Gujarat Sidhee Cement Limited

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Gujarat SidheeCement Limited

Final Print for approval

Board of DirectorsAs on 30.7.2004

Shri M.N. Mehta ChairmanShri Jay Mehta Executive Vice-ChairmanShri Sanat Mehta Nominee of The Mehta International LimitedShri Erling Frandsen Nominee of F.L. Smidth & Co.A/S, DenmarkDr. Nayan Desai Nominee of GIIC LimitedShri K. LalitShri M. L. TandonShri S.V.S. RaghavanShri P. T. Thomas Nominee of IDBIShri P. K. Behl Nominee of LICShri P. Niranjan Nominee of SBIShri M.S. Gilotra Managing Director

Shri R. K. Poddar Deputy Managing Director

SR. VICE PRESIDENT (FINANCE) &

COMPANY SECRETARYShri V. R. Mohnot

BANKERSState Bank of IndiaDena BankState Bank of TravancoreState Bank of Bikaner & JaipurState Bank of PatialaUnion Bank of IndiaState Bank of Saurashtra

AUDITORS

Messrs. Manubhai & Co.Chartered Accountants

Ahmedabad

REGISTERED OFFICE & WORKS

“Sidheegram”Off Veraval - Kodinar HighwayPin Code 362 276District JunagadhGUJARAT.

CORPORATE OFFICE

Agrima Business CentreN K Mehta International House178, Backbay ReclamationMumbai - 400 020.

CONTENTS Page No. (s)

Notice 03

Directors’ Report 10

Auditors’ Report 26

Balance Sheet 28

Profit and Loss Account 29

Cash Flow Statement 30

Schedules 1 to 14 31

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GUJARAT SIDHEE CEMENT LIMITEDRegd. Office : “Sidheegram”, Off Veraval-Kodinar Highway

Pin 362 276, Dist. Junagadh, Gujarat.

N O T I C EN O T I C EN O T I C EN O T I C EN O T I C E

Notice is hereby given that the Thirty First Annual General Meeting of the Shareholders of the Company will be

held on Monday the 27th September, 2004 at 4 P.M. at the Registered Office of the Company at “Sidheegram”,

Off Veraval-Kodinar Highway - Pin 362 276, Dist. Junagadh, Gujarat, to transact the following business :

ORDINARY BUSINESS :

1. To receive and adopt the Directors’ Report and Audited Profit & Loss Account for the year ended 31st

March, 2004 and Balance Sheet as at that date and the Auditors’ Report thereon.

2. To appoint a Director in place of Dr. Nayan R. Desai, who retires by rotation, but being eligible, offers himself

for reappointment.

3. To appoint a Director in place of Shri Sanat M. Mehta, who retires by rotation, but being eligible, offers

himself for reappointment.

4. To consider and, if thought fit, to pass with or without modification the following resolution as an Ordinary

Resolution :

“RESOLVED THAT M/s. Manubhai & Co., Chartered Accountants, the retiring auditors of the Company, be

and are hereby re-appointed as Auditors of the Company for audit of accounts for the financial year 2004-

2005 and they shall hold office from the conclusion of this meeting until the conclusion of the next Annual

General Meeting of the Company at a remuneration of Rs.2,25,000/- p.a. (Rupees Two Lakhs Twenty Five

Thousand only) plus Service Tax and reimbursement of travelling and out of pocket expenses actually

incurred.”

SPECIAL BUSINESS :

5. To consider and if thought fit, to pass, with or without modification(s), the following resolution as a Special

Resolution :

“RESOLVED THAT pursuant to Sections 198, 269 and 309, read with Schedule XIII and other applicable

provisions, if any, of the Companies Act, 1956, and subject to such other approvals as may be necessary,

approval of the Company be and is hereby given to the re-appointment of Shri Raj K. Poddar, as Deputy

Managing Director of the Company for a period of 3 years from 3rd December, 2003 to 2nd December

2006 on payment of remuneration as specified in the Explanatory Statement attached to this Notice and

that the said remuneration (other than commission) shall be paid to him as minimum remuneration in the

event of loss or inadequacy of profits in any financial year during the tenure of his appointment.”

“RESOLVED FURTHER THAT pursuant to Article 107 (a) of Articles of the Company, he shall not be liable to

retire by rotation till he continues as Deputy Managing Director of the Company.”

“RESOLVED FURTHER THAT the Board of Directors of the Company / Committee of the Board be and is

hereby authorized to alter, amend or vary the terms and conditions of appointment as may be agreed to

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between the Board of Directors and Shri Raj K Poddar and in accordance with Sections 198, 310, and 311

read with Schedule XIII of the Companies Act, 1956.”

By Order of the Board of Directors

V. R. Mohnot

Sr. Vice President (Fin) & Co. Secretary

MUMBAI, dated : 30th July, 2004.

Registered Office :

“Sidheegram”

Off Veraval-Kodinar Highway

Pin 362 276.

Dist. Junagadh (Gujarat).

NOTES :

1.1.1.1.1. A member entitled to attend and vote is entitled to appoint a proxy or proxies to attend and voteinstead of himself on a poll and that a proxy need not be a member. Proxies in order to beeffective must be received by the company at the Registered Office not less than 48 hours beforethe meeting.

2. The Explanatory Statement as required under Section 173 of the Companies Act, 1956 setting out materialfacts in respect of the business under item No.5. is annexed hereto.

3. Re-appointment of Directors :

At the ensuing Annual General Meeting Dr. Nayan R. Desai and Shri Sanat M Mehta, shall retire by rotation andbeing eligible, offer themselves for re-appointment. Pursuant to Clause 49 of the Listing Agreement relatingto code of Corporate Governance, the profile of the above directors are given under para (iv) (Re-appointment of Directors) of Corporate Governance Report annexed to Directors Report.

4. The Share Transfer Books and Register of Members of the Company shall remain closed on 20th September,2004 to 27th September, 2004 (both days inclusive) in connection with AGM.

5. Letter dated 28th May, 2004 from Under Secretary to the Government of India, Department of CompanyAffairs, New Delhi sanctioning re-appointment and payment of remuneration to Shri R. K. Poddar, DeputyManaging Director upto the date of this meeting, is open for inspection between 10.00 a.m. to 12.00 noonat the registered office of the company.

6. Members who have multiple account in identical names or joint accounts in same order are requested tosend all the share certificates to the Company for consolidation of all such shareholdings into one accountto facilitate better service.

7. (a) Members are requested to notify immediately any change of address :

(i) to their Depository Participants (DPs) in respect of their electronic share accounts, and

(ii) To the Registrar and Transfer Agents at : M/s. Intime Spectrum Registry Ltd., C-13 Pannalal Silk MillsCompound, LBS Road, Bhandup (West) Mumbai 400 078, in respect of their physical share folios,

if any.

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(b) In case the mailing address mentioned on this Annual Report is without the Pincode, members are

requested to kindly inform their PINCODE immediately.

8. Non-resident Indian Shareholders are requested to inform us immediately the change in the residential status.

9. Members desiring any information on the Accounts are requested to write to the Company at least one

week before the meeting so as to enable the Management to keep the information ready and replies will

be provided only at the meeting.

10. Shares of the company are required to be compulsorily traded in demat form from 22nd March,

2000. If you have, therefore, not demated your shares, you are requested to please do the same

at the earliest.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THECOMPANIES ACT, 1956.ITEM NO.6.

Shri Raj K. Poddar was re- appointed as a Deputy Managing Director of the Company for a period of three yearsfrom 3rd December, 2003 to 2nd December 2006 by the Board of Directors at its meeting held on 23.10.2003on the terms and conditions as enumerated hereunder.

Subsequently, the company approached the Department of Company Affairs, Government of India, New Delhifor their approval which the company has received now, wherein it is specifically stated that the approval isgranted till the ensuing general meeting of the company. For approval for the remaining tenure upto 2.12.2006,the approval will be granted on submission of Special Resolution along with statement containing the informationas required in para (iv) of Part II section II (B) of Schedule XIII to the Companies, Act 1956. Accordingly, theaforesaid item is again placed before the members for their approval.

Shri Raj K Poddar is an experienced Chartered Accountant. He has worked with reputed business houses forover 30 years and has good and varied exposure in Finance and Commercial Function. He has also held variouspositions at the Senior Management level.

Remuneration and perquisites payable to Shri Raj K. Poddar, Deputy ManagingDirector.1. PART-A

a) Basic salary Rs. 90,000/- p.m. in the scale of 75,000-7,500-90,000-10,000-2,00,000.

b) Commission on the net profits of the Company for each financial year, subject to maximum of 1% ofnet profits of the company.

c) Perquisites, as per details given below:

Housing - I

The expenditure by the Company on hiring furnished accommodation for the appointee will besubject to the following ceilings :

i.) If posted at Mumbai, 60% of the salary, over and above

Kolkata, Delhi & Chennai 10% payable by the appointee.

ii) Other Places 50% of the salary, over and above

10% payable by the appointee.

Housing – II

In case the accommodation is provided by the Company , 10% of the salary of the appointee shall bededucted by the Company.

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Housing - III

i) In case no accommodation is provided by the Company, the appointee shall be entitled to houserent allowance subject to the ceilings laid down in Housing - I.

ii) The expenditure incurred on Gas, Electricity and water will be on actual basis. The perquisites valuewhereof will be evaluated as per Rule 3(d) of the Income Tax Rules.

iii) Medical Reimbursement for Self & family - 8.33% of salary per annum.

iv) Leave Travel expenses for Self & family - 12.5% of salary per annum.

v) Club fees (excluding admission or life membership fee) will be on actual basis, subject to maximum of2 clubs.

vi) Expenses on children’s education not exceeding Rs.3000/- per annum per child subject to maximumof 2 children.

vii) Personal Accident Insurance & Mediclaim Insurance for self and family will be as per Company’s Rules.Premia not to exceed Rs.10,000/- per annum per person.

viii) The perquisites for servant not exceeding Rs.10,800/- per annum.

ix) Expenses incurred on soft furnishing not exceeding Rs.7,000/- per annum.

For the above purpose family means the spouse, the dependent children & dependent parents ofappointee.

x) Performance incentive Rs.5,00,000/- per annum on completion of one part of the Rehabilitation Schemei.e. either commissioning of DG Set or commissioning of Captive Jetty. This incentives becomespayable for the financial year in which one part of the project is commissioned.

PART-B

Over and above the perquisites specified in Part-A, the Deputy Managing Director shall be entitled to thefollowing perquisites which shall not form part of the remuneration specified in Part ‘A’ :

(a) Contribution to the Provident Fund, Superannuation Fund or Annuity Fund will not be included in thecomputation of the ceiling on perquisites to the extent these, either singly or put together are nottaxable under the Income-Tax Act. (27%).

(b) Gratuity not exceeding half a month’s salary for each completed year of service.

PART-C

(a) Conveyance and Telephone :

Provision of car with driver for use on Company’s business and telephone at residence will not beconsidered as perquisites. Personal long distance calls and use of car for personal purpose will beevaluated as per I.T. Rules.

(b) Earned/Privilege Leave/Casual/Sick Leave :

One month’s earned leave for every eleven months of service. However, earned / privilege leaveaccumulated but not availed of will be allowed to be encashed at the end of the tenure of theappointment as per the rules of the Company. Casual Leave (CL) and Sick Leave (SL) as applicableto other Senior Executives of the Company shall be allowed. However, CL/SL cannot be encashed atthe end of the term or during the tenure of appointment. Encashment of leave at the end of thetenure will not be included in the computation of the ceiling on perquisites.

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(c) Reimbursement of Entertainment Expenses :

Shri Poddar shall also be entitled to reimbursement of entertainment expenses actually incurredfor Company’s business against submission of supporting/declaration subject to a maximum ofRs.15,000/- per month.

(d) Periodicals:

Reimbursement of expenses incurred in respect of books and periodicals at actuals against submissionof supporting / declarations.

(e) Sitting Fees :

No sitting fees shall be paid / payable for attending the Meetings of the Board of Directors / Committeesthereof.

(f) Reimbursement of expenses incurred on official work :

Shri Poddar will be reimbursed for actual travelling, hotel and other related expenses for himself andhis spouse touring in India and abroad on Company’s work, subject to one foreign travel of spouse ina year.

