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Notes to Accounts of Kesoram Industries Ltd.

Mar 31, 2014

1 DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

a) Pursuant to the Announcement on Accounting for Derivatives issued by the Institute of Chartered Accountants of India in March, 2008, the Company has accounted for during the year net loss amounting to Rs. 1.15 crore (31st March, 2013 - Rs. 2.57 crore) in respect of outstanding derivative contracts at the Balance Sheet date by marking them to market as indicated in Note 2.9 above and the resultant excess gain of Rs. 1.44 crore net of realised loss (Net ) of Rs. 1.71 crore during the year arising from derivative contracts are provided for and included in Finance Cost ''under Note 23 to accounts.

2. LEASES As a lessee:

Operating Lease

Rent expenditure (under Note 22) includes lease payments of Rs. 0.97 crore (2012-13 - Rs. 1.64 crore) relating to non cancellable operating lease. The leasing arrangement is for three to nine years and is in respect of office premises. The significant leasing arrangement inter alia includes option for renewal.

3. Certain records/documents pertaining to production, raw materials, purchase records etc. of the Company''s Assam Cotton Mills Unit were seized by the Excise Authorities and are presently not available with the Company.

4. The time frame of completion of expansion of 80 MT/day capacity of car radial project at Balasore is being extended to end of 2014-15 and 85 MT/day capacity of truck radial tyre project at Uttrakhand are being extended beyond 2014-15.

5. The time frame for grinding facility of 2.5 million MT cement per annum to be situated at Solapur in the state of Maharashtra is being extended beyond 2014-15.

6. The Company''s Spun Pipes and Foundries Unit is under suspension of work effective 2nd May, 2008.

7. The Company intends to hive off its Hindusthan Heavy Chemicals unit (the Unit) as reflected in the Board Resolution of 31st January, 2006 and later on consented by the shareholders by postal ballot of 24th March, 2006. The Unit is not significant in terms of the Company''s total assets/ liabilities/ revenue/ expenses/ cash flows. Pending disposal of the Unit, the Unit is in operation and results thereof, have been reflected in these Accounts. The Company had to declare suspension of work at the unit effective 8th December,2010 in consequence of illegal strike/activities by workmen.

8. Previous Year''s figures have been regrouped or rearranged where considered necessary.


Mar 31, 2013

1. GENERAL INFORMATION

Kesoram Industries Limited (the Company) is a public company domiciled and incorporated under the provisions of the The Indian Companies Act,1913. The Company is flagship company of B. K. Birla group of companies. The Company is a multiproduct and multi location company. Cement and automobile tyre business are its core businesses and it also has interest in rayon and cellulose paper, cast iron spun pipes and caustic soda & allied chemicals. Its shares are listed on three stock exchanges in India ( Bombay Stock Exchange, National Stock Exchange and Calcutta Stock Exchange) and its Global Depositary Receipts (GDR) are listed on Luxembourg Stock Exchange. The Company markets its automobile tyres under the brand name "Birla Tyres" and cement is marketed under "Birla Shakti" brand.

2. CONTINGENT LIABILITIES 31st March, 2013 31st March, 2012

(a) Guarantees given -

(i) to excise authorities 0.12 0.12

(ii) by Banks on behalf of the Company 68.78 58.40 (excluding relating to joint venture referred to in note 33 below)

(b) Claims against the Company not acknowledged as debts :

(i) Rates, Taxes, Duties etc. demanded by various Authorities 230.75 213.95

(ii) Amount demanded by Provident Fund Authorities which is sub judice 0.87 0.87

(c) Rates, Taxes, Duties etc. 16.06 15.80

(d) Amount payable in connection with reorganisation of the Company in earlier year 3.37 3.49

3. Legal action initiated by the company against an erstwhile management official and others in respect of certain transactions in one of the unit of the Company continue to be sub judice. The Company has initiated the detailed follow up investigation in the matter which has since been completed indicating no requirement for any disclosures/ adjustment.

4. DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

Pursuant to the Announcement on Accounting for Derivatives issued by the Institute of Chartered Accountants of India in March, 2008, the Company has accounted for during the year net loss amounting to Rs. 2.57 crore (31st March, 2012 - Rs. 4.09 crore) in respect of outstanding derivative contracts at the Balance sheet date by marking them to market as indicated in Note 2.9 above and the resultant excess liability of Rs. 1.52 crore net of realised loss (net) of Rs. 2.06 crore during the year arising from derivative contracts are provided for and included in Finance Cost ''under Note 23 to accounts. In 2011-12, the aforesaid mark to market loss along with realised loss (net) of Rs. 6.27 crore was included in ''Finance Cost'' under Note 23 to accounts.

