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Notes to Accounts of Sagar Cements Ltd.

Mar 31, 2015

1. DEPRECIATION

Depreciation on Fixed Assets has been provided with effect from April 01, 2014 adopting the useful life of the fixed assets in alignment with Schedule II to the Companies Act, 2013.

Adjustment to the tune of Rs.51.97 lakhs, net of deferred taxes have been made to opening balance of retained earnings as on April 01,2014, after retaining the residual value @ 5%, wherever the remaining useful life of an asset was nil as on April 01,2014.

2. OPERATING LEASE

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.

3. CONTINGENT LIABILITIES

Based on legal opinion/advice obtained, no financial implication to the company with respect to the following cases is perceived as on the Balance Sheet date

Particulars 31 March 2015

Disputed Paid Amount Under Protest

AP TRANSCO Voltage surcharge and grid supporting charges 173.50 108.00 (Refer Note 1)

Demand by Sales tax authorities year 2009-10-Sale of Fixed Assets 109.40 27.40 (Refer Note 2)

Demand by Sales Tax authorities year 1999-2000-Interest 19.60 4.90 on delayed payment (Refer Note 3)

Demand by Central Excise Department benefit of Cenvat credit 225.00 195.00 on capital goods (Refer Note 4)

Demand by Central Excise Department benefit of Cenvat credit 650.80 0.00 on capital goods (Refer Note 5)

Demand by Road Transport Authority, Nalgonda for payment of Life Tax on dumpers 28.50 3.20 used in the mines (Refer Note No. 6)

Demand Raised by Central Excise Department (Refer Note No. 7) 59.41 0.00

Demand Raised by Central Excise Department (Refer Note No. 8) 43.04 0.00

Demand Raised by Central Excise Department (Refer Note No. 9) 146.30 0.00

Demand Raised by Central Excise Department (Refer Note No.10) 7.67 3.84

Disallowed input tax credit on sales made to SEZ units 6.29 0.00 for the year 2010-11. (Refer Note No. 11)

Disallowed input tax credit on steel during the year 2007-08. 144.25 18.03 (Refer Note No. 12)

Disallowed input tax credit on steel during the year 2008-09. 75.68 9.46 (Refer Note No. 13)

Demand raised by Commissioner of Customs Visakhapatnam, 67.92 0.00 relating to coal classification. (Refer Note No. 14)

Demand raised by Commissioner of Customs Guntur, relating to 54.75 0.00 coal classification. (Refer Note No. 15)

Disallowance of Expenditure U/s 14A (Refer Note No. 16) 37.60 0.00



Particulars 31 March 2014

Disputed Paid Amount Under Protest

AP TRANSCO Voltage surcharge and 173.50 108.00 grid supporting charges (Refer Note 1)

Demand by Sales tax authorities 109.40 27.40 year 2009-10-Sale of Fixed Assets (Refer Note 2)

Demand by Sales Tax authorities 19.60 4.90 year 1999-2000-Interest on delayed payment (Refer Note 3)

Demand by Central Excise Department 225.00 195.00 benefit of Cenvat credit on capital goods (Refer Note 4)

Demand by Central Excise 650.80 0.00 Department benefit of Cenvat credit on capital goods (Refer Note 5)

Demand by Road Transport Authority, Nalgonda for payment 28.50 3.20 of Life Tax on dumpers used in the mines (Refer Note No. 6)

Demand Raised by Central Excise 59.41 0.00 Department (Refer Note No. 7)

Demand Raised by Central Excise 0.00 0.00 Department (Refer Note No. 8)

Demand Raised by Central Excise 146.30 0.00 Department (Refer Note No. 9)

Demand Raised by Central Excise 7.67 3.84 Department (Refer Note No.10)

Disallowed input tax credit on 6.29 0.00 sales made to SEZ units for the year 2010-11. (Refer Note No. 11)

Disallowed input tax credit 144.25 18.03 on steel during the year 2007-08. (Refer Note No. 12)

Disallowed input tax credit 75.68 9.46 on steel during the year 2008-09. (Refer Note No. 13)

Demand raised by Commissioner 67.92 0.00 of Customs Visakhapatnam, relating to coal classification. (Refer Note No. 14)

Demand raised by Commissioner of 54.75 0.00 Customs Guntur, relating to coal classification. (Refer Note No. 15)

Disallowance of Expenditure 37.60 0.00 U/s 14A (Refer Note No. 16)

1 APTRANSCO had raised a demand of Rs.173.50 lakhs towards voltage surcharge and grid supporting charges and the company has paid Rs.108.00 lakhs under protest. The said demand is contested by the company and the matter is pending before the Division Bench of the Honorable High Court of Andhra Pradesh.

2 In the year 2009-10, Sales Tax Authorities raised a demand for Rs.109.40 lakhs in respect of tax on sale of fixed assets. The company has paid an amount of Rs. 27.40 lakhs and contested before the Sales Tax Appellate Tribunal.