2. Notwithstanding the above, in the event of inadequacy or absence of profit in any financial year,remuneration mentioned in Part A, except commission, and perquisites mentioned in Part-B and Part-C (which shall not form part of remuneration) as mentioned above shall be the minimum remunerationpayable to Shri Poddar subject to the company obtaining the requisite permission/ approval from thecompetent authority, as may be required.

3. The appointment can be terminated by either side by giving six month’s notice in writing.

The Chairman of the Company is authorized to execute the contract by incorporating the above termson behalf of the Company.

Shri Raj K Poddar is also the Deputy Managing Director of Saurashtra Cement Limited (SCL), a MehtaGroup Company. He shall not draw any remuneration from SCL and has been appointed as DeputyManaging Director without any remuneration.

Your Directors recommend the special resolution for the approval of the Members.

Except Shri Raj K Poddar none of the other Directors is interested in this Resolution.

This may be treated as extract of agreement/appointment letter as required u/s 302 of the CompaniesAct, 1956.

As required by Schedule XIII of the Companies Act, 1956 the required particulars are furnished below :

I. General Information :

1. Nature of Industry

Manufacturers of Ordinary Portland Cement, Portland Puzzalona Cement and Cement Clinker.

2. Date or expected date of commencement of commercial production :

March 1988.

3. In case of new companies, expected date of commencement of activities as per project approvedby financial institutions appearing in the prospectus.

Not applicable.

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4. Financial performance based on given indicators :2000-01 2001-02 2002-03

Rs./lacs Rs./lacs Rs./lacsTurnover 14,775.07 17,535.16 17,122.16Profit /Loss before tax (6,139.43) (3,190.47) 6,715.07Profit /Loss after tax (6141.30) (3,191.49) 16,366.99Net worth (18,465.96) (21,508.36) (5,055.54)

5. Export performance and net foreign exchange earned :2000-01 2001-02 2002-03

Rs./lacs Rs./lacs Rs./lacsExport of Goods 731.61 179.12 4255.22(FOB basis)

6. Foreign investments or collaborators, if any.F.L. Smidth A/S IFU

No. of Equity Shares. 62,50,000 62,50,000Equity shareholding (%) 4.47% 4.47%

II. Information about the appointee :1. Background details :

Mr. R.K. Poddar, B.A. (Comm.) and F.C.A. , Chartered Accountant, having 30 years experience in variousindustries like Steel, Cement, Textiles etc. Held Senior Management positions, in large Industrial Houses, inIndia. He has been with Gujarat Sidhee Cement Ltd., since December, 1998 as under :(a) From 3.12.1998 to 27.5.1999 as Executive Director (Finance)(b) From 28.5.1999 till date as Deputy Managing Director

2. Past remuneration :Last drawn gross earnings with the company was approximately Rs.12.23 lacs per annum.

3. Recognition or award : Nil4. Job Profile and his suitability :

As Deputy Managing Director of the company, he is responsible for general management and financemanagement. He has varied experience in various industries like Steel, Cement, Textiles etc. Held SeniorManagement positions, in large Industrial Houses, in India.Suitability : Most suitable.

5. Remuneration proposed :As set out in the Resolution.Minimum remuneration : The minimum remuneration shall be the amount as set out in the resolution.

6. Comparative remuneration profile with respect to Industry, size of the company, profile of the position andperson. (in case of expatriates the relevant details would be with reference to the country of origin.)(a) Comparative remuneration profile with respect to industry :

Companies like ACC, Gujarat Ambuja Cement Ltd., Grasim Ltd., who are also the cement manufacturer,are paying much higher salary as compared to GSCL. Comparative figures are given hereunder forperusal :-(a) ACC Limited Rs.1,50,000/-p.m. basic salary plus perquisites(b) Gujarat Abuja Cement Ltd. Rs.1,00,000/-p.m. basic salary plus perquisites(c) Ambuja Cement Eastern Ltd. Rs.1,80,000/-p.m. basic salary plus perquisites(d) Kakatia Cement & Sugar Ltd. Rs. 99,000/- p.m. basic salary plus perquisites(e) Grasim Indus. Ltd., Rs. 90,12,451 p.a. all inclusive benefits

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(b) Size of the company .- GSCL is having an installed capacity of 1.2 million ton of cement per annum.While all the above referred companies are having installed capacity of more than 1.2 million perannum and having multi location plants spread all over India.

(c) Profile of the position and person - Mr. R.K. Poddar, is B.A. (Comm.) and F.C.A. , Chartered Accountant,having 30 years experience in various industries like Steel, Cement, Textiles etc. Held Senior Managementpositions, in large Industrial Houses, in India.

7. Pecuniary relationship directly or indirectly with the company, or relationship with the managerial personnelif any. Nil.

III. Other information.1. Reasons of loss or inadequate profits.

Gujarat has passed through a difficult period of five years with various natural calamities hitting the stateresulting in no growth in the consumption of cement and due to substantial excess supply as comparedto demand led to pressure on the prices of cement.

2. Steps taken or proposed to be taken for improvement.The Company has implemented various cost reduction measures by installing (a) Variable FrequencyDrive in cooler fans, (b) replacement of low efficiency fan for cement mill with high efficiency (c)Utilization of Grinding aid for electrical energy conservation in cement grinding section (d) replacementof primary air fan to improve thermal energy conservation (e) replacement of conventional insulationwith improved quality to reduce radiation in entire pyro processing system and (f) modification /improvement in system to reduce electrical energy.The company proposed to implement investment proposals viz. installation of captive power plantand construction of captive jetty as envisaged under the Rehabilitation Scheme sanctioned by theHon’ble AAIFR.

3. Expected increase in productivity and profits in measurable terms.Long term prospects of the cement industry in India as well as in Gujarat continue to be remain bright.The growth in infrastructure sector especially roads and irrigation, is expected to result in demandgrowing up over 8% per annum. Moreover the construction boom in U.A.E. and other Gulf countrieswill help the plants in Gujarat export their surplus production ensuring a good capacity utilization. Ifthe boom in demand of cement continues, the export price of clinker / cement is expected toimprove further.

By Order of the Board of Directors

V.R. MohnotSr. Vice President (Fin) & Co. Secretary

MUMBAI, dated : 30th July, 2004.Registered Office :“Sidheegram”Off Veraval-Kodinar HighwayPin 362 276.Dist. Junagadh (Gujarat).

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DIRECTORS’ REPORT

Dear Members,

The Directors present the 31st Annual Report along with the Audited Accounts and Auditors Report for the yearended 31st March 2004.

During the year under review, cement consumption on an all India basis increased by 5.8 percent (from 107.50million tonnes to 113.83 million tones). The installed capacity increased from 136.97 million tonnes at the endof March 2003 to 144.98 million tonnes at the end of March 2004.

The consumption of cement in Gujarat grew by 6 percent to 7.83 million tonnes against 7.38 million tones inthe previous year. As a result of the good monsoon throughout India, including Gujarat, both demand and theprices of cement improved from December 2003 onwards. Gujarat has passed through a difficult period of fiveyears with various natural and other calamities hitting the State resulting in no growth in the consumption andpressure on the prices of cement in Gujarat.

Export markets, especially in the Gulf and the U.A.E. continued to be strong, and prices of both cement andclinker have improved during the year under review.

FINANCIAL RESULTS

The highlights of the financial results for the year ended 31st March 2004 are given below:Rupees in Million

Current Year Previous Year(2003 -2004) (2002-2003)

Sales & Other Receipts 1428.55 1577.68Profit / (Loss) before interest, Depreciation and Misc. ExpensesWritten Off and extraordinary items. (81.69) 30.63Interest 64.64 66.82Profit/(Loss) before Depreciation & Misc. Expenses Written Off. (146.33) (36.19)Depreciation and Misc. Expenses written off 98.14 97.51Profit/(Loss) before Extra Ordinary items and Deferred Tax Assets (244.47) (133.69)Extra Ordinary Items – 805.20Deferred Tax Assets 84.49 965.19Prior Period adjustment – Credit NIL NILProfit/(Loss) after tax (159.98) 1636.70Carried forward Profit/(Loss) of earlier years (1774.08) (3410.78)Balance of (Loss) carried to Balance Sheet (1934.06) (1774.08)

PERFORMANCE REVIEW

Production and Despatches :

Cement production improved from 540,240 tonnes in the previous year to 595,780 tonnes in the year underreview. The volume of clinker production during the year was 1,039,600 tonnes as against 1,067,450 tonnes inthe previous year. The sale of cement during the current year increased by about 6 percent to 627,280 tonnesfrom 591,326 metric tonnes in the previous year. The Company exported 372,603 tonnes of clinker and sold161,603 tonnes in the local market.

Cost Reduction

The Company continued to use indigenously available petcoke mixed with imported coal to the extent of 48percent of fuel used thereby offsetting the high cost of imported coal. The operational parameters of the plantwere slightly lower than the previous year on account of lower production during the second quarter mainlydue to heavy rainfall in the Saurashtra region.

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Marketing :

The consumption of cement in Gujarat grew by 6 percent from 7.38 million tonnes to 7.83 million tonnes. TheCompany’s despatches within Gujarat increased by almost 10 percent from 535,341 tonnes in the previousyear to 589,975 tonnes in the year under review. The prices of cement in Gujarat remained low in the first threequarters of the year on account of increased competition from a new entrant in the market. Prices have stabilisedfrom the last quarter of the year onwards. The Company has withdrawn from the Maharashtra, Kerala andRajasthan markets due to unremunerative prices.

Exports

Exports have continued to be strong in the current year. The Company has exported 372,603 tonnes of clinkerduring the year under review as compared to 463,085 tonnes in the previous year. We see a continued growthin demand for cement and clinker in the Gulf Area. The cement companies located in Gujarat are well placed tomeet this demand, and we expect the prices of both cement and clinker to increase in the coming year.

Rehabilitation

The Hon’ble AAIFR vide their order dated 21.11.2002 had sanctioned a Rehabilitation Scheme interalia allowingthe restructuring of the debt of the company and grant of certain reliefs and concessions after obtaining consentof the creditors. However, the Government of Gujarat had field a writ petition before the Gujarat High Courtchallenging the order of Hon’ble AAIFR with regard to interpretation of their communication to AAIFR. TheHon’ble High Court of Gujarat has not yet admitted the petition and not granted interim stay against implementationof the order of the Hon’ble AAIFR. Uncertainty arising out of this court case and delays in completing theformalities for acquiring the DG Sets as envisaged in the Scheme have resulted in delay in implementation of theSanctioned Scheme. We expect the D.G. Sets to be installed by the end of March 2005.

FUTURE OUTLOOK

Long term prospects of the cement industry in India as well as in Gujarat continue to remain bright. The growthin the infrastructure sector especially roads and irrigation, is expected to result in demand growing up over 8percent per annum. Moreover, the construction boom in the U.A.E. and other Gulf countries will help theplants in Gujarat export their surplus production ensuring a good capacity utilization.

The areas of concern remain the high cost of energy. The Installation of a captive power plant as per theRehabilitation Scheme will help in reducing the cost of production in the near future.

DIVIDEND

In view of the losses in current year, the Directors express their inability to recommend any dividend for the year.

AUDITORS’ OBSERVATIONS

In respect of observations of Auditors, attention of members is invited to Note No.(2) of Schedule 14 of Noteson Accounts, which are self-explanatory and do not require elucidation.

PUBLIC DEPOSITS

The company has not invited and/or accepted any deposits, during the year.

CASH FLOW STATEMENT

Cash flow statement pursuant to Clause 32 of the listing agreement is attached herewith.

DIRECTORS

Shri Sanat M. Mehta, Shri Erling Frandsen and Dr. Nayan R. Desai, shall retire by rotation and being eligible offerthemselves for reappointment.

During the year Mr. Jespher Horsholt, nominee director of F.L.Smidth A/S, Denmark, resigned from the Boardand in his place Mr. Erling Frandsen was appointed. The Board places on record its appreciation of the valuableservices rendered by him during his tenure as a member of the Board. Mr. Christian Venderby has been appointedas alternate director to Mr. Erling Frandsen.

