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Notes to Accounts of ACC Ltd.

Dec 31, 2015

Allocation of common costs

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

Inter Segment transfers

Inter segment revenue has been accounted for based on the transaction price agreed to between segments which is based on current market prices.

Unallocated items

Revenue, expenses, assets and liabilities which relate to the Company as a whole and not allocable to segments on reasonable basis have been included under 'unallocated revenue / expenses / assets / liabilities'.

Segment Policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

i) Terms / rights attached to equity shares

The Company has only one class of equity shares having par value of Rs, 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Both these Companies are subsidiaries of LafargeHolcim Ltd (Formerly known as Holcim Ltd), Switzerland, the ultimate holding Company.

ii) The Company has issued Nil (Previous Year - 5,064) Equity shares Rs, 10 each fully paid during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option plan, wherein part consideration was received in form of employee services.

Mines restoration expenditure is incurred on an ongoing basis and until the closure of the mine. The actual expenses may vary based on the nature of restoration and the estimate of restoration expenditure.

1. EMPLOYEE BENEFITS:

a) Defined Contribution Plans - Amount recognized and included in Note 25 "Contributions to Provident and other Funds" of Statement of Profit and Loss Rs, 18.28 Crore (Previous Year -t 14.82 Crore).

b) Defined Benefit Plans-As per actuarial valuation on December 31, 2015

The Company has a defined benefit gratuity, additional gratuity, post retirement medical benefit plans and Trust managed provident fund plan as given below:

i. Every employee who has completed minimum five years of service is entitled to gratuity at 15 days salary for each completed year of services. The scheme is funded with insurance companies in the form of qualifying insurance policies.

ii. Every employee who has joined before 1st December 2005 and separates from service of the Company on Superannuation and on medical grounds is entitled to additional gratuity. The scheme is Non Funded.

iii. Benefits under Post Employment Medical Benefit Plans are payable for actual domiciliary treatment / hospitalization for employees and their specified relatives. The scheme is Non Funded.

iv. Provident fund for certain eligible employees is managed by the Company through trust "The Provident Fund of ACC Ltd.", in line with the Provident Fund and Miscellaneous Provision Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee.

The minimum interest rate payable by the Trust to the beneficiaries every year is being notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate.

The ASB Guidance on Implementing AS-15, Employee Benefits (revised 2005) issued by Accounting Standards Board (ASB) states that benefit plans involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefit plans. As per the Guidance Note from the Actuarial Society of India, the Company has obtained the actuarial valuation of interest rate obligation in respect of Provident Fund and there is no shortfall as at December 31, 2015 and December 31, 2014.

b) Demographic Assumptions

1 Mortality pre-retirement Indian Assured Lives Mortality (2006-08) (Modified)ultimate Indian Assured Lives Mortality (2006-08) (Modified) Ultimate

2 Mortality post-retirement Mortality for annuitants LIC (1996-98) ultimate Mortality for annuitants LIC (1996-98) ultimate

3 Turnover rate 5% p.a. (P.Y. - 5% p.a.)

4 Medical premium inflation 12% p.a. for the first 4 years and thereafter 8% p.a. 12% p.a. for the first 5 years and thereafter 8% p.a.

(Figures in italics pertain to previous year)

c) Basis used to determine expected rate of return on assets:

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligation. The Gratuity Scheme is invested in Life Insurance Corporation (LIC) of India's Group Gratuity-cum-Life Assurance cash accumulation policy and HDFC Standard Life's Group Unit Linked Plan - For Defined Benefit Scheme.

The Trust formed by the Company manages the investments of provident fund plan.

d) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

e) The Company expects to contribute Rs, 11.00 Crore (Previous Year - Rs, 9.00 Crore) to Gratuity fund and 118.84 Crore (Previous Year -t 19.12 Crore) to trust managed provident fund in the year 2016.

f) Post employment defined benefit plan expenses are included under employee benefit expenses in the statement of Profit and Loss.

*Since there is surplus, the same has not been recognized in Balance Sheet, only liability recognized in Balance Sheet.

# Experience adjustments information for the year 2011 is not available, hence not disclosed.

h) Amount recognized as an expense under employee benefit expenses in the statement of Profit and Loss in respect of other long term benefits is Rs, 22.29 Crore (Previous Year - Rs, 39.89 Crore).

i) Present value of compensated absences at year end is Rs, 38.44 Crore (Previous Year - Rs, 109.22 Crore). During the year, the Company has contributed Rs, 75 Crore to the fund against provision for compensated absences.

j) Present value of Long service award and other benefit plan obligation at year end is Rs, 7.17 Crore (Previous Year -t 9.88 Crore). This scheme is non funded.

2. SEGMENT REPORTING

The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the differing risks and returns, the organization structure and internal reporting system. The Company's operations predominantly relate to manufacture of Cement and Ready Mix Concrete. The export turnover is not significant in the context of total turnover of the company and further the risk and returns are not significantly different from that of India. As such there is only one geographical segment.

b) Operating lease payment recognized in Statement of Profit and Loss amounting to Rs, 173.64 Crore (Previous Year -Rs, 133.82 Crore)

c) General description of the leasing arrangement:

(i) Leased Assets: Grinding facility, Concrete pumps, Godowns, Transit Mixer, Flats, Office premises and other premises.

(ii) Future lease rentals are determined on the basis of agreed terms.

(iii) There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

(iv) At the expiry of the lease term, the Company has an option either to return the asset or extend the term by giving notice in writing.