3 Demand raised by the Sales Tax Authorities for a sum of Rs.19.60 lakhs towards interest U/s.16(3) of the APGST Act, on delayed payment of tax for the AY 1999-2000. The company filed an appeal with Sales Tax Appellate Tribunal by paying an amount of Rs.4.90 lakhs.

4 The Excise Department had raised a demand of Rs.225.00 lakhs denying the benefit of Cenvat credit on dumpers used in captive mines. The company has paid an amount of Rs.195 lakhs under protest and filed an appeal with CESTAT, Bangalore. Matter is pending before CESTAT.

5 The Excise Department had raised a demand of Rs.650.80 lakhs denying the Cenvat credit on MS Steel, Cement, TMT bars etc., used in expansion. The company has contested the same before CESTAT who in turn demanded 50% of the aforesaid amount i.e. Rs.325.40 lakhs to be paid. The company went for an appeal before AP High Court. The AP High Court has granted interim stay order.

6 Show Cause Notice has been received from the RTA, Nalgonda demanding Life Tax on dumpers purchased during year 2006 - 2010 and used in the captive mines. The matter is contested and pending in the Honorable High Court of Andhra Pradesh.

7 Additional Director General Intelligence Hyderabad has issued a Show Cause Notice No.26/2012(OR Mo.53/ 2012) dated 27-03-13 for an amount of Rs.59.41 lakhs and an equal amount of penalty along with interest on the ground that cement has been cleared to the contractors at a rate which is lesser than the price at which the cement was sold in the normal course of transaction, resulting into a short payment of Central excise duty. Matter is pending before CESTAT Bangalore.

8 Commissioner of Central Excise Hyderabad has issued a Show Cause Notice OR No.60/2013 Hyd III dated 0605-13 for an amount of Rs.33.04 lakhs and penalty of Rs. 10 lakhs along with interest on the ground that cement has been cleared to the contractors at a rate which is lesser than the price at which the cement was sold in the normal course of transaction, resulting into a short payment of Central excise duty. Matter is pending before CESTAT Bangalore.

9 The Commissioner of Central Excise, Customs and Service Tax, Hyderabad III Commissionerate has raised a Demand for Rs.136.30 lakhs along with interest and also imposed a penalty Rs.10.00 lakhs on the ground that the Company has availed Cenvat Credit against Service Tax paid on the freight charges incurred for the transportation of cement beyond the place of removal during the period from July 2008 to February 2011. Matter is pending before CESTAT Bangalore.

10 The Commissioner (Appeals) of Central Excise, Customs and Service Tax has disallowed CENVAT credit of Rs.7.67 lakhs availed during the period from December 2006 to March 2010 on the ground that Cenvat Credit had been availed on Input Services such as Advertisement, Audit and Telephone telex services used in relation to the trading activity which did not have any nexus with the manufacturing activity. An amount Rs.3.84 lakhs has been deposited by the company under protest and an appeal has been filed before CESTAT, Bangalore in this regard.

11 Input tax credit on sales made to SEZ units during the year 2010-11 amounting to Rs.6.29 lakhs has been disallowed. Interim stay was granted by AP High court. Final hearing is pending before the AP High Court.

12 Input tax credit on steel, MS Angles, etc. taken at the time of factory expansion during the year 2007-08 has been disallowed by the Commercial Tax authorities. Demand was raised for an amount of Rs.144.25 lakhs. An amount of Rs.18.03 lakhs have been paid in order to maintain the appeal. Matter is pending before Appellate Deputy Commissioner Tribunal.

13 Input tax credit on steel, MS Angles, etc. taken at the time of factory expansion during the year 2008-09 has been disallowed by the Commercial Tax authorities. Demand was raised for an amount of Rs.75.68 lakhs. An amount of Rs.9.46 lakhs have been paid in order to maintain the appeal. Matter is pending before Appellate Deputy Commissioner Tribunal.

14 Commissioner of Customs Visakhapatnam has served a demand order on the ground that imported coal was wrongly classified under steam coal instead of bituminous coal. Demand was raised for an amount of Rs.67.92 lakhs. The company has filed an appeal before CESTAT Bangalore against the said order.

15 Commissioner of Customs Guntur has served a show cause notice on the ground that imported coal was wrongly classified under steam coal instead of bituminous coal. Demand was raised for an amount of Rs. 54.75 lakhs. The matter is pending before Commissioner (Appeals).

16 The Deputy Commissioner of Income Tax Circle-1(1), Hyderabad has disallowed an amount of Rs.37.60 lakhs under Section 14A (Disallowance of expenditure incurred in relation to income which is not included in the total income) claimed as expenditure during the assessment years from 2008-09 to 2010-11 on account of Interest paid on term loans to Financial Institutions. In this regard an appeal is being filed by the company with Appellate Tribunal.

17 Bank Guarantees Pending as on 31.03.15 Rs.153.29 lakhs (Previous year Rs. 418.50 lakhs).

4. APTRANSCO has raised a demand of Rs.23.71 crores, on account of Fuel Surcharge Adjustment (FSA) relating to earlier years. Out of which, the company has paid an amount of Rs.21.37 crores up to 31.3.2015. The company has filed Writ Petition with High Court of Andhra Pradesh. The matter is still pending before the High Court as on 31.03.2015.

