NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS

1. Corporate Information

The Ramco Cements Limited is a Public Limited Company domiciled and headquartered in India and incorporated under the provisions of Companies Act. Its shares are listed in BSE Limited, and National Stock Exchange of India Limited. The Company is engaged in manufacture of Cement, Ready-mix concrete and Dry Mortar products. The Company caters mainly to the domestic markets. The Company is also engaged in sale of surplus electricity generated from its windmills and thermal power plants after meeting its captive requirements.

2. Significant Accounting Policies

2.1 Basis of Preparation and Presentation of Financial Statements

2.1.1. The financial statements have been brpared under the historical cost convention in accordance with the generally accepted accounting principles in India and in compliance of the Accounting Standards specified under Section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014.

2.1.2 The accounting policies that are adopted in brparation of the financial statements are consistently followed by the Company as in the brvious year except for change in the accounting policies as below:

The Company was brviously debrciating its tangible assets based on useful life brscribed by the schedule II of the Companies Act, 2013. With effect from 01-04-2015, it became mandatory that the computation of debrciation has to be done based on useful life of significant components that are materially different from the remaining components of those assets. Accordingly, the useful life and the value of such components of tangible asset have been determined based on technical advice.

As per the transitional provisions of Schedule II of the Companies Act, 2013 the Company opted to adjust the carrying amount of the components of asset as on 01-04-2015 in the Retained earnings, where the remaining useful life of components of such assets is Nil after retaining the residual value of 5%, net of applicable adjustment of deferred taxes.

The Company used to charge off the mines restoration expenses to the Statement of Profit and Loss in the year in which such expenditure is incurred. From this year onwards, the Company provides for the estimated expenses that are required to restore the mines. The estimated restoration expenses are originally assessed based on the total available minerals and provision is created based on the quantity of minerals mined during the year. Mines restoration expenses are incurred on an on-going basis until the closure of mines. The total estimate of restoration expenses is reviewed periodically, on the basis of technical estimates. However, the actual expenses may vary based on the nature of restoration.

2.1.3 The financial statements are brsented in Indian Rupees rounded to the nearest crores with two decimals. The amount below the round off norm adopted by the Company is denoted as Rs. 0.00 crores.

2.1.4 The Company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

2.1.5 The Company has considered its operating cycle as 12 months for the purpose of Current or Non-current classification of assets and liabilities.

2.1.6 The brvious year figures are regrouped / restated wherever necessary.

2.2 Use of Estimates

2.2.1 The brparation of financial statements in accordance with the generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period.

Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates in the future periods.

2.2.2 Estimates and underlying assumptions are reviewed on an on-going basis. Any revision to accounting estimates is recognised prospectively in the current and future periods.

2.3 Inventories

2.3.1 Raw-materials, Components, Stores & Spares, Fuel, Packing materials etc., are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their brsent location and condition after providing for obsolescence and other losses or net realisable value whichever is lower. However, these items are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost.

2.3.2 Process stock is valued at weighted average cost including the cost of conversion with systematic allocation of production and administration overheads or net realisable value whichever is lower.

2.3.3 Finished goods are valued at cost or net realisable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their brsent location and condition including excise duty.

2.3.4 Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

2.4 Cash Flow Statement

2.4.1 Cash flows are brsented using indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.

2.4.2 Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances, highly liquid investments that are readily convertible into cash.

2.5 Debrciation & Amortisation

2.5.1 Debrciation is the systematic allocation of the debrciable amount of an asset over its useful life. The debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less 5% being its residual value, except for process control systems whose residual value is considered as Nil.

2.5.2 Freehold lands are not debrciated. Leasehold lands are amortised on straight-line basis over lease period and are included in "Debrciation & Amortisation".

2.5.3 Debrciation is provided on straight-line method based on useful life of significant components of certain class of tangible assets viz., plant, property and equipments based on technical advice.

2.5.4 The Company believes the useful lives of the significant components of certain class of tangible assets on best estimate basis upon technical advice, which is different from the useful lives as brscribed under Part C of Schedule II of the Companies Act, 2013, as below:

Significant Components forming part of

Useful life of such components ranging from

Buildings 3 to 60 years

Plant and equipments - Cement 2 to 60 years

Thermal power plants 5 to 60 years

Windmills 5 to 30 years

Workshop and Quarry equipments 8 to 25 years

Plant and equipments - Ready mix concrete 10 to 25 years

Plant and equipments - Dry mortar products 5 to 25 years

2.5.5 The Company does not consider it appropriate to componentise certain class of tangible assets viz., Furniture & Fixtures, Office Equipment and Vehicles as these assets are generally replaced in entirety. For these classes of assets, the useful life brscribed in Schedule II to the Companies Act, 2013 have been adopted.