3. RELATED PARTY DISCLOSURE

(A) Names of the Related parties where control exists: Nature of Relationship_

1 LafargeHolcim Ltd (Formerly known as Holcim Ltd) Ultimate Holding Company

2 Holderind Investments Ltd Holding Company of Holcim(lndia)Private Limited

3 Holcim (India) Private Limited Holding Company

4 Bulk Cement Corporation (India) Limited Subsidiary Company

5 ACC Mineral Resources Limited Subsidiary Company

6 Lucky Minmat Limited Subsidiary Company

7 National Limestone Company Private Limited Subsidiary Company

8 Singhania Minerals Private Limited Subsidiary Company

9 Oneindia BSC Private Limited Joint venture Company (w.e.f 13 August 2015)

(B) Others - With whom transactions have been taken place during the year

(a) Names of other Related parties Nature of Relationship

1 Alcon Cement Company Private Limited Associate Company

2 Asian Concretes and Cements Private Limited Associate Company

3 Aakaash Manufacturing Company Private Limited Associate Company

4 Lafarge India Private Limited Fellow Subsidiary (w.e.f 10 July 2015)

5 Ambuja Cements Limited Fellow Subsidiary

6 Holcim Technology (Singapore) Pte Ltd Fellow Subsidiary

7 Holcim (Lanka) Ltd I Fellow Subsidiary

8 P T Holcim Indonesia Tbk Fellow Subsidiary

9 Holcim Services (South Asia) Limited Fellow Subsidiary

10 Holcim Cement (Bangladesh) Ltd Fellow Subsidiary

Names of other Related parties Nature of Relationship

11 Holcim (Vietnam) Ltd Fellow Subsidiary

12 Holcim (Malaysia) SDN Bhd Fellow Subsidiary

13 Holcim Foundation I Entity controlled by LafargeHolcim Ltd

14 Holcim Philippines Fellow Subsidiary

15 Holcim Services (Asia) Ltd Fellow Subsidiary

16 Holcim Group Services Ltd Fellow Subsidiary

17 Holcim Technology Ltd Fellow Subsidiary

18 Holcim Trading Pte Ltd Fellow Subsidiary

19 ALJabor Cement Industries Co. Fellow Subsidiary

20 National Cement Factory Associate Company of Fellow Subsidiary

21 Holcim (Romania) S.A. Fellow Subsidiary

22 Holcim Azerbaijan Fellow Subsidiary

23 Holcim (Canada) Inc. Fellow Subsidiary (b) Key Management Personnel:

Name of the Related Party Nature of Relationship

1 Mr. Harish Badami CEO & Managing Director (w.e.f 13th August 2014)

2 Mr. Kuldip K. Kaura CEO & Managing Director (Upto 12th August 2014)

3 Mr.Sunil K. Nayak__ Chief Financial Officer

4 Mr. Burjor D. Nariman | Company Secretary

c) The Company had filed writ / appeal petitions against the orders / notices of various authorities demanding Rs, 114.24 Crore (Previous Year -Rs, 106.59 Crore) towards demand of additional Royalty on Limestone based on the ratio of 1.6 tonnes of Limestone to 1 tonne of Cement produced at its factories in Chattisgarh and on cement produced visa vis consumption of limestone at its factory in Tamil Nadu. The Mad hya Pradesh High Court has decided this matter in favour of the Company by directing the Authorities to only demand Royalty based on quantity of Limestoneactua I ly mined and recorded through statutory documentation, and not based on any ratio. The Company holds the view that the payment of royalty on limestone is correctly made by the Company based on the actual quantity of limestone extracted, and feels that similar relief can also be expected from the Judiciary and/or Authorities in the cases of Chattisgarh & Tamil Nadu Units. In view of the demand being legally unjustifiable, and due to the decision of the Madhya Pradesh High Court, directly on this issue, the Company does not expect any liability in above matter.

4. (B) Material Demands and disputes considered as "remote" by the Company

a) The Company had availed Sales Tax Incentives in respect of it's new 1 MTPA Plant at Gagal (Gagal ll)underthe HP State Industrial Policy, 1991. The Company had accrued Sales Tax Incentives aggregating Rs, 56 Crore. The Sales Tax Authorities had introduced certain restrictive conditions after commissioning of the unit stipulating that incentive is available only for incremental amount over the base revenue and production (of Gagal I) prior to the commissioning of Gagal II. The Company contends that such restrictions are not applicable to the unit as Gagal II is a new unit, as decided by the HP High Court and confirmed by the Supreme Court while determining the eligibility for Transport Subsidy. The Department had recovered Rs, 64 Crore (Tax of Rs, 56 Crore and interest ofRs, 8 Crore) and the same is accounted as an amount recoverable.

The HP High Court, had, in 2012, dismissed the Company's appeal. The Company believes the Hon'ble High Court's judgment is based on an erroneous understanding of certain facts and legal positions and that it also failed to consider certain key facts. The Company has been advised by legal experts that there is no change in the merits of the Company's case. Based on such advice, the Company filed a Special Leave Petition before the Hon'ble Supreme Court in, which is pending.

b) The Company was eligible for certain incentives (in the nature of One Time Lumpsum Capital Subsidy and refund of incremental VAT paid) in respect of its investment towards modernization and expansion of the Chaibasa Cement Unit pursuant to confirmation received under the State Industrial Policy of Jharkhand. Accordingly, the company has made claims for refund of VAT paid each financial year. However, no disbursals were made (except an amount of Rs, 7 Crore representing part of the One Time Lumpsum capital Subsidy Claim of Rs, 15 Crore) as the authorities have raised various new conditions and restriction, that were extraneous to the approvals and confirmations expressly received by the Company. The Company had filed two writ appeals before the Jharkhand High Court against the restrictions and disputes on the extent of the eligible claims now being sought to be effected / raised by the Government.

The Division Bench of the Jharkhand High Court, while dealing with appeals by both the Company and the State of Government, against a single bench order only partially allowing the Companies claim, in it's order dated February 24, 2015, has allowed the Companies Appeal in totality while dismissing the Governments Appeal, thereby confirming that the entire amount claimed by the Company is correct and hence payable immediately. Pursuant to this order, a cumulative amount of Rs, 235 Crore stand accrued in the books up to December, 2015.

The Government of Jharkhand has filed an SLP in the Supreme Court against the order of the division bench, which has been admitted. In its interim order, the Supreme Court had, while not staying the Division Bench Order, has only stayed disbursement of 40% of the amount due.

The Company has also pursued a contempt petition filed in the High Court of Jharkhand against non disbursal of amounts due by the Government. Consequently, as of date, the company has received Rs, 64 Crore in part disbursement from the Government of Jharkhand.

The Company is pursuing the matter of disbursement of further amounts outstanding. The Company is of the view, and also has been advised, that the merits are strongly in its favor and it expects that the SLP shall be rejected upholding the order of the Division bench of the Jharkhand HC by the Apex Court.

c) The Company had set up a captive power plant ('Wadi TG 2') in the year 1995-96. This plant was sold to Tata Power Co. Ltd., in the year 1998-99 and was subsequently repurchased from it in the year 2004-05. The Company had purchased another captive power plant ('Wadi TG 3', set up by Tata Power Co. Ltd. in the year 2002-03) in 2004-05. Both these power plants were eligible for tax holiday under the provisions of Section 80IA of the Income Tax Act, 1961. The Income tax department has disputed the Company's claim of deduction under Section 80IAof the Act, on the ground that the conditions prescribed under the section are not fulfill led. In case of Wadi TG 2, in respect of the demand of Rs, 56.66 Crore (net of provision), the Company is in appeal before the ITAT and in case of Wadi TG 3 in respect of the demand of Rs, 115.62 Crore, which was set aside by the ITAT, the Department is in appeal against the decision in favour of the Company. The Company believes that the merits of the claims are strong and will be allowed.

d) One of the Company's Cement manufacturing plants located in Himachal Pradesh was eligible, under the State Industrial Policy for deferral of its sales tax liability arising on sale of cement manufactured in the said plant. The Excise and Taxation department of the Government of Himachal Pradesh, disputed the eligibility of the company to such deferment on the ground that the company also manufactures an intermediate product, viz. Clinker, arising in the manufacture of cement, and such intermediate product was is in the negative list. A demand of Rs, 82.37 Crore was raised. The Company filed a writ petition before High Court of Himachal Pradesh against the demand. The case has been admitted and the hearing is in process. The Company believes its case is strong and the demand shall not sustain under law.

e) The Company is eligible for incentives for one of its cement plants situated in Maharashtra, under a Package Scheme of Incentives of the Government of Maharashtra. The scheme inter alia, includes refund of royalty paid by the Company on extraction or procurement of various raw materials (Minerals). The Department of Industries has disputed the Company's claim for refund of royalty on an erroneous technical interpretation of the sanction letter issued to the Company, that only the higher of the amount of (i) VAT Refund and (ii) Royalty refund claim amounts, each year, shall be considered. The Company maintains that such annual restriction is not applicable as long as the cumulative limit of claim does not exceed the amount of eligible investment. The Company has accrued an amount of Rs, 106 Crore till December 31, 2015 (Rs, 73 Crore till December 31, 2014) on this account. The Company has filed an appeal before the Bombay High Court challenging the stand of the Government, which is admitted and pending. The Company believes that the merits of the claim are strong.

f) Consequent upon the Supreme Court's judgment in Goa Foundation case, restricting the "deemed renewal" provision of captive mining leases to the first renewal period, the Company had received demand from District Mining Officer for Rs, 881 Crore for being penalty for alleged illegal mining activities carried out by the Company during January 1991 to September 2014. The aforesaid demands were challenged by the Company and Writ Petition with High Court of Jharkhand. The petition has been admitted subject to a token deposit of Rs, 48 Crore which shall be refundable in case the matter is decided in the Companies favor. The Company is of the considered view based on legal advice, that this demand does not have merit, and shall not stand the test of judicial scrutiny, considering that the said mining, leases pending State Government's approval, have been automatically extended up to March 31, 2030 by Mines and Minerals (Development and Regulation) (Amendment) Act, 2015 without any recourse being made available to the State Government.

