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Notes to Accounts of Grasim Industries Ltd.

Mar 31, 2015

GENERAL INFORMATION

Grasim Industries Limited (the "Company") is engaged primarily in two businesses, Viscose Staple Fibre (VSF) and in Cement, through its subsidiary UltraTech Cement Limited. It also produces Rayon Grade Pulp, Caustic Soda and allied Chemicals which are used in the manufacture of VSF. The manufacturing plants of the Company, its Subsidiaries and Joint Ventures are located in India, Canada, Sweden, China, Middle East, Sri Lanka and Bangladesh. The Company is a public limited company and its shares are listed on the Bombay Stock Exchange (BSE), India, and the National Stock Exchange (NSE), India, and the Company''s Global Depository Receipts are listed on the Luxembourg Stock Exchange.

1.1.1 Carrying value of the assets whose useful life is already exhausted as on 1st April, 2014, amounting to Rs. 14.14 Crore net off deferred tax credit of Rs. 4.89 Crore has been recognised in Surplus as per Statement of Profi t and Loss as per Schedule II to the Companies Act, 2013. (Refer Note No 2.11.8)

1.1.2 The Board of Directors has recommended a dividend of Rs. 18 per share for the year ended, 31st March, 2015 (Previous Year Rs. 21 per share). The total cash outfl ows on account of the dividend would be Rs. 165.33 Crore (Previous Year Rs. 192.84 Crore) and on account of Corporate Dividend Tax Rs. 3.37 Crore (Previous Year Rs. 7.48 Crore).

1.1.3 Proposed Dividend (including Corporate Dividend Tax) includes Rs. 0.04 Crore (Previous Year Rs. 0.03 Crore) related to Previous Year.

1.2.1 From 1st April, 2014 as per applicable provisions of Schedule II to the Companies Act, 2013, the depreciation has been provided as per the useful life specifi ed in the Act or as re-assessed by the Company. Carrying value of the assets whose useful life is already exhausted as on 1st April, 2014, amounting to Rs. 14.14 Crore and deferred tax credit of Rs. 4.89 Crore has been recognised in the Surplus as per Statement of Profi t and Loss. Had there been no change as stated above, depreciation would have been higher by Rs. 43.47 Crore for the year ended 31st March, 2015

1.3.1 97,142,856 Equity Shares of Rs. 10 each, received in terms of the Scheme of Amalgamation of Samruddhi Cement Limited with UltraTech Cement Limited, were locked in for a period of 3 years from the date of allotment, i.e. 26th August, 2010.

1.3.2 The investment in Company''s Subsidiary, Grasim Bhiwani Textiles Limited; its Joint Ventures, AV Cell Inc., AV Nackawic Inc., AV Terrace Bay Inc., Birla Jingwei Fibres Company Limited, Aditya Group AB; and its Associate, Idea Cellular Limited, are subject to maintenance of specifi ed holding by the Company until the credit facility provided by certain lenders to respective companies are outstanding.

Without guaranteeing the repayment to the lenders, the Company has also agreed that the affairs of the Subsidiary and JVs will be managed through its nominee directors on the boards of respective borrowing companies, in such a manner that they are able to meet their respective fi nancial obligations.

1.3.3 Investment in shares of Larsen & Toubro Limited are non-transferable, pending disposal of appeal fi led in earlier year by Larsen & Toubro Limited and others in Hon''ble Bombay High Court against the single bench order of the court in favour of the Company.

1.3.4 Provision for diminution in previous year represents diminution in value of shares of Aditya Birla Power Ventures Limited, which has been dissloved under section 560 of the Companies Act, 1956 during the current year.

1.3.5 The Company holds 40% stake in Birla Lao Pulp and Plantations Company Ltd. (BLPP), a joint venture of the Company to secure pulp requirement for its VSF business at a cost of Rs. 91.24 Crore. Considering the present overcapacity in both pulp and fi bre businesses, it''s strategic importance to the Company is diminished. Therefore the Company has provided Rs. 26.24 Cr. (being the excess of the cost over the estimated enterprise value) towards diminution, other than temporary, in the value of the said investment which has been disclosed as Exceptional Item.

