DALMIA CEMENT (BHARAT) LIMITED

DIRECTORS

SHRI P.K. KHAITAN - Chairman

SHRI N.GOPALASWAMY - Whole-time Director

SHRI M. H. DALMIA

SHRI N. KHAITAN

SHRI M. RAGHUPATHY

SHRI J.S. BAIJAL

BANKERS

PUNJAB NATIONAL BANK

CANARA BANK

CORPORATION BANK

STATE BANK OF INDIA

STATE BANK OF TRAVANCORE

BNP PARIBAS

U T I BANK LIMITED

ICICI BANK LIMITED

HEAD OFFICE

11TH & 12TH FLOORS, ‘HANSALAYA’

15, BARAKHAMBA ROAD

NEW DELHI-110001

REGISTERED OFFICE

DALMIAPURAM - 621 651

DISTRICT TIRUCHIRAPALLI

(TAMIL NADU)

AUDITORS

S.S. KOTHARI MEHTA & CO.

CHARTERED ACCOUNTANTS

5 YEARS FINANCIAL HIGHLIGHTS

Rs. Lakhs31.3.02 31.3.03 31.3.04 31.3.05 31.3.06

Sales and Other Income 42881 47098 46541 54313 73161Operating Profit (PBIDT) 8540 7469 7890 7854 16033Gross Profit 5559 4655 5158 5602 13687Profit before tax 3536 2555 3089 3573 10894Profit after tax 2546 1989 2537 3087 8485

Fixed Assets (Net) 41486 38126 36476 61594 78859Investments 7583 14884 14849 8733 17528Net Current Assets 17911 14867 17826 21296 21990

Share Capital 765 765 765 765 765Reserves and Surplus 32763 33127 34071 35066 41994Borrowings 27321 27838 28247 49884 68318

Earning per Share (Rs.) 6.66 5.20 6.63 6.07 22.18Net Worth per Share (Rs.) 87.64 88.59 91.06 93.66 111.76Debt-Equity Ratio 0.81 0.82 0.81 1.39 1.60Current Ratio 3.17 2.94 2.89 2.38 1.93Dividend (Rs. Lakhs) 421 344 383 383 765

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Dalmia CementLetter from the PresidentDear Shareholder,

It feels great to be an Indian. The economy has grown by 8.1 per cent in 2005-06. This has come after 7.5 per cent GDP growth in 2004-05, and 8.5 per cent in 2003-04. Barring any unforeseen disaster, everyone seems to agree that 2006-07 should also see growth in theregion of 8 per cent. Thanks to such performance, the country has captured the imagination and whetted the appetite of global investors.

The Economy

While India has achieved a compound average growth rate of 8 per cent over the last three years — something that has caught the eyesof the world — the fact is that the country has been doing well economically since 1992-93. The World Bank’s World DevelopmentIndicators show that the compound annual trend rate of growth of India’s GDP between 1992-93 and 2005-06 has been 6.3 per cent.

To put it in an international perspective, since 1992-93, India has been the second fastest growing large economy of the world. The onlycountry with a national income greater than India’s that grew faster over this period was China. We share this fact with you to emphasisethat while we have done even better in the last three years, we have performed creditably in the previous eleven.

To our mind, there are two positive aspects of India’s growth experience. First, it has occurred across every key sector of manufacturing— instead of depending only upon the impetus of services. In 2005-06, for instance, manufacturing grew at 9.4 per cent and constructionat over 12 per cent. Our growth, therefore, is getting more broad based. If we can significantly enhance investments in physicalinfrastructure and increase agricultural productivity, India can achieve growth rates in the region of 9 per cent per annum.

The second positive aspect of India’s growth is more structural and goes back to over two decades. Well over 65 per cent of India’s GDPis accounted for by domestic consumption — compared to around 45 per cent for China. Simply put, domestic demand fuels India’s growthwhich, in turn, further raises the level of domestic consumption. Given the huge and growing size of India’s markets, this large componentof domestic demand also partly mitigates some of the global risks inherent in export-dominated growth.

Company Performance

Let us now move on to the performance of your Company.

Buoyancy of demand for cement as well as sugar coupled with high levels of operational efficiency in both businesses have contributedto a significant growth in revenues and even better performance in terms of profits and profitability. While the details are given in thechapter on Management Discussion and Analysis, let us share with you some key numbers.

Revenue from operations, after deducting excise duty, increased by almost 27 per cent to Rs. 5,697 million. Profits before depreciation,interest and taxes (PBDIT) more than doubled to Rs. 1,603 million. Profits after tax increased by 175 per cent to Rs. 848 million. And yourCompany’s fully diluted earnings per share grew by 140 per cent to Rs. 11.78. These are good results.

However, being in cement since 1939 and in sugar since 1994, we are well aware of the cyclical nature of these industries. While atpresent construction is at an all-time high and excess demand for sugar shows no signs of abatement, these can always turn. There arethree ways of leveraging growth and simultaneously immunising your Company from any possible future downturn. These are: buildingscale, consistently maintaining best-in-class operational efficiencies, and increasing internal accruals. Please allow us to briefly discussthese three issues.

Scale, Efficiency and Internal Accruals

Your Company’s cement business has been there for more than 65 years now, since 1939. This year we increased its scale of operationsfrom 1.5 million MT to 3.5 million MT, keeping in mind the strong economic growth, and higher spending power of the common man. Theadditional 2 million MT of cement capacity became operational in April this year, and should add significantly to Dalmia Cement revenues andprofits in 2006-07 and thereafter. To support the increased capacity and reduce power costs, your Company commissioned a ThermalPower plant of 27 MW.

Traditionally, cement is thought of as a simple building material. However, special cements are needed to suit performance required forvarious special applications. With our strong R & D, your Company is among the very few in India and perhaps in the World, to havedeveloped these niche special cements, like, Oil Well Cement with API Monogram (first in India since 1984, Railway Sleeper Cement formaking pre-stressed concrete railway sleepers demanding very high performance since 1973, and Insulator Cement for High TensionInsulator Industry since 2005.

Your Company diversified into sugar industry in 1994. Sugar capacities, too are being increased. Your Company is setting up twoadditional sugar plants in Uttar Pradesh, through its wholly owned subsidiary, each with a capacity of 7,500 metric tons crushed per day(TCD). These are expected to be commissioned during 2006-07, and will take the total capacity of the sugar business to 22,500 TCD oraround 300,000 M Tonnes sugar per year. In addition, both new factories will have bagasse-based co-generation power plants, one of27 MW and the other of 25 MW. Your Company is also setting up a distillery with a capacity of 80 kilolitres per day to produce ethanol which,in the context of high petroleum prices, is expected to be more widely used as a petrol additive.

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Your Company has always given a great deal of importance to operational efficiencies. Today, its cement plant at Dalmiapuram (in TamilNadu) is considered to be one of the most efficient in India in terms of both power and overall energy consumption. And with a recoveryrate of 10.3 per cent, your Company’s sugar factory ranks among the best. Going forward, we will strive to further improve operationalefficiencies over significantly larger scale.

Being successful in cyclical industries requires unwavering attention to internal cash accruals. The dictum is simple: in good times, buildthe scale and the cash that must be more than enough to tide you through difficulties. Your Company has been traditionally strong ingenerating free cash accruals. In the immediate future, we would expect it to produce more cash for its businesses.

Dalmia Cement has always been recognised as a profitable, efficiently managed, value driven company. Today, in addition to these virtues,we have the scale to rapidly grow our major businesses and widen our footprint in the market place. Your Company will always live byits core values — the importance of superior products, greater efficiencies and higher profitability. These will now be played out oversignificantly larger scale to deliver superior shareholder value.

Informed investors have been aware of your Company’s performance and its potential. That is why Actis, a leading private equity investorin emerging markets, has put in Rs.1,173 million towards the equity capital of Dalmia Cement. We sincerely thank all of you for reposingyour faith in us.

Your Company’s results could not have been possible without the motivation and efforts of its employees, and we wholeheartedly thankthem for their efforts. Just as we thank you for your support.

Your Company is now more than 55 years old, however, it is not ageing. Since inception, we have contributed to core industries forNation’s growth. Now with substantial increase in the scale of your business and proactive risk management, we are endeavouring togrow your value in future.

With kind regards,

Yours sincerely,

J. H. DalmiaPresident

Y. H. DalmiaPresident

5

DIRECTORS’ REPORTFOR THE YEAR ENDED 31ST MARCH, 2006

The Directors have pleasure in submitting their Annual Report and Audited Statements of Account of the Company for the year ended 31stMarch, 2006.

FINANCIAL RESULTS(Rs. million)

FY - 05 FY - 06

Net Sales Turnover 4501 5697

EBITDA 785 1603

Less: Interest 225 235

PBDT 560 1368

Less: Depreciation 203 279

Profit before tax 357 1089

Provision for current tax 24 92

Provision for deferred tax 24 139

Fringe Benefit Tax — 10

Profit after tax 309 848

Add:

(i) Surplus brought forward 926 1054

(ii) Excess provision for tax written back 14 —

(iii) Transfer from Debenture Redemption Reserve — 151

Profit available for appropriation 1249 2053

APPROPRIATIONS:

General Reserve 50 100

Reserve for Bad and Doubtful Debts 13 —

Debenture Redemption Reserve 88 110

Proposed Dividend 38 77

Dividend Distribution tax thereon 6 11

Balance carried forward 1054 1756

1249 2053

DIVIDENDYour Directors take pleasure in recommending a 100 per cent dividend amounting to Rs. 2/- per share of face value Rs.2/- each as againsta dividend of Rs. 5/- per share of face value Rs.10/- each for the previous year.

OPERATIONS AND BUSINESS PERFORMANCEPlease refer to the chapter on Management Discussion and Analysis covered under Corporate Governance which is a part of the AnnualReport for a detailed analysis of the performance of the Company during 2005-06. In addition, working results for key businesses havebeen provided as an annexure to this report (Annexure - A).

CORPORATE GOVERNANCEThe Company’s corporate governance practices have been detailed in a separate chapter in this document. The Auditors certificate on thecompliance of Corporate Governance Code embodied in Clause 49 of the Listing Agreement is attached as annexure and forms part of thisReport.

CHANGE IN CAPITAL STRUCTURE AND LISTING OF SHARESThe Company decided to infuse more equity by issuing forty four lakh seventy thousand five hundred eighty eight (44,70,588) shares offace value Rs. 2 each at a premium of Rs. 260.43 per share to Actis and/or their nominees, a leading private equity investor in emergingmarkets. Formal agreement to this effect was signed on 24th April 2006 and the entire amount of approximately Rs.1173 million has beenreceived by the Company.

In terms of the resolution passed by the Shareholders in the Annual General Meeting held on 27 September 2003, the Company applied fordelisting of its securities from dealings on the Calcutta Stock Exchange. The Company has received an ‘in principle’ approval from theCalcutta Stock Exchange in response to its application for delisting of the securities.

INDUSTRIAL RELATIONSThe industrial relations during the year under review remained harmonious and cordial, except for some minor incidents at Salem. The

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Directors wish to place on record their appreciation for the excellent cooperation received from all employees at various units of theCompany.

EMPLOYEES’ PARTICULARSThe statement giving particulars of employees who were in receipt of remuneration in excess of the limits prescribed under Section217(2A) of the Companies Act, 1956 read with the Rules and Notifications made thereunder, is annexed.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE TRANSACTIONSA statement giving details of Conservation of Energy, Technology Absorption and Foreign Exchange transactions, in accordance with theCompanies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, forms a part of this report as Annexure – B.

SUBSIDIARIESThe Directors’ Report and audited accounts of Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, ShriRangam Properties Limited, Geetee Estates Limited, D.I. Properties Limited, Avnija Properties Limited, Hemshila Properties Limited, HimshikharInvestment Limited, Dalmia Sugars Limited, Arjuna Brokers & Minerals Limited, Shri Radha Krishna Brokers & Holdings Limited, Shri RangamBrokers & Holdings Limited, Dalmia Minerals & Properties Limited, Seeta Estates & Brokers Limited, Sri Kesava Mines & Minerals Limited, SriShanmugha Mines & Minerals Limited, Sri Subramanya Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, and SriMadhava Minerals & Properties Limited, subsidiaries of your Company, for the year ended 31st March, 2006 are enclosed in this annualreport.

FIXED DEPOSITSThe total amount of deposits remaining due for payment and not claimed by the depositors as on 31st March, 2006 was Rs. 2.4 million inrespect of 20 depositors, out of which deposits amounting to Rs. 0.6 million in respect of 6 depositors have since been paid/renewed.

DIRECTORSShri M.H. Dalmia was co-opted as an additional Director on 26-7-2005 and his appointment as a Director of the Company was confirmedat the Annual General Meeting held on 29-8-2005.

Shri N. Khaitan and Shri J.S. Baijal, retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment. TheCompany has obtained necessary intimations from them in terms of the Companies (Disqualification of Directors under Section 274(1)(g)of the Companies Act, 1956) Rules, 2003 to the effect that they have not incurred any disqualification under Section 274(1)(g) of theCompanies Act, 1956 and they are eligible to be reappointed as Directors of the Company.

Except for Shri N. Khaitan who holds 6,655 Ordinary Shares of Rs.2/- each, no other Director holds shares in the Company.

CONSOLIDATED FINANCIAL STATEMENTSIn compliance with the Accounting Standard 21 on Consolidated Financial Statements, this Annual Report also includes ConsolidatedFinancial Statements for the financial year 2005-06.

CEO/CFO REPORT ON ACCOUNTS AND DIRECTORS RESPONSIBILITY STATEMENTAs required under the revised clause 49 of the Listing Agreement, the CEO/CFO’s Report on the Accounts is attached.

In terms of the provisions of Section 217(2AA) of the Companies Act, 1956 your Directors declare that:

(a) in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no departures have beenmade there from;

(b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that arereasonable 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 andof the profit of the Company for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;and

(d) the Directors had prepared the annual accounts on a going concern basis.

AUDITORSM/s. S.S. Kothari Mehta & Co., Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual GeneralMeeting and are eligible for re-appointment. As required under Section 224 of the Companies Act, 1956, the Company has obtained fromthem a certificate to the effect that their re-appointment, if made, would be in conformity with the limits prescribed in the said Section.

For and on behalf of the Board

NEW DELHIDated: 27th April, 2006 CHAIRMAN

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ANNEXURE – A

WORKING RESULTSFY - 04 FY - 05 FY - 06

CEMENT DIVISION (‘000 MT)Clinker Production 1043 1151 1262Cement Production 1293 1405 1569Cement Sales and Self Consumption 1297 1403 1577

SUGAR DIVISION (‘000 MT)Cane crushed 886 702 817Sugar production 89 73 84Sugar sales 66 75 99Molasses production 47 34 41

MAGNESITE DIVISION (‘000 MT)Dead Burnt Magnesite Production 22 21 20Dead Burnt Magnesite Sales and Self consumption 17 19 25Magnesia-Carbon Bricks Production 1.9 2.0 1.7Magnesia-Carbon Bricks Sales and Self consumption 2.0 2.0 1.7

REFRACTORIES DIVISION (‘000 MT)Production 21 30 29Sales and Self Consumption 20 30 29

ELECTRONICS DIVISION (Million units)Chip Capacitors Production 9.2 9.3 6.4Chip Capacitors Sales 10.0 7.7 8.1Chip Resistors Production 12.4 11.7 3.3Chip Resistors Sales 12.3 12.0 3.4

WIND FARMInstalled Capacity (MW) 16.5 16.5 16.5Production (MW) 4.3 4.0 3.0Load Factor 26.0% 24.0% 18.4%

GOVAN TRAVELSNet turnover (Rs. million) 26.6 30.7 25.2

ANNEXURE – B

PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO ANDEARNINGS

A. CONSERVATION OF ENERGY

(a) Energy Conservation measures taken:(i) Dry Fly-ash addition increased by 5% in PPC reducing paid heat cost.(ii) Usage of alternate fuel in pyro-processing and kilns.(iii) Retrofitting inefficient piston type compressors with high efficiency compressors.(iv) Duct modification in pre-heater down comer to reduce power consumption.(v) Designing of Sugar Boiling House suitable for flow of process material by gravity.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy:(i) Cooler up gradation to reduce specific heat consumption.(ii) Variable frequency drives for water pumps.(iii) Utilising cooler vent hot gas for air conditioning/refrigeration.(iv) Bye pass duct for coal mill hot gas fan for power saving.

(c) Impact of measures taken already and proposed vide (a) and (b) above are aimed at:(i) Enable the Company to save electrical energy and thermal energy as compared to previous levels.

(d) Total energy consumption and consumption per unit of production as per Form “A” attached.

B. TECHNOLOGY ABSORPTION

Efforts made in technology absorption as per Form “B” attached.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services, andexport plans:

(i) Magnesite/Refractories: Ramming Mix, etc valued at Rs. 13.3 million F.O.B., was exported. Efforts are being made to explorepossibilities of exports to nearby Asian Countries by making business visits and supplying materials for field trials.

(b) Total foreign exchange used and earned during the year:

(i) Used: Rs. 472.5 million (ii) Earned: Rs. 37.9 million

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FORM ‘A’(Form of Disclosure of Particulars with respect to Conservation of Energy)

Current year Previous year

A. POWER AND FUEL CONSUMPTION1. ELECTRICITY:a) Purchased:

Units (KWH in million) 88.0 39.6Total Amount (Rs. million) 256.7 192.8Rate/Unit (Rs.) 2.92 4.88

b) Own Generation:i) Through Diesel Generator:

Units (KWH in million) 35.9 68.3KWH per Litre of HSD/FO 3.99 4.20Rate/Unit (Rs.) 4.32 3.46

ii) Through Steam Turbine:(Generated out of own bagasse consumption)Units (KWH in million) 24.9 22.7

2. COAL-SLACK/STEAM – GRADES B TO E, LIGNITE AND COKE BREEZEQuantity (‘000 MT) 209 145Total Cost (Rs. million) 717.1 511.8Average Rate (Rs. / MT) 3433 3528

3. FURNACE OIL INCLUDING (LSHS & HSD)Quantity (MT) 13672 21118Total Amount ( Rs. million) 243.0 267.8Average Rate (Rs. / MT) 17772 12682

4. OTHERS/INTERNAL GENERATIONQuantity (Lakh MT) 1.12 1.02Total Amount (Rs. million) 61.9 90.2Average Rate (Rs. / MT) 552 884

B. CONSUMPTION PER UNIT OF PRODUCTION:

PRODUCT CEMENT DEAD BURNT MAGNESITE

Standard Current Previous Standard Current PreviousIf any Year Year If any Year Year

Electricity (Units/MT) 76* 75* 101 103Furnace Oil (includingLSHS) (Kgs. /MT) 0.71 0.54 205 207Coal (Kgs. / MT) 100 100 NIL NIL

PRODUCT SUGAR MgO-CARBON BRICKS

Standard Current Previous Standard Current PreviousIf any Year Year If any Year Year

Electricity (Units/MT) 304 319 200 189Diesel Oil (includingLSHS) (Kgs. /MT) N.A. N.A. 29 29

PRODUCT REFRACTORIES

Standard Current PreviousIf any Year Year

Electricity (Units/MT) N.A. N.A.Furnace Oil (including LSHS) (Ltr. /MT) 1.73 10.37Coal (Kgs. / MT) 183.97 147.66

* Due to increased level of production, Ball Mills were run to grind the extra production and as a result the average power consumptionincreased when compared to last year.

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FORM “B”(Form of Disclosure of Particulars with respect to Absorption)

RESEARCH AND DEVELOPMENT (R&D)

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

(a) In- house development of technology for making Oil Well Cement with improved additive response.

(b) Improved wear resistance material used for grid cone of raw and cement mill, resulting in better mill availability.

(c) High Thermal Shock Resistance Magnesite Bricks developed in house are being used in our Rotary Kiln for manufacture of DeadBurnt Magnesite. Evaluation in Cement Plant is partially over. Free trials in Dolomite sintering Rotary Kiln at Bhilai Steel Plantcommenced in the financial year 2005-06. Patent was granted to the Company in 2005-06

(d) Development and field testing of Magnesium Phosphate Cement Mix for repairing concrete pavements was completed. Companywas granted patent in 2005-06.

(e) Development of Magnesia Alumina Spinel Brick is over and these Bricks are being evaluated in the Company’s Rotary Kiln.

(f) A new Ramming Mix has been developed for glass industry tanks. Samples have been given to a prospective user.

(g) Recycling of waste Refractory products is continuing and this has resulted in substantial savings to the Company.

(h) Use of waste derived and other alternative fuels.

(i) Recycling of waste refactory products is continuing and this has resulted in substantial savings to the Company.

2. Benefits derived as a result of the above R&D:

Production of niche products, diversification of market resulting in increased turnover. Also to offer price and performance wisesuperior products to customers to enable them to reduce their specific consumption.

The above efforts have resulted in cost reduction in operation, energy savings and helped in reducing environmental pollution.Considerable improvement in life of expensive wear parts as a result of innovative material selection.

3. Future plans of action:

(a) Use of alternative non-conventional energy sources.

(b) Conduct further test firing of high thermal shock resistant Magnesite Bricks, and more evaluation by potential customers likecement and integrated steel plants.

(c) Development of Thermistors and Varistors.

(d) Development of high wear resistant technical ceramics.

4. Expenditure on R&D:

(Rs. million)

(a) Capital Nil

(b) Recurring 1.5

(c) Contribution/Expenditure on Research and Development —

(d) Total 1.5

(e) Total R&D Expenditure as a percentage of turnover 0.02 %

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts in brief, made towards technology absorption, adaptation and innovation:

(a) Considerable improvement in life of expensive spare parts as a result of introduction of control charts and continuousmonitoring.

(b) Technology for manufacture of Oil Well Cement with improved additive response (in-house development) has been implemented.

(c) Considerable improvement in the life of expensive wear parts as a result of innovative material selection for limestone grinding.

2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development,import substitution, etc.:

The Company as a result of the above efforts, has made improvement in the product quality and saved energy resulting into costsavings. Considerable improvement in the life of expensive spare parts as a result of introduction of control charts and continuousmonitoring.

3. No technology has been imported for the last five years.

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STATEMENT OF EMPLOYEES FORMING PART OF DIRECTORS’ REPORT FOR 2005-06

Sl. Name Age Qualifications Experience Designation/ Date of Remuneration Last Employment heldNo. (years) Nature of Commencement of received Rs.

duties Employment

Name of DesignationCompany /Organisation

A. Employed throughout the financial year:

01. Dalmia Jai Hari 62 B.E. (Elec.), 37 President – 01.08.1975 25,59,826 Orissa ExecutiveM.S. in Electrical Magnesite, Sugar, Cement DirectorEngineering, USA Electronic and Limited

Travel AgencyDivision

02. Dalmia Yadu Hari 58 B.Com. (Hons), F.C.A. 36 President – Cement 01.01.1970 40,44,731 None NoneDivision and

Co-ordination

03 Dalmia Puneet 34 B. Tech, M.B.A. 9 Vice- President 25.03.1997 30,41,334 None None

B. Employed for part of the financial year:

01 Dutta H.M. 50 B. Com 32 Dy. Executive 09.01.06 5,58,089 Bharti Tele- Head –Director Ventures Corporate

(Corporate Affairs) Limited Affairs

02. Amandeep 37 M.E. 9 Dy. Executive 11.01.06 6,43,069 Bausch & General

Director (HR) Lomb Eye Manager

Care (I) Pvt. (HR)

Limited

Note: 1. In addition to the above remuneration, employees are entitled to Gratuity and benefit of Personal Accident Insurance in accordance with theCompany’s Rules.

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Dalmia CementGrowth, Scale, Values, Profits .........

MANAGEMENT DISCUSSION AND ANALYSIS

2005-06 has been an excellent year for Dalmia Cement (Bharat) Limited’s (“Dalmia Cements” or “the company”). The financial highlights for fiscal year 2005-06are:

l Revenue from operations, net of excise duty, increased by 26.6 per cent to Rs.5,697 million (Rs.1 crore = Rs.10 million).l Total income increased by 37.2 per cent to Rs. 6,506 million.l Profit before depreciation, interest and taxes (PBDIT) more than doubled from Rs.785 million in 2004-05 to Rs.1,603 million in

2005-06.l Cash profits before tax increased by 144 per cent to Rs.1,369 million.l Profit before tax more than tripled from Rs.357 million in 2004-05 to Rs.1,089 million in 2005-06.l Profit after tax (PAT) grew by 175 per cent from Rs.309 million in 2004-05 to Rs.848 million in 2005-06.l Cash return on average capital employed (cash ROCE) increased from 9.5 per cent in 2004-05 to 14.3 per cent in 2005-06.l Return on average net worth (RONW) increased from 8.7 per cent in 2004-05 to 21.6 per cent in 2005-06.l Earnings per share on a fully diluted basis (EPS diluted) rose by 140 per cent from Rs.4.91 in 2004-05 to Rs.11.78 in 2005-06.

Cash EPS increased from Rs.8.5 in 2004-05 to Rs.17.6 in 2005-06.

In this Management Discussion and Analysis, we first outline the state of the Indian economy and focus on the parameters that have abearing on Dalmia Cement’s performance, after which we move on to detailed analysis of the company’s key businesses, particularlycement and sugar.

The Economy: On a High Growth PathFiscal 2005-06 has been the third consecutive year of excellent economic performance for India. After a GDP growth of 8.5 per cent in2003-04 and 7.5 per cent in 2004-05, India has achieved 8.1 per cent during the year. This is the early estimate of growth by the CentralStatistical Organisation of the Government of India. If the last few years are any indication, the final growth figures for 2005-06 ought tobe in the region of 8.3 per cent.

This 8 per cent plus growth has been driven by industry as well as services, and has resulted in an unprecedented improvement indemand across all sectors, coupled with renewed business and consumer confidence. In 2005-06, manufacturing grew at 9.4 per centand construction, which is the end-use industry for the company’s cement operations, grew at 12.1 per cent. Growth in production ofcement is expected to exceed 11 per cent. Chart A plots the real GDP growth of the economy over the last three years.

Chart B is more instructive, for it gives a global perspective by comparing India’s growth with other nations of the world. It shows that,despite its ups and downs, India has was always grown faster than Brazil, and at a significantly greater rate that either the US or the Euro-Zone countries. India’s compound annual trend rate of growth over the last 14 years has been 6.3 per cent which, among the majornations, is the second highest decadal growth rate in the world — bettered only by China. Moreover, there has been a clear inflexion pointin India’s growth since 2002-03: the average growth since then has been above 8 per cent.

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India, therefore, is clearly poised on a higher growth path. And while it is too early to make a firm forecast about 2006-07, the generalconsensus among economists is that India ought to again achieve 8 per cent growth.

Given this backdrop of accelerated growth, we now turn to a review of the company’s major businesses.

Our Businesses: Where Good has Got Even BetterStrong performance of the economy benefited the company in terms of significantly increased demand for its products. There was ahealthy growth in demand for both cement and sugar, and realisations improved significantly in the second half of the year. Chart C givesthe size and share of Dalmia Cement’s businesses during the last two years.

Cement is the company’s largest business with sales of Rs.3,946 million in 2005-06. It grew by 21.3 per cent over the previous year. Aftercement comes sugar, which accounted for sales worth Rs.1,911 million in 2005-06, and grew by 43.1 per cent over 2004-05. Together,these businesses accounted for 90 per cent of the company’s turnover in 2005-06.

Other business, which includes magnesite, refractories and wind-farm, registered Rs.650 million of sales in 2005-06, and accounted forthe remaining 10 per cent of the company’s overall turnover for the year.

Although 2005-06 saw an unprecedented increase in the prices of raw materials and energy, the company successfully leveraged itsscale and production efficiencies — Dalmia Cements is one of India’s most efficient companies in both cement and sugar — to withstandthese pressures and achieve significantly higher profits as well as profit growth compared to the previous year.

Cement,3254, 62% Cement,

3946, 62%

Su gar,1336, 26%

Su gar,1911, 26%Others

599, 12%Others650, 10%

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The Cement BusinessWith a total capacity of 157 million metric tonnes (MMT) in 2005-06, the Indian cement industry is the second largest after China, surpassingdeveloped nations like the USA and Japan. Although the per capita consumption has increased from 28 kg in 1980-81 to around 120 kg in2005-06, India’s average consumption is still very low. Thus, as incomes increase with India’s economic growth, the inevitable processof catching up with international averages will drive future growth of the industry. Chart D depicts the growth of the cement industry inIndia.

2005-06 was an excellent year for the cement industry in India. Consumption grew at over 12 per cent from 121 MMT to 136 MMT — asmuch as four percentage points higher than the 8 per cent compound annual growth in domestic cement consumption in the last decade.This growth was accompanied with better capacity utilisation, which has steadily increased from 78.9 per cent in 2001-02 to 86.4 per centin 2005-06.

Thanks to high demand and better utilisation of capacity, the industry enjoyed favourable prices and impressive profit growth, especiallyduring the second half of 2005-06. Dalmia Cements leveraged the construction boom in India to achieve excellent results, which are givenbelow.

l Sales of the company’s cement operations increased by 21.3 per cent — from Rs.3,254 million in 2004-05 to Rs.3,946 million in2005-06.

l In terms of volume, sales grew by 12.4 per cent — from 1.40 million MT to 1.58 million MT during the same period.

l Capacity utilisation increased from 93.5 per cent to over 100 per cent. Indeed, the company was constrained by its capacity to furtherservice its markets and increase market shares. That is the reason for its proposed capacity expansion, which is discussed later.

Cement: Manufacturing Capacity and ExpansionsOur cement plant is located in Dalmiapuram, in the southern Indian state of Tamil Nadu, with a total capacity of 1.5 million MT of finishedcement during 2005-06. This capacity no longer suffices to meet the region’s growing demand. To better leverage growth opportunities

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in the domestic market, Dalmia Cement implemented an brown-field expansion plan of an additional 2 million MT. This extra cement capacitywas commissioned in April 2006 and will stabilise by the end of the first quarter of 2006-07. Once fully operational, it will add substantialscale to the current cement operations by taking the company’s manufacturing capacity to 3.5 million MT.

In order to meet the energy requirements of the expanded operations, the company also commissioned a thermal power plant with acapacity of 27 MW during 2005-06. Around 85 per cent of the current power requirement of 35 MW for the entire capacity of 3.5 millionMT will be met by captive power generation. This includes approximately 4 MW from the company’s wind farm operations which has aninstalled capacity of 16.5 MW. Captive power will not only ensure assured electricity supply to the plant, but will also be more costeffective compared to the tariff paid for power from the state grid.

Cement: Product Mix and MarketsDalmia Cements produces a diverse mix of cements, which include ordinary Portland cement (OPC) and Portland pozzolana (fly ashblended) cement (PPC. The company has well established brands such as Dalmia Superoof and Vajram, which are known for their qualityand command market premium.

The company also produces high-value special cements used in the construction of oil wells, railway sleepers and air strips. Thesecements are well established and respected brands in these product segments. In fact, Dalmia Cements is one of the few manufacturersin the country that has the capability of manufacturing such products.

Used for cementing walls of both on-shore and off-shore oil wells of companies like ONGC and Oil India, oil well cement manufactured bythe company was the first cement in India to receive the prestigious American Petroleum Institute (API) certification, and continues to bethe market leader in the segment. Railway sleeper cement manufactured by the company is considered the best. Pioneered by thecompany, it has been extensively used to replace wooden railway sleepers for high speed trains, and is supplied to all major railwaysleeper manufacturers in India.

Going forward, Dalmia Cements will continue to focus on its premium pricing strategy by maintaining its focus on the high margin retailsegment and further building a pipeline of specialised product offerings.

A defining feature of the cement industry is that it is clustered around limestone deposits, which is the basic raw material in themanufacturing process. Moreover, given prohibitive costs of long range transporting cement, markets get geographically segmented andcompetition becomes localised. Since the company’s cement plant is located in the southern part of the country, it is not surprising that TamilNadu and Kerala are its main markets. With the expected increase in capacity, Dalmia Cement will focus on also developing the Karnatakamarket.

Given that our plant is located in Tamil Nadu, our medium term strategy to concentrate on being a key regional player in South India,especially in the markets of Tamil Nadu, Kerala and Karnataka. These are states which are clocking GDP growth in excess of 6.5 per centper annum; they are in the midst of a construction boom; and we believe that the company has a strong market and brand position to furtherleverage this regional growth.

Cement: OperationsCoal and power costs constitute the major share of total cement manufacturing cost and, thus, are the most important determinants ofoperating costs. The company has continuously taken initiatives to improve its energy efficiencies. Power consumption in manufacturingcement has come down from 84 Kwh/MT in 2001-02 to 76 Kwh/MT in 2005-06. Overall energy consumption, including coal used to fire thekiln, has come down from 806 MKcal/MT in 2001-02 to 755 MKcal/MT in 2005-06.

Fuel prices have been ruling very high during the last couple of years. Thus, despite greater efficiencies, energy costs have gone up. Toeconomise on such costs, efforts have been made to substitute higher priced fuel with cheaper alternates such as pet-coke and lignite.It is precisely to reduce the dependence on astronomically priced furnace oil that the company commissioned its 27 MW captive thermalpower plant based on lignite during 2005-06.

Cement: OutlookGrowth of the cement business is inextricably linked to construction and overall growth of the economy. As the economy continues togrow at over 8 per cent, the company expects the cement industry to witness high growth in the future. At the regional level, cementconsumption in Tamil Nadu and Kerala has also picked up during the year — growing at 12.6 per cent compared to 4.7 per cent during theprevious year and a CAGR of 7.5 per cent over the last decade.

As mentioned earlier, Dalmia Cements commands a significant market share in its key markets, and is confident of leveraging this growthwith its recently concluded expansion in cement capacity, excellent brand image and effective distribution channels. We expect to carryforward our expertise, efficiencies and profitability of our current operations over the much larger capacity. Thus, we are optimistic aboutthe outlook for the cement business in 2006-07.

The Sugar BusinessIndia is the largest consumer and the second largest producer of sugar in the world with a total production of over 18 million MT in 2005-06. The outlook for sugar remain as bullish for 2006-07 as in 2005-06. This needs explanation.

Sugar: A Bullish Global ScenarioBeing the largest producer of sugar in the world, Brazil wields significant influence over global prices. High oil prices have made it moreattractive to convert cane into ethanol, which is widely used in Brazil as an automobile fuel. Flexi-fuel vehicles, which allow drivers to varythe amount of gasoline or ethanol they use, account for 48 percent of car sales in the country. In 2005-06, almost half of Brazil’s caneoutput was directed to the country’s ethanol industry, which is the world’s largest. Growth in ethanol output has, in turn, reduced the

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production and export of sugar from Brazil. This has sharply accentuated the demand-supply gap in the global sugar market, andappreciably raised sugar prices, which have increased from US$275 in September 2005 to US$480 in March 2006. Indeed, Brazil’s biggestchallenge in 2006-07 will be to allocate its cane output between meeting the growing domestic ethanol demand and producing sugar atsignificantly higher world prices.

There are other factors that augur for a relatively long period of firm sugar prices. The subsidised export of 6 to 7 million MT of beet-rootbased white sugar by the European Union is also coming to an end. The EU has to reduce its sugar subsidies by 36 per cent over the nextfour year beginning May 2006, in line with their commitments with the WTO. Consequently, the EU has declared a much lower interventionprice for 2006-07, with the aim to discourage further planting of beet. This is expected to further widen the demand-supply gap in theglobal sugar market, and hence maintain a high floor on sugar prices.

Moreover, the most significant increase in demand for sugar is now coming from the rapidly growing Asian countries, notably India andChina. Sugar consumption in developing countries is estimated to reach 100 million MT in 2006-07, with Chinese consumption forecastedto increase by 2.5 per cent to reach 13.7 million MT, thanks to the increased demand from the processed food sector and decliningproduction of artificial sweeteners.

Further, with global supply deficits for 2005-06 and declining stocks in China, India and Russia, all international sugar agencies andcouncils have confirmed that prices are expected to be even firmer in 2006-07, as sugar consumption continues to outstrip production forthe third consecutive year.

The domestic market, too, is going through a similar demand-supply imbalance. After two continuous years of poor performance due todrought conditions and pest attacks in the sugar belts of the country, production of sugar increased significantly during 2005-06, withoutput estimated at 19 million MT — a growth of 48 per cent over the previous season. Even so, as Chart F shows, domestic sugar off-take was higher still, realisations were at an all-time high. Going forward, all the factors mentioned here presents the Indian sugar industryexcellent growth opportunities in 2006-07.

Sugar: The Company’s AchievementsNot surprisingly, therefore, the company’s sugar business achieved significant increase in capacity utilisation and highest ever recoveryrates during the season. At 10.3 per cent, the company’s recovery rate was among the best in the industry. Sales of the sugar businessgrew at 43.1 per cent — from Rs.1,336 million in 2004-05 to Rs.1,911 million in 2005-06.

In volume terms, sales grew from 75,000 MT to 98,800 MT during the period. Chart G plots the trend.

0 1

9

3

4

37 36

47

34

41

37 36

4 7

34

41

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Sugar: Manufacturing Capacity and ExpansionsThe company’s sugar mill is located at Ramgarh in Uttar Pradesh. It has a total capacity of 7,500 TCD (tonnes crushed per day). During2005-06, Dalmia Cements, along with its subsidiary Dalmia Sugars, formalised a comprehensive programme for expanding its sugaroperations with a total outlay of Rs.6,300 million spread across three locations.

This expansion plan entails setting up of two new sugar plants with a capacity of 7,500 TCD each at Ramnagar and Nigohi, both in UttarPradesh. The Ramnagar plant will also have a 27 MW bagasse-based co-generation power plant and a 80 kilolitre per day distillery toproduce ethanol from molasses. Bagasse and molasses are by-products of the sugar manufacturing process. The new sugar factory atNigohi, too, will have a bagasse-based power plant with a capacity of 25 MW. Surplus power generated by the business will be suppliedto the Uttar Pradesh State Electricity Board grid. These capacities are expected to be commissioned shortly, and should begin contributingto the company’s financial performance in 2006-07.

Once this expansion is complete, total capacity will increase to 22,500 TCD or approximately 300,000 MT of sugar per annum. Moreover,the company will have a 80 kilolitre per day capacity of ethanol, and 79 MW of power generation capability, of which approximately 52 MWwill be surplus power sold to the grid. In carrying out this plan, the company will also benefit from attractive schemes for investment insugar and related businesses announced by the Government of Uttar Pradesh, under which companies investing over.5,000 million areto receive attractive fiscal concessions for period ten years.

With this expansion, the company’s sugar business will escalate to a new level in terms of both scale and integration. By using by-products of sugar manufacturing to generate additional revenue streams, the company expects to diversify and de-risk itself from thecyclical nature of the sugar industry. Furthermore, with anticipated future increases in demand for ethanol as alternate fuel, we will havethe expertise to upscale our ethanol operations to benefit from such opportunities.

Sugar: The Regulatory EnvironmentSugar is a highly regulated industry in India, where the government controls the price and availability of sugarcane and, albeit to a lesserextent, the price and target market for the sugar.

In 2004-05, the Supreme Court of India upheld the right of state governments to announce State Advised Prices (SAP) for procurementof sugarcane from the farmers that could be above the Statutory Minimum Price (SMP) declared by the central government. In response,most northern states have been announcing their SAP which significantly exceed the SMP. For the sugar season 2005-06, the SAP in UttarPradesh was Rs.1,150 per MT compared to the SMP of Rs.795, both linked to a sugar recovery rate of 9 per cent. As a result, sugar millsin Uttar Pradesh have ended up paying significantly more for their cane. Moreover, state governments also allocate the catchment areafor each mill to procure its sugarcane requirement during the season.

Imposing higher than statutory minimum cane prices and creating constraints in sourcing supply are significant risk factors in the sugarindustry. To be sure, in good years such as the last three, higher input prices have not hurt sugar producers. But in the event of a downturn— and the sugar industry is notoriously cyclical — these can affect margins.

The only way to mitigate the negative effect of such policies is to improve efficiency. On that score, the company is well placed by havinga cane recovery rate of 10.3 per cent, which ranks among the best in the industry. Going forward, the company will have to maintain, ifnot enhance, its efficiency, productivity and recovery rate to further immunise itself from a potential downturn.

There are some regulatory constraints in the distribution of output as well. Regulations decree that 10 per cent of the entire sugarproduction is to be sold to the government at a lower than market rate for public distribution. The remaining 90 per cent is free to be soldat market determined prices according to a release mechanism determined by the government. While in the ideal world this constraint oughtto be removed, it is fair to say that its effects are not as potentially detrimental as the regulations determining cane pricing and cane supply.

Sugar: The OutlookThe Indian sugar industry is fragmented and regulated, with minimal pricing power in the hand of the manufacturers. Given the largeincrease in domestic sugar manufacturing capacities and good realisation in the export market, the government is considering liberalisingsugar exports — which, at present, occurs in an on-off basis depending on ad hoc government policies as well as the balance betweensupply and domestic demand. If exports were to be liberalised, then sugar realisations will certainly continue to reign at their current levelsin the near future. Otherwise, too, price expectations are bullish for at least 2006-07.

On the positive side, the new tariffs announced by the Uttar Pradesh Electricity Regulatory Commission for buying power from co-generation plants have met the industry’s expectation, and make co-gen a profitable opportunity for sugar manufacturers. And while thegovernment has been slow in implementing the use of 5 per cent ethanol as an additive to petrol, as oil prices continue to remain high, itscoverage is expected to be expanded to all states from the current nine. When it happens, this will substantially increase the demand forethanol.

Our strategy for the sugar business is to build scale with an integrated production model that uses the by-products of sugar manufacturingprocess to diversify and de-risk the company from the cyclical nature of the industry. Our current expansion of capacities of sugar, powerand ethanol, and the modernisation plan for the business are in line with this strategy. Given the current market situation and bullish futureexpectations, the expansion should significantly contribute to both revenues and profits of the company in the next few years. Consequently,our outlook for the sugar business is also optimistic.

Other BusinessesOther businesses of Dalmia Cements accounted for 10 per cent of the company’s revenues in 2005-06, and comprise wind farm,refractory and the magnesite division.

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Performance of magnesite business — the manufacturing of dead burnt magnesite, monoliths and magnesia carbon bricks — is closelylinked to that of the steel industry. After a few years of relatively poor performance, the demand situation improved thanks to growth insteel output and demand. Consequently, sales of the magnesite division increased from Rs.250 million in 2004-05 to Rs.280 million in 2005-06. However, high price of furnace oil and the ongoing voluntary retirement scheme for rationalisation of manpower resulted in poorprofitability, and the business made a loss during the year.

The refractory business faced a healthy demand situation during the year. Sales increased by over 20 per cent from Rs.211 million in 2004-05 to Rs.255 million in 2005-06. The business also registered a surplus during the year. Overall, the company’s other businessesgenerated a small surplus during the year.

Information TechnologyLeveraging information technology (IT) tools to improve productivity and profitability of its operations is a key focus areas for DalmiaCements. The role of IT is to ensure a seamless information architecture for multi-users throughout all locations the company — be itthrough voice, video or high speed data interchange.

All current locations benefit from a fully functional IT infrastructure. The ERP is a customised solution built on the Oracle 10G platform.During the year, it was upgraded to a web enabled application, which has resulted in significant improvement in the accessibility andoperational efficiency. For the cement business, the ERP has five key modules — sales distribution system, finance and accountingsystem, purchase information system, stores information system and personnel management system. For sugar, the company uses aspecialised solution for the sector which includes modules on planning and scheduling procurement of cane, actual procurement, andfinancial accounting.

Given the increasing scale and complexity of our operations, additional focus has been on ensuring greater security of the IT infrastructure,especially the web enabled applications. We have deployed a multi-layer security arrangement which consists of advanced firewalls,intrusion detection systems and anti-virus solutions.

During the year, the company initiated multi-point video conferencing across its various locations. Apart from improving the operatingefficiencies, this has resulted in substantial savings in time and travelling costs.

Human ResourcesDalmia Cement believes that its workforce is its most valuable asset. Over the years, the company has built a pool of talented individualswith a shared value system that is committed to maintaining the high ethical standards of the organisation.

As we implement our large scale modernisation and expansion plans, we shall be moving from steady growth to an accelerated growthpath. Recognising this, and the concomitant need to re-build organisational resources, the company has involved a leading HR consultingfirm to assist it in developing and aligning its HR practices with the growing needs of the businesses.

As a part of this exercise, the company conducted an HR audit and an employee engagement survey during 2005-06. It has drawn up acomprehensive programme to focus on various HR and organisation development initiatives so as to achieve the overall objective ofbecoming an employer of choice. This covers all aspects of employee development including induction, job definition, employee evaluationand reward management.

The company has always enjoyed excellent support of its trade union. Wage settlement for next three years was finalised at the beginningof 2005-06 at mutually beneficial terms. The company had 1,988 employees as at the end of 2005-06. Industrial relations continued to becordial during the year and not a single day’s work was lost due to industrial unrest at any of our manufacturing facilities.

Regional Training CentreWith total decontrol of the Indian cement industry in 1989 came an unprecedented growth in the requirement for highly trained and skilledpersonnel. A Manpower Development Study was conducted by Holderbank under World Bank aid, which recommended that four cementcompanies would be selected — one in each of the four regions of the country — for setting up of Regional Training Centres (RTCs) toupgrade human resource development. Dalmia Cements was chosen for South India, and an RTC was set-up with aid from World Bankand Danish International Development Agency (DANIDA).

The RTC is equipped with state-of-the-art technologies, teaching aids and apparatus and offer tailor-made, need based training packages.High quality technical packages have been translated into local languages, and computer based training is given to personnel at theoperator level. Courses include a variety of topics like mining, process and quality control, mechanical, electrical and instrumentation,operation and maintenance of pollution control equipment, energy conservation and management, and other aspects of cement production.The RTC has imparted best practices of the cement industry to the trainees, and has become a source for providing trained manpower forthe industry.

Awards and RecognitionsDalmia Cement has won numerous awards from the government and independent agencies such as National Council for Cement andBuilding Material (NCCBM) and Confederation of Indian Industry (CII) for energy efficiency and energy conservation in its cement business.The company also received awards for environment excellence in plant operations and limestone mining from NCCBM, and acclaim for itsinitiatives in the area of safety, health and environment from the CII.

Social InitiativesSince its inception in 1939, Dalmia Cements has been a responsible corporate citizen committed to sustainable development. To achievethis, the company regularly undertakes a number of initiatives in education, healthcare, environment and community development to benefitsociety in its geographical areas of influence.

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The company has established a number of schools and training centres, including sports facilities, near its manufacturing plants. It hasbeen running a senior secondary school near its cement plant for more than five decades, which has around 2,000 students, mostly fromvillages in the surrounding area. The company also supports another high school. During 2005-06, Dalmia Cement donated a building at acost of Rs.700,000 and 4,000 cement bags to another school in the district.

The company also runs a small hospital for its employees at Dalmiapuram with two doctors and 10 paramedical staff. It is now in theprocess of being equipped with a maternity ward. In the area of community development, the company has generously donated forconstruction and renovation of temples, building an indoor stadium and swimming pools and developing drinking water facilities in manyvillages. During the recent floods in Tamil Nadu, Dalmia Cements assisted the local administration by distributing food packets for over tendays and helping stranded passengers in railway stations

FinancialsThis section presents a summary of the financial performance of Dalmia Cement for 2005-06 and 2004-05, first as a stand-alone entity andthen on a consolidated basis.

Stand-alone FinancialsTable 1: DCB’s abridged profit and loss statement, stand-alone (Rs. million)

FY - 05 FY - 06

Net Sales from operation 4,501 5,697

Other Income 242 808

Total Income 4,743 6,506

Material costs adjusted for change in stocks 1,336 1,838

Manufacturing and other expenses 2,621 3,065

Financial expenses 225 235

Depreciation 203 279

Total expenditure 4,386 5,416

PBDIT 785 1,603

PBDT 560 1,369

PBIT 582 1,324

PBT 357 1,089

Current tax 25 92

Deferred tax 24 139

Fringe Benefit Tax 0 10

PAT 309 848

As mentioned earlier, 2005-06 has been a very good year for the company with excellent demand conditions for both its key businesses— cement and sugar. As a result, net sales from operations grew by 26.6 per cent from Rs.4,501 million in 2004-05 to Rs.5,697 million in2005-06. Other income, which primarily includes interest and profit from sale of investments, also contributed to the growth of the totalincome of the Company to Rs.6,506 million in 2005-06.

Prices of raw materials, specially fuel and energy, increased significantly during the year. As a result, and notwithstanding operationalefficiencies, the cost of raw materials as a percentage of net sales increased from 29.7 per cent in 2004-05 to 32.3 per cent in 2005-06.Interest and depreciation expenses also increased on account of the investment in the expansions plans in cement and sugar businessescarried out by the company. However, due to improvement in productivity, operational efficiencies and scale economies, the company wasable to register a much better performance during the year.

Cash profits before tax more than doubled from Rs.560 million in 2004-05 to Rs.1,368 million in 2005-06. PBT more than tripled to Rs.1,089million during the period. Profit after tax (PAT) increased by 175 per cent to Rs.848 million. Consequently, the company’s fully diluted EPSincreased to Rs.11.78 (per share of face value of Rs.2) — up from Rs.4.91 in the previous year. Cash EPS (fully diluted), defined as PBDTminus current tax and FBT per share, increased from Rs.8.5 in 2004-05 to Rs.17.6 in 2005-06.

As a result of such performance, all indicators of profitability have registered a marked improvement over the previous year (Table 2).Cash ROCE (return on capital employed) defined as PBDIT minus current tax and FBT as a percentage of average capital employed duringthe year, increased by almost 5 percentage points to 14.3 per cent; and return on net worth increased from 8.7 per cent in 2004-05 to 21.6per cent in 2005-06.

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Table 2: Profitability Ratios

FY - 05 FY - 06

PBDIT/Total Income 16.6% 24.6%

PBIT/Total Income 12.3% 20.4%

PBT/Total Income 7.5% 16.7%

PAT/Total Income 6.5% 13.0%

Cash ROCE 9.5% 14.3%

Return on Average Net Worth 8.7% 21.6%

During the year, the company assumed fresh debts to finance the expansion of our cement operations. Due to this, there has been amarginal increase in our financial leverage. However, the interest coverage ratio is 5.6 — up from 2.6 in 2004-05 — and Dalmia Cementsis in a comfortable position to service and repay this debts.

Table 3: Capital Structure Ratios

FY - 05 FY - 06

Debt-Equity ratio 1.39 1.60

Debt-Total assets ratio 0.47 0.48

Interest coverage 2.59 5.64

To strengthen the capital structure in view of its future growth and investment plans, the company decided to infuse more equity by issuing4.47 million shares of face value of Rs.2 each at a premium of Rs.260.43 per share to Actis, a leading private equity investor in emergingmarkets. The entire amount of approximately Rs.1,173 million has been received by the company.

Overall liquidity situation of the Company remained comfortable throughout the year, as is reflected in the liquidity ratios in Table 4. Inparticular, cash ratio improved from 0.71 in 2004-05 to almost 1 in 2005-06.

Table 4: Liquidity Ratios FY - 05 FY - 06

Current ratio (Current assets/Current liabilities) 2.38 1.93

Quick ratio (Current assets net of Inventories/Current liabilities) 1.13 1.12

Cash ratio (Cash and cash equivalents/Current liabilities) 0.71 0.99

Consolidated FinancialsTable 5 gives the abridged profit and loss statement for Dalmia Cement as a consolidated entity. Total income from operations of theconsolidated entity is almost same as that of Dalmia Cement as a stand-alone entity — and so too is the performance.

Table 5: Consolidated Results of Dalmia Cement (Rs. million) FY - 05 FY - 06

Net Sales from operation 4,501 5,697

Other Income 248 825

Total Income 4,749 6,523

Material costs adj. for change in stocks 1,336 1,838

Manufacturing and other expenses 2,623 3,073

Financial expenses 225 235

Depreciation 203 279

Total expenditure 4,387 5,425

PBDIT 789 1,612

PBDT 564 1,377

PBIT 586 1,332

PBT 361 1,098

Current tax 25 93

Deferred tax 24 139

Fringe Benefit Tax 0 10

PAT 313 856

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The company has already made all regulatory and legal applications for approval of the merger of Dalmia Sugars, a 100 per centsubsidiary, which is implementing the expansion plans of the sugar business at Ramnagar and Nigohi.

Risks and ConcernsMarket and Competition RiskBoth cement and sugar are commodities where the industries are cyclical and fragmented in nature. Although the current outlook for theseindustries is extremely positive, worsening of the demand situation in the future can result in high competition and a drop in realisations.

To mitigate this risk in the cement business, the company has spent considerable resources to develop strong brands. These help DalmiaCements to sell its products at a premium even in relatively unfavourable market conditions. In the sugar business, the company’sexpansion plans involves substantial investments in power generation and ethanol, which are not cyclical and ought to reduce the impactof any downside in the sugar market scenario. Ethanol manufacturing capability, in particular, is expected give the company a businessopportunity in the future as its use is expected to increase in a milieu of hardening global oil prices.

Raw Material RiskThe cement operations face risks relating to the price and supply of coal, which is currently imported, and of limestone. To mitigate this riskthe Company maintains reasonable quantities of coal as inventories and periodically evaluates the reserves and quality of limestone.

Shortage of sugarcane pose similar risks for the sugar business. Sugarcane is a perishable item and the government controls its price andavailability to the mills. On its part, the company engages with sugarcane farmers and educates them on better farming technology andinputs to improve their yields and profitability and, thus, increase the viability of sugarcane farming.

Regulatory RiskAs mentioned earlier, the company operates in a highly regulated industry in the case of sugar, where the government controls the priceand availability of sugarcane and, to a lesser extent, the price and target market for the produce. More recently, the government’s decisionto de-license sugar mills has been challenged in the courts. The company, which had gone ahead with its expansion plans subsequentto the de-licensing decision, faces the uncertainty which has resulted from this development — as have many others in the industry. Tomitigate this risk, the company has already applied for licenses which, while these are not required currently, may become necessary inthe event of an unfavourable judgement in this regard.

Currency RiskDalmia Cement’s exposure to currency risk arises out of the import of coal for its cement plant and project imports for its expansions. Thecompany continuously monitors exchange rate movements and hedges major transactions in foreign currency by taking forwardcontracts in the currency market, as considered appropriate.

Internal Control SystemsDalmia Cements has a strong and adequate internal audit and control systems to ensure that all transactions are authorised, recorded andreported correctly. The internal control systems consist of comprehensive internal and statutory audits. The company has a well staffedinternal audit department, which periodically evaluates adequacy of internal controls and concurrently audit majority of the transactions.This provides reasonable assurance regarding the effectiveness and efficiency of operations, reliability of financial reporting, andcompliance with applicable laws and regulations. In the opinion of the management and the internal audit division, there exist adequatesafeguard against fraud and negligence within the Company. Independence of the audit and compliance function is ensured by the directreporting of the internal audits to the Audit Committee of the Board. Details on the composition and functions of the Audit Committee canbe found in the chapter on Corporate Governance of the Annual Report.

