Dewan Housing Finance - JK Cement

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					FEBRUARY 2013

                                   § No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness
                                      or correctness of the information or opinions contained in this presentation. Such information and opinions are in all events not current
                                      after the date of this presentation. Certain statements made in this presentation may not be based on historical information or facts and may
                                      be "forward looking statements" based on the currently held beliefs and assumptions of the management of J. K. Cement Limited
                                      (“Company” or “JKC”), which are expressed in good faith and in their opinion reasonable, including those relating to the Company’s
                                      general business plans and strategy, its future financial condition and growth prospects and future developments in its industry and its
                                      competitive and regulatory environment.

                                   § Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results,
                                      financial condition, performance or achievements of the Company or industry results to differ materially from the results, financial
                                      condition, performance or achievements expressed or implied by such forward-looking statements, including future changes or
                                      developments in the Company’s business, its competitive environment and political, economic, legal and social conditions. Further, past
                                      performance is not necessarily indicative of future results. Given these risks, uncertainties and other factors, viewers of this presentation are
                                      cautioned not to place undue reliance on these forward-looking statements. The Company disclaims any obligation to update these forward
                                      -looking statements to reflect future events or developments.

                                   § This presentation is for general information purposes only, without regard to any specific objectives, financial situations or informational
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                                      needs of any particular person. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities in any
                                      jurisdiction, including the United States. No part of it should form the basis of or be relied upon in connection with any investment decision
                                      or any contract or commitment to purchase or subscribe for any securities. None of our securities may be offered or sold in the United
                                      States, without registration under the U.S. Securities Act of 1933, as amended, or pursuant to an exemption from registration therefrom.

                                   § This presentation is confidential and may not be copied or disseminated, in whole or in part, and in any manner.

                                                                                                                         Strictly Private & Confidential

                                  Indian Cement Industry: Sustained Demand Growth

                                     India, the 2nd largest cement producer in the world with total installed capacity of 350 mn tonnes

                                                                                                                                                   Source: CMA

                                   § The Cement industry has witnessed secular growth in consumption with quarterly variation in a year

                                   § The momentum will sustain and gather further steam, driven by:
                                                                                                       Demand growth - 8% (FY13) & 10% (FY14-FY15)
                                      •   Expected interest rate cuts in 4QFY13 positively
                                          impacting demand from housing, infrastructure
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                                          and industry segments
                                      •   Multiple state/general elections in the next 18
                                      •   The government’s focus on reviving investment
                                      •   Positive outlook on the Rabi crop rubbing off on
                                          rural housing demand.
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                                                                                                                                        Source: Company Estimates

                                  Expected Slowdown in New Capacity Addition will
                                  Improve Utilization of Current Capacity
                                  § In the current economic and political scenario, setting          § With strong volume growth and decline in pace of
                                    up a new Greenfield project has become challenging                 capacity addition, utilization (%) will improve,
                                    in view of the following:                                          having bottomed out in 2H CY11
                                       •   Long arduous       process   of   environmental
                                                                                                     § The average utilization will be 80% going ahead
                                       •   Land acquisition
                                                                                                        •     Most regions will operate at 90%+ utilization
                                       •   Complexity of mineral composition in new areas                     except Andhra Pradesh, which has capacity
                                       •   Supporting infrastructure of rail connect and
                                           water availability
                                       •   Greenfield project cost in current context is $135-
                                           $150/ton, depending on the site location                            Capacity Utilization to improve from FY13 onwards
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                                                                                                                                 Source: Company Estimates
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                                  Prices will Continue to Remain Robust Resulting in
                                  Improved Profitability
                                   § An annual increase of INR 20-25 / bag is expected,          §     50% of India’s installed capacity has come up in
                                    considering:                                                       last 5 years

                                                                                                            •   This relatively new capacity requires an
                                        • Improvement in demand growth
                                                                                                                EBITDA/ton of Rs.1,000 – 1,100 to justify
                                        • Pass-on of cost-push                                                  equity returns

