NOTE 1

Significant Accounting Policies

1.1. The financial statements are brpared in accordance with the Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention (except for certain fixed assets which were revalued) on the accrual basis. GAAP comprises mandatory accounting standards specified under section 133 of the Companies Act 2013 (the Act) read with Rule 7 of the Companies (Accounts) Rule 2014 and the relevant provisions of the Act. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

1.2. Fixed Assets are stated at cost adjusted by revaluation of certain fixed assets.

1.3. Expenditure during construction/erection period is included under Capital Work-in-Progress and is allocated to the respective fixed assets on completion of construction/erection.

1.4. Foreign currency transactions are recorded at exchange rates brvailing on the date of transaction. Monetary Assets and liabilities related to foreign currency transactions are stated at exchange rate brvailing at the end of the year and exchange difference in respect thereof is charged to Statement of Profit & Loss. Premium in respect of forward contracts is recognized over the life of the contract.

1.5. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management. The current investments are stated at lower of cost and quoted / fair value computed category wise.

1.6. Inventories are valued at lower of cost and net realizable value (except scrap / waste which are valued at net realizable value). The cost is computed on weighted average basis. Finished Goods and Process Stock include cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition.

1.7. Revenue is recognized when significant risk and reward of ownership have been passed on to the Customer. Export incentives, Duty drawbacks and other benefits are recognized in the Statement of Profit and Loss and other revenue incentives are netted from respective head. Project subsidy is credited to Capital Reserve.

1.8. Revenue expenditure on Research and Development is charged to Statement of Profit and Loss and capital expenditure is added to Fixed Assets.

1.9. Borrowing cost is charged to Statement of Profit and Loss except cost of borrowing for acquisition of qualifying assets which is capitalized till the date of commercial use of the asset.

1.10 (i) Debrciation on Buildings, Plant & Machinery {except for Power Plants, Split Grinding Units and Ready Mix Concrete Plants (RMC)} and Railway Siding is provided as per Straight Line Method (SLM), as per useful life specified in Schedule II to the Act (Schedule II). Debrciation on Captive Power Plants, Split Grinding units & Other Assets is provided on Written Down Value (WDV) method as per the said Schedule. Debrciation on Aircraft and RMC is provided considering estimated useful life of 6 years on SLM basis. Debrciation on impaired assets is provided on the basis of their residual useful life.

(ii) Leasehold Land is being amortized over the lease period. 56 Financial Statements 

1.11. The carrying amounts of Assets are reviewed at each Balance Sheet date to assess impairment, if any, based on internal / external factors. An impairment loss is recognised, as an expense in the Statement of Profit & Loss, wherever the carrying amount of the Asset exceeds its recoverable amount. The impairment loss recognised in prior accounting period is reversed, if there has been an improvement in recoverable amount in subsequent years.

1.12. Intangible Assets are being recognized if the future economic benefits attributable to the Assets are expected to flow to the Company and cost of the Asset can be measured reliably. The same are being amortised over the expected duration of benefits.

1.13. Current Tax is the amount of tax payable on the estimated taxable income for the current year as per the provisions of Income Tax Act, 1961. Deferred Tax Assets and Liabilities are recognized in respect of current year and prospective years. Deferred Tax Assets is recognized on the basis of reasonable / virtual certainty that sufficient future taxable income will be available against which the same can be realized.

1.14. Employee Benefits:

(i) Defined Contribution Plan

Contributions to the Employees' Regional Provident Fund, Superannuation Fund and Pension Fund are recognized as Defined Contribution Plan and charged as expenses in the year in which the employees render the services.

(ii) Defined Benefit Plan

Retirement benefits in the form of Gratuity and Leave Encashment are considered as Defined Benefit Plan and determined on actuarial valuation, using the Projected Unit Credit Method, as at the date of the Balance Sheet. Actuarial Gains / Losses, if any, are immediately recognized in the Statement of Profit and Loss.

The Provident Fund Contribution other than Employees' Regional Provident Fund, is made to Trust administered by the Trustees. The interest payable on Fund to the members of the Trust shall not be lower than the statutory rate declared by the Central Government under Employees' Provident Fund and Miscellaneous Provision Act, 1952. Shortfall, if any, shall be made good by the Company.

(iii) Short Term Employee Benefits

Short term compensated absences are provided based on past experience of the leave availed.

1.15. Provision in respect of brsent obligation arising out of past events are made in Accounts when reliable estimates can be made of the amount of the obligation. Contingent Liabilities are not recognized but are disclosed by way of Notes to Accounts. Contingent Assets are not recognized or disclosed in Financial Statements. 