Rs. in Crore Current Previous Year Year

2.1 CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

2.1.1 Claims/Disputed Liabilities not acknowledged as Debts:

(a) Custom Duty 11.02 7.06

(b) Sales Tax/Purchases Tax/VAT 0.27 0.10

(c) Excise Duty/Cenvat Credit/Service Tax 86.25 83.16

(d) Water Cess - 17.69

(e) Income Tax 156.88 144.36

(f) Various claims in respect of disputed liabilities of discontinued 34.26 34.26 business in earlier year

(g) Others 32.98 26.95

2.1.2 Out of the 4.1.1 above, disputes pending with revenue and other government authorities challenged/appealed by the Company are:

(a) Income tax demand raised on completion of assessment for 156.88 144.36 Financial Year 2009-10

(b) Excise Duty demanded against Cenvat credit availed in respect of 58.91 54.82 electricity not used for manufacturing

(c) Transfer of Cenvat credit on merger of excise registration of two 21.97 19.44 units disputed by Excise Department

(d) Custom classifi cation dispute on import of coal 9.29 5.11

(e) Water charges for water not made available as per agreement - 17.69

(f) Penalty for not utilising the land within the time limit prescribed 7.93 6.96 as per the sanction document, utilisation of which is delayed due to non-fulfi llment of condition by Gujarat Industrial Development Corporation

(g) Claims arising from disputes of vendors / contractors 7.60 8.26

Cash outfl ows for the above are determinable only on receipt of judgments pending with various authorities/Courts/Tribunals etc.

2.1.3 Other Money for which the Company is contingently liable :

(a) Custom Duty Liability (Net of Cenvat credit), which may arise if 12.41 37.48 obligation for exports is not fulfi lled against import of raw materials and machinery

(b) Bills discounted with banks fully covered by buyers'' letters of - 7.37 credit

2.2 SEGMENT REPORTING

2.2.1 Primary Segment Reporting (by Business Segment)

Primary Segment has been identifi ed based on the nature of products and services, the different risks and returns, and the internal reporting structure. The Company considers Business Segment as the Primary Segment for disclosure. Details of products included in each of the segments are as under:- Fibre and Pulp - Viscose Staple Fibre and Rayon Grade Pulp Chemicals - Caustic Soda, Epoxy and Allied Chemicals

Others - Mainly Textiles

Inter-segment transfers of independent marketable products are at market rates.

Unallocated items include general corporate income, expense, assets and liabilties which are not allocated to any business segment.

(viii) Gratuity:

The Employees'' gratuity fund is managed by a Trust. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method as prescribed by the Accounting Standard (AS)-15 (Revised) - ''Employee Benefi ts'', which recognises each period of service as giving rise to additional unit of employee benefi t entitlement and measure each unit separately to build up fi nal obligation.

(ix) There are no amounts included in the Fair Value of Plan Assets for:

a) Company''s own fi nancial instrument

b) Property occupied by or other assets used by the Company

(x) Basis used to determine Expected Rate of Return on Plan Assets:

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

(xi) Salary Escalation Rate:

The estimates of future salary increases are considered taking into account infl ation, seniority, promotion, increments and other relevant factors.

2.3.1.1 Compensated Absences:

The obligation for compensated absences is recognised in the same manner as gratuity, amounting to charge of Rs. 11.91 Crore (Previous Year Rs. 0.38 Crore).

2.3.2 Defined Contribution Plans:

Amount recognised as expense and included in the Note 3.7 as "Contribution to Provident and Other Funds" Rs. 26.53 Crore (Previous Year Rs. 23.77 Crore).

2.4.1 The Company has spent Rs. 16.71 Cr. on Corporate Social Responsibility Projects/initiatives during the year including Rs. 0.87 Cr. towards capital expenditure.

