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Notes to Accounts of Heidelberg Cement India Ltd.

Mar 31, 2016

1. CAPITAL WORK IN PROGRESS AND CAPITALISATION OF EXPENDITURE

(a) Capital work in progress include tangible assets amounting to Rs, 560.5 million (31 March 2015: Rs, 1,274.2 million).

(b) Capital work in progress includes an amount Rs, 217.1 million (31 March 2015: Rs, 1,003.1 million) towards setting up of Waste Heat Recovery (WHR) Power Plant at its clinkerisation unit at Narsingarh, adjacent to the Kilns to generate power from waste heat. The same is being setup as a separate unit for generation of approximately 12 to 13 MW of power. The Company intends to utilize the energy generated by WHR for captive consumption. The Company has capitalized two lines which has commenced commercial production in February''2016. Closing balance of Rs, 217.1 million pertains to remaining one line which is expected to be commissioned in 2016-17.

(c) Capital work-in-progress relating to tangible fixed assets includes capital items in transit amounting to Rs, Nil (31 March 2015: Rs, 5.7 million).

(d) During the year, the Company has capitalized the following expenses of revenue nature to the cost of fixed assets/ Capital work in progress which are incurred during construction period on substantial expansion of existing units/ new projects/intangible assets of the Company. Consequently, expenses disclosed under the respective notes are net of amount capitalized by the company:

2. RELATED PARTY DISCLOSURE

(a) Names of related parties and related party relationship:

Names of related parties where control exists irrespective of whether transactions have occurred or not:

Ultimate holding company Heidelberg Cement AG

Holding company Cementrum I.B.V

Related parties under AS 18 with whom transactions have taken place during the period:

Fellow subsidiaries Heidelberg Cement Asia Pte Ltd

Cochin Cement Limited PT Inducement Tunggal Prakarsa Tbk

Key management personnel Mr. Sushil Kumar Tiwari, Whole Time Director

Additional related parties as per Companies Act, 2013 with whom transactions have taken place during the year:

Chief Financial Officer Mr. Anil Sharma (w.e.f. 1 April 2014)

Company Secretary Mr. Rajesh Relan (w.e.f. 1 April 2014)

* Change of Rs, 3,479.8 million (31 March 2015: Rs, 60.2 million) in ECB loan amount payable to Cement rum IBV as at 31 March 2016 is on account of repayment amounting to Rs, 2,752.6 million and balance on account of reinstatement at closing exchange rate.

** As the liabilities for gratuity and leave encashment are provided on an actuarial basis for the Company as a whole, the amounts pertaining to the director are not included above.

3. The Company has taken various residential premises, office premises and warehouses under operating lease agreements. These are generally cancellable and are renewable by mutual consent on mutually agreed terms except one office premises which is taken on a non-cancellable lease. The Company has recognized Rs, 17.7 million (31 March 2015: Rs, 21.4 million) in respect of cancellable operating leases and Rs, 10.8 million (31 March 2015: Rs, 10.1 million) in respect of non-cancellable operating leases.

Operating Lease (Non-Cancellable)

The total of future minimum lease payments under non- cancellable operating leases for each of the following periods:

Out of the total rent recognized, Rs, 0.3 million (31 March 2015: Rs, 1.4 million) relating to residential accommodation provided to the employees has been shown under Employee benefit expenses.

Rs, Nil (31 March 2015: Rs, 1.0 million) relating to a non-cancellable operating lease has been capitalized during the current year.

4. CAPITAL COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs, 105.5 million (31 March 2015: Rs, 623.7 million).

*The Company had filed writ petition against the order of the Madhya Pradesh State Mining Department (referred as ''department'') towards payment of additional royalty on limestone based on the ratio of 1.6 tonnes of limestone to 1 tonne of cement produced. 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. All writ petitions & writ appeals filed by the cement manufacturers regarding Royalty have been disposed of by Madhya Pradesh High Court vide its Order dated 8th July 2014 and it has quashed and set aside the department''s contention to use notional conversion factor of 1.6 instead of actual consumption. Further, the matter has been relegated before the Assessing Officer for re-examination of the entire matter afresh from the stage of filing of the returns in light of above observation. Presently, the reassessment is in process.

In respect of above cases based on the favorable decisions in similar cases/legal opinions taken by the Company/ discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in these financial statements.

Note: Figures in brackets are for the previous period.

Above provisions have been made against demands raised by various authorities. All these cases are under litigation and are pending with various authorities; expected timing of resulting outflow of economic benefits cannot be specified. Amount deposited under protest against these provisions are shown under short term loan and advances in note no. 12.

