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Notes to Accounts of Shree Cements Ltd.

Mar 31, 2017

1. Corporate Information

Shree Cement Limited (“the Company”) is a public limited company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is located at Bangur Nagar, Beawar, District- Ajmer - 305901 (Rajasthan) India. The Company is engaged in manufacturing and supply of cement and power generation. Currently its manufacturing operations are spread over North and Eastern India. It is recognized as one of the most efficient and environment friendly Company in the global cement industry.

For Company’s principal shareholders, Refer Note No. 16.

These financial statements are approved and adopted by the Board of Directors of the Company in their meeting dated 16th May, 2017.

2. Basis of Preparation and Statement of Compliance

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended by the Companies (Indian Accounting Standards) (Amendment), Rules, 2016. For all periods up to and including the period ended 31st March, 2016, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act, 2013, read together with rule 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). These financial statements for the year ended 31st March, 2017 are the first Ind AS financial statements. Refer Note 55 for information on how the Company adopted Ind AS. The Company had adopted change in its accounting year in terms of section 2(41) of the Companies Act, 2013 from Financial Year 2015-2016. Accordingly the said financial year of the Company was of a nine months period from 1st July, 2015 to 31st March, 2016. Hence, the figures for the current financial year are not comparable to those of the previous year.

3. Significant Accounting Judgements, Estimates and Assumptions

The preparation of company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Although these estimates are based upon management’s best knowledge of current events and action, actual results could differ from these estimates. These estimates are reviewed regularly and any change in estimates are adjusted prospectively.

In the process of applying the Company’s accounting policies, management has made the following estimates, assumptions and judgements, which have significant effect on the amounts recognized in the financial statements:

a) Deferred Tax Assets

The recognition of deferred tax assets requires assessment of whether it is probable that sufficient future taxable profit will be available against which deferred tax asset can be utilized. The Company reviews at each balance sheet date the carrying amount of deferred tax assets.

b) Property, Plant and Equipment & Intangible Assets

The determination of depreciation and amortization charge depends on the useful lives for which judgements and estimations are required. The residual values, useful lives, and method of depreciation of property, plant and equipment and intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.

c) Allowances for Uncollected Trade Receivables

Trade receivables do not carry any interest and are stated at their normal value as reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not to be collectible.

d) Contingencies

Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/ claims/litigation against the company as it is not possible to predict the outcome of pending matters with accuracy.

e) Mines Reclamation Obligation

The measurement of mine reclamation obligation requires long term assumptions regarding the phasing of the restoration work to be carried out. Discount rates are determined based on the government bonds of similar tenure.

f) Defined Benefit Plan

The cost of defined benefit plan and present value of such obligation are determined using actuarial valuation. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and attrition rate. Due to the long-term nature of the plan, such estimates are subject to significant uncertainty. All assumption are reviewed at each reporting date. For sensitivity analysis Refer Note 39.

4.1 Includes deposits of Rs.20.00 crore (As at 31.03.2016 Rs.19.00 crore, as at 01.07.2015 Rs.19.00 crore) are pledged with banks against overdraft facilities. (Refer Note 22.2)

4.2 Includes Rs.39.75 crore (As at 31.03.2016 Rs.10.00 crore, as at 01.07.2015 Rs.53.19 crore), given as security to Government department and others.

4.3 Includes Rs.Nil (As at 31.03.2016 Rs.Nil, as at 01.07.2015 Rs.30.00 crore) are earmarked against debentures due for redemption in next 12 months as per provisions of Companies Act, 2013.

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

5.2 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.

5.3 As no fresh issue of shares or reduction in capital was made during the current year as well as during the previous period, hence there is no change in the opening and closing capital. Accordingly, reconciliation of share capital has not been given.

5.4 Aggregate number of bonus shares issued, shares issued for consideration other than cash and bought back shares during the period of five years immediately preceding the reporting date:

5.5 The Equity Shares of the Company are listed at BSE Limited and National Stock Exchange of India Limited and the annual listing fees has been paid for the year.

6. OTHER EQUITY

Nature of Reserves

Capital Redemption Reserve

Capital Redemption Reserve represents the reserve created as a result of redemption of preference shares capital of the Company. The same may be applied by the Company, in paying up unissued shares of the Company to be issued to members of the Company as fully paid-up bonus shares.

Securities Premium Reserve

Securities Premium Reserve represents the amount received in excess of par value of equity shares of the Company. The same, inter-alia, may be utilized by the Company to issue fully paid-up bonus shares to its members and buying back the shares in accordance with the provisions of the Companies Act, 2013.

General Reserve

General Reserve represents the reserve created by apportionment of profit generated during the year or transfer from other reserves either voluntarily or pursuant to statutory requirements. The same is a free reserve and available for distribution.

Retained Earnings

Retained Earnings represents the undistributed profits of the Company.

7.1 There are no amounts due and outstanding to Investor Education and Protection Fund as at 31.03.2017, 31.03.2016 and 01.07.2015. (Refer note 15)

7.2 Others include the liability related to Employees, Rebate and Discount to Customers etc.

8.1 Demand loans from banks are secured by hypothecation of inventories of stock-in-trade, stores & spares, book-debts and all other current assets of the Company on First charge basis and on whole of movable fixed assets of the Company on second charge basis and also secured by joint equitable mortgage on all the immovable assets of the Company situated at Beawar on second charge basis.

8.2 Bank Overdraft is secured against pledge of Fixed Deposits and payable on demand. (Refer Note 15.1)

8.3 There is no default in repayment of principal and interest thereon.

9.1 Trade Payables are based on the information available with the Company regarding the status of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006” and there are no delays in payments to Micro, Small and Medium Enterprises as required to be disclosed under the said Act.

10. CONTINGENT LIABILITIES (CLAIMS/DEMANDS NOT ACKNOWLEDGED AS DEBT)

a. Custom duty Rs.80.66 crore (As at 31.03.2016 Rs.56.56 crore, As at 01.07.2015 Rs.56.56 crore).

b. Income tax matters Rs.0.28 crore (As at 31.03.2016 Rs.3.26 crore, As at 01.07.2015 Rs.Nil).

c. (i) The Competition Commission of India (CCI) had, vide its order dated 31st August, 2016 imposed a penalty of Rs.397.51 crore on the Company for alleged violation of Competition Act. The CCI passed the above order pursuant to the directions of the Competition Appellate Tribunal (COMPAT) issued vide its order dated 11th December, 2015 whereby CCI order dated 30th July, 2012 was set aside and matter was remitted back to CCI for fresh adjudication. The Company has filed an appeal against the said order with the COMPAT. On Company’s appeal, COMPAT, vide its order dated 7th November, 2016, has granted stay on CCI order on the condition that the Company deposits 10% of the penalty amounting to Rs.39.75 crore. The Company has deposited the said amount in compliance of the order. Based on the Company’s own assessment and advice given by its legal counsels, Company has strong case in appeal and thus pending final disposal of the appeal, the matter has been disclosed as contingent liability. Total contingent liability amounting to Rs.422.57 crore (including interest of Rs.25.06 crore up to 31.03.2017).

