Dear Shareholders, The Directors are pleased to present their 51st Annual Report and Audited Financial Statements

of your Company for the year ended 31 March 2011. Financial Results at a glance Parameters Gross revenue Less excise duty Net revenue EBITDA Profit before taxation and extraordinary items Less extraordinary item Profit before taxation Less provision for taxation Profit after taxation Add balance brought forward Amount available for appropriation Appropriations Transferred to General Reserve Proposed dividend on equity shares Corporate dividend tax Balance carried forward PERFORMANCE ANALYSIS Revenues for the year 2010-11 crossed the Rs. 100,000 lacs milestone. Net Profits surged by 67% to reach Rs. 8,735 lacs, strengthening the growth momentum throughout the organisation. The Company has in place increased capacity, improved manufacturing efficiency and an expanding sales network to drive accelerated growth. Effective cost control has resulted in improved margins. Financial highlights of 2010-11 include the annual revenue increase by 33% nearing Rs.113,000 lacs, EBITDA growth of 40% crossing Rs. 21,600 lacs, EBIT Margin improved by 234 basis points to 15.75%, Cash Profit growth of 41% to Rs. 15,985 lacs which is indicative of the Company''s 1,000 1,651 268 20,819 600 1,101 186 15,003 2010-11 112,977 7,396 105,581 21,659 12,746 12,746 4,011 8,735 15,003 23,738 (Rs. in lacs) 2009-10 84,964 4,699 80,265 15,480 6,568 6,568 1,325 5,243 11,648 16,890

financial strength and an EPS jump of 52% touching Rs. 14.47 per share. The Container Glass Division experienced gross revenue growth of 31% to stand at Rs.60,089 lacs and the Building Products Division experienced a gross revenue growth of 36% to stand at Rs. 52,681 lacs. The Company continued to focus on ensuring a strong balance sheet together with a consistent growing profitability. The debt equity was maintained at 0.65 in 2010-11 as against 1.25 in 2009-10, an interest cover of 6.08 in 2010- 11 as against 3.86 in 2009-10. The total net worth of the Company increased to Rs. 60,349 lacs in 2010-11 as against Rs. 39,008 lacs in 2009-10. The profits were a result of increased capacity, acquisitions, improvement in manufacturing efficiency, extension of sales network and control of costs. Both business divisions contributed strongly to hSIL''s commendable performance for the year. ongoing business expansion and business improvement initiatives have demonstrated favourable outcomes. Focused approach towards customers through deeper penetration in the market, new product introductions and market promotions have had an overarching benefit for business dynamics. our consistent and dedicated focus on premium products across all product categories in the Building Products Division continues to depict favourable results. The following strategies were the major contributors to this commendable performance: Differential positioning of the Company''s products - Continuous developments in the product offering, based on the consumer preference and demand - Increased focus on the value-added product segments of faucets, kitchen appliances and tiles - Cost control measures undertaken - Enhanced distribution network strength - Continuous process innovation for better capacity utilisation Business Division Review Performance of the Building Products Division in 2010-11 The divisional gross revenues grew 36%, mainly on account of higher share of premium products segment and increased volume. Major initiatives Strengthened distribution channel to deepen market reach Rebranding the hindware logo Launched new products and brands Acquired Barwood Products, uK

organised numerous architects and plumbers meets Enhanced production efficiencies through in-process innovations Performance of the container glass Division in 2010-11 The divisional gross revenues increased 31%, on account of increased production volume and better product mix at the production units. Major initiatives The container glass green field facility at Bhongir continued successful operations The debottlenecking exercise at the Sanathnagar facility led to capacity expansion of 50 TPD Strengthened quality checks Secured and strengthened raw material supplier base Optimised fuel consumption acquisition oF uK BaseD BaRwooD PRoDucts HSIL has, through its step down subsidiary, haas International B.v., based in Netherlands, acquired 100% equity share capital of Barwood Products (Staffordshire) Ltd. (now Barwood Products Ltd. with effect from 16 December 2010), against a consideration of EuRo 1155684 under a definitive Share Purchase Agreement dated 24 June 2010 in an all cash transactions. The acquisition would help hSIL strengthen its reach in uK and other Countries in Europe. hSIL plans to launch the product portfolio of Barwood Products in India, to service niche customer segment in domestic market. DIVIDEND Your Directors recommend a dividend of Rs. 2.50/- per share on equity shares of Rs. 2/- each for the year ended 31 March 2011, for consideration of the Members at their ensuing Annual General Meeting. Total outgo on this account including tax thereon will be Rs. 1,919 lacs. APPROPRIATIONS A sum of Rs. 1,000 lacs has been transferred to the General Reserve account of the Company and the balance of Rs. 20,819 lacs has been carried to its Profit and Loss account. MANAGEMENT FOCUS HSIL is a leading player in both, Building Products and the Container Glass industry. The Company endeavours to anticipate customer needs and strives to deliver products and services to customers at the earliest,