                                        • Increase in capital costs

                                        • Slowing capacity addition                              §     At the current Replacement Cost and Variable
                                                                                                       cost levels, an increase of Rs.20-25/bag is
                                   § The rising costs of power, fuel and freight are likely to         necessitated to earn new capacities 15% RoCE
                                    stabilize, although at slightly elevated levels

                                                                                                     A significant improvement is seen in EBITDA/ton
                                                                                                     from the trough levels of ~INR525/ton in 2HCY10.
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                                                                                                     The EBITDA/ton is likely to be ~INR1034/ton in
                                                                                                     FY13 and INR 1,184/ton in FY14 (v/sFY12 average of
                                                                                                     INR 850/ton).

                                                                                                     Strictly Private & Confidential
                                  Source: Company Estimates

                                  Company Background
                                                       §   J. K. Cement Ltd. (“JKCL” or “Company”) is part of the $3 billion conglomerate,
                                                           JK Organisation. The company is promoted by Dr. Gaur Hari Singhania & Mr.
                                                           Yadupati Singhania and entered cement business in 1975
                                                       §   2nd largest white cement manufacturer in India with 0.40 MTPA capacity and one
                                                           of the leading grey cement producers in North India with over 36 years of
                                                       §   Highly reputed brand with extensive nation-wide distribution
                                                       §   Integrated Cement manufacturing company with 7.5 MTPA grey cement capacity
                                                           •   Nimbahera, Mangrol and Gotan (Rajasthan): 4.5 MTPA
                                                           •   Muddapur (Karnataka): 3 MTPA
                                                           •   105.5 MW of Captive power
                                                           •   Proximity and access to large high quality reserves of limestone, sufficient to
                                                               operate cement plants for the next 30 years.
                                                       §   Expanding domestic grey cement capacity to 10.5 MTPA and white cement
                                                           capacity to 0.60 MTPA and wall putty capacity to 0.60 MTPA by Sept 2014.
                                                           •   Mangrol (Rajasthan): 1.5 MTPA
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                                                           •   Jhajjar (Haryana): 1.5 MTPA split grinding
                                                           •   Gotan (Rajasthan): 0.20 MTPA white cement and 0.30 MTPA wall putty
                                                       §   Greenfield Expansion in the Middle East
                                                           •   Fujairah (UAE): Dual process plant - 0.6 MTPA white cement or 1.0 MTPA
                                                               Grey cement
                                                       §   JK Cement’s LT credit rating was recently upgraded to AA- by CARE Ratings
                                                       §                        Strictly Private & (“NSE”) and Bombay Stock Exchange
                                                           Listed on National Stock Exchange Confidential
                                                           (“BSE”) with a market capitalization of INR 23bn

                                  Key Highlights
                                   v Cement Sector on Strong Foundation with Positive Future Outlook
                                         •   Sustained demand coupled with slowdown in capacity addition resulting in higher capacity utilization

                                         •   Improvement in profitability, backed by higher cement prices and operating margins

                                   v Integrated manufacturing facilities at multiple locations
                                         •   Plants in North & South India enable the company to serve multiple regions

                                         •   105 MW of captive power and large limestone reserves at close proximity, sufficient for the next 30 years

                                   v White cement business cash cow with strong growth and profitability
                                         •   White cement & wall putty segments contribute consistently to profitability and provide healthy margins & stable cash

                                         •   White cement capacity to increase from 0.4 mtpa to 0.6 mtpa by Sept ‘14 and augment current market share of 40%.

