Imported 0.69 0.2 Indigenous 281.56 99.8 265.34 100.0 Total 282.25 100.0 265.34 100.0 2005-06 2004-05 Value % Value % Rs. in Crore Rs. in Crore Stores & spares Imported 29.19 10.0 30.31 12.0 Indigenous 248.90 90.0 216.17 88.0 Total 278.09 100.0 246.48 100.0 5. EXPENDITURE IN FOREIGN CURRENCY: Rs. in Crores 2005-06 2004-05 Freight/ Despatch / Demurrage 54.18 51.54 Commission 0.26 Advertising 0.01 4.86 Service fees 0.77 1.23 Interest 3.70 5.80

Other matters 3.13 1.63 6. EARNING IN FOREIGN EXCHANGE: Rs. in Crores 2005-06 2004-05 Export of goods {Including Rs. 460.66 Crores (Rs. 493.72 Crores) on FOB basis} 490.25 514.36 Professional fees 2.06 1.97 Other receipts 10.47 16.62 SCHEDULES (67) SCHEDULE 22 (Contd.) 7. DIVIDEND REMITTED IN FOREIGN CURRENCY TO NONRESIDENT SHAREHOLDERS: 2005-06 2004-05 No. Gross No. Gross of Shares Amount of of Shares Amount of Shareholders Held Dividends Shareholders Held Dividends Equity 3669 9576564 Rs 0.72 crore 4015 9257969 Rs 0.46 crore Dividend remitted in the year 2005-06 is pertaining to 2004-05 and dividend remitted in 2004-05 is pertaining to 2003-04, respectively. 8. Previous years figures have been regrouped and rearranged wherever necessary to confirm to this years classification. In view of the amalgamation of NCCL with the Company with effect from October 1, 2005, the figures of the current year are not comparable with those of the previous year. Signatures to Schedules 1 to 22 KUMAR MANGALAM BIRLA Chairman S. MISRA RAJASHREE BIRLA Manager & CEO R. C. BHARGAVA Y. M. DEOSTHALEE K. C. BIRLA S. MISRA Executive President & CFO J. P. NAYAK S. RAJGOPAL S. K. CHATTERJEE D. D. RATHI Mumbai, July 7, 2006 Company Secretary Directors SCHEDULES (68)

ADDITIONAL INFORMATION UNDER PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956 Balance Sheet Abstract and General Business Profile I Registration Details Registration No. 1 1 - 1 2 8 4 2 0 State Code 1 1 Balance Sheet Date 3 1 - 0 3 - 0 6 II Capital raised during the year (Amount in Rs. Thousands) Public Issue Right Issue NILNIL Bonus Issue Private Placement NIL873 III Position of Mobilisation and Development of Funds (Amount in Rs. Thousands) Total Liabilities Total Assets 3623106036231060 Source of Funds Paid-Up-Capital Reserve & Surplus 12448599137838 Secured Loans Unsecured Loans 122192212299011 Application of Funds Net Fixed Assets Investments 267820241723874 Net Current Assets Miscellaneous Expenditure 2164712NIL IV Performance of Company (Amount in Rs. Thousands) Turnover Total Expenditure 3785288334996963 +/- Profit / (Loss) Before Tax +/- Profit/(Loss) After Tax +2855920+2297613 Earning per share (Rs.) Dividend rate % 18.4617.50 V Generic Names of Principal product of the Company Item Code 2 5 2 3 2 9 . 0 1 Product Description P O R T L A N D C E M E N T KUMAR MANGALAM BIRLA Chairman S. MISRA RAJASHREE BIRLA Manager & CEO R. C. BHARGAVA Y. M. DEOSTHALEE K. C. BIRLA S. MISRA Executive President & CFO J. P. NAYAK

S. RAJGOPAL S. K. CHATTERJEE D. D. RATHI Mumbai, July 7, 2006 Company Secretary Directors (69) Name of the Subsidiary Company Dakshin UltraTech Cements Ceylinco Limited (Pvt) Limited 1 Financial year of the subsidiary company ended on March 31, 2006 March 31, 2006 2 Holding Companys Interest a) Number of Shares fully paid 50,000 40,000,000 b) Extent of holding 100% 80% Rs. Crores Rs. Crores 3 Net aggregate amount of Profit/(Loss) of the subsidiary, so far as they concern members of the UltraTech Cement Limited i) for the financial year of the subsidiary a) Dealt with in the account of the holding company b) Not dealt with in the accounts of the 8.42 * holding company ii) for the previous financial years of the subsidiary since it became the holding companys subsidiary a) Dealt with in the account of the holding company b) Not dealt with in the accounts of the 3.90 # holding company 4 As the financial year of the subsidiary companies coincide with the financial year of the holding company, Section 212(5) of the Companies Act, 1956 is not applicable. * converted Re. 1 = Sri Lankan Rupees 2.29 # converted Re. 1 = Sri Lankan Rupees 2.27 Note: Narmada Cement Company Limited (NCCL) was amalgamated with the Company with effect from October 1, 2005 and was not a subsidiary at the end of the financial year of the Company. KUMAR MANGALAM BIRLA Chairman S. MISRA RAJASHREE BIRLA Manager & CEO R. C. BHARGAVA

Y. M. DEOSTHALEE K. C. BIRLA S. MISRA Executive President & CFO J. P. NAYAK S. RAJGOPAL S. K. CHATTERJEE D. D. RATHI Mumbai, July 7, 2006 Company Secretary Directors STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES (70) AUDITORS REPORT TO THE BOARD OF DIRECTORS OF ULTRATECH CEMENT LIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF ULTRATECH CEMENT LIMITED AND ITS SUBSIDIARIES. 1. We have examined the attached Consolidated Balance Sheet of ULTRATECH CEMENT LIMITED (the Company) and its subsidiaries, which together constitute the Group, as at 31st March 2006, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our opinion. 3. We did not audit the financial statements of two subsidiaries, whose financial statements reflect total assets

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

31st March, 2006; b. in the case of the Consolidated Profit and loss Account, of the profit of the Group for the year ended on that date and c. in the case of the Consolidated Cash Flow Statement, of the case flows of the Group for the year ended on that date. For S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO. Chartered Accountants Chartered Accountants NALIN M. SHAH ATUL B. DESAI Partner Partner (Membership No. 15860) (Membership No. 30850) Mumbai, 7th July, 2006 (72) CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2006 Rs. in Crores Previous Schedules Year SOURCES OF FUNDS Shareholders Funds Share Capital 1A 124.40 124.40 Share Capital Suspense 1B 0.09 Reserves and Surplus 2 916.88 849.28 1,041.37 973.68 Loan Funds Secured Loans 3 1,222.09 1,259.94 Unsecured Loans 4 229.90 278.03 1,451.99 1,537.97 Minority Interest 4.75 4.08 Deferred Tax Liabilities (Net) 577.55 581.71 TOTAL 3,075.66 3,097.44 APPLICATION OF FUNDS Fixed Assets Gross Block 5 4,633.75 4,530.13 Less : Depreciation 2,074.46 1,879.36 Net Block 2,559.29 2,650.77 Capital Work-in-Progress 141.17 49.65 2,700.46 2,700.42 Goodwill 10.45 152.98 Investments 6 148.15

Current Assets, Loans and Advances Inventories 7 386.79 333.48 Sundry Debtors 8 162.05 174.52 Cash and Bank Balances 9 68.39 60.16 Loans and Advances 10 158.84 152.53 776.07 720.69 Less: Current Liabilities & Provisions Current Liabilities 11 518.75 452.02 Provisions 12 40.72 24.65 559.47 476.67 Net Current Assets 216.60 244.02 Miscellaneous Expenditure 13 0.02 (to the extent not written off or adjusted) TOTAL 3,075.66 3,097.44 Accounting Policies and Notes on Accounts 22 In terms of our report attached. KUMAR MANGALAM BIRLA Chairman For S. B. BILLIMORIA & CO. For G. P. KAPADIA & CO. S. MISRA RAJASHREE BIRLA Chartered Accountants Chartered Accountants Manager & CEO R. C. BHARGAVA Y. M. DEOSTHALEE NALIN M. SHAH ATUL B. DESAI K. C. BIRLA S. MISRA Partner Partner Executive President & CFO J. P. NAYAK S. RAJGOPAL S. K. CHATTERJEE D. D. RATHI Mumbai, July 7, 2006 Company Secretary Directors (73) CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2006 Rs. in Crores Previous Schedules Year INCOME Gross Sales 3,885.49 3,184.18 Less : Excise Duty 501.54 483.19 Net Sales 3,383.95 2,700.99 Interest & Dividend Income 14 3.71 4.19 Other Income 15 28.11 18.55

Increase / (Decrease) in Stocks 16 40.23 21.23 3,456.00 2,744.96 EXPENDITURE Raw Materials Consumed 17 324.31 320.42 Manufacturing Expenses 18 1,285.41 1,224.66 Purchase of Finished Products 176.45 9.01 Payments to and Provisions for Employees 19 98.06 94.66 Selling, Distribution, Administration and Other Expenses 20 965.16 717.26 Interest 21 90.07 109.33 Depreciation 220.41 229.52 Amortisation of Goodwill on Consolidation 10.17 19.00 3,170.04 2,723.86 Profit/(Loss) Before Tax Expenses & Impairment 285.96 21.10 Less: Profit of a Subsidiary till Acquisition Date 0.76 Less: Impairment of Goodwill 76.84 Profit/(Loss) Before Tax Expenses 285.96 (56.50) Provision for Current Tax 59.78 32.50 Deferred Tax (4.16) (36.89) Fringe Benefit Tax 3.64 Profit / (Loss) After Tax 226.70 (52.11) Minority Interest 1.60 1.28 Profit/ (Loss) After Minority Interest 225.10 (53.39) Adjustment due to Merger 101.56 Balance Brought Forward from Previous Year (67.77) (3.72) Profit / (Loss) Available for Appropriation 258.89 (57.11) Appropriations Proposed Dividend 21.79 9.33 Corporate Dividend Tax 3.06 1.33 Debenture Redemption Reserve 9.45 General Reserve 25.00 Balance carried to Balance Sheet 199.59 (67.77) 258.89 (57.11) Basic and Diluted Earnings Per Equity Share (in Rs.) 18.08 (4.29) Face Value Per Equity Share (in Rs.) 10.00 10.00 Weighted Average Number Of Equity Shares (in Nos.) 124,485,879 124,398,621 Accounting Policies and Notes on Accounts 22 In terms of our report attached. KUMAR MANGALAM BIRLA Chairman

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

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

Rs. in Crores Previous SCHEDULE 1A Year SHARE CAPITAL Authorised 130,000,000 Equity Shares of Rs. 10 each 130.00 130.00 130.00 130.00 Issued, Subscribed and Paid up 124,398,621 Equity Shares of Rs. 10 each fully paid-up 124.40 124.40 124.40 124.40 SCHEDULE 1B SHARE CAPITAL SUSPENSE 87,258 Equity Shares of Rs. 10 each fully paid-up to be issued. 0.09 0.09 SCHEDULE 2 RESERVES & SURPLUS Rs. in Crores Balance *Adjustment Additions Deduction/ Balance as at due to during Adjustments as at 31st Merger the during 31st March, 05 with NCCL year the year March, 06 Capital Reserve 25.02 25.02 Cash Subsidy Reserve 0.10 0.10 Debenture Redemption Reserve 129.43 9.45 138.88 General Reserve 762.50 (234.01) 25.00 553.49 Exchange Variation Reserve** (0.20) (0.20) Surplus as per Profit & Loss Account (67.77) 101.56 225.10 (59.30) 199.59 849.28 (132.45) 259.35 (59.30) 916.88 Previous Year 928.94 (64.05) (15.61) 849.28 * See Note B 2 ** Exchange Variation Reserve has been created for Exchange Variation loss in Opening Equity Share Capital and Reserve & Surplus of UltraTech Ceylinco (Pvt.) Ltd. SCHEDULE 3 SECURED LOANS Non-Convertible Debentures 1,018.55 999.75 Other Loans: Loans from Financial Institutions 5.82 Foreign Currency Loan 89.23 79.50 Loans from Banks:

