Home  »  Company  »  The Ramco Cements  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of The Ramco Cements Ltd.

Mar 31, 2015

1. Corporate Information

The Ramco Cements Limited, formerly known as Madras Cements Ltd, is a public limited company domiciled and headquartered in India and incorporated under the provisions of Companies Act. Its shares are listed in BSE Limited and National Stock Exchange of India Limited. The Company is engaged in manufacture of Cement, Ready- mix concrete and Dry Mortar products. The company caters mainly to the domestic markets. The company is also engaged in sale of surplus electricity generated from its windmills and thermal power plants after meeting its captive requirements.

Rs. in Crores As at As at 2. Contingent Liabilities 31-03-2015 31-03-2014

2.1 Unexpired Letters of credit for purchase of:

- Spares & Fuel 98.56 1.74

- Capital Goods 10.52 33.31

28.2 Guarantees given by the bankers on behalf of company 55.29 53.86

2.2 Guarantees given to banks to avail loan facilities by Related parties:

- Thanjavur Spinning Mill Limited 68.00 83.00

- Sandhya Spinning Mill Limited 34.38 59.38

- Ramco Systems Limited 250.00 325.00

- Raja Charity Trust 100.00 100.00

- Ramco Windfarms Limited 23.50 -

2.3 Income tax assessments have been completed up to the accounting year ended on 31st March 2012 i.e., Assessment Year 2012-13. The company has preferred appeals before appellate authorities in respect of various disallowances in assessments and the appeals are pending. As against the tax demand of Rs.23.76 Crores (PY: Rs.23.77 Crores), the department has adjusted Rs.10.55 Crores (PY: Rs.10.56 Crores) against refunds claimed. In the opinion of Management, there may not be any tax liability with regard to the said disallowances and the refunds so adjusted are held in "Deposits under protest, in appeals" under Long term Loans and Advances.

2.4 The VAT authority in the State of Tamil Nadu levied VAT of Rs.3.13 Crores and penalty of Rs.1.56 Crores for the sales made and assessed in other states for the years 2008-09 to 2010-11. Challenging the said demand, the Company has filed a writ petition in the Madurai Bench of Honourable Madras High Court and obtained an interim stay vide order dated 18-11-2014. Hearing is completed and final order is awaited.

The VAT authority in the State of Tamil Nadu has issued notices proposing to disallow input tax credit under Tamil Nadu VAT Act, 2006 for Rs.68.32 Crores for the years 2011-12 to 2014-15. Challenging the said notices, the Company has filed a writ petitions in the Madurai Bench of Honourable Madras High Court that are pending.

In respect of other statutory appeals in VAT & CST matters in various States pending with the Appellate Authorities, as against the net tax demands amounting to Rs.25.19 Crores (PY: Rs.40.05 Crores), a sum of Rs.4.81 Crores

(PY: Rs.6.84 Crores) have been paid under protest and is held in "Deposits under protest, in appeals" under Long term Loans and Advances.

2.5 As on 31-03-2015, the differential excise duty on cement in "Bulk & Cement supplies to industrial consumers" including penalty amounting to Rs.268.43 Crores (PY: Rs.213.63 Crores) demanded by the Department, denying the concession provided under relevant notifications, remain un-paid. The Tribunals have allowed our appeals in this matter. The Department''s appeal was also dismissed in Karnataka High court in the similar issue pertaining to another cement company. But the department has preferred an appeal before the Honourable Supreme Court against Tribunal orders in this matter. However periodical demands are being issued to the company by the department in this matter in view of pendency of its appeal in the Honourable Supreme Court.

The demands due to CENVAT credit disallowance on some of the inputs, capital goods, service tax on goods transports and levy of differential excise duty with consequential interest and penalty, as at 31-03-2015, amounts to Rs.188.87 Crores (PY: Rs.58.85 Crores) remain un-paid, against which the company has objected or preferred appeals that are pending adjudication. Out of the aggregate dispute of Rs.188.87 Crores, the Company had favourable orders from the lower authority for Rs.15.55 Crores against which the Department has preferred appeals. The company has paid so far Rs.11.22 Crores as pre-deposit in compliance of the interim orders by the appellate authorities and the same is held in "Deposits under protest, in appeals" under Long term Loans and Advances.

2.6 The Classification of import of "Steam coal" was challenged by the Customs Department for the period from 17-03-2012 to 28-02-2013 for the imports made by the company as well as other importers across the country. The Department has sought to re-classify the "Steam coal" as "Bituminous coal" and levy duty accordingly. While imposing the above said differential duties, the Department has denied the benefit of the Notification No.46/2011-Cus dated 01-06-2011, a concession provided for levy of duty based on origin of goods. Subsequently the Department has allowed the benefit of above said notification upon the direction from the Honourable Madras High court in the writ filed by the company in one of the appeals. Accordingly the aggregate demand is re-quantified for Rs.9.16 Crores as differential customs duty and Rs.12.62 Crores as differential CVD. Apart from that a penalty of Rs.7.22 Crores and redemption fine of Rs.3.60 Crores were also imposed. Had the benefit of the Notification No.46/2011-Cus dated 01-06-2011 been granted in all cases as claimed by the company, the duty liability would have been Rs.4.37 Crores towards differential customs duty and Rs.11.47 Crores towards differential CVD. The company has filed statutory appeals before CESTAT against the said re-classification. The company has paid so far Rs.3.55 Crores as pre-deposit in compliance of the interim orders by the appellate authorities and the same is held in "Deposits under protest, in appeals" under Long term Loans and Advances.

2.7 The Writ Petitions filed by the company in the Honourable Madras High Court against Tamil Nadu Electricity Board (TNEB) towards levy of electricity tax at 15% on the generation of power from captive generator sets using furnace oil are pending. The levy pertains to the period 01-01-1992 to 30-10-1997. The disputed amount remaining un-paid is Rs.0.85 Crores.

2.8 TNEB has imposed Rs.1.39 Crores towards penalty, alleging shortfall in lifting of flyash as per the terms of MoU entered into with the Company. TNEB has made the calculation based on the estimation of flyash quantity that could have been generated for the quantity of coal used by them, instead of ascertaining the actual availability of flyash generated by them. The Company has obtained stay orders against the penalty from Honourable High Court of Madras.

2.9 The company had entered into MoU with TNEB for sourcing flyash from their thermal power stations. Ignoring the company''s right vested under MoU, it was proposed by TNEB to introduce auction unilaterally, for disposal of flyash. Further TNEB has also proposed to increase the rate from Rs.350/- to Rs.700/- per ton of flyash from 01-03-2011. In the writ petitions filed by the Company and other similarly affected companies, the Honourable High Court of Madras, has fixed rate at Rs.540/- per ton. Challenging the above order, the company filed a review petition and obtained an interim order fixing the rate at Rs.410/- per ton. Based on the interim order, the company has paid at the rate of Rs.410/- per ton. The final decision from the court is awaited.

