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Accounting Policies of The Ramco Cements Ltd. Company

Mar 31, 2015

1.1 Basis of Preparation and Presentation of Financial Statements

2.1.1 The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles in India, and in compliance of the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 1956 and Companies Act, 2013, as applicable.

2.1.2 The accounting policies that are adopted in preparation of the financial statements are consistently followed as in the previous year except for change in the accounting policy for depreciation, as adopted consistently by the Company.

2.1.3 Pursuant to the notification of Schedule II to the Companies Act, 2013 for computation of Depreciation with effect from 01-04-2014, the Company revised the useful life of its assets to align the useful life specified in Schedule II of the said Act. The depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less 5% being its residual value. The carrying amount of the asset on 01-04-2014, after retaining the residual value, is adjusted in the Retained earnings, where the remaining useful life of an asset is Nil.

2.1.4 Assets individually costing Rs.5,000/- or less that were fully depreciated earlier in the year of purchase, are now depreciated based on the useful life considered by the Company for the respective category of assets.

2.1.5 The financial statements are presented in Indian Rupees rounded to the nearest Crores with two decimals. The amount below the round off norm adopted by the company is denoted as Rs.0.00 Crores

2.1.6 The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

2.1.7 The company has considered its operating cycle as 12 months for the purpose of Current or Non-current classification of Assets and Liabilities.

2.1.8 The previous year figures are regrouped / restated wherever necessary.

2.2 Use of Estimates

The preparation of financial statements in accordance with the generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates in the future periods.

2.3 Inventories

2.3.1 Raw-materials, Components, Stores & Spares, Fuel, Packing materials etc., are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their present location and condition after providing for obsolescence and other losses or net realizable value whichever is lower. However, these items are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost.

2.3.2 Process Stock is valued at weighted average cost, including the cost of conversion with systematic allocation of production and administration overheads.

2.3.3 Finished goods are valued at cost or net realisable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their present location and condition including excise duty.

2.4 Cash Flow Statement

2.4.1 Cash flows are presented using indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow from operating, investing and financing activities of the company is segregated based on the available information.

2.4.2 Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances, highly liquid investments that are readily convertible into cash.

2.5 Depreciation & Amortisation

2.5.1 Depreciation has been provided for Tangible Assets on straight-line basis as per the useful life prescribed in Schedule II to the Companies Act, 2013. Intangible Assets are amortised over their estimated useful life on straight line method. This is included under "Depreciation & Amortisation".

2.5.2 Extraction of mineral reserves is specifically excluded from the purview of AS-26; hitherto amortisation was not done for this intangible asset viz., "Mining rights". However after introduction of Schedule II to the Companies Act, 2013, all assets including intangible assets are to be depreciated / amortised in accordance with its useful life (i.e.) based on remaining period of extraction rights as per the mining lease agreement. Accordingly, amortisation is provided during the year and the same is included under "Depreciation & Amortisation" and to that extent there is a change in accounting policy during the year.

2.5.3 The amortisation of intangible assets relating to development and reclamation of mines are included under "Cost of materials consumed."

2.5.4 The amortisation of intangible assets relating to installation of power transmission lines in connection with sale of power to Tamil Nadu Electricity Board is adjusted against "Profit on Sale of Power from TPP".

2.5.5 The amortisation of intangible assets relating to installation of power transmission lines in connection with purchase of power from Tamil Nadu Electricity Board is included under "Power & Fuel"

2.5.6 The useful life adopted for amortisation for computer software meant for process control is same as applicable to respective plant and equipments. For other software the useful life adopted is six years.

2.5.7 The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year to reflect the changed pattern, if any.

2.6 Revenue Recognition

2.6.1 Revenue is recognised to the extent it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

2.6.2 Revenue from operations:

a. Sale of products is recognised when the significant risks and rewards of ownership of the goods have been passed to the buyer. It excludes Excise duty, Education Cess, Secondary and Higher education cess, VAT / CST, trade discounts, rebates and returns.

b. Industrial Promotion Assistance (IPA) is recognised when the company''s right to receive the same is established with reasonable certainty.

c. Power generated from Windmills:

Power generated from windmills that are covered under power purchase agreement with TANGEDCO are sold to State Electricity Boards at the rate fixed by respective State Electricity Regulatory Commissions and the income is included in Value of power generated from windmills.

Power generated from windmills that are covered under wheeling & banking arrangement with TANGEDCO, KPTCL & BESCOM are consumed at factories. The monetary values of such power generated that are captively consumed are not recognised as revenue because it is inter-divisional transfer.

2.6.3 Other income:

a. Interest income and Rental income are recognised on time proportion basis.

b. Dividend income is recognised when the company''s right to receive dividend is established.

c. Scrap sales does not include Excise duty, Education Cess, Secondary and Higher education cess, VAT / CST.

d. Profit on sale of Power from TPP, arising out of sale of surplus electricity generated from its thermal power plants after meeting its captive requirements, is recognised net off expenses attributable to it.

2.7 Tangible Fixed Assets

2.7.1. Tangible Fixed Assets are stated at cost of acquisition (net of CENVAT / VAT wherever applicable) less accumulated depreciation / amortisation and impairment losses if any, except freehold land which is carried at cost. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Machinery spares that are purchased alongwith the original equipments, machineries which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the asset beyond its previously assessed standard of performance.

All other expenses on fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the Statement of Profit and Loss for the period during which such expenses are incurred.

2.7.2 Fixed assets acquired in full or part exchange for another asset are recorded at the fair market value or the net book value of the asset given up, adjusted for any balancing cash transaction. Fair market value is determined either for the assets acquired or asset given up, whichever is more clearly evident.

2.7.3 Gains or losses arising from disposal of fixed assets, measured as the difference between the net disposal proceeds and the carrying amount of such assets, are recognised in the Statement of Profit and Loss.

2.7.4 Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, including related expenses and attributable interest are recognised as capital work-in-progress.

