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Notes to Accounts of Mangalam Cement Ltd.

Mar 31, 2018

Note No. 1

Events occurring after Balance Sheet Date:

Proposed Dividend

The Board of Directors has proposed a dividend of Rs. 0.50 (Full value) (previous year Rs. 0.75) (Full value) per equity shares of Rs. 10 each and the total proposed dividend amounts to Rs. 133.47 Lacs (previous year Rs. 200.20 Lacs) and corporate dividend tax to be Rs. 27.44 Lacs (previous year Rs. 40.76 Lacs) and same is subject to approval of shareholders at the ensuing Annual General Meeting.

Note No.2

Inventory includes coal valuing Rs. 1512.64 Lacs (previous year Rs. 1512.64 Lacs) sent for processing lying with a vendor for long time. Due to financial difficulty, vendor could not supply the material but the Company is hopeful of recovery.

Note No. 3

Revenue expenditure on Research and Development amounting to Rs. Nil (Previous year Rs. 65.87 lacs) is shown in the Statement of Profit & Loss.

Note No. 4

Other operating Revenue includes investment subsidy and employment generation subsidy aggregating Rs. 391.34 Lacs (Previous Year Rs. 386.84 Lacs).

Note No. 5

Employee Defined Benefits:

A. Defined Contribution Plans

The Company makes contributions towards provident fund and superannuation fund to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits.

B. Defined Benifit Plans

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. Gratuity liabilty is being contributed to Group Gratuity cum Life Assurance Schemes administered by the LIC of India. The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2018. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

IX. Description of Risk Exposures:

"Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various risks as follow -

A) Salary Increases - Higher than expected increase in salary will increase the defined benefit obligation.

B) Discount Rate - Reduction in discount rate in subsequent valuations can increase the plan''s liability.

C) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumption in the valuation can impact the liabilities.

D) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan''s liability.

Note No. 6Segment Reporting

According to Ind AS 108, identification of operating segments is based on Chief Operating Decision Maker (CODM) approach for making decisions about allocating resources to the segment and assessing its performance. The business activity of the company falls within one broad business segment viz. âCement" and substantially sale of the product is within the country. Hence, the disclosure requirement of Ind AS 108 of ''Segment Reporting'' is not considered applicable.

Note No. 7 Capital Management

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The primary objective of the Company''s capital management is to maximize the shareholder value. The Company''s primary objective when managing capital is to ensure that it maintains an efficient capital structure and healthy capital ratios and safeguard the Company''s ability to continue as a going concern in order to support its business and provide maximum returns for shareholders. The Company also proposes to maintain an optimal capital structure to reduce the cost of capital. No changes were made in the objectives, policies or processes during the year ended March 31,2018 and March 31,2017.

For the purpose of the Company''s capital management, capital includes issued capital, share premium and all other equity reserves. Net debt includes, interest bearing loans and borrowings, trade and other payables less cash and short term deposits.

The Company monitors capital using gearing ratio, which is net debt divided by total capital as under:

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches of the financial covenants of any interest bearing loans and borrowing for reported periods.

Note No. 8

Financial Instrument - Fair Value and Risk Management

I. Fair Value Measurement

A. Financial Instrument by category

B. Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are:

a. Recognised and measured at fair value and

b. measured at amortised cost and for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1 : Hierarchy includes financial instruments measured using quoted prices. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.

There are no transfers between level 1 and level 2 during the year.

Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments

- the fair value of forward foreign exchange contracts is determined as per valuation provided by the bank

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

All of the resulting fair value estimates are included in level 2 except for unlisted equity securities and preference shares, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.

Valuation Process

The Company gets the valuations performed from an independent valuer, required for financial reporting purposes, including level 3 fair values.

The main level 3 inputs for unlisted preference shares used by the Company are derived and evaluated as follows:

- Risk adjusted discount rates are estimated based on expected cash inflows arising from the instrument and the entity''s knowledge of the business and how the current economic environment is likely to impact it.

Changes in level 2 and 3 fair values are analysed at the end of each reporting period.

Note No. 32.14

Financial risk management objective and policies

"The Company has exposure to the following risks arising from financial instruments:

- Credit risk;

- Liquidity risk; and

- Market riskâ

Risk Management Framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the mechanism of property defined framework.

The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company''s Audit Committee oversees compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obi ligations, and arises principally from the Company''s receivables from customers and investments in debt securities. The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic market. The Management impact analysis shows credit risk and impact assessment as low. Trade receivables

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes market check, industry feedback, past financials and external ratings, if they are available. Sale limits are established for each customer and reviewed periodically.

The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables.