2.10 TANGEDCO has raised a demand towards compensation charges of Rs.0.92 Crores alleging that the Company has exceeded the quota of power consumption during evening peak hours. The Company has deposited the amount under protest, filed writ petition before the Honourable High Court of Madras and the same has been admitted.

2.11 Government of Karnataka has imposed Environmental Protection Fee of Rs.5.60 Crores, in connection with Company''s mining leases. In the writ petitions filed by the Company and other similarly affected companies, the Honourable High Court of Karnataka, has stayed the imposition of the fee. As per the interim order, the Company has deposited a sum of Rs.2.90 Crores (PY: Rs.2.90 Crores).

2.12 The Competition Commission of India vide its order dated 20-06-2012 has imposed a penalty of Rs.258.63 Crores on the company for alleged cartelisation with select cement manufacturers. The company has filed an appeal against the order before Competition Appellate Tribunal. In compliance of the interim order, the company has deposited Rs.25.86 Crores, being 10% of the impugned penalty. The appeal is pending. The company believes that it has a good case and hence no provision is made.

2.13 Southern Power Distribution Company of Andhra Pradesh Limited has demanded an amount of Rs.0.32 Crores towards alleged excess load factor incentives allowed by them. The Company has filed an appeal before Honourable High Court of Andhra Pradesh and obtained an order of interim stay.

2.14 Andhra Pradesh Transmission Corporation Limited (APTRANSCO) has levied Rs.5.85 Crores as Fuel Surcharge Adjustment (FSA) for the period from Apr-08 to Dec-12. Out of that, the company has paid and expensed Rs.3.72 Crores. Out of that an amount of Rs.2.13 Crores is not presently enforceable for the reasons that a part of the amount is covered in the appeal filed by the APTRANSCO before Honourable Supreme court and the interim order granted in favour of the company by the Honourable AP High court. APERC has ordered that this FSA is not leviable from Jan-13 onwards.

2.15 Under the Jute Packing Materials (Compulsory use of packing commodities) Act, 1987, 50% of the cement produced should be supplied in jute bags. Failure to do so attracts a maximum fine equal to twice the cost of jute bags not used as required by the Act. In view of the competitive conditions prevailing in the market and consumer preference for paper and HDPE bags, the company was not able to use jute bags. The Honourable Supreme Court upheld the Constitutional validity of the above Act. However, the Honourable Madras High Court and also a few other High Courts have stayed the implementation of the Jute Control Order, in the Writ Petitions filed by the Trade Unions, taking into account the health hazards associated with Jute Packing. Subsequently, Cement has been removed from the schedule of items required to be packed in Jute Packing Materials with effect from 01-07-1997 vide GOI Gazette Extraordinary No.472E dated 30-06-1997. The amount that may become payable in case it is ultimately held for non-compliance of the Act during the intervening period is presently not quantifiable.

2.16 The AP State Electricity Board (APSEB) had hiked the wheeling charges with effect from 24-03-2002. As a result, the cost of power the company is getting from A P Gas Power Corporation Ltd (APGPCL) had gone up by Rs.0.84 per unit. APGPCL and other affected consumers including our company had filed appeals in the Honourable AP High Court. The court passed orders in favour of the industries. The APSEB has preferred an appeal to the Honourable Supreme Court and the matter is pending.

2.17 The Director of Geology & Mining, Government of Tamil Nadu had raised additional Royalty demand on limestone, based on production of cement by the company instead of basing it on actual quantity of limestone mined. The demand for the company is Rs.9.66 Crores for the period from the year 1989 to year 2001. In the Writ petitions filed by the company and other similarly affected companies, the Honourable Madras High court has stayed the demands of the Government.

2.18 Water Resources Department of Public Works Department, Government of Tamil Nadu had raised a demand of Rs.1.13 Crores contending that water charges are to be paid on the contracted quantity and not on the actual quantity of water drawn by the company from Arjuna River in Virudhunagar District. The demand pertains to the period from the year 1990 to year 2009. The company has obtained interim stay from the Honourable High Court of Madras. As per the interim order, the Company has deposited a sum of Rs.0.30 Crores with the Department.

2.19 Environment, Forests Science & Technology Department, Government of Andhra Pradesh has increased the Royalty on the Limestone mined from the Forest Area from Rs.5/- per permit to Rs.10/- per ton from the year 2010- 11 onwards. The company filed a writ petition before the Honourable High Court of Andhra Pradesh and obtained an interim order, to pay 1/3rd of the demand. As per the Court order, the company has paid and expensed Rs.1.26 Crores (PY: Rs.0.99 Crores), being the 1/3rd portion upto 31-03-2015.

2.20 New Industries set up in Tamil Nadu were eligible for Power Tariff Concession as per G.O.Ms. No.29 dated 31- 01-1995, which was sought to be withdrawn to Industries set up after 14-02-1997 as per G.O.Ms. No.17 dated 14- 02-1997. The eligibility for Power Tariff Concession for Alathiyur unit became a dispute between the Company and TNEB. Based on the interim order of the Honourable High Court of Madras, the Company had availed power tariff concession to the tune of Rs.11.41 Crores and sought refund of un-availed concession of Rs.1.80 Crores. The matter was finally settled by the Honourable Supreme Court, vide its judgement dated 16-05-2008, wherein it laid down criteria for ascertaining the eligibility for Power Tariff Concession for new industries and directed the TNEB to decide the eligibility for the Company based on the said criteria. However, vide its order dated 30-06-2008, the TNEB sought to introduce new criteria not enumerated in the Honourable Supreme Court judgement. Aggrieved, the Company filed a writ petition (WP No:16348 of 2008) before the Honourable High Court of Madras, which by its judgement dated 13-11-2008 set aside the additional criteria not mentioned in the Honourable Supreme Court Judgement and confirmed the eligibility of Power Tariff Concession for the Company. TNEB has filed a writ appeal (WA No: 629 of 2010) in the Honourable High Court of Madras against the said order seeking disentitlement of power tariff concession already availed. The matter is pending before the Honourable High Court of Madras.