Cash Credits / Working Capital Borrowings from Banks Secured by Hypothecation of Stocks and Book Debts. 14.31 74.87 Other Loans 100.00 100.00 1,222.09 1,259.94 SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (76) SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS SCHEDULE 4 Rs. in Crores UNSECURED LOANS Previous Year Short Term Loans from Banks 76.06 Sales Tax Deferment Loan 229.90 201.97 229.90 278.03 SCHEDULE 5 FIXED ASSETS Rs. in Crores PARTICULARS GROSS BLOCK DEPRECIATION NET BLOCK As at Additions Deductions/ As at As at For the Deductions/ Upto As at As at 31.03.05 Adjustments 31.03.06 31.03.05 year Adjustments 31.03.06 31.03.06 31.03.05 Freehold Land 68.73 2.56 71.29 71.29 68.73 Leasehold Land 19.98 0.06 0.02 20.02 4.83 0.58 5.41 14.61 15.15 Buildings 466.41 3.82 0.04 470.19 125.04 13.15 (0.20) 138.39 331.80 341.37 Railway Sidings 159.35 0.31 159.66 52.40 7.51 59.91 99.75 106.95 Plant & Machinery 3,658.28 112.38 22.89 3,747.77 1,589.29 185.54 19.73 1,755.10 1,992.67 2,068.99 Furniture & Fixtures 71.08 9.70 2.51 78.27 41.21 5.42 1.94 44.69 33.58 29.87 Jetty 76.63 76.63 61.11 3.97 65.08 11.55 15.52 Vehicles 9.67 1.23 0.98 9.92 5.48 1.05 0.65 5.88 4.04 4.19 4,530.13 130.06 26.44 4,633.75 1,879.36 217.22 22.12 2,074.46 2,559.29 2,650.77 Previous year 4,473.06 73.83 16.76 4,530.13 1,660.20 230.23 11.07 1,879.36 ADD: CAPITAL WORK-IN-PROGRESS 141.17 49.65 2,700.46 2,700.42 NOTE: Rs. in Crores

Depreciation for the year 217.22 Add: Obsolescence 3.19 Depreciation as per Profit & Loss Account 220.41 SCHEDULE 6 Rs. in Crores INVESTMENTS - At Cost Previous LONG TERM Year Government and Trust Securities -Unquoted (Rs. 10,000, Previous Year Rs.10,000) Pledged as Security Deposit CURRENT - Unquoted Investment in Debt Schemes of Various Mutual Funds 148.15 148.15 Note: No. of Units of Various Mutual Funds - Debt Schemes purchased and redeemed during the year 1219735096. SCHEDULE 7 INVENTORIES Stores & Spare Parts, Packing Material, Fuels and Scrap 201.02 192.90 Raw Materials 12.74 10.57 Work-in-progress 105.97 68.38 Finished Goods (Includes transit stock of Rs. 4.38 Crores, Previous year Nil) 67.06 61.63 386.79 333.48 (77) SCHEDULE 8 Rs. in Crores SUNDRY DEBTORS Previous Year Exceeding six months: Good and Secured 8.90 3.62 Good and Unsecured 1.70 1.75 Doubtful and Unsecured 3.02 1.53 13.62 6.90 Less: Provision for Doubtful Debts 3.02 1.47 10.60 5.43 Others: Good and Secured 79.02 69.50 Good and Unsecured 72.43 99.59 151.45 169.09 162.05 174.52 SCHEDULE 9 CASH AND BANK BALANCES

Cash Balance on Hand 0.20 0.26 Bank Balance with Scheduled Banks: In Current Accounts 61.41 59.01 In Fixed Deposits Accounts 6.78 0.89 68.39 60.16 SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS SCHEDULE 10 LOANS & ADVANCES Secured & Considered Good Loan against mortgage of House Property 2.23 3.07 Unsecured Considered Good: Deposits and Balances with Government and other Authorities (including accrued interest ) 31.65 29.68 Advances Recoverable in Cash or in Kind or for Value to be Received 124.96 116.00 Advance Income Tax (Net of Provision) 3.78 Considered Doubtful: Advances Recoverable in Cash or in Kind 0.22 0.22 156.83 149.68 Less: Provision for Doubtful Loans and Advances 0.22 0.22 156.61 149.46 158.84 152.53 SCHEDULE 11 CURRENT LIABILITIES Sundry Creditors 318.28 248.02 Security and Other Deposits 78.82 34.45 Advances from Customers 42.38 25.38 Unpaid Dividend 0.21 0.10 Other Liabilities 44.59 106.91 Interest Accrued but not Due on Loans 34.47 37.16 518.75 452.02 (78) SCHEDULE 12 Rs. in Crores PROVISIONS Previous Year Provision for Contingency 3.56 Provision for Retirement Benefits 12.22 10.45 Provision for Income Tax (Net of Advance Tax) 3.65

Proposed Dividend 21.79 9.33 Corporate Dividend Tax 3.06 1.31 40.72 24.65 SCHEDULE 13 MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) Deferred Revenue Expenditure 0.02 0.02 SCHEDULE 14 INTEREST & DIVIDEND INCOME Interest (Gross) on others 1.49 4.09 (Tax Deducted at Source Rs.0.11 Crore, Previous Year Rs. 0.62 Crore) Dividend from Current Investments 2.22 0.10 3.71 4.19 SCHEDULE 15 OTHER INCOME Lease Rent 3.93 4.60 Profit on Sale of Current Investments (Net) 0.08 Insurance Claim 0.47 0.10 Profit on Sale of Fixed Assets (Net) 0.21 Exchange Rate Difference (Net) 1.23 Unclaimed Credit Balances Written Back 0.81 0.20 Excess Provisions Written Back (Net) 8.84 0.36 Miscellaneous Income/ receipts 12.54 13.29 28.11 18.55 SCHEDULE 16 INCREASE / (DECREASE) IN STOCKS Closing Stock Work-in-progress 105.97 68.38 Finished Goods 62.68 61.62 168.65 130.00 Opening stock Work-in-progress 68.38 56.83 Finished Goods 61.62 48.23 130.00 105.06 Add: Increase / (Decrease) in Excise Duty on Stocks 1.58 (3.72) Increase / (Decrease) in Stocks 40.23 21.23 SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (79)

SCHEDULE 17 Rs. in Crores RAW MATERIALS CONSUMED Previous Year Opening Stock 13.04 8.93 Purchase and Incidental Expenses 324.01 322.06 337.05 330.99 Less: Closing Stock 12.74 10.57 324.31 320.42 SCHEDULE 18 MANUFACTURING EXPENSES Consumption of Stores, Spare Parts & Components and Packing Materials 243.42 223.84 Power & Fuel Consumed 967.44 940.95 Hire Charges of Plant & Machinery and others 5.45 4.01 Repairs to Plant & Machinery 51.14 40.85 Repairs to Buildings 3.80 2.34 Repairs to Others 14.16 12.67 1,285.41 1,224.66 SCHEDULE 19 PAYMENTS TO AND PROVISIONS FOR EMPLOYEES Salaries, Wages and Bonus, etc. 73.97 61.41 Contribution to and Provisions for Provident and Other Funds 9.82 6.79 Welfare Expenses 14.27 14.57 Voluntary Retirement Scheme 11.88 98.06 94.66 SCHEDULE 20 SELLING, DISTRIBUTION, ADMINISTRATION AND OTHER EXPENSES Commission paid to Distributors and Selling Agents 8.27 8.69 Cash Discount 26.73 20.79 Freight, handling and other expenses 778.28 499.87 Advertisements & Sales Promotion 49.39 68.13 Insurance 9.14 9.05 Rent (including Lease Rent) 8.93 9.83 Rates and Taxes 12.67 14.46 Stationery, Printing, Communication Expenses 8.14 7.84 Travelling and Conveyance 18.89 15.74 Legal and Professional charges 18.55 13.17 Bad Debts and Advances Written Off 0.17 6.38 Provision for Doubtful Debts and Advances 1.79 1.58

Capital Work in Progress Written Off 3.10 Directors Fees 0.11 0.14 Power (other than related to manufacturing activity) 1.18 0.90 Exchange Rate difference (Net) 0.23 Loss on Sale of Fixed Assets (Net) 0.75 Miscellaneous Expenses 22.92 36.63 965.16 717.26 SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (80) SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS Rs. in Crores Previous Year SCHEDULE 21 INTEREST On Debentures and Fixed Loans 83.53 95.78 On Others loans 6.54 13.55 90.07 109.33 SCHEDULE 22 ACCOUNTING POLICY AND NOTES ON ACCOUNTS A. Significant Accounting Policies: 1. Basis of Accounting: The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with the applicable mandatory Accounting Standards. 2. Fixed Assets: Fixed assets are stated at cost (including other expenses related to acquisition and installation). 3. Foreign Currency Transactions: Foreign currency transactions are accounted for at the rates prevailing on the dates of the transactions/ converted at contracted rate. Foreign currency assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered are restated at year end rate. Premium in respect of forward contracts is recognised over the life of contracts. Exchange differences relating to fixed assets acquired from a country outside

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

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

c) Gratuity based on actuarial valuation done at the year end. Gratuity is funded with an approved fund. Gratuity in respect of a subsidiary is accrued based on local laws. d) Leave encashment benefit on actuarial valuation basis done at the year end. (82) SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS 10. Interest: The difference between the face value and the issue price of Discounted Value Non Convertible Debentures, being in the nature of interest, is charged to the Profit and Loss Account, on a compound interest basis determined with reference to the yield inherent in the discount. 11. Borrowing Costs: Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred. 12. Provision for Current & Deferred Tax: Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period and in accordance with the provisions as per the Income Tax Act, 1961. Deferred Tax resulting from timing difference between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The Deferred Tax asset is recognised and carried forward only to the extent that there is a reasonable certainty except for carried forward losses and unabsorbed depreciation which is recognised on virtual certainty that the assets will be realised in future. 13. Sales: a) Sales are accounted on despatch of products. b) Export sales are accounted on the basis of date of bill of lading. 14. Provisions, Contingent Liabilities and Contingent Assets:

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

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

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

acquisition at each point of time of making the investment in the subsidiaries. For this purpose, the Groups share of net worth is determined on the basis of the latest financial statements prior to the acquisition after making necessary adjustments for material events between the date of such financial statements and the date of respective acquisition. Goodwill on NCCL is amortised upto September 30, 2005 the balance unamortised portion of goodwill is adjusted to General Reserve as explained in Note 3. (84) SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS Goodwill arising out of an acquisition of equity stake in subsidiaries is amortised in equal amounts over a period of 10 years from the date of first acquisition. In the event of cessation of operations of the subsidiaries, the unamortised goodwill is written off fully. During the year Rs. 10.17 crores ( Previous year Rs. 18.99 crores) was amortised from goodwill. 6. Reserve shown in the consolidated balance sheet represents the Groups share in the respective reserves of the Group companies. 7. Contingent Liabilities not provided for in respect of: Claims not acknowledged as debts in respect of matters in appeals: Rs. in Crores Previous Year (a) Sales-tax liability 50.92 32.75 (b) Excise duty 27.10 20.29 (c) Royalty on Limestone/ Marl 29.68 13.53 (d) Customs 30.12 (e) Others 15.63 11.83 8. Estimated amount of contracts remaining to be executed on capital account and not provided (net of advances) Rs. 531.97 crores (Previous year Rs.58.08 crores). 9. The Ministry of Textiles, vide its orders dated June 30, 1997 and July 1, 1999 has deleted cement from the list of commodities to be packed in Jute bags under the Jute Packaging (Compulsory Use in Packing Commodities)

Act 1987. In view of this, the company does not expect any liability for nondispatch of cement in Jute bags in respect of earlier years. 10. Segment reporting The Group has only one business segment cement as primary segment and its operations are solely situated in India. The secondary segment is geographical, which is as under: Rs. in Crores Revenue 2005-06 2004-05 Net Sales: Domestic 2830.40 2127.43 Export 553.55 573.56 Total 3383.95 2700.99 11. Disclosure of related parties / related party transactions: a) Names of the related parties with whom transactions were carried out during the year and description of relationship: Name of the Related Party Nature of Relationship Grasim Industries Limited (Grasim) Holding Company Sun God Trading & Investment Ltd. Fellow Subsidiary Samruddhi Swastik Trading & Investment Ltd. (SSITL) Fellow Subsidiary Shree Digvijay Cement Co. Ltd. (SDCCL) Fellow Subsidiary Others Key Management Personnel (KMP) and their relatives Mr. S. Misra, Manager & CEO of the Company Mr. V. M. Muralidharan, Manager of NCCL (upto 30.09.2005) (85) SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS SCHEDULE 22 (Contd.) b) Disclosure of related party transactions: Rs. in Crores Sl. No. Nature of Transaction Grasim SSITL SDCCL KMP Total 1 Sale of Goods 206.39 206.39 (2.76) (2.76) 2 Purchase of goods 170.31 170.31 (11.27) (11.27) 3 Purchase / lease/Rent of fixed assets (0.19) (0.19) 4 Transfer of fixed assets 0.13 0.13

