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Dear Shareholders,

CUMI had yet another year of excellent all round performance. It was a year of tremendous uncertainty wherein the fragility of many economies around the world had a significant impact on businesses worldwide. CUMI and subsidiaries had their share of difficulty with economic growth in the markets served falling much below expectations. This downtrend continues and has been further accentuated by spiraling raw material prices, utility costs, foreign exchange, inflationary trends and consequent interest rates.

Despite this rather gloomy backdrop, CUMI performed well particularly in the geographies of India, Russia and Australia across Abrasives and Refractories in particular. This performance was well supported by its joint ventures with world leaders in India. Consolidated revenues increased by 24% and earnings (EBITDA) before exceptional income by 36%. Cash flows were strong and the company’s debt low and thus well positioned to support growth initiatives. In these rather challenging times CUMI continues it’s efforts to pursue it’s strategic objectives with carefully planned growth and investment to ensure consistent performance and be in readiness for future opportunities. The Board remains confident of such progress and has announced a final dividend of Re.1/- per share which in addition to the interim dividend of Re.1/- per share aggregates to 200% on the base equity.

Conventional and Super abrasives at CUMI and subsidiaries had their best ever year amidst stiff competition. This has been possible through enhanced engagement with channel partners through effective use of information technology, reaching out to their customers through seminars, product demonstrations and providing new products, training and service support. Direct customer engagements through product development and application engineering support continue to be the hallmark of CUMI’s marketing effort. Advanced Programmes on grinding, safety and product use optimisation further strengthened customer relationships. During the year strategic partnerships with machine tool and power tool manufacturers were established with a view to providing customers a more comprehensive range of offerings both directly and through distribution. Manufacturing plants across India and Russia placed greater emphasis on productivity improvement, waste reduction and energy management to offset at least partially increasing input costs. In the last quarter of the year, the China operations had positive earnings. This hopefully will be sustained going forward.

The Ceramics vertical comprising, specialist refractories, wear resistant and metallised ceramics and corrosion resistant materials had an excellent year. Large project orders in the first half of the year and continuing partnerships through ongoing replacement and efficiency improvement programmes at customer sites in India, Australia and Africa played an important role in improving the all round performance. The division also enhanced its capability of offering customers a range of products and services often with joint venture and strategic partners covering, design, application and installation services to a wide variety of customers. This will increasingly become the approach towards greater customer engagement. Supplier relationships were strengthened to develop greater understanding of input material characteristics critical to product development and application support. Manufacturing plants focused on operational flexibility and energy management to support customer needs as also off set cost increases.

A research joint venture project to make ceramic foam refractories has commenced. This will place the company in the forefront of emerging technologies in heat resistance and insulation in the future.

The Electrominerals business had a good year overall with continued strong performance in the Russian operations manufacturing Silicon Carbide, good success in new product development in India and a resilient response to huge increases in input material costs in South Africa. A shift in the photovoltaic industry and the economic downturn in several customer markets continue to pose many challenges. However, the teams across all these locations are working towards many derisking initiatives, seeking new customers and applications while optimizing plant capacities. New facilities for making Fused Zirconia bubbles in South Africa and increasing Silicon Carbide production in Russia will be operational in 2012 and 2013 respectively.

Across CUMI operations worldwide, there were many initiatives strategic to the company’s future. An important step was to strengthen Research and Product Development. Many technologists and Materials Scientists are working within and across divisions in a collaborative effort to enhance all round capabilities in material characterization, processing technology and application engineering. A fresh round of financial participation was made into the Centre for Nano Functional Materials at the Indian Institute of Technology, Chennai and a set of projects have been identified for joint research. On the manufacturing front, modernization of facilities is being done in a phased manner to improve quality, productivity and cost position. This is reflected in the capital expenditure programme that will continue into the future, despite challenging business and trading conditions.

Looking ahead towards the next year, we see these trends continuing and hence we will continue our approach of prudence and consolidation while addressing opportunities, managing costs, implementing capital expenditure programmes and building partnerships with customers and companies worldwide to further improve our competence and capability.

As I travel to the various sites of CUMI, its joint ventures and associates, visit customers, meet with academic, research institutions and regulatory authorities, I am touched and most gratified by the commitment shown by the entire CUMI team towards building enduring relationships and as a result, a sustainable institution. The team is led by a dynamic and energetic person Mr.K.Srinivasan, well supported by the leadership at various divisions, functions and companies that comprise the CUMI family. Mr. P R Ravi under whose leadership the Ceramics business was given a fresh impetus retired in October, 2011. We wish him well in his retirement.

The involvement of our outstanding Board of Directors in all that we do is most commendable. They have been most generous with their time, wisdom and counsel. The Board deliberations have a good mix of encouragement, challenge and caution always ensuring sound governance, strong adherence to our core values and also a great support and emphasis on building good citizenship.

This, together with your unstinted support as shareholders, keeps us focused in our quest to build an institution that Makes Materials Work For Man.