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HOME   >  CORPORATE INFO >  NOTES TO ACCOUNT
Notes Of Account      
 
Year End: March 2016

NOTES ON ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2016

1. BASIS OF brPARATION OF FINANCIAL STATEMENTS

The financial statements have been brpared in accordance with Generally Accepted Accounting Principles (GAAP), includes generally under the historical cost convention on accrual basis and exceptions to this basis, if any, are herein specifically mentioned. GAAP comprises of mandatory Accounting Standards issued by the National Advisory Committee on Accounting Standards (NACAS) and The Institute of Chartered Accountants of India (ICAI), the provisions of the Indian Companies Act, 1956 / Companies Act, 2013 and the Guidelines issued by ICAI and Securities and Exchange Board of India (SEBI). Accounting policies have been consistently adopted except where a change in existing GAAP requires a change in accounting policy hitherto in use.

2. SIGNIFICANT ACCOUNTING POLICIES

1. Use of estimates

The brparation of financial statements is in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates.

2. Inventories

(a) Valuation of inventories of raw materials, packing materials, stores, spares, fuels is at weighted average cost.

(b) Work-in-Process & Semi-finished goods are valued at cost or net realisable value whichever is lower and do not include interest and other administrative overheads.

(c) Finished goods are valued at cost or net realisable value whichever is lower. The value of finished goods includes excise duty and does not include interest and other administrative overheads.

(d) Construction and Infrastructure Projects are valued at cost or net realisable value whichever is lower.

3. Cash and Cash equivalents

Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash at bank, in hand (including cheques in hand) and short term investment with an original maturity of three months or less.

4. Fixed Assets

Fixed Assets are valued and shown adopting the following basis:

(a) Fixed Assets and Capital Work-in-progress of all the cement manufacturing facilities were revalued and shown at revalued amounts as at 31st March 2004. All other Fixed assets acquired are shown at the cost of acquisition.

(b) Fixed assets acquired on the Hire Purchase or on Financial Lease are shown at their principal cost, excluding the interest cost included in these agreements which is charged to revenue over the life of the agreement.

(c) Expenditures and outlays of money on uncompleted projects of the capital nature are shown as capital work-in-progress until such time these projects are completed and commissioned. All costs including financing costs incurred on specific projects / acquisition of undertakings are charged to the concerned heads.

(d) (i) During the year the Company has charged debrciation based on useful life of the assets in accordance with Schedule II of Companies Act, 2013.

(ii) Debrciation on incremental value arising from the revaluation of fixed assets is charged to the Revaluation Reserve Account.

(e) Intangible Assets, which are expected to generate economic benefits are accounted at cost and amortised over the useful life on Straight Line Method.

5. (a) Foreign Currency Transactions

(i) Pursuant to the Companies (Accounting Standard) Amendment Rules, 2011 the Company has exercised the option of adjusting the cost of the debrciable capital assets arising on the exchange differences, in respect of accounting periods commencing from 1st April 2011, on long term foreign currency monetary items, which were hitherto recognized as income or expenses in the period in which they arise. As a result, such exchange difference so far as they relate to the acquisition of debrciable capital assets have been adjusted with the cost of such assets, to be debrciated over the balance useful life of the respective assets.

(ii) In respect of other long term foreign currency monetary items, such exchange differences is accumulated in foreign currency monetary items translation difference account and amortized over the balance period of such liability.

(b) Foreign Exchange transactions are accounted at the exchange rates brvailing at the time of transactions or at contracted rates. Assets and liabilities, other than those and for the purposes as mentioned in 5(a) above, in Foreign currencies are translated at values brvailing as at the year end. Gains / Losses if any, arising therefrom are recognised in the Profit and Loss Account.

(c) Forward Exchange contracts used to hedge Foreign Currency Transactions are initially recognised at the spot rate on the date of contract. Forward Exchange contracts remaining unsettled at the end of the year are translated at the year end rates. The difference in translation of Forward exchange contracts are recognised in the Profit and Loss Account. The discount or brmium is amortised over the tenure of the contract.

(d) Investments in Equity Capital of overseas Companies registered outside India are carried in the Balance Sheet at the rates at which transaction has been executed.

6 (a) Sales include excise duty, revenue from trade related activities and sales tax deferred as reduced by consideration for assignment of Sales Tax deferral liability if any and is net of rebates, discounts and incentives as ascertained by management as per market conditions.

(b) Revenue from Construction and Infrastructure projects under property development division is recognised on percentage of completion method.

(c) Revenue on time charter of ships is recognized on a proportionate basis.