NOTES TO ACCOUNT

1. Estimated amount of contracts remaining to be executed on capital account (Net of Advances) Rs. 124.11 crore (Previous year Rs. 332.60 crore).

2. In respect of certain disallowances and additions made by the Income Tax Authorities, Appeals are pending before the Appellate Authorities and adjustment, if any, will be made after the same are finally settled.

3. Contingent liability for non-use of jute bags for Cement packing upto 30th June, 1997, as per Jute Packaging Materials (Compulsory use of Packaging Commodities) Act, 1987 is not ascertained and the matter is subjudice. The Government has excluded Cement Industry from application of the said Order from 1st July, 1997.

4. During the current year, the Company has computed the Debrciation based on useful life of the fixed assets as brscribed under Schedule II of the Companies Act 2013 and in case of certain assets useful life as assessed in the valuation report. The Carrying Value of the Fixed Assets which have completed their useful life as on 1st April,2014 have been charged off against the General Reserve amounting to Rs. 39.79 crore (net of deferred tax Rs. 1.62 crore). Had there not been any change in the useful life of the Fixed Assets the Debrciation would have been higher by Rs. 24.24 crore for the year ended March 2015.

5. Maximum balance due for Commercial Paper issued during the year was Rs. 120 crore and the yearend balance is Rs. 50 crore (Previous year Maximum balance Rs. 50 crore and at the yearend Nil).

6. Rajasthan Government had granted the benefit of 75% exemption to the Company for a period of 9 years vide its notification dated 28.4.2003 on the RST and CST payable u/s Section 15 of Rajasthan Sales Tax Act 1994. With the enactment of VAT Act, 2006 the benefit of exemption for the balance period was converted into deferment w.e.f. 1st April 2006. The Company has received Demand Notices of Rs. 222.54 crore consisting of Sales Tax Exemption of X 49.19 crore availed upto March 2006, balance of Sales Tax Deferment of Rs. 56.57 crore from April 2006 to May 2009 and interest of Rs. 116.78 crore thereon. The Demand had arisen consequent to Subrme Court's adverse judgment in case of another cement company.

In order to avoid any coercive measure against the Company by the Department, the Company during the year has paid under protest the full principal demand toward Sales Tax Exemption and Sales Tax Deferment of Rs. 105.77 crore, pending judgment from the judicial authorities.

Based on the fact that the grounds under which the Company has been granted this benefit is different from the grounds on which the other cement company availed the benefit and as also based on the opinion of senior legal counsels, the Company believes it has sufficient strong ground eventually to get favorable legal remedy in the matter. However out of abundant caution a provision shown as Exceptional Item for Rs. 49.19 crore against the Sales Tax Exemption amount has been made in the books and interest of Rs. 116.78 crore is considered as contingent liability.

7. a) Sales include own consumption at cost Rs. 0.94 crore (Previous years X 6.98 crore).

b) Consumption of Stores and Spares is net of scrap sale Rs. 5.69 crore (Previous year Rs. 4.85 crore.)

c) Interest expenses include Rs. 4.81 crore (Previous year Rs. 3.97 crore) being interest on entry tax.

8. Exceptional Items of Rs. 63.25 crore includes Rs. 49.19 crore towards provision for Sales Tax Exemption (refer Note 37), Rs. 12.61 crore being one time expenditure incurred on the launch of new Product & setting up of new Marketing Network in Eastern Market and Rs. 1.45 crore being claims against fire loss due to fire & arson at Durg in 2013, not accepted by the insurer (brvious year Rs. 18.50 crore for provision made against duties/cess in respect of earlier years for matter under litigation). 

9. The Company has commissioned 1st Phase of Company's 2.7 Million Tonnes Greenfield Cement Plant at Durg, in Chhattisgarh with a Cement Capacity of 1.7 Million Tonnes w.e.f 21st March, 2015.

10. a) Other-Non-Operating Income includes receipts from aircraft flying Rs. 2.34 crore, (brvious year Rs. 3.34 crore) net of expenses of Rs.5.94 crore (brvious year X 5.63 crore) and Nil on account of liabilities no longer required written back (Previous year X 10.10 crore). b) Miscellaneous expenses include contribution to Satya Electrol Trust Rs. 1.10 crore (Previous year - Nil) for political purpose, CSR expenses amounting to Rs. 3.36 crore (brvious year Nil) and Foreign exchange fluctuation of loss (net) Rs. 2.38 crore) (brvious year gain(net) Rs. 0.53 crore.

11. a) Forward contracts of Rs.132.52 crore - USD 20.71Mn (Previous year Rs.24.37 crore - EUR .04 Mn USD 3.56 Mn, GBP .03 Mn, DKK 0.07Mn.) taken for the purpose of hedging of payables.

b) Un-hedged Rs. 5.58 crore - USD 0.09 Mn, (brvious year Nil) against letter of credit outstanding as at 31st March, 2015.

