NOTES TO FINANCIAL STATEMENTS

Note 1: Company Profile & Significant Accounting Policies:

(i) Company Overview:

Ultratech Cement Limited (the Company) is a Public Limited Company incorporated in India under the provisions of Companies Act, 1956. Its shares are listed on two stock exchanges in India. The company is engaged in the manufacturing and selling of Cement and Cement related products. The Company caters mainly to the domestic market.

(ii) Basis of Accounting and brparation of Financial Statements:

The financial statements are brpared and brsented under the historical cost convention on accrual basis of accounting in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). These financial statements comply in all material aspects with the Accounting Standards (AS) specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of the Companies Act, 2013 ("the Act"), as applicable and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.

The accounting policies adopted in the brparation of these financial statements are consistent with those of the brvious year.

(iii) Use of estimates:

The brparation of financial statements in conformity with the Indian GAAP requires the management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities on the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures relating to contingent liabilities as of the date of the financial statements. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in outcomes different from the estimates. Difference between actual results and estimates are recognised in the period in which the results are known or materialise.

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

(iv) Classification of Assets and Liabilities into Current/Non-current:

All assets and liabilities are brsented as Current or Non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III of the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realization, the Company has ascertained its operating cycle as 12 months for the purpose of Current / Non-current classification of assets and liabilities.

(v) Fixed Assets:

Fixed assets (whether Tangible or Intangible) are stated at cost less accumulated debrciation / amortization / impairment loss (if any), net of Cenvat (wherever claimed). The cost of fixed assets includes taxes, duties, freight, borrowing cost, if capitalisation criteria are met, and other incidental expenses incurred in relation to their acquisition / bringing the assets for their intended use.

Spares which can be used only in connection with a particular Plant and Equipment of the Company and use is expected to be irregular, are capitalised at cost, net of Cenvat (wherever claimed).

Losses arising from the retirement of, and gains / losses arising from disposal of fixed assets which are carried at cost are recognised in the Statement of Profit and Loss.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its brviously assessed standard of performance.

A fixed asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Assets retired from active use and held for disposal are stated at the lower of their net book value and net realisable value and shown under "Other Current Assets".

(vi) Expenditure during construction period:

Expenditure/ Income, during construction period (including financing cost relating to borrowed funds for construction or acquisition of qualifying fixed assets) is included under Capital Work-in-Progress, and the same is allocated to the respective fixed assets on the completion of their construction. Advances given towards acquisition or construction of fixed assets outstanding at each Balance Sheet date are disclosed as Capital Advances under "Long-term loans and advances".

(vii) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

Borrowing cost includes interest expense, amortization of discounts, ancillary costs incurred in connection with borrowing of funds and exchange difference arising from foreign currency borrowings to the extent they are regarded as an adjustment to the Interest cost.

(viii) Debrciation and Amortisation:

Debrciation is the systematic allocation of the debrciable amount of an asset over its useful life and is provided on a straight-line basis over the useful lives as brscribed in Schedule II to the Companies Act, 2013 and as estimated by the management.

Debrciable amount for assets is the cost of an asset less its estimated residual value.

The useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity.

In case of certain class of assets, the Company uses different useful life than those brscribed in Schedule II to the Companies Act, 2013. Besides the useful life of specific assets, the company follows the process of componentization for fixed assets w.e.f. 01.04.2015 as per the requirement of the Act. Accordingly, the company has identified a part of an asset as a separate component in whole asset value (beyond certain value) and useful life of the part is different from the useful life of the remaining asset. The useful life has been assessed based on technical advice, taking into account the nature of the asset / component of an asset, the estimated usage of the asset / component of an asset on the basis of management's best estimation of getting economic benefits from those class of assets / components of an asset. The Company uses its technical expertise along with historical and industry trends for arriving the economic life of an asset/component of an asset. The useful lives are reviewed by management periodically and revised, if appropriate. In case of a revision, the unamortised debrciable amount is charged over the remaining useful life of the assets.

(ix) Impairment of Assets:

The carrying amount of assets are reviewed at each balance sheet date, if there is an indication of impairment based on internal and external factors.

An asset is treated as impaired when the carrying amount of the asset exceeds its recoverable amount. An asset's recoverable amount is the higher of an assets net selling price and value in use. Value in use is the brsent value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. The discounting rate is a br-tax discount rate that reflects current market assessments of the time value of money and risks specific to the assets. Net selling price is the amount obtainable from sale of the asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal.

An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which the asset is identified as impaired. Impairment loss recognised in prior years is reversed when there is an indication that impairment loss recognised for the asset no longer exists or has decreased.

