MIRA INFORM REPORT

Report Date :

21.10.2011

IDENTIFICATION DETAILS

Name :	SAGAR CEMENTS LIMITED
Registered Office :	8-2-472/B/2, Road No. 1, Banjara Hills, Hyderabad-500034, Andhra Pradesh
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	15.01.1981
Com. Reg. No.:	01-2887
Capital Investment / Paid-up Capital :	Rs. 150.023 Millions
CIN No.: [Company Identification No.]	L26942AP1981PLC002887
TAN No.: [Tax Deduction & Collection Account No.]	HYDS00253B
PAN No.: [Permanent Account No.]	AACCS8680H
Legal Form :	A Public Limited Liability Company. The Company’s shares are listed on Stock Exchange.
Line of Business :	Manufacturer and Exporter of Cement
No. of Employees :	380 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (54)

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 8865000
Status :	Good
Payment Behaviour :	Usually correct
Litigation :	Clear
Comments :	Subject is a well established company having fine track. Trade relations are fair. Financial position of the company is good. Profit margin is also good. The company is doing well. It’s payments are usually correct and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – September 30, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

LOCATIONS

Registered Office/ Administrative Office :	8-2-472/B/2, Road No. 1, Banjara Hills, Hyderabad-500034, Andhra Pradesh, India
Tel. No.:	91-40-23351571
Fax No.:	91-40-23356573
E-Mail :	info@sagarcements.in
Website :	http://www.sagarcements.com
Factory 1 :	Mattampally, Via Huzurnagar, Nalgonda District-508204, Andhra Pradesh, India
Tel. No.:	91-8683-247039
Factory 2 :	Pedaveedu Village, Via Huzurnagar, Nalgonda Destrict, Andhra Pradesh – 508204, India
Tel. No.:	91-8683-216533/247333

DIRECTORS

As on 31.03.2011

Name :	Mr. O. Swaminatha Reddy
Designation :	Chairman and Independent and Non Executive
Qualification :	Charted account and Financial Management
Name :	Mr. S Veera Reddy
Qualification :	Managing Director
Name :	Dr. S Anand Reddy
Designation :	Joint Managing Director
Qualification :	M.B.B.S
Name :	Mr. S Sreekanth Reddy
Designation :	Executive Director
Qualification :	B.E and PG Diploma
Name :	Mr. K Thanu Pillai
Designation :	Independent and Non Executive
Qualification :	MBA and CAIIB
Name :	Mr. Glibert Noel Claude Natta
Designation :	Non Executive
Qualification :	MBA, ESSEC Business School
Name :	Mr. Werner C R Poot
Qualification :	Independent and Non Executive
Name :	Mr. P Rajeswara Rao
Designation :	APIDC Nominee
Name :	Mr. V V S Ravindra
Designation :	IDBI Nominee and Independent (up to 29.04.2011)
Name :	Mr. G. Suneel Babu
Designation :	IDBI Nominee and Independent (w.e.f 29.04.2011)

KEY EXECUTIVES

Name :	Mr. R Soundararajan
Designation :	Company Secretary
Senior Management Team:	Corporate Office:
Name :	Mr. M.S.A Narayana Rao
Designation :	Group President
Name :	Mr. M.V. Subba Rao
Designation :	Senior Vice President
Name :	Mr. P. Vasudeva Reddy
Designation :	Vice- President Work
Name :	Mr. K. Ganesh
Designation :	Vice President Project
Name :	Mr. P. Venkat Reddy
Designation :	Vice President – Finance
Name :	Mr. P.S. Prasad
Designation :	Vice President- Marketing
Name :	Mr. O. Anji Reddy
Designation :	Chief general Manager – Electrical and Installations
Name :	K.V. Ramana
Designation :	Chief General Manager – Mines
	Sites
Name :	Mr. M. V. Ramana Murthy
Designation :	General Manager – Production and QC
Name :	Mr. A.K Nagesh
Designation :	General Manager – Mechanical and Development

