NAME- GAURAVTYAGI TERM PAPER OF LAW ROLL NO.

RT1910 B48 ACC CEMENT FORMATION

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's operations are spread throughout the country with 16 modern cement factories, more than 40 Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a workforce of about 9,000 persons and a countrywide distribution network of over 9,000 dealers. Since inception in 1936, the company has been a trendsetter and important benchmark for the cement industry in many areas of cement and concrete technology. ACC has a unique track record of innovative research, product development and specialized consultancy services. The company's various manufacturing units are backed by a central technology support services centre the only one of its kind in the Indian cement industry. ACC has rich experience in mining, being the largest user of limestone. As the largest cement producer in India, it is one of the biggest customers of the domestic coal industry, of Indian Railways, and a considerable user of the countrys road transport network services for inward and outward movement of materials and products. Among the first companies in India to include commitment to environmental protection as one of its corporate objectives, the company installed sophisticated pollution control equipment as far back as 1966, long before pollution control laws came into existence. Today each of its cement plants has state-of-the art pollution control equipment and devices. ACC plants, mines and townships visibly demonstrate successful endeavours in quarry rehabilitation, water management techniques and greening activities. The company actively promotes the use of alternative fuels and raw materials and offers total solutions for waste management including testing, suggestions for reuse, recycling and co-processing. ACC has taken purposeful steps in knowledge building. We run two institutes that offer professional technical courses for engineering graduates and diploma holders which are relevant to manufacturing sectors such as cement. The main beneficiaries are youth from remote and backward areas of the country. ACC has made significant contributions to the nation building process by way of quality products, services and sharing expertise. Its commitment to sustainable development, its high ethical standards in business dealings and its on-going efforts

in community welfare programmes have won it acclaim as a responsible corporate citizen. ACCs brand name is synonymous with cement and enjoys a high level of equity in the Indian market. It is the only cement company that figures in the list of Consumer SuperBrands of India.

The Formation of the ACC As this is our inaugural report, we thought it would be interesting to remind us all of how the ACC started. The ACC was formed in New Delhi on the 19th of September 1983, as the Asian Cricket Conference. The aims and objectives as stated in the original constitution were, organising, developing and promoting the game of Cricket in Asia. Aims to which it has adhered ever since. The first Office Bearers of the ACC were: President N.K. P. Salve MP Vice President Gamini Dissanayake MP Hon. Secretary A.W. Kanmadikar Hon. Joint Secretary Syed Ashraful Huq Hon. Treasurer M.A. Chidambaram The founding members of the ACC were Bangladesh India, Malaysia, Pakistan, Singapore and Sri Lanka.Membership subsequently increased first with Hong Kong, then the UAE, followed by Nepal in 1990. China is the most recent member, joining the ACC in 2004. In 1993 the Asian Cricket Conference became the Asian Cricket Council.There are two categories of membership at the ACC - Full and Associate with the Test-playing countries and ICC Associate countries (Hong Kong, Malaysia, Nepal, Singapore, UAE) being accorded Full Member Status with the rest of the member countries ranked as ACC Associates. It has been a steadfast policy of the ACC to expand the game and to take it boldly into new territories and thus truly globalise the game. Development activities go hand in hand with tournament activities in order to carry forward the original aims of the ACC. Fiji, Japan and Papua New Guinea have all been members of the ACC and have competed in ACC Trophies. However, following the ICCs formation of the East Asia-Pacific Region for development activity in that region, these countries ceded membership of the ACC. Until December 1999 all administrative positions of the ACC were honorary. Since 1999 the Secretary and Treasurer have been drawing remuneration. Up to 2003 the headquarters of the ACC were shifted every two years with the biennial rotation of the Presidents and Secretarys home country. Kuala Lumpur, Malaysia was chosen to be the permanent headquarters of the Asian Cricket Council from the latter part of 2003.

Inaugural Meeting of The Asian Cricket Conference on 19th and 20th September 1983, New Delhi, India. Standing (left to right): Prof. M.V. Chandgadkar (India), R. S. Mahendra (India), A.Sajjad (Pakistan), Q. Noorani (UAE), A. R. Falaknaz (UAE), S.K. Wankhede (India), M.A. Chidambaram (India), P.M.Rungta (India), S.Sriraman (India), M. Jaikishan (India), I.S. Bindra (India), J. Dalmiya (India) Seated (left to right): A.Abbasi (Pakistan), A.R.Bukhatir (UAE), D.S.Gill (Malaysia), Air Marshal (Retd.) Nur Khan (Pakistan), N.K.P.Salve (India), G.Dissanayake MP (Sri Lanka), S.A. Huq (Bangladesh), N.Mohammad (Sri Lanka), A.W. Kanmadikar (India) The ACC was originally formed as the Asian Cricket Conference in 1983, changing its name to the Asian Cricket Council in 1993. The ICC was originally formed as the Imperial Cricket Conference in 1909, changing its name to the International Cricket Conference in 1965 and then to the International Cricket Council in 1989. Eight of the A C C s members have become affiliates of the ICC since 2000.

ACC Annual Report & Accounts 2004-2005 Finance & Marketing Committee Development Team Secretariat Staff John Cribbin, Hong Kong Member Syed Ashraful Huq Chief Executive, ACC - Ex Officio Thusith Perera Finance Manager, ACC - Ex Officio Peter Manuel Resource Person (Umpire) K.T. Francis Resource Person (Umpire) Khizar Hayat Resource Person (Umpire) NEW ZEALAND SPORTS TURF INSTITUE Keith McAuliffe Consultant Grounds and Pitch Development CRICKET AUSTRALIA Ross Turner General Manager, Game Development Peter Hanlon

Education & Training Manager, Game Development Anna Lalitha PA to the Chief Executive Ganesan Sundarammoorthy Development Program Coordinator Philip Lee Finance Executive Noor Faizah Dolah Finance Assistant K.K. Haridas Events Assistant Susan Moorthy Receptionist Giarat Ali Driver / Office Assistant Ferose Najib Driver ACC FINANCE & MARKETING COMMITTEE Shaharyar M. Khan Chairman Jagmohan Dalmiya President, ACC - Ex Officio Ranbir Singh Mahendra Member Nuski Mohammad, Sri Lanka Member

MEMORANDUM OF ASSOCIATION
ORDINARY BUSINESS

1. To receive and adopt the Audited Profit and Loss Account for the nine months period ended December 31, 2005, the Balance Sheet as at that date and the Reports of the Directors and Auditors thereon. 2. To declare a dividend. 3. To appoint a Director in place of Mr. A L Kapur who retires by rotation and is eligible for reappointment. 4. To appoint a Director in place of Mr. S M Palia who retires by rotation and is

eligible for reappointment. 5. To appoint a Director in place of Mr. Naresh Chandra who retires by rotation and is eligible for reappointment. 6. To appoint Messrs K S Aiyar & Co. and Messrs. S R Batliboi & Associates, Chartered Accountants, as Auditors of the Company on such remuneration as agreed upon by the Board of Directors and the Auditors, in addition to reimbursement of service tax and all out of pocket expenses in connection with the audit of the Accounts of the Company for the year ending December 31, 2006.

SPECIAL BUSINESS

7. To appoint a Director in place of Mr. D K Mehrotra who was appointed by the Board of Directors an Additional Director of the Company with effect from October 14, 2005 and who holds office upto the date of the forthcoming Annual General Meeting of the Company under Section 260 of the Companies Act 1956, but who is eligible for appointment and in respect of whom the Company has received a notice in writing under Section 257 of the Companies Act, 1956 from a Member proposing his candidature for the office of Director.

8. To appoint a Director in place of Mr. R A Shah who was appointed by the Board of Directors an Additional Director of the Company with effect from January 24, 2006 and who holds office upto the date of the forthcoming Annual General Meeting of the Company under Section 260 of the Companies Act 1956, but who is eligible for appointment and in respect of whom the Company has received a notice in writing under Section 257 of the Companies Act, 1956

from a Member proposing his candidature for the office of Director. 9. To appoint a Director in place of Dr. Nirmalya Kumar who was appointed by the Board of Directors an Additional Director of the Company with effect from January 24, 2006 and who holds office upto the date of the forthcoming Annual General Meeting of the Company under Section 260 of the Companies Act 1956, but who is eligible for appointment and in respect of whom the Company has received a notice in writing under Section 257 of the Companies Act, 1956 from a Member proposing his candidature for the office of Director.

10. To appoint a Director in place of Mr Anil Singhvi who was appointed by the Board of Directors an Additional Director of the Company with effect from February 17, 2006 and who holds office upto the date of the forthcoming Annual General Meeting of the Company under Section 260 of the Companies Act 1956, but who is eligible for appointment and in respect of whom the Company has received a notice in writing under Section 257 of the Companies Act, 1956 from a Member proposing his candidature for the office of Director.

