| EXPLANATORY STATEMENT PURSUANT TO SECTION 173 OF THE COMPANIES ACT, 1956 |
| Item nos. 6 & 7 |
| In the Annual General Meeting of the Company held on 26th June, 2008 the Shareholders had authorised the Board of
Directors of the Company under Section 293(1)(d) of the Companies Act, 1956, to borrow from time to time up to a limit
of Rs. 3,000 Crores (Rupees Three Thousand crores only). |
| The Company, for the purpose of development of its activities and expansions in hand, needs to increase its borrowing
powers further by Rs.1,000 Crores (Rupees One Thousand Crores only) to Rs. 4,000 Crores (Rupees Four Thousand Crores
only). Accordingly, it has proposed to increase the said limit. |
| Since, the borrowings would exceed the paid up Share Capital and Free Reserves (excluding the temporary loans obtained
from the Company's bankers and financial institutions etc. in the ordinary course of business) therefore, the resolution no.6
is being proposed in accordance with the provisions of Section 293(1)(d) of the Act, for approval of the Shareholders. |
| The resolution number 7 is intended to obtain the consent of the Shareholders under Section 293(1)(a) of the Act to
mortgage, hypothecate, lease or create any charge on the present and/or future properties/assets of the Company for
securing the loans taken or to be taken by the Company from the banks and/or financial institutions etc. up to a limit of
Rs. 4,000 Crores (Rupees Four Thousand Crores only). |
| In view of the above, your Directors recommend the approval of both the aforesaid resolutions as Ordinary Resolutions. |
| None of the Directors/Manager is in any way concerned or interested in the proposed resolutions. |
| Item no. 8 |
Shri K C Jain, Senior President (Cement Sections) of the Company was reappointed as Manager of the Company w.e.f
04.05.2006 for a period of 5 years at a specified remuneration as approved by the Shareholders in their meeting held on
29.06.2006. Accordingly, he was being paid the remuneration every month as sanctioned by the shareholders.
|
| Similarly, Shri Deepak Tandon, Senior President of Birla Tyres (Balasore and Haridwar sections) was appointed as Whole
time Director in the Company with effect from 01.04.2010. Necessary resolution for his appointment was got approved
from the shareholders accordingly in their meeting held on 01.07.2010 as per applicable provisions of the law. He was also
being paid monthly salary in accordance with the approval of the shareholders. |
| The restrictions specified in Schedule XIII of the Act for payment of remuneration to Shri Jain & Shri Tandon were not
applicable as there being adequate profit in the previous financial years since the Company had the consistent profit earning
record. It had a PAT of Rs. 237.34 crores for the financial year ended 31.03.2010 but has incurred a loss in the financial year
ended 31.03.2011 mainly due to steep increase in input cost to produce tyres, natural rubber price being the leader, which
could not be passed on to customers. As a result of the loss in the said year, restrictions contained in Schedule XIII for
payment of remuneration to the Manager and Whole-time Director become applicable. Since the Company had profit for
the year ended 31.03.2010 as such at that time there was no need to get the same approved from shareholders as special
resolutions and take permission from Central Government for payment of remuneration, which is now required to be taken
to regularise the payments made as aforestated. |
| Shri Jain and Shri Tandon both are Chartered Accountants and have vast experience in accounts, finance besides wide
experience of Cement and Tyre Industries over 40 years and 26 years, respectively. Your Directors are of the view that
considering their qualification and experience, the remuneration paid to Shri Jain and Shri Tandon are in line with the
corporate trend prevailing at present and it is desirable that the payment of the remuneration to both of them as stated in
the Resolution 8 of the Notice, is approved by the shareholders to enable the Company to obtain necessary approval of
Central Government for the regularisation of it in accordance with the law. |
| None of the Directors of the Company is concerned or interested in the aforesaid two resolutions except Shri Jain as a
Manager and Shri Tandon as a Director. |
| Your Directors recommend passing of the aforesaid resolutions as Special Resolutions. |