5. LEASES As a lessee:

Operating Lease

Rent expenditure (under Note 22) includes lease payments of Rs. 1.64 crore (2011-12 - Rs. 1.26 crore) relating to non cancellable operating lease. The leasing arrangement is for three to nine years and is in respect of office premises. The significant leasing arrangement inter alia includes option for renewal.

6. Certain records/documents pertaining to production, raw materials, purchase records etc. of the Company''s Assam Cotton Mills Unit were seized by the Excise Authorities and are presently not available with the Company.

7. The time frame of completion of expansion of 80 MT/day capacity of car radial project at Balasore is being extended to end of 2013-14 and 85 MT/day capacity of truck radial tyre project at Uttrakhand are being extended beyond 2013-14

8. The time frame for grinding facility of 2.5 million MT cement per annum to be situated at Solapur in the state of Maharashtra is being extended beyond 2013-14


Mar 31, 2011

(1) Government Grants

Grants of Capital nature and related to specific Fixed Assets are deducted from gross value of assets. Other grants of Capital nature are credited to Capital Reserve. Grant related to revenue are recognised in the Profit and Loss Account on a systematic basis to match them with related costs.

2 (a) Radial car tyre project with 80 MT/day capacity at Balasore and further expansion of radial truck tyre by 85 MT/day at Uttarakhand taken up during the year 2009-10 are expected to commence commercial production by the end of 2011- 2012.

( b) The time frame for completion of expansion of Vasavadatta cement unit of the Company (clinker production capacity of 1.71 million MT/year together with captive power plant of 18 MW capacity at an estimated cost of Rs.925.00 crores and related grinding facility of 2.5 million MT cement per annum to be situated at Solapur in the state of Maharashtra at estimated cost of Rs. 200.00 crores) is being extended beyond 2012-13.

3 (a) The Company intends to hive off its Hindusthan Heavy Chemicals unit (the Unit) as reflected in the Board Resolution of 31st January, 2006 and later on consented by the shareholders by postal ballot of 24th March, 2006. The Unit is not significant in terms of the Companys total assets/liabilities/revenue/expenses/cash flows. Pending disposal of the Unit, the Unit is in operation and results thereof, have been reflected in these Accounts. The Company had to declare suspension of work at the unit effective 8th December, 2010 in consequence of illegal strike/activities by workmen.

(b) The Companys Spun Pipes and Foundries Unit is under suspension of work effective 2nd May, 2008.

31st March, 2011 31st March, 2010 Rs. Rs.

4 Contingent Liabilities:

(a) Guarantees given -

(i) to excise authorities 11,73,223 11,73,223

(ii) by Banks on behalf of the Company 64,62,00,803 70,38,54,755

(excluding relating to joint venture referred to in note 15 below)

(b) Claims against the Company not acknowledged as debts :

Rates, Taxes, Duties etc. demanded by various Authorities 1,37,76,47,666 1,20,94,00,083

Amount demanded by Provident Fund 86,86,000 86,86,000

Authorities which is sub judice

1,38,63,33,666 1,21,80,86,083

(c) Rates, Taxes, Duties etc. 30,29,87,802 8,14,89,255

(d) Amount payable in connection with reorganisation of the Company in earlier year 3,59,00,565 3,71,22,132

13 Miscellaneous expenses (Schedule 15) include Rs. 21,05,881 (Net) (2009-10 Rs. 10,91,48,160) excise duty related to the difference between the closing stock and opening stock.

14 A. In keeping with the Guidance on implementing Accounting Standard (AS) 15 on Employee Benefits issued by the Accounting

Standards Board of the Institute of Chartered Accountants of India (ASB Guidance), employer-established provident fund trusts are treated as Defined Benefit Plans since the Company is obligated to meet interest shortfall, if any, with respect to covered employees. According to the management, in consultation with Actuary, actuarial valuation cannot be applied to reliably measure provident fund liabilities in absence of guidance from Actuarial Society of India. Accordingly, the Company is currently not in a position to provide other related disclosures as required by the aforesaid AS 15 read with the ASB Guidance, however, having regard to the position of the Fund (for covered employees) and confirmation from the Trustees of such Fund there is no shortfall as at the year end.