2.5 The Board of Directors of the Company at its meeting held on 11th February, 2015 has approved a Scheme of Amalgamation (''the Scheme'') for the merger of Aditya Birla Chemicals (India) Limited (''ABCIL'') with the Company w.e.f. 1st April 2015 (the appointed date) in terms of the provisions of sections 391 to 394 of the Companies Act, 1956 read with other applicable provisions of the Companies Act, 1956 and the Companies Act, 2013.

The Scheme will be effective upon obtaining requisite approvals inter alia, approval of shareholders and creditors, sanction of the Scheme of Arrangement by the Hon''ble High Courts, approval of the Competition Commission of India and other regulatory approvals.

On merger of ABCIL with the Company, the shareholders of ABCIL will receive 1 (one) equity share of the Company of face value Rs. 10 each fully paid-up for every 16 (sixteen) equity shares of ABCIL of face value Rs. 10 each fully paid-up.

2.6 Previous year (Year ended 31st March, 2014) fi gures have been regrouped/reclassifi ed, wherever necessary, to correspond with the current year (31st March 2015) classifi cation/disclosure.

2.7 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.


Mar 31, 2014

GENERAL INFORMATION

Grasim Industries Limited (the "Company") is engaged primarily in two businesses, Viscose Staple Fibre (VSF) and in Cement, through its subsidiary UltraTech Cement Limited. It also produces Rayon Grade Pulp, Caustic Soda and allied Chemicals, which are used in the manufacture of VSF. The manufacturing plants of the Company, its Subsidiaries and Joint Ventures are located in India, Canada, Sweden, China, Middle East, Sri Lanka and Bangladesh. The Company is a public limited company and its shares are listed on the Bombay Stock Exchange (BSE), India, and the National Stock Exchange (NSE), India, and the Company''s Global Depository Receipts are listed on the Luxembourg Stock Exchange.

Rs.in Crore

Current Previous Year Year

1.1 CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

1.1.1 Claims/Disputed Liabilities not acknowledged as Debts:

(a) Custom Duty 7.06 2.07

(b) Sales Tax/Purchases Tax/VAT 0.10 0.01

(c) Excise Duty/Cenvat Credit/Service Tax 83.16 1.98

(d) Water Cess 17.69 23.96

(e) Income Tax 144.36 -

(f) Various claims in respect of disputed liabilities of discontinued 34.26 70.00 business in earlier year

(g) Others 26.95 25.37

1.1.2 Out of the 4.1.1 above, disputes pending with revenue and other government authorities challenged/appealed by the Company are:

Cash outflows for the above are determinable only on receipt of judgements pending at various forums/ authorities.

1.3 SEGMENT REPORTING

1.3.1 Primary Segment Reporting (by Business Segment)

Primary Segment has been identified based on the nature of products and services, the different risks and returns, and the internal reporting structure. The Company considers Business Segment as the Primary Segment for disclosure. Details of products included in each of the segments are as under:

Fibre and Pulp - Viscose Staple Fibre and Rayon Grade Pulp

Chemicals - Caustic Soda, Epoxy and Allied Chemicals

Others - Mainly Textiles

Inter-segment transfers of independent marketable products are at market rates.

Unallocated items include general corporate income, expense, assets and liabilties, which are not allocated to any business segment.

1.4.1 Secondary Segment Reporting (by Geographical Segment):

The Company''s operating facilities are located in India.

(viii) Gratuity:

The Employees'' gratuity fund is managed by a Trust. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method as prescribed by the Accounting Standard (AS)-15 (Revised) - ''Employee Benefits'', which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up final obligation.

(ix) There are no amounts included in the Fair Value of the Plan Assets for:

a) Company''s own financial instrument

b) Property occupied by or other assets used by the Company

(x) Basis used to determine Expected Rate of Return on Plan Assets:

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

(xi) Salary Escalation Rate:

The estimates of future salary increases are considered taking into account inflation, seniority, promotion, increments and other relevant factors.

(xiii) The best estimate of the expected Contribution for the next year amounts to Rs. 7.50 Crore (Previous Year Rs. 7.50 Crore).