5. The Competition Commission of India (CCI) in 2012 had imposed a penalty ofRs, 1,147.59 Crore for alleged contravention of the provisions of the Competition Act, 2002 (the Act). On the Company's appeal, Competition Appellate Tribunal (COMPAT).vide its interim order, stayed the penalty with a condition to deposit 10% of the penalty amount, which was deposited. The amount of penalty was disclosed as a contingent liability in the financial statements up to the previous year.

On December 11, 2015 the COMPAT, vide its final order, set aside the order of the CCI and remitted the matter to the CCI for fresh adjudication of the issues relating to the alleged violation of relevant provisions of the Act, for passing a fresh order. Further, in terms of the order, the Company has received the refund of deposit, along- with accumulated interest.

This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

6. INTEREST IN JOINT VENTURE

During the year, the Company subscribed 25,01,000 (Previous Year - Nil) equity shares for a total consideration of Rs, 2.50Crore (Previous Year - Nil) in One India BSC Private Limited, which is a jointly controlled entity with an equal equity participation with Ambuja Cements Limited, a fellow subsidiary Company, with aim to provide back office services with respect to routine processes.

7. ACC Mineral Resources Limited (AMRL), a wholly-owned subsidiary of the Company, through its joint-venture had secured development and mining rights for four coal blocks allotted to Madhya Pradesh State Mining Corporation Ltd. These allocations stand cancelled pursuant to the order of the Supreme Court ruling that allocation of various coal blocks, including these, was arbitrary and illegal. The Government of India has commenced auctioning process for all such blocks in a phased manner. The auctioning for Bicharpur, being one of the four blocks, is completed, with the block being awarded to the successful bidder. Pursuant to a vesting order in this regard, possession of the coal mine has been handed over to the successful bidder, with which the Company is in discussions for transfer of remaining assets. In respect of other three blocks, auctioning dates have not yet been announced.

8. During the year, the Company has provided Rs, 15.15 Crore in ACC Mineral Resources Limited (Previous year -Rs, 4.13 Crore in National Limestone Company Private Limited) for diminution in the value of these investment considering the diminution other than temporary nature.

9. In the previous year, 'Tax adjustments for earlier years' aggregating Rs, 309.23 Crore comprises write-back of provision for income tax arising on conclusion of assessment of a year, and upon a consequential review of tax provisions for unassisted years.

10. The Company has arrangements with few third parties whereby it sells clinker to them and purchases Cement manufactured by them out of such clinker. While the transactions are considered as individual sale / purchase transactions for determination of taxable turnover and tax under VAT laws, considering the accounting treatment prescribed under various accounting guidance, revenue for sale of such clinker of Rs, 26.29 Crore (Previous year -Rs, 22.84 Crore) has not been recognized as a part of the Turnover but has been adjusted against cost of purchase of cement so converted.

(b) Details of Investments made are given in Note 11 & 14.

(c) Guarantee given on behalf of Lucky Minmat Limited, wholly owned subsidiary company, of Rs, 0.12 Crore (Previous Year -Rs, 0.12 Crore) for the purpose of renewal of mining lease.

(d) The loanees have not made any investments in the shares of the Company.

11. Pursuant to provisions of Schedule II of the Companies Act, 2013, becoming applicable to the Company w.e.f. January 1, 2015, the Company has reviewed and where necessary, revised estimates of useful lives of fixed assets. Accordingly, Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, an additional charge of Rs, 153.17 Crore, being the carrying amount as of January 1, 2015 of fixed assets with no remaining useful life (as revised) as of that date, is recognized in the Statement of Profit and Loss for the year ended December 31, 2015 and disclosed as an exceptional item.

Had this change in the useful life of fixed assets not been made, depreciation for the year ended December 31, 2015 would have been lower byRs, 111.61 Crore and the profit after-tax would have been higher byRs, 173.14 Crore.

12. The Company has received approval from the Company Law Board under Section 2(41) of the Companies Act, 2013 permitting the Company to continue having 1st January - 31st December as its Financial Year.

13. COMPARATIVE FIGURES

Previous year's figures have been regrouped / reclassified wherever necessary, to conform to current year's classification.


Dec 31, 2014

1 COMPANY OVERVIEW

ACC Limited (the Company) is a public limited company domiciled and headquartered in India and incorporated under the provision of Companies Act, 1913. Its shares are listed on two stock exchanges in India. The Company is engaged in the manufacturing and selling of Cement and Ready mix concrete. The Company caters mainly to the domestic market.

2. i) Terms / rights attached to equity shares

The company has only one class of equity shares having par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

ii) The Company has issued total 5,064 (Previous Year - 63,537) Equity shares Rs. 10 each fully paid during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option plan, wherein part consideration was received in form of employee services.

3. LONG-TERM BORROWINGS

*Amount disclosed under the head "Other Current Liabilities" (Refer Note - 9)

i) 8.45% Debentures were redeemable at par at the end of five years from the date of allotment, viz 07 October 2009. These debentures were secured by a charge on all movable and immovable assets under the Debenture Trust Deed. During the year, the Company has redeemed 320 debentures (Previous year - Nil) of Rs. 32 Crore (Previous year -Rs. Nil).

ii) Deferred Payment Liability was payable to the Industrial Development Corporation of Orissa Limited (IDCOL) in eight equal annual installments of Rs. 1.62 Crore beginning from 2007 without interest or penalty.

iii) Deferred sales tax loan was interest-free and payable in 12 yearly installments of Rs. 1.41 Crore each beginning from 2003.

4. OTHER EXPENSES

i) Includes excise duty related to the difference between the closing stock and opening stock.

ii) Includes excise duty on captive consumption of Clinker Rs. Nil (Previous Year - Rs. 6.58 Crore)

iii) Miscellaneous expenses includes:

(a) Loss on sale / write off and impairment of Fixed Assets (Net) - Rs. 15.88 Crore (Previous Year - Rs. 15.78 Crore)

(b) Provision for other than temporary diminution in long term investment of Rs. 4.13 Crore (Previous year - Rs. 17.86 Crore)

(c) Investments written off of Rs. 0.69 Crore (Previous year - Rs. Nil)

5. EMPLOYEE BENEFITS:

a) Defined Contribution Plans - Amount recognised and included in Note 26 "Contributions to Provident and other Funds" of Statement of Profit and Loss Rs. 14.82 Crore (Previous Year- Rs. 14.59 Crore).

b) Defined Benefit Plans - As per actuarial valuation on December 31, 2014

The Company has a defined benefit gratuity and post retirement medical benefit plans as given below:

i. Every employee who has completed minimum five years of service is entitled to gratuity at 15 days salary for each completed year of services. The scheme is funded with insurance companies in the form of qualifying insurance policies.

ii. Benefits under Post Employment medical Benefit plans are payable for actual domiciliary treatment / hospitalization for employees and their specified relatives. The scheme is Non Funded.

iii. Every employee who has joined before December 01,2005 and separates from service of the Company on Superannuation and on medical grounds is entitled to additional gratuity. The scheme is Non Funded.

6. a) Basis used to determine expected rate of return on assets:

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligation. The Gratuity Scheme is invested in Life Insurance Corporation (LIC) of India''s Group Gratuity-cum-Life Assurance cash accumulation policy and HDFC Standard Life''s Group Unit Linked Plan - For Defined Benefit Scheme.

b) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

c) The Company expects to contribute Rs. 9.00 Crore (Previous year -Rs. 7.50 Crore) to Gratuity fund in the year 2015.

d) Post employment defined benefit plan expenses are included under employee benefit expenses in the statement of Profit and Loss.

e) Provident Fund

Provident fund for certain eligible employees is managed by the Company through trust " The Provident Fund of ACC Ltd.", in line with the Provident Fund and Miscellaneous Provision Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee.