5. As required by Accounting Standards AS 18, the related parties' disclosure issued by the Institute of Chartered Accountants of India is as follows:

Related Party Disclosures:

Names of related parties and description of relationship:

S.No Particulars

1 Key Management Personnel a. Shri S.Veera Reddy, Managing Director

b. Dr.S.Anand Reddy, Joint Managing Director

c. Shri S.Sreekanth Reddy, Executive Director

2 Enterprise where key managerial personnel a. Panchavati Polyfibres Ltd. along with their relatives exercise significant influence b. Sagar Power Limited

c. RV Consulting Services Pvt. Ltd.

d. Sagar Priya Housing & Industrial Enterprises Ltd.

e. Sagarsoft (India) Ltd.

f. Smt S.Vanajatha

6. Corporate Social Responsibility (CSR) activities: The Company has spent an amount of Rs.23.11 lakhs towards Corporate Social Responsibility (CSR) activities based on the recommendations of CSR Committee constituted by the Board. All these activities have been covered under Schedule VII to the Companies Act, 2013.

7. In the opinion of the Board, current assets and loans and advances are realizable at a value, which is at least equal to the amount, at which these are stated, in the ordinary course of business. Independent confirmation of balances of sundry debtors, sundry creditors, loans and advances and other parties are in progress as on the date of this report.

8. The Finance Minister of Government of India had announced in the budget for the year 2010-2011, imposition of clean energy cess as a duty of excise on coal, lignite and peat. This came into force with effect from 1.7.2010.

As advised by the legal experts the company took Cenvat credit pertaining to clean energy cess on coal for an amount of Rs.5,18,83,449-00 from July 2010 to March 2015. The Department of Central Excise issued a letter and asked to reverse the amount on the ground that the clean energy cess is not specified tax for input Cenvat credit, thus the credit availed on cess is irregular. Based on departments letter the amount of Rs. 5, 18, 83,449-00 was reversed, but UNDER PROTEST. The matter is pending before the Department. Credit will be taken again once the issue is settled in favour of the company.

9. Based on the provisions of "The Mines and Minerals (Development and Regulation) Amendment Act,2015" which is applicable from 12th January, 2015 the holder of mining lease granted before the date of commencement of the aforesaid Act, shall in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount not exceeding the royalty paid in terms of the second Schedule in such manner and subject to the categorization of the mining leases and the amount payable by the various categories of lease holders, as may be prescribed by the Central Government.

As on the date of Balance Sheet constitution of District Mineral Foundation is pending and modalities pertaining to implementation of the aforesaid provisions are still to be notified by the State Government hence the same have not been given effect to in the financial statements for the current year.

10. Figures for the previous year have been regrouped, recast and rearranged to confirm to those of the current year wherever necessary.


Mar 31, 2014

1.1 CONTINGENT LIABILITIES

Particulars 31 March 2014 31 March 2013 Disputed Paid Disputed Paid Amount Under Amount Under Protest Protest

AP TRANSCO Voltage surcharge and grid supporting charges 173.50 108.00 173.50 108.00 (Refer Note 1)

Demand by Sales tax authorities year 2009-10-Sale of Fixed Assets 109.40 27.40 109.40 27.40 (Refer Note 2)

Demand by Sales Tax authorities year 1999-2000-Interest on 19.60 4.90 19.60 4.90 delayed payment (Refer Note 3)

Demand by Central Excise Department benefit of Cenvat credit on 225.00 195.00 225.00 195.00 capital goods (Refer Note 4)

Demand by Central Excise Department benefit of Cenvat credit on 650.80 0.00 650.80 0.00 capital goods (Refer Note 5)

Demand by Road Transport Authority, Nalgonda for payment of Life Tax on dumpers used in the mines (Refer Note No. 6) 28.50 3.20 28.50 3.20

Demand Raised by Central Excise Department (Refer Note No. 7) 59.41 0.00 59.41 0.00

Demand Raised by Central Excise Department (Refer Note No. 8) 146.30 0.00 146.30 0.00

Demand Raised by Central Excise Department (Refer Note No.9) 7.67 3.84 7.67 3.84

Disallowed input tax credit on sales made to SEZ units 6.29 0.00 0.00 0.00 for the year 2010-11. (Refer Note No. 10)

Disallowed input tax credit on steel during the year 2007-08. 144.25 18.03 0.00 0.00 (Refer Note No. 11)

Disallowed input tax credit on steel during the year 2008-09. 75.68 9.46 0.00 0.00 (Refer Note No. 12)

Demand raised by Commissioner of Customs Visakhapatnam, relating to coal classification. (Refer Note No. 13) 67.92 0.00 0.00 0.00

Demand raised by Commissioner of Customs Guntur, relating to coal classification. (Refer Note No. 14) 54.75 0.00 0.00 0.00

Disallowance of Expenditure U/s 14A (Refer Note No. 15) 37.60 0.00 75.29 0.00

1 APTRANSCO had raised a demand of Rs.173.50 lakhs towards voltage surcharge and grid supporting charges and the company has paid Rs.108.00 lakhs under protest. The said demand is contested by the company and the matter is pending before the Division Bench of the Honorable High Court of Andhra Pradesh.