14 B. In keeping with the Companys gratuity scheme (a defined benefit plan), eligible employees are entitled to gratuity benefit (at one half months eligible salary for each completed year of service) on retirement/death/incapacitation/termination. Also refer Note 1 (j) for accounting policy relating to gratuity. Following are the further particulars with respect to gratuity.

17.1 7.30% secured redeemable non-convertible debentures aggregating Rs. 1,00,00,00,000 (31.03.2010 Rs. - 1,00,00,00,000), privately placed (allotment date -17th November, 2009) have been redeemed at par during the year. On the aforesaid redemption, Rs. 25,00,00,000 being 25% of the aforesaid value of debentures in Debenture Redemption Reserve, has been transferred from Debenture Redemption Reserve to the Profit and Loss Account.

17.2 Short-term loans from others (Schedule 4) include :-

(a) Zero coupon unsecured redeemable non-convertible debentures aggregating Rs. 1,10,00,00,000 (31.03.2010 - Rs. 1,10,00,00,000), privately placed (allotment date 15th March, 2010) are due for redemption at par at the end of 396 days from the date of allotment.

(b) 7.75% unsecured redeemable non convertible debentures aggregating Rs. 50,00,00,000 (31.03.2010 - Rs. 50,00,00,000) privately placed (allotment date -19th March, 2010) are due for redemption at par on 5th April,2011

(c) 7 % unsecured redeemable non convertible debentures aggregating Rs. 1,00,00,00,000 privately placed (allotment date -17th May, 2010) are due for redemption at par at the end of 396 days from the date of allotment.

18 Pursuant to the Announcement on Accounting for Derivatives issued by the Institute of Chartered Accountants of India in March, 2008, the Company has accounted for during the year net loss amounting to Rs.5,10,63,967 (31.03.10 - Rs. 1,43,41,747) in respect of outstanding derivative contracts at the Balance Sheet date by marking them to market as indicated in Note 1 (g) above and the resultant short liability of Rs. 3,67,22,220 net of realised gain(net) of Rs. 53,28,800 during the year arising from derivative contracts are provided for and included in Miscellaneous Expenses under Schedule 15 to accounts. In 2009-10, the aforesaid mark to market loss along with realised Gain (net) of Rs. 15,05,46,781 was included in Miscellaneous Income under Schedule 13 to accounts.

19 a) Rent expenditure (Schedule 15) includes lease payments of Rs. 85,15,640 (2009-10 - Rs. 18,19,595) relating to non-cancellable operating lease. The leasing arrangement is for three to nine years and is in respect of office premises. The significant leasing arrangement inter alia includes option for renewal.

(i) not later than one year - Rs. 1,25,93,640 (2009-10 - Rs. 25,68,840)

(ii) later than one year but not later than five years - Rs. 4,14,16,105 (2009-10 - Rs. 33,18,085)

(iii) later than five years - Rs. 4,12,15,264 (2009-10 - Nil)

20 Information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 is given in Schedule 18, which forms an integral part of this Schedule.

25 Certain records/documents pertaining to production, raw materials, purchase records etc. of the Companys Assam Cotton Mills Unit were seized by the Excise Authorities and are presently not available with the Company.

26 Previous years figures have been regrouped or rearranged where considered necessary.


Mar 31, 2010

1 Amalgamation of Bulland Buildmart Private Limited, a wholly owned subsidiary Company (Transferor Company) with Kesoram Industries Limited (transferee Company)

1.1 Pursuant to a scheme of Amalgamation (the Scheme) sanctioned by the High Court at Calcutta in July 2009 under the provisions of the Companies Act, 1956, the Transferor Company has been amalgamated with Transferee Company in these accounts with retrospective effect from 1st October, 2008 (Appointed Date.). The Scheme has been accounted for using the Purchase Method set out in Accounting Standard 14 on Accounting for Amalgamation.

1.2 The Transferor Company was primarily engaged in the business of purchasing land for sale/ development and civil & constructional work relating to building, roads, bridges etc.

1.3 In accordance with the scheme, ail assets and liabilities of the Transferor Company immediately preceding the Appointed Date have been incorporated in the books of-account of Transferee Company at their respective book values on the basis of audited accounts of the Tranferor Company. The net assets as per the books of account of the Transferor Company after cancellation of investment of the Transferee Company in Tranferor Company as on 30th September, 2008 has been credited to Capital Reserve of the Transferee Company in 2009-10 and the results of the Tranferor Company for the period 1st October,2008 to 31st March,Transferee Company.