2.21 Under Tamil Nadu Electricity Regulatory Commission (Renewable Energy Purchase Obligations) Regulations, 2010, consumers owning grid connected captive power generating plants and open access consumers with a sanctioned demand of more than 2 MVA are obligated to consume a minimum of 9% and 0.5% of their energy requirements from wind and solar sources respectively. The non-complainants are required to purchase Renewable Energy Certificates (REC) from markets @ 1 REC per 1000 units of shortage or deposit an equivalent amount in a separate designated fund. Even though the Company is consuming wind energy generated from its wind farms, it has been excluded for reckoning the obligatory consumption, since the company has wheeling and banking arrangement with TNEB. Aggrieved, the Company including other affected producers have approached the Honourable Madras High Court and obtained an interim stay against the implementation of the said regulation.

2.22 TANGEDCO has levied "Scheduling & System Operation charges" for windmills under "Sale to Board" category at Rs.600 per day per 2 MW based on their internal circular dated 25-11-2014. The annual impact of "Scheduling & System Operation charges" will be Rs.1.02 Crores. The Company has filed a Writ Petition before the Honourable Madras High Court challenging the collection of said charges and obtained an interim stay against the "Scheduling & System Operation charges".

2.23 The Company had purchased around 40.36 acres of lands in Tamil Nadu after verification of title documents based on revenue records of the year 1987 as basis. Thereafter, the revenue officials verified the title documents and transferred the patta in the name of the Company. While this being so, the Sub-Collector, Ariyalur, by the order dated 10-02-2015, cancelled the said patta and reclassified the said land as Government poromboke ''Anadheenam lands'' by placing reliance on revenue records of the year 1927. The Company has filed a Writ Petition before the Honourable Madras High Court challenging the said cancellation of patta and obtained an interim stay.

2.24 The Government of West Bengal enacted "The West Bengal Tax on Entry of goods into local areas Act, 2012" and writ petitions were filed by others challenging the validity of the said Act. The Calcutta High court held that the said the Act was ultra-vires. Aggrieved, the Government has preferred an appeal before the Division Bench and obtained an interim direction to continue the Assessment proceedings only. Though the company has not received any demand, it has filed a petition to join in the case.

2.25 TANGEDCO had raised a demand of Rs.6.18 Crores towards levy of energy and demand charges based on its Audit objections which were disputed by the Company vide its detailed explanations supported by the Orders of TNERC. Consequent to that, TANGEDCO has reworked the calculations and advised the Company to remit a sum of Rs.0.52 Crores to drop the matter. Even after remittance of the said amount, TANGEDCO instead of dropping the matter revised the demand to Rs.1.74 Crores. The Company has challenged the said demand before the TNERC by filing a Petition on 30-05-2014 and the same is pending before the Commission.

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 with Schedule II of the Act. Accordingly the carrying values of the fixed assets which have completed their useful life as on 01-04-2014 have been charged off against the Retained Earnings amounting to Rs.36.22 Crores after netting off deferred tax of Rs.15.62 Crores. Due to this change in accounting policy, the depreciation for the year ended 31-03-2015 is lower by Rs.55.77 Crores when compared to the calculation of depreciation under the Companies Act, 1956.

4. The Company''s shares are listed in BSE Limited and National Stock Exchange of India Limited for which Listing fees for the year 2015-16 have been paid. The Company''s application for de-listing from Calcutta Stock Exchange is under process.

5. There are no dues to Micro and Small Enterprises as at 31-03-2015 (PY: Nil). This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

6. The company has invested Rs.22.12 Crores in Andhra Pradesh Gas Power Corporation Ltd (APGPCL) by purchasing its 16,08,000 equity shares. The investment entitles the company to source 6 MW power from APGPCL at economical rates compared to the rates charged by AP State Electricity Board. Considering the availability of captive power sources at Jayanthipuram plant, in order to utilise the entitled power, all the shares are being held jointly with the following related parties:

APGPCL will supply the entitled power of 6 MW (PY: 6 MW) to the above related parties for which the charges will be paid by them directly. The Company has received 10 paise per unit for the power consumed by them by virtue of the joint ownership of the shares amounting to Rs.0.10 Crores (PY: Rs.0.18 Crores).

7. Research and Development expenses for the year are Rs.9.87 Crores (PY: Rs.10.94 Crores) including Rs.3.72 Crores towards Depreciation (PY: Rs.5.39 Crores).

8. Out of units of 21.06 Crores units (PY: 26.67 Crores units) generated net of wheeling and banking at wind farms -

a) 17.81 Crores units (PY: 22.96 Crores units) were sold to TANGEDCO for Rs.53.44 Crores (PY: 68.24 Crores) shown under "Power generated from windmills".

b) 3.16 Crores units (PY: 3.53 Crores units) were consumed at the cement plants. The monetary value of such units was not recognised as it is inter-divisional transfer.

c) 0.07 Crores units (PY: 0.16 Crores units) were adjusted towards transmission loss.

d) Unadjusted units as on 31-03-2015 eligible for adjustment in subsequent periods is 0.02 Crores (PY: 0.02 Crores) units. The monetary value of such units is Rs.0.12 Crores (PY: Rs.0.15 Crores) and the same is included in "Other Current Assets".

9. The Pre-operative expenses incurred on account of insurance premium of Rs.0.12 Crores (PY: Rs.0.16 Crores) and borrowing costs of Rs.38.89 Crores (PY: Rs.26.56 Crores) relating to acquisition / construction of assets have been capitalized during the year.

10. The company''s petition filed against the judgement upholding the validity of "The Cess and Other Taxes on Minerals (Validation) Act, 1992" in the Honourable Supreme Court has been ruled in company''s favour. Pursuant to the above judgement, the company is entitled to receive a sum of Rs.1.50 Crores (PY: Rs.1.50 Crores) from the Government of Tamil Nadu and is held under "Advances recoverable in cash or kind".

11. The Company is eligible for incentives under "West Bengal Incentive Scheme 2004" in respect of the clinker grinding unit at Kolaghat in the State of West Bengal. A sum of Rs.51.02 Crores (PY: Rs.50.14 Crores) accrued as Industrial Promotional Assistance (IPA), being 90% of taxes paid for the year 2014-15, is credited to Statement of Profit and Loss, under "Other Operating Revenue". The aggregate value of incentives receivable as on 31-03-2015 is Rs.101 Crores (PY: Rs.120.04 Crores). During the year the company has realised Rs.70.06 Crores (PY: Rs.5.53 Crores). The accrued incentives of Rs.1.25 Crores in the State of Andhra Pradesh for the year 2013-14 was realised during the current year.

12. The Company is required to spend CSR expenditure of Rs.8.66 Crores for the year 2014-15 in accordance with Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014. As against this, the company has spent Rs.7.80 Crores in the following categories:

The previous year figures were re-grouped / re-stated based on comparable criteria.