leveraging the strength of its well established distribution network. The Company strives to maintain a long-term association with the customers by satisfying their ever changing needs. hSIL seeks to achieve sustainable growth by strengthening its relationships with various customers and channel partners, penetrating unexplored markets, increasing production efficiencies, expanding capacities, widening the product and brand portfolio and strengthening the distribution network. The management also seeks to invest in good governance and fiscal discipline in accordance with the best practices relevant globally. DiRECTORS In accordance with the applicable provisions of the Companies Act, 1956 read with the Articles of Association of the Company, Mr. G. L. Sultania, Mr. Ashok Jaipuria and Mr. N. G. Khaitan, Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The tenure of Mr. Rajendra K Somany, Chairman and Managing Director of the Company expires on 8 January 2012. The Board has therefore, proposed to re-appoint him for a further period of three years w.e.f. 9 January 2012 on the remuneration and perquisites as set out in the relevant explanatory statement attached to the notice of ensuing Annual General Meeting and as may be approved by the Members at the said General Meeting. Dr. Rainer Siegfried Simon, appointed as an Additional Director on the Board with effect from 18 May 2011, holds office till the ensuing Annual General Meeting of the Company. Notice under Section 257 of the Companies Act, 1956 has been received from a Member of the Company signifying his consent, for his appointment as a Director of the Company. Keeping in view the vast experience and strong credentials of Dr. Simon in the global sanitaryware and faucet business, the Company intends to obtain expert advisory services of Dr. Simon in the best interest of the Company, for a period of two years with effect from 1 June 2011 at a remuneration of EuRo 50,000 (equivalent to Rs. 3,215,000/- per annum), subject however to the approval of Members of the Company at their ensuing Annual General Meeting and the Central Government. INCREASE IN PAID-UP SHARE CAPITAL During the year under review, the Company raised Rs. 1,499,942,721/- by way of issuance and allotment of 11020887 fully paid-up equity shares of Rs. 2/- each at a premium of Rs. 134.10/- per share on 6 october 2010, to qualified Institutional Buyers (qIB) through qualified Institutional Placement (qIP) as prescribed under Chapter VIII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. Consequent upon, the Paid-up Share Capital of the Company has increased from Rs. 110,054,841/- to Rs. 132,096,615/-. These equity shares were listed at the Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. with effect from 12 october 2010. CORPORATE GOVERNANCE

Your Company has been practicing the principle of good Corporate Governance over the years and it is a continuous and ongoing process. Your Company is committed to benchmark itself with global standards in all areas including appropriate standards for Good Corporate Governance. Towards this end, an effective Corporate Governance System has been put in place in the Company, which also ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with. A detailed report on the Corporate Governance Code and practices of the Company along with a certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under clause 49 of the Listing Agreement are given in a separate section in this Annual Report. Further, the Management Discussion and Analysis Report is appended to and forms a part of the Annual Report. WHOLLY OWNED SUBSIDIARIES As per the requirement under Section 212 (3) of the Companies Act, 1956, a statement of particulars of the Company''s subsidiaries for the year ended 31 March 2011, is annexed hereto and forms part of this Report. PARTICULARS UNDER SECTION 212(8) OF THE COMPANIIES ACT, 1956 In terms of general exemption granted by the Ministry of Corporate Affairs under Section 212 (8) of the Companies Act, 1956, copies of Balance Sheet, Profit and Loss Account, Reports of the Board of Directors and Auditors of the subsidiary Companies (including step down subsidiary Companies) have not been attached to the Balance Sheet of the Company. These documents will be made available upon receipt of request from shareholders of the Company and shall be kept open for inspection by any shareholder at the Registered office of the Company and that of the respective subsidiary Companies. However, as directed by the said Ministry, the financial data of the Company''s subsidiaries have been furnished under Financial Information of Subsidiary Companies forming part of the Annual Report. Further, pursuant to Accounting Standard-21 specified in the Companies (Accounting Standards) Rules, 2006, the Consolidated Financial Statements presented by the Company include financial information of its Subsidiaries. EMPLOYEES During 2010-11, your Company continued to have cordial relations with all employees at all the units. The Company recognises the importance of human capital and enrichment of professional and technical skills is an ongoing process within the organisation. Your Directors recognise the team''s valuable contribution and place on record their appreciation for the employees across the organisation. STATUTORY DISCLOSURES

Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars of Employees) Rules, 1975, the statement giving names and other particulars of the employees annexed hereto forms part of this report. FIXED DEPOSIT Your Company did not invite or accept any fixed deposit pursuant to provisions of Section 58A of the Companies Act, 1956, during the year. AWARDS AND RECOGNITION HSIL awarded The BIZZ Award in 2011 for being an Inspirational Company. The BIZZ award is given by world Confederation of Businesses, houston, Texas - HSIL awarded The BIZZ Award in 2011 - The Peak of Success Award for its excellence in Business Model by world Confederation of Businesses, houston, Texas HSIL receives Business Superbrand 2010-11; hSIL has been selected as a Business Superbrand three times over HSIL honoured with Golden Peacock Innovation Award 2011 HSIL has been rated the fastest growing building products company in the Sanitaryware and tiles category by Construction world Magazine, 4 times Brand hindware honoured with Power Brand 2010-11 (India''s Most Powerful Brands chosen by consumer) by IIPM Brand hindware honoured with Star Brand 2011 from IIPM Readers Digest Trusted Brands - Gold Award 2011 awarded to hindware in Sanitaryware category Hindware has been chosen amongst The 100 Most valuable Brands in India'' by the 4Ps journal (also the only bathroom brand in this selection) Confederation of Indian Industry Green Building Council (CII GBC) 7th National Award for The Most Innovative water Saving Products'' for 2010 Hindware''s Nano EwC has been conferred the Elle Deco International Design Awards (EDIDA) in 2010 Hindware has been honoured consistently with Consumer Superbrand Award by Superbrands Limited, u.K. League of American Communication Professionals (LACP), uSA Awards for Best Annual Report 2009/10- won Platinum Award in 2 categories viz. Best Report Financials and Best Report in Consumer Durable Category. overall Ranking 4th, worldwide out of 4400 entries Other awards and recognitions achieved by us:

2010 IMM Award for Excellence as Eminent organisation Golden Peacock National quality Award 2010 BIZZ Awards 2010 for being Inspirational Company Capexil Award 2009 IES Excellence Award 2009 Golden Peacock Environment Management Award 2009 Elle Deco International Design Award (EDIDA) in 2008 for Poncho Kids Series DIRECTORS'' RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956 Your Directors hereby confirm that in the preparation of annual accounts, the applicable accounting standards were followed along with proper explanation relating to material departures, if any. Your Directors selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit of your Company for that period. Your Directors took proper and sufficient care for maintaining adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities. Your Directors prepared the annual accounts on a going concern basis. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/OUTGO Information required under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in Report of the Board of Directors) Rules, 1988, is annexed to this Report. AUDITORS The Statutory Auditors of the Company, M/s walker, Chandiok & Co., Chartered Accountants retire at the ensuing Annual General Meeting and have confirmed their eligibility for re- appointment in terms of Section 224 (1B) of the Companies Act, 1956. The M/s the the Audit Committee and the Board of Directors recommend appointment of walker, Chandiok & Co. as Statutory Auditors of the Company from conclusion of ensuing Annual General Meeting upto the conclusion of next Annual General Meeting of the Company.