(ii) In another matter, CCI has vide its order dated 19th January, 2017 imposed a penalty of Rs.18.44 crore on the Company in connection with a reference filed by the Government of Haryana in respect of tender invited by Director Supplies & Disposals, Haryana, for supply of cement. Company has filed an appeal before the COMPAT against the above order. Based on the Company’s own assessment and advice given by its legal counsels, Company has strong case in appeal and thus pending final disposal of the appeal, the same has been disclosed as contingent liability.

d. The Divisional Bench of Hon’ble Rajasthan High Court vide Judgement dated 6th December, 2016 has allowed the appeal filed by Commercial Taxes Department/Finance Department of the Govt. of Rajasthan against earlier favorable order of single member bench of Hon’ble Rajasthan High Court in the matter of incentives granted under Rajasthan Investment Promotion Scheme-2003 to the Company for capital investment made in cement plants in the State of Rajasthan.

Vide the above Judgement of Hon’ble High Court, the Company’s entitlement towards Capital Subsidy for the entitled period stands revised from ‘‘up to 75% of Sales Tax / VAT” to ‘‘up to 50% of Sales Tax/ VAT”. The Company has filed special leave petition before the Hon’ble Supreme Court against the above judgment which is admitted for deciding on merits. Based on the legal opinion, it has a good case before Hon’ble Supreme Court. Accordingly, no provision has been made for differential subsidy ( i.e. difference of 75% and 50%) amounting to Rs.73.08 crore received and Rs.282.30 crore not received though accounted for.

11. Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs.1,127.07crore (As at 31.03.2016 Rs.201.21 crore, As at 01.07.2015 Rs.249.60 crore).

12. Capital work-in-progress includes directly attributable expenses of Rs.49.02 crore (As at 31.03.2016 Rs.10.60 crore) which includes depreciation of Rs.8.46 crore (for Nine Months ended 31.03.2016 Rs.Nil) on assets during construction period.

13. The Company has reviewed the useful lives and residual values of the Property, Plant and Equipment and Intangible assets in accordance with requirement of Ind AS and revised the useful lives of Property, Plant and Equipment and Intangible assets. Accordingly, depreciation for the current year is higher by Rs.527.24 crore (Including charge of Rs.23.27 crore, being the carrying amount of certain items of Property, Plant and Equipment with no remaining useful life [as revised]) and profit after tax is lower by Rs.344.77 crore.

14. EMPLOYEE BENEFITS (REFER NOTE 29)

(a) Contribution to defined contribution plans recognized as expenses are as under:

(b) Defined Benefit Plan

Gratuity - The Company has defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India.

The estimates of future salary increases have been considered in actuarial valuation after taking into consideration the impact of inflation, seniority, promotion and other relevant factors such as supply and demand situation in the employment market. Same assumptions were considered for comparative period i.e. 2015-2016 as considered in previous GAAP on transition to Ind AS.

The Gratuity Scheme is invested in group Gratuity-Cum-Life assurance cash accumulation policy offered by Life Insurance Corporation of India. The gratuity plan is not exposed to any significant risk in view of absolute track record, investment as per IRDA guidelines and mechanism is there to monitor the performance of the fund.

(c) Provident fund managed by a trust set up by the Company

In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary has provided a valuation of provident fund liability and based on the assumption provided below, there is no short fall as at 31.03.2017.

(d) Amount recognized as an expense in respect of leave encashment and compensated absences are Rs.13.16 crore (Rs. 8.79 crore for Nine Months ended 31.03.2016).

15. SEGMENT REPORTING

A. The Company has two primary business segments, namely Cement and Power. Revenue, Results and other information:

16. RELATED PARTY DISCLOSURE (AS PER IND AS 24- RELATED PARTY DISCLOSURES)

Relationships:

(a) Parties where control exists:

(i) Shree Global Pte. Ltd. Subsidiary Company

(b) Enterprises over which Key Management Personnel (KMP) are able to exercise control /significant influence with whom there were transactions during the year:

(i) The Kamla Company Limited

(ii) Shree Capital Services Ltd.

(iii) Aqua Infra Project Limited

(iv) Alfa Buildhome Pvt. Ltd.

(v) Rajasthan Forum

(vi) The Bengal

(vii) Sant Parmanand Hospital

(c) Key Management Personnel:

(i) Shri H. M. Bangur Managing Director

(ii) Shri Prashant Bangur Joint Managing Director

(d) Relatives to Key Management Personnel:

(i) Shri B. G. Bangur Father of Shri H. M. Bangur

17. As per Notification G.S.R. 308(E) dated 30.03.2017 issued by the Ministry of Corporate Affairs, the details of Specified Bank Notes (SBNs) held and transacted during the period from 08.11.2016 to 30.12.2016:

18. DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses forward contracts and cross currency and interest rate swaps to manage some of its transaction exposure. The details of such contracts outstanding as on the balance sheet date are as follows:

Cross Currency and Interest Rate Swaps

The objective of cross currency and interest rate swap is to hedge the cash flows of the foreign currency denominated debt related to variation in foreign currency exchange rates and interest rates. The hedge provides for exchange of notional amount at agreed exchange rate of principle at each repayment date and conversion of variable interest rate into fixed interest rate as per notional amount at agreed exchange rate. Outstanding notional amount for swap contract is USD 8 crore, USD 8.44 crore and USD 6.50 crore as on 31.03.2017, 31.03.2016 and 01.07.2015 respectively.

The Company is having risk management objectives and strategies for undertaking these hedge transactions. The Company has maintained adequate documents stating the nature of the hedge and of hedge effectiveness test. All these derivatives have been marked to market to reflect their fair value and the fair value differences representing the effective portion of such hedge have been taken to equity.

Foreign Currency Forward Contracts

The Company has taken buyers’ credit. These buyers’ credit are denominated in foreign currency. In order to protect itself from volatility in exchange rate, the Company enters into forward contract to buy notional foreign currency on each payment date as agreed in the loan contract. The Company also enters into other forward contracts with intention to reduce the foreign exchange risk of expected purchases.

The foreign currency forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally within one year.

Outstanding notional amount for forward contracts is USD 9.38 crore, EURO 1.40 crore and JPY 13.50 crore as on 31.03.2017 (Nil as on 31.03.2016 and 01.07.2015).