2.8 Foreign currency transactions

2.8.1 All transactions in foreign currency are initially recognised at the exchange rates prevailing on that date.

2.8.2 Monetary assets and liabilities in foreign currencies outstanding at the year end are translated at the rates prevailing on Balance Sheet date and the resultant gains or losses are recognised during the year.

2.8.3 In respect of forward exchange contracts to hedge currency risks, the difference between the forward rate and the exchange rate at the inception of a forward exchange contract is recognised as income or expense amortized over the life of the contract. Any profit or loss arising on cancellation or renewal of such forward exchange contract is recognised as income or expense in the period in which such cancellation or renewal is made.

2.8.4 The Exchange Differences arising on such contracts as on Balance Sheet date are recognised as income or expenses along with the exchange differences of the underlying assets and liabilities

2.9 Government Grants

2.9.1 Revenue related grants are recognised on accrual basis wherever there is reasonable certainty and are disclosed under other operating income. Receivables of such grants are shown under Loans and Advances.

2.9.2 Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same. Receivables of such benefits are shown under Loans and Advances.

2.9.3 Capital related grant is accounted as "Capital Subsidy" under Reserves and Surplus upon fulfilment of conditions attached thereto and is not adjusted against Fixed Assets.

2.10 Investments

2.10.1 All investments being non-current and non-trade are valued at cost. Costs of investments include acquisition charges such as brokerage, fees and duties.

2.10.2 The carrying amount of long term investments is determined on an individual investment basis.

2.10.3 As at the Balance Sheet date, provision for diminution is made to recognise the decline other than temporary, in the value of investments. The reduction in carrying amount is charged to Statement of Profit and Loss. This reduction amount is reversed when there is a rise in the value of investment other than temporary.

2.11 Investment Properties

2.11.1 An investment in land or buildings, which are not intended to be occupied substantially for use by, or in the operations of the company, are classified as investment properties.

2.11.2 Investment properties are stated at cost, net of accumulated depreciation and impairment loss, if any.

2.11.3 Depreciation on buildings under investment properties are calculated on straight-line basis based on useful life prescribed in Schedule II to the Companies Act, 2013.

2.11.4 Gains or losses arising from disposal of investment properties, measured as the difference between the net disposal proceeds and the carrying amount of such investment properties, are recognised in the Statement of Profit and Loss.

2.12 Employee Benefits

2.12.1 Short-term Employee Benefits viz., Salaries and Wages are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

2.12.2 Defined Contribution Plan viz., Contributions to Provident fund and Superannuation fund are recognized as an expense in the Statement of Profit and Loss for the year in which the employees have rendered services.

2.12.3 The company contributes monthly to Employees'' Provident Fund & Employees'' Pension Fund administered by the Employees'' Provident Fund Organisation, Government of India, at 12% of employee''s basic salary.

2.12.4 The company also contributes for superannuation a sum equivalent to 15% of the officer''s eligible annual basic salary. Out of the said 15% contribution, a sum upto Rs.1 Lac per annum is remitted to "The Ramco Cements Limited Officer''s Superannuation Fund" administered by trustees and managed by LIC of India. The balance amount, if any, is either remitted to National Pension System (NPS) subject to applicable ceiling or paid as salary at the option of employees. There are no other obligations other than the above defined contribution plans.

2.12.5 The Company has its own Defined Benefit plan viz., an approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement, death while in employment or on termination of employment of an amount equivalent to 15 day''s basic salary for each completed year of service. Vesting occurs upon completion of five years of continuous service. The company makes annual contributions to "The Ramco Cements Limited Employees'' Gratuity Fund" administered by trustees and managed by LIC of India, based on the Actuarial Valuation by an independent external Actuary as at the Balance Sheet date using the Projected Unit Credit Method.

2.12.6 The company has a policy of providing encashment of un-availed leave to its employees. The expense is recognized at the present value of the amount payable determined based on an independent external Actuarial valuation as at the Balance Sheet date, using Projected Unit Credit Method.

2.13 Borrowing costs

2.13.1 Borrowing cost include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss.

2.13.2 Borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalised as part of the cost of those assets upto the date of capitalisation of such asset.

2.14 Segment Reporting

2.14.1 The company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

2.14.2 The company identifies business segment as the primary segment. Under the primary segment, there are two reportable segments viz., Cement and Power generation from Windmills.

2.14.3 Segments were identified considering the nature of the products, the differing risks and returns. The inter-segment transfers of units of power from windmills are recognised at the applicable tariff rates of the electricity boards for the purpose of segment reporting as per the relevant accounting standard.

2.14.4 The company caters mainly to the needs of the domestic market and thus there are no reportable geographical segments.

2.14.5 Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment.

2.15 Leases

2.15.1 Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the Lessor are recognised as operating lease.

2.15.2 Operating lease receipts and payments are recognised in the Statement of Profit and Loss on accrual basis as per the lease terms.

2.16 Earnings per share

Net profit after tax is divided by the weighted average number of equity shares including un-allotted Bonus shares outstanding during the year.

2.17 Income-tax

2.17.1 Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income tax Act, 1961 and other applicable tax laws.

2.17.2 Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future tax liability is recognised as an asset to the extent there is convincing evidence that the company will pay normal Income tax and it is highly probable that future economic benefits associated with it will flow to the company during the specified period. The said asset is recognised as "MAT Credit Entitlement" and the same is created by way of credit to the Statement of Profit and loss and shown as "MAT Credit Recognition". The company reviews the "MAT Credit Entitlement" at each Balance Sheet date and writes down the carrying amount of the same to the extent there is no longer convincing evidence to the effect that the company will pay normal Income tax during the specified period.

2.17.3 Deferred tax is recognised on timing difference between taxable income and the accounting income that originates in one period and is capable of reversal in one or more subsequent periods. It is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date.

2.17.4 Deferred tax liability is recognised based on the accumulated timing difference using the tax rate that have been enacted or substantially enacted by the Balance Sheet date.

2.17.5 The Deferred tax assets are recognised for timing differences of items other than un-absorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. This is reviewed for realisability at each Balance Sheet date.