In monitoring customer credit risk, customers are reviewed according to their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties. The ageing analysis of the receivables has been considered from the date the invoice falls due

During the year, the Company has made no write-offs of trade receivables, it does not expect to receive future cash flows or recoveries from collection of cash flows previously written off. The Company management also pursue all legal option for recovery of dues wherever necessary based on its internal assessment.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows. This is generally carried out in accordance with practice and limits set by the Company. These limits vary by location to take into account requirement, future cash flow and the liquidity in which the entity operates. In addition, the Company''s liquidity management strategy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in Indian rupee and have an average maturity within a year.

Maturity profile of Financial liabilities

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include trade payables, trade receivables, borrowings, etc.

Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and small exposure in EUR. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company''s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the Rs. cash flows of highly probable forecast transactions by hedging the foreign exchange inflows on regular basis. The Company also take help from external consultants who for views on the currency rates in volatile foreign exchange markets.

Currency risks related to the principal amounts of the Company''s foreign currency payables, have been partially hedged using forward contracts taken by the Company.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

Interest rate risk

The Company''s exposure to the risk of changes in market interest rates relates primarily to long term debt. To protect itself from the volatility prevailing, the Company maintain its long term borrowing on fixed interest rate through interest rate swap instrument for borrowings in foreign currency, in which it agrees to exchange at specific intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed upon principal amount.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows.

Note No.9

Operating Leases

The Company''s significant leasing arrangements are in respect of operating leases of premises for warehouse. These leasing arrangements, which are cancellable, are typically for a period of 11 months or are usually renewable on mutually agreeable terms. The Company has recognized expense amounting to Rs. 495.93 lacs (Previous year Rs. 355.67 lacs).

Note No. 10Borrowing costs

During the year, the Company has capitalized borrowing cost amounting to Rs. 60.00 Lacs (Previous year Rs. 266.90 Lacs). The capitalized rate used to determine the amount of borrowing cost to be capitalized is weighted average interest rate applicable to the borrowing during the year is 9.15% (Previous year 9.69%).

Note No.11

Other Disclosures

a. Disclosure as specified in Schedule V of SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015.

Note No. 12

Previous year''s figures have been regrouped and rearranged wherever necessary.

The accompanying notes are an integral part of the financial statements.

Mar 31, 2017

1 Terms/rights attached to Equity Shares

The Company has only one class of equity shares having a par value of ''10 each. Each holder of one equity share 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.

2. The Board of Directors has proposed a dividend of Rs. 0.75 per equity shares of Rs.10 each for the year ended 31st March 2017 and the total proposed dividend amounts to Rs.200.20 lacs and corporate dividend tax to be Rs.40.76 lacs.

(b) The Jute Packaging (Compulsory use in Packing Commodities) Act 1987 was stayed by the Rajasthan High Court in 1997. However, the Jute Commissioner issued a show cause notice on 14.08.2002 for non-use of Jute Packaging Material. This has been challenged by the Company and the amount involved is not quantifiable.

The Company has engaged competent professional advisors to defend its positions against all disputed claims/notices and based on advice received no liabilities are expected to materialize.

3. Revenue expenditure on Research and Development amounting to Rs.65.87 lacs (Previous year Rs.99.30 lacs) is shown in the Statement of Profit & Loss. Capital expenditure relating to Research and Development amounting to Rs. Nil (Previous year Rs.10.42 lacs) has been included in fixed assets.

4. Other operating revenue includes investment subsidy and employment generation subsidy aggregating to Rs.386.74 lacs (Previous Year Rs.318.14 lacs).

5. The Company is engaged only in the cement business and there are no separate reportable segments.

6. Related Party information as per Ind AS 24.

Note : The amount related to gratuity cannot be ascertained separately since they are included in the contribution in respect made to the insurance company on a group basis for all employees together. As the liability for leave encashment are provided on actuarial basis for the Company as a whole. Hence not included as above.

Fair Value Hierachy

Level-1 Quoted Price (unadjusted) is active markets for identical assets or liabilities

Level-2 Inputs other than quoted prices included within Level-1 that are observable for the asset or liability, either directly (i.e as prices) or indirectly (i.e. derived from prices)

Level-3 Inputs other than quoted prices included within Level-1 that are based on non-observable market data.

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31, 2017 :

7. Financial risk management objective and policies

The Company''s Financial liabilities include Loan and borrowing, security deposits, retention money and Trade & other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s financial assets include investments, trade & other receivables, deposits and cash & cash equivalents.

The Company''s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company''s financial performance. The Company uses derivative financial instruments to hedge certain risk exposures. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes.

The Company is exposed to market risk, credit risk and liquidity risk. The Company has a Risk management policy and its management is supported by a Risk management committee that advises on risks and the appropriate financial risk governance framework for the Company. The Risk management committee provides assurance to the Company''s management that the Company''s risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below.