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.06.2011

Category of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of promoter and Promoter Group
1) Indian
a) Individuals / Hindu Undivided Family	5380110	38.15
b) Bodies corporate	344785	2.44
Sub Total	5724895	40.60
2) Foreign
Total shareholding of Promoter and Promoter Group (A)	5724895	40.60
(B) Public Shareholdings
1) Institutions
a) Mutual Funds	1169588	8.29
b) Financial Institutions/Banks	4150	0.03
2) Non – Institution
a) Bodies corporate	4471206	31.71
b) Individuals
i. Individual Shareholders holding nominal share capital upto Rs.0.100 Million	1493617	10.59
ii. Individual Shareholders holding nominal share capital in excess Rs.0.100 Million	179691	1.27
c) Any other
i) Non Resident Indians	22236	0.16
ii) Foreign Corporate Bodies	1000000	7.09
iii) Hindu Undivided Families	36580	0.26
iv) Clearing Members	337	-
Sub Total	7203667	51.08
Total Public shareholding (B)	8377405	59.40
Total (A)+(B)	14102300	100.00
Total (A)+(B)	14102300	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer and Exporter of Cement

Products :

Product Description	ITC Code
Cement	252300
Clinker	252310

PRODUCTION STATUS 31.03.2011

CAPACITIES AND PRODUCTIONS (MATTAMPALLY)

Licensed and Installed Capacity (TPA)	2350000
Actual Production (MTS)	1277720

CAPACITIES AND PRODUCTIONS (PEDAVEEDU)

Licensed and Installed Capacity (TPA)	346500
Actual Production (MTS)	212942

GENERAL INFORMATION

No. of Employees :

380 (Approximately)

Bankers :

· State Bank of Hyderabad

· State Bank of India

· Punjab National Bank

· IDBI Bank Limited

Facilities :

Secured Loan	As on 31.03.2011 (Rs. in Millions)	As on 31.03.2010 (Rs. in Millions)
TERM LOANS
Andhra Pradesh State Financial Corporation Limited	80.402	45.053
State Bank of India	253.386	335.886
State Bank of Hyderabad	711.509	371.509
IDBI Bank	550.000	750.000
L and T Finance Limited	6.833	42.506
Vehicle Loans From Banks	11.787	7.913
CASH CREDIT FROM
State Bank of Hyderabad	293.975	249.090
Punjab National Bank	0.000	83.652
State Bank of India	327.066	204.032
IDBI Bank Limited	99.504	79.942
Bills Discounting	36.092	48.652
Total	2370.554	2218.235
Unsecured Loan	As on 31.03.2011 (Rs. in Millions)	As on 31.03.2010 (Rs. in Millions)
Directors	32.191	0.000
Others	68.033	0.000
Sales Tax Deferment	50.061	0.000
Total	150.285	0.000

Banking Relations :	--
Financial Institute:	Andhra Pradesh State Financial Corporation Limited L and T Finance Limited
Auditors :
Name :	P Srinivasan and Company Chartered Accountant
Address :	H.No.12-13-422, Street No.1, (Lane Opposite Bank of Baroda), Tarnaka, Secundrabad – 500017, India
Cost Auditors :
Name :	Narasimha Murthy and Company Chartered Accountant
Address :	104, Pavani Estate, Y V Rao Mansion, Himayathnagar, Hyderabad-500029, Andhra Pradesh, India
Subsidiaries :	Sagar Power Limited, India (up to 31.05.2010)
Associates :	Vicat Sagar Cement Private Limited, India
Transactions with Companies in which Directors are interested :	· Panchavati Polyfibres Limited · Sagarpriya Housing and Industrial Enterprises Limited · Golkonda Hospitality Services and Resorts Limited · Sagar Power Limited · BSCPL Infrastructure Limited

CAPITAL STRUCTURE

As on 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
20000000	Equity Shares	Rs.10/- each	Rs. 200.000 Millions
2000000	Preference Shares	Rs.10/- each	Rs. 20.000 Millions
	TOTAL		Rs. 220.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
15002300	Equity Shares	Rs.10/- each	Rs. 150.023 Millions
	TOTAL		Rs. 150.023 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2011	31.03.2010	31.03.2009
SHAREHOLDERS FUNDS
1] Share Capital		150.023	150.023	150.023
2] Equity Share Capital Suspense		23.857	0.000	0.000
3] Reserves & Surplus		2042.594	1920.968	1772.199
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		2216.474	2070.991	1922.222
LOAN FUNDS
1] Secured Loans		2370.554	2218.235	2408.569
2] Unsecured Loans		150.285	0.000	0.000
Creditor For Capital Goods		35.657	55.652	202.086
TOTAL BORROWING		2556.496	2273.887	2610.655
DEFERRED TAX LIABILITIES		359.773	303.589	123.088
TOTAL		5132.743	4648.467	4655.965
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		3464.045	3575.358	3714.647
Capital work-in-progress		61.147	101.253	77.710
INVESTMENT		860.265	408.868	177.988
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	575.390	488.615	425.332
	Sundry Debtors	459.421	411.879	249.295
	Cash & Bank Balances	28.591	26.732	112.204
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	666.732	439.647	474.215
Total Current Assets		1730.134	1366.873	1261.046
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	511.802	423.613	501.513
	Other Current Liabilities	377.256	285.697
	Provisions	93.792	94.575	73.913
Total Current Liabilities		982.850	803.885	575.426
Net Current Assets		747.284	562.988	685.620
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		5132.743	4648.467	4655.965