Mine reclamation expense is incurred on an ongoing basis and until the closure of mines. The actual expenses may vary based on the nature of reclamation and the estimate of reclamation expenses.

5. CROSS CURRENCY INTEREST RATE SWAP

The Company has a cross currency interest rate swap agreement with a bank for ECB Loan of USD 65,000,000 (31 March 2015: USD 125,000,000) whereby the Company pays a fixed rate of interest for various tranches of loan and receives a variable rate linked to LIBOR. The swap is being used to hedge the ECB loan taken on floating interest rate linked to LIBOR.

The loss on reinstatement of bank borrowings up to year end amounting to Rs, 1,086.8 million (up to 31 March 2015: Rs, 1,814.1 million) has been charged off to Statement of profit and loss and offset with a similar gain on increase in fair value of Derivative Assets. The Company has closing derivative assets of Rs, 1,082.7 million (31 March 2015: Rs, 1,896.6 million) which is presented under other current assets in Note 13.2. Effective portion of cash flow hedge and differential accrued interest amounting to Rs, 37.2 million (31 March 2015: Rs, 144.3 million) has been taken to "Hedging Reserve Account" under Reserves and Surplus under Note 4.

6. Excise duty on sales amounting to Rs, 2,675.7 million (31 March 2015: Rs, 3,271.0 million) has been reduced from sales in statement of profit and loss. Excise duty expenses on increase in stocks amounting to Rs, 30.0 million (31 March 2015: excise duty income of Rs, 8.1 million) has been considered in Note 21 of the financial statements.

7. a) Gratuity and other employment benefit plans

The Company has three post-employment funded plans, namely Gratuity, Superannuation and Provident Fund.

Gratuity being administered by a Trust is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employee after completing 5 years of service. The Gratuity plan for the Company is a defined benefit scheme where annual contributions as demanded by the insurer are deposited to a Gratuity Trust Fund established to provide gratuity benefits. The Trust Fund has taken a Scheme of Insurance, whereby these contributions are transferred to the insurer. The Company makes provision of such gratuity asset/liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method. Plan assets also include investments and bank balances used to deposit premiums until due to the insurance company.

Retirement benefits in the form of Superannuation Fund (being administered by Trusts) are funded defined contribution schemes and the contributions are charged to the Statement of profit and loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable.

The Provident Fund being administered by a Trust is a defined benefit scheme whereby the Company deposits an amount determined as a fixed percentage of basic pay to the fund every month. The benefit vests upon commencement of employment. The interest credited to the accounts of the employees is adjusted on an annual basis to confirm to the interest rate declared by the Government for the Employees Provident Fund. The Guidance Note on implementing AS-15, Employee Benefits (Revised 2005) issued by the Accounting Standard Board (ASB) states that provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. Based on latest actuarial valuation of the said trust, there is no deficit in the fund.

The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the amounts recognized in the balance sheet for the Gratuity.

Statement of profit and loss

Note:

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.

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.

b) Provident Fund

Provident fund for certain eligible employees is managed by the Company through trust "Mysore Cement Limited officers'' and staff provident fund trust", 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 31 March 2016 and 31 March 2015.

8. As per Micro, Small and Medium Enterprises Act, 2006, the Company is required to identify the Micro, Small and Medium suppliers and pay them interest on overdue beyond the specified period irrespective of the terms agreed with the suppliers. As per the information available with the Company, none of the creditors fall under the definition of "Supplier" as per Section 2(n) of the Act. In view of this prescribed disclosures under Section 22 of the Act are not required to be made in the financial statements.

9. SALES AND ENTRY TAX BENEFIT

The Company is entitled to benefits under the Madhya Pradesh State Industrial Promotion Policy, 2004 and 2010 for the increased cement production facility at Damoh, Madhya Pradesh w.e.f. 18 February 2013. Under the said policy, the Company has been exempted from payment of Entry Tax on input materials for a period of 7 years and also claim refund upto 75% of VAT/CST paid on sales for a period of 10 years within the state of Madhya Pradesh in respect of the increased production facility.