The loss due to fluctuation in foreign currency exchange rates on derivative contract, recognized in the Statement of Profit and Loss is Rs.44.92 crore (Rs.Nil for the Nine Months ended 31.03.2016) for the Year ended 31.03.2017.

19. CAPITAL MANAGEMENT

The primary objective of the Company’s capital management is to ensure availability of funds at competitive cost for its operational and development needs and maintain a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value.

The Company manages its capital structure and makes changes in view of changing economic conditions. No changes were made in the objectives, policies or process during the year ended 31.03.2017 and 31.03.2016. There have been no breaches of the financial covenants of any interest bearing loans and borrowings for the reported period.

The Company monitors capital structure on the basis of debt to equity ratio. For the purpose of Company’s capital management, equity includes paid up equity share capital and reserves and surplus and effective portion of cash flow hedge and Debt comprises of long term borrowings including current maturities of these borrowings.

Fair Value Techniques:

The fair value of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The following methods and assumptions were used to estimate the fair values:

a) Fair value of cash and short term deposits, trade receivables, trade payables, current loans, other current financial assets, short term borrowings and other current financial liabilities approximate to their carrying amount largely due to the short term maturities of these instruments.

b) Long term fixed rate and variable rate receivables / borrowings are evaluated by the Company based on parameters such as interest rate, specific country risk factors, credit risk and other risk characteristics. Fair value of variable interest rate borrowings approximates their carrying values. For fixed interest rate borrowings fair value is determined by using Discounted Cash Flow (DCF) method using discount rate that reflects the issuer’s borrowings rate. Risk of non-performance for the company is considered to be insignificant in valuation.

c) The fair value of derivatives are estimated by using pricing models, where the inputs to those models are based on readily observable market parameters basis contractual terms, period to maturity and market parameters such as interest rates, foreign exchange rates and volatility. These models do not contain a high level of subjectivity as the valuation techniques used do not require significant judgement and inputs thereto are readily observable from actively quoted market prices. Management has evaluated the credit and non-performance risks associated with its derivatives counterparties and believe them to be insignificant and not warranting a credit adjustment.

Fair Value Hierarchy

The following table provides the fair value measurement hierarchy of Company’s asset and liabilities grouped into Level 1 to Level 3 as described below:

Quoted prices / published Net Asset Value (NAV) in an active markets (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities and financial instruments like mutual funds for which NAV is published by mutual funds. This category consists mutual fund investments.

Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using 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).

Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (i.e. unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The following table provides the fair value measurement hierarchy of Company’s asset and liabilities grouped into Level 1 to Level 3 as described below:

During the year ended 31.03.2017 and 31.03.2016, there were no transfers between Level 1 and level 2 fair value measurements and no transfer into and out of Level 3 fair value measurements. There is no transaction/balance under level 3.

The fair values of the financial assets and financial liabilities included in the level 2 categories above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparties. Following table describes the valuation techniques used and key inputs to valuation for level 2 of the fair value hierarchy as at 31.03.2017, 31.03.2016 and 01.07.2015, respectively:

20. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings and trade and other payables. The main purpose of these financial liabilities is to manage finances for the Company’s operations. The Company has loans, trade and other receivables, and cash and short-term deposits that arrive directly from its operations. The Company also holds fair value through profit or loss investments and enters into derivative transactions.

The Company is exposed to market risk, credit risk and liquidity risk.

The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by senior management and the Audit and Risk Management Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies and ensuring compliance with market risk limits and policies.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarized below:

Market risk and sensitivity

Market risk is the risk that the fair value or future cash flows of a financial instruments will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency rate risk and interest rate risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments and derivatives financial instruments. Foreign currency risk is the risk that the fair value or future cash flows of financial instrument will fluctuate because of changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. This is based on the financial assets and liabilities held as at 31.03.2017 and 31.03.2016.

The sensitivity analyses excludes the impact of movement in market variables on the carrying value of post-employment benefit obligations, provisions and on non-financial assets and liabilities. The sensitivity of the relevant statement of profit and loss item is the effect of the assumed changes in respective market rates. The company’s activities exposes it to a variety of financial risk including the effect of changes in foreign currency exchange rates and interest rates. The company uses derivatives financial instruments such as foreign exchange forward contracts and cross currency and interest rate swaps of varying maturity depending upon the underlying contract and risk management strategy to manage its exposures to foreign exchange fluctuation and interest rates.

Interest rate risk and sensitivity

The Company’s exposure to the risk of changes in market interest rates relates primarily to the long term debt obligations and Buyer’s credit obligations with floating interest rates.

The Company’s policy is to manage its floating interest rate loans and borrowings by entering into interest rate swaps, in which the Company agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed upon principal amount.

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

The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

Foreign currency risk and sensitivity

The company has obtained foreign currency loans and has foreign currency payables for supply of fuel, raw material and equipment and is therefore, exposed to foreign exchange risk. The Company uses Cross Currency swaps and forward currency contracts to eliminate the currency exposures.

The impact on profit before tax is due to change in the fair value of monetary assets and liabilities including non- designated foreign currency derivatives.

The following tables demonstrates the sensitivity in the USD, JPY, EURO and GBP to the Indian Rupee with all other variable held constant.

The assumed movement in exchange rate sensitivity analysis is based on the currently observable market environment.

Credit risk

Credit risk is the risk that the counterparty will not meet its obligation under a financial instruments or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities including deposits with banks, mutual funds and financial institutions and other financial instruments.

Trade receivables

The Company extends credit to customers in normal course of business. The Company considers factors such as credit track record in the market and past dealings for extension of credit to customers. The Company monitors the payment track record of the customers. Outstanding customer receivables are regularly monitored. The company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdiction and industries and operate in largely independent markets. The Company has also taken advances and security deposits from its customers which mitigate the credit risk to an extent.

Financial Instruments and cash deposits

The Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks with which balances and deposits are maintained. Investments of surplus funds are made only with approved counterparties. The maximum exposure to credit risk for the components of the balance sheet is Rs.4,824.76 crore as at 31.03.2017 and Rs.3,822.21 crore as at 31.03.2016, which is the carrying amounts of cash and cash equivalents, other bank balances, investments (other than equity investments in subsidiary), trade receivables, loans and other financial assets.

Liquidity risk

Liquidity risk is the risk that the company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses.

The Company monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial investments and financial assets (i.e. trade receivables, other financial assets) and projected cash flows from operations. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of working capital loans, letter of credit facility, bank loans and credit purchases.

The table below provides undiscounted cash flows towards non-derivative financial liabilities and net-settled derivative financial liabilities into relevant maturity based on the remaining period at the balance sheet date to the contractual maturity date:

21. COLLATERALS

Inventory, Trade Receivables, Other Financial Assets, Property, Plant and Equipment are pledged/hypothecated as collateral/security against the borrowings. Refer Note 18 and 22.