 5 Rendering of Services 0.04 0.04 (0.02) (0.02) 6 Receiving of Services 13.66 0.12 1.92 15.70 (1.24) (1.34) (2.58) Outstanding Balance as on 31st March 1 Debtors 0.43 0.43 (0.23) (0.23) 2 Loans & Advances 0.09 0.00 0.50 0.59 (0.18) (0.50) (0.68) 3 Creditors 0.45 0.45 (1.44) (1.44) 4 Other Liabilities 4.08 4.08 Figures in brackets are pertaining to the previous year. 12. Leases Operating Leases: i) The Company has taken various plant and machinery under cancellable operating leases. These lease agreement are generally renewed on expiry. ii) (a) The Company has taken on non-cancellable operating leases certain assets, the future minimum lease payments in respect of which, as at March 31, 2006 are as follows: Rs. in Crores 2005-06 2004-05 Minimum Lease Payments Payable i. not later than 1 year 0.40 1.77 ii. later than 1 year and not later than 5 years 0.50 3.04 iii. later than 5 years Total Minimum Lease Payments 0.90 4.81 (b) The lease agreements provide for an option to the Company to renew the lease period at the end of the non-cancellable period. There are no exceptional / restrictive covenants in the lease agreements. (iii) The rental expense in respect of operating leases was Rs. 0.83 crore (Previous year Rs. 3.07 crore). (iv) Contingent rent recognised in the Profit and Loss Account: Rs. 3,379 (Previous year Rs. 34,305). (86) 13. Deferred Tax Assets and Liabilities as on March 31, 2006 are as under:

Rs. in Crores Particulars Deferred Tax Current Year Deferred Tax (assets)/ Charge/(Credit) (assets)/ liabilities as at liabilities as at 01.04.2005 31.03.2006 Deferred Tax Assets:Provision allowed under tax on payment basis (13.13) 3.66 (9.47) Unabsorbed Losses (5.96) (5.96) (13.13) (2.30) (15.43) Deferred Tax Liabilities:Accumulated Depreciation 587.17 (1.86) 585.31 Miscellaneous expenditure (to the extent not written-off or adjusted) Payments allowed under tax not expensed in books 7.67 7.67 594.84 (1.86) 592.98 Net Deferred Tax Liability 581.71 (4.16) 577.55 Deferred tax asset is recognised on account of unabsorbed losses after taking into account the current performance of the subsidiary. 14. Auditors remuneration (excluding service tax) and expenses charged to the accounts: Rs. in Crores a) Statutory Auditors: 2005-06 2004-05 Audit fees 0.27 0.24 Tax audit fees 0.03 0.03 Certification fees 0.14 0.08 Expenses reimbursed 0.02 0.00 b) Cost Auditors: Audit fees 0.02 0.02 Expenses reimbursed (Rs. 12,555 previous year Rs. 7620) 15. Depreciation for the year ended March 31,2006 and March 31,2005 includes Rs 4.20 crores and Rs 18.34 crores respectively related to earlier years. 16. Figures pertaining to the subsidiary companies have been reclassified wherever necessary to bring them in line with the Companys financial statements. 17. Previous years figures have been regrouped and rearranged wherever necessary to confirm to this years classification. In view of the amalgamation of NCCL with the Company with effect from October 1, 2005, the

figures of the current year are not comparable with those of the previous year. Signatures to Schedules 1 to 22 KUMAR MANGALAM BIRLA Chairman S. MISRA RAJASHREE BIRLA Manager & CEO R. C. BHARGAVA Y. M. DEOSTHALEE K. C. BIRLA S. MISRA Executive President & CFO J. P. NAYAK S. RAJGOPAL S. K. CHATTERJEE D. D. RATHI Company Secretary Directors Mumbai, July 7, 2006 SCHEDULES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (87) NARMADA CEMENT COMPANY LIMITED DIRECTORS REPORT Dear Shareholders, Your Directors present the Annual Report and the Audited Accounts for the year ended 30th September 2005. 2004 05 2003 04 (Rs. crore) (Rs. crore) Gross Turnover 277.66 205.06 Profit / (Loss) before depreciation and taxes 26.94 (19.96) Depreciation on fixed assets 6.42 6.67 Profit / (Loss) before tax 20.52 (26.63) Provision for tax: Deferred tax (net) 0.00 (31.51) Fringe benefit tax 0.06 0.00 Profit / (Loss) after tax 20.46 (58.14) Add: Balance brought forward from the previous year (173.39) (115.25) Balance to be carried forward (152.93) (173.39) Your Directors do not recommend any dividend for the financial year under review. PERFORMANCE Sales, production and profitability

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

Companies (Special Provisions) Act, 1985. The application has been acknowledged by BIFR and a case has been registered. BIFR is yet to appoint an Operating Agency to proceed further in the matter. DEPOSITS The Company has not invited / renewed deposits from the public / shareholders in accordance with section 58A of the Companies Act, 1956. No deposits due to be paid have remained unpaid. AUDITORS REPORT The Auditors Report to the Shareholders does not contain any qualifications. DIRECTORS RESPONSIBILITY STATEMENT The Directors confirm that: (i) in preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any; (ii) they have selected the accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year under review and for the profit and loss of the Company for that period; (iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) they have prepared the Annual Accounts on a going concern basis. INDUSTRIAL RELATIONS Industrial relations continued to be cordial during the year. DIRECTORS In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri Sanjeev Bafna retires from the Board of Directors by rotation and is eligible for re-appointment. COST AUDIT

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

V. M. Muralidharan K. C. Birla Directors Sanjeev Bafna Place : Mumbai Dated : 8th November, 2005 } (88) NARMADA CEMENT COMPANY LIMITED FORM B (RULE 2) Form for disclosure of particulars with respect to absorption. A. RESEARCH AND DEVELOPMENT (R&D) 1. Specific areas in which R&D carried out by the Company: NA 2. Benefits derived as a result of the above R&D: NA 3. Future plan of action: NA 4. Expenditure on R&D: (Rs. lakhs) Current Year Previous Year 2004 - 05 2003 04 a) Capital expenditure - b) Recurring expenditure - c) Total expenditure - d) Total R&D expenditure as % of turnover - B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATIONS 1. Efforts in brief, made towards technology absorption, adaptation and innovation: Imparting training to personnel in various manufacturing processes. 2. Benefits derived as a result of the above efforts: Cost reduction. 3. Information regarding technology imported during the last 5 years: a) Technology imported No b) Year of import NA c) Has technology been fully absorbed NA d) If not fully absorbed, areas where this has not taken place,reasons therefore and future plans of action. NA

C. FOREIGN EXCHANGE EARNINGS AND OUTGO (Rs. lakhs) Current Year Previous Year 2004 - 05 2003 04 Foreign exchange earned 320 Nil Foreign exchange used 238 248 ANNEXURE A TO THE DIRECTORS REPORT INFORMATION AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED 30th SEPTEMBER 2005. A) CONSERVATION OF ENERGY a) Energy conservation measures taken: Improvement in Plant Run factor and Reliability. Process optimization. b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Installation of Belt Bucket Elevator in Kiln feed. c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: Reduction in specific power consumption. Reduction in heat consumption. d) Total energy consumption and energy consumption per unit of production as per FORM A. FORM A (RULE 2) Current Year Previous Year 2004-05 2003-04 A POWER AND FUEL CONSUMPTION 1 Electricity: a) Purchased Unit 000 kWh 70464 50420 Total amount Rs. lakhs 3787 2811 Rate / Unit Rs. 5.37 5.58 b) Own Generation Through Diesel Generator

Unit 000 kWh 49351 54314 Units (kWh) per Ltr. of fuel oil 4.14 3.68 Cost / Unit Rs. 3.98 3.61 2 Coal For process in Cement Plants Quantity Tonnes 181725 189199 Total cost Rs. lakhs 6160 4659 Average rate Rs./Tonne 3390 2462 3 Furnace Oil (FO / HFO) Quantity K. Ltrs 11929 11994 Total amount Rs. lakhs 1355 918 Average rate Rs./K. Ltrs 11359 7650 4 Light Diesel Oil (LDO) Quantity K. Ltrs 344 2657 Total amount Rs. lakhs 86 482 Average rate Rs./K. Ltrs 24997 18139 5 High Speed Diesel Oil (HSD) Quantity K. Ltrs 591 464 Total amount Rs. lakhs 171 109 Average rate Rs./K. Ltrs 28926 23465 B CONSUMPTION PER UNIT OF PRODUCTION Product: Cement Electricity# kWh 93.63 91.89 Coal Tonne 0.13 0.14 # excludes non production power consumption (89) NARMADA CEMENT COMPANY LIMITED AUDITORS REPORT AUDITORS REPORT TO THE MEMBERS OF NARMADA CEMENT COMPANY LIMITED 1. We have audited the attached Balance Sheet of Narmada Cement Company Limited (the Company) as at September 30, 2005 and also the Profit & Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the

responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the order) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act 1956 (the Act), and on the basis of such checks of the books and records as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the Company. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: a) we have obtained all the information and explanations to the best of our knowledge and belief were necessary for the purpose of our audit; b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in Section 211 (3C) of the Act to the extent they are applicable to the Company; e) on the basis of the written representation received from the directors of the Company as on 30th September 2005, and taken on record by the Board of Directors of the Company, we report that none of the directors is disqualified as on 30th September 2005 from being

appointed as directors in terms section 274 (1)(g) of the Act; f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto, give the information required by the Act, in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 30th September, 2005; (ii) in the case of the Profit and Loss Account, of the profits of the Company for the year ended on that date; and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. For HARIBHAKTI & CO. Chartered Accountants Place : Mumbai CHETAN DESAI Date : 8th November, 2005 Partner Membership No. 17000 ANNEXURE TO THE AUDITORS REPORT Annexure referred to in Paragraph 3 of the Auditors Report of even date to the members of Narmada Cement Company Limited on the accounts for the year ended September 30, 2005. Fixed Assets: 1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. 2. We have been informed that fixed assets have been physically verified by the management according to the regular programme of periodical verification in phased manner. The discrepancies noticed on such physical verification were not material. 3. The Company has not disposed off substantial part of its fixed assets during the year. Inventory: 4. We are informed that the inventory has been physically verified by the management during the year at reasonable intervals. 5. The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to size of the Company and the nature of its business.

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

generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Service Tax, Excise Duty, Custom Duty, Cess and any other statutory dues with the appropriate authorities. 14. According to the information and explanations provided to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues were outstanding as at 30th September 2005 for a period of more than six months from the date they became payable. 15. As at 30th September 2005, according to the information and explanations provided to us, there are no dues of sales tax, income tax, custom duty, service tax, excise duty or cess which have not been deposited on account of any dispute except as follows: Name of Nature of Amount Period to Forum where Statute Dues (Rs. Lakhs) the amounts which dispute relates is pending Sales Tax Sales Tax 126.92 1998-1999 Appellate Laws Authority Tribunal level 0.31 1994-1995 Deputy Commissioner Central Excise 119.22 1997-2004 Appellate Excise Act, Duty Authority 1944 Upto Commissioners / Revisional Authorities Level 6.99 2002-2003 Appellate Authority Tribunal level Customs Customs 934.88 2003-2004 Appellate Act, 1962 Duty Authority Upto Commissioners/ Revisional Authorities level Mineral Interest 130.91 Various Years Geologist-Amreli Concession on Royalty

Rules Land Land 44.13 Various Years Revenue Revenue Revenue DepartmentAct Government of Gujarat Potentially Sick Company: 16. The accumulated losses of the Company at the year-end exceeds fifty percent of its networth. The Company has incurred cash profits during the year covered by our audit and cash losses in the immediately preceding financial year. Repayment of Dues: 17. The Company has not defaulted in repayment of dues to bank. Guarantees Given: 18. According to the information and explanations provided to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Sources and Application of Funds: 19. On the basis of review of utilization of funds, which is based on an overall examination of the balance sheet of the Company and related information as made available to us and as represented to us by the management, no funds raised on short basis have been used for long term purpose. Fraud: 20. Based upon the audit procedures performed and the information and explanations provided to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit. Other Clauses: 21. Following clauses of Paragraph 4 of Companies (Auditors Report) Order, 2003 are not applicable to the Company and hence the same are not reported upon:Clause (xii), Clause (xiii), Clause (xiv), Clause (xvi), Clause (xviii), Clause (xix) and Clause (xx). For HARIBHAKTI & CO. Chartered Accountants Place : Mumbai CHETAN DESAI Date : 8th November, 2005 Partner Membership No. 17000 (91)

NARMADA CEMENT COMPANY LIMITED BALANCE SHEET AS AT 30TH SEPTEMBER, 2005 As at 30-09-2005 As at 30-09-2004 Schedules Rs lakhs Rs lakhs Rs lakhs SOURCES OF FUNDS: SHAREHOLDERS FUNDS: Share Capital 1 7138.64 7138.64 Reserves and Surplus 2 15.23 15.23 7153.87 7153.87 Loan Funds Secured Loans 3 769.52 1013.33 Unsecured Loans 4 13208.41 13208.41 13977.93 14221.74 TOTAL 21131.80 21375.61 APPLICATION OF FUNDS Fixed Assets Gross Block 5 19730.13 19727.76 Less : Depreciation 12188.90 11564.38 Net Block 7541.23 8163.38 Capital Work-in-Progress 536.29 11.72 8077.52 8175.10 Current Assets, Loans and Advances Inventories 6 5281.33 4670.78 Sundry Debtors 7 1945.44 864.74 Cash and Bank Balances 8 197.36 261.58 Other Current Assets 0.15 0.13 Loans and Advances 9 1137.77 684.37 8562.05 6481.60 Less: Current Liabilities & Provisions Current Liabilities 10 9906.83 9741.57 Provisions 11 77.15 61.17 9983.98 9802.74 Net Current Assets (1421.93) (3321.14) Profit & Loss Account 12 14476.21 16521.65 TOTAL 21131.80 21375.61 Accounting Policies and Notes on Accounts 21 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 30TH SEPTEMBER, 2005