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LISTING OF EQUITY SHARES

The company’s equity shares are listed on the Stock Exchanges at Mumbai and National Stock Exchange.

AUDITORS

M/s. Manubhai & Company, Chartered Accountants, Ahmedabad, the Auditors of the Company, are due to retirein accordance with the provisions of the Companies Act, 1956 and being eligible, offer themselves for reappointment.

COST AUDITORS

In pursuance to Order No. 52/58/CAB-98 dated 30th October, 1998 issued under section 233-B of the CompaniesAct, 1956, your Directors have appointed M/s. K.G.Goyal & Co., as Cost Auditors of the company for the year2003-2004.

PARTICULARS OF EMPLOYEES

Particulars of the employees as required under section 217(2A) of the Companies Act, 1956 are not givensince none of the employees employed through out the year or for part of the financial year 2002-2003 isdrawing remuneration exceeding the limit specified in Section 217(2A) of the Companies Act, 1956 as amendedfrom time to time.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGEAs required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure ofParticulars in the Report of Board of Directors’) Rules 1988 the relevant particulars are enclosed in Annexure 1,forming part of the Report.

INDUSTRIAL RELATIONSThe company continued to maintain harmonious and cordial relations with its workers, which enabled it toachieve improved performance levels.

CORPORATE GOVERANCEA separate report on the compliance with Clause 49 of the Listing Agreement with the Stock Exchanges onCorporate Governance and the Auditors’ Certificate on its compliance forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORTThe Management Discussion and Analysis Report on the Operations of the Company is provided in a separatesection and forms part of this Report.

DIRECTORS’ RESPONSIBILITY STATEMENTYour Directors confirm:v These statements have been prepared in conformity with generally accepted accounting principles and

appropriate accounting standards. Judgements and estimates are reasonable and prudent.v The accounting policies selected and applied consistently give a true and fair view of the financial statements.v The company has implemented internal controls to provide reasonable assurances of the reliability of its

financial records, proper safeguarding and use of its assets and detection of frauds and irregularities. Suchcontrols are based on established policies and procedures and are implemented by trained, skilled andqualified personnel with an appropriate segregation of duties. The company’s internal auditors conductregular internal audits, which complement the internal controls.

v The Directors have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTThe Directors wish to thank the Government of Gujarat, Financial Institutions, Bankers, Shareholders, Employees,Stockists, Dealers and all others associated with its operations for the co-operation and encouragement extendedto the company.

On behalf of the Board of Directors.

R. K. Poddar M. S. GilotraDy.Managing Director Managing Director

Mumbai, dated 28th May, 2004.

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ANNEXURE - 1DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO AS REQUIRED UNDER COMPANIES (DISCLOSURE OFPARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULE 1988 AND FORMING PART OF THE DIRECTORS’REPORT FOR THE YEAR ENDED 31.03.2004.A. CONSERVATION OF ENERGY :

(a) ENERGY CONSERVATION MEASURES TAKEN :

1. Installation of Variable Frequency Drive (VFD) in cooler fans.

2. Replacement of Low Efficiency Fan for Cement Mill with High Efficiency.

3. Utilisation of Grinding aid for electrical energy conservation in Cement grinding section.

4. Replacement of primary air fan to improve thermal energy conservation.

5. Conventional Insulation is replaced with improved quality to reduce radiation in entire pyroprocessing system for thermal energy conservation.

6. Modification / Improvement in system to reduce electrical energy (Logic modification, Reorientation& speed reduction of drives etc.)

(b) ADDITIONAL INVESTMENT AND PROPOSALS, IF ANY, BEING IMPLEMENTED FOR REDUCTION OFCONSUMPTION OF ENERGY.

1. The Company proposed to implement investment proposals viz. installation of Captive PowerPlant as envisaged under the Rehabilitation Scheme sanctioned by the Hon’ble AAIFR.

2. Replacement of low efficiency machinery by high efficiency machinery.

(c) IMPACT OF THE MEASURES AT (a) AND (b) ABOVE FOR REDUCTION OF ENERGY CONSUMPTIONAND SUBSEQUENT IMPACT ON THE COST OF PRODUCTION OF GOODS.

There is an improvement in consumption of fuel as well as electrical power.

(d) TOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER UNIT OF PRODUCTION AS PERFORM “A” OF THE ANNEXURE.

B. TECHNOLOGY ABSORPTION :

Efforts made in Technology absorption are given in prescribed Form B annexed.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

1. Activities relating to exports, initiatives taken to increase exports, development of new export marketsfor products and export plans.

The Company has exported 372603 MT Clinker during the year to various courtires.

2. Total foreign exchange used and earned :(Rs. in Lacs)

2003-2004 2002-2003Used 585.71 209.03Earned 3532.63 4255.22

On behalf of the Board Directors

R. K. Poddar M. S. GilotraDy. Managing Director Managing Director

Mumbai, dated 28th May, 2004

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FORM - A (See Rule - 2)

(Form of Disclosure of particulars with respect to Conservation of Energy)

A. POWER AND FUEL CONSUMPTION

2003-2004 2002-2003

1. Electricity

a. Purchased

Unit (KWH) - Lacs 797.35 777.15

Total Amount (Rs. in Lacs) 4414.58 4318.79

Rate / Unit (Rs.) 5.54 5.56

b. Own Generation

I. Through diesel generator (KWH / in Lacs) NIL NIL

II. Through Steam Turbine / Generator NIL NIL

2. Coal & Other Fuel used as Kiln fuel.

I. Quantity (In Million K. Cal.) 847274 867837

II. Total cost (Rs. in Lacs) 3128.36 2819.01

III. Average rate (Rs. in Million K. Cal.) 369.23 324.83

3. H.S.D. / L. D. O.

I. Quantity in (K. Ltrs.) 85.51 43.74

II. Total cost (Rs. in Lacs) 13.74 7.46

III. Average rate (Rs. In K. Ltrs.) 16063.02 17055.01

4. Others / Internal Generation NIL NIL

B. CONSUMPTION PER UNIT OF PRODUCTION

2003-2004 2002-2003

Cement / Clinker

I. Electricity (KWH / T of Cement )* 86.36 84.27

II. Diesel (Ltr. / T of Clinker) 0.08 0.04

III. Coal / Lignite (K. Cal. / Kg. of Clinker) 815 813

IV. Others NIL NIL

* Net of non - productive power.

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31stAnnualReport

FORM - B (See rule - 2)

(Form for Disclosure of Particulars with respect to Absorption)

A. RESEARCH AND DEVELOPMENT (R&D) :

1. RESEARCH AND DEVELOPMENT HAS BEEN CARRIED OUT FOR IMPROVEMENT IN THE

FOLLOWING AREAS :

a. Modification in raw mix design.

b. Use of alternative fuels in the Kiln.

c. Use of alternate fuels for mining machinery.

d. Use of grinding aids for cement grinding.

e. Improvement in colour of cement to improve market acceptability.

f. Usage of waste derived additives to conserve minerals and reduce cost of raw material.

2. FOLLOWING BENEFITS WERE DERIVED OF THE ABOVE R & D :

a. Savings due to optimum use of additives.

b. Savings due to reduced electrical consumption.

c. Savings in the cost of fuel.

d. Increase in production.

3. FUTURE PLAN OF ACTION :

a. Manufacturing of special grade cement.

b. Development of blended cement.

c. Development of ready mix concrete.

4. EXPENDITURE ON R & D :

(Rs. in Lakhs)

a. Capital NIL

b. Recurring 63.18

c. Total 63.18

d. Total R & D expenditure as a percentage 0.39%

of total turnover

B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION :

Information regarding technology imported during the last five years :

a. Technology Imported N. A.

b. Year of Import N. A.

c. Has Technology been fully absorbed N. A.

d. If not fully absorbed, areas where this has not N. A.

been taken place, reason thereof and future

plan of action.

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ANNEXURE TO DIRECTORS’ REPORT (contd.)Corporate Governance

A. MANDATORY REQUIREMENTS :

1. COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE :

The Company has always been committed to the principles of good corporate governance which interaliaincludes protection of shareholders rights, enhancement of shareholder value, equitable treatment of allstakeholders such as suppliers, customers and employees and to report financial information adequatelyand transparently. A continuous process of delegation of powers commensurate to accountability, coupledwith trust, faith and transparency has been embedded in the day to day functioning. A system to effectivelymanage risks has been implemented. The Company has been disclosing detailed information on differentissues concerned the Company’s performance from time to time.

2. BOARD OF DIRECTORS :

(i) COMPOSITION:

The Board of Directors comprises of a combination of Executives and Non-Executives who areprofessionals in their respective fields and bring in a wide range of skills and experience. Thecomposition and attendance at the Board Meetings held during the financial year and last AnnualGeneral Meeting were as under :

Executive / No. of Board Last AGMNon-Executive Meetings Attendance

Attended (Yes/No)

Shri M.N. Mehta Non-Executive Chairman 1 No.

Shri Jay M Mehta Executive Vice Chairman 3 Yes.

Shri Sanat M Mehta Non-Executive Director – - No.TMIL Nominee

Shri Jesper Horsholt (ceasd to Non-Executive Director – - No.be a director w.e.f. 23.10.03) FLS Nominee

Shri Erling Frandsen (appointed Non-Executive Director – - No.as a director w.e.f. 23.10.03) FLS Nominee

Dr. Nayan R. Desai Non-Executive Director 2 No.GIIC/GoG Nominee

Shri M.S. Gilotra Managing Director 3 No.

Shri Raj K Poddar Dy. Managing Director 4 Yes

Shri K.Lalit Independent Director 3 Yes

Shri M.L. Tandon Independent Director 2 No.

Shri S.V.S. Raghavan Independent Director 1 No.

Shri S.M. Kanwar, IAS (Retd.) Non-Executive Director – 4 No.BIFR Nominee

Shri P.T. Thomas Independent Director – 3 No.IDBI Nominee

Shri P.K. Behl Independent Director – 3 No.LIC Nominee

Shri P. Niranjan Non-Executive Director – 4 No.SBI Nominee

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31stAnnualReport

(ii) MEETINGS OF THE BOARD :

Four Board Meetings were held during the year ended 31.3.2004.

Date of Board Meeting City No. of Directors Present

30.5.2003 Mumbai 9

30.07.2003 Mumbai 5

23.10.2003 Mumbai 7

29.01.2004 Mumbai 12

(iii) OTHER DIRECTORSHIPS

The details of other directorships and chairmanships held by the Directors of the Company aregiven below :-

Name(s) of Directors No. of Directorship, Chairman No. of other Boardexcluding directorship in of the Committees in whichPrivate Companies /firms Board he/she is a member

& Cos. Incorporate u/s 25 or chairman /of the Companies Act. chair person

Shri M N Mehta 5 1 1

Shri Jay M Mehta 7 - 4

Shri Sanat Mehta 1 - -

Shri S V S Raghavan 2 2 2

Shri M L Tandon 10 - -

Shri K Lallit - - -

Shri Jesper Horsholt 2 - -

Shri Erling Frandsen 3 - -

Shri P T Thomas 1 - -

Shri P K Behl - - -

Shri S M Kanwar, IAS (Retd.) - - -

Shri P. Niranjan 1 - -

Shri M S Gilotra 1 - 4

Shri Raj K Poddar 1 - 4

Dr. Nayan R. Desai 7 - 1

(iv) RE-APPOINTMENT OF DIRECTORS

The brief particulars of the Directors of the Company, retiring by rotation and proposed to be re-appointed at the ensuing Annual General Meeting are as under :-

1. Dr. Nayan R. Desai, aged 55 years, joined the Board of the Company during the year 2002.He is General Manager (Projects) of GIIC Limited, a Government of Gujarat Company.

2. Shri Sanat M. Mehta, aged 79 years, joined the Board of the Company during the year 1992.He was Ex.Finance Minister of Gujarat Government and Ex.Chairman of Sardar Sarovar NarmadaNigam Limited.