22. OPERATING LEASES

The Company has taken various residential premises, office premises and warehouses under operating lease agreements. These are cancellable and are renewable by mutual consent on mutually agreed terms.

23. Figures less than 50,000 have been shown at actual, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest crore.

24. FIRST TIME ADOPTION OF IND AS

1. Basis of Preparation

These financial statements, for the year ended 31.03.2017, are the Company’s first Ind-AS Financial Statements. For periods up to and including the year ended 31.03.2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act, 2013, read together with para 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind-AS applicable for periods ending on 31.03.2017, together with the restated comparative period data as at and for the year ended 31.03.2016, as described in the significant accounting policies and basis of preparation. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 01.07.2015 (i.e. transition date opening balance as at 01.07.2015), the Company’s date of transition to Ind-AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statement, including the balance sheet as at 01.07.2015 and the financial statements as at and for the period ended 31.03.2016.

2. Exemptions applied

Ind AS 101- First Time Adoption of Indian Accounting Standards allows first time adopters certain optional exemptions from the retrospective application of requirements under Ind AS. The Company has availed the benefit of and applied the following exemptions:

a) Ind AS 103 Business Combinations has not been applied to acquisition of cement grinding unit, which are considered business under Ind AS that occurred before 01.07.2015. Use of this exemption means that the Indian GAAP carrying amounts of assets and liabilities, that are required to be recognized under Ind AS, is their deemed cost at the date of acquisition. After the date of acquisition, measurement is in accordance with respective Ind AS. Assets and liabilities that do not qualify for recognition under Ind AS are excluded from the opening Ind AS balance sheet. The Company did not recognize or exclude any previously recognized amounts as a result of Ind AS recognition requirement except goodwill which was adjusted as per Ind AS 101.

b) Carrying value of all Property, Plant and equipment and Intangible Assets as recognized in previous Indian GAAP financial is recognized as deemed cost at the transition date under Ind AS.

c) The Company uses derivative financial instruments, such as cross currency and interest rate swaps, to hedge its foreign currency and interest rate risk. Under Indian GAAP, there is no mandatory standard that deals comprehensively with hedge accounting, which has resulted in the adoption of varying practices. The Company has designated various economic hedges and applied economic hedge accounting principles to avoid profit or loss mismatch. All the hedges designated under Indian GAAP also qualify for hedge accounting in accordance with Ind AS 109 on the transition date. Accordingly, the Company has applied the hedge accounting in accordance with Ind AS 109 and gain/loss are recorded in Other Comprehensive Income.

3. Estimates

The estimates at 01.07.2015 and 31.03.2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies).

4. Footnotes to the reconciliation of equity as at 01.07.2015 and 31.03.2016 and Profit or loss for the nine months period ended 31.03.2016:

a) Financial Assets at Amortized Cost

Under Indian GAAP, the Company accounted for long term investments in bonds and debentures as investments measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated these investments as financial assets measured at amortized cost. At the date of transition to Ind AS, difference between amortized cost and the Indian GAAP carrying value has been recognized in retained earnings. Subsequent to the date of transition to Ind AS, interest income has been recognized based on EIR method.

b) Financial Assets at Fair Value Through Profit or Loss (FVTPL)

Under Indian GAAP, the Company accounted for long term investments in preference shares and mutual funds as investments measured at cost less provision for other than temporary diminution in the value of investments and current investments at lower of cost or market value. Under Ind AS, the Company has designated these investments as financial assets measured at fair value through profit or loss. Ind AS requires that investment designated at FVTPL, are measured at fair value. At the date of transition to Ind AS, difference between fair value and the Indian GAAP carrying value has been recognized in retained earnings. Subsequent to the date of transition to Ind AS, fair value gain or loss has been recognized to Statement of Profit and Loss.

c) Derivative Financial Instruments

The fair value of cross currency and interest rate swaps is recognized under Ind AS. Under Indian GAAP, there is no mandatory standard that deals with accounting of swaps, hence the same was not recognized. The swaps, which were designated as hedging instruments under Indian GAAP, have been designated as at the date of transition to Ind AS as hedging instruments in a cash flow hedge. The corresponding adjustments have been recognized as a separate component of equity, under the effective portion of cash flow hedge reserve.

d) Defined Benefit liabilities

Both under Indian GAAP and Ind AS, the Company recognized costs related to post employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire costs, including actuarial gains and losses, are charged to Statement of Profit and Loss. Under Ind AS, remeasurements (comprising of actuarial gains or losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income. Thus, the employee benefit cost is increased by Rs.5.32 crore and remeasurement gain on defined benefit plan has been recognized in the other comprehensive income, net of tax.

e) Provisions

Under Indian GAAP, the Company has accounted for provisions, including long term provisions, at the undiscounted amount. In contrast, Ind AS 37 requires that where the effect of time value of money is material, the amount of provision should be the present value of the expenditures expected to be required to settle the obligation. The discount rate(s) should not reflect risk for which future cash flow estimates have been adjusted. Ind AS 37 also provides that where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognized as borrowing cost. This led to a decrease in the provision for mines reclamation expenses on the date of transition by Rs.12.37 crore and which was adjusted to retained earnings.

f) Deferred Tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12-Income Taxes requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of asset or liability in the balance sheet and its corresponding tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.

MAT Credit entitlement is in the nature of deferred tax under Ind AS. Hence on transition to Ind AS MAT credit entitlement of Rs.95.87 crore as on 01.07.2015 and Rs.107.40 crore as on 31.03.2016 has been grouped under deferred tax assets from current tax assets.

g) Government Grants

Under Indian GAAP, Government grants in the nature of promoter’s contribution are recognized to capital reserve. Under Ind AS, all Government grants has to be recognized to the Statement of Profit and Loss. Accordingly, Government grants recognized to the Statement of Profit and Loss. Further, the government grants credited to capital reserve under erstwhile Indian GAAP have also been reclassified to retained earnings as per Ind AS 101 - First Time Adoption of Indian Accounting Standards.

h) Sale of goods

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of Statement of Profit and Loss accordingly, sale of goods under Ind AS for the Nine Months ended 31.03.2016 has increased by Rs.676.32 crore.

Under Ind AS cash discount and other sale incentives are required to be netted off from sale of products which was accounted as expenses under Indian GAAP. Hence sale of products is decreased by Rs.116.72 crore for the period ended 31.03.2016.