2 In the year 2009-10, Sales Tax Authorities raised a demand for Rs.109.40 lakhs in respect of tax on sale of fixed assets. The company has paid an amount of Rs. 27.40 lakhs and contested before the Sales Tax Appellate Tribunal.

3 Demand raised by the Sales Tax Authorities for a sum of Rs.19.60 lakhs towards interest U/s.16(3) of the APGST Act, on delayed payment of tax for the AY 1999-2000. The company filed an appeal with Sales Tax Appellate Tribunal by paying an amount of Rs.4.90 lakhs.

4 The Excise Department had raised a demand of Rs.225.00 lakhs denying the benefit of Cenvat credit on dumpers used in captive mines. The company has paid an amount of Rs.195 lakhs under protest and filed an appeal with CESTAT, Bangalore. Matter is pending before CESTAT.

5 The Excise Department had raised a demand of Rs.650.80 lakhs denying the Cenvat credit on MS Steel, Cement, TMT bars etc., used in expansion. The company has contested the same before CESTAT who in turn demanded 50% of the aforesaid amount i.e. Rs.325.40 lakhs to be paid. The company went for an appeal before AP High Court. The AP High Court has granted interim stay order.

6 Show Cause Notice has been received from the RTA, Nalgonda demanding Life Tax on dumpers purchased during year 2006 – 2010 and used in the captive mines. The matter is contested and pending in the Honorable High Court of Andhra Pradesh.

7 Additional Director General Intelligence Hyderabad has issued a Show Cause Notice No.26/2012(OR Mo.53/ 2012) dated 27-03-13 for an amount of Rs.59.41 lakhs and an equal amount of penalty along with interest on the ground that cement has been cleared to the contractors at a rate which is lesser than the price at which the cement was sold in the normal course of transaction, resulting into a short payment of Central excise duty. Matter is pending before CESTAT Bangalore.

8 The Commissioner of Central Excise, Customs and Service Tax, Hyderabad III Commissionerate has raised a Demand for Rs.136.30 lakhs along with interest and also imposed a penalty Rs.10.00 lakhs on the ground that the Company has availed Cenvat Credit against Service Tax paid on the freight charges incurred for the transportation of cement beyond the place of removal during the period from July 2008 to February 2011. Matter is pending before CESTAT Bangalore.

9 The Commissioner (Appeals) of Central Excise, Customs and Service Tax has disallowed CENVAT credit of Rs.7.67 lakhs availed during the period from December 2006 to March 2010 on the ground that Cenvat Credit had been availed on Input Services such as Advertisement, Audit and Telephone telex services used in relation to the trading activity which did not have any nexus with the manufacturing activity. An amount Rs.3.84 lakhs has been deposited by the company under protest and an appeal has been filed before CESTAT, Bangalore in this regard.

10 Input tax credit on sales made to SEZ units during the year 2010-11 amounting to Rs.6.29 lakhs has been disallowed. Interim stay was granted by AP High court. Final hearing is pending before the AP High Court.

11 Input tax credit on steel, MS Angles, etc. taken at the time of factory expansion during the year 2007-08 has been disallowed by the Commercial Tax authorities. Demand was raised for an amount of Rs.144.25 lakhs. An amount of Rs.18.03 lakhs have been paid in order to maintain the appeal. Matter is pending before Appellate Deputy Commissioner Tribunal.

12 Input tax credit on steel, MS Angles, etc. taken at the time of factory expansion during the year 2008-09 has been disallowed by the Commercial Tax authorities. Demand was raised for an amount of Rs.75.68 lakhs. An amount of Rs.9.46 lakhs have been paid in order to maintain the appeal. Matter is pending before Appellate Deputy Commissioner Tribunal.

13 Commissioner of Customs Visakhapatnam has served a demand order on the ground that imported coal was wrongly classified under steam coal instead of bituminous coal. Demand was raised for an amount of Rs.67.92 lakhs. The company has filed an appeal before CESTAT Bangalore against the said order.

14 Commissioner of Customs Guntur has served a show cause notice on the ground that imported coal was wrongly classified under steam coal instead of bituminous coal. Demand was raised for an amount of Rs. 54.75 lakhs. The matter is pending before Commissioner (Appeals).

15 The Deputy Commissioner of Income Tax Circle-1(1), Hyderabad has disallowed an amount of Rs.37.60 lakhs under Section 14A (Disallowance of expenditure incurred in relation to income which is not included in the total income) claimed as expenditure during the assessment years from 2008-09 to 2010-11 on account of Interest paid on term loans to Financial Institutions. In this regard an appeal is being filed by the company with Appellate Tribunal.