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	4768.540	4795.733	3065.452
		Other Income	192.979	67.878	8.372
		TOTAL (A)	4961.519	4863.611	3073.824
Less	EXPENSES
		Raw Material Consumed	496.406	418.397	191.759
		Manufacturing Expenses	1789.505	1533.080	827.955
		Salaries and Wages	166.721	140.623	103.189
		Purchase of Cement	0.000	464.506	643.718
		Value added Tax and Other Tax	635.267	560.689	365.219
		Administration and other Expenses	72.191	86.892	78.473
		Adjustment for Stocks	(226.959)	(21.043)	(52.186)
		Selling and Distribution Expenses	1214.468	815.875	317.142
		TOTAL (B)	4147.599	3999.019	2475.269
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		813.920	864.592	598.555
Less	FINANCIAL AND INTEREST EXPENSES (D)		311.396	289.507	158.988
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		502.524	575.085	439.567
Less/ Add	DEPRECIATION/ AMORTISATION (F)		275.979	276.885	187.226
	PROFIT BEFORE TAX (E-F) (G)		226.545	298.200	252.341
Less	TAX (H)		52.425	106.965	87.774
	PROFIT AFTER TAX (G-H) (I)		174.120	191.235	164.567
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		711.457	612.688	532.700
Less	APPROPRIATIONS
		Proposed Dividend	34.776	37.506	38.504
		Corporate Dividend Tax	4.452	4.960	6.073
		Transfer to General Reserve	17.400	50.000	40.000
	BALANCE CARRIED TO THE B/S		828.949	711.457	612.688
	IMPORTS
		Capital Goods	0.000	11.406	98.930
		Coal, Components and Spare parts	297.859	259.495	299.926
	TOTAL IMPORTS		297.859	270.901	398.856
	Earnings Per Share (Rs.)
	Basic		11.61	12.75	11.48
	Diluted		10.01	12.75	11.48

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.06.2011 1 Quarter
Net Sales	1724.960
Total Expenditure	1319.440
PBIDT	405.520
Other Income	1.660
Operating Profit	407.180
Interest	87.000
Exceptional Items	0.000
PBDT	320.180
Depreciation	63.490
Profit Before Tax	256.690
Tax	74.890
Provision and contingencies	0.000
Profir After Tax	181.800

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	3.51	3.93	3.35
Net Profit Margin (PBT/Sales)	(%)	4.75	6.22	8.23
Return on Total Assets (PBT/Total Assets}	(%)	4.36	6.03	15.38
Return on Investment (ROI) (PBT/Networth)		0.10	0.14	0.23
Debt Equity Ratio (Total Liability/Networth)		1.59	1.49	2.31
Current Ratio (Current Asset/Current Liability)		1.76	1.70	2.19

LOCAL AGENCY FURTHER INFORMATION

OPERATIONS REVIEW:

While there was a marginal increase of 2% in the total income of your company as compared to the previous year, Operating Profit and PAT were however marginally lower as compared to the previous year.

The performance of your company in terms of quantity of production and sale is given below:

Description	2010-11	2009-10
Production MT
Clinker	1510135	1430000
Cement	1490662	1120350
Sales in MT
Clinker	30840	350133
Cement	1469172	1127739
Cement – Second Sales	0	204191
Self Consumption	877	2897
Total Cement Sales	1470049	1334827

Andhra Pradesh, which is a major market for the Company saw a lull in the construction and infrastructure industries in 2010-11 causing a fall in the demand for cement. The company marginally improved its market shares in the said State. There was also a respite in the form of a marginal improvement on the price front in the form of better sales realisation, mainly due to the efforts initiated in the recent past to improve upon its brand image among the intermediaries and end users and to extend its reach further. These factors saw your company avoiding any significant fall in its revenue and profitability.