In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary has provided a valuation of provident fund liability and based on the assumption provided below there is no shortfall as at December 31,2014 and December 31,2013.

f) Amount recognised as an expense under employee benefit expenses in the statement of Profit and Loss in respect of other benefits is Rs. 39.89 Crore (Previous Year-Rs. 29.52 Crore).

g) Present value of other benefits obligation at year end is Rs. 119.10 Crore (Previous year Rs. 100.15 Crore). These schemes are Non Funded.

7. SEGMENT REPORTING

The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the differing risks and returns, the organisation structure and internal reporting system. The Company''s operations predominantly relate to manufacture of cement and Ready mix concrete. The export turnover is not significant in the context of total turnover of the company and further the risk and returns are not significantly different from that of India. As such there is only one geographical segment.

Inter segment transfers:

Inter Segment Transfer Pricing Policy - Cement supplied to ready mix concrete activity and ready mix concrete supplied to Cement activity is based on current market prices. All other inter segment transfers are at cost.

8. OPERATING LEASE

a) Operating lease payment recognised in Statement of Profit & Loss amounting to Rs. 133.82 Crore (Previous Year - Rs. 116.54 Crore)

b) General description of the leasing arrangement:

(i) Leased Assets: Grinding facility, Concrete pumps, Godowns, Transit Mixer, Flats, Office premises and other premises.

(ii) Future lease rentals are determined on the basis of agreed terms.

(iii) There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

(iv) At the expiry of the lease term, the Company has an option either to return the asset or extend the term by giving notice in writing.

9. (A) CONTINGENT LIABILITIES NOT PROVIDED FOR -

2014 2013 Rs. Crore Rs. Crore

a) Claims not acknowledged by the Company

Sales tax 31.43 30.22

Customs demand 30.97 17.69

Claim by Suppliers 36.79 36.79

Labour related 29.57 26.48

Claims for mining Lease rent 73.46 -

Others 23.14 27.98

TOTAL 225.36 139.16

In respect of above matters, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums / authorities.

b) Indemnity, Guarantee/s given to Banks/ Financial Institutions, Government 341.73 256.16 Bodies and others {Including Guarantee given on behalf of Subsidiary Company of Rs. 0.12 Crore (Previous Year - Rs. Nil)}

c) Bills discounted 22.38 9.51

d) The Company had filed petitions against the orders / notices of various authorities demanding Rs. 106.59 Crore (Previous Year- Rs. 211.73 Crore including MP) towards demand of additional Royalty on Limestone based on the ratio of 1.6 tonnes of Limestone to 1 tonne of Cement produced at its factories in Chattisgarh and on cement produced vis a vis consumption of limestone at its factory in Tamil Nadu. Recently, the Madhya Pradesh High Court has decided the matter in favour of the Company by directing the Authorities to only demand Royalty based on quantity of Limestone, actually mined and recorded through statutory documentation, and not based on any ratio.

The Company holds the view that the payment of royalty on limestone is correctly made based on the actual quantity of limestone extracted from the mining area, and feels that similar relief can also be expected from the Judiciary and / or Authorities in the cases of Chattisgarh & Tamil Nadu Units. In view of the demand being legally unjustifiable, and due to the decision of the Madhya Pradesh High Court, the Company does not expect any liability in above matter.

e) The Competition Commission of India issued an Order dated June 20, 2012, imposing penalty on certain cement manufacturers, including the Company, concerning alleged contravention of the provisions of the Competition Act, 2002, and imposed a penalty of Rs. 1,147.59 Crore on the Company. The Company had filed an appeal against the said Order before the Competition Appellate Tribunal (COMPAT). Pending final disposal of the appeal, the COMPAT has stayed the penalty with a condition to deposit 10% of the penalty amount, which has been deposited in the form of short term bank fixed deposit with lien in favour of COMPAT. The fixed deposit has been renewed periodically on maturity along with interest of Rs. 13.81 Crore. Based on the advice of external legal counsel, the Company believes that it has good grounds for a successful appeal. Accordingly, no provision is considered necessary.

9. (B) MATERIAL DEMANDS AND DISPUTES CONSIDERED AS "REMOTE" BY THE COMPANY

a) The Company had availed Sales Tax Incentives in respect of it''s new 1 MTPA Plant at Gagal (Gagal II) under the HP State Industrial Policy, 1991. The Company had accrued Sales Tax Incentives aggregating Rs. 56 Crore. The Sales Tax Authorities had introduced certain restrictive conditions after commissioning of the unit stipulating that incentive is available only for incremental amount over the base revenue and production (of Gagal I) prior to the commissioning of Gagal II. The Company contends that such restrictions are not applicable to the unit as Gagal II is a new unit, as decided by the HP High Court and confirmed by the Supreme Court while determining the eligibility for Transport Subsidy. The Department had recovered Rs. 64 Crore (Tax of Rs. 56 Crore and interest of Rs. 8 Crore) and the same is accounted as an amount recoverable.

The HP High Court, had, in 2012, dismissed the Company''s appeal. The Company believes the Hon''ble High Court''s judgment is based on an erroneous understanding of certain facts and legal positions and that it also failed to consider certain key facts. The Company has been advised by legal experts that there is no change in the merits of the Company''s case. Based on such advice, the Company filed a Special Leave Petition before the Hon''ble Supreme Court in , which is pending.

b) The Company was eligible for certain incentives (in the nature of One Time Lumpsum Captal Subsidy and refund of incremental VAT paid) in respect of its investment towards modernization and expansion of the Chaibasa Cement Unit pursuant to confirmation received under the State Industrial Policy of Jharkhand. Accordingly, the company has made claims for refund of VAT paid each financial year. However, no disbursals were made (except an amount of Rs. 7 Crore representing part of the One Time Lumpsum capital Subsidy Claim of Rs. 15 Crore) as the authorities have raised various new conditions and restriction, that were extraneous to the approvals and confirmations expressly received by the Company. The Company had filed two writ appeals before the Jharkhand High Court against the restrictions and disputes on the extent of the eligible claims now being sought to be effected / raised by the Government.

In October 2013, the High Court (Single Bench) decided the matter partially in favour of the Company. Consequently, the Company has accrued, on account of VAT Refund, Rs. 95 Crore, and in respect of the unpaid One Time Lumpsum Capital Subsidy, reversed a provision of Rs. 8 Crore made in an earlier year. Based on the Court direction, the Company has submitted its revised claim in this regard.