10. Capital advances include an amount of Rs, 150.6 million paid during an earlier year to a supplier against a bank guarantee for setting up a Waste Heat Recovery based Power Generation Plant at the Company''s clinkerisation unit at Narsingarh in Madhya Pradesh. A dispute arose with the supplier as they failed to adhere to the agreed timelines and insisted for enhancement of the contract price in view of depreciation of Rupee against US dollars, despite the contract being for a fixed price. The supplier offered the Company to renegotiate and agree with its sub-contractors for settlement of the aforesaid advance. The Company invoked the advance bank guarantee to recover the advances paid to the said supplier. The Hon''ble High Court of Delhi had on 19 October 2013 granted an ad interim ex-parte injunction against the invocation of aforesaid Bank Guarantee, against which the Company had filed an application for vacation of stay, which is currently pending. The Company has sent a notice of arbitration to the supplier on 18 May 2016 demanding advance given as per supply contract, interest on advance given and compensation in terms of risk purchase clause of the contract for loss incurred in respect of work completed through other third parties.

Basis legal assessment, precedents of Supreme Court judgments and valid bank guarantee, the management is confident of recovering the amounts and no adjustments are considered necessary in the financial statements in this regard.

11. DISCONTINUED OPERATION

a) In accordance with the approval granted by the Board of Directors of the Company on 21 May 2013, the Company executed a Business Transfer Agreement on 5 October 2013 with JSW Steel Limited for sale of its cement grinding facility in Raigad, Maharashtra, to JSW Steel Limited, as a going concern on slump sale basis for a consideration of '' 1,660.0 million. The process of selling the Raigad plant was completed on 3 January 2014 and net gain of Rs, 603.1 million has been disclosed as an exceptional item in the statement of profit and loss during the previous period.

The carrying amounts of the total assets and liabilities disposed off at 3 January 2014 are as follows. Comparative information for Raigad plant is included in accordance with AS 24 Discontinuing Operations.


Dec 31, 2012

1. CORPORATE INFORMATION

HeidelbergCement India Limited (hereinafter referred to as "HCIL" or "the Company") is a Company formed and registered under the Companies Act, 1956. The principal activity of HCIL is the manufacture of Portland cement at its four locations viz. Ammasandra (Karnataka), Damoh (Madhya Pradesh), Jhansi (Uttar Pradesh) and Raigad (Maharashtra).

2. BASIS OF PREPARATION

The financial statements have been prepared to comply in all material respects with the Notified Accounting Standard by the Companies Accounting Standards Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out. The Company has changed the denomination of the financial figures from Rupees in lacs to Rupees in million (or ''MINR''). Therefore, figures for the previous year have also been stated in the new denomination. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

a. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.

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.

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

a. Indian rupee loan :

Secured by 100% unconditional and irrevocable Corporate Guarantee of HeidelbergCement AG, Germany, the ultimate holding company. The loans are repayable in 4 equal half yearly installments after completion of 3 years from the date of drawdown of the respective tranches. The loans carry floating interest rates linked to the base rates of the banks .

b. External commercial borrowings :

The Company has availed ECB from the parent company "Cementrum 1 B.V." on unsecured basis at a rate linked to LIBOR. The loan is repayable after a period of 5 years from the date of drawdown of the respective tranches. The entire exposure has been hedged through a Cross Currency Interest Rate Swap agreement with a bank whereby the Company pays a fixed rate of interest and receives a variable rate linked to LIBOR.

3. SEGMENTAL INFORMATION:

(a) Business Segment

The Company primarily deals in only one business segment i.e. "Cement".

(b) Geographical Segment

The Company primarily operates into two geographical segments i.e. within India and outside India which are based on the location of the customers.

4. The Company has taken various residential premises, office premises and warehouses under operating lease agreements. These are generally cancellable and are renewable by mutual consent on mutually agreed terms except for three office premises which is taken on a non-cancellable lease. The Company has recognized Rs. 28.7 million (Previous year: Rs. 25.8 million) in respect of cancellable operating leases and Rs. 6.4 million (Previous year: Rs. 4.7 million) in respect of non-cancellable operating leases.

Out of the total rent recognised, Rs. 0.4 million (Previous year Rs. 0.6 million) relating to residential accommodation provided to the employees has been shown under Employee Benefit Expenses.

Rs. 3.4 million (Previous year: Rs. 3.4 million) relating to a non-cancellable operating lease and Rs. 2.2 million (Previous year: Rs. 3.1 million) relating to cancellable operating lease has been capitalized during the current year.

5. CAPITAL COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 486.0 million (Previous year: Rs. 2,149.0 million).

In respect of above cases based on the favorable decisions in similar cases/ legal opinions taken by the Company/ discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any of the above liability has been made in these financial statements.

Note: Figures in brackets are for the previous year.