2(a) Expansion activities taken up in 2006-07 relating to fourth production line at Companys Vasavadatta Cement Unit for 1.65 million tons capacity increase of cement has commenced commercial production on 7th August, 2009. The related clinker plant commenced commercial production on 1st June, 2009

(b) Radial truck tyre (140 MT/day) and motor cycle tyre (95 MT/day) projects taken in 2008-09 at Uttarakhand commenced commercial production in March, 2010 and in phases from October, 2009 to March, 2010 respectively. Further expansion in bias tyre at Uttarakhand by 60 MT/day taken up in 2008-09 has been completed during the year.

(c) Radial car tyre project with 80 MT/day capacity at Balasore and further expansion of radial truck tyre by 85 MT/day at Uttarakhand taken up during the year are expected to commence commercial production by the end 2010-2011.

3 The Company intends to hive off its Hindusthan Heavy Chemicals unit (the Unit) as reflected in the Board Resolution of 31st January, 2006 and later on consented by the shareholders by postal ballot of 24th March, 2006. The Unit is not significant in terms of the Companys total assets/ liabilities/ revenue/ expenses/ cashflows. Pending disposal of the Unit, the Unit is in operation and results thereof, have been reflected in these Accounts.

The Companys Spun Pipes and Foundries Unit is under suspension of work effective 2nd May,2008.

31st March, 2010 31st March, 2009 Rs. Rs. 4A Contingent Liabilities:

(a) Guarantees given -

(i) to excise authorities 11,73,223 11,73,223 (ii) by Banks on behalf of the Company 70,38,54,755 45,96,01,210 (excluding relating to joint venture referred to in Note 16 below)

(b) Claims against the Company not acknowledged as debts:

Rates, Taxes, Duties etc. demanded by various Authorities 1,20.94,00.083 1,20,64,70,509

Amount demanded by Provident Fund and Employees State Insurance 86,86,000 1,24,00,913

Authorities which is subjudice 1,21,80,86,083 1,21,88,71,422

(c) Rates, Taxes, Duties etc. 8, 14,89.255 8,91,12,673

(d) Amount payable in connection with reorganisation of 3,71,22,132 3,79,65,159 the Company in earlier year

5 (a) Provision for Current Tax for the current year 2009-2010 is net of MAT credit of Rs.44,50,00,000 (2008-2009 - Rs.Nil) as the Company is confident to generate sufficient taxable income in the next few years available for set off of the aforesaid credit within the stipulated time.

(b) Provision for Current Tax for the year 2009-2010 is net of write back of Rs.Nil (2008-2009 - Rs.40,92,26,444) in respect of earlier years.

6 Miscellaneous expenses (Schedule 15) include Rs. 10,91,48,160 [2008-09 - net of Rs.3,80,73,336] excise duty related to the difference between the closing stock and opening stock

7 A. In keeping with the Guidance on implementing Accounting Standard (AS) 15 on Employee Benefits issued by the Accounting Standards Board of the Institute of Chartered Accountants of India (ASB Guidance), employer-established provident fund trusts are treated as Defined Benefit Plans since the Company is obligated to meet interest shortfall, if any, with respect to covered employees. According to the management, in consultation with Actuary, actuarial valuation cannot be applied to reliably measure provident fund liabilities in absence of guidance from Actuarial Society of India. Accordingly, the Company is currently not in a position to provide other related disclosures as required by the aforesaid AS 15 read with the ASB Guidance, however, having regard to the position of the Fund (for covered employees) and confirmation from the Trustees of such Fund there is no shortfall as at the year end.

B. In keeping with the Companys gratuity scheme (a defined benefit plan), eligible employees are entitled to gratuity benefit (at one half months eligible salary for each completed year of service) on retirement / death / incapacitation / termination. Also refer Note 1 (i) for accounting policy relating to gratuity. Following are the further particulars with respect to gratuity:-

8. 13% Secured redeemable non convertible debentures aggregating Rs. 1,00,00,00,000 (2008-09 - Rs.Nil), privately placed (allotment date -17th November,2008)| have been redeemed at par by exercising put option during the year. On the aforesaid redemption, Rs.25,00,00,000, being 25% of the aforesaid value of debentures in Debenture Redemption Reserve, has been tranferred from Debenture Redemption Reserve to the Profit and Loss Account.