Opportunities and OutlookThe current boom environment in both cement and sugar provides a unique opportunity to the company to move to a higher growthtrajectory. Recognising this, Dalmia Cements has made substantial investments in both these businesses. While the additional cementcapacities have already started, the expansions in the sugar business will start contributing to the performance of the company towardsthe end of 2006-07.

We are confident of leveraging our greater scale of operations to achieve even better performance in 2006-07. Thus, our outlook for thenext financial year is optimistic.

Cautionary StatementCertain statements in this management discussion and analysis describing the Company’s objectives, projections, estimates andexpectations may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Forward looking statementsare identified in this report, by using the words ‘anticipates’, ‘believes’, ‘expects’, ‘intends’ and similar expressions in such statements.Although we believe our expectations are based on reasonable assumptions, these forward-looking statements may be influenced bynumerous risks and uncertainties that could cause actual outcomes and results to be materially different from those expressed orimplied. Some of these risks and uncertainties have been discussed in the section on ‘risks and concerns’. The Company takes noresponsibility for any consequence of decisions made based on such statements and holds no obligation to update these in the future.

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REPORT ON CORPORATE GOVERNANCECompany’s Philosophy on Corporate GovernanceDCB (Dalmia Cement (Bharat) Limited) believes in and remains committed to good Corporate Governance. The spirit of corporategovernance has remained imbibed in the company’s business philosophy since its inception. This philosophy is shaped by the very valuesof transparency, professionalism and accountability. Today, your company’s corporate governance practices are driven by strong Boardoversight, timely disclosures, transparent accounting policies and high levels of integrity in decision-making.

In India, corporate governance standards for listed companies are regulated by the Securities and Exchange Board of India (SEBI) throughClause 49 of the listing agreement of the Stock Exchanges. The stipulations mandated by Clause 49 became applicable to your companyin March 2001 and have been fully complied with since then. SEBI, through circulars dated 29 October 2004 and 29 March 2005, hasrevised Clause 49 and mandated listed companies to comply with the revised Clause 49 by 31 December 2005.

This chapter, along with the chapters on Management Discussion and Analysis and Additional Shareholders Information, reports DCB’scompliance with the revised Clause 49.

Board of DirectorsComposition of the BoardAs on 31 March 2006 the company’s Board comprised six members—one executive Director and five non-executive Directors, of whichthree are independent. The Chairman of the Board of Directors’ is a non-executive Director. The composition of the Board is in conformitywith Clause 49 of the listing agreement, which stipulates that 50 per cent of the Board should comprise non-executive Directors, and if theChairman is non-executive, one-third of the Board should be independent.

Number of Board MeetingsThe Board of Directors met five times during the year on 21 May 2005, 26 July 2005, 20 September 2005, 29 October, 2005 and 23 January2006. The maximum gap between any two meetings was less than 4 months.

Directors’ Attendance Record and Directorship HeldAs mandated by the Clause 49, none of the Directors are members of more than ten Board level Committees nor are they Chairman of morethan five Committees in which they are members. Table 1 gives the details of the composition of the Board and attendance.

Table 1: Composition of the Board of Directors

Attendance Particulars No. Of other Directorships andCommittee membership/chairmanships

Number of Last O ther Committee CommitteeBoard AGM Director- Member- Chairman-

Meetings ships ships ships

Name of Directors Category

Held Attended

Mr. P.K. Khaitan, Non-Executive 5 4 No 12 8 1

Chairman

Mr. N. Khaitan Independent 5 5 No 2 None None

Mr. J.S. Baijal Independent 5 4 No 2 None None

Mr. M. Raghupathy Independent 5 5 Yes None None None

Mr. N. Gopalaswamy Executive 5 3 Yes 7 2 None

Mr. M. H. Dalmia* Non-Executive 4 4 No 2 None None

* Appointed to the Board with effect from 26 July 2005

As mandated by the revised Clause 49, the independent Directors on DCB’s Board:

l Apart from receiving Director’s remuneration, do not have any material pecuniary relationships or transactions with thecompany, its promoters, its Directors, its senior management or its holding company, its subsidiaries and associates which mayaffect independence of the Director

l Are not related to promoters or persons occupying management positions at the Board level or at one level below the Board

l Have not been an executive of the company in the immediately preceding three financial years

l Are not partners or executives or were not partners or an executives during the preceding three years of the:

l Statutory audit firm or the internal audit firm that is associated with the company

l Legal firm(s) and consulting firm(s) that have a material association with the company

l Are not material suppliers, service providers or customers or lessors or lessees of the company, which may affect independenceof the Director

l Are not substantial shareholders of the company i.e. do not own two percent or more of the block of voting shares

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Information Supplied to the BoardThe Board has complete access to all information with the company. The agenda and papers for consideration of the Board are circulatedat least three days prior to the date of the Board meeting. Adequate information is circulated as part of the agenda papers and also placedat the meeting to enable the Board to take an informed decision. Inter-alia, the following information is regularly provided to the Board asa part of the agenda papers well in advance of the Board meetings or is tabled in the course of the Board meeting.

l Annual operating plans & budgets and any update thereof

l Capital budgets and any updates thereof

l Quarterly results for the company and operating divisions and business segments

l Minutes of the meetings of the Audit Committee and other Committees of the Board

l Information on recruitment and remuneration of senior officers just below the level of Board, including the appointment or removal ofChief Financial Officer and company Secretary

l Materially important show cause, demand, prosecution notices and penalty notices

l Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems

l Any material default in financial obligations to and by the company, or substantial non-payment for goods sold by the company

l Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which,may have passed strictures on the conduct of the company or taken an adverse view regarding another enterprise that can havenegative implications on the company

l Details of any joint venture or collaboration agreement

l Transactions that involve substantial payment towards goodwill, brand equity or intellectual property

l Significant labour problems and their proposed solutions. Any significant development in human resources / industrial relations frontlike signing of wage agreement, implementation of voluntary retirement scheme, etc.

l Sale of material nature of investments, subsidiaries, assets, which is not in the normal course of business

l Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange ratemovement, if material

l Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as non-payment ofdividend, delay in share transfer, etc

The Board periodically reviews compliance reports of all laws applicable to the company, prepared by the company as well as steps takenby the company to rectify instances of non-compliances.

Remuneration Paid To DirectorsThe compensation payable to the executive Director is decided by the Remuneration Committee constituted by the Board of Directors. Thedetails of remuneration paid, during the year, to the executive Director and the non-executive Directors is presented in Table 2.

Table 2: Details of remuneration paid to Directors for 2005-06 (Rs. Lakh)

Name of the Director Category Sitting Salary and Retirement Commission T otalFees Perquisites Benefits @

Mr. P.K. Khaitan Non-executive 0.65 2.09 2.74

Mr. N. Khaitan Independent 0.85 2.09 2.94

Mr. J.S. Baijal Independent 1.25 2.09 3.34

Mr. M. Raghupathy Independent 1.35 2.09 3.44

Mr. M. H. Dalmia* Non-executive 0.60 1.64 2.24

Mr. N. Gopalaswamy Executive 18.72 3.72 22.44

* Appointed to the Board with effect from 26 July 2005

@ Commission paid on net profit only

Retirement benefits comprise the company’s contribution to provident fund and superannuation fund. The payment of retirement benefitsis being made by the respective fund(s). In addition to the above the Company also contributes, on actuarial valuation basis, amount to theGratuity Fund towards gratuity of its employees including the Whole-time Director. The amount relating to the contribution made in respectof the whole-time Director is unascertainable.

There are no stock option plans. Mr. N. Gopalaswamy, executive Director has been appointed for a period of three years with effect from1 August 2004 and no severance fees is payable to him in respect of his cessation.

The company has also paid an amount of Rs. 18.24 lakhs (including Rs. 6.00 lakhs towards out-of-pocket expenses) to M/s. Khaitan & Co.,Solicitors and Advocates (a firm in which Mr. P.K. Khaitan is a Partner), for the professional services rendered by them for their/ theirrepresentatives appearances and opinions on various matters and also for appearances of other Advocates/Senior Advocates engagedby them in defending legal cases on behalf of the Company.

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Code of ConductDCB’s Board has laid down a code of conduct for all Board members and designated senior management of the company. The code ofconduct is available on the website of the company www.dalmiacement.com . All Board members and senior management personnelhave affirmed compliance with the Code of Conduct. A declaration signed by the Chief Executive Officer (CEO) to this effect is enclosedat the end of this report.

Risk ManagementDCB has a risk management framework in place. Under this framework the management identifies and monitors business risks on acontinuous basis, and initiates appropriate risk mitigation steps as and when deemed necessary. DCB has established procedures toperiodically place before the Board the risk assessment and minimisation procedures being followed by the company and steps taken byit to mitigate those risks through a properly defined framework.

Committees of the BoardThe company has four Board-level Committees – Audit Committee, Remuneration Committee, Committee for Borrowings and ShareholdersGrievance Committee

All decisions pertaining to the constitution of Committees, appointment of members and fixing of terms of service for Committee membersis taken by the Board of Directors. Details on the role and composition of these Committees, including the number of meetings held duringthe financial year and the related attendance, are provided below:

a) Audit CommitteeAs on 31 March 2006, the Audit Committee comprises three members Mr. M. Raghupathy, Chairman, Mr. J.S. Baijal and Mr. N. Khaitan all ofwhom are independent Directors. Mr. N. Khaitan was inducted as a member of the Audit Committee with effect from 23 January 2006. TheAudit Committee met four times during the year on 21 May 2005, 26 July 2005, 29 October 2005 and 23 January 2006. The time gapbetween any two meetings was less than four months. The details of the Audit Committee are given in Table 3.

Table 3: Attendance record of DCB’s Audit Committee

Name of Members Category Status No. of Meetings

Held Attended

Mr. M. Raghupathy Independent Chairman 4 4

Mr. J. S. Baijal Independent Member 4 4

Mr. N. Khaitan* Independent Member Nil Nil

* Appointed to the Audit Committee with effect from 23 January 2006

The Officer responsible for the finance function, the head of internal audit and the representative of the statutory auditors, internalauditors and cost auditors are regularly invited by the Audit Committee to its meetings. Mr. K.V. Mohan, Company Secretary, is thesecretary to the Committee

All members of the Audit Committee have requisite accounting and financial management expertise while Mr. M. Raghupathy, Chairman ofthe Committee, has accounting and financial management expertise. The Chairman of the Audit Committee attended the Annual GeneralMeeting (AGM) held on 29 August 2005 to answer shareholder queries.

The functions of the Audit Committee of the company include the following:

l Oversight of the company’s financial reporting process and the disclosure of its financial information to ensure that the financialstatement is correct, sufficient and credible

l Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor andthe fixation of audit fees

l Approval of payment to statutory auditors for any other services rendered by the statutory auditors

l Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particularreference to:

l Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms ofclause (2AA) of section 217 of the Companies Act, 1956

l Changes, if any, in accounting policies and practices and reasons for the same

l Major accounting entries involving estimates based on the exercise of judgment by management

l Significant adjustments made, if any, in the financial statements arising out of audit findings

l Compliance with listing and other legal requirements relating to financial statements

l Disclosure of any related party transactions

l Qualifications, if any, in the draft audit report

l Reviewing, with the management, the quarterly financial statements before submission to the Board for approval

l Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems

24

l Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing andseniority of the official heading the department, reporting structure coverage and frequency of internal audit

l Discussion with internal auditors any significant findings and follow up there on

l Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud orirregularity or a failure of internal control systems of a material nature and reporting the matter to the Board

l Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussionto ascertain any area of concern

l To look into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in caseof non payment of declared dividends) and creditors

l Carrying out any other function as is mentioned in the terms of reference of the Audit Committee

The Audit Committee is empowered, pursuant to its terms of reference, to:

l Investigate any activity within its terms of reference and to seek any information it requires from any employee

l Obtain legal or other independent professional advice and to secure the attendance of outsiders with relevant experience andexpertise, when considered necessary

The company has systems and procedures in place to ensure that the Audit Committee mandatorily reviews:

l Management discussion and analysis of financial condition and results of operations

l Statement of significant related party transactions (as defined by the Audit Committee), submitted by management

l Management letters / letters of internal control weaknesses issued by the statutory auditors

l Internal audit reports relating to internal control weaknesses

l The appointment, removal and terms of remuneration of the Chief Internal Auditor

l Whenever applicable, the uses/applications of funds raised through public issues, rights issues, preferential issues by majorcategory (capital expenditure, sales and marketing, working capital, etc), as part of the quarterly declaration of financial results

l If applicable, on an annual basis, statement certified by the statutory auditors, detailing the use of funds raised through public issues,rights issues, preferential issues for purposes other than those stated in the offer document/prospectus/notice

The Audit Committee is also apprised on information with regard to related party transactions by being presented:

l A statement in summary form of transactions with related parties in the ordinary course of business

l Details of material individual transactions with related parties which are not in the normal course of business

l Details of material individual transactions with related parties or others, which are not on an arm’s length basis along with management’sjustification for the same.

b) Remuneration CommitteeAs of 31 March 2006, the Remuneration Committee comprised Mr. N. Khaitan and Mr. J.S. Baijal both independent Directors. The Committeedid not meet at any time during the year.

c) Shareholders Grievance CommitteeThe Shareholders Committee comprises Mr. M. Raghupathy, as its Chairman, and Mr. N. Gopalaswamy as its member. The terms ofreference to this Committee is to look into and redress the complaints received from investors, in coordination with the Company’sRegistrars and Share Transfer Agent. The Committee met seven times during the year on 23 April 2005, 21 May 2005, 23 July 2005, 29August 2005, 13 October 2005, 29 October 2005, and 2 March 2006. During the year, 156 complaints were received from investors andall of them were resolved in time to the satisfaction of the concerned investors. At the close of the year there were no cases pending inrespect of share transfers. Table 4 gives the details:

Table 4: Nature of complaints received and attended to during 2005-06

Nature of Complaint Pending as on Received during Answered during Pending as on1 April 2005 the year the year 31 March 2006

1. Transfer / Transmission / Duplicate Nil 59 59 Nil

2. Non-receipt of Dividend Nil 92 92 Nil

3. Dematerialisation /Rematerialisation of shares Nil 2 2 Nil

4. Complaints received from:

- Securities and Exchange Board of India Nil Nil Nil Nil

- Stock Exchanges Nil 1 1 Nil

- Registrar of Companies/ Department ofCompany Affairs Nil Nil Nil Nil

5. Others Nil 2 2 Nil

Total Nil 156 156 Nil

25

The names and designations of the Compliance Officer are as follows: -

l Mr. K.V. Mohan, Company Secretary; and

l Mr. L.V. Ganapathiraman, Asst. General Manager (Costing)

The Board of Directors has delegated the powers of approving the transfer of shares/debentures to senior executives of the Company.

d) Committee for BorrowingsThe Board has constituted a Committee comprising Mr. N. Khaitan, Mr. J.S. Baijal and Mr. P.K. Khaitan for maintaining oversight on emergentmatters arising in the day-to-day working of the Company. The Committee met two times during the year on 16 May 2005 and 8 October2005. Details of the Committee are given in Table 5 below. Mr. P.K. Khaitan was also appointed as a Member of the Committee in the Meetingof the Board of Directors of the Company held on 20-9-2005. The particulars of attendance of the Director’s is set out in Table 5 hereunder:

Table 5: Attendance record of Committee for Borrowings

Name of Members Category Status No. of Meetings

Held Attended

Mr. N. Khaitan Independent Chairman 2 2

Mr. J.S. Baijal Independent Member 2 1

Mr. P.K. Khaitan* Non-Executive Member 1 1

* Appointed to the Committee with effect from 20 September 2005

Subsidiary CompaniesThe revised Clause 49 defines a “material non-listed Indian subsidiary” as an unlisted subsidiary, incorporated in India, whose turnover ornet worth (i.e. paid up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holdingcompany and its subsidiaries in the immediately preceding accounting year.

As on 31 March 2006, under this definition, DCB does not have a ‘material non-listed Indian subsidiary’.

Shares and Convertible Instruments Held by Non-Executive DirectorsTable 6 gives details of the shares and convertible instruments held by the non-executive Directors as on 31 March 2006

Table 6: Details of the shares and convertible instruments held by the non-executive Directors

Name of the Director Category Number of shares held Number of convertible instruments held

Mr. P.K. Khaitan Non-Executive Nil Nil

Mr. N. Khaitan Independent 6665 Nil

Mr. J.S. Baijal Independent Nil Nil

Mr. M. Raghupathy Independent Nil Nil

Mr. M. H. Dalmia Non-Executive Nil Nil

ManagementManagement Discussion and AnalysisAnnual Report has a detailed report on Management Discussion and Analysis.

DisclosuresThere are no materially significant related party transactions, i.e. transactions of the Company of material nature with its Promoters, theDirectors, their Relatives and Subsidiaries, etc., that would have potential conflict with the interests of the Company at large. The registerof contracts containing the transactions in which the Directors are interested is placed before the Board regularly for their approval. Thelist of related party transactions is furnished in Note No. 18 of Schedule 19 B to the financial statements in the Annual Report.

Disclosure of Accounting Treatment in Preparation of Financial StatementsDCB has followed the guidelines of accounting standards laid down by the Institute of Chartered Accountants of India (ICAI) in preparationof its financial statements.

Details of Non-Compliance by the CompanyDCB has complied with all the requirements of regulatory authorities. No penalties/strictures were imposed on the company by stockexchanges or SEBI or any statutory authority on any matter related to capital market during the last three years.

Code for Prevention of Insider-Trading PracticesIn compliance with the SEBI regulation on prevention of insider trading, the company has instituted a comprehensive code of conduct forits management and staff. The code lays down guidelines, which advises them on procedures to be followed and disclosures to be made,while dealing with shares of company, and cautioning them of the consequences of violations.

26

CEO/ CFO CertificationThe CEO and CFO certification of the financial statements for the year is enclosed at the end of the report.

Shareholders

Reappointment/Appointment of DirectorsPursuant to the Articles of Association of DCB, at every Annual General Meeting of the Company, one-third of the rotational Directors retireby rotation or if their number is not three or a multiple of three, the number nearest to one-third retire from office.

Accordingly, at the ensuing Annual General Meeting Mr. N. Khaitan and Mr. J.S. Baijal, Directors of the Company retire by rotation and beingeligible, offer themselves for re-appointment.

Mr. M.H. Dalmia was co-opted as an additional Director on the Board of Directors of the Company in its Meeting held on 26 July 2005 andhis appointment has been confirmed by the Shareholders in the Annual General Meeting held on 29 August 2005. Brief resumes of theseDirectors are attached below:

Mr. M.H. Dalmia holds a Bachelors degree in chemical engineering from Jadavpur University, Kolkata. He is President of OCL India Limited.He has been associated with OCL India Limited since 1970. He is a member of the leading Dalmia industrial family with substantial businessinterests mostly in India, UK and USA. Dalmia Group is a leading business conglomerate with interests in cement, industrial ceramics, realestate, information technology, investments, engineering and trading. He has been associated with various industry organizations in thepast. He is a member of the Managing Committee of the Associated Chambers of Commerce and Industry. He was the President of IndianRefractories Manufacturers Association and of Cement Manufacturers Association. He was also the President of National Council forCement and Building Materials during 1986-89 and a member of the Managing Committee of the FICCI during 1987-89. He was awarded agold medal in 1961 for best engineering student. He holds Directorship in two Public Companies namely Hari Machines Limited and FirstCapital India Limited and in two Private Companies namely, Artech Infosystems Pvt. Ltd. and Artech Information Systems (India) Pvt. Ltd.

Mr. N. Khaitan, is an Advocate by profession and has a rich experience in legal and commercial matters. He is a Director in 2 Public LimitedCompanies, namely, Jay Cylinders Limited and Universal Conveyor Belting Limited.

Mr. J.S. Baijal, is a M.A. in Economics. He joined the Indian Administrative Service (IAS) in 1954 and has held the posts of Secretary,Finance, Government of Orissa; Joint Secretary to the Government of India, Ministry of Finance, Department of Economic Affairs; Directorof National Fertilisers Limited, IFFCO; Minister Economic, Embassy of India, Washington; Chairman of Industrial Development Corporationof Orissa; Officer on Special Duty with Reserve Bank of India; Secretary, Irrigation & Power, Orissa Government; Addl. Secretary to theGovernment of India, Health & Family Welfare; Addl. Secretary to the Government of India, Ministry of Finance, Department of EconomicAffairs; Ex-officio Director of Mineral & Metals Trading Corporation of India Ltd, ONGC Ltd, Punjab National Bank; Secretary to theGovernment of India, Planning Commission and Executive Director, World Bank, IFC, IDA, Washington, prior to his retirement. After hisretirement he has held positions as Director of HDFC Bank Limited, before being appointed as a Director of the Company on 31 May 1999.

Presently, he holds Directorships in two Public Companies, namely Denso India Limited and Polylink Polymers India Limited.

Means of Communication with ShareholdersThe Board of Directors of the Company approves and takes on record the unaudited financial results in the format prescribed by the StockExchanges within one month of the close of every quarter and such results are published in two financial newspapers, viz., BusinessStandard and Business Line, and one Regional Newspaper, Dinamani, within the stipulated time. The Company also publishes its annualaudited results in these newspapers within the stipulated period.

As required under Clause 51 of the Listing Agreement all the data related to quarterly financial results, shareholding pattern, etc., isprovided to the web-site www.sebiedifar.nic.in within the time frame prescribed in this regard. All the details required to be forwarded tothe Stock Exchanges are being sent by the Company from time to time.

General Body MeetingsTable 7 gives the details of the last three Annual General Meetings (AGMs).

Table 7: Details of last three AGMs

Financial year Date Time Location

2004-05 29 August 2005 10.30 a.m. Community Centre, Dalmiapuram Dist. Tiruchirapalli, Tamil Nadu, 621651.

2003-04 27 August 2004 10.00 a.m. Regional Training Centre Premises, Dalmiapuram, Dist. Tiruchirapalli,Tamil Nadu, 621651.

2002-03 27 September 2003 11.00 a.m. Community Centre, Dalmiapuram, Dist. Tiruchirapalli, Tamil Nadu, 621651.

The details of Special Resolutions in respect of the last three Annual General Meetings (AGMs) and Extraordinary General Meetings(EGMs) are given in Table 8.

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Table 8: Details of Special Resolutions passed in last three General Meetings

Date of Type of Particulars Meeting Meeting

22 February 2006 EGM l Authorising the Board to issue securities to the extent of Rs. 7,000 Million and also tosecure the issue if made in form of borrowings.

(The above Resolution was adopted unanimously)

17 October 2005 EGM l Increase in Authorised Capital from Rs. 20 crores to Rs. 40 crores.l Authority to the Board to issue and allot against each existing Warrant 5 Equity Shares of

Rs. 2/- each.(The above Resolutions were adopted unanimously)

27 August 2004 AGM l Payment of commission on net profits to Directors other than the Whole-time Directorsubject to a maximum monetary limit of Rs.10 lakhs.

l Reappointment of Mr. N. Gopalaswamy as a Whole-time Director of the Company effective1-8-2004 for a period of 3 years.

(The above Resolutions were adopted unanimously)

27 September 2003 AGM l Delisting of the Company’s securities from dealings on the Delhi Stock Exchange andCalcutta Stock Exchange.

(The above Resolution was adopted unanimously)

Postal BallotDuring the year ended 31 March 2006, the Board decided to approach the Shareholders to seek their consent, by way of a postal ballot,to an Ordinary Resolution for authorising the Board to sell, transfer, dispose of the Company’s right in the Sugar undertaking/establishmentat Ramgarh. The Board approved the Notice for this purpose and appointed a Scrutinizer, namely, Mr. R. Venkatasubramanian, PractisingCompany Secretary, No. 12 – S.A.N. Office & Shopping Complex, 28 – Main Road, Sirudaiyur, Lalgudi - 621601, who conducted thisexercise in accordance with law. Shareholders holding 45.08% of the number of Shares responded to the Postal Ballot. Holders in respectof 45.06% of the number of Shares responded in favour of the Resolution, while holders in respect of 0.02% of the Shares expressedtheir dissent. The Resolution was passed with requisite majority. Necessary intimation relating to the voting by Postal Ballot has been sentto all the Stock Exchange(s) where the Company’s Shares are listed.

Compliance

Mandatory RequirementsDCB is fully compliant with the applicable mandatory requirements of the revised Clause 49.

Adoption of Non-Mandatory RequirementsAlthough it is not mandatory, a Remuneration Committee of the Board is in place. Details of the Remuneration Committee have beenprovided under the Section ‘Remuneration Committee’.

Additional Shareholder Information

Annual General MeetingDate: 26 June, 2006Time: 10.30 a.m.Venue: Community Centre Premises,

Dalmiapuram -621651 Dist. Tiruchirapalli, Tamil Nadu

Financial CalendarFinancial year: 1 April to 31 March

For the year ended 31 March 2006, results were announced on:· 22 May, 2005: Fourth quarter and annual of 31 March, 2005· 27 July, 2005: First quarter· 30 October, 2005: Half yearly· 24 January, 2006: Third quarter· 29 April, 2006: Fourth Quarter.

Book ClosureThe dates of book closure are from 17 June 2006 to 26 June 2006 inclusive of both days.

Dividend PaymentA dividend of Rs. 2/- per equity share will be paid on or after 7 July 2006, subject to approval by the shareholders at the Annual GeneralMeeting.

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ListingListing on Stock Exchanges in respect of the Equity Shares and Detachable Tradable Warrants is as under:

a) The Madras Stock Exchange Limited,Exchange Building,Post Box No. 183,11, Second Line Beach,CHENNAI - 600001.

b) Bombay Stock Exchange Limited,Phiroze Jeejeebhoy Towers,Dalal Street,MUMBAI - 400001.

c) The Calcutta Stock Exchange Association Limited,7, Lyons Range,KOLKATA – 700001 … In principle approval for delisting received.

d) The National Stock Exchange of India Limited,Exchange Plaza,5th Floor,Plot No. C/1, G - Block,Bandra Kurla Complex,Bandra (East),MUMBAI - 400051

The Privately placed Non-Convertible Debentures are listed on WDM Segment of the National Stock Exchange of India Limited. Listing feesfor the year 2006-07 has been paid to all the above Stock Exchanges.

Stock CodesBombay Stock Exchange: Code No. 500097National Stock Exchange: Code DALMIACEMISIN No. (for Dematerialised Shares) : INE495A01022ISIN No. (for Dematerialised Warrants): INE495A13019(Besides the above the Privately Placed Debentures have also been dematerialised)

Stock Market DataTable 1, 2 and Chart A gives details

Table 1: High, lows of company’s shares for 2005-06 at BSE

High Low CloseMonth Rs. Rs. Rs.April, 2005 404.0 376.2 385.0May, 2005 414.9 382.7 405.0June, 2005 409.7 373.9 380.9July, 2005 480.0 376.0 473.2August, 2005 597.3 465.1 590.6September, 2005 814.5 583.0 739.7October, 2005 800.0 651.0 149.1 *November, 2005 * 203.0 147.0 189.6December, 2005 * 200.0 168.1 193.2January, 2006 * 249.9 192.9 244.4February, 2006 * 254.7 216.5 251.4March, 2006 * 274.4 246.0 264.5

*On face value of Rs. 2/- each

Table 2: Stock Performance over past 5 years% of Change in

Company’s Share Sensex Nifty Company in comparison withBSE NSE Sensex Nifty

2005-06 242 237 74 67 168 1702 years 362 359 102 92 260 2673 years 924 958 270 248 654 7105 years 925 879 213 196 712 683

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Chart A: DCB’s Share Performance versus BSE Sensex

Note: DCB’s shares and BSE sensex indexed to 100 as on 1 April 2005

Distribution of ShareholdingTable 3 and 4 lists the distribution of the shareholding of the equity shares of the company by size and by ownership class as on 31 March2006.

Table 3: Shareholding pattern by size

No. of Equity Shares held No. of % of No. of % ofShareholders Shareholders Shares held Shareholding

1-500 6,791 64.57 12,11,191 3.17

501-1000 1,413 13.43 10,85,606 2.84

1001-2000 1,151 10.94 17,20,844 4.50

2001-3000 384 3.65 9,73,087 2.54

3001-4000 209 1.99 7,57,735 1.98

4001-5000 124 1.18 5,67,748 1.48

5001-10000 252 2.40 17,62,039 4.61

10001 and above 194 1.84 3,01,79,855 78.88

Total 10,518 100.00 3,82,58,105 100.00

Table 4: Shareholding Pattern by ownership

Particulars No. of % of No. of % ofShareholders Shareholders Shares held Shareholding

Promoters 71 0.67 1,73,41,780 45.33

Central/State Governments 4 0.04 1,28,155 0.33

Mutual Funds 2 0.02 72,500 0.19

Foreign Institutional Investors 3 0.03 9,97,338 2.61

Banks 26 0.25 81,826 0.21

Insurance Companies 4 0.04 17,79,100 4.65

Bodies Corporate 377 3.58 51,75,963 13.53

Overseas Body Corporates 5 0.05 24,66,593 6.45

NRI/Foreign Nationals 88 0.84 1,27,823 0.33

Individuals/Others 9,938 94.48 1,00,87,027 26.37

Total 10,518 100.00 3,82,58,105 100.00

050

100150200

250300

350400

Ap

r-05

May

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Jun

-05

Jul-

05

Au

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5

Sep

-05

Oct

-05

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Dec

-05

Jan

-06

Feb

-06

Mar

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DCB

Sensex

30

Dematerlisation of SharesAs on 31 March 2006, over 64.46% shares of the company were held in dematerialised form.

Outstanding GDRs/ADRs/Warrants/OptionsThe company has issued 76,51,621 Warrants convertible into 5 equity shares of Rs. 2/- each at a maximum price of Rs.23.764 per share.These Warrants are convertible into equity shares upon a call option being exercised by the Board of Directors of the Company by giving60 days notice in leading newspapers or 11 September, 2008, whichever is earlier.

Details of Public Funding Obtained in the last three yearsNIL

Registrar and Transfer AgentFor Equity Shares and the Detachable Tradable Warrants:Karvy Computershare Private Limited,No. 21, Avenue No. 4,Street No. 1, Banjara Hills,HYDERABAD - 500034.

For Privately Placed Debentures:

Share Department having address at the Registered Office or at the address of the Registrar and Transfer Agents, M/s. Karvy ComputersharePrivate Limited (for dematerialised form only) at the above address.

Share Transfer SystemThe share transfers in the physical form are presently processed by the Registrars and Transfer Agents and returned within a period of30 days. The company’s Equity Shares are tradable in dematerialised form since August, 2000. Under the dematerialised system, theShareholder can approach a Depository Participant (DP) for getting his shares converted from physical form to dematerialised form. TheDP will generate a request for the dematerialisation, which will be sent by him to the Company’s Registrars and Share Transfer Agents.On receipt of the same the shares will be dematerialised. This transfer system also applies to the Detachable Tradable Warrants whichis also listed on the Stock Exchange(s).

Registered Office Address:Dalmia Cement (Bharat) LimitedDalmiapuram -621651,Dist. Tiruchirapalli,Tamil NaduPhone: 04329 - 235131Fax: 04329 235111

PLANT LOCATIONSDalmiapuram (Tamil Nadu)Dalmiapuram -621651,Dist. Tiruchirapalli,Tamil Nadu

Salem (Tamil Nadu)Vellakkalpatti,P.O. Karuppur,Salem – 636012.

Muppandal (Tamil Nadu)Aralvaimozhy –629301District Kanyakumari (Tamil Nadu)

Ramgarh (Uttar Pradesh)Village Ramgarh - 261403,Tehsil Misrikh,District Sitapur(Uttar Pradesh)

Bangalore (Karnataka).Plot No. 53, 54A, Electronics City,Hosur Road,Bangalore - 560100

Address for CorrespondenceDalmia Cement (Bharat) Limited Shares DepartmentDALMIAPURAM – 621651Dist. TiruchirapalliTamil NaduPhone: 04329 - 235131Fax: 04329 235111

31

ToThe Board of Directors,Dalmia Cement (Bharat) LimitedRegistered Office: Dalmiapuram – 621651District TiruchirapalliTamil Nadu

Dear Sirs,

I do hereby certify that the all the Members of the Board of Directors of the Company and the Senior Management Personnel have affirmedtheir compliance with the Code of Conduct laid down by the Board of Directors of the Company in their Meeting held on 26-7-2005.

This certificate is being given in compliance with the requirements of Clause 49 (I) (D) (ii) of the Listing Agreement entered into with theStock Exchanges.

Dated: 27-4-2006 N. GopalaswamyNew Delhi Chief Executive Officer

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

The Members,Dalmia Cement (Bharat) Limited

We have examined the compliance of conditions of Corporate Governance by Dalmia Cement (Bharat) Limited , for the year ended31st March, 2006, as stipulated in clause 49 of the Listing Agreement of the said Company with Stock Exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to proceduresand implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neitheran 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 theDirectors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated inthe above mentioned Listing Agreement.

As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to state that as per the recordsmaintained by the Company, there were no investor grievances remaining unattended/pending for more than 30 days.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectivenesswith which the Management has conducted the affairs of the Company.

For S.S.KOTHARI MEHTA & CO.Chartered Accountants

Place : NEW DELHI CA J. KRISHNANDated: 27.04.06 Partner

Membership No. 84551

32

AUDITORS’ REPORT TO THE MEMBERS OF DALMIA CEMENT (BHARAT) LIMITED

1. We have audited the attached balance sheet of DALMIA CEMENT (BHARAT) LIMITED, as at 31st March, 2006, and also the profitand loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on ouraudit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we planand perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overallfinancial 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, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 and on thebasis of such checks of the books and records of the Company as we considered appropriate and according to the information andexplanations given to us, we enclose 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 above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for thepurposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from ourexamination of those books;

(iii) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the booksof account;

(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March, 2006 and taken on record by the Boardof Directors, we report that none of the directors is disqualified as on 31st March, 2006 from being appointed as a director interms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956;

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

(a) in the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2006;

(b) in the case of the profit and loss account, of the profit for the year ended on that date; and

(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

for S.S. KOTHARI MEHTA & CO.Chartered Accountants

Place: New Delhi CA J. KRISHNANDate:27.04.2006 Partner

Membership No. 84551

Annexure

Re: Dalmia Cement (Bharat) LimitedReferred to in paragraph 3 of our report of even date,

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

2. All the assets have not been physically verified by the management during the year but there is a regular programme of verificationwhich, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancieswere noticed on such verification.

3. In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposedoff by the Company during the year.

4. The inventory of the Company has been physically verified by the management during the year. In our opinion, the frequency ofverification is reasonable.

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

6. On the basis of our examination of the records of inventory, in our opinion, the Company has maintained proper records of inventory

33

and as explained to us, the discrepancies noticed on physical verification of inventory as compared to book records were notmaterial and have been properly dealt with in the books of account.

7. The Company has not granted or taken any loans, secured or unsecured, to/from companies, firms or other parties covered in theregister maintained under section 301 of the Companies Act, 1956.

8. In our opinion and according to the information and explanations given to us, there are adequate internal control procedurescommensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assetsand for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, carriedout in accordance with the generally accepted auditing practices in India, we have neither come across nor have we been informedof any instance of a continuing failure to correct major weaknesses in the aforesaid internal control procedures.

9. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we areof the opinion that the contracts and arrangements that need to be entered into the register maintained under section 301 of theCompanies Act, 1956 have been so entered.

10. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contractsor arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices whichare reasonable having regard to prevailing market prices at the relevant time.

11. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions ofsections 58A, 58AA and any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits)Rules, 1975 with regard to the deposits accepted from the public.

12. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

13. We have broadly reviewed the books of account maintained by the Company pursuant to the Order made by the Central Governmentof India for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the cement and sugarunits and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, wehave not carried out a detailed examination of such records. The Company is not required to maintain any cost records under section209(1) (d) of the Companies Act, 1956, in respect of activities carried out at the other units of the Company.

14. According to the records of the Company examined by us and the information and explanations given to us, in our opinion, theCompany is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor educationand protection fund, employees state insurance, income-tax, sales-tax, service tax, wealth-tax, customs duty, excise duty, cess andother statutory dues applicable to it.

15. According to the records of the Company examined by us and the information and explanations given to us, no undisputed amountspayable in respect of income tax, wealth tax, sales tax, service tax, customs duty and excise duty were outstanding, as at 31st

March, 2006 for a period of more than six months from the date they became payable.

16. According to the records of the Company examined by us and the information and explanations given to us, there are no dues ofsales tax, service tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of anydispute, other than the following:-

Name of the Statute Nature of Dues Amount Period to which the Forum whereRs. Lakhs amount relates dispute is pending

Central Excise Act, 1944 Disallowance of Cenvat 72.32 Oct. ’01 to Apr. ‘02 CESTAT, Southern Credit Region Bench

Tamil Nadu General Differential tax and Penalty 10.08 1997-98, 1998-99 & STAT, MaduraiSales Tax Act, 1959 for non - acceptance of 1999-00

Form XVII for purchase

Tamil Nadu Electricity Taxation on consumption of 134.36 Oct. ’92 to Sep. “99 High Court, Madras(Taxation on Consumption) self - generated energyAct, 1962 using Furnace Oil as fuel

Mines and Minerals Royalty on Patta Lands 27.74 30.05.1982 to Supreme Court of(Regulation & Development) 31.12.1991 IndiaAct, 1957

The Employees Provident PF Contribution 3.20 July’86 to July ‘89 Madras High CourtFund and Misc. ProvisionsAct. 1952

Income-tax Act, 1961 Income Tax 69.02 A.Y. 2003-04 C.I.T (Appeals)

U.P. Trade Tax Act, 1948 Trade Tax 1.36 A.Y. 2000-01 Jt. Commissioner(Appeals),Sitapur.

34

17. The Company does not have accumulated losses as at the close of the financial year. The Company has not incurred any cash lossesduring the financial year covered by our audit and the immediately preceding financial year.

18. According to the records of the Company examined by us and the information and explanations given to us, in our opinion, theCompany has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

19. In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks orfinancial institutions during the year are not prejudicial to the interest of the Company.

20. According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the termloans taken by the Company have been applied for the purpose for which they were obtained.

21. According to the information and explanations given to us and on the basis of an overall examination of the balance sheet of theCompany, in our opinion, generally, there are no funds raised by the Company on short-term basis, which have been used for long-term investment.

22. During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the registermaintained under section 301 of the Companies Act, 1956.

23. According to the information and explanations given to us, during the period covered by our audit report, the Company had issued1000 debentures of Rs. 10,00,000 each. The Company has created security in respect of debentures issued.

24. During the period covered by our audit report, the Company has not raised any money by public issue.

25. During the course of our examination of the books and records of the Company carried out in accordance with the generallyaccepted auditing practices in India, we have neither come across any instance of fraud on or by the Company, noticed or reportedduring the year, nor have we been informed of such case by the management.

26. The other provisions of the Order do not appear to be applicable for the year under report.

for S.S. KOTHARI MEHTA & CO.Chartered Accountants

Place: New Delhi CA J. KRISHNANDate:27.04.2006 Partner

Membership No. 84551

ToThe Board of Directors,Dalmia Cement (Bharat) LimitedRegistered Office: Dalmiapuram – 621651District TiruchirapalliTamil Nadu

Dear Sirs,

1. We have reviewed the Balance Sheet, Profit and Loss account and all its Schedules and Notes on Accounts, as well as the Cash FlowStatements as at 31st March, 2006 and certify that to the best of our knowledge and belief:

1) These Statements do not contain any materially untrue statement or omit any material fact or contain Statements that might bemisleading;

2) These Statements read together present a true and fair view of the Company’s Affairs and are in compliance with existingAccounting Standards, applicable laws and regulations.

2. We further certify that, to the best of our knowledge and belief, no transactions have been entered into by the Company during theyear which are fraudulent, illegal or violative of the Company’s Code of Conduct;

3. We accept responsibility for establishing and maintaining internal controls and that we have evaluated the effectiveness of the internalcontrol systems of the Company and we have disclosed to the Auditors and the Audit Committee, deficiencies in the design oroperation of internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify thesedeficiencies;

4. We have indicated to the Auditors and the Audit Committee;

(i) Significant changes in internal control during the year;

(ii) Significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financialstatements; and

(iii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or anemployee having a significant role in the company’s internal control systems.

Dated: 27-4-2006 Sanjay S. Mittra N. GopalaswamyNew Delhi Chief Financial Officer Chief Executive Officer

35

BALANCE SHEETAS AT 31ST MARCH, 2006

As at As at31.3.2006 31.3.2005

Schedule Rs. Lakhs Rs. Lakhs Rs. LakhsI. SOURCES OF FUNDS

1. SHAREHOLDERS’ FUNDS

a) Share Capital 1 765.16 765.16

b) Reserves and Surplus 2 42061.37 35200.70

42826.53 35965.86

2. LOAN FUNDS

a) Secured Loans 3 62460.71 44839.05

b) Unsecured Loans 4 5857.14 5045.19

68317.85 49884.24

3. DEFERRED TAX 5 7299.83 5907.19

118444.21 91757.29

II. APPLICATION OF FUNDS

1. FIXED ASSETS

a) Gross Block 104457.70 76913.73

b) Less: Depreciation 41402.35 37829.66

c) Net Block 6 63055.35 39084.07

d) Capital work-in-progress 15803.18 22509.43

78858.53 61593.50

2. INVESTMENTS 7 17528.32 8732.93

3. CURRENT ASSETS, LOANS AND ADVANCES

a) Inventories 8 19168.17 19279.16

b) Sundry Debtors 9 5975.36 5169.99

c) Cash and Bank balances 10 5890.00 2280.48

d) Loans and Advances 11 14594.26 9990.07

45627.79 36719.70

Less: Current Liabilities and Provisions

a) Current Liabilities 12 20379.27 12399.55

b) Provisions 13 3258.53 3024.02

23637.80 15423.57

Net Current Assets 21989.99 21296.13

4. DEFERRED REVENUE EXPENDITURE 14 67.37 134.73

118444.21 91757.29

Significant Accounting Policies and Notes to Accounts 19

P.K.KhaitanN.Gopalaswamy

As per our report of even date attached M.H.DalmiaFor S.S. Kothari Mehta & Co., N.KhaitanChartered Accountants K.V. Mohan S. Subramanian M.RaghupathyCA J. Krishnan COMPANY DY. EXECUTIVE DIRECTOR J.S.BaijalPARTNER SECRETARY & GROUP CONTROLLER DIRECTORSNew DelhiDated: this the 27th day of April, 2006

36

PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2006

This Year Previous YearSchedule Rs. Lakhs Rs. Lakhs Rs. Lakhs

I N C O M ESales {inclusive of Excise Duty Rs.8104.02 Lakhs(Rs 6883.63 Lakhs)} 65078.62 51889.52Other Income 15 8082.09 2423.91Increase/(Decrease) in Stocks 16 (1080.73) 1183.23

72079.98 55496.66

E X P E N D I T U R ERaw Materials consumed 17045.13 14543.78Purchases 250.36 0.63Salaries, Wages and Benefits to Employees 17 3206.90 2702.93Other Expenses 18 37890.91 32647.54Depreciation 3545.65 2863.95Less: Transferred from Revaluation Reserve 752.81 835.17

2792.84 2028.78

61186.14 51923.66

Profit before Tax and Exceptional Items 10893.84 3573.00Exceptional Items:

Cane Price difference of earlier years — 1208.82Less: withdrawn from General Reserve — 1208.82

Profit before Tax 10893.84 3573.00Provision for Taxation :Current Tax 919.00 247.48Deferred Tax 1392.64 238.52Fringe Benefits Tax 97.64 —

2409.28 486.00

Profit after Tax 8484.56 3087.00Add: Surplus brought forward from previous year 10536.60 9262.74Add: Excess Provision for tax written back — 137.21Add: Transfer from Debenture Redemption Reserve 1507.58 —

Surplus available for appropriation 20528.74 12486.95

APPROPRIATIONSGeneral Reserve 1000.00 500.00Reserve for Bad and Doubtful Debts — 130.00Debenture Redemption Reserve 1100.00 883.13Dividend:Proposed Dividend 765.16 382.58Dividend Distribution tax thereon 107.32 54.64

872.48 437.22Balance carried to Balance Sheet 17556.26 10536.60

20528.74 12486.95Earnings per Share (Face Value of Rs. 2/- per share)

(Refer Note B-7 of Schedule 19)Basic Rs. 22.18 Rs. 8.07Diluted Rs. 11.78 Rs. 4.91

Significant Accounting Policiesand Notes to Accounts 19

P.K.KhaitanN.Gopalaswamy

As per our report of even date attached M.H.DalmiaFor S.S. Kothari Mehta & Co., N.KhaitanChartered Accountants K.V. Mohan S. Subramanian M.RaghupathyCA J. Krishnan COMPANY DY. EXECUTIVE DIRECTOR J.S.BaijalPARTNER SECRETARY & GROUP CONTROLLER DIRECTORSNew DelhiDated: this the 27th day of April, 2006

37

S C H E D U L E S

Schedule Nos. 1 to 19 forming part of the Balance Sheet as at 31st March, 2006and the Profit and Loss Account for the year ended on that date.

As at As at31.3.2006 31.3.2005

Rs. Lakhs Rs. LakhsSCHEDULE 1 – SHARE CAPITAL

Authorised

7,65,16,210 Ordinary Shares of Rs. 2 each (2,00,00,000 Shares of Rs.10 each) 1530.32 2000.00

12,34,83,790 Unclassified Shares of Rs. 2 each 2469.68 —

4000.00 2000.00

Issued and Subscribed

3,82,58,105 Ordinary Shares of Rs. 2 each fully paid up (76,51,621

ordinary shares of Rs.10 each fully paid up) 765.16 765.16

Note:

1 Of the above Shares:(i) 66,51,410 Shares were allotted as fully paid-up pursuant to

arrangements/scheme of conversion, without payments beingreceived in cash; and

(ii) 2,76,31,245 Shares were allotted as fully paid-up by way ofBonus Shares by capitalisation of Reserves.

2. During the year 2001-02, the Company had issued 76,51,621 Non-Convertible debentures of Rs.10/-each along with detachabletradeable warrants. The holders of these warrants have the option to subscribe to equity shares of the Company (5 ordinary sharesof Rs.2 each) at Rs. 23.764 per Share upon the call option being exercised by the Board of Directors or on 11-9-2008, whichever isearlier in terms of the Letter of Offer dated 26th June, 2001.

3. During the current year, consequent to a share split, the equity shares of Rs.10 each of the Compnay have been split into 5 equityshares of Rs.2 each.

SCHEDULE 2 – RESERVES AND SURPLUS(Rs. Lakhs)

As at As at

31.3.2005 Additions Deductions 31.3.2006

Capital Reserve 35.00 — — 35.00*Revaluation Reserve 9389.73 — 752.81 8636.92Realised Revaluation Reserve 5.79 — — 5.79Share Premium Account 8.85 — — 8.85General Reserve 12390.75 1000.00 — 13390.75Debenture Redemption Reserve 2832.58 1100.00 1507.58 2425.00Reserve for Bad and Doubtful Debts 174.69 — — 174.69Less: Set off against Doubtful Debts and Advances 173.29 171.89

1.40 2.80Surplus in Profit and Loss Account 10536.60 17556.26

35200.70 42061.37

* Out of above, Rs.15.00 Lakhs is secured by a second charge on all fixed assets of the Company’s Sugar unit.

38

As at As at31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs

1333.33 2000.00

2000.00 3000.00

2000.00 2000.00

2932.00 1950.00

7500.00 7500.00

7500.00 7500.00

2430.00 —

5000.00 —

3976.28 673.80

34671.61 24623.80

214.60 357.40

214.60 357.40

74.50 85.35

34960.71 25066.55

SCHEDULE 3 – SECURED LOANS

A. FROM BANKS

(i) Term Loan secured by whole of the movable properties(except book debts) of Wind Farm and Sugar units

(ii) Rupee Loan secured by first joint mortgage of all immovableproperties and first charge by way of hypothecation of allmovables (except book debts) of Wind Farm unit subject toprior charges created in favour of Bankers. The abovecharges rank pari-passu on inter-se basis with otherchargeholders

(iii) Rupee Loan secured by first joint mortgage of all immovableproperties and first charge by way of hypothecation of allmovables (except book debts) of Sugar unit subject to priorcharges created in favour of Bankers. The above chargesrank pari-passu on inter-se basis with other chargeholders

(iv) Working Capital Term Loan secured by hypothecation ofinventories and other current assets in favour of theparticipating Banks ranking pari-passu on inter-se basis

(v) Term Loan secured by hypothecation of all the movable fixedassets of Cement and Magnesite units on first pari passubasis with other term lending banks/ institutions

(vi) Term Loan secured by hypothecation of plant and machineryand other movable tangible assets installed at the Cement andMagnesite units on first pari-passu basis with otherchargeholders

(vii) Term Loan secured by hypothecation of all the fixed assetsof Cement and Mageniste Units on first pari passu basis withother term lending banks/institutions

(viii) Term Loan secured by hypothecation of all the fixed assetsof Cement and Mageniste Units on first pari passu basis withother term lending banks/institutions

(ix) Cash Credit secured by hypothecation of inventories andother current assets in favour of the participating Banks rankingpari-passu on inter-se basis

B. FROM FINANCIAL INSTITUTIONSTERM LOAN

Rupee Loan secured by first joint mortgage of all immovableproperties and first charge by way of hypothecation of allmovables (except book debts) of Sugar unit subject to priorcharges created in favour of Bankers. The above chargesrank pari-passu on inter-se basis with other chargeholders

C.FROM HOUSING DEVELOPMENT FINANCE CORPORATIONLIMITED

Rupee Loan secured by bank guarantee

Carried over

39

As at As at31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs

34960.71 25066.55

— 340.00

— 333.34

— 334.00

— 500.00

— 1507.34

34960.71 25066.55

Brought forward

D. PRIVATELY PLACED DEBENTURESSeries – VI

Secured by a second charge on the fixed assets of theCompany’s Cement, Magnesite, Sugar and Wind Farm unitson a pari-passu basis with other chargeholders and a firstfloating charge on the Company’s investments in securities ofCentral Government, Public Sector Bonds and Units of Debt-based Mutual Funds up to Rs.25 Crores on pari passu basis.Redeemable in three equal yearly instalments from the 5thyear from the date of allotment

Series – VII

Secured by a second charge on the fixed assets of theCompany’s Cement, Magnesite, Sugar and Wind Farm unitson a pari-passu basis with other chargeholders and a firstfloating charge on the Company’s investments in securities ofCentral Government, Public Sector Bonds and Units of Debt-based Mutual Funds up to Rs.25 Crores on a pari passubasis. Redeemable in three equal yearly instalments after theexpiry of the 4th year from the date of allotment

Series – VII C

Secured by a second charge on the fixed assets of theCompany’s Cement, Magnesite, Sugar and Wind Farm unitson a pari-passu basis with other chargeholders and a firstfloating charge on the Company’s investments in securities ofCentral Government, Public Sector Bonds and Units of Debt-based Mutual Funds up to Rs.25 Crores on a pari passubasis. Redeemable in three equal yearly instalments after theexpiry of the 4th year from the date of allotment

Series – VII D

Secured by a second charge on the fixed assets of theCompany’s Cement, Magnesite, Sugar and Wind Farm unitson a pari-passu basis with other chargeholders and a firstfloating charge on the Company’s investments in securities ofCentral Government, Public Sector Bonds and Units of Debt-based Mutual Funds up to Rs.25 Crores on a pari passubasis. Redeemable in three equal yearly instalments after theexpiry of the 4th year from the date of allotment

Carried over

Carried over

40

As at As at31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs

34960.71 25066.55

— 1507.34

5000.00 5000.00

4000.00 4000.00

500.00 500.00

8000.00 8000.00

5000.00 —

5000.00 —

27500.00 19007.34

— 765.16

62460.71 44839.05

Brought forward

Brought forward

Non - Convertible Debentures

Secured by a first charge on the movable properties of Cementand Magnesite Units and Jamnagar Property. Redeemable inthree yearly equal instalments after the expiry of fourth, fifthand sixth year from the date of allotment

Non - Convertible Debentures

Secured by a first charge on the movable properties of Cementand Magnesite Units and Jamnagar Property. Redeemable inthree yearly equal instalments after the expiry of fifth, sixthand seventh year from the date of allotment

Non - Convertible Debentures

Secured by a first charge on the movable properties of Cementand Magnesite Units and Jamnagar Property. Redeemable inthree yearly equal instalments after the expiry of fifth, sixthand seventh year from the date of allotment

Non - Convertible Debentures

Secured by a first charge on whole of the movable propertiesof Cement and Magnesite Units (except book debts) andJamnagar Property. Redeemable in three yearly instalmentsin the ratio of 30:30:40 after the expiry of eighth, ninth andtenth year from the deemed date of allotment

Non - Convertible Debentures

Secured by a first charge on whole of the movable propertiesof Cement and Magnesite Units (except stock and book debts)and Jamnagar Property. Redeemable in three yearlyinstalments in the ratio of 30:30:40 after the expiry of eighth,ninth and tenth year from the deemed date of allotment

Non - Convertible Debentures

Secured by a first pari-passu charge on all the movable andimmovable properties of Cement and Magnesite Units (exceptstock and book debts) and Jamnagar Property. Redeemablein three yearly instalments in the ratio of 30:30:40 after theexpiry of eighth, ninth and tenth year from the deemed date ofallotment

E. NON-CONVERTIBLE DEBENTURES

76,51,621- 6% Debentures of Rs.10 each fully paid securedby first charge on fixed assets of Wind Farm Unit rankingpari-passu with other chargeholders. Redeemable at the endof four years from the date of allotment.

41

As at As at31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. LakhsSCHEDULE 4 – UNSECURED LOANS

A. Fixed Deposits 520.04 633.66Add: Interest accrued and due on above 34.83 53.75

554.87 687.41

B. Other LoansInterest-free Sales Tax Loan 3957.37 3007.88From Government of India (against bank guarantee) 1344.90 1344.90From Government of India (Sugar Technology Mission- Interest free) — 5.00

5302.27 4357.78

5857.14 5045.19

SCHEDULE 5 - DEFERRED TAX

Deferred Tax assets/liabilities are attributable to the following items:- LiabilitiesDepreciation 7503.93 5977.67Others 71.13 32.89

7575.06 6010.56AssetsVoluntary retirement expenses 118.46 89.10Expenses allowable for tax purposes when paid 156.77 14.27

275.23 103.37

Net 7299.83 5907.19

SCHEDULE 6 – FIXED ASSETS

(Rs. in Lakhs)

GROSS BLOCK DEPRECIATION NET BLOCK

Description of As at Additions Deduct- As at For the Upto As at As atAssets 31.3.2005 ions 31.3.2006 year @ 31.3.2006 31.3.2006 31.3.2005

Owned Assets:

Land 2991.41 362.40 1.34 3352.47 — — 3352.47 2991.41

Land (Leasehold) 57.46 — — 57.46 0.58 6.81 50.65 51.23

Buildings 9098.01 1880.07 10.05 10968.03 336.79 4401.27 6566.76 5027.31

Plant and Machinery 57324.03 24690.39 4.91 82009.51 2753.24 35490.70 46518.81 24583.75

Railway Sidings 269.97 — — 269.97 12.36 94.80 175.17 187.53

Vehicles 355.26 52.82 19.93 388.15 45.57 236.37 151.78 148.87

Furniture and Fixtures 333.82 32.58 0.48 365.92 30.07 231.43 134.49 132.33

Other Assets 599.31 160.57 0.33 759.55 38.79 530.34 229.21 107.80

Owned AssetsLeased out:

Buildings 109.64 160.83 — 270.47 14.89 15.81 254.66 108.72

Plant and Machinery 5774.82 241.35 — 6016.17 365.12 394.82 5621.35 5745.12

76913.73 27581.01 37.04 104457.70 3597.41 41402.35 63055.35 39084.07

Previous year 70492.47 6545.94 124.68 76913.73 2944.12 37829.66 39084.07

Notes:

1. Land includes certain lands under acquisition, the proceedings for which are presently stayed by the Order of the appropriate HighCourts.