The Company has also preferred an appeal before the Division Bench of the Jharkhand High Court for the balance claim. Similarly, the Jharkhand Government has preferred an appeal against the part of the order of the single Judge, which was in the Company''s favour. The appeals have been heard on January 19, 2015, and the order reserved.

c) The Company had set up a captive power plant (''Wadi TG 2'') in the year 1995-96. This plant was sold to Tata Power Co Ltd., in the year 1998-99 and was subsequently repurchased from it in the year 2004-05. The Company had purchased another captive power plant (''Wadi TG 3'', set up by Tata Power Co Ltd in the year 2002-03) in 2004-05. Both these power plants were eligible for tax holiday under the provisions of Section 80IA of the Income Tax Act, 1961. The Income tax department has disputed the Company''s claim of deduction under Section 80IA of the Act, on the ground that the conditions prescribed under the section are not fulfilled. In case of Wadi TG 2, in respect of the demand of Rs. 56.66 Crore (net of provision), the Company is in appeal before the ITAT and in case of Wadi TG 3 in respect of the demand of Rs. 115.62 Crore, which was set aside by the ITAT, the Department is in appeal against the decision in favour of the Company. The Company believes that the merits of the claims are strong and will be allowed.

d) One of the Company''s Cement manufacturing plants located in Himachal Pradesh was eligible, under the State Industrial Policy for deferral of its sales tax liability arising on sale of cement manufactured in the said plant. The Excise and Taxation department of the Government of Himachal Pradesh, disputed the eligibility of the company to such deferment on the ground that the company also manufactures an intermediate product, viz. Clinker, arising in the manufacture of cement, and such intermediate product was is in the negative list. A demand of Rs. 82.37 Crore was raised. Company filed a writ petition before High Court of Himachal Pradesh against the demand. The case has been admitted and the hearing is in process. The Company believes its case is strong and the demand shall not sustain under law.

e) The Company is eligible for incentives for one of its cement plants situated in Maharashtra, under a Package Scheme of Incentives of the Government of Maharashtra. The scheme inter alia, includes refund of royalty paid by the Company on extraction or procurement of various raw materials (Minerals). The Department of Industries has disputed the Company''s claim for refund of royalty on an erroneous technical interpretation of the sanction letter issued to the Company, that only the higher of the amount of (i) VAT Refund and (ii) Royalty refund claim amounts, each year, shall be considered. The Company maintains that such annual restriction is not applicable as long as the cumulative limit of claim does not exceed the amount of eligible investment. The Company has accrued an amount of Rs. 73 Crore till December 2014 on this account. The Company has filed an appeal before the Bombay High Court challenging the stand of the Government, which is admitted & pending. The Company believes that the merits of the claim are strong.

10. ACC Mineral Resources Limited (''AMRL''), a wholly owned subsidiary of the Company, had participated in four Joint Ventures with the Madhya Pradesh State Mining Corporation Limited (''MPSMCL'') for development and mining of four coal blocks allocated to MPSMCL. The Company had applied for the development and mining operations through a competitive bidding process, consequent to which the JVs were effected, in which AMRL and MPSMCL hold 49% and 51% shares respectively. As of December 31, 2014, the amount incurred, invested and advanced (including deposits to MPSMCL and other parties) by the Company in this regard is approximately Rs. 153.79 Crore.

The Hon''ble Supreme Court, vide it''s decision of September 24, 2014, held that allocation of various coal blocks, including those allocated to MPSMCL, is arbitrary and illegal, and hence liable to be cancelled. Subsequently, the Government promulgated The Coal Mines (Special Provisions) Ordinance, 2014, which intends to take appropriate action to deal with the situation arising pursuant to the Hon''ble Supreme Court''s decision.

The management, based on its understanding of it''s contractual rights under its JV agreements, its interpretation of the Ordinance and on the basis of legal advice, believes that the financial loss or operational impact if any, will not be significant.

11. During the year, the Company has provided Rs. 4.13 Crore in National Limestone Company Private Limited (Previous year- Rs. 17.86 Crore in Shiva Cement Limited) for diminution in the value of these investment considering the diminution in value of this investment other than temporary nature.

12. During the year, the Company has written back Rs. 112.75 Crore of provision for income-tax upon completion of assessment. Outcome of certain matters in this assessment, read with judicial precedents, provides additional information relating to certain tax positions, which has a bearing on some subsequent unassessed years, resulting in provision for tax recognized of Rs. 196.48 Crore for those years being considered no longer necessary. Accordingly, total amount of Rs. 309.23 Crore (Previous Year - Rs. 216.74 Crore) have been written back during the year and disclosed separately as ''Tax adjustments for earlier years.

13. The Company has arrangements with few third parties whereby it sells clinker to them and purchases Cement manufactured by them out of such clinker. While the transactions are considered as individual sale / purchase transactions for determination of taxable turnover and tax under VAT laws, considering the accounting treatment prescribed under various accounting guidance, revenue for sale of such clinker of Rs. 22.84 Crore (Previous year - Rs. 25.88 Crore) has not been recognized as a part of the Turnover but has been adjusted against cost of purchase of cement so converted.

14. COMPARATIVE FIGURES :

Previous year''s figures have been regrouped / reclassified wherever necessary, to conform to current year''s classification.


Dec 31, 2013

1 COMPANY OVERVIEW

ACC Limited (the Company) is a public limited company domiciled and headquartered in India and incorporated under the provision 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 Ready mix concrete. The Company caters mainly to the domestic market.

2. EMPLOYEE BENEFITS

a) Defined Contribution Plans - Amount recognised and included in Note 27 "Contributions to Provident and other Funds" of Statement of Profit and Loss Rs. 14.59 Crore (Previous Year - Rs. 16.23 Crore).

b) Defined Benefit Plans - As per actuarial valuation on December 31, 2013

The Company has a defined benefit gratuity and post retirement medical benefit plans as given below:

i. Every employee who has completed minimum five years of service is entitled to gratuity at 15 days salary for each completed year of services. The scheme is funded with insurance companies in the form of a qualifying insurance policy.

ii. Benefits under Post Employment medical Benefit plans are payable for actual domiciliary treatment / hospitalization for employees and their specified relatives.

iii. Every employee who has joined before 1st December 2005 and separates from service of the Company on Superannuation and on medical grounds is entitled to additional gratuity. The scheme is Non Funded.

c) Basis used to determine expected rate of return on assets:

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligation. The Gratuity Scheme is invested in Life Insurance Corporation (LIC) of India''s Group Gratuity-cum-Life Assurance cash accumulation policy and HDFC Standard Life''s Group Unit Linked Plan - For Defined Benefit Scheme.

d) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

e) The Company expects to contribute Rs. 7.50 Crore (Previousyear - Rs. Nil) to Gratuity fund in the year 2014.

f) Post employment defined benefit plan expenses are included under employee benefit expenses in the statement of Profit and Loss.

h) Provident Fund

Provident fund for certain eligible employees is managed by the Company through trust " The Provident Fund of ACC Ltd.", in line with the Provident Fund and Miscellaneous Provision Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee.

In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary has provided a valuation of provident fund liability and based on the assumption provided below there is no shortfall as at December 31, 2013 and December 31, 2012.

3. SEGMENT REPORTING

The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the differing risks and returns, the organisation structure and internal reporting system. The Company''s operations predominantly relate to manufacture of cement and Ready mix concrete. The export turnover is not significant in the context of total turnover. As such there is only one geographical segment.

Inter segment transfers:

Inter Segment Transfer Pricing Policy - Cement supplied to ready mix concrete activity and ready mix concrete supplied to Cement activity is based on current market prices. All other inter segment transfers are at cost.

4. OPERATING LEASE

b) Operating lease payment recognised in Statement of Profit & Loss amounting to Rs. 79.44 Crore (Previous Year -Rs. 87.66 Crore)

c) General description of the leasing arrangement

(i) Leased Assets: Grinding facility, Dumpers, Cranes and Tippers, Car, Locomotives, Godowns, Flats, Computers, Concrete pumps and other related Office equipments and other premises.

(ii) Future lease rentals are determined on the basis of agreed terms.

(iii) There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

(iv) At the expiry of the lease term, the Company has an option either to return the asset or extend the term by giving notice in writing.

5. AMALGAMATION OF WHOLLY OWNED SUBSIDIARY COMPANIES A) Encore Cement and Additives Private Limited (Encore)

a) During the previous year, pursuant to the scheme of amalgamation (''the Scheme'') of erstwhile Encore Cement and Additives Private Limited with the Company under Sections 391 to 394 of the Companies Act, 1956 sanctioned by Humble Bombay High Court on October 05 2012, entire business and all assets and liabilities of Encore Cement and Additives Private Limited were transferred and vested in the Company effective from January 01, 2011. Accordingly the Scheme was given effect to in the financial statements of previous year.