The notes to the accounts referred to in the Auditors'' Report, are self-explanatory and therefore, do not require any further comments

under Section 217 (3) of the Companies Act, 1956. INTERNAL AUDIT The Company has an adequate system of internal control to ensure compliance with policies and procedures. Internal audit of all the units / divisions of the Company is regularly carried out to review the internal control systems. The internal Auditors evaluate the adequacy of internal controls and independence of the audit is ensured by their direct reporting to the Audit Committee of the Board. APPRECIATION Your Directors are grateful for the valuable support and cooperation received from bankers, business associates, financial institutions, shareholders, various departments of Governments and other stakeholders. The Board places on record its sincere indebtedness towards the Company''s valued customers in India and abroad for the support and confidence reposed by them in the organisation and looks forward to the continuance of this mutually supportive relationship in future. Your Directors also appreciate the employees of the Company for their contribution and hard work and its subsidiaries at all levels, who, through their competence, hard work, solidarity, cooperation and support, have enabled the Company to achieve consistent growth. For and on behalf of the Board of Directors Place: Gurgaon Date: 18 May 2011 Rajendra K somany Chairman and Managing Director

Consolidated Balance Sheet of HSIL Mar '11 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Init. Contribution Settler Preference Share Application Money Employee Stock Opiton Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Minority Interest Policy Holders Funds Group Share in Joint Venture Total Liabilities 13.21 13.21 0.00 0.00 0.00 0.00 0.00 658.67 0.00 671.88 349.08 47.63 396.71 0.00 0.00 0.00 1,068.59 Mar '11 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Minority Interest Group Share in Joint Venture Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 1,097.57 285.89 811.68 56.30 35.71 222.33 163.73 19.65 405.71 57.89 8.19 471.79 0.00 282.11 24.78 306.89 164.90 0.00 0.00 0.00 1,068.59 137.60 101.73

------------------- in Rs. Cr. ------------------Mar '10 Mar '09 Mar '08 Mar '07 12 mths 11.01 11.01 0.00 0.00 0.00 0.00 0.00 456.28 0.00 467.29 313.74 171.53 485.27 0.00 0.00 0.00 952.56 Mar '10 12 mths 1,035.90 268.00 767.90 8.06 11.72 162.58 141.92 15.70 320.20 75.99 8.98 405.17 0.00 222.86 17.45 240.31 164.86 0.00 0.00 0.00 952.54 55.02 84.92 12 mths 11.01 11.01 0.00 0.00 0.00 0.00 0.00 227.99 0.00 239.00 433.19 30.62 463.81 0.00 0.00 0.00 702.81 Mar '09 12 mths 646.67 224.20 422.47 125.15 10.80 150.94 102.77 9.28 262.99 85.26 70.44 418.69 0.00 220.10 54.20 274.30 144.39 0.00 0.00 0.00 702.81 26.42 43.43 12 mths 11.01 11.01 0.00 0.00 0.00 0.00 0.00 206.56 0.00 217.57 123.00 73.72 196.72 0.00 0.00 0.00 414.29 Mar '08 12 mths 457.20 209.26 247.94 29.48 13.72 147.04 90.96 8.77 246.77 73.21 3.44 323.42 0.00 142.18 58.09 200.27 123.15 0.00 0.00 0.00 414.29 52.67 39.54 12 mths 11.01 11.01 0.00 0.00 0.00 0.00 0.00 189.42 0.00 200.43 164.99 21.34 186.33 0.00 0.00 0.00 386.76 Mar '07 12 mths 418.71 183.74 234.97 22.03 33.63 121.82 77.04 7.40 206.26 64.18 1.97 272.41 0.00 134.29 42.00 176.29 96.12 0.00 0.00 0.01 386.76 37.91 36.42

Consolidated Profit & Loss account of HSIL

Mar '11 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses 1,152.47 74.77 1,077.70 11.87 36.73 1,126.30 452.79 199.05 123.17 6.34 120.58 21.79 0.00 923.72 Mar '11 12 mths Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Minority Interest Share Of P/L Of Associates Net P/L After Minority Interest & Share Of Associates Total Value Addition Preference Dividend Equity Dividend 190.71 202.58 36.45 166.13 55.36 0.00 110.77 7.38 118.15 39.88 78.34 0.00 0.00 70.77 470.93 0.00 16.51