2. There are no registered title deeds for Company’s flats/accommodation in multistoreyed buildings in National Capital Territory of Delhi.

3. @ includes depreciation charged to other heads Rs. 51.76 Lakhs (Rs.80.17 Lakhs).

42

Face As at As at Value 31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs Rs. LakhsSCHEDULE 7 – INVESTMENTS

Government and Trust Securities 0.38 0.38 0.38Unit Trust of India – 6.75% Tax Free Bonds 9.85 15.85 15.85

Units of Mutual Funds – Debt based schemes 637.86 845.00 @@ 3039.53

Units of Mutual Funds – Balanced schemes 141.76 191.05 @@ —

Ordinary Shares of Joint Stock CompaniesFully paid-up:Kanika Investment Limited ** 42.00 232.00 232.00

Anupama Investment Limited ** 33.45 465.45 465.45

Ishita Properties Limited ** 5.00 129.96 129.96

Shri Rangam Properties Limited ** 24.90 24.90 24.90

Avnija Properties Limited ** 24.90 24.90 24.90

Geetee Estates Limited ** 4.99 4.99 4.99

D.I. Properties Limited ** 24.90 24.90 24.90

Hemshila Properties Limited ** 24.90 24.91 24.91

Himshikhar Investment Limited ** 45.00 445.00 445.00

Dalmia Sugars Limited ** 10.00 10.01 @@ —

Shree Radha Krishna Broker & Holdings Ltd. ** 5.00 5.00 @@ —

Dalmia Minerals & Properties Ltd. ** 5.00 5.00 @@ —

Seeta Estates & Brokers Limited ** 5.00 5.00 @@ —

Shri Rangam Brokers & Holdings Limited ** 5.00 5.00 @@ —

Arjuna Brokers & Minerals Limited ** 5.00 5.00 @@ —

Sri Keshava Mines & Minerals Limited ** 5.00 5.00 @@ —

Sri Swaminatha Mines & Minerals Limited ** 5.00 5.00 @@ —

Sri Shanmugha Mines & Minerals Limited ** 5.00 5.00 @@ —

Sri Madhava Minerals & Properties Limited ** 5.00 5.00 @@ —

Sri Subramanya Mines & Minerals Limited ** 5.00 5.00 @@ —Indus League Clothing Limited 126.36 272.65 272.65

Reliance Industries Limited 117.54 5581.94 @@ 2171.01

Reliance Communication Ventures Limited 92.48 5884.11 @@ —

Reliance Energy Ventures Limited 211.76 1218.42 @@ —

Reliance Capital Ventures Limited 179.46 191.68 @@ —

Reliance Natural Resources Limited 89.73 103.21 @@ —

The Associated Cement Companies Limited — — @@ 1342.22

National Thermal Power Corporation Limited — — @@ 28.69

Indian Petrochemicals Limited 5.00 124.69 @@ 304.07

Reliance Energy Limited 6.07 367.32 @@ —

Ranbaxy Laboratories Limited 2.30 176.56 @@ —

Mangalore Refinery & Petrochemicals Limited 2.50 13.11 @@ —

Bharti Televentures Limited 0.50 18.06 @@ —

Bharat Forge Limited 0.03 5.06 @@ —

Jai Corp Limited 11.87 128.85 @@ —Great Eastern Shipping Limited 1.30 30.86 @@ —

Aditya Birla Nuvo Limited 0.85 54.06 @@ —

Reliance Industrial Infrastructure Limited 23.00 685.90 @@ —

Dalmia Electrodyne Technologies (P) Limited 4.93 175.00 175.00

Assam Bengal Cement Company Limited (under liquidation) @ ((250)) ((144)) ((144))

Asian Refractories Limited (under liquidation) ((200)) ((200)) ((200))

Haryana Financial Corporation 0.02 0.02 0.02

1165.75 16468.52 5670.68

43

Face As at As at Value 31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs Rs. Lakhs

Partly paid-up:Hindalco Industries Limited 0.01 1.03 @@ —Preference Shares of Joint Stock CompaniesFully paid-up:Avnija Properties Limited ** 0.10 0.10 0.10Geetee Estates Limited ** 0.01 0.01 0.01D.I. Properties Limited ** 0.10 0.10 0.10Shri Rangam Properties Limited ** 0.10 0.10 0.10Hemshila Properties Limited ** 0.10 0.10 0.10

0.41 0.41Fully paid-up Shares of Co-operative Societies 0.07 0.07 0.07Property Rights in Holiday Resorts 6.01 6.01 6.01

17528.32 8732.93

Book Value Market ValueRs. Lakhs Rs. Lakhs

Quoted 15635.73 19995.07Unquoted 1892.59 —

Notes:@ Trade Investments** Subsidiary Companies@@ Includes purchases during the year – Face value Rs. 31533.65 Lakhs, Cost Rs. 62800.57 Lakhs; Bonus Shares/ Shares received

under demerger scheme - Face value Rs.540.47 Lakhs and net of sales during the year – Face value Rs. 33603.87 Lakhs, CostRs.54005.18 Lakhs.

As at As at 31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs Rs. Lakhs

SCHEDULE 8 – INVENTORIES

(As certified by the Management)Stores, Spares etc.On hand 3336.83 3066.90In transit 1074.24 923.14

4411.07 3990.04

Loose Tools 3.18 2.78

Raw MaterialsOn hand 3486.27 3094.13In transit 165.84 9.67

3652.11 3103.80Material in Process 1006.94 540.66

Stock-in-TradeDead Burnt Magnesite Dust 0.25 6.56Others 10094.62 11635.32

10094.87 11641.8819168.17 19279.16

SCHEDULE 9 – SUNDRY DEBTORS

a) Debts over six monthsConsidered good

Secured 122.02 47.49Unsecured 266.44 350.99

Considered doubtful 152.72 154.12Less: Set off from Reserve for Bad and Doubtful Debts 152.72 154.12

— —

388.46 398.48b) Others

Considered goodSecured 2896.40 2007.82Unsecured 2690.50 2763.69

5586.90 4771.51

5975.36 5169.99

44

As at As at 31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs Rs. LakhsSCHEDULE 10 – CASH AND BANK BALANCES

Cash on hand (including stamps) 141.45 58.57Cheques on hand/Remittances-in-transit 698.21 96.42Balances with Scheduled Banks

Current Accounts 4678.68 1562.16Fixed Deposit Accounts 370.00 561.84

5048.68 2124.00Balances with Other Banks in Current Accounts * 1.66 1.37Post Office Savings Bank Accounts(Pledged with Government Departments and Others) — 0.12

5890.00 2280.48* Balances with

Avadh Gramin Bank 0.28 0.22 Zila Sahakari Bank Limited 1.38 1.15

SCHEDULE 11 – LOANS AND ADVANCES

LoansSecured – Considered good

Employees * 123.78 114.80Others 51.66 367.78

175.44 482.58Unsecured – Considered good

Employees * 1.84 41.34Subsidiary Companies ** (Interest-free) 7734.40 98.52Others 343.23 1002.28

8079.47 1142.14Advances recoverable in cash or in kind or for valueto be received (Unsecured)

Considered good * 2242.76 3560.05Considered doubtful 19.17 19.17Less: Set off from Reserve for Bad and Doubtful Debts 19.17 19.17

— —

2242.76 3560.05Income-tax paid 1298.56 1755.38Deposits and Balances with GovernmentDepartments and Other Authorities 2798.03 3049.92 (Unsecured – Considered good)

14594.26 9990.07* Includes:(a) Due from Officers of the Company 10.68 31.57(b) Maximum amount due from Officers at any time during the year 33.67 34.30** Due from Subsidiaries:(a) Ishita Properties Limited 33.53 36.53(b) Anupama Investment Limited 9.00 9.00(c) Hemshila Properties Limited 6.50 6.50(d) Geetee Estates Limited 104.85 19.25(e) D.I. Properties Limited 3.50 3.50(f) Himshikhar Investment Limited 23.74 23.74(g) Dalmia Sugars Limited 7173.41 —(h) Dalmia Minerals & Properties Limited 11.00 —(i) Arjuna Brokers & Minerals Limited 16.00 —(j) Shri Rangam Brokers & Holdings Limited 16.50 —(k) Shri Rangam Properties Limited 67.81 —(l) Seeta Estates & Brokers Limited 139.40 —(m) Shri Radha Krishna Brokers & Holdings Limited 129.16 —

45

As at As at 31.3.2006 31.3.2005

Rs. Lakhs Rs. LakhsSCHEDULE 12 – CURRENT LIABILITIES

Sundry Creditors 17236.80 9882.77Advances from Customers 623.10 342.58Directors’ Commission payable 10.00 10.00Unclaimed Dividend * 125.74 126.33Matured Fixed Deposits and interest thereon * 9.61 8.74Other Liabilities 1298.66 1061.11Interest accrued but not due on Loans 1075.36 968.02

20379.27 12399.55

* There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund.

SCHEDULE 13 – PROVISIONS

For Taxation 2016.20 2241.51Proposed Dividend 765.16 382.58Pension and other Staff benefits 273.62 250.04Impairment of Assets 96.23 96.23Others 107.32 53.66

3258.53 3024.02SCHEDULE 14 – DEFERRED REVENUE EXPENDITURE(To the extent not written off or adjusted)

A.Payments under Voluntary Retirement SchemeAs per Last Balance Sheet 134.73 202.10Less: Amount charged to the Profit and Loss account 67.36 67.37

67.37 134.73B. Others

As per Last Balance Sheet — 14.59Less: Amount charged to the Profit and Loss account — 14.59

— —

67.37 134.73

This PreviousYear Year

Rs. Lakhs Rs. Lakhs Rs. LakhsSCHEDULE 15 – OTHER INCOME

Income from Travel Agency business{Tax deducted at source Rs.15.52 Lakhs (Rs. 10.36 Lakhs)} 166.80 208.80

Income from Other InvestmentsDividends 64.17 235.76

Interest from Banks and Others (Gross) {Tax deducted at source Rs. 6.16 Lakhs

(Rs. 5.17 Lakhs)} 102.23 124.24Profit on Sale of Fixed Assets 20.30 11.84Profit on Sale of Investments 6439.74 798.97Miscellaneous Receipts 1288.85 1044.30

8082.09 2423.91

SCHEDULE 16 – INCREASE / (DECREASE) IN STOCKS

Opening Stock:Finished 11641.88 10343.42Process 540.66 655.89

12182.54 10999.31Closing Stock:

Finished 10094.87 11641.88Process 1006.94 540.66

11101.81 12182.54

Increase / (Decrease) in Stocks (1080.73) 1183.23

46

This PreviousYear Year

Rs. Lakhs Rs. Lakhs Rs. Lakhs

SCHEDULE 17 – SALARIES, WAGES AND BENEFITS TO EMPLOYEES

Salaries and Wages{After allocating Rs. 1182.66 Lakhs (Rs. 1245.71 Lakhs) to other accounts} 2156.73 1861.06Payments under Voluntary Retirement Scheme 301.62 204.19Contribution to Provident and Other Funds 398.97 377.41Bonus 9.72 2.48Workmen and Staff Welfare Expenses 339.86 257.79

3206.90 2702.93

SCHEDULE 18 – OTHER EXPENSES

Power and Fuel 12125.14 9899.63Processing Charges 876.42 735.81Packing Materials 2875.46 2517.65Consumption of Stores and Spare Parts{After allocating Rs. 1785.82 Lakhs to other accounts (Rs. 2100.99 Lakhs)} 55.58 67.62Repairs and Maintenance

Machinery 1576.35 1735.73Buildings 229.13 426.31Others 99.05 130.41

1904.53 2292.45Royalty, Cess, Dead Rent etc. 0.05 0.05Rent 37.44 56.90Rates and Taxes 482.61 547.83Excise Duty 7936.27 6954.36Insurance 178.85 157.11Travelling 238.27 182.72Advertisement and Publicity 758.05 571.10Freight, Transportation and Other Charges 41 16.30 3362.66Commission paid to Other Selling Agents 50.26 65.18Rebate, Discount and Allowances 54.61 6.19Interest On Term loans 929.32 966.10 On Fixed Deposits 49.01 78.87 On Borrowings from Banks and Others 548.43 403.78 On Debentures 819.52 803.14

2346.28 2251.89Directors’ Sitting Fees 4.70 5.55Directors’ Commission 10.00 10.00Charity and Donation 78.43 87.85Assets written off and Loss on sale of Assets 0.15 4.35Loss on sale of Investments 331.42 463.47Bad Debts written off 11.51 143.01Miscellaneous Expenses 3418.58 2264.16

37890.91 32647.54

SCHEDULE 19 – SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

1. Accounting Convention

The financial statements are prepared under historical cost convention (except for certain fixed assets, which are revalued) on agoing concern basis and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India.

2. Fixed Assets

Land, Buildings, Plant and Machinery and Railway Sidings have been stated at the revalued figures. All other fixed assets have beenstated at cost (net of cenvat, where applicable). All significant costs incidental to the acquisition of the fixed assets are capitalised.

47

3. Excise Duty

Excise duties recovered are included in the sale of products.

4. Retirement Benefits

(i) Gratuity: Appropriate contributions are made to the Company’s Gratuity Fund Trust.

(ii) Leave Salaries: Provision is made for the value of unutilised leave due to the employees at the end of the year.

5. Inventories

(i) Finished stocks are valued at cost or net realisable value, whichever is lower. In the case of Dead Burnt Magnesite Dust stocksto the extent these are considered saleable, valuation is done at Raw Materials cost plus Packing Charges or net realisablevalue, whichever is lower.

(ii) Process Stocks are valued at or below cost.

(iii) Stores, Spares and Raw Materials on hand are valued at weighted average cost and those in transit at cost.

6. Investments

Investments are stated at cost.

7. Revenue Recognition

Revenue is recognised principally on accrual basis. However, cash subsidies and coal quality rebates are accounted for on thebasis of final ascertainment of revenue.

8. Depreciation

(i) Depreciation on major classifications of “plant and machinery” of Salem and Dalmiapuram Works (excluding earth movingmachinery) and on all fixed assets at Ballabhgarh, Wind Farm Unit, Bangalore Works and Ramgarh Chini Mills (Sugar Unit) isprovided on straight-line method. In respect of the remaining fixed assets, depreciation is provided for on diminishing balancemethod.

(ii) Depreciation on amount added on revaluation of fixed assets is transferred from Revaluation Reserve.

(iii) Cost of leasehold land is amortised over the period of the lease.

9. Research and Development

Revenue expenditure on Research and Development is charged in the year in which it is incurred. Expenditure which results increation of assets is included in Fixed assets and depreciation is provided on such assets at the applicable rates.

10. Foreign Currency Transactions

Foreign currency transactions are accounted at the equivalent rupee value earned/ incurred on the date of the transaction. Year-endbalances in respect of loan taken for the purpose of acquisition of fixed assets and current assets / liabilities are accounted for atthe exchange rates prevailing at the year-end. The resultant gain or loss is added/deducted from the cost of fixed assets if theforeign currency liability relates to fixed assets and in respect of current assets / liabilities the same is taken credit for or charged tothe profit and loss account.

11. Deferred Revenue Expenditure

(i) Expenditure on advertisement for launch of new products, construction of roads on Public land and expenditure on RailwaySiding on Railway land is treated as deferred revenue expenditure and amortised over a period of five years.

(ii) Expenditure incurred under the Voluntary Retirement Scheme of the Company till 31-3-2003 is treated as deferred revenueexpenditure and amortised over a period of five years. Such expenditure incurred after 1-4-2003 has been fully charged torevenue in accordance with Accounting Standard AS – 26 issued by the Institute of Chartered Accountants of India.

12. Impairment of Assets

Impairment losses, if any, are recognised in accordance with the accounting standard issued in this regard by The Institute ofChartered Accountants of India.

13. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheetdate is considered probable. Contingent liabilities are shown by way of Notes to Accounts in respect of obligations where, based onthe evidence available, their existence at the Balance Sheet date is considered not probable. Contingent assets are not recognisedin the Accounts.

14. Expenses and income pertaining to Cement and Sugar Works are allocated as required under Cost Accounting Record Rules.

48

B. NOTES TO ACCOUNTSAs at As at

31.3.2006 Rs. LakhsRs. Lakhs 31.3.2005

1. Claims against the Company not acknowledged as debts 936.68 748.94

2. Other money for which the Company is contingently liableincluding Guarantees given of Rs.4800 Lakhs (Rs. Nil) 5444.84 318.32

3. Uncalled Liability on Partly Paid up Shares 3.09 —

4. Estimated amount of contracts remaining to be executed oncapital account and not provided for (net of advances) 6145.57 10967.18

5. Loans falling due for repayment within one year: Secured 2488.82 4093.12 Unsecured 285.93 316.14

This PreviousYear Year

Rs. Lakhs Rs. Lakhs Rs. Lakhs6. Amount paid to Auditors:

a) Statutory Auditori) Audit Fee 7.71 6.06ii) For Tax Audit and Other services 2.68 2.84iii) For Expenses 4.64 5.13

b) Cost Auditori) Audit Fee 0.61 0.59ii) For Expenses 0.18 0.27

7(a).Computation of profits under Section 349 of the Companies Act,

1956 for calculating commission payable to Directors:

Profit as per Profit and Loss Account 10893.84

Add: i) Directors’ Commission 10.00

ii) Directors’ Sitting Fees 4.70

iii) Whole-time Directors’ remuneration 22.4437.14

10930.98

Less: Profit on Sale of Fixed Assets 20.30

20.30

Net profit for calculating Directors’ Commission 10910.68Directors’ Commission @ 1% on Rs. 10910.68 Lakhs 109.11

Maximum Commission payable 10.00

(b). Details of Remuneration to Whole-time Director: Salaries 16.30 14.44 Perquisites 2.42 0.74 Contribution to Provident Fund and Superannuation Fund 3.72 3.09

22.44 18.27

8. Earnings per Share (EPS) as per Accounting Standard – 20:Profit after tax 8484.56 3087.00Weighted average no. of equity shares (face value of Rs.2 each)Basic 3,82,58,105 3,82,58,105Diluted – after considering potential equity shares uponconversion of warrants (refer Note 2 to Schedule – 1) 7,20,08,919 6,28,71,220Earnings per share

Basic (Rs.) 22.18 8.07Diluted (Rs.) 11.78 4.91

49

9. Prior period expenses amounting to Rs Nil (Rs. Nil) and prior period income (including excess provisions written back) amounting toRs. 71.06 Lakhs ( Rs.29.78 Lakhs) have been accounted for under the relevant heads of account.

10. In the opinion of the Board and to the best of their knowledge and belief, the value on realisation of loans, advances and currentassets in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet.

11. The Company is in the process of collecting details with regard to dues outstanding and payable to Small Scale Industrial Undertaking(s)in compliance with the Notification No. GSR 129(E) dated 22.2.1999 amending Schedule VI to the Companies Act, 1956. In theabsence of information from the suppliers as to whether they are a Small Scale Industrial Undertaking, the information as required isnot being furnished.

12. The Company is a lessor in respect of certain items of buildings, plant and machinery, etc. The said fixed assets have been given onan operating lease for a period of 10 years. The lease is non-cancellable by the lessee and the lease rental in respect of the saidlease is Rs. 220.50 lakhs per annum. The lease rentals recognised in the accounts for the year is Rs. 220.50 lakhs and no contingentrent has been recognised in this regard.

13. Detailed particulars regarding opening and closing stock, purchases, sales and consumption:

I. Opening and Closing Stock of goods traded in and produced

Class of goods Opening Stock Closing StockQuantity V alue Quantity V alue

Rs. Lakhs Rs. Lakhs

Cement (‘000 Tonnes) 22.78 386.73 14.31 262.56(20.70) (335.70) (22.78) (386.73)

Dead Burnt Magnesite (‘000 Tonnes) 10.45 785.41 5.72 480.80(8.55) (679.03) (10.45) (785.41)

Sugar (‘000 Tonnes) 71.84 9319.12 57.43 8508.14(73.87) (8772.29) (71.84) (9319.12)

Multilayer Ceramic (Lakh Nos.) 21.83 9.05 5.04 2.21Chip Capacitors (6.11) (1.13) (21.83) (9.05)

Refractories etc. (‘000 Tonnes) 3.68 259.58 3.66 314.45(3.59) (252.25) (3.68) (259.58)

MgO-C Bricks (‘000 Tonnes) 0.11 28.74 0.08 20.39(0.15) (30.62) (0.11) (28.74)

Others 853.25 506.32(272.40) (853.25)

II. Purchase of goods traded in:

Class of goods This Year Previous YearQuantity V alue Quantity V alue

Rs. Lakhs Rs. Lakhs

Sugar (‘000 Tonnes) 1.30 250.36 — — Others — — — 0.63

III. Sales of goods traded in and produced (including Excise duty)*

Class of goods

Cement (‘000 Tonnes) 1577.29 39395.53 1403.14 32217.34

Dead Burnt Magnesite (‘000 Tonnes) 24.58 2032.86 19.09 1637.01Sugar (‘000 Tonnes) 99.86 17725.24 74.91 12092.31Multilayer Ceramic Chip Capacitors (Lakh Nos.) 80.84 62.31 77.08 38.02

Refractories etc. (‘000 Tonnes) 29.16 3013.29 29.65 2480.05

MgO-C Bricks (‘000 Tonnes) 1.75 462.34 1.97 620.45Others 2387.05 2804.34

65078.62 51889.52

* includes Self Consumption Rs.1529.56 Lakhs (Rs.1875.74 Lakhs)

50

IV. Consumption of Raw Materials / Components:

This Year Previous YearQuantity V alue Quantity V alue

Rs. Lakhs Rs. Lakhs

Limestone (‘000 Tonnes) 1877.61 2910.86 1635.65 2335.67Gypsum (‘000 Tonnes) 62.83 273.14 67.16 226.11Raw Magnesite (‘000 Tonnes) 43.72 693.71 55.20 834.92Sugar Cane (‘000 Tonnes) 817.32 10334.12 702.20 8193.88Fly Ash (‘000 Tonnes) 272.97 1032.48 189.13 652.48Others 1800.82 2300.72

17045.13 14543.78

14. Detailed quantitative information about goods produced:

InstalledCapacity * Actual

per annum Production

Cement (‘000 Tonnes) 3500.00 1569.03

(1234.00) (1405.29)

Dead Burnt Magnesite (‘000 Tonnes) 72.00 19.85

(72.00) (20.99)

Multilayer Ceramic Chip Capacitors (Lakh Nos.) 1200.00 64.05

(1200.00) (92.80)

Chip Resistors (Lakh Nos.) 1000.00 33.48

(1000.00) (116.84)

Sugar (‘000 Tonnes) 7.50** 84.15

(5.00)** (72.88)

Mgo-C Bricks (‘000 Tonnes) 7.50 1.72

(7.50) (1.97)

Refractories etc. # (‘000 Tonnes) N.A. 29.21

(N.A.) (29.89)

Licenced capacity not furnished as the above industries are delicenced.

* As certified by the Management and accepted by the Auditors.** Sugarcane crushed in Tonnes per day.# Production on job-work basis.

This PreviousYear Year

Rs. Lakhs Rs. Lakhs15. (a) Value of Imports calculated on C.I.F. basis:

Raw Materials and Components 1256.78 1596.51

Stores and Spare Parts 2252.53 1196.96

Capital Goods 831.18 4926.77

(b) Expenditure in Foreign Currency:Professional Fees, Consultation Fee and Interest 362.05 18.11

Others 22.71 23.14

16. Earnings in Foreign Exchange: Export of Goods 365.22 414.83

Tourism and Sale of Tickets 13.85 2.81

379.07 417.64

51

17. Details regarding imported and indigenous materials consumed during the year:

IMPORTED INDIGENOUSValue Percentage Value Percentage V alue of total

to total to total consumptionRs. Lakhs consumption Rs. Lakhs consumption Rs. Lakhs

Raw Materials 950.77 5.58 16,094.36 94.42 17,045.13(1321.38) (9.09) (13,222.40) (90.91) (14,543.78)

Stores, Spare Parts 254.39 13.81 1,587.01 86.19 1,841.40and Components (133.29) (6.15) (2,035.32) (93.85) (2,168.61)

18. Segment reporting, as required by Accounting Standard –17, is as below:

(Rs. Lakhs)Segment à Cement Sugar Others Total

Revenue 39905.82 19599.91 13654.98 73160.71(32854.72) (13794.20) (7664.51) (54313.43)

Profit/(Loss) 4311.71 4040.11 6.81 8358.63(2835.05) (3058.18) (453.59) (6346.82)

Less:

Interest 2346.28(2251.89)

Other unallocable expenditure (4881.49)net of unallocable income (521.93)

10893.84(3573.00)

Assets 63670.11 18055.58 25658.89 107384.58(38749.41) (18561.94) (16737.04) (74048.39)

Liabilities 17453.09 3468.03 6736.28 27657.40(9107.44) (2606.03) (3656.15) (15369.62)

Depreciation 2249.90 464.21 883.30 3597.41(1552.73) (463.73) (927.66) (2944.12)

Capital Expenditure 27347.40 90.66 142.95 27581.01(6334.61) (23.51) (187.82) (6545.94)

Though the Magnesite and Wind Farm divisions were reportable segments in the previous year, they have ceased to bereportable segments in the current year as per provisions of Accounting Standard 17 issued by The Institute of CharteredAccountants of India. The figures in relation to the said segments have been included in “Other Segments” and the amounts inRs. Lakhs in respect of the said segments are: Revenue – Rs. 2760.03 (Rs. 2,486.58) Magnesite, Rs. 930.37 (Rs. 1,203.59)Wind Farm; Results – Rs. (-) 673.01 (Rs. (-) 407.88) Magnesite, Rs. 451.50 (Rs. 741.76) Wind Farm; Assets – Rs. 6,902.79 (Rs.7,543.39) Magnesite, Rs. 3,743.19 (Rs. 4,080.67) Wind Farm; Liabilities – Rs. 447.53 (Rs. 332.60) Magnesite, Rs. 6.13 (Rs. 1.53)Wind Farm; Depreciation – Rs. 371.39 (Rs. 403.77) Magnesite, Rs. 330.59 (Rs. 331.19) Wind Farm; Capital Expenditure – Rs.37.80 (Rs. 7.59) Magnesite, Rs. Nil (Rs. 0.73) Wind Farm.

19. Related Party Disclosure, as required by Accounting Standard-18 is as below:

A. Relationships:

(i) Subsidiaries of the Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, D.I. Properties Limited, Geetee EstatesLimited, Avnija Properties Limited, Shri Rangam Properties Limited, Hemshila Properties Limited, Himshikhar Investment Limited,Dalmia Sugars Limited, Dalmia Minerals & Properties Limited, Shree Radha Krishna Broker & Holdings Limited, Seeta Estates &Brokers Limited, Shri Rangam Brokers & Holdings Limited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & MineralsLimited, Sri Madhava Minerals & Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & MineralsLimited and Sri Subramanya Mines & Minerals Limited.

(ii) Directors of the Company :Shri P.K.Khaitan, Shri Nil Ratan Khaitan, Shri J.S.Baijal, Shri M. Raghupathy and Shri M.H.Dalmia

52

(iii) Whole-time Director of the Company :Shri N. Gopalaswamy.

(iv) Promoters of the Company:Shri J.H. Dalmia and Shri Y.H. Dalmia

(v) Relatives of Promoters:

Shri Gautam Dalmia, Shri Puneet Dalmia, and their relatives, Shri V.H. Dalmia, Smt. Kavita Dalmia, Smt. Bela Dalmia, Smt.Anupama Dalmia, Smt. Avantika Dalmia, Kumari Shrutipriya Dalmia, Kumari Sukeshi Dalmia, Kumari Vaidehi Dalmia, KumariVasumana Dalmia and Kumari Avanee Dalmia.

(vi) Enterprises controlled by the Promoters of the Company:Rama Investment Company Private Limited, Puneet Trading & Investment Company Private Limited, Kavita Trading &Investment Company Private Limited, Sita Investment Company Limited, Mayuka Investments Limited, Kanodia Commer-cial Limited, Ankita Pratishtan Limited, Kajal (India) Limited, Himgiri Commercial Limited, Valley Agro Industries Limited,Alirox Abrasives Limited, Shri Nataraj Ceramic and Chemical Industries Limited, Shri Chamundeswari Minerals Limited,Shree Nirman Limited, Dalmia Electrodyne Technologies Limited, Keshav Power Private Limited, Avanee and AshniSecurities Private Limited, OCL India Limited and ZipAhead.Com Limited.

Note: The persons mentioned in (iv), (v) and (vi) above consstitute a ‘Group’ pursuant to Regulation 3(1)(e)(i) of the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

B. The following transactions were carried out with the related parties in the ordinary course of business:

(Rs. in Lakhs)

Nature of Subsidiary Directors and Whole-time Promoters Promoter TotalTransaction Companies their relatives Directors and their controlled

and their relatives enterprisesrelatives

Sale of goods and services 3.57 265.39 268.96Purchase of goods and services 2300.76 2300.76Rent payment 5.76 5.76Rent receipt (including lease rent) 220.72 220.72Remuneration and Sitting fees 14.70 14.70to DirectorsInterest on Fixed Deposits 0.43 0.43Receipt of Security deposit 4925.00 4925.00Loans given 7638.88 7638.88Loan received back 3.00 3.00Purchase of Fixed Assets 6.96 6.96Purchase of Investments 59.84 59.84Salary and Perquisites 22.44 126.69 149.13

20. (a) Previous year figures have been regrouped/ rearranged wherever considered necessary.(b) Figures less than Rs. Five hundred which are required to be shown separately have been shown at actuals in double

brackets.(c) Figures in brackets pertain to previous year.

53

P.K.KhaitanN.Gopalaswamy

As per our report of even date attached M.H.DalmiaFor S.S. Kothari Mehta & Co., N.KhaitanChartered Accountants K.V. Mohan S. Subramanian M.RaghupathyCA J. Krishnan COMPANY DY. EXECUTIVE DIRECTOR J.S.BaijalPARTNER SECRETARY & GROUP CONTROLLER DIRECTORSNew DelhiDated: this the 27th day of April, 2006

21. Information pursuant to part IV of Schedule VI to the Companies Act, 1956 :

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

I. Registration Details:Registration No. 0 0 6 4 0 State Code 1 8Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands)Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilisation and deployment of funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

1 1 8 4 4 4 2 1 1 1 8 4 4 4 2 1Sources of Funds :

Paid up Capital Reserves and Surplus

7 6 5 1 6 4 2 0 6 1 3 7

Secured Loans Unsecured Loans

6 2 4 6 0 7 1 5 8 5 7 1 4Application of Funds :

Net Fixed Assets Investments

7 8 8 5 8 5 3 1 7 5 2 8 3 2

Net Current Assets Miscellaneous Expenditure(considering deferred tax liability)

1 4 6 9 0 1 6 6 7 3 7

Accumulated Losses

N I L

IV. Performance of the Company (Amount in Rs. Thousands)

Turnover Total Expenditure

6 5 0 7 8 6 2 5 4 1 8 4 7 8

Profit before tax Profit after tax

1 0 8 9 3 8 4 8 4 8 4 5 6

Earning per Share in Rs. Dividend rate

2 2 . 1 8 1 0 0 %

V. Generic names of three principal products/services of Company (as per monetary terms)

Product C E M E N T R E F R A C T O R Y S U G A R

Item Code 2 5 2 3 2 9 6 9 0 2 2 0 1 7 0 1 1 1(ITC Code)

54

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 20062005-06 2004-05

(Rupees in Lakhs)

Cash Flow from operating activities :

Net profit before tax 10,893.84 3,573.00

Adjustments for :

Depreciation (net) 2,844.60 2,108.95

Dividend income (64.17) (235.76)

Interest (net) 2,244.05 2,127.65

Deferred Revenue Exp. Written off 67.36 81.96

Profit on sale of investments (6,108.32) (335.50)

Profit/loss on sale of fixed assets (20.15) (7.49)

Operating profit before working capital changes 9,857.21 7,312.81

Adjustments for working capital changes :

Inventories 110.99 (2,940.40)

Trade and other receivables (5,864.98) (7,392.84)

Trade payables 7,895.96 6,142.81

Cash generated from operations 11,999.18 3,122.38

Exceptional Item- Cane Price difference of earlier years - (1,208.82)

Interest paid (2,238.94) (1,983.28)

Direct taxes paid (785.13) (399.48)

Net cash from operating activities 8,975.11 (469.20)

Cash Flow from investing activities :

Purchase of fixed assets (20,874.76) (28,084.00)

Sale of fixed assets 32.47 29.02

Purchase of investment (62,800.57) (82,858.77)

Sale of investment 60,113.50 89,310.23

Dividend received 64.17 235.76

Interest received 102.23 124.24

Net cash used in investing activities (23,362.96) (21,243.52)

Cash Flow from financing activities :

Proceeds from secured loans 17,621.66 21,128.63

Proceeds from unsecured loans 944.49 858.57

Fixed deposits from public (132.54) (349.80)

Dividend paid (382.58) (382.58)

Corporate dividend tax (53.66) (50.00)

Net cash from financing activities 17,997.37 21,204.82

Net change in cash & cash equivalents 3609.52 (507.90)

Cash & cash equivalents (opening balance) 2,280.48 2,788.38

Cash & cash equivalents (closing balance) 5,890.00 2,280.48

Change in cash & cash equivalents 3609.52 (507.90)

P.K.KhaitanN.Gopalaswamy

As per our report of even date attached M.H.DalmiaFor S.S. Kothari Mehta & Co., N.KhaitanChartered Accountants K.V. Mohan S. Subramanian M.RaghupathyCA J. Krishnan COMPANY DY. EXECUTIVE DIRECTOR J.S.BaijalPARTNER SECRETARY & GROUP CONTROLLER DIRECTORSNew DelhiDated: this the 27th day of April, 2006

55

Statement attached to Balance Sheet as at 31st March, 2006 pursuant toSection 212 of the Companies Act, 1956

Subsidiary Companies Anupama Kanika Ishita Avnija HemshilaInvestment Investment Properties Properties Properties

Limited Limited Limited Limited Limited

1 Financial year ending 31-3-2006 31-3-2006 31-3-2006 31-3-2006 31-3-2006

2. Date from which it became a subsidiary 23-7-79 6-8-79 25-9-95 4-7-96 4-7-96

3. Holding Company’s interest in

the share capital 100% 100% 100% 100% 100%

4. The net aggregate amount of thesubsidiary’s profits less losses, sofar as it concerns the members of theHolding Company and is not dealt within the Holding Company’s accounts:

a) For the year ended 31.3.2006 (Rs.) 86,48,456 (-)25,666 2,11,654 7,188 5,441

b) For the previous financial years since it became Company’s Subsidiary (Rs.) 32,84,329 76,89,429 15,44,499 2,94,792 2,79,954

5. The net aggregate amount of thesubsidiary’s profits less losses, so farthese profits are dealt with in theHolding Company’s accounts :

a) For the year ended 31.3.2006 (Rs.) Nil Nil Nil Nil Nil

b) For the previous financial years since it became Company’s Subsidiary (Rs.) 1,57,212 9,36,651 Nil Nil Nil

Subsidiary Companies Geetee D.I. Shri Rangam Himshikhar Dalmia SugarsEstates Properties Properties Investment Limited Limited Limited Limited Limited

1 Financial year ending 31-3-2006 31-3-2006 31-3-2006 31-3-2006 31-3-20062. Date from which it became a subsidiary 4-7-96 4-7-96 10-1-97 10-1-97 8-6-053. Holding Company’s

interest in the share capital 100% 100% 100% 100% 100%4. The net aggregate amount of the

subsidiary’s profits less losses, sofar as it concerns the members ofthe Holding Company and is not dealtwith in the Holding Company’s accounts:a) For the year ended 31.3.2006 (Rs.) 29,600 28,136 (-) 8,105 10,55,785 (-) 19,01,220b) For the previous financial years since it became Company’s Subsidiary. (Rs.) 259 2,92,262 2,40,289 1,54,332

5. The net aggregate amount of thesubsidiary’s profits less losses, so farthese profits are dealt with in theHolding Company’s accounts.a) For the year ended 31.3.2006 (Rs.) Nil Nil Nil Nilb) For the previous financial years since it became Company’s Subsidiary (Rs.) Nil Nil Nil Nil

56

Subsidiary Companies Arjuna Brokers Dalmia Minerals Shri Rangam Shri Radha Seeta Estates& Minerals & Properties Brokers & Krishna Brokers & Brokers

Limited Limited Holdings & Holdings LimitedLimited Limited

1 Financial year ending 31-3-2006 31-3-2006 31-3-2006 31-3-2006 31-3-2006

2. Date from which it became a subsidiary 30-8-05 30-8-05 30-8-05 30-8-05 30-8-05

3. Holding Company’s interest in

the share capital 100% 100% 100% 100% 100%

4. The net aggregate amount of thesubsidiary’s profits less losses, sofar as it concerns the members of theHolding Company and is not dealt within the Holding Company’s accounts:

a) For the year ended 31.3.2006 (Rs.) (-) 37,894 (-) 37,669 (-) 37,669 (-) 37,894 (-) 37,969

b) For the previous financial yearssince it became Company’sSubsidiary (Rs.) Nil Nil Nil Nil Nil

5. The net aggregate amount of thesubsidiary’s profits less losses, so farthese profits are dealt with in theHolding Company’s accounts :

a) For the year ended 31.3.2006 (Rs.) Nil Nil Nil Nil Nil

b) For the previous financial years since it became Company’s Subsidiary (Rs.) Nil Nil Nil Nil Nil

Subsidiary Companies Sri Sri Sri Sri SriKesava Shanmugha Subramanya Swaminatha MadhavaMines & Mines & Mines & Mines & Minerals &

Minerals Minerals Minerals Minerals Properties Limited Limited Limited Limited Limited

1 Financial year ending 31-3-2006 31-3-2006 31-3-2006 31-3-2006 31-3-20062. Date from which it became a subsidiary 10-2-06 10-2-06 10-2-06 10-2-06 10-2-063. Holding Company’s

interest in the share capital 100% 100% 100% 100% 100%4. The net aggregate amount of the

subsidiary’s profits less losses, sofar as it concerns the members ofthe Holding Company and is not dealtwith in the Holding Company’s accounts:a) For the year ended 31.3.2006 (Rs.) (-) 37,152 (-) 37,152 (-) 37,152 (-) 37,152 (-) 37,152b) For the previous financial years since it became Company’s Subsidiary. (Rs.) Nil Nil Nil Nil Nil

5. The net aggregate amount of thesubsidiary’s profits less losses, so farthese profits are dealt with in theHolding Company’s accounts.a) For the year ended 31.3.2006 (Rs.) Nil Nil Nil Nil Nilb) For the previous financial years since it became Company’s Subsidiary (Rs.) Nil Nil Nil Nil Nil

P.K.KhaitanN.Gopalaswamy

M.H.DalmiaN.Khaitan

K.V. Mohan S. Subramanian M.RaghupathyCOMPANY DY. EXECUTIVE DIRECTOR J.S.Baijal

SECRETARY & GROUP CONTROLLER DIRECTORSNew DelhiDated: this the 27th day of April, 2006

57

ANUPAMA INVESTMENT LIMITED

DIRECTORS AUDITORS REGISTERED OFFICEShri H.N.Kumar Batra Kapur & Associates Hansalaya,11th Floor,Shri K.V.Mohan Chartered Accountants 15, Barakhamba RoadShri Sanjay S.Mittra New Delhi-110001

ANNUAL REPORT2005-2006

ANUPAMA INVESTMENT LIMITED

DIRECTORS’ REPORTFor the year ended 31st March, 2006

We have pleasure in presenting the Twenty Seventh Annual Reportand the audited Statements of Account of the Company for theyear ended 31st March, 2006.

WORKING RESULTS

The financial results of operations for the year under report are asfollows:

This Previousyear year

Rs. Rs.

Profit for the year 86,84,456 9,27,879Less: Provision for Taxation 36,000 27,000

Profit after Taxation 86,48,456 9,00,879Add:Surplus / from previous year 14,64,987 7,45,108

Surplus available for appropriation 1,01,13,443 16,45,987

APPROPRIATIONSReserve Fund 17,30,000 1,81,000Surplus / Carried to Balance Sheet 83,83,443 14,64,987

1,01,13,443 16,45,987

DIVIDEND

Your Directors do not recommend any payment of dividend for theyear under review as there is a need to conserve the resourcesof your Company for its future operations.

DIRECTORATE

Shri Sanjay S. Mittra retires by rotation at the ensuing AnnualGeneral Meeting and is eligible for re-appointment. The Companyhas obtained necessary intimation from him in terms of theCompanies (Disqualification of Directors under Section 274(1)(g)of the Companies Act, 1956) Rules, 2003 to the effect that he hasnot incurred any disqualification under section 274(1)(g) of theCompanies Act, 1956 and he is eligible to be reappointed as aDirector of the Company.

EMPLOYEE REMUNERATION

During the year, there was no employee in receipt of remunerationin excess of the amounts mentioned under Section 217 (2A) of theCompanies Act, 1956.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION,EXCHANGE EARNINGS ETC.

Conservation of energy, technology absorption, foreign exchangeearnings and outgo are not applicable, as the Company is engagedonly in finance and investment activities.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217 (2AA) of the CompaniesAct, 1956, your Directors declare that: -

(i) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(ii) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(iv) the Directors had prepared the annual accounts on a goingconcern basis.

COMPLIANCE CERTIFICATE

In terms of the proviso to section 383A of the Companies Act,1956, compliance certificate obtained from M/s K.S. AssociatesCompany Secretaries for the year ended 31st March, 2006 isannexed.

AUDITORS

M/s. Batra Kapur & Associates, Chartered Accountants, Auditorsof the Company retire at the conclusion of the ensuing AnnualGeneral Meeting and are eligible for re-appointment. The Companyhas obtained a certificate from the auditors, as required underSection 224 of the Companies Act, 1956 to the effect that their re-appointment, if made, would be in conformity with the limits,specified in the said Section.

For and on behalf of the BoardH.N. KumarK.V.Mohan

Sanjay S. MittraNew Delhi DIRECTORSDated: 20

th April , 2006

58

ANUPAMA INVESTMENT LIMITED

COMPLIANCE CERTIFICATE

Registration No. of Company -55-40218Nominal Capital: Rs. 5,00,00,000/-

To,The Members,Anupama Investment LimitedNew Delhi

We have examined the registers, records, books and papers ofAnupama Investment Limited, (the Company) as required to bemaintained under the Companies Act, 1956, (the Act) and the rulesmade thereunder and also the provisions contained in theMemorandum & Articles of Association of the Company for thefinancial year ended on 31st March 2006. In our opinion and to thebest of our information and according to the examinations carriedout by us and explanations furnished to us by the Company, itsofficers and agents, we certify that in respect of the aforesaidfinancial year:

1. The Company has kept and maintained all registers as statedin Annexure ‘A’ to this certificate, as per the provisions of theAct and the rules made thereunder and all entries thereinhave been duly recorded.

2. The Company has duly filed the forms and returns as statedin Annexure ‘B’ to this certificate, with the Registrar ofCompanies, Regional Director, Central Government, CompanyLaw Board or other authorities within the time prescribedunder the Act and the rules made thereunder.

3. The Company, being a public limited Company, comments arenot required.

4. The Board of Directors duly met Four times respectively on27th April, 2005, 24th August, 2005, 26th December, 2005 and20th March, 2006 in respect of which meetings proper noticeswere given and the proceeding were properly recorded andsigned in the Minutes Book maintained for the purpose.

5. The Company was not required to close its Register ofMembers during the financial year.

6. The annual general meeting for the financial year ended on31st March, 2005 was held on 22nd August, 2005 after givingdue notice to the members of the Company and the resolutionspassed thereat were duly recorded in Minutes Book maintainedfor the purpose.

7. No extra ordinary general meeting was held during the financialyear.

8. The Company has not advanced any loans to its directors orpersons or firms or companies referred in the section 295 ofthe Act.

9. The Company has not entered into any contracts falling withinthe purview the provisions of section 297 of the Act

10. The Company was not required to make any entries in theregister maintained under section 301 of the Act.

11. As there were no instances falling within the purview ofsection 314 of the Act, the Company has not obtained anyapprovals from the Board of Directors, members or CentralGovernment.

12. The Company has not issued any duplicate share certificatesduring the financial year.

13. The Company :

(i) has not made any transfer/transmission/allotment ofsecurities during the financial year;

(ii) was not required to deposit any amount in a separateBank account as no dividend was declared during thefinancial year.

(iii) was not required to post warrants to any members ofthe Company as no dividend was declared during thefinancial year.

(iv) has no unpaid dividend or other such liabilities whichhave remained unpaid as stated.

(v) has duly complied with the requirement of section 217 ofthe Act.

14. The Board of Directors of the Company is duly constitutedand no appointment of Directors, additional directors, alternatedirectors and directors to fill casual vacancies have beenmade.

15. The Company has not appointed any Managing Director/Whole-time director/manager during the financial year.

16. The Company has not appointed any sole–selling agentsduring the financial year.

17. The Company was not required to obtain any approvals ofthe Central Government, Company Law Board, RegionalDirector, Registrar and /or such authorities prescribed underthe various provisions of the Act, during the financial year.

18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisionsof the Act and the rules made thereunder.

19. The Company has not issued any shares, debentures orother securities during the financial year

20. The Company has not bought back any shares during thefinancial year ended on 31st March, 2006.

21. There was no redemption of preference shares during thefinancial year.

22. There were no transaction necessitating the Company tokeep in abeyance the rights to dividend, rights shares andbonus shares pending registration of transfer of shares incompliance with the provisions of the Act.

23. The Company has not invited or accepted any deposits fallingwithin the purview of section 58A of the Companies Act,1956 during the financial year ended on 31st March, 2006.

24 The Company has not made any borrowings during thefinancial year ended 31st March, 2006.

25. The provisions of section 372A of the Companies Act, 1956are not applicable to the Company as its principal business isthat of acquisition of shares and securities.

26. The Company has not altered the provisions of theMemorandum with respect to situation of the Company’sregistered office from one State to another during the yearunder scrutiny.

59

ANUPAMA INVESTMENT LIMITED

27. The Company has not altered the provisions of theMemorandum with respect to objects of the Company duringthe year under scrutiny.

28. The Company has not altered the provisions of theMemorandum with respect to name of the Company duringthe year under scrutiny.

29. The Company has not altered the provisions of theMemorandum with respect to share capital of the Companyduring the year under scrutiny.

30. The Company has not altered the Articles of Association ofthe Company during the financial year under scrutiny.

31. There were no prosecution initiated against or show cause

notices received by the Company and no fines or penalties orany other punishment was imposed on the Company duringthe financial year, for offences under the Act.

32. The Company has not received any money as security fromits employees during the financial year,

33 The Company was not required to deduct any contributiontowards Provident Fund during the financial year.

For K. S. & AssociatesKamal Sachdev

Place: New Delhi C.P. No.: 5209Date: 20th April, 2006 ACS: 16619

Annexure B

Form and returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or otherauthorities during the financial year ending 31 st March, 2006

Sl. Form Filed under Date of Whether filed If delay in filingNo. No./Return Section filing within prescribed whether requisite

time Yes/No. additional fee paidYes/No.

1. Annual return 159 16-09-2005 Yes No

2. Annual Report 220 (1) (a) 16-09-2005 Yes No

3. Compliance Certificate 383A 16-09-2005 Yes No

Registers as maintained by the Company

STATUTORY REGISTERS

1. Register of Members U/s150

2. Register and returns U/s163

3. Minute Book of Board Meetings & General Meetings

4. Register of Director, Managing Director, Manager and SecretaryU/s 303

5. Register of Directors’ Shareholding U/s 307

6. Register of investments u/s 372A.

Annexure A

7. Register of Securities Bought Back u/s 77A.

8. Register of Destruction of Records/Documents.

9. Register of Contracts u/s 301.

10. Register of Fixed Assets.

OTHER REGISTER

1. Register of Directors’ Attendance

2. Register of Shareholders’ Attendance

3. Register of Share transfer

60

ANUPAMA INVESTMENT LIMITED

AUDITORS’ REPORT

The Shareholders,Anupama Investment Limited,New Delhi.

Gentlemen,

1. We have audited the attached Balance Sheet of AnupamaInvestment Limited as at 31st March, 2006 and also theannexed Profit and Loss Account and the cash flow statementof the Company for the year ended on that date, from all ofwhich paise have been eliminated. These financial statementsare the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by the CompaniesAct, 1956 in the manner so required and give a true andfair view in conformity with the accounting principlesgenerally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theProfit for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For BATRA KAPUR AND ASSOCIATESChartered Accountants

Ravinder KapurPARTNER

NEW DELHIDated: This the 20

th day of April, 2006

ANNEXURE

Re: ANUPAMA INVESTMENT LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order, 2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets;

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, no

61

ANUPAMA INVESTMENT LIMITED

transaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The Company does not have any accumulated lossesexceeding at least 50% of its net worth, and thus theprovisions of clause 4(x) of the Companies (Auditors’ Report)Order, 2003 are not applicable to the Company;

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. In our opinion and according to the explanations given to uswith regard to the transactions in shares, securities,debentures and other instruments, the Company has :

a) maintained proper records of the transactions and

contracts wherever applicable, and timely entries havebeen made therein.

b) made necessary arrangements to hold the investmentsin its own name.

15. According to information and explanations given to us ,theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

16. According to information and explanations given to us, theCompany has not raised any term loan.

17. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment.

18. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

19. According to information and explanations given to us, theCompany has not issued any debentures during the year.

20. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

21. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the yea

Yours faithfully,For BATRA KAPUR AND ASSOCIATES

Chartered AccountantsRavinder Kapur

PARTNER

NEW DELHIDated: This the 20

th day of April, 2006

62

ANUPAMA INVESTMENT LIMITED

BALANCE SHEETAs at 31st March, 2006

As at As at31.3.2006 31.3.2005

Rs. Rs . Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised50,00,000 Equity Shares

of Rs. 10 each 5,00,00,000 5,00,00,000

Issued, subscribed and paid-up3,34,500 Equity Shares

of Rs. 10 each 33,45,000 33,45,000(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Company)

RESERVES AND SURPLUSReserve FundAs perlast Balance Sheet 18,19,400 16,38,400Add :- Transfer from

Profit and Lossaccount 17,30,000 1,81,000

35,49,400 18,19,400Share Premium Account 3,86,50,000 3,86,50,000Surplus 83,83,443 14,64,987

5,05,82,843 4,19,34,387

UNSECURED LOANSLoan from Dalmia Cement (Bharat)Limited - the Holding Company 9,00,000 9,00,000

CURRENT LIABILITIES ANDPROVISIONSA. Current Liabilities

Sundry Creditors 4,408 4,673

B. ProvisionsProvision for TaxationAs per lastBalance Sheet 1,21,311 94,311

Add:- Provided for the year 36,000 27,000

1,57,311 1,21,311Less:-Adjustedduring the year 43,349 —

1,13,962 1,21,311

Provision for diminutionin value of investments 76,46,332 41,89,038

77,64,702 43,15,022

6,25,92,545 5,04,94,409

Significant Accounting Policies and Notes at the end of the Profit and Loss Account

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATESChartered AccountantsRavinder KapurPARTNERNew DelhiDated : This the 20th day of April, 2006

As at As at31.3.2006 31.3.2005

Rs. Rs . Rs. Rs.ASSETS

FIXED ASSETSLand (Freehold)As per Last Balance Sheet 10,20,510 10,20,510Less:- Sold during the year 6,15,974 —

4,04,536 10,20,510

INVESTMENTS (At Cost)As per Schedule I 4,96,54,888 4,43,04,691

CURRENT ASSETS, LOANS ANDADVANCESA. Current Assets

Interest accrued onInvestments 675 980Cheques in hand — 24,11,760Balances with ScheduledBanks inCurrent Accounts 5,42,987 1,27,439

5,43,662 25,40,179

B. Loans and Advances

Advances recoverable in cashor in kind or for value tobe received 1,18,74,583 8,680Share Application Money — 25,00,000Advance tax and taxdeducted at source 1,14,876 1,20,349

1,19,89,459 26,29,029

6,25,92,545 5,04,94,409

H.N. KumarK.V. Mohan

Sanjay S. MittraDIRECTORS

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ANUPAMA INVESTMENT LIMITED

This Previousyear year

INCOME Rs. Rs.

Dividend (Gross) 5,45,704 1,17,143Interest Receipts (Gross) 2,839 7,867Profit on Sale of investments 1,42,00,054 10,03,933Miscellaneous Income — 137

1,47,48,597 11,29,080

Profit brought down 86,84,456 9,27,879Surplus from last year 14,64,987 7,45,108

1,01,49,443 16,72,987

This Previousyear year

EXPENDITURE Rs. Rs.

Directors’ Sitting Fee 1,200 1,200Auditors Remuneration Audit Fee 4,408 4,408 For other Services 1,653 2,193Filing Fee 1,500 2,000Professional Fee 1,102 1,080Loss on Sale of Investments 43,674 23,632Demat Charges 7,309 2,788Sundry Balances written off 25,00,000 —Security Transaction Tax 37,742 1,969Miscellaneous Expenses 261 212Bank Charges 7,998 —Provision for diminution in value of Investments 34,57,294 1,61,719Profit carried down 86,84,456 9,27,879

1,47,48,597 11,29,080

Provision for taxation 36,000 27,000Reserve Fund 17,30,000 1,81,000Balance carried to Balance Sheet 83,83,443 14,64,987

1,01,49,443 16,72,987

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account:

1. Significant Accounting Policies:a) Fixed Assets. Fixed assets are stated at cost.b) Investments.

Investments are stated at cost. Diminution in value of Investments which in the opinion of the management are of temporary nature, has not beenprovided, in accordance with Accounting Standard 13 on ‘Accounting for Investments’ issued by the Institute of Chartered Accountants of India.

c) Revenue Recognition. Revenue is recognised on accrual basis.