Under Ind AS when goods or services are exchanged or swapped for goods or services which are of a similar nature and value, the exchange is not regarded as a transaction which generates revenue. Thus sale of products and cost of material consumed has been decreased by Rs.21.20 crore for the period ended 31.03.2016.

i) Statement of Cash Flows

The impact of transition from Indian GAAP to Ind AS on the Statement of Cash Flows is due to various reclassification adjustments recorded under Ind AS in balance Sheet, Statement of Profit and Loss and differences in the definition of cash and cash equivalents in Ind AS and Indian GAAP.

j) Borrowings

Under Indian GAAP, transaction costs incurred in connection with borrowings are charged upfront to Statement of Profit and Loss for the period/year. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to Statement of Profit and Loss using effective interest method.

k) Other Comprehensive Income

Under Indian GAAP, the company has not presented Other Comprehensive Income (OCI) separately. Hence it has reconciled Indian GAAP profit or loss to profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

l) Proposed Dividend and Tax on Proposed Dividend

Under Indian GAAP, proposed dividends including tax on proposed dividend are recognized as liability in the period to which they relate, irrespective of the approval by shareholders. Under Ind AS, proposed dividend is recognized as a liability in the period in which it is declared by the Company (when approved by shareholders in a general meeting) or paid. Therefore, the proposed dividend and tax on proposed dividend of Rs.58.70 crore as on 01.07.2015 has been derecognized and recognized in 2015-16 on approval by shareholders and payment.

25. Previous year figures have been regrouped and rearranged wherever necessary.


Jun 30, 2015

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

2. 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.

3. The Board of Directors, in its meetings held on 25th August, 2014 declared interim dividend of Rs. 10 per equity share. The Final Dividend of Rs. 14 per equity share proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

4. As no fresh issue of shares or reduction in capital was made during the current year as well as during the previous year, hence there is no change in the opening and closing capital. Accordingly, reconciliation of share capital has not been given.

5. The Equity Shares of the Company are listed at Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the annual listing fees has been paid for the year.

6. There are disputes raised by various statutory authorities related to taxes, legal and other matters, which are under various stages of litigation. As a measure of prudence, the management has created a special reserve to meet any eventuality that may arise in the future.

7. Demand loans and suppliers credit from banks are secured by hypothecation of inventories of stock-in-trade, stores & spares, book- debts and all other current assets of the Company on First charge basis and on whole of movable fixed assets of the Company on second charge basis and also secured by joint equitable mortgage on all the immovable assets of the Company on second charge basis.

8. Bank Overdraft is secured against pledge of Fixed Deposits and payable on demand. (Refer Note 16)

9. Trade Payables are based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006" and there are no delays in payments to Micro, Small and Medium Enterprises as required to be disclosed under the said Act.

10.Other Payables include the liability related to Employees, Rebate and Discount to customers etc.

11. Deposits of Rs. 19.00 crore (Previous year Rs. 17.02 crore) are pledged with banks against overdraft facilities.

12. Rs. 53.19 crore (Previous year Rs. 49.75 crore), given as security to Government department and others.

13. Rs. 30.00 crore are earmarked against debentures due for redemption in next 12 months as per provisions of Companies Act, 2013.

14. CONTINGENT LIABILITIES (CLAIMS/DEMANDS NOT ACKNOWLEDGED AS DEBT):

a) Custom duty ?56.56 crore (Previous year ?56.56 crore).

b) The Competition Commission of India (CCI) has, vide its order dated 30th July, 2012, imposed penalty of Rs. 397.51 crore on the Company, which has been challenged before the Competition Appellate Tribunal (COMPAT). COMPAT has granted stay on CCI Order on the condition that the Company deposits 10% of the penalty amounting to ?39.75 Crore. The same stands deposited in the form of bank fixed deposit with lien in favour of COMPAT. The fixed deposit has been renewed periodically on maturity along with interest of ?3.44 crore.

15. Estimated amount of contracts remaining to be executed on capital account (net of advances) ?249.60 crore (Previous Year ?528.26 crore).

16. Capital Work-in-Progress includes pre-operative expenses of ?36.87 crore (Previous Year ?69.08 crore) which includes depreciation of ?2.46 crore (Previous Year ?8.93 crore) on assets during construction period.

17. Excise duty on sales amounting to ?723.27 crore (Previous year ?657.00 crore) has been reduced from sales in the Statement of Profit and Loss and excise duty on increase / decrease in stock amounting to ?5.20 crore (Previous year ?2.54 crore) has been considered as other expenses.

18. Defined Benefit Plans:

(A) Gratuity - The Company has defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India.

a) The estimates of future salary increases have been considered in actuarial valuation after taking into consideration the impact of inflation, seniority, promotion and other relevant factors such as supply and demand situation in the employment market.

b) Basis used to determine expected rate of return on assets:

The expected return on plan assets is based on market expectation, at the beginning of the period, which is used for calculating returns over the entire life of the related obligation. The Gratuity Scheme is invested in group Gratuity-Cum-Life assurance cash accumulation policy offered by Life Insurance Corporation of India.

19. Provident fund managed by a trust set up by the Company:

In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary has provided a valuation of provident fund liability and based on the assumption provided below, there is no short fall as at 30.6.2015.

20. RELATED PARTY DISCLOSURE (AS PER AS-18 "RELATED PARTY DISCLOSURES" SPECIFIED UNDER SECTION 133 OF THE COMPANIES ACT, 2013):

Relationships:

(a) Parties where control exists:

(i) Shree Global Pte. Ltd. Subsidiary Company

(ii) Katni Industries Private Ltd. Subsidiary Company (up to 15.03.15)

(b) Enterprises over which Key Management Personnel (KMP) are able to exercise significant influence with whom there were transactions during the year:

(i) The Kamla Company Limited

(ii) Shree Capital Services Ltd.

(iii) Aqua Infra Project Limited

(iv) Asish Creations Pvt. Ltd.

(v) Alfa Buildhome Pvt. Ltd.

(vi) Rajasthan Forum

(vii) The Bengal

(viii) Sant Parmanand Hospital

21. RELATED PARTY DISCLOSURE (contd...)

(c) Key Management Personnel:

(i) Shri H. M. Bangur Managing Director

(ii) Shri Prashant Bangur Whole Time Director

(iii) Shri Mahendra Singhi Executive Director (upto 6.12.2013)

(d) Relatives to Key Management Personnel:

(i) Shri B. G. Bangur Father of Shri H. M. Bangur

22. OPERATING LEASE:

The Company has taken various residential premises, office premises and warehouses under operating lease agreements. These are cancellable and are renewable by mutual consent on mutually agreed terms.