11. To consider and if thought fit, to pass with or without modification, the following Resolution as an Ordinary Resolution:-

RESOLVED THAT pursuant to the provisions of Sections 269, 309 and other applicable provisions, if any, of the Companies Act, 1956, the Company hereby approves of the reappointment and remuneration of Mr M L Narula, Managing Director of the Company, for a period of one year commencing from November 1, 2005 upon the terms and conditions (including the remuneration to be paid in the event of loss or inadequacy of profits in the financial year during the

aforesaid period) set out in the draft Agreement submitted to this Meeting and signed by a Director for the purpose of identification, which Agreement is hereby specifically sanctioned with liberty to the Directors to alter and vary the terms and conditions of the said reappointment and/or Agreement in such manner as may be agreed to between the Directors and Mr Narula.

12. To consider and if thought fit, to pass with or without modification, the following Resolution as a Special Resolution:-

RESOLVED THAT in accordance with the provisions of Section 198, 309(4) and all other applicable provisions of the Companies Act, 1956 or any statutory modification(s) or re enactment thereof, the Articles of Association of the Company and subject to all applicable approval(s) as may be required, the consent of the Company be and is hereby accorded to the payment of commission for a period of five years commencing from 1st January 2006, to the non executive Directors of the Company as may be decided by the Board from time to time provided that the total commission payable to the non executive Directors per annum shall not exceed one percent of the net profits of the Company as computed in the manner referred to under Section 198(1) of the Companies Act 1956, with authority to the Board to determine the manner and proportion in which the amount be distributed among the non executive Directors.

CHANGE OF NAME

OF THE COMPANY

13. To consider and if thought fit to pass with or without modification, the following Resolution as a Special Resolution:-

RESOLVED that in accordance with Section 21 and other applicable provisions, if any, of the Companies Act, 1956 and subject to the approval of the Central Government, the name of the Company be changed from The Associated Cement Companies Limited to ACC Limited

RESOLVED FURTHER that the name The Associated Cement Companies Limited wherever it appears in the Memorandum and Articles of Association of the Company be replaced with the new name of the Company.

Notes : (a) A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER.

(b)

The Register of Members and Transfer Books of the Company will be closed from Saturday, April 1, 2006 to Wednesday, April 12, 2006 both days inclusive. (c) The Dividend, after declaration, will be paid to those shareholders whose names stand on the Register of Members on April 12,

2006. The dividend in respect of shares held in the electronic form will be paid to the beneficial owners of shares whose names appear in the list furnished by the Depositories for this purpose as on March 31, 2006. The dividend will be paid on and from April 25, 2006. (d) The Securities and Exchange Board of India has made it mandatory for all companies to use the bank account details furnished by the depositories for depositing dividend through Electronic Clearing Service (ECS) to investors wherever ECS and bank details are available. In the absence of ECS facilities, the Company will print the bank account details, if available, on the payment instrument for distribution of dividend. (e) During the current financial year 2006, the Company will be required to transfer to the Investor Education & Protection Fund, the unpaid/unclaimed Dividend for the year ended March 31, 1999. Those shareholders who have not encashed their warrants are requested to immediately return the outdated warrants to the Company or to write to the Company in the matter to enable the Company to issue Demand Drafts in lieu thereof. (f) The relative Explanatory Statements pursuant to Section 173 of the Companies Act, 1956, in respect of the business under Items 6 to 13 as set out above are annexed hereto. 5

(g)

As per the provisions of the Companies Act, 1956, facility for making nominations is available for shareholders, in respect of the shares held by them. Nomination forms can be obtained from the Share Department of the Company.

Registered Office : Cement House 121, Maharshi Karve Road, Mumbai 400 020.

EXPLANATORY STATEMENTS:

The following Explanatory Statements, as required by Section 173 of the Companies Act, 1956, set out all material facts relating to the business under Items 6 to 13 mentioned in the accompanying Notice dated February 17, 2006.

2. Item 6: Messrs A F Ferguson & Co., Chartered Accountants who were one of the Statutory Auditors of the Company have informed the Company that they do

not wish to seek reappointment. The Members are accordingly requested to appoint Messrs K S Aiyar & Co. and Messrs S R Batliboi & Associates as Auditors for the current year and to authorize the Board of Directors to fix their remuneration.

3. The Directors commend the Resolution at Item 6 for acceptance by the Members.

4. Items 7 to 10: Mr D K Mehrotra was appointed as an Additional Director on the Board with effect from October 14, 2005. Mr Mehrotra holds a B.Sc.(Honours) degree. He is the Managing Director of Life Insurance Corporation of India (LIC) and is also a director on the Board of Directors of some of LICs Subsidiary Companies. He represents LIC on the ACC Board.

5. Further, with a view to making the Board of Directors more broad based and bringing about greater effectiveness in the decision making process and to represent the shareholding pattern of Ambuja Cement India Limited (ACIL) in ACC, the Board of Directors has at the request of ACIL appointed Mr R A Shah, Dr. Nirmalya Kumar and Mr Anil Singhvi as Additional Directors of the Company. While Mr R A Shah and Dr. Nirmalya Kumar have been appointed with effect from January 24, 2006, Mr Anil Singhvi has been appointed with effect from February 17, 2006. Mr R A Shah, Dr Nirmalya Kumar and Mr Anil Singhvi are not Independent Directors as per Clause 49 of the Listing Agreement.

6. Mr. R.A. Shah is a leading Solicitor and a Senior Partner of M/s. Crawford Bayley and Co., a firm of Advocates & Solicitors. He specializes in a broad spectrum of corporate laws in general, with special focus on Foreign Investments, Joint Ventures, Technology and Licence Agreement, Intellectual Property Rights, Mergers and Acquisitions, Industrial Licensing, and Anti Trust Laws, Company Law and Taxation. He is a Director on the Boards of various public limited companies and is Chairman of the Board in many of these public limited companies. He is also on the Audit Committees of some of the companies on which he is a Director.

7. Dr. Nirmalya Kumar is Professor of Marketing, Director of Centre for Marketing, and Co-Director of Aditya Birla India Centre at London Business School. He received his B.Com. from Calcutta University, MBA from the University of Illinois at Chicago and PhD in marketing from Kellogg Graduate School of Management. Prior to his present assignment at London Business School, Dr. Kumar taught at Columbia University, Harvard Business School, IMD (Switzerland), and Northwestern University and has won several awards for his teaching. He has worked with various Fortune 500 companies as consultant and has served on the Boards of reputed Indian Companies.

8. Mr Anil Singhvi is a Fellow Member of the Institute of Chartered Accountants of India. He started his career in1982. He joined Gujarat Ambuja Cements Limited

(GACL) in1986 and has held very senior managerial positions in that Company. He was elevated to the Companys Board of Directors in 1999 as a Wholetime Director responsible for Corporate Finance, Treasury, Mergers and Acquisitions, Strategic plans and General Corporate Affairs. Mr Singhvi is appointed as the Managing Director of GACL with effect from January 30, 2006. He is also on the boards of several associate and subsidiary companies of GACL which are engaged in cement and other activities. Mr Singhvi was ranked the best CFO in 2001 by The Economist Intelligence Unit, India. He has served on several committees constituted by SEBI and CII.

9. Under Section 260 of the Companies Act 1956, Mr D K Mehrotra, Mr R A Shah, Dr. Nirmalya Kumar and Mr Anil Singhvi hold office as Directors only till the date of the forthcoming Annual General Meeting.

10.

The Board commends the above appointments.

11. Mr D K Mehrotra, Mr R A Shah, Dr Nirmalya Kumar and Mr Anil Singhvi are concerned or interested in their respective Resolutions at Items at 7, 8, 9 and 10 of the Notice.

12.

Item 11: The tenure of appointment of Mr M L Narula Managing Director of the Company was for a period December 1, 2002 till October 31, 2005. The Board of Directors of the Company at its Meeting held on August 31, 2005 reappointed Mr Narula as the Managing Director for a period of one year with effect from November 1, 2005 subject to the approval of the shareholders in general meeting.

13. Mr Narula received his B.Sc. Engineering (Electrical) degree from Punjab University and is a Fellow of the Institute of Engineers. Mr Narula joined ACC in 1963 as a junior engineer and has a total experience of around 43 years with the Company in various positions including as a Wholetime Director since April 1996.

14. The terms of reappointment and remuneration of Mr Narula inter alia contain the following principal terms and conditions :

SALARY : Rs 2,00,000 per month in the grade Rs 1,00,000 Rs 2,50,000.

The annual increment will be effective April 1, 2006 and will be decided by the Board or the Compensation Committee of the Board and will be merit based and take into account the Companys performance.

PERFORMANCE INCENTIVE

Such remuneration by way of Performance Incentive payment upto an

amount equivalent to a maximum of twenty four months of his salary, in addition to the salary, perquisites and allowances payable, in a particular financial year as may be determined by the Board of Directors of the Company at the end of each financial year, subject to the overall ceilings stipulated in Sections 198 and 309 of the Companies Act,

1956. The specific amount payable to the Managing Director will be decided by the Board or the Compensation Committee of the Board.

iii) PERQUISITES & ALLOWANCES

In addition to the salary and performance incentive as outlined above, Mr Narula shall also be entitled to perquisites and allowances like accommodation (furnished or otherwise) or house rent allowance in lieu thereof; house maintenance allowance together with reimbursement of expenses or allowances for utilities such as gas, electricity, water, furnishings and repairs, medical reimbursement, leave travel concession for himself and his family, club fees, personal accident insurance and such other perquisites and allowances in accordance with the Rules of the Company or as may be agreed to by the Board of Directors and Mr Narula, such perquisites and allowances will be subject to a maximum of 125% of his annual salary.