(x) Investments:

a) Presentation & disclosure

Investments which are readily realisable, and are intended to be held for not more than one year are classified as current investments. All other investments are classified as long-term investments / non-current investments.

b) Recognition & measurement

Long-term investments are stated at cost after deducting provisions made, if any, for diminution in value of investments other than temporary, determined separately for each individual investment.

The carrying cost of long-term investment in subsidiary having mining rights for the mineral resources is determined net-off amortization pertaining to the minerals extracted from the mines, calculated in proportion to the quantity extracted during the period out of the total estimated mineral reserve size. The total estimated reserve size is reviewed at each balance sheet date, on the basis of technical estimates.

Current investments, except current maturities of Long- term investments, are stated at lower of cost and fair value determined for each category of investments.

Any reduction in the carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss.

c) Disposal

On disposal of an investment, the difference between the carrying amount and the disposal proceeds, net of expenses, is recognised in the Statement of profit and loss.

(xi) Foreign Currency Transactions:

a) Transactions denominated in foreign currency are recorded at the exchange rate brvailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currency at the balance sheet date are translated at the year-end rates.

b) In respect of forward exchange contracts, brmium or discount, being the difference between the forward exchange rate and the exchange rate at the inception of contract is recognised as expense or income over the life of the contract.

c) Exchange difference including brmium or discount on forward exchange contracts, relating to borrowed funds, liabilities and commitments in foreign currency for acquisition of fixed assets, arising till the assets are ready for their intended use, are adjusted to cost of fixed assets. Any other exchange difference either on settlement or translation is recognised in the Statement of Profit and Loss.

d) Investment in equity capital of overseas companies registered outside India are carried in the Balance Sheet at the rates at which transactions have been executed.

(xii) Derivatives:

Derivative instruments are used to hedge risk associated with foreign currency fluctuations, interest rates and commodity prices. The derivative contracts are closely linked with underlying transactions and are intended to be held till maturity. The Company does not enter into any derivative contracts for speculations or trading purposes.

The Company has adopted AS 30 - "Financial Instrument - Recognition and Measurement", to the extent that adoption did not conflict with exiting accounting standards and other regulatory requirements. Accordingly the Company tests each contracts which are entered on the basis of highly probable forecast transactions and decided whether to designate as an effective hedge.

To designate a forward contract as an effective hedge, the management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk.

The gain or losses on designated hedging contract that qualify as an effective hedge is recorded in the hedging reserve account until the transactions are complete. Upon completion or cessation of hedging relationship as an effective, net cumulative gain / losses are transferred to Statement of Profit & Loss.

The gain or losses on the contracts which do not qualify for hedge accounting or considered as ineffective hedge transactions are charged to Statement of Profit & Loss.

(xiii) Inventories:

Inventories are valued as follows:

a) Raw material, fuel, stores & spare parts and packing materials:

Valued at lower of cost and net realisable value (NRV). 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. The cost includes purchase price as well as incidental expenses and is determined on weighted average basis.

b) Work-in- progress (WIP), finished goods, stock-in-trade and trial run inventories:

Valued at lower of cost and NRV. Finished goods and WIP cost includes cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition. In case of manufactured inventories and work in progress, fixed production overheads are allocated on the basis of normal capacity of production facilities. Cost of finished goods includes excise duty. Cost of inventories is computed on weighted average basis.

c) Waste / Scrap:

Waste / Scrap inventory is valued at NRV.

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

(xiv) Employee Benefits:

a) Short term employee benefits

Short term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

b) Defined Contribution Plan

Contributions payable to recognised provident fund, approved superannuation scheme and national pension scheme, which are substantially defined contribution plans, are recognised as expense in the Statement of Profit and Loss, as they are incurred.

Contributions as specified by law are paid to the provident fund set up as irrevocable trust. The Company is generally liable for annual contribution and any shortfall in the fund assets based on the government specified minimum rates of return and recognises such contribution and shortfall, if any, as an expense in the year incurred.

c) Defined Benefit Plan

The obligation in respect of defined benefit plans, which cover Gratuity, Pension and Post-retirement medical benefits, are provided for on the basis of an actuarial valuation, using the projected unit credit method, at the end of each financial year. Gratuity is funded with an approved fund. Actuarial gains / losses, if any, are recognised immediately in the Statement of Profit and Loss.

Obligation is measured at the brsent value of estimated future cash flows using a discount rate that is based on the brvailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

d) Other Long Term Benefits

The Company provides for encashment of leave or leave with pay subject to certain rules. Long-term compensated absences are provided for on the basis of an actuarial valuation, using the projected unit credit method, at the end of each financial year. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profit and Loss.

e) Presentation of Non-funded obligation of defined benefit plans and other long term benefits, as long term and short term liability is on the basis of actuary's report.