2.17.6 Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by same governing tax laws and the company has legally enforceable right for such set off.

2.17.7 Deferred tax relating to items directly recognised in reserves is recognised in reserves and not in the Statement of Profit and Loss.

2.18 Intangible Assets

2.18.1 The cost of land acquired under lease securing right to use of land for a term in connection with installation of plants is capitalised.

2.18.2 The cost incurred in connection with securing right to extract mineral reserves on lease are capitalised.

2.18.3 Costs incurred for development and reclamation of mines are capitalised and amortised over the expected beneficial period, not exceeding five years.

2.18.4 The costs of computer software that are installed including process control software are accounted at cost of acquisition of such software and its subsequent improvements thereon are carried at cost less accumulated amortisation and impairment, if any. Internally generated software is not capitalized and the expenditure is recognized in the Statement of Profit and Loss in the year in which the expenditure is incurred.

2.18.5 Costs incurred for establishing power transmission system in connection with evacuation of power to Tamil Nadu Electricity Board from its Thermal Power Plants to sell its surplus power which are expected to yield enduring benefits are capitalised and amortised over the expected beneficial period, not exceeding five years.

2.18.6 Costs incurred for establishing power transmission system in connection with evacuation of power from Tamil Nadu Electricity Board to its Cement grinding plant which are expected to yield enduring benefits are capitalised and amortised over the expected beneficial period, not exceeding five years.

2.19 Joint Ventures

The Accounts of the company reflect its share of jointly controlled asset which is accounted on the basis of Joint venture Agreement.

2.20 Impairment of Assets

2.20.1 The carrying values of tangible assets, cash generating units and intangible assets at each Balance Sheet date are reviewed for impairment if any indication of impairment exists.

2.20.2 Tangible Asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. The intangible assets are treated as impaired when the asset is not available for use.

2.20.3 An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired.

2.21 Provisions, Contingent Liabilities and Contingent Assets

2.21.1 Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources embodying economic benefits in respect of which a reliable estimate can be made. Such provisions are not discounted to their present value except relating to retirement benefits. These provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

2.21.2 Un-provided contingent liabilities are disclosed in the financial statements. Contingent Assets are not recognised.

2.21.3 Insurance claims are accounted for on the basis of claims admitted or expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.

2.22 Research & Development expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to Statement of Profit & Loss under the respective revenue heads, while those of capital nature are treated as fixed assets, under the respective asset heads and depreciated in accordance with the policies stated for Tangible Fixed Assets.

(ii) Term/Rights attached to Equity Shares

The Company has one class of equity shares having a face value of Rs.1/- each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

(a) The company owned 1/6th share in the jointly owned Aircraft was sold during the year.

(b) Amortization of Mine development & reclamation is included in "Cost of materials consumed"

(c) Amortization of Power transmission system is adjusted in "Profit on sale of power from TPP" for Rs.1.97 Crores (PY: Rs.1.97 Crores) and in "Power & Fuel" for Rs.0.62 Crores (PY: Rs.0.21 Crores)

(d) The difference between Gross Block and Depreciation/Amortization pertaining to deductions on impairment is recognized as an Impairment Loss for Rs.1.60 Crores (PY: Rs.0.54 Crores) in the Statement of Profit and Loss.

(e) The Depreciation amortisation amount of Rs.249.88 Crores (PY: Rs.306.29 Crores) as per Statement of Profit and Loss consist of the following:

Tangible Fixed Assets: Rs.236.31 Crores (PY: Rs.295.17 Crores); Mining Rights: Rs.1.18 Crores (PY: Nil); Computer Software: Rs.10.61 Crores (PY: Rs.10.27 Crores); Investment Property (Note 13): Rs.1.78 Crores (PY: Rs.0.85 Crores)

(f) Pursuant to implementation of depreciation methodology as per Companies Act 2013, the value of assets whose life is exhauseted as on 01-04-2014 has been adjusted to Retained Earnings.

(g) Adjustments include reclassification of Gross Block of Land (Cost: Rs.2.49 Crores) and Builidngs (Cost: Rs.4.92 Crores), Accumulated Depreciation (Rs.0.52 Crores) into Investment Property. (h The impact of change in accounting policy consequent to implementation of Depreciation methodology based on useful life of Asset is disclosed in Note 32.

(i) Previous years figures have been re-classified/regrouped wherever necessary.


Mar 31, 2014

1.1 Basis of Preparation and Presentation of Financial Statements

2.1.1. The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles in India, and in compliance of the Accounting Standards notified under section 211(3C) of the Companies Act, 1956, which continues to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13-09-2013 of the Ministry of Corporate Affairs and the relevant provisions of the Companies Act, 1956 and Companies Act, 2013, as applicable, as adopted consistently by the Company.

2.1.2 The financial statements are presented in Indian Rupees and the amounts are rounded to the nearest Crores with two decimals, except as stated otherwise.

2.1.3 The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

2.1.4 The company has considered its operating cycle as 12 months for the purpose of Current or Non-current classification of assets and liabilities.

2.1.5 The previous year figures are regrouped / restated wherever necessary.

2.2 Use of Estimates

The preparation of financial statements in accordance with the generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates in the future periods.

2.3 Tangible Fixed Assets

2.3.1. Tangible Fixed Assets are stated at cost of acquisition (net of CENVAT / VAT wherever applicable) less accumulated depreciation / amortisation and impairment losses if any, except freehold land which is carried at cost. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the asset beyond its previously assessed standard of performance. All other expenses on fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

2.3.2 The cost of lands acquired under lease, other than the cost of development and extraction of mineral rights, are amortised equally over the lease period and such amount is included in Depreciation.

2.3.3 Depreciation has been provided on straight-line basis at the rates specified as per Schedule XIV to the Companies Act, 1956, prevailing at the time of acquisition of the asset.

2.3.4 Gains or losses arising from disposal of fixed assets, measured as the difference between the net disposal proceeds and the carrying amount of such assets, are recognised in the statement of profit and loss.