23. During the year, the Company has acquired 1.50 MTPA cement grinding unit of Jaiprakash Associates Limited situated at Panipat in the State of Haryana on going concern basis with effect from 27th April, 2015 for an aggregate consideration of Rs. 358.22 crore which, based on expert valuer's report, has been apportioned as under-

24. Previous year figures have been regrouped and rearranged wherever necessary.

25. Figures less than 50,000 have been shown at actual, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest lac.


Jun 30, 2014

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

1.2 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.

1.3 The Board of Directors, in its meetings held on 27th January, 2014 and 25th August, 2014 declared interim dividend of Rs.10 and Rs.12 per equity share respectively.

1.4 As no fresh issue of shares or reduction in capital was made during the current year as well as during the previous year, hence there is no change in the opening and closing capital. Accordingly, reconciliation of share capital has not been given.

1.5 The Equity Shares of the Company are listed at Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the annual listing fees has been paid for the year.

1.6 Demands raised by various statutory authorities related to taxes, legal and other matters, which are under various stages of litigation, are reflected under contingent liabilities. As a measure of prudence, the management has created a special reserve to meet any eventuality that may arise in the future with respect to these contingent liabilities.

1.7 Demand loans and suppliers credit from banks are secured by hypothecation of inventories of stock-in-trade, stores & spares, book-debts and all other current assets of the Company on First charge basis and on whole of movable fixed assets of the Company on second charge basis and also secured by joint equitable mortgage on all the immovable assets of the Company on second charge basis.

1.8 Bank Overdraft is secured against pledge of Fixed Deposits and payable on demand. (Refer Note 16)

1.9 Trade Payables are based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006" and there are no delays in payments to Micro, Small and Medium Enterprises as required to be disclosed under the said Act. This has been relied upon by the Auditors.

1.10 Other Payables include the liability related to Employees, Rebate and Discount to customers etc.

1.11 NABARD Bhavishya Nirman Bonds and NHB Zero Coupon Bonds are held as Capital Assets under Section 2(48) of the Income Tax Act, 1961.

1.12 Deposits ofRs. 17.02 crore (Previous year Rs. 15.22 crore) are pledged with banks against overdraft facilities.

1.13 Rs. 51.73 crore (Previous year Rs. 11.73 crore), given as security to Government department and others.

2 Contingent liabilities (claims/demands not acknowledged as debt):

a. Custom duty Rs. 56.56 crore (Previous year Rs. 56.56 crore).

b. The Competition Commission of India (CCI) has, vide its order dated 30th July, 2012, imposed penalty of Rs. 397.51 Crore on the Company, which has been challenged before the Competition Appellate Tribunal (COMPAT).COMPAThas granted stay on CCI Order on the condition that the Company deposits 10% of the penalty amounting to Rs. 39.75 Crore. The same stands deposited in the form of bank fixed deposit with lien in favour of COM PAT.

3 Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. 528.26 crore (Previous Year Rs. 772.06 crore).

4 Other Exceptional items include the following:

a. Write off of Pre-operative expenses incurred on certain capital projects amounting to Rs. 11.24 Crore.

b. Provision towards Statutory Liabilities amounting to Rs. 29.62 crore on account of disallowances by assessing authorities though appeal(s) have been filed in these matters.

c. Provision towards tax exemption availed as per relevant notifications amounting to Rs. 32.87 crore for which assessing authorities have taken contrary stand. Company has however, filed appeals in these matters.

5 Capital Work-in-Progress includes pre-operative expenses ofRs. 69.08 crore (Previous Year Rs. 29.91 crore) which includes depreciation of Rs. 8.93 crore (Previous Year Rs. 1.13 crore) on assets during construction period.

6 Excise duty on sales amounting to Rs. 657.00 crore (Previous year Rs. 578.83 crore) has been reduced from sales in the Statement of Profit and Loss and excise duty on increase / decrease in stock amounting to Rs. 2.54 crore [Previous year Rs. (0.08) crore] has been considered as other expenses.

7 Employee Benefits:

(ii) Defined Benefit Plans:

(A) Gratuity - The Company has defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India.

8 Related Party Disclosure :

Relationships:

(a) Parties where control exists:

(i) Shree Global Pte. Ltd. Subsidiary Company

(ii) Katni Industries Private Ltd. Subsidiary Company

(b) Enterprises over which Key Management Personnel (KMP) are able to exercise significant influence:

(i) The Kamla Company Limited

(ii) Shree Capital Services Ltd.

(iii) Aqua Infra Projects Limited

(iv) Asish Creations Pvt. Ltd.

(v) Alfa Buildhome Pvt. Ltd.

(vi) Rajasthan Forum

(vii) The Bengal

(c) Key Management Personnel:

(i) Shri H.M. Bangur Managing Director

(ii) Shri Prashant Bangur Wholetime Director (From 23.8.2012)

(iii) Shri Mahendra Singhi Executive Director (upto 6.12.2013)

(d) Relatives to Key Management Personnel:

(i) Shri B.G. Bangur Father of Shri H.M. Bangur

(ii) Shri Prashant Bangur Son of Shri H.M. Bangur

9 Operating lease:

The Company has taken various residential premises, office premises and warehouses under operating lease agreements. These are cancellable and are renewable by mutual consent on mutually agreed terms.

10 Previous year figures have been regrouped and rearranged wherever necessary.

11 Figures less than 50,000 have been shown at actual, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest lac.


Jun 30, 2013

1 Related Party Disclosure :

Relationships:

(a) Parties where control exists:

(i) Raipur Cement Company Private Limited Subsidiary Company (From 4.5.2012 to 21.6.2012)

(ii) Shree Global Pte. Ltd. Subsidiary Company (w.e.f 8.10.2012)

(iii) Katni Industries Private Ltd. Subsidiary Company (w.e.f 11.9.2012)

(b) Enterprises over which Key Management Personnel (KMP) are able to exercise significant influence :

(i) The Kamla Company Limited

(ii) Shree Capital Services Ltd.

(iii) Aqua Infra Project Limited

(iv) Shri Venkatesh Ayurvedic Aushadhalaya

(v) Asish Creations Pvt. Ltd.

(vi) Alpha Buildhome Pvt. Ltd.

(vii) Rajasthan forum

(c) Key Management Personnel :

(i) Shri B.G. Bangur Executive Chairman (upto 23.01.2012)

(ii) Shri H.M. Bangur Managing Director

(iii) Shri Mahendra Singhi Executive Director

(iv) Shri Prashant Bangur Wholetime Director (From 23.08.2012)

(d) Relatives to Key Management Personnel :

(i) Shri B.G. Bangur Father of Shri H.M. Bangur

(iI) Shri Prashant Bangur Son of Shri H.M. Bangur

2 Purchases of stock-in-trade represent cement.

3 Previous year figures have been regrouped and rearranged wherever necessary.

4 The figures of current year are for twelve months whereas that of previous period are for fifteen months.

5 Figures less than 50,000 have been shown at actual, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest Lac.


Jun 30, 2012

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

1.2 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.

