AFFLUENCE

DIRECTORS' REPORT & MANAGEMENT DISCUSSION & ANALYSIS

To the Shareholders

Your Directors have pleasure in presenting their annual report on the business and operations of your Company together with the audited accounts of the Company and its subsidiaries for the year ended 31st March, 2016.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 6 per share (i.e. 60%) on 7,70,05,347 ordinary shares for the year ended 31st March, 2016 aggregating to Rs.  55.61 crores including Corporate Dividend Tax of Rs.  9.40 crores as compared to Rs.  55.61 crores (including Corporate Dividend Tax of Rs.  9.40 crores) in the previous year.

 1.1 CEMENT DIVISION

(a) Industry Structure and Developments :

Cement is indispensable for nation building and has a direct linkage with nation's health and growth. The domestic cement sector is the second largest market globally and contributes around 8% to the global cement production. India's per capita consumption is quite low at 202 kg. as against the world's average of 543 kg. This underlines the tremendous scope for growth in Indian cement industry in the long term. It is estimated that 60% of the cement demand comes from housing, 25% from infrastructure and remaining 15% from institutional and commercial sectors. While housing constitutes around %rd of the cement demand, the rural housing accounts for 40% of the total demand. India has the largest homeless population in the world and the rural housing offers a huge opportunity. The surge in the rural housing demand is expected mainly on account of strong wage growth.

Though India has witnessed sustained cement consumption growth in last 15 years since 2001, the cement volume growth has been weakening in last 3/4 years, led by a slump in infrastructure, commercial and housing sector. While the capacity in the cement industry doubled in last decade, the growth in cement demand remained low when the capacity was getting added leading to surplus capacity. The industry has created capacity on the back of government's projection of potential cement demand arising out of thrust given to housing and infrastructure development of the country. However, cement demand, as projected, did not materialise while capacity was created.

The cement sector is slowly heading for a major consolidation as Greenfield projects are becoming difficult to set up due to increased impediments in areas like mineral concession, land acquisition and related environmental and operational issues.

This may lead to consolidation in the cement industry. Going forward, the acquisition space in the industry is expected to gather steam, with organic growth becoming difficult and opportunities arising due to various companies opting to liquidate assets to deleverage.

During the financial year under review, the Indian cement industry faced weak demand, which kept the prices and operating margins under pressure. The cement demand remained weak primarily due to low consumption from end-user sectors and procedural delays in clearance for industrial and infrastructure projects. Going forward, capacity addition is expected to be limited and the cement demand is expected to improve resulting in higher capacity utilisation.

(b) Review of performance :

Sales :

During the year under review, your Company has registered a growth of about 6% in cement sales. In absolute terms, the sale of cement has increased to 80.36 Lac tons compared to 76.05 Lac tons in the previous year. The net sales during the year have increased to Rs.  3225.24 crores as against Rs.  3152.25 crores in the previous year, an increase of 2%.

Cost and Profitability :

The profitability of the Company during the year was impacted due to the outsourcing of limestone at higher prices. Substantial quantity of limestone was raised by mechanical means. However, it was still short of the total requirement, which had to be outsourced at substantially high rates. The realizations were low. The Company could partially mitigate its impact on its profitability by improving operational efficiencies in various areas, including :

I. Increase in the consumption percentage of fly ash and slag to manufacture blended cement;

II. Use of higher quantity of petcoke at Satna instead of coal;

III. Utilizing alternative fuel which was also environmentfriendly;

IV. Purchase of power from the Exchange at rates lower than grid power;

V. Reduction in power consumption - per tonne of cement produced.

With a view to economise on the cost of power and fuel, the Company has taken measures to shift its dependence on linkage coal as well as imported coal by optimising the fuel mix so as to enhance the use of alternative fuel and petcoke.

During the year, petcoke was available at attractive prices on account of a decline in global oil prices. The Company has increased the usage of petcoke and has initiated measures to further reduce consumption of coal and substitute the same with petcoke by making investments for installation of various equipments and machineries required for the purpose. Though power and fuel costs declined, the benefits were off-set by the Direct Mineral Fund (DMF) and National Mineral Exploration Trust (NMET) levies imposed by the government on mining of Limestone.

Freight costs, another key cost for the industry also increased as railway imposed railway surcharge and also raised tariffs. However, the cost of transportation through road was lower during the year due to decline in diesel prices.

Cement demand and prices :

Cement demand remained weak during the first 3 quarters of the financial year and was impacted by slower off-take in private housing and delayed spending on government sponsored housing projects, ban on sand mining in Madhya Pradesh and deficient monsoon. The performance of the Company was impacted due to poor demand in the Company's major marketing areas in the North and Central regions which put cement prices under severe pressure. However, from February, 2016 onwards, a pick up in demand have been witnessed. While the production growth in the cement sector for the entire year was at 4.6%, the output in the month of March saw an increase of 11.9% as compared to the same month last year.

Cement prices continued to remain under pressure during the year. However, cement realisation have improved towards the end of the year on the back of better demand.