2.4 Intangible Assets

2.4.1 The costs of computer software that are installed are accounted at cost of acquisition of such software and are carried at cost less accumulated amortisation and impairment, if any. Internally generated software is not capitalized and the expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

2.4.2 Costs incurred to secure right to extract mineral reserves are capitalised. Since extractions of mineral reserves are excluded by the relevant accounting standard, amortisation does not arise.

2.4.3 Costs incurred for development and reclamation of mines are capitalised and amortised over the expected beneficial period, not exceeding five years. The amortised expenditure is included under "Cost of materials consumed."

2.4.4 Costs incurred for installation of fly ash handling equipments to secure right to extract fly ash in Thermal power stations which are expected to yield enduring benefits are capitalised and amortised over the expected beneficial period, not exceeding five years. The amortised expenditure is included under "Cost of materials consumed."

2.4.5 Costs incurred for establishing power transmission system for Tamil Nadu Electricity Board to secure right to use the said system to evacuate power from the company''s thermal power plant which are expected to yield enduring benefits are capitalised and amortised over the expected beneficial period, not exceeding five years. The amortised expenditure is accounted under "Profit on Sale of Power from TPP."

2.5 Impairment of Assets

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired.

2.6 Investments

2.6.1 All investments being non-current and non-trade are valued at cost.

2.6.2 The carrying amount of long term investments is determined on an individual investment basis.

2.6.3 As at the balance sheet date, provision for diminution is made to recognise the decline other than temporary, in the value of investments. The reduction in carrying amount is charged to statement of profit and loss. This reduction amount is reversed when there is a rise in the value of investment other than temporary.

2.7 Investment Properties

2.7.1 An investment in land or buildings, which are not intended to be occupied substantially for use by, or in the operations of, the company, are classified as investment properties.

2.7.2 Investment properties are stated at cost, net of accumulated depreciation and accumulated impairment loss, if any.

2.7.3 Depreciation on buildings under investment properties are calculated on straight-line basis using the rate prescribed under Schedule XIV to the Companies Act, 1956.

2.7.4 Gains or losses arising from disposal of investment properties, measured as the difference between the net disposal proceeds and the carrying amount of such investment properties, are recognised in the statement of profit and loss.

2.8 Inventories

2.8.1 Raw materials, Components, Stores & spares, coal, packing materials etc., are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their present location and condition or net realizable value whichever is lower.

2.8.2 Process Stock is valued at weighted average cost, including the cost of conversion with systematic allocation of production and administration overheads.

2.8.3 Finished goods are valued at cost or net realisable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their present location and condition including excise duty.

2.9 Revenue Recognition

2.9.1 Revenue is recognised to the extent that is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

2.9.2 Revenue from operations for sale of products is recognised when the significant risks and rewards of ownership of the goods have been passed to the buyer. It excludes Excise duty, Education Cess, Secondary and Higher education cess, VAT / CST, trade discounts, rebates and returns.

2.9.3 Industrial promotion assistance (IPA) is recognised when the company''s right to receive the same is established with reasonable certainty.

2.9.4 Dividend income is recognised when the company''s right to receive dividend is established.

2.9.5. Scrap sales does not include Excise duty, Education Cess, Secondary and Higher education cess, VAT / CST.

2.9.6 Interest income and Rental income are recognised on time proportion basis.

2.9.7 Profit on sale of Power from TPP, arising out of sale of surplus electricity (generated from its thermal power plants) after meeting its captive requirements, is recognised net off expenses attributable to it.

2.9.8 Income from Wind Mills:

a. Under Power purchase agreement:

Units generated from windmills are sold to State Electricity Boards at the rate fixed by respective State Electricity Regulatory Commissions and the income is included in Value of power generated from wind mills.

b. Under wheeling and banking arrangement:

The monetary value of the power generated at wind farms that are consumed at factories are not recognised as revenue because it is inter-divisional transfer.

2.10 Employee Benefits

2.10.1 Short-term employee benefits viz., Salaries and Wages are recognized as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

2.10.2 Defined Contribution plan viz., Contributions to Provident fund and Superannuation fund are recognized as an expense in the statement of profit and loss for the year in which the employees have rendered services.

2.10.3 The company contributes monthly to Employees'' Provident Fund and Employees'' Pension Fund administered by the Employees'' Provident Fund Organisation, Government of India, at 12% of employee''s basic salary.

2.10.4 The company also contributes for superannuation a sum equivalent to 15% of the officer''s eligible annual basic salary. Out of the said 15% contribution, a sum upto Rs.1 Lac per annum is remitted to "The Ramco Cements Limited Officers'' Superannuation Fund" administered by trustees and managed by LIC of India. The balance amount, if any, is either remitted to National pension system (NPS) subject to applicable ceiling or paid as salary at the option of employees. There are no other obligations other than the above defined contribution plans.

2.10.5 The Company has its own Defined Benefit plan viz., an approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement, death while in employment or on termination of employment of an amount equivalent to 15 day''s basic salary for each completed year of service. Vesting occurs upon completion of five years of continuous service. The company makes annual contributions to "The Ramco Cements Limited Employees'' Gratuity Fund" administered by trustees and managed by LIC of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the projected unit credit method.

2.10.6 The company has a policy of providing encashment of unavailed leave to its employees. The expense is recognized at the present value of the amount payable determined based on an independent external actuarial valuation as at the balance sheet date, using projected unit credit method.

2.11 Provisions, Contingent Liabilities and Contingent Assets

2.11.1 Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources embodying economic benefits in respect of which a reliable estimate can be made.

2.11.2 Unprovided contingent liabilities are disclosed in the financial statements. Contingent Assets are not recognised.

2.12 Research & Development Expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to statement of Profit & Loss under the respective revenue heads, while those of capital nature are treated as fixed assets, under the respective asset heads.