Perquisites and allowances shall be evaluated as per Income-tax Rules,

wherever applicable. In the absence of any such rules, perquisites and allowances shall be evaluated at actual cost.

Provision for use of Companys car for official duties and telephone at residence (including payment for local calls and long distance official calls) shall not be included in the computation of perquisites for the purpose of calculating the said ceiling.

iv) PROVIDENT FUND, SUPERANNUATION / ANNUITY FUND

Companys contribution to Provident Fund and Superannuation or Annuity Fund to the extent these either singly or together are not taxable under the Income-tax Act, gratuity payable as per the rules of the Company and encashment of leave at the end of his tenure shall not be included in the computation of limits for the remuneration or perquisites aforesaid.

v) MINIMUM REMUNERATION

Notwithstanding anything herein, where in any financial year during the currency of the tenure of office of the Managing Director, the Company has no profits or its profits are inadequate, the Company will pay remuneration by way of salary and perquisites as specified above, subject to the requisite approvals being obtained.

vi) The terms and conditions of Mr Narulas reappointment as Managing

Director may be varied, altered, increased, enhanced or widened from time to time by the Board as it may in its discretion deem fit, within the maximum amounts payable in accordance with the provisions of the Companies Act, 1956 or any amendments made hereafter in this regard.

vii) The draft Agreement between the Company and Mr Narula, Managing Director inter alia also contain the following terms and conditions:-

(a) The Managing Director shall conduct the day-to-day management of the Company subject to the supervision and control of the Board of Directors.

(b) If at any time the Managing Director ceases to be a Director of the Company for any reason whatsoever, he shall cease to be the Managing Director.

(c) If at any time the Managing Director ceases to be in the employment of the Company for any cause whatsoever he shall cease to be a Director of the Company.

(d) The Managing Director is reappointed by virtue of his employment in the Company and his reappointment is subject to the provisions of Section 283(1)(l) of the Companies Act, 1956, while at the same time, he is liable to retire by rotation.

(e) The Managing Director shall not be entitled to supplement his earnings with any buying or selling commission. He shall not become interested or otherwise concerned directly or through his wife and/ or minor children in any selling agency of the Company without the approval of the Central Government.

(f) The Agreement may be terminated by either party giving the other party three months notice in writing of such termination or the Company paying three months salary in lieu of the notice.

(g) The draft Agreement also set out the mutual rights and obligations of the Company and of the Managing Director.

15. In compliance with the provisions of the Companies Act, 1956, the reappointment and terms of remuneration specified above are now being placed before the Members in General Meeting for their approval. The Board commends the Resolution at Item 11 for acceptance by the Members.

16. The draft of the Agreement to be entered into by the Company with the Managing Director is available for inspection by the Members of the Company at the Registered Office of the Company between 10.00 a.m. and 12.15 p.m. on any working day of the Company.

17. Mr M L Narula is concerned or interested in the Resolution at Item. 11 of the Notice.

18. Item 12: The Company has vast business operations spread over various locations within the country and consultancy contracts abroad. In the current competitive business environment, the directors are required to take far more

10

complex business decisions than before and are required to commit their time and provide expertise for the Company business. In addition, with the more stringent Accounting Standards and Corporate Governance norms, the Board of Directors not only has to ensure compliance with various statutory requirements but also enhance the level and quality of Corporate Governance. Apart from sitting fees of Rupees Twenty thousand for each meeting of the Board or a Committee thereof, the non executive Directors do not draw any remuneration from the Company. It is accordingly proposed to pay the non executive Directors a commission with effect from the current financial year 2006. The Board of Directors will determine each year, the specific amount to be paid as commission to the non executive Directors which shall not exceed 1% of the net profits of the Company as computed in the manner referred to in Section 198(1) of the Companies Act, 1956. Members are requested to approve the payment of commission to the non executive Directors and to authorise the Board to determine the manner and proportion in which the amounts be distributed to the said non executive Directors. The payment of

Commission would be in addition to the sitting fees payable for attending Board/ Committee Meetings.

19. All the Directors of the Company except Mr. M L Narula, Managing Director and Mr A K Jain, Wholetime Director are interested in the Resolution set out at Item 12 of the Notice.

20. The Board commends the Resolution at Item 12 for acceptance by the Members.

PROSPECTUS OF ACC CEMENT

BOARD OF DIRECTORS Mr. Tarun Das Chairman Mr. N. S. Sekhsaria Deputy Chairman Mr. M. L. Narula Managing Director Mr. N. A. Soonawala Mr. Amitabha Ghosh Nominee Director of Unit Trust of India Mr. O. P. Dubey Mr. A. L. Kapur Mr. S. M. Palia Mr. Cyril S Shroff Mr. Naresh Chandra Mr. R. K. Vashishtha Mr. Markus Akermann Mr. Paul Hugentobler Mr. A. K. Jain Wholetime Director CONTENTS Notice ..................................... 3-11 Directors Report ..................... 12-18 Annexures to Directors Report .. 19-25 Management Discussion

and Analysis ............................ 26-34 Corporate Governance ............ 35-58 Performance Highlights ........... 59-65 Auditors Report ...................... 66-69 Balance Sheet ......................... 70 Profit and Loss Account .......... 71 Schedules 1 to 3 and A to O ................... 72-101 Balance Sheet Abstract and Companys General Business Profile ....................... 102 Cash Flow Statement .............. 103 Statement under Section 212 .. 104 Consolidated Financial Statements ............................... 105-134 Accounts Subsidiary Companies ............. 135-215 REGISTERED OFFICE CEMENT HOUSE 121, MAHARSHI KARVE ROAD, MUMBAI 400 020. Website: www.acclimited.com 3NOTICE IS HEREBY GIVEN THAT THE SIXTY-NINTH ANNUAL GENERAL MEETING OF THE ASSOCIATED CEMENT COMPANIES LIMITED will be held at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai 400 020 on Wednesday, July 13, 2005 at 3.30 p.m. to transact the following business:1. To receive and adopt the Audited Profit and Loss Account for the financial year ended March 31, 2005, the Balance Sheet as at that date and the Reports of the Directors and Auditors thereon. 2. To declare a dividend. 3. To appoint a Director in place of Mr. Tarun Das who retires by rotation and is eligible for reappointment. 4. To appoint a Director in place of Mr. N S Sekhsaria who retires by rotation and is eligible for reappointment. 5. To appoint a Director in place of Mr. M L Narula who retires by rotation and is eligible for reappointment. 6. To appoint a Director in place of Mr A K Jain who retires by rotation and is eligible for reappointment. 7. To appoint a Director in place of Mr. Markus Akermann who was appointed by the Board of Directors an Additional Director of the Company with effect from May 6, 2005 and who holds office upto the date of the forthcoming Annual General Meeting of the Company under Section 260 of the Companies Act 1956, but who is eligible for appointment and in respect of whom the Company has received a notice in writing under Section 257 of the Companies Act, 1956 from a Member proposing his candidature for the office of Director. 8. To appoint a Director in place of Mr. Paul Hugentobler who was appointed by the Board of Directors an Additional Director of the Company with effect from May 6, 2005 and who holds office upto the date of the forthcoming Annual General Meeting of the Company under Section 260 of the Companies Act 1956, but who is eligible for appointment and in respect of whom the Company

has received a notice in writing under Section 257 of the Companies Act, 1956 from a Member proposing his candidature for the office of Director. 9. To consider and if thought fit, to pass with or without modification, the following Resolution as an Ordinary Resolution: RESOLVED THAT pursuant to the provisions of Sections 269, 309 and other applicable provisions, if any, of the Companies Act, 1956, the Company hereby approves of the reappointment and terms of remuneration of Mr A K Jain, Wholetime Director of the Company, for a period of three years commencing from January 25, 2005 upon the terms and conditions (including the remuneration to be paid in the event of loss or inadequacy of profits in any financial year during the aforesaid period) set out in the draft Agreement submitted to this NOTICE Meeting and signed by a Director for the purpose of identification, which Agreement is hereby specifically sanctioned with liberty to the Directors to alter and vary the terms and conditions of the said reappointment and/or Agreement in such manner as may be agreed to between the Directors and Mr Jain. 10. To consider and if thought fit to pass with or without modification, the following Resolution as a Special Resolution: RESOLVED THAT pursuant to the provisions of Section 31 and other applicable provisions, if any, of the Companies Act 1956, the Articles of Association of the Company be altered by deleting the existing Article 109 and substituting it with the following new Article 109: Number of 109. Until otherwise determined by a general meeting, the Directors number of Directors shall not be less than nine nor more than fifteen. 11. To appoint Messrs A F Ferguson & Co., Messrs K S Aiyar & Co., and Messrs S R Batliboi & Associates, Chartered Accountants, as Auditors of the Company on such remuneration as agreed upon by the Board of Directors and the Auditors, in addition to reimbursement of service tax and all out of pocket expenses in connection with the audit of the Accounts of the Company for the year ending March 31, 2006. Notes : (a) A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER. (b) The Register of Members and Transfer Books of the Company will be closed from Friday, July 1, 2005 to Wednesday, July 13, 2005, both days inclusive. (c) The Dividend, after declaration, will be paid to those shareholders whose names stand on the Register of Members on July 13, 2005. The dividend in respect of shares held in the electronic form will be paid to the beneficial owners of shares whose names appear in the list furnished by the Depositories for this purpose as on June 30, 2005. The dividend will be paid on and from July 26, 2005. (d) The Securities and Exchange Board of India has made it mandatory for all companies to use the bank account details furnished by the depositories for depositing dividend through Electronic Clearing Service (ECS) to investors wherever ECS and bank details are available. In the absence of ECS facilities, the Company will print the bank account details, if available, on the payment instrument for distribution of dividend.