(c) Launch of Premium Brand cement :

(i) Birla Samrat Unique Cement :

Since the introduction of the premium quality Portland Slag Cement (PSC) brand, Birla Samrat UNIQUE, in Eastern India in 2011, its market share has been witnessing steady improvement. Presented in pilfer and weatherproof packing, the finer grains of UNIQUE give higher compressive strength and larger surface area coverage. It has lower water absorption and silica-rich slag, ensuring dense and durable concrete.

(ii) Birla Samrat Ultimate Cement :

The fly ash-based, premium Portland Pozzolana Cement (PPC) brand, Birla Samrat ULTIMATE Cement, introduced in 2014, has received market acceptance in both eastern and central regions. Based on the Complete Particle Size Distribution (CPSD) technology, the "double refined" cement is being marketed in tamper-proof packaging. The product is corrosion-resistant, cohesive and has low alkali properties. Trade associates have welcomed the premium product since it has been catering to the demands of discerning consumers.

Both UNIQUE and ULTIMATE cements, being premium brands, have been fetching higher prices than the Company's normal brands, contributing to profitability.

(d) Mining operations at Chanderia :

The Mining Operations (through blasting) at the Chanderia plant had been suspended since August, 2011 owing to the Order of Jodhpur High Court (Rajasthan), which was challenged by the Company before Hon'ble Supreme Court. As a partial relief, the Supreme Court had allowed mining operations beyond 2 kilometers from the Chittorgarh Fort by using heavy earth moving machinery. The Hon'ble Supreme Court had further directed Central Building Research Institute (CBRI) to submit a report after comprehensive study of all relevant aspects and facets relating to full-scale mining operations and its impact, if any, on the Chittorgarh Fort. The report of CBRI, has concluded that vibrations and air pressures induced by mine of Birla Cement Works and adjoining mines are well within safe limits as per national and international standards and there is no damage to the Fort due to the mining operations. During the year, the Company has filed an Interim Application seeking Interim Relief for blasting at the existing working pit. The matter is expected to come up for final hearing before the Hon'ble Supreme Court shortly.

In the meanwhile, the Company has taken measures to install additional equipments for mechanical mining. However, the process of learning and stabilizing the operation with the use of new equipments is continuing, since the process of mechanical mining for limestone is very difficult, being tried for the first time in India.

(e) Deallocation of Coal Block:

The Hon'ble Supreme Court, vide it's decision dated 24th September, 2014, held allocation of various coal blocks as arbitrary and illegal and hence liable to be cancelled. Subsequently, the Government promulgated The Coal Mines (Special Provisions) Ordinance, 2014, which intends to take appropriate action to deal with the situation arising puruant to the Hon'ble Supreme Court's decision. In respect of Bikram Coal Block in the state of Madhya Pradesh allotted to the Company, the management has submitted its claim for compensation to the government for the investments made on the block. Consequential adjustments, if any, will be made on settlement of the claim.

 (f) Threats, Risks and Concerns :

Cement Industry continues to face rise in freight and forwarding costs, which have significantly increased over the past 2/3 years. Though, the coal and petcoke prices have remained soft during the year, any major rebound in prices may increase the costs.

Setting up new cement capacity is becoming more challenging due to tougher land acquisition process, higher capital cost, increased gestation period, requirement of several regulatory clearances and non-availability of new limestone mines.

The high taxes and administrative burden continues to remain a major concern for cement industry; cement along with steel, constitute important raw materials for infrastructure and real estate sector. Whereas steel falls under the category of "Goods of Special Importance" and attracts a lower VAT rate of 5%, cement is subjected to higher rate of tax of about 15%. The solution to this issue probably lies in the uniform tax regime through the implementation of Goods and Services Tax (GST), which is slated to play a critical role in the next level of growth and realise full extent of country's potential.

Right now the Indian cement industry is facing the problem of excess supply on two counts. First, demand for cement has been subdued due to slow capex in infra and poor rural income. Second, in the last few years the cement industry went on an expansion drive.

(g) Opportunities :

On the back of an expected pick-up in consumption based on infrastructure development and ambitious projects such as "Make in India", "Housing for all by 2022", "Digital India", "Smart Cities Mission", "Atal Mission for Rejuvenation & Urban Transformation" (AMRUT), demand in the housing sector may be stimulated with a gradual reduction in the interest rates, wider supply of affordable housing, tax benefits and increase in disposable incomes and household savings.

The demand for cement is expected to be better in the financial year 2016-17 on the back of planned spending by the Central Government on various projects including Highway and Infrastructure Projects, Railway Projects, Urban Infrastructure Projects, River Inter-linking Projects, increased government spending in Bihar and West Bengal post elections.

The recent announcement made by the Prime Minister on investment of Rs. 1 lac crore to double the capacity of the ports augurs well for the cement sector. Further, the Minister for Road, Transport and Highways has recently set a goal of building 15000 kms. of highways in the financial year 2016-17, two and a half times of what was achieved last year. The proposed move of the Ministry for Road Transport and Highways to use cement in place of bitumen for road construction augurs well for the industry. The payment of about Rs. 75000 crores towards increase in salary of government employees based on the recommendation of the 7th Pay Commission is also expected to lead to an upsurge in demand in housing and would be favourable for the cement sector.