18



3. AUDIT COMMITTEE :

The Audit Committee of the Board was formed on 18.12.1989 and it comprises of 4 non-executiveDirectors, Viz. Shri K. Lalit, Mr.S.M. Kanwar, Shri P.T. Thomas and Shri S.V.S.Raghavan, all independentDirectors. Shri K. Lalit is the Chairman of Audit Committee. Shri M.S. Gilotra, Managing Director, Shri R. K.Poddar, Dy. Managing Director and Shri P. Niranjan, Nominee Director of SBI, are permanent invitees. The Sr.Vice President (Finance) & Company Secretary also attend the Audit Committee Meeting. The Chairman ofthe Audit Committee was present at the last Annual General Meeting.

The Audit Committee’s functions include reviewing the Company’s internal control system, audit procedures,compliance with statutory and regulatory requirements, financial reporting process and the disclosure ofits financial information to ensure that the financial statements are true and correct. It also reviews thequarterly results and the annual financial statements before submission to the Board. The Audit Committeeeffectively acts as a link to the Board of Directors, Statutory Auditor and Internal Audit functions. Duringthe financial year ended 31.3.2004, 4 Audit Committee Meetings were held on 12.4.03, 30.5.03, 22.10.03& 29.1.04. The attendance at the Audit Committee Meetings is as under :

Name of the Director No. of Meetings attended

Shri K. Lalit 4

Shri S.V. S. Raghavan 1

Shri S.M. Kanwar 4

Shri P.T. Thomas 1

The Minutes of the Audit Committee Meetings are noted by the Board of Directors at the subsequent BoardMeeting.

4. REMUNERATION COMMITTEE :(i) COMPOSITION

The Board at their 169th Meeting held on 30th May, 2002 constituted a Remuneration Committeecomprising of 3 Independent Directors. Viz. Shri K. Lalit, Mr.S.M. Kanwar and Shri P.K. Behl. Shri K.Lalit, Director, is nominated as Chairman of the Remuneration Committee.The Remuneration Committee’s functions inter-alia includes (a) review and recommend the appointmentand remuneration of Managing / Whole-time Director, and (b) periodically review of the remunerationpackage of Managing / Whole-time Director and to recommend suitable revision therein to the Boardof Directors. During the year one meeting was held on 22nd October 2003, in which all the memberswere present.

(ii) DETAILS OF REMUNERATION FOR THE YEAR 2003 – 2004 :Executive Directors :

(Rs/Lacs)

Name Salary & Per- Commi- Contri- TotalAllowances quisite ssion. bution to PF/ (Rs)

(Rs) (Rs) (Rs) Super-annuation

Shri Jay M Mehta, NIL* NIL NIL NIL NILExecutive Vice Chairman

Shri M.S.Gilotra, Managing NIL* NIL NIL NIL NILDirector

Shri Raj K Poddar, Deputy 8.38 1.85 NIL 2.72 12.95Managing Director

* Shri Jay M Mehta, Executive Vice Chairman and Shri M.S. Gilotra, Managing Director are also Executive ViceChairman and Managing Director respectively in Saurashtra Cement Ltd., Group Company, and are drawingremuneration from that Company.

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31stAnnualReport

The tenure of appointment of Shri Jay Mehta, EVC, is for a period of 3 years from 28.5.04 to27.5.07, Shri M.S. Gilotra, MD is for a period of 3 years from 11.12.03 to 10.12.06 and Shri R.K.Poddar, DMD is for a period of 3 years from 3.12.03 to 2.12.06.

Non-Executive Directors :Non-Executive Directors are paid sitting fees of Rs.5000/- for attending the meeting of Board,Management Committee, Audit Committee and Project management Committee etc. attendedby them.

Director Business Relationshiprelationship with with otherGSCL if any Directors.

Shri M.N. Mehta, Chairman None Father of Shri

Jay M Mehta,Executive ViceChairman.

Shri Sanat M Mehta Director None None

Shri S.V.S. Raghavan, Director None None

Shri M.L. Tandon, Director None None

Shri K.Lalit, Director None None

Shri Jesper Horsholt, FLS Nominee Director None None

Shri Erling Frandsen, FLS Nominee Director None None

Shri P.T. Thomas, IDBI Nominee Director None None

Shri P.K. Behl, LIC Nominee Director None None

Shri S.M. Kanwar, IAS (Retd.) BIFR Nominee Director None None

Shri P. Niranjan, SBI Nominee Director None None

Dr. Nayan R. Desai, GIIC/GoG Nominee Director None None

5. SHARE TRANSFER / INVESTORS’ GRIEVANCES COMMITTEE :

The Company presently has a Share Transfer / Investors’ Grievances Committee of Directors (to transfer etcabove 1 lakh shares) as well as a Sub-Committee of Working Directors and Sr.Vice President (Fin) & CompanySecretary (to transfer etc. below 1 lakh shares). It looks into the aspect of transfers / transmissions / demat/ remat of shares issued by the Company, issue of duplicate certificates, certificates after split / consolidation/ renewal & redressal of investor complaints.

The Committee comprises of Shri M.N. Mehta, Non-Executive Chairman, Shri Jay M Mehta, Executive ViceChairman, Shri M.S. Gilotra, Managing Director, Shri R.K. Poddar Dy. Managing Director and Shri P. Niranjan,Nominee Director of State Bank of India. The Sub-Committee comprises of Shri Jay Mehta, Executive ViceChairman, Shri M.S. Gilotra, Managing Director, Shri R.K. Poddar, Dy. Managing Director and Company Secretaryin attendance. Shri V.R. Mohnot, Sr.Vice Preisdent (Fin) & Company Secretary is the Compliance Officerunder the Listing Agreement. During the year the Committee (including Sub-Committee) had 8 meetings.

The Minutes of the Share Transfer Committee are noted by the Board of Directors at the subsequent BoardMeeting.

6. GENERAL BODY MEETINGS :Location and time where last three AGMs were held

Financial Year Date Time Venue Dividend declared

2002-03 25.9.2003 10.00 AM Registered Office of the Company Nil

2001-02 19.9.2002 10.00 AM Registered Office of the Company Nil

2000-01 20.9.2001 3.30 PM Registered Office of the Company Nil

20



No special resolutions were required to be put through postal ballot last year. No special resolutions onmatters requiring postal ballot as recommended under clause 49 of the Listing Agreement are placed forshareholders’ approval at this meeting.

7. DISCLOSURES :

(a) Details of transaction of material nature with its Promoters, the Directors or the management or theirsubsidiaries or relatives of the Directors during the year have been disclosed in Note No. 13 of Schedule-14 of Notes to the Accounts. There were no instances of non-compliance on any matter related tothe capital markets, during the last three years.

(b) No Penalties or strictures have been imposed on the Company by Stock Exchange or SEBI or anystatutory authority on any matter related to capital markets.

(c) The Company is part of Mehta Group. The Group Companies comprising of companies specifiedbelow hold 41.86% of the shares of the company. As these Companies exercise control over thecompany, they constitute the Group as defined under section 2(ef) of the Monopolies and RestrictiveTrade Practices Act, 1969 :-

1. Pranay Holdings Limited 10. Bromeliads Finvest Pvt.Ltd.2. Prachit Holdings Limited 11. The Mehta International Ltd.

3. Ria Holdings Limited 12. Euro India Investments Ltd.

4. Reeti Investments Limited 13. Exchange Management Ltd.

5. Sameta Exports Pvt.Ltd. 14. Clarence Investments Limited

6. Sumaraj Holdings Pvt.Ltd. 15. Glenn Investments Ltd.

7. Sunnidhi Trading Pvt.Ltd. 16. Hopgood Investments Limited

8. Villa Trading Co. Pvt.Ltd. 17. The Industrialization Fund forDeveloping Countries (IFU)

9. Elian Finvest Pvt.Ltd. 18. F.L. Smidth, A/S

Apart from the above, the following Companies being holding companies of one or more of the aboveshareholders, may be treated as indirectly holding the equity shares of Gujarat Sidhee Cement Ltd.

1. Saurashtra Cement Limited 3. Sampson Limited

2. Industrial Constructions Ltd. 4. Beverley Investment Inc.

8. MEANS OF COMMUNICATION :The quarterly, half-yearly and yearly financial results of the Company are sent to the Stock Exchangesimmediately after these are approved by the Board. These results are published in prominent daily newspapers in Gujarat and Maharashtra. The Company has not sent the half yearly report to each household ofshareholders. The Company has not made any presentation to the Institutional Investors or Analysts.

9. GENERAL SHAREHOLDERS INFORMATION :i) Audited results for the current Financial year

ending March 31, 2004

ii) Board Meeting for consideration of unauditedresults for the first three quarters of the currentfinancial year viz. April 1, 2003 to March 31, 2004

iii) Annual General Meeting is proposed to be held

iv) Date of Book closure

Within three months from the end of the lastquarter as stipulated under the Listing Agreementwith the Stock exchange.Within one month from the end of the quarteras stipulated under the Listing Agreement withthe Stock ExchangeBefore end of September, 2004 at the registeredoffice of the company.Book closure normally commences 10 days priorto date of AGM and ends immediately after thedate of the AGM.

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31stAnnualReport

v) Listing of equity shares on Stock Exchanges at :

S.No. Name(s) of the Stock Exchange Stock Code

a) The Stock Exchange, Mumbai 518029, 18029 & 290044

b) The National Stock Exchange Limited GUJSIDHCEM

vi) Listing Fees :

The Company has paid Listing Fees for the financial year 2004-2005 to all the Stock Exchanges wheresecurities are listed.

vii) Registrar & Share Transfer Agent :

As per SEBI regulation, the Company has appointed M/s. Intime Sprectrum Registry Limited as Registrarand Transfer Agent for transfer of shares in physical as well as demat mode. The Registrars also acceptsand deals with complaints of shareholders. Shareholder complaints are given top priority by them andare replied promptly.

Barring 11 cases, pending in courts relating to disputes over the title to shares in which the companyhas been made a party, the Company and/or Registrars attended to all of the investor grievances /correspondences with speed. No complaint is pending from the shareholders / investors relating totransfer of shares.

viii) Share Transfer System :

The share transfer in physical form are processed and the share certificates returned within a period of 15to 20 days from the date of receipt. The Company has, as per SEBI guidelines with effect from September,2000 offered the facility of transfer cum demat. Under the same system, the shareholder can approacha Depository Participant (DP) with physical share certificates for dematerialization. The DP will, based onthe demat application, generate a demat request which will be sent to the company along with ShareCertificates. On receipt of the same the Registrars will demat the shares. The Company is also offeringa sub division cum demat scheme for those shareholders who are submitting their shares for sub division.

ix) Distribution of Shareholding as on 31st March, 2004 :

No. of equity No. of % of No. of % ofshares held shareholders shareholders shares held shareholding

1 – 100 19970 34.48 1960641 1.40

101 – 500 22855 39.47 7668653 5.48

501 – 1000 7691 13.28 6956693 4.97

1001 – 5000 6025 10.4 14592217 10.43

5001 – 10000 787 1.36 5979339 4.28

10001 - 100000 526 0.91 12954396 9.26

100001 - 500000 28 0.05 5780059 4.13

500001 & above 28 0.05 83996810* 60.05

TOTAL 57910 100.00 13,98,88,808 100.00

* ( including partly paid shares)

* 150,00,000 partly paid shares of Rs.10/- each on which Re.1 per share has been paid.

22



x) Shareholders Profile as on 31st March, 2004

Category No. of % of No. of % ofshareholders shareholders shares held shareholding

Resident Indians & 57331 99 97860073* 69.96Bodies CorporateNRIs 536 1 1990857 1.42FIIs 11 0 196700 0.14Financial Institutions 7 0 13472428 9.63Banks 4 0 78600 0.06Mutual Fund 7 0 244725 0.17Foreign Company 2 0 12500000 8.94Overseas CorporateBodies 12 0 13545425 9.68Total 57910 100.00 13,98,88,808 100.00

(* including partly paid shares)* 150,00,000 partly paid shares of Rs.10/- each on which Re.1 per share has been paid.

xi) Dematerialization of shares:As on 31st March, 2004, about 60.85.% of the company’s total share capital is held indematerialized form with NSDL and CDSL.

xii) GDR etc.There are no pending GDR / ADR / Warrants or convertible instruments.

xiii) Stock Market price data for the year 2003 – 2004 :GSCL Price on BSE

Month High LowApril 2003 4.25 2.90May 2003 5.20 3.35June 2003 6.70 4.33July 2003 7.10 5.55August 2003 13.39 6.50September 2003 10.30 6.55October 2003 8.17 5.65November 2003 8.50 5.79December 2003 9.75 6.61January 2004 9.73 6.15February 2004 6.95 5.61March 2004 5.98 4.07

xiv) Stock Performance (Indexed)The performance of the Company’s shares relating to Bombay Stock Exchange Sensex is given in thechart below :-

xiv) Plant Location :“Sidheegram” Off Veraval – Kodinar Highway, Dist. Junagadh, Pin Code 362 276.