                                         •   Wall putty capacity will increase from 0.3 mtpa to 0.6 mtpa, in phases during next two years

                                   v Domestic expansion to consolidate leadership in North and improve operating efficiencies
                                         •   Expansion plan to tap new markets, increase market share in North India and derive benefit from VAT incentives for
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                                             entire production at Mangrol and Haryana

                                         •   North based plants operating at 90%+ and newer plants will offer better operating efficiency

                                         •   Increase in share from south plant, which serves higher realization markets, will improve margins

                                   v Dual process plant in UAE to grow internationally
                                         •   Cater to white cement demand in Middle East & North Africa(MENA) and infrastructure development projects in Qatar

                                         •                                                                Strictly Private and frees up
                                             Unit in UAE provides logistical advantage to serve GCC and MENA countries& Confidential current export quantity from
                                             India for domestic sale

                                  Corporate Milestones


                                                                                                                                              Dec 2012
                                                                                                                                              Company’s long term credit rating
                                                                                                                                              upgraded from A+ to AA- by CARE Rating.
                                                                                                                                      Nov 2012
                                                                                                                                      “Best Employer Award - 2011” from Employer’s
                                                                                                                                      Association of Rajasthan
                                                                                                                                      Foundation laying ceremony for setting up a split
                                                                                                                       Oct 2012       grinding unit at Jhajjar, Haryana
                                                                                                                       Foundation laying ceremony for brownfield expansion at
                                                                                                               July 2012
                                                                                                               “National Award for Excellence in Cost Management – 2011”
                                                                                                               from The Institute of Cost Accountants of India
                                                                                                     Nov 2011
                                                                                                     Foundation laying ceremony at Fujairah to set up dual process plant
                                                                                               Sept 2009
                                                                                               Commissioned a 3 mtpa Greenfield plant in south at Muddapur, Karnataka
                                                                                       §Enhanced grey cement capacity by 0.50 mtpa, set up a 20MW coal based power plant and
                                                                                       13.2MW of heat recovery based power plant at Nimbahera and enhanced white cement
                                                                                       capacity by 0.1 mtpa at Gotan, through IPO proceeds
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                                                                                       §Acquired a 0.1 mtpa white cement unit at Gotan from Nihon Nirmaan and subsequently in
                                                                                       2009, converted the unit to produce 0.47 mtpa grey cement
                                                                   March 2006
                                                                   Successfully raised INR 2960 mn through the Follow on Public Offer (“FPO”)
                                                           June 2005
                                                           The Company got listed on the Bombay Stock Exchange (“BSE”)
                                                      Nov 2004
                                                      Acquired a cement division from its affiliate through slump sale, on a going concern basis, with
                                                      a capacity to manufacture 3.55 mtpa of grey cement and 0.3 mtpa of white cement along with 15
                                         May 1975     MW of captive power plant
                                         Entered cement business with 0.3 mtpa plant at Nimbahera, becoming one ofStrictly Private & Confidential
                                                                                                                  the first few to
                                         enter the cement business

                                  Existing Plant locations and Market Reach

                                    Gotan Nagaur (Rajasthan)
                                   Gotan - -Nagaur (Rajasthan)
                                       0.47 MTPA# :Grey Cement
                                   §§ 0.47 MTPA# :Grey Cement
                                       0.40 MTPA* :White Cement
                                   §§ 0.40 MTPA* :White Cement
                                   § 0.3 MTPA: Wall Putty
                                    § 0.3 MTPA: Wall Putty
                                       7.5 MW: Thermal Power Plant
                                   §§ 7.5 MW: Thermal Power Plant

                                    Nimbahera Chittorgarh (Rajasthan)
                                   Nimbahera ––Chittorgarh (Rajasthan)
                                       3.2 MTPA Grey Cement
                                   §§ 3.2 MTPA : :Grey Cement
                                       20 MW:Thermal Power Plant
                                   §§ 20 MW:Thermal Power Plant
                                   § 13 MW: Waste Heat Recovery
                                    § 13 MW: Waste Heat Recovery
                                       15 MW (Bamania): Thermal Plant
                                   §§ 15 MW (Bamania): Thermal Plant