(h) Outlook :

Consistent with the positive outlook for the Indian economy, the Company foresees similar revival in demand for cement. Signs of increased construction activity have been witnessed in industry and commercial segment as well as from mass housing and mid-income housing scheme across the country.

A major fillip to construction activity would come from theinitiative taken by the government to kick-start delayed projects by emphasising the need to facilitate clearances and by continuing construction work in the industrial corridors and freight corridors.

The cement industry bears strong co-relation with domestic economy and hence the optimistic outlook of the Indian economy should reflect positively on the cement industry. The industry is expected to be a beneficiary of the renewed thrust on infrastructure development. On the supply side also the pace of new capacities has slowed down. Over the period 2016-17 to 2019-20, the capacity addition in the industry is expected to be muted as the industry is approaching the end of investment cycle.

As per CRISIL Research Report, over 5-year period cement demand is projected to increase 8.0 - 8.5% CAGR, led by continued growth in the housing and infrastructure sectors. Demand from industrial and commercial segments is, however, expected to be muted over the medium term. The northern, central and eastern zones in which the Company operates are likely to see a healthy growth in demand over a low base as the State Governments increase focus on development.

After two consecutive years of poor monsoon the Indian Meteorological Department has forecasted normal monsoon in the year 2016, which would positively impact the consumption growth and would spur long awaited economic recovery. There are healthy indicators of an uptrend in demand for cement from projects such as concrete roads, flyovers and bridges, power plants, irrigation schemes, ports, freight corridor, railways and metro railway projects.

The overall demand for cement has, only recently, shown signs of pick-up and if the momentum continues the margins of the Company will improve. Interest rates may soften in the coming months, helping retail home buyers. Factors like reduction in variable costs, including those of coal, Pet coke, slag and fly ash, as well as those of packaging material, are expected to contribute to the improved performance.

 1.2 JUTE DIVISION

(a) Industry Structure and Developments :

Jute Industry is mostly concentrated in the eastern part of India particularly in West Bengal. It plays a vital role in the economy of the state. Jute industry supports over 200000 workers and over 3 million farm families. Jute Industry is principally dependent on the orders from the government food grains procuring agencies and over the previous few years, dependence on the government orders is increasing and now it accounts for over 70% of its installed capacity. Packaging of food grains is mandated to be packed in jute bags under The Jute Packaging Materials (Compulsory use in Packaging Commodities), Act, 1987 (JPMA). It is likely that government will dilute mandatory packaging requirements which will affect the long term viability of the jute mills, unless alternative usage of the jute is enhanced meaningfully.

(b) Performance :

Jute Division has reported excellent results during the year. It has reported its highest ever turnover and profit. The Division has reported its Highest ever production at 38024 MT as against 33248 MT in the previous year. The improved performance of the Jute Division can be attributed to the following factors :

> Substantial investment made in recent past for modernization.

> Improvement in production efficiencies.

> Substantial reduction in wastage generation.

> Judicious product and market selection.

> Economical and strategic purchase of raw jute.

> Low power consumption, which was one of the lowest in the industry.

(c) Opportunities and Threats; Risks and Concerns :

Rains during the year have been erratic. There were less rains during the sowing season resulting in poor yield and then there were excess rains during harvesting time resulting in damage to standing crop. As a result crop size during the year has been estimated at about 60 lakh bales against normal annual requirement of 90 lakh bales. Price of Raw Jute has sky rocketed to unprecedented levels. The raw jute prices started at Rs.  3800 per quintal in the month of August 2015 sharply increasing to T 5600 per quintal in the month of March 2016.

Jute Industry faces daunting task of competing with subsidized duty free imports from Bangladesh. Industry is not only loosing the market share in the overseas market to Bangladesh but Bangladesh is also extensively pushing the jute goods in India at the cost of market share of Indian Jute Mills.

Jute manufacturing is a labour intensive process and requires huge labour force. Jute industry was always dependent on labour availability from nearby states. Now, migration from the other states has virtually dried due to employment availability locally in those states. Further, local people are getting alternate employment in lighter job like embroidery, masonry etc. Difficulty in getting workers for running the mills is resulting in lower capacity utilization causing further increase in cost of production per unit.

To overcome all these problems of a) loss of traditional market, b) lower availability of workers, c) subsidized import from Bangladesh, d) ever increasing raw jute prices, the company has taken up large scale modernization of the mills resulting in lower requirement of man power thereby reducing dependence on man power availability, reducing cost and diversifying in non-traditional product category.

(d) Outlook :

The increase in raw jute prices coupled with lower crude prices have further widened the gap between prices of synthetic bags and jute bags. If this trend continues there is strong concern that packing of many more commodities will shift to synthetic packaging material. Government is also likely to dilute mandatory Packaging Act due to increasing cost of packaging in jute bags.