------------------- in Rs. Cr. ------------------Mar '10 12 mths 855.49 51.08 804.41 4.89 23.85 833.15 324.44 166.87 87.99 5.66 103.03 14.47 0.00 702.46 Mar '10 12 mths 125.80 130.69 40.19 90.50 50.29 0.00 40.21 -2.70 37.51 9.13 43.65 0.00 0.00 30.34 378.02 0.00 11.01 Mar '09 12 mths 667.40 45.15 622.25 -4.19 -1.60 616.46 239.29 123.37 67.12 3.64 75.98 13.64 0.00 523.04 Mar '09 12 mths 97.61 93.42 16.81 76.61 28.40 0.00 48.21 1.05 49.26 17.53 31.73 0.00 0.00 30.68 283.75 0.00 8.80 Mar '08 12 mths 577.55 58.30 519.25 1.06 23.04 543.35 207.50 111.37 57.43 3.96 66.34 12.65 0.00 459.25 Mar '08 12 mths 83.04 84.10 16.34 67.76 26.42 0.00 41.34 0.93 42.27 15.48 26.69 0.00 0.00 27.06 251.75 0.00 8.25 Mar '07 12 mths 527.86 50.14 477.72 3.21 9.54 490.47 188.67 93.46 49.48 3.03 63.76 9.40 0.00 407.80 Mar '07 12 mths 79.46 82.67 14.25 68.42 24.83 0.00 43.59 0.77 44.36 16.50 27.85 0.00 0.00 27.09 219.13 0.00 7.84

Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

2.68 660.46 11.86 0.00 101.73

1.87 550.26 7.93 0.00 84.92

1.50 550.26 5.77 0.00 43.43

1.40 550.26 4.85 0.00 39.54

1.26 550.26 5.06 0.00 36.42

Key Financial Ratios of HSIL

Mar '11 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover 2.00 2.50 31.13 156.92 89.13 36.74 19.83 14.61 14.67 12.88 12.88 8.39 8.39 14.37 12.45 11.49 106.16 106.16 15.10 1.14 0.80 0.55 0.47 4.40 Mar '10 2.00 2.00 24.08 143.26 68.60 44.10 16.81 10.55 10.59 10.87 10.87 7.14 7.14 8.88 11.59 7.57 88.64 88.64 9.77 1.13 0.98 0.99 0.81 2.38 Mar '09 2.00 1.60 19.00 112.15 43.24 44.10 16.94 12.38 12.43 11.74 11.74 6.48 6.48 11.08 16.02 17.91 45.53 45.53 13.33 0.79 0.96 1.84 1.36 4.75 Mar '08 2.00 1.50 15.57 94.37 37.81 44.10 16.50 11.37 11.43 10.71 10.71 5.46 5.46 14.98 12.92 13.42 40.10 40.10 20.20 0.86 0.82 0.88 0.40 3.82 Mar '07 2.00 1.50 14.67 86.82 34.36 44.10 16.89 11.62 14.46 11.21 11.03 6.05 5.86 15.19 14.43 13.99 36.65 36.65 19.85 0.74 0.79 0.92 0.47 4.14

Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times

0.55 5.88 4.95 6.44 6.88 6.44 0.98 0.96 0.98 45.29 61.50 51.95 40.67 34.58 7.64 2.32 21.96 13.62 76.20 85.69 2.87 Mar '11

0.99 3.37 3.63 6.41 6.50 6.41 0.78 0.82 0.78 32.39 59.23 73.32 39.74 37.96 8.50 2.50 22.77 12.19 65.18 85.03 5.60 Mar '10 10.28 88.64

1.84 6.42 5.09 5.21 6.37 5.21 0.99 0.87 0.99 49.95 78.73 82.56 38.23 30.97 9.04 4.35 25.65 15.14 77.05 85.84 6.35 Mar '09 7.30 45.53

0.88 5.44 4.36 4.54 6.18 4.54 1.18 1.26 1.18 37.63 95.55 82.43 39.32 27.52 10.13 3.91 33.84 17.60 67.40 82.74 3.49 Mar '08 5.19 40.10

0.92 5.88 4.78 3.95 5.66 4.99 2.13 1.24 1.19 37.98 86.28 71.87 39.49 29.40 10.53 5.89 31.27 16.87 67.74 82.84 3.51 Mar '07 5.29 36.65

Earnings Per Share Book Value

13.23 106.16