                                                                                                                                             Pan-India market
                                                                                                                                              reach in white
                                   Mangrol Chittorgarh (Rajasthan)
                                   Mangrol -- Chittorgarh (Rajasthan)
                                   § 0.75 MTPA -- Grey Cement
                                   § 0.75 MTPA Grey Cement                                                                                cement & presence in
                                                                                                                                             13 states for grey
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                                                                                                                                           cement. 105.5MW of
                                                                                                           Cement Plant
                                                                                                                                            captive power and
                                   Muddapur --Bagalkot (Karnataka)
                                    Muddapur Bagalkot (Karnataka)                                                                          abundant limestone
                                    § 3 MTPA: Grey Cement
                                   § 3 MTPA: Grey Cement                                                                                          reserves
                                    § 50 MW: Thermal Power Plant
                                   § 50 MW: Thermal Power Plant                                            Power Plant

                                                                                                           Market Reach
                                  # The grey cement capacity is interchangeable with white cement       Strictly Private & Confidential
                                  * The white cement capacity is being expanded to 0.60 MTPA

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                                  Established Brands

                                                                                Grey Cement

                                    Ordinary Portland Cement (OPC) is sold under           Portland Pozzolana Cement (PPC) and Portland
                                    the J.K. Cement brand name, Sarvashaktiman              Slag Cement (PSC) variants are sold under the
                                                                                                   J.K. Super Cement brand name

                                                 White Cement                                         Value Added Products
                                    J.K. White Cement is marketed and distributed        White cement based Wall Putty and Water Proofing
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                                                  across the country                                       Compound

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                                  Superior Product Mix on account of White Cement

                                   White Cement Industry in India                   Growth Drivers                          JK White Cement
                                                                         White cement growing at 10%                  § Current market share: 40%
                                   § Installed Capacity: 1.0 mtpa        annually and expected to increase on         § Pan-India     reach   with
                                                                         account of:                                    established brand
                                   § Only 2 producers – UltraTech
                                                                            • Increase in per-capita consumption
                                     Cement & JK Cement                                                               § White cement contributes ~25%
                                                                            • Demand from wall putty,                   to revenue & ~30% to
                                                                              registering 30% annual growth             profitability
                                   § Domestic Sales: 0.9 mtpa
                                                                            • Increase in demand for Housing
                                                                                                                      § Sufficient to service interest
                                   § Export Quantity: 0.1 mtpa                sector
                                                                                                                        liability & tax payout of the
                                                                                                                        entire company
                                   § Key Export Markets: South-Asia,
                                     Middle East & Africa
                                                                                            Price Realization (INR/ton) – Grey vs White*
                                   § Entry of new players remote as:

                                      ü Requirement of Special quality
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                                      ü High investment costs

                                      ü Problems in mine allocation

                                                                          * White cement price including wall putty

                                     White cement provides J.K. Cement with superior product mix and unique position to leverage
                                                                                         Strictly Private & Confidential
                                                              on high-growth, superior margin segment

                                  Advantageous Revenue & Market Mix

                                       Increasing share of White Cement in Revenues                 Product Mix – Grey Cement (FY12)

                                   Rising share from West & South to improve Realization        Market Mix evenly distributed (FY12)
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                                                                        §Poised to be among top 5 white cement
                                                                         producers globally
                                                                        §Increasing white cement and wall putty capacity
                                                                         to sustain present share of revenue from this

                                   § Dual process plant in UAE                                                               §All plants enjoy proximity to
                                     to cater to growing markets                                                              raw material & growth markets
                                     of Middle East & Africa                                                                 §Brown field expansion
                                   § Infrastructure development                                                              §Split grinding in Haryana for
                                     demand in Qatar for soccer                                                               logistical advantage in National
                                     world cup
                                                                                   STRATEGY                                   Capital Region
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                                   § Captive power generation to provide long                                     § A leading brand in North for Grey
                                     term sustained source of low cost power at                                     Cement. JK White and JK Wall Putty are
                                     fixed rate                                                                     marketed across the country
                                   § Use of waster heat recovery to reduce                                        § Enhance visibility further through print &
                                     environmental impact                                                 Strictly Private & Confidential
                                                                                                                        online media and consumer promotions