(e) During the current financial year viz 2005- 2006, the Company will be required to transfer to the Investor Education & Protection Fund, AMENDMENT TO THE ARTICLES OF ASSOCIATION APPOINTMENT OF AUDITORS 5 the unpaid/unclaimed dividend for the year ended March 31, 1998. Those shareholders who have not encashed their warrants are requested to immediately return the outdated warrants to the Company or to write to the Company in the matter to enable the Company to issue Demand Drafts in lieu thereof. (f) The relative Explanatory Statements pursuant to Section 173 of the Companies Act, 1956, in respect of the business under Items 7 to 11 as set out above are annexed hereto. (g) As per the provisions of the Companies Act, 1956, facility for making nominations is available for shareholders, in respect of the shares held by them. Nomination forms can be obtained from the Share Department of the Company. By Order of the Board, For THE ASSOCIATED CEMENT COMPANIES LIMITED, A Anjeneyan Company Secretary Mumbai, May 6, 2005 Registered Office : Cement House 121, Maharshi Karve Road, Mumbai 400 020. 6 The following Explanatory Statements, as required by Section 173 of the Companies Act, 1956, set out all material facts relating to the business under Items 7 to 11 mentioned in the accompanying Notice dated May 6, 2005. 2. Items 7 & 8: Pursuant to the Open Offer made inter alia by Holdcem Cements Private Limited with Ambuja Cement India Limited (ACIL) and Gujarat Ambuja Cements Limited (GACL) as persons acting in concert, ACIL holds 34.69% of the Equity Share Capital of ACC as on May 5, 2005. With a view to ensure representation of their shareholding in ACC, ACIL requested the ACC Board to consider the appointment of Mr Markus Akermann, CEO, Holcim Limited and Mr Paul Hugentobler, Member of Executive Committee, Holcim Limited, on ACC Board. Accordingly, the Board of Directors has appointed Mr Markus Akermann and Mr Paul Hugentobler as Additional Directors on the Board with effect from May 6, 2005. 3. Mr Akermann obtained a degree in business economics from the University of St. Gallen in 1973 and studied economics and social sciences at the University of Sheffield, UK. He started his career in 1975 with the former Swiss Bank Corporation. In 1978, he joined Holcim Limited and worked in various senior positions including as Area Manager for Latin America and Holcim Trading. In 1993, he was appointed to the Executive Committee with responsibility for Latin America and international trading activities. He was appointed CEO of Holcim Limited on January 1, 2001 and was elected to its Board of Directors at that Companys Annual General Meeting in 2002. In addition to his other responsibilities, Mexico remains his direct responsibility.

4. Mr Hugentobler has a degree in civil engineering from the ETH, Zurich, and a degree in economic science from the University of St. Gallen. He joined what is now Holcim Group Support Limited in 1980 as Project Manager and in 1994 was appointed area manager for Holcim Limited. During 1999-2000, he served as CEO of Siam City Cement, Bangkok, Thailand. He has been a Member of the Executive Committee of Holcim since January 1, 2002 with responsibility for South Asia and ASEAN excluding Philippines. 5. Under Section 260 of the Companies Act 1956, Mr Markus Akermann and Mr Paul Hugentobler hold office as Directors only upto the date of the forthcoming Annual General Meeting. 6. Notice under Section 257 of the Companies Act 1956 has been received from a Member signifying their intention to propose the appointment of Mr Markus Akermann and Mr Paul Hugentobler as Directors of the Company. 7. Taking into consideration the fact that Mr Akermann and Mr Hugentobler have been recommended for appointment by ACIL, the largest shareholder of the Company and the fact that both Mr Akermann and Mr Hugentobler have a rich and varied experience handling senior positions in Holcim Limited which is a leading cement producer with a world wide network, it is eminently in your Companys interest to appoint Mr Markus Akermann and Mr Paul Hugentobler as Directors of the Company. 8. Mr Markus Akermann and Mr Paul Hugentobler are concerned or interested in the Resolutions at Items 7 & 8 of the Notice respectively. 9. Item 9: The tenure of appointment of Mr A K Jain who was appointed Wholetime Director of the Company for a period of three years expired on January 24, 2005. EXPLANATORY STATEMENTS: 7 The Board of Directors of the Company at its Meeting held on December 16, 2004 has reappointed Mr Jain as a Wholetime Director for a period of three years with effect from January 25, 2005. The said reappointment is subject to the approval of the shareholders in general meeting. 10 Mr A K Jain is a B. Tech (Hons.) in Chemical Engineering from IIT Mumbai. He joined the Company in 1969 as a Graduate Engineering Trainee. Mr Jain has had an outstanding career in the Company with a rich and varied experience of R&D, Refractories Business, Human Resources and Cement Marketing functions at senior levels. He is presently in charge of the Companys Cement Marketing function, Ready Mixed Concrete and Refractories businesses. He is a Member of the Managing Committee of Cement Manufacturers Association and was also the Chairman of its Apex Marketing Committee. He is a Director on the Board of some of the subsidiary and associate companies of ACC. 11. The terms of reappointment and remuneration of Mr Jain inter alia contain the following principal terms and conditions : i) SALARY : Rs 1,15,000 per month in the grade Rs 75,000 Rs 2,00,000 The annual increment will be effective April 1, each year and will be decided by the Board or the Compensation Committee of the Board each year and will be merit based and take into account the Companys performance. ii) PERFORMANCE INCENTIVE Such remuneration by way of Performance Incentive payment upto an amount equivalent to a maximum of twenty four months of his salary, in addition to the salary, perquisites and allowances payable, in a particular financial year as may be determined by the Board of Directors of the Company at the end of each financial year, subject to the overall ceilings

stipulated in Sections 198 and 309 of the Companies Act, 1956. The specific amount payable to the Wholetime Director will be decided by the Board or the Compensation Committee of the Board. iii) PERQUISITES & ALLOWANCES In addition to the salary and performance incentive as outlined above, Mr Jain, Wholetime Director, shall also be entitled to perquisites and allowances like accommodation (furnished or otherwise) or house rent allowance in lieu thereof; house maintenance allowance together with reimbursement of expenses or allowances for utilities such as gas, electricity, water, furnishings and repairs, medical reimbursement, leave travel concession for himself and his family, club fees, personal accident insurance and such other perquisites and allowances in accordance with the Rules of the Company or as may be agreed to by the Board of Directors and Mr Jain, such perquisites and allowances will be subject to a maximum of 125% of his annual salary. 8 Perquisites and allowances shall be evaluated as per Income-tax Rules, wherever applicable. In the absence of any such rules, perquisites and allowances shall be evaluated at actual cost. Provision for use of Companys car for official duties and telephone at residence (including payment for local calls and long distance official calls) shall not be included in the computation of perquisites for the purpose of calculating the said ceiling. iv) PROVIDENT FUND, SUPERANNUATION / ANNUITY FUND Companys contribution to Provident Fund and Superannuation or Annuity Fund to the extent these either singly or together are not taxable under the Income-tax Act, gratuity payable as per the rules of the Company and encashment of leave at the end of his tenure shall not be included in the computation of limits for the remuneration or perquisites aforesaid. v 14. Mr A K Jain is concerned or interested in the Resolution at Item 9 of the Notice. 15. Item 10: The existing Article 109 of the Articles of Association of the Company reads as under : Number of 109. Until otherwise determined by a general meeting and Directors subject to Section 252 of the Act, the number of Directors shall not be less than twelve nor more than twenty-eight. 16. These limits on the minimum and maximum number of directors were fixed long back when the Articles of Association of the Company granted a right to certain parties viz. Cement Agencies Limited, former Managing Agents of ACC, certain State Governments and The National Cement Mines & Industries Limited to appoint Special Directors under certain circumstances. With the changed circumstances, such provisions were deleted from the Articles of Association. 17. It is, therefore, proposed to alter the Articles of Association so as to fix the limit for the minimum number of directors at nine and the maximum number of directors at fifteen. 18 These limits are in keeping with the modern corporate practice of making the Board more cohesive and bring about greater effectiveness in the decision making process. 19. A copy of the Memorandum and Articles of Association together with the proposed alteration is available for inspection by the Members of the Company at