2.5.6 Debrciation for tangible assets on additions is calculated on pro-rata basis from the date of such additions. For deletion/disposals, the debrciation is calculated on pro-rata basis up to the date on which such assets have been discarded / sold.

2.5.7 Intangible Assets are amortised over their estimated useful life on straight line method. The estimated useful lives of intangible assets and its accounting classification are given below:

Nature of Intangible assets- Estimated useful life

Mining rights -Over the period of mining lease

Mine Development -5 years

Computer software -6 years

Power transmission system- 5 years

Amortisation of Intangible assets -Accounting classification

Mining rights -Debrciation & Amortisation

Mine Development -Cost of materials consumed

Computer software -Debrciation & Amortisation

Power transmission system

- Sale of power - Profit on Sale of Power from TPP

- Purchase of power - Power & Fuel

2.5.8 The estimated useful life of the both tangible and intangible assets is reviewed each financial year to reflect the changed pattern, if any.

2.6 Revenue Recognition

2.6.1 Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

2.6.2 Revenue from operations:

a. Sale of products is recognised when the significant risks and rewards of ownership of the goods have been passed to the buyer. It excludes Excise duty, Education Cess, Secondary and Higher education cess, VAT / CST, trade discounts, rebates and returns.

b. Industrial Promotion Assistance (IPA) is recognized when the Company’s right to receive the same is established with reasonable certainty.

c. Power generated from Windmills:

Power generated from windmills that are covered under power purchase agreement with TANGEDCO are sold to State Electricity Boards at the rate fixed by respective State Electricity Regulatory Commissions and the income is included in Value of power generated from windmills.

Power generated from windmills that are covered under wheeling & banking arrangement with TANGEDCO, KPTCL & BESCOM are consumed at factories. The monetary values of such power generated that are captively consumed are not recognised as revenue because it is inter-divisional transfer.

2.6.3 Other income:

a. Interest income, Rental income are recognised on time proportion basis.

b. Dividend income is recognised when the Company's right to receive dividend is established.

c. Scrap sales does not include Excise duty, Education Cess, Secondary and Higher Education Cess, VAT / CST.

d. Profit on sale of Power from TPP, arising out of sale of surplus electricity generated from its thermal power plants after meeting its captive requirements, is recognised net off expenses attributable to it.

e. Sale of carbon credits are recognised upon execution of firm sale contract for the eligible credits.

2.7 Tangible Fixed Assets

2.7.1. Tangible Fixed Assets are stated at cost of acquisition or construction (net of CENVAT / VAT wherever applicable) less accumulated debrciation / amortisation and impairment losses if any, except freehold land which is carried at cost. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.

Machinery spares that are purchased alongwith the original equipments, machineries which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised at cost.

Pursuant to Schedule II of the Companies Act, 2013 the Company has componentized all the tangible fixed assets except Furniture & Fixtures, Office Equipments and Vehicles. The cost of replacement of significant components are capitalised and the carrying amount of replaced components are de-recognised.

Other expenses on fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts that are not significant, are charged to the Statement of Profit and Loss for the period during which such expenses are incurred.

2.7.2 The cost of land acquired under lease securing right to use of land for a term in connection with installation of plants is capitalised.

2.7.3 Fixed assets acquired in full or part exchange for another asset are recorded at the fair market value or the net book value of the asset given up, adjusted for any balancing cash transaction. Fair market value is determined either for the assets acquired or asset given up, whichever is more clearly evident.

2.7.4 Fixed assets are eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. When gains or losses arise from disposal of fixed assets, the difference between the net disposal proceeds and the carrying amount of such assets, are recognised in the Statement of Profit and Loss.

2.7.5 Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, including related expenses and attributable interest are recognised as capital work-in-progress.

2.8 Foreign currency transactions

2.8.1 All transactions in foreign currency are recorded on initial recognition at the exchange rates brvailing on that date.

2.8.2 Monetary assets and liabilities in foreign currencies outstanding at the year end are translated at the rates brvailing on Balance Sheet date and the resultant gains or losses are recognised during the year.

2.8.3 In respect of forward exchange contracts to hedge currency risks, the difference between the forward rate and the exchange rate at the inception of a forward exchange contract is recognised as income or expense amortized over the life of the contract. Any profit or loss arising on cancellation or renewal of such forward exchange contract is recognised as income or expense in the period in which such cancellation or renewal is made.

2.8.4 The Exchange differences arising on forward exchange contracts as on Balance Sheet date are recognised as income or expenses along with the exchange differences of the underlying assets and liabilities.

2.9 Government Grants

2.9.1 Revenue related grants are recognised upon fulfilment of conditions attached thereto on accrual basis, wherever there is reasonable certainty and are disclosed under other operating revenue. Receivables of such grants are shown under Loans and Advances.