2. Information required by para 4-D of Part-II of Schedule VI- Nil.

3. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:Dalmia Cement (Bharat) Limited

(ii) Directors of the CompanyShri H.N. Kumar, Shri Sanjay S. Mittra and Shri K.V. Mohan

(iii) Enterprises controlled by the Promoter Company:

Kanika Investment Limited, Hemshila Properties Limited, Ishita Properties Limited, D.I. Properties Limited, Avnija Properties Limited, Shri RangamProperties Limited, Geetee Estates Limited, Himshikhar Investment Limited, Dalmia Minerals & Properties Limited, Shri Radha Krishna Brokers &Holdings Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers & Holdings Limited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines& Minerals Limited, Sri Madhava Minerals & Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited,Sri Subramanya Mines & Minerals Limited and Dalmia Sugars Limited.

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Sale of Land to Holding Company Rs.6,15,974(ii) Directors sitting fees paid to Directors Rs. 1,200

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ANUPAMA INVESTMENT LIMITED

4. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 5 5 - 4 0 2 1 8 State Code 5 5

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

6 2 5 9 3 6 2 5 9 3

Sources of Funds

Paid-up Capital Reserves & Surplus

3 3 4 5 5 0 5 8 3

Secured Loans Unsecured Loans

N I L 9 0 0

Application of Funds

Net Fixed Assets Investments

4 0 5 4 9 6 5 5

Net Current Assets Miscellaneous Expenditure

4 7 6 8 N I L

Accumulated Losses

N I L

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

1 4 7 4 8 6 0 6 4

Profit before tax Profit after tax

8 6 8 4 8 6 4 8

Earning per Share in Rs. Dividend rate %

2 5 . 8 5 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

5. Previous year figures have been regrouped or rearranged wherever considered necessary.6. Figures in brackets pertain to previous year.

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

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ANUPAMA INVESTMENT LIMITED

Schedule IInvestments (Other than Trade Investments - Not in Companies under the same management )

As at 31.03.2006 As at 31.03.2005Particulars No.of Face Total No. of Face Total

Shares/units Value Value Shares/units Value ValueRs. Rs. Rs. Rs.

A. GOVERNMENT SECURITIES11.19% GOI Loan, 2005 - - 20000 20600

B. FULLY PAID UP EQUITY SHARESAndhra Sugars Ltd. 2200 22000 202766 2200 22000 202766Ansal Properties & Infrastructure Ltd. 400 4000 100182 - - -Bajaj Auto Finance Ltd. 5400 54000 2921897 5440 54400 448733Bajaj Hindusthan Limited 16500 16500 7998013 16517 16517 883202Berger Paints (India) Limited 5500 11000 202199 5500 11000 202199Crew B.O.S Products Ltd. 2200 22000 203864 2200 22000 203864Deve Paints Limited 500 5000 10650 500 5000 10650DCM Shriram Consolidated Ltd. 11000 @ 22000 767825 200 2000 71955DCM Shriram Industries Ltd. 5600 56000 489656 3600 36000 290908E Commodities Limited 300000 3000000 3000000 300000 3000000 3000000EID Parry (India) Limited - - - 600 6000 255821Grasim Industries Limited 133 1330 - 133 1330 -Gujarat Narmada Valley Fertilizer Company Limited - - - 1500 15000 96397Gujarat Heavy Chemicals Ltd. 13550 135500 1221760 - - -Himatsingka Seide Limited 600 * 3000 24332 150 1500 24332Heritage Foods (India) Limited 3868 38680 199570 3868 38680 199570Hindustan Motors Ltd. 9025 90250 269457 4000 40000 95420Hindustan Sanitary ware & Industries Ltd. 2500 5000 196461 - - -Indus League Clothing Limited 140252 1402520 9999968 140252 1402520 9999968J.K. Cement Ltd. 2000 20000 249696 - - -Larson & Toubro Limited 100 200 12000 100 200 12000Mahindra Gesco Developers Ltd. 750 7500 200568 - - -Mayuka Investment Limited - - - 228515 2285150 1721528Mirza Tanners Limited 900 9000 205205 900 9000 205205National Thermal Power Corporation Limited 838 8380 51956 838 8380 51956Punjab National Bank 236 2360 92040 236 2360 92040Revathi Equipment Ltd. 275 2750 200970 - - -Reliance Industries Limited 3679 # 36790 1305333 254 2540 8185Reliance Communication Ventures Limited 3679 # 18395 971470 - - -Reliance Energy Ventures Limited 3679 # 36790 183249 - - -Reliance Capital Ventures Limited 3679 # 36790 32633 - - -Reliance Natural Resources Limited 3679 # 18395 17572 - - -State Bank Of India 300 3000 196628 - - -SPL Limited 11888 118880 573421 13699 136990 506235Stringinfo Knowledge Services Private Limited 12500 125000 2500000 12500 125000 2500000Shiv-Vani Oil & Gas Exploration Services Ltd. 1900 19000 201063 1900 19000 201063Spentex Industries Limited 5000 xx 50000 200394 10000 100000 200394Sun Beam Infotech Limited - - - 25000 50000 92575Tata Steel Limited 3400 34000 1829747 3424 34240 509360Tata Chemicals Ltd. 700 7000 105293 700 7000 105293Tata Power Company Limited 2500 25000 1451751 2532 25320 159298Television Eighteen India Limited 65 650 12154 55 550 9800Tata Consultancy Services Limited 100 100 130215 100 100 130215Tata Tele Services Maharashtra Ltd. 3000 30000 104065 3000 30000 104065Ugar Sugar Limited 11000 11000 498718 - - -UltraTech Cemco Limited 80 800 - 80 800 -Ultramarine & Pigments Limited 4335 @@ 8670 - 1445 14450 199912Unitech Limited 1200 12000 125499 1200 12000 125499

39260240 22920408

C. UNITS OF MUTUAL FUNDBirla Advantage Fund - Dividend Reinvestment 1175 11748 52261 1092 10919 46801Birla Floating Rate Fund - Long Term Growth 686532 6865316 7417034 1778810 17788099 19205010DSP Merrill Lynch India T.I.G.E.R Fund - Dividend 40048 400476 585618 28369 283688 400000Franklin India Prima Fund - Growth Option 5848 58485 325000 5848 58485 325000Franklin India Bluechip Fund - Growth Option 8852 88518 350000 8852 88518 350000Franklin India Prima Fund - Dividend Reinvestment 8109 81091 339493 7180 71805 300000Franklin ITI Infotech Fund - Dividend Reinvestment 8264 82636 97924 7060 70601 76744Morgan Stanley Growth Fund 34700 347000 817393 19700 197000 300825Prudential ICICI Dynamic Plan - Dividend 28957 289570 350622 25311 253109 300000Unit Trust of India - Master Shares 3600 36000 14667 3600 36000 14667

10350012 21319047

66

ANUPAMA INVESTMENT LIMITED

As at 31.03.2006 As at 31.03.2005Particulars No.of Face Total No. of Face Total

Shares/units Value Value Shares/units Value ValueRs. Rs. Rs. Rs.

D. FULLY PAID UP BONDS6.75% UTI Tax Free Bonds - 2008 300 30000 44636 300 30000 44636

44636 44636

49654888 44304691

@ Subdivision of shares of Rs.10/- each into 5 shares of Rs.2 /- each & bonus shares received in the ratio of 1:1@@ Subdivision of shares of Rs.10/- each into 5 shares of Rs.2/- each & bonus shares received in the ratio of 3:5* Subdivision of shares of Rs.10/- each into 2 shares of Rs.5/- each & bonus shares received in the ratio of 1:1# Pursuant to scheme of arrangement for demerger of Reliance Industries Limited, shares of new entities were received and cost is apportioned in

the ratio of book value of net assets transferred to demerged entitiesxx Share capital of the company was reduced by 50%

Book Value Market Value

Rs. Rs.Quoted 34144270 48464859Unquoted 15510618

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

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ANUPAMA INVESTMENT LIMITED

Schedule to the Balance Sheet of Anupama Investment Ltd., a Non-Banking Financial Company(as required in terms of Paragraph 9BB of Non-Banking Financial Companies Prudential Norms

(Reserve Bank) Directions, 1998)(Rs. in lakhs)

Particulars

Liabilities side :

(1) Loans and advances availed by the NBFCs inclusive of Amount Amountinterest accrued thereon but not paid : outstanding Overdue(a) Debentures : Secured NIL NIL

Unsecured NIL NIL(Other than falling within the meaning of public deposits*)

(b) Deferred Credits NIL NIL(c) Term Loans NIL NIL(d) Inter-corporate loans and borrowing NIL NIL(e) Commercial Paper NIL NIL(f) Public Deposits* NIL NIL(g) Other Loans (specify nature) NIL NIL

Loan from holding Company 9.00 NIL* Please see Note 1 below

(2) Break-up of (1)(f) above (Outstanding public deposits inclusive ofinterest accrued thereon but not paid):(a) In the form of Unsecured debentures NIL NIL(b) in the form of partly secured debentures i.e debentures where there is a

shortfall in the value of security NIL NIL(c) Other public deposits NIL NIL* Please see Note 1 below

Assets side:

Amount outstanding

(3) Break-up of Loans and Advances including bills receivables [other thanthose included in (4) below]

(a) Secured NIL(b) Unsecured 118.75

(4) Break-up of Leased Assets and stock on hire and hypothecation loanscounting towards EL/HP activities(i) Lease assets including lease rentals under sundry debtors:

(a) Financial lease NIL(b) Operating lease NIL

(ii) Stock on hire including hire charges under sundry debtors:(a) Assets on hire NIL(b) Repossessed Assets NIL

(iii) Hypothecation loans counting towards EL/HP Activities(a) Loans where assets have been repossessed NIL(b) Loans other than (a) above NIL

(5) Break-up of Investements:

Current Investments :1. Quoted :

(i) Shares : (a) Equity NIL(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds NIL(iv) Government Securities NIL(v) Others (please specify) NIL

2. Unquoted :

(i) Shares: (a) Equity NIL(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds NIL(iv) Government Securities NIL(v) Others (please specify) NIL

68

ANUPAMA INVESTMENT LIMITED

Amount outstanding(Rs. in Lakhs)

Long Term Investments :

1. Quoted :

(i) Shares: (a) Equity 237.49(b) Preference NIL

(ii) Debentures and Bonds 0.45(iii) Units of mutual funds 103.50(iv) Government Securities NIL(v) Others (please specify) NIL

2. Unquoted :

(i) Shares: (a) Equity 155.11(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds NIL(iv) Government Securities NIL(v) Others (please specify) NIL

(6) Borrower group-wise classification of all leased assets, stock-on-hire and loans and advances:Please see Note 2 below

Category Amount net of provisions

Secured Unsecured Total1. Related Parties ** — — —

(a) Subsidiaries — — —

(b) Companies in the same group — — —

(c) Other related parties — — —

2. Other than related parties — 118.75 118.75

Total — 118.75 118.75

(7) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquote d):Please see note 3 belowCategory Market Value/Break up Book Value

or fair value or NAV (Net of Provisions)

1. Related Parties **(a) Subsidiaries NIL NIL(b) Companies in the same group NIL NIL(c) Other related parties NIL NIL

2. Other than related parties 564.65 420.09Total 564.65 420.09

** As per Accounting Standard of ICAI (please see Note 3)(8) Other information

Particulars Amount(i) Gross Non-performing Assets

(a) Related parties NIL(b) Other than related parties NIL

(ii) Net Non-Performing Assets(a) Related parties NIL(b) Other than related parties NIL

(iii) Assets acquired in satisfaction of debt NIL

Note:1. As defined in paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions,1998.2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998.3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets

acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquotedinvestments should be disclosed irrespective of whether they are classified as long term or current in column (5) above.

For BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

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ANUPAMA INVESTMENT LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006Rs.

Cash Flow from operating activities :

Net Profit before tax 8,684,456

Adjustment for :

Provision for diminution in value of Investments 3,457,294

Operating profit before working capital changes 12,141,750

Adjustments for working capital changes :

Trade Payable (265)

Trade and other receivables (9,365,598)

Cash generated from operations 2,775,887

Direct Taxes Paid (37,876)

Net cash from operating activities 2,738,011

Cash Flow from investing activities :

Purchase of investment (22,194,197)

Sale of investment 16,844,000

Sale of Fixed Assets 615,974

Net cash used in investing activities : (4,734,223)

Net change in cash & cash equivalents 1,996,212

Cash & cash equivalents ( opening balance ) 2,539,199

Cash & cash equivalents ( closing balance ) 542,987

Change in cash & cash equivalents (1,996,212)

As per our report of even date attachedFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

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KANIKA INVESTMENT LIMITED

DIRECTORS AUDITORS REGISTERED OFFICEShri H.N.Kumar Batra Kapur & Associates Dalmiapuram - 621651Shri K.V.Mohan Chartered Accountants Dist. TiruchirapalliShri Sanjay S.Mittra (Tamil Nadu)

ANNUAL REPORT2005-2006

KANIKA INVESTMENT LIMITED

DIRECTORS’ REPORTFor the year ended 31st March, 2006

We have pleasure in presenting the Twenty Seventh Annual Reportand the audited Statements of Account of the Company for theyear ended 31st March, 2006.

WORKING RESULTS

The financial results of operations for the year under report are asfollows:

This Previousyear year

Rs. Rs.

Profit/(Loss) for the year (25,666) 24,30,813

Less:

(a) Provision for Taxation — —(b) Provision for Fringe Benefit Tax 1,426 —

Profit after Taxation (27,092) 24,30,813Add:(i) Surplus from previous year 58,15,004 38,69,825(ii) Excess Provision written back — 1,366

Surplus available for appropriation 57,87,912 63,02,004

APPROPRIATIONSReserve Fund — 4,87,000Surplus carried to Balance Sheet 57,87,912 58,15,004

57,87,912 63,02,004

DIVIDEND

In view of the loss, your Directors do not recommend any paymentof dividend for the year under review.

DIRECTORATE

Shri Sanjay S. Mittra retires by rotation at the ensuing AnnualGeneral Meeting and is eligible for re-appointment. The Companyhas obtained necessary intimation from him in terms of theCompanies (Disqualification of Directors under Section 274(1)(g)of the Companies Act, 1956) Rules, 2003 to the effect that he hasnot incurred any disqualification under section 274(1)(g) of theCompanies Act, 1956 and he is eligible to be reappointed as aDirector of the Company.

EMPLOYEE REMUNERATION

During the year, there was no employee in receipt of remunerationin excess of the amounts mentioned under Section 217 (2A) of theCompanies Act, 1956.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION,EXCHANGE EARNINGS ETC.

Conservation of energy, technology absorption, foreign exchangeearnings and outgo are not applicable, as the Company is engagedonly in finance and investment activities.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217 (2AA) of the CompaniesAct, 1956, your Directors declare that :-

(i) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(ii) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(iv) the Directors had prepared the annual accounts on a goingconcern basis.

COMPLIANCE CERTIFICATE

In terms of the proviso to section 383A of the Companies Act,1956, compliance certificate obtained from M/s K.S. Associates,Company Secretaries, for the year ended 31st March, 2006 isannexed.

AUDITORS

M/s. Batra Kapur & Associates, Chartered Accountants, Auditorsof the Company retire at the conclusion of the ensuing AnnualGeneral Meeting and are eligible for re-appointment. The Companyhas obtained a certificate from the auditors, as required underSection 224 of the Companies Act, 1956 to the effect that their re-appointment, if made, would be in conformity with the limits,specified in the said Section.

For and on behalf of the Board

H.N. KumarK.V. Mohan

Sanjay S. MittraNew Delhi DIRECTORSDated: 20

th April, 2006

71

KANIKA INVESTMENT LIMITED

COMPLIANCE CERTIFICATERegistration No. of Company 18-50181Nominal Capital: Rs. 1,00,00,000/-

To,The Members,Kanika Investment Limited,Dalmiapuram

We have examined the registers, records, books and papers ofKanika Investment Limited, (the Company) as required to bemaintained under the Companies Act, 1956, (the Act) and the rulesmade thereunder and also the provisions contained in theMemorandum & Articles of Association of the Company for thefinancial year ended on 31st March 2006. In our opinion and to thebest of our information and according to the examinations carriedout by us and explanations furnished to us by the Company, itsofficers and agents, we certify that in respect of the aforesaidfinancial year:

1. The Company has kept and maintained all registers as statedin Annexure ‘A’ to this certificate, as per the provisions of theAct and the rules made thereunder and all entries thereinhave been duly recorded.

2. The Company has duly filed the forms and returns as statedin Annexure ‘B’ to this certificate, with the Registrar ofCompanies, Regional Director, Central Government, CompanyLaw Board or other authorities within the time prescribedunder the Act and the rules made thereunder.

3. The Company, being a public limited Company, comments arenot required.

4. The Board of Directors duly met four times respectively on27th April, 2005, 15th September, 2005, 26th December, 2005,and 20th March, 2006 in respect of which meetings propernotices were given and the proceeding were properlyrecorded and signed including the circular resolutions passedin the Minutes Book maintained for the purpose.

5. The Company was not required to close its Register ofMembers during the financial year.

6. The annual general meeting for the financial year ended on31st March, 2005 was held on 22nd August, 2005 after givingdue notice to the members of the Company and the resolutionspassed thereat were duly recorded in Minutes Book maintainedfor the purpose.

7. No extra ordinary general meeting was held during the financialyear.

8. The Company has not advanced any loans to its directors orpersons or firms or companies referred in the sections 295 ofthe Act.

9. The Company has not entered into any contracts falling withinthe purview the provisions of section 297 of the Act

10. The Company was not required to make any entries in theregister maintained under section 301 of the Act.

11. As there were no instances falling within the purview ofsection 314 of the Act, the Company has not obtained anyapprovals from the Board of Directors, members or CentralGovernment.

12. The Company has not issued any duplicate share certificatesduring the financial year.

13. The Company :

(i) has delivered all the share certificates on lodgmentthereof for transfer in accordance with the provisionsof the Act. There were no transmission or allotment ofsecurities during the year.

(ii) was not required to deposit any amount in a separateBank account as no dividend was declared during thefinancial year.

(iii) was not required to post warrants to any members ofthe Company as no dividend was declared during thefinancial year.

(iv) has no unpaid dividend or other such liabilities whichhave remained unpaid as stated.

(v) has duly complied with the requirement of section 217 ofthe Act.

14. The Board of Directors of the Company is duly constitutedand no appointment of Directors, additional directors, alternatedirectors and directors to fill casual vacancies have beenmade during the year under scrutiny.

15. The Company has not appointed any Managing Director/Whole- time director /manager during the financial year.

16. The Company has not appointed any sole –selling agentsduring the financial year.

17. The Company was not required to obtain any approvals ofthe Central Government, Company Law Board, RegionalDirector, Registrar or such other authorities prescribed underthe various provisions of the Act during the financial year.

18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisionsof the Act and the rules made thereunder.

19. The Company has not issued any shares, debentures orother securities during the financial year.

20. The Company has not bought back any shares during thefinancial year.

21. There was no redemption of preference shares during thefinancial year.

22. There were no transaction necessitating the Company tokeep in abeyance the rights to dividend, rights shares andbonus shares pending registration of transfer of shares incompliance with the provisions of the Act.

23. The Company has not invited or accepted any deposits fallingwithin the purview of section 58A of the Companies Act,1956 during the financial year ended on 31st March, 2006.

24. The Company has not made any borrowings during thefinancial year ended 31st March, 2006.

25. The provisions of section 372A of the Companies Act, 1956are not applicable to the Company as its principal business isthat of acquisition of shares and securities.

26. The Company has not altered the provisions of theMemorandum with respect to situation of the Company’s

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KANIKA INVESTMENT LIMITED

registered office from one State to another during the yearunder scrutiny.

27. The Company has not altered the provisions of theMemorandum with respect to objects of the Company duringthe year under scrutiny.

28. The Company has not altered the provisions of theMemorandum with respect to name of the Company duringthe year under scrutiny.

29. The Company has not altered the provisions of theMemorandum with respect to share capital of the Companyduring the year under scrutiny.

30. The Company has not altered its Articles of Association duringthe financial year.

31. There were no prosecution initiated against or show causenotices received by the Company and no fines or penalties orany other punishment was imposed on the Company duringthe financial year, for offences under the Act.

32. The Company has not received any money as security fromits employees during the financial year,

33. The Company was not required to deduct any contributiontowards Provident Fund during the financial year.

For K. S. & AssociatesKamal Sachdev

Place: New Delhi C.P. No.: 5209Date: 20th April, 2006 ACS: 16619

Annexure B

Form and returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or otherauthorities during the financial year ending 31st March, 2006

Sl. Form Filed under Date of Whether filed If delay in filingNo. No./Return Section filing within prescribed whether requisite

time Yes/No. additional fee paidYes/No.

1. Annual return 159 20-09-2005 Yes No

2. Annual Report 220 (1) (a) 20-09-2005 Yes No

3. Compliance Certificate 383A 20-09-2005 Yes No

4. Form III for disclosure 187 C 09-05-2005 Yes Noof Beneficial Interest

Registers as maintained by the CompanySTATUTORY REGISTERS1. Register of Members U/s1502. Register and returns U/s1633. Minute Book of Board Meetings & General Meetings4. Register of Director, Managing Director, Manager and Secretary

U/s 3035. Register of Directors’ Shareholding U/s 307

Annexure A6. Register of investments u/s 372A.7. Register of Contracts u/s 301.8. Register of Fixed Assets.OTHER REGISTER1. Register of Directors’ Attendance2. Register of Shareholders’ Attendance3. Register of Share transfer

73

KANIKA INVESTMENT LIMITED

AUDITORS’ REPORT

The Shareholders,Kanika Investment Limited,Dalmiapuram.

Gentlemen,

1. We have audited the attached Balance Sheet of KanikaInvestment Limited as at 31st March, 2006 and also theannexed Profit and Loss Account and the Cash Flowstatement of the Company for the year ended on that date,from all of which paise have been eliminated. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For BATRA KAPUR AND ASSOCIATESChartered Accountants

Ravinder KapurPARTNER

NEW DELHIDated: This the 20

thday of April, 2006

ANNEXURE

Re: KANIKA INVESTMENT LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order,2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets;

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, notransaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

74

KANIKA INVESTMENT LIMITED

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The Company does not have any accumulated lossesexceeding at least 50% of its net worth, and thus theprovisions of clause 4(x) of the Companies (Auditors’ Report)Order, 2003 are not applicable to the Company;

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. In our opinion and according to the explanations given to uswith regard to the transactions in shares, securities,debentures and other instruments, the Company has :

a) maintained proper records of the transactions andcontracts wherever applicable, and timely entries havebeen made therein.

b) made necessary arrangements to hold the investmentsin its own name.

15. According to information and explanations given to us ,theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

16. According to information and explanations given to us, theCompany has not raised any term loan.

17. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment.

18. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

19. According to information and explanations given to us, theCompany has not issued any debentures during the year.

20. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

21. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

Yours faithfully,For BATRA KAPUR AND ASSOCIATES

Chartered AccountantsRavinder Kapur

PARTNERNEW DELHIDated: This the 20thday of April, 2006

75

KANIKA INVESTMENT LIMITED

BALANCE SHEETAs at 31st March, 2006

As at As at31.3.2006 31.3.2005

Rs. Rs. Rs. Rs.LIABILITIESSHARE CAPITALAuthorised2,50,000 - UnclassifiedShares of Rs. 10 each 25,00,000 25,00,0007,50,000 Equity Shares ofRs. 10 each 75,00,000 75,00,000

1,00,00,000 1,00,00,000

Issued, subscribed and paid-up4,20,000 Equity Sharesof Rs. 10 each 42,00,000 42,00,000(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Company)

RESERVES AND SURPLUSGeneral Reserve 2,06,625 2,06,625Reserve FundAs per last Balance Sheet 16,67,800 11,80,800Add :- Transfer from

Profit and Loss account — 4,87,000

16,67,800 16,67,800Share Premium Account 1,90,00,000 1,90,00,000Surplus 57,87,912 58,15,004

2,66,62,337 2,66,89,429

CURRENT LIABILITIES ANDPROVISIONSA. Current LiabilitiesSundry Creditors 4,509 4,473

B. ProvisionsProvision for TaxationAs per lastBalance Sheet 1,41,134 1,42,500Add:- Provided during the year — —

1,41,134 1,42,500

Less:-Adjusted during the year 1,41,134 1,366

— 1,41,134Provision for Leaveencashment 13,025 11,740Provision for diminutionin value of investments 48,953 47,128

66,487 2,04,475

3,09,28,824 3,10,93,904

Significant Accounting Policies and Notes at the end of the Profit and Loss Account

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATESChartered AccountantsRavinder KapurPARTNERNew DelhiDated : This the 20th day of April, 2006

As at As at31.3.2006 31.3.2005

Rs. Rs. Rs.ASSETSFIXED ASSETSLand (Freehold)As per Last Balance Sheet 62,94,638 60,34,223Add:-Purchased duringthe year — 2,60,415

62,94,638 62,94,638

INVESTMENTS (At Cost)As per Schedule I 2,41,98,144 1,91,98,644

CURRENT ASSETS, LOANS ANDADVANCES

A. Current AssetsBalances with ScheduledBanks inCurrent Accounts 4,36,042 54,39,159

B. Loans and AdvancesAdvances recoverable incash or in kind or for valueto be receivedUnsecured(Considered good) — 17,549

Advance tax and taxdeducted at source — 1,43,914

— 1,61,463

3,09,28,824 3,10,93,904

H.N. KumarK.V. Mohan

Sanjay S. MittraDIRECTORS

76

KANIKA INVESTMENT LIMITED

This Previousyear year

INCOME Rs. Rs.

Dividend (Gross) 1,49,164 1,46,521Interest Receipts (Gross) 646 572Profit on Sale of investments 49,500 24,96,151Miscellaneous Receipts 49 2Provision for diminution in Value of investments written back — 14,06,480Loss carried down 25,666 —

2,25,025 40,49,726

Profit brought down — 24,30,813Excess provision written back — 1,366Surplus from last year 58,15,004 38,69,825

58,15,004 63,02,004

This Previousyear year

EXPENDITURE Rs. Rs.

Salaries and Wages 1,83,522 1,65,230Staff Welfare Expenses 18,395 25,836Directors’ Sitting Fee 1,200 1,200Auditors Remuneration Audit Fee 4,408 4,408 For other Services 1,653 2,193Professional Charges 1,102 1,080Filing Fee 1,500 1,500Bank Charges 285 237Demat Charges 434 2,164Security Transaction Tax — 2,036Miscellaneous Expenses 4,388 7,265Printing and Stationery 3,952 —Loss on sale of Investments — 14,04,679Sundry balances written off 2,361 1,085Provision for diminution in Value of

investments 1,825 —Profit carried down — 24,30,813

2,25,025 40,49,726

Loss Brought down 25,666 —Reserve Fund — 4,87,000Fringe Benefits Tax 1,426 —Balance carried to Balance Sheet 57,87,912 58,15,004

58,15,004 63,02,004

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account:

1. Significant Accounting Policies:a) Fixed Assets Fixed assets are stated at cost.b) Investments.

Investments are stated at cost/transfer valuec) Revenue Recognition.

Revenue is recognised on accrual basis.

2. Information required by para 4-D of Part-II of Schedule VI- Nil.

3. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:Dalmia Cement (Bharat) Limited

(ii) Directors of the CompanyShri H.N. Kumar, Shri Sanjay S. Mittra and Shri K.V. Mohan

(iii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Hemshila Properties Limited, Ishita Properties Limited, D.I. Properties Limited, Avnija Properties Limited, ShriRangam Properties Limited, Geetee Estates Limited, Himshikhar Investment Limited, Dalmia Minerals & Properties Limited, Shri Radha KrishnaBrokers & Holdings Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers & Holdings Limited, Arjuna Brokers & Minerals Limited, SriKesava Mines & Minerals Limited, Sri Madhava Minerals & Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines &Minerals Limited, Sri Subramanya Mines & Minerals Limited and Dalmia Sugars Limited.

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

Directors sitting fees paid to Directors Rs. 1,200

77

KANIKA INVESTMENT LIMITED

4. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I . Registration Details

Registration No. 1 8 - 5 0 1 8 1 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

3 0 9 2 9 3 0 9 2 9

Sources of Funds

Paid-up Capital Reserves & Surplus

4 2 0 0 2 6 6 6 2

Secured Loans Unsecured Loans

N I L N I L

Application of Funds

Net Fixed Assets Investments

6 2 9 5 2 4 1 9 8

Net Current Assets Miscellaneous Expenditure

3 6 9 N I L

Accumulated Losses

N I L

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

1 9 9 2 2 5

Profit before tax Profit after tax

(-) 2 6 (-) 2 4

Earning per Share in Rs. Dividend rate %

(-) 0 . 0 6 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

5. Previous year figures have been regrouped or rearranged wherever considered necessary.6. Figures in brackets pertain to previous year.

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

78

KANIKA INVESTMENT LIMITED

Schedule IInvestments (Other than Trade Investments - Not in Companies under the same management )

As at 31.03.2006 As at 31.03.2005Particulars No.of Face Total No. of Face Total

Shares/units Value Value Shares/units Value ValueRs. Rs. Rs. Rs.

A. FULLY PAID UP PREFERENCE SHARE0.01% Cummulative Redeemable Preference Shares of Essar Steel Limited 100 @ 1000 — — — —

B. FULLY PAID UP EQUITY SHARESA.R.C. Cement Limited 50 500 712 50 500 712Bellary Steel Alloys Limited 3000 & 3000 6264 300 3000 6264Century Textiles and Industries Limited 10 100 345 10 100 345Chettinad Cement Corporation Limited 10 100 734 10 100 734Deepak Fertilizers and Petrochemicals Corp. Limited 150 1500 2300 150 1500 2300Deve Paints Limited 800 8000 16755 800 8000 16755Deccan Cements Ltd. 300 3000 8668 300 3000 8668Essar Steel Limited 150 @ 1500 13750 250 2500 13750Grasim Industries Limited 10 100 600 10 100 600Gujarat Ambuja Cement Limited 75 @@ 150 - 10 100 -Gujarat High Tech Industries Limited 100 1000 500 100 1000 500Gujarat Narmada Valley Fertilizers Company Limited 200 2000 3250 200 2000 3250Gujarat Refractories Limited 146 1460 1460 146 1460 1460Gujarat Poly AVX Electronics Limited 60 600 1000 60 600 1000Gujarat Sidhee Cement Limited 10 100 29 10 100 29Hindustan Development Corporation Limited 144 1440 10368 144 1440 10368Icicon Electronics (India) Limited 100 1000 400 100 1000 400India Cements Limited 10 100 305 10 100 305Jaiprakash Associates Limited 10 100 275 10 100 275Jubilant Organosys Limited 1600 # 1600 13940 320 1600 13940J K Lakshmi Cement Limited 200 ## 2000 13600 200 2000 13600J.K. Cement Ltd. 19 @@@ 190 - - - -J.K.Synthetics Limited 194 1940 3960 194 1940 3960Kakatiya Cements Sugar & Industries Limited 10 100 209 10 100 209Kashipur Holdings Limited 100 1000 503 100 1000 503Khaitan Consultants Limited - - - 3000 300000 250500K.R.Steel Union Limited 100 1000 400 100 1000 400Larson & Toubro Limited 200 400 24000 200 400 24000Madras Cement Limited 10 100 4373 10 100 4373Mangalam Cement Limited 10 100 43 10 100 43Mangalore Refinary & Petrochemicals Limited 200 2000 2000 200 2000 2000Mysore Cements Limited 10 100 69 10 100 69Minerva Holdings Limited 40 400 201 40 400 201Oswal Chemicals and Fertilizers Limited 600 6000 9600 600 6000 9600OCL India Limited 50 $ 100 471 10 100 471Pratap Steel Rolling Mills (1935) Limited 100 1000 1000 100 1000 1000Rain Commodities Limited 100 $$ 1000 1000 100 1000 1000Raasi Cements Limited 300 3000 8340 300 3000 8340Rathi Ispat Limited 100 1000 4076 100 1000 4076Raymond Limited 595 5950 34488 595 5950 34488Recron Synthetics Limited 100 1000 2000 100 1000 2000Reliance Industries Limited 304 $$$ 3040 4776 304 3040 9185Reliance Communication Ventures Limited 304 $$$ 1520 3555 - - -Reliance Energy Ventures Limited 304 $$$ 3040 671 - - -Reliance Capital Ventures Limited 304 $$$ 3040 119 - - -Reliance Natural Resources Limited 304 $$$ 1520 64 - - -Shree Cement Limited 10 100 417 10 100 417Sri Vishnu Cement Limited 10 100 1508 10 100 1508Tata Motors Limited 160 1600 19000 160 1600 19000The Associated Cement Companies Limited 10 100 1523 10 100 1523Usha Martin Limited 16 80 2000 16 80 2000Usha Martin Infotech Ltd 16 80 - 16 80 -Ultra Tech CemCo Limited 160 1600 - 160 1600 -Zuari Industries Limited 10 100 242 10 100 242

225863 476363

79

KANIKA INVESTMENT LIMITED

Investments (Other than Trade Investments - Not in Companies under the same management)

As at 31.03.2006 As at 31.03.2005Particulars No.of Face Total No. of Face Total

Shares/units Value Value Shares/units Value ValueRs. Rs. Rs. Rs.

C. UNITS OF MUTUAL FUNDBirla Floating Rate Fund - Short Term - Growth Plan 378735 3787347 3929157 378735 3787347 3929157Birla Floating Rate Fund - Long Term - Growth Plan 1312715 13127147 14200000 1312715 13127147 14200000Morgan Stanley Growth Fund 5000 50000 42750 5000 50000 42750Principal Floating Rate Fund FMP -Growth Plan 497300 4973004 5250000 — — —Unit Trust of India - Master Shares 53600 536000 550374 53600 536000 550374

23972281 18722281

24198144 19198644

Book Value Market ValueRs. Rs.

Quoted 2,41,55,997 2,87,77,109Unquoted 42,147

@ Preference shares received in lieu of equity shares as per scheme of reorganisation of share capital of Essar Steel Ltd. In the ratio of 4 : 10@@ Subdivision of shares of Rs.10/- each into 5 shares of Rs.2/- each and Bonus shares received in the ratio 1:2@@@ Shares received as per scheme of arrangement with J.K.Synthetics Ltd in the ratio 1 : 10$ Subdivision of shares of Rs. 10/- each in to 5 shares of Rs. 2/- each$$ Formerly known as Priyadarshni Cement Limited$$$ Pursuant to scheme of arrangement for demerger of Reliance Industries Limited, shares of new entities were received and cost is apportioned

in the ratio of book value of net assets transferred to demerged entities.# Subdivision of shares of Rs.5 each into 5 shares of Re.1 each## Formerly known as JK Corp Limited& Subdivision of shares of Rs.10 each into 10 shares of Re.1 each

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

Schedule I

80

KANIKA INVESTMENT LIMITED

Schedule to the Balance Sheet of Kanika Investment Ltd., a Non-Banking Financial Company(as required in terms of Paragraph 9BB of Non-Banking Financial Companies Prudential Norms

(Reserve Bank) Directions, 1998)(Rs. in lakhs)

Particulars

Liabilities side :

(1) Loans and advances availed by the NBFCs inclusive of Amount Amountinterest accrued thereon but not paid : outstanding Overdue(a) Debentures : Secured NIL NIL

Unsecured NIL NIL(Other than falling within the meaning of public deposits*)

(b) Deferred Credits NIL NIL(c) Term Loans NIL NIL(d) Inter-corporate loans and borrowing NIL NIL(e) Commercial Paper NIL NIL(f) Public Deposits* NIL NIL(g) Other Loans (specify nature)

* Please see Note 1 below

(2) Break-up of (1)(f) above (Outstanding public deposits inclusive ofinterest accrued thereon but not paid):(a) In the form of Unsecured debentures NIL NIL(b) in the form of partly secured debentures i.e. debentures where there is a

shortfall in the value of security NIL NIL(c) Other public deposits NIL NIL* Please see Note 1 below

Assets side:

Amount outstanding

(3) Break-up of Loans and Advances including bills receivables [other thanthose included in (4) below]

(a) Secured NIL(b) Unsecured NIL

(4) Break-up of Leased Assets and stock on hire and hypothecation loanscounting towards EL/HP activities(i) Lease assets including lease rentals under sundry debtors:

(a) Financial lease NIL(b) Operating lease NIL

(ii) Stock on hire including hire charges under sundry debtors:(a) Assets on hire NIL(b) Repossessed Assets NIL

(iii) Hypothecation loans counting towards EL/HP Activities(a) Loans where assets have been repossessed NIL(b) Loans other than (a) above NIL

(5) Break-up of Investements:

Current Investments :1. Quoted :

(i) Shares : (a) Equity NIL(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds NIL(iv) Government Securities NIL(v) Others (please specify) NIL

2. Unquoted :

(i) Shares: (a) Equity NIL(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds NIL(iv) Government Securities NIL(v) Others (please specify) NIL

81

KANIKA INVESTMENT LIMITED

Amount outstanding(Rs. in Lakhs)

Long Term Investments :

1. Quoted :

(i) Shares: (a) Equity 1.84(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds 239.72(iv) Government Securities NIL(v) Others (please specify)

NIL2. Unquoted :

(i) Shares: (a) Equity 0.42(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds NIL(iv) Govenment Securities NIL(v) Others (please specify) NIL

(6) Borrower group-wise classification of all leased assets, stock-on-hire and loans and advances:Please see Note 2 below

Category Amount net of provisions

Secured Unsecured Total1. Related Parties ** — — —

(a) Subsidiaries — — —

(b) Companies in the same group — — —

(c) Other related parties — — —

2. Other than related parties — — —

Total — — —

(7) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquote d):Please see note 3 belowCategory Market Value/Break up Book Value

or fair value or NAV (Net of Provisions)

1. Related Parties **(a) Subsidiaries NIL NIL(b) Companies in the same group NIL NIL(c) Other related parties NIL NIL

2. Other than related parties 287.87 241.49Total 287.87 241.49

** As per Accounting Standard of ICAI (please see Note 3)(8) Other information

Particulars Amount(i) Gross Non-performing Assets

(a) Related parties NIL(b) Other than related parties NIL

(ii) Net Non-Performing Assets(a) Related parties NIL(b) Other than related parties NIL

(iii) Assets acquired in satisfaction of debt NIL

Note:1. As defined in paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions,1998.2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998.3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets

acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquotedinvestments should be disclosed irrespective of whether they are classified as long term or current in column (5) above.

For BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

82

KANIKA INVESTMENT LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH,2006Rs.

Cash Flow from operating activities :

Net Profit before tax (25,666)

Adjustment for :

Provision for diminution in value of Investments 1,825

Operating profit before working capital changes (23,841)

Adjustments for working capital changes :

Trade Payable 1,321Trade and other receivables 17,549Cash generated from operations (4,971)Direct Taxes / Fringe Benfit Tax 1,354

Net cash from operating activities (3,617)

Cash Flow from investing activities :

Purchase of investment (52,59,191)Sale of investment 259,691Net cash used in investing activities : (49,99,500)

Net change in cash & cash equivalents (50,03,117)

Cash & cash equivalents ( opening balance ) 54,39,159

Cash & cash equivalents ( closing balance ) 4,36,042

Change in cash & cash equivalents (50,03,117)

As per our report of even date attachedFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

83

ISHITA PROPERTIES LIMITED

DIRECTORS AUDITORS REGISTERED OFFICEShri Gautam Dalmia S.S. Kothari Mehta & Co. 11th Floor, Hansalaya,Shri H.N.Kumar Chartered Accountants 15, Barakhamba Road,Shri K.V.Mohan New Delhi - 110001

ANNUAL REPORT2005-2006

ISHITA PROPERTIES LIMITED

DIRECTORS’ REPORT TO THE MEMBERS

Your Directors have pleasure in presenting their Twelfth AnnualReport and Audited Accounts for the year ended 31st March, 2006.

WORKING RESULTS

The financial results for the year under review are as follows:

This Previousyear year

Rs. Rs.

Profit for the year 3,16,654 3,28,382Less: Provision for Taxation 1,05,000 1,16,000

Profit after Taxation 2,11,654 2,12,382

Add:(i) Surplus from previous year 15,21,429 13,09,047(ii) Excess provision written back — —

Surplus available for appropriation 17,33,083 15,21,429

APPROPRIATIONSurplus carried to Balance Sheet 17,33,083 15,21,429

17,33,083 15,21,429

DIVIDEND

Your Directors do not recommend payment of any dividend, inorder to conserve resources of the Company with a view to ensurethe repayment of loans taken by it from the Holding Company.

DIRECTORS

Shri Gautam Dalmia, Director, retires by rotation at the ensuingAnnual General Meeting and is eligible for re-appointment. TheCompany has obtained necessary intimation from him in terms ofthe Companies (Disqualification of Directors under Section 274(1)(g)of the Companies Act, 1956) Rules, 2003 to the effect that he hasnot incurred any disqualification under section 274(1)(g) of theCompanies Act, 1956 and he is eligible to be reappointed as aDirector of the Company.

AUDITORS

M/s. S. S. Kothari Mehta & Co., Chartered Accountants, Auditorsof the Company retire at the conclusion of the ensuing AnnualGeneral Meeting and are eligible for re-appointment. The Company

has obtained a certificate from the auditors, as required underSection 224 of the Companies Act, 1956 to the effect that their re-appointment, if made, would be in conformity with the limits,specified in the said Section.

EMPLOYEE REMUNERATION

During the year, there had been no employee in receipt ofremuneration in excess of the limits mentioned under Section 217(2A) of the Companies Act, 1956.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION,EXCHANGE EARNINGS ETC.

The Company is not engaged in manufacturing activities. Hence,the requirements of reporting about energy conservation,technology absorption and exchange earnings and outgo are notapplicable to the Company.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217 (2AA) of the CompaniesAct, 1956, your Directors declare that: -

(i) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(ii) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(iv) the Directors had prepared the annual accounts on a goingconcern basis.

For and on behalf of the BoardGautam Dalmia

H.N. KumarK.V. Mohan

New Delhi DIRECTORSDated: 27th April, 2006

84

ISHITA PROPERTIES LIMITED

AUDITORS’ REPORT

TO THE MEMBERS OF ISHITA PROPERTIES LIMITED

1. We have audited the attached balance sheet of ISHITAPROPERTIES LIMITED as at 31st March, 2006 and also theprofit and loss account for the year ended on that dateannexed thereto. These financial statements are theresponsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are freeof material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order, 2003as amended by the Companies (Auditors’ Report)(Amendment) Order, 2004, issued by the Central Governmentof India in terms of sub-section (4A) of section 227 of theCompanies Act, 1956 and on the basis of such checks of thebooks and records of the Company as we consideredappropriate and according to the information and explanationsgiven to us, we enclose in the Annexure a statement on thematters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above,we report that:

(i) We have obtained all the information and explanations,which to the best of our knowledge and belief werenecessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required bylaw have been kept by the Company so far as appearsfrom our examination of those books;

(iii) The balance sheet and profit and loss account dealtwith by this report are in agreement with the books ofaccount;

(iv) In our opinion, the balance sheet and profit and lossaccount dealt with by this report comply with theaccounting standards referred to in sub-section (3C) ofsection 211 of the Companies Act, 1956;

(v) On the basis of written representations received fromthe directors, as on 31

st March, 2006, and taken on record

by the Board of Directors, we report that none of thedirectors is disqualified as on 31

st March, 2006 from

being appointed as a director in terms of clause (g) ofsub- section (1) of section 274 of the Companies Act,1956;

(vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by the CompaniesAct, 1956, in the manner so required and give a true andfair view in conformity with the accounting principlesgenerally accepted in India:

(a) in the case of the balance sheet, of the state ofaffairs of the Company as at 31st March, 2006; and

(b) in the case of the profit and loss account, of theprofit for the year ended on that date.

for S.S. KOTHARI MEHTA & CO.Chartered Accountants

CA J. KRISHNANPlace: New Delhi PartnerDate: 27th April, 2006 Membership No. 84551

Annexure

Re: Ishita Properties LimitedReferred to in paragraph 3 of our report of even date,

1. The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixedassets.

2. The fixed assets have been physically verified by themanagement during the year, the frequency of which, in ouropinion, is reasonable having regard to size of the Companyand the nature of its assets. No material discrepancies werenoticed on such verification.

3. In our opinion and according to the information andexplanations given to us, a substantial part of fixed assetshas not been disposed off by the Company during the year.

4. The Company has not granted or taken any loans, securedor unsecured, to/from companies, firms or other partiescovered in the register maintained under section 301 of theCompanies Act, 1956.

5. In our opinion and according to the informations andexplanations given to us, there are adequate internal controlprocedures commensurate with the size of the Companyand the nature of its business with regard to purchase offixed assets. Further, on the basis of our examination of thebooks and records of the Company, carried out in accordancewith the generally accepted auditing practices in India, wehave neither come across nor have we been informed ofany instance of a continuing failure to correct majorweaknesses in the aforesaid internal control procedures.

6. Based on the audit procedures applied by us and accordingto the information and explanations provided by themanagement, we are of the opinion that there were nocontracts or arrangements that were required to be enteredinto the register maintained under section 301 of theCompanies Act, 1956.

7. In our opinion and according to the information and

85

ISHITA PROPERTIES LIMITED

explanations given to us, the Company has not accepted anydeposits within the meaning of section 58A, 58AA or anyother relevant provisions of the Companies Act, 1956 andrules framed thereunder.

8. According to the records of the Company examined by usand the information and explanations given to us, noundisputed amounts payable in respect of income-tax, wealth-tax, sales tax, service tax, customs duty and excise dutywere outstanding, as at 31st March, 2006 for a period ofmore than six months from the date they became payable.

9. According to the records of the Company examined by usand the information and explanations given to us, there areno dues of sales tax, income tax, customs duty, service tax,wealth tax, excise duty and cess which have not beendeposited on account of any dispute.

10. The Company does not have accumulated losses at the endof the financial year. The Company has not incurred cashlosses during the financial year covered by our audit and theimmediately preceding financial year.

11. According to the information and explanations given to us,the Company has not given any guarantee for loans taken byothers from banks or financial institutions during the year.

12. According to the information and explanations given to usand on the basis of an overall examination of the balancesheet of the Company, in our opinion, generally, there are nofunds raised by the Company on short-term basis, whichhave been used for long-term investment.

13. During the year, the Company has not made any preferential

allotment of shares to parties and companies covered in theregister maintained under section 301 of the Companies Act,1956.

14. During the period covered by our audit report, the Companyhas not issued any debentures.

15. During the period covered by our audit report, the Companyhas not raised any money by public issue.

16. During the course of our examination of the books and recordsof the Company carried out in accordance with the generallyaccepted auditing practices in India, we have neither comeacross any instance of fraud on or by the Company, noticedand reported during the year, nor have we been informed ofsuch case by the management

17. The other provisions of the Order do not appear to beapplicable for the year under report.

for S.S. KOTHARI MEHTA & CO.Chartered Accountants

CA J. KRISHNANPlace: New Delhi PartnerDate: 27th April, 2006 Membership No. 84551

86

ISHITA PROPERTIES LIMITED

BALANCE SHEETAs at 31st March, 2006

As at As at31.03.2006 31.03.2005

Rs . Rs. Rs.

SHARE CAPITALAuthorised

50,000 Equity Sharesof Rs. 10/- each 5,00,000 5,00,000

Issued, subscribed andpaid-up

50,000 Equity Sharesof Rs. 10/- each 5,00,000 5,00,000

{(Entire issued and subscribed capitalis held by Dalmia Cement (Bharat)Limited holding company) (of theabove, 41,000 equity shares ofRs. 10/- each, fully paid up, havebeen issued, by way of BonusShares by capitalisation ofReserves)}

RESERVES AND SURPLUSShare Premium account 52,67,100 52,67,100Surplus as per Profitand Loss account 17,33,083 15,21,429

70,00,183 67,88,529

UNSECURED LOANS(Interest-free)Dalmia Cement (Bharat)Ltd. (Holding Company) 33,53,301 36,53,301

CURRENT LIABILITIES AND PROVISIONSA.Current Liabilities

Sundry Creditors 6,612 6,612B. Provisions

Provision for tax 6,34,000 5,29,000

1,14,94,096 1,14,77,442

Significant Accounting Policies and Notes to accounts (See Note 2)

As per our report of even date attachedFor S.S. Kothari Mehta & Co.Chartered AccountantsCA J. KrishnanPARTNERDated : This the 27th day of April, 2006

As at As at31.03.2006 31.03.2005

Rs. Rs.

FIXED ASSETSAs per Schedule annexed 4,81,389 5,87,776(See Note 1)

INVESTMENTS(Non-trade - unquoted -at cost)36,000 Equity Shares of

Rs. 10 each heldin G.S. Homes andHotels Pvt. Limited 49,50,000 49,50,000

CURRENT ASSETS,LOANS AND ADVANCESA. Current Assets:

Interest Receivable 2,438 1,808Balances withScheduled Banks in:Current Accounts 4,22,199 4,31,114Fixed DepositAccounts 2,00,000 2,00,000

6,24,637 6,32,922

B. Loans and Advances:(Unsecured -considered good)Tax deductedat Source 7,17,227 5,85,786Security Deposit made 46,81,782 46,81,782Income-tax refund receivable 37,307 37,307Prepaid Expenses 1,754 1,869

54,38,070 53,06,744

1,14,94,096 1,14,77,442

Gautam DalmiaH.N.KumarK.V.Mohan

DIRECTORS

87

ISHITA PROPERTIES LIMITED

This Previousyear year

INCOME Rs. Rs.

Interest on Fixed Deposit(Tax deducted Rs. 2,189/-previous year Rs. 1,517/-) 10,385 7,275

Licence Fee received(Tax deducted Rs. 1,29,252/-previous year Rs. 1,19,656/-) 5,76,000 5,76,000

5,86,385 5,83,275

Profit brought down 3,16,654 3,28,382Surplus from last year 15,21,429 13,09,047

18,38,083 16,37,429

This Previousyear year

Rs. Rs.Expenditure

Filing Fees 600 600Bank Charges 150 55Auditors' RemunerationAudit Fee 6,612 6,612

Corporation Tax 1,47,374 1,33,948Insurance 4,656 4,826Sundry Balances written off — 43,544Stationery & Printing 3,952 —Depreciation 1,06,387 65,308Profit carried down 3,16,654 3,28,382

5,86,385 5,83,275

Provision for Tax 1,05,000 1,16,000Balance carried toBalance Sheet 17,33,083 15,21,429

18,38,083 16,37,429

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

Earnings per Share (Basic & Diluted) (Face value Rs. 10/- per share) Rs. 4.23 Rs. 4.25

Significant Accounting Policies and Notes to accounts (See Note 2)

As per our report of even date attachedFor S.S. Kothari Mehta & Co.,Chartered AccountantsCA J. KrishnanPARTNERDated : This the 27th day of April, 2006

Gautam DalmiaH.N.KumarK.V.Mohan

DIRECTORS

Notes :

1. Schedule of Fixed Assets: (Rs.)

Particulars Cost Depreciation Written down value

As on Additi- Deleti- As on Upto For the Upto As on As on31.3.2005 ons ons 31.3.2006 31.3.2005 year 31.3.2006 31.3.2006 31.3.2005

Interior work 11,51,908 — — 11,51,908 5,64,132 1,06,387 6,70,519 4,81,389 5,87,776on Building

Total 11,51,908 — — 11,51,908 5,64,132 1,06,387 6,70,519 4,81,389 5,87,776

Previous 11,51,908 — — 11,51,908 4,98,824 65,308 5,64,132 5,87,776Year

88

ISHITA PROPERTIES LIMITED

2. Significant Accounting Policies and Notes to Accounts:

A. Basis of Accounting :The accounts of the company are prepared under the historical cost convention on accrual basis as a going concern and complywith the Accounting Standards issued by the Institute of Chartered Accountants of India.

B. Depreciation :Depreciation has been provided on fixed assets under the diminishing balance method at the rates prescribed under ScheduleXIV to the Companies Act, 1956.

C. Contingent Liabilities :Nil.

D. Related party disclosure, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company: Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Avnija Properties Limited, Geetee Estates Limited, Shri RangamProperties Limited, Himshikhar Investment Limited, Himshila Properties Limited, D.I. Properties Limited, Dalmia Minerals &Properties Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers& Holdings Limited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals &Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines &. Minerals Limited, Sri SubramanyaMines & Minerals Limited and Dalmia Sugars Limited.

B. The following transactions were carried out with the related parties in the ordinary course of business during the year:

(i) Refund of Loan to Holding Company Rs. 3,00,000(ii) Receipt of rent from Holding Company Rs. 5,76,000(iii) Reimbursement of Expenses incurred by Holding Company Rs. 1,47,974

E. Previous years figures have been regrouped and/or rearranged wherever considered necessary.

F. Information pursuant to Part IV of Schedule VI to the Companies Act, 1956

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE.

I. Registration DetailsRegistration No. 1 1 6 8 3 2 State Code 5 5

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

1 1 4 9 4 1 1 4 9 4

Sources of Funds :

Paid-up Capital Reserves & Surplus

5 0 0 7 0 0 0

Secured Loans Unsecured Loans

N I L 3 3 5 3

89

ISHITA PROPERTIES LIMITED

Application of Funds

Net Fixed Assets Investments

4 8 1 4 9 5 0

Net Current Assets Miscellaneous Expenditure

5 4 2 2 N I L

Accumulated Losses

N I L

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

5 8 6 2 6 9

Profit before tax Profit after tax

3 1 7 2 1 2

Earning per Share in Rs. Dividend rate %(Basic and Diluted)

4 . 2 3 N I L

V. Generic names of three Principal Products / Services of Company (as per monetary terms)

Product N A

Item Code (ITC Code) N A

As per our report of even date attachedFor S.S. Kothari Mehta & Co. Gautam DalmiaChartered Accountants H.N.KumarCA J. Krishnan K.V.MohanPARTNER DIRECTORSDated : This the 27th day of April, 2006

90

ISHITA PROPERTIES LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006Rs.

Cash Flow from operating activities :

Net Profit before tax 3,16,654

Adjustment for :

Depreciation 1,06,387

Operating profit before working capital changes 4,23,041

Adjustments for working capital changes :

Trade and other receivables (515)

Cash generated from operations 4,22,526

Direct Taxes Paid (1,31,441)

Net cash from operating activities 2,91,085

Cash Flow from Financing activities :

Proceeds from unsecured Loans (3,00,000)

Net cash from financing activities (3,00,000)

Net change in cash & cash equivalents (8,915)

Cash & cash equivalents ( opening balance ) 6,31,114

Cash & cash equivalents ( closing balance ) 6,22,199

Changes in cash & cash equivalents (8,915)

NOTE : As cash flow statement is being prepared for the first time, previous year’s figures have not been given.