2.13 Borrowing Costs

2.13.1 Borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalised as part of the cost of those assets.

2.13.2 All other borrowing costs are charged to revenue.

2.14 Foreign Currency Transactions

2.14.1 All transactions in foreign currency are initially recognised at the exchange rates prevailing on that date.

2.14.2 Monetary assets and liabilities in foreign currencies outstanding at the year end are translated at the rates prevailing on Balance sheet date and the resultant gains or losses are recognised during the year.

2.14.3 In respect of forward exchange contracts to hedge currency risks, the difference between the forward rate and the exchange rate at the inception of a forward exchange contract is recognised as income or expense amortized over the life of the contract.

2.14.4 The Exchange differences arising on such contracts as on Balance sheet date are recognised as income or expenses along with the exchange differences of the underlying assets and liabilities.

2.15 Earnings per Share

Net profit after tax is divided by the weighted average number of equity shares including unallotted Bonus shares outstanding during the year.

2.16 Government Grants

2.16.1 Revenue related grants are recognised on accrual basis wherever there is reasonable certainty and are disclosed under other operating income.

2.16.2 Receivables of such grants are shown under Loans and advances.

2.16.3 Capital related grant is accounted as "Capital Subsidy" under Reserves and Surplus upon fulfilment of conditions attached thereto and is not adjusted against Fixed Assets.

2.17 Income Tax

2.17.1 The current tax liability is recognised at the applicable tax rates in accordance with the Income tax Act, 1961.

2.17.2 The deferred tax liability is recognised based on the accumulated timing difference using the tax rate that have been enacted or substantially enacted by the balance sheet date.

2.17.3 The deferred tax assets are recognised and reviewed at each balance sheet date, only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

2.17.4 Minimum Alternate Tax (MAT) credit is recognised as an asset to the extent there is convincing evidence that the company will pay normal Income tax during the specified period. When the MAT credit becomes eligible to be recognised as an Asset viz., "MAT credit entitlement", the same is created by way of credit to the Statement of Profit and loss and shown as "MAT credit Recognition".

2.17.5 The company reviews the MAT credit at each Balance Sheet date and writes down the carrying amount of the same to the extent there is no longer convincing evidence to the effect that the company will pay normal Income tax during the specified period.

2.18 Segment Reporting

2.18.1 The company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

2.18.2 The company identifies business segment as the primary segment. Under the primary segment, there are two reportable segments viz., Cement and Power generation from Windmills.

2.18.3 Segments were identified considering the nature of the products, the differing risks and returns. The inter-segment transfers of units of power from windmills are recognised at the applicable tariff rates of the electricity boards for the purpose of segment reporting as per the relevant accounting standard.

2.18.4 The company caters mainly to the needs of the domestic market and thus there are no reportable geographical segments.

2.18.5 Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment.

2.19 Leases

2.19.1 Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor are recognised as operating lease.

2.19.2 Operating lease receipts / payments are recognised in the statement of profit and loss on accrual basis as per the lease terms and other considerations.


Mar 31, 2013

1. Basis of preparation and presentation of financial statements

1.1 The financial statements have been prepared under the historical cost convention and in accordance with the generally accepted accounting principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and notified under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956 as adopted consistently by the Company.

1.2 The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

1.3 During the year the monetary value of the power generated at wind farms that are consumed at factories are not recognised as revenue in accordance with the announcement of ICAI on Treatment of inter-divisional transfers. Hitherto such value was recognised as revenue in the wind farms and included as expenditure in Cement divisions grouped under power & fuel. The change in presentation does not have any impact on the financial statements.

1.4 The previous year figures are regrouped / restated wherever necessary.

2. Use of Estimates

The preparation of financial statements in accordance with the generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates in the future periods.

3. Tangible Fixed assets

3.1. Tangible Fixed Assets are stated at cost of acquisition (net of CENVAT / VAT wherever applicable) less accumulated depreciation / amortisation and impairment losses if any, except freehold land which is carried at cost. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the asset beyond its previously assessed standard of performance. All other expenses on fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

3.2 The cost of lands acquired under lease, other than the cost of development and extraction of mineral rights, are amortised equally over the lease period and such amount is included in Depreciation.

3.3 Depreciation has been provided on straight-line basis at the rates specified under rules / Schedule XIV to the Companies Act, 1956, prevailing at the time of acquisition of the asset.

3.4 Gains or losses arising from disposal of fixed assets, measured as the difference between the net disposal proceeds and the carrying amount of such assets, are recognised in the statement of profit and loss.

4. Intangible Assets

4.1 The costs of computer software that are installed are accounted at cost of acquisition of such software and are carried at cost less accumulated amortisation and impairment, if any. Internally generated software is not capitalized and the expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

4.2 Costs incurred to secure right to extract mineral reserves are capitalised. Since extractions of mineral reserves are excluded by AS-26, amortisation does not arise.

4.3 Costs incurred for development of mines are capitalised and amortised over the expected beneficial period, not exceeding five years. The amortised expenditure is included under "Cost of materials consumed"

4.4 Costs incurred for installation of fly ash handling equipments to secure right to extract fly ash in Thermal power stations which are expected to yield enduring benefits are capitalised and amortised over the expected beneficial period, not exceeding five years. The amortised expenditure is included under "Cost of materials consumed"

4.5 Costs incurred for establishing power transmission system for Tamil Nadu Electricity Board to secure right to use the said system to evacuate power from the company''s thermal power plant which are expected to yield enduring benefits are capitalised and amortised over the expected beneficial period, not exceeding five years. The amortised expenditure is accounted under "Profit on sale of power"

5. Impairment of Assets

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired.

6. Investments

All investments being non-current and non-trade are valued at cost. Provision for diminution is made to recognise the decline other than temporary, in the value of investments.

7. Investment Property

7.1 An investment in land or buildings, which is not intended to be occupied substantially for use by, or in the operations of, the company, is classified as investment property. Investment properties are stated at cost, net of accumulated depreciation and accumulated impairment loss, if any.