Loss of traditional market of jute to synthetic fabric is likely to cause major demand problem in the industry.

However, the Division is confident that the efforts and investments made in the past will help it to sail through the troubled times in an efficient manner.

 1.3 VINDHYACHAL STEEL FOUNDRY

Steel Foundry produces iron & steel castings primarily for internal consumption. The total production of castings during the year has been 1083 Ts. as against 1213 Ts. in the previous year.

ACQUISITION OF CEMENT BUSINESS OF RELIANCE INFRASTRUCTURE LIMITED

During the year the Company has signed a Share Purchase Agreement with Reliance Infrastructure Limited for acquisition of its entire cement business for an enterprise value of Rs. 4800 crores. The Company will acquire all the shares of Reliance Cement Company Private Limited (RCCPL). The acquisition will provide the Company ownership of high quality assets taking its total capacity from 10 MTPA to 15.5 MTPA strengthening its presence in the high growth central region. The Company's expansion potential will also be enhanced with mineral concession in the states of Madhya Pradesh, Maharashtra, Rajasthan, Karnataka, Andhra Pradesh and Himachal Pradesh enabling the Company to emerge as a pan-Indian player in the foreseeable future.

RCCPL has three cement Units, an integrated cement plant at Maihar (Madhya Pradesh) and grinding Units at Kundanganj (Uttar Pradesh) and Butiburi (Maharashtra). The Company will also benefit from Reliance Cement's strategically located raw material sources, captive coal mine, optimum manpower, efficient operating parameters and technical capability for producing top end quality product.

The said acquisition, however, is subject to the approval of regulatory authorities as may be applicable.

 CAPITALEXPENDITURE

> The 5-lakh ton blending unit at Raebareli was commissioned in October, 2015. The Unit produces superior quality of cement which is marketed mainly under the premium brand, Birla Samrat ULTIMATE Cement.

> For the purpose of carrying out mining without blasting the Company has procured various equipments such as Excavators, Rock Breakers, Terminators etc. for mechanical mining. The Company plans to add further equipments to augment the capacity of mechanical mining.

> New Coal Vertical Roller Mill for Pet coke grinding at Satna, commissioned in June, 2015.

> The Company has received environmental clearance for second phase expansion of New Chittor Cement Works from 1.2 MTPA to 2.7 MTPA. The project will be implemented once the limestone mining issue is resolved and environmental clearance for additional limestone mining is received.

 EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 as required under Section 92 of the Companies Act, 2013, is marked as Annexure - A which is annexed hereto and forms part of the Directors' Report.

 NUMBER OF MEETINGS OF THE BOARD

The details of the number of meetings of the Board held during the financial year 2015-16 forms part of the Corporate Governance Report.

 DIRECTORS' RESPONSIBILITY STATEMENT

As required by Section 134(3)(c) of the Companies Act, 2013 your Directors state that:

(a) in the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards have been followed with proper explanation relating to material departures, if any;

(b) the accounting policies adopted in the preparation of the annual accounts have been applied consistently except as otherwise stated in the Notes to Financial Statements and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year 2015-16 and of the profit for the year ended 31st March, 2016;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts for the year ended 31st March, 2016, have been prepared on a going concern basis;

(e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

 DECLARATION BY INDEPENDENT DIRECTORS

Shri Vikram Swarup, Shri Anand Bordia, Shri Brij Behari Tandon, Shri Dhruba Narayan Ghosh, Dr. Deepak Nayyar and Smt. Shailaja Chandra are Independent Directors on the Board of the Company. The Independent Directors hold office for a fixed term of five years and are not liable to retire by rotation.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI Listing Regulations with the Stock Exchanges.

COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

The Board of Directors of the Company, based on the recommendation of the Nomination and Remuneration Committee, has formulated a Remuneration Policy.

The remuneration policy of the Company, inter alia, includes the aims and objectives, principles of remuneration, guidelines for remuneration to Executive Directors and Non-Executive Directors, fixed and variable components in the remuneration package, criteria for identification of the Board members and appointment of senior management.

The criteria for identification of the Board Members including those for determining qualification, positive attributes, independence etc. are summarily given hereunder :

> The Board member shall possess appropriate skills, qualification, characteristics and experience. The objective is to have a Board with diverse background and experience in business, government, academics, technology, human resources, social responsibilities, finance, law etc. and in such other areas as may be considered relevant or desirable to conduct the Company's business in a holistic manner.

> Independent director shall be person of integrity and possess expertise and experience and/or someone who the Committee/Board believes could contribute to the growth/philosophy/strategy of the Company.

> In evaluating the suitability of individual Board members, the Committee takes into account many factors, including general understanding of the Company's business dynamics, global business, social perspective, educational and professional background and personal achievements.

> Director should possess high level of personal and professional ethics, integrity and values. He should be able to balance the legitimate interest and concerns of all the Company's stakeholders in arriving at decisions, rather than advancing the interests of a particular constituency.