As per our report of even date attachedFor S.S.Kothari Mehta & Co., Gautam DalmiaChartered Accountants H.N. Kumar CA J.Krishnan K.V. MohanPARTNER DIRECTORSNew DelhiDated : This the 27th day of April , 2006

91

AVNIJA PROPERTIES LIMITED

ANNUAL REPORT2005-2006

AVNIJA PROPERTIES LIMITED

DIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri H.N. Kumar Batra Kapur & Associates Hansalaya,11th Floor, Dalmiapuram-621651Shri K.V.Mohan Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri Sanjay S.Mittra New Delhi-110001 (Tamil Nadu)

DIRECTORS’ REPORT

For the year ended 31st March, 2006

We have pleasure in presenting the Tenth Annual Report and theaudited Statements of Account of the Company for the year ended31st March, 2006.

WORKING RESULTS

The financial results of operations for the year under report are asfollows:

This Previousyear year

Rs. Rs.

Profit for the year 7,888 10,770Less: Provision for Taxation 700 850

Profit after Taxation 7,188 9,920Add : Surplus from previous year 2,94,792 2,84,872

Surplus carried to Balance Sheet 3,01,980 2,94,792

DIVIDEND

With a view to conserve the resources, your Directors do notrecommend any payment of dividend for the year.

DIRECTORATE

Shri H.N. Kumar, retires by rotation at the ensuing Annual GeneralMeeting and is eligible for re-appointment. The Company hasobtained necessary intimation from him in terms of the Companies(Disqualification of Directors under Section 274(1)(g) of theCompanies Act, 1956) Rules, 2003 to the effect that he has notincurred any disqualification under section 274(1)(g) of theCompanies Act, 1956 and he is eligible to be reappointed as aDirector of the Company.

EMPLOYEE REMUNERATION

During the year, there had been no employee in receipt ofremuneration in excess of the amounts mentioned under Section217 (2A) of the Companies Act, 1956.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION,EXCHANGE EARNINGS ETC.

Conservation of energy, technology absorption, foreign exchangeearnings and outgo are not applicable, as the Company is notengaged in any manufacturing activities.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217 (2AA) of the CompaniesAct, 1956, your Directors declare that :-

(i) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(ii) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(iv) the Directors had prepared the annual accounts on a goingconcern basis.

COMPLIANCE CERTIFICATE

In terms of the proviso to section 383A of the Companies Act,1956, compliance certificate obtained from M/s. K. S. & Associates,Company Secretaries, for the year ended 31st March, 2006 isannexed.

AUDITORS

M/s. Batra Kapur & Associates, Chartered Accountants, Auditorsof the Company retire at the conclusion of the ensuing AnnualGeneral Meeting and are eligible for re-appointment. The Companyhas obtained a certificate from the auditors, as required underSection 224 of the Companies Act, 1956 to the effect that their re-appointment, if made, would be in conformity with the limits, specifiedin the said Section.

For and on behalf of the BoardH.N. KumarK.V. Mohan

Sanjay S. MittraNew Delhi DIRECTORSDated: 20

th April, 2006

92

AVNIJA PROPERTIES LIMITED

COMPLIANCE CERTIFICATE

Registration No. of Company 18-35963Nominal Capital: Rs. 25,00,000/-

To,The Members,Avnija Properties LimitedDalmiapuram

We have examined the registers, records, books and papers ofAvnija Properties Limited, (the Company) as required to bemaintained under the Companies Act, 1956, (the Act) and the rulesmade thereunder and also the provisions contained in theMemorandum & Articles of Association of the Company for thefinancial year ended on 31st March 2006. In our opinion and to thebest of our information and according to the examinations carriedout by us and explanations furnished to us by the Company, itsofficers and agents, we certify that in respect of the aforesaidfinancial year:

1. The Company has kept and maintained all registers as statedin Annexure ‘A’ to this certificate, as per the provisions of theAct and the rules made thereunder and all entries thereinhave been duly recorded.

2. The Company has duly filed the forms and returns as statedin Annexure ‘B’ to this certificate, with the Registrar ofCompanies, Regional Director, Central Government, CompanyLaw Board or other authorities within the time prescribedunder the Act and the rules made thereunder.

3. The Company, being a public limited Company, comments arenot required.

4. The Board of Directors duly met Four times respectively on27th April, 2005, 15th September, 2005, 26th December, 2005and 20th March, 2006, in respect of which meetings propernotices were given and the proceeding were properlyrecorded and signed in the Minutes Book maintained for thepurpose.

5. The Company was not required to close its Register ofMembers during the financial year.

6. The annual general meeting for the financial year ended on31st March, 2005 was held on 22nd August, 2005 after givingdue notice to the members of the Company and the resolutionspassed thereat were duly recorded in Minutes Book maintainedfor the purpose.

7. No extra ordinary general meeting was held during the financialyear.

8. The Company has not advanced any loans to its directors orpersons or firms or companies referred in the section 295 ofthe Act

9. The Company has not entered into any contracts falling withinthe purview the provisions of section 297 of the Act

10. The Company was not required to make any entries in theregister maintained under section 301 of the Act.

11. As there were no instances falling within the purview ofsection 314 of the Act, the Company has not obtained anyapprovals from the Board of Directors, members or Central

Government.

12. The Company has not issued any duplicate share certificatesduring the financial year.

13. The Company :

(i) has delivered all the share certificates on lodgment thereoffor transfer in accordance with the provisions of the Act.There were no transmission or allotment of securities duringthe year;

(ii) was not required to deposit any amount in a separate Bankaccount as no dividend was declared during the financialyear.

(iii) was not required to post warrants to any members of theCompany as no dividend was declared during the financialyear.

(iv) has no unpaid dividend or other such liabilities which haveremained unpaid as stated.

(v) has duly complied with the requirement of section 217 of theAct.

14. The Board of Directors of the Company is duly constitutedand no appointment of Directors, additional directors, alternatedirectors and directors to fill casual vacancies have beenmade during the year under scrutiny.

15. The Company has not appointed any Managing Director /Whole- time director /manager during the financial year.

16. The Company has not appointed any sole –selling agentsduring the financial year.

17. The Company was not required to obtain any approval of theCentral Government, Company Law Board, Regional Director,Registrar or such other Authorities prescribed under thevarious provisions of the Act, during the financial year.

18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisionsof the Act and the rules made thereunder.

19. The Company has not issued any shares, debentures orother securities during the financial year

20. The Company has not bought back any shares during thefinancial year.

21. There was no redemption of preference shares during thefinancial year.

22. There were no transaction necessitating the Company tokeep in abeyance the rights to dividend, rights shares andbonus shares pending registration of transfer of shares incompliance with the provisions of the Act.

23. The Company has not invited or accepted any deposits fallingwithin the purview of section 58A of the Companies Act,1956 during the financial year ended on 31st March, 2006.

24. The Company has not made any borrowings during thefinancial year ended 31st March, 2006.

25. The Company has not made any investments during thefinancial year ended 31st March, 2006.

26. The Company has not altered the provisions of the

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AVNIJA PROPERTIES LIMITED

Memorandum with respect to situation of the Company’sregistered office from one State to another during the yearunder scrutiny.

27. The Company has not altered the provisions of theMemorandum with respect to objects of the Company duringthe year under scrutiny.

28. The Company has not altered the provisions of theMemorandum with respect to name of the Company duringthe year under scrutiny.

29. The Company has not altered the provisions of theMemorandum with respect to share capital of the Companyduring the year under scrutiny.

30. The Company has not altered its of Article of Associationduring the financial year.

31. There were no prosecution initiated against or show causenotices received by the Company and no fines or penalties orany other punishment was imposed on the Company duringthe financial year, for offences under the Act.

32. The Company has not received any money as security fromits employees during the financial year,

33. The Company was not required to deduct any contributiontowards Provident Fund during the financial year.

For K. S. & AssociatesKamal Sachdev

Place: New Delhi C.P. No.: 5209Date: 20th April, 2006 ACS: 16619

Annexure B

Form and returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or otherauthorities during the financial year ending 31 st March, 2006

Sl. Form Filed under Date of Whether filed If delay in filingNo. No./Return Section filing within prescribed whether requisite

time Yes/No. additional fee paidYes/No.

1. Annual return 159 19-09-2005 Yes No

2. Annual Report 220 (1) (a) 19-09-2005 Yes No

3. Compliance Certificate 383A 19-09-2005 Yes No

4. Form III for disclosure 187 C 11-04-2005 Yes Noof Beneficial Interest

5. Form III for disclosure 187 C 06-10-2005 Yes Noof Beneficial Interest

Registers as maintained by the Company

STATUTORY REGISTERS

1. Register of Members U/s150

2. Register and returns U/s163

3. Minute Book of Board Meetings & General Meetings

4. Register of Director, Managing Director, Manager and SecretaryU/s 303

5. Register of Directors’ Shareholding U/s 307

Annexure A

6. Register of investments u/s 372A.

7. Register of Contracts u/s 301.

8. Register of Fixed Assets.

OTHER REGISTER

1. Register of Directors’ Attendance

2. Register of Shareholders’ Attendance

3. Register of Share transfer

94

AVNIJA PROPERTIES LIMITED

AUDITORS’ REPORT

The Shareholders,Avnija Properties Limited,Dalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of AvnijaProperties Limited as at 31st March, 2006 and also theannexed Profit and Loss Account and the cash flow statementof the Company for the year ended on that date, from all ofwhich paise have been eliminated. These financial statementsare the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theProfit for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For BATRA KAPUR AND ASSOCIATESChartered Accountants

Ravinder KapurPARTNER

NEW DELHIDated: This the 20

th day of April, 2006

ANNEXURE

Re: AVNIJA PROPERTIES LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order, 2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, no

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AVNIJA PROPERTIES LIMITED

transaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months form the date they became payable;

10. The Company does not have any accumulated lossesexceeding at least 50% of its net worth, and thus theprovisions of clause 4(x) of the Companies (Auditors’ Report)Order, 2003 are not applicable to the Company;

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. In our opinion and according to the explanations given to uswith regard to the transactions in shares, securities,debentures and other instruments, the Company has :

a) maintained proper records of the transactions andcontracts wherever applicable, and timely entries havebeen made therein.

b) made necessary arrangements to hold the investmentsin its own name.

15. According to information and explanations given to us ,theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

16. According to information and explanations given to us, theCompany has not raised any term loan.

17. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

18. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

19. According to information and explanations given to us, theCompany has not issued any debentures during the year.

20. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

21. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

Yours faithfully,For BATRA KAPUR AND ASSOCIATES

Chartered AccountantsRavinder Kapur

PARTNER

NEW DELHIDated: This the 20

thday of April, 2006

96

AVNIJA PROPERTIES LIMITED

BALANCE SHEETAs at 31st March, 2006

As at As at31.03.2006 31.03.2005

Rs. Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised2,49,000 Equity Shares

of Rs. 10/- each 24,90,000 24,90,000

1,000 RedeemableNon cumulativePreferenceShares ofRs. 10/- each 10,000 10,000

25,00,000 25,00,000

Issued, subscribed and paid-up2,49,000 Equity

Shares ofRs. 10/- each 24,90,000 24,90,000

1,000 PreferenceShares ofRs. 10/- each 10,000 10,000

25,00,000 25,00,000(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Company)

RESERVES AND SURPLUSSurplus 3,01,980 2,94,792

CURRENT LIABILITIES AND PROVISIONS

Sundry Creditors 1,102 1,102

Provision for Taxation 5,650 4,950

6,752 6,052

28,08,732 28,00,844

Significant Accounting Policies and Notes at the end of the Profit and Loss Account

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATESChartered AccountantsRavinder KapurPARTNERNew DelhiDated : This the 20thday of April, 2006

As at As at31.03.2006 31.03.2005

Rs. Rs. Rs.ASSETS

FIXED ASSETSLand (Freehold) 24,01,966 24,01,966

CURRENT ASSETS,LOANS & ADVANCESInterest accrued onFixed Deposit 7,707 3,123Balances withScheduled Banks inCurrent Accounts 36,632 89,905Fixed DepositAccounts 3,54,969 3,00,000

3,91,601 3,89,905Advance Tax andTax Deductedat Source 7,458 5,850

4,06,766 3,98,878

28,08,732 28,00,844

H.N. KumarK.V. Mohan

Sanjay S. MittraDIRECTORS

97

AVNIJA PROPERTIES LIMITED

This Previousyear year

INCOME Rs. Rs.

Profit on Sale of Investments - 12,839

Interest on Fixed Deposit 15,918 3123

{Tax Deducted at Source Rs.2,544

( Rs. Nil )}

Miscellaneous Income 99 1,528

16,017 17,490

Profit brought down 7,888 10,770

Surplus from last year 2,94,792 2,84,872

3,02,680 2,95,642

This Previousyear year

EXPENDITURE Rs. Rs.

Filing Fee 1,500 1,500

Auditors Remuneration

Audit Fee 1,102 1,102

For other Services 551 551

Bank Charges 130 95

Demat Account Charges - 386

Professional Fees 1,102 1,080

Loss on Sale of Investments - 1,356

Printing & Stationery 3,744 650

Profit carried down 7,888 10,770

16,017 17,490

Provision for Taxation 700 850

Balance carried to Balance Sheet 3,01,980 2,94,792

3,02,680 2,95,642

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. Significant Accounting Policies:

a) Fixed Assets.

Fixed assets are stated at cost

b) Investments.

Investments are stated at cost.

c) Revenue Recognition.

Revenue is recognised on accrual basis.

2. Information required by para 4-D of Part-II of Schedule VI-Nil.

3. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, D.I. Properties Limited, Geetee Estates

Limited, Shri Rangam Properties Limited, Hemshila Properties Limited, Himshikhar Investment Limited, Dalmia Minerals & Prop-

erties Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers &

Holdings Limited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals & Properties

Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines & Minerals

Limited and Dalmia Sugars Limited

B. No transactions were carried out with the related parties in the ordinary course of business during the year

98

AVNIJA PROPERTIES LIMITED

4. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 3 5 9 6 3 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

2 8 0 9 2 8 0 9

Sources of Funds

Paid-up Capital Reserves & Surplus

2 5 0 0 3 0 2

Secured Loans Unsecured Loans

N I L N I L

Application of Funds

Net Fixed Assets Investments

2 4 0 2 N I L

Net Current Assets Miscellaneous Expenditure

4 0 0 N I L

Accumulated Losses

N I L

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

1 6 0 8

Profit before tax Profit after tax

0 8 0 7

Earning per Share in Rs. Dividend rate %

0 . 0 3 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20thday of April, 2006

99

AVNIJA PROPERTIES LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH,2006Rs.

Cash Flow from operating activities :

Net Profit before tax 7,888

Adjustments for working capital changes :

Trade and other Receivables (4,584)

Cash generated from operations 3,304

Direct Taxes Paid (1,608)

Net cash from operating activities 1,696

Net change in cash & cash equivalents 1,696

Cash & cash equivalents ( opening balance ) 3,89,905

Cash & cash equivalents ( closing balance ) 3,91,601

Change in cash & cash equivalents 1,696

As per our report of even date attachedFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MitraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

100

HEMSHILA PROPERTIES LIMITED

ANNUAL REPORT2005-2006

HEMSHILA PROPERTIES LIMITED

DIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri H.N. Kumar Batra Kapur & Associates Hansalaya,11th Floor, Dalmiapuram-621651Shri K.V.Mohan Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri Sanjay S.Mittra New Delhi-110001 (Tamil Nadu)

DIRECTORS’ REPORTFor the year ended 31st March, 2006

We have pleasure in presenting the Tenth Annual Report and theaudited Statements of Account of the Company for the year ended31st March, 2006.

WORKING RESULTS

The financial results of operations for the year under report are asfollows:

This Previousyear year

Rs. Rs.

Profit for the year 6,041 15,596Less: Provision for Taxation 600 1,250

Profit after Taxation 5,441 14,346Add: Surplus from previous year 2,79,954 2,65,608

Surplus carried to Balance Sheet 2,85,395 2,79,954

DIVIDEND

With a view to conserve the resources, your Directors do notrecommend any payment of dividend for the year.

DIRECTORATE

Shri H.N. Kumar retires by rotation at the ensuing Annual GeneralMeeting and is eligible for re-appointment. The Company hasobtained necessary intimation from him in terms of the Companies(Disqualification of Directors under Section 274(1)(g) of theCompanies Act, 1956) Rules, 2003 to the effect that he has notincurred any disqualification under section 274(1)(g) of theCompanies Act, 1956 and he is eligible to be reappointed as aDirector of the Company.

EMPLOYEE REMUNERATION

During the year, there had been no employee in receipt ofremuneration in excess of the amounts mentioned under Section217 (2A) of the Companies Act, 1956.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION,EXCHANGE EARNINGS ETC.

Conservation of energy, technology absorption, foreign exchangeearnings and outgo are not applicable, as the Company is notengaged in any manufacturing activities.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217 (2AA) of the CompaniesAct, 1956, your Directors declare that :-

(i) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(ii) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(iv) the Directors had prepared the annual accounts on a goingconcern basis.

COMPLIANCE CERTIFICATE

In terms of the proviso to section 383A of the Companies Act,1956, compliance certificate obtained from M/s. K. S. & Associates,Company Secretaries, for the year ended 31st March, 2006 isannexed.

AUDITORS

M/s. Batra Kapur & Associates, Chartered Accountants, Auditorsof the Company retire at the conclusion of the ensuing AnnualGeneral Meeting and are eligible for re-appointment. The Companyhas obtained a certificate from the auditors, as required underSection 224 of the Companies Act, 1956 to the effect that their re-appointment, if made, would be in conformity with the limits, specifiedin the said Section.

For and on behalf of the Board

H.N. KumarK.V. Mohan

Sanjay S. MittraNew Delhi DIRECTORSDated: 20th April, 2006

101

HEMSHILA PROPERTIES LIMITED

COMPLIANCE CERTIFICATE

Registration No. of Company -18-35962Nominal Capital: Rs. 25,00,000/-

To,The Members,Hemshila Properties LimitedDalmiapuram

We have examined the registers, records, books and papers ofHemshila Properties Limited, (the Company) as required to bemaintained under the Companies Act, 1956, (the Act) and the rulesmade thereunder and also the provisions contained in theMemorandum & Articles of Association of the Company for thefinancial year ended on 31st March, 2006. In our opinion and to thebest of our information and according to the examinations carriedout by us and explanations furnished to us by the Company, itsofficers and agents, we certify that in respect of the aforesaidfinancial year:

1. The Company has kept and maintained all registers as statedin Annexure ‘A’ to this certificate, as per the provisions of theAct and the rules made thereunder and all entries thereinhave been duly recorded.

2. The Company has duly filed the forms and returns as statedin Annexure ‘B’ to this certificate, with the Registrar ofCompanies, Regional Director, Central Government, CompanyLaw Board or other authorities within the time prescribedunder the Act and the rules made thereunder.

3. The Company, being a public limited Company, comments arenot required.

4. The Board of Directors duly met Four times respectively on27th April, 2005, 15th September, 2005, 26th December, 2005and 20th March, 2006 in respect of which meetings propernotices were given and the proceedings were properlyrecorded and signed in the Minutes Book maintained for thepurpose.

5. The Company was not required to close its Register ofMembers during the financial year.

6. The annual general meeting for the financial year ended on31st March, 2005 was held on 22nd August, 2005 after givingdue notice to the members of the Company and the resolutionspassed thereat were duly recorded in Minutes Book maintainedfor the purpose.

7. No extraordinary general meeting was held during the financialyear.

8. The Company has not advanced any loans to its directors orpersons or firms or companies referred in the section 295 ofthe Act.

9. The Company has not entered into any contracts falling withinthe purview the provisions of section 297 of the Act.

10. The Company was not required to make any entries in theregister maintained under section 301 of the Act.

11. As there were no instances falling within the purview ofsection 314 of the Act, the Company has not obtained anyapprovals from the Board of Directors, members or CentralGovernment

12. The Company has not issued any duplicate share certificatesduring the financial year.

13. The Company :

(i) has delivered all the share certificates on lodgmentthereof for transfer in accordance with the provisionsof the Act. There were no transmission or allotment ofsecurities during the year;

(ii) was not required to deposit any amount in a separateBank account as no dividend was declared during thefinancial year.

(iii) was not required to post warrants to any members ofthe Company as no dividend was declared during thefinancial year.

(iv) has no unpaid dividend or other such liabilities whichhave remained unpaid as stated.

(v) has duly complied with the requirement of section 217 ofthe Act.

14. The Board of Directors of the Company is duly constitutedand no appointment of Directors, additional directors, alternatedirectors and directors to fill casual vacancies have beenmade during the year under scrutiny.

15. The Company has not appointed any Managing Director /Whole-time director/manager during the financial year.

16. The Company has not appointed any sole–selling agentsduring the financial year.

17. The Company was not required to obtain any approval of theCentral Government, Company Law Board, Regional Director,Registrar or such other Authorities prescribed under thevarious provisions of the Act, during the financial year.

18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisionsof the Act and the rules made thereunder.

19. The Company has not issued any shares, debentures orother securities during the financial year.

20. The Company has not bought back any shares during thefinancial year.

21. There was no redemption of preference shares during thefinancial year.

22. There were no transaction necessitating the Company tokeep in abeyance the rights to dividend, rights shares andbonus shares pending registration of transfer of shares incompliance with the provisions of the Act.

23. The Company has not invited or accepted any deposits fallingwithin the purview of section 58A of the Companies Act,1956 during the financial year ended on 31st March, 2006.

24 The Company has not made any borrowings during thefinancial year ended on 31st March, 2006.

25. The Company has made not any investments during thefinancial year ended on 31st March, 2006.

26. The Company has not altered the provisions of theMemorandum with respect to situation of the Company’sregistered office from one State to another during the yearunder scrutiny.

102

HEMSHILA PROPERTIES LIMITED

27. The Company has not altered the provisions of theMemorandum with respect to objects of the Company duringthe year under scrutiny.

28. The Company has not altered the provisions of theMemorandum with respect to name of the Company duringthe year under scrutiny .

29. The Company has not altered the provisions of theMemorandum with respect to share capital of the Companyduring the year under scrutiny.

30. The Company has not altered its Article of Association duringthe financial year.

31. There were no prosecution initiated against or show causenotices received by the Company and no fines or penalties orany other punishment was imposed on the Company during

the financial year, for offences under the Act.

32. The Company has not received any money as security fromits employees during the financial year.

33 The Company was not required to deduct any contributiontowards Provident Fund during the financial year.

For K. S. & AssociatesKamal Sachdev

Place: New Delhi C.P. No.: 5209Date: 20th April, 2006 ACS: 16619

Annexure B

Form and returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or otherauthorities during the financial year ending 31 st March, 2006

Sl. Form Filed under Date of Whether filed If delay in filingNo. No./Return Section filing within prescribed whether requisite

time Yes/No. additional fee paidYes/No.

1. Annual return 159 19-09-2005 Yes No

2. Annual Report 220 (1) (a) 19-09-2005 Yes No

3. Compliance Certificate 383A 19-09-2005 Yes No

4. Form III for disclosure 187 C 11-04-2005 Yes Noof Beneficial Interest

5. Form III for disclosure 187 C 06-10-2005 Yes Noof Beneficial Interest

Registers as maintained by the Company

STATUTORY REGISTERS

1. Register of Members U/s150

2. Register and returns U/s163

3. Minute Book of Board Meetings & General Meetings

4. Register of Director, Managing Director, Manager and SecretaryU/s 303

5. Register of Directors’ Shareholding U/s 307

Annexure A

6. Register of investments u/s 372A.

7. Register of Contracts u/s 301.

8. Register of Fixed Assets.

OTHER REGISTERS

1. Register of Directors’ Attendance

2. Register of Shareholders’ Attendance

3. Register of Share transfer

103

HEMSHILA PROPERTIES LIMITED

AUDITORS’ REPORT

The Shareholders,Hemshila Properties Limited,Dalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of HemshilaProperties Limited as at 31st March, 2006 and also theannexed Profit and Loss Account and the cash flow statementof the Company for the year ended on that date, from all ofwhich paise have been eliminated. These financial statementsare the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by the CompaniesAct, 1956 in the manner so required and give a true andfair view in conformity with the accounting principlesgenerally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theProfit for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For BATRA KAPUR AND ASSOCIATESChartered Accountants

Ravinder KapurPARTNER

NEW DELHIDated: This the 20

th day of April, 2006

ANNEXURE

Re: HEMSHILA PROPERTIES LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order, 2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, no

104

HEMSHILA PROPERTIES LIMITED

transaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The Company does not have any accumulated lossesexceeding at least 50% of its net worth, and thus theprovisions of clause 4(x) of the Companies (Auditors’ Report)Order, 2003 are not applicable to the Company;

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. In our opinion and according to the explanations given to uswith regard to the transactions in shares, securities,debentures and other instruments, the Company has :

a) maintained proper records of the transactions andcontracts wherever applicable, and timely entries havebeen made therein.

b) made necessary arrangements to hold the investmentsin its own name.

15. According to information and explanations given to us, theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

16. According to information and explanations given to us, theCompany has not raised any term loan.

17. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment.

18. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

19. According to information and explanations given to us, theCompany has not issued any debentures during the year.

20. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

21. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

Yours faithfully,For BATRA KAPUR AND ASSOCIATES

Chartered AccountantsRavinder Kapur

PARTNER

NEW DELHIDated: This the 20

th day of April, 2006

105

HEMSHILA PROPERTIES LIMITED

BALANCE SHEETAs at 31st March, 2006

As at As at31.03.2006 31.03.2005

Rs . Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised2,49,000 Equity Shares

of Rs. 10/- each 24,90,000 24,90,000

1,000 RedeemableNon cumulativePreference Sharesof Rs. 10/- each 10,000 10,000

25,00,000 25,00,000

Issued, subscribed and paid-up2,49,000 Equity Shares of

Rs. 10/- each 24,90,000 24,90,0001,000 Preference

Shares ofRs. 10/- each 10,000 10,000

25,00,000 25,00,000(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Company)

RESERVES AND SURPLUSSurplus 2,85,395 2,79,954

Unsecured LoansLoan from Dalmia Cement (Bharat)Limited - the holding company 6,50,000 6,50,000

CURRENT LIABILITIES AND PROVISIONSSundry Creditors 1,102 1,102Provision for Taxation 4,900 4,300

6,002 5,402

34,41,397 34,35,356

Significant Accounting Policies and Notes at the end of the Profit and Loss Account

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATESChartered AccountantsRavinder KapurPARTNERNew DelhiDated : This the 20th day of April, 2006

As at As at31.03.2006 31.03.2005

Rs. Rs . Rs. Rs.ASSETS

FIXED ASSETSLand (Free hold) 29,00,723 29,00,723

INVESTMENTS (At Cost)

As per Schedule I 2,00,000 2,00,000

CURRENT ASSETS,LOANS & ADVANCESInterest accured onFixed deposit 818 565Balances withScheduled Banks inCurrent Accounts 45,478 53,537Fixed DepositAccounts 2,85,728 2,75,000

3,31,206 3,28,537

Advance Tax andTax Deductedat Source 8,650 5,531

3,40,674 3,34,633

34,41,397 34,35,356

H.N. KumarK.V. Mohan

Sanjay S. MittraDIRECTORS

106

HEMSHILA PROPERTIES LIMITED

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. Significant Accounting Policies:

a) Fixed Assets.

Fixed assets are stated at cost

b) Investments.

Investments are stated at cost.

c) Revenue Recognition.

Revenue is recognised on accrual basis.

2. Information required by para 4-D of Part-II of Schedule VI-Nil.

3. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, D.I. Properties Limited, Avnija Properties

Limited, Shri Rangam Properties Limited, Geetee Estates Limited, Himshikhar Investment Limited, Dalmia Minerals & Properties

Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers & Holdings

Limited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals & Properties Limited, Sri

Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines & Minerals Limited and

Dalmia Sugars Limited

B. No transactions were carried out with the related parties in the ordinary course of business during the year

This Previousyear year

INCOME Rs. Rs.

Interest Income on Fixed Deposit 14,100 12,678

{Tax Dedducted at Source Rs. 3,119

(Rs.2,511)}

Profit on Sale Investments - 8,254

Interest on Income tax refund - 28

14,100 20,960

Profit brought down 6,041 15,596

Surplus from last year 2,79,954 2,65,608

2,85,995 2,81,204

This Previousyear year

EXPENDITURE Rs. Rs.

Filing Fee 1,500 1,500

Auditors Remuneration

Audit Fee 1,102 1,102

For other Service 551 551

Bank Charges 60 95

Demat Account Charges - 386

Professional Charges 1,102 1,080

Printing & Stationery 3,744 650

Profit carried down 6,041 15,596

14,100 20,960

Provision for Taxation 600 1,250

Balance carried to Balance Sheet 2,85,395 2,79,954

2,85,995 2,81,204

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

107

HEMSHILA PROPERTIES LIMITED

4. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 3 5 9 6 2 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

3 4 4 1 3 4 4 1

Sources of Funds

Paid-up Capital Reserves & Surplus

2 5 0 0 2 8 6

Secured Loans Unsecured Loans

N I L 6 5 0

Application of Funds

Net Fixed Assets Investments

2 9 0 1 2 0 0

Net Current Assets Miscellaneous Expenditure

3 3 5 N I L

Accumulated Losses

N I L

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

1 4 0 8

Profit before tax Profit after tax

0 6 0 5

Earning per Share in Rs. Dividend rate %

0 . 0 2 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

108

HEMSHILA PROPERTIES LIMITED

Schedule - I

Investments (Other than Trade investments-Not in Companies under the same management)

As at 31.03.2006 As at 31.03.2005No.of Face Total No. of Face Total

Particulars units Value Value units Value ValueRs. Rs. Rs. Rs.

UNITS OF MUTUAL FUND

Brila Floating Rate Fund Long Term Plan 18,495 1,84,954 2,00,000 18,495 1,84,954 2,00,000

2,00,000 2,00,000

Book Value Market ValueRs. Rs.

Quoted 2,00,000 2,13,681Unquoted -

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

109

HEMSHILA PROPERTIES LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH,2006Rs.

Cash Flow from operating activities :

Net Profit before tax 6,041

Adjustments for working capital changes :

Trade and other Receivables (253)

Cash generated from operations 5,788

Direct Taxes Paid (3,119)

Net cash from operating activities 2,669

Net change in cash & cash equivalents 2,669

Cash & cash equivalents ( opening balance ) 3,28,537

Cash & cash equivalents ( closing balance ) 3,31,206

Change in cash & cash equivalents 2,669

As per our report of even date attachedFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORS

New DelhiDated : This the 20th day of April, 2006

110

GEETEE ESTATES LIMITED

ANNUAL REPORT2005-2006

GEETEE ESTATES LIMITED

DIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri H.N. Kumar Batra Kapur & Associates Hansalaya,11th Floor, Dalmiapuram-621651Shri K.V.Mohan Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri Sanjay S.Mittra New Delhi-110001 (Tamil Nadu)

DIRECTORS’ REPORT

For the year ended 31st March, 2006

We have pleasure in presenting the Tenth Annual Report and theaudited Statements of Account of the Company for the year ended31st March, 2006.

WORKING RESULTS

The financial results of operations for the year under report are asfollows:

This Previousyear year

Rs. Rs.

Profit for the year 45,100 36,361Less: Provision for Taxation 15,500 10,500

Profit after Taxation 29,600 25,861Add: Surplus / (loss) from previous year 259 (25,602)

Surplus carried to Balance Sheet 29,859 259

DIVIDEND

With a view to conserve the resources, your Directors do notrecommend any payment of dividend for the year.

DIRECTORATE

Shri H.N. Kumar, retires by rotation at the ensuing Annual GeneralMeeting and is eligible for re-appointment. The Company hasobtained necessary intimation from him in terms of the Companies(Disqualification of Directors under Section 274(1)(g) of theCompanies Act, 1956) Rules, 2003 to the effect that he has notincurred any disqualification under section 274(1)(g) of theCompanies Act, 1956 and he is eligible to be reappointed as aDirector of the Company.

EMPLOYEE REMUNERATION

During the year, there had been no employee in receipt ofremuneration in excess of the amounts mentioned under Section217 (2A) of the Companies Act, 1956.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION,EXCHANGE EARNINGS ETC.

Conservation of energy, technology absorption, foreign exchange

earnings and outgo are not applicable, as the Company is notengaged in any manufacturing activities.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217 (2AA) of the CompaniesAct, 1956, your Directors declare that :-

(i) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(ii) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(iv) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Batra Kapur & Associates, Chartered Accountants, Auditorsretire at the conclusion of the ensuing Annual General Meeting andare eligible for re-appointment. The Company has obtained acertificate from the auditors, as required under Section 224 of theCompanies Act, 1956 to the effect that their re-appointment, ifmade, would be in conformity with the limits, specified in the saidSection.

For and on behalf of the Board

H.N. KumarK.V. Mohan

Sanjay S. MittraNew Delhi DIRECTORSDated: 20

th April, 2006

111

GEETEE ESTATES LIMITED

AUDITORS’ REPORT

The Shareholders,Geetee Estates Limited,Dalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of GeeteeEstates Limited as at 31st March, 2006 and also the annexedProfit and Loss Account and the cash flow statement of theCompany for the year ended on that date, from all of whichpaise have been eliminated. These financial statements arethe responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information and accordingto the explanations given to us, the said accounts givethe information required by the Companies Act, 1956 in themanner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India :

a) in the case of the Balance Sheet, of the state of affairsof the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of the Profitfor the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For BATRA KAPUR AND ASSOCIATESChartered Accountants

Ravinder KapurPARTNER

NEW DELHIDated: This the 20

th day of April, 2006

ANNEXURE

Re: GEETEE ESTATES LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order, 2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, notransaction was required to be entered in the register(s)

112

GEETEE ESTATES LIMITED

maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months form the date they became payable;

10. The Company does not have any accumulated lossesexceeding at least 50% of its net worth, and thus theprovisions of clause 4(x) of the Companies (Auditors’ Report)Order, 2003 are not applicable to the Company;

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. In our opinion and according to the explanations given to uswith regard to the transactions in shares, securities,debentures and other instruments, the Company has :

a) maintained proper records of the transactions andcontracts wherever applicable, and timely entries have

been made therein.

b) made necessary arrangements to hold the investmentsin its own name.

15. According to information and explanations given to us, theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

16. According to information and explanations given to us, theCompany has not raised any term loan.

17. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment.

18. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

19. According to information and explanations given to us, theCompany has not issued any debentures during the year.

20. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

21. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

Yours faithfully,For BATRA KAPUR AND ASSOCIATES

Chartered AccountantsRavinder Kapur

PARTNER

NEW DELHIDated: This the 20

th day of April, 2006

113

GEETEE ESTATES LIMITED

BALANCE SHEETAs at 31st March, 2006

As at As at31.3.2006 31.3.2005

Rs . Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised2,49,000 Equity Shares

of Rs. 10/- each 24,90,000 24,90,000

1,000 RedeemableNon cumulativePreference Sharesof Rs. 10/- each 10,000 10,000

25,00,000 25,00,000

Issued, subscribed and paid-up49,915 Equity Shares of

Rs. 10/- each 4,99,150 4,99,15085 Preference

Shares ofRs. 10/- each 850 850

5,00,000 5,00,000(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Company)

RESERVES AND SURPLUSSurplus 29,859 259

Unsecured LoansLoan from Dalmia Cement (Bharat)Limited - the holding company 1,04,84,680 19,24,680

CURRENT LIABILITIES AND PROVISIONSSundry Creditors 1,102 1,102Provision for Taxation 26,000 10,500

1,10,41,641 24,36,541

Significant Accounting Policies and Notes at the end of the Profit and Loss Account

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATESChartered AccountantsRavinder KapurPARTNERNew DelhiDated : This the 20th day of April, 2006

As at As at31.3.2006 31.3.2005

Rs. Rs . Rs. Rs.ASSETS

FIXED ASSETSLand (Free hold)As per Last Balance sheet 22,98,215 22,98,215Add :- Purchasedduring the year 86,20,223 -

1,09,18,438 22,98,215

CURRENT ASSETS,LOANS & ADVANCESInterest accured onFixed deposit 350 263Balances withScheduled Banks inCurrent Accounts 16,319 46,877Fixed DepositAccounts 80,000 80,000

96,319 1,26,877

Advance Tax andTax Deductedat Source 26,534 11,186

1,23,203 1,38,326

1,10,41,641 24,36,541

H.N. KumarK.V. Mohan

Sanjay S. MittraDIRECTORS

114

GEETEE ESTATES LIMITED

This Previousyear year

INCOME Rs. Rs.

Interest Income on Fixed Deposit 4,051 4,258

Income from Consultancy Services 47,000 35,000

51,051 39,258

Profit brought down 45,100 36,361

Surplus from last year 259 -

45,359 36,361

This Previousyear year

EXPENDITURE Rs. Rs.

Filing Fee 1,000 1,000

Auditors Remuneration

Audit Fee 1,102 1,102

Bank Charges 105 145

Printing & Stationery 3,744 650

Profit carried down 45,100 36,361

51,051 39,258

Loss from last year - 25,602

Provision for Taxation 15,500 10,500

Balance carried to Balance Sheet 29,859 259

45,359 36,361

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. Significant Accounting Policies:

a) Fixed Assets.

Fixed assets are stated at cost.

b) Revenue Recognition.

Revenue is recognised on accrual basis.

2. Information required by para 4-D of Part-II of Schedule VI-Nil.

3. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, D.I. Properties Limited, Avnija Properties

Limited, Shri Rangam Properties Limited, Hemshila Properties Limited, Himshikhar Investment Limited, Dalmia Minerals &

Properties Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers &

Holdings Limited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals & Properties

Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines & Minerals

Limited and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

Unsecured Loan from Holding Company Rs. 85,60,000

115

GEETEE ESTATES LIMITED

4. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 3 5 9 6 5 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

1 1 0 4 2 1 1 0 4 2

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 3 0

Secured Loans Unsecured Loans

N I L 1 0 4 8 5

Application of Funds

Net Fixed Assets Investments

1 0 9 1 9 N I L

Net Current Assets Miscellaneous Expenditure

9 6 N I L

Accumulated Losses

N I L

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

5 1 0 6

Profit before tax Profit after tax

4 5 3 0

Earning per Share in Rs. Dividend rate %

0 . 5 9 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

116

GEETEE ESTATES LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH,2006Rs.

Cash Flow from operating activities :

Net Profit before tax 45,100

Adjustments for working capital changes :

Trade and other Receivables (87)

Cash generated from operations 45,013

Direct Taxes Paid (15,348)

Net cash from operating activities 29,665

Cash Flow from Investing activities :

Purchase of Fixed Assets (86,20,223)

Net cash used in invsting activities (86,20,223)

Cash Flow from Financing activities :

Proceeds from unsecured loans 85,60,000

Net cash used in Financing activities 85,60,000

Net change in cash & cash equivalents 30,558

Cash & cash equivalents ( opening balance ) 126,877

Cash & cash equivalents ( closing balance ) 96,319

Change in cash & cash equivalents (30,558)

As per our report of even date attachedFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

117

D.I. PROPERTIES LIMITED

ANNUAL REPORT2005-2006

D.I. PROPERTIES LIMITED

DIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri H.N. Kumar Batra Kapur & Associates Hansalaya,11th Floor, Dalmiapuram-621651Shri K.V.Mohan Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri Sanjay S.Mittra New Delhi-110001 (Tamil Nadu)

DIRECTORS’ REPORT

For the year ended 31st March, 2006

We have pleasure in presenting the Tenth Annual Report and theaudited Statements of Account of the Company for the year ended31st March, 2006.

WORKING RESULTS

The financial results of operations for the year under report are asfollows:

This Previousyear year

Rs. Rs.

Profit for the year 43,136 30,215Less: Provision for Taxation 15,000 2,400

Profit after Taxation 28,136 27,815Add: Surplus / from previous year 2,92,262 2,64,447

Surplus carried to Balance Sheet 3,20,398 2,92,262

DIVIDEND

With a view to conserve the resources, your Directors do notrecommend any payment of dividend for the year.

DIRECTORATE

Shri H.N. Kumar, retires by rotation at the ensuing Annual GeneralMeeting and is eligible for re-appointment. The Company hasobtained necessary intimation from him in terms of the Companies(Disqualification of Directors under Section 274(1)(g) of theCompanies Act, 1956) Rules, 2003 to the effect that he has notincurred any disqualification under section 274(1)(g) of theCompanies Act, 1956 and he is eligible to be reappointed as aDirector of the Company.

EMPLOYEE REMUNERATION

During the year, there had been no employee in receipt ofremuneration in excess of the amounts mentioned under Section217 (2A) of the Companies Act, 1956.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION,EXCHANGE EARNINGS ETC.

Conservation of energy, technology absorption, foreign exchangeearnings and outgo are not applicable, as the Company is notengaged in any manufacturing activities.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217 (2AA) of the CompaniesAct, 1956, your Directors declare that :-

(i) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(ii) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(iv) the Directors had prepared the annual accounts on a goingconcern basis.

COMPLIANCE CERTIFICATE

In terms of the proviso to section 383A of the Companies Act,1956, compliance certificate obtained from M/s K.S. AssociatesCompany Secretaries for the year ended 31st March, 2006 isannexed.

AUDITORS

M/s. Batra Kapur & Associates, Chartered Accountants, Auditorsof the Company retire at the conclusion of the ensuing AnnualGeneral Meeting and are eligible for re-appointment. The Companyhas obtained a certificate from the auditors, as required underSection 224 of the Companies Act, 1956 to the effect that their re-appointment, if made, would be in conformity with the limits, specifiedin the said Section.

For and on behalf of the Board

H.N. KumarK.V. Mohan

Sanjay S. MittraNew Delhi DIRECTORSDated: 20

th April, 2006

118

D.I. PROPERTIES LIMITED

COMPLIANCE CERTIFICATE

Registration No. of Company 18-35964Nominal Capital: Rs. 25,00,000/-

To,The Members,D. I. Properties LimitedDalmiapuram

We have examined the registers, records, books and papers ofD. I. Properties Limited (the Company) as required to be maintainedunder the Companies Act, 1956, (the Act) and the rules madethereunder and also the provisions contained in the Memorandum& Articles of Association of the Company for the financial yearended on 31st March 2006. In our opinion and to the best of ourinformation and according to the examinations carried out by usand explanations furnished to us by the Company, its officers andagents, we certify that in respect of the aforesaid financial year:

1. The Company has kept and maintained all registers as statedin Annexure ‘A’ to this certificate, as per the provisions of theAct and the rules made thereunder and all entries thereinhave been duly recorded.

2. The Company has duly filed the forms and returns as statedin Annexure ‘B’ to this certificate, with the Registrar ofCompanies, Regional Director, Central Government, CompanyLaw Board or other authorities within the time prescribedunder the Act and the rules made thereunder.

3. The Company, being a public limited Company, comments arenot required.

4. The Board of Directors duly met Four Times respectively on27th April, 2005, 15th September, 2005, 26th December, 2005and 20th March, 2006 in respect of which meetings propernotices were given and the proceeding were properlyrecorded and signed in the Minutes Book maintained for thepurpose.

5. The Company was not required to close its Register ofMembers during the financial year.

6. The annual general meeting for the financial year ended on31st March, 2005 was held on 22nd August, 2005 after givingdue notice to the members of the Company and the resolutionspassed thereat were duly recorded in Minutes Book maintainedfor the purpose.

7. No extra ordinary general meeting was held during the financialyear.

8. The Company has not advanced any loans to its directors orpersons or firms or companies referred in the section 295 ofthe Act.

9. The Company has not entered into any contracts falling withinthe purview the provisions of section 297 of the Act

10. The Company was not required to make any entries in theregister maintained under section 301 of the Act.

11. As there were no instances falling within the purview ofsection 314 of the Act, the Company has not obtained anyapprovals from the Board of Directors, members or CentralGovernment.

12. The Company has not issued any duplicate share certificatesduring the financial year.

13. The Company :

(i) has delivered all the share certificates on lodgmentthereof for transfer in accordance with the provisionsof the Act. There were no transmission or allotment ofsecurities during the year;

(ii) was not required to deposit any amount in a separateBank account as no dividend was declared during thefinancial year.

(iii) was not required to post warrants to any members ofthe Company as no dividend was declared during thefinancial year.

(iv) has no unpaid dividend or other such liabilities whichhave remained unpaid as stated.

(v) has duly complied with the requirement of section 217 ofthe Act.

14. The Board of Directors of the Company is duly constitutedand no appointment of Directors, additional directors, alternatedirectors and directors to fill casual vacancies have beenmade during the year under scrutiny.

15. The Company has not appointed any Managing Director /Whole- time director /manager during the financial year.

16. The Company has not appointed any sole –selling agentsduring the financial year.

17. The Company was not required to obtain any approval of theCentral Government, Company Law Board, Regional Director,Registrar or such other Authorities prescribed under thevarious provisions of the Act, during the financial year.

18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisionsof the Act and the rules made thereunder.

19. The Company has not issued any shares, debentures orother securities during the financial year.

20. The Company has not bought back any shares during thefinancial year.

21. There was no redemption of preference shares during thefinancial year.

22. There were no transaction necessitating the Company tokeep in abeyance the rights to dividend, rights shares andbonus shares pending registration of transfer of shares incompliance with the provisions of the Act.

23. The Company has not invited or accepted any deposits fallingwithin the purview of section 58A of the Companies Act,1956 during the financial year ended on 31st March, 2006.

24 The Company has not made any borrowings during thefinancial year ended on 31st March, 2006.

25. The Company has not given any loans or advances orguarantees or provided securities to other bodies corporateand consequently no entries have been made in the registerkept for the purpose.

119

D.I. PROPERTIES LIMITED

26. The Company has not altered the provisions of theMemorandum with respect to situation of the Company’sregistered office from one State to another during the yearunder scrutiny.

27. The Company has not altered the provisions of theMemorandum with respect to objects of the Company duringthe year under scrutiny.

28. The Company has not altered the provisions of theMemorandum with respect to name of the Company duringthe year under scrutiny.

29. The Company has not altered the provisions of theMemorandum with respect to share capital of the Companyduring the year under scrutiny.

30. The Company has not altered Articles of Association duringthe financial year.

31. There were no prosecution initiated against or show causenotices received by the Company and no fines or penalties orany other punishment was imposed on the Company duringthe financial year, for offences under the Act.

32. The Company has not received any money as security fromits employees during the financial year,

33 The Company was not required to deduct any contributiontowards Provident Fund during the financial year.

For K. S. & AssociatesKamal Sachdev

Place: New Delhi C.P. No.: 5209Date: 20th April, 2006 ACS: 16619

Annexure B

Form and returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or otherauthorities during the financial year ending 31 st March, 2006

Sl. Form Filed under Date of Whether filed If delay in filingNo. No./Return Section filing within prescribed whether requisite

time Yes/No. additional fee paidYes/No.

1. Annual return 159 19-09-2005 Yes No

2. Annual Report 220 (1) (a) 19-09-2005 Yes No

3. Compliance Certificate 383A 19-09-2005 Yes No

4. Form III for disclosure 187 C 11-04-2005 Yes Noof Beneficial Interest

5. Form III for disclosure 187 C 06-10-2005 Yes Noof Beneficial Interest

Registers as maintained by the Company

STATUTORY REGISTERS

1. Register of Members U/s150

2. Register and returns U/s163

3. Minute Book of Board Meetings & General Meetings

4. Register of Director, Managing Director, Manager and SecretaryU/s 303

5. Register of Directors’ Shareholding U/s 307

Annexure A

6. Register of Contracts u/s 301.

7. Register of Fixed Assets.

OTHER REGISTER

1. Register of Directors’ Attendance

2. Register of Shareholders’ Attendance

3. Register of Share transfer

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D.I. PROPERTIES LIMITED

AUDITORS’ REPORT

The Shareholders,D.I. Properties Limited,Dalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of D.I. PropertiesLimited as at 31st March, 2006 and also the annexed Profitand Loss Account and Cash flow statement of the Companyof the Company for the year ended on that date, from all ofwhich paise have been eliminated. These financial statementsare the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theProfit for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For BATRA KAPUR AND ASSOCIATESChartered Accountants

Ravinder KapurPARTNER

NEW DELHIDated: This the 20

th day of April, 2006

ANNEXURE

Re: D.I. PROPERTIES LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order, 2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, no

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D.I. PROPERTIES LIMITED

transaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The Company does not have any accumulated lossesexceeding at least 50% of its net worth, and thus theprovisions of clause 4(x) of the Companies (Auditors’ Report)Order, 2003 are not applicable to the Company;

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. In our opinion and according to the explanations given to uswith regard to the transactions in shares, securities,debentures and other instruments, the Company has :

a) maintained proper records of the transactions and

contracts wherever applicable, and timely entries havebeen made therein.

b) made necessary arrangements to hold the investmentsin its own name.

15. According to information and explanations given to us, theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

16. According to information and explanations given to us, theCompany has not raised any term loan.

17. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

18. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

19. According to information and explanations given to us, theCompany has not issued any debentures during the year.

20. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

21. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

Yours faithfully,For BATRA KAPUR AND ASSOCIATES

Chartered AccountantsRavinder Kapur

PARTNER

NEW DELHIDated: This the 20

th day of April, 2006

122

D.I. PROPERTIES LIMITED

BALANCE SHEETAs at 31st March, 2006

As at As at31.3.2006 31.3.2005

Rs . Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised2,49,000 Equity Shares

of Rs. 10/- each 24,90,000 24,90,000

1,000 RedeemableNon cumulativePreference Sharesof Rs. 10/- each 10,000 10,000

25,00,000 25,00,000

Issued, subscribed and paid-up2,49,000 Equity Shares of

Rs. 10/- each 24,90,000 24,90,0001,000 Preference

Shares ofRs. 10/- each 10,000 10,000

25,00,000 25,00,000(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Company)

RESERVES AND SURPLUSSurplus 3,20,398 2,92,262

Unsecured LoansLoan from Dalmia Cement (Bharat)Limited - the holding company 3,50,000 3,50,00

CURRENT LIABILITIES AND PROVISIONSSundry Creditors 1,102 1,102Provision for Taxation 17,400 2,400

31,88,900 31,45,764

Significant Accounting Policies and Notes at the end of the Profit and Loss AccountAnnexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

As at As at31.3.2006 31.3.2005

Rs. Rs . Rs. Rs.ASSETS

FIXED ASSETSLand (Free hold) 30,56,766 30,56,766

CURRENT ASSETS,LOANS & ADVANCESInterest accured onFixed deposit 187 -Balances withScheduled Banks inCurrent Accounts 35,007 86,578Fixed DepositAccounts 80,000 -

1,15,007 86,578

Advance Tax andTax Deductedat Source 16,940 2,420

1,32,134 88,998

31,88,900 31,45,764

123

D.I. PROPERTIES LIMITED

This Previousyear year

INCOME Rs. Rs.

Income from Consultancy Services 50,000 35,000

Interest on Fixed Deposit 1,195 —

Interest on Income Tax Refund — 28

51,195 35,028

Profit brought down 43,136 30,215

Surplus from last year 2,92,262 2,64,447

3,35,398 2,94,662

This Previousyear year

EXPENDITURE Rs. Rs.

Filing Fee 1,500 1,500

Auditors Remuneration

Audit Fee 1,102 1,102

For other Services 551 -

Bank Charges 60 95

Demat Account Charges - 386

Professional Fees 1,102 1,080

Printing & Stationery 3,744 650

Profit carried down 43,136 30,215

51,195 35,028

Provision for Taxation 15,000 2,400

Balance carried to Balance Sheet 3,20,398 2,92,262

3,35,398 2,94,662

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. Significant Accounting Policies:

a) Fixed Assets.

Fixed assets are stated at cost

b) Revenue Recognition.

Revenue is recognised on accrual basis.

2. Information required by para 4-D of Part-II of Schedule VI-Nil.

3. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, Geetee Estates

Limited, Shri Rangam Properties Limited, Hemshila Properties Limited, Himshikhar Investment Limited, Dalmia Minerals &

Properties Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers &

Holdings Limited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals & Properties

Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines & Minerals

Limited and Dalmia Sugars Limited

B. No transactions were carried out with the related parties in the ordinary course of business during the year

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D.I. PROPERTIES LIMITED

4. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 3 5 9 6 4 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

3 1 8 9 3 1 8 9

Sources of Funds

Paid-up Capital Reserves & Surplus

2 5 0 0 3 2 0

Secured Loans Unsecured Loans

N I L 3 5 0

Application of Funds

Net Fixed Assets Investments

3 0 5 7 N I L

Net Current Assets Miscellaneous Expenditure

1 1 3 N I L

Accumulated Losses

N I L

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

5 1 0 8

Profit before tax Profit after tax

4 3 2 8

Earning per Share in Rs. Dividend rate %

0 . 1 1 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

125

D.I. PROPERTIES LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006Rs.

Cash Flow from operating activities :

Net Profit before tax 43,136

Adjustments for working capital changes :

Trade and other Receivables (187)

Cash generated from operations 42,949

Direct Taxes Paid (14,520)

Net cash from operating activities 28,429

Net change in cash & cash equivalents 28,429

Cash & cash equivalents ( opening balance ) 86,578

Cash & cash equivalents ( closing balance ) 115,007

Change in cash & cash equivalents 28,429

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

126

SHRI RANGAM PROPERTIES LIMITED

DIRECTORS’ REPORTFor the year ended 31st March, 2006

We have pleasure in presenting the Tenth Annual Report and theaudited Statements of Account of the Company for the year ended31st March, 2006.

WORKING RESULTS

The financial results of operations for the year under report are asfollows:

This Previousyear year

Rs. Rs.

Profit/(Loss) for the year (8,105) 4,736Less: Provision for Taxation — 400

Profit/(Loss) after Taxation (8,105) 4,336Add: Surplus/(Loss) from previous year 2,40,289 2,35,953

Surplus carried to Balance Sheet 2,32,184 2,40,289

DIVIDEND

With a view to conserve the resources, your Directors do notrecommend any payment of dividend for the year.

DIRECTORATE

Shri H.N. Kumar retires by rotation at the ensuing Annual GeneralMeeting and is eligible for re-appointment. The Company hasobtained necessary intimation from him in terms of the Companies(Disqualification of Directors under Section 274(1)(g) of theCompanies Act, 1956) Rules, 2003 to the effect that he has notincurred any disqualification under section 274(1)(g) of theCompanies Act, 1956 and he is eligible to be reappointed as aDirector of the Company.

EMPLOYEE REMUNERATION

During the year, there had been no employee in receipt ofremuneration in excess of the amounts mentioned under Section217 (2A) of the Companies Act, 1956.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION,EXCHANGE EARNINGS ETC.

Conservation of energy, technology absorption, foreign exchangeearnings and outgo are not applicable, as the Company is notengaged in any manufacturing activities.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217 (2AA) of the CompaniesAct, 1956, your Directors declare that :-

(i) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(ii) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(iv) the Directors had prepared the annual accounts on a goingconcern basis.

COMPLIANCE CERTIFICATE

In terms of the proviso to section 383A of the Companies Act,1956, compliance certificate obtained from M/s. K.S. & Associates,Company Secretaries, for the year ended 31st March, 2006 isannexed.