7.2 Depreciation on building component of investment property is calculated on straight-line basis using the rate prescribed under Schedule XIV to the Companies Act, 1956.

7.3 Gains or losses arising from disposal of investment properties, measured as the difference between the net disposal proceeds and the carrying amount of such investment properties, are recognised in the statement of profit and loss.

8. Inventories

8.1 Raw-materials, Components, Stores & spares, coal, packing materials etc., are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their present location and condition or net realizable value whichever is lower.

8.2 Process Stock is valued at weighted average cost, including the cost of conversion with systematic allocation of production and administration overheads.

8.3 Finished goods are valued at cost or net realisable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their present location and condition including excise duty.

9 Revenue recognition

9.1 Revenue is recognised to the extent that is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

9.2. Revenue from Sale of products is recognised when the significant risks and rewards of ownership of the goods have been passed to the buyer.

9.3 Revenue from operation excludes Excise duty, Education Cess, Secondary and Higher education cess, VAT / CST, trade discounts, rebates and returns.

9.4 Dividend income is recognised when the company''s right to receive dividend is established by the reporting date.

9.5 Income from Wind Mills:

a. Under Power purchase agreement:

Units generated from windmills are sold to State Electricity Boards at the rate fixed by respective State Electricity Regulatory Commissions and the income is included in Value of power generated from wind mills.

b. Under wheeling and banking arrangement:

The monetary value of the power generated at wind farms that are consumed at factories are not recognised as revenue because it is inter-divisional transfer.

10. Employee Benefits

10.1 Short-term employee benefits viz., Salaries and Wages are recognized as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

10.2 Provident Fund:

Defined Contribution plan viz., Contributions to Provident fund and Superannuation fund are recognized as an expense in the statement of profit and loss for the year in which the employees have rendered services. The company contributes monthly to Employees'' Provident Fund and Employees'' Pension Fund administered by the Employees'' Provident Fund Organisation, Government of India, at 12% of employee''s basic salary.

Pension Fund:

The company also contributes for superannuation a sum equivalent to 15% of the officer''s eligible annual basic salary. Out of the said 15% contribution, a sum upto Rs.1 Lac per annum is remitted to Madras Cements Ltd. Officer''s Superannuation Fund administered by trustees and managed by LIC of India. The balance amount, if any, is either remitted to National pension system (NPS) or paid as salary at the option of employees. There are no other obligations other than the above defined contribution plans.

10.3 Defined Benefit Plan:

Gratuity:

The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement, death while in employment or on termination of employment of an amount equivalent to 15 days'' basic salary for each completed year of service. Vesting occurs upon completion of five years of continuous service. The company makes annual contributions to The Madras Cements Ltd. Employees'' Gratuity Fund administered by trustees and managed by LIC of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the projected unit credit method.

Leave Encashment:

The company has a policy of providing encashment of unavailed leave to its employees. The expense is recognized at the present value of the amount payable determined based on an independent external actuarial valuation as at the balance sheet date, using projected unit credit method.

11. Provisions, Contingent liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources embodying economic benefits in respect of which a reliable estimate can be made. Unprovided contingent liabilities are disclosed in the financial statements. Contingent Assets are not recognised.

12. Research & development expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to statement of Profit & Loss under the respective revenue heads, while those of capital nature are treated as fixed assets, under the respective asset heads.

13. Borrowing costs

Borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalised as part of the cost of those assets as per AS-16. All other borrowing costs are charged to revenue.

14. Foreign currency transactions

14.1 All transactions in foreign currency are initially recognised at the exchange rates prevailing on that date.

14.2 Monetary assets and liabilities in foreign currencies outstanding at the year end are translated at the rates prevailing on Balance sheet date and the resultant gains or losses are recognised during the year.

14.3 In respect of forward exchange contracts to hedge currency risks, the difference between the forward rate and the exchange rate at the inception of a forward exchange contract is recognised as income or expense amortized over the life of the contract.

14.4 The Exchange differences arising on such contracts are recognised as income or expenses along with the exchange differences of the underlying assets and liabilities.

15. Earnings per share

Net profit after tax is divided by the weighted average number of equity shares including unallotted Bonus shares outstanding during the year.

16. Government Grants

Revenue related grants are recognised on accrual basis wherever there is reasonable certainty and are disclosed under other operating income. Receivables of such grants are shown under Loans and advances. Capital related grants are accounted upon fulfilment of conditions attached thereto.

17. Income-tax

The tax provision is considered as stipulated in AS-22 (Accounting for Taxes on income) and includes current and deferred tax liability. The current tax liability is recognised at applicable tax rates. The deferred tax liability is recognised based on the accumulated timing difference using the tax rate that have been enacted or substantially enacted by the balance sheet date.

18. Segment Reporting

18.1 The company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

18.2 The company identifies business segment as the primary segment as per AS-17. Under the primary segment, there are two reportable segments viz., Cement and Power generation from Windmills. These were identified considering the nature of the products, the differing risks and returns. The inter-segment transfers of units of power from windmills are recognised at the applicable tariff rates of the electricity boards.

18.3 The company caters mainly to the needs of the domestic market and thus there are no reportable geographical segments.

18.4 Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment.

19. Leases

19.1 Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor are recognised as operating lease.

19.2 Operating lease receipts / payments are recognised in the statement of profit and loss on accrual basis as per the lease terms and other considerations.


Mar 31, 2012

1. Basis of preparation and presentation of financial statements

1.1 The financial statements have been prepared under the historical cost convention and in accordance with the generally accepted accounting principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and notified under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956 as adopted consistently by the Company.

1.2 The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

1.3 From the beginning of the reporting period, the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the company, for preparation and presentation of its financial statements which has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year. Current year and previous year figures have been reported in Crores with two decimals.

2. Use of Estimates

The preparation of financial statements in accordance with the generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates in the future periods.