2.9.2 Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same. Receivables of such benefits are shown under Loans and Advances.

2.9.3 Capital grant not related to specific fixed assets are accounted as "Capital Subsidy" under Reserves and Surplus upon fulfilment of conditions attached thereto.

2.10 Investments

2.10.1 All investments being non-current and non-trade are valued at cost. Costs of investments include acquisition charges such as brokerage, fees and duties.

2.10.2 The carrying amount of long term investments is determined on an individual investment basis.

2.10.3 As at the Balance Sheet date, provision for diminution is made to recognise the decline other than temporary, in the value of investments. The reduction in carrying amount is charged to Statement of Profit and Loss. This reduction amount is reversed when there is a rise in the value of investment.

2.10.4 On disposal of an investment, the difference between the carrying amount and the net disposal proceeds is recognised in the Statement of Profit and Loss under "Other income".

2.11 Investment Properties

2.11.1 An investment in land or buildings, which are not intended to be occupied substantially for use by, or in the operations of the Company, are classified as investment properties.

2.11.2 Investment properties are stated at cost, net of accumulated debrciation and impairment loss, if any.

2.11.3 Debrciation on buildings under investment properties are calculated on straight-line method based on useful life of the significant components of such assets.

2.11.4 Gains or losses arising from disposal of investment properties, measured as the difference between the net disposal proceeds and the carrying amount of such investment properties, are recognised in the Statement of Profit and Loss.

2.12 Employee Benefits

2.12.1 Short-term employee benefits viz., Salaries and Wages are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

2.12.2 Defined Contribution plan viz., Contributions to Provident Fund and Superannuation Fund are recognized as an expense in the Statement of Profit and Loss for the year in which the employees have rendered services.

2.12.3 The Company contributes monthly to Employees' Provident Fund & Employees' Pension Fund administered by the Employees' Provident Fund Organisation, Government of India, at 12% of employee's basic salary.

2.12.4 The Company also contributes for superannuation a sum equivalent to 15% of the officer's eligible annual basic salary. Out of the said 15% contribution, a sum upto

Rs. 1 Lac per annum is remitted to The Ramco Cements Limited Officer's Superannuation Fund administered by trustees and managed by LIC of India. The balance amount, if any, is either remitted to National Pension System (NPS) subject to applicable ceiling or paid as salary at the option of employees. There are no other obligations other than the above defined contribution plans.

2.12.5 The Company has its own Defined Benefit plan viz., an approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement, death while in employment or on termination of employment, of an amount equivalent to 15 day's basic salary for each completed year of service. Vesting occurs upon completion of five years of continuous service. The Company makes annual contributions to "The Ramco Cements Limited Employees' Gratuity Fund" administered by trustees and managed by LIC of India, including for its employees in subsidiary Company, based on the Actuarial Valuation by an independent external actuary as at the Balance Sheet date using the projected unit credit method.

2.12.6 The Company has a policy of providing encashment of un-availed leave to its employees. The expense is recognized at the brsent value of the amount payable determined based on an independent external actuarial valuation as at the Balance Sheet date, using projected unit credit method.

2.12.7 Actuarial gains and losses, if any, in respect of Defined Benefit plans are charged to Statement of Profit and Loss.

2.13 Borrowing Costs

2.13.1 Borrowing cost include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss.

2.13.2 Borrowing costs directly attributable to the acquisition and construction of an asset which takes substantial period of time to get ready for its intended use are capitalised as a part of the cost of those assets, until such time the asset is substantially ready for its intended use.

2.14 Segment Reporting

2.14.1 The Company brpares its segment information in conformity with accounting policies adopted for brparing and brsenting the financial statements of the Company as a whole.

2.14.2 The Company identifies business segment as the primary segment. Under the primary segment, there are two reportable segments viz., Cement and Power generation from Windmills.

2.14.3 Segments were identified considering the nature of the products, the differing risks and returns. The inter-segment transfers of units of power from windmills are recognised at the applicable tariff rates of the electricity boards for the purpose of segment reporting as per the relevant accounting standard.

2.14.4 The Company caters mainly to the needs of the domestic market and thus there are no reportable geographical segments.

2.14.5 Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment.

2.15 Leases

2.15.1 Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the Lessor are recognised as operating lease.

2.15.2 Operating lease receipts and payments are recognised in the Statement of Profit and Loss on accrual basis as per the lease terms.

2.16 Earnings Per Share

Net profit after tax attributable to equity shareholders is divided by the weighted average number of equity shares including unallotted bonus shares outstanding during the year.

2.17 Income-tax

2.17.1 Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income tax Act, 1961 and other applicable tax laws.