2004-05 2003-04 Schedules Rs lakhs Rs lakhs Rs lakhs INCOME Gross Sales 27765.86 20505.56 Less : Excise Duty 3530.78 2463.90 Net Sales 24235.08 18041.66 Interest & Dividend Income 13 2.81 3.22 Other Income 14 121.77 124.39 Increase / (Decrease) in Stocks 15 (357.32) 751.11 24002.34 18920.38 EXPENDITURE Raw Material Consumed 16 1781.48 1611.32 Manufacturing Expenses 17 14853.13 12416.15 Clinker Transportation & Handling Expenses 2337.58 1388.59 Payments to and Provisions for Employees 18 867.95 2236.25 Selling, Distribution, Administration and Other Expenses 19 1349.52 1961.22 Interest 20 118.83 1299.08 Miscellaneous Expenditure Written Off 3.61 Depreciation 641.99 667.34 21950.48 21583.56 Profit/(Loss) before Tax 2051.86 (2663.18) Provision for Tax: Net Deferred Tax 3150.80 Fringe Benefit Tax 6.42 Profit/(Loss) after Tax 2045.44 (5813.98) Balance brought forward from Previous Year (17338.42) (11524.44) Balance carried to Balance Sheet (15292.98) (17338.42) Basic and diluted earnings per equity share (in Rs.) 2.87 (8.15) Face value per equity share (in Rs.) 10.00 10.00 Number of equity shares 71373950 71373950 Accounting Policies and Notes on Accounts 21 } As per our separate report attached. For HARIBHAKTI & CO. V. M. MURALIDHARAN Chartered Accountants

K. C. BIRLA Directors CHETAN DESAI Partner SANJEEV BAFNA Mumbai Dated : 8th November, 2005 KAMAL RATHI Company Secretary } As per our separate report attached. For HARIBHAKTI & CO. V. M. MURALIDHARAN Chartered Accountants K. C. BIRLA Directors CHETAN DESAI Partner SANJEEV BAFNA Mumbai Dated : 8th November, 2005 KAMAL RATHI Company Secretary (92) NARMADA CEMENT COMPANY LIMITED SCHEDULES (Rs Lakhs) SCHEDULE 1 As at As at 30-09-2005 30-09-2004 SHARE CAPITAL Authorised 75000000 (75000000) Equity shares of Rs. 10 each 7500.00 7500.00 500000 (500000) Redeemable cumulative preference shares of Rs. 100/- each 500.00 500.00 8000.00 8000.00 Issued and Subscribed 71398700 (71398700) Equity shares of Rs. 10 each fully paid-up 7139.87 7139.87 Paid-up 71373950 (71373950) Equity shares of Rs. 10 each fully paid-up 7137.40 7137.40 Forfeited Equity Shares 1.24 1.24 7138.64 7138.64 NOTE: Aggregate shares held by UltraTech Cement Limited (Holding Company) 69803293 (69752898) Equity shares of Rs. 10/- each fully paid. SCHEDULE 2 RESERVES & SURPLUS (Rs. lakhs)

Balance Additions Deduction/ Balance as at 30th during Adjustments as at 30th September, 04 the year during the year September, 05 Capital Reserve 15.23 15.23 General Reserve* 816.77 816.77 832.00 816.77 15.23 Previous year 2393.60 2378.37 15.23 *(Rs.816.77 Lakhs deducted as per Contra in Profit & Loss Account) SCHEDULE 3 As at As at 30-09-2005 30-09-2004 SECURED LOANS Cash Credits secured by hypothecation of stocks and book debts of the Company 769.52 1013.33 769.52 1013.33 SCHEDULE 4 UNSECURED LOANS Inter corporate deposits 13208.41 13208.41 (Due within one year Rs.13208.41 Lakhs (Rs. 8838.16 Lakhs)) 13208.41 13208.41 SCHEDULE 5 FIXED ASSETS (Rs lakhs) Particulars GROSS BLOCK DEPRECIATION NET BLOCK As at Additions Deductions As at Upto For the Deductions Upto As at As at 30-09-04 30-09-05 30-09-04 Year 30-09-05 30-09-05 30-09-04 Freehold Land 176.15 176.15 5.77 0.60 6.37 169.78 170.38 Leasehold Land 194.68 194.68 48.02 9.61 57.63 137.05 146.66 Buildings 1669.55 1669.55 450.62 41.46 492.08 1177.47 1218.93 Plant and Machinery 17204.31 11.70 17216.01 10726.11 558.34 11284.45 5931.56 6478.20 Furniture and Fixtures & Office Equipments 427.83 0.21 6.79 421.25 285.11 27.60 6.79 305.92 115.33 142.72 Vehicles 55.24 6.03 8.78 52.49 48.75 4.38 10.68 42.45 10.04 6.49 Total 19727.76 17.94 15.57 19730.13 11564.38 641.99 17.47 12188.90 7541.23 8163.38 Previous Year 19638.74 89.02 19727.76 10897.04 667.34 11564.38 Add: Capital work-in-progress 536.29 11.72 8077.52 8175.10

NOTE:- 1. Amount of Rs.3.94 lakhs appearing in depreciation deductions is towards excess depreciation provided in earlier years 2. Capital work in progress includes Capital Advances to suppliers of Rs. 59.69 lakhs. (93) NARMADA CEMENT COMPANY LIMITED SCHEDULE 6 (Rs Lakhs) As at 30-09-2005 As at 30-09-2004 INVENTORIES Stores & Spare parts, Packing Material and Fuels 3012.13 2100.07 Raw Materials 156.66 145.63 Finished Goods 355.71 231.27 Process Stock 1756.83 2193.81 5281.33 4670.78 SCHEDULE 7 SUNDRY DEBTORS Exceeding six months: Good and Unsecured 7.79 21.86 Doubtful and Unsecured 193.61 8.62 201.40 30.48 Less: Provision for Doubtful Debts 193.61 8.62 7.79 21.86 Other: Good and Unsecured 1937.65 842.88 1945.44 864.74 SCHEDULE 8 CASH AND BANK BALANCES Cash balance on hand 1.72 1.90 Bank Balance with Scheduled Banks: On Current accounts 184.07 240.94 On Dividend Account 7.17 On Fixed Deposits accounts 10.00 10.00 On Other Accounts 1.57 1.57 197.36 261.58 SCHEDULE 9 LOANS & ADVANCES Unsecured Considered Good: Advances recoverable in cash or

in kind or for value to be received 643.59 203.98 Advance Income-tax and tax deducted at source 15.93 16.03 Advance and Deposits with Railways, Government Bodies and Others 478.25 464.36 1137.77 684.37 Considered doubtful: Advances recoverable in cash or in kind 22.00 22.00 1159.77 706.37 Less: Provision for doubtful loans and advances 22.00 22.00 1137.77 684.37 SCHEDULE 10 CURRENT LIABILITIES Sundry Creditors Small Scale Industries 16.12 17.97 (To the extent identified with available information) Others 8026.06 8249.24 8042.18 8267.21 Security and Other Deposits 98.80 104.10 Advances from customers 99.87 49.83 Amount transferable to Investor Education and Protection Fund, when due - Unclaimed amount on account of redemption of preference shares 0.37 0.37 - Unclaimed dividend 7.17 Other Liabilities 1593.37 1203.82 Pension payable under Voluntary Retirement-cum-Pension scheme 72.24 109.07 9906.83 9741.57 SCHEDULE 11 (Rs Lakhs) As at 30-09-2005 As at 30-09-2004 PROVISIONS Provision for Leave Encashment 73.66 59.45 Provision for Taxation 1.72 Provision for FBT 3.49

77.15 61.17 SCHEDULE 12 Profit and Loss Account Profit and Loss Account (Debit Balance) 15292.98 17338.42 Less :General Reserve deducted as per Contra 816.77 816.77 14476.21 16521.65 2004-05 2003-04 SCHEDULE 13 INTEREST & DIVIDEND INCOME Interest (Gross) 2.81 3.22 (Tax Deducted at Source Rs.46494, Previous year Rs.61133) 2.81 3.22 SCHEDULE 14 OTHER INCOME Insurance Claim 32.96 17.98 Provision written back 7.66 Profit on sale of assets 0.24 Miscellaneous Income/ receipts 80.91 106.41 121.77 124.39 SCHEDULE 15 INCREASE / (DECREASE) IN STOCKS Closing Stock Finished Goods 355.71 231.27 Process Stock 1756.83 2193.81 2112.54 2425.08 Opening stock Finished Goods 231.27 75.88 Process Stock 2193.81 1357.49 2425.08 1433.37 Add: Increase / (Decrease) in Excise Duty on Stocks (44.78) 240.60 Increase / (Decrease) in Stocks (357.32) 751.11 SCHEDULE 16 RAW MATERIALS CONSUMED Opening Stock 145.63 121.88 Purchase and Incidental Expenses 1792.51 1635.07

1938.14 1756.95 Less: Closing Stock 156.66 145.63 1781.48 1611.32 SCHEDULES (94) NARMADA CEMENT COMPANY LIMITED SCHEDULE 17 (Rs Lakhs) 2004-05 2003-04 MANUFACTURING EXPENSES Consumption of Stores, Spare Parts and Components, Packing Materials and Incidental Expenses 1991.03 2100.17 Power & Fuel Consumed 12053.28 9598.95 Hire Charges of Plant & Machinery and others 145.88 78.33 Repairs to Plant & Machinery 487.18 508.12 Repairs to Buildings 42.02 39.78 Repairs to Others 133.74 90.80 14853.13 12416.15 SCHEDULE 18 PAYMENTS TO AND PROVISIONS FOR EMPLOYEES Salaries, Wages and Allowances 667.39 625.35 Contribution to and Provisions for Provident and Other Funds 54.78 50.79 Welfare Expenses 145.78 172.00 VRS, VRPS & other schemes written-off 1388.11 867.95 2236.25 SCHEDULE 19 SELLING, DISTRIBUTION, ADMINISTRATION AND OTHER EXPENSES Commission paid to Distributors and Selling Agents 42.86 26.59 Freight, handling and other expenses 480.38 131.15 Advertisements & Publicity 1.61 5.58 Insurance 93.61 104.03 Rent (including Lease Rent) 17.55 19.86 Rates and Taxes 74.32 64.39 Stationery, Printing, Postage and

Telephone Expenses 27.89 22.01 Travelling and Conveyance 26.18 31.80 Legal and Professional charges 83.25 64.04 Bad Debts Written Off 0.20 34.19 Provision for Doubtful Debts 193.61 8.62 Loss on Sale of Fixed Assets 0.93 Inventory Obsolescence 843.11 Capital Work-in-Progress Written off 309.90 Settlement Charges 109.42 Other Miscellaneous Expenses 197.71 295.95 1349.52 1961.22 SCHEDULE 20 INTEREST On Cash Credit 71.79 142.86 On Inter Corporate Deposits 823.29 On Other Accounts 47.04 332.93 118.83 1299.08 SCHEDULE 21 SIGNIFICANT ACCOUNTING POLICIES I. Basis of Accounting The Company maintains its accounts on accrual basis following the historical cost convention, in compliance with the Accounting Standards specified to be mandatory by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. II. Fixed Assets and Depreciation Fixed assets are stated at original cost less accumulated depreciation. Depreciation in respect of all assets is provided on straight line basis at the rates prescribed in Schedule XIV to the Companies Act, 1956. Leasehold land / land under mining lease are amortized over the period of lease / expected mining deposits. No depreciation is charged on Freehold land not having mining deposit. III. Inventories Inventories are valued at lower of cost or estimated net realisable value. Cost of raw materials is determined on weighted average basis. Material-in-process includes related overheads and cost of finished goods includes related overheads and excise duty paid/payable on such goods. IV. Revenue Recognition Revenue is recognised only when there is no significant uncertainty as to measurability / collectibility of the amounts. Sales are accounted on dispatch

of products and sales value is net of discount on sales and includes excise duty. V. Retirement Benefits Provisions for / contributions to retirement benefit schemes are made as follows: a) Provident fund on actual liability basis. b) Gratuity based on actuarial valuation. c) Superannuation on actual liability basis. d) Leave encashment benefit on retirement on actuarial valuation basis. VI. Foreign Currency Transactions Foreign currency transactions are accounted for at the rates prevailing on the date of transaction. Foreign currency assets and liabilities outstanding at the close of the financial year are restated at the contracted and / or appropriate exchange rates at the close of the year. The gain or loss due to decrease / increase in Rupee liability on account of fluctuations in the rate of exchange is adjusted to the cost of assets if it relates to acquisition of fixed assets and is charged to Profit and Loss account in other cases. VII. Leases Assets acquired under leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Profit & Loss Account on accrual basis. VIII. Taxes on Income Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961, and based on expected outcome of assessments/ appeals. Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. IX. Contingent Liabilities Depending on facts of each case and after due evaluation of relevant legal aspects, claims against the Company not acknowledged as debts are provided