3. Tangible Fixed Assets

3.1. Tangible Fixed Assets are stated at cost of acquisition (net of CENVAT / VAT wherever applicable) less accumulated depreciation / amortisation and impairment losses if any, except freehold land which is carried at cost less impairment losses if any. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the asset beyond its previously assessed standard of performance. All other expenses on fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

3.2 The lands acquired under lease, other than the cost of development and extraction of mineral rights, are amortised equally over the lease period and such amount is included in Depreciation.

3.3 Depreciation has been provided on straight-line basis at the rates specified under rules / Schedule XIV to the Companies Act, 1956, prevailing at the time of acquisition of the asset.

3.4 Gains or losses arising from disposal of fixed assets, are measured as the difference between the net disposal proceeds and the carrying amount of such assets and are recognised in the statement of profit and loss.

4. Intangible Assets

4.1 The costs of computer software that are installed are accounted at cost of acquisition of such software and are carried at cost less accumulated amortisation and impairment, if any. Internally generated software is not capitalized and the expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

4.2 Costs incurred to secure right to extract mineral reserves are capitalised which are not amortised in accordance with AS-26.

4.3 Costs incurred for development of mines are capitalised and amortised over the expected beneficial period, not exceeding five years. The amortised expenditure is included under "Cost of materials consumed".

4.4 Costs incurred for installation of fly ash handling equipments to secure right to extract fly ash in Thermal power stations which are expected to yield enduring benefits are capitalised and amortised over the expected beneficial period, not exceeding five years. The amortised expenditure is included under "Cost of materials consumed".

5. Impairment of Assets

An asset is treated as impaired when carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired.

6. Investments

All investments being non-current and non-trade are valued at cost. Provision for diminution is made to recognise the decline other than temporary, in the value of investments.

7. Investment Property

7.1 An investment in land or buildings, which is not intended to be occupied substantially for use by, or in the operations of, the company, is classified as investment property. Investment properties are stated at cost, net of accumulated depreciation and accumulated impairment loss if any.

7.2 Depreciation on building component of investment property is calculated on straight-line basis using the rate prescribed under Schedule XIV to the Companies Act, 1956.

7.3 Gains or losses arising from disposal of investment properties, are measured as the difference between the net disposal proceeds and the carrying amount of such investment properties and are recognised in the statement of profit and loss.

8. Inventories

8.1 Raw Materials, Components, Stores & Spares, Coal, Packing Materials etc., are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their present location and condition or net realizable value whichever is lower.

8.2 Process Stock is valued at weighted average cost, including the cost of conversion. The cost of conversion includes direct costs, including a systematic allocation of production and administration overheads.

8.3 Finished goods are valued at cost or net realisable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their present location and condition including excise duty.

9 Revenue recognition

9.1 Revenue is recognised to the extent that is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

9.2. Sale of products is recognised when the significant risks and rewards of ownership of the goods have been passed to the buyer.

9.3 Revenue from operation excludes Excise Duty, Education Cess, Secondary and Higher Education Cess, VAT and CST.

9.4 Dividend income is recognised when the company's right to receive dividend is established by the reporting date.

9.5 Income from Wind Mills

a. Under wheeling and banking arrangement

Units generated from wind mills are adjusted against the consumption of power at the factories. The monetary value of the units so adjusted, calculated at the prevailing EB rates net of wheeling charges has been included in power & fuel. The value of unadjusted units as on the Balance Sheet date has been included under short term loans and advances.

b. Under Power Purchase Agreement

Units generated from windmills are sold to State Electricity Boards at the rate fixed by respective State Electricity Regulatory Commissions and the income is included in Value of power generated from wind mills.

10. Employee Benefits

10.1 Short-term employee benefits viz., Salaries and Wages are recognized as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

10.2 Defined Contribution plan viz., Contributions to Provident fund and Superannuation fund are recognized as an expense in the statement of profit and loss for the year in which the employees have rendered services. The company contributes monthly to Employees' Provident Fund and Employees' Pension Fund administered by the Employees' Provident Fund Organisation, Government of India, at 12% of employee's basic salary. The company also contributes annually for superannuation a sum equivalent to 15% of the officer's eligible annual basic salary subject to a maximum of Rs.1 Lac per annum to Madras Cements Ltd. Officer's Superannuation Fund administered by trustees and managed by LIC of India. There are no other obligations other than the above defined contribution plans.

10.3 Defined Benefit Plan Gratuity

The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement, death while in employment or on termination of employment of an amount equivalent to 15 Day's basic salary for each completed year of service. Vesting occurs upon completion of five years of continuous service. The company makes annual contributions to The Madras Cements Ltd. Employees' Gratuity Fund administered by trustees and managed by LIC of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the projected unit credit method.

Leave Encashment

The company has a policy of providing encashment of unavailed leave to its employees. The expense is recognized at the present value of the amount payable determined based on an independent external actuarial valuation as at the balance sheet date, using projected unit credit method.

11. Provisions, Contingent liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Un-provided contingent liabilities are disclosed in the financial statements. Contingent Assets are not recognised.

12. Research & Development expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to statement of Profit & Loss under the respective revenue heads, while those of capital nature are treated as fixed assets, under the respective asset heads.

13. Borrowing costs

Borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalised as part of the cost of those assets as per AS-16. All other borrowing costs are charged to revenue.

14. Foreign currency transactions

14.1 Transactions in Foreign Currency are accounted at the exchange rates prevailing at the time of transaction.

14.2 Covered liabilities in foreign currencies are accounted at the rate at which they have been covered. Uncovered liabilities in Foreign Currency are accounted at the rates as on the Balance Sheet date.

14.3 The difference between the forward rate and the exchange rate at the inception of a forward exchange contract is recognised as income or expense over the life of the contract.

14.4 Exchange difference in respect of uncovered foreign currency liabilities are recognised in the statement of profit and loss.

15. Earnings per share

Net profit after tax is divided by the weighted average number of equity shares including un-allotted Bonus shares outstanding during the year.

16. Government Grants

Revenue related grants are recognised on accrual basis wherever there is reasonable certainty and are disclosed under other operating income. Receivables of such grants are shown under Loans and advances. Capital related grants are accounted upon fulfilment of conditions attached thereto.