(xv) Employee Share based payments:

The Company follows intrinsic value method for valuation of Employee Stock Option in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014 {erstwhile SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999} and the Guidance Note on Accounting for Employee Share based payments, issued by the Institute of Chartered Accountants of India. The excess of market price of shares at the time of grant of options, over the exercise price to be paid by the option holder is considered as employee compensation expense and is amortised in the Statement of Profit and Loss over the period of vesting, adjusting for the actual and expected vesting.

(xvi) Income Taxes:

Income Tax expenses comprise current tax and deferred tax charge or credit.

Current Tax is measured on the basis of estimated taxable income for the current accounting period in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws.

Deferred Tax reflects the impact of timing difference between accounting income and taxable income during the current year and reversal of timing differences for the earlier years. Deferred tax charge or credit and corresponding deferred tax liabilities or assets are measured using the tax rates and laws enacted or substantively enacted as on the balance sheet date. Deferred tax assets are recognised and carried forward only to the extent that there is reasonable certainty, except for carried forward losses and unabsorbed debrciation and items relating to capital losses which is recognised based on virtual certainty, supported by continuing evidence that there will be sufficient future taxable income available to realise the asset.

Minimum Alternate Tax (MAT):

MAT under the provisions of Income tax Act, 1961, where applicable, is recognised as current tax in the statement of Profit and Loss. The credit available under the Income Tax Act, 1961 is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance Note issued by The Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and is shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.

(xvii) Revenue Recognition:

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

a) Sales are recognised on transfer of significant risks and rewards of ownership of the goods to the buyer. Sales are disclosed net of Sales Tax, Value added tax (VAT), trade discounts, rebates and returns but include excise duty. Sales exclude self-consumption of finished goods.

b) Income from services is recognised (net of service tax as applicable) as they are rendered, based on agreement / arrangement with the concerned parties.

c) Dividend income is accounted for when the right to receive the income is established and known by the Balance Sheet date. Interest income is recognised on time proportion basis taking into account the amount outstanding and the rate applicable. Premium or Discount on Investment Instruments is amortised over the holding period till maturity. Income other than dividend, interest & brmium or discount on Investments are recognised on maturity or sale.

d) Export incentives, insurance, railway and other claims/receipts, where quantum of accruals cannot be ascertained with reasonable certainty, are accounted on acceptance basis.

(xviii) Mines Restoration Expenditure:

The Company provides for the estimated expenditure required to restore quarries and mines. The total estimate of restoration expenses is apportioned over the estimate of mineral reserves and a provision is made based on minerals extracted during the year. The total estimate of restoration expenses is reviewed periodically, on the basis of technical estimates.

(xix) Government Grants and Subsidies:

a) Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached thereto and that the grants will be received.

b) Capital Government Grants or Subsidies relating to specific fixed assets are deducted from the gross value of the respective fixed assets and other capital grants are credited to Capital Reserve.

c) Other Government Grants or Subsidies relating to an expense item are recognised as income over the period to match them on a systematic basis to the costs or deducted from related expenses.

(xx) Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised when there is a brsent obligation as a result of past events that can be estimated reliably and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate.

A brsent obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

Claims against the Company where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.

Contingent Liabilities are not recognised but are disclosed and Contingent Assets are neither recognised nor disclosed, in the financial statements.

(xxi) Earnings Per Share:

The basic Earnings Per Share ("EPS") is computed by dividing the net profit / (loss) after tax for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, net profit / (loss) after tax for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

(xxii) Segment Reporting: a)Identification of Segments:

Primary Segment is identified based on the nature of products and services, the different risks and returns and the internal business reporting system. Secondary segment is identified based on geography in which major operating divisions of the Company operate.

b) Segment Policies:

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

(xxiii) Research and development expenditure:

Revenue expenditure pertaining to research is expensed as incurred. Capital expenditure incurred on development is capitalised if such expenditure leads to creation of an asset, otherwise such expenditure is charged to the Statement of Profit and Loss.

(xxiv) Operating lease:

Leases where significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases and lease rentals thereon are charged to the Statement of Profit and Loss on a straight-line basis over the lease term

Note 1

The Board of Directors has recommended a dividend of Rs. 9.50 per share for the year ended March 31, 2016 (Previous year Rs. 9 per share). Total Cash outflows on account of dividend Rs. 260.71 Crores (Previous Year Rs. 246.96 Crores) and on account of Corporate Dividend Tax Rs. 53.07 Crores (Previous Year Rs. 50.28 Crores).

Note 2: Capital and other commitments:

Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs. 700.26 Crores. (Previous Year Rs.1,239.25 Crores).