Share Capital

Pursuant to the Scheme of Arrangement for the merger of ACL with the Company, your Board of Directors, at their meeting held on 12th July 2011, have allotted 32,85,714 Equity Shares to the shareholders of ACL. 900000 equity shares of the Company held by ACL as its investments have been cancelled pursuant to the said Scheme. Reflecting these developments, the equity share capital of your company now stands at Rs.17,38,80,140 divided into 1,73,88,014 Equity Shares of Rs 10/- each

Future Outlook

Fresh investments in infrastructure projects have slowed down in the recent times. The projects already announced are also not implemented with the speed with which they were initiated. Nor is there any sign of revival in the construction activities. In such a scenario, they do not foresee any significant increase in demand for cement in the next couple of year’s at least. This, along with increasing inputs costs, will continue to put the margins under pressure. However, in the longer term , growth of the cement industry is expected to turn robust, as infrastructure development is vital for the development of any country and cannot therefore be allowed to be ignored for a long in a welfare State like that of ours. They therefore remain cautiously optimistic of maintaining their growth amidst aggressive competition by improving our market share through innovative strategies and by cutting costs and improving efficiency in all areas of our operations.

Subsidiary Company

In their previous report they had conveyed your company’s proposal to divest its holdings in subject with a view to enabling the company to focus more on its core area namely cement business. The entire stake held by your company in subject having since been divested, the latter ceased to be a subsidiary of the Company.

Vicat Sagar Cement

The Company and Parficim S.A.S., a wholly owned subsidiary of Vicat S.A. of France have jointly ‘promoted subject as a special purpose vehicle, to set up a 5.5 mtpa capacity cement plant along with a captive power unit of 60MW capacity in Gulbarga District of Karnataka State. Subject and the Vicat Group have so far invested a sum of Rs.860 million and Rs. 4140 million respectively in the project. This project is implemented in two phases, each phase with a capacity of 2.75 mtpa. The major part of the acquisition of land in respect of first phase having since been completed, the civil works in respect of the project is in progress. Financial closure has already been achieved for this phase through tie-up with International Lending Institutions. This phase, barring unforeseen circumstances, is ex expected to go on stream by the middle of 2012.

MANAGEMENT DISCUSSION AND ANALYSIS

Global Scenario

Irrespective of the political system adopted by individual countries for their development, the need for housing and continued thrust on the investments in infrastructure development are expected to drive the global demand for cement in the next two decades at least.

National Scenario

As one of the basic infrastructure industries, cement industry continues to contribute in a significant way to the Indian economy in terms of employment generation, tax revenues, and industrial growth.

The per capita consumption of cement being an important indicator of the country’s economic development, it is used in almost every sector of the economy for strategic planning. This industry, which is the second largest in the world, produces several varieties of cement such as Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement, etc., aided by a strong capacity base contributed by more than 140 large and 365 mini plants.

The robust growth recently witnessed in the cement industry was expected to continue over the medium term, given the expected revival in the housing markets, continued Government spending on the rural sector, and the gradual increase in the number of infrastructure projects being executed by the private sector. This, coupled with the investment norms including the investor-friendly guidelines for foreign direct investment (FDI) into the cement industry, was also expected to continue to attract more multinational cement majors apart from luring global private equity firms and fund managers towards this industry. However, belying all the above expectations, the industry suffered a setback in the year 2010-11 in the form of subdued market conditions, increasing input costs, and the inability of cement prices to keep pace with the rising costs leading to reduction in margins.

The Company could not register any significant increase in its sales during the year due to poor demand for cement in Andhra Pradesh, where more than 75% of your Company’s sales are accounted for. Though subject did manage to marginally increase its shares in the A.P. Market, it could not ensure the price realization to the level that would have taken care of decrease in sales in terms of volume. This was largely due to excess supply emanating from the cement plants in the State that had expanded their capacities in recent times. These factors had an adverse impact on all the financial parameters of the Company. Though there was a marginal increase in the total income, the same was mainly due to incentives received and amount realized on the divestments of the stake held by the Company in its erstwhile subsidiary.

While the year 2009-10 saw subject stabilizing its production process from the capacity expanded in the later part of its previous year, the year 2010-11 saw the Company not being able to take advantage of the expected capacity to the fullest extent due to lower demand for cement, forcing the Company to curtail its production.