1.3 The Board of Directors, in its meetings held on 23rd January, 2012 and 15th May, 2012 declared two interim dividend of Rs. 6 each per equity share. The Final dividend proposed by Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

1.4 As no fresh issue of shares or reduction in capital was made during the current year as well as during the previous year, hence there is no change in the opening and closing capital. Accordingly, reconciliation of capital has not been given.

1.5 The Equity Shares of the Company are listed at Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the annual listing fee has been paid for the year.

2.1 Demand loans from banks are secured by hypothecation of inventories of stock-in-trade, stores & spares, book-debts and other current assets of the Company on First charge basis and on whole of movable fixed assets of the Company on second charge basis and also secured by joint equitable mortgage on all the immovable assets of the company on second charge basis.

3.1 Trade Payables is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006" and there are no delays in payments to Micro, Small and Medium Enterprises as required to be disclosed under the said Act. This has been relied upon by the Auditors.

3.2 Other Payables includes the liability of employees and rebates to customers etc.

4. The Competition Commission of India (CCI) has, vide its order dated 30.07.2012, alleged contravention of provisions of the Competition Act, 2002 and imposed penalty of Rs. 397.51 crore on the Company. The company is contesting the same & accordingly, no provision has been made as on 30.06.2012.

5. Hitherto the revenue from Traded Power and corresponding purchase cost of power trading activities was recorded as sales and purchase separately. For better presentation, Company has now shown these sale and purchase with their net result as revenue from power trading operation. Accordingly, the corresponding numbers of previous year have been regrouped and rearranged. There is no effect on the profits of the Company.

6. Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. 220.35 crore (Previous Year Rs. 198.18 crore).

7. Capital Work-in-Progress includes pre-operative expenses of Rs. 17.60 crore (Previous Year Rs. 18.31 crore) which includes depreciation of Rs. 0.36 crore (Previous Year Rs. 0.46 crore) on assets during construction period.

8. The grants / subsidies given by government for promoting industrialization, being capital in nature, have been credited to capital reserve in the current accounting period (Refer accounting policy on government grants). Consequently, the profit for the period ended 30th June, 2012 is lower by Rs. 210.23 crore.

9. Till the year ended 31st March 2011, Leasehold Land was shown at cost. During the current financial year, the company has changed amortization policy to provide that Leasehold Land not containing mineral reserve is amortized over the period of lease. (Refer Note No. 1 - XIII (b)).

It has been decided to give retrospective effect to this change. Accordingly amortization of Rs. 0.40 crore has been provided during the period. This change will give a systematic basis of amortization charge, representative of the time pattern in which the economic benefits flow to the company. Current period profit is therefore lower by Rs. 0.40 crore, due to this change.

10. Till the year ended 31st March 2011, Mineral Bearing Land was being shown at cost. During the current financial year the company has changed the amortization policy to provide that "Mineral Reserve" forming part of Land is valued at cost and is amortized over its estimated commercial life based on the unit of production method. (Refer Note No. 1 - XIII (c)).

It has been decided to give retrospective effect to this change also. Accordingly an amortization of Rs. 2.24 crore has been provided during the period. This change will give a systematic basis of amortization charge, representative of pattern of utilization of minerals in which the economic benefits flow to the company. Current period profit is therefore lower by Rs. 2.24 crore due to this change.

11. Excise duty on sales amounting to Rs. 679.25 crore (Previous year Rs. 425.92 crore) has been reduced from sales in statement of profit and loss and excise duty on increase / decrease in stock amounting to Rs. (1.07) crore (Previous year Rs. 1.21 crore) has been considered as other expenses.

12. Previous year figures have been regrouped and rearranged wherever necessary as also to bring the same in conformity with the current year classification under Revised Schedule VI.

13. In view of extended financial year, the figures for the current year are for fifteen months period.

14. Figures less than 50,000 have been shown at actual, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest lac.


Mar 31, 2011

1. Contingent liabilities not provided for : Counter-guarantees in favour of banks: Rs. 8103.88 Lac (Previous Year Rs. 15595.50 Lac).

2. Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs 19817.77 Lac (Previous Year Rs. 69313.03 Lac).

3. Installments of Secured Loans falling due for repayment in next 12 months amounting to Rs. 19301.43 Lac (Previous Year Rs. 5668.11 Lac).

4. Capital Work-in-Progress includes:

a) Rs. 29880.88 Lac (Previous Year Rs. 29824.66 Lac) paid towards capital advances.

b) Pre-operative expenses of Rs. 1831.33 Lac (Previous Year Rs. 1968.39 Lac) which includes depreciation of Rs 45.87 Lac (Previous Year Rs. 140 Lac) on assets during construction period.

5. Disclosure of Sundry Creditors under Current Liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006” and there are no delays in payments to Micro, Small and Medium Enterprises as required to be disclosed under the said Act. This has been relied upon by the Auditors.

(c) The estimates of future salary increases have been considered in actuarial valuation after taking into consideration the impact of inflation, seniority, promotion and other relevant factors such as supply and demand situation in the employment market.

(d) In terms of the Guidance Note on implementing the Accounting Standard 15 (revised 2005), issued by the Accounting Standard Board of the Institute of Chartered Accountants of India, the provident fund set up by the company is treated as defined benefit plan since the Company has to meet the interest shortfall, if any. However, as at the end of the year no shortfall remains unprovided for. As advised by an independent actuary, it is not feasible to actuarially value the liability considering that the rate of interest as notified by the Government can vary annually. Further the pattern of investments for investible funds is as prescribed by the Government.

Accordingly other related disclosures in respect of provident fund have not been made.

(e) Basis used to determine expected rate of return on assets:

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligations. The Gratuity Scheme is invested in a Group Gratuity-cum-Life Assurance cash accumulation policy offered by Life Insurance Corporation (LIC) of India. The information on the allocation of the fund into major asset classes and expected return on each major class are not readily available. We understand that LICs overall portfolio of assets is well diversified and the long term return on the policy is expected to be higher than the rate of return on Central Government Bonds. Historically too, the returns declared by LIC on such policies have been higher than Government Bond yields.

(g) Amount recognized as an expense in respect of leave encashment and compensated absences is Rs. 617.25 Lac (Previous Year Rs. 484.71 Lac).

6. Revenue expenditure on Research and Development amounting to Rs. 830.97 Lac (Previous Year Rs. 638.70 Lac) is included under relevant heads of expenditure. Capital expenditure relating to Research and Development amounting to Rs. 123.07 Lac (previous year Rs. 1787.83 Lac) has been included in fixed assets.