the Registered Office of the Company between 10.00 a.m. and 12.15 p.m. on any working day of the Company. 20. None of the Directors is concerned or interested in the Special Resolution at Item 10 of the Notice. 21. The Directors commend the Resolution at Item 10 for acceptance by the Members. 22. Item 11 : In addition to the existing Auditors, Messrs A F Ferguson & Co., and Messrs K S Aiyar & Co., Chartered Accountants, it is proposed to appoint Messrs S R Batliboi & Associates, Chartered Accountants, as Auditors of the Company in connection with the audit of the Accounts of the Company for the year ending March 31, 2006. This appointment is considered necessary taking into account the expected growth in the Companys operations, to facilitate compliance with the enhanced Regulatory requirements and also assist in the overseas reporting requirements in view of your Company becoming a Holcim associate. 23. The Directors commend the Resolution at Item 11 for acceptance by the Members. By Order of the Board, For THE ASSOCIATED CEMENT COMPANIES LIMITED, A Anjeneyan Company Secretary Mumbai, May 6, 2005 Registered Office : Cement House 121, Maharshi Karve Road, Mumbai 400 020. 12 DIRECTORS REPORT TO THE MEMBERS OF THE ASSOCIATED CEMENT COMPANIES LIMITED The Directors hereby present their Sixty-Ninth Annual Report on the business and operations of the Company together with the audited Financial Accounts for the year ended March 31, 2005. 13 3. DIVIDEND The Board is pleased to recommend a higher dividend at the rate of Rs. 7 per share of Rs.10 each for the year aggregating to Rs.142.50 crore including tax on dividend of Rs 17.53 crore as compared to Rs. 4 per share aggregating to Rs.79.96 crore, including tax on dividend of Rs.9.08 crore in the previous year. 4. OPERATIONAL PERFORMANCE The buoyancy exhibited by the Indian economy, the continued growth in housing sector and the increased emphasis on infrastructure enabled the industry to post 7.8% growth during the year under review. ACC Group cement production and sales volume grew by 8% whereas ACC standalone cement production and sales volume grew by 5% and 7% respectively in the current year. Other business divisions turned in record performances during the year.

Operational performance of major business of the Group for the year ended March 31, 2005 is as under: 4.1 CEMENT- CONSOLIDATED 2004-05 2003-04 Growth % Clinker Production (Million Tonnes) 12.13 11.45 6 Cement Production (Million Tonnes) 16.61 15.34 8 Sales volume (Million Tonnes)* 16.57 15.39 8 Sales value excluding excise duty ( Rs crore) ** 3439.25 2949.16 17 * Includes cement sale to RMC etc. ** Sales value as indicated in the consolidated cement segment 4.2 CEMENT- STANDALONE 2004-05 2003-04 Growth % Clinker Production (Million Tonnes) 11.50 11.27 2 Cement Production (Million Tonnes) 15.32 14.65 5 Sales volume (Million Tonnes)* Including traded cement 16.29 15.25 7 Sales value excluding excise duty ( Rs crore) ** 3386.00 2906.09 17 * Includes cement sale to RMC etc. ** Sales value as indicated in the standalone cement segment 14 4.3 REFRACTORY 2004-05 2003-04 Growth % Sales (Lakh Tonnes) * 1.66 1.24 34 Value of Sales & Services excluding excise duty (Rs crore) ** 224.40 165.11 36 * Only outside party sales ** As indicated in the consolidated refractory segment 4.4 READY MIXED CONCRETE 2004-05 2003-04 Growth % Sales volume (Lakh Cubic Metres) 8.87 6.12 45 Value of Sales & Services (Rs crore)* 183.29 128.63 42 * As indicated in the consolidated RMC segment 4.5 A detailed analysis of the Companys performance is contained in the Management Discussion and Analysis, which forms part of this Report. 5. TURNOVER AND PROFIT 5.1 The consolidated turnover of the Company grew by 19% to Rs. 4227.22 crore as compared to Rs 3560.44 crore in the previous year. The profit before depreciation, interest, exceptional items, tax and minority interest improved to Rs. 810.27 crore in the current year from Rs. 605.55 crore in the previous year. ACC standalone turnover also grew by 19% to Rs. 3902.06 crore as compared to Rs 3284.48 crore in the previous year. The profit before depreciation, interest, exceptional items and tax improved to

Rs. 719.67 crore in the current year from Rs. 533.92 crore in the previous year. 5.2 The cement prices improved in most of the regions and were more stable during the year underreview. The year under review witnessed sharp increases in prices of inputs, fuel, freight, etc. The cost impact of these was, however, partially neutralized by the ongoing productivity improvement initiatives. 5.4 Despite the firming up of the interest rates and the increased capital spending, the group was able to contain the interest cost at Rs. 92.54 crore which was lower as compared to Rs 98.91 crore in the previous year. Interest expense for ACC stand Rs 92.91 crore in the previous year. 5.5 Due to the impact of acquisition of Wadi Captive Power Plant from Tata Power Company Ltd. and Gagal Unit-I kiln modernization, the depreciation for ACC group was higher at Rs. 225.70 crore against Rs 198.95 crore in the previous year. As regards ACC standalone depreciation was higher at Rs. 186.86 crore as compared to Rs 176.85 crore in the previous year 5.6 The group, in line with its accounting policies has provided for exceptional items of Rs. 0.50 crore 15 compared to Rs. 5.99 crore in the previous year. With respect to ACC standalone the exceptional item was Rs 0.50 crore as compared to Rs 10.30 crore in the previous year. 5.7 The firm trend in cement prices, higher sales volume and the cost and productivity improvement initiatives has enabled the Company to post its best ever performance during the year under review. Profit before taxes for the year for the group increased to Rs. 485.42 crore as compared to Rs. 287.86 crore in the previous year. After providing current tax of Rs. 59.86 crore (previous year Rs. 27.59 crore) and deferred tax of Rs. 23.04 crore (previous year Rs. 40.14 crore), the profit after taxes increased by 83 % to Rs. 402.52 crore from Rs. 220.13 crore in the previous year. As regards the ACC standalone, the profit before tax for the year increased to Rs 444.12 crore as compared to Rs 253.86 crore in the previous year. After providing for current tax of Rs 45.50 crore (previous year Rs 16.09 crore) and deferred tax of Rs 20.23 crore (previous year Rs 37.53 crore) the profit after taxes increased by 89% to Rs 378.39 crore as compared to Rs 200.24 crore in the previous year. 6. MODERNIZATION/EXPANSION PROJECTS 6.1 The modernization of cement plant at Chaibasa in the State of Jharkhand made substantial progress during the year. While the CPP

has commenced commercial production in April 2005, the modernization project is likely to be commissioned in the first quarter of financial year 2005-06. 6.2 The projects for augmentation of capacity of Gagal Units I & II are expected to be commissioned during the course of the financial year 2005-06. 6.3 The Company has taken up the expansion and modernization of Lakheri Cement Works along with the installation of a new 25 MW CPP to take care of its power requirements. The total project cost would be Rs. 260 crore and is scheduled for completion in the financial year 2006-07. 6.4 After completion of the above projects by 2007, ACC group capacity would be about 20.60 million tonnes as against the present capacity of 18.30 million tonnes. 6.5 The Company has taken up installation of an additional 25 MW TG at a cost of Rs. 32 crore at its Kymore Cement Works to enhance its captive power availability. 7. ACQUISITION The Company acquired 75 MW Captive Power Plant located at Wadi Cement Works from Tata Power Company Ltd. with effect from July 1, 2004 for a consideration of Rs. 235.45 crore. This acquisition is expected to bring in significant savings in cost of power. 8. OVERSEAS CONTRACTS 8.1 Shareholders will be pleased to note that the initiatives taken by the Company in the area of providing consultancy services for the overseas markets have resulted in improved revenues from this activity during the year. 8.2 The operations and management contract with Yanbu Cement Company Ltd., Saudi Arabia was renewed for a further period of three years upto February 28, 2008. 8.3 The project consultancy assignment with Dangote Group, Nigeria for the setting up of cement plant for Obajana Cement Plc. and the rehabilitation of the cement plant of Benue Cement Co. Plc. progressed satisfactorily. The Company has entered into a MoU with Dangote Group for operations and management of these plants after their commissioning. 8.4 The Company has entered into an agreement with Ishikawajima Harima Heavy Industries Company Ltd. (IHI), Japan for rendering technical consultancy services to them. 9. OUTLOOK