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31stAnnualReport

xv) Address for correspondence :The Company’s Registered Office is situated at “Sidheegram”,off Veraval-Kodinar Highway, Pin Code 362 276, Dist.Junagadh, Gujarat.Email Id : [email protected]

Shareholder correspondence should be addressed to Registrars & Transfer Agent :M/s. Intime Spectrum Registry Limited(Unit: Gujarat Sidhee Cement Limited)C-13, Pannalal Silk Mills CompoundL.B.S. Marg, BhandupMUMBAI – 400 078.Tel. 55555354, Fax. 55555343

Contact Person : Mr. Sharad Patkar.

Shareholders holding shares in electronic mode should address all their correspondence to theirrespective Depository Participant (DP) regarding change of address, change of Bank Account / Banknomination etc.

B. NON MANDATORY REQUIREMENTS :(a) Chairman of the Board :-

At present, the Chairman does not have separate office in the Company. The Corporate Office of theCompany supports the Chairman in discharging the responsibilities.

(b) Remuneration CommitteePlease refer item No. (4) under the headings Mandatory Requirements.

(c) Shareholders RightsAs the Company’s quarterly results are published in English Newspaper having circulation all over Indiaand in a Gujarati Newspaper widely circulated in Gujarat, the same are not sent to each Shareholder.

(d) Postal Ballot :The provisions relating to Postal Ballot will be complied with in respect of matters whenever applicable.Code of Conduct for Prevention of Insider Trading :Pursuant to the requirements of SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended, theCompany has adopted a “Code of Conduct for Prevention of Insider Trading”. Mr. V.R. Mohnot, SeniorVice President (Finance) & Co. Secretary has been appointed as the “Compliance Officer” for thispurpose. The Code of Conduct is applicable to all such employees of the Company who are expectedto have access to unpublished price sensitive information relating to the Company as well as all Directors.

On behalf of the Board of Directors

R.K. Poddar M.S. GilotraMumbai, dated 28th May, 2004 Dy.Managing Director Managing Director

AUDITOR’S REPORT ON CORPORATE GOVERNANCETo, The MembersGujarat Sidhee Cement Limited,We have examined the relevant records of Gujarat Sidhee Cement Ltd.(the company) for the year ended 31

st March,2004

relating to compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement enteredinto, by the Company, with the Stock Exchanges.The compliance of conditions of corporate govemance is the responsibility of the management. Our review was limited toprocedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of theCorporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.In our opinion and according to the information and explanations given to us, we have to state that to the best of the ourknowledge the Company has complied with the conditions of Corporate governance stipulated in Clause 49 of the abovementioned Listing Agreement.We state that no investor grievance is pending for a period exceeding one month against the Company, as certified by theshare transfer agents of the Company, based on the records maintained by them.We further state that, such compliance is neither an assurance as to the future viability of the Company, nor as to the efficiencyor effectiveness with which the management has conducted affairs of the Company.

For MANUBHAI & COMPANYCHARTERED ACCOUNTANTS

(K. C. PATEL) PARTNER

PLACE : AHMEDABADDATED : 28th May, 2004

24



MANAGEMENT DISCUSSION AND ANALYSIS REPORT1. Industry Structure and Development

India is the third largest cement producer in the world having approximate installed capacity of 144.98 milliontonnes per annum as at 31.3.2004 including 8.01 million tonnes added during the year. The industry is highlyfragmented having more than 125 plants producing cement in the country owned by nearly 55 companies.

2. Opportunities and Threats

It is projected that cement industry should achieve a growth rate between 8 percent to 10 percent perannum, due to substantial growth expected in housing for which fiscal and other incentives have beengranted by the Govt. The reduction in the rate of interest on housing loans will add to demand for housingleading to increased consumption of cement. The boost to infrastructure like Ports, Roads is expected toboost the demand for cement.

3. Segment Review and Analysis

It is a single product company.

4. Outlook

The long term outlook for the cement industry is encouraging. The demand for cement is expected togrow around 8% to 10% p.a. in the coming years. Since per capita consumption of cement is only around105 kgs., p.a. compared to world average of over 260 kgs p.a. To be at par with world average per capitacement consumption, then the production of cement has to grow around 2.5 times of current level.Considering the good monsoon during 2003-04 and indication of equally good monsoon for the year2004-05, the demand of cement is expected to grow substantially in the coming years.

5. Risks and Concerns

As compared to the increase in consumer price index, the increase in price of cement has not beencommensurate. While on the other end the cost of production continuous to rise unabated in view of thecontinuous rise in the cost of fuel, coal and increase in royalty on various raw materials used for cementproduction.

The position in Gujarat is particularly vulnerable since the installed capacity of cement in Gujarat is around 17million metric tonnes p.a. against the demand of around 8 million metric tonnes p.a. for the year 2003-04.It leaves a wide gap between the supply and demand leads to continuous pressure on prices of thecommodity. The company could not complete its proposed capital projects for setting up of captive powerplant as the formalities for acquiring old DG Sets were not completed.

6. Internal Control systems and their adequacy

The Company has adequate system of internal control relating to purchase of stores, raw materials includingcomponents, plant and machinery, equipment and other similar assets and for the sale of goodscommensurate with the size of the Company and the nature of its business. The Company has internalcontrol systems for speedy compilation of accounts and management information reports and to complywith the applicable laws and regulations. The Audit Committee ensures proper compliance with provisionsof the Listing Agreements with the Stock Exchanges and the relevant provisions of the Companies Act.

7. Company’s Financial Performance and Analysis

Though the selling price of cement in Gujarat improved to some extent in Mid-December 2003, the pricedeclined again in February/March 2004 due to impending Election of Parliament. Considering the forecastof good monsoon for 2004-05, the company expects reasonable growth in demand of cement and alsoimprovements in price of cement, which should enable the company to earn some profits. Since thecompany’s networth has been totally eroded, the company continue to be Sick Company under SickIndustrial Companies (Special Provisions) Act, 1985 (SICA).

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31stAnnualReport

8. Human Resource Development/Industrial Relations

The Company believes that its human resources to be its most valuable asset. Its HR Mission is to becomea Total Quality Organisation. In this quest, the Company is committed to empowering each employee tomake continuous improvement relating to both internal activities and external customer satisfaction, therebyenhancing his potential for development.

In pursuit of good corporate governance, we practice the Values of Respecting the individual rights anddignity of people, Upholding the integrity of self and that of the customers. Being team players, behaving ina professional manner, Recognising merit as the main criterion for growth and development and create anopen environment for ideas /suggestions.

The Company continues to take steps for the involvement, education and development of employees andcontinues to benchmark with the best practices of suggestion schemes, TPM, Management Action teams,Employees training, HR Audit, and Employee Satisfaction Survey etc., as well as installing effective systemsfor improving the productivity, quality and accountability at all levels in harmony with the business needs/strategy.The Management places on record the contribution of employees during the year and their wholeheartedco-operation in meeting the difficult business conditions during the year.

The company had 491 permanent employees as on 31.3.2004.

9. Cautionary Statement

Statements in this Report on Management’s Discussion and Analysis describing the Company’s objectives,projections, estimates, expectations or predictions may be forward looking statements within the meaningof applicable security laws and regulations. The Statements are based on certain assumptions andexpectation of future events. Actual results could however differ from those expressed or implied. Importantfactors that could make a difference to the Company’s operations include the global and domestic demandsupply position, raw material cost and availability, changes in Government regulations and tax structure,economic development in India.

The Company assumes no responsibility in respect of forward looking statements which may be amendedor modified in future on the basis of subsequent developments, information or events.

On behalf of the Board of Directors

R.K. Poddar M.S. GilotraDy.Managing Director Managing Director


26



AUDITORS’ REPORTTO,THE MEMBERS OFGUJARAT SIDHEE CEMENT LIMITED1) We have audited the attached Balance Sheet of GUJARAT SIDHEE CEMENT LIMITED as at 31st March, 2004, and also the Profit

and Loss Account and the cash flow statement for the year ended on that date annexed there to. These financial statements arethe responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements basedon our audit.

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

3) As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of subSection (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a Statement on the matters specified inparagraph 4 of the said Order.

4) Further to our comments in the Annexure referred to above, we report that:I. The Company is a sick industrial company within the meaning of clause (0) of Sub section (1) of section 3 of the Sick Industrial

Companies (Special Provisions) Act, 1985 and is registered with Board For Industrial and Financial Reconstruction (BIFR). TheCompany’s accumulated losses as on 31st March, 2004 are Rs.193.41 crores as against paid-up capital and free reservesof Rs.126.71 crores. The Company is sick industrial company within the meaning of clause (o) of Sub section (10 of section3 of the Sick Industrial Companies (Special Provision) Act, 1985 is registered with Board for Industrial and Financial Reconstruction(BIFR). The Company’s accumulated losses as on 31st March 2004 are Rs. 193.41 Crores as against paid-up capital and freereserve of Rs. 126.71 Crores as against paid-up capital and free reserve of Rs. 126.71 Crores. However having regard to thesanction of rehabilitation scheme vide order dated 21st November, 2002 by the Hon’ble Appellate Authority for Industrialand Financial Reconstruction (AAIFR) and commencement of its implementation as mentioned in note 2 of Schedule 14, theaccounts are prepared on the basis that the Company is a going concern;

II. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary forthe purposes of our audit;

Ill. In our opinion, proper books of accounts as required by law, have been kept by the Company so far as appears from ourexamination of those books.

IV. The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with books of account.V. In our opinion, the Balance Sheet , the Profit & Loss Account and the Cash Flow Statement dealt with by this report comply

with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, I 956.VI. On the basis of written representations received from the directors, as on 31st March, 2004 and taken on record by the

Board of Directors, and having regard to clarification issued by Ministry of Law, Justice and Company affairs vide GeneralCircular No. 8/2002 dated 22/03/2002 exempting nominee directors appointed by public financial institutions, central andstate governments as well as banks, we report that none of directors is disqualified as on 31st March, 2004 from beingappointed as a director in terms of Clause (g) of sub Section (1) of Section 274 of the Companies Act, 1956;

VII. As mentioned in Note no.8 of Schedule 14, the Company has accounted for deferred tax credit of Rs.118.50 croresbased virtual certainty of getting set off of unabsorbed losses and depreciation in future years in view of the position setout in the said note.Subject to the foregoing, in our opinion and to the best of our information and according to the explanatiopns given to us,the said accounts give the infromation required by the Companies Act, 1956, in the manner so required, and give a trueand fair view in conformity with the accounting principles generally accepted in India:(a) in the case of Balance Sheet of the state of affairs of the Company as at 31 st March, 2004,(b) in the case of Profit & Loss Account of the Profit for the year ended on that date; and(c) in case of cash flow statement, of the cash flows for the year ended on that date.

For MANUBHAI & COMPANYCHARTERED ACCOUNTANTS


PLACE : MUMBAIDATED : 28th May, 2004

ANNEXURE TO AUDITORS’ REPORT(Referred to in paragraph (3) of our report of even date)

(i) (a) The Company has maintained proper recodes showing full particulars, including quantitative details and situation offixed assets.

(b) The fixed assets have been physically verified by the management during the year, According to the information andexplanation given to us no material discrepancies were noticed on such verification;

(c) there has not been any significant disposal of fixed assets during the year.(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of

verification is reasonable.(b) the procedures of physical verification of inventories followed by the management are reasonable and adequate in

relation to the size of the Company and the nature of its business;(c) the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical

verification.

27

31stAnnualReport

(iii) The Company has not granted or taken any loans to/from companies, firms or other parties covered in the Registermaintained under section 301 of the Companies Act, 1956. Consequently, requirements of clauses (iii.b), (iii,c) and (iii,d)of paragraph 4 of the Order are not applicable.