7. Balance with non scheduled bank represents balance in current account with Sir M. Vishweshwaraiah Sahakar Bank Niyamitha, Gulberga. Maximum balance outstanding during the year Rs. 104.78 Lac (previous year Rs. 247.36 Lac). None of the directors or their relatives are interested in the bank.

8. Segment Reporting:

The Company has two primary business segments, namely Cement and Power. There is no reportable secondary segment as the Company operates only in one geographical area.

9. Related Party Disclosure (AS-18):

Relationships:

(a) Enterprises over which Key Management Personnel (KMP) are able to exercise significant influence

(i) The Kamla Company Limited

(ii) Aqua Infra Project Limited

(iii) Shri Venkatesh Ayurvedic Aushadhalaya

(iv) Asish Creations Pvt. Ltd.

(v) Alpha Buildhome Pvt. Ltd.

(b) Key Management Personnel

(i) Shri B.G. Bangur Executive Chairman

(ii) Shri H.M. Bangur Managing Director

(iii) Shri M.K. Singhi Executive Director

(c) Relatives to key Management Personnel (i) Shri Prashant Bangur

10. The Equity Shares of the Company are listed at Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the

annual listing fee has been paid for the year

11. Information pursuant to provisions of paragraphs 3, 4-C and 4-D of Part-II of Schedule VI to the Companies Act, 1956.

12. The figures of previous year have been regrouped and rearranged wherever necessary.


Mar 31, 2010

1. Contingent liabilities not provided for :

Counter.guarantees in favour of banks: Rs. 15595.50 Lac (Previous Year Rs.10500.88 Lac).

2. Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs 69313.03 Lac (Previous Year Rs.43800.21 Lac).

3. Fixed Assets include Rs.9864.58 lac (Previous Year Rs.5563.38 lac) paid towards cost of land in respect of which conveyance deeds are pending execution in favour of the Company.

4. Installments of Secured Loans falling due for repayment in next 12 months amounting to Rs.5668.11 Lac (Previous Year Rs.13184.01 Lac).

5. Capital Work.in.Progress includes Pre.operative expenses of Rs. 1968.39 lac (Previous Year Rs.1878.37 Lac) which includes depreciation of Rs 140 lac on assets during construction period (Previous Year Rs. 47.68 Lac).

6. The revision in the entitlement of various subsidies provided under Rajasthan Investment promotion Scheme, 2003 with retrospective effect has been challenged by the Company in the

Honble High Court of Rajasthan.Consequently, the subsidy entitlement certificates for interest of Rs.3407.69 lac and wages of Rs.916.13 lac for the year has not been issued to the Company by the Government authorities.The Company, as a matter of conservative accounting policy, has not recognized said amount in the current year and accordingly, employee expenses and interest and financial expenses are higher as compared to last year.

7. The Company has claimed certain tax concessions/exemptions as per the relevant notifications issued by the Government authorities amounting to Rs.4367.62 lac. However, the assessing authorities have taken contrary stand for these claims for which appeals have been filed.The Company, as a matter of conservative accounting policy, has recognized said amount in books as exceptional item.

8. Disclosure of Sundry Creditors under Current Liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006” and there are no delays in payments to Micro, Small and Medium Enterprises as required to be disclosed under the said Act.This has been relied upon by the Auditors.

9. Unhedged Foreign Currency Exposure:

(c) The estimates of future salary increases have been considered in actuarial valuation after taking into consideration the impact of inflation, seniority, promotion and other relevant factors such as supply and demand situation in the employment market.

(d) In terms of the Guidance Note on implementing the Accounting Standard 15 (revised 2005), issued by the Accounting Standard Board of the Institute of Chartered Accountants of India, the provident fund set up by the company is treated as defined benefit plan since the Company has to meet the interest shortfall, if any. However, as at the end of the year no shortfall remains unprovided for.As advised by an independent actuary, it is not feasible to actuarially value the liability considering that the rate of interest as notified by the Government can vary annually.Further the pattern of investments for investible funds is as prescribed by the Government. Accordingly other related disclosures in respect of provident fund have not been made.

(e) Basis used to determine expected rate of return on assets:

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligations.The Gratuity Scheme is invested in a Group Gratuity.cum.Life Assurance cash accumulation policy offered by Life Insurance Corporation (LIC) of India.The information on the allocation of the fund into major asset classes and expected return on each major class are not readily available.We understand that LICs overall portfolio of assets is well diversified and the long term return on the policy is expected to be higher than the rate of return on Central Government Bonds.Historically too, the returns declared by LIC on such policies have been higher than Government Bond yields.

(f) Amount for the current and previous two years are as follows:

(g) Amount recognized as an expense in respect of leave encashment and compensated absences is Rs. 484.71 lac (Previous Year Rs.370.28 Lac)

10. Revenue expenditure on Research and Development amounting to Rs. 638.70 Lac (Previous Year Rs.864.18 Lac) is included under relevant heads of expenditure.Capital expenditure relating to Research and Development amounting to Rs.1787.83 Lac (previous year Rs.12.34 Lac), which includes expenditure incurred on pilot project of Synthetic gypsum, has been included in fixed assets.

11. Balance with non scheduled bank represents balance in current account with Sir M Vishweshwaraiah Sahakar Bank Niyamitha, Gulberga. Maximum balance outstanding during the year Rs.247.36 lac (previous year Rs.176.84 lac).None of the directors or their relatives are interested in the bank.

12. Segment Reporting :

The Company has two primary business segments, namely Cement and Power. There is no reportable secondary segment as the Company operates only in one geographical area.

13. Related Party Disclosure (AS.18):

Relationships:

(a) Enterprises over which Key Management Personnel (KMP) are able to exercise significant influence (i) The Kamla Company Limited

(ii) Ramgopal Holding Private Limited

(iii) Aqua Infra Project Limited

(iv) Shri Venkatesh Ayurvedic Aushadhalaya

(b) Key Management Personnel

(i) Shri B.G.Bangur Executive Chairman

(ii) Shri H.M.Bangur Managing Director

(iii) Shri M.K.Singhi Executive Director

(c) Relatives to key Management Personnel (i) Shri Prashant Bangur

14. Movement of Provisions during the year as required under Accounting Standard .29 Mines Reclamation Expenses:

15. Payment made to Auditors :

16. (a) The Break.up of remuneration to the Wholetime Directors is as under:

(b) Computation of Net Profit in accordance with Section 198 read with Section 349 of the Companies Act, 1956:

17. The Equity Shares of the Company are listed at Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the annual listing fee has been paid for the year.

18. Information pursuant to provisions of paragraphs 3, 4.C and 4.D of Part.II of Schedule VI to the Companies Act, 1956. (A) Licensed, Installed Capacity and Production:

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