                                  Expansion Plan

                                                               Domestic – Rajasthan & Haryana                                     Fujairah, UAE

                                                                                                               Greenfield- In a subsidiary, held 90% by JK Cement
                                  Nature             Brownfield
                                                                                                               along with Govt. of UAE (10%)

                                                     3.0 mtpa, with 1.5 mtpa grinding in Mangrol & 1.5 mtpa    Dual process cement plant capable of producing 0.6
                                  Capacity           split grinding at Jhajjar, Haryana                        mtpa white cement or 0.9 mtpa grey cement
                                                     § Haryana: June ’14
                                  Commissioning                                                                Mar ‘14
                                                     § Mangrol: Sep ’14
                                                     § Abundant land                                           § Connectivity to road & port
                                  Features           § Captive thermal plant of 25 MW and 9 MW WHR             § Quality limestone reserves
                                                     § Railway siding at both locations                        § Flexibility to switch between white & grey cement

                                                     Total project cost: Rs. 1734 Cr.                          Total project cost: Rs. 765 Cr.
                                  Capital Outley &
                                                     Debt: Rs.1200 Cr.                                         Debt: Rs. 510 Cr.
                                  Funding Mix
                                                     Equity Contribution: Rs. 534 Cr.                          Equity Contribution: Rs. 255 Cr

                                                     Proposal moved to banks and in the process of tie-up.     Financial closure achieved for debt portion. Loan of
                                  Tied-up            Company also has sufficient internal resources for        Rs.150 Cr. for promoter contribution and Rs.95 Cr. of
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                                                     equity financing                                          own resources remitted
                                                     §   Entire land acquired at both locations
                                                                                                               § Civil & mechanical work progressing on schedule.
                                                     §   Mining lease allotted for additional limestone mine
                                  Project Status                                                               § 60% of the RCC work completed till date
                                                     §   Civil work has commenced
                                                                                                               § Erection of equipment has commenced
                                                     §   Orders placed for equipments with renowned vendors
                                                     Haryana unit provides logistical advantage to serve the     Cater to Middle East and North African white cement
                                  Target Market      National Capital Region and helps consolidate JK’s          demand and infrastructure development projects in
                                                     leadership position in the North.                           Qatar for soccer world cup
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                                  Past consolidated financials

                                  Income Statement Highlights                                                     Balance Sheet Highlights

                                  INR mn                           FY '10       FY '11    FY '12 H1FY13           INR mn                                 FY '10      FY '11   FY '12 H1FY13

                                  Operating Income                  18,268       20,943    25,468   14,483        Equity Share Capital                        699      699      699      699

                                  Other Income                         193         299       469      287         Reserves & Surplus                     12,786      13,250   1,4522   15,762

                                  Total Income                      18,461       21,243    25,936   14,770        Networth                               13,486      13,949   15,221   16,461

                                  Total Operating Expenses          13,891       18,180    20,329   11,623        Long Term Loans                        10,138      10,584    9,965    9,455

                                  EBIDTA (B’fore Excep. Items)       4,570        3,063     5,608    3,147        Total Borrowings                       10,737      11,183   10,808   10,618

                                  Interest                             616        1,185     1,443     665         Deferred Tax Liability (net)               1,858    2,109    2,291    2,436

                                  Depreciation                         855        1,128     1,256     633         Other Liab & Provisions                    3,579    6,746    7,440    8,402
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                                  Exceptional Item                          -      (72)       78         -        Net Fixed Assets (Incl CWIP)           22,822      23,996   24,071   23,997

                                  PBT                                3,098         823      2,830    1,850        Investments                                  48       42       92     1,483

                                  Provisions                           853         196      1,085     620         Cash & Cash Equivalents                    1,318    3,215    4,332    3,445

                                  PAT                                2,246         626      1,746    1,230        Other Assets                               5,473    6,734    7,264    8,993

                                   Note: H1FY13 numbers are on standalone basis.                                           Strictly Private & Confidential