Above provisions have been made against demands raised by various authorities. All these cases are under litigation and are pending with various authorities; expected timing of resulting outflow of economic benefits cannot be specified.

6. CROSS CURRENCY INTEREST RATE SWAP

The Company has a cross currency interest rate swap agreement with a bank for ECB Loan of USD 125,000,000 (Previous year USD 90,000,000) whereby the Company pays a fixed rate of interest for various tranches of loan and receives a variable rate linked to LIBOR. The swap is being used to hedge the ECB loan taken on floating interest rate linked to LIBOR.

The loss on restatement of bank borrowings amounting to Rs. 885.9 million (previous year Rs. 629.3 million) has been charged off to Statement of profit and loss and offset with a similar gain on increase in fair value of cross currency swap. Effective portion of cash flow hedge and differential accrued interest amounting to Rs. 63.0 million (previous year Rs. 47.4 million) has been taken to "Hedging Reserve Account" under Reserves & Surplus under Note 4.

7. Excise duty on sales amounting to Rs. 1,750.6 million, which includes Rs. 23.8 million (Previous Year: Nil) from sales out of production during trial runs (Previous year Rs. 1,439.8 million) has been reduced from sales in statement of profit and loss and expenditure during construction period. Excise duty expenses on increase in stocks amounting to Rs. 11.4 million (Previous year excise duty income of Rs. 2.5 million) has been considered in Note 21 of the financial statement and excise duty on closing stock out of trial production amounting Rs. 6.6 million (Previous year Rs. Nil) has been debited to expenditure during construction period under capital work in progress.

8. GRATUITY AND OTHER EMPLOYMENT BENEFIT PLANS

The Company has three post-employment funded plans, namely Gratuity, Superannuation and Provident Fund.

Gratuity being administered by a Trust is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employee after completing 5 years of service. The Gratuity plan for the Company is a defined benefit scheme where annual contributions as demanded by the insurer are deposited to a Gratuity Trust Fund established to provide gratuity benefits. The Trust Fund has taken a Scheme of Insurance, whereby these contributions are transferred to the insurer. The Company makes provision of such gratuity asset/ liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method. Plan assets also include investments and bank balances used to deposit premiums until due to the insurance company.

Retirement benefits in the form of Superannuation Fund (being administered by Trusts) are defined contribution schemes and the contributions are charged to the Statement of profit and loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable.

The Provident Fund being administered by a Trust is a defined benefit scheme whereby the Company deposits an amount determined as a fixed percentage of basic pay to the fund every month. The benefit vests upon commencement of employment. The interest credited to the accounts of the employees is adjusted on an annual basis to confirm to the interest rate declared by the Government for the Employees Provident Fund. The Guidance Note on implementing AS-15, Employee Benefits (Revised 2005) issued by the Accounting Standard Board (ASB) states that provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. Based on latest audited balance sheet of the said trust, there is no deficit in the fund.

Note:

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.

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.

9. PREVIOUS YEAR FIGURES

Till the year ended 31 December 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31 December 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year''s classification.


Dec 31, 2011

1. The Capital Work-in-progress relating to tangible fixed assets includes capital advances amounting to Rs. 5,388.74 lacs (Previous year: Rs. 15,077.68 lacs) and inventory of capital items in transit amounting to Rs. 1,987.16 lacs (Previous Year: Rs. 2,089.73 lacs).

Capital work-in-progress includes expenditure during construction period on substantial expansion of existing units of the company.

2. SEGMENTAL INFORMATION:

(a) Business Segment

The Company primarily deals in only one business segment i.e, "Cement".

(b) Geographical Segment

The Company primarily operates into two geographical segments i.e. within India and outside India which are based on the location of the customers. Geographical Segment

Difference of Rs. 6,293.18 lacs in ECB loan amount received & payable to Cementrum IBV as at December 31, 2011 is on account of restatement of ECB loan at closing exchange rate.

3. The Company has taken various residential premises, Office premises and warehouses under operating lease agreements. These are generally cancellable and are renewable by mutual consent on mutually agreed terms except for three Office premises which are taken on a non-cancellable lease. The Company has recognized Rs. 258.13 lacs (Previous year: Rs. 267.39 lacs) in respect of cancellable operating leases and Rs. 47.42 lacs (Previous year: Rs. 34.07 lacs) in respect of non-cancellable operating leases.

Operating Lease (Non Cancellable)

The total of future minimum lease payments under non- cancellable operating leases for each of the following periods:

Out of the total rent recognised, Rs. 6.00 lacs (Previous year Rs.25.46 lacs) relating to residential accommodation provided to the employees has been shown under Personnel Expenses.