16 Bank Guarantees Pending as on 31.03.14 Rs.418.50 lakhs ( Previous year Rs. 376.93 lakhs).

2.1 APTRANSCO has raised a demand of Rs.21.59 crores, on account of Fuel Surcharge Adjustment (FSA) relating to earlier years. Out of which, the company has paid an amount of Rs.16.94 crores up to 31.3.2014. The company has filed Writ Petition with High Court of Andhra Pradesh. The matter is still pending before the High Court as on 31.03.2014

2.2 The disclosures required under Accounting Standard 15 “Employee Benefits” notified in the Companies (Accounting Standards) Rules, 2006 are given below:

Investment details: 100% invested in LIC Group gratuity (cash accumulation policy) Actuarial assumptions

a) Mortality table (LIC) 2008-10 (ultimate)

b) Discounting rate – 8.20 %

c) Expected rate of return on plan asset – 9.25%

d) Expected average remaining working lives of employees–18 Years

e) Rate of escalation in salary – 5 %

2.3 As required by Accounting Standards AS 18, the related parties’ disclosure issued by the Institute of Chartered Accountants of India is as follows:

Related Party Disclosures:

Names of related parties and description of relationship:

S.No Particulars

1 Associates Vicat Sagar Cement Private Limited

2 Key Management Personnel a. Shri S.Veera Reddy, Managing Director

b. Dr.S.Anand Reddy, Joint Managing Director

c. Shri S.Sreekanth Reddy, Executive Director

3 Enterprise where key managerial personnel a. Panchavati Polyfibres Ltd. along with their relatives exercise significant influence b. Sagar Power Limited

c. RV Consulting Services Pvt. Ltd.

d. Sagar Priya Housing & Industrial Enterprises Ltd.

e. Sagarsoft (India) Ltd.

f. Smt S.Vanajatha


Mar 31, 2012

1. The company had issued 2,385,714 equity shares during the year ended 31.03.2012 to the equity shareholders of erstwhile Amareswari Cements Limited pursuant to the Scheme of Arrangement for Merger approved by the shareholders on 7th March 2011 and later sanctioned by the Honorable High Court of Andhra Pradesh. The amount was shown as Equity Share Capital Suspense Account during the year ended 31.03.2011 pending allotment of the same.

2. 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. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

3. For the year ended 31 March 2012, the amount of per share dividend recognized as distribution to equity shareholders is Rs.3 (31 March 2011: Rs.2 per share).

4. 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.

1. Term Loan of Rs.1000 Million in Indian Rupees was taken from IDBI Bank during the year 2008-09 and is repayable in 60 monthly installments of Rs.16.70 Million each. The loan was sanctioned with interest at 175 bps below Bench Mark Prime Lending rate and is payable at monthly rests. As of 31.03.2012, out of 60 installments, 39 installments have been paid and the balance installments to be paid are 21. Present rate of interest as on 31.03.2012 is 14% (31.03.2011: 12.75%). The term loan from the bank is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

2. Term Loan of Rs.450 Million in Indian Rupees was taken from State Bank of India during the year 2008-09 and

is repayable in 60 monthly installments of Rs.7.50 Million each. The loan was sanctioned with interest at 0.50% below Stat Bank Advance Rate and is payable at monthly rests. As of 31.03.2012 out of 60 installments 39 installments have been paid and the balance installments to be paid are 21. Present rate of interest as on 31.03.2012 is 14.75% (31.03.2011: 13.00%). The term loan from the bank is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

3. Term Loan of Rs.500 Million in Indian Rupees was taken from State Bank of Hyderabad during the year 2008- 09 and is repayable in 60 monthly installments of Rs.7.50 Million each. The loan was sanctioned with interest at 75 base points below prime lending rate of the Bank and is payable at monthly rests. As of 31.03.2012, out of total 60 installments, 39 installments have been paid and the balance installments to be paid are 21. Present rate of interest as on 31.03.2012 is 14.25% (31.03.2011 : 13.00%). The term loan from the bank is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

4. Term Loan of Rs.450 Million in Indian Rupees was taken from State Bank of Hyderabad during the year 2010- 11 and is repayable in 60 monthly installments from December, 2010. As of 31.03.2012 out of 60 installments, 16 Installments have been paid and balance 44 installments to be paid every month at Rs.2.50 Million for first 9 Installments and Rs.10 Million for next 27 installments and Rs.15 Million for next 7 installments and last installment of Rs.12.50 Million. The interest was fixed at 4.25% above Basic Rate of interest. Present rate of interest as on 31.03.2012 is 14.75% (31.03.2011: 13.25%). The term loan from the bank is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

5. Term Loan of Rs.100 Million in Indian Rupees was taken from Andhra Pradesh State Financial Corporation Ltd., during the year 2008-09 and is repayable in 22 Quarterly installments from January, 2009 @ Rs.4.40 Million. As of 31.03.2012 out of Quarterly 22 installments, 19 have been paid and the balance 3 installments are to be paid. The interest was fixed at 2.75% below Bench Mark Prime Lending rate of interest. Present rate of interest as on 31.03.2012 is 11.75% (31.03.2011: 11.75%). The term loan from the APSFC is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