                                  Latest Quarter Performance

                                  Particulars              Q3 FY13 Q2 FY13 Change       Q3 FY13 Q3 FY12 Change            9M         9M        Change     FY 12
                                                           Dec 31, Sept 30,  (%)        Dec 31, Dec 31,   (%)            Dec 31,    Dec 31,      (%)      Mar 31,
                                  INR million                               Q-o-Q                        Y-o-Y                                  Y-o-Y
                                                            2012    2012                 2012    2011                     2012       2011                  2012
                                   Total Operating
                                                             6880.8   7148.7   - 3.7%     6880.8        6158.9   11.7%    21404.1    17373.8     23.2%      25467.8
                                   Income (Net)

                                   EBITDA                    1348.8   1316.8    2.4%      1348.8        1204.0   12.0%     4249.6     3138.8     35.4%       5166.3

                                   PBT                        775.6    830.1   - 6.6%      775.6         645.7   20.1%     2625.2     1437.1      82.7%      2857.8

                                   PAT                        543.8    540.9    0.5%       543.8         435.2   25.0%     1773.5      969.8     82.9%       1773.3

                                   EPS – Basic & Diluted       7.78     7.74                7.78          6.22              25.36      13.87                  25.36

                                   Raw Material Cost %       15.3%    13.1%                15.3%        12.1%              13.6%      12.4%                   12.2%

                                   Power & Fuel Cost %       24.8%    24.4%                24.8%        25.3%              25.1%      26.5%                   25.7%

                                   Freight Costs %           20.5%    20.4%                20.5%        19.3%              20.0%      19.5%                   19.1%
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                                   Others %                  19.8%    23.7%                19.8%        23.8%              21.5%      23.6%                   22.8%

                                   EBITDA %                  19.6%    18.4%               19.6%         19.5%              19.8%      18.0%                   20.2%

                                   PAT %                      7.9%     7.5%                7.9%          7.0%               8.2%       5.5%                   6.9%

                                   v During 9MFY12, Company’s revenue grew by 23.2% as compare to the corresponding period 9MFY11.
                                   v During 9MFY12, Company’s EBIDTA margin improved by 1.8% primarily on account of reduction in power &
                                     fuel cost and other expenses.                              Strictly Private & Confidential


                                                   Board Of Directors                 Key Management                                          Experience

                                   Gaur Hari Singhania    Chairman                                         Special Executive                      5 years
                                   Yadupati Singhania     Managing Director and CEO                        Special Executive                      2 years
                                                                                      A K Saraogi          President (Corp. Affairs) & CFO       25 years
                                   K.B. Agarwal           Independent Director
                                                                                      M. P. Rawal          President (Tech. & Mgmt Service)      37 years
                                   J. P. Bajpai           Independent Director
                                                                                      D Ravisankar         President (Projects)                  35 years
                                   Suparas Bhandari       Independent Director
                                                                                      R. C. Shukla         President (Mktng, Grey Cement)        28 years

                                   J. N. Godbole          Independent Director
                                                                                      Mohan Sharma         Head (Mktng, White Cement)            24 years

                                   Achintya Karati        Independent Director        Kaustubh
                                                                                                           Head (Mktng, South-West)              25 years
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                                   K. N. Khandelwal       Independent Director
                                                                                      B. K. Arora          President (J.K. White Cement Works)   34 years

                                   Raj Kumar Lohia        Independent Director        K. K. Jalori         Plant Head, Nimbahera                 32 years

                                   Ashok Sharma           Independent Director        A. K. Jain           Plant Head, Muddapur                  26 years

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                                  Awards & Recognition
                                                           9th National Award for Excellence in Cost Management, 2011
                                                                    (The Institute of Cost Accountants of India)

                                     Commemorative Stamp in                                                       Best Employer Award, 2011
                                    honor of the Founding Father                                               Employers’ Association of Rajasthan

                                           Productivity Excellence Award 2009-10                Over All Performance Award by
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                                           (Rajasthan State Productivity Council)                  Indian Bureau of Mines

                                                                                                Strictly Private & Confidential

                                  Thank You
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                                           Strictly Private & Confidential


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