Market risk

Interest rate risk

The Company''s exposure to the risk of changes in market interest rates relates primarily to long term debt. To protect itself from the volatility prevailing, the Company maintain its long term borrowing on fixed interest rate through interest rate swap instrument, in which it agrees to exchange at specific intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed upon principal amount.

Interest rate sensitivity

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company has hedged its foreign currency borrowing through forward cover to protect itself from the foreign currency volatility. However, the Company''s exposure to the risk of changes in foreign exchange rates are not significant.

Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables).

Trade receivables

Customer credit risk is managed by the respective department subject to Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on individual credit limits as defined by the Company. Outstanding customer receivables are regularly monitored.

An impairment analysis is performed at each reporting date on an individual basis. The calculation is based on historical data of credit losses.

The ageing analysis of the receivables (gross of provision) has been considered from the date the invoice falls due.

Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations or at a reasonable price. The Company''s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s net liquidity position through rolling forecasts on the basis of expected cash flows.

Maturity profile of Financial liabilities

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.

8. Capital management

The Company monitors capital using gearing ratio, which is net debt divided by total capital as under:

9. Corporate Social Responsibilities

As per section 135 of Companies Act, 2013, Company meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three years on corporate social responsibility. A CSR committee has been formed by the company as per the Act The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of The Companies Act,2013.

(a) Gross amount required to be spent by Company during the year is Rs. 52.15 lacs

(b) Amount Spent during the year on :

10. Disclosure on Specified Bank Notes (SBN)

During the year, the Company has specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308 (E) dated 30th March, 2017 on the details of specified Bank Notes (SBN) held and transaction during the period from November 8, 2016 to December 30, 2016 is given below :

11. First Time Adoption of Ind AS

As these accounts are the first financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, (First-time Adoption of Indian Accounting Standards) has been applied. An explanation of how the transition from previous GAAP to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company.

(a) Exemption on first time adoption of Ind AS availed in accordance with Ind AS 101

The Company has elected to measure items of PPE at the date of transition to Ind AS at their Carrying Value. Company has used the Carrying Value of assets at the date of transition as at 01.04.2015, which is considered as deemed cost on transition

(e) Foot Note

The Company has made following reclassification as per the requirements of Ind-AS:

A. Reclassifications

i) Assets / liabilities which do not meet the definition of financial asset / financial liability have been reclassified to other asset / liability.

ii) Re-Measurement gains/(losses) on defined benefit plans on long term employee benefit plans are re-classified from profit and loss to OCI.

B. Property, plant & equipment and Intangible Assets

(i) Under previous GAAP, company was carrying assets on at revaluation assessed 01.04.1987, to fair value assets with corresponding increase in revaluation reserve. On the date of transition, the Company has elected to measure items of Property, Plant & Equipment and Intangible Assets at the date of transition to Ind AS at their carrying value as deemed cost. Consequently, revaluation reserve carrying value Rs. 471.61 lacs has been adjusted against retained earnings.

(ii) The Company has measured the liability relating to Site Restoration cost in accordance with Ind AS 37 on the date of transition viz. 1st April, 2015 and has capitalized the obligation as a separate component under Intangible Assets together with the accumulated depreciation from the date the obligation was incurred to the transition date. The amount to be capitalized as part of the cost of the asset has been calculated by discounting the liability back to the date the obligation initially arose using the best estimate of historical discount rates, with the associated accumulated depreciation having been calculated by applying the current estimate of the useful life of the asset, using the entity''s depreciation policy for the asset.

C. Derivative financial instruments

Under Ind AS, derivative contracts are measured at fair value at each balance sheet date to the extent of any reduction/gain in fair value, recognized in Statement of Profit and Loss as finance expense or finance income. Under Indian GAAP premium on forward contract is amortized over the contract period.

D. Fair valuation of financial assets and liabilities

(i) Under Indian GAAP, receivables and payables were measured at transaction cost Under Ind AS, these financial assets and liabilities are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less allowance for impairment, if any. The resulting gain /loss recognized in the Statement of Profit and Loss for financial liabilities as Finance Cost or Finance Income.

(ii) Under Ind AS investments are designated as fair value through other comprehensive income (FVOCI), fair value through profit and loss (FVTPL) and carried at amortized cost. For investment designated as FVOCI, difference between the fair value and carrying value is recognized in OCI. For investment designated as FVTPL, difference between the fair value and carrying value is recognized in profit and loss. For investment designated as amortized cost, accrual of interest is recognized in profit and loss with which value of investment will be equal to maturity date contractual cash flows which includes solely payments of interest and principal.