> Director must be willing to devote sufficient time and energy in carrying out their duties and responsibilities effectively. He must have the aptitude to critically evaluate management's working as part of a team in an environment of collegiality and trust.

> The Committee evaluates each individual with the objective of having a group that best enables the success of the Company's business and achieve its objectives.

 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

 CREDITRATING

CRISIL has rated short term debt including Commercial Paper to the extent of T 200 crores as "A1+". Long Term Non Convertible Debentures of the Company to T 400 crores has been rated as "AA+". Both the ratings have been placed under ratings watch with negative implications considering the recent acquisition deal of the Company to buy Reliance Cement Company Private Limited.

Further, Credit Analysis and Research Limited (CARE) has also rated "CARE AA+" rating for the Company's Long Term Bank facilities and "CARE A1+" for the Company's Short Term Bank facilities aggregating to T 1298 crores. The rating Committee of CARE has assigned "CARE AA+" for the outstanding Non-Convertible Debentures of T 400 crores. CARE has also placed the ratings under watch considering the acquisition deal of Reliance Cement Company Private Limited.

FINANCE

The high financial discipline and prudence and the strong credit rating has enabled the Company to reduce its cost of working capital borrowings. The Company continuously undertakes review of liability management so as to reduce cost.

Further, the Company efficiently manages its surplus funds by investing in highly rated debt securities, fixed deposits and debt schemes of mutual funds considering safety, liquidity and return.

 CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance Code as stipulated under the SEBI Listing Regulations with the Stock Exchanges. A separate section on Corporate Governance, along with certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report.

 RELATED PARTY TRANSACTIONS

All transactions entered with Related Parties during the financial year were on an arm's length basis and were in the ordinary course of business and the provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus, disclosure in Form AOC-2 is not required. Further, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted along with a statement giving details of all related party transactions are placed before the Audit Committee.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website and may be accessed at the link http://www.birlacorporation.com/investors/related-partp-transactionspolicp. pdf.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under provisions of the Companies Act, 2013 and Rule 8(3) of Companies (Accounts) Rules, 2014 details relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in the Annexure - B, which is annexed hereto and forms part of the Directors' Report.

 RISK MANAGEMENT

Risk management is the process of identification, assessment, and prioritisation of risks followed by coordinated efforts to minimise, monitor and mitigate/control the probability and / or impact of unfortunate events or to maximise the realisation of opportunities. The Company has laid a comprehensive Risk Assessment and Minimization Procedure which is reviewed by the Audit Committee and approved by the Board from time to time. These procedures are reviewed to ensure that executive management controls risk through means of a properly defined framework. The major risks have been identified by the Company and its mitigation process/measures have been formulated in the areas such as business, location, quality, market, litigation, logistics, project execution, financial, human resources, environment and statutory compliance.

 AWARDS & RECOGNITIONS

During the year, Company's Cement Unit: Satna Cement Works has been conferred 4 nos. of Gold Award from Quality Circle Forum of India, Regional Convention at Varanasi.

 OCCUPATIONAL HEALTH & SAFETY

Employees of the Company play an important role in the industrial operation and Company's growth, and are considered as the most valuable assets and their personal and professional development along with their robust health and safety is one of the top priorities of the organization.

The Company is complying with all the Statutory Provisions as required under the Factories Act. Competent persons carry out compulsory testing/ examination of lifting tools, pressure vessels, cranes, safety belts etc. as per statutory requirement. To get good results in the accident prevention we have included safety programmes like investigation & analysis of all serious and fatal accidents, recommendations / remedial measures to prevent similar accidents. Near- miss situation / incident with no injury is accorded serious consideration for planning of preventive measures.

As a part of safety measures, we are ensuring almost cent percent use of Personal Protective Equipment by developing voluntary safety culture. Various periodical health check up programmes are conducted from time to time so as to monitor health hazards, if any.

Safety posters, slogans are widely displayed in the conspicuous places at the factory including work places, canteen and plant gates to continuously remind everyone about safe working practices and environment so as to inculcate a culture of safety amongst the workers. Safety day / week celebration is being organized every year with a view to arouse and motivate safety consciousness amongst the employees.

 CORPORATE SOCIAL RESPONSIBILITY

In line with the provisions of the Companies Act, 2013, the Company has framed its Corporate Social Responsibility (CSR) policy for the development of programmes and projects for the benefit of weaker sections of the society and the same has been approved by the CSR Committee and the Board of Directors of the Company.

The Corporate Social Responsibility (CSR) policy of the Company provides a road map for its CSR activities. The purpose of CSR Policy is to devise an appropriate strategy and focus its CSR initiatives and lay down the broad principles on the basis of which the Company will fulfill its CSR objectives. As per the said policy, the Company continues the strategy of discharging part of its CSR responsibilities related to social service through various trusts/societies in addition to its own initiatives and donations made to other non-government organizations.

The CSR Policy has been uploaded on the Company's website and may be accessed at the link http://www.birlacorporation.com/investors/csrpolicp. pdf.