4. CAPITAL COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.21,489.72 lacs (Previous year: Rs.84,109.97 lacs).

In respect of above cases based on the favorable decisions in similar cases/legal opinions taken by the Company/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in these financial statements.

Above provisions have been made against demands raised by various authorities. All these cases are under litigation and are pending with various authorities; expected timing of resulting outflow of economic benefits cannot be specified.

5. CROSS CURRENCY INTEREST RATE SWAP

The Company has a cross currency interest rate swap agreement with a bank for ECB Loan of USD 90,000,000 whereby the Company pays a fixed rate of interest of 7.65% to 9.55% (for various tranches of loan) and receives a variable rate equal to LIBOR 6M 250 bps on the loan amount. The swap is being used to hedge the ECB loan taken on floating interest rate of LIBOR 6M 250 bps.

The loss on account of restatement of ECB amounting to Rs. 6,293.18 lacs has been charged off to Profit and loss account and off set with a similar gain on increase in fair value of cross currency swap. Eff ective portion of cash fl ow hedge and differential accrued interest amounting to Rs.474.09 lacs has been taken to "Hedging Reserve Account" under Reserve & Surplus.

6. Excise duty on sales amounting to Rs.14,398.07 lacs (Previous Year Rs.11,983.21 lacs) has been reduced from sales and decrease in the excise duty on closing inventories amounting to Rs. 25.11 lacs (previous year increase of Rs. 129.29 lacs) has been considered as an income (expense in the previous year) in the Profit & Loss Account.

7. Gratuity and other employment benefit plans

The Company has three post employment funded plans, namely Gratuity, Superannuation and Provident Fund. Gratuity being administered by a Trust is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employee completing 5 years of service. The Gratuity plan for the Company is a defined benefit scheme where annual contributions as demanded by the insurer are deposited to a Gratuity Trust Fund established to provide gratuity benefits. The Trust Fund has taken a Scheme of Insurance, whereby these contributions are transferred to the insurer. The Company makes provision of such gratuity asset/ liability in the books of accounts on the basis of actuarial valuation as per the Projected unit credit method. Plan assets also include investments and bank balances used to deposit premiums until due to the insurance company.

Retirement benefits in the form of Superannuation Fund (being administered by Trusts) are funded defined contribution schemes and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable.

The Provident Fund being administered by a Trust is a defined benefit scheme whereby the Company deposits an amount determined as a fixed percentage of basic pay to the fund every month. The benefit vests upon commencement of employment. The interest credited to the accounts of the employees is adjusted on an annual basis to confirm to the interest rate declared by the Government for the Employees Provident Fund. The Guidance Note on implementing AS-15, Employee Benefits (Revised 2005) issued by the Accounting Standard Board (ASB) states that provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. Based on certificate issued by the Actuary, there is no defi cit in the fund.

The following tables summarize the components of net benefit expense recognised in the Profit and Loss Account and the amounts recognised in the balance sheet for the Gratuity.

Note:

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.

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 major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

15. Details of dues to Micro, Small and Medium Enterprises as per MSMED Act, 2006 as per the information available with the Company in response to the enquiries from all existing suppliers with whom the Company deals.

(ii) the amount of interest paid by the buyer in terms of section 16, along with the amounts of the payment made to the supplier beyond the appointed day

(iii) the amount of interest due and payable for the year of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under this Act

(iv) the amount of interest accrued and remaining unpaid

(v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of this Act


Dec 31, 2010

1. NATURE OF OPERATIONS

HeidelbergCement India Limited (hereinafter referred to as "HCIL" or "the company") is a Company formed and registered under the Companies Act, 1956. The principal activity of HCIL is the manufacture of Portland cement at its four locations viz. Ammasandra (Karnataka), Damoh (Madhya Pradesh), Jhansi (Uttar Pradesh) and Raigad (Maharashtra).

2. The Capital Work-in-progress relating to tangible fixed assets includes capital advances amounting to Rs. 15,077.68 lacs (Previous year: Rs. 1,026.10 lacs) and inventory of capital items in transit amounting to Rs. 2,089.73 lacs (Previous Year: Rs. 1,587.64 lacs).

Capital work-in-progress includes expenditure during construction period on substantial expansion of existing units of the Company. There was no such expenditure in the previous year.

3. SEGMENTAL INFORMATION:

(a) Business Segment

The Company primarily deals in only one business segment i.e, "Cement".