8.1 7.3% secured redeemable non convertible debentures aggregating Rs,1,00,00,00,000-(31.03.2009 - Rs. Nil), privately placed (allotment date -17th November,2009) are due for redemption at par at the end of 13 months from the date of allotment. Debenture Redemption Reserve of Rs.25,00,00,000, being 25% of the aforesaid value of debentures, has been created out of the profits for the year.

9.1 Short term loans from banks (Schedule 4) include Commercial Paper of Rs.50,00,00,000 (31.03.09 - Rs.Nil). Short term loans from others (Schedule 4) comprise :- (a) Commercial Paper - Rs.2,40,00,00,000 (31.03.09 - Rs.Nil)

(b) 6.4% redeemable non convertible debentures aggregating Rs.50,00,00,000 (31.03.09 - Rs.Nil), privately placed (allotment date -17th March,2010) are due for redemption at par on 16th April, 2010.

(c) 6.2% redeemable non convertible debentures aggregating Rs.15,00,00,000 (31.03:09 - Rs.Nil), privately placed (allotment date -24th February,2010) are due for redemption at par on 24th May, 2010.

(d) 6% redeemable non convertible debentures aggregating Rs.25,00,00,000. (31.03:09 - Rs.Nil) and Rs.25,00,00,000 (31.03.09 - Rs.Nil), privately placed (allotment dates -15th February, 2010 & 17th February, 2010) are due for redemption at par on 14th May, 2010 and.17th May, 2010 respectively.

(e) 5.71 % redeemable non convertible debentures aggregating Rs.30,00,00,000 (31.03.09 - Rs.Nil), privately placed (allotment date -15th February,2010) are due for redemption at par on 12th May, 2010.

10. Other loans from banks {Schedule 4) include:-

(a) Zerocaupon unsecured redeemate placed (allotmentdate -15th March, 2010) are due for redemption at par at the end of 396 days from the date of allcrtment

(b) 7.75% unsecured redeemable non convertible debentures aggregating Rs 50,00,00,000 (31.03.2009 - Rs.Nil) privately placed (allotment date -19th March, 2010) are due for redemption at par on 5th April, 2011.

(c) 8.35 % unsecured redeemable non convertible debentures aggregating Rs 1,00,00,00,000 (31.03.2009 - Rs.Nil) privately placed (allotment date-22nd September, 2009) are due for redemptron at par at the end of 377 allotment.

10.1 Debenture redemption reserve of Rs 1,01,25,00,000, being 25% of the value debentures referred to in Notes 19.1 and 19.2 above has been created out the of profit of the Company.

11.Pursuant to the Announcement on Accounting for Derivatives issued by the Institute of Chartered Accountants of India in March,2008,the company has accounted for during the year net less amounting to Rs. 1,43,41,747 (31.03.09-Rs17,38,12,270) in respect of outstanding derivative contracts at the Balance sheet date by maring therm to market as indicacated in Note 1 (g) above and the resultant excess liability of Rs.15,92,70,523 net of realised loss (net) of Rs.87,23,742 during the year arising from derivative contracts is written back and included in Miscellaneous Income under Schedule 13 to accounts.in 2908-09, the aforesaid mark to market loss along with realised loss (net) of Rs.77,02,500 was included Miscellaneous Expenses under schedule 15 to accounts.

12 a) Rent expenditure (Schedule 15) includes tease payments of Rs.18,19,595,(2008^-Rs.Nil)relating to mm cancellable operating lease. This leasing arrangement is for three years and is in respect of office premises. The significant leasing arrangement interalia includes option for renewal.

The total of future minimum lease payments under this non cancellable operating lease:

(i) not later than one year - Rs.25,68,840 (200849 - Rs.Nil)

(ii) later than one year but not later than five years -Rs.33,18,085 (2008-09 - Rs.Nil)

(iii) later than five years - Rs.Nil (2008-09 - Rs.Nil)

b) The Company has given a unit of building on operating lease to Lazarus Hospital duririg me year for 5 years extendable up to 12 years on mutual consent

13 Information pursuant to the provisions of paragraph 3,4C and 4D of Part II of Schedule VI to the Companies Act 1956 in given in Schedule 18, which forms an integral part of this Schedule,

14 Shares of Jay Shree Tea & Industries Ltd. held by the Company at face value being bonus shares remaining unclaimed.

15 Certain records/ documents pertaining to production, rew materials, purchase records etc. of the Companys Assam Cotton Milts Unit were Seized by the Excise Authorities and are presently not available with the Company

16 Previous years figures have been regrouped or rearranged where considered necessary,

 
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