ACC

[Type the document title]

[Type the document subtitle]

[Year]
y y y y y y ABHINAV ARORA AKSHAY PRATAP SINGH AVITOSH PANDA CHETAN SORTE 01 54 29 38 21 60

DEEPINDER SODHI RICHA KEWALRAMANI

[TYPE

THE COMPANY ADDRESS]

ASSIGNMENT SUBMITTED BY GROUP NO-8

NAME

ROLL.NO

y ABHINAV ARORA y AKSHAY PRATAP SINGH y AVITOSH PANDA y CHETAN SORTE y DEEPINDER SODHI y RICHA KEWALRAMANI

01 54 29 38 21 60

OBJECTIVE Based on the company report, identify various business decisions taken by the company and specify those decisions by functional areas.

History

The Company was incorporated on 1st August 1936 under the name "The Associated Cement Companies Limited." The said name was selected since one of the Company's objective was to acquire the cement works of some of the then existing cement companies. The Company today is the largest cement manufacturer in the country. The Company's products are sold under the brand name "ACC" which is the acronym for "The Associated Cement Companies Limited". ACC is among the country's most widely used brands of cement. It is sold in several states of the country through a large number of retail outlets to consumers in both urban and rural areas. These include small and large individual homebuilders and farmers. Most of these customers refer to the Company and its cement as ACC. The Super brands Council of India, a private brand certification program affiliated to a worldwide body, has twice selected "ACC" as one of the Super brands of India. With usage of the acronym "ACC" over a period of time, the Company has become better known throughout the country by all stakeholders including the media and in the Cement Industry as "ACC" than by its longer full name. The change of name to the shorter abbreviated version viz. "ACC Limited" would therefore more accurately reflect the corporate image and brand name.

List Of Various Functional Areas.

Marketing decision
y The Company opened10 more ACC Help Centers during the year to guide and advice the individual home builders in good construction practices. More than 50 dealers opened retail outlets manned by civil engineers and equipped them with facilities to guide customers to enable them to build strong and durable homes. The Company's customer focused initiatives are supported by a large number of "Grihamitra" vans designed to assist customers at construction sites in materials and concrete testing.

The project for modernization of cement plant and installation of 15 MW CPP at Chaibasa Cement Works was commissioned during the current period. This would enhance the Company's presence and its cost competitiveness in the Eastern region. On commissioning of the new state of the art 1.2 MTPA clinkering plant, the Company retired the last of its wet process kilns. The Company sold its Refractory Business to Ace Refractories Limited for a consideration of Rs 257.48 crore. This sale would enable the Company to completely focus on its core business of cement and RMX and provide cash to fund the growth program of the Company.

Financial decisions y y The accounting year has been changed from April-March to January-December. Therefore the accounts have been drawn up for nine months, for the period ended December 31, 2005. The Consolidated Financial Statements of the Group are attached. The net worth of the Group as at December 31, 2005 is Rs.2143.85 crore as against Rs. 1557.36 crore as at the end of the previous year. Profit before Exceptional Items & Tax for the nine months period ended December 31, 2005 for the Group was Rs. 435 crore as against Rs.486 crore in the previous full year. Profit after Tax for the Group for the nine months period ended December 31, 2005 grew on an annualized basis by 70% to Rs. 514 crore from Rs.403 crore. On standalone basis Profit before Exceptional Items & Tax for the nine months period ended December 31, 2005 Rs 405 crore as against Rs.445 crore in the previous full year. On standalone basis Profit after Tax increased on annualized basis by 92% to Rs. 544 crore from Rs. 378 crore in the previous full year.
Total expenditure on R&D was Rs 779 Lakhs, which was 0.23% percentage of total turnover.

y y y y
y

y y

Payment of commission to the non executive directors. During the period under review, the Refractory s business was divested in line with the decision taken by the Board to exit from non-core businesses. This resulted in an exceptional income of Rs.174.05 crore . Further, the Company also sold more than 50% of the share capital of Everest Industries Limited which resulted in an exceptional income of Rs. 110.26 crore.

The Directors recommend a dividend of Rs 8 per share for the nine months as against Rs 7 per share for the previous year comprising of 12 months. This would involve cash out flow of Rs 168.31 crore including tax on dividend of Rs 20.70 crore against the previous year outflow of Rs 142.5 crore including tax on dividend of Rs 17.53 crore. The Company had held 1,12,50,030 equity shares of Rs 10 each in Everest Industries Limited (EIL), which corresponds to 76% of EIL's equity capital. The Company entered into a Share Purchase Agreement (SPA) with Everest Finvest (India) Private Limited (EFIPL) for the sale of 74,00,020 equity shares i.e. just over 50% of EIL's equity capital at a price of Rs 134 per share and received the entire consideration of Rs. 99.16 crore. Further, in line with the terms of the SPA, the Company withdrew its nominees from the Board of EIL and ceded management control. With the substantive completion of the sale formalities and ceding of control, EIL has ceased to be the Company's subsidiary.