Pursuant to the requirement under Section 135 and Rules made thereunder a report on CSR activities and initiatives taken during the year in the prescribed format is given in Annexure - C, which is annexed hereto and forms part of the Directors' Report.

The Company is actively associated with various social and philanthropic activities undertaken on its own as well as by different Trusts and Societies. As a constructive partner in the communities in which it operates, the Company has been taking concrete action to realize its social responsibility objective. The Company has been playing a pro-active role in the socioeconomic growth and has contributed to all spheres ranging from health, education, empowerment of women, rural infrastructure development, environment conservation etc. In the past nine decades, the Company has supported innumerable social initiatives in India, touching the lives of thousands of people positively by supporting environmental and healthcare projects and social, cultural and educational programs.

Health, Educational and Social Initiatives :

The Company provides active assistance, financial as well as managerial, to various hospitals and educational and philanthropic institutions set up by trusts and societies.

The Company is financially and otherwise contributing to the M/s Madhav Prasad Priyamvada Birla Apex Charitable Trust for construction of a 200 beds multi speciality Hospital namely "M. P. BIRLA HOSPITAL & RESEARCH CENTRE" which is situated near cement plant of the Company at Chittorgarh, Rajasthan. The total built up area of the hospital building and housing building will be approximately 1.90 lacs Sq. ft. and will have basement, ground and 1st to 4th floors. The hospital shall have a separate residential building for resident doctors and nurses. The construction of the hospital and housing building is progressing satisfactorily on the basis of architect's drawings. Slab casting up to the 4th floor of the Hospital Block and Housing Block has been completed. Work order in respect of Civil, Electricals, Plumbing & Fire Fighting, HVAC (Air Conditioners), Elevators, DG Sets, Medical Gas Pipe Line Systems, Solar water heater, Central Sterile Services department and scrub station has already been awarded and these agencies are simultaneously doing their work. The finishing work is in full swing. Dados and flooring work is under various stages of completion. External cladding and painting work is also under various stages of completion. It is expected that the hospital shall start operation in the year 2016.

This apart, the CSR activities undertaken include :

01] Health care activities :

The Company supports various social development activities in the area of healthcare by way of providing free medical check up and administer free treatment and medicines for the needy people, treatment facility for various critical diseases in remote areas, running voluntary centres and dispensaries providing much-needed medical services to the local population at a highly subsidized rate, organising free eye Camps including eye screening and surgery Camps, carried out anti malaria treatment, organised health awareness camps and programs etc.

Free health camps including free treatment of asthma and cancer are organised in rural areas to provide quality healthcare services to the local population as well as to the population of the area surrounding the Company's cement plants at Satna by M.P Birla Hospital and Priyamvada Birla Cancer Research Institute.

02] Education :

The Company provides financial and infrastructural support to the schools located close to the Company's plants, by way of repairing and renovating the buildings from time to time. Schools are run at Satna and Chanderia with support and contribution by the Company.

The Company conducted awareness programme on Road Safety during 'Sarak Suraksha Saptaha'. School dresses, winter clothes, books, stationery and other materials are provided free of cost to needy students on regular basis. Apart from the above, the Company has also arranged installation of Water Coolers and renovation of toilet for school premises. Computer training is provided to the students in the villages in nearby area.

The Company also provides vocational training to management and engineering students and workers on regular basis.

03] Empowerment of women:

With a view to bring advancement, development and empowerment of women and also to elevate their economic condition, the Company has taken various initiatives to promote skill building and income generating schemes for women in surrounding villages of factory and mining area. The initiatives include income generating activities such as 'Sewing Training Programmes' and educating them about the stitching and distribution of sewing machines free of cost. Necessary training and support is provided to women self-help groups under the projects to make them self reliant. The Company also organises Rural Women Sports Meet in which women of various villages surrounding Company's mining area participate.

04] Animal welfare and livestock development :

With the support of M/s. BAIF Development Research Foundation, Pune, Livestock development and improved agricultural programme were undertaken in the villages nearby the mining areas of the Company. The programme aims to provide livelihood support and improve socio-economic condition of the local people and initiate various rural development projects e.g. to help in developing high yielding breeds of cattle, goats and sheep, improve agricultural practices by providing good quality of seeds and training on best practices to the farmers by agriculture specialists. Promotion of organic vegetable and seasonal crops in our mining areas was initiated. Use of agricultural waste in terms of energy conservation and renewable energy development were undertaken. Several sanitation and hygiene programme are organised in schools and villages nearby our factory and mining areas.

05] Promotion of rural sports :

The Company organises sports and games activities for villagers in nearby mining and factory areas. Financial support is provided for organizing State level Kabaddi rural sports meet at villages. The Company also provided financial assistance to All India Independence Day Football Tournament at Nagod which is registered as Class 1 Tournament by All India Football Association.

06] Other Social Initiatives :

The Company undertakes other social welfare activities and rural development projects including providing drinking water facility through water tankers in villages near its plants, repairing of hand pumps & submersible pumps, construction of water hut (Piau) and provided drinking water coolers. The Company has also contributed for development of historical and religious places at Bathia Khurd. The Company has made contribution towards various traditional art and cultural activities including that of Meera Samriti Sansthan and Dashra Mela.