2.17.2 Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future tax liability is recognised as an asset to the extent there is convincing evidence that the Company will pay normal Income tax and it is highly probable that future economic benefits associated with it will flow to the Company during the specified period. The said asset is recognised as "MAT Credit Entitlement" and the same is created by way of credit to the Statement of Profit and Loss and shown as "MAT Credit Recognition". The Company reviews the "MAT Credit Entitlement" at each Balance Sheet date and writes down the carrying amount of the same to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income tax during the specified period.

2.17.3 Current tax assets and liabilities are offset since the Company has legally enforceable right to set off the recognised amounts and intends to settle the asset and the liability on a net basis.

2.17.4 Deferred tax is recognised on timing difference between taxable income and the accounting income that originates in one period and is capable of reversal in one or more subsequent periods. It is recognised based on the accumulated timing difference using the tax rates and the tax laws enacted or substantially enacted as on reporting date.

2.17.5 The deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is un-absorbed debrciation or carry forward losses under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. This is reviewed for realisability at each Balance Sheet date.

2.17.6 Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by same governing tax laws and the Company has legally enforceable right for such set off.

2.17.7 Deferred tax on items directly recognised in reserves is also recognised in reserves and not in the Statement of Profit and Loss.

2.18 Intangible Assets

2.18.1 The cost incurred in connection with securing right to extract mineral reserves and development of mines are capitalised.

2.18.2 The costs of computer software acquired and its subsequent improvements are capitalised. Internally generated software is not capitalized and the expenditure is recognized in the Statement of Profit and Loss in the year in which the expenditure is incurred.

2.18.3 The cost incurred for establishing power transmission system for sale of power from Company's captive thermal power plants to State grid are capitalized as the Company is expected to yield future economic benefits for its unrestricted usage.

2.18.4 The cost incurred for establishing power transmission system for drawl of power from State grid to the Company's grinding unit is capitalised as the Company is expected to yield future economic benefits for its unrestricted usage.

2.18.5 The intangible assets that are not yet ready for their intended use are carried at cost including related expenses and attributable interest are recognised as Intangible assets under development.

2.19 Impairment of Assets

2.19.1 The carrying values of tangible assets, cash generating units and intangible assets at each Balance Sheet date are reviewed for impairment if any indication of impairment based on internal and external factors.

2.19.2 Tangible Asset is treated as impaired when the carrying amount of the asset exceeds its recoverable value. The intangible assets are treated as impaired when the asset is not available for use and no future economic benefits are expected from its use. After recognition of impairment loss, the debrciation for the fixed assets is provided for remaining useful life based on the revised carrying amount, less its residual value if any, on straight line basis.

2.19.3 An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired.

2.19.4 An impairment loss is reversed when there is an indication that the impairment loss may no longer exist or may have decreased.

2.20 Mines Restoration Expenditure

2.20.1 The Company provides for the estimated expenses that are required to restore mines. The estimated restoration expenses are determined based on the estimated mineral reserves available. The actual expenses may vary based on the nature of restoration and estimate of restoration expenses.

2.20.2 Mines restoration expenses are incurred on an on-going basis until the closure of mines. The total estimate of restoration expenses is reviewed periodically, on the basis of technical estimates. The provision for this expenses are included under "Cost materials consumed" to the extent such mineral reserves were used in the production.

2.21 Provisions, Contingent Liabilities and Contingent Assets

2.21.1 Provisions involving substantial degree of estimation in measurement are recognised when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources embodying economic benefits in respect of which a reliable estimate can be made. Such provisions are not discounted to their brsent value except relating to retirement benefits. These provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

2.21.2 Insurance claims are accounted on the basis of claims admitted or expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.

2.21.3 Contingent liability is a possible obligation that may arise from past events and its existence will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the same are not recognised but disclosed its existence in the financial statements. Contingent Assets are neither recognised nor disclosed.

2.22 Research & Development Expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to Statement of Profit & Loss under the respective revenue heads, while those of capital nature are treated as fixed assets, under the respective asset heads and debrciated in accordance with the policies stated for Tangible Fixed Assets.

As per our report annexed

For M.S.Jagannathan & N.Krishnaswami

Chartered Accountants

Firm Registration No. 001208S

K.SRINIVASAN

Partner

Membership No. 021510

For CNGSN & ASSOCIATES LLP

Chartered Accountants

Firm Registration No. 004915S

LLP Registration No. S200036

C.N.GANGADARAN

Partner

Membership No. 011205

P.R.RAMASUBRAHMANEYA RAJHA Chairman & Managing Director

A.V.DHARMAKRISHNAN Chief Executive Officer

S.VAITHIYANATHAN Chief Financial Officer

K.SELVANAYAGAM Secretary

 P.R.VENKETRAMA RAJA

R.S.AGARWAL

M.B.N. RAO

M.M.VENKATACHALAM

Smt. Justice CHITRA VENKATARAMAN (Retd.)

Directors