2.1 Compensated Absences:

The obligation for compensated absences is recognised in the same manner as gratuity, amounting to charge of Rs. 0.38 Crore (Previous Year Rs. 2.88 Crore).

2.2 Defined Contribution Plans:

Amount recognised as expense and included in the Note 3.7 as "Contribution to Provident and Other Funds" Rs. 23.77 Crore (Previous Year Rs. 22.50 Crore).

3 General Description of Leasing Agreements:

(i) Lease Assets: Godowns, Offices, Flats and Others

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

(iii) At the expiry of lease terms, the Company has an option to return the assets or extend the term by giving notice in writing

4. Previous year figures have been regrouped/reclassified, wherever necessary, to correspond with the current year classification/disclosure.

5. 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.


Mar 31, 2013

GENERAL INFORMATION

Grasim Industries Limited (the "Company") is engaged primarily in two businesses, Viscose Staple Fibre (VSF) and in Cement, through its subsidiary. It also produces Rayon Grade Pulp, Caustic Soda and allied Chemicals, which are used in the manufacture of VSF. The manufacturing plants of the Company, its Subsidiaries and Joint Ventures are located in India, Canada, Sweden, China, Middle East, Sri Lanka and Bangladesh. The Company is a public limited company and its shares are listed on the Bombay Stock Exchange (BSE), India, and the National Stock Exchange (NSE), India, and the Company''s GDRs are listed on the Luxembourg Stock Exchange.

1.1.1.1 Fair Valuation

The fair value of options used to compute proforma net income and earnings per equity share has been done by an independent firm of Chartered Accountants on the date of grant using Black-Scholes Model.

2.1.1 The Board of Directors has recommended a dividend of Rs. 22.50 per share for the year ended, 31st March, 2013 (Previous Year Rs. 22.50 per share). The total cash outflows on account of the dividend would be Rs. 206.52 Crore (Previous Year Rs. 206.36 Crore) and on account of Corporate Dividend Tax Rs. 9.81 Crore (Previous Year Rs. 12.02 Crore).

2.1.2 Proposed Dividend (including Corporate Dividend Tax) includes Rs. 0.02 Crore (Previous Year Rs. 0.01 Crore) related to Previous Year.

# Net of Deferred Employees'' Compensation Expenses Rs. 0.65 Crore (Previous Year Rs. 1.65 Crore).

3.1 CAPITAL COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided {(Net of Advance paid of Rs. 268.23 Crore (Previous Year Rs. 488.20 Crore)}

3.2 SEGMENT REPORTING

3.2.1 Primary Segment Reporting (by Business Segment)

Primary Segment have been identified based on the nature of products and services, the different risks and returns and the Internal reporting structure. The Company considers Business Segment as the Primary Segment for disclosure. Details of products included in each of the segments are as under:

Fibre and Pulp - Viscose Staple Fibre and Rayon Grade Pulp

Chemicals - Caustic Soda and Allied Chemicals

Others - Mainly Textiles

Inter-segment transfers of independent marketable products are at market rates.

(viii) Gratuity:

The Employee''s gratuity fund is managed by a Trust. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method as prescribed by the Accounting Standard (AS) 15 - Revised ''Employee Benefits'', which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up final obligation.

(ix) There are no amounts included in the Fair Value of Plan Assets for:

a) Company''s own financial instrument

b) Property occupied by or other assets used by the Company

(x) Basis used to determine Expected Rate of Return on Plan Assets:

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

(xi) Salary Escalation Rate:

The estimates of future salary increases are considered taking into account inflation, seniority, promotion, increments and other relevant factors.

(xiii) The best estimate of the expected Contribution for the next year amounts to Rs. 7.50 Crore (Previous Year Rs. 7.50 Crore).

3.3.1.1 Compensated Absences:

The obligation for compensated absences is recognised in the same manner as gratuity, amounting to charge of Rs. 2.88 Crore (Previous Year Rs. 2.12 Crore).

3.3.2 Defined Contribution Plans:

Amount recognised as expense and included in the Note 3.7 as "Contribution to Provident and Other Funds" Rs. 22.50 Crore (Previous Year Rs. 20.04 Crore).

