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"CUMI’s development and progress over the years has been based on the relentless pursuit of a clear vision, strong ethical values, its commitment to customers, good governance, high standards of quality, application service, adherence to safety standards, environmental and regulatory compliance and above all committed leadership".

Dear Shareholders,

2010-11 was a year of excellent all round performance for Carborundum Universal Limited (CUMI) across the world. The company, its subsidiaries, joint ventures and associates turned in a record performance in the wake of improving economic conditions worldwide, more particularly in India, South East Asia, Russia and to an extent in Australia and South Africa. Customer demand for CUMI’s range of products across all divisions and the increasing need for value added services have contributed substantially to this performance.

The year also witnessed many challenges relative to rising costs of input materials and utilities critical to CUMI’s operations. Inflationary trends in India and fluctuating currencies across the world added to this challenge. Amidst this rather mixed environment CUMI continued to maintain and enhance its growth trajectory in both, revenues and profits. Consolidated sales grew by 25 percent to Rs 16 billion and operating profits by 30 percent to Rs 2.6 billion, the best performance in the past decade.

The Board is pleased to declare a final dividend of Re 1/- per share taken together with the interim dividend declared in February 2011 making it Rs. 2.5 per share overall. This reflects current performance and the confidence in maintaining and improving upon it in the future.

Strong performances were recorded by the Abrasives and Electro Minerals divisions both, in India and Russia. The Abrasives related subsidiary i.e. Sterling Abrasives India which manufactures specialist conventional abrasives, Volzhsky Abrasive Works, Russia manufacturing abrasives and electrominerals, and Wendt India, which manufactures super abrasives and precision components also had their best year ever. The year was marked by better consumer demand, greater focus on product distribution and reach and an emphasis on developing strong customer partnerships in India and across the world. This has enabled the company to address comprehensively, the entire range of grinding and finishing requirements of user industries with strong product and application support. The Chinese operations improved considerably but continued to incur losses. However this situation is set to improve with better capacity utilization and price realizations based on a detailed exercise of production rationalization between the manufacturing units in China, India and Russia. A new facility for making non-woven abrasives was commissioned towards the end of the year and this will serve to enhance the product range particularly in finishing applications across user industries.

Electrominerals had a very good year too. Despite a challenge of availability and costs of input materials, the operations in Russia and India worked to near full capacity. The focus on enhancing production of silicon carbide micro grits which find extensive use in solar cell manufacturing contributed to the business growth and value addition. Stabilized Zirconia production in South Africa improved substantially over the previous year but the operations were constrained by rising raw materials costs and a fluctuating rand.

Ceramics and Refractories built high quality partnerships with customers in India, Australia and Russia. New breakthroughs in design and development of products for the emerging energy sector in the United States and other parts of the world will progressively provide a unique positioning of the ceramics division to address opportunities in this sector. The expertise developed in the Australian operations to provide design and application services to the mining industry was extended to customers in South East Asia, South Africa and India. In the refractories business although the growth was lower than planned the emphasis on strong customer partnerships both in India and Russia have led to consistent customer recognition which will result in enhanced revenues going forward. CUMI is well positioned to address opportunities in a variety of industry sectors and its efforts are gaining momentum in emerging sectors such as power and renewable energy, based on both, product development and research initiatives in- house and in collaboration with universities and research institutions. This, together with enhanced customer partnerships will be the basis on which CUMI’s growth will be fashioned in the years ahead. The emphasis on technology excellence cannot stand alone. Therefore, CUMI continues its efforts in building world class facilities, enhancing capacities and improving its operations across the world both, in terms of ensuring consistently high product quality, manufacturing efficiency and strong application support. This quite naturally will mean greater investment in its people, their skills and leadership abilities.

CUMI’s development and progress over the years has been based on the relentless pursuit of a clear vision, strong ethical values, its commitment to customers, good governance, high standards of quality, application service, adherence to safety standards, environmental and regulatory compliance and above all committed leadership. Mr K Srinivasan, our Managing Director has led his team which comprises of people from many nationalities across the world very ably in a year of record performances. Mr N Kishore, President of the Abrasives Division together with the Technology responsibility across the company, retired during the year. We wish him well in his retirement. CUMI teams across the world worked very well together addressing both opportunities and challenges with equal vigour. To the company leadership and to our colleagues worldwide my sincere gratitude and appreciation for the wonderful work that they do.

Our Board is a great source of strength to the company and to me personally. Our Directors have visited key operating sites, interacted with our various teams, encouraging and challenging them to set their sight on higher levels of achievement across all facets of the company’s operations. I thank them for their interest, sharing their expertise and their wise counsel and look forward to their continued support.

As shareholders, your support to us has been invaluable. Many of you take a very keen interest in the development and progress of the company and have expressed kind words of appreciation. To everyone of us in CUMI this is indeed both, gratifying and inspiring.

Looking ahead we will continue our journey towards the larger vision of addressing opportunities in ceramics and related specialist materials worldwide. We strongly believe that we have the necessary ingredients to evolve into a global company which will focus on Making Materials Work For Man.