13. Disclosure of Related party transactions as per AS-18 for the year & previous year figures in bracket are as below: Key Managerial Personnel

P.R.Ramasubrahmaneya Rajha, Chairman & Managing Director P.R.Venketrama Raja, Director

A. V. Dharmakrishnan, Chief Executive officer

Relative of Key Managerial personnel

P.R.Venketrama Raja, Director, Son of P.R.Ramasubrahmaneya Rajha

R. Nalina Ramalakshmi, Daughter of P.R.Ramasubrahmaneya Rajha

S. Sharada Deepa, Daughter of P.R.Ramasubrahmaneya Rajha

B. Sri Sandhya Raju, Daughter of P.R.Venketrama Raja

Enterprises over which the above persons exercise significant influence and with which the company had transactions during the year


Mar 31, 2014

1. Corporate Information

The Ramco Cements Limited, formerly known as Madras Cements Ltd, is a public limited company domiciled and headquartered in India and incorporated under the provisions of Companies Act. Its shares are listed in Madras Stock Exchange Limited, Bombay Stock Exchange Limited, and National Stock Exchange of India Limited. The Company is engaged in manufacturing of Cement, Ready-mix concrete and Dry Mortar products. The company caters mainly to the domestic markets. The company is also engaged in sale of surplus electricity generated from its windmills and thermal power plants after meeting its captive requirements.

(Rs. in Crores)

As at As at 31-03-2014 31-03-2013 2. Contingent Liabilities:

2.1 Unexpired Letters of credit for purchase of: – Spares, Fuel & packing materials 1.74 17.71 – Capital Goods 33.31 16.70

2.2 Guarantees given by the bankers on behalf of company 53.86 46.17

2.3 Guarantees given to banks to avail loan facilities by Group companies:

– Thanjavur Spinning Mill Limited 83.00 58.00

– Sandhya Spinning Mill Ltd. 59.38 59.38

– Ramco Systems Limited 325.00 233.00

– Raja Charity Trust 100.00 NIL

2.4 Income tax assessments have been completed up to the accounting year ended on 31st March 2011 i.e., Assessment Year 2011-12. The company has preferred appeals before appellate authorities in respect of various disallowances in assessments and the appeals are pending. As against the tax demand of Rs.23.77 Crores (PY: Rs.27.91 Crores), the department has adjusted Rs.10.56 Crores (PY: Rs.14.70 Crores) against refunds claimed. In the opinion of Management, there may not be any tax liability with regard to the said disallowances and the refunds so adjusted are held in "Deposits under protest, in appeals" under Long term loans and advances.

2.5 In respect of Sales Tax (VAT & CST) matters appeals are pending with the Appellate Authorities in respect of tax demands amounting to Rs.40.05 Crores, (PY: Rs.34.07 Crores) against which Rs.6.84 Crores (PY: Rs.7.01 Crores) have been paid under protest and is held in "Deposits under protest, in appeals" under Long term loans and advances. In the opinion of the management, there may not be any tax liability with regard to the said demands.

2.6 Differential excise duty on cement in "Bulk & Cement supplies to industrial consumers" amounting to Rs.213.63 Crores (PY: Rs.152.55 Crores) demanded by the Department, denying the concession provided under relevant notifications, remain unpaid. The Tribunals have allowed our appeals in this matter. The Department''s appeal was also dismissed in Karnataka High court in the similar issue pertaining to another cement company. But still the department has preferred an appeal before the Supreme Court against Tribunal orders. However periodical demands are being issued to the company by the department in view of pendency of its appeal in the Supreme Court. The demands due to CENVAT credit disallowance on some of the inputs, capital goods, service tax on goods transports and levy of differential excise duty with consequential interest and penalty, as at 31-03-2014, amounts to Rs.58.85 Crores (PY: Rs.58.71 Crores) remain unpaid, against which the company has replied / preferred appeals that are pending adjudication. In the opinion of the management, there may not be any liability with regard to the said demands.

2.7 The Classification of import of "Steam coal" was challenged by the Customs Department for the period from 17-03-2012 to 28-02-2013 for the imports made by the company as well as other importers across the country. The Department has sought to re-classify the "Steam coal" as "Bituminous coal". Accordingly a sum of Rs.12.70 crores as differential customs duty and Rs.12.68 crores as differential CVD were demanded. Apart from that a penalty of Rs.7.22 crores was also imposed. While imposing the above said differential duties, the Department has denied the benefit of the Notification No.46/2011-Cus dated 01-06-2011; otherwise the duty liability would have been Rs.4.37 crores towards differential customs duty and Rs.11.33 crores towards differential CVD. Aggrieved by that, the company has filed a writ petition before Hon''ble Madras High court and as per the interim order passed by the court, the company has deposited Rs.2 crores. The writ petition is pending. The company is proposing to file statutory appeals before CESTAT against the said re-classification. The amount so deposited by the company is held in "Deposits under protest, in appeals" under Long term loans and advances.

2.8 The Writ Petitions filed by the company in the Honourable Madras High Court against Tamil Nadu Electricity Board (TNEB) towards levy of electricity tax at 15% on the generation of power from captive generator sets using furnace oil are pending. The levy pertains to the period 01-01-1992 to 30-10-1997. The disputed amount remaining unpaid is Rs.0.85 Crores.

2.9 TNEB has imposed Rs.1.39 crores towards penalty, alleging shortfall in lifting of fly ash as per the terms of MoU entered into with the Company. TNEB has made the calculation based on the estimation of fly ash quantity that could have been generated for the quantity of coal used by them, instead of ascertaining the actual availability of fly ash generated by them. The Company has obtained stay orders against the penalty from Honourable High Court of Madras.

2.10 The company had entered into MoU with TNEB for sourcing fly ash from their thermal power stations. Ignoring the company''s right vested under MoU, it was proposed by TNEB to introduce auction unilaterally, for disposal of fly ash. Further TNEB has also proposed to increase the rate from Rs.350/- to Rs.700/- per tonne of fly ash from 01-03-2011. In the writ petitions filed by the Company and other similarly affected companies, the Honourable High Court of Madras, has fixed rate at Rs.540/- per tonne. Challenging the above order, the company filed a review petition and obtained an interim order fixing the rate at Rs.410/- per tonne. Based on the interim order, the company has paid and expensed the differential rate of Rs.60/- per tonne amounting to Rs.7.51 crores during the year (PY: Nil). The final decision from the court is awaited.

2.11 TANGEDCO has raised a demand towards compensation charges of Rs.0.92 Crores alleging that the Company has exceeded the quota of power consumption during evening peak hours. The Company has deposited the amount under protest, filed writ petition before the High Court of Madras and the same has been admitted.