Birla Jute Mills has adopted a jute growing village at Nakashipara Block in Bethuadahari region of Nadia district in the state of West Bengal under Jute I-Care Programme of National Jute Board to hand-hold the farmers in adopting improved agricultural practices with a view to increase productivity.

The Company also financially supported construction activities including those for community hall, boundary wall and rooms for villagers.

07] Environmental sustainability :

The Company believes in sustainable development by promoting clean and pollution free environment and making the environment eco friendly. Accordingly, various initiatives have been taken for Clean Development Mechanism (CDM) and pollution prevention. Sustainable development and environmental dimension forms an integral part of the Company's business decisions.

The Company is installing equipment to set up the Alternative Fuel and Raw Material Feeding System (AFRS) for increase in the use of alternative fuel on continuous basis at its clinker manufacturing units. This initiative to utilize alternative fuel, in the form of agricultural waste, is expected to be operational by the first quarter of the next fiscal. Vacant land at the Company's cement plants is also being utilized to grow alternative fuel inputs to meet the AFR requirement partially. This pioneering move will ensure the availability of alternative fuel throughout the year which will not only bring down the fuel cost but also help in reducing the carbon footprint.

Extensive eco friendly plantations and beautifications of plant and residential colonies have been undertaken. Regular inspection and maintenance of pollution equipment are done and emission levels are maintained within the statutory limits.

Measures have been taken during the year for further improving the environmental performance such as installation of Bag Dust Collectors and new water spray system for controlling dust emission. SO2 & NOx gas analyzer in kiln stack has been installed for close monitoring. Sheds are constructed for maintaining good house keeping inside the plant premises. Measures have also been taken for conservation of limestone reserves. Water tankers, pumps, rain guns and water spray system have been provided for pressurized spray in order to control dust pollution around mining area and roads.

The Waste Heat Recovery System at Satna and Chanderia plants of the Company uses the waste hot gases coming out of the pre-heater and clinker cooler to generate substantial power thereby reducing Green House Gas (GHG) emissions into the atmosphere. Grinding aid is introduced in all the units to improve consumption of Fly Ash and Slag. Further, to protect the environment, the Company has consumed 17.59 lac tonnes of Fly ash during the year 2015-16 at various cement plants of the Company. This has resulted in reduction of clinker usage, which in turn reduced GHG emissions at our plants, without compromising on the quality and strength of cement.

 BOARDEVALUATION

The Board has carried out an annual evaluation of its own performance, the Directors individually as well as the evaluation of the functioning of various Committees. The Independent Directors also carried out the evaluation of the Chairman and the Non-Independent Directors, the details of which are covered in the Corporate Governance Report.

 CRITERIA FOR EVALUATION OF DIRECTORS

For the purpose of proper evaluation, the Directors of the Company have been divided into 3 (three) categories i.e. Independent, Non-Independent & Non-Executive and Executive.

The criteria for evaluation includes factors such as engagement, strategic planning and vision, team spirit and consensus building, effective leadership, domain knowledge, management qualities, team work abilities, result/ achievements, understanding and awareness, motivation/commitment/ diligence, integrity/ethics/values and openness/receptivity.

 DIRECTORS AND KEY MANAGERIAL PERSONNEL

Shri Bachh Raj Nahar, Managing Director retires from the Board by rotation and being eligible, offers himself for re-appointment.

The above is subject to the approval of the shareholders in the ensuing Annual General Meeting of the Company.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The three subsidiary companies namely, Thiruvaiyaru Industries Limited, Birla North East Cement Limited and Birla Corporation Cement Manufacturing PLC', Ethiopia are under the process of voluntary winding up. In view of the aforesaid, these subsidiaries have not been considered in preparing the consolidated Balance Sheet.

No company has become a joint venture during the financial year 2015- 16.

A report on the performance and the financial position of 6 (six) subsidiary companies along with 2 (two) associate companies as per Companies Act, 2013 forms part of the consolidated financial statement and hence not repeated here for the sake of brevity.

DEPOSITS

The Company has not accepted deposits, during the year under review, from the public falling within the ambit of Section 73 of the Act and the Rules framed thereunder.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS, COURTS AND TRIBUNALS

No significant and material order has been passed by the regulators, courts, tribunals impacting the going concern status and company's operations in future.

 INTERNAL CONTROL AND SYSTEMS

The Company has a robust and comprehensive Internal Financial Control system commensurate with the size, scale and complexity of its operations.

The system encompasses the major processes to ensure reliability of financial reporting, compliance with policies, procedures, laws, and regulations, safeguarding of assets and economical and efficient use of resources.

The Company has performed an evaluation and made an assessment of the adequacy and the effectiveness of the Company's Internal Financial Control system. The Statutory Auditors of the Company have also reviewed the Internal Financial Control system implemented by the Company on financial reporting and in their opinion, the Company has, in all material respects, adequate Internal Financial Control system over Financial Reporting and such Internal Financial Controls over Financial Reporting were operating effectively as on 31st March, 2016 based on the internal control over Financial Reporting Criteria established by the Company.