E. Proposed Dividend

Under Indian GAAP, proposed dividends are recognized as liability in the period to which they relate irrespective of the approval by shareholders. Under Ind AS a proposed dividend is recognized as liability in the period in which it is declared (on approval of shareholders in a general meeting) or paid. Therefore, the proposed dividend and dividend distribution tax of Rs. 642.55 lacs on March 31, 2015 has been derecognized and recognized during 2015-16 on payment. Similarly proposed dividend and dividend distribution tax of Rs.160.64 lacs on March 31, 2016 has been derecognized and recognized during 2016-17.

F. Deferred tax

The Company has accounted for deferred tax on the various adjustments between Indian GAAP and Ind AS at the tax rate at which they are expected to be reversed.

MAT entitlement credit being of the nature of deferred tax, on transition to IND AS MAT credit entitlement of Rs. 1584.35 lacs and Rs. 905.00 lacs for April 1, 2015 and March 31, 2016 respectively has been regrouped under deferred tax assets from Current tax assets (net).

G. The impact of change in actuarial assumption and experience adjustments for defined benefit obligation towards gratuity liability and Leave Encashment is accounted in the Statement of Other Comprehensive Income and responding tax impact on the same. Due to this Rs. 12.95 lacs and Rs. 467.00 lacs for the period ended March 31, 2016 and March 31, 2017 respectively, tax credit there on is shown in OCI and reversal in Statement of Profit and loss.

H. Profit on reinstatement of loan given is shown under finance income, Loss on reinstatement with respect to borrowings and regarded as an adjustment to borrowing cost are shown under finance expense.

I. In case of operating lease, the carrying amount of Leasehold Land shown as a prepayment under Non-Financial Assets and amortized as lease rent over a period of Lease.

12. Previous year''s figures have been regrouped and rearranged wherever necessary.

Mar 31, 2016

B. NOTES ON ACCOUNTS

1. The Company has componentized its fixed assets and has separately assessed the life of the major components forming part of the main assets. Consequently, the depreciation charge for the year ended 31.03.2016 is higher by Rs. 89.57 Lacs. Depreciation for the year includes Rs. 8.91 lacs (Previous year Rs. 8.91 lacs) being depreciation on the increased amount of assets due to revaluation and an equivalent amount has been transferred from the Revaluation Reserve to the Statement of Profit & Loss..

2. Exceptional items of Rs. Nil (Previous Year Rs. 343.21 Lacs) represent interest on disputed U.P. entry tax for earlier year charged and collected by the commercial taxes department, U.P.

4. The Board of Directors has proposed a dividend of Rs. 0.50 per equity shares of Rs. 10 each for the year ended 31st March 2016 and the total proposed dividend amounts to Rs. 133.47 lacs and corporate dividend tax to be Rs. 27.17 lacs.

5. Revenue expenditure on Research and Development amounting to Rs. 99.30 lacs (Previous year Rs. 105.60 lacs) is shown in the Statement of Profit & Loss. Capital expenditure relating to Research and Development amounting to Rs. 10.42 lacs (Previous year Rs. Nil) has been included in fixed assets.

6. Other operating revenue includes investment subsidy and employment generation subsidy aggregating to Rs. 318.14 lacs (Previous Year Nil).

7. (a) All Raw Materials consumed are indigenous.

8. Previous year''s figures have been regrouped and rearranged wherever necessary.

Mar 31, 2015

NOTE 1

Accounting Policies and Notes on Accounts for the year ended 31st March 2015.

1. (a) Pursuant to the enactment of Company

Act 2013, the Company revised its policy of providing depreciation in fixed assests effective from April 1, 2014 by depreciating carrying amount of fixed assets as on April 1, 2014 over the remaining useful life of the assets as per Schedule II as against at the rate and in the manner specified in Schedule XIV to the Companies Act 1956. Consequently,-

(i) Where the useful life is nil as on 1st April 2014 depreciation of Rs. 128.42 Lacs (Rs. 84.77 Lacs net of deffered tax) has been deducted from retained earnings.

(ii) Depreciation for the year is lower by Rs. 917.23 Lacs

(b) Depreciation for the year includes Rs. 8.91 Lacs (Previous year Rs. 8.91 Lacs) being depreciation on the increased amount of assets due to revaluation and an equivalent amount has been transferred from the Revaluation Reserve to the Statement of Profit & Loss.

2. Exceptional items of Rs. 343.21 Lacs represent interest on disputed U.P. entry tax for earlier year charged and collected by the commercial taxes department, U.P.

3. Contingent Liabilities and Commitments (to the extent not provided for)-

i. Contingent Liabilities:

(a) Claims against the Company not acknowledged as debts - (Rs. in Lacs) 31st March, 31st March, 2015 2014

Taxation Matters

- Direct tax 1949.26 1120.69

- Indirect tax 6360.44 6520.85

Others 1013.39 344.23

(b) The Jute Packaging (Compulsory use in Packing Commodities) Act 1987 was stayed by the Rajasthan High Court in 1997. However, the Jute Commissioner issued a show cause notice on 14.08.2002 for non- use of Jute Packaging Material. This has been challenged by the Company and the amount involved is not quantifiable.