(iv) 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 for the purchase of inventory and fixed assetsand with regard to sale of goods. During the course of our audit, we have not observed any continuing failure to correctmajor weaknesses in internal control.

(v) There were no transactions that need to be entered in the Register in pursuance of section 301 of the Companies Act, 1956.(vi) The Company has not accepted deposits from the public within the meaning of section 58A of the Companies Act, 1956

and the Rules framed there under. We are informed that no Order has been passed by the Company Law Board.(vii) Internal Audit has been carried out by a firm of chartered accountants. In our opinion, the internal audit system is

commensurate with the size of the company and nature of its business.(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the Order made by the

Central Government for maintenance of cost records under section 209(i)(d) of the Companies Act, 1956, and are of theopinion that prima facie the prescribed accounts and records has been made and maintained. We have not, however,made a detailed examination of the records.

(ix) (a) In our opinion and according to the information and explanation given to us, the company has been regular indepositing undisputed statutory dues with the appropriate authorities in respect of provident fund, employees’ stateinsurance, income -tax, wealth tax, profession tax, cess and other material statutory dues applicable to it. In respectof deferred sales tax, turnover tax, royalty and electricity duty, the dues have not become payable upto 31/03/2004in terms of rehabilitation scheme approved by the Hon’ble AAIFR.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of incometax, wealth tax, sales tax, customs duty, excise duty, and cess were in arrears, as at 31 st March 2004 for a period ofmore than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of income tax, wealth tax and cesswhich have not been deposited on account of any dispute. In respect of excise duty, customs duty and sales tax,details of disputed dues are given hereunder:

(x) The accumulated losses of the Company as at the end of the year are more than fifty percent of its net worth. The Companyhas incurred cash losses during the year. Cash losses were also incurred in the immediately preceding financial year.

(xi) in accordance with the Rehabilitation scheme approved by Hon’b!e Appellate Authority for Industrial and FinancialReconstruction (AAIFR) the repayment schedule of dues to Banks and Financial Institutions has been revised! rescheduled.In our opinion and according to the information given to us the company has not defaulted in repayment of dues to Banksand Financial institution in accordance with the revised repayment schedule.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures andother securities.

(xiii) According to the information and explanation given to us, the company has not provided guarantees for loans taken byothers from banks and financial institutions.

(xiv)In our opinion, the term loans have been applied for the purpose for which they were raised.(xv) According to records examined by us and the information and explanations given to us, on an overall basis, funds raised

on short term basis have not, prima fäcie, been used during the year for long term investment and vice versa.(xvi)During the year the Company has not made any preferential allotment of shares to parties and companies covered in the

Register maintained under section 301 of the Companies Act, 1956.(xvii) There are no debentures issued and outstanding during the year.(xviii) During the year, the Company has not raised money by public issue(s).(xix)To the best of our knowledge and belief, and according to the information and explanation given to us, no fraud on or by

the Company was noticed or reported during the year.(xx) The nature of the Company’s activities is such that the requirements of clauses (xiii) and (xiv) of paragraph 4 of the Order

are not applicable.For MANUBHAI & COMPANYCHARTERED ACCOUNTANTS


PLACE : AHMEDABADDATED : 28th May, 2004

Name of the Nature of the Amount Period to which Forum where disputeStatute Dues (Rs. Lacs) amount relates is pending

Rajasthan Sales Tax Sales Tax 24.74 1996-97 Rajasthan High CourtRajasthan Sales Tax Sales Tax 35.10 1997-98 Assessing Authority at PaliKerala Sales Tax Sales Tax 1.20 1999-00 Duputy Commissioner of AppealsCentral Excise Excise Duty 36.42 1992-93 CEGATCentral Excise Excise Duty 40.37 1997-98 CEGATCentral Excise Excise Duty 8.50 2000-01 Commissioner of Central ExciseCentral Excise Excise Duty 17.97 2001-02 CEGATCentral Excise Excise Duty 82.31 2001-02 Commissioner of Central ExciseCentral Excise Excise Duty 41.44 2002-03 Commissioner of Central ExciseCentral Excise Excise Duty 135.66 2001-02 Commissioner of Central ExciseCustoms Customs Duty 3.60 1997-98 CEGATCustoms Customs Duty 9.64 1997-98 Commissioner, (Customs)Customs Customs Duty 35.85 1995-96 CEGAT

28



BALANCE SHEET As at 31st March, 2004(Rs. in Lacs)

As at As atMarch 31, 2004 March 31, 2003

Schedule Rs. Rs.I. SOURCES OF FUNDS

Shareholders’ Funds :Share Capital 1 12,644.18 12,644.18Advance Call Money 50.00 50.00Reserves & Surplus 2 26.95 26.95

12,721.13 12,721.13Loan Funds :

Secured Loans 3 8,104.42 7,291.09Unsecured Loans 4 17,773.91 17,444.80

25,878.33 24,735.89Total ... 38,599.46 37,457.02

II. APPLICATION OF FUNDSFixed Assets :

Gross Block 5 18,737.05 18,737.62Less: Depreciation 13,035.98 12,218.47Net Block 5,701.07 6,519.15Capital Work-in-Progress 124.37 115.19

5,825.44 6,634.34Investments (At cost- Unquoted)

6 Years National Savings Certificates (kept as Security 0.43 0.43Deposit with Government Authorities)Deferred Tax Assets 14 (8) 10,498.82 9,652.85

Current Assets, Loans & Advances : 6Inventories 1,716.36 1,482.54Sundry Debtors 2,570.66 2,097.37Cash & Bank Balances 894.72 1,056.42Loans & Advances 1,439.39 1,561.12

6,621.13 6,197.45

Less :Current Liabilities & Provisions 7 3,686.97 2,804.72Net Current Assets 2,934.16 3,392.73

Miscellaneous Expenditure (To theextent not written off or adjusted) 8 – 35.83Profit & loss Account 19,340.61 17,740.84

Total ... 38,599.46 37,457.02NOTES FORMING PART OF THE ACCOUNTS 14

As per our Report of even date attached

For MANUBHAI & CO.Chartered Accountants

K.C. PATELPartner


For and on Behalf of the Board


}Jay MehtaSanat MehtaS. M. KanwarK. LalitP. K. BehlDr. Nayan R. DesaiP. NiranjanM. S. GilotraR. K. PoddarV. R. Mohnot

Executive Vice Chairman

Directors

Managing DirectorDy. Managing DirectorSr. VP (Fin.) & Company Secretary

29

31stAnnualReport

PROFIT AND LOSS ACCOUNT for the year ended 31st March, 2004(Rs. in Lacs)

For the year For the yearended ended

March 31, 2004 March 31, 2003Schedule Rs. Rs.

INCOME

Sales 16,250.62 17,122.16

Less :Excise Duty 2,397.91 1,943.27

Net Sales 13,852.71 15,178.89

Other Income 9 432.79 597.95

Increase / ( Decrease) in Stocks 10 215.09 (170.01)

Total ... 14,500.59 15,606.83

EXPENDITURE

Manufacturing and Other Expenses 11 15,317.51 15,300.45

Interest 12 646.37 668.23

Total ... 15,963.88 15,968.68

Loss for the year before Depreciation and (1,463.29) (361.85)

Miscellaneous expenditure written off

Depreciation and Miscellaneous expenditure written off 13 981.38 975.06

Loss before Tax and Extra-ordinary Items (2,444.67) (1,336.91)

Extraordinary item :

Provision no more required written back – 8,051.98

Net profit/ (Loss) before Taxation (2,444.67) 6,715.07

Deferred Tax Adjustment 14(8) 845.97 9,652.85

Provision for Wealth tax 1.07 0.93

Net profit/( Loss) for the year (1,599.77) 16,366.99

Loss brought forward from previous year 17,740.84 34,107.82

Balance of Loss carried to Balance Sheet 19,340.61 17,740.84

Basic & diluted Earning per share before

extra-ordinary items 14(14) (1.27) 6.58

Basic & diluted Earning per share after

extra-ordinary items 14(14) (1.27) 12.95

NOTES FORMING PART OF THE ACCOUNTS 14



K.C. PATELPartner






Directors


30



CASH FLOW STATEMENT AS ON 31ST MARCH, 2004 AS PER CLAUSE 32 OF THELISTING AGREEMENT

Rs. in lacs2003-04 2002-03

A. CASH FLOW FROM OPERATING ACTIVITIES :NET PROFIT / (LOSS) BEFORE TAX AND EXTRAORDINARY ITEMS (2,444.67) (1,336.91)ADJUSTMENTS FOR :DEPRECIATION & MISC. EXPENSES WRITTEN OFF 981.38 975.06INTEREST 646.37 668.23LOSS ON SALE / DISCARD OF FIXED ASSETS (NET) 23.09 0.30PROVISION FOR DOUBTFUL DEBTORS AND ADVANCES (NET) 31.87 100.77OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES (761.96) 407.45ADJUSTMENTS FOR :TRADE AND OTHER RECEIVABLES (64.40) (298.92)INVENTORIES (233.57) 157.13TRADE PAYABLE 882.25 (58.78)CASH GENERATED FROM OPERATIONS (177.68) 206.88INTEREST PAID 60.33 71.81DIRECT TAXES - WEALTH TAX 1.07 0.93NET CASH FLOW FROM OPERATING ACTIVITIESBEFORE EXTRA ORDINARY ITEMS (239.08) 134.14PROVISIONS NO MORE REQUIRED WRITTEN BACK – 8,051.98NET CASH FLOW FROM OPERATING ACTIVITIES (239.08) 8,186.12

B. CASH FLOW FROM INVESTING ACTIVITIES :PURCHASE OF FIXED ASSETS (162.78) (94.57)ADVANCE TO PARTIES FOR CAPITAL EXPENDITURE (319.02) –SALE OF FIXED ASSETS 2.79 0.67NET CASH FLOW IN INVESTING ACTIVITIES (479.01) (93.90)

C. CASH FLOW FROM FINANCING ACTIVITIESPROCEEDS FROM ISSUE OF SHARE CAPITAL – 50.00LONG TERM BORROWINGS(Net) 347.91 4,320.91INCREASE/(DECREASE) IN UNSECURED LOANS 329.11 (7,099.72)WORKING CAPITAL FACILITIES FROM BANKS (120.62) (5,215.29)NET CASH FLOW IN FINANCING ACTIVITIES 556.39 (7,944.10)NET INCREASE IN CASH AND CASH EQUIVALENTS (161.70) 148.12CASH AND CASH EQUIVALENTS AS ON 01.04.2003 1,056.42 908.30CASH AND CASH EQUIVALENTS AS ON 31.03.2004 894.72 1,056.42



K.C. PATELPartner






Directors


31

31stAnnualReport

Schedules to the Accounts

SCHEDULE 1 - SHARE CAPITAL(Rs. in Lacs)


Rs. Rs.AUTHORISED

17,00,00,000 Equity Shares (Previous year

15,00,00,000 Equity Shares) of Rs. 10 each 17,000.00 15,000.00

ISSUED

14,00,89,475 Equity Shares of Rs. 10 each 14,008.95 14,008.95

SUBSCRIBED


PAID UP


1, 50,00,000 Equity Shares of Rs. 10 each, 150.00 150.00partly paid up Rs. 1/- each

Less : Calls unpaid (other than from Directors) – –

12,638.88 12,638.88

Add : Shares forfeiture Account 5.30 5.30

Total... 12,644.18 12,644.18

SCHEDULE 2 - RESERVES & SURPLUS(Rs. in Lacs)


Rs. Rs.CAPITAL RESERVES

State Capital Subsidy 12.75 12.75

State Subsidy for Road 4.20 4.20

Central Capital Subsidy 10.00 10.00

Total... 26.95 26.95

32



SCHEDULE 3 - SECURED LOANS(Rs. in Lacs)


Rs. Rs.Term Loans :

a. From Banks 5,259.13 4,911.18

b. Financial Institutions 2,452.68 2,224.67

7,711.81 7,135.85

Infrastructural development loan from GIIC LTD. 154.00 154.00

Working Capital Loan From Banks :

Cash Credit 194.26 –

Interest accrued and due thereon 44.35 1.24

Total 8,104.42 7,291.09

a) Rupee Loans of Rs. 5495.75 lacs (previous year Rs.5495.75 lacs) from Banks and Financial Institutions aresecured by first mortgage ranking pari passu on all movable and immovable assets of the Company, bothpresent and future (save & except book debts), subject to charges created or to be created in favour ofCompany’s Bankers on movable assets and book debts for working capital borrowings. Further, such loansare secured by second charge ranking pari passu movable assets in favour of work are further secured bythe personal guarantee of two promoter directors.

b) Rs. 1868.10 lacs (Previous year Rs. 1640.10 lacs) being Funded Interest Term Loans from Banks and FinancialInstitutions are secured by way of second charge ranking pari passu to be created on all immovable andmovable assets of the Company, both present and future.

c) Vehicle Loan from ICICI Bank is secured by hypothecation of vehicle financed by them.d) Interest free Infrastructural term loan of Rs.154 lacs (previous year Rs.154 Lacs) from GIIC LTD. is secured

by way of joint equitable mortgage on Company’s immovable and movable properties, both present andfuture, subject to prior charge of Financial Institutions & Banks.

e) Working Capital Loans from Banks are secured by hypothecation of Inventories and book debts as well assecond charge on company’s immovable and movable properties present and future. These loans arealso secured by the personal guarantee of two promoter directors.