Note 3:

The Competition Commission of India ("CCI") had upheld the complaint of alleged cartelisation against certain manufacturing companies including the Company by its order dated June 20, 2012 and had imposed a penalty of Rs. 1,175.49 crores on the Company. The Company filed an appeal against the order before the Competition Appellate Tribunal ("COMPAT"). COMPAT granted stay on the CCI order on condition that the Company deposit 10% of the penalty, amounting to Rs. 117.55 crores, which has been deposited. COMPAT by its order dated December 11, 2015 set aside the aforementioned CCI order and remitted the matter to CCI for fresh adjudication of the issues and passing of fresh order. Further, COMPAT has allowed withdrawal of the amount deposited by the Company in compliance with the COMPAT interim order, which has since been refunded.

Note 4: The Subrme Court of India has allowed an appeal filed by the State of Rajasthan in a matter relating to transfer of mining lease in the name of the Company's wholly-owned subsidiary, Gotan Lime Stone Khanij Udyog Private Limited ("GKUPL") and has directed the State of Rajasthan to frame and notify its policy relating to transfer of mining lease within one month of receipt of the order and thereafter pass appropriate order in respect of the mining lease of GKUPL. Till such a decision is taken, status quo is to be maintained.

Note 5: The Subrme Court of India by its judgement dated August 25, 2014 read with its Order dated September 24, 2014 cancelled 204 coal blocks which had been allocated earlier for the purposes of mining coal for captive consumption. These include two coal blocks allotted to the Company jointly with others, viz. Bhaskarpara and Madanpur (North) in Chhattisgarh. No mining activity has commenced on these blocks and the cancellation will not have any material adverse impact on the Company.

As regards its investment in the cancelled coal blocks, the Company is likely to recover the majority of the amount from the new allottee, once the auction will be conducted for the above mines in terms of the ordinances promulgated by the Central Government.

Note 6: "Acquisition of cement units of Jaiprakash Associates Limited in Madhya Pradesh"

The Board of Directors of the Company had approved acquisition of the cement units of Jaiprakash Associates Limited ("JAL") situated at Bela and Siddhi in Madhya Pradesh having cement capacity of 4.9 MTPA. The effectiveness of the Scheme was inter-alia subject to the sanction of the Hon'ble Bombay High Court ("high court"). During the course of hearing for sanction of the Scheme, the high court has indicated that based on the provisions of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 ("amended MMDR Act") only mining leases granted under an auction could be transferred. Since the mining leases which form part of the business to be transferred to the Company from JAL were allotted to JAL and not granted under an auction, the same could not, in terms of the amended MMDR Act, be transferred. Under the circumstances, the Company applied for withdrawal of the Scheme filed before the High Court which has been permitted.

Note 7: "Acquisition of identified cement units of Jaiprakash Associates Limited"

The Board of Directors at its meeting on March 31, 2016 approved signing of definitive agreements for the acquisition of identified cement plants of Jaiprakash Associates Limited ("JAL") and its subsidiaries in the states of Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh having cement capacity of 21.20 MTPA at an enterprise value of Rs. 15,900 Crores. The transaction is subject to necessary regulatory approval

Note 8: Segment Reporting:

The Company is exclusively engaged in the business of cement and cement related products. As per AS 17 "Segment Reporting", specified under Section 133 of the Companies Act, 2013, there are no reportable business and geographical segment applicable to the Company.

Note 9: Revenue expenditure on Research and Development included in different heads of expenses in the Statement of Profit and Loss is Rs. 14.27 Crores. (Previous Year Rs. 14.07 Crores).

Note 10: Expenditure incurred on Corporate Social Responsibility activities, included in different heads of expenses in the Statement of Profit and Loss is Rs. 46.27 Crores (Previous Year Rs. 40.35 Crores) and on account of capital expenditure is Rs. 4.62 Crores (Previous Year  Rs. 4.11 Crores).

The amount required to be spent under Section 135 of the Companies Act, 2013 for the year ended March 31, 2016 is Rs. 57.82 Crores (Previous Year Rs. 61.51 Crores) i.e 2% of average net profits for last three financials years, calculated as per section 198 of the Companies Act, 2013.

Note 11 : Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year classification / disclosure.

Note 12:

Figures less than Rs. 50,000 have been shown at actual, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest lakh.

Signatures to Note '1' to '57'

In terms of our report attached. For and on behalf of the Board

For B S R & Co. LLP  

Chartered Accountants

Firm Registration No: 101248W/W-100022  

VIKAS R KASAT

Partner

Membership No: 105317

For G.P. Kapadia & Co.  

Chartered Accountants

Firm Registration No: 104768W  

ATUL B. DESAI

Partner

Membership No: 30850

K.K.MAHESHWARI  

Managing Director

R. C. BHARGAVA G. M. DAVE  

Directors

ATUL DAGA

Chief Financial Officer

S. K. CHATTERJEE

Company Secretary

Place : Mumbai,

Date : April 25, 2016