12. Based on information available with the Company in respect of MSME ('The Micro Small & Medium Enterprises Development Act 2006'). The details are as under :

i) Principal and Interest amount due and remaining unpaid as at 31st March 2015 - Principal X 0.46 crore (Previous year - Nil).

ii) Interest paid in terms of section 16 of the MSME Act during the year - Nil (Previous year - Nil).

iii) The amount of Interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified - Nil (Previous year - Nil).

iv) Payment made beyond the appointed day during the year - Nil (Previous year - Nil).

v) Interest Accrued and unpaid as at 31st March 2015- Nil (Previous year - Nil).

13. The Company has only one business segment namely Cementitious Materials.

14. Other advances include an amount of Rs. 33.33 crore (including Rs. 3.33 crore receivable within one year) (Previous year Rs. 36.67 crore) (Maximum balance due Rs. 36.67 crore, brvious year Rs. 40.00 crore) due from BACL and arising out of an earlier Scheme of Reconstruction, Arrangement and Demerger sanctioned by Hon'ble High Courts of Rajasthan (Jodhpur) and Delhi.

15. The Company has taken up revival and rehabilitation of Udaipur Cement Works Limited (UCWL) after its Rehabilitation Scheme got approved by BIFR in January, 2012. The Company was to invest Rs. 150.00 crore in UCWL inclusive of 9% Non Convertible Redeemable Debentures (NCD) of Rs.49.79 crore, issued by the Company directly to the erstwhile Term Lenders of UCWL against their outstanding dues. In this connection, the Company has given a Letter of Comfort to BIFR to infuse / arrange funds to meet any crystallized liability in UCWL. The Company has already infused Rs. 149.11 crore (brvious year Rs. 122.90 crore) [inclusive of issue of NCDs of Rs. 49.79 crore (brvious year Rs. 49.79 crore) up to 31st March, 2015]. During the year UCWL has issued 5% Cumulative Redeemable Preference Shares (CRPS) of Rs.60.00 crore to the Company.

The Company has further given a Corporate Guarantee to a Bank for a term loan of Rs. 150.00 crore sanctioned by Bank to UCWL. The Bank has so far disbursed only Rs. 50.00 crore. This term loan is to be utilized by UCWL for its Revival and Rehabilitation Project.

16. During the year the Company has received subsidy of Rs. 0.30 crore (Previous year Rs. 5.08 crore) in terms of State Investment Promotion Scheme, of which Rs. 0.30 crore (Previous year Rs. 3.50 crore) and Rs. Nil (Previous year Rs. 1.58 crore) have been reduced from Interest and wages respectively.

17. Pending assessment of actual damage to Plant & Machinery and Other Equipment due to the incident of fire & arson at Durg Cement Plant in the year 2013-14, the Company had filed a provisional claim of Rs. 83.95 crore against the Insurance Company. Out of these equipment worth Rs.20.04 crore were found to be usable. The Insurers have admitted the claim at Rs. 62.46 crore and have not accepted the claim of Rs. 1.45 Crore, which has been charged off in the Current Year as an Exceptional Item.

The Company has already received Rs. 45.00 crore from the Insurers and balance of Rs. 17.46 crore is being shown under other Current Assets.

18. Disclosure pursuant to Clause 32 of the Listing Agreement :

(Loans / Advances to employees as per Company's policy are not considered.)

19. Some of the Balances of debtors and creditors are in process of confirmation.

20. During the Financial Year 2014-15, the Company availed Short Term Bridge Loans to part finance ongoing Projects pending disbursement/tie-up of long term loans from Banks/Markets. 

21 Previous year's figures have been re-grouped/re-classified wherever necessary and figures less than Rs. 50000 have been shown as actual in bracket. 

As per our report of even date

For LODHA & CO.

Chartered Accountants

N.K. Lodha

Partner

Firm Registration No.: 301051E

Membership No. : 85155

For and on behalf of the Board

B.H. SINGHANIA Chairman & Managing Director

VINITA SINGHANIA Vice Chairman & Managing Director

KASHI NATH MEMANI Directors

N.G. KHAITAN Directors

PRADEEP DINODIA Directors

RAVI JHUNJHUNWALA Directors

Dr. R.P. SINGHANIA Directors

Dr. S. CHOUKSEY  Directors

S.K. WALI  Directors

B.K. DAGA Vice President & Company Secretary

SUDHIR A. BIDKAR   Chief Financial Officer

New Delhi, the 15th May, 2015