SCHEDULE 4 - UNSECURED LOANS(Rs. in Lacs)


Rs. Rs.a) Interest free Sales Tax Deferment Loan under Sales Tax Incentive 550.27 680.52

Scheme of Government of Gujaratb) Interest Free Deferment as per Sanctioned Rehabilitation Scheme :

I) Sales Tax 9,746.21 9,746.21ii) Turnover Tax 1,140.91 1,140.91III) Royalty 495.11 495.11iv) Electricity Duty 4,711.32 4,257.66v) Tax on Sale of Electricity 740.67 740.67

c) Others :Security Deposits 389.42 383.72

Total... 17,773.91 17,444.80

33

31stAnnualReport

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34



SCHEDULE 6 - CURRENT ASSETS, LOANS AND ADVANCES :(Rs. in Lacs)


Rs. Rs.CURRENT ASSETS :

Inventories (As certified by the Management) :

Stores and Spares 933.00 896.59

Raw Materials 28.70 46.39

Materials-in-Process 266.02 212.27

Finished Goods 488.64 327.29

1,716.36 1,482.54

Sundry Debtors (Unsecured) :

Exceeding six months : Considered good 551.01 624.67

Considered doubtful 605.09 573.23

Others : Considered good 2,019.65 1,472.70

3,175.75 2,670.60

Less : Provision for doubtful debts 605.09 573.23

2,570.66 2,097.37

Cash And Bank Balances :

Cash and cheques on hand and in transit 2.73 2.63

Current Accounts 782.91 1,018.70

Margin Money Fixed Deposit Accounts (including Rs. 1.43 lacs

Interest accrued thereon, previous year Rs. 0.92 lacs) 109.08 35.09

894.72 1,056.42

Loans & Advances (Unsecured) :

Advances against Capital Expenditure 319.02 –

Advances Recoverable in cash or in kind

or for value to be received.

i) Considered good 637.50 1,062.59

ii) Considered doubtful 2.74 37.13

959.26 1,099.72

Less : Provision for doubtful Advances 2.74 37.13

956.52 1,062.59

Tax deducted at source 3.64 9.45

Deposits 469.50 474.42

Balances with Central Excise in Current Account 9.73 14.66

1,439.39 1,561.12

Total... 6,621.13 6,197.45

35

31stAnnualReport

SCHEDULE 7 - CURRENT LIABILITIES & PROVISIONS(Rs. in Lacs)


Rs. Rs.CURRENT LIABILITIES :

Sundry Creditors 2,935.69 2,099.50Due to Banks in current account – 5.56Other Liabilities 599.90 563.92

3,535.59 2,668.98

PROVISIONS :Wealth tax 1.07 0.93Gratuity 150.31 134.81

151.38 135.74Total... 3,686.97 2,804.72

(Note : No amount due and outstanding which is required to betransferred to Investors’ Education and Protection fund)

SCHEDULE 8 - MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)

(Rs. in Lacs)As at As at

March 31, 2004 March 31, 2003Rs. Rs.

Share Issue Expenses:Opening Balance 35.83 71.67Less :- Written-off 35.83 35.84Total... – 35.83

SCHEDULE 9 - OTHER INCOME(Rs. in Lacs)

Year ended Year endedMarch 31, 2004 March 31, 2003

Rs. Rs.Interest (TDS Rs. 14,925; previous year Rs. 8944) 3.59 6.31Miscellaneous Income 118.91 48.27Export Incentive 168.72 457.77Exchange Rate Fluctuation 3.37 3.99Insurance Claims 104.78 3.60Provisions no longer required, written back 33.42 78.01Total... 432.79 597.95

SCHEDULE 10 - INCREASE /(DECREASE) IN STOCK(Rs. in Lacs)


Rs. Rs.Opening Stocks :a) Process Stock 212.27 663.23b) Finished Goods 327.30 46.35Closing Stocks : 539.57 709.58a) Process Stock 266.02 212.27b) Finished Goods 488.64 327.30

754.66 539.57Increase / ( Decrease) in Stock 215.09 (170.01)

36



SCHEDULE 11 - MANUFACTURING AND OTHER EXPENSES(Rs. in Lacs)


Rs. Rs.Cement / Clinker purchase for Resale 1,165.59 1,335.05Consumption of Raw Materials 347.31 354.01Royalty, Cess etc. 537.60 459.63Stores and Spares consumed 1,068.66 814.62Packing Material consumed 501.54 468.19Power and Fuel 7,542.94 7,137.80Salaries,Wages, Bonus & Gratuity 756.67 774.47Contribution to Provident and Other Funds 76.22 79.39Employees’ Welfare Expenses 38.92 40.15Repair & Maintenance :Plants and Machinery 143.53 175.73Buildings 2.63 110.24Other 49.05 53.88Rent 35.86 33.72Rates and Taxes 26.52 10.14Insurance Premium 116.90 106.08Commission and Discount on Sales 249.21 199.78Freight outward 1,610.68 1,954.80Directors’ Sitting Fees 1.67 0.98Business Promotion Expenses 177.56 235.16Auditor’s Remunaration 2.88 2.60Miscellaneous Expenses 809.26 852.96Loss on sale of Fixed assets(net) 2.19 0.30Value of Discarded Assets 20.90 –Prov. for doubtful debts / advances 33.22 100.77

Total... 15,317.51 15,300.45

SCHEDULE 12 - INTEREST(Rs. in Lacs)


Rs. Rs.Interest on Term Loans 228.05 188.34Other Interest 418.32 479.89

646.37 668.23

SCHEDULE 13 - DEPRECIATION AND MISCELLANEOUS EXPENDITUREWRITTEN OFF

(Rs. in Lacs)Year ended Year ended

March 31, 2004 March 31, 2003Rs. Rs.

Depreciation 945.55 939.22Miscellaneous expenditure written off 35.83 35.84

Total... 981.38 975.06

37

31stAnnualReport

SCHEDULE - 14 NOTES TO THE ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES1.1 Historical Cost Basis :

The Financial statements are prepared under the historical cost convention and in accordance with applicablemandatory Accounting Standards and relevant presentation requirements of the Companies Act, 1956.

1.2 Revenue Recognition :The company generally follows accrual system of accounting as required under Section 209(3) (b) of theCompanies Act, 1956. However, considering uncertainties and / or difficulties involved in estimation ofliabilities and / or final determination of refund claims filed by the Company, the following items are consideredto be accrued and accounted only when settled or agreed to with the party and / or receipts / paymentsof necessary amount.i) Claim against Railways for shortages / damages for cement in transit.ii) Insurance Claims, andiii) Scrap Sales

1.3 Fixed Asset and Depreciation :a) Fixed assets include all expenditure of capital nature and are stated at cost (net of Cenvat, wherever

applicable) less accumulated depreciation.b) Depreciation is provided on fixed assets on straight-line method at the rates prescribed in schedule

XIV to the Companies Act, 1956.c) In respect of addition and sales of assets during the year, depreciation is provided on prorata monthly

basis.1.4. Inventories:

Inventories are stated :a) At cost or net realizable value, whichever is lower. For this purpose cost has been arrived at on the

basis of moving weighted average.b) Provision for obsolescence is made wherever necessary.

1.5 Sales :Sales figures are inclusive of excise duty, but are net of sales tax, sales returns, and rate difference adjustment.Export sales and export benefits are accounted on the basis of the dates of bills of lading.

1.6 Foreign Currency Transaction :Transactions of foreign currency are recorded at the exchange rate as applicable at the date of transaction.Current Assets / liabilities outstanding at the close of the financial year are stated at the contracted and / orappropriate exchange rate at the close of the year and the gain / loss is credited / charged to Profit & LossAccount.

1.7 Retirement Benefit :a) Provision is made in respect of Gratuity liability based on actuarial valuation as at the year end.b) Retirement benefits in the form of provident fund and pension scheme whether in pursuance of any

law or otherwise is accounted on accrual basis.c) The Company has no Leave Encashment Scheme as a part of “Retirement Benefit Scheme”. The employees

are entitled to encash their unavailed accrued leave during the course of their employment in accordancewith the company’s rules and regulations. The same is therefore accounted as and when claimed.

d) Contribution for the employees covered under Superannuation Scheme of the Company is beingmade to approved Superannuation Fund which fully covers the same under policy with Life InsuranceCorporation of India.

1.8 Expenses :All material known liabilities are provided on the basis of available information / estimates.

1.9 Borrowing Cost :Borrowing costs, attributable to the acquisition / construction of qualifying assets, are capitalised. Otherborrowing costs are charged to profit and loss account.

1.10Taxation :(a) Income tax charge or credit comprises current tax and deferred tax charge or credit.(b) Deferred tax asset or liability on timing difference are recognised using current rates and tax laws that has been

enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised to the extentthere exists a virtual certainty that these assets can be realised in future. Net deferred tax asset is recognisedbased on the principles of prudence. Deferred tax effects are reviewed at each Balance Sheet date.

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1.11General :Accounting policies not specifically referred to are consistent with generally accepted accounting practice.

2. The Company is registered as a sick company with The Board for Industrial & Financial Reconstruction (BIFR)under The Sick Industrial (Special Provisions) Act, 1985. The Hon’ble Appellate Authority for Industrial &Financial Reconstruction (AAIFR) has sanctioned a rehabilitation scheme resting with its order dated 21st

November, 2002 envisaging various relief and concessions from Government of Gujarat, Financial Institutionsand Consortium of banks. The sanctioned rehabilitation scheme interalia provides for restructuring of debtsand grant of fresh loans for financing of cost of the Scheme. The effect of waiver, concessions, relief andrestructuring of existing loans pursuant to the sanctioned scheme has been accounted for.Barring any unforseen circumstances, the Management is confident that after implementation of the proposedRehabilitation Scheme, the Company would be able to generate sufficient returns to make its net worthpositive in future. Accordingly, the accounts of the Company are prepared on Going Concern Basis.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net ofadvances) Rs. 2051.62 lacs (Previous year Rs. 16.33 lacs).

4. Contingent liabilities not provided for in respect of :a) Demand of Excise & Customs and Cenvat Credit of Rs.411.76 lacs (Previous year Rs. 445.78 lacs).b) Claims against the company not acknowledged as debt Rs.938.24 lacs (Previous years Rs. 1064.18 lacs).c) Demand of Rajshthan Sales Tax of Rs. 59.84 lacs (Previous year Rs.60.73 lacs).d) Demand of Kerala Sales Tax of Rs. 1.20 lacs (Previous year Rs. 12.20 lacs).

5. Local Gram Panchayat in earlier years had raised demands for octroi duty aggregating to Rs.51.90 lacs. TheCompany has deposited an amount of Rs. 43.85 lacs as advance as per the order of the Hon’ble HighCourt. No provision has been made for this demand for octroi duty as the Company has preferred appeals.

6. The Public Financial institutions and Banks have a right to exercise an option for conversion of part of theloan into equity shares of the company at par during the currency of loan agreements.