7. Research and Development

Research and Development expenses not resulting in any tangible property / equipment are charged to revenue.

8. Borrowing Costs

Interest and other costs in connection with borrowing of funds to the extent related / attributed to the acquisition / construction of qualifying fixed assets are capitalised upto the date when such assets are ready for its intended use and other borrowing costs are charged to Profit and Loss Account.

9. Claims / Incomes arising from price escalation and/or any other item of compensation and which are indeterminate are accounted when there is certainty of income accrual.

10. Trade investments and investments in subsidiary & associate companies are long term investments and are carried at cost. The other investments are carried at lower of cost or realisable value. Provision for diminution in value is made wherever necessary in accordance with the Accounting Standard.

11. Employee Benefits

Retirement benefits are provided by charge to revenue including provision for gratuity and superannuation fund determined on an actuarial basis for which a trust has been created. The Actuarial gains / losses arising on retirement benefits are also recognised in the Profit and Loss Account. Unavailed leave balances are accounted based on respective employee's earnings as at the balance sheet date on actuarial basis.

12. Fringe Benefits arising on options vested under Employees Stock Options Scheme (ESOS), 2006 are charged to Profit and Loss Account and credited to Stock Options Reserve Account. On allotment of shares, corresponding amount is transferred from Stock Option Reserve to Securities Premium Account.

13. Premium on Redemption of Debentures / Bonds.

Premium on redemption of Debentures / Bonds is accounted on redemption and set off against the Securities Premium Account.

14. Tax Expense

(a) Current income tax is measured and accounted based on the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961 at the tax rates brvailing during the year.

(b) Deferred Tax

Deferred tax is measured and accounted based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date.

15. Contingent liabilities / Assets

Contingent liabilities and contingent assets are not recognised in the books of accounts. Provisions are made for the reliably estimated amount of brsent obligation to pay for the past events.

3.1 As at Balance Sheet date, amounts aggregating to Rs.NIL are due to Micro, Small and Medium Enterprises and there were no delays as per the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 in payment of dues to such enterprises. The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company and has been relied upon by the auditors.

3.2 Recognition of Foreign Currency Fluctuations:

a) Long-term Monetary Liability pursuant to the notification issued by the Ministry of Corporate Affairs dated 29th December 2011 on Accounting Standard 11, the Company has opted to:

i) Capitalize the exchange gain/loss on the loans against purchase of fixed assets after the same has been put to use and debrciated over the balance life of the asset.

ii) Exchange loss other than those attributable to capital assets amounting to Rs.354.11 Lakhs (as on 31st March 2015: Rs.428.38 Lakhs), has been accumulated in Foreign Currency Monetary Items Translation Difference Account. Out of which, Rs.573.75 Lakhs (as on 31st March 2015: Rs.566.54 Lakhs) has been amortized during the year (included in Administration and other charges) and the balance of Rs.675.14 Lakhs will be amortized over the remaining period of the liability.

b) Short term Monetary Liability:

Exchange gain/loss on short term monetary liability is continued to be credited / debited to the Statement of Profit & Loss.

3.3  During the Financial Year 2014-15, the franchise rights in Indian Premier League (IPL) were transferred to Chennai Super Kings Cricket Limited (CSKCL), a wholly owned subsidiary at its Net Asset Value (NAV as at March 31, 2014) as per books at Rs. 7.83 Crores.

The BCCI approved the said transfer subject to the condition that ICL shall provide a parent company guarantee (guarantee provided on 20-02-2015) for the purpose of guaranteeing performance / compliance by CSKCL of the obligations of the franchisee under the Franchise Agreement and it was further provided that ICL and CSKCL should enter into a tripartite Novation Agreement with BCCI - IPL whereby from the effective date, CSKCL shall inter alia step into all obligations of ICL under the Franchise Agreement without any further act or deed.

Board of Directors of the Company in their meeting held on 23.02.2015 approved the sale of entire shareholding in CSKCL aggregating to 50,000 equity shares of Rs.10/- each to a trust called the "India Cements Shareholders Trust", (Trust) aggregating to Rs. 5,00,000/-, at cost. Three of the Independent Directors of the Company are the Trustees of the Trust. The trust has been established for the purposes of distribution of the said shares purchased from the company by the trust to :

i) All the non-promoter shareholders of ICL; and

ii) The shares that the promoters are entitled to shall be allotted to another Trust established for the benefit of ex-cricketers of ICL.