or disclosed as contingent liabilities. In respect of statutory matters, contingent liabilities are provided or disclosed only for those demand(s) that are contested by the Company. SCHEDULES (95) NARMADA CEMENT COMPANY LIMITED 1. Cash Credit facility from the Bank is secured by way of a charge by hypothecation of stocks, stores, book debts, movable properties of the Company and by equitable / legal mortgage of immoveable properties situated at Babarkot village in Jafrabad. 2. Future liability on account of pension payable under the Voluntary Retirement cum Pension Scheme / Employee Separation Scheme introduced earlier, amount to Rs.72.24 lakhs (Rs. 109.07 lakhs). 3. Details of contingent liabilities not provided for in the books in respect of the following: Rs. lakhs 30.9.2005 30.9.2004 a. Counter guarantees given by the Company to Bankers against guarantees issued by them. 98.55 17.78 b. Estimated amount of Contracts remaining to be executed on Capital Account and not provided for (gross). 269.17 8.80 Amount net of advances. 209.48 8.80 c. Other claims against the Company not acknowledged as debts. 225.53 50.49 d. Disputed demands / matters in appeals in respect of notices received from Central Excise / Customs / Sales Tax authorities, and are pending for disposal. 1188.32 266.75 4. In respect of Small Scale Industries, the Company owes a sum of Rs. 16.12 lakhs (Rs. 17.97 lakhs) as at 30th September, 2005. Total outstanding dues of small scale industrial undertakings have been determined to the extent such parties have been identified on the basis of information available with the Company.

The names of the small scale industry to whom the company owes monies for more than 30 days as at 30th September, 2005 are: 1. Sea Linkers 2. Multiple Fabric Company Ltd. 5. Related Party relationships / transactions warranting disclosures under AS-18 issued by the Institute of Chartered Accountants of India are as under: (i) Names and relationship of the transacting parties: Holding Company UltraTech Cement Limited (holds 97.80 per cent of the Equity Capital as at 30th September, 2005). Other related parties Subsidiary Companies of UltraTech Cement Limited Dakshin Cements Limited, UltraTech Ceylinco (Private) Limited. Holding Company of UltraTech Cement Limited Grasim Industries Limited (ii) Nature and volume of transactions: Rs. lakhs 2004-05 2003-04 UltraTech Cement Limited Holding Company 1 Sales 20399.05 13558.11 2 Purchases 2.1 Raw materials 0.14 1.15 2.2 Stores & Spares 13.99 2.3 Power & Fuel 5682.39 5074.70 3 Interest & other finance charges 1152.31 4 Share capital 6980.33 6975.29 5 Unsecured loans ICDs 13208.41 13208.41 6 Current assets - Sundry Debtors 1702.27 374.16 7 Current liabilities - Sundry Creditors 6696.29 6467.25 Grasim Industries Limited (Holding Company of UltraTech Cement Limited) Sea Freight 461.28 350.21 No amounts have been written off or written back in the year in respect of debts due from or to the above parties. (iii) Related party relations are identified by the Company and relied upon by the auditors. 6. The Company has taken on operating lease certain assets costing Rs. 27.97

lakhs (Rs. 27.97 lakhs), the future lease obligation against which is Rs. 20.07 lakhs (Rs. 26.91 lakhs) as at 30th September, 2005; break up of which is as underRs. lakhs 30.9.2005 30.9.2004 not later than one year 7.24 7.16 Later than one year but not later than five years 12.83 19.75 Later than five years Nil Nil 7. Basic and Diluted Earning per share having Face value of Rs. 10/- each is Rs. 2.87 (previous year Rs. (8.15)). The calculation is based on Profit after Tax Rs. 2045.44 lakhs as divided by weighted average number of equity shares as at 30th September, 2005 of 713.74 lakhs. 8. Deferred Tax Assets/ liabilities a. The details of deferred tax assets and liabilities are as under: Rs. lakhs As at For the Year As at 30.09.2004 2004-05 30.09.2005 Deferred tax assets Carried forward business loss 4636.62 (953.10) 3683.52 Unabsorbed tax depreciation 2785.54 (544.79) 2240.75 Expenditure disallowed u/s 43B 24.53 24.53 Voluntary retirement schemes 274.67 (150.59) 124.08 Total 7696.83 (1623.95) 6072.88 Deferred tax liability Difference between tax and book depreciation 2023.74 (177.12) 1846.62 Total 2023.74 (177.12) 1846.62 Net Deferred Tax Assets 5673.09 (1446.83) 4226.26 b. Working of Deferred Taxes is based on Assessment Orders where assessments are complete and on Return of Income in other cases. c. Deferred Tax Assets and Liabilities have not been recognized during the current year. 9. Figures for the previous year have been regrouped or rearranged wherever necessary to make them comparable with those for the current year. 10. Figures in brackets are for the previous year. 11. Additional information pursuant to provisions of paragraph 3 and 4 of Part II of Schedule VI to the Companies Act, 1956: 2004-05 2003-04 Quantity Rs Lakhs Quantity Rs Lakhs

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

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

Sources of Funds Paid up Capital : 713864 Reserves & Surplus : 1523 Secured Loans : 76952 Unsecured Loans : 1320841 Deferred Tax Liabilities : Nil Application of Funds Net Fixed Assets : 807752 Investments : Nil Deferred Tax Assets : Nil Net Current Assets : (142193) Misc. Expenditure : Nil Accumulated Losses : 1447621 IV. Performance of the Company (Amount in Rs Thousands) Turnover : 2400234 Total Expenditure : 2195048 Profit Before Tax : 205186 Provision for Taxes : 642 Provision for Deferred Taxes (net) : Nil Profit After Tax : 204544 Earning Per Share : 2.87 Dividend Rate (%) : Nil V. Generic Name of Principal Product of the Company Item Code : 252329.01 Product Description : Other Grey Portland Cement V. M. MURALIDHARAN K. C. BIRLA Directors KAMAL RATHI SANJEEV BAFNA Place: Mumbai Company Secretary Dated: 8th November, 2005 SCHEDULES (98) NARMADA CEMENT COMPANY LIMITED CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH SEPTEMBER, 2005 Year ended Year ended 30-09-2005 30-09-2004 Rs. lakhs Rs. lakhs A. Cash flow from Operating Activities :

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

As per our separate report attached For HARIBHAKTI & CO. V. M. MURALIDHARAN Chartered Accountants K. C. BIRLA SANJEEV BAFNA CHETAN DESAI Partner Directors KAMAL RATHI Company Secretary Place : Mumbai : Dated : 8th November, 2005 (99) DAKSHIN CEMENTS LIMITED DIRECTORS REPORT To The Members, Dakshin Cements Limited Your Directors present the Thirteenth Annual Report of your Company together with Audited Accounts for the year ended 31st March 2006. FINANCIAL RESULTS During the year under review, your Company did not carry on any business activities and accordingly no Profit and Loss Account has been prepared. CAPITAL EXPENDITURE During the year under review, your Company did not incur any capital expenditure. FIXED DEPOSITS Your Company has not accepted any fixed deposit during the year ending 31st March, 2006. DIRECTORS RESPONSIBILITY STATEMENT As required under Section 217 (2AA) of the Companies Act, 1956 your Directors confirm that: i) in the preparation of Annual Accounts, the applicable accounting standards have been followed; ii) the Directors have selected such accounting policies and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March, 2006; iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for

safeguarding the assets of the company and for preventing and detecting the fraud and other irregularities; and iv) the Directors have prepared the annual accounts on a going concern basis. AUDITORS REPORT There are no adverse comments, observation or reservation in the Auditors Report on the Annual Accounts of the Company. The Notes to the Accounts referred to in the Auditors Report are self explanatory and therefore do not call for any further comments from the Directors. PARTICULARS OF EMPLOYEES. Section 217(2A) of Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 do not apply to your Company as none of its employees are covered under its provisions. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO During the year under review, your Company did not carry any commercial / business activity and accordingly particulars under conservation of energy, technology absorption, foreign exchange earnings & outgo have not been provided. AUDITORS M/s G.P. Kapadia & Co., Chartered Accountants, Mumbai the existing Auditors will retire at the ensuing Annual General Meeting of your Company. They being eligible to be re-appointed have expressed their willingness to be re-appointed as the Statutory Auditors of your Company for the financial year 2006-07. A resolution seeking your approval for their re-appointment has been included in the Notice convening the Annual General Meeting. ACKNOWLEDGEMENT The Board of Directors wish to place on record their appreciation for the support and co-operation extended by UltraTech Cement Limited, the Auditors and the Bankers of the Company. For and on behalf of the Board of Directors K.C. BIRLA DEEPAK RAZDAN Directors M.R. PRASANNA Place: Mumbai Date: April 18, 2006 }

(100) DAKSHIN CEMENTS LIMITED AUDITORS REPORT We have audited the attached Balance Sheet of Dakshin Cements Limited as at 31st March, 2006. No Profit and Loss Account has been prepared as the Company has not carried out any activities. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In accordance with the provisions of Section 227 of the Companies Act, 1956, we report that: 1. As the Company has carried out no activities during the year, the requirement by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, is not applicable. 2. Further to our comments in paragraph 1 above, we report that: (a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; (c) the balance sheet dealt with by this report is in agreement with the books of account; (d) in our opinion, the balance sheet dealt with by this report, complies with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956, to the extent applicable;

(e) on the basis of written representations received from the directors as on 31st March, 2006, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2006 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956; and (f) in our opinion and to the best of our information and according to the explanations given to us, the said balance sheet read together with the significant accounting policies and other notes appearing in Schedule 5, gives the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of Companys affairs as at 31st March, 2006. G. P Kapadia &Co Chartered Accountants by the hand of ATUL B. DESAI Partner (Membership No 30850) Mumbai,April 18, 2006 (101) DAKSHIN CEMENTS LIMITED BALANCE SHEET AS AT 31st March, 2006 As at As at 31st March, 2006 31st March,2005 Schedules Rupees Rupees Rupees Rupees I. SOURCES OF FUNDS: SHARE HOLDERS FUNDS Share Capital 1 500,000 500,000 Loan Funds 500,000 500,000 II. APPLICATION OF FUNDS: Fixed Assets 2 Gross block Less : Depreciation Net block Capital Work in progress Incidental Expenditure pending

allocation / capitalisation 1,390,738 1,390,738 1,197,776 1,197,776 Current Assets, Loans and Advances 3 361,165 202,546 361,165 202,546 Less : Current Liabilities and Provisions 4 1,289,297 (928,132) 937,716 (735,170) Miscellaneous Expenditure (to the extent not written off or adjusted) 37,394 37,394 500,000 500,000 Notes on Accounts 5 As per our report attached. For G.P. Kapadia & Co Chartered Accountants by the hand of ATUL B. DESAI K. C. BIRLA DEEPAK RAZDAN M. R. PRASANNA Partner Director Director Director Membership No. 30850 Mumbai, April 18, 2006 (102) DAKSHIN CEMENTS LIMITED Schedules forming part of the Balance Sheet As at As at 31st March, 31st March, 2006 2005 Schedule - 1 Rupees Rupees SHARE CAPITAL Authorised 500,000 Equity shares of Rs 10 each 5,000,000 5,000,000 Issued and subscribed 50,000 Equity shares of Rs 10 each fully paid (All the shares are held by UltraTech Cement Limited, the holding company) 500,000 500,000 Schedule - 2 FIXED ASSETS Gross block Less : Depreciation Net block Capital work in progress Incidental Expenditure pending allocation /capitalisation 1,390,738 1,197,776