4. The Board of Directors has proposed a dividend of Rs. 2 per equity shares of Rs. 10 each for the year ended 31st March 2015 and the total proposed dividend amounts to Rs. 533.88 Lacs and corporate dividend tax to be Rs. 108.68 Lacs.

5. Revenue expenditure on Research and Development amounting to Rs. 105.60 Lacs (Previous Year Rs. 317.35 Lacs) is shown in the Statement of Profit & Loss. Capital expenditure relating to Research and Development amounting to Rs. Nil (Previous Year Rs. 14.92 Lacs) has been included in fixed assets.

6. The Company is engaged only in the cement business and there are no separate reportable segments.

7. Previous year's figures have been regrouped and rearranged wherever necessary.

Mar 31, 2014

1. Depreciation for the year includes Rs. 8.91 lacs (Previous year Rs. 8.91 lacs) being depreciation on the increased amount of assets due to revaluation and an equivalent amount has been transferred from the Revaluation Reserve to the Statement of Profit & Loss.

2. Contingent Liabilities and Commitments (to the extent not provided for) -

i. Contingent Liabilities:

(a) Claims against the Company not acknowledged as debts -

(Rs in lacs) Particulars As at As at 31st March, 31st March, 2014 2013

Taxation patters

- Direct tax 1120.69 1628.55

- Indirect tax 6520.85 2685.05

Others 544.25 211.64

(b) The Jute Packaging (Compulsory use in Packing Commodities) Act 1987 was stayed by the Rajasthan High Court in 1997. However, the Jute Commissioner issued a show cause notice on 14.08.2002 for non-use of Jute Packaging (V^aterial. This has been challenged by the Company and the amount involved is not quantifiable.

3. The Board of Directors has proposed a dividend ofRs. 3 per equity shares ofRs. 10 each for the year ended 31st |V|ar 2014 and the total proposed dividend amounts to Rs. 800.81 lacs and corporate dividend tax to be Rs. 136.10 lacs.

4. Revenue expenditure on Research and Development amounting to Rs. 317.35 lacs (Previous year Rs. 284.27 lacs) is shown in the Statement of Profit & Loss. Capital expenditure relating to Research and Development amounting to Rs. 14.92 lacs (Previous yearRs. 40.06 lacs) has been included in fixed assets.

5. Employee Defined Benefits:

(a) Defined Contribution Plans

The Company has Recognised expenses towards the defined contribution plans as under:

6. Related party information:

Particulars

I- List of related parties

(a) Key Management Personnel

(b) Enterprise in which Key Management Personnel is able to exercise significant influence 31st March, 2014

(1) Shri A.V. Jalan

(2) Smt.Vidula Jalan

(1) Pilani Investment & Industrial Corporation Ltd.

(2) Vidula Consultancy Service Ltd.

(3) |V|angalam Timber Products Ltd.

(4) Aditya Marketing & Manufacturing Ltd.

31st March, 2013

(1) Shri A.V. Jalan

(2) Smt.Vidula Jalan

(1) Pilani Investments Industrial Corporation Ltd.

(2) Vidula Consultancy Service Ltd.

(3) Man9a^arn Timber Products Ltd.

(4) Aditya Marketing & Manufacturing Ltd.

Note: the amounts related to gratuity cannot be ascertained separately since they are included in the contribution in this respect made to the insurance company on a group basis for all the employees together. inclusive of service tax amounting to Current yearRs. 3.23 lacs, (Previous yearRs. 4.33 lacs)

7. (a) All Raw Materials consumed are indigenous, (b) Stores and spare parts consumed:

Mar 31, 2013

1. Depreciation for the year includes Rs. 8.91 lacs (Previous year Rs. 8.91 lacs) being depreciation on the increased amount of assets due to revaluation and an equivalent amount has been transferred from the Revaluation Reserve to the Statement of Profit & Loss.