H.R decisions y
y

There are seven directors seeking reappointment at the forthcoming Annual General Meeting.
Total number of permanent employees as of December 31, 2005 was 9170. The company believes that its employees are at the core of its corporate purpose. The Company is organizing companywide employee satisfaction survey through an Independent agency to identify areas of employee concerns so that redressed measures could be put in place. The company has drawn up plans to enhance its training capabilities to achieve an average of five days of training per person per year. The Company has launched another initiative to foster innovation at the workplace and to make the company a learning organization. This met with enthusiastic response from the employees. The Chief Internal Auditor is appointed with the approval of the Audit Committee of the Board. The apartment is adequately staffed with qualified professionals including accountants and engineers. The Company is fully committed to ensuring an effective internal control environment which would provide assurance on the efficiency of its operations and security of its assets. Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property, if any. Sale of material nature, of investments, subsidiaries assets, which is not in normal course of business. Industrial Relations; wage agreements, human resource planning and development; report on fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems, if any. information on senior appointments below the Board level including the appointment/ removal of the Chief Financial Officer (CFO) and the Company Secretary; proposals for joint venture/collaborations. material communications from Government including show cause notices, demand, prosecution notices and penalty notices, if any, which are materially important; communication to the Stock Exchanges, the Shareholders and the Press regarding Company's performance, future plans and other decision/changes of significant importance or of price sensitive nature.

y y y

y y y

y y y
y

Merger and acquisition y y Acquired Tarmac (India) Private Limited - a RMX Company. Subsidiaries - Bargarh Cement Limited and Damodhar Cement & Slag Limited merged with the Company.

Research and development

1 Specific areas in which R&D was carried out by the company y Beneficiation of raw materials and fuels y Enhanced absorption of blending materials y Development of new and high performance concretes, mortars and grouts y Development of particle separation technologies y Use of alternative fuels & raw materials 2. Benefits derived as result of above R&D: y Marginal quality raw materials and fuels could be used

y Absorption of blending materials enhanced y High performance concretes, mortars and grouts developed 3. Future plan of action: y Research for even better processes of beneficiation for raw materials and fuels. y Focus on development of products aimed at enhancing use of cement in various applications. y The Company has formed a dedicated team to work exclusively on identification and usage of cost effective Alternative Fuels and Raw Materials (APR). This initiative will address the crying need of protecting the environment by utilization of hazardous waste produced by various industries, thereby conserving energy resources of the country and reducing the cost of production for the Company.

Production decision y y Group capacity for cement reached 19 million tonnes per year. Production and sale of cement of 13 million tonnes (MT) for the Year (nine months) ended December 31, 2005 ; Production grew by 6 % and sales grew by 7 % over corresponding previous period. The expansion and modernization of Lakheri Cement Works along with the installation of a new 25 MW CPP, Gagal Unit II expansion and the 25 MW TG at Kymore Cement Works are making satisfactory progress and are scheduled for completion in 2006.

Corporate social responsibility

y
Corporate Social Responsibility has been an important part of the mission of ACC from its very beginning. The quality of life of its employees, welfare of the community in which it operates and protection of the environment has been engaging the attention of the company for several decades. The Company continued its various activities in support of the community around its manufacturing plants by organizing health camps, vocational training and in assisting them in supply of potable water, so as to improve the general wellbeing of the community at large. The Company provided assistance to over 5000 families and children to tide over the severe hardships suffered by them due to unprecedented floods in and around Mumbai. Further, the Company made substantial contributions to the Prime Minister's Relief fund to support aid efforts of the Government for the victims of floods in Maharashtra and of earthquake in Jammu & Kashmir. The Company continued the rehabilitation of the Tsunami affected people in Tamil Nadu by providing sources of livelihood like fishing boats, creating community infrastructure etc. Growing incidence of HIV in the country has assumed endemic proportions. The company has joined hands with Cll to spread awareness about HIV prevention by opening a dedicated centre near our largest plant at Wadi in Karnataka. This centre is also being equipped to provide AntiRetro Viral treatment facilities for the affected people.

Strategy y y To consider and if thought fit to pass with or without modification, the name of the company from The Associated Cement Companies Limited to ACC Limited To make the board of directors more broad and bringing out more effectiveness in the decision making process and to represent the shareholding pattern of Ambuja cement India limited in ACC, the board of directors has appointed three additional directors. In line with its policy to exit from all its noncore businesses, efforts are on to divest the two 100% engineering business subsidiaries ACC Machinery Company Limited (AMCL) and ACC Ninon Castings Limited (ANCL). Renewed focus on its core business of Cement and Ready Mix Concrete (RMX) Refractory Business divested. Substantial equity stake in Everest Industries Limited (EIL) sold. EIL ceases to be a subsidiary of the Company. Initiatives taken up to create synergies with Holcim for enhancing Company's performance.

y y y y y

Miscellaneous Rules & Regulations

In this particular measure directors have to take various kinds of decisions related to different sectors and branches of their companies like:1. Conservation of energy(Measures Taken): a. They have replaced the wet process to efficient dry process. b. Use of alternative fuels. c. Installation for pre-grinder for cement mills. d. Installation of high efficiency discharge end seal. e. Retrofitting of floatation cells with high-efficiency ones. f. Rationalization in the use of water pumps, compressors and fans at various cement factories. g. Reduction in pre heater pressure. h. Replacement of aluminium blades by cooling towers hollow FRP blades. i. Reduction in transmission losses by appropriate modifications in the distribution networks. j. Replacing the old inefficient HT motors with energy efficient ones. 2. Additional proposal being implemented: a. Replacing the grate coolers by high-efficiency grate coolers. b. Installation of high efficiency seal at discharge end of Kilns. c. Addition of one more stage of pre-heater cyclone. d. Replacement of pneumatic conveying system for transporting cement. e. Improvement in cement mills performance by provision of modified liners and close circuiting of mills. f. Installation of pre-grinders at cement-mill. g. Replacing high cost fuel to low cost fuel. h. Conversion Stoker Fired Boilers to FBC Boilers. i. Improving Grate Cooler performance.

Information Technology:
y Common and aligned business processes supported by a state of the art IT system for all the operations of the Company was felt to be a key tool to enhance the Company's competitive edge. The Company has, therefore, taken up "Project Connect India" which involves implementation of the enterprise software, SAP with the assistance of Holcim. A new IT hub has been created at the Thane complex near Mumbai.