1,390,738 1,197,776 Schedule - 3 CURRENT ASSETS, LOANS AND ADVANCES Cash and Bank Balances Cash on Hand 241 241 Balance with Scheduled Bank on current account 200,305 200,305 200,546 200,546 Loans and Advances Unsecured, considered good advances recoverable in cash or in kind or for value to be received 160,619 2,000 Total 361,165 202,546 Schedule - 4 CURRENT LIABILITIES AND PROVISIONS Liabilities Due to UltraTech Cement Limited (The Holding Company) 1,101,840 755,769 Due to Others 171,187 171,187 Other liabilities 16,270 10,760 Total 1,289,297 937,716 Schedule - 5 NOTES ON ACCOUNTS 1. Significant Accounting Policies : The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles (GAAP) and in compliance with the accounting standards referred to in Section 211 (3C) and other requirements of the Companies Act, 1956, to the extent applicable. 2. As the Company has not yet started commercial operation no, Profit & Loss Account has been prepared. The statement showing the unallocated, preoperative expenditure incurred up to 31st March, 2006 is shown in Schedule - 2. 3. The pre-operative expenditure as under pending allocation will be allocated to

appropriate fixed assets on commencement of commercial production: Incidental expenditure pending allocation / capitalisation As at As at 31st March, 31st March, 2006 2005 Rupees Rupees Travelling and conveyance 134,629 134,629 Subscription 1,000 1,000 Survey expenses 90,750 90,750 Testing charges 8,000 8,000 Consultancy Charges 2,500 2,500 Auditorss remuneration 57,670 52,160 Printing & Stationery 3,764 3,764 Office expenses 2,745 2,745 Bank charges 325 325 Directors sitting fees 7,500 7,500 Filing fees 33,770 28,270 Royalty/dead rent 757,192 575,240 Legal fees 262,000 262,000 Interest 7,008 7,008 Miscellaneous expenses 21,885 21,885 Total 1,390,738 1,197,776 4. Contingent liabilities - Nil. 5. Previous year figures have been regrouped wherever necessary. Signature to Schedule 1 to 5 As per our report attached. For G.P. Kapadia & Co Chartered Accountants by the hand of ATUL B. DESAI K. C. BIRLA DEEPAK RAZDAN M. R. PRASANNA Partner Director Director Director Membership No. 30850 Mumbai , April 18, 2006 (103) DAKSHIN CEMENTS LIMITED Balance Sheet abstract and Companys General Business Profile 1 Registration Details Registration No. 0 1 - 0 1 6 0 0 2 State Code 0 1 Balance Sheet Date 3 1 - 0 3 - 0 6 2 Capital raised during the year (Amount in Rs. Thousands)

Public Issue Rights Issue NILNIL Bonus Issue Private Placement NILNIL 3 Position of Mobilisation and Development of funds (Amount in Rs. Thousands) Total Liabilities Total Assets 17891789 Sources of Funds : Paid up Capital Reserves & Surplus 500NIL Secured Loans Unsecured Loans NILNIL Application of Funds : Net Fixed Assets Investments 1391NIL Net Current Assets Miscellaneous Expenditure (928)37 Accumulated Losses NIL 4 Performance of the Company (Amount in Rs. Thousands) Turnover (including other income) Total Expenditure NILNIL + - Profit / (Loss) before Tax + - Profit / (Loss) after Tax NILNIL Please Tick Appropriate box + for Profit, - for loss Earnings per Share (Rs.) Dividend Rate (%) NANA 5 Generic Names of Three Principal Products/Services of the Company (as per monetary terms) No Activities during the year K. C. BIRLA DEEPAK RAZDAN M. R. PRASANNA Director Director Director Mumbai, April 18, 2006 UltraTechCeylinco(Pvt)Ltd (104) The Directors of UltraTech Ceylinco (Pvt) Ltd have pleasure in presenting to the members their report for the 15 month period ended 31st March 2006. PRINCIPAL ACTIVITY The principal activity of the Company is carrying on business of

importers, exporters, distributors warehousemen, wholesalers, retailers and dealers of cement and to establish storage terminals and other facilities for the bagging and distribution of bulk cement. MESSAGE FROM THE CEO The performance during the 15 month period of our JV was the best ever since the inception. The Company distributed 0.539 MMT of cement against 0.470 MMT. This has given 16% growth as against market growth of 12% which has resulted in increase in market share to 13%. The sales and other income for the financial year under review were Rs.4346 M as against Rs.3209 M during the same period last year which has given us a growth of 35%. The profit after providing tax for the period was Rs.242 M as against the profit of Rs.224M. The performance for the year was much better than previous year, mainly due to increase in the quantity sold, better price realization and continuous efforts in the cost reduction activities and better productivity. Looking in to the present scenario and the efforts announced by the government to invite more FDI, infra structure facilities such as power and road, we are expecting performance even better than last year. GDP expected to remain 6%. We have taken enormous efforts in the brand awareness after changing our brand name last year and the coming year, special steps will be taken for brand building exercises. PROFIT & LOSS ACCOUNT 15 months ended Year ended 31.03.2006 31.12.2004 Note SLR SLR Turnover 1 4,349,045,969 2,497,995,777 Cost of Sales (3,842,782,316) (2,199,030,298) Gross Profit 506,263,653 298,965,479 Other Operating Income 2 4,894,446 3,941,188 Administrative expenses (57,094,226) (37,377,999) Distribution cost (91,140,962) (37,097,940) Other operating expenses 3 (63,637,579) Profit from Operations 4 299,285,332 228,430,728 Financing cost 5 31,700,606 (44,066,582) Profit before Taxation 330,985,938 184,364,146 Income tax expense 6 (88,195,671) (11,048,273) Profit for the year 7 242,790,267 173,315,873

Earnings per share 3.88 3.47 DIRECTORATE The names of the Directors of the Company as at date are given under Corporate Information. There have been no change in the directorate during the year under review. RETIREMENT BY ROTATION AND/OR OTHERWISE By virtue of provisions contained in the Articles of Association of the Company, the Directors are not subject to Retirement by Rotation. CHANGE IN FINANCIAL YEAR The Board decided to change the financial year of the Company from 31st March in order to be in line with the financial year of the parent company, viz. UltraTech Cement Limited and as such the accounts contained herein reflect the financial status of the Company for the 15 month period ended 31st March 2006. DIVIDEND The Directors do recommend a first and final dividend of 20% to the ordinary shareholders of the Company registered as on the date of the Annual General Meeting. DIRECTORS INTERESTS IN CONTRACTS The Directors of the Company have no direct and indirect interest in any contract or proposed contract of the Company, except those specified in Note 20 to the financial statement, which have been disclosed and declared at meetings of the Directors in accordance with section 203 of the Companies Act No.17 of 1982. AUDITORS The Accounts for the year under review have been audited by Messrs KPMG Ford, Rhodes, Thornton & Company, Chartered Accountants, who retire and being eligible offer themselves for re-appointment for the year 2006/2007. The Directors do recommend their re-appointment. BY ORDER OF THE BOARD Sgd.(Authorised Signatory) INTERNATIONAL CONSULTANCY AND CORPORATE SERVICES (PVT) LTD SECRETARIES FOR ULTRATECH CEYLINCO (PVT) LTD 22nd May 2006. Colombo UltraTechCeylinco(Pvt)Ltd

(105) REPORT OF THE AUDITORS TO THE MEMBERS OF ULTRATECH CYCLINCO (PVT) LTD We have audited the Balance Sheet of Ultratech Ceylinco (Pvt) Ltd, as at 31st March, 2006 and the related Statements of Income, Changes in Equity and Cash Flow for the period then ended, together with the Accounting Policies and Notes thereon. Respective Responsibilities of Directors and Auditors The Directors are responsible for preparing and presenting these financial statements in accordance with the Sri Lanka Accounting Standards. Our responsibility is to express an opinion on these financial statements, based on our audit. Basis of Opinion We conducted our audit in accordance with the Sri Lanka Auditing Standards, which require that we plan and perform the audit to obtain reasonable assurance about whether the said financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the said financial statements, assessing the accounting principles used and significant estimates made by the Directors, evaluating the overall presentation of the financial statements, and determining whether the said financial statements are prepared and presented in accordance with the Sri Lanka Accounting Standards. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion, so far as appears from our examination, the Company maintained proper books of account for the period ended at 31st March, 2006 and to the best of our information and according to the explanations given to us, the said Balance Sheet and related Statements of Income, Changes in Equity and Cash Flow and the Accounting Policies and Notes thereto, which are in agreement with the said books and have been prepared and presented in accordance with the Sri Lanka Accounting Standards, provide the information required by the Companies Act No.17 of 1982 and give a true and fair view of the Companys state of affairs as at 31st March, 2006, and of its profit and cash flows for the period then

ended. Directors Interests in Contracts with the Company According to the information made available to us, the Directors of the Company were not directly or indirectly interested in any contracts with the Company during the period ended 31st March, 2006, other than those disclosed in Note 20 to these financial statements. For KPMG FORD, RHODES, THORNTON & CO., Chartered Accounts Colombo, 10th April, 2006 UltraTechCeylinco(Pvt)Ltd (106) } Balance Sheet as at 31st March, 2006 31-03-2006 31-12-2004 ASSETS Note SLR INR SLR INR Non-current assets Leasehold land 8 29,837,744 12,936,934 31,229,484 13,059,626 Property, plant and equipment 9 480,312,872 208,252,199 509,864,608 213,216,496 510,150,616 221,189,133 541,094,092 226,276,122 Current assets Inventories 10 217,476,820 94,292,759 99,439,959 41,584,058 Trade receivables 11 178,863,243 77,550,834 94,953,140 39,707,749 Other receivables 12 34,837,876 15,104,872 41,760,447 17,463,491 Prepayments and advances 1,625,318 704,699 4,642,337 1,941,344 Cash and cash equivalents 13 176,768,213 76,642,479 111,721,220 46,719,868 609,571,470 264,295,643 352,517,103 147,416,511 TOTAL ASSETS 1,119,722,086 485,484,776 893,611,195 373,692,633 EQUITY AND LIABILITIES Equity Share capital 14 500,000,000 216,788,068 500,000,000 209,091,289 Accumulated profit 48,832,190 21,172,472 (93,958,077) (39,291,560) 548,832,190 237,960,540 406,041,923 169,799,729 Non-current liabilities Retirement benefit obligations 15 2,536,750 1,099,874 1,970,700 824,112 Deferred Taxation 16 13,543,162 5,871,992 16,079,912 6,971,866 1,970,700 824,112 Current liabilities

Trade payable 17 429,393,891 186,174,944 418,829,981 175,147,401 Other payables 18 41,277,942 17,897,131 41,596,004 17,394,724 Income tax payable 47,232,196 20,478,753 Accrued expenses 12,529,725 5,432,590 2,963,216 1,239,095 Bank overdraft 24,376,230 10,568,952 22,209,371 9,287,572 554,809,984 240,552,370 485,598,572 203,068,792 TOTAL EQUITY AND LIABILITIES 1,119,722,086 485,484,776 893,611,195 373,692,633 The figures in INR is converted at the rate of: 2.3064=102.9/44.615 2.3913=104.5/43.7 The Directors are responsible for the preparation and presentation of these Financial Statement. The Accounting Policies and Notes annexed form an integral part of the Financial Statement Signed for and on behalf of the Board, D. J. L. B. Kotelawala S. Misra A. R. Gunawardena Directors K. C. Birla D. Razdan UltraTechCeylinco(Pvt)Ltd (107) Income Statement for the period ended 31st March, 2006 15 months ended Year ended 31.03.2006 31.12.2004 Note SLR INR SLR INR Turnover 1 4,349,045,969 1,897,216,356 2,497,995,777 1,105,992,994 Cost of sales (3,842,782,316) (1,676,365,234) (2,199,030,298) (973,625,387) Gross profit 506,263,653 220,851,122 298,965,479 132,367,608 Other operating income 2 4,894,446 2,135,140 3,941,188 1,744,969 Administrative expenses (57,094,226) (24,906,635) (37,377,999) (16,549,189) Distribution cost (91,140,962) (39,759,093) (37,097,940) (16,425,193) Other operating expenses 3 (63,637,579) (27,761,090) Profit from operations 4 299,285,332 130,559,444 228,430,728 101,138,195 Financing income /(cost) 5 31,700,606 13,182,868 (44,066,582) (23,769,002) Profit before taxation 330,985,938 143,742,312 184,364,146 77,369,193

Income tax expense 6 (88,195,671) (38,474,247) (11,048,273) (4,891,647) Profit for the period 242,790,267 105,268,065 173,315,873 72,477,546 Earnings per share - Annualised (Rs) 7 3.88 3.47 The figures in INR is converted at the rate of: 2.29233 = ((99.65+102.9)/2)/ ((43.745+44.615)/2) 2.2586=((96.7+104.5)/2)/((45.38+43.7)/2) Statement of Changes in Equity for the Period Ended 31st March, 2006 Share Capital Accumulated Profit Total SLR SLR SLR Balance as at 1st January 2004 500,000,000 (167,273,950) 332,726,050 Profit for the year 173,315,873 173,315,873 Dividend paid (100,000,000) (100,000,000) Balance as at 31st December 2004 500,000,000 (93,958,077) 406,041,923 Profit for the period 242,790,267 242,790,267 Dividend paid (100,000,000) (100,000,000) Balance as at 31st March 2006 500,000,000 48,832,190 548,832,190 UltraTechCeylinco(Pvt)Ltd (108) Cash Flow Statement for the period ended 31st March, 2006 15 months ended Year ended 31-03-2006 31-12-2004 SLR INR SLR INR Cash flows from operating activities Profit from operations 299,285,332 130,559,445 228,430,728 101,138,195 Adjustments for : Depreciation on property, plant and equipment 32,594,483 14,218,931 26,196,089 11,598,375 Amortisation of leasehold land 1,391,740 607,129 1,113,392 492,957 Provision for retiring gratuity 781,925 341,105 678,725 300,507 Exchange Difference 1,210,567 (2,199,267) Provision for bad and doubtful debts 6,115,476 2,707,640 (Gain)/loss on translation of foreign currency 27,542,516 12,015,075 (Gain)/loss on disposal of property, plant and equipment (122,793) (53,567) (334,915) (148,284) Operating profit before working capital changes 361,473,203 158,898,685 262,199,495 113,890,123 (Increase)/decrease in inventories (118,036,861) (51,492,089) 28,283,367 12,522,521 (Increase)/decrease in trade and other receivables. (73,970,513) (32,268,702) 249,937,195 110,660,230