2. Contingent Liabilities and Commitments (to the extent not provided for)-

i. Contingent Liabilities:

(a) Claims against the Company not acknowledged as debts - Differential of royalty on limestone Rs. 159.83 lacs (previous year Rs. 159.83 lacs), Disputed Cenvat and other excise claims Rs. 1483.38 lacs (previous year Rs. 1330.56 lacs), Disallowance of credit notes & differential tax on raw material (Sales Tax) etc. Rs. 4.08 lacs (previous year Rs. 4.08 lacs), Claims by customers and others Rs. 51.81 lacs (previous year Rs. 54.21 lacs), Income Tax matters Rs. 1628.55 lacs (previous year Rs. 531.95 lacs), Differential of Central Sales Tax Rs. 733.34 lacs (previous year Rs. 686.28 lacs), Haryana VAT matters Rs. 0.68 lacs (previous year Rs. 0.68 lacs), UP sales tax Rs. 0.43 lacs (previous year Rs. 0.43 lacs), UP Entry tax Rs. 450 lacs (previous year Rs. Nil), Interest Demanded on Deferment of VAT (Raj.) Rs. 11.12 lacs (previous year Rs. Nil).

(b) The Jute Packaging (Compulsory use in Packing Commodities) Act 1987 was stayed by the Rajasthan High Court in 1997.

However, the Jute Commissioner issued a show cause notice on 14th August, 2002 for non-use of Jute Packaging Material. This has been challenged by the Company and the amount involved is not quantifiable.

The Company has engaged competent professional advisors to defend its positions against all disputed claims/ notices and based on advice received no liabilities are expected to materialise.

3. The Board of Directors has proposed a dividend of Rs. 6 per equity shares of Rs. 10 each for the year ended 31st March, 2013 and the total proposed dividend amounts to Rs. 1601.63 lacs and corporate dividend tax to be Rs. 272.20 lacs.

4. Revenue Expenditure on Research and Development amounted to Rs. 284.27 lacs (Previous year Rs. 191.76 lacs) is shown in statement of Profit & Loss. Capital Expenditure relating to Research and Development amounting to Rs. 40.06 lacs (Previous year Rs. 76.64 lacs) has been included in fixed assets.

5. It is not possible to ascertain the quantum of accrual with reasonable certainty in respect of insurance, other claims and performance guarantees, the same are continued to be accounted on settlement basis.

6. (a) Capital work-in-progress includes machinery under installation and building and other assets under erection.

7. Previous year''s figures have been regrouped and rearranged wherever necessary.

Mar 31, 2012

1. Depreciation for the year includes Rs. 8.91 lacs (Previous year Rs. 9.10 lacs ) being depreciation on the increased amount of assets due to revaluation and an equivalent amount has been transferred from Revaluation Reserve to the Profit and Loss Account.

2. In view of the long delay in obtaining approval of Hon'ble High Court of Orissa and uncertainty, all essential and vital parameters considered in approving the scheme of amalgamation including fair basis, now resulting in unfavourable share exchange ratio, the scheme of amalgamation of Mangalam Timber Products Ltd (MTPL) with the company has been withdrawn.

3. Consequent to withdrawal of scheme of amalgamation interest free loan of Rs. 30 Crores advanced to MTPL has been converted into Inter-Corporate deposit repayable on demand with interest @12.5% p.a.

4. Contingent Liabilities and Commitments (to the extent not provided for)

i. Contingent Liabilities

(a) Claims against the Company not acknowledged as debts - Differential of royalty on limestone Rs. 159.83 lacs

(previous year Rs. 180.34 lacs), Disputed Cenvat and other excise claims Rs. 1330.56 lacs (previous year Rs. 1157.12 lacs), Disallowance of credit notes & differential tax on raw material (Sales Tax) etc. Rs. 4.08 lacs (previous year Rs. 9.72 lacs), Turnover tax Rs. Nil (previous year Rs. 3.13 lacs), Claims by customers and others Rs. 54.21 lacs (previous year Rs. 50.51 lacs), Income Tax matters Rs. 531.95 lacs (previous year Rs. 542.86 lacs), Differential of CST Rs. 686.28 lacs (previous year Rs. 639.22 lacs), Haryana VAT matters Rs. 0.68 lacs (previous year Rs. 0.68 lacs), UP sales tax Rs. 0.43 lacs (previous year Rs. Nil).

(b) Other money for which the company is contingently liable- The Jute Commissioner has issued a show cause notice dated 14th August, 2002 for non use of Jute Packaging Material as stipulated under the Jute Packaging Material (Compulsory use in Packing Commodities) Act 1987, which has been stayed by the Honorable Rajasthan High Court, Jodhpur. Liabilities on this account upto 30.06.1997 are presently not quantifiable.

5. Board of director has proposed a dividend of Rs. 6 per equity shares of Rs. 10 each for the year ended 31st May 2012 and total proposed dividend will be Rs. 1601.63 lacs and corporate dividend tax will be Rs. 259.82 lacs.

6. (a) During the year Rs. 6 lacs (Previous year Rs. Nil) has been received as Government Grant in the nature of "Grants Related to Specific Fixed Assets". This amount has been reduced from the cost of concerned Fixed Assets.