BCCI approved the transfer of 50,000 equity shares held by the company in CSKCL to the India Cements Shareholders Trust (Trust) subject to the condition that CSKCL make a fresh application for distribution of shares from the Trust to the ultimate beneficiaries (as explained above) together with all the necessary documents, details, information that is necessary for the proposed transaction. The Company was informed that CSKCL has sought the permission of BCCI, for the distribution of the shares on September 30, 2015. The Company has also been informed all the approvals from Regulators are for the distribution have been obtained and the approval from BCCI is awaited.

Whereas certain proceedings which were in progress prior to the transfer of the franchise by the Company to CSKCL had been referred to a 3 member panel appointed by the Apex Court. The said 3 member panel has suspended the I C L (Franchisee) for a period of 2 years from the League. CSKCL is contesting the suspension.

The Company has been informed that CSKCL, is contesting the demand of "Franchise Fee" by BCCI for the current season (for which CSKCL has been suspended). The matter is currently sub-judice.

Brief Financials of CSKCL for the financial year ended March 31, 2016, as informed by them, are as follows: (a) Total Revenue Rs.175.25 Crores; (b) Total Expenses Rs.148.16 Crores; (c) Profit before tax Rs. 27.09 Crores; and (d) Profit after tax Rs.17.70 Crores.

The financial statements do not include IPL Franchise Operations.

3.4 Note on PMLA.

The Authorities have issued an attachment notice under the Prevention of Money Laundering Act, 2002 (PMLA) attaching certain assets of the company for an aggregate value of Rs. 120.34 Crores. The Company filed an appeal against the Order of the adjudicating authority specified under PMLA. The matter is currently sub-judice.

3.5 Managerial Remuneration

(a) The Managerial Remuneration paid during the year 2014-15 exceeded the limits brscribed in the Companies Act by Rs.267.36 Lakhs due to inadequacy of profits for 2014-15. This Amount has been refunded by the Managing Director in the current year.

(b) The appointment and remuneration of the Wholetime Director for a period of 5 years from March 05, 2015, has been approved by the shareholders.

3.6  Note on Waste Heat Recovery Project:

 The Company during the year 2004-05 commissioned the Waste Heat Recovery Project at Vishnupuram Plant as per the MOU signed by the Company with New Energy Development Organisation (NEDO), Japan, Ministry of Commerce and Industry, Government of India. As per the MOU, the necessary equipment has been provided to the Company free of cost by the Government of Japan through Government of India. The value of the equipment and concessional import duty thereon under EPCG scheme have been capitalised and treated as Deferred Income in the accounts. The debrciation on the value of the equipment is adjusted against the Deferred Income.

3.7 The Board of Directors has approved a Scheme of Amalgamation of Trinetra Cement Limited and Trishul Concrete Products Limited with the Company effective 1st January 2014. Petitions have been filed in the Honorable High Court of Judicature at Madras under Sections 391 to 394 of the Companies Act, 1956 for completing the procedural requirements for the said Scheme. The Shareholders of the respective Companies have since approved the Scheme of Amalgamation.

Pending sanction of the Scheme by the Court, the Financial Results do not include those of the Amalgamating Companies. Consequently no interest has been charged on the amounts outstanding from Trinetra Cement Limited in view of the said Scheme.

3.8 The Company continued to draw the incremental debrciation, amounting to Rs.45.83 crores (Rs 52.69 crores) arising on account of revaluation of fixed assets, from revaluation reserves to Statement of Profit and Loss based on ICAI's Guidance Note issued in 1982 on Treatment of Reserves created on revaluation of Fixed Assets which was effective as at the beginning of the financial year but withdrawn subsequently during the financial year. The said withdrawal is considered prospective and applicable to subsequent financial years, and hence its impact is not considered in the financial statements for the financial year.

3.9  Previous year's figures have been regrouped wherever necessary.

As per our Report of 26th May, 2016

For P. S. SUBRAMANIA IYER & Co.,

Chartered Accountants

Firm Registration No: 004104S

V.SWAMINATHAN

Partner

Membership No. 22276

For BRAHMAYYA & Co.,

Chartered Accountants

Firm Registration No. 000511S

N.SRI KRISHNA

Partner

Membership No. 26575

On behalf of the Board

N.SRINIVASAN Vice Chairman & Managing Director

RUPA GURUNATH Wholetime Director

CHITRA SRINIVASAN R.K.DAS ARUN DATTA Directors

V. MANICKAM N. SRINIVASAN N.R.KRISHNAN Directors

RABINARAYAN PANDA PL. SUBRAMANIAN Directors

S.BALASUBRAMANIAN ADITYAN Directors

Place : Chennai

Date :26th May, 2016

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