The policies and procedures adopted by the company ensures the orderly and efficient conduct of its business and adherence to the company's policies, prevention and detection of frauds and errors, accuracy and completeness of the records and the timely preparation of reliable financial information.

The Internal auditors and the Management Audit Department continuously monitor the efficacy of internal controls with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organisation's risk management with regard to the internal control framework.

Audit Committee meets regularly to review reports submitted by the Internal Auditors. The Audit Committee also meet the Company's Statutory Auditors to ascertain their views on the financial statements, including the financial reporting system and compliance to accounting policies and procedures followed by the Company.

 VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has framed a Vigil Mechanism/Whistle Blower Policy to deal with unethical behaviour, actual or suspected fraud or violation of the company's code of conduct or ethics policy, if any. The Vigil Mechanism/Whistle Blower Policy has also been uploaded on the website of the Company.

 PARTICULARS OF EMPLOYEES

As required under provisions of the Companies Act, 2013 and Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, particulars of the employees concerned forms a part of the Directors' Report. Having regard to the provisions of Section 136 of the Companies Act, 2013, the Annual Report is being sent to the members of the Company excluding the aforesaid information. Any member interested in obtaining such particulars may write to the Company Secretary of the Company.

DETAILS RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is marked as Annexure - D which is annexed hereto and forms part of the Directors' Report.

HUMAN RESOURCE DEVELOPMENT/INDUSTRIAL RELATIONS

There is a continuous effort for better Human Resource (HR) service delivery in order to better serve the customers with simple well executed processes with proper use of technology. HR service delivery has become all the more critical in the organization due to rise in customer expectation.

The organization has a mechanism to provide employees with feedback on a continuous basis. Based on the organization's strategic plan, HR planning processes map the capacity of the organization. The knowledge, skills and abilities of the employees are identified.

The strategic thrust of HR has been improvement of the performance of the employees through training & development and also to identify high performers who are having potential for taking higher responsibilities.

The Company had 6021 permanent employees on its rolls at the close of business hours on 31st March 2016. Industrial relations continued to remain cordial throughout the year at all the units. Suspension of Operation continues at Soorah Jute Mills, Auto Trim Division, Birlapur and at Birla Vinoleum, Birlapur. Workers of Auto Trim Division at Birlapur, Chakan, Gurgaon and Birla Vinoleum at Birlapur have availed separation.

 AUDITORS & AUDITORS' REPORT

Statutory Auditor :

The Company's Auditors, Messrs H.P Khandelwal & Co., Chartered Accountants, who retire at the ensuing Annual General Meeting of the Company and are eligible for reappointment. The members are requested to appoint the auditors and to fix their remuneration.

The notes on accounts referred to in the Auditors' Report are self-explanatory and, therefore, do not call for any comments.

Secretarial Auditor :

The Board had appointed Ms. Mamta Binani, Practising Company Secretary to conduct Secretarial Audit of the Company for the Financial Year 2015- 16. The Secretarial Audit Report for the Financial Year ended 31st March, 2016 is annexed herewith and marked as "Annexure - E". The Report is self-explanatory and do not call for any comments.

Cost Auditors :

The Board of Directors on the recommendation of the Audit Committee appointed Shri Somnath Mukherjee, Cost Accountant, as the Cost Auditor of the Company. The remuneration proposed to be paid to the Cost Auditor requires ratification of the shareholders of the Company. In view of this, your ratification for payment of remuneration to the Cost Auditor is being sought at the ensuing Annual General Meeting.

Shri Somnath Mukherjee has confirmed that his appointment is within the limits of the Section 139 of the Companies Act, 2013 and has certified that he is free from any disqualifications specified under Section 148(5) and all other applicable provisions of the Companies Act, 2013.

The Audit Committee has also received a Certificate from the Cost Auditor certifying his independence and arm's length relationship with the Company.

The Company submits its Cost Audit Report with the Ministry of Corporate Affairs within the stipulated time period.

 CAUTIONARY STATEMENT

Statements in this Report, particularly those which relate to Management Discussion & Analysis, describing the Company's objectives, projections, estimates, expectations or predictions may be' forward looking statements' within the meaning of applicable laws or regulations. Actual results could however differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include global and domestic demand-supply conditions, finished goods prices, raw materials and fuels cost& availability, transportation costs, changes in Government regulations and tax structure, economic developments within India and the countries with which the Company has business contacts and other factors such as litigation and industrial relations.

APPRECIATION

We wish to place on record our appreciation for the continued assistance and co-operation extended to the Company by the Government of India, State Governments, Financial Institutions and Banks, Dealers and Customers, Shareholders and to all others who are continuing their assistance to the Company.

For and on behalf of the Board of Directors

Harsh V. Lodha Chairman

Bachh Raj Nahar Managing Director

Kolkata

Dated, the 6th day of May, 2016