(b) Government grant received in the nature of "Grants related to Revenue" Rs. 1.58 lacs (Previous year Rs.2.49 lacs) reduced from the related expenditure.

7. Revenue Expenditure on Research and Development amounting to Rs. 191.76 lacs (Previous year Rs. 131.53 lacs) is shown under the head Research and Development Account (under relevant heads in the previous year). Capital Expenditure relating to Research and Development amounting to Rs. 76.64 lacs (Previous year Rs. 2.66 lacs) has been included in fixed assets.

8. (i) Pursuant the order dated 30th November, 2007 of the Hon'ble Rajasthan High Court reversal of deferred tax liability for the year Rs. 28.39 lacs (previous year Rs. 1164 lacs has been adjusted from securities premium account) has been credited to against Securities Premium Account.

9. It is not possible to ascertain the quantum of accrual with reasonable certainty in respect of insurance, other claims and performance guarantees, the same are continued to be accounted on settlement basis.

10. (a) Capital work-in-progress includes machinery under installation and building and other assets under erection.

11. Previous year's figures have been regrouped and rearranged wherever necessary.

Mar 31, 2011

1. Buildings, Plant and Machinery and Railway siding were revalued as on 1st January, 1988 by the valuer after considering useful life, quotations and R.B.I. indices, etc. As a result net book value of such assets was increased by Rs.2355.16 lacs which was transferred to revaluation reserve. Depreciation for the year includes Rs.9.10 lacs (Previous year Rs.9.17 lacs) being depreciation on the increased amount of assets due to revaluation and an equivalent amount has been transferred from Revaluation Reserve to the Profit and Loss Account.

2. The merger of Mangalam Timber Products Ltd (MTPL) with the company through the judicial process is in progress. The Honble High Court of Rajasthan, Jaipur, has directed convening of the meeting of unsecured creditors and Share holders of the company which is scheduled for Saturday the 21st May, 2011 at the Registered Office of the Company. The merger, on approval by Honble High Court of Rajasthan, Jaipur and Honble High Court of Orissa, Cuttack, will be effective from 1st April 2010.

3. Contingent liabilities not provided for:

(i) Claims against the Company not acknowledged as debts: Differential of royalty on limestone Rs.180.34 lacs (previous year Rs.180.34 lacs), Disputed Cenvat and other excise claims Rs.1157.12 lacs (previous year Rs.1100.60 lacs), differential tax on raw material (Sales Tax) etc. Rs.9.72 lacs (previous year Rs.9.72 lacs), Turnover tax Rs.3.13 lacs (previous year Rs.3.13 lacs), Claims by customers and others Rs.50.51 lacs (previous year Rs.50.81 lacs), Income Tax matters Rs.542.86 lacs (previous year Rs.76.26 lacs), Differential of CST Rs.639.22 lacs (previous year Rs.592.16 lacs), Haryana VAT matters Rs.0.68 lacs (previous year Rs.0.68 lacs).

(ii) The Jute Commissioner has issued a show cause notice dated 14.08.2002 for non use of Jute Packaging Material as stipulated under the Jute Packaging Material (Compulsory use in Packing Commodities) Act 1987, which has been stayed by the Honorable Rajasthan High Court, Jodhpur. Liabilities on this account upto 30.06.1997 are presently not quantifiable.

4. In accordance with the proposed Scheme of Amalgamation, the Company has advanced interest free loan of Rs.3 crores to Mangalam Timber Products Ltd. (MTPL) on 18.01.2011, which has since been received back. However, in case the merger is not effected, interest @11.5% p.a. will be paid by MTPL to the Company on the said loan.

5. Provision for current tax for the current year 2010-11 is net of MAT credit of Rs.805 lacs (2009-10 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.

6. Estimated capital commitments outstanding Rs.425.77 lacs (previous year Rs.9457.70 lacs) against which advance paid Rs.78.21 lacs (Previous year Rs.4542.51 lacs).

7. (i) Pursunt the order dated 30th November, 2007 of the Honble Rajasthan High Court deferred tax liability for the year Rs.1164 lacs (previous year Rs.585 lacs) has been adjusted against Securities Premium Account.

8. It is not possible to ascertain the quantum of accrual with reasonable certainty in respect of insurance, other claims and performance guarantees, the same are continued to be accounted on settlement basis.

9. Maximum amount due at any time during the year from an officer of the Company under the head ÃLoans and AdvancesÃ is Rs.2.05 lacs (Previous year Rs.0. 77 lac).

10. (a) Capital work-in-progress includes advance against capital orders, machinery under installation and building and other assets under erection.

11 Employee Defined Benefits

(b) Defined Benefit Plans as per Actuarial Valuation as on 31st March, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes:

12. The company is engaged only in cement business and there are no separate reportable segments as per Accounting Standard 17.