6. Term Loan of Rs.50 Million in Indian Rupees was taken from Andhra Pradesh State Financial Corporation Ltd., during the year 2010-11 and is repayable in 55 monthly installments of Rs.91 Million each. As of 31.03.2012 out of 55 installments, 11 installments have been paid and balance installments to be paid are 44. The interest was fixed at 3% below Bench Mark Prime Lending rate of interest. Present rate of interest as on 31.03.2012 is 13% (31.03.2011: 13.00%). The term loan from the APSFC is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

7. Sales Tax Deferred amount payable pertains to Amareswari Cements Limited. This is pursuant to the Scheme of Merger approved by the shareholders on 7th March 2011 and later sanctioned by the Honorable High Court of Andhra Pradesh. The repayment schedule is as below:

8. Vehicle Loans from L & T Finance and various Banks is secured by the Hypothecation of Specific assets purchased from that loan and further secured by personal guarantees of Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

Cash credit Loans from Banks are secured against Stocks of Raw materials, Finished goods and Trade Receivables, Stores & Spares, present and future, and by second charge on fixed assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director. The cash credit is repayable on demand and carries interest @ 13% to 14.5%.

Out of the said amount Rs.0.13 Million (Previous Year : Nil) pertain to Micro, Small and Medium enterprises as defined in Micro, Small and Medium Enterprises Development Act, 2006 based on the information available with the Company. There is no interest payable to such parties as at 31st March 2012 (Previous Year: Nil).

1. Up to the Accounting Year ending 31.03.2011 taxes on Sale of Products were included in sale. For the year ending 31.03.2012 Sale of Products is recognised excluding taxes on sale. The change does not impact the profit. However, it would impact the figures shown as ''Sale of Products'' above.

2. As per Andhra Pradesh State Industrial Policy 2005-10, the Company has made an application to the General Manager, District Industries Centre, Nalgonda, Andhra Pradesh claiming the Incentives on Value Added Tax and Power Consumption. General Manager, DIC, Nalgonda has recommended an amount of Rs.112.87 Million (Previous year 104.12 Million) during the year to the State Level Committee. This amount has been considered as Other Operating income.

9.1 CONTINGENT LIABILITIES_ Disputed Paid Disputed Paid

Amount under Amount Under

Protest Protest

APTRANSCO Voltage surcharge and grid 17.35 10.80 17.35 10.80

supporting charges (Refer Note 1)

Demand by Sales tax authorities year 2009-10-Sale 10.94 2.74 10.94 2.74

of Fixed Assets (Refer Note 2)

Demand by Sales Tax authorities year 1.96 0.49 1.96 0.49

1999-2000-Interest on delayed payment (Refer Note 3)

Demand by Income tax Department Assessment 7.50 0.00 7.50 0.00

year 2006-07 disallowances (Refer Note 4)

Demand by Central Excise Department benefit of 22.50 19.50 22.50 19.50

Cenvat credit on capital goods (Refer Note 5)

Demand by Central Excise Department benefit of 65.08 0.00 0.00 0.00

Cenvat credit on capital goods (Refer Note 6)

Demand by Road Transport Authority, Nalgonda for 2.85 0.32 0.00 0.00

payment of Life Tax on dumpers used in the mines (Refer Note No. 7)

Bank Guarantees 33.53 0.00 29.21 0.00

1. APTRANSCO had raised a demand of Rs.17.35 Million towards voltage surcharge and grid supporting charges and the company has paid Rs.10.80 Million under protest. The said demand is contested by the company and the matter is pending before the Division Bench of the Honorable High Court of Andhra Pradesh.

2. In the year 2009-10, Sales Tax Authorities raised a demand for Rs.10.94 Million in respect of tax on sale of fixed assets. The company has paid an amount of Rs. 2.74 Million and contested before the Sales Tax Appellate Tribunal.

3. Demand raised by the Sales Tax Authorities on Amareswari Cements Limited for a sum of Rs.1.96 Million (this is consequent to the merger of Amareswari Cements Limited with Sagar Cements Limited) towards interest u/s.16(3) of the APGST Act, on delayed payment of tax for the AY 1999-2000. The company filed an appeal with Sales Tax Appellate Tribunal by paying an amount of Rs.0.49 Million.

4. The Income Tax Department has raised a demand of Rs.7.50 Million on disallowances of certain expenditure related to the AY 2006-07 and the same is contested before the Commissioner Appeals.

5. The Excise Department has raised a demand of Rs.22.50 Million denying the benefit of Cenvat credit on dumpers used in captive mines. The company has paid an amount of Rs. 19.50 Million under protest and filed an appeal with CESTAT, Bangalore. Matter is pending before CESTAT.

6. The Excise Department has raised a demand of Rs.65.08 Million denying the Cenvat credit on MS Steel, Cement, TMT bars etc., used in expansion. The company has contested the same before CESTAT and the matter is pending for hearing.