The Encore was engaged in manufacture and sale of cement.

b) The amalgamation was accounted for under the "Pooling of Interest" method as prescribed by the Accounting Standard 14 "Accounting for Amalgamations" notified under the Companies (Accounting Standards) Rules, 2006 (as amended). Accordingly, the accounting treatment had been given in the previous year as under:-

(i) The assets and liabilities as at January 01, 2011 were incorporated in the financial statement of the Company at its book value.

(ii) Debit balance in the statement of Profit and Loss of Encore as at January 01, 2011 amounting to Rs. 13.42 Crore was adjusted in "Surplus in Statement of Profit and Loss".

(iii) 5,000,000 Equity Shares of Rs. 10 each fully paid in Encore Cement and Additives Private Limited, held as investment by the Company stands cancelled and difference between the book value and face value of such shares amounting to Rs. 6.78 Crore was adjusted against the Statement of Profit and Loss of the Company.

(iv) The accounts of Encore for the year ended December 31, 2011 were finalised as a separate entity. The net profit after tax amounting to Rs. 1.87 Crore for the year ended December 31, 2011 was adjusted in "Surplus in Statement of Profit and Loss".

B) ACC Concrete Limited (ACCCL)

a) During the previous year, pursuant to the scheme of amalgamation (''the Scheme'') of erstwhile ACC Concrete Limited with the Company under Sections 391 to 394 of the Companies Act, 1956 sanctioned by Humble Bombay High Court on October 09 2012, entire business and all assets and liabilities of ACC Concrete Limited were transferred and vested in the Company effective from January 01, 2012. Accordingly the Scheme was given effect to in the financial statements of previous year.

The erstwhile ACC Concrete Limited was engaged in manufacture and sale of Ready mix concrete.

b) The amalgamation was accounted for under the "Pooling of Interest" method as prescribed by the Accounting Standard 14 "Accounting for Amalgamations" notified under the Companies (Accounting Standards) Rules, 2006 (as amended). Accordingly, the accounting treatment had been given in the previous year as under:-

(i) The assets and liabilities as at January 01, 2012 were incorporated in the financial statement of the Company at the book value.

(ii) Debit balance in the Statement of Profit and Loss of ACC Concrete Limited amounting to Rs. 197.96 Crore was adjusted in "Surplus in Statement of Profit and Loss".

(iii) 15,00,000 Equity Shares of Rs. 10 each fully paid and 10,00,00,000 1% Cumulative Redeemable Preference Share of Rs. 10 each Fully paid in ACC Concrete Limited, held as investment by the Company were cancelled.

6. (A) Contingent liabilities not provided for -

2013 2012 Rs. Crore Rs. Crore

a) Claims not acknowledged by the Company

Sales tax 30.22 30.14

Customs demand 17.69 -

Claim by Suppliers 36.79 36.79

Labour related 26.48 23.42

Others 27.98 20.24

139.16 110.59

In respect of above matters, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums / authorities.

b) Indemnity, Guarantee/s given to Banks/ Financial Institutions, 256.16 216.19 Government Bodies and others

c) Bills discounted 9.51 13.25

d) The Company had filed petitions against the orders / notices of various authorities demanding Rs. 211.73 Crore (Previous Year - Rs. 193.60 Crore) towards payment of additional Royalty on Limestone based on the ratio of 1.6 tonnes of Limestone to 1 tonne of Cement produced at its factories in Madhya Pradesh and Chattisgarh and on cement produced vis a vis consumption of limestone at its factory in Tamil Nadu. The Company holds the view that the payment of royalty on limestone is correctly made based on the actual quantity of limestone extracted from the mining area.

In view of above demand being legally unjustifiable, the Company does not expect any liability in above matter.

e) The Competition Commission of India issued an Order dated 20th June, 2012, imposing penalty on certain cement manufacturers, including the Company, concerning alleged contravention of the provisions of the Competition Act, 2002, and imposed a penalty of Rs. 1,147.59 Crore on the Company. The Company had filed an appeal against the said Order before the Competition Appellate Tribunal (COMPAT). Pending final disposal of the appeal, the COMPAT has stayed the penalty with a condition to deposit 10% of the penalty amount, which has been deposited in the form of short term bank fixed deposit with lien in favor of COMPAT. The fixed deposit has been renewed on maturity along with interest of Rs. 4.30 Crore. Based on the advice of external legal counsel, the Company believes that it has good grounds for a successful appeal. Accordingly, no provision is considered necessary.

(B) a) The Company had availed Sales Tax Incentives in respect of it''s new 1 MTPA Plant at Gagal (Gagal II) under the HP State Industrial Policy, 1991. The Company had in 2011 accrued Sales Tax Incentives aggregating Rs. 56 Crore even though the Sales Tax Authorities had introduced certain restrictive conditions after commissioning of the unit stipulating that incentive is available only for incremental amount over the base revenue and production (of Gagal I) prior to the commissioning of Gagal II. The Company contends that Gagal II is a new unit, as decided by the HP High Court and confirmed by the Supreme Court while determining the eligibility for Transport Subsidy, and hence such restrictions are not applicable to the unit. The Department had recovered Rs. 64 Crore (Tax of Rs. 56 Crore plus interest of Rs. 8 Crore) and the same is accounted as an amount recoverable.

The HP High Court, had in 2012 dismissed the Company''s appeal. The Company believes the Humble High Court''s judgment is based on an erroneous understanding of certain facts and legal positions and that it also failed to consider certain key facts in its order. The Company has been advised by legal experts that there is no change in the merits of the Company''s case.

Based on the advice, the Company filed a review petition before HP High Court which has recently been rejected, subsequent to which the Company submitted a Special Leave Petition before the Humble Supreme Court.

b) Pursuant to incentives available under a State Industrial Policy in respect of one of its cement plants, the Company has made claims in accordance with its eligibility. However, the disbursal of the amounts claimed was not forthcoming as the authorities have raised various new conditions and restrictions, totally extraneous to the approvals and confirmations expressly received by the Company. The Company had filed two writ appeals before the Jharkhand High Court against the restrictions and disputes on the extent of the eligible claims now being sought to be effected / raised by the Government.

The High Court (Single Bench) has recently decided the matter partially in favor of the Company. Pursuant to the decision of the High Court, the Company has accrued a further amount of Rs. 34.99 Crore and reversed the provision made earlier for capital subsidy of Rs. 8 Crore. The Cumulative amount accrued (including capital subsidy) for the entire period of claims, on this basis, stands at Rs. 86.85 Crore. Based on the court direction, the Company has submitted its revised claim in this regard.

The Company has also preferred an appeal before the Division Bench of the Jharkhand High Court for the balance claim which was turned down by the Humble Single Bench.

7. During the year, the Company has provided Rs. 17.86 Crore for diminution in the value of investment in Shiva Cement Limited considering the diminution in market value of these investments other than temporary nature.

8. During the previous year, effective from 1 January, 2012, the Company had with retrospective effect changed its method of providing depreciation on fixed assets related to Captive Power Plants from the ''Straight Line'' method to the ''Written Down Value'' method, at the rates prescribed in Schedule XIV to the Companies Act, 1956. Accordingly, an additional depreciation charge of Rs. 335.38 Crore relating to period upto December 31, 2011 was disclosed as an exceptional item.

9. Tax adjustments for earlier years of Rs. 216.74 Crore represents write back of tax provision related to earlier assessment years.