Increase/(decrease) in trade and other payables 33,355,519 14,550,923 (256,645,753) (113,630,458) Cash generated from operations 202,821,347 89,688,817 283,774,304 123,442,416 Interest paid (1,727,148) (753,446) (53,694,177) (23,773,212) Dividends paid (100,000,000) (43,623,737) (100,000,000) (44,275,215) Income tax paid (40,963,475) (17,869,798) (11,048,273) (4,891,647) Retiring gratuity paid (215,875) (94,173) Net cash flow from operating activities 59,914,850 27,347,663 119,031,854 50,502,342 Cash flows from investing activities Purchase and construction of property, plant and equipment (3,567,450) (1,556,255) (1,140,075) (504,771) Interest received 5,885,238 2,567,361 9,627,595 4,262,638 Proceeds from sale of property, plant and equipment 647,496 282,462 844,022 373,693 Net cash flow from investing activities 2,965,284 1,293,568 9,331,542 4,131,560 Net Increase/(Decrease) in Cash & Cash Equivalents 62,880,134 28,641,231 128,363,396 54,633,902 Cash and Cash Equivalents at the beginning of the year 89,511,849 37,432,296 (38,851,547) (17,201,606) Cash and Cash Equivalents at the end of the year 152,391,983 66,073,527 89,511,849 37,432,296 Cash and Cash Equivalents as at year end Cash in hand 2,126,822 922,139 2,250,214 941,000 Cash at bank 174,641,391 75,720,340 109,471,006 45,778,868 Bank overdraft (24,376,230) (10,568,952) (22,209,371) (9,287,572) 152,391,983 66,073,527 89,511,849 37,432,296 UltraTechCeylinco(Pvt)Ltd (109) Notes to the Accounts for the period ended 31st March, 2006 15 months ended Year ended 31.03.2006 31.12.2004 SLR INR SLR INR 1 TURNOVER Turnover - Cement 4,349,045,969 1,897,216,356 2,497,995,777 1,105,992,994 2 OTHER OPERATING INCOME

Income from storage and handling 4,892,772 2,134,410 3,580,268 1,585,171 Scrap sales 1,000 436 2,130 943 Gain on disposals of fixed assets 334,915 148,284 Lab service income 674 294 23,875 10,571 4,894,446 2,135,140 3,941,188 1,744,969 3 OTHER OPERATING EXPENSES Loss on disposal of property, plant & equipment 122,793 53,567 NSL Assessment 30,777,179 13,426,155 Promotion expense 32,737,607 14,281,368 63,637,579 27,761,090 4 PROFIT FROM OPERATIONS Profit from operations is stated after charging all expenses including the following Directors emoluments 1,615,883 704,909 1,540,712 682,154 Auditors remuneration 340,000 148,321 265,000 117,329 Depreciation and amortisation of leasehold land 33,986,222 14,826,060 27,309,481 12,091,331 Provision for bad and doubtful debts 6,115,476 2,707,640 Donation 3,075,000 1,341,430 Staff cost Note 2.1 24,960,565 10,888,731 23,592,012 10,445,414 2.1 Staff cost Salaries and related costs 21,003,690 9,162,594 20,763,721 9,193,182 Defined contribution plan cost-EPF and ETF 3,174,950 1,385,032 2,149,566 951,725 Defined benefit plan cost-Retiring gratuity 781,925 341,105 678,725 300,507 24,960,565 10,888,731 23,592,012 10,445,414 5 FINANCING INCOME /(COST) Interest on overdrafts and temporary facilities (1,727,148) (753,446) (23,736) (10,509) Interest on loans (13,911,111) (6,159,174) Interest income 5,885,238 2,567,361 9,627,595 4,262,638 Gain/(loss) on translation of foreign currency 27,542,516 12,015,073 (39,759,330) (21,861,957) 31,700,606 13,828,988 (44,066,582) (23,769,002) 6 INCOME TAX EXPENSE Income tax on profits 74,466,343 32,485,001 11,048,273 4,891,647 Transferred to / (from) deferred tax 13,543,162 5,908,033 Social Responsibility Levy 186,166 81,213

88,195,671 38,474,247 11,048,273 4,891,647 The Company is liable to income tax at the corporate rate of 32.5%. Income tax on business income Profit before tax 330,985,938 144,388,434 184,364,146 81,627,622 Disallowable expenses 38,681,048 16,874,118 28,133,630 12,456,224 Allowable expenses (17,163,590) (7,487,399) (3,299,709) (1,460,953) Total statutory income 352,503,396 153,775,153 209,198,067 92,622,893 Tax loss brought forward from previous years claimed (123,376,188) (53,821,303) (73,219,323) (32,418,012) Assessable income 229,127,208 99,953,850 135,978,744 60,204,881 Allowable Investment tax allowance (101,984,058) (45,153,661) Taxable income 229,127,208 99,953,850 33,994,686 15,051,220 Tax liability @ 32.5% 74,466,343 32,485,001 11,048,273 4,891,647 Income tax on profit 74,466,343 32,485,001 11,048,273 4,891,647 As per the provisions of Inland Revenue (Amendment) Act No.12 of 2004, with effect from the year of assessment 2004/2005, the brought forward tax loss (other than any capital loss) which could be claimed in arriving at the Assessable Income is restricted to 35% of the total statutory income for the year. The tax loss of the Company brought forward from the year of assessment 2004/2005 was SLR 546,634,533 and the Company claimed SLR 123,376,188 during the year of assessment 2005/2006. The tax loss carried forward for the year of assessment 2006/2007 is SLR 423,258,345. 7 EARNINGS PER SHARE The calculation of the basic earnings per ordinary share is based on the profits attributable to the ordinary shareholders divided by weighted average number of shares in issue during the year. 31.03.2006 31.12.2004 Net profit attributable to the ordinary shareholders (Rs.) 242,790,267 105,268,065 173,315,873 72,477,546 Number of ordinary shares in issue 50,000,000 50,000,000 50,000,000 50,000,000 Basic earnings per ordinary share-

Annualised (Rs.) 3.88 1.69 3.47 1.45 8 LEASEHOLD LAND Cost 38,946,767 16,886,389 38,946,767 16,286,859 Cumulative amortisation As at the beginning of the year 7,717,283 3,346,030 6,603,891 2,761,632 Charge for the year 1,391,740 603,425 1,113,392 465,601 Balance at the end of the year 9,109,023 3,949,455 7,717,283 3,227,233 Written down value 29,837,744 12,936,934 31,229,484 13,059,626 Leasehold land is amortised over the lease period of 30 years. 9 PROPERTY, PLANT AND EQUIPMENT - Refer next page 10 INVENTORIES Naked cement 101,389,289 43,959,976 74,468,382 31,141,380 Bags 1,414,783 613,416 2,480,974 1,037,500 Stores and spares 13,599,995 5,896,633 11,143,741 4,660,118 Goods-in-transit 101,072,753 43,822,734 11,346,862 4,745,060 217,476,820 94,292,759 99,439,959 41,584,058 11 TRADE RECEIVABLES Trade receivables 212,433,856 92,106,250 128,523,755 53,746,395 Provision for bad and doubtful debts (33,570,613) (14,555,416) (33,570,615) (14,038,646) 178,863,243 77,550,834 94,953,140 39,707,749 12 OTHER RECEIVABLES Receivable from AES 14,592,200 6,326,830 14,592,200 6,102,204 GST recoverable 3,948,807 1,651,322 Larsen and Toubro Ltd 13,876,834 5,803,050 VAT recoverable 5,718,088 2,479,227 Economic service charge recoverable 14,401,724 6,244,244 8,162,404 3,413,375 Others 125,864 54,571 1,180,202 493,540 34,837,876 15,104,872 41,760,447 17,463,491 13 CASH AND CASH EQUIVALENTS Cash in hand 2,126,822 922,139 2,250,214 941,000 Cash at bank 174,641,391 75,720,340 109,471,006 45,778,868 176,768,213 76,642,479 111,721,220 46,719,868 14 SHARE CAPITAL Authorised 100,000,000 Ordinary Shares of SLR 10/- each 1,000,000,000 433,576,136 1,000,000,000 418,182,579 Issued and fully paid 50,000,000 Ordinary shares

of SLR 10/- each 500,000,000 216,788,068 500,000,000 209,091,289 15 RETIREMENT BENEFIT OBLIGATIONS Provision for retiring gratuity As at the beginning of the year 1,970,700 854,448 1,291,975 523,605 Provision for the year 781,925 339,024 678,725 300,507 2,752,625 1,193,472 1,970,700 824,112 Payments made during the year (215,875) (93,598) Balance at the end of the year 2,536,750 1,099,874 1,970,700 824,112 16 DEFERRED TAX LIABILITIES As at the beginning of the year Provision for the year 13,543,162 5,871,992 Balance at the end of the year 13,543,162 5,871,992 17 TRADE PAYABLES UltraTech Cement Ltd 426,341,744 184,851,606 410,653,650 171,728,202 Other trade payables 3,052,147 1,323,338 8,176,331 3,419,199 429,393,891 186,174,944 418,829,981 175,147,401 18 OTHER PAYABLES Retention money from contractors 10,409,883 4,513,477 10,671,546 4,462,655 Value added tax payable 13,280,066 5,553,492 Debtors deposit 6,252,393 2,710,888 4,257,388 1,780,365 Withholding tax payable 177,929 77,146 76,107 31,827 Economic service charge payable 8,147,719 3,532,657 4,572,876 1,912,297 Due to Larsen and Toubro on account of AES 9,376,525 4,065,437 Others 6,913,493 2,997,526 8,738,021 3,654,088 41,277,942 17,897,131 41,596,004 17,394,724 31.03.2006 31.12.2004 SLR INR SLR INR UltraTechCeylinco(Pvt)Ltd (110) NOTES TO THE ACCOUNTS Property, plant and equipment BUILDING PLANT & OFFICE LAB COMPUTER ELECTRICAL HT POWER FURNITURE MOTOR MOTOR TOTAL MACHINERY EQUIPMENT EQUIPMENT EQUIPMENTINSTALLATION LINE & FITTING VEHICLE CYCLES Cost

Balance as at 01-01-05 37,574,084 489,473,995 2,472,008 2,039,822 4,604,506 71,748,890 1,167,013 1,459,706 1,782,971 1,405,162 613,728,157 Additions during the period 409,511 1,257,010 41,513 1,859,416 3,567,450 Disposals during the period (161,473) (721,359) (989,600) (1,872,432) Balance as at 31-03-06 37,574,084 489,473,995 2,720,046 2,039,822 5,140,157 71,748,890 1,167,013 1,501,219 1,782,971 2,274,978 615,423,175 Depreciation Balance as at 01-01-05 5,907,107 78,346,914 1,686,144 1,515,460 2,488,042 11,482,240 233,403 945,857 625,224 633,158 103,863,549 Charge for the period 1,878,704 24,473,700 484,511 380,521 926,242 3,587,445 58,351 282,881 318,388 203,740 32,594,483 Disposals during the period (160,795) (630,368) (556,566) (1,347,729) Balance as at 31-03-06 7,785,811 102,820,614 2,009,860 1,895,981 2,783,916 15,069,685 291,754 1,228,738 943,612 280,332 135,110,303 Written down value As at 31-03-06 29,788,273 386,653,381 710,186 143,841 2,356,241 56,679,205 875,259 272,481 839,359 1,994,646 480,312,872 As at 01-01-05 31,666,977 411,127,081 785,864 524,362 2,116,464 60,266,650 933,610 513,849 1,157,747 772,004 509,864,608 DESCRIPTION COST ADDITIONS/DEDUCTION COST DEPRECIATION W.D.V AS AT 1-1-2005 FOR THE PERIOD AS AT 31-03-2006 AS AT 1-12005 Additions Disposals AS AT 31-03-2006 AS AT 31-03-2006 AS AT 31-12-2004 SLR INR SLR INR SLR INR SLR INR SLR INR SLR INR Ex-dif (INR) SLR INR SLR INR SLR INR BUILDING 37,574,084 15,712,827 578,399 37,574,084 16,291,226 5,907,107 2,470,249 1,878,704 819,561 85,932 7,785,811 3,375,742 29,788,273 12,915,484 31,666,977 13,242,578 PLANT & MACHINERY 489,473,995 204,689,497 7,534,746 489,473,995 212,224,243 78,346,914 32,763,315 24,473,700 10,676,342 1,140,908 102,820,614 44,580,565 386,653,381 167,643,679 411,127,081 171,926,183 OFFICE

