DIRECTORS' REPORT

Dear Shareholders,

We have pleasure in presenting the 114th Annual Report of the Company along with the audited statements of Account for the year ended 31st March, 2011. The financial results for the year are shown below. The working and operational parameters at all the plants of the Company were quite satisfactory during the year, but profitability was adversely affected in comparison to the previous year due to adverse market conditions prevailing mainly in the Cement industry. Further, increase in the overall cost of all operations of the Company also depleted profitability. In view of all the challenges in the industries and markets in which your Company does business, the results are considered satisfactory.

1. DIVIDEND:

The Board of Directors has recommended a dividend of Rs.5.50 (Rupees five and paise fifty) per share of Rs.10/- each equivalent to 55% (fifty five percent) on the paid up equity share capital of the Company for the year ended 31.03.2011 as against Rs.5.50 (Rupees five and paise fifty) equivalent to 55% (fifty five percent) paid in the previous year on the equity shares of Rs.10/- each. The dividend will be paid when declared by the shareholders in accordance with law. The dividend will be free of tax in the hands of the shareholders. The Company will have to pay dividend distribution tax @ 15% plus applicable surcharge and education cess, aggregating about 16.22% on the dividend amount so distributed,

2. EXPORTS:

The total exports of the Company amounted to Rs.366 crore (Previous year Rs.372 crore) representing about 8 percent of the net sales.

3. EXPANSION & MODERNISATION

a) Rayon

The process of installation of 12 machines for production of viscose filament yarn is in progress in order to increase the production capacity of viscose filament yarn by about 5 per cent per annum. Further, two existing electrolyzers are being replaced by an energy efficient electrolyzer in the Caustic Soda plant. These improvements involve capital expenditure of about Rs.50 crore and are expected to be completed before December, 2011.

b) Cement

Purchase orders for supply of main plant & machinery for 1.5 million tonnes per annum (tpa) cement grinding unit named Sonar Bangla Cement at Sagardighi, Distt. Murshidabad, West Bengal and for expansion of 2.8 million tpa cement manufacturing capacity at Manikgarh Cement, Gadchandur, Distt. Chandrapur, Maharashtra have been released.

At Sonar Bangla Cement (Grinding Unit) extensive pilling work on account of soil condition had to be undertaken and it is likely to be over by June, 2011. Thereafter main plant civil work will commence. Civil work for Manikgarh Cement expansion will start from June, 2011. The Sonar Bangla Cement (Grinding Unit) is expected to be operational by September, 2012 and Manikgarh Cement expansion by March, 2013.

After ongoing upgradation & expansion, the total cement manufacturing capacity will stand increased to 12.8 million tonnes per annum.

c) Pulp and Paper

The Fibre Line (Pulp Plant) with a capacity of 1.62 lac tonnes per annum and Multilayer Packaging Board Plant with a capacity of 1.8 lac tonnes per annum are near completion. The production is expected to commence during May, 2011 and will get stabilized in due course. It may be added that the 43 MW turbine has already been commissioned successfully.

Further, we have undertaken upgradation of Paper Machine based on recycled pulp by installing a size press and A-4 cutter for copier paper for which orders have already been placed. We are also increasing the bagasse pulping capacity by another 23,400 tonnes per annum by installing a continuous digester and carrying out modifications in the existing plant. The total cost for these initiatives is expected to be about Rs.220 crores and these are likely to be completed before the end of the current financial year.

d) General

Modernisation and technological upgradation programmes continue at all the units of the Company to maintain competitiveness and achieve better quality. Stringent cost control measures remain in place in all possible areas and are regularly reviewed.