2.12 Government of Karnataka has imposed Environmental Protection Fee of Rs.5.60 crores, in connection with Company''s mining leases. In the writ petitions filed by the Company and other similarly affected companies, the Honourable High Court of Karnataka, has stayed the imposition of the fee. As per the order, the Company has deposited a sum of Rs.2.90 Crores (PY: Rs.2.90 Crores).

2.13 The Competition Commission of India vide its order dated 20-06-2012 has imposed a penalty of Rs.258.63 crores on the company for alleged cartelisation with select cement manufacturers. The company has filed an appeal against the order before Competition Appellate Tribunal. In compliance of the interim order, the company has deposited Rs.25.86 crores, being 10% of the impugned penalty. The appeal is pending. Based on the legal opinion the company has not considered any provision as necessary.

2.14 Southern Power Distribution Company of Andhra Pradesh Limited has demanded an amount of Rs.0.32 Crores towards alleged excess load factor incentives allowed by them. The Company has filed an appeal before Honourable High Court of Andhra Pradesh and obtained an order of interim stay.

2.15 Andhra Pradesh Transmission Corporation Limited (APTRANSCO) has levied Rs.5.91 crores as Fuel Surcharge Adjustment (FSA) for the period from Apr-08 to Dec-12. Out of that, the company has paid and expensed Rs.2.82 crores. Out of that an amount of Rs.2.13 crores is not presently enforceable for the reasons that a part of the amount is covered in the appeal filed by the APTRANSCO before Hon''ble Supreme court and the interim order granted in favour of the company by the Hon''ble AP High court. The further balance amount of Rs.0.96 crores will be paid as and when it is demanded. APERC has ordered that this FSA is not leviable from Jan-13 onwards.

2.16 Under the Jute Packing Materials (Compulsory use of packing commodities) Act, 1987, 50% of the cement produced should be supplied in jute bags. Failure to do so attracts a maximum fine equal to twice the cost of jute bags not used as required by the Act. In view of the competitive conditions prevailing in the market and consumer preference for paper and HDPE bags, the company was not able to use jute bags. The Supreme Court upheld the Constitutional validity of the above Act. However, the Madras High Court and also a few other High Courts have stayed the implementation of the Jute Control Order, in the Writ Petitions filed by the Trade Unions, taking into account the health hazards associated with Jute Packing. Subsequently, Cement has been removed from the schedule of items required to be packed in Jute Packing Materials with effect from 01-07-1997 vide GOI Gazette Extraordinary No.472E dated 30-06-1997. The amount that may become payable in case it is ultimately held that penalty is leviable for non-compliance of the Act during the intervening period is presently not quantifiable.

2.17 The AP State Electricity Board (APSEB) had hiked the wheeling charges with effect from 24-03-2002. As a result, the cost of power the company is getting from A P Gas Power Corporation Ltd (APGPCL) had gone up by Re.0.84 per unit. APGPCL and other affected consumers including our company had filed appeals in the Honourable AP High Court. The court passed orders in favour of the industries. The APSEB has preferred an appeal to the Honourable Supreme Court and the matter is pending.

2.18 The Director of Geology & Mining, Government of Tamil Nadu had raised additional Royalty demand on limestone, based on production of cement by the company instead of basing it on actual quantity of limestone mined. The demand for the company is Rs.9.66 crores for the period from the year 1989 to 2001. In the Writ petitions filed by the company and other similarly affected companies, the Honourable Madras High court has stayed the demands of the Government.

2.19 Water Resources Department of Public Works Department, Government of Tamil Nadu had raised a demand of Rs.1.13 crores contending that water charges are to be paid on the contracted quantity and not on the actual quantity of water drawn by the company from Arjuna River in Virudhunagar District. The demand pertains to the period from the year 1990 to 2009. The company has obtained interim stay from the Honourable High Court of Madras. As per the interim order, the Company has deposited a sum of Rs.0.30 Crores (PY: Rs.0.30 Crores) with the Department.

2.20 Environment, Forests Science & Technology Department, Government of Andhra Pradesh has increased the Royalty on the Limestone mined from the Forest Area from Rs.5/- per permit to Rs.10/- per tonne from the year 2010-11 onwards. We have filed a writ petition before the Honourable High Court of Andhra Pradesh and obtained an interim order, to pay 1/3rd of the demand. As per the Court order, we have paid and expensed Rs.0.99 Crores (PY: Rs.0.63 Crores), being the 1/3rd portion upto 31-03-2014.

2.21 New Industries set up in Tamil Nadu were eligible for Power Tariff Concession as per G.O.Ms. No.29 dated 31-01-1995, which was sought to be withdrawn to Industries set up after 14-02-1997 as per G.O.Ms. No.17 dated 14-02-1997. The eligibility for Power Tariff Concession for Alathiyur unit became a dispute between the Company and TNEB. Based on the interim order of the High Court of Madras, the Company had availed power tariff concession to the tune of Rs.11.41 crores and sought refund of unavailed concession of Rs.1.80 crores. The matter was finally settled by the Supreme Court, vide its judgement dated 16-05-2008, wherein it laid down criteria for ascertaining the eligibility for Power Tariff Concession for new industries and directed the TNEB to decide the eligibility for the Company based on the said criteria. However, vide its order dated 30-06-2008, the TNEB sought to introduce new criteria not enumerated in the Supreme Court judgement. Aggrieved, the Company filed a writ petition (WP No:16348 of 2008) before the High Court of Madras, which by its judgement dated 13-11-2008 set aside the additional criteria not mentioned in the Supreme Court Judgement and confirmed the eligibility of Power Tariff Concession for the Company. TNEB has filed a writ appeal (WA No:629 of 2010) in the High Court of Madras against the said order seeking disentitlement of power tariff concession already availed. The matter is pending for hearing at the High Court of Madras.

2.22 Under Tamil Nadu Electricity Regulatory Commission (Renewable Energy Purchase Obligations) Regulations, 2010, consumers owning grid connected captive power generating plants and open access consumers with a sanctioned demand of more than 2 MVA are obligated to consume a minimum of 9% and 0.5% of their energy requirements from wind and solar sources respectively. The non-complainants are required to purchase Renewable Energy Certificates (REC) from markets @ 1 REC per 1,000 units of shortage or deposit an equivalent amount in a separate designated fund. Even though the Company is consuming wind energy generated from its wind farms, it has been excluded for reckoning the obligatory consumption, since the company has wheeling and banking arrangement with TNEB. Aggrieved, the Company including other affected producers have approached the Honourable Madras High Court and obtained an interim stay against the implementation of the said regulation.

2.23 The Government of West Bengal enacted "The West Bengal Tax on Entry of goods into local areas Act, 2012" and writ petitions were filed by others challenging the validity of the said Act. The Calcutta High court held that the said the Act was ultra-vires. Aggrieved, the Government has preferred an appeal before the Division Bench and obtained an interim direction to continue the Assessment proceedings only. Though the company has not received any demand, it has filed a petition to join in the case.