Opportunities and threats

Main drivers for the growth in demand for cement being road and housing projects, the increased spending by the Government in these areas and the revival of the real estate sector would ensure no let up in the demand for cement, notwithstanding the substantial additions to capacity witnessed in the industry. This augurs well for subject, which, with its expanded capacity, is well placed to grab the opportunities available in the above scenario.

However, rising costs of coal, power and fuel and transportation remain a cause of worry. While there are no problems with respect to the availability of limestone to meet the expanded capacity, thanks to the merger of Amareswari Cements, which enjoys high quality of lime stone reserves in huge quantity, concerns however do exist with regard to non-availability of adequate quantity of coal — a major input — forcing the Company to take recourse to imported coal at a higher cost.

Logistics is another area of concern for the Company. Distribution cost being a significant component of the cost structure, Subject is working towards strengthening its distribution network to bring it down. As part of this strategy, the company will be exploring ways to increase its bulk sales. A proposal to provide a railways siding near the Company’s plant is under implementation, the completion of which will go a long way in reducing the transportation cost.

The Indian cement industry with its huge potential continues to attract the entry of more global cement majors and encourages the strengthening of production bases by existing companies. This may lead to a substantial part of the cement capacity being controlled by a few players. Subject proposes to meet some of the challenges posed by this development by further improving its brand image, spending more on advertising, strengthening its distribution networks as well as by customer-focused initiatives

Outlook

The growth traction in the cement industry is strongly related to the overall economic strength of the country. The massive budget outlay earmarked by the Central and State Governments for infrastructure development is expected to absorb increasing cement capacities. Subject is operationally strong and poised to benefit from such a demand positive situation and will continue to focus on maintaining good plant performance and optimizing efficiencies. Subject will be focusing on penetration into more districts of A.P., to increase its market share in the said State and continue to explore new markets especially in North Eastern States where there is a huge deficit in the supply of cement, and with this strategy, Subject is confident of achieving higher capacity utilization.

BUSINESS DESCRIPATIONS

Subject is an India-based company. The Company is engaged in the production and sale of cement/clinker. Its plant is based on dry process rotary kiln technology. Sagar Power Limited is the Company’s wholly owned subsidiary. For the fiscal year ended 31 March 2010, Subject revenues increased 59% to RS4.878. Net Income increased 2% to RS 193.8M. Revenues reflect higher income from operations and increased other income. Net income was partially offset by increased consumption of raw materials, higher employee benefit expenses, increased other expenses, higher Interest expenses and a rise In selling & distribution expenses.

WEBSITES DETAILS:

HISTORY

Subject has a rich history of providing high quality cement for more than 25 years. Starting of by being a mini cement plant, their journey started in the year 1985 and is moving into higher gears with production getting into multi million tonnes per annum.

PROFILE

Subject   is a prominent player in the field of cement in Andhra Pradesh for the past 25 Years adopting progressive manufacturing practices, whether it relates to maintaining high standards of quality of its products or development of its highly valued human resources or the need to keep the pollution to the barest minimum.

The Company manufactures various varieties of cement like Ordinary Portland Cement (OPC) of 53 grade, 43 grade, Portland Pozzalona Cement (PPC) and Sulphate Resistant Cement (SRC) to suit different needs of customers and all these products are being sold under the Brand Name “Sagar” which has already become popular in Andhra Pradesh, has now found its acceptance among the customers in the neighboring States as well.

The Company employs modern technology in each of its process of manufacture at its Plant and has adopted progressive manufacturing practices, whether it relates to maintaining high standards of quality of its products or development of its highly valued human resources or the need to keep the pollution to the barest minimum.

The Company has a strong committed marketing network comprising various layers like Distributors, Dealers, C and F Agents, all of whom are served by dedicated marketing personnel. The Company has a well-designed Organizational Structure and the roles and responsibilities of each of its personnel have been well defined. The Company believes in the importance of development of Human Resources as a valuable asset and is endeavoring to enhance its value by organizing various need based in-house training programmes and encouraging their participation in the external programmes sponsored by various institutions of repute.

Subject has a consistent Profit track record and, except for a few years when it was either executing its expansion plans or the industry as a whole was undergoing a difficult period, it has been declaring dividend at reasonable percentages.

The company’s Shares are listed on Hyderabad and Bombay Stock Exchanges, where they are actively traded.