AUDITORS

M/s. Batra Kapur & Associates, Chartered Accountants, Auditorsof the Company retire at the conclusion of the ensuing AnnualGeneral Meeting and are eligible for re-appointment. The Companyhas obtained a certificate from the auditors, as required underSection 224 of the Companies Act, 1956 to the effect that their re-appointment, if made, would be in conformity with the limits, specifiedin the said Section.

For and on behalf of the Board

H.N. KumarK.V. Mohan

Sanjay S. MittraNew Delhi DIRECTORSDated: 20th April, 2006

ANNUAL REPORT2005-2006

SHRI RANGAM PROPERTIES LIMITED

DIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri H.N. Kumar Batra Kapur & Associates Hansalaya,11th Floor, Dalmiapuram-621651Shri K.V.Mohan Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri Sanjay S.Mittra New Delhi-110001 (Tamil Nadu)

127

SHRI RANGAM PROPERTIES LIMITED

COMPLIANCE CERTIFICATERegistration No. of Company 18-37308Nominal Capital: Rs. 25,00,000/-

ToThe Members,Shri Rangam Properties Limited,Dalmiapuram

We have examined the registers, records, books and papers ofShri Rangam Properties Limited, (the Company) as required to bemaintained under the Companies Act, 1956, (the Act) and the rulesmade thereunder and also the provisions contained in theMemorandum & Articles of Association of the Company for thefinancial year ended on 31st March 2006. In our opinion and to thebest of our information and according to the examinations carriedout by us and explanations furnished to us by the Company, itsofficers and agents, we certify that in respect of the aforesaidfinancial year:

1. The Company has kept and maintained all registers as statedin Annexure ‘A’ to this certificate, as per the provisions of theAct and the rules made thereunder and all entries thereinhave been duly recorded.

2. The Company has duly filed the forms and returns as statedin Annexure ‘B’ to this certificate, with the Registrar ofCompanies, Regional Director, Central Government, CompanyLaw Board or other authorities within the time prescribedunder the Act and the rules made thereunder.

3. The Company, being a public limited Company, comments arenot required.

4. The Board of Directors duly met four times respectively on27th April, 2005, 15th September, 2005, 26th December, 2005and 20th March, 2006 in respect of which meetings propernotices were given and the proceedings were properlyrecorded and signed in the Minutes Book maintained for thepurpose.

5. The Company was not required to close its Register ofMembers during the financial year.

6. The annual general meeting for the financial year ended on31st March, 2005 was held on 22nd August, 2005 after givingdue notice to the members of the Company and the resolutionspassed thereat were duly recorded in Minutes Book maintainedfor the purpose.

7. No extraordinary general meeting was held during the financialyear.

8. The Company has not advanced any loans to its directors orpersons or firms or companies referred in the sections 295 ofthe Act.

9. The Company has not entered into any contracts falling withinthe purview of the provisions of section 297 of the Act

10. The Company was not required to make any entries in theregister maintained under section 301 of the Act.

11. As there were no instances falling within the purview ofsection 314 of the Act, the Company has not obtained anyapprovals from the Board of Directors, members or CentralGovernment.

12. The Company has not issued any duplicate share certificatesduring the financial year.

13. The Company :

(i) has delivered all the share certificates on lodgmentthereof for transfer in accordance with the provisionsof the Act. There were no transmission or allotment ofsecurities during the year;

(ii) was not required to deposit any amount in a separateBank account as no dividend was declared during thefinancial year.

(iii) was not required to post warrants to any members ofthe Company as no dividend was declared during thefinancial year.

(iv) has no unpaid dividend or other such liabilities whichhave remained unpaid as stated.

(v) has duly complied with the requirement of section 217 ofthe Act.

14. The Board of Directors of the Company is duly constitutedand no appointment of Directors, additional directors, alternatedirectors and directors to fill casual vacancies have beenmade during the year under scrutiny.

15. The Company has not appointed any Managing Director/Whole- time director /manager during the financial year.

16. The Company has not appointed any sole–selling agentsduring the financial year.

17. The Company was not required to obtain any approvals ofthe Central Government, Company Law Board, RegionalDirector, Registrar or such other authorities prescribed underthe various provisions of the Act during the financial year.

18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisionsof the Act and the rules made thereunder.

19. The Company has not issued any shares, debentures orother securities during the financial year

20. The Company has not bought back any shares during thefinancial year.

21. There was no redemption of preference shares during thefinancial year.

22. There were no transaction necessitating the Company tokeep in abeyance the rights to dividend, rights shares andbonus shares pending registration of transfer of shares incompliance with the provisions of the Act.

23. The Company has not invited or accepted any deposits fallingwithin the purview of section 58A of the Companies Act,1956 during the financial year ended on 31st March, 2006.

24. The Company has made borrowings during the financial yearended 31st March, 2006 in accordance with the provisions ofthe Companies Act, 1956.

25. The Company has not made any investments during thefinancial year ended 31st March, 2006.

26. The Company has not altered the provisions of theMemorandum with respect to situation of the Company’s

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SHRI RANGAM PROPERTIES LIMITED

registered office from one State to another during the yearunder scrutiny.

27. The Company has not altered the provisions of theMemorandum with respect to objects of the Company duringthe year under scrutiny.

28. The Company has not altered the provisions of theMemorandum with respect to name of the Company duringthe year under scrutiny.

29. The Company has not altered the provisions of theMemorandum with respect to share capital of the Companyduring the year under scrutiny.

30. The Company has not altered its Articles of Association duringthe financial year.

31. There were no prosecution initiated against or show causenotices received by the Company and no fines or penalties orany other punishment was imposed on the Company duringthe financial year, for offences under the Act.

32. The Company has not received any money as security fromits employees during the financial year,

33. The Company was not required to deduct any contributiontowards Provident Fund during the financial year.

For K. S. & AssociatesKamal Sachdev

Place: New Delhi C.P. No.: 5209Date: 20th April, 2006 ACS: 16619

Annexure B

Form and returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or otherauthorities during the financial year ending 31 st March, 2006

Sl. Form Filed under Date of Whether filed If delay in filingNo. No./Return Section filing within prescribed whether requisite

time Yes/No. additional fee paidYes/No.

1. Annual return 159 19-09-2005 Yes No

2. Annual Report 220 (1) (a) 19-09-2005 Yes No

3. Compliance Certificate 383A 19-09-2005 Yes No

4. Form III for disclosure 187 C 11-04-2005 Yes Noof Beneficial Interest

Registers as maintained by the Company

STATUTORY REGISTERS

1. Register of Members U/s150

2. Register and returns U/s163

3. Minute Book of Board Meetings & General Meetings

4. Register of Director, Managing Director, Manager and SecretaryU/s 303

5. Register of Directors’ Shareholding U/s 307

Annexure A

6. Register of investments u/s 372A.

7. Register of Contracts u/s 301.

8. Register of Fixed Assets.

OTHER REGISTERS

1. Register of Directors’ Attendance

2. Register of Shareholders’ Attendance

3. Register of Share transfer

129

SHRI RANGAM PROPERTIES LIMITED

AUDITORS’ REPORT

The Shareholders,Shri Rangam Properties Limited,Dalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of Shri RangamProperties Limited as at 31st March, 2006 and also theannexed Profit and Loss Account and the cash flow statementof the Company for the year ended on that date, from all ofwhich paise have been eliminated. These financial statementsare the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by the CompaniesAct, 1956 in the manner so required and give a true andfair view in conformity with the accounting principlesgenerally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For BATRA KAPUR AND ASSOCIATESChartered Accountants

Ravinder KapurPARTNER

NEW DELHIDated: This the 20

th day of April, 2006

ANNEXURE

Re: SHRI RANGAM PROPERTIES LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order,2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, no

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SHRI RANGAM PROPERTIES LIMITED

transaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The Company does not have any accumulated lossesexceeding at least 50% of its net worth, and thus theprovisions of clause 4(x) of the Companies (Auditors’ Report)Order, 2003 are not applicable to the Company;

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. In our opinion and according to the explanations given to uswith regard to the transactions in shares, securities,debentures and other instruments, the Company has :

a) maintained proper records of the transactions andcontracts wherever applicable, and timely entries havebeen made therein.

b) made necessary arrangements to hold the investmentsin its own name.

15. According to information and explanations given to us ,theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

16. According to information and explanations given to us, theCompany has not raised any term loan.

17. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment.

18. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

19. According to information and explanations given to us, theCompany has not issued any debentures during the year.

20. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

21. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

Yours faithfully,For BATRA KAPUR AND ASSOCIATES

Chartered AccountantsRavinder Kapur

PARTNER

NEW DELHIDated: This the 20

th day of April, 2006

131

SHRI RANGAM PROPERTIES LIMITED

BALANCE SHEETAs at 31st March, 2006

As at As at31.3.2006 31.3.2005

Rs . Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised2,49,000 Equity Shares

of Rs. 10/- each 24,90,000 24,90,000

1,000 RedeemableNon cumulativePreference Sharesof Rs. 10/- each 10,000 10,000

25,00,000 25,00,000

Issued, subscribed and paid-up2,49,000 Equity Shares of

Rs. 10/- each 24,90,000 24,90,0001,000 Preference

Shares ofRs. 10/- each 10,000 10,000

25,00,000 25,00,000(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Company)

RESERVES AND SURPLUSSurplus 2,32,184 2,40,289

Unsecured LoansLoan from Dalmia Cement (Bharat)Limited - the holding company 67,81,000 —

CURRENT LIABILITIES AND PROVISIONSSundry Creditors 1,102 1,102Provision for Taxation 4,300 4,300

5,402 5,402

95,18,586 27,45,691

As at As at31.3.2006 31.3.2005

Rs . Rs. Rs.ASSETS

FIXED ASSETSLand (Free hold)As per LastBalance Sheet 26,09,808 19,81,875Add :- Purchased duringthe year 67,85,012 6,27,933

93,94,820 26,09,808

INVESTMENTS (At Cost)

As per Schedule I 1,00,000 1,00,000

CURRENT ASSETS,LOANS & ADVANCESBalances withScheduled Banks inCurrent Accounts 19,182 30,012Advance Tax andTax Deductedat Source 4,584 5,871

23,766 35,883

95,18,586 27,45,691

Significant Accounting Policies and Notes at the end of the Profit and Loss Account

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATESChartered AccountantsRavinder KapurPARTNERNew DelhiDated : This the 20th day of April, 2006

H.N. KumarK.V. Mohan

Sanjay S. MittraDIRECTORS

132

SHRI RANGAM PROPERTIES LIMITED

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account.

1. Significant Accounting Policies:

a) Fixed Assets.

Fixed assets are stated at cost

b) Investments.

Investments are stated at cost.

c) Revenue Recognition.

Revenue is recognised on accrual basis.

2. Information required by para 4-D of Part-II of Schedule VI-Nil.

3. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, Geetee Estates

Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Dalmia Minerals & Properties

Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers & Holdings

Limited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals & Properties Limited,

Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines & Minerals Limited

and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

Unsecured Loan from Holding Company Rs. 67,81,000

This Previousyear year

INCOME Rs. Rs.

Profit on Sale Investments - 10,030

Interest on Income tax refund 94 -

Loss carried down 8,105 -

8,199 10,030

Profit brought down - 4,736

Surplus from last year 2,40,289 2,35,953

2,40,289 2,40,689

This Previousyear year

EXPENDITURE Rs. Rs.

Filing Fee 1,500 1,500

Auditors Remuneration

Audit Fee 1,102 1,102

For other Services 551 551

Bank Charges 200 25

Demat Account Charges - 386

Professional Fees 1,102 1,080

Printing & Stationery 3,744 650

Profit carried down - 4,736

8,199 10,030

Loss brought down 8,105 -

Provision for Taxation _ 400

Balance carried to Balance Sheet 2,32,184 2,40,289

2,40,289 2,40,689

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

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SHRI RANGAM PROPERTIES LIMITED

4. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 3 7 3 0 8 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

9 5 1 9 9 5 1 9

Sources of Funds

Paid-up Capital Reserves & Surplus

2 5 0 0 2 3 2

Secured Loans Unsecured Loans

N I L 6 7 8 1

Application of Funds

Net Fixed Assets Investments

9 3 9 5 1 0 0

Net Current Assets Miscellaneous Expenditure

1 8 N I L

Accumulated Losses

N I L

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L 0 8

Profit before tax Profit after tax

(-) 0 8 (-) 0 8

Earning per Share in Rs. Dividend rate %

(-) 0 . 0 3 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

134

SHRI RANGAM PROPERTIES LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006Rs.

Cash Flow from operating activities :

Net Profit before tax (8,105)

Direct Taxes (1,287)

Net cash from operating activities (6,818)

Cash Flow from investing activities :

Purchase of Fixed Assets (67,85,012)

Net cash used in investing activities (67,85,012)

Cash Flow from financing activities :

Proceeds from unsecured loans 67,81,000

Net cash from financing activities 67,81,000

Net change in cash & cash equivalents (10,830)

Cash & cash equivalents ( opening balance ) 30,012

Cash & cash equivalents ( closing balance ) 19,182

Change in cash & cash equivalents (10,830)

As per our report of even date attachedFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORS

New DelhiDated : This the 20th day of April, 2006

Schedule - I

Investments (Other than Trade investments-Not in Companies under the same management)

As at 31.03.2006 As at 31.03.2005No.of Face Total No. of Face Total

Particulars units Value Value units Value ValueRs. Rs. Rs. Rs.

UNITS OF MUTUAL FUND

Brila Floating Rate Fund Long Term Plan 9,248 92,477 1,00,000 9,248 92,477 1,00,000

Total 1,00,000 1,00,000

Book Value Market ValueRs. Rs.

Quoted 1,00,000 1,06,841Unquoted —

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATES H.N. KumarChartered Accountants K.V. MohanRavinder Kapur Sanjay S. MittraPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

135

HIMSHIKHAR INVESTMENT LIMITED

ANNUAL REPORT2005-2006

HIMSHIKHAR INVESTMENT LIMITED

DIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri H.N. Kumar Batra Kapur & Associates 4, Scindia House Dalmiapuram-621651Shri Ashok K. Agarwal Chartered Accountants New Delhi-110001 Dist. TiruchirapalliShri C. Nagaratnam (Tamil Nadu)Shri D. Muthukrishnan

DIRECTORS’ REPORTFor the year ended 31st March, 2006

We have pleasure in presenting the Ninth Annual Report and theaudited Statements of Account of the Company for the year ended31st March, 2006.

WORKING RESULTS

The financial results of operations for the year under report are asfollows:

This Previousyear year

Rs. Rs.

Profit for the year 15,58,785 1,76,332

Less: Provision for Taxation 5,03,000 22,000

Profit after Taxation 10,55,785 1,54,332Add: Surplus from Previous year 1,23,332 —

11,79,117 1,54,332

APPROPRIATIONS

Reserve Fund 2,12,000 31,000Surplus carried to Balance Sheet 9,67,117 1,23,332

11,79,117 1,54,332

DIVIDEND

With a view to conserve the resources, your Directors do notrecommend any payment of dividend for the year.

DIRECTORATE

Shri C. Nagaratnam and Shri Ashok K. Agarwal, Directors, retire byrotation at the ensuing Annual General Meeting and are eligible forre-appointment. The Company has obtained necessary intimationfrom them in terms of the Companies (Disqualification of Directorsunder Section 274(1)(g) of the Companies Act, 1956) Rules, 2003to the effect that they have not incurred any disqualification undersection 274(1)(g) of the Companies Act, 1956 and that they areeligible to be reappointed as Director of the Company.

EMPLOYEE REMUNERATION

During the year, there had been no employee in receipt ofremuneration in excess of the amounts mentioned under Section217 (2A) of the Companies Act, 1956.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION,EXCHANGE EARNINGS ETC.

Conservation of energy, technology absorption, foreign exchangeearnings and outgo are not applicable, as the Company is notengaged in any manufacturing activities.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217 (2AA) of the CompaniesAct, 1956, your Directors declare that: -

(i) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and nodepartures have been made therefrom;

(ii) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(iv) the Directors had prepared the annual accounts on a goingconcern basis.

COMPLIANCE CERTIFICATE

In terms of the proviso to section 383A of the Companies Act,1956, compliance certificate obtained from M/s. K.S. & Associates,Company Secretaries, for the year ended 31st March, 2006 isannexed.

AUDITORS

M/s. Batra Kapur & Associates, Chartered Accountants, the Auditorsof the Company hold office till the conclusion of the ensuing AnnualGeneral Meeting. The retiring Auditors, M/s. Batra Kapur &Associates, Chartered Accountants, are eligible for re-appointmentand the Company has obtained a certificate from them, as requiredunder Section 224 of the Companies Act, 1956 to the effect thattheir re-appointment, if made, would be in conformity with thelimits, specified in the said Section.

For and on behalf of the Board

H.N. KumarAshok K. Agarwal

New Delhi DIRECTORSDated: 20th April, 2006

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HIMSHIKHAR INVESTMENT LIMITED

COMPLIANCE CERTIFICATERegistration No. of Company 18-38989Nominal Capital: Rs. 50,00,000/-

ToThe Members,Himshikhar Investment LimitedDalmiapuram

We have examined the registers, records, books and papers ofHimshikhar Investment Limited, (the company) as required to bemaintained under the Companies Act, 1956, (the Act) and the rulesmade thereunder and also the provisions contained in theMemorandum & Articles of Association of the Company for thefinancial year ended on 31st March 2006. In our opinion and to thebest of our information and according to the examinations carriedout by us and explanations furnished to us by the company, itsofficers and agents, we certify that in respect of the aforesaidfinancial year:

1. The company has kept and maintained all registers as statedin Annexure ‘A’ to this certificate, as per the provisions of theAct and the rules made thereunder and all entries thereinhave been duly recorded.

2. The company has duly filed the forms and returns as stated inAnnexure ‘B’ to this certificate, with the Registrar ofCompanies, Regional Director, Central Government, CompanyLaw Board or other authorities within the time prescribedunder the Act and the rules made thereunder.

3. The company, being a public limited company, comments arenot required.

4. The Board of Directors duly met five times respectively on27th April, 2005, 10th June, 2005, 15th September, 2005, 26th

December, 2005, and 20th March, 2006, in respect of whichmeetings proper notices were given and the proceedingswere properly recorded and signed in the Minutes Bookmaintained for the purpose.

5. The company was not required to close its Register ofMembers during the financial year.

6. The annual general meeting for the financial year ended on31st March, 2005 was held on 22nd August, 2005 after givingdue notice to the members of the company and the resolutionspassed thereat were duly recorded in Minutes Book maintainedfor the purpose.

7. No extraordinary general meeting was held during the financialyear.

8. The company has not advanced any loans to its directors orpersons or firms or companies referred in the section 295 ofthe Act.

9. The company has not entered into any contracts falling withinthe purview the provisions of section 297 of the Act

10. The company was not required to make any entries in theregister maintained under section 301 of the Act.

11. As there were no instances falling within the purview ofsection 314 of the Act, the company has not obtained anyapprovals from the Board of Directors, members or CentralGovernment

12. The company has not issued any duplicate share certificatesduring the financial year.

13. The Company :

(i) has delivered all the share certificates on lodgement fortransfer thereof in accordance with the provisions ofthe Act. There were no allotment or transmission ofsecurities during the year;

(ii) was not required to deposit any amount in a separateBank account as no dividend was declared during thefinancial year.

(iii) was not required to post warrants to any members ofthe company as no dividend was declared during thefinancial year.

(iv) has no unpaid dividend or other such liabilities whichhave remained unpaid as stated.

(v) has duly complied with the requirement of section 217 ofthe Act.

14. The Board of Directors of the company is duly constitutedand there was no appointment of Director during the yearunder scrutiny.

15. The Company has not appointed any Managing Director/Whole-time director/manager during the financial year.

16. The company has not appointed any sole–selling agents duringthe financial year.

17. The company was not required to obtain any approval of theCentral Government, Company Law Board, Regional Director,Registrar or such other Authorities prescribed under thevarious provisions of the Act, during the financial year.

18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisionsof the Act and the rules made thereunder.

19. The company has not issued any shares during the financialyear ended 31st March, 2006.

20. The company has not bought back any shares during thefinancial year.

21. There was no redemption of preference shares during thefinancial year.

22. There were no transaction necessitating the company to keepin abeyance the rights to dividend, rights shares and bonusshares pending registration of transfer of shares in compliancewith the provisions of the Act.

23. The company has not invited or accepted any deposits fallingwithin the purview of section 58A of the Companies Act,1956 during the financial year ended on 31st March, 2006.

24. The company has not borrowed any amount during thefinancial year ended 31st March, 2006.

25. The provisions of section 372A of the Companies Act, 1956are not applicable to the Company as its principal business isthat of acquisition of shares and securities.

26. The company has not altered the provisions of theMemorandum with respect to situation of the company’sregistered office from one State to another during the yearunder scrutiny.

137

HIMSHIKHAR INVESTMENT LIMITED

27. The company has not altered the provisions of theMemorandum with respect to objects of the company duringthe year under scrutiny.

28. The company has not altered the provisions of theMemorandum with respect to name of the company duringthe year under scrutiny.

29. The company has not altered the provisions of theMemorandum with respect to share capital of the companyduring the year under scrutiny.

30. The company has not altered its Articles of Association duringthe financial year.

31. There were no prosecution initiated against or show causenotices received by the company and no fines or penalties or

any other punishment was imposed on the company duringthe financial year, for offences under the Act.

32. The company has not received any money as security fromits employees during the financial year,

33. The company was not required to deduct any contributiontowards Provident Fund during the financial year.

For K. S. & AssociatesKamal Sachdev

Place: New Delhi C.P. No.: 5209Date: 20th April, 2006 ACS: 16619

Annexure B

Form and returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or otherauthorities during the financial year ending 31 st March, 2006

Sl. Form Filed under Date of Whether filed If delay in filingNo. No./Return Section filing within prescribed whether requisite

time Yes/No. additional fee paidYes/No.

1. Annual return 159 05-09-2005 Yes No

2. Annual Report 220 (1) (a) 12-09-2005 Yes No

3. Compliance Certificate 383A 12-09-2005 Yes No

4. Form III for disclosure 187 C 06-10-2005 Yes Noof Beneficial Interest

Registers as maintained by the Company

STATUTORY REGISTERS

1. Register of Members U/s150

2. Register and returns U/s163

3. Minute Book of Board Meetings & General Meetings

4. Register of Director, Managing Director, Manager and SecretaryU/s 303

5. Register of Directors’ Shareholding U/s 307

Annexure A

6. Register of investments u/s 372A.

7. Register of Contracts u/s 301.

8. Register of Fixed Assets.

OTHER REGISTERS

1. Register of Directors’ Attendance

2. Register of Shareholders’ Attendance

3. Register of Share transfer

138

HIMSHIKHAR INVESTMENT LIMITED

AUDITORS’ REPORT

The Shareholders,Himshikhar Investment Limited,New Delhi

Gentlemen,

1. We have audited the attached Balance Sheet of HimshikharInvestment Limited as at 31st March, 2006 and also theannexed Profit and Loss Account and the cash flow statemnetof the Company for the year ended on that date, from all ofwhich paise have been eliminated. These financial statementsare the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by the CompaniesAct, 1956 in the manner so required and give a true andfair view in conformity with the accounting principlesgenerally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theProfit for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For BATRA KAPUR AND ASSOCIATESChartered Accountants

Ravinder KapurPARTNER

NEW DELHIDated: This the 20

th day of April, 2006

ANNEXURE

Re: HIMSHIKHAR INVESTMENT LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order, 2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, no

139

HIMSHIKHAR INVESTMENT LIMITED

transaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The Company does not have any accumulated lossesexceeding at least 50% of its net worth, and thus theprovisions of clause 4(x) of the Companies (Auditors’ Report)Order, 2003 are not applicable to the Company;

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. In our opinion and according to the explanations given to uswith regard to the transactions in shares, securities,debentures and other instruments, the Company has :

a) maintained proper records of the transactions andcontracts wherever applicable, and timely entries havebeen made therein.

b) made necessary arrangements to hold the investmentsin its own name.

15. According to information and explanations given to us, theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

16. According to information and explanations given to us, theCompany has not raised any term loan.

17. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment.

18. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

19. According to information and explanations given to us, theCompany has not issued any debentures during the year.

20. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

21. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

Yours faithfully,For BATRA KAPUR AND ASSOCIATES

Chartered AccountantsRavinder Kapur

PARTNER

NEW DELHIDated: This the 20

th day of April, 2006

140

HIMSHIKHAR INVESTMENT LIMITED

Significant Accounting Policies and Notes at the end of the Profit and Loss Account

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATESChartered Accountants H.N. KumarRavinder Kapur Ashok K. AgarwalPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

BALANCE SHEETAs at 31st March, 2006

As at As at31.3.2006 31.3.2005

Rs. Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised5,00,000 Equity Shares

of Rs. 10 each 50,00,000 50,00,000

Issued, subscribed and paid-up4,50,000 Equity Shares

of Rs. 10 each 45,00,000 45,00,000(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Company)

RESERVES AND SURPLUSSurplus 9,67,117 1,23,332Reserve Fund 2,43,000 31,000Share Premium Account 4,00,00,000 4,00,00,000

4,12,10,117 4,01,54,332

UNSECURED LOANS

Loan from Dalmia Cement (Bharat)Limited - the Holding Company 23,74,492 23,74,492

CURRENT LIABILITIES ANDPROVISIONS

Sundry Creditors 1,102 1,102

Provision for Taxation 5,25,000 22,000

5,26,102 23,102

4,86,10,711 4,70,51,926

As at As at31.3.2006 31.3.2005

Rs. Rs. Rs.ASSETS

FIXED ASSETSLand (Freehold)As per Last Balance Sheet 26,22,897 17,74,686Add:- Purchased during the year — 8,48,211

26,22,897 26,22,897

INVESTMENTS (At Cost)As per Schedule I 1,98,10,000 18,00,000

CURRENT ASSETS, LOANS ANDADVANCESBalances with ScheduledBanks inCurrent Accounts 2,56,26,942 4,25,90,573

Advance tax and taxdeducted at source 5,22,030 —

2,61,48,972 4,25,90,573

MISCELLANEOUS EXPENDITURE(To the extent notwritten off or adjusted)Preliminary &Pre-operative expeness 28,842 38,456

4,86,10,711 4,70,51,926

141

HIMSHIKHAR INVESTMENT LIMITED

This Previousyear year

INCOME Rs. Rs.

Profit on Sale of investments 99,804 2,02,728

Interest Income from

Banks and others 14,76,399 -

{(Tax Deducted

at Source Rs.3,26,635/-

(Rs. Nil)}

15,76,203 2,02,728

Profit brought down 15,58,785 1,76,332

Surplus from last year 1,23,332 —

16,82,117 1,76,332

This Previousyear year

EXPENDITURE Rs. Rs.

Auditors Remuneration

Audit Fee 1,102 1102

For other Services 3,857 -

Filing Fee 1,583 15,300

Bank Charges 160 175

Professional Fees 1,102 -

Miscellaneous Expenses - 205

Preliminary &

Pre-operative expenses

written off 9,614 9,614

Profit carried down 15,58,785 1,76,332

15,76,203 2,02,728

Provision for Taxation 5,03,000 22,000

Reserve Fund 2,12,000 31,000

Balance carried to Balance Sheet 9,67,117 1,23,332

16,82,117 1,76,332

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. Significant Accounting Policies:

a) Fixed Assets.Fixed assets are stated at cost

b) Investments. Investments are stated at cost.

c) Revenue Recognition.Revenue is recognised on accrual basis.

d) Preliminary and Pre-operative expenses. Preliminary and Pre-operative expenses are amortised over a period of five years.

2. Information required by para 4-D of Part-II of Schedule VI-Nil.

3. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, Geetee EstatesLimited, Shri Rangam Properties Limited, Hemshila Properties Limited, D.I. Properties Limited, Dalmia Minerals & PropertiesLimited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers & HoldingsLimited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals & Properties Limited,Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines & Minerals Limitedand Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

Reimbursement of Expenses incurred by holding Company Rs. 1,583

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HIMSHIKHAR INVESTMENT LIMITED

4. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 3 8 9 8 9 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

4 8 6 1 1 4 8 6 1 1

Sources of Funds

Paid-up Capital Reserves & Surplus

4 5 0 0 4 1 2 1 0

Secured Loans Unsecured Loans

N I L 2 3 7 5

Application of Funds

Net Fixed Assets Investments

2 6 2 3 1 9 8 1 0

Net Current Assets Miscellaneous Expenditure

2 5 6 2 3 2 9

Accumulated Losses

N I L

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

1 5 7 6 1 7

Profit before tax Profit after tax

1 5 5 9 1 0 5 6

Earning per Share in Rs. Dividend rate %

2 . 3 5 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

4. Previous year figures have been regrouped or rearranged wherever considered necessary.5. Figures in brackets pertain to previous year.

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATESChartered Accountants H.N. KumarRavinder Kapur Ashok K. AgarwalPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

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HIMSHIKHAR INVESTMENT LIMITED

Investments (Other than Trade Investments)

As at 31.03.2006 As at 31.03.2005Particulars No.of Face Total No. of Face Total

Shares/units Value Value Shares/units Value ValueRs. Rs. Rs. Rs.

A. FULLY PAID UP EQUITY SHARES(Under the same Management)Avanee and Ashni Securities Private Limited 70,000 7,00,000 1,98,10,000 — — —

B. UNITS OF MUTUAL FUND(Not Under the same Management)Birla Floating Rate Fund Short Term Plan – — — 74,119 7,41,187 8,00,000Birla Floating Rate Fund Long Term Plan – — — 92,289 9,22,892 10,00,000

1,98,10,000 18,00,000

Book Value Market ValueRs. Rs.

Quoted — —Unquoted 1,98,10,000

Annexure to our Report of dateFor BATRA KAPUR & ASSOCIATESChartered Accountants H.N. KumarRavinder Kapur Ashok K. AgarwalPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

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HIMSHIKHAR INVESTMENT LIMITED

Schedule to the Balance Sheet of Himshikhar Investment Ltd., a Non-Banking Financial Company(as required in terms of Paragraph 9BB of Non-Banking Financial Companies Prudential Norms

(Reserve Bank) Directions, 1998)(Rs. in lakhs)

Particulars

Liabilities side :

(1) Loans and advances availed by the NBFCs inclusive of Amount Amountinterest accrued thereon but not paid : outstanding Overdue(a) Debentures : Secured NIL NIL

Unsecured NIL NIL(Other than falling within the meaning of public deposits*)

(b) Deferred Credits NIL NIL(c) Term Loans NIL NIL(d) Inter-corporate loans and borrowing NIL NIL(e) Commercial Paper NIL NIL(f) Public Deposits* NIL NIL(g) Other Loans (specify nature) NIL NIL* Please see Note 1 below

(2) Break-up of (1)(f) above (Outstanding public deposits inclusive ofinterest accrued thereon but not paid):(a) In the form of Unsecured debentures NIL NIL(b) in the form of partly secured debentures i.e debentures where there is a

shortfall in the value of security NIL NIL(c) Other public deposits NIL NIL* Please see Note 1 below

Assets side:

Amount outstanding

(3) Break-up of Loans and Advances including bills receivables [other thanthose included in (4) below]

(a) Secured NIL(b) Unsecured NIL

(4) Break-up of Leased Assets and stock on hire and hypothecation loanscounting towards EL/HP activities(i) Lease assets including lease rentals under sundry debtors:

(a) Financial lease NIL(b) Operating lease NIL

(ii) Stock on hire including hire charges under sundry debtors:(a) Assets on hire NIL(b) Repossessed Assets NIL

(iii) Hypothecation loans counting towards EL/HP Activities(a) Loans where assets have been repossessed NIL(b) Loans other than (a) above NIL

(5) Break-up of Investements:

Current Investments :1. Quoted :

(i) Shares : (a) Equity NIL(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds NIL(iv) Government Securities NIL(v) Others (please specify) NIL

2. Unquoted :

(i) Shares: (a) Equity NIL(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds NIL(iv) Government Securities NIL(v) Others (please specify) NIL

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HIMSHIKHAR INVESTMENT LIMITED

Amount outstanding(Rs. in Lakhs)

Long Term Investments :

1. Quoted :

(i) Shares: (a) Equity NIL(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds NIL(iv) Government Securities NIL(v) Others (please specify) NIL

2. Unquoted :

(i) Shares: (a) Equity 198.10(b) Preference NIL

(ii) Debentures and Bonds NIL(iii) Units of mutual funds NIL(iv) Government Securities NIL(v) Others (please specify) NIL

(6) Borrower group-wise classification of all leased assets, stock-on-hire and loans and advances:Please see Note 2 below

Category Amount net of provisions

Secured Unsecured Total1. Related Parties ** — — —

(a) Subsidiaries — — —

(b) Companies in the same group — — —

(c) Other related parties — — —

3. Other than related parties — — —

Total — — —

(7) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquote d):Please see note 3 belowCategory Market Value/Break up Book Value

or fair value or NAV (Net of Provisions)

1. Related Parties **(a) Subsidiaries NIL NIL(b) Companies in the same group 198.10 198.10(c) Other related parties NIL NIL

2. Other than related parties NIL NILTotal 198.10 198.10

** As per Accounting Standard of ICAI (please see Note 3)(8) Other information

Particulars Amount(i) Gross Non-performing Assets

(a) Related parties NIL(b) Other than related parties NIL

(ii) Net Non-Performing Assets(a) Related parties NIL(b) Other than related parties NIL

(iii) Assets acquired in satisfaction of debt NIL

Notes:1. As defined in paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions,1998.2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998.3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets

acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquotedinvestments should be disclosed irrespective of whether they are classified as long term or current in column (5) above.

For BATRA KAPUR & ASSOCIATESChartered AccountantsRavinder KapurPARTNERNew DelhiDated: This the 20th day of April, 2006

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HIMSHIKHAR INVESTMENT LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH,2006Rs.

Cash Flow from operating activities :

Net Profit before tax 15,58,785

Adjustment for :

Preliminary & Pre - operative expenses written off 9,614

Cash generated from operations 15,68,399

Direct Taxes Paid (5,22,030)

Net cash from operating activities 10,46,309

Cash Flow from investing activies :

Purchase of investment (198,10,000)

Sale of investment 18,00,000

Net cash used in investing activities (1,80,10,000)

Net change in cash & cash equivalents (1,69,63,631)

Cash & cash equivalents ( opening balance ) 4,25,90,573

Cash & cash equivalents ( closing balance ) 2,56,26,942

Change in cash & cash equivalents (1,69,63,631)

As per our report of even date attachedFor BATRA KAPUR & ASSOCIATESChartered Accountants H.N. KumarRavinder Kapur Ashok K. AgarwalPARTNER DIRECTORSNew DelhiDated : This the 20th day of April, 2006

147

DALMIA SUGARS LIMITED

ANNUAL REPORT2005-2006

DALMIA SUGARS LIMITED

DIRECTORS AUDITORS REGISTERED OFFICEShri Gautam Dalmia V. Sankar Aiyar & Co. 4, Scindia HouseShri B.B. Mehta Chartered Accountants New Delhi-110001Shri K.V. Mohan

DIRECTORS’ REPORTYour Directors take pleasure in presenting the First Annual Report ofthe Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 8th June,2005 as a private company limited by shares under the name of M/s. Ramnagar Chini Mills Private Limited. Thereafter, by a specialresolution passed by the shareholders of the Company on 18th June,2005 the word “private” was deleted from the name of the Companyand a fresh Certificate of Incorporation was issued by the Registrar ofCompanies, National Capital Territory of Delhi and Haryana on 29th

July, 2005. With effect from 12th January, 2006, the name of theCompany was again changed to M/s. Dalmia Sugars Limited.

OPERATIONS

The Company has undertaken the setting up of two new sugarmanufacturing facilities at Jawaharpur in District Sitapur and Nigohiin District Shahjahanpur in the State of Uttar Pradesh. Both theseprojects will have a cogeneration system for generation and supplyof power to the State Grid. The Company also proposes to set up amanufacturing facility for manufacture of Ethanol in one of the sites.

FINANCIAL RESULTS

During the period under review, the Company incurred a net loss ofRs. 19,01,220/- after writing off the preliminary expenses. In view ofthe same, your Directors do not propose to recommend any dividend.

SHARE CAPITAL

During the year under review, the company issued and allotted 90,000Equity Shares of Rs. 10/- each. The entire amount was subscribed byDalmia Cement (Bharat) Limited and consequently, your Companyis now a cent percent subsidiary of Dalmia Cement (Bharat) Limited.

EMPLOYEES’ PARTICULARS

There was no employee in the employment of the Company duringthe period under review. As such, no employee was in receipt ofremuneration in excess of the limits prescribed under Section 217(2A)of the Companies Act, 1956 read with the Rules and Notificationsmade thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company has not commenced any manufacturing activity,the details of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri Gautam Dalmia, Shri B.B. Mehta and Shri K.V. Mohan, werethe first Directors of the Company and they hold office till theconclusion of the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.

The Company has obtained necessary intimation from each of themin terms of the Companies (Disqualification of Directors under Section274(1)(g) of the Companies Act, 1956) Rules, 2003 to the effect thatthey have not incurred any disqualification under section 274(1)(g)of the Companies Act, 1956 and they are eligible to be appointed asDirector(s) of the Company.

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri Gautam Dalmia, Shri B.B. Mehta and Shri K.V.Mohan as Director(s) of the Company, together with requisite depositas envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the Companies Act,1956, your Directors declare that: -

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made there from;

(b) the Directors had selected such accounting policies and appliedthem consistently and made judgements and estimates thatare reasonable and prudent so as to give a true and fair view ofthe state of affairs of the Company at the end of the financialyear and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and otherirregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. V. Sankar Aiyar & Co., Chartered Accountants, were appointedas the first auditors of the Company and they hold office till theconclusion of the forthcoming Annual General Meeting and areeligible for reappointment. As required under Section 224 of theCompanies Act, 1956, the Company has obtained from them acertificate to the effect that their reappointment, if made, would bein conformity with the limits prescribed in the said Section.

COMPLIANCE CERTIFICATE

The Company has obtained a compliance certificate for the periodended 31-3-2006 from M/s. K. S. & Associates, Company Secretaries,in terms of the proviso to Section 383A of the Companies Act, 1956.A copy of the said compliance certificate is attached to this Report.

Gautam DalmiaB.B. MehtaK.V. Mohan

Dated: 20th April, 2006 DIRECTORS

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DALMIA SUGARS LIMITED

COMPLIANCE CERTIFICATERegistration No. of Company -55-137348Nominal Capital: Rs. 10,00,00,000/-

ToThe Members,Dalmia Sugars Limited (formerly known as Ramnagar Chini MillsLimited)New Delhi

We have examined the registers, records, books and papers ofDalmia Sugars Limited, (the Company) as required to be maintainedunder the Companies Act, 1956, (the Act) and the rules madethereunder and also the provisions contained in the Memorandum& Articles of Association of the Company for the financial yearended on 31st March 2006. In our opinion and to the best of ourinformation and according to the examinations carried out by usand explanations furnished to us by the Company, its officers andagents, we certify that in respect of the aforesaid financial year:

1. The Company has kept and maintained all registers as statedin Annexure ‘A’ to this certificate, as per the provisions of theAct and the rules made thereunder and all entries thereinhave been duly recorded.

2. The Company has duly filed the forms and returns as statedin Annexure ‘B’ to this certificate, with the Registrar ofCompanies, Regional Director, Central Government, CompanyLaw Board or other authorities within the time prescribedunder the Act and the rules made thereunder.

3. The Company, being a public limited Company, comments arenot required.

4. The Board of Directors duly met eleven times respectively on8th June, 2005, 14th June, 2005, 18th June, 2005, 20th June,2005, 3rd August, 2005, 7th September, 2005, 6th October, 2005,3rd November, 2005, 10th November, 2005, 19th January, 2006and 18th March, 2006 in respect of which meetings propernotices were given and the proceedings were properlyrecorded and signed in the Minutes Book maintained for thepurpose.

5. The Company was not required to close its Register ofMembers during the financial year.

6. This being the first financial year of the Company, no annualgeneral meeting was held during the financial year.

7. Three extraordinary general meetings were held during thefinancial year after giving due notice to the members of theCompany and the resolutions passed thereat were dulyrecorded in Minutes Book maintained for the purpose.

8. The Company has not advanced any loans to its directors orpersons or firms or companies referred in the section 295 ofthe Act.

9. The Company has not entered into any contracts falling withinthe purview the provisions of section 297 of the Act

10. The Company was not required to make any entries in theregister maintained under section 301 of the Act.

11. As there were no instances falling within the purview ofsection 314 of the Act, the Company has not obtained anyapprovals from the Board of Directors, members or CentralGovernment

12. The Company has not issued any duplicate share certificates

during the financial year.

13. The Company :

(i) has delivered all the share certificates on allotment ofsecurities and lodgment thereof for transfer inaccordance with the provisions of the Act. There wasno transmission of securities during the financial year;

(ii) was not required to deposit any amount in a separateBank account as no dividend was declared during thefinancial year.

(iii) was not required to post warrants to any members ofthe Company as no dividend was declared during thefinancial year.

(iv) has no unpaid dividend or other such liabilities whichhave remained unpaid as stated.

(v) has duly complied with the requirement of section 217 ofthe Act.

14. The Board of Directors of the Company is duly constitutedand no appointment of Directors, additional directors, alternatedirectors and directors to fill casual vacancies have beenmade during the year under scrutiny.

15. The Company has not appointed any Managing Director /Whole-time director/manager during the financial year.

16. The Company has not appointed any sole–selling agentsduring the financial year.

17. The Company has obtained necessary approvals of the CentralGovernment/Registrar of Companies under the variousprovisions of the Act, as detailed below :-

(i) Conversion of the Company into a Public Limited Company;and

(ii) Change in the name of the Company.

18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisionsof the Act and the rules made thereunder.

19. The Company has issued 90,000 Equity Shares during thefinancial year and complied with the provisions of the Act.

20. The Company has not bought back any shares during thefinancial year.

21. There was no redemption of preference shares during thefinancial year.

22. There were no transaction necessitating the Company tokeep in abeyance the rights to dividend, rights shares andbonus shares pending registration of transfer of shares incompliance with the provisions of the Act.

23. The Company has not invited or accepted any deposits fallingwithin the purview of section 58A of the Companies Act,1956 during the financial year ended on 31st March, 2006.

24 The Company has made borrowings during the financial yearended 31st March, 2006 in accordance with the provisions ofthe Companies Act, 1956.

25. The Company has not made any investments during thefinancial year ended on 31st March, 2006.

26. The Company has not altered the provisions of theMemorandum with respect to situation of the Company’sregistered office from one State to another during the year

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DALMIA SUGARS LIMITED

under scrutiny.

27. The Company has not altered the provisions of theMemorandum with respect to objects of the Company duringthe year under scrutiny.

28. The Company has altered the provisions of the Memorandumwith respect to name of the Company during the year underscrutiny and complied with the provisions of the Act.

29. The Company has altered the provisions of the Memorandumwith respect to share capital of the Company during the yearunder scrutiny and complied with the provisions of the Act.

30. The Company has altered its Articles of Association afterobtaining approval of members in the extra ordinary generalmeetings held on 18th June, 2005 and 16th July, 2005 and theamendments to the Articles of Association have been duly

filed with the Registrar of Companies.

31. There were no prosecution initiated against or show causenotices received by the Company and no fines or penalties orany other punishment was imposed on the Company duringthe financial year, for offences under the Act.

32. The Company has not received any money as security fromits employees during the financial year,

33 The Company was not required to deduct any contributiontowards Provident Fund during the financial year.

For K. S. & AssociatesKamal Sachdev

Place: New Delhi C.P. No.: 5209Date: 20th April, 2006 ACS: 16619

Annexure B

Form and returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or otherauthorities during the financial year ending 31 st March, 2006

Sl. Form Filed under Date of Whether filed If delay in filingNo. No./Return Section filing within prescribed whether requisite

time Yes/No. additional fee paidYes/No.

1. 1A 21 24-05-2005 Yes No

2. 1 33 06-06-2005 Yes No

3. Memorandum of Association 21 06-06-2005 Yes No

4. Articles of Association 21 06-06-2005 Yes No

5. 18 146 06-06-2005 Yes No

6. 32 303 06-06-2005 Yes No

7. Schedule IV 44 04-07-2005 Yes No

8. 5 95 24-06-2005 Yes No

9. 23 192 24-06-2005 Yes No

10. 22A 171 24-06-2005 Yes No

11. 2 75 24-06-2005 Yes No

12. 23 192 19-07-2005 Yes No

13. Form III for disclosure

of Beneficial Interest 187C 27-09-2005 Yes No

14. 1A 21 26-09-2005 Yes No

15. 23 192 24-10-2005 Yes No

16. 22A 171 24-10-2005 Yes No

17. Application for change 21 27-10-2005 Yes No

in name

18. 22 165 11-11-2005 No Yes

Registers as maintained by the Company

STATUTORY REGISTERS

1. Register of Members U/s150

2. Register and returns U/s163

3. Minute Book of Board Meetings & General Meetings

4. Register of Director U/s 303

5. Register of Directors’ Shareholding U/s 307

Annexure A

6. Register of Contracts u/s 301.

7. Register of Fixed Assets.

OTHER REGISTERS

1. Register of Directors’ Attendance

2. Register of Shareholders’ Attendance

3. Register of Share transfer

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DALMIA SUGARS LIMITED

AUDITORS’ REPORT

TO THE SHAREHOLDERS OF DALMIA SUGARS LIMITED

1. We have audited the attached Balance Sheet of DalmiaSugars Limited as at 31st March 2006 and also the Profitand Loss Account and the Cash Flow statement of theCompany for the period ended on that date, annexed thereto.These financial statements are the responsibility of theCompany’s management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We-conducted the audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are freeof material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order, 2003issued by the Central Government of India in terms of Section227(4A) of the Companies Act, 1956, we enclose in theannexure, a statement on the matters specified in paragraphs4 and 5 of the said Order to the extent applicable on the basisof such checks as we considered appropriate and accordingto the information and explanations given to us.

4. Further to our comments in the annexure referred to inparagraph 3 above, we report that:-

(a) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purposes of our audit;

(b) In our opinion, proper Books of Accounts as required bylaw have been kept by the Company so far as appearsfrom our examination of the books;

(c) The Balance Sheet, Profit and Loss Account and cashflow statement dealt with by this report are in agreementwith the Books of Account;

(d) In our opinion, the Balance Sheet, Profit & Loss Accountand cash flow statement dealt with by this report, complywith the accounting standards referred to in subsection(3C) of section 211 of the Companies Act, 1956 to theextent applicable.

(e) On the basis of information obtained, none of the Directorsof the Company are prima-facie, disqualified under section274(l)(g) of the Companies Act, 1956 as on 31.03.2006from being appointed as Directors of the Company.

(f) In our opinion and to the best of our information andaccording to the explanations given to us, the accounts,read with the notes on accounts, give the information

required by the Companies Act, 1956 in the manner sorequired and give a true and fair view in conformity withthe accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31

st March, 2006; and

ii) in the case of Profit and Loss Account, of the Lossfor the period ended on that date; and

iii) in the case of Cash Flow statement of the CashFlows for the period ended on that date.

For V. Sankar Aiyar & Co.Chartered Accountants

R. RaghuramanPlace: New Delhi PartnerDate: 20.4.2006 Membership No: - 81350

ANNEXURE

Referred to in para 3 of our report of even date to the shareholdersof Dalmia Sugar Limited

1. The Company has only Land for which proper records aremaintained showing full particulars, details and situation ofthe land.

2. (a) According to the records of the Company, the Companyhas been generally regular in depositing with appropriateauthorities the undisputed statutory dues in respect ofIncome-tax and any other statutory dues. According tothe information and explanations given to us, there areno undisputed amounts payable in respect of theaforesaid statutory dues which have remainedoutstanding as at 31-03-2006 for a period of more thansix months from the date they became payable.We areinformed that there is no . liability towards EmployeesProvident Fund, Investor Education and Protection Fund,Employees State Insurance , Sales Tax, Wealth Tax,Service Tax, Custom Duty, Excise Duty, Cess for theperiod under audit.

(b) According to the information given to us, there are noPending disputes in respect of Income Tax as on 31.03.06

3. Based on the audit procedures performed and representationobtained from the management, we report that no fraud on orby the Company has been noticed or reported during theperiod under audit.

4. In our opinion, the requirement of clauses (ii) to (viii) and (x)to (xx) specified in paragraph-4 of the said order are eithernot applicable or do not call for a statement for the periodunder audit.

For V. Sankar Aiyar & Co.Chartered Accountants

R. RaghuramanPlace: New Delhi PartnerDate: 20.4.2006 Membership No: - 81350

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DALMIA SUGARS LIMITED

BALANCE SHEETAS AT 31ST MARCH, 2006

As at31.3.2006

Schedule Rs. Rs.

I. SOURCES OF FUNDS1. SHAREHOLDERS’ FUNDS

Share Capital 1 10,00,000

2. LOAN FUNDSUnsecured Loans from Dalmia Cement (Bharat)Limited – the holding company (Interest-free) 71,73,40,706

TOTAL 71,83,40,706

II. APPLICATION OF FUNDS 1. FIXED ASSETS

a) Land (Freehold) 9,55,95,296b) Capital work-in-progress 2 59,92,53,464c) Pre-operative Expenses during

construcion pending allocation 3 38,61,328

69,87,10,088

2. CURRENT ASSETS, LOANS AND ADVANCESa) Inventories – Misc. stores 58,240b) Cash and Bank balances 4 70,03,377

c) Loans and Advances 5 1,35,12,270

2,05,73,887

Less: Current Liabilities and ProvisionsCurrent Liabilities & Provisions 6 28,44,489

28,44,489Net Current Assets

1,77,29,398

3. PROFIT AND LOSS ACCOUNT 19,01,220

TOTAL 71,83,40,706

Significant Accounting Policiesand Notes to Accounts 7

As per our report of even date attachedFor V.Sankar Aiyar & Co., Gautam DalmiaChartered Accountants B.B. MehtaR. Raghuraman K.V. MohanPARTNER DIRECTORSNew DelhiDated: this the 20th day of April, 2006

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DALMIA SUGARS LIMITED

PROFIT AND LOSS ACCOUNTFOR THE PERIOD ENDED 31ST MARCH, 2006

Schedule This Period

Rs.

I N C O M E

Other Income 4,65,660

4,65,660

E X P E N D I T U R E

Cane Development & Marketing Expenses 15,29,081

Filing Fees 6,05,056

Legal & Court Expenses 1,62,652

Fees and Expenses to Cosulltants 50,630

Audit Fees 16,530

Other Expenses 2,931

23,66,880

Profit/ (Loss) for the year (19,01,220)

Balance carried to Balance Sheet (19,01,220)

(19,01,220)

Earnings per Share (Face Value of Rs. 10 per

share – No. of Shares 1,00,000)

Basic (-) Rs. 19.01

Diluted (-) Rs. 19.01

Significant Accounting Policiesand Notes to Accounts 7

As per our report of even date attachedFor V.Sankar Aiyar & Co., Gautam DalmiaChartered Accountants B.B. MehtaR. Raghuraman K.V. MohanPARTNER DIRECTORSNew DelhiDated: this the 20th day of April, 2006

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DALMIA SUGARS LIMITED

S C H E D U L E S

Schedule Nos. 1 to 7 forming part of the Balance Sheet as at 31 st March, 2006 and the Profit and Loss Account for the periodended on that date.

As at31.3.2006

Rs.SCHEDULE 1 – SHARE CAPITALAuthorised50,00,000 Equity Shares of Rs. 10 each 5,00,00,00050,00,000 Unclassified Shares of Rs. 10 each 5,00,00,000

Total 10,00,00,000

Issued and Subscribed1,00,000 Equity Shares of Rs. 10 each fully paid up 10,00,000

Note:1. The entire subscribed capital is held by Dalmia Cement (Bharat) Limited, the hoding company and its nominees.

SCHEDULE 2 – CAPITAL WORK IN PROGRESSProject Construction / Engineering 8,31,36,500Buildings under Construction 39,42,640Advances for Capital expenditure 51,21,74,324

59,92,53,464

SCHEDULE 3 – PRE OPERATIVE EXPENDITURE PENDING ALLOCATIONSalaries and Wages 4,03,940Travelling & Conveyance 4,23,402Telephone & Fax 21,531Vehicle Running & Hire 1,33,773Bank Charges 14,91,793Insurance 45,653Licence & Fees 2,38,446Power Charges 8,40,618Miscellaneous 2,62,172

38,61,328

SCHEDULE 4 – CASH AND BANK BALANCESCash on hand 6,58,496Balances with Scheduled Banks Current Accounts 63,44,881

70,03,477

SCHEDULE 5 – LOANS AND ADVANCES ( Unsecured Considered good)

Advances recoverable in cash or in kind or for valueto be received 88,703

Deposits and Balances with GovernmentDepartments and Other Authorities 1,34,23,567

1,35,12,270

SCHEDULE 6 – CURRENT LIABILITIES & PROVISIONS

Provisional Bills 23,06,903TDS Payable 5,21,983Outstanding Expenses 15,603

28,44,489

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DALMIA SUGARS LIMITED

SCHEDULE 7 – SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

1. Accounting ConventionThe financial statements are prepared under historical cost convention on a going concern basis and comply with the AccountingStandards issued by the Institute of Chartered Accountants of India.

2. Fixed AssetsFixed Assets are stated at cost. Capital work in progress includes cost of assets at sites, construction expenditure and advancesmade for acquisition of capital assets. Pre-operative expenses incurred during Project construction will be allocated to Fixed Assetsupon completion of the Project.

3. InventoriesInventories are valued at cost.

4. Revenue Recognition Revenue is recognised on accrual basis.

B. NOTES TO ACCOUNTSAs at

31.3.2006Rs.

1. Estimated amount of contracts remaining to be executed oncapital account and not provided for (net of advances) 246,16,25,676

2. The Company was incorporated on 8th June, 2005 and this being the first accounts, there are no comparative figures for the previousyear.

3. In the opinion of the Board and to the best of their knowledge and belief, the value on realisation of advances and current assets inthe ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet.