13 Related Party Information 2010-11

I. List of Related Parties

(a) Key Management Personnel Shri KC Jain (Managing Director)

(b) Enterprise in which Key Management personnel is able (1) Kesoram Industries to exercise significant influence Ltd.

(2) Kamal C Jain & Co.

(c) Other Related Parties #

(1) Shri A.V. Jalan

(2) Smt.Vidula Jalan

(3) Pilani Investment & Industrial Corporation Ltd.

(4) Vidula Consultancy Service Ltd.

(5) Mangalam Timber Products Ltd.

2009-10

I. List of Related Parties

(a) Key Management Personnel Shri KC Jain (Managing Director)

(b) Enterprise in which Key Management personnel is able to exercise significant influence (1) Kesoram Industries Ltd.

(2) Kamal C Jain & Co.

(c) Other Related Parties # (1) Shri A.V. Jalan

(2) Smt.Vidula Jalan

(3) Pilani Investment & Industrial Corporation Ltd.

(4) Vidula Consultancy Service Ltd.

(5) Mangalam Timber Products Ltd.

# The parties stated in (c) above are Related Parties in the broader sense of the term and are included for making the financial statements more transparent.

14 (a) Information for class of goods manufactured, sold and stocks- Portland cement

(b) All Raw Materials consumed are indigenous.

(c) Stores and spare parts consumed.

15. Previous years figures have been regrouped and rearranged wherever necessary.

Mar 31, 2010

1. Buildings, Plant and Machinery and Railway siding were revalued as on 1st January, 1988 by the valuer after considering useful life, quotations and R.B.I, indices, etc. As a result net book value of such assets was increased by Rs.2355.16 lacs which was transferred to revaluation reserve. Depreciation for the year" includes Rs. 9.17 lacs (Previous year Rs. 9.19 lacs) being depreciation on the increased amount of assets due to revaluation and an equivalent amount has been transferred from Revaluation Reserve to the Profit and Loss Account.

2. Contingent liabilities not provided for:

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

(a) Differential of royalty on limestone Rs. 180.34 lacs (previous year Rs.180.34 lacs), (b) Disputed Cenvat and other excise claims Rs. 1100.60 lacs (previous year Rs.1017.53 lacs).

(c) differential tax on raw material (Sales Tax) etc. Rs. 9.72 lacs (previous year Rs. 9.72 lacs).

(d) Turnover tax Rs. 3.13 lacs (previous year Rs. 3.13 lacs), (e) Claims by customers and others Rs. 50.81 lacs (previous year Rs.87.79 lacs) (f) Income Tax matters Rs. 76.26 lacs (previous year Rs. 76.26 lacs), (g) Differential of CST Rs. 592.16 lacs (previous year Rs. 545.11 lacs), (h) Haryana VAT matters Rs. 0.68 lacs (previous year Nil).

(ii) The Jute Commissioner has issued a show cause notice dated 14.08.2002 for non use of Jute Packaging Material as stipulated under the Jute Packaging Material (Compulsory use in Packing Commodities) Act 1987, which has been stayed by the Honorable Rajasthan High Court, Jodhpur. Liabilities on this account upto 30.06.1997 are presently not quantifiable.

3. Estimated capital commitments outstanding Rs. 9457.70 lacs (previousyear Rs. 475.78 lacs) against which advance paid Rs. 4542.51 lacs (Previous year Rs. 115.15 lacs).

4. It is not possible to ascertain the quantum of accrual with reasonable certainty in respect of insurance, other claims and performance guarantees, the same are continued to be accounted on settlement basis.

5 (i) During the year the company has bought back 13,39,418 equity shares at value of Rs.1003.90 lacs (previous year 213560 equity shares at value of Rs.114.69 lacs) out of General Reserve till closure of the scheme on 30.07.2009. The shares bought back were extinguished and the share capital has been reduced to this extent and total nominal value of equity shares purchased Rs.133.94 lacs (Previous year Rs.21.36 lacs) have been transferred to Capital Redemption Reserve.

(ii) Consequent to above 1339418 equity shares which were bought back during the period 1st April 2009 to the date of record date did not carry dividend and provision of Rs.73.67 lacs for dividend and corporate dividend tax of Rs.12.52 lacs made as on 31.03.2009 on these shares has been written back during the year.

6, Maximum amount due at any time during the year from an officer of the Company under the head "Loans and Advances" is Rs. 0.77 lac (Previous year Rs.0.36 lac).

7. (i) Capital work-in-progress includes advance against capital orders, machinery under installation and building and other assets under erection.

8 The company is engaged only in cement business and there are no separate reportable segments as pei Accounting Standard 17.

9. Previous years figures have been regrouped and rearranged wherever necessary.

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