3. During the year, the company has partly sold its wind electric generators with an aggregate capacity of 33.23 MW to its newly formed subsidiary company viz., "Ramco Windfarms Limited" at the fair market value of Rs.31.39 crores including taxes. The profit arising out of such sale amounting to Rs.22.99 crores is included in "Profit on sale of assets" under "Other income".

4. The Company''s shares are listed in Madras Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited for which Listing fees for the year 2013-14 have been paid. The Company''s application for de-listing from Calcutta Stock Exchange is under process.

5. There are no dues to Micro and Small Enterprises as at 31-03-2014 (PY: Nil). This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

6. The company has invested Rs.22.12 Crores in Andhra Pradesh Gas Power Corporation Ltd (APGPCL) by purchasing its 16,08,000 equity shares. The investment entitles the company to source 6 MW power from APGPCL at economical rates compared to the rates charged by AP State Electricity Board. Considering the availability of captive power sources at Jayanthipuram plant, in order to utilise the entitled power, all the shares (PY: 11,12,200 Shares) are being held jointly with the following related parties:

APGPCL will supply the entitled power of 6 MW (PY: 6 MW) to the above related parties for which the charges will be paid by them directly. The Company has received 10 paise per unit for the power consumed by them by virtue of the joint ownership of the shares amounting to Rs.0.18 Crores (PY: Rs.0.15 Crores).

7. Research and Development expenses for the year are Rs.10.94 Crores (PY: Rs.9.36 Crores) including Rs.5.39 Crores towards Depreciation (PY: Rs.5.38 Crores).

8. Out of units of 26.67 Crores units (PY: 32.47 Crores units) generated net of wheeling and banking at wind farms –

a) 22.68 Crores units (PY: 27.44 Crores units) were sold to TANGEDCO for Rs.67.32 crores (PY 81.63 Crores), shown under "Power generated from windmills".

b) 3.69 Crores units (PY: 3.84 Crores units) were consumed at the cement plants. The monetary value of such units was not recognised as it is inter-divisional transfer.

c) 0.30 Crores units (PY: 1.19 Crores units) remain unadjusted as on 31-03-2014 is not allowed for carry forward as per terms of agreement but are eligible for encashment. Its monetary value of Rs.0.92 Crores (PY: Rs.5.45 Crores) has been included in "Unbilled revenue" under "Other current assets".

9. The Pre-operative expenses incurred on account of insurance premium of Rs.0.16 Crores (PY: Rs.0.41 Crores) and borrowing costs of Rs.26.56 Crores (PY: Rs.22.80 Crores) relating to acquisition / construction of assets have been capitalized during the year.

10. The company''s petition filed against the judgement upholding the validity of "The Cess and Other Taxes on Minerals (Validation) Act, 1992" in the Honourable Supreme Court has been ruled in company''s favour. Pursuant to the above judgement, the company is entitled to receive a sum of Rs.1.50 Crores (PY: Rs.1.50 crores) from the Government of Tamil Nadu and is held under "Advances recoverable in cash or kind".

11. The Company is eligible for incentives under "West Bengal Incentive Scheme 2004" in respect of the clinker grinding unit at Kolaghat in the State of West Bengal. A sum of Rs.50.14 crores (PY: Rs.42.38 crores) accrued as Industrial Promotional Assistance (IPA), being 90% of taxes paid, is credited to Statement of Profit and Loss, under "Other operating Income". During the year the company has realised Rs.5.53 crores (PY: Nil). The aggregate value of incentives receivable as on 31-03-2014 is Rs.120.04 crores (PY: Rs.75.43 crores). The company is also eligible for incentives under "Industrial investment promotion policy, 2005-10 scheme" in respect of expansion of cement manufacturing capacity in Jayanthipuram plant in the state of Andhra Pradesh for the year 2012-13. A sum of Rs.1.25 crores (PY: Nil) accrued as reimbursement of 25% of incremental VAT paid, is also credited to Statement of Profit and Loss under "Other operating income".

12. Related party transactions for the year & previous year figures in bracket are furnished below: Key Managerial personnel:

P.R.Ramasubrahmaneya Rajha, Chairman & Managing Director A.V.Dharmakrishnan, Chief Executive Officer K. Selvanayagam, Company Secretary Relative of Key Managerial personnel: P.R.Venketrama Raja, Director, Son of P.R.Ramasubrahmaneya Rajha.


Mar 31, 2013

(Rs. in Crores)

As at As at 31-03-2013 31-03-2012

1. Contingent Liabilities:

1.1 Unexpired Letters of credit for purchase of:

- Spares, Fuel & packing materials 17.71 4.27

- Capital Goods 16.70 8.19

1.2 Guarantees given by the bankers on behalf of company 46.17 28.10

1.3 Guarantees given to bankers to avail loan facilities by Group companies:

- Thanjavur Spinning Mill Limited 58.00 58.00

- Sandhya Spinning Mill Ltd 59.38 59.38

- Ramco Systems Limited 233.00 145.00

1.4. Income tax assessments have been completed up to the accounting year ended on 31st March 2010 i.e., Assessment Year 2010-11. The company has preferred appeals before appellate authorities in respect of various disallowances in assessments and the appeals are pending. As against the tax demand of Rs.27.91 Crores (PY: Rs.23.52 Crores), the department has adjusted Rs.14.70 Crores (PY: Rs.10.31 Crores) against refunds claimed. In the opinion of Management, there may not be any tax liability with regard to the said disallowances and the refunds so adjusted are held under "Advances recoverable in cash or kind".

1.5. In respect of Sales Tax matters appeals are pending with the Appellate Authorities in respect of tax demands amounting to Rs.34.07 Crores, (PY: Rs.22.52 Crores) against which Rs.7.01 Crores (PY: Rs.6.63 Crores) have been paid under protest and is held under "Advances recoverable in cash or kind". In the opinion of the management, there may not be any tax liability with regard to the said demands.

1.6. The demands due to CENVAT credit disallowance on some of the inputs, capital goods, service tax on goods transports and levy of differential excise duty with consequential penalty, amounts to Rs.211.26 Crores as at 31-03-2013 (PY Rs.158.76 Crores) remain unpaid, against which the company has replied / preferred appeals. In the opinion of the management, there may not be any liability with regard to the said demands.

1.7 The Company has been importing "Steam coal" for its use as fuel and getting it assessed by Customs Department upon payment of duty. However for the "Steam coal" imported by the company and for other importers of the said coal for the period from 15-03-2012 to 28-02-2013, the Customs department has initiated action to levy additional customs duty by proposing to re-classify it as "Bituminous coal". The contingent liability on account of the said additional duty for the company is Rs.10.54 crores. The company will take appropriate legal recourse against the re-classification.