4. Related Party Disclosures, as required by Accounting Standard – 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, D.I. Properties Limited, Geetee EstatesLimited, Avnija Properties Limited, Shri Rangam Properties Limited, Hemshila Properties Limited, Himshikhar InvestmentLimited, Dalmia Minerals & Properties Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & BrokersLimited, Shri Rangam Brokers & Holdings Limited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & Minerals Limited, SriMadhava Minerals & Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited,Sri Subramanya Mines & Minerals Limited

B. The following transactions were carried out with the related parties in the ordinary course of business:

(i) Unsecured Loan from Holding Company Rs. 71,73,40,706

(ii) Subscription to Share Capital by Holding Company Rs. 9,00,000

As per our report of even date attachedFor V.Sankar Aiyar & Co., Gautam DalmiaChartered Accountants B.B. MehtaR. Raghuraman K.V. MohanPARTNER DIRECTORSNew DelhiDated: this the 20th day of April, 2006

155

DALMIA SUGARS LIMITED

Information pursuant to Part IV of Schedule VI to the Companies Act 1956:

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 3 7 3 4 8 State Code 5 5

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 1 0 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

7 1 8 3 4 1 7 1 8 3 4 1

Sources of Funds

Paid-up Capital Reserves & Surplus

1 0 0 0 N I L

Secured Loans Unsecured Loans

N I L 7 1 7 3 4 0

Application of Funds

Net Fixed Assets Investments

1 8 7 5 0 4 N I L

Net Current Assets Miscellaneous Expenditure

5 2 8 9 3 5 N I L

Accumulated Losses

1 9 0 1

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

4 6 6 2 3 6 7

Profit before tax Profit after tax

(-) 1 9 0 1 (-) 1 9 0 1

Earning per Share in Rs. Dividend rate

(-) 1 9 . 0 1 N I L

V. Generic names of three Principal Products / Services of Company ( as per monetary terms)

Product N I L

Item Code (ITC Code) N I L

Gautam DalmiaB.B. Mehta

K.V. MohanNew Delhi DIRECTORSDated: this the 20th day of April, 2006

156

DALMIA SUGARS LIMITED

CASH FLOW STATEMENT FOR THE PERIOD ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net profit before tax (19,01,220)

Adjustments for working capital changes :

Inventories (58,240)

Trade and other receivables (1,35,12,270)

Trade payables 28,44,489

Net cash from operating activities (1,26,27,241)

Cash Flow from investing activities :

Purchase of fixed assets and expenditure incurred on capital

work in progress and pre operative expenses (69,87,10,088)

Net cash used in investing activities (69,87,10,088)

Cash Flow from financing activities :

Proceeds from Share Capital 10,00,000

Proceeds from unsecured loans 71,73,40,706

Net cash from financing activities 71,83,40,706

Net change in cash & cash equivalents 70,03,377

Cash & cash equivalents (opening balance) —

Cash & cash equivalents (closing balance) 70,03,377

Change in cash & cash equivalents 70,03,377

As per our report of even date attachedFor V.Sankar Aiyar & Co., Gautam DalmiaChartered Accountants B.B. MehtaR. Raghuraman K.V. MohanPARTNER DIRECTORSNew DelhiDated: this the 20th day of April, 2006

157

ARJUNA BROKERS & MINERALS LIMITED

DIRECTORS’ REPORTFOR THE PERIOD ENDED 31st MARCH, 2006

Your Directors take pleasure in presenting the First Annual Reportof the Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 30th

August, 2005 and obtained its Certificate for Commencement ofBusiness on 9th September, 2005.

FINANCIAL RESULTS

During the period under review, the Company incurred a net lossof Rs. 37,894/- after writing off the preliminary expenses of Rs.29,738/-. In view of the same, your Directors do not propose torecommend any dividend.

EMPLOYEES’ PARTICULARS

During the year, there was no employee in the Company. As such,no employee was in receipt of remuneration in excess of the limitsprescribed under Section 217(2A) of the Companies Act, 1956read with the Rules and Notifications made thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company is not engaged in any manufacturing activity, thedetails of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri B.B. Mehta, Shri R.K. Agarwal and Shri R.K. Ghai, were thefirst Directors of the Company and they hold office till the conclusionof the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.The Company has obtained necessary intimation from each ofthem in terms of the Companies (Disqualification of Directors underSection 274(1)(g) of the Companies Act, 1956) Rules, 2003 to theeffect that they have not incurred any disqualification under section274(1)(g) of the Companies Act, 1956 and they are eligible to beappointed as Director(s) of the Company.

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri B.B. Mehta, Shri R.K. Agarwal and Shri R.K.Ghai as Director(s) of the Company, together with requisite depositas envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the CompaniesAct, 1956, your Directors declare that:

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Indra D. Narayan & Co., Chartered Accountants, wereappointed as the first Auditors of the Company and they holdoffice till the conclusion of the forthcoming Annual General Meetingand are eligible for reappointment. As required under Section 224of the Companies Act, 1956, the Company has obtained from thema certificate to the effect that their reappointment, if made, wouldbe in conformity with the limits prescribed in the said Section.

B.B. MehtaR.K. Agarwal

R.K. GhaiNew Delhi DIRECTORSDated: 20th April, 2006

ANNUAL REPORT2005-2006

ARJUNA BROKERS & MINERALS LIMITEDDIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri B.B. Mehta Indra D. Narayan & Co. Hansalaya,11th Floor, Dalmiapuram-621651Shri R.K. Agarwal Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri R.K. Ghai New Delhi-110001 (Tamil Nadu)

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ARJUNA BROKERS & MINERALS LIMITED

AUDITORS’ REPORT

The Shareholders,Arjuna Brokers & Minerals LimitedDalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of ArjunaBrokers & Minerals Limited as at 31st March, 2006 and alsothe annexed Profit and Loss Account and the cash flowstatement of the Company for the year ended on that date,from all of which paise have been eliminated. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by the CompaniesAct, 1956 in the manner so required and give a true andfair view in conformity with the accounting principlesgenerally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For Indra D. Narayan & Co.Chartered Accountants

Indra Dev NarayanPARTNER

NEW DELHIDated: This the 20th day of April, 2006

ANNEXURE

Re: ARJUNA BROKERS & MINERALS LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order,2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

159

ARJUNA BROKERS & MINERALS LIMITED

5. According to information and explanations given to us, notransaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The provisions of clause 4(x) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company, beingnot in existence for more than 5 years, hence not commentedupon.

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. According to information and explanations given to us ,theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

15. According to information and explanations given to us, theCompany has not raised any term loan.

16. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

17. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

18. According to information and explanations given to us, theCompany has not issued any debentures during the year.

19. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

20. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

21. The other provisions of the order do not appear to beapplicable for the year under report.

Yours faithfully,For Indra D. Narayan & Co.

Chartered AccountantsIndra Dev Narayan

PARTNERNEW DELHIDated: This the 20th day of April, 2006

160

ARJUNA BROKERS & MINERALS LIMITED

BALANCE SHEETAs at 31st March, 2006

As at31.3.2006

Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised50,000 Equity Shares

of Rs. 10 each 5,00,000

Issued, subscribed and paid-up

50,000 Equity Sharesof Rs. 10 each 5,00,000

(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Companyand its nominees)

UNSECURED LOANSLoan from Dalmia Cement (Bharat)Limited - the holding Company16,00,000

CURRENT LIABILITIES ANDPROVISIONS

Sundry Creditors 2,204

21,02,204

As at31.3.2006

Rs . Rs.ASSETS

FIXED ASSETS Land (Free hold) Purchased during the year 18,59,730

CURRENT ASSETS, LOANS ANDADVANCES

Balances with Scheduled Bank inCurrent Accounts 2,04,580

Profit and Loss Account 37,894

21,02,204

Significant Accounting Policies and Notes at the end of the Profit and loss Account

Annexure to our Report of dateFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

161

ARJUNA BROKERS & MINERALS LIMITED

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

This YearRs.

EXPENDITURE

Filing Fee 600Auditors RemunerationAudit Fee 2,204For other Services 551

Bank Charges 225Printing & Stationery 4,576Preliminary & Pre-operative expenses 29,738

37,894

This YearRs.

INCOME

Loss Carried to Balance Sheet 37,894

37,894

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. The Company was incorporated on 30th August, 2005. Being the first accounts, there are no figures for the previous years.

2. Significant Accounting Policies:

a) Fixed Assets.Fixed assets are stated at cost

b) Revenue Recognition.Revenue is recognised on accrual basis.

3. Information required by para 4-D of Part-II of Schedule VI-Nil.

4. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, GeeteeEstates Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Dalmia Minerals &Properties Limited, Shri Rangam Properties Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers & HoldingsLimited, Shri Radha Krishna Brokers & Holdings Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals &Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri SubramanyaMines & Minerals Limited and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Unsecured Loan from Holding Company Rs. 16,00,000(ii) Reimbursement of Expenses incurred by Holding Company Rs. 20,329(iii) Subscription to Share Capital by Holding Company Rs. 4,99,400

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ARJUNA BROKERS & MINERALS LIMITED

5. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 0 5 7 3 2 9 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 5 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

2 1 0 2 2 1 0 2

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L 1 6 0 0

Application of Funds

Net Fixed Assets Investments

1 8 6 0 N I L

Net Current Assets Miscellaneous Expenditure

2 0 2 N I L

Accumulated Losses

3 8

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L 3 8

Profit before tax Profit after tax

(-) 3 8 (-) 3 8

Earning per Share in Rs. Dividend rate %

(-) 0 . 7 6 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

163

ARJUNA BROKERS & MINERALS LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net Profit before tax (37,894)

Adjustments for working capital changes :

Trade Payable 2,204

Net cash from operating activities (35,690)

Cash Flow from investing activities :

Purchase of Fixed Assets (18,59,730)

Net cash used in investing activities (18,59,730)

Cash Flow from financing activities :

Proceeds from Share Capital 5,00,000

Proceeds from unsecured loans 16,00,000

Net cash from financing activities 21,00,000

Net change in cash & cash equivalents 2,04,580

Cash & cash equivalents ( opening balance ) -

Cash & cash equivalents ( closing balance ) 2,04,580

Change in cash & cash equivalents 2,04,580

As per our report of even date attached

For Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

164

DALMIA MINERALS & PROPERTIES LIMITED

DIRECTORS’ REPORTFOR THE PERIOD ENDED 31st MARCH, 2006

Your Directors take pleasure in presenting the First Annual Reportof the Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 30th

August, 2005 and obtained its Certificate for Commencement ofBusiness on 9th September, 2005.

FINANCIAL RESULTS

During the period under review, the Company incurred a net lossof Rs. 37,669/- after writing off the preliminary expenses of Rs.29,738/-. In view of the same, your Directors do not propose torecommend any dividend.

EMPLOYEES’ PARTICULARS

During the year, there was no employee in the Company. As such,no employee was in receipt of remuneration in excess of the limitsprescribed under Section 217(2A) of the Companies Act, 1956read with the Rules and Notifications made thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company is not engaged in any manufacturing activity, thedetails of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri B.B. Mehta, Shri R.K. Agarwal and Shri R.K. Ghai, were thefirst Directors of the Company and they hold office till the conclusionof the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.The Company has obtained necessary intimation from each ofthem in terms of the Companies (Disqualification of Directors underSection 274(1)(g) of the Companies Act, 1956) Rules, 2003 to theeffect that they have not incurred any disqualification under section274(1)(g) of the Companies Act, 1956 and they are eligible to beappointed as Director(s) of the Company.

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri B.B. Mehta, Shri R.K. Agarwal and Shri R.K.Ghai as Director(s) of the Company, together with requisite depositas envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the CompaniesAct, 1956, your Directors declare that:

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Indra D. Narayan & Co., Chartered Accountants, wereappointed as the first Auditors of the Company and they holdoffice till the conclusion of the forthcoming Annual General Meetingand are eligible for reappointment. As required under Section 224of the Companies Act, 1956, the Company has obtained from thema certificate to the effect that their reappointment, if made, wouldbe in conformity with the limits prescribed in the said Section.

B.B. MehtaR.K. Agarwal

R.K. GhaiNew Delhi DIRECTORSDated: 20th April, 2006

ANNUAL REPORT2005-2006

DALMIA MINERALS & PROPERTIES LIMITEDDIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri B.B. Mehta Indra D. Narayan & Co. Hansalaya,11th Floor, Dalmiapuram-621651Shri R.K. Agarwal Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri R.K. Ghai New Delhi-110001 (Tamil Nadu)

165

DALMIA MINERALS & PROPERTIES LIMITED

AUDITORS’ REPORT

The Shareholders,Dalmia Minerals & Properties LimitedDalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of DalmiaMinerals & Properties Limited as at 31st March, 2006 andalso the annexed Profit and Loss Account and the cash flowstatement of the Company for the year ended on that date,from all of which paise have been eliminated. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For Indra D. Narayan & Co.Chartered Accountants

Indra Dev NarayanPARTNER

NEW DELHIDated: This the 20th day of April, 2006

ANNEXURE

Re: DALMIA MINERALS & PROPERTIES LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order,2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

166

DALMIA MINERALS & PROPERTIES LIMITED

5. According to information and explanations given to us, notransaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The provisions of clause 4(x) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company, beingnot in existence for more than 5 years, hence not commentedupon.

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. According to information and explanations given to us ,theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

15. According to information and explanations given to us, theCompany has not raised any term loan.

16. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

17. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

18. According to information and explanations given to us, theCompany has not issued any debentures during the year.

19. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

20. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

21. The other provisions of the order do not appear to beapplicable for the year under report.

Yours faithfully,For Indra D. Narayan & Co.

Chartered AccountantsIndra Dev Narayan

PARTNERNEW DELHIDated: This the 20th day of April, 2006

167

DALMIA MINERALS & PROPERTIES LIMITED

Significant Accounting Policies and Notes at the end of the Profit and loss Account

Annexure to our Report of dateFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

BALANCE SHEETAs at 31st March, 2006

As at31.3.2006

Rs.LIABILITIES

SHARE CAPITALAuthorised50,000 Equity Shares

of Rs. 10 each 5,00,000

Issued, subscribed and paid-up50,000 Equity Shares

of Rs. 10 each 5,00,000

(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Companyand its nominees)

UNSECURED LOANS

Loan from Dalmia Cement (Bharat)Limited - the holding Company 11,00,000

CURRENT LIABILITIES AND PROVISIONS

Sundry Creditors 2,204

16,02,204

As at31.3.2006

Rs.ASSETS

FIXED ASSETS Land (Free hold) Purchased during the year 15,23,194

CURRENT ASSETS, LOANS ANDADVANCES

Balances with Scheduled Bank inCurrent Accounts 41,341

Profit and Loss Account 37,669

16,02,204

168

DALMIA MINERALS & PROPERTIES LIMITED

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

This YearRs.

EXPENDITURE

Filing Fee 600Auditors RemunerationAudit Fee 2,204For other Services 551

Printing & Stationery 4,576Preliminary & Pre-operative expenses 29,738

37,669

This YearRs.

INCOME

Loss Carried to Balance Sheet 37,669

37,669

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. The Company was incorporated on 30th August, 2005. Being the first accounts, there are no figures for the previous years.

2. Significant Accounting Policies:

a) Fixed Assets.Fixed assets are stated at cost

b) Revenue Recognition.Revenue is recognised on accrual basis.

3. Information required by para 4-D of Part-II of Schedule VI-Nil.

4. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, GeeteeEstates Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Arjuna Brpkers &Minerals Limited, Shri Rangam Properties Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers & HoldingsLimited, Shri Radha Krishna Brokers & Holdings Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals &Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri SubramanyaMines & Minerals Limited and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Unsecured Loan from Holding Company Rs. 11,00,000(ii) Reimbursement of Expenses incurred by Holding Company Rs. 20,329(iii) Subscription to Share Capital by Holding Company Rs. 4,99,400

169

DALMIA MINERALS & PROPERTIES LIMITED

5. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 0 5 7 3 2 7 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 5 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

1 6 0 2 1 6 0 2

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L 1 1 0 0

Application of Funds

Net Fixed Assets Investments

1 5 2 3 N I L

Net Current Assets Miscellaneous Expenditure

3 9 N I L

Accumulated Losses

3 8

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L 3 8

Profit before tax Profit after tax

(-) 3 8 (-) 3 8

Earning per Share in Rs. Dividend rate %

(-) 0 . 7 5 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

170

DALMIA MINERALS & PROPERTIES LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net Profit before tax (37,669)

Adjustments for working capital changes :

Trade Payable 2,204

Net cash from operating activities (35,465)

Cash Flow from investing activities :

Purchase of Fixed Assets (15,23,194)

Net cash used in investing activities (15,23,194)

Cash Flow from financing activities :

Proceeds from Share Capital 5,00,000

Proceeds from unsecured loans 11,00,000

Net cash from financing activities 16,00,000

Net change in cash & cash equivalents 41,341

Cash & cash equivalents ( opening balance ) -

Cash & cash equivalents ( closing balance ) 41,341

Change in cash & cash equivalents 41,341

As per our report of even date attachedFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

171

SHRI RANGAM BROKERS & HOLDINGS LIMITED

ANNUAL REPORT2005-2006

SHRI RANGAM BROKERS & HOLDINGS LIMITEDDIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri B.B. Mehta Indra D. Narayan & Co. Hansalaya,11th Floor, Dalmiapuram-621651Shri R.K. Agarwal Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri R.K. Ghai New Delhi-110001 (Tamil Nadu)

DIRECTORS’ REPORTFOR THE PERIOD ENDED 31st MARCH, 2006

Your Directors take pleasure in presenting the First Annual Reportof the Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 30th

August, 2005 and obtained its Certificate for Commencement ofBusiness on 9th September, 2005.

FINANCIAL RESULTS

During the period under review, the Company incurred a net lossof Rs. 37,669/- after writing off the preliminary expenses of Rs.29,738/-. In view of the same, your Directors do not propose torecommend any dividend.

EMPLOYEES’ PARTICULARS

During the year, there was no employee in the Company. As such,no employee was in receipt of remuneration in excess of the limitsprescribed under Section 217(2A) of the Companies Act, 1956read with the Rules and Notifications made thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company is not engaged in any manufacturing activity, thedetails of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri B.B. Mehta, Shri R.K. Agarwal and Shri R.K. Ghai, were thefirst Directors of the Company and they hold office till the conclusionof the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.The Company has obtained necessary intimation from each ofthem in terms of the Companies (Disqualification of Directors underSection 274(1)(g) of the Companies Act, 1956) Rules, 2003 to theeffect that they have not incurred any disqualification under section274(1)(g) of the Companies Act, 1956 and they are eligible to beappointed as Director(s) of the Company.

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri B.B. Mehta, Shri R.K. Agarwal and Shri R.K.Ghai as Director(s) of the Company, together with requisite depositas envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the CompaniesAct, 1956, your Directors declare that:

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Indra D. Narayan & Co., Chartered Accountants, wereappointed as the first Auditors of the Company and they holdoffice till the conclusion of the forthcoming Annual General Meetingand are eligible for reappointment. As required under Section 224of the Companies Act, 1956, the Company has obtained from thema certificate to the effect that their reappointment, if made, wouldbe in conformity with the limits prescribed in the said Section.

B.B. MehtaR.K. Agarwal

R.K. GhaiNew Delhi DIRECTORSDated: 20th April, 2006

172

SHRI RANGAM BROKERS & HOLDINGS LIMITED

AUDITORS’ REPORT

The Shareholders,Shri Rangam Brokers & Holdings LimitedDalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of Shri RangamBrokers & Holdings Limited as at 31st March, 2006 and alsothe annexed Profit and Loss Account and the cash flowstatement of the Company for the year ended on that date,from all of which paise have been eliminated. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For Indra D. Narayan & Co.Chartered Accountants

Indra Dev NarayanPARTNER

NEW DELHIDated: This the 20th day of April, 2006

ANNEXURE

Re: SHRI RANGAM BROKERS & HOLDINGS LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order,2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

173

SHRI RANGAM BROKERS & HOLDINGS LIMITED

5. According to information and explanation given to us, notransaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The provisions of clause 4(x) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company, beingnot in existence for more than 5 years, hence not commentedupon.

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. According to information and explanations given to us ,theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

15. According to information and explanations given to us, theCompany has not raised any term loan.

16. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

17. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

18. According to information and explanations given to us, theCompany has not issued any debentures during the year.

19. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

20. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

21. The other provisions of the order do not appear to beapplicable for the year under report.

Yours faithfully,For Indra D. Narayan & Co.

Chartered AccountantsIndra Dev Narayan

PARTNERNEW DELHIDated: This the 20th day of April, 2006

174

SHRI RANGAM BROKERS & HOLDINGS LIMITED

Significant Accounting Policies and Notes at the end of the Profit and loss Account

Annexure to our Report of dateFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

BALANCE SHEETAs at 31st March, 2006

As at31.03.2006

Rs.LIABILITIES

SHARE CAPITALAuthorised50,000 Equity Shares

of Rs. 10 each 5,00,000

Issued, subscribed and paid-up50,000 Equity Shares

of Rs. 10 each 5,00,000

(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Company)

UNSECURED LOANSLoan from Dalmia Cement (Bharat)Limited - the holding Company 16,50,000

CURRENT LIABILITIES ANDPROVISIONS

Sundry Creditors 2,204

21,52,204

As at31.03.2006

Rs.ASSETS

FIXED ASSETS Land (Free hold) Purchased during the year 9,46,327

CURRENT ASSETS, LOANS ANDADVANCES

Balances with Scheduled Bank inCurrent Accounts 1,68,208

Profit and Loss Account 37,669

21,52,204

175

SHRI RANGAM BROKERS & HOLDINGS LIMITED

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

This YearRs.

EXPENDITURE

Filing Fee 600Auditors RemunerationAudit Fee 2,204For other Services 551

Printing & Stationery 4,576Preliminary & Pre-operative expenses 29,738

37,669

This YearRs.

INCOME

Loss Carried to Balance Sheet 37,669

37,669

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. The Company was incorporated on 30th August, 2005. Being the first accounts, there are no figures for the previous years.

2. Significant Accounting Policies:

a) Fixed Assets.Fixed assets are stated at cost

b) Revenue Recognition.Revenue is recognised on accrual basis.

3. Information required by para 4-D of Part-II of Schedule VI-Nil.

4. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, GeeteeEstates Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Arjuna Brokers &Minerals Limited, Shri Rangam Properties Limited, Seeta Estates & Brokers Limited, Dalmia Minerals & Properties Limited,Shri Radha Krishna Brokers & Holdings Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals & PropertiesLimited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines &Minerals Limited and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Unsecured Loan from Holding Company Rs. 16,50,000(ii) Reimbursement of Expenses incurred by Holding Company Rs. 20,329(iii) Subscription to Share Capital by Holding Company Rs. 4,99,400

176

SHRI RANGAM BROKERS & HOLDINGS LIMITED

5. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 0 5 7 3 2 8 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 5 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

2 1 5 2 2 1 5 2

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L 1 6 5 0

Application of Funds

Net Fixed Assets Investments

1 9 4 6 N I L

Net Current Assets Miscellaneous Expenditure

1 6 6 N I L

Accumulated Losses

3 8

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L 3 8

Profit before tax Profit after tax

(-) 3 8 (-) 3 8

Earning per Share in Rs. Dividend rate %

(-) 0 . 7 5 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

177

SHRI RANGAM BROKERS & HOLDINGS LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net Profit before tax (37,669)

Adjustments for working capital changes :

Trade Payable 2,204

Net cash from operating activities (35,465)

Cash Flow from investing activities :

Purchase of Fixed Assets (19,46,327)

Net cash used in investing activities (19,46,327)

Cash Flow from financing activities :

Proceeds from Share Capital 5,00,000

Proceeds from unsecured loans 16,50,000

Net cash from financing activities 21,50,000

Net change in cash & cash equivalents 1,68,208

Cash & cash equivalents ( opening balance ) —

Cash & cash equivalents ( closing balance ) 1,68,208

Change in cash & cash equivalents 1,68,208

As per our report of even date attachedFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

178

SHRI RADHA KRISHNA BROKERS & HOLDINGS LIMITED

DIRECTORS’ REPORTFOR THE PERIOD ENDED 31st MARCH, 2006

Your Directors take pleasure in presenting the First Annual Reportof the Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 30th

August, 2005 and obtained its Certificate for Commencement ofBusiness on 9th September, 2005.

FINANCIAL RESULTS

During the period under review, the Company incurred a net lossof Rs. 37,894/- after writing off the preliminary expenses of Rs.29,738/-. In view of the same, your Directors do not propose torecommend any dividend.

EMPLOYEES’ PARTICULARS

During the year, there was no employee in the Company. As such,no employee was in receipt of remuneration in excess of the limitsprescribed under Section 217(2A) of the Companies Act, 1956read with the Rules and Notifications made thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company is not engaged in any manufacturing activity, thedetails of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri B.B. Mehta, Shri R.K. Agarwal and Shri R.K. Ghai, were thefirst Directors of the Company and they hold office till the conclusionof the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.The Company has obtained necessary intimation from each ofthem in terms of the Companies (Disqualification of Directors underSection 274(1)(g) of the Companies Act, 1956) Rules, 2003 to theeffect that they have not incurred any disqualification under section274(1)(g) of the Companies Act, 1956 and they are eligible to beappointed as Director(s) of the Company.

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri B.B. Mehta, Shri R.K. Agarwal and Shri R.K.Ghai as Director(s) of the Company, together with requisite depositas envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the CompaniesAct, 1956, your Directors declare that:

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made there from;

(b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Indra D. Narayan & Co., Chartered Accountants, wereappointed as the first Auditors of the Company and they holdoffice till the conclusion of the forthcoming Annual General Meetingand are eligible for reappointment. As required under Section 224of the Companies Act, 1956, the Company has obtained from thema certificate to the effect that their reappointment, if made, wouldbe in conformity with the limits prescribed in the said Section.

B.B. MehtaR.K. Agarwal

R.K. GhaiNew Delhi DIRECTORSDated: 20

th April, 2006

ANNUAL REPORT2005-2006

SHRI RADHA KRISHNA BROKERS & HOLDINGS LIMITEDDIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri B.B. Mehta Indra D. Narayan & Co. Hansalaya,11th Floor, Dalmiapuram-621651Shri R.K. Agarwal Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri R.K. Ghai New Delhi-110001 (Tamil Nadu)

179

SHRI RADHA KRISHNA BROKERS & HOLDINGS LIMITED

AUDITORS’ REPORT

The Shareholders,Shri Radha Krishna Brokers & Holdings LimitedDalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of Shri RadhaKrishna Brokers & Holdings Limited as at 31st March, 2006and also the annexed Profit and Loss Account and the cashflow statement of the Company for the year ended on thatdate, from all of which paise have been eliminated. Thesefinancial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For Indra D. Narayan & Co.Chartered Accountants

Indra Dev NarayanPARTNER

NEW DELHIDated: This the 20th day of April, 2006

ANNEXURE

Re: SHRI RADHA KRISHNA BROKERS & HOLDINGS LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order,2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, no

180

SHRI RADHA KRISHNA BROKERS & HOLDINGS LIMITED

transaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The provisions of clause 4(x) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company, beingnot in existence for more than 5 years, hence not commentedupon.

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. According to information and explanations given to us, theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

15. According to information and explanations given to us, theCompany has not raised any term loan.

16. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

17. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

18. According to information and explanations given to us, theCompany has not issued any debentures during the year.

19. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

20. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

21. The other provisions of the order do not appear to beapplicable for the year under report.

Yours faithfully,For Indra D. Narayan & Co.

Chartered AccountantsIndra Dev Narayan

PARTNERNEW DELHIDated: This the 20th day of April, 2006

181

SHRI RADHA KRISHNA BROKERS & HOLDINGS LIMITED

Significant Accounting Policies and Notes at the end of the Profit and loss Account

Annexure to our Report of dateFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

BALANCE SHEETAs at 31st March, 2006

As at31.03.2006

Rs.LIABILITIES

SHARE CAPITALAuthorised50,000 Equity Shares

of Rs. 10 each 5,00,000

Issued, subscribed and paid-up50,000 Equity Shares

of Rs. 10 each 5,00,000

(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Companyand its nominees)

UNSECURED LOANS

Loan from Dalmia Cement (Bharat)Limited - the holding Company 1,29,16,000

CURRENT LIABILITIES ANDPROVISIONS

Sundry Creditors 2,204

1,34,18,204

As at31.3.2006

Rs.ASSETS

FIXED ASSETS Land (Free hold) Purchased during the year 1,33,15,279

CURRENT ASSETS, LOANS ANDADVANCES

Balances with Scheduled Bank inCurrent Accounts 65,031

Profit and Loss Account 37,894

1,34,18,204

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SHRI RADHA KRISHNA BROKERS & HOLDINGS LIMITED

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

This YearRs.

EXPENDITURE

Filing Fee 600Auditors RemunerationAudit Fee 2,204For other Services 551

Bank Charges 225Printing & Stationery 4,576Preliminary & Pre-operative expenses 29,738

37,894

This YearRs.

INCOME

Loss Carried to Balance Sheet 37,894

37,894

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. The Company was incorporated on 30th August, 2005. Being the first accounts, there are no figures for the previous years.

2. Significant Accounting Policies:

a) Fixed Assets.Fixed assets are stated at cost

b) Revenue Recognition.Revenue is recognised on accrual basis.

3. Information required by para 4-D of Part-II of Schedule VI-Nil.

4. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, GeeteeEstates Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Dalmia Minerals &Properties Limited, Shri Rangam Properties Limited, Seeta Estates & Brokers Limited, Shri Rangam Brokers & HoldingsLimited, Arjuna Brokers & Minerals Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals & PropertiesLimited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines &Minerals Limited and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Unsecured Loan from Holding Company Rs.1,29,16,000(ii) Reimbursement of Expenses incurred by Holding Company Rs. 20,329(iii) Subscription to Share Capital by Holding Company Rs. 4,99,400

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SHRI RADHA KRISHNA BROKERS & HOLDINGS LIMITED

5. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 0 5 7 3 3 0 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 5 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

1 3 4 1 8 1 3 4 1 8

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L 1 2 9 1 6

Application of Funds

Net Fixed Assets Investments

1 3 3 1 5 N I L

Net Current Assets Miscellaneous Expenditure

6 3 N I L

Accumulated Losses

3 8

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L 3 8

Profit before tax Profit after tax

(-) 3 8 (-) 3 8

Earning per Share in Rs. Dividend rate %

(-) 0 . 7 6 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

184

SHRI RADHA KRISHNA BROKERS & HOLDINGS LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net Profit before tax (37,894)

Adjustments for working capital changes :

Trade Payable 2,204

Net cash from operating activities (35,690)

Cash Flow from investing activities :

Purchase of Fixed Assets (1,33,15,279)

Net cash used in investing activities (1,33,15,279)

Cash Flow from financing activities :

Proceeds from Share Capital 5,00,000

Proceeds from unsecured loans 1,29,16,000

Net cash from financing activities 1,34,16,000

Net change in cash & cash equivalents 65,031

Cash & cash equivalents ( opening balance ) —

Cash & cash equivalents ( closing balance ) 65,031

Change in cash & cash equivalents 65,031

As per our report of even date attachedFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

185

SEETA ESTATES & BROKERS LIMITED

DIRECTORS’ REPORTFOR THE PERIOD ENDED 31st MARCH, 2006

Your Directors take pleasure in presenting the First Annual Reportof the Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 30th

August, 2005 and obtained its Certificate for Commencement ofBusiness on 9th September, 2005.

FINANCIAL RESULTS

During the period under review, the Company incurred a net lossof Rs. 37,969/- after writing off the preliminary expenses of Rs.30,038/-. In view of the same, your Directors do not propose torecommend any dividend.

EMPLOYEES’ PARTICULARS

During the year, there was no employee in the Company. As such,no employee was in receipt of remuneration in excess of the limitsprescribed under Section 217(2A) of the Companies Act, 1956read with the Rules and Notifications made thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company is not engaged in any manufacturing activity, thedetails of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri B.B. Mehta, Shri R.K. Agarwal and Shri R.K. Ghai, were thefirst Directors of the Company and they hold office till the conclusionof the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.The Company has obtained necessary intimation from each ofthem in terms of the Companies (Disqualification of Directors underSection 274(1)(g) of the Companies Act, 1956) Rules, 2003 to theeffect that they have not incurred any disqualification under section274(1)(g) of the Companies Act, 1956 and they are eligible to beappointed as Director(s) of the Company.

ANNUAL REPORT2005-2006

SEETA ESTATES & BROKERS LIMITEDDIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri B.B. Mehta Indra D. Narayan & Co. Hansalaya,11th Floor, Dalmiapuram-621651Shri R.K. Agarwal Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri R.K. Ghai New Delhi-110001 (Tamil Nadu)

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri B.B. Mehta, Shri R.K. Agarwal and Shri R.K.Ghai as Director(s) of the Company, together with requisite depositas envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the CompaniesAct, 1956, your Directors declare that:

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Indra D. Narayan & Co., Chartered Accountants, wereappointed as the first Auditors of the Company and they holdoffice till the conclusion of the forthcoming Annual General Meetingand are eligible for reappointment. As required under Section 224of the Companies Act, 1956, the Company has obtained from thema certificate to the effect that their reappointment, if made, wouldbe in conformity with the limits prescribed in the said Section.

B.B. MehtaR.K. Agarwal

R.K. GhaiNew Delhi DIRECTORSDated: 20th April, 2006

186

SEETA ESTATES & BROKERS LIMITED

AUDITORS’ REPORT

The Shareholders,Seeta Estates & Brokers LimitedDalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of Seeta Estates& Brokers Limited as at 31st March, 2006 and also theannexed Profit and Loss Account and the cash flowstatement of the Company for the year ended on that date,from all of which paise have been eliminated. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For Indra D. Narayan & Co.Chartered Accountants

Indra Dev NarayanPARTNER

NEW DELHIDated: This the 20th day of April, 2006

ANNEXURE

Re: SEETA ESTATES & BROKERS LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order,2003 asfar as it is applicable, we further report that:

1) a) The Company has maintained proper records to showfull particulars including quantitative details and situationof fixed assets.

b) The fixed assets have been physically verified by theManagement at reasonable intervals. As per informationand explanations given to us, no material discrepancieswere found on such verification;

c) During the year under audit, the Company has notdisposed off any substantial part of its assets so as toaffect its going concern status.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

187

SEETA ESTATES & BROKERS LIMITED

5. According to information and explanation given to us, notransaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The provisions of clause 4(x) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company, beingnot in existence for more than 5 years, hence not commentedupon.

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. According to information and explanations given to us, theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

15. According to information and explanations given to us, theCompany has not raised any term loan.

16. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

17. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

18. According to information and explanations given to us, theCompany has not issued any debentures during the year.

19. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

20. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

21. The other provisions of the order do not appear to beapplicable for the year under report.

Yours faithfully,For Indra D. Narayan & Co.

Chartered AccountantsIndra Dev Narayan

PARTNERNEW DELHIDated: This the 20th day of April, 2006

188

SEETA ESTATES & BROKERS LIMITED

Significant Accounting Policies and Notes at the end of the Profit and loss Account

Annexure to our Report of dateFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

BALANCE SHEETAs at 31st March, 2006

As at31.3.2006

Rs.LIABILITIES

SHARE CAPITALAuthorised50,000 Equity Shares

of Rs. 10 each 5,00,000

Issued, subscribed and paid-up50,000 Equity Shares

of Rs. 10 each 5,00,000

(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Companyand its nominees)

UNSECURED LOANS

Loan from Dalmia Cement (Bharat)Limited - the holding Company 1,39,40,000

CURRENT LIABILITIES AND PROVISIONS

Sundry Creditors 2,204

1,44,42,204

As at31.3.2006

Rs.ASSETS

FIXED ASSETS Land (Free hold) Purchased during the year 1,43,35,334

CURRENT ASSETS, LOANS ANDADVANCES

Balances with Scheduled Bank inCurrent Accounts 68,901

Profit and Loss Account 37,969

1,44,42,204

189

SEETA ESTATES & BROKERS LIMITED

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

This YearRs.

EXPENDITURE

Filing Fee 600Auditors RemunerationAudit Fee 2,204For other Services 551

Printing & Stationery 4,576Preliminary & Pre-operative expenses 30,038

37,969

This YearRs.

INCOME

Loss Carried to Balance Sheet 37,969

37,969

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. The Company was incorporated on 30th August, 2005. Being the first accounts, there are no figures for the previous years.

2. Significant Accounting Policies:

a) Fixed Assets.Fixed assets are stated at cost

b) Revenue Recognition.Revenue is recognised on accrual basis.

3. Information required by para 4-D of Part-II of Schedule VI-Nil.

4. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, GeeteeEstates Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Arjuna Brokers &Minerals Limited, Shri Rangam Properties Limited, Shri Rangam Brokers & Holdings Limited, Dalmia Minerals & PropertiesLimited, Shri Radha Krishna Brokers & Holdings Limited, Sri Kesava Mines & Minerals Limited, Sri Madhava Minerals &Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri SubramanyaMines & Minerals Limited and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Unsecured Loan from Holding Company Rs. 1,39,40,000(ii) Reimbursement of Expenses incurred by Holding Company Rs. 20,629(iii) Subscription to Share Capital by Holding Company Rs. 4,99,400

190

SEETA ESTATES & BROKERS LIMITED

5. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 0 5 7 3 2 6 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 5 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

1 4 4 4 2 1 4 4 4 2

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L 1 3 9 4 0

Application of Funds

Net Fixed Assets Investments

1 4 3 3 5 N I L

Net Current Assets Miscellaneous Expenditure

6 7 N I L

Accumulated Losses

3 8

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L N I L

Profit before tax Profit after tax

(-) 3 8 (-) 3 8

Earning per Share in Rs. Dividend rate %

(-) 0 . 7 6 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

191

SEETA ESTATES & BROKERS LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net Profit before tax (37,969)

Adjustments for working capital changes :

Trade Payable 2,204

Net cash from operating activities (35,765)

Cash Flow from investing activities :

Purchase of Fixed Assets (1,43,35,334)

Net cash used in investing activities (1,43,35,334)

Cash Flow from financing activities :

Proceeds from Share Capital 5,00,000

Proceeds from unsecured loans 1,39,40,000

Net cash from financing activities 1,44,40,000

Net change in cash & cash equivalents 68,901

Cash & cash equivalents ( opening balance ) -

Cash & cash equivalents ( closing balance ) 68,901

Change in cash & cash equivalents 68,901

As per our report of even date attachedFor Indra D. Narayan & Co. B.B. MehtaChartered Accountants R.K. AgarwalIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

192

SRI KESAVA MINES & MINERALS LIMITED

DIRECTORS’ REPORTFOR THE PERIOD ENDED 31st MARCH, 2006

Your Directors take pleasure in presenting the First Annual Reportof the Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 10th

February, 2006 and obtained its Certificate for Commencement ofBusiness on 28th February, 2006.

FINANCIAL RESULTS

During the period under review, the Company incurred a net lossof Rs. 37,152/- after writing off the preliminary expenses of Rs.30,138/-. In view of the same, your Directors do not propose torecommend any dividend.

EMPLOYEES’ PARTICULARS

During the year, there was no employee in the Company. As such,no employee was in receipt of remuneration in excess of the limitsprescribed under Section 217(2A) of the Companies Act, 1956read with the Rules and Notifications made thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company is not engaged in any manufacturing activity, thedetails of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri N. Gopalaswamy, Shri B.B. Mehta and Shri R.K. Ghai, werethe first Directors of the Company and they hold office till theconclusion of the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.The Company has obtained necessary intimation from each ofthem in terms of the Companies (Disqualification of Directors underSection 274(1)(g) of the Companies Act, 1956) Rules, 2003 to theeffect that they have not incurred any disqualification under section274(1)(g) of the Companies Act, 1956 and they are eligible to beappointed as Director(s) of the Company.

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri N. Gopalaswamy, Shri B.B. Mehta and ShriR.K. Ghai as Director(s) of the Company, together with requisitedeposit as envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the CompaniesAct, 1956, your Directors declare that:

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Indra D. Narayan & Co., Chartered Accountants, wereappointed as the first Auditors of the Company and they holdoffice till the conclusion of the forthcoming Annual General Meetingand are eligible for re-appointment. As required under Section 224of the Companies Act, 1956, the Company has obtained from thema certificate to the effect that their re-appointment, if made, wouldbe in conformity with the limits prescribed in the said Section.

B.B. MehtaR.K. Ghai

New Delhi DIRECTORSDated: 20th April, 2006

ANNUAL REPORT2005-2006

SRI KESAVA MINES & MINERALS LIMITEDDIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri N. Gopalaswamy Indra D. Narayan & Co. Hansalaya,11th Floor, Dalmiapuram-621651Shri B.B. Mehta Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri R.K. Ghai New Delhi-110001 (Tamil Nadu)

193

SRI KESAVA MINES & MINERALS LIMITED

AUDITORS’ REPORT

The Shareholders,Sri Kesava Mines & Minerals LimitedDalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of Sri KesavaMines & Minerals Limited as at 31st March, 2006 and also theannexed Profit and Loss Account and the cash flowstatement of the Company for the year ended on that date,from all of which paise have been eliminated. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For Indra D. Narayan & Co.Chartered Accountants

Indra Dev NarayanPARTNER

NEW DELHIDated: This the 20th day of April, 2006

ANNEXURE

Re: SRI KESAVA MINES & MINERALS LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order, 2003 asfar as it is applicable, we further report that:

1. The Company does not have any fixed assets.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanation given to us, notransaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

194

SRI KESAVA MINES & MINERALS LIMITED

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The provisions of clause 4(x) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company, beingnot in existence for more than 5 years, hence not commentedupon.

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. According to information and explanations given to us, theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

15. According to information and explanations given to us, theCompany has not raised any term loan.

16. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

17. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

18. According to information and explanations given to us, theCompany has not issued any debentures during the year.

19. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

20. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

21. The other provisions of the order do not appear to beapplicable for the year under report.

Yours faithfully,For Indra D. Narayan & Co.

Chartered AccountantsIndra Dev Narayan

PARTNERNEW DELHIDated: This the 20th day of April, 2006

195

SRI KESAVA MINES & MINERALS LIMITED

Significant Accounting Policies and Notes at the end of the Profit and loss Account

Annexure to our Report of dateFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

BALANCE SHEETAs at 31st March, 2006

As at31.03.2006

Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised50,000 Equity Shares

of Rs. 10 each 5,00,000

Issued, subscribed and paid-up50,000 Equity Shares of Rs. 10 each 5,00,000

(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Companyand its nominees)

CURRENT LIABILITIES ANDPROVISIONS

Sundry Creditors 2,204

5,02,204

As at31.03.2006

Rs . Rs.ASSETS

CURRENT ASSETS, LOANS ANDADVANCES

Cash in Hand 600Balances with Scheduled Bank inCurrent Accounts 4,64,452

4,65,052

Profit and Loss Account 37,152

5,02,204

196

SRI KESAVA MINES & MINERALS LIMITED

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. The Company was incorporated on 10th February, 2006. Being the first accounts, there are no figures for the previous years.

2. Significant Accounting Policies:

Revenue Recognition.Revenue is recognised on accrual basis.

3. Information required by para 4-D of Part-II of Schedule VI-Nil.

4. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, GeeteeEstates Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Arjuna Brokers &Minerals Limited, Shri Rangam Properties Limited, Shri Rangam Brokers & Holdings Limited, Dalmia Minerals & PropertiesLimited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Sri Madhava Minerals &Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri SubramanyaMines & Minerals Limited and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Reimbursement of Expenses incurred by Holding Company Rs. 21,045(ii) Subscription to Share Capital by Holding Company Rs. 4,99,400

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

This Year

Rs.

EXPENDITURE

Filing Fee 121

Auditors Remuneration

Audit Fee 2,204

Bank Charges 113

Printing & Stationery 4,576

Preliminary & Pre-operative expenses 30,138

37,152

This Year

Rs.

INCOME

Loss Carried to Balance Sheet 37,152

37,152

197

SRI KESAVA MINES & MINERALS LIMITED

Annexure to our Report of dateFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

5. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 0 5 8 8 1 8 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 5 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

5 0 2 5 0 2

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L N I L

Application of Funds

Net Fixed Assets Investments

N I L N I L

Net Current Assets Miscellaneous Expenditure

4 6 3 N I L

Accumulated Losses

3 7

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L 3 7

Profit before tax Profit after tax

(-) 3 7 (-) 3 7

Earning per Share in Rs. Dividend rate %

(-) 0 . 7 4 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

198

SRI KESAVA MINES & MINERALS LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net Profit before tax (37,152)

Adjustments for working capital changes :

Trade Payable 2,204

Net cash from operating activities (34,948)

Cash Flow from financing activities :

Proceeds from Share Capital 5,00,000

Proceeds from unsecured loans —

Net cash from financing activities 5,00,000

Net change in cash & cash equivalents 4,65,052

Cash & cash equivalents ( opening balance ) —

Cash & cash equivalents ( closing balance ) 4,65,052

Change in cash & cash equivalents 4,65,052

As per our report of even date attachedFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

199

SRI SHANMUGHA MINES & MINERALS LIMITED

ANNUAL REPORT2005-2006

SRI SHANMUGHA MINES & MINERALS LIMITEDDIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri N. Gopalaswamy Indra D. Narayan & Co. Hansalaya,11th Floor, Dalmiapuram-621651Shri B.B. Mehta Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri R.K. Ghai New Delhi-110001 (Tamil Nadu)

DIRECTORS’ REPORTFOR THE PERIOD ENDED 31st MARCH, 2006

Your Directors take pleasure in presenting the First Annual Reportof the Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 10th

February, 2006 and obtained its Certificate for Commencement ofBusiness on 28th February, 2006.

FINANCIAL RESULTS

During the period under review, the Company incurred a net lossof Rs. 37,152/- after writing off the preliminary expenses of Rs.30,138/-. In view of the same, your Directors do not propose torecommend any dividend.

EMPLOYEES’ PARTICULARS

During the year, there was no employee in the Company. As such,no employee was in receipt of remuneration in excess of the limitsprescribed under Section 217(2A) of the Companies Act, 1956read with the Rules and Notifications made thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company is not engaged in any manufacturing activity, thedetails of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri N. Gopalaswamy, Shri B.B. Mehta and Shri R.K. Ghai, werethe first Directors of the Company and they hold office till theconclusion of the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.The Company has obtained necessary intimation from each ofthem in terms of the Companies (Disqualification of Directors underSection 274(1)(g) of the Companies Act, 1956) Rules, 2003 to theeffect that they have not incurred any disqualification under section274(1)(g) of the Companies Act, 1956 and they are eligible to beappointed as Director(s) of the Company.

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri N. Gopalaswamy, Shri B.B. Mehta, and ShriR.K. Ghai as Director(s) of the Company, together with requisitedeposit as envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the CompaniesAct, 1956, your Directors declare that:

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made there from;

(b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Indra D. Narayan & Co., Chartered Accountants, wereappointed as the first Auditors of the Company and they holdoffice till the conclusion of the forthcoming Annual General Meetingand are eligible for reappointment. As required under Section 224of the Companies Act, 1956, the Company has obtained from thema certificate to the effect that their reappointment, if made, wouldbe in conformity with the limits prescribed in the said Section.

B.B. MehtaR.K. Ghai

New Delhi DIRECTORSDated: 20th April, 2006

200

SRI SHANMUGHA MINES & MINERALS LIMITED

AUDITORS’ REPORT

The Shareholders,Sri Shanmugha Mines & Minerals LimitedDalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of SriShanmugha Mines & Minerals Limited as at 31st March, 2006and also the annexed Profit and Loss Account and the cashflow statement of the Company for the year ended on thatdate, from all of which paise have been eliminated. Thesefinancial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For Indra D. Narayan & Co.Chartered Accountants

Indra Dev NarayanPARTNER

NEW DELHIDated: This the 20th day of April, 2006

ANNEXURE

Re: SRI SHANMUGHA MINES & MINERALS LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order,2003 asfar as it is applicable, we further report that:

1. The Company does not have any fixed assets.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, notransaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

201

SRI SHANMUGHA MINES & MINERALS LIMITED

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The provisions of clause 4(x) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company, beingnot in existence for more than 5 years, hence not commentedupon.

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. According to information and explanations given to us ,theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

15. According to information and explanations given to us, theCompany has not raised any term loan.

16. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

17. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

18. According to information and explanations given to us, theCompany has not issued any debentures during the year.

19. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

20. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

21. The other provisions of the order do not appear to beapplicable for the year under report.

Yours faithfully,For Indra D. Narayan & Co.

Chartered AccountantsIndra Dev Narayan

PARTNERNEW DELHIDated: This the 20th day of April, 2006

202

SRI SHANMUGHA MINES & MINERALS LIMITED

Significant Accounting Policies and Notes at the end of the Profit and loss Account

Annexure to our Report of dateFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

BALANCE SHEETAs at 31st March, 2006

As at31.3.2006

Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised50,000 Equity Shares

of Rs. 10 each 5,00,000

Issued, subscribed and paid-up

50,000 Equity Sharesof Rs. 10 each 5,00,000

(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Companyand its nominees)

CURRENT LIABILITIES ANDPROVISIONS

Sundry Creditors 2,204

5,02,204

As at31.3.2006

Rs . Rs.ASSETS

CURRENT ASSETS, LOANS ANDADVANCES

Cash in Hand 600Balances with Scheduled Bank inCurrent Accounts 4,64,452

4,65,052

Profit and Loss Account 37,152

5,02,204

203

SRI SHANMUGHA MINES & MINERALS LIMITED

PROFIT AND LOSS ACCOUNTFor the Year ended 31st March, 2006

This YearRs.

EXPENDITURE

Filing Fee 121Auditors RemunerationAudit Fee 2,204

Bank Charges 113Printing & Stationery 4,576Preliminary & Pre-operative expenses 30,138

37,152

This YearRs.

INCOME

Loss Carried to Balance Sheet 37,152

37,152

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. The Company was incorporated on 10th February, 2006. Being the first accounts, there are no figures for the previous years.

2. Significant Accounting Policies:

Revenue Recognition.

Revenue is recognised on accrual basis.

3. Information required by para 4-D of Part-II of Schedule VI-Nil.

4. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, Geetee

Estates Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Arjuna Brokers &

Minerals Limited, Shri Rangam Properties Limited, Shri Rangam Brokers & Holdings Limited, Dalmia Minerals & Properties

Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Sri Kesava Mines & Minerals

Limited, Sri Madhava Minerals & Properties Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines &

Minerals Limited and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Reimbursement of Expenses incurred by Holding Company Rs. 21,045

(ii) Subscription to Share Capital by Holding Company Rs. 4,99,400

204

SRI SHANMUGHA MINES & MINERALS LIMITED

5. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 0 5 8 8 1 7 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 5 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

5 0 2 5 0 2

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L N I L

Application of Funds

Net Fixed Assets Investments

N I L N I L

Net Current Assets Miscellaneous Expenditure

4 6 3 N I L

Accumulated Losses

3 7

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L 3 7

Profit before tax Profit after tax

(-) 3 7 (-) 3 7

Earning per Share in Rs. Dividend rate %

(-) 0 . 7 4 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

205

SRI SHANMUGHA MINES & MINERALS LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net Profit before tax (37,152)

Adjustments for working capital changes :

Trade Payable 2,204

Net cash from operating activities (34,948)

Cash Flow from financing activities :

Proceeds from Share Capital 5,00,000

Proceeds from unsecured loans -

Net cash from financing activities 5,00,000

Net change in cash & cash equivalents 4,65,052

Cash & cash equivalents ( opening balance ) -

Cash & cash equivalents ( closing balance ) 4,65,052

Change in cash & cash equivalents 4,65,052

As per our report of even date attached

For Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

206

SRI SUBRAMANYA MINES & MINERALS LIMITED

ANNUAL REPORT2005-2006

SRI SUBRAMANYA MINES & MINERALS LIMITEDDIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri N. Gopalaswamy Indra D. Narayan & Co. Hansalaya,11th Floor, Dalmiapuram-621651Shri B.B. Mehta Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri R.K. Ghai New Delhi-110001 (Tamil Nadu)

DIRECTORS’ REPORTFOR THE PERIOD ENDED 31st MARCH, 2006

Your Directors take pleasure in presenting the First Annual Reportof the Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 10th

February, 2006 and obtained its Certificate for Commencement ofBusiness on 28th February, 2006.

FINANCIAL RESULTS

During the period under review, the Company incurred a net loss ofRs. 37,152/- after writing off the preliminary expenses of Rs. 30,138/-. In view of the same, your Directors do not propose to recommendany dividend.

EMPLOYEES’ PARTICULARS

During the year, there was no employee in the Company. As such,no employee was in receipt of remuneration in excess of the limitsprescribed under Section 217(2A) of the Companies Act, 1956 readwith the Rules and Notifications made thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company is not engaged in any manufacturing activity, thedetails of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri N. Gopalaswamy, Shri B.B. Mehta and Shri R.K. Ghai, werethe first Directors of the Company and they hold office till theconclusion of the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.The Company has obtained necessary intimation from each of themin terms of the Companies (Disqualification of Directors underSection 274(1)(g) of the Companies Act, 1956) Rules, 2003 to theeffect that they have not incurred any disqualification under section274(1)(g) of the Companies Act, 1956 and they are eligible to beappointed as Director(s) of the Company.

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri N. Gopalaswamy, Shri B.B. Mehta, and ShriR.K. Ghai as Director(s) of the Company, together with requisitedeposit as envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the CompaniesAct, 1956, your Directors declare that:

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made there from;

(b) the Directors had selected such accounting policies and appliedthem consistently and made judgements and estimates thatare reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financialyear and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds and otherirregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Indra D. Narayan & Co., Chartered Accountants, wereappointed as the first Auditors of the Company and they hold officetill the conclusion of the forthcoming Annual General Meeting andare eligible for reappointment. As required under Section 224 ofthe Companies Act, 1956, the Company has obtained from them acertificate to the effect that their reappointment, if made, would bein conformity with the limits prescribed in the said Section.

B.B. MehtaR.K. Ghai

New Delhi DIRECTORSDated: 20th April, 2006

207

SRI SUBRAMANYA MINES & MINERALS LIMITED

AUDITORS’ REPORT

The Shareholders,Sri Subramanya Mines & Minerals LimitedDalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of SriSubramanya Mines & Minerals Limited as at 31st March, 2006and also the annexed Profit and Loss Account and the cashflow statement of the Company for the year ended on thatdate, from all of which paise have been eliminated. Thesefinancial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those standards require that weplan and perform the audit to obtain reasonable assurancewhether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing theaccounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section 211of the Companies Act, 1956;

v) On the basis of written representations received from thedirectors, as on 31st March, 2006 and taken on record bythe Board of Directors, we report that none of the Directorsof Company is disqualified as on 31st March, 2006 frombeing appointed as a Director under clause (g) of subsection (1) of section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For Indra D. Narayan & Co.Chartered Accountants

Indra Dev NarayanPARTNER

NEW DELHIDated: This the 20th day of April, 2006

ANNEXURE

Re: SRI SUBRAMANYA MINES & MINERALS LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order, 2003 asfar as it is applicable, we further report that:

1. The Company does not have any fixed assets.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of any failureto correct major weakness in internal control;

5. According to information and explanation given to us, notransaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate withits size and nature of its operations;

208

SRI SUBRAMANYA MINES & MINERALS LIMITED

8. The Company is not required to maintain any cost recordsas per section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to us theCompany is regular in depositing undisputed statutory duesincluding investor Education and Protection Fund, Income Taxand other statutory dues with the appropriate authorities andhave no undisputed amounts payable in respect of Income-tax outstanding as on 31st March, 2006 for a period of morethan six months from the date they became payable;

10. The provisions of clause 4(x) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company, beingnot in existence for more than 5 years, hence not commentedupon.