EQUIPMENTS 2,472,008 1,033,751 248,038 145,596 2,720,046 1,179,347 1,686,144 705,116 484,511 211,362 (160,795) (70,145) 25,094 2,009,860 871,427 710,186 307,920 785,864 328,635 LAB EQUIPMENTS 2,039,822 853,018 31,400 2,039,822 884,418 1,515,460 633,739 380,521 165,997 22,316 1,895,981 822,052 143,841 62,366 524,362 219,279 COMPUTERS 4,604,506 1,925,524 535,651 303,125 5,140,157 2,228,649 2,488,042 1,040,456 926,242 404,061 (630,368) (274,990) 37,512 2,783,916 1,207,040 2,356,241 1,021,610 2,116,464 885,068 ELECTRICAL INSTALLATION 71,748,890 30,004,136 1,104,471 71,748,890 31,108,606 11,482,240 4,801,673 3,587,445 1,564,978 167,206 15,069,685 6,533,856 56,679,205 24,574,751 60,266,650 25,202,463 H T POWER LINE 1,167,013 488,025 17,964 1,167,013 505,989 233,403 97,605 58,351 25,455 3,438 291,754 126,498 875,259 379,491 933,610 390,419 FURNITURE & FITTINGS 1,459,706 610,424 41,513 40,469 1,501,219 650,893 945,857 395,541 282,881 123,403 13,807 1,228,738 532,751 272,481 118,141 513,849 214,883 MOTOR VEHICLES 1,782,971 745,607 27,446 1,782,971 773,054 625,224 261,458 318,388 138,893 8,777 943,612 409,128 839,359 363,926 1,157,747 484,150 MOTOR CYCLE 1,405,162 587,614 869,816 398,762 2,274,978 986,376 633,158 264,776 203,740 88,879 (556,566) (242,795) 10,686 280,332 121,545 1,994,646 864,831 772,004 322,839 TOTAL 613,728,157 256,650,423 1,695,018 10,182,379 615,423,175 266,832,802 103,863,549 43,433,927 32,594,483 14,218,931 (1,347,729) (587,930) 1,515,675 135,110,303 58,580,603 480,312,872 208,252,199 509,864,608 213,216,496 UltraTechCeylinco(Pvt)Ltd (111) 19 Related party transactions The Companys transactions with its related Companies are as follows. 31-03-2006 31-12-2004 SLR INR SLR INR UltraTech Cement Ltd Import of cement 2,190,341,157 955,508,656 776,381,327 343,744,500 Import of spares for machinery 3,753,121 1,637,252 494,732 219,044

Amount payable as at the balance sheet date 426,341,744 184,851,606 410,653,650 171,728,202 Larsen & Toubro Ltd ( until 28th June 2004) Import of cement 861,034,377 381,224,819 Import of spares for machinery 652,348 288,828 Ceylinco Developers (Pvt) Ltd Sale of Cement 558,000 247,056 Amount Receivable as at the Balance Sheet date 232,398 97,185 Ceylinco Homes International Ltd. Sale of Cement 3,038,791 1,325,634 3,481,250 1,541,331 Amount Receivable as at the Balance Sheet date 249,790 108,303 326,041 136,345 International Consultancy & Corporate Services (Pvt) Ltd Secretarial services 323,437 141,095 246,040 108,935 Ceylinco Insurance Company Ltd Insurance Services 15,056,015 6,567,996 6,787,344 3,005,111 Commission on Sales 987,895 430,957 263,880 116,833 Professional services 25,000 11,069 Amount payable as at the balance sheet date 43,677 18,937 511,387 213,853 Ceylinco CISCO Security Transport & Allied Services (Pvt) Ltd Cash Transportation services 431,250 188,127 273,700 121,181 Ceylinco Internet Services Ltd E-Mail & Internet Services 15,812 6,898 12,885 5,705 20 DIRECTORS INTEREST IN CONTRACTS No director of the Company is directly or indirectly interested in any contract with the Company other than the following: Mr. Ajith Gunawardena a Director of the company is also a director of following companies. Ceylinco Developers (Pvt) Ltd Ceylinco International Trading Company Ltd. Mr.J.L.B.Kothalawala and Mr.A.R.Gunawardena are Directors of the Company are also Directors of the following Companies. Ceylinco Insurance Company Ltd Ceylinco Developers (Pvt) Ltd Ceylinco Homes International Ltd International Consultancy & Corporate Services (Pvt) Ltd Mr.J.L.B.Kothalawala a Director of the Company is also a Director of the following Company Ceylinco CISCO Securities Transport & Allied Services (Pvt) Ltd

Mr Saurabh Misra, Mr Kailash Chand Birla, Mr.M.R.Prasanna and Mr Deepak Razdan are directors of the Company. Mr Kiran Redkar is a alternative director for Mr Deepak Razdan. 21 CAPITAL COMMITMENTS There were no capital commitments as at the balance sheet date which requires disclosure in the accounts. 22 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE No circumstances have arisen since the balance sheet date which would require adjustments to or disclosure in the financial statements. 23 CONTINGENT LIABILITIES There are no contingent liabilities as at the balance sheet date which would require adjustments or disclosure in the accounts UltraTechCeylinco(Pvt)Ltd (112) ACCOUNTING POLICIES 1. CORPORATE INFORMATION Domicile and Legal Form Larsen and Toubro Ceylinco (Pvt) Ltd was incorporated on 29th August 1997 as a Private limited liability Company and domiciled in Sri Lanka. Consequence to the change in the major shareholder of the Company, the Company was renamed as UltraTech Ceylinco (Pvt) Ltd on 11 March 2005. Principal Business Activities The Company imports naked cement from India and markets it in Sri Lanka in 50kg bags and in bulk form. The Name of the Parent Enterprise and The Ultimate Parent Enterprise The shareholding of the Company at the Balance Sheet date is as follows. UltraTech Cement Limited 80% Ceylinco Insurance Company Ltd 18% Ceylinco International Trading Ltd 2% Accordingly, UltraTech Cement Ltd incorporated in India is the Ultimate Parent Company. Number of Employees Number of employees as at the end of the period-62 (2004 58) 1.1 Statement of Compliance The financial statements have been prepared in accordance with the accounting standards issued by the Institute of Chartered Accountant of Sri Lanka (ICASL), and the requirements of the Companies Act No. 17 of 1982.

1.2 Basis of Preparation The financial statements are presented in Sri Lankan Rupees and prepared on the historical cost basis. The Accounting Policies are consistent with those used in the previous year. 1.3 Foreign Currency Transactions Transactions in foreign currencies are translated to rupees at the foreign exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to rupees at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated to rupees at the foreign exchange rate ruling at the date of the transaction. 2. ASSETS AND BASES OF THEIR VALUATIONS 2.1 Property, Plant & Equipment 2.1.1 Leasehold Property Lease hold Property located at 81/11/1, New Nuge Road, Peliyagoda has been sub leased for a period of 30 years from East West Properties Limited who have taken on lease the said premises for a period of 99 years from the Urban Development Authority. The sub-lease rentals and related expenses are amortised on a yearly basis as per the schedule of the agreement 2.1.2 Owned Assets Items of Property, Plant and Equipment are stated at cost less accumulated depreciation. Where an item of Property, Plant and Equipment comprises major components having different useful lives, they are accounted for as separate items of Property, Plant and Equipment. 2.1.3 Subsequent Expenditure Expenditure incurred to replace a component of an item of Property, Plant and Equipment that is accounted for separately, is capitalised with the carrying amount of the component being written off. Other subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the item of Property, Plant and Equipment. All other expenditure is recognised in the income statement as an expense as incurred. 2.1.4 Depreciation Depreciation is charged on a straight-line basis over the estimated useful lives of the assets. No depreciation is charged in the year of purchase and full depreciation is charged in the year of disposal. The estimated useful lives are as follows.

ASSET No. Of Years Building 25 Plant and Machinery 25 Lab Equipment 06 Electronic Installation 25 Office Equipment 06 Motor Cars 07 Motor Cycles 10 HT Power line 25 Computers 06 Furniture & Fittings 06 2.2 Inventories Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs and selling expenses. The cost of inventory is based on the FIFO cost price principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. 2.3 Trade and Other Receivable Trade and other receivable are stated at the amounts estimated to be realised. Provisions have been made in the accounts where necessary for bad and doubtful debts. 2.4 Cash and Cash Equivalents Cash and cash equivalents comprise cash balance and short-term highly liquid investments that are readily convertible to known amounts of cash. For the purpose of Statement of Cash Flow, cash and cash equivalents are presented net of bank overdraft. 3. LIABILITIES AND PROVISIONS All known liabilities have been accounted in preparing the financial statements. 3.1 Classification of Liabilities Liabilities classified as current liabilities on the Balance Sheet date are those, which fall due for payment on demand within one year from Balance Sheet date. Non-current liabilities are those balances that fall due for payment after one year from the Balance Sheet date. 3.2 Retirement Benefit Plans 3.2.1 Defined Benefit Plan Provisions have been made in the accounts for retiring Gratuity payable under the Payment of Gratuity Act, No. 12 of 1983 and it is provided from the first year of service for all employees in conformity with SLAS

16 (Retirement Benefit Costs). However, according to the Act, liability to an employee arises on completion of five years service. The liability is not externally funded nor is it actuarially valued. 3.2.2 Defined Contribution Plans Contributions to Employees Provident Fund and Employees Trust Fund are recognised as an expense in the Income Statement as incurred. 4. Revenue Recognition Revenue is generally accounted for on accrual basis and is recognised as follows: 4.1 On sale of goods all significant risks and rewards of ownership have been transferred to the buyer, which normally occurs on delivery of the goods. 4.2 Interest income on short-term investment is accounted on cash basis. 5. Borrowing Cost Borrowing costs are recognised as an expense in the year in which they are incurred, except to the extent where borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset that take a substantial period of time to get ready for intended use or sale is capitalised as part of that asset. 6. Taxation 6.1 The liability to taxation has been computed according to the provisions of the Inland Revenue Act No. 38 of 2000 and amendments thereto. 6.2 Deferred tax is provided using the liability method, providing for timing differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purpose. 7. Cash Flow The Cash Flow Statement has been prepared using the Indirect method. Prominent Aditya Birla Group Companies / JVs in India The Aditya Birla Group enjoys a leadership position in all the sectors in which it operates I UltraTech Cement Limited & its associates _ UltraTech Cement Limited : Cement Subsidiaries - Dakshin Cements Limited : Cement - UltraTech Ceylinco (Pvt) Ltd. : Cement _ Grasim Industries, its other subsidiaries & JVs Grasim Industries Limited (holding Company) : Viscose Staple Fibre, Cement,

Sponge Iron, Chemicals, Textiles Fellow Subsidiaries - Samruddhi Swastik Trading And Investments Limited : Investment - Shree Digvijay Cement Company Limited : Cement - Sun God Trading And Investments Limited : Investment Joint Ventures - AV Cell Inc., : Pulp - AV Nackawic Inc., : Pulp - Idea Cellular Limited : Telecom II Others _ Aditya Birla Nuvo Limited & its subsidiaries Aditya Birla Nuvo Limited : Viscose Filament Yarn, Garments, Carbon Black, Fertilisers, Textiles (Spun Yarn & Fabrics), Insulator (Domestic Marketing), Financial Services Subsidiaries - Aditya Birla Telecom Limited : - BGFL Corporate Finance Private Limited : Corporate Services - Birla Global Asset Finance Company Limited : Retail Finance Company - Birla Insurance Advisory Services Limited : Non-life Insurance Advisory Services - Birla Sun Life Insurance Company Limited : Life Insurance - Laxminarayan Investment Limited : Investment - Madura Garments Exports Limited : Contract manufacturing of garments - PSI Data Systems Limited : Software Services - TransWorks Information Services Limited : Business Process Outsourcing Joint Ventures - Birla NGK Insulators Private Limited : Insulators - Birla Sunlife Asset Management Company Limited : Investment / Mutual Fund - Birla Sunlife Distribution Company Limited : Investment Advisory - Birla Sunlife Trustee Company Limited : Trustee of Birla Mutual Fund - Idea Cellular Limited : Telecom _ Hindalco Industries Limited & its subsidiaries Hindalco Industries Limited : Aluminium, Copper Subsidiaries - Indian Aluminium Company Limited : Aluminium Foil - Bihar Caustic And Chemicals Limited : Caustic Soda, Liquid Chlorine,

Hydrochloric Acid _ Essel Mining & Industries Limited : Iron and Manganese Ore Mining, Noble Ferro Alloys, Nitrogen production _ TANFAC Industries Limited : Fluorine Products INFOMEDIA INDIA LIMITED