7. Based on the information available with the company regarding the status of the suppliers as defined underthe “Interest On Delayed Payment to Small Scale & Ancillary Industrial Undertaking Act 1993”. No amountis due to SSI parties whose outstanding is more than 30 days.

8. In accordance with Accounting Standards / 22 “Accounting for Taxes on Income” issued by the Institute ofChartered Accountants of India, the company has computed Deferred Tax Assets of Rs. 11,849.96 Lacsand Deferred Tax Liabilities of Rs. 1,351.14 Lacs as on 31st March 2004. The financial projections of thecompany have been evaluated by State Bank of India, the Operating Agency. The implementation of theRehabilitation Scheme which include installation of captive power plant and captive jetty will result in toreduction in cost of production and transportation. Having regard to this and also considering the presentmarket scenario of the Company’s products, the Management is confident that the Company will havesufficient taxable income as envisaged in the Financial projections against which unabsorbed depreciationand business losses will be set off. Accordingly, the deferred tax effects on the following items of timingdifferences have been recognized as detailed below:

As at 31-03-04 As at 31.03.03Rs. In lacs Rs. in lacs

a. Deferred Tax Assets :Accrued Expenses deductible on cash basis 6327.71 6053.87Provision for Doubtful debts & advances 218.20 218.97Unabsorbed Depreciation 4245.99 4108.95Accumulated Business Losses 1058.06 807.57

Total 11849.96 11189.36b. Deferred Tax Liabilities :

Difference between WDV of fixed assets as per theIncome-tax Act,1961 and the Companies Act, 1956 1351.14 1536.51

Total 1351.14 1536.51

c. Net Deferred Tax Assets (a – b) 10498.82 9652.85

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9. The Company has been advised that in view of assessable loss under the Income Tax Act, 1961, noprovision is required to be made for Income Tax for the year.

10. Profit & Loss Account includes Auditors Remuneration as under :2003-2004 2002-2003Rs. in lacs Rs. in lacs

As Auditors 2.16 2.10In Other Capacity (for certification etc.) 0.72 0.40Reimbursement of Expenses 0.13 0.10

3.01 2.6011. Managerial Remuneration

2003-2004 2002-2003Rs. in lacs Rs. in lacs

a) Remuneration to the Dy. Managing DirectorSalary & Allowances 8.38 7.20Contribution to PF and other funds 1.85 1.94Perquisites (Valued as per IT Rules, wherever applicable) 2.72 3.09

12.95 12.23

b) Dy. Managing Director has been reappointed with effect from 3.12.2003 at revised remuneration in termsof resolution passed in Extra Ordinary General Meeting on 25th November, 2003 subject to approval ofCentral Government. Pending approval of Central Government, provision has been made for remuneration.

c) Provision of incremental gratuity liability for the current year in respect of the director has not beenconsidered above, since the provision is based on an actuarial valuation for the Company as a whole.

d) In the absence of profits calculated under section 198 of the Companies Act, 1956 no commission ispayable to the directors of the Company and accordingly the computation of net profit under section349 / 350 is not stated.

12. Information pursuant to provisions of para 3,4 (C) and 4 (D) of part II of schedule VI to the Companies Act, 1956.a) Licence and installed capacity and production. 2003-2004 2002-2003

MT MTClass of Goods – Cement :Licence capacity *Installed capacity (MT / PA) ** 1200000 1200000Production— Cement (MT) 595780 540240

— Clinker (MT) (to the extent of quantity sold 469156 585511

* The Company’s product is exempt from Licensing requirements under Industrial Policy in terms ofNotification No. S.O. 477 (E) dated 25th July, 1991.

** As certified by the management and relied upon by Auditors, being technical matter.b) Purchase, Sales and Stocks : 2003-2004 2002-2003

Quantity Value Quantity ValueMT Rs. in lacs MT Rs. in lacs

i) Opening Stock — Cement 7528 110.32 2564 46.35ii) Purchases — Cement 38530 582.57 56170 827.19

— Clinker 65050 583.02 67713 507.86

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2003-2004 2002-2003

Quantity Value Quantity ValueMT Rs. in lacs MT Rs. in lacs

iii) Sales :Cement including 15 MT self consumption& samples (Previous year 48 MT) 627295 8899.32 591338 9163.68Clinker 534205 4953.39 653224 6015.21

13852.71 15178.89iv) Closing Stock – Cement

(after considering, transit loss and othershortage 13 MT (Previous year 108 MT) 14530 220.54 7528 110.32Closing Stock – Clinker (Out of Purchases) NIL NIL 1017 8.15

c) Raw Material Consumed :(Indigenous)

i) Limestone & Marl Excavated bythe Company 1451500 — 1464500 —

ii) Gypsum 31426 116.24 29639 119.68Iii) Others 231.07 234.33

347.31 354.01d) Value of imported and indigenous spares and

components consumed.2003-2004 2002-2003

Amount % to Amount % toRs. in Lacs Consumption Rs. in Lacs Consumption

Imported 256.41 24 146.28 18Indigenous 812.25 76 668.34 82

1068.66 100 814.62 100

2003-2004 2002-2003Rs. in lacs Rs. in lacs

e) CIF Value of imports :— Stores and spares 162.61 110.61— Coal 344.08 NIL

f) Expenditure in Foreign Currency :Foreign Travel 74.33 91.58Professional fees 4.58 6.73Others 0.11 1.21

g) Earnings in Foreign Currency :FOB value of Exports 3532.63 4255.22

13. Related Parties Disclosure :a) Promoters combined holding in excess of 20% of paid up capital :

(1) Sumarat Holding Pvt. Ltd. (10) The Mehta International Ltd.(2) Ria Holding Pvt. Ltd. (11) Euro India Investment Ltd.(3) Pranay Holding Pvt. Ltd. (12) Exchange Management Ltd.(4) Reeti Investment Pvt. Ltd. (13) Clarance Investments Ltd.(5) Prachit Holding Pvt. Ltd. (14) Glenn Investments Ltd.(6) Bromeliads Finvest Pvt. Ltd. (15) Hopgood Investments Ltd.(7) Sunnidhi Trading Pvt. Ltd. (16) Gujarat Industrial Investment Corp. Ltd.(8) Elian Finvest Pvt. Ltd. (17) The Industrilization Fund for Developing Countries(9) Sameta Export Pvt. Ltd., (18) F L Smidth A/S

b) Name of Key Management Personnel :(i) Mr. Jay Mehta — Executive Vice Chairman(ii) Mr. M. S. Gilotra — Managing Director(iii) Mr. R. K. Poddar — Dy. Managing Director

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c) Particulars of remuneration paid to Mr. R. K. Poddar are given in note No. 11.

d) (i) Name of the transacting related party — Saurashtra Cement Limited(ii) Description of the relationship between the parties — Common Key Management Personnel(iii) Particulars of transactions are disclosed in aggregate value for the year 2003-04 as under :

Particulars 2003-2004 2002-2003Amount Amount

Rs. in Lacs Rs. in LacsPurchase of Goods & materials 1427.64 1769.03Sale of Goods & materials 2517.18 1825.10Expenses for Services 611.52 38.37Outstanding Receivable 1248.19 770.17

e) (i) Name of the transacting related party — F L Smidth A/S(ii) Description of the relationship between the parties — Promoter Company(iii) Purchase of Spares for Plant — Rs. 2.46 lacs

14. Earning Per Share: 2003-2004 2002-2003a) Net Profit / (Loss) after tax but before

extra-ordinary items (Rs. in Lacs) (1599.77) 8315.01b) Net Profit / (Loss) after tax &

extra-ordinary items (Rs. in Lacs) (1599.77) 16366.99c) Calculation of Weighted Average number of

Equity Shares of Rs.10 each.Number of Shares of Rs. 10 each 12,48,88,808 12,48,88,808Number of Shares of Rs.10 each on whichRs.1 is paid (considered 1/10th numbers) 15,00,000 15,00,000Total Number of Shares of Rs. 10 each 12,63,88,808 12,63,88,808

d) Basic & Diluted Earning per share inrupees before extra-ordinary items (1.27) 6.58

e) Basic & Diluted Earning per share inrupees after extra-ordinary items (1.27) 12.95

15. The Company has only one business segment ‘Cement / Clinker’ as primary segment. The secondary segmentis geographical segment which is given below :

2003-2004 2002-2003Rs. In lacs Rs. In lacs

Revenue – Salesa. Domestic (India) 10296.26 10,844.20b. Export 3556.45 4,334.69

Total 13852.71 15178.89All the assets of the Company are in India only.

16. Previous year’s figures have been regrouped and / or rearranged wherever necessary to make themcomparable with current year’s figures.



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BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEI. Registration Details

Registration No. 2 2 4 5 State Code 0 4Balance Sheet Date 3 1 0 3 2 0 0 4

Date Month YearII. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Rights IssueN I L N I L

Bonus Issue Private PlacementN I L N I L

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)Total Liabilities Total Assets

3 8 5 9 9 4 6 3 8 5 9 9 4 6SOURCES OF FUNDS

Paid-up Capital Reserves & Surplus1 2 6 4 4 1 8 2 6 9 5Advance call money 5 0 0 0

Secured Loans Unsecured Loans 8 1 0 4 4 2 1 7 7 7 3 9 1APPLICATION OF FUNDS

Net Fixed Assets Investments 5 8 2 5 4 4 4 3Net current Asets Misc. Expenditure

2 9 3 4 1 6 N I LAccumulated Losses Deferred Tax Assets1 9 3 4 0 6 1 1 0 4 9 8 8 2

IV. Performance of Company (Amount in Rs.Thousands)Turnover Total Expenditure

1 4 5 0 0 5 9 1 6 9 4 5 2 6Loss (-) before tax Loss (-) after tax

– 2 4 4 4 6 7 - 1 5 9 9 7 7Earning Per Share (Rs.) Dividend rate % – 1 . 2 7

V. Generic Names of Three Principal Products / Services Of Company(as per monetary terms)Items Code No. 2 5 2 3 2 9 0 1(ITC Code)Product Description ORDINARY PORT LAND CEMENTItem Code No. 25231000(ITC Code)Product Description CLINKER



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31stAnnualReport


Pin 362 276, Dist. Junagadh (Gujarat).

D.P. Id.* L.F. No.

Client Id.* No. of Shares

ATTENDANCE SLIPI / We hereby record my / our presence at the 31st Annual General Meeting of the Company held at theRegistered Office of the Company at “Sidheegram”, Off Veraval-Kodinar Highway, Dist. Junagadh (Gujarat) at4.00 p.m. on Monday, the 27th September, 2004 and at any adjournment thereof.

NAME OF THE SHAREHOLDER(IN BLOCK LETTERS)

SIGNATURE OF THE SHAREHOLDER

NAME OF THE PROXY(IN BLOCK LETTERS)

SIGNATURE OF THE PROXY

* Applicable for investors holding shares in Electronic form.NOTE :

1. You are requested to sign and hand over this slip at the entrance to the Meeting Venue.2. If you intend to appoint a proxy to attend the Meeting instead of yourself, the proxy must be deposited at

the Registered Office of the Company not less than 48 hours before the time for holding the Meeting.

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Pin 362 276, Dist. Junagadh (Gujarat).

D.P. Id.* L.F. No.

Client Id.* No. of Shares

FORM OF PROXY

I / We ………………………….......................………… of ………….......................…………………………….in the district of …..................…..........……… being a Member / Members of Gujarat Sidhee Cement Limitedhereby appoint ……………………..........................…….of ………................................................………………in the district of ……………………............................................…………….. or failing him ………........……….of ……………………………………..................................................................….. in the district of …...........…………as my/our proxy to attend and vote for me/us and on my/our behalf at the 31st Annual General Meeting of theCompany to be held on Monday, the 27th September, 2004 at 4.00 p.m. and at any adjournment thereof.Singed this …………… day of ……………… 2004

Singature ……………………………* Applicable for investors holding shares in Electronic form.

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BOOK-POST

If undelivered please return to:

Gujarat Sidhee Cement LimitedRegistered Office :‘‘Sidheegram’’,Off. Veraval-Kodinar HighwayPin Code 362 276,Dist. Junagadh(Gujarat)

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Transcript of Gujarat Sidhee Cement Limited