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. According to information and explanations given to us ,theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

15. According to information and explanations given to us, theCompany has not raised any term loan.

16. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

17. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

18. According to information and explanations given to us, theCompany has not issued any debentures during the year.

19. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

20. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

21. The other provisions of the order do not appear to be applicablefor the year under report.

Yours faithfully,For Indra D. Narayan & Co.

Chartered AccountantsIndra Dev Narayan

PARTNERNEW DELHIDated: This the 20th day of April, 2006

209

SRI SUBRAMANYA MINES & MINERALS LIMITED

Significant Accounting Policies and Notes at the end of the Profit and loss Account

Annexure to our Report of dateFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

BALANCE SHEETAs at 31st March, 2006

As at31.3.2006

Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised50,000 Equity Shares

of Rs. 10 each 5,00,000

Issued, subscribed and paid-up

50,000 Equity Shares of Rs. 10 each 5,00,000

(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Companyand its nominees)

CURRENT LIABILITIES AND PROVISIONS

Sundry Creditors 2,204

5,02,204

As at31.3.2006

Rs. Rs.ASSETS

CURRENT ASSETS, LOANS ANDADVANCES

Cash in Hand 600Balances with Scheduled Bank inCurrent Accounts 4,64,452

4,65,052

Profit and Loss Account 37,152

5,02,204

210

SRI SUBRAMANYA MINES & MINERALS LIMITED

PROFIT AND LOSS ACCOUNTFor the Year ended 31st March, 2006

This YearRs.

EXPENDITURE

Filing Fee 121Auditors RemunerationAudit Fee 2,204

Bank Charges 113Printing & Stationery 4,576Preliminary & Pre-operative expenses 30,138

37,152

This YearRs.

INCOME

Loss Carried to Balance Sheet 37,152

37,152

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. The Company was incorporated on 10th February, 2006. Being the first accounts, there are no figures for the previous years.

2. Significant Accounting Policies:

Revenue Recognition.

Revenue is recognised on accrual basis.

3. Information required by para 4-D of Part-II of Schedule VI-Nil.

4. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, Geetee

Estates Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Arjuna Brokers &

Minerals Limited, Shri Rangam Properties Limited, Shri Rangam Brokers & Holdings Limited, Dalmia Minerals & Proper-

ties Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Sri Kesava Mines &

Minerals Limited, Sri Madhava Minerals & Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha

Mines & Minerals Limited, and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Reimbursement of Expenses incurred by Holding Company Rs. 21,045

(ii) Subscription to Share Capital by Holding Company Rs. 4,99,400

211

SRI SUBRAMANYA MINES & MINERALS LIMITED

5. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 0 5 8 8 1 6 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 5 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

5 0 2 5 0 2

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L N I L

Application of Funds

Net Fixed Assets Investments

N I L N I L

Net Current Assets Miscellaneous Expenditure

4 6 3 N I L

Accumulated Losses

3 7

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L 3 7

Profit before tax Profit after tax

(-) 3 7 (-) 3 7

Earning per Share in Rs. Dividend rate %

(-) 0 . 7 4 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

212

SRI SUBRAMANYA MINES & MINERALS LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net Profit before tax (37,152)

Adjustments for working capital changes :

Trade Payable 2,204

Net cash from operating activities (34,948)

Cash Flow from financing activities :

Proceeds from Share Capital 5,00,000

Proceeds from unsecured loans —

Net cash from financing activities 5,00,000

Net change in cash & cash equivalents 4,65,052

Cash & cash equivalents ( opening balance ) —

Cash & cash equivalents ( closing balance ) 4,65,052

Change in cash & cash equivalents 4,65,052

As per our report of even date attached

For Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

213

SRI SWAMINATHA MINES & MINERALS LIMITED

ANNUAL REPORT2005-2006

SRI SWAMINATHA MINES & MINERALS LIMITEDDIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri N. Gopalaswamy Indra D. Narayan & Co. Hansalaya,11th Floor, Dalmiapuram-621651Shri B.B. Mehta Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri R.K. Ghai New Delhi-110001 (Tamil Nadu)

DIRECTORS’ REPORTFOR THE PERIOD ENDED 31st MARCH, 2006

Your Directors take pleasure in presenting the First Annual Reportof the Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 10th

February, 2006 and obtained its Certificate for Commencement ofBusiness on 28th February, 2006.

FINANCIAL RESULTS

During the period under review, the Company incurred a net lossof Rs. 37,152/- after writing off the preliminary expenses of Rs.30,138/-. In view of the same, your Directors do not propose torecommend any dividend.

EMPLOYEES’ PARTICULARS

During the year, there was no employee in the Company. As such,no employee was in receipt of remuneration in excess of the limitsprescribed under Section 217(2A) of the Companies Act, 1956read with the Rules and Notifications made thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company is not engaged in any manufacturing activity, thedetails of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri N. Gopalaswamy, Shri B.B. Mehta and Shri R.K. Ghai, werethe first Directors of the Company and they hold office till theconclusion of the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.The Company has obtained necessary intimation from each ofthem in terms of the Companies (Disqualification of Directors underSection 274(1)(g) of the Companies Act, 1956) Rules, 2003 to theeffect that they have not incurred any disqualification under section274(1)(g) of the Companies Act, 1956 and they are eligible to beappointed as Director(s) of the Company.

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri N. Gopalaswamy, Shri B.B. Mehta, and ShriR.K. Ghai as Director(s) of the Company, together with requisitedeposit as envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the CompaniesAct, 1956, your Directors declare that:

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made there from;

(b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Indra D. Narayan & Co., Chartered Accountants, wereappointed as the first Auditors of the Company and they holdoffice till the conclusion of the forthcoming Annual General Meetingand are eligible for reappointment. As required under Section 224of the Companies Act, 1956, the Company has obtained from thema certificate to the effect that their reappointment, if made, wouldbe in conformity with the limits prescribed in the said Section.

B.B. MehtaR.K. Ghai

New Delhi DIRECTORSDated: 20th April, 2006

214

SRI SWAMINATHA MINES & MINERALS LIMITED

AUDITORS’ REPORT

The Shareholders,Sri Swaminatha Mines & Minerals LimitedDalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of SriSwaminatha Mines & Minerals Limited as at 31st March, 2006and also the annexed Profit and Loss Account and the cashflow statement of the Company for the year ended on thatdate, from all of which paise have been eliminated. Thesefinancial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For Indra D. Narayan & Co.Chartered Accountants

Indra Dev NarayanPARTNER

NEW DELHIDated: This the 20th day of April, 2006

ANNEXURE

Re: SRI SWAMINATHA MINES & MINERALS LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order,2003 asfar as it is applicable, we further report that:

1. The Company does not have any fixed assets.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internal controlprocedure commensurate with the size of the Company andthe nature of its business with regard to its purchase andsale of or investments in shares, debentures and othersecurities. During the course of our audit we have neithercome across nor have we been informed of any failure tocorrect major weakness in internal control;

5. According to information and explanations given to us, notransaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

215

SRI SWAMINATHA MINES & MINERALS LIMITED

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The provisions of clause 4(x) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company, beingnot in existence for more than 5 years, hence not commentedupon.

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. According to information and explanations given to us ,theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

15. According to information and explanations given to us, theCompany has not raised any term loan.

16. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

17. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

18. According to information and explanations given to us, theCompany has not issued any debentures during the year.

19. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

20. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

21. The other provisions of the order do not appear to beapplicable for the year under report.

Yours faithfully,For Indra D. Narayan & Co.

Chartered AccountantsIndra Dev Narayan

PARTNERNEW DELHIDated: This the 20th day of April, 2006

216

SRI SWAMINATHA MINES & MINERALS LIMITED

Significant Accounting Policies and Notes at the end of the Profit and loss Account

Annexure to our Report of dateFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

BALANCE SHEETAs at 31st March, 2006

As at31.3.2006

Rs. Rs.LIABILITIES

SHARE CAPITALAuthorised50,000 Equity Shares

of Rs. 10 each 5,00,000

Issued, subscribed and paid-up

50,000 Equity Shares of Rs. 10 each 5,00,000

(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Companyand its nominees)

CURRENT LIABILITIES ANDPROVISIONS

Sundry Creditors 2,204

5,02,204

As at31.3.2006

Rs . Rs.ASSETS

CURRENT ASSETS, LOANS ANDADVANCES

Cash in Hand 600Balances with Scheduled Bank inCurrent Accounts 4,64,452

4,65,052

Profit and Loss Account 37,152

5,02,204

217

SRI SWAMINATHA MINES & MINERALS LIMITED

PROFIT AND LOSS ACCOUNTFor the Year ended 31st March, 2006

This YearRs.

EXPENDITURE

Filing Fee 121Auditors RemunerationAudit Fee 2,204

Bank Charges 113Printing & Stationery 4,576Preliminary & Pre-operative expenses 30,138

37,152

This YearRs.

INCOME

Loss Carried to Balance Sheet 37,152

37,152

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. The Company was incorporated on 10th February, 2006. Being the first accounts, there are no figures for the previous years.

2. Significant Accounting Policies:

Revenue Recognition.

Revenue is recognised on accrual basis.

3. Information required by para 4-D of Part-II of Schedule VI-Nil.

4. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, Geetee

Estates Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Arjuna Brokers &

Minerals Limited, Shri Rangam Properties Limited, Shri Rangam Brokers & Holdings Limited, Dalmia Minerals & Properties

Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Sri Madhava Minerals &

Properties Limited, Sri Shanmugha Mines & Minerals Limited, Sri Kesava Mines & Minerals Limited, Sri Subramanya Mines

& Minerals Limited and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Reimbursement of Expenses incurred by Holding Company Rs. 21,045

(ii) Subscription to Share Capital by Holding Company Rs. 4,99,400

218

SRI SWAMINATHA MINES & MINERALS LIMITED

5. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 0 5 8 8 2 0 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 5 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

5 0 2 5 0 2

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L N I L

Application of Funds

Net Fixed Assets Investments

N I L N I L

Net Current Assets Miscellaneous Expenditure

4 6 3 N I L

Accumulated Losses

3 7

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L 3 7

Profit before tax Profit after tax

(-) 3 7 (-) 3 7

Earning per Share in Rs. Dividend rate %

(-) 0 . 7 4 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

219

SRI SWAMINATHA MINES & MINERALS LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net Profit before tax (37,152)

Adjustments for working capital changes :

Trade Payable 2,204

Net cash from operating activities (34,948)

Cash Flow from financing activities :

Proceeds from Share Capital 5,00,000

Net cash from financing activities 5,00,000

Net change in cash & cash equivalents 4,65,052

Cash & cash equivalents ( opening balance ) —

Cash & cash equivalents ( closing balance ) 4,65,052

Change in cash & cash equivalents 4,65,052

As per our report of even date attached

For Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORSNew DelhiDated: This the 20th day of April, 2006

220

SRI MADHAVA MINERALS & PROPERTIES LIMITED

DIRECTORS’ REPORTFOR THE PERIOD ENDED 31st MARCH, 2006

Your Directors take pleasure in presenting the First Annual Reportof the Company for the period ended 31st March, 2006.

INCORPORATION

Members are aware that the Company was incorporated on 10th

February, 2006 and obtained its Certificate for Commencement ofBusiness on 28th February, 2006.

FINANCIAL RESULTS

During the period under review, the Company incurred a net lossof Rs. 37,152/- after writing off the preliminary expenses of Rs.30,138/-. In view of the same, your Directors do not propose torecommend any dividend.

EMPLOYEES’ PARTICULARS

During the year, there was no employee in the Company. As such,no employee was in receipt of remuneration in excess of the limitsprescribed under Section 217(2A) of the Companies Act, 1956read with the Rules and Notifications made thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE TRANSACTIONS

As the Company is not engaged in any manufacturing activity, thedetails of Conservation of Energy, Technology Absorption andForeign Exchange transactions, in accordance with the Companies(Disclosure of particulars in the Report of the Board of Directors)Rules, 1988 is Nil.

DIRECTORS

Shri N. Gopalaswamy, Shri B.B. Mehta and Shri R.K. Ghai, werethe first Directors of the Company and they hold office till theconclusion of the ensuing Annual General Meeting.

The appointment(s) of the aforesaid persons as Director(s) of theCompany is being proposed at the ensuing Annual General Meeting.The Company has obtained necessary intimation from each ofthem in terms of the Companies (Disqualification of Directors underSection 274(1)(g) of the Companies Act, 1956) Rules, 2003 to theeffect that they have not incurred any disqualification under section274(1)(g) of the Companies Act, 1956 and they are eligible to beappointed as Director(s) of the Company.

The Company has received Notice(s) from a Member to the effectthat he intends to move necessary Resolution(s) proposing theappointment of Shri N. Gopalaswamy, Shri B.B. Mehta, and ShriR.K. Ghai as Director(s) of the Company, together with requisitedeposit as envisaged in Section 257 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 217(2AA) of the CompaniesAct, 1956, your Directors declare that:

(a) in the preparation of the annual accounts, the applicableAccounting Standards have been followed and no departureshave been made therefrom;

(b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting frauds andother irregularities; and

(d) the Directors had prepared the annual accounts on a goingconcern basis.

AUDITORS

M/s. Indra D. Narayan & Co., Chartered Accountants, wereappointed as the first Auditors of the Company and they holdoffice till the conclusion of the forthcoming Annual General Meetingand are eligible for reappointment. As required under Section 224of the Companies Act, 1956, the Company has obtained from thema certificate to the effect that their reappointment, if made, wouldbe in conformity with the limits prescribed in the said Section.

B.B. MehtaR.K. Ghai

New Delhi DIRECTORSDated: 20th April, 2006

ANNUAL REPORT2005-2006

SRI MADHAVA MINERALS & PROPERTIES LIMITEDDIRECTORS AUDITORS HEAD OFFICE REGISTERED OFFICEShri N. Gopalaswamy Indra D. Narayan & Co. Hansalaya,11th Floor, Dalmiapuram-621651Shri B.B. Mehta Chartered Accountants 15, Barakhamba Road Dist. TiruchirapalliShri R.K. Ghai New Delhi-110001 (Tamil Nadu)

221

SRI MADHAVA MINERALS & PROPERTIES LIMITED

AUDITORS’ REPORT

The Shareholders,Sri Madhava Minerals & Properties LimitedDalmiapuram

Gentlemen,

1. We have audited the attached Balance Sheet of Sri MadhavaMinerals & Properties Limited as at 31st March, 2006 andalso the annexed Profit and Loss Account and the cash flowstatement of the Company for the year ended on that date,from all of which paise have been eliminated. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order 2003,issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that :

i) We have obtained all the information and explanations,which to the best of our knowledge and belief, werenecessary for the purpose of our audit;

ii) In our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;

iii) The Balance Sheet and Profit and Loss Account dealtwith by the Report are in agreement with the books ofaccount;

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with this report comply with the AccountingStandards referred to in Sub-section (3C) of Section211 of the Companies Act, 1956;

v) On the basis of written representations received fromthe directors, as on 31st March, 2006 and taken on recordby the Board of Directors, we report that none of theDirectors of Company is disqualified as on 31st March,2006 from being appointed as a Director under clause(g) of sub section (1) of section 274 of the CompaniesAct, 1956;

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India :

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2006;

b) in the case of Profit and Loss Account of theLoss for the year ended on that date.

c) in the case of the cash flow statement, of the cashflows for the year ended on that date.

For Indra D. Narayan & Co.Chartered Accountants

Indra Dev NarayanPARTNER

NEW DELHIDated: This the 20th day of April, 2006

ANNEXURE

Re: SRI MADHAVA MINERALS & PROPERTIES LIMITED(Referred to in paragraph 3 of our audit report of even date)

As required by the Companies (Auditors’ Report) Order,2003 asfar as it is applicable, we further report that:

1. The Company does not have any fixed assets.

2. According to information and explanations given to us, theCompany does not have any inventory.

3. According to the information and explanations given to us,the Company has not granted to/taken any loans fromCompanies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956;

4. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol procedure commensurate with the size of theCompany and the nature of its business with regard to itspurchase and sale of or investments in shares, debenturesand other securities. During the course of our audit we haveneither come across nor have we been informed of anyfailure to correct major weakness in internal control;

5. According to information and explanations given to us, notransaction was required to be entered in the register(s)maintained under section 301 of the Companies Act, 1956;

6. According to information and explanations given to us, theCompany has not accepted any deposits from the public.

7. As per information and explanations given to us, the Companyis maintaining an internal audit system commensurate with itssize and nature of its operations;

222

SRI MADHAVA MINERALS & PROPERTIES LIMITED

8. The Company is not required to maintain any cost records asper section 209(1)(d) of the Companies Act, 1956;

9. According to the information and explanations given to usthe Company is regular in depositing undisputed statutorydues including investor Education and Protection Fund, IncomeTax and other statutory dues with the appropriate authoritiesand have no undisputed amounts payable in respect ofIncome-tax outstanding as on 31st March, 2006 for a periodof more than six months from the date they became payable;

10. The provisions of clause 4(x) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company, beingnot in existence for more than 5 years, hence not commentedupon.

11. According to the information and explanations given to us,the Company has not taken any loans/advances from anyfinancial institution, bank or debenture holders.

12. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of any security by way of pledge of shares,debentures and other securities;

13. The Company is not a chit fund or a nidhi mutual benefit fund/society.

14. According to information and explanations given to us, theCompany has not given any guarantee for loans taken byothers from any bank or financial institution .

15. According to information and explanations given to us, theCompany has not raised any term loan.

16. According to information and explanations given to us andon an overall examination of the balance sheet of theCompany, we report that no funds raised on short term basishave been used for long term investment .

17. According to information and explanations given to us, theCompany has not made any preferential allotment of shares.

18. According to information and explanations given to us, theCompany has not issued any debentures during the year.

19. According to information and explanations given to us, theCompany has not raised any money by way of public issuedduring the year.

20. According to information and explanations given to us, nofraud on or by the Company has been noticed or reportedduring the year.

21. The other provisions of the order do not appear to beapplicable for the year under report.

Yours faithfully,For Indra D. Narayan & Co.

Chartered AccountantsIndra Dev Narayan

PARTNERNEW DELHIDated: This the 20th day of April, 2006

223

SRI MADHAVA MINERALS & PROPERTIES LIMITED

Significant Accounting Policies and Notes at the end of the Profit and loss Account

Annexure to our Report of dateFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

BALANCE SHEETAs at 31st March, 2006

As at31.03.2006

Rs.LIABILITIES

SHARE CAPITALAuthorised50,000 Equity Shares

of Rs. 10 each 5,00,000

Issued, subscribed and paid-up

50,000 Equity Shares of Rs. 10 each 5,00,000

(The entire subscribed capitalis held by Dalmia Cement (Bharat)Limited - the Holding Companyand its nominees)

CURRENT LIABILITIES ANDPROVISIONS

Sundry Creditors 2,204

5,02,204

As at31.03.2006

Rs . Rs.ASSETS

CURRENT ASSETS, LOANS ANDADVANCES

Cash in Hand 600Balances with Scheduled Bank inCurrent Accounts 4,64,452

4,65,052

Profit and Loss Account 37,152

5,02,204

224

SRI MADHAVA MINERALS & PROPERTIES LIMITED

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2006

This YearRs.

EXPENDITURE

Filing Fee 121Auditors RemunerationAudit Fee 2,204

Bank Charges 113Printing & Stationery 4,576Preliminary & Pre-operative expenses 30,138

37,152

This YearRs.

INCOME

Loss Carried to Balance Sheet 37,152

37,152

Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit and Loss Account :

1. The Company was incorporated on 10th February, 2006. Being the first accounts, there are no figures for the previous years.

2. Significant Accounting Policies:

Revenue Recognition.

Revenue is recognised on accrual basis.

3. Information required by para 4-D of Part-II of Schedule VI-Nil.

4. Related party Disclosures, as required by Accounting Standard - 18 is as below:

A. Relationships:

(i) Holding and Promoter Company:

Dalmia Cement (Bharat) Limited

(ii) Enterprises controlled by the Promoter Company:

Anupama Investment Limited, Kanika Investment Limited, Ishita Properties Limited, Avnija Properties Limited, Geetee

Estates Limited, Himshikhar Investment Limited, Hemshila Properties Limited, D.I. Properties Limited, Arjuna Brokers &

Minerals Limited, Shri Rangam Properties Limited, Shri Rangam Brokers & Holdings Limited, Dalmia Minerals & Properties

Limited, Shri Radha Krishna Brokers & Holdings Limited, Seeta Estates & Brokers Limited, Sri Kesava Mines & Minerals

Limited, Sri Shanmugha Mines & Minerals Limited, Sri Swaminatha Mines & Minerals Limited, Sri Subramanya Mines &

Minerals Limited and Dalmia Sugars Limited

B. The following transactions were carried out with the related parties in the ordinary course of business during the year

(i) Reimbursement of Expenses incurred by Holding Company Rs. 21,045

(ii) Subscription to Share Capital by Holding Company Rs. 4,99,400

225

SRI MADHAVA MINERALS & PROPERTIES LIMITED

5. Information required under Part IV of Schedule VI are as under :-

Balance Sheet Abstract and Company’s General Business Profile.I. Registration Details

Registration No. 1 8 - 0 5 8 8 1 9 State Code 1 8

Balance Sheet Date 3 1 . 0 3 . 2 0 0 6

II. Capital raised during the year ( Amount in Rs. Thousands )

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 5 0 0

III. Position of mobilisation and deployment of funds ( Amount in Rs. Thousands )

Total Liabilities Total Assets

5 0 2 5 0 2

Sources of Funds

Paid-up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L N I L

Application of Funds

Net Fixed Assets Investments

N I L N I L

Net Current Assets Miscellaneous Expenditure

4 6 3 N I L

Accumulated Losses

3 7

IV. Performance of Company ( Amount in Rs. Thousands )

Turnover Total Expenditure

N I L 3 7

Profit before tax Profit after tax

(-) 3 7 (-) 3 7

Earning per Share in Rs. Dividend rate %

(-) 0 . 7 4 N I L

V. Generic names of three Principal Products / Services of Company

N O T A P P L I C A B L E

Annexure to our Report of dateFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

226

SRI MADHAVA MINERALS & PROPERTIES LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006

Rs.

Cash Flow from operating activities :

Net Profit before tax (37,152)

Adjustments for working capital changes :

Trade Payable 2,204

Net cash from operating activities (34,948)

Cash Flow from financing activities :

Proceeds from Share Capital 5,00,000

Proceeds from unsecured loans —

Net cash from financing activities 5,00,000

Net change in cash & cash equivalents 4,65,052

Cash & cash equivalents ( opening balance ) —

Cash & cash equivalents ( closing balance ) 4,65,052

Change in cash & cash equivalents 4,65,052

As per our report of even date attachedFor Indra D. Narayan & Co.Chartered Accountants B.B. MehtaIndra Dev Narayan R.K. GhaiPARTNER DIRECTORS

New DelhiDated: This the 20th day of April, 2006

227

AUDITOR’S REPORT TO THE BOARD OF DIRECTORS OF DALMIA CEMENT (BHARAT) LIMITED ON THECONSOLIDATED FINANCIAL STATEMENTS OF DALMIA CEMENT (BHARAT) LIMITED AND ITS SUBSIDIARIES

We have examined the attached consolidated balance sheet of Dalmia Cement (Bharat) Limited (the Company) and its subsidiaries as at31st March, 2006, the consolidated profit and loss account for the year ended on that date annexed thereto and the consolidated cash flowstatement for the year ended on that date. These consolidated financial statements are the responsibility of the Dalmia Cement (Bharat)Limited’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan andperform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordancewith an identified financial reporting framework and 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 principlesused and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe thatour audit provides a reasonable basis for our opinion.

We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets of Rs.9272.40 lakhs asat 31st March, 2006 and total revenues of Rs.166.57 lakhs for the year ended on that date These financial statements have been auditedby other auditors whose report(s) have been furnished to us, and our opinion, insofar as it relates to the amounts included in respect ofthese subsidiaries, is based solely on the report of the other auditors.

We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements ofAccounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India and on thebasis of the separate audited financial statements of Dalmia Cement (Bharat) Limited and its subsidiaries included in the consolidatedfinancial statements.

On the basis of the information and explanations given to us and on the consideration of the separate audit reports on individual auditedfinancial statements of Dalmia Cement (Bharat) Limited and its aforesaid subsidiaries, in our opinion, the consolidated financial statementstogether with the notes thereon 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 consolidated state of affairs of Dalmia Cement (Bharat) Limited and itssubsidiaries as at 31st March, 2006;

(b) in the case of the consolidated profit and loss account, of the consolidated results of operations of Dalmia Cement (Bharat) Limitedand its subsidiaries for the year ended on that date; and

(c) in the case of the consolidated cash flow statement, of the consolidated cash flows of Dalmia Cement (Bharat) Limited and itssubsidiaries for the year ended on that date.

For S.S.KOTHARI MEHTA & CO.Chartered Accountants

CA J. KrishnanPlace : NEW DELHI PartnerDated: 27.04.2006 Membership No.84551

228

CONSOLIDATED BALANCE SHEET OF DALMIA CEMENT (BHARAT) LIMITED AND ITS SUBSIDIARIESAS AT 31ST MARCH, 2006

As at As at31.3.2006 31.3.2005

Schedule Rs. Lakhs Rs. Lakhs Rs. LakhsI. SOURCES OF FUNDS

1. SHAREHOLDERS’ FUNDS

a) Share Capital 1 765.16 765.16

b) Reserves and Surplus 2 42230.42 35293.01

42995.58 36058.17

2. LOAN FUNDS

a) Secured Loans 3 62460.71 44839.05

b) Unsecured Loans 4 5857.14 5045.19

68317.85 49884.24

3. DEFERRED TAX 5 7299.83 5907.19

118613.26 91849.60

II. APPLICATION OF FUNDS

1. FIXED ASSETS

a) Gross Block 106207.44 77229.83

b) Less: Depreciation 41409.06 37835.30

c) Net Block 6 64798.38 39394.53

d) Capital work-in-progress 21795.72 22509.43

e) Pre-operative Expenses during

construction pending allocation 38.62 -

86632.72 61903.96

2. INVESTMENTS 7 17080.02 8061.04

3. CURRENT ASSETS, LOANS AND ADVANCES

a) Inventories 8 19168.76 19279.16

b) Sundry Debtors 9 5975.36 5169.99

c) Cash and Bank balances 10 6270.58 2802.10

d) Loans and Advances 11 7175.24 9972.91

38589.94 37224.16

Less: Current Liabilities and Provisions

a) Current Liabilities 12 20408.16 12399.77

b) Provisions 13 3348.92 3074.90

23757.08 15474.67

Net Current Assets 14832.86 21749.49

4. MISCELLANEOUS EXPENDITURE 14 67.66 135.11

118613.26 91849.60

Significant Accounting Policies and Notes to Accounts 19

P.K. KhaitanN. Gopalaswamy

As per our report of even date attached M.H. DalmiaFor S.S. Kothari Mehta & Co., N. KhaitanChartered Accountants K.V. Mohan S. Subramanian M. RaghupathyCA J. Krishnan COMPANY DY. EXECUTIVE DIRECTOR J.S. BaijalPARTNER SECRETARY & GROUP CONTROLLER DIRECTORSNew DelhiDated: this the 27th day of April, 2006

229

CONSOLIDATED PROFIT AND LOSS ACCOUNT OF DALMIA CEMENT (BHARAT) LIMITED AND ITS SUBSIDIARIESFOR THE YEAR ENDED 31ST MARCH, 2006

This PreviousYear Year

Schedule Rs. Lakhs Rs. Lakhs Rs. LakhsI N C O M E

Sales {inclusive of Excise Duty Rs.8104.02 Lakhs(Rs 6883.63 Lakhs)} 65078.62 51889.52Other Income 15 8253.42 2479.53Increase/(Decrease) in Stocks 16 (1080.73) 1183.23

72251.31 55552.28

E X P E N D I T U R ERaw Materials consumed 17045.13 14543.78Purchases 250.36 0.63Salaries, Wages and Benefits to Employees 17 3208.92 2704.84Other Expenses 18 37975.64 32660.49Depreciation 3546.71 2864.60Less: Transferred from Revaluation Reserve 752.81 835.17

2793.90 2029.43

61273.95 51939.17

Profit before Tax and Exceptional Items 10977.36 3613.11Exceptional Items:

Cane Price difference of earlier years — 1208.82Less: withdrawn from General Reserve — 1208.82

Profit before Tax 10977.36 3613.11Provision for Taxation :Current Tax 925.76 249.28Deferred Tax 1392.64 238.52Fringe Benefits Tax 97.66 —

2416.06 487.80

Profit after Tax 8561.30 3125.31Add: Surplus brought forward from previous year 10591.66 9286.47Add: Excess Provision for tax written back — 137.22Add: Transfer from Debenture Redemption Reserve 1507.58 —

Surplus available for appropriation 20660.54 12549.00

APPROPRIATIONSGeneral Reserve 1000.00 500.00Reserve for Bad and Doubtful Debts — 130.00Reserve Fund 19.42 6.99Debenture Redemption Reserve 1100.00 883.13Dividend:

Proposed Dividend 765.16 382.58Dividend Distribution tax thereon 107.32 54.64

872.48 437.22Balance carried to Balance Sheet 17668.64 10591.66

20660.54 12549.00Earnings per Share (Face Value of Rs. 2/- per share)

Basic Rs. 22.38 Rs. 8.17Diluted Rs. 11.89 Rs. 4.97

Significant Accounting Policiesand Notes to Accounts 19

P.K. KhaitanN. Gopalaswamy

As per our report of even date attached M.H. DalmiaFor S.S. Kothari Mehta & Co., N. KhaitanChartered Accountants K.V. Mohan S. Subramanian M. RaghupathyCA J. Krishnan COMPANY DY. EXECUTIVE DIRECTOR J.S. BaijalPARTNER SECRETARY & GROUP CONTROLLER DIRECTORSNew DelhiDated: this the 27th day of April, 2006

230

SCHEDULES TO THE CONSOLIDATED ACCOUNTS

Schedule Nos. 1 to 19 forming part of the Balance Sheet as at 31st March, 2006and the Profit and Loss Account for the year ended on that date.

As at As at31.3.2006 31.3.2005

Rs. Lakhs Rs. LakhsSCHEDULE 1 – SHARE CAPITAL

Authorised

7,65,16,210 Ordinary Shares of Rs. 2 each (2,00,00,000 Shares of Rs.10 each) 1530.32 2000.00

12,34,83,790 Unclassified Shares of Rs. 2 each 2469.68 —

4000.00 2000.00

Issued and Subscribed

3,82,58,105 Ordinary Shares of Rs. 2 each fully paid up (76,51,621

ordinary shares of Rs.10 each fully paid up) 765.16 765.16

Notes:

1 Of the above Shares:(i) 66,51,040 Shares were allotted as fully paid-up pursuant to

arrangements/scheme of conversion, without payments beingreceived in cash; and

(ii) 2,76,31,245 Shares were allotted as fully paid-up by way ofBonus Shares by capitalisation of Reserves.

2. During the year 2001-02, the Company had issued 76,51,621 Non-Convertible debentures of Rs.10/-each along with detachabletradeable warrants. The holders of these warrants have the option to subscribe to equity shares of the Company (5 ordinary sharesof Rs.2 each) at Rs. 23.764 per Share upon the call option being exercised by the Board of Directors or on 11-9-2008, whichever isearlier in terms of the Letter of Offer dated 26th June, 2001.

3. During the current year, consequent to a share split, the equity shares of Rs.10 each of the Compnay have been split into 5 equityshares of Rs.2 each.

SCHEDULE 2 – RESERVES AND SURPLUS(Rs. Lakhs)

As at As at

31.3.2005 Additions Deductions 31.3.2006

Capital Reserve 35.00 - - 35.00*

Revaluation Reserve 9389.73 - 752.81 8636.92Realised Revaluation Reserve 5.79 - - 5.79Share Premium Account 8.85 - - 8.85General Reserve 12392.81 1000.00 - 13392.81Reserve Fund 35.19 19.42 - 54.61Debenture Redemption Reserve 2832.58 1100.00 1507.58 2425.00Reserve for Bad and Doubtful Debts 174.69 - - 174.69Less: Set off against Doubtful Debts and Advances 173.29 171.89

1.40 2.80Surplus in Profit and Loss Account 10591.66 17668.64

35,293.01 42,230.42

* Out of above, Rs.15.00 Lakhs is secured by a second charge on all fixed assets of the Company’s Sugar unit.

231

As at As at31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs

1333.33 2000.00

2000.00 3000.00

2000.00 2000.00

2932.00 1950.00

7500.00 7500.00

7500.00 7500.00

2430.00 —

5000.00 —

3976.28 673.80

34671.61 24623.80

214.60 357.40

214.60 357.40

74.50 85.35

34960.71 25066.55

SCHEDULE 3 – SECURED LOANS

A. FROM BANKS

(i) Term Loan secured by whole of the movable properties(except book debts) of Wind Farm and Sugar units

(ii) Rupee Loan secured by first joint mortgage of all immovableproperties and first charge by way of hypothecation of allmovables (except book debts) of Wind Farm unit subject toprior charges created in favour of Bankers. The abovecharges rank pari-passu on inter-se basis with otherchargeholders

(iii) Rupee Loan secured by first joint mortgage of all immovableproperties and first charge by way of hypothecation of allmovables (except book debts) of Sugar unit subject to priorcharges created in favour of Bankers. The above chargesrank pari-passu on inter-se basis with other chargeholders

(iv) Working Capital Term Loan secured by hypothecation ofinventories and other current assets in favour of theparticipating Banks ranking pari-passu on inter-se basis

(v) Term Loan secured by hypothecation of all the movable fixedassets of Cement and Magnesite units on first pari passubasis with other term lending banks/ institutions

(vi) Term Loan secured by hypothecation of plant and machineryand other movable tangible assets installed at the Cement andMagnesite units on first pari-passu basis with otherchargeholders

(vii) Term Loan secured by hypothecation of all the fixed assetsof Cement and Mageniste Units on first pari pasu basis withother term lending banks/institutions

(viii) Term Loan secured by hypothecation of all the fixed assetsof Cement and Mageniste Units on first pari pasu basis withother term lending banks/institutions

(ix) Cash Credit secured by hypothecation of inventories andother current assets in favour of the participating Banks rankingpari-passu on inter-se basis

B. FROM FINANCIAL INSTITUTIONSTERM LOAN

Rupee Loan secured by first joint mortgage of all immovableproperties and first charge by way of hypothecation of allmovables (except book debts) of Sugar unit subject to priorcharges created in favour of Bankers. The above chargesrank pari-passu on inter-se basis with other chargeholders

C.FROM HOUSING DEVELOPMENT FINANCE CORPORATIONLIMITED

Rupee Loan secured by bank guarantee

Carried over

232

As at As at31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs

34960.71 25066.55

— 340.00

— 333.34

— 334.00

— 500.00

— 1507.34

34960.71 25066.55

Brought forward

D. PRIVATELY PLACED DEBENTURESSeries – VI

Secured by a second charge on the fixed assets of theCompany’s Cement, Magnesite, Sugar and Wind Farm unitson a pari-passu basis with other chargeholders and a firstfloating charge on the Company’s investments in securities ofCentral Government, Public Sector Bonds and Units of Debt-based Mutual Funds up to Rs.25 Crores on pari passu basis.Redeemable in three equal yearly instalments from the 5thyear from the date of allotment

Series – VII

Secured by a second charge on the fixed assets of theCompany’s Cement, Magnesite, Sugar and Wind Farm unitson a pari-passu basis with other chargeholders and a firstfloating charge on the Company’s investments in securities ofCentral Government, Public Sector Bonds and Units of Debt-based Mutual Funds up to Rs.25 Crores on a pari passubasis. Redeemable in three equal yearly instalments after theexpiry of the 4th year from the date of allotment

Series – VII C

Secured by a second charge on the fixed assets of theCompany’s Cement, Magnesite, Sugar and Wind Farm unitson a pari-passu basis with other chargeholders and a firstfloating charge on the Company’s investments in securities ofCentral Government, Public Sector Bonds and Units of Debt-based Mutual Funds up to Rs.25 Crores on a pari passubasis. Redeemable in three equal yearly instalments after theexpiry of the 4th year from the date of allotment

Series – VII D

Secured by a second charge on the fixed assets of theCompany’s Cement, Magnesite, Sugar and Wind Farm unitson a pari-passu basis with other chargeholders and a firstfloating charge on the Company’s investments in securities ofCentral Government, Public Sector Bonds and Units of Debt-based Mutual Funds up to Rs.25 Crores on a pari passubasis. Redeemable in three equal yearly instalments after theexpiry of the 4th year from the date of allotment

Carried over

Carried over

233

As at As at31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs

34960.71 25066.55

— 1507.34

5000.00 5000.00

4000.00 4000.00

500.00 500.00

8000.00 8000.00

5000.00 —

5000.00 —

27500.00 19007.34

— 765.16

62460.71 44839.05

Brought forward

Brought forward

Non - Convertible Debentures

Secured by a first charge on the movable properties of Cementand Magnesite Units and Jamnagar Property. Redeemable inthree yearly equal instalments after the expiry of fourth, fifthand sixth year from the date of allotment

Non - Convertible Debentures

Secured by a first charge on the movable properties of Cementand Magnesite Units and Jamnagar Property. Redeemable inthree yearly equal instalments after the expiry of fifth, sixthand seventh year from the date of allotment

Non - Convertible Debentures

Secured by a first charge on the movable properties of Cementand Magnesite Units and Jamnagar Property. Redeemable inthree yearly equal instalments after the expiry of fifth, sixthand seventh year from the date of allotment

Non - Convertible Debentures

Secured by a first charge on whole of the movable propertiesof Cement and Magnesite Units (except book debts) andJamnagar Property. Redeemable in three yearly instalmentsin the ratio of 30:30:40 after the expiry of eighth, ninth andtenth year from the deemed date of allotment

Non - Convertible Debentures

Secured by a first charge on whole of the movable propertiesof Cement and Magnesite Units (except stock and book debts)and Jamnagar Property. Redeemable in three yearlyinstalments in the ratio of 30:30:40 after the expiry of eighth,ninth and tenth year from the deemed date of allotment

Non - Convertible Debentures

Secured by a first pari-passu charge on all the movable andimmovable properties of Cement and Magnesite Units (exceptstock and book debts) and Jamnagar Property. Redeemablein three yearly instalments in the ratio of 30:30:40 after theexpiry of eighth, ninth and tenth year from the deemed date ofallotment

E. NON-CONVERTIBLE DEBENTURES

76,51,621- 6% Debentures of Rs.10 each fully paid securedby first charge on fixed assets of Wind Farm Unit rankingpari-passu with other chargeholders. Redeemable at the endof four years from the date of allotment.

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As at As at31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. LakhsSCHEDULE 4 – UNSECURED LOANS

A. Fixed Deposits 520.04 633.66Add: Interest accrued and due on above 34.83 53.75

554.87 687.41

B. Other LoansInterest-free Sales Tax Loan 3957.37 3007.88From Government of India (against bank guarantee) 1344.90 1344.90From Government of India (Sugar Technology Mission- Interest free) — 5.00

5302.27 4357.78

5857.14 5045.19

SCHEDULE 5-DEFERRED TAX

Deferred Tax assets/liabilities are attributable to the following items:- LiabilitiesDepreciation 7503.93 5977.67Others 71.13 32.89

7575.06 6010.56AssetsVoluntary retirement expenses 118.46 89.10Expenses allowable for tax purposes when paid 156.77 14.27

275.23 103.37

Net 7299.83 5907.19

SCHEDULE 6 – FIXED ASSETS

(Rs. in Lakhs)

GROSS BLOCK DEPRECIATION NET BLOCK

Description of As at Additions Deduct- As at For the Upto As at As atAssets 31.3.2005 ions 31.3.2006 year @ 31.3.2006 31.3.2006 31.3.2005

Owned Assets:

Goodwill 72.52 72.52 72.52 72.52

Land 3223.47 1796.04 1.34 5018.17 — — 5018.17 3223.47

Land (Leasehold) 57.46 — — 57.46 0.58 6.81 50.65 51.23

Buildings 9109.53 1880.07 10.05 10979.55 337.85 4407.98 6571.57 5033.19

Plant and Machinery 57324.03 24690.39 4.91 82009.51 2753.24 35490.70 46518.81 24583.75

Railway Sidings 269.97 — — 269.97 12.36 94.80 175.17 187.53

Vehicles 355.26 52.82 19.93 388.15 45.57 236.37 151.78 148.87

Furniture and Fixtures 333.82 32.58 0.48 365.92 30.07 231.43 134.49 132.33

Other Assets 599.31 160.57 0.33 759.55 38.79 530.34 229.21 107.80

Owned AssetsLeased out:

Buildings 109.64 160.83 — 270.47 14.89 15.81 254.66 108.72

Plant and Machinery 5774.82 241.35 — 6016.17 365.12 394.82 5621.35 5745.12

77229.83 29014.65 37.04 106207.44 3598.47 41409.06 64798.38 39394.53

Previous year 70791.20 6563.31 124.68 77229.83 2944.77 37835.30 39394.53

Notes:

1. Land includes certain lands under acquisition, the proceedings for which are presently stayed by the Order of the appropriate HighCourts.

2. There are no registered title deeds for Company’s flats/accommodation in multistoreyed buildings in National Capital Territory of Delhi.

3. @ includes depreciation charged to other heads Rs. 51.76 Lakhs (Rs.80.17 Lakhs).

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Face As at As at Value 31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs Rs. LakhsSCHEDULE 7 – INVESTMENTS

Government and Trust Securities 0.38 0.38 0.59Unit Trust of India – 6.75% Tax Free Bonds 10.15 16.30 16.30Units of Mutual Funds – Debt based schemes 928.16 1155.96 3433.87Units of Mutual Funds – Equity based schemes 19.82 35.26 27.07Units of Mutual Funds – Balanced schemes 141.76 191.05Ordinary Shares of Joint Stock CompaniesFully paid-up: 942.82 15673.96 4577.13Partly paid-up: 0.01 1.03 —Preference Shares of Joint Stock CompaniesFully paid-up: 0.01 — —Fully paid-up Shares of Co-operative Societies 0.07 0.07 0.07Property Rights in Holiday Resorts 6.01 6.01 6.01

17080.02 8061.04

Book Value Market ValueRs. Lakhs Rs. Lakhs

Quoted 16221.73 20770.70Unquoted 858.29

As at As at 31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs Rs. LakhsSCHEDULE 8 – INVENTORIES

(As certified by the Management)Stores, Spares etc.

On hand 3337.42 3066.90In transit 1074.24 923.14

4411.66 3990.04Loose Tools 3.18 2.78Raw Materials

On hand 3486.27 3094.13In transit 165.84 9.67

3652.11 3103.80

Material in Process 1006.94 540.66Stock-in-Trade

Dead Burnt Magnesite Dust 0.25 6.56Others 10094.62 11635.32

10094.87 11641.88

19168.76 19279.16SCHEDULE 9 – SUNDRY DEBTORS

a) Debts over six monthsConsidered good

Secured 122.02 47.49

Unsecured 266.44 350.99Considered doubtful 152.72 154.12Less: Set off from Reserve for Bad and Doubtful Debts 152.72 154.12

— —

388.46 398.48

b) OthersConsidered goodSecured 2896.40 2007.82Unsecured 2690.50 2763.69

5586.90 4771.51

5975.36 5169.99

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As at As at 31.3.2006 31.3.2005

Rs. Lakhs Rs. Lakhs Rs. Lakhs Rs. LakhsSCHEDULE 10 – CASH AND BANK BALANCES

Cash on hand (including stamps) 141.48 58.57Cheques on hand/Remittances-in-transit 698.21 120.54Balances with Scheduled Banks

Current Accounts 5049.22 2051.11Fixed Deposit Accounts 380.01 570.39

5429.23 2621.50Balances with Other Banks in Current Accounts * 1.66 1.37Post Office Savings Bank Accounts(Pledged with Government Departments and Others) - 0.12

6270.58 2802.10* Balances with

Avadh Gramin Bank 0.28 0.22 Zila Sahakari Bank Limited 1.38 1.15

SCHEDULE 11 – LOANS AND ADVANCES

LoansSecured – Considered good

Employees * 123.78 114.80Others 51.66 367.78

175.44 482.58Unsecured – Considered good

Employees * 1.84 41.52Others 343.23 1002.28

345.07 1043.80Advances recoverable in cash or in kind or for valueto be received (Unsecured)

Considered good * 2497.14 3585.60Considered doubtful 19.17 19.17Less: Set off from Reserve for Bad and Doubtful Debts 19.17 19.17

— —

2497.14 3585.60Income-tax paid 1312.74 1764.19Deposits and Balances with GovernmentDepartments and Other Authorities 2844.85 3096.74 (Unsecured – Considered good)

7175.24 9972.91* Includes:(a) Due from Officers of the Company 10.68 31.57(b) Maximum amount due from Officers at any time during the year 33.67 34.30

SCHEDULE 12 – CURRENT LIABILITIES

Sundry Creditors 17265.69 9882.99Advances from Customers 623.10 342.58Directors’ Commission payable 10.00 10.00Unclaimed Dividend * 125.74 126.33Matured Fixed Deposits and interest thereon * 9.61 8.74Other Liabilities 1298.66 1061.11Interest accrued but not due on Loans 1075.36 968.02

20408.16 12399.77

* There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund.

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As at As at 31.3.2006 31.3.2005

Rs. Lakhs Rs. LakhsSCHEDULE 13 – PROVISIONS

For Taxation 2029.51 2249.91Proposed Dividend 765.16 382.58Pension, Gratuity and other Staff benefits 273.75 250.16Impairment of Assets 96.23 96.23Others 184.27 96.02

3348.92 3074.90

SCHEDULE 14 – MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)

Deferred Revenue ExpenditureA.Payments under Voluntary Retirement Scheme

As per Last Balance Sheet 134.73 202.10Less: Amount charged to the Profit and Loss account 67.36 67.37

67.37 134.73B. Others

As per Last Balance Sheet — 14.59Less: Amount charged to the Profit and Loss account — 14.59

— —

Preliminary and Pre-operative expenses 0.29 0.38

67.66 135.11

This PreviousYear Year

Rs. Lakhs Rs. Lakhs Rs. LakhsSCHEDULE 15 – OTHER INCOME

Income from Travel Agency business{Tax deducted at source Rs.15.52 Lakhs (Rs. 10.36 Lakhs)} 166.80 208.80

Income from Other InvestmentsDividends 71.12 238.44

Interest from Banks and Others (Gross) {Tax deducted at source Rs.9.50 Lakhs

(Rs. 5.21 Lakhs)} 117.49 124.56Profit on Sale of Fixed Assets 20.30 11.84Profit on Sale of Investments 6583.23 836.81Miscellaneous Receipts 1294.48 1059.08

8253.42 2479.53

SCHEDULE 16 – INCREASE / (DECREASE) IN STOCKS

Opening Stock:Finished 11641.88 10343.42Process 540.66 655.89

12182.54 10999.31

Closing Stock:Finished 10094.87 11641.88Process 1006.94 540.66

11101.81 12182.54

Increase / (Decrease) in Stocks (1080.73) 1183.23

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This PreviousYear Year

Rs. Lakhs Rs. Lakhs Rs. Lakhs

SCHEDULE 17 – SALARIES, WAGES AND BENEFITS TO EMPLOYEES

Salaries and Wages{After allocating Rs. 1182.66 Lakhs (Rs. 1245.71 Lakhs) to other accounts} 2158.57 1862.71Payments under Voluntary Retirement Scheme 301.62 204.19Contribution to Provident and Other Funds 398.97 377.41Bonus 9.72 2.48Workmen and Staff Welfare Expenses 340.04 258.05

3208.92 2704.84SCHEDULE 18 – OTHER EXPENSES

Power and Fuel 12125.14 9899.63Processing Charges 876.42 735.81Packing Materials 2875.46 2517.65Consumption of Stores and Spare Parts{After allocating Rs. 1785.82 Lakhs to other accounts (Rs. 2100.99 Lakhs)} 55.58 67.62Repairs and Maintenance

Machinery 1576.35 1735.73Buildings 229.13 426.31Others 99.05 130.41

1904.53 2292.45Royalty, Cess, Dead Rent etc. 0.05 0.05Rent 31.68 51.14Rates and Taxes 490.29 549.43Excise Duty 7936.27 6954.36Insurance 178.90 157.16Travelling 238.27 182.72Advertisement and Publicity 758.05 571.10Freight, Transportation and Other Charges 41 16.30 3362.66Commission paid to Other Selling Agents 50.26 65.18Rebate, Discount and Allowances 54.61 6.19Interest On Term loans 929.32 966.10 On Fixed Deposits 49.01 78.87 On Borrowings from Banks and Others 548.43 403.78 On Debentures 819.52 803.14

2346.28 2251.89

Directors’ Sitting Fees 4.72 5.57Directors’ Commission 10.00 10.00Charity and Donation 78.43 87.85Assets written off and Loss on sale of Assets 0.15 4.35Loss on sale of Investments 331.86 477.77Bad Debts written off 11.51 143.01Miscellaneous Expenses 3500.88 2266.90

37975.64 32660.49

SCHEDULE 19 – SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

1. Accounting Convention

The financial statements are prepared under historical cost convention (except for certain fixed assets, which are revalued) ona going concern basis and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India.

2. Principles of Consolidation

(i) The Consolidated financial statements relate to Dalmia Cement (Bharat) Limited (‘the Company’) and its wholly ownedSubsidiary Companies. The consolidated financial statements have been prepared on the following basis.

- The financial statements of the Company and its Subsidiary Companies have been combined on a line-by-line basis byadding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-groupbalances and intra-group transactions resulting in unrealised profits or losses.

- The consolidated financial statements have been prepared using uniform accounting policies for like transactions and

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other events in similar circumstances and are presented to the extent possible, in the same manner as the Company’sseparate financial statements.

- The excess of cost to the Company of its investment in the Subsidiary Companies over equity is recognised in thefinancial statements as goodwill.

(ii) The Subsidiary Companies considered in the consolidated financial statements are:

Name of the Company Country of % voting power held as incorporation at 31st March,2006

Kanika Investment Limited (KIL) India 100%

Anupama Investment Limited (AIL) India 100%

Ishita Properties Limited (IPL) India 100%

Hemshila Properties Limited (HPL) India 100%

Avnija Properties Limited (APL) India 100%

Geetee Estates Limited (GEL) India 100%

D.I. Properties Limited (DPL) India 100%

Shri Rangam Properties Limited (SRPL) India 100%

Himshikhar Investment Limited (HIL) India 100%

Dalmia Sugars Limited (DSL) India 100%

Seeta Estates & Brokers Limited (SEBL) India 100%

Shri Rangam Brokers & Holding Limited (SRBHL) India 100%

Shri Radha Krishna Brokers & Holding Limited (SRKBHL) India 100%

Dalmia Minerals & Properties Limited (DMPL) India 100%

Arjuna Brokers & Minerals Limited (ABML) India 100%

Sri Kesava Mines & Minerals Limited (SKMML) India 100%

Sri Madhava Minerals & Properties Limited (SMMPL) India 100%

Sri Shanmugha Mines & Minerals Limited (SHMML) India 100%

Sri Swaminatha Mines & Minerals Limited (SWMML) India 100%

Sri Subramanya Mines & Minerals Limited (SUMML) India 100%

3. Other Significant Accounting Policies

These are set out in the notes to accounts under “Significant Accounting Policies” of the financial statements of the Company,KIL, AIL, IPL, HPL, APL, GEL, DPL, SRPL , HIL, DSL, SEBL,SRBHL, SRKBHL,DMPL, ABML, SKMML, SMMPL, SHMML, SWMML andSUMML.

B. OTHER NOTES TO ACCOUNTS

1. These are set out in the notes to accounts of the financial statements of the Company, KIL, AIL, IPL, HPL, APL, GEL, DPL, SRPL,HIL, DSL, SEBL,SRBHL, SRKBHL, DMPL, ABML, SKMML,SMMPL, SHMML, SWMML and SUMML.

2. The consolidated financial statements have been prepared in accordance with Accounting Standard (AS-21) - “ConsolidatedFinancial Statements” issued by the Institute of Chartered Accountants of India.

3. Previous year figures have been regrouped/rearranged wherever considered necessary.

P.K. KhaitanN. Gopalaswamy

As per our report of even date attached M.H. DalmiaFor S.S. Kothari Mehta & Co., N. KhaitanChartered Accountants K.V. Mohan S. Subramanian M. RaghupathyCA J. Krishnan COMPANY DY. EXECUTIVE DIRECTOR J.S. BaijalPARTNER SECRETARY & GROUP CONTROLLER DIRECTORSNew DelhiDated: this the 27th day of April, 2006

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DALMIA CEMENT (BHARAT) LIMITED AND ITS SUBSIDIARIESCONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH , 2006

2005-06 2004-05(Rupees in Lakhs)

Cash Flow from operating activities : Net profit before tax 10,977.36 3,613.11 Adjustments for : Depreciation (net) 2,845.66 2,109.60 Dividend income (71.12) (238.44) Interest (net) 2,228.79 2,127.33 Deferred Revenue Exp. Written off 67.45 81.58 Profit on sale of investments (6,251.37) (359.04) Profit/loss on sale of fixed assets (20.15) (7.49) Operating profit before working capital changes 9,776.62 7,326.65 Adjustments for working capital changes : Inventories 110.40 (2,940.40) Trade and other receivables 1,542.25 (7,386.66) Trade payables 7,959.23 6,130.33 Cash generated from operations 19388.50 3,129.92 Exceptional Item- Cane Price difference of earlier years — (1,208.82) Interest paid (2,238.94) (1,983.28) Direct taxes paid (792.37) (401.10) Net cash from operating activities 16,357.19 (463.28)

Cash Flow from investing activities : Purchase of fixed assets (28,339.56) (28,101.37) Sale of fixed assets 32.48 29.02 Purchase of investment (63,225.20) (83,461.60) Sale of investment 60,457.59 90,424.67 Dividend received 71.12 238.44 Interest received 117.49 124.56 Net cash used in investing activities (30,886.08) (20,746.28)

Cash Flow from financing activities : Proceeds from secured loans 17,621.66 21,128.63 Proceeds from unsecured loans 944.49 858.57 Fixed deposits from public (132.54) (349.80) Dividend paid (382.58) (382.58) Corporate dividend tax (53.66) (50.00)

Net cash from financing activities 17,997.37 21,204.82

Net change in cash & cash equivalents 3,468.48 (4.74) Cash & cash equivalents (opening balance) 2,802.10 2,806.84 Cash & cash equivalents (closing balance) 6,270.58 2,802.10 Change in cash & cash equivalents 3,468.48 (4.74)

P.K. KhaitanN. Gopalaswamy

As per our report of even date attached M.H. DalmiaFor S.S. Kothari Mehta & Co., N. KhaitanChartered Accountants K.V. Mohan S. Subramanian M. RaghupathyCA J. Krishnan COMPANY DY. EXECUTIVE DIRECTOR J.S. BaijalPARTNER SECRETARY & GROUP CONTROLLER DIRECTORSNew DelhiDated: this the 27th day of April, 2006