17. Income-tax

The tax provision is considered as stipulated in AS-22 (Accounting for Taxes on Income) and includes current and deferred tax liability. The company recognises the deferred tax liability based on the accumulated timing difference using the current tax rate.

18. Segment Reporting

18.1 The company identifies business segment as the primary segment as per AS-17. Under the primary segment, there are two reportable segments viz., Cement and Power generation from Windmills. These are identified considering the nature of the products, the differing risks and returns. The valuation of inter segment transfers are based on prevailing market prices.

18.2 The company caters mainly to the needs of the domestic market and thus there are no reportable geographical segments.

18.3 Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment.

18.4 The company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

19. Leases

19.1 Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor are recognised as operating lease.

19.2 Operating lease receipts / payments are recognised in the statement of profit and loss on accrual basis as per the lease terms and other considerations.


Mar 31, 2011

A Basis of preparation of financial statements

1. The financial statements have been prepared under the historical cost convention and in accordance with the generally accepted accounting principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

B Investments

All investments being long term & non-trade are valued at cost. Provision for diminution is made to recognise the decline other than temporary, in the value of investments.

C Fixed assets

Fixed Assets are accounted at acquisition cost (net of CENVAT / VAT wherever applicable) less accumulated depreciation. Depreciation has been provided on straight-line basis at the rates specified under rules/Schedule XIV to the Companies Act, 1956, prevailing at the time of acquisition of the asset. The lands acquired under lease, other than the cost of development and extraction of mineral rights, are amortised equally over the lease period and such amount is included in Depreciation.

D Inventories

1. Raw materials, stores, spares, coal, packing materials, etc. are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their present location and condition or net realizable value whichever is lower.

2. Process Stock is valued at weighted average cost, including the cost of conversion. The cost of conversion includes direct costs, including a systematic allocation of production and administration overheads.

3. Finished goods are valued at cost or net realisable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their present location and condition including excise duty.

E Sales

Net Sales exclude Excise Duty, Education Cess, Secondary and Higher education Cess and VAT / CST.

F Income from Wind Mills

1. Under wheeling and banking arrangement:

Units generated from windmills are adjusted against the consumption of power at factories. The monetary value of the units so adjusted, calculated at the prevailing EB rates net of wheeling charges has been included in power & fuel. The value of unadjusted units as on the Balance Sheet date has been included in Advances recoverable in cash or in kind under the schedule loans and advances.

2. Under Power purchase agreement:

Units generated from windmills are sold to State Electricity Board at agreed rates and the income is included in Value of power generated from wind mills.

G Employee Benefits

1. Short-term employee benefits viz., Salaries and Wages are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which the related service is rendered.

2. Defined Contribution plan viz., Contributions to Provident fund and Superannuation fund are recognized as an expense in the profit and loss account for the year in which the employees have rendered services. The company contributes monthly to Provident fund administered by the Government at 12% of employees basic salary. The company also contributes annually for superannuation a sum equivalent to 15% of the employees eligible annual basic salary subject to a maximum of Rs.1 Lac per annum to funds administered by trustees and managed by LIC of India. There are no other obligations other than the above defined contribution plans.

3. Defined Benefit Plan:

Gratuity:

The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement, death while in employment or on termination of employment of an amount equivalent

to 15 Days basic salary for each completed year of service. Vesting occurs upon completion of five years of continuous service. The company makes annual contributions to funds administered by trustees and managed by LIC of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the projected unit credit method.

Leave Encashment:

The company has a policy of encashing unavailed leave for its employees. The obligation for the leave encashment is recognised based on an independent external actuarial valuation as at the Balance Sheet date. The expense is recognized at the present value of the amount payable determined based on actuarial valuation using projected unit credit method.

H Provisions, Contingent liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Unprovided contingent liabilities are disclosed in the Accounts by way of Notes. Contingent Assets are not recognised.

I Research & Development Expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to Profit & Loss Account under the respective revenue heads, while those of capital nature are treated as fixed assets.

J Borrowing costs

Borrowing Costs that are directly attributable to the acquisition and construction of qualifying assets are capitalised as part of the cost of those assets as per AS-16. All other borrowing costs are charged to revenue.

K Foreign currency transactions

1. Transactions in Foreign Currency are accounted at the exchange rates prevailing at the time of transaction.

2. Covered liabilities in foreign currencies are accounted at the rate at which they have been covered. Uncovered liabilities in Foreign Currency are accounted at the rates as on the Balance Sheet date.

3. The difference between the forward rate and the exchange rate at the inception of a forward exchange contract is recognised as income or expense over the life of the contract.

4. Exchange difference in respect of uncovered foreign currency liabilities are recognised in the profit and loss account.

L Earnings per share

Net profit after tax is divided by the weighted average number of equity shares including un-allotted Bonus shares outstanding during the year.

M Government Grants

Revenue related grants are recognised on accrual basis wherever there is reasonable certainty and are disclosed under other income. Receivables of such grants are shown under Loans and advances. Capital related grants are accounted upon fulfilment of conditions attached thereto.

N Income-tax

The tax provision is considered as stipulated in AS-22 (Accounting for Taxes on income) and includes current and deferred tax liability. The company recognises the deferred tax liability based on the accumulated timing difference using the current tax rate.

O Segment Reporting

The company identifies business segment as the primary segment as per AS-17. Under the primary segment, there are two reportable segments viz., Cement and Power generation from Windmills. These were identified considering the nature of the products, the differing risks and returns. The valuation of inter segment transfers are based on prevailing market prices.

The company caters mainly to the needs of the domestic market and thus there are no reportable geographical segments.

P Miscellaneous Expenditure

Mining development expenditure and amount spent for installation of fly ash handling equipments in Thermal power stations in connection with collection of fly ash which are expected to yield enduring benefits are held under Miscellaneous Expenditure and amortised over the expected beneficial period, not exceeding five years.

 
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