3.3.3 Previous year figures have been regrouped/reclassified, wherever necessary, to correspond with the current year classification/disclosure.

3.3.4 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.


Mar 31, 2012

GENERAL INFORMATION

Grasim Industries Limited (the "Company") is engaged primarily in two businesses, Viscose Staple Fibre (VSF) and in cement through its subsidiary. It also produces Caustic Soda and allied Chemicals and Rayon Grade Pulp which are used in the manufacture of VSF. The manufacturing plants of the Company, its Subsidiaries and its Joint Ventures are located in India, Middle East, Sri Lanka, Canada, Bangladesh and China. The Company is a public limited company and its shares are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), and the Company's GDR's are listed on the Luxembourg Stock Exchange.

1.1.1 The Board of Directors has recommended a dividend of Rs 22.50 per share for the year ended 31st March, 2012 (Previous Year Rs 20 per share).

The total cash outflows on account of the dividend Rs 206.36 Crore (Previous Year Rs 183.40 Crore) and on account of Corporate Dividend Tax Rs 12.02 Crore (Previous Year Rs 13.66 Crore).

1.1.2 Proposed Dividend (including Corporate Dividend Tax) for the Current Year includes Rs 0.01 Crore related to Previous Year.

Rs in Crore Current Previous Year Year

2.1 Contingent Liabilities not provided for in respect of :

2.1.1 Claims/Disputed Liabilities not acknowledged as debt:

Custom Duty 3.70 3.70

Sales Tax/Purchase Tax/VAT 0.20 2.01

Excise Duty/Cenvat Credit/Service Tax 7.58 7.65

Water Cess 24.17 22.53

Various claims in respect of disputed liabilities of discontinued business in earlier year 70.00 -

Others 26.81 36.05

Out of the above matter disputes pending with Revenue and other Government authorities challenged/appealed by the Company are:

(a) Water charges for water not made available as per agreement 22.32 20.68

(b) Penalty for not utilising the land within the time limit prescribed as per the sanction document, utilisation of which 5.34 - is delayed due to non-fulfilment of condition by Gujarat Industrial Development Corporation

(c) Claims arising from disputes of vendors/contractors 7.16 7.56

(d) Service Tax on Goods Transport Agency on full amount of service instead on 25% of value of services 5.90 4.81

Cash outflows for the above are determinable only on receipt of judgements pending at various forums/authorities

2.1.2 Custom Duty (Net of Cenvat Credit) which may arise if obligation for exports is not fulfilled against import of raw materials and machinery 8.06 0.85

2.1.3 Letter of Undertaking-cum-Indemnity, Corporate Guarantees given to Bank/ Financial Institutions for finance provided to subsidiary and joint venture 207.61 378.68

- Amount Outstanding against above 96.69 178.36

2.2 Estimated amount of contracts remaining to be executed on capital account and not provided (Net of Advance paid of Rs 488.20 Crore, Previous Year Rs 44.43 Crore) 1,427.14 226.17

2.3 Segment Reporting

2.3.1 Primary Segment Reporting (by Business Segment)

Segments have been identified in line with the Accounting Standard on Segment Reporting (AS-17), taking into account the organisational reporting structure as well as the differential risks and returns of these segments. Details of products included in each of the segments are as under:

Fibre and Pulp - Viscose Staple Fibre and Rayon Grade Pulp

Chemicals - Caustic Soda and Allied Chemicals

Others - Mainly Textiles

Inter-segment transfers of independent marketable products are at market rates.

Unallocated items include general corporate income, expense, assets and liabilities which are not allocated to any business segment.

2.4.1 During the year ended 31st March, 2012, the revised format of accounts was notified by modifying Schedule VI under the Companies Act, 1956. The new format has been followed for preparation and presentation of the financial statements. The adoption of revised Schedule VI, as aforesaid does not impact recognition and measurement principles followed for preparation of the financial statements. The Company has reclassified the previous year's figures in accordance with the requirements applicable in the current year.

2.4.2 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.

 
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