7. Show cause notice has been served by the RTA, Nalgonda demanding Life Tax on 8 dumpers purchased during year 2006-2010 and used in the captive mines. The matter is contested and pending in the Honorable High Court of Andhra Pradesh.

Actuarial assumptions

a) Mortality table (LIC) 1994-96 (ultimate)

b) Discounting rate 8.60 %

c) Expected rate of return on plan asset 9.25%

d) Expected average remaining working lives of employees! 8 Years

e) Rate of escalation in salary 5 %

9.10 As required by Accounting Standards AS 18, the 'related parties' disclosure issued by the Institute of Chartered Accountants of India is as follows:


Mar 31, 2011

1. CONTINGENT LIABILITIES

a) Estimated amount of contracts to be executed on capital account and not provided for Rs.l 92.39 Lakhs (Previous Year: Rs. 857.45 Lakhs).

b) Demand raised by APTRANSCO towards voltage surcharge and grid supporting charges is Rs.l,73,50,747/- and the company paid Rs.l,08,02,441/- under protest. The said demand is contested by the company with Division Bench of High Court of Andhra Pradesh.

c) Bank Guarantees: Rs.292.05 Lakhs (Previous year: Rs.90 lakhs).

d) Letter of Credit: Rs. Nil. (Previous year: Rs.NIL Lakhs).

e) During the year 2009-10, demand raised by Sales Tax Authorities for a sum of Rs.l,09,40,297/- in respect of tax on sale of fixed assets. We have paid an amount of Rs.27,35,074/- and contested before the State Appellate Tribunal.

f) The Income Tax Department has raised a demand of Rs. 74.98 Lakhs on disallowances of certain expenditure relating to the Assessment Year 2006-07 and the same was contested before the Commissioner Appeals.

g) The Income Tax Department has raised a demand of Rs.l 1.42 Lakhs on disallowances of certain expenditure relating to the Assessment Year 2008-09 and the same was contested before the Commissioner Appeals.

h) The Excise Department has raised a demand of Rs.2,24,95,200/- denying the benefit of Cenvat credit on capital goods. The Company has paid an amount of Rs.l,95,00,000/- and filed an appeal with CESTAT Bangalore.

i) Demand raised by the Sales Tax Authorities for a sum of Rs.l 9,60,832/- towards interest on delayed payment of tax amount for the year 1999-2000 and filed an appeal before the Appellate Tribunal by paying an amount of Rs.4,90,208/-.

2. SECURED LOANS

a) The term loans from the Banks and Financial Institutions are secured by the fixed assets i.e., Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the borrower company both proposed and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

b) Cash Credit from State Bank of Hyderabad, State Bank of India and IDBI Bank Ltd., are secured by hypothecation of raw materials, goods-in-process, finished goods, stores and spares and receivables, present and future, and by second charge on fixed assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

c) Loan from L&T Finance Limited is secured by the mortgage of specific assets purchased from that loan and further secured by personal guarantees of Dr.S.Anand Reddy, joint Managing Director and Shri S.Sreekanth Reddy Executive Director.

d) Vehicle loans from bank are secured by the mortgage of specific vehicle purchased from that loan and further secured by personal guarantees of Dr.S.Anand Reddy, joint Managing Director and Shri S.Sreekanth Reddy Executive Director.

3. As per Andhra Pradesh State Industrial Policy 2005-10, Company has made an application to the General Manager, District Industries Centre, Nalgonda, Andhra Pradesh for claiming the incentives on Value Added Tax and power consumption. General Manager, DIC, Nalgonda has verified and recommended an amount of Rs. 1018 lakhs (previous year Rs.400.07 Lakhs) during the year to the State Level Committee. This amount has been considered as income during the current year and shown in Schedule 14 'Other Income'.

e) Investment details

100% invested in LIC Group gratuity (cash accumulation policy)

f) Actuarial assumptions

Mortality table (LIC) 1994-96 (ultimate)

Discounting rate - 8%

Expected rate of return on plan asset - 9.25%

Expected average remaining working lives of employees-!8 Yrs

Rate of escalation in salary - 4%

4. Scheme of Amalgamation

a) Pursuant to the Scheme of Arrangement for merger of ACL with SCL, which was approved by the Shareholders on 7th March 2011 and later sanctioned by the Honorable High Court of Andhra Pradesh, the entire assets and liabilities, rights and obligations etc., of ACL (Transferor Company) as detailed in the Scheme stand transferred to and vested in Sagar Cements Limited (the Transferee Company) with effect from 1- April 2010 (Appointed Date). A copy of the Scheme was filed with the Registrar of Companies on 20* May 2011 (Transferor Company) i.e., after the end of the Financial Year 2010-11. This is an amalgamation in the nature of merger and has been given effect to in these accounts under the pooling of interest method.