10. CAPITALISATION OF EXPENDITURE

Capital work-in-progress includes Pre-operative expenses pending allocation of Rs. 73.93 Crore (Previous year - Rs. 32.80 Crore).

During the year, the company has capitalized the following expenses of revenue nature to the cost of capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

11. COMPARATIVE FIGURES

Previous year''s figures have been regrouped / reclassified wherever necessary, to conform to current year''s classification.


Dec 31, 2012

1. COMPANY OVERVIEW

ACC Limited (the Company) is a public limited company domiciled and headquartered in India and incorporated under the provision 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 Ready mix concrete. The Company caters mainly to the domestic market.

i) Terms / rights attached to equity shares

The company has only one class of equity shares having par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

ii) The Company has issued total 1,20,938 (Previous Year - 3,04,110) Equity shares Rs. 10 each fully paid during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option plan, for which, only exercise price has been recovered in cash.

i) 8.45% Debentures are redeemable at par at the end of five years from the date of allotment, viz 07, October 2009. These debentures are secured by a charge on all movable and immovable assets under the Debenture Trust Deed. During the year, the Company has bought back 2,180 debentures of Rs. 218 Crore, which have been extinguished during the year / subsequent to the year end.

ii) 11.30% Debentures are redeemable at par at the end of five years from the date of allotment, viz 09, December 2008. These debentures are secured by a charge on all movable and immovable assets under the Debenture Trust Deed. During the year, the Company has bought back 1,250 debentures of Rs. 125 Crore, which have been extinguished during the year.

iii) Deferred payment liability is payable to the Industrial Development Corporation of Orissa Limited (IDCOL) in eight equal annual installments of Rs. 1.62 Crore beginning from 2007 without interest or penalty.

iv) Deferred sales tax loan is interest-free and payable in 12 yearly installments of Rs. 1.41 Crore each beginning from 2003.

v) For the current maturities of long-term borrowings, refer note (ii) in Note 10 Other current liabilities.

There is no principal amount and interest overdue to Micro, Small & Medium Enterprises. During the year no interest has been paid to such parties. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

i) There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at December 31, 2012

ii) Current maturities of Long-term borrowings (Refer Notes (ii), (iii) and (iv) in Note 5)

Notes:-

(i) Buildings include cost of Shares Rs. 5,460 (Previous Year - Rs. 5,710) in various Co-operative Housing Societies, in respect of 25 residential flats (Previous Year - 27).

(ii) Buildings include Gross block ofRs. 23.86 Crore (Previous year - Rs. 23.86 Crore) and Net block ofRs. 22.05 Crore (Previous Year - Rs. 22.44 Crore) in respect of which the transfer of title deeds to the name of the Company is under process.

(iii) Plant and Equipment includes assets given on lease to Railways under "Own Your Wagons" Scheme of Rs. 28.48 Crore (Previous Year -Rs. 28.48 Crore) and accumulated depreciation Rs. 28.48 Crore (Previous Year-Rs. 28.48 Crore).

(iv) Plant and Equipment and Buildings include Gross Block ofRs. 12.68 Crore (Previous Year - Rs. 12.68 Crore), Rs. 26.23 Crore (Previous Year- Rs. 26.17 Crore), and Net BlockRs. Nil (Previous Year-Rs. Nil), Rs. 0.12 Crore (Previous Year-Rs. 0.37 Crore), respectively, in respect of expenditure incurred on capital assets, ownership of which does not vest in the Company.

2. EMPLOYEE BENEFITS

a) Defined Contribution Plans - Amount recognised and included in Note 27 "Contributions to Provident and other Funds" of Statement of Profit and Loss Rs. 10.03 Crore (Previous Year -Rs. 8.88 Crore).

b) Defined Benefit Plans - As per actuarial valuation on December 31, 2012

The Company has a defined benefit gratuity and post retirement medical benefit plans as given below:

i. Every employee who has completed minimum five years of service is entitled to gratuity at 15 days salary for each completed year of services. The scheme is funded with insurance companies in the form of a qualifying insurance policy.

ii. Benefits under Post Employment medical Benefit plans are payable for actual domiciliary treatment / hospitalization for employees and their specified relatives.

iii. Every employee who has joined before December 01, 2005 and separates from service of the Company on Superannuation and on medical grounds is entitled to additional gratuity. The scheme is Non Funded.

(Figures in italics pertain to previous year)

c) Basis used to determine expected rate of return on assets:

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligation. The Gratuity Scheme is invested in Life Insurance Corporation (LIC) of India''s Group Gratuity-cum-Life Assurance cash accumulation policy and HDFC Standard Life''s Group Unit Linked Plan - For Defined Benefit Scheme.

d) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

e) The Company expects to contribute Rs. Nil to Gratuity fund in the year 2013.

f) Post employment defined benefit plan expenses are included under employee benefit expenses in the statement of Profit and Loss.

h) Provident Fund

Provident fund for certain eligible employees is managed by the Company through trust "The Provident Fund of ACC Ltd.", in line with the Provident Fund and Miscellaneous Provision Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities.The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee.

In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary has provided a valuation of provident fund liability and based on the assumption provided below there is no shortfall as at December 31, 2012 and December 31, 2011.

i) Amount recognised as an expense under employee benefit expenses in the statement of Profit and Loss in respect of other long term benefits is Rs. 24.95 Crore (Previous Year - Rs. 17.83 Crore).

3. SEGMENT REPORTING

The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the differing risks and returns, the organisation structure and internal reporting system. The Company''s operations predominantly relate to manufacture of cement. Pursuant to the amalgamation of ACC concrete limited during the year, Ready mix concrete business is disclosed as a separate segment. The export turnover is not significant in the context of total turnover.

Inter segment transfers:

Inter Segment Transfer Pricing Policy - Cement supplied to ready mix concrete activity is based on current market prices. All other inter segment transfers are at cost.

b) Operating lease payment recognised in Statement of Profit & Loss amounting to Rs. 106.82 Crore (Previous Year - Rs. 66.67 Crore)

c) General description of the leasing arrangement:

(i) Leased Assets: Grinding facility, Dumpers, Cranes and Tippers, Car, Locomotives, Godowns, Flats, Computers, Concrete pumps and other related Office equipments and other premises.

ii) Future lease rentals are determined on the basis of agreed terms.

(iii) There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

(iv) At the expiry of the lease term, the Company has an option either to return the asset or extend the term by giving notice in writing.

4. AMALGAMATION OF WHOLLY OWNED SUBSIDIARY COMPANIES

A) Encore Cement and Additives Private Limited (Encore)

a) Pursuant to the scheme of amalgamation (''the Scheme'') of erstwhile Encore Cement and Additives Private Limited with the Company under Sections 391 to 394 of the Companies Act, 1956 sanctioned by Hon''ble Bombay High Court on October 05, 2012 entire business and all assets and liabilities of Encore Cement and Additives Private Limited were transferred and vested in the Company effective from January 01, 2011. Accordingly the Scheme has been given effect to in these financial statements.

The Encore was engaged in manufacture and sale of cement.

b) The amalgamation has been accounted for under the "Pooling of Interest" method as prescribed by the Accounting Standard 14 "Accounting for Amalgamations" notified under the Companies (Accounting Standards) Rules, 2006 (as amended). Accordingly, the accounting treatment has been given as under:-

(i) The assets and liabilities as at January 01, 2011 were incorporated in the financial statement of the Company at its book value.

(ii) Debit balance in the statement of Profit and Loss of Encore as at January 01, 2011 amounting to Rs. 13.42 Crore was adjusted in "Surplus in Statement of Profit and Loss".