With the Indian economy expected to maintain its momentum, the Cement Industry is likely to post a growth of around 8% in FY 2005-06. As no major capacity additions are in the pipeline, the industry is expected to operate at higher level of capacity utilization. Your Companys continuing initiatives for improvement in efficiencies, plant utilization and 16 planned capacity additions should enable it to maintain healthy growth of its financials. 10. SALE OF MANCHERIAL WORKS The Company has decided to sell its Mancherial Cement Works with a capacity of 3.3 LTPA due to its unviable operations. The approval of the shareholders was obtained through postal ballot in March 2005 and thereafter efforts are on to dispose of the unit. 11. MERGER OF CEMENT SUBSIDIARIES The Board of Directors has at its Meeting held on May 6, 2005, decided to recommend to you the members, the amalgamation of the cement subsidiaries viz. Bargarh Cement Ltd. (BCL) and Damodhar Cement and Slag Ltd. (DCSL) with your Company. While BCL is a wholly owned subsidiary, your Company holds 97.61% equity stake in DCSL. Your Directors believe that the merger would result in cost savings and lead to improved working results. The merger, subject to the approval of the shareholders and the Honourable High Courts of Bombay, Kolkata and Orissa is proposed to be effective from April 1, 2005. 12. SHARE CAPITAL 12.1 In accordance with the Resolution passed by the shareholders at the Annual General Meeting held on July 9, 2004, the Compensation Committee of the Board has granted 6,04,150 Options (each option being equal to one Equity Share) under the Employees Stock Option Scheme (ESOS) for the year 2004-05. Consequent upon the exercise of the Options by the employees under the ESOS 200001, 2001-02, 2002-03, 2003-04 5,31,629 shares have been allotted during the year. Accordingly, the subscribed share capital of the Company stands increased to that extent. 12.2 Details of Employees Stock Option Schemes as required under the SEBI Guidelines are set out in Annexure C to the Directors Report. 12.3 As mentioned in last years Directors Report, 8,06,000 shares were allotted in April 2004 consequent to the exercise of Green Shoe option under the Global Depositary Receipt Issue made in

March 2004. 14. FIXED DEPOSITS The Company has discontinued its fixed deposits scheme in financial year 2001-02 and as at March 31, 2005 the total amount of fixed deposits held by the Company was Rs. 0.89 crore, all of which represents unclaimed deposits which had matured. 15. SUBSIDIARY COMPANIES As required under Section 212 of the Companies Act 1956, the audited statements of accounts, along with the report of the Board of Directors relating to the Companys subsidiaries, ACC Machinery Company Ltd., ACC Nihon Castings Ltd., The Cement Marketing Company of India Ltd., Bulk Cement Corporation (India) Ltd., Damodhar Cement and Slag Ltd., Everest Industries Ltd. and Bargarh Cement Ltd. and respective Auditors Report thereon for the year ended March 31, 2005 are annexed. 16. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements of the Group are attached. The net worth of the Group as at 17 March 31, 2005 was Rs.1557.36 crore as against Rs.1260.14 crore as at the end of the previous year. 17. COST AUDIT As per the Governments directive, the Companys Cost Records in respect of Cement for the year ended March 31, 2005 are being audited by Cost Auditors, M/s. N I Mehta & Co. who were appointed by the Board with the approval of the Central Government. 18. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO As required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo are set out in Annexure A to the Directors Report. 19. PERSONNEL During the year under review, industrial relations at all units of the Company continued to be cordial and peaceful. 20. PARTICULARS OF EMPLOYEES Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975 as amended regarding employees is

given in Annexure B to the Directors Report. 21. MANAGEMENT 21.1 Mr. P K Sinor, Wholetime Director and Company Secretary retired with effect from August 1, 2004. The Board has placed on record its warm appreciation of the valuable services rendered by Mr. Sinor during his long association of 29 years with the Company. 21.2 Mr. A K Jain was reappointed as a Wholetime Director in the Company for a period of 3 years with effect from January 25, 2005 subject to the approval of the shareholders. The resolution pertaining to reappointment of Mr. A K Jain as Wholetime Director and the remuneration payable to him is set out at Item 9 of the Notice and the relevant Explanatory Statement. The Resolution is commended to the members for acceptance. 22. DIRECTORS 22.1 Mr. Markus Akermann, CEO, Member of Board of Directors , Holcim Ltd. and Mr. Paul Hugentobler, Member of Executive Committee, Holcim Ltd. were appointed as Additional Directors on May 6, 2005. As Additional Directors, they hold office till the ensuing Annual General Meeting. In view of their vast and varied experience, it is eminently in your Companys interest to appoint Mr. Markus Akermann and Mr. Paul Hugentobler as Directors. Accordingly, Items 7 and 8 of the Notice in regard to their appointments are commended to the Members. 22.2 In accordance with the provisions of the Companies Act, 1956 and the Articles of Association, Mr. Tarun Das, Chairman, Mr. N S Sekhsaria, Deputy Chairman, Mr. M L Narula, Managing Director and Mr. A K Jain, Wholetime Director, retire by rotation and are eligible for reappointment. 23. DIRECTORS RESPONSIBILITY To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of section 217(2AA) of the Companies Act, 1956: i. that in the preparation of the annual accounts for the year ended March 31, 2005 the applicable accounting standards have been followed along with proper explanation relating to material departures, if any ii. that such accounting policies as mentioned in Note 1 of the Notes to the Accounts have been selected and

applied consistently, and judgements and estimates have been made that are 18 reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2005 and of the profit of the Company for the year ended on that date; iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. iv. the annual accounts have been prepared on a going concern basis. 24. CORPORATE GOVERNANCE As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance Practices followed by the Company together with a certificate from the Companys Auditors confirming compliance is set out in the Annexure forming part of this report. 25. AUDITORS 25.1 M/s. A.F. Ferguson & Co., Mumbai and M/s. K.S. Aiyar & Co., Mumbai, retire as auditors of the Company and have given their consent for re-appointment. 25.2 In addition to the existing auditors M/s. A.F. Ferguson & Co., Mumbai and M/s. K.S. Aiyar & Co., Mumbai, it is proposed to appoint M/s. S. R. Batliboi & Associates, Chartered Accountants, Mumbai as Auditors of the Company. This appointment is considered necessary taking into account the expected growth in the Companys operations and to facilitate compliance with the enhanced regulatory and operational requirements. The shareholders are requested to appoint the aforesaid auditors for the current year and to authorize your Directors to fix their remuneration as per Item 11 of the Notice. 25.3 As required under the provisions of Section 224 (1B) of the Companies Act, 1956, the Company has obtained written confirmation from the above auditors proposed to be appointed that the appointment if made would be in conformity with the limits specified in the said Section. 26. ACKNOWLEDGEMENT Your Directors take this opportunity to express their grateful appreciation for the excellent assistance

and co-operation received from the Central Government, the State Governments and the consortium of Banks. Your Directors also thank all the shareholders for their continued support and all the employees of the Company for their valuable services during the year. For and on behalf of the Board, Tarun Das Chairman Mumbai : May 6, 2005 19 ANNEXURE A TO DIRECTORS REPORT (Para 18) Statement pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. (A) CONSERVATION OF ENERGY: (a) Energy Conservation measures taken: Replacement of High Pressure Drop Cyclone Preheaters by new high efficiency 6 Stage Preheater at Gagal Unit I. Replacement of Grate Cooler by a High Efficiency Modern Grate Cooler at Gagal Unit I. Installation of High Efficiency Seal at Discharge end of Kiln of Gagal Unit I & Unit II, Wadi Kiln Nos. 3 & 4. Installation of VVVF drives for various motors at different Works. Addition of one more stage of Preheater Cyclone (conversion from 4 stage to 5 stage Preheater) for Kiln 1, 2 and 3 at Wadi Works and Kiln No. 3 at Jamul Works for reducing specific heat consumption. Retrofits of High Efficiency Separator for cement grinding at Mill No. 3 at Sindri Works, Cement Mill No. 1 at Gagal Unit I and Cement Mill No. 1 at Kymore Works. Installation of Energy Monitoring System for section-wise monitoring of energy consumption at Gagal Unit I & Unit II. Provision of Mechanical Conveying System for unloading of flyash from bulkers and conveying to silos at Kymore Works and for feeding of flyash into the cement mills at Kymore and Tikaria Works. Increase in flyash absorption levels in PPC at various Works through optimization of cement mills performance. Reduction in self consumption of Captive Power Plants at Madukkarai, Chanda and Tikaria. Use of cashew nut shells as alternate fuel for Calciner at Madukkarai Works. (b) Additional Proposals being implemented for further conservation of energy. Replacement of 3 Nos. Wet Process Kilns by new high efficiency Semi Dry Process Kiln at Chaibasa Works. Retrofitting of existing flotation cells with High Efficiency ones at Chaibasa and Madukkarai Works. Replacement of Pneumatic Conveying System by Mechanical Conveying System for transportation of cement to Silos at Sindri and Madukkarai Works and flyash to Silos at Madukkarai Works.