4. LAND DEVELOPMENT AT WORLI, MUMBAI:

At present, one office building adjacent to Century Bhavan, the registered office of the Company and another office building with an entry plaza on Century Mill's land at Worli, both meant for leasing, are under construction with a total constructed area of about thirteen lac square feet including parking spaces etc. at a total cost of about Rs.625 crore. In view of various regulatory approvals required from time to time for construction of such buildings, a long monsoon in 2010 and shortage of sand, the completion is taking more time than expected. Efforts are being made to expedite completion which is now anticipated to take about a year. As regards the legal dispute with the existing lessor in respect of about 10 acres of leasehold land where a part of Century Mill was situated at Worli, the matter continues to be sub judice.

5. CORPORATE GOVERNANCE:

A separate report on Corporate Governance is enclosed as a part of this Annual Report. A certificate from the Auditors of the Company regarding compliance with Corporate Governance norms stipulated under Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

6. GENERAL - AWARDS, SPORTS & WELFARE ACTIVITIES:

Various Divisions of the Company have received awards for environmental excellence, efficiency in energy, safety provisions etc. Some notable awards are as under:-

a) Century Cement:

* First Prize for "Standard of Working", "Tyre Maintenance" and "Environment Management & Pollution Control" for the limestone mines from the Director General of Mines Safety, Bilaspur Region.

* First Prize for "Noise Vibration Control and Aesthetic Beauty" for the limestone mines, from Indian Bureau of Mines, Nagpur Region (Chhattisgarh State).

* Six students of our school and college (1 in Football, 1 in Soft Ball and 4 in Net Ball) have been selected at the National Level.

* Five students of our school (2 of class VII, 1 of Class VIII and 2 of class XII) have attained merit positions in the Board Exams for the academic session 2009-10.

b) Maihar Cement:

* First prize for "Standard of Working", "Electrical Installation & Ore Handling Plant" and "Best Team of First-Aid Competition" for the limestone mines from the Director General of Mines Safety, Jabalpur Region.

* First prize for "Waste Dump Management" for the limestone mines, from the Indian Bureau of Mines, Jabalpur Region.

* Master Devesh Gedam, student of Class VII of our School received the Gold Medal in "Junior General Knowledge & Intelligence Test" conducted by the "Central Institute of General Knowledge Learning, New Delhi".

* 13 Students from our school (8 Scouts and 5 Guides) have been selected for the "Governor's Award" during the academic session 2010-11.

c) Manikgarh Cement:

* First Prize "Gold Award" in the International Convention of Quality Circles held at Hyderabad on the case study titled "To eliminate Bags and Electrodes damage inside Hybrid ESP".

* First Prize for "Overall Performance", "Opencast Working", "Transport in Mines & Dust Suppression", "House Keeping & Provision of Welfare Facility", "Injury Rate Performance" and "Exhibition Stall" for the limestone mines, from the Directorate General of Mines Safety, Western Zone, Nagpur Region.

* First Prize for "Environment Excellence", "Waste Dump Management", "Noise Vibration Control and Aesthetic Beauty" and "Water Quality Management" for the limestone mines from the Indian Bureau of Mines, Nagpur Region (Maharashtra & Madhya Pradesh States).

d) Pulp and Paper:

* The Unit's Quality Circle "AGRO" has secured the "Gold Award" in the 21st Regional Convention on Quality Circles, organized by the Quality Circle Forum of India, Kanpur Chapter, held at Kanpur on 13 November 2010 for their case study presentation.

* The Unit's Quality Circle "AGRO" has secured "Excellent Award" in the 24th National Convention on Quality Circles, organized by the Quality Circle Forum of India, Visakhapatnam Chapter, held at Visakhapatnam during 27th to 30th December, 2010 for their case study presentation.

* Certified for Forest Stewardship Council (FSC) Chain-of-custody (CoC), an International Certification, for the period from 24.01.2011 to 23.01.2016 which will assist us for business with improved international market access in an increased environmentally aware sector.