1.8. The Writ Petitions filed by the company in the Honourable Madras High Court against Tamil Nadu Electricity Board (TNEB) towards levy of electricity tax at 15% on the generation of power from captive generator sets using furnace oil are pending. The levy pertains to the period 01-01-1992 to 30-10-1997. The amount remaining unpaid is Rs.0.85 Crores.

1.9. TNEB has imposed Rs.1.39 crores towards penalty, alleging shortfall in lifting of fly ash as per the terms of MoU entered into with the Company. TNEB has made the calculation based on the estimation of fly ash quantity that could have been generated for the quantity of coal used by them, instead of ascertaining the actual availability of fly ash generated by them. The Company has obtained stay orders against the penalty from Honourable High Court of Madras.

1.10. The company had entered into MoU with TNEB for sourcing fly ash from their thermal power stations. Ignoring the company''s right vested under MoU, it was proposed by TNEB to introduce auction unilaterally, for disposal of fly ash. Further TNEB has also proposed to increase the rate from Rs.350/- to Rs.700/- per tonne of fly ash from 01 -03-2011. In the writ petitions filed by the Company and other similarly affected companies, the Honourable High Court of Madras, has fixed rate at Rs.540/- per ton. Challenging the above order the company filed a review petition and obtained an interim order fixing the rate at Rs.410/- per ton. The additional liability at the rate of Rs.60/- per ton would be Rs.7.51 crores. The final decision from the court is awaited.

1.11. TANGEDCO has raised a demand towards compensation charges of Rs.0.80 Crores alleging that the Company has exceeded the quota of power consumption during evening peak hours. The Company has deposited the amount under protest, filed writ petition before the Honourable High Court of Madras and the same has been admitted.

1.12. Government of Karnataka has imposed Environmental Protection Fee of Rs.5.60 crores, in connection with Company''s mining leases. In the writ petitions filed by the Company and other similarly affected companies, the Honourable High Court of Karnataka, has stayed the imposition of the fee. As per the order, the Company has deposited a sum of Rs.2.90 crores.

1.13. The Competition Commission of India vide its order dated 20-06-2012 has imposed a penalty of Rs.258.63 crores on the company for alleged cartelisation with select cement manufacturers. The company has filed an appeal against the order before Competition Appellate Tribunal and an interim order was passed that 10% of the penalty should be deposited on or before 16-06-2013.

1.14. Southern Power Distribution Company of Andhra Pradesh Limited has demanded an amount of Rs.0.32 Crores towards alleged excess load factor incentives allowed by them. The Company has filed an appeal before Honourable High Court of Andhra Pradesh and obtained an order of interim stay.

1.15. In June 2010, Transmission Corporation of Andhra Pradesh Limited (APTRANSCO) has demanded Rs.1.13 crores as Fuel Surcharge Adjustment pertaining to the year 2008-09. The Company has filed a writ petition in the Honourable High Court of Andhra Pradesh along with other affected cement companies. The court passed orders in favour of the industry. The APTRANSCO has preferred an appeal to the Honourable Supreme Court and is pending. In the meantime, APTRANSCO has again demanded FSA charges of Rs.4.94 crores from the year 2008-09 to 2011-12. We had filed a writ petition in the Honourable High Court of Andhra Pradesh and obtained a stay order covering the period from 01-04-2008 to 30-06-2011. For the demands received for subsequent periods, the amounts have been paid and are expensed.

1.16. Under the Jute Packing Materials (Compulsory use of packing commodities) Act, 1987, 50% of the cement produced should be supplied in jute bags. Failure to do so attracts a maximum fine equal to twice the cost of jute bags not used as required by the Act. In view of the competitive conditions prevailing in the market and consumer preference for paper and HDPE bags, the company was not able to use gunny bags. The Supreme Court upheld the Constitutional validity of the above Act. However, the Madras High Court and also a few other High Courts have stayed the implementation of the Jute Control Order, in the Writ Petitions filed by the Trade Unions, taking into account the health hazards associated with Jute Packing. Subsequently, Cement has been removed from the schedule of items required to be packed in Jute Packing Materials with effect from 01-07-1997 vide Government of India Gazette Extraordinary No.472E dated 30-06-1997. The amount that may become payable in case it is ultimately held that penalty is leviable for non-compliance of the Act during the intervening period is presently not quantifiable.

1.17. The Andhra Pradesh State Electricity Board (APSEB) had hiked the wheeling charges with effect from 24-03-2002. As a result, the cost of power the company is getting from A P Gas Power Corporation Ltd; (APGPCL) had gone up by Re.0.84 per unit. APGPCL and other affected consumers including our company had filed appeals in the Honourable A P High Court. The court passed orders in favour of the industries. The APSEB has preferred an appeal to the Honourable Supreme Court and no stay has been granted.

1.18. The Director of Geology & Mining, Government of Tamil Nadu had raised additional Royalty demand on limestone, based on production of cement by a company instead of basing it on actual quantity of limestone mined. The demand for the company is Rs.9.66 crores for the period from the year 1989 to year 2001. In the Writ petitions filed by the company and other similarly affected companies, the Honourable Madras High court has stayed the demands of the Government.

1.19. Water Resources Department of Public Works Department, Government of Tamil Nadu had raised a demand of Rs.1.13 crores contending that water charges are to be paid on the contracted quantity and not on the actual quantity of water drawn by the company from Arjuna River in Virudhunagar District. The demand pertains to the period from the year 1990 to year 2009. The company has obtained interim stay from the Honourable High Court of Madras. As per the interim order, the Company has deposited a sum of Rs.0.30 Crores with the Department.

1.20. Environment, Forests Science & Technology Department, Government of Andhra Pradesh has increased the Royalty on the Limestone mined from the Forest Area from Rs.5/- per permit to Rs.10/- per tonne. We have filed a writ petition before the Honourable High Court of Andhra Pradesh and obtained an interim order, to pay 1/3rd of the demand. As per the Court order, we have paid Rs.0.63 Crores, being the 1/3rd portion upto 31-03-2013.

1.21. Central Power Distribution Company of Andhra Pradesh Limited has demanded a sum of Rs.0.05 Crores by revising the tariff rate, alleging that the packing plant of the Company near Hyderabad is not engaged in manufacturing / processing activity and hence should be classified under HT Category-ll, instead of HT Category-I. Against the demand, the Company has filed a writ petition in the Honourable High Court of Andhra Pradesh and obtained a stay order against the re-classification.