 Installation of online Energy Monitoring System at Kymore and Tikaria Works. Rationalization in the use of water pumps and compressors at various Works. . 21 (B) TECHNOLOGY ABSORPTION Research & Development (R&D) 1. Specific areas in which R&D carried out by the company 1) Beneficiation of raw materials and fuels 2) Enhanced absorption of blending materials 3) Development of new and high performance concretes, mortars and grouts 4) Development of particle separation technologies 2. Benefits derived as result of above R&D - Marginal quality raw materials and fuels could be used - Absorption of blending materials enhanced - High performance concretes, mortars and grouts developed 3. Future plan of action I. Research for even better processes of beneficiation for raw materials and fuels. II. Focus on development of products aimed at enhancing use of cement in various applications. 4. Expenditure on R&D Rs Lakhs a. Capital 26 b. Recurring (Gross) 656 c. Total 682 d. Total R&D expenditure as percentage of total turnover 0.17% Technology absorption, adaptation and innovation. All the technologies developed have been successfully adapted and absorbed. (C) FOREIGN EXCHANGE EARNINGS AND OUTGO Rs Lakhs Foreign exchange earned 8510 Foreign exchange used 12356 For and on behalf of the Board, Tarun Das Chairman Mumbai: May 6, 2005 22 Statement pursuant to section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and forming Part of the Directors Report for the year ended March 31, 2005 Sr. Name Designation & Remuneration Qualifications Date of Total Age Last Employment No. Nature of duties Gross Commence- Experi- in Rs. ment of ence (Years) Employment (Years) 1 Jain A .K . Wholetime Director 53,49,372 B.Tech. (Hons) 01.08.1969 36 57 Nil 2 Narula M.L. Managing Director 85,31,535 B.Sc.Engg.FIE India 15.01.1963 42 64 Nil 3 Sinor P.K.* Wholetime Director & 21,59,161 B.Com., FCS 01.07.1975 44 65 Co. Secretary, Company Secretary ACC-Vickers Babcock Ltd. Notes (i) Gross Remuneration shown above is subject to tax and comprises salary, allowances, incentives, monetary value of perquisites, companys contribution to provident fund, officers superannuation fund and applicable discount on Stock Options.

(ii) In addition to the above remuneration, employees are entitled to gratuity in accordance with the Companys rules. (iii) All the employees have adequate experience to discharge the responsibility assigned to them. (iv) The nature of employment in all cases is contractual. * Indicates that the employee was in service only for a part of the year. For and on behalf of the Board, Tarun Das Chairman Mumbai: May 6, 2005 MANAGEMENT DISCUSSION AND ANALYSIS HIGHLIGHTS OF PERFORMANCE / EVENTS Production and sales of the group 16.6 million tonnes, thus continues to be Indias largest cement manufacturing company. Capacity utilisation at 91% as compared to industrys utilisation level of 84%. Stable to better cement prices in Companys key markets. Profit before Exceptional Items & Tax for the Group Rs. 486 crore as against Rs. 294 crore in the previous year. On standalone basis profit before Exceptional Items & Tax Rs. 445 crore as against Rs. 264 crore in the previous year. Profit after Taxes for the group increased by 83% to Rs 403 crore from Rs 220 crore. On standalone basis profit after tax increased by 89% to Rs 378 crore from Rs 200 crore in the previous year. Growth in profit through higher volume, better cement price realization, improved operational efficiencies, despite sharp increase in prices of fuel and other inputs. Acquired 75 MW Captive Power Plant located at Wadi from Tata Power Company Ltd. Though no major capacity additions barring completion of Tikaria expansion made in 200405, implementation of Chaibasa modernization and Gagal Units I and II capacity augmentation projects progressed during the year and consequently, capacity addition is poised to take place in financial year 2005-06 to keep up with the growth in cement demand. ECONOMY AND BUSINESS ENVIRONMENT Despite indifferent monsoons, the Indian economy fared well in 2004-05. The countrys GDP growth rate is estimated at 6.9% for this fiscal, compared to 8.5% achieved in 2003-04, mainly due to low agricultural growth rate of 1.1%. This level of growth on a higher base reflects the inherent resilience and robustness of the Indian economy. The foreign exchange reserves continued to rise and the Rupee appreciated against the U S Dollar. The capital markets performed smartly during the year. With the credit offtake increasing during the year, the year also witnessed strong performance of the manufacturing sector and the reemergence of capital spending. The inflationary pressures being exerted on the economy particularly due to continued

upward spiral of oil price, developing shortages experienced in the coal availability and the unsatisfactory fiscal situation of the centre and state finances continue to be areas of concern. The year in retrospect has been a year of overall progress for the national economy. INDUSTRY OUTLOOK & OPPORTUNITIES FOR CEMENT BUSINESS The industry performance during 2004-05 was characterized by normal volume growth, stable to better cement prices and favourable demandsupply balance in certain regions. The Industry cement production during the year 2004-05 was at 125.6 million tonnes and despatches during the year 2004-05 was at 125.1 million tonnes registering a growth of 7.8%. As anticipated in last years review, improvement in demand-supply balance was witnessed on account of slow down in new capacity additions and robust demand growth. This in turn got reflected in better and stable cement prices and higher levels of capacity utilisation. During the year, the industry had to face various challenges such as the steep increase in price of inputs, lower coal and wagon availability etc. While the increase in price of key inputs like coal, diesel etc. adversely 27 impacted the cost of production, the increase in rail and road freight increased the logistics cost. The poor availability of coal is forcing the industry to look for costlier alternate options and to exceed the prudent stocking norms both of which affect costs and profitability. The continued thrust of the Central Government on housing and infrastructure with particular focus on rural infrastructure along with opening up of real estate sector for foreign direct investment is expected to sustain healthy growth of cement demand. The Governments emphasis on rural lending could improve the investments in new houses in the rural sector. This along with the continued focus on National Highway Development Project and the planned infrastructure projects of airports, ports and power generation should give adequate fillip to the cement demand. Against the above backdrop, cement demand in the year 2005-06 is expected to grow at around 8%, a rate higher than the capacity creation, thus ensuring high capacity utilization and stable and improved cement price realization. Risks and concerns: While the macro economic and industry outlook are positive, factors such as spiralling oil prices, further inflationary pressures mounting on the economy, weak monsoon, political surprises, shortages of coal and grid power, transport bottlenecks, tardy implementation of VAT and the worsening of fiscal deficit could adversely impact the economic and industry environment.

Cement Business Consolidated performance at a glance : Year ended Year ended % Change 31-3-2005 31-3-2004 Production Million Tonnes 16.61 15.34 8 Sales volume Million Tonnes* 16.57 15.39 8 Sales value Rs Crore ** 3439.25 2949.16 17 Return on Capital Employed % 17% 10% * Cement sales volume includes sale to RMC etc. ** Sales value as per consolidated cement segment Return on capital employed = PBIT / capital employed excluding capital work in progress Cement Business Standalone performance at a glance : Year ended Year ended % Change 31-3-2005 31-3-2004 Production Million Tonnes 15.32 14.65 5 Sales volume Million Tonnes (including traded cement)* 16.29 15.25 7 Sales value Rs Crore ** 3386.00 2906.09 17 Return on Capital Employed % 17% 11% * Includes cement sale to RMC etc. **as per standalone cement segment Return on capital employed = PBIT / capital employed excluding capital work in progress Detailed segmental analysis is included in Notes on Accounts on page number 90 of this annual report. 28 Operational Performance: (Standalone) 2004 -05 2003-04 Capacity utilization (%) 91 % 91 % Blended cement (%) 82 % 83 % Fuel consumption Kcal /Kg of Clinker 753 775 Power consumption (Process) Kwh/T 85 89 Manhours per tonne of cement 1.23 1.32 Review of Operations, Costs and Profitability: The Company continues to be the single largest cement company in India. Our broad geographic diversification in various regions with different market dynamics allows us to sustain consistent growth and profitability. In the recent past it has been able to protect and enhance its market share by adding additional capacity through continuous modernization and expansion of its production facilities, capitalizing on and strengthening its strong brand equity and innovation in the market place. The Company has posted its best ever results for the year 2004-05. This has been possible due to higher volumes, improved price realization for cement and better operational efficiencies, which mitigated the severe pressure on margins due to rising price of inputs. During the year under review, we continued with our cost reduction initiatives such as increased use of cheaper captive power, improved fuel and power efficiencies, reduced cost of slag and absorbed higher level of fly ash. Future Plans Cement Business:

Manufacturing The Company plans to retain its growth momentum by continuing to focus on markets, which have long-term growth potential with low per capita consumption and high pent up demand. The state of the art 1.3 MTPA clinkering unit would be commissioned at Chaibasa Cement Works in the first quarter of the financial year 2005-06 whereas 15 MW Captive Power Plant has commenced commercial production in April 2005. This project besides reducing the cost of production would enable the Company to meet the clinker requirements of Sindri Cement Works and the Companys subsidiary, i.e. Damodhar Cement & Slag Ltd. (DCSL) more cost effectively and further strengthen its position in the eastern region. Similarly, the completion of the projects at Gagal Units I and II for augmentation of their capacity in the financial year 2005-06 should enable the Company to retain its pre-eminent status in the northern region. The acquisition of Wadi Captive Power Plant from Tata Power Company Ltd., which was concluded in January 2005, would enable the Company to bring down the cost of power generation significantly. The Company has also taken up the expansion and modernization of its Lakheri Cement Works capacity from 0.6 MTPA to 1.5 MTPA along with setting up a new 25MW captive power plant involving a total capital outlay of Rs 260 crore. This project is expected to be completed by 2007. On completion of all these projects, the capacity of the Company along with its subsidiaries will go up to 20.6 million tonnes per annum. The Company has taken up installation of an additional 25MW TG at a cost of Rs. 32 crore at its Kymore Cement Works to enhance its captive power availability. 29 Marketing The Company has opened ACC Help Centers at various locations in the country in order to provide guidance and advice on correct construction practices to prospective house builders. In a fresh initiative to educate rural customers through dissemination of information regarding correct construction practices, the Company is participating in rural markets / mandis in different parts of the country. Based on the positive market feedback about these centers, we intend to roll out more centers in the financial year 2005-06. The Company has also launched an initiative called Project Sambandh to further strengthen its marketing channel. The Company would continue to strive to provide market leadership in the cement industry. Engineering Consultancy