b) In accordance with the above said Scheme, the Company is required to allot 32,85,714 equity shares of Rs.10/- each at par as fully paid up to the equity shareholders of Amareswari Cements Limited, in the ratio of 10 equity share of Rs 10/- each fully paid up of the Company for every 14 equity shares of the face value of Rs.10/- each fully paid up, held in Amareswari Cements Limited towards consideration for the aforesaid transfer. Pending the above allotment of shares as at the year end, the face value of 32,85,714 shares i.e., Rs 3,28,57,140 has been credited to Share Capital Suspense.

c) The difference between the amounts recorded as purchase consideration and the value of the net identifiable assets acquired has been adjusted against reserves.

d) In accordance with The Scheme, all assets and liabilities pertaining to the business of the Transferor Company have been incorporated in the books of the Company (Transferee Company) at the book values as on the appointed date.

e) Under the Scheme, upon the effective date 9,00,000 Equity Shares held in the Transferee Company by the Transferor Company shall stand extinguished and no equity shares shall be allotted to the Transferor Company. To reflect this, Share Suspense Account was debited with the face value of 9,00,000 equity shares of Rs.10/- each.

5. There are no amounts due to micro and small enterprises.

6. Previous year's figures have been regrouped, recast and reclassified wherever necessary to conform with those of the current year.

7. Paise have been rounded to the nearest rupee.


Mar 31, 2010

1. CONTINGENT LIABILITIES

a) Estimated amount of contracts to be executed on capital account and not provided for Rs.857.45 Lakhs (Previous Year: Rs.3785 Lakhs).

b) Demand raised by APTRANSCO towards voltage surcharge and grid supporting charges is Rs. 1,73,50,747/- and the company paid Rs. 1,08,02,441/- under protest. The said demand is contested by the company with Division Bench of High Court of Andhra Pradesh.

c) Bank Guarantees: Rs.90 Lakhs (Previous year: Rs.72.36 lakhs).

d) Letter of Credit: Rs. Nil. (Previous year: Rs.NIL Lakhs).

e) There is a demand from Sales Tax authorities for a sum of Rs.31,00,933 /- in respect of Input Tax Credit on Coal Consumption availed by the company from April, 2005 to December, 2005, claiming that the company is not eligible for the said credit. (Paid under protest in the year 2006 Rs. 15,50,466/-). The said demand is contested by the company.

f) Demand raised by Sales Tax authorities for a sum of Rs.8,08,656/- in respect of input tax credit availed on closing stock of coal held on 31st March, 2005 and filed writ petition before the High Court of Andhra Pradesh on payment of 50% of the disputed tax amount i.e. Rs.4,04,328/-. (Paid under protest in the year 2007 is Rs.4,04,328/-).

g) During the year 2009-10, demand raised by Sales Tax Authorities for a sum of Rs. 1,09,40,297/- in respect of tax on sale of fixed assets. We have paid an amount of Rs.27,35,074/- and contested before the State Appellate Tribunal.

h) Show cause notices were issued by the Central Excise Authorities for an amount of Rs. 19.44 lakh, pertaining to various issues under Central Excise and Service Tax Act and for an amount of Rs.203.44 lakhs for availment of service tax credit. The company has replied to the show cause notices and the matter is pending before the Department for adjudication.

2. SECURED LOANS

a) The term loans from the Banks and Financial Institutions are secured by the fixed assets i.e., Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the borrower company both proposed and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

b) Cash Credit from State Bank of Hyderabad, Punjab National Bank, State Bank of India and IDBI Bank Ltd., are secured by hypothecation of raw materials, goods-in-process, finished goods, stores and spares and receivables, present and future, and by second charge on fixed assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

c) Loan from L&T Finance Limited is secured by the mortgage of specific assets purchased from that loan and further secured by personal guarantees of Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy Executive Director.

d) Vehicle loans from bank are secured by the mortgage of specific vehicle purchased from that loan and further secured by personal guarantees of Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy Executive Director.

3. a) As per Andhra Pradesh State Industrial Policy 2005-10, Company has made an application to the General Manager, District Industries Centre, Nalgonda, Andhra Pradesh for claiming the incentives on Value Added Tax and power consumption. General Manager, DIC, Nalgonda has verified and recommended an amount of Rs.400.07 lakhs during the year to the State Level Committee. This amount has been considered as income during the current year and shown in Schedule 13 Other Income.

b) Other income includes Rs. 1.45 crores receivable from insurance company.

4. The disclosures required under Accounting Standard 15 "Employee Benefits" notified in the Companies (Accounting Standards) Rules, 2006 are given below

e) Investment details

100% invested in LIC Group gratuity (cash accumulation policy)

f) Actuarial assumptions

Mortality table (LIC) 1994-96 (ultimate)

Discounting rate - 8%

Expected rate of return on plan asset - 9.25%

Expected average remaining working lives of employees-18 Yrs

Rate of escalation in salary - 4%

5. There are no amounts due to micro and small enterprises.

6. Previous years figures have been regrouped, recast and reclassified wherever necessary to conform with those of the current year.

7. Paise have been rounded to the nearest rupee.

 
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