The Company which started its operation with a Cement capacity of 66000 TPA, has gradually increased it to the level of 2.35 MTPA, while its Clinker capacity has also witnessed a significant increase from 66000 TPA in 1982 to present level of 2.10 MTPA

Fixed Assets:

· Land

· Building

· Plant and Machinery

· Electrical Installation

· Furniture and Fixtures

· Office Equipments

· Computers

· Vehicles

· Other Equipments

BOARD OF DIRECTOR

O. SWAMINATHA REDDY

- Independent Non-Executive Chairman of the Board

Mr. O.Swaminatha Reddy serves as Independent Non-Executive Chairman of the Board of subject. He is a Chartered Accountant by qualification - Financial and Management Consultant by profession and is known for his acumen in Corporate Finance - Associated with Sagar Cements Limited since 1983 as its Chairman - Earlier served as Chairman of Andhra Bank and Andhra Pradesh State Finance Corporation (APSFC). He is on the Board of several reputed Organizations. He is also a Director of TCI Finance Limited Golkonda Hospitality Services and Resorts Limited Sagar Power Limited, VBC Industries Limited, KCP Limited Transport Corporation of India limited , Surana Telecom Limited , Bhagyanagar India Limited, Khaitan Electricals Ltd, HBC FlexTech.Limited, KM Power Private limited and EPR Gene Technologies Limited

GILBERT NOEL CLAUDE NATTA

- Non-Independent Non-Executive Director

Mr. Gilbert Noel Claude Natta is the Non-Independent Non-Executive Director of subject. He obtained his Scientific baccalaureat in 1966 and MBA ESSEC in 1971. He served in French Military during the period from 1971 to 1973 as Supply Officer. During the period from 1973 to 1988 he served as a banker with Banque Indosuez, a part of Suez Group and held his assignments in South Africa, Saudi Arabia, Holland and France. He has experience in Commercial and Merchant Banking areas and held positions in France as Deputy Director of Strategy and Budget and Head of Risks for Asia and Australasia. He joined Vicat in 1988 as Deputy Finance Director. He was appointed as Development Director for the Vicat group in 1991 and he is now on the Board of its subsidiaries in Turkey, Mauritania, Egypt, Kazakhstan and India, which include Vicat Sagar Cement Private Limited, a company promoted jointly by Sagar Cements Limited and Parficim SAS, a wholly owned subsidiary of Vicat S.A. He has been a director of Bharathi Cement Corporation Private Limited, Vicat Sagar Cement Private limited.

KOLAPPA THANU PILLAI

- Non-Executive Independent Director

Mr. Kolappa Thanu Pillai, M.B.A...CAIIB serves as Non-Executive Independent Director of subject. He is an M.B.A. and CAIIB. He has experience in Banking and Finance. His other directorships includes: State Bank of Travancore BSCPL Infrastructure Limited, LVS Power Limited, Sathavahana Ispath Limited, Bollineni Castings and Steel Limited, Amar Biotech Limited, Aishu Projects Limited., Bollineni Developers Limited., BSCPL Realty Limited, BSCPL Infra Projects Limited.

WERNER C.R. POOT –

Non-Executive Non-Independent Director

Mr. Werner C.R. Poot was appointed as Non-Executive Non-Independent Director of subject. He has been a director of AVH Resources India Private limited, Oriental Quarries and Mines Private Limited.

P. RAJESWARA RAO

- Non-Executive Non-Independent Director

Mr. P. Rajeswara Rao is Non-Executive Non-Independent Director of Sagar Cements Limited and also APIDC Nominee. He holds MCom.

SAMMIDI ANAND REDDY

- Joint Managing Director, Non-Independent Executive Director

Dr. Sammidi Anand Reddy is Joint Managing Director and Non-Independent Executive Director of Sagar Cements Limited. He has experience in Marketing and Project Management. He holds M.B.B.S. His other directorships includes: Sagar Power Limited, Amareswari Cements Limited., Satwik Drugs Limited, Sagar Priya Housing and Industrial Enterprises Limited.

S.SREEKANTH REDDY

- Non-Independent Whole Time Director

Mr. S.Sreekanth Reddy serves as Non-Independent Whole Time Director of subject. He holds B.E. (1 and P) and PG Diploma in cement technology. He has been a director of Sagarsoft (India) Limited., Sagar Power Limited Vicat Sagar Cement Private limited, Vijaynagar Sugar Private limited, Sree Venkateshwara Winery and Distillery Private limited, Amareswari Cements Limited., Sagar Priya Housing and Industrial Enterprises Limited.