The Company is continuing to leverage on its rich experience in operating and maintaining cement plants and the vast pool of high skilled manpower it has at its disposal for expanding its overseas operations such as operations and management contract with Yanbu Cement Company Ltd., in the Republic of Saudi Arabia. The Company has entered into a MoU with Dangote Group, Nigeria for operating the plants of Obajana Cement Plc. and Benue Cement Plc. The Company has also entered into a contract with Ishikawajima Harima Heavy Industries Co. Ltd (IHI), Japan for technical consultancy services. Further, the Company is rendering project consultancy for setting up a cement plant in Yemen. REFRACTORY BUSINESS Refractory business has reported impressive results for the year ended March 31, 2005 a growth rate of 34% in sales volume and 36% in revenues . The expansion and capital repair projects being undertaken by Iron and Steel, Aluminum and other sectors were the main contributory factors for this growth. The Company would strive to further expand product portfolio, cut down its production cost by judicious sourcing and also seek to become a leading player of niche products in both domestic and global markets. Performance at a glance: Year ended Year ended % Change 31-3-2005 31-3-2004 Sales volume (Lakh Tonnes) * 1.66 1.24 34% Sales value( Rs crore) ** 224.40 165.11 36% Return on Capital employed 63% 38% * excludes sister works sales ** as per consolidated refractory segment READY MIXED CONCRETE (RMC) BUSINESS Despite intense competition from existing players and new entrants, RMC volumes and turnover grew by an impressive 45% and 42% during the year 2004-05. The Company will be adding 4 additional units in financial year 2005-06. The RMC business is expected to continue its growth momentum in the future. 30 Performance at a glance: Year ended Year ended % Change 31-3-2005 31-3-2004 Sales volume ( Lakh Cubic Metres) 8.87 6.12 45 Sales value( Rs crore) * 183.29 128.63 42 Return on Capital Employed % 28% 18% * as per consolidated RMC segment RESEARCH AND DEVELOPMENT The activities of the Research and Development center continued to be focused on the Companys core business of cement to achieve improvement mainly in the areas of raw material utilisation, process

improvement, energy conservation, enhanced usage of blending materials, improved beneficiation technologies, development of high performance concretes, mortars and grouts. PERFORMANCE OF SUBSIDIARY COMPANIES Damodhar Cement and Slag Limited (DCSL): DCSL turned out very satisfactory performance during 200405. Cement sales during the year were 5.02 lakh tonnes as compared to 4.70 lakh tonnes in the previous year. Better cement price realisation and higher volume has enabled DCSL to post higher net profit of Rs.16.81 crore as compared to net profit of Rs 5.19 crore in the previous year. Bargarh Cement Limited (BCL): The first full year performance of BCL after its take over by ACC has been satisfactory. The Companys cement sales for the year 2004-05 was 8.09 lakh tonnes (previous year 7.70 lakh tonnes). BCL reported a net profit of Rs. 5.01 crore for the year as against a loss of Rs. 26.31 crore during the previous year. BCL is striving to improve its profitability by optimizing its production, productivity and manpower rationalization. Bulk Cement Corporation (India) Limited (BCCI): BCCI handled 6.94 lakh tonnes during the year 2004-05 operating at 138% of capacity utilization as compared to 5.89 lakh tonnes in the previous year. The Company has reported a net profit of Rs. 2.96 crore as compared to Rs 2 crore during the previous year. Everest Industries Limited (EIL): Despite severe competition, EILs performance during the year under review was satisfactory. Turnover and other income for the year 2004-05 was Rs. 230 crore as compared to Rs 201 crore during the previous year. Net profit for the year was Rs. 19.17 crore as compared to Rs. 59.57 crore (which included profit from sale of land of Rs.46.71 crore) for the previous year. EIL has recommended a dividend of Rs. 5 per Equity share of Rs 10 each for the year. ACC Machinery Company Limited (AMCL): AMCL posted good results for the year with a sales turnover and other income of Rs. 28.82 crore for the year 2004-05 as compared to Rs 17.07 crore during the previous year. The Company has reported a net profit of Rs.4.02 crore as compared to Rs. 2.30 crore during the previous year. AMCL has recommended a dividend of Rs 50 per Equity share of Rs 100 each for the year. ACC Nihon Castings Limited (ANCL): ANCL has shown improved sales and other income at Rs. 37.36 crore during the year 2004-05 as compared to Rs 24.50 crore in the previous year. However, the working has resulted in a marginal net profit of Rs 0.35 crore as compared to loss of Rs.1.72 crore during the previous year. 31 CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility has been one of the guiding principles of your Company right from its inception. The Company always strives to improve the quality of life of its employees and of the community in which it operates. This year, the Company had restated its CSR policy to give better strategic thrust to its CSR activities and make it more relevant to the changing times. The Company swiftly responded by deputing volunteers with relief materials for the Tsunami victims from its Madukkarai Cement Works in Tamil Nadu. It also donated Rs.1 crore to the Prime Ministers Tsunami Relief Fund. Our employees also spontaneously came forward to donate one days salary to provide succour to the victims. It is proposed to join hands with Confederation of Indian Industry to take up special projects for helping fishermen in Tsunami affected areas in Tamil Nadu in sustaining their business, create common community infrastructure for enhanced living standards, and for training on alternate livelihood skills. The Company organized Health Camps in the proximity of its various manufacturing units for providing better health and hygiene. The Company places utmost emphasis on safety of its workmen. The Five Star Safety Management System as per the British Safety Council is in vogue in all the manufacturing units. Annual Safety Audits are carried out by external agencies. The Companys commitment to protecting and improving the environment extends beyond normal regulatory requirements and is manifested in ISO 14001 accreditation at 9 of its manufacturing units. HUMAN RESOURCES The total number of permanent employees of the Company as at March 31, 2005 was 8995. To enhance the productivity of employees as well as to make their workplace enjoyable, the Company has adopted Total Productive Maintenance (TPM) as a philosophy in our work places across all units and Head Office. An annual audit of TPM implementation was carried out with the assistance of an external agency. The Company is focused on training its employees on a continuous basis, both on the job and through training programmes by internal and external agencies. During the year, the Company launched a new initiative Innovate to Excel to foster innovation at the workplace. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Management Audit function is an independent function reporting directly to the Managing Director. The Department is adequately staffed with qualified professionals including accountants and engineers. The Department conducts in-depth review of internal controls, accounting procedures and policies as well as

operational audit at the Companys various plants, regional marketing offices, other business units and subsidiaries. Appropriate recommendations are made from operational and financial management perspectives. It also provides value-added services to the auditees for improvement in efficiencies and prevention of avoidable losses. The Management Audit Department also reviews the quarterly and annual financial statements and adequacy of disclosure, treatment of various items involving accounting judgements. The Management Audit Department is accredited with the ISO 9001:2000 Quality Systems Procedures Certification. 32 The reports prepared by the Management Audit are reviewed periodically by the Operations Review Committee and Audit Committee. Financial performance increase is mainly on account of retained profits. Loan Funds There has been an increase in loan funds to Rs. 1492.15 crore as at March 31, 2005 (standalone Rs. 1407.73 crore) as compared to Rs.1440.08 crore at the end of the previous year (standalone Rs. 1352.70 crore). Fixed Assets Net fixed assets including Capital Work in Progress, as at March 31, 2005 was Rs.3274.50 crore (standalone Rs. 2863.45 crore ) as compared to Rs. 2880.09 crore (standalone Rs 2472.07 crore) as at March 31, 2004. Total amount of investments as at March 31, 2005 was Rs.18.80 crore (standalone Rs. 326.69 crore) as compared to Rs.57.59 crore (standalone Rs. 375.74 crore) as at March 31, 2004. Deferred Tax Liability provision outstanding as at March 31, 2005 was Rs. 311.41 crore (standalone Rs. 295.46 crore) as compared to Rs 288.37 crore (standalone Rs. 275.23 crore) as at March 31,2004. 34 Net Current Assets increased to Rs. 313.88 crore (standalone Rs 191.36 crore) as at March 31, 2005 from Rs.294.64 crore (standalone Rs 188.95 crore) as at March 31, 2004.