7. ENVIRONMENT AND POLLUTION CONTROL:

Century continues to give top priority to maintenance and performance improvement of all pollution abatement facilities like effluent treatment plants, air emission control and waste disposal facilities at its manufacturing plants. As far as possible rainwater harvesting and treated effluent recycling is being carried out at manufacturing plants to reduce dependence on water from other natural resources. Training, awareness and learning have been always at the forefront of Century's journey to become world class in environmental performance. Century has inculcated the habit to be in harmony with nature and in this context, afforestation, maintenance of green belts and gardens, and reuse of treated water in horticulture activities are routine practices. Environment impact assessment and risk analysis have been performed right from the stage of planning for implementation of all new major expansion projects to incorporate the necessary measures to minimise adverse environmental impact.

All manufacturing facilities have obtained environmental clearance from the respective Pollution Control Boards and are in compliance with all current environmental legislation. As an integral part of its environment protection drive, the Company ensures the very minimum quantity of generation of waste, low emission levels and low noise pollution levels during operations of all manufacturing facilities.

8. DIRECTORS:

The Directors express their profound sorrow at the sad demise on 24th December, 2010 of Shri E.B. Desai, their esteemed erstwhile colleague who was the Senior Partner of Mulla and Mulla and Craigie Blunt and Caroe, Solicitors and Advocates and Director of many large companies and place on record their deep sense of appreciation for the valuable services rendered by him during his association as a Director of the Company for a long period of about 40 years. The Board expresses its grateful appreciation for his advice and guidance which have been beneficial to the Company during his tenure as a Director.

Under Article 130 of the Articles of Association of the Company Shri B.K. Birla and Shri Amal Ganguli retire by rotation and being eligible, offer themselves for re-election.

9. AUDITORS:

The retiring Auditors, M/s. Dalai & Shah, Chartered Accountants (Firm Registration Number: 102021W), are eligible for re-appointment and have expressed their willingness to accept the re-appointment. In terms of Section 224A of the Companies Act, 1956, their re-appointment needs to be approved by the members and their remuneration has to be fixed.

10. AUDITORS' REPORT:

The Auditors' Report to the Shareholders does not contain any reservation, qualification or adverse remark.

11. COST AUDITORS:

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956, qualified Cost Auditors have been appointed to conduct cost audits relating to several products manufactured by the Company.

12. DIRECTORS' RESPONSIBILITY STATEMENT:

On the basis of compliance certificates received from the concerned executives of the respective Divisions of the Company and subject to disclosures in the annual accounts, as also on the basis of the discussion with the Statutory Auditors of the Company from time to time, we state:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations provided relating to material departures, if any;

ii) that the Directors have followed appropriate accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that year;

iii) that the Directors have taken proper and sufficient care to ensure the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, if any;

iv) that the Directors have prepared the annual accounts on a going concern basis.

13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and marked Annexure TV and forms part of this Report.

14. PARTICULARS OF EMPLOYEES:

In accordance with the provisions of Section 217(2A) read with Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors' report, as an addendum thereto. However, as required by the provisions of Section 219(l)(b)(iv) of the Companies Act, 1956, the Report and accounts as set out therein, are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company, and the same will be forwarded by post.

15. CASH FLOW ANALYSIS:

In conformity with the provisions of clause 32 of the Listing Agreement the Cash Flow Statement for the year ended 31.03.2011 is annexed hereto.

16. APPRECIATION:

The Board places on record its deep appreciation of the devoted services of the loyal workers, executives and other staff of the Company, who have contributed in no small measure to the performance and the Company's continued inherent strength. It also extends grateful thanks to the Central and various State Governments, the investors, the banking circles, financial institutions and district level authorities for their continued support extended to the Company from time to time. Shareholders' appreciation of the managements' efforts expressed at the general meetings of the Company and otherwise, is a great fillip to strive for better performance year after year.

Registered Office:

Century Bhavan, On behalf of the Board,

Dr. Annie Besant Road, Worli, Mumbai - 400 030

B. K. Birla

Chairman

Dated: 2nd May, 2011