(iii) 50,00,000 Equity Shares of Rs. 10 each fully paid in Encore Cement and Additives Private Limited, held as investment by the Company stands cancelled and difference between the book value and face value of such shares amounting to Rs. 6.78 Crore was adjusted against the statement of Profit and Loss of the Company.

(iv) The accounts of Encore for the year ended December 31, 2011 were finalised as a separate entity. The net profit after tax amounting to Rs. 1.87 Crore for the year ended December 31, 2011 has been adjusted in "Surplus in Statement of Profit and Loss".

B) ACC Concrete Limited (ACCCL)

a) Pursuant to the scheme of amalgamation (''the Scheme'') of erstwhile ACC Concrete Limited with the Company under Sections 391 to 394 of the Companies Act, 1956 sanctioned by Hon''ble Bombay High Court on October 09 2012, entire business and all assets and liabilities of ACC Concrete Limited were transferred and vested in the Company effective from January 01, 2012. Accordingly the Scheme has been given effect to in these financial statements.

The erstwhile ACC Concrete Limited was engaged in manufacture and sale of Ready mix concrete.

b) The amalgamation has been accounted for under the "Pooling of Interest" method as prescribed by the Accounting Standard 14 "Accounting for Amalgamations" notified under the Companies (Accounting Standards) Rules, 2006 (as amended). Accordingly, the accounting treatment has been given as under:-

(i) The assets and liabilities as at January 01, 2012 were incorporated in the financial statement of the Company at the book value.

(ii) Debit balance in the statement of Profit and Loss of ACC Concrete Limited amounting to Rs. 197.96 Crore was adjusted in "Surplus in Statement of Profit and Loss".

(iii) 15,00,00,000 Equity Shares of Rs. 10 each fully paid and 10,00,00,000 1% Cumulative Redeemable Preference Share of Rs. 10 each Fully paid in ACC Concrete Limited, held as investment by the Company stands cancelled.

In view of above amalgamations the figures for the year ended December 31, 2012 are not strictly comparable to the previous year.

5. During the previous year, the Company has written off expenditure incurred for mining rights aggregating Rs. 19.02 Crore due to an inordinate delay in ability to access the related mining reserves.

6. (A) CONTINGENT LIABILITIES NOT PROVIDED FOR

2012 2011 Rs. Crore Rs. Crore

a) Claims not acknowledged by the Company

Sales tax 30.14 28.47

Claim by Suppliers 36.79 36.79

Labour related 23.42 20.06

Others 20.24 15.71

110.59 101.03

In respect of above matters, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums / authorities.

b) Guarantee given on behalf of subsidiary company - 0.08

c) Indemnity, Guarantee/s given to Banks/ Financial Institutions, Government 216.19 177.91 Bodies and others

d) Bills discounted 13.25 -

e) The Company had filed petitions against the orders / notices of various authorities demanding Rs. 193.60 Crore (Previous Year - Rs. 169.75 Crore) towards payment of additional Royalty on Limestone based on the ratio of 1.6 tonnes of Limestone to 1 tonne of Cement produced at its factories in Madhya Pradesh and Chattisgarh and on cement produced vis a vis consumption of limestone at its factory in Tamil Nadu. The Company holds the view that the payment of royalty on limestone is correctly made based on the actual quantity of limestone extracted from the mining area.

In view of above demand being legally unjustifiable, the Company does not expect any liability in above matter.

f) The Competition Commission of India issued an Order dated June 20, 2012 imposing penalty on certain cement manufacturers, including the Company, concerning alleged contravention of the provisions of the Competition Act, 2002, and imposed a penalty of Rs. 1,147.59 Crore on the Company. The Company has filed an appeal against the Order before the Competition Appellate Tribunal, which is pending for disposal. Based on the advice of external legal counsel, the Company believes it has good grounds for a successful appeal. Accordingly, no provision is considered necessary.

(B) a) The Company had availed Sales Tax Incentives in respect of it''s new 1 MTPA Plant at Gagal (Gagal II) under the HP State Industrial Policy, 1991. The Company had, as on December 31, 2011, claimed and accrued Sales Tax Incentives aggregating to Rs. 56 Crore even though the Sales Tax Authorities had introduced certain restrictive conditions after commissioning of the unit stipulating that incentive is available only for incremental amount over the base revenue and production (of Gagal 1) prior to the commissioning of Gagal

II. The Company contends that Gagal II is a new unit, as decided by the HP High Court and confirmed by the Supreme Court while determining the eligibility for Transport Subsidy, and hence such restrictions are not applicable to the unit. The Department had recovered Rs. 64 Crore (Tax of Rs. 56 Crore plus interest of Rs. 7 Crore) and the same is accounted as an amount recoverable.

The HP High Court, in a recent order, has dismissed the Company''s appeal. The Company feels that the Hon''ble High Court had decided against the Company based on erroneous understanding of certain facts and legal positions and has also failed to consider certain key facts in it''s order. The Company has taken legal opinion / s on the matter and has been advised that there is no change in the merits of the Company''s case and the company should file a review before the High Court for consideration of all the facts appropriately and also file a Special Leave Petetion (SLP) in appeal before the Hon''ble Supreme Court.

The company has already filed the Review Petition before the HP High Court and is in the process of filing an SLP before the Supreme Court. The Company has not made any provision for the amounts in dispute following the legal opinion /s obtained.

b) Pursuant to incentives available under a State Industrial Policy in respect of one of its cement plants, the Company has made claims in accordance with its eligibility. However, the disbursal of the amounts claimed were not forthcoming as the authorities have raised various new conditions and restrictions, totally extraneous to the approvals and confirmations expressly received by the Company. The Company has filed two writ appeals before the Jharkhand High Court against the restrictions and disputes on the extent of the eligible claims now being sought to be effected / raised by the Government. The appeals are expected to come up for hearing on merits in the first quarter of 2013 and the Company expects completely favourable outcome.

During the year, the Company has accrued a further amount of Rs. 10 Crore, following the estimated basis followed in the previous year, representing the quantum of benefits after taking into consideration all the restrictions and disputes now raised by the Jharkhand Government. The Cumulative amount accrued for the entire period of claims, on this basis, stands at Rs. 43 Crore.

7. The Company through its Fraud Risk Mechanism detected certain instances of fraud, involving a representative of the Company colluding with vendors to receive undue benefits, resulting in a loss to the Company of Rs. 0.57 Crore, and incidents of misappropriation by employees of sale proceeds estimated at Rs. 0.30 Crore. The Company has taken necessary steps to further strengthen controls and the services of the concerned employees have been terminated.

8. The Company''s investment in 2,36,50,000 equity shares of Shiva Cement Limited amounting to Rs. 23.65 Crore is a strategic investment and the Company considers the decline in the market value of the investment to be of a temporary nature resulting from the subdued capital market situation.

9. PROPOSED AMALGAMATION

The Board of Directors at its Meeting held on February 03, 2011 and the Members of the Company at the Court convened Meeting held on June 01, 2011 have approved the Scheme of Amalgamation of Lucky Minmat Limited and National Limestone Company Private Limited, wholly owned subsidiaries with the Company.

As per the above Scheme, the appointed date is January 01, 2011. The Scheme of Amalgamation was filed with the Bombay High Court and is pending approval of the Court.

In view of the above, no effect of the above Scheme of Amalgamation has been recognized in the financial statements.

10. During the year, the Company has acquired 100% stake in Singhania Minerals Private Limited, for a total consideration of Rs. 5 Crore, a Company engaged in mining of Limestone.

11. COMPARATIVE FIGURES

Pursuant to the amalgamation of ACCCL and Encore (Refer note - 34), the figures of the current year are not strictly comparable to those of the previous year. Previous year''s figures have been regrouped / reclassified wherever necessary, to conform to current year''s classification.

 
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