PRESS RELEASE:

CBI checks out Jagan's palatial Hyderabad house

New Indian Express (India)

22 July 2011

HYDERABAD, July 22 -- The CBI has begun a probe into the palatial houses owned by YSR Congress chief YS Jagan Mohan Reddy in Hyderabad and Bangalore.

Simultaneously, the has intensified its probe into the investments made by about 50 companies in Jagan's firms, particularly three companies, one of which had invested an additional Rs 2000.000 millions in March even though a CBI probe appeared imminent then. Top sources disclosed to express that a CBI team visited Jagan's palatial house in HUDA Heights, near Lotus pond in Banjara Hills recently.

The house, named Lotus Mahal, is constructed on nearly 53,000 square feet of land (more than an acre). The five-storeyed building is valued at over Rs 3000.000 millions. Sources say the two buildings on the campus comprise a gymnasium, tennis, squash and volleyball courts, a 200-seat capacity mini-theatre, several escalators, a three-floor underground parking among other facilities. It has 20 servants' quarters and a two-storeyed outhouse.

Sources said there are 60 rooms and bathrooms. "The plot was bought by Jagan's front companies. While two-thirds is owned by Jagan, the remaining is in the name of his sister Sharmila Reddy," the sources said.

The CBI is understood to have taken photographs of the sprawling buildings, the marble for which is said to have arrived from Rajasthan.

The construction is nearing completion. Simultaneously, the CBI is taking details of his Bangalore residence which is worth more than the MP's Hyderabad residence.

"They are probing the investments made in these properties," sources said.

Meanwhile, the CBI has learnt that one of the investors in Jagan's firm, Matrix Laboratories, had invested an additional Rs 2000.000 millions in March. Though about 50 companies which have invested in Jagan's company are under the scanner, the is viewing with suspicion Matrix, Pennar Cements, PVP Business Ventures and India Cements among others.

Sources said in their defence, the representatives from Jagan's companies stated that the investors in Bharati Cements like Dalmia Cements and India Cements were themselves pioneers in the industry and their investments should not be viewed with any suspicion.

It is learnt that they further said that even the shares of My Home group and Sagar Cements were also valued at very high price and foreign investors such as CRSI IRIS and Vicat, among others, had purchased shares in India Cements at a very high valuation.

They further argued that a capital gains tax of Rs 850.000 millions was paid from the Rs 255 crore arising out of the sale of shares of Bharati Cements making Jagan the highest tax payer in the country in 2010.

But the problem the Jagan company may face, sources said, are the Kolkata-based companies as it is being alleged that these companies do not exist at all. The Enforcement Directorate is probing this very angle.

The CBI on Thursday completed one week of the preliminary probe. The court, on July 13, gave two weeks time for the premier to wind up the preliminary. Published by HT Syndication with permission from New Indian Express

Sagar Cements Updates On Merger With Amareswari Cements Limited

March 07, 2011

Sagar Cements announced that the Scheme of Arrangement for the proposed merger of Amareswari Cements Limited with Sagar Cements Limited has been approved without any modification by the Equity Shareholders and Unsecured Creditors of the respective Companies at their meetings held on March 07, 2011 under the Chairman appointed by the Hon'ble High Court of Andhra Pradesh for the purpose. The above Scheme of Arrangement is subject to the confirmation in due course by the Hon'ble High Court of Andhra Pradesh.

Sagar Cements Announces Board Approval For Merger With Amareswari Cements Limited

Oct 22, 2010

Sagar Cements announced that the Board of Directors of the Company at its meeting held on October 22, 2010, has accepted the reports of M/s. Deloitte Touche Tohmatsu India Private limited., (Deloitte) and M/s. KPMG India Private limited, (KPMG), determining a fair Exchange Ratio for the said merger as 10 equity shares of INR10 each of Sagar Cements for every 14 equity shares of INR10 held in M/s. Amareswari Cements Limited This merger, provides for issue of 32,85,714 equity shares by Sagar Cements Limited to the shareholders of Amareswari Cements Limited and the extinguishment of 9,00,000 equity shares held by Amareswari Cements Limited as investment in Sagar Cements Limited April 01, 2010 is the appointed date for the merger.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.48.89
UK Pound	1	Rs.77.31
Euro	1	Rs.67.73

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		54

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.