(b) Geographical Segment

The Company primarily operates into two geographical segments i.e. within India and outside India which are based on the location of the customers.

4. RELATED PARTY DISCLOSURE

(a) Names of related parties:

Names of related parties where control exists irrespective of whether transactions have occurred or not:

Ultimate Holding Company Heidelberg Cement AG

Holding Company Cementrum I.B.V

Names of other related parties with whom transactions have taken place during the year:

Fellow Subsidiaries HeidelbergCement Technology Center

Scancemlnternational Ans

HeidelbergCement Asia Pte Ltd

Cochin Cements Limited

HC Fuels Limited

PT Indocement Tunggal Prakarsa Tbk

HC Trading Malta Limited

5. The Company has taken various residential premises, office premises and warehouses under operating lease agreements. These are generally cancellable and are renewable by mutual consent on mutually agreed terms except for one office premises which is taken on a non-cancellable lease. The Company has recognized Rs. 209.60 lacs (Previous year: Rs. 219.03 lacs) in respect of cancellable operating leases and Rs. 34.07 lacs (Previous year: Rs. 36.56 lacs) in respect of non-cancellable operating leases.

6. CAPITAL COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 84,109.97 lacs (Previous year: Rs. 5,135.52 lacs).

7. CONTINGENCIES

(a) Contingent Liabilities not provided for (Rs. in Lacs)

Particulars December 31, 2010 December 31, 2009

A. Disputed Statutory claims / levies:

Excise Duty / Service Tax 636.35 270.98

Sales Tax/ Trade Tax 8,565.64 7,657.25

Entry Tax 605.18 593.97

Differential Royalty on 13,999.51 12,098.38 Limestone

B. Claims against the Company 132.35 248.81 not acknowledged as Debts

Claims by various Suppliers 786.80 532.77 of goods and Services

Electricity charges 250.71 593.51

Claims by customers and others

C. Show cause notices for levy

Excise Duty / Service Tax 508.80 649.76 54.00 54.00 Sales Tax In respect of above cases based on the favorable decisions in similar cases/ legal opinions taken by the Company/ discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in these financial statements.

8. During the current year, the Company has exercised call option on May 11,2010 to redeem 9% Cumulative Redeemable Preference Shares of Rs. 100 each aggregating to Rs. 1,349.34 lacs. The accumulated dividend amounting to Rs. 414.57 lacs, which includes dividend Rs. 370.98 lacs for the period December 12, 2006 to December 31,2009 and Rs. 43.59 lacs for the period January 1, 2010 to May 11, 2010 (being the date of redemption), has also been paid on such redemption alongwith the redemption proceeds.

9. Excise duty on sales amounting to Rs. 11,983.21 lacs (Previous Year Rs. 10,384.63 lacs) has been reduced from sales and increase in the excise duty on closing inventories amounting to Rs. 129.29 lacs (Previous Year Rs. 25.95 lacs) has been considered as an expense in the Profit & Loss account.

10. Gratuity and other employment benefit plans

The Company has three post employment funded plans, namely Gratuity, Superannuation and Provident Fund. Gratuity being administered by a Trust is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employee completing 5 years of service. The Gratuity plan for the Company is a defined benefit scheme where annual contributions as demanded by the insurer are deposited to a Gratuity Trust Fund established to provide gratuity benefits. The Trust Fund has taken a Scheme of Insurance, whereby these contributions are transferred to the insurer. The Company makes provision of such gratuity asset/ liability in the books of accounts on the basis of actuarial valuation as per the Projected unit credit method. Plan assets also include investments and bank balances used to deposit premiums until due to the insurance company.

Retirement benefits in the form of Superannuation Fund (being administered by Trusts) are funded defined contribution schemes and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable.

The Provident Fund being administered by a Trust is a defined benefit scheme whereby the Company deposits an amount determined as a fixed percentage of basic pay to the fund every month. The benefit vests upon commencement of employment. The interest credited to the accounts of the employees is adjusted on an annual basis to confirm to the interest rate declared by the Government for the Employees Provident Fund. The Guidance Note on implementing AS- 15, Employee Benefits (Revised 2005) issued by the Accounting Standard Board (ASB) states that provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. Based on certificate issued by the Actuary, there is no deficit in the fund.

The following tables summarize the components of net benefit expense recognised in the Profit and Loss Account and the amounts recognised in the balance sheet for the Gratuity.

11. Previous Year Comparatives

Previous years figures have been regrouped where necessary to confirm to this years classification.

 
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