1.22. New Industries set up in Tamil Nadu were eligible for Power Tariff Concession as per G.O.Ms. No.29 dated 31-01-1995, which was sought to be withdrawn to Industries set up after 14-02-1997 as per G.O.Ms. No.17 dated 14-02-1997. The eligibility for Power Tariff Concession for Alathiyur unit became a dispute between the Company and TNEB. Based on the interim order of the Honourable High Court of Madras, the Company had availed power tariff concession to the tune of Rs.11.41 crores and sought refund of unavailed concession of Rs.1.80 crores. The matter was finally settled by Honourable Supreme Court, vide its judgement dated 16-05-2008, wherein it laid down criteria for ascertaining the eligibility for Power Tariff Concession for new industries and directed the TNEB to decide the eligibility for the Company based on the said criteria. However, vide its order dated 30-06-2008, the TNEB sought to introduce new criteria not enumerated in the Supreme Court judgement. Aggrieved, the Company filed a writ petition (WP No: 16348 of 2008) before the Honourable High Court of Madras, which by its judgement dated 13-11-2008 set aside the additional criteria not mentioned in the Supreme Court Judgement and confirmed the eligibility of Power Tariff Concession for the Company. TNEB has filed a writ appeal (WA No:629 of 2010) in the Honourable High Court of Madras against the said order seeking disentitlement of power tariff concession already availed by the Company and matter is pending for hearing at the High Court of Madras.

1.23. Under Tamil Nadu Electricity Regulatory Commission (Renewable Energy Purchase Obligations) Regulations, 2010, consumers owning grid connected captive power generating plants and open access consumers with a sanctioned demand of more than 2 MVA are obligated to consume a minimum of 9% and 0.5% of their energy requirements from wind and solar sources respectively. The non-complainants are required to purchase Renewable Energy Certificates (REC) from markets @ 1 REC per 1000 units of shortage or deposit an equivalent amount in a separate designated fund. Even though the Company is consuming wind energy generated from its wind farms, it has been excluded for reckoning the obligatory consumption, since the company has wheeling and banking arrangement with TNEB. Aggrieved, the Company including other affected producers have approached the Honourable Madras High Court and obtained an interim stay against the implementation of the said regulation.

2. Extraordinary items represent provision for diminution in value of investments created during the year for Rs.0.01 Crores (PY: Rs.0.10 Crores) and expenses incurred for Rs.0.46 Crores (PY: Nil) on identification of prospective limestone deposits in new areas.

3. The Company''s shares are listed in Madras Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited for which Listing fees for the year 2012-13 have been paid. The Company''s application for de-listing from Calcutta Stock Exchange is under process.

4. There are no dues to Micro and Small Enterprises as at 31-03-2013 (PY: Nil). This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

5. The company has invested Rs.22.12 Crores in Andhra Pradesh Gas Power Corporation Ltd (APGPCL) by purchasing its 16,08,000 equity shares. The investment entitles the company to source 6 MW power from APGPCL at economical rates compared to the rates charged by AP State Electricity Board. Considering the availability of captive power sources at Jayanthipuram plant, in order to utilise the entitled power, all the shares (PY: 11,12,200 Shares) are being held jointly with the following related parties:

6. Research and Development expenses for the year are Rs.9.36 Crores (PY Rs.8.99 Crores) including Rs.5.38 Crores towards Depreciation (PY Rs.5.34 Crores).

7. Out of units of 3247 Lacs units (PY 2855 Lacs units) generated net of wheeling and banking at wind farms -

a) 2744 Lac units (PY 2055 Lacs units) were sold to TANGEDCO for Rs.81.63 crores (PY Rs.61.27 Crores), shown under "Power generated from windmills".

b) 384 Lacs units (PY 793 Lacs units) were consumed at the cement plants. The monetary value of such units calculated based on applicable tariff rates of the electricity boards amounting to Rs.22.50 crores (PY Rs.34.59 crores) were offset between "Power generated from wind mills" and "Power & fuel".

c) 119 Lacs units (PY 7 Lacs units) remain unadjusted as on 31-03-2013 is not allowed for carry forward as per terms of agreement but are eligible for encashment. Its monetary value of Rs.5.45 Crores (PY: Rs.0.32 Crores) has been included in "Trade receivables".

8. The Pre-operative expenses incurred on account of insurance premium of Rs.0.41 Crores (PY Rs.0.77 Crores) and borrowing costs of Rs.22.80 Crores (PY Rs.35.06 Crores) relating to acquisition / construction of assets have been capitalized during the year.

9. The company''s petition filed against the judgement upholding the validity of "The Cess and Other Taxes on Minerals (Validation) Act, 1992" in the Honourable Supreme Court has been ruled in company''s favour. Pursuant to the above judgement, the company is entitled to receive a sum of Rs.1.50 Crores from the Government of Tamil Nadu and is held under "Advances recoverable in cash or kind".

10. The Company is eligible for incentives under "West Bengal Incentive Scheme 2004" in respect of the clinker grinding unit at Kolaghat in the State of West Bengal. A sum of Rs.42.38 crores (PY: Rs.20.36 crores) accrued as Industrial Promotional Assistance (IPA), being 90% of taxes paid, is credited to Statement of Profit and Loss, under other operating Income. The aggregate value of incentives receivable as on 31-03-2013 is Rs.75.44 crores (PY Rs.33.06 crores)

11. Related party transactions:

As per AS-18, the Company''s related parties are given below: Key Managerial personnel and relatives: P.R.Ramasubrahmaneya Rajha P.R.Venketrama Raja

Enterprises over which the above persons exercise significant influence and with which the company had transactions during the year:

a) Companies: Rajapalayam Mills Ltd

The Ramaraju Surgical Cotton Mills Ltd Ramco Industries Limited Sri Vishnu Shankar Mill Ltd Ramco Systems Limited Sandhya Spinning Mill Ltd Thanjavur Spinning Mill Limited Sri Harini Textiles Limited Rajapalayam Spinners Ltd

b) Public Trusts:

Smt.Lingammal Ramaraju Shastra Prathista Trust

PACR Sethurammal Trust

Ramco welfare Trust

PACR Sethurammal Charities

Raja Charity Trust


Mar 31, 2012

(Rs. in Crores) As at As at 31-3-2012 31-3-2011

1. Contingent Liabilities:

1.1 Unexpired Letters of credit for purchase of:

- Spares, Raw Material & Fuel 4.27 40.85

- Capital Goods 8.19 114.20

1.2 Guarantees given by the bankers on behalf of company 28.10 25.62

1.3 Guarantees given to bankers to avail loan facilities by Group companies:

- Thanjavur Spinning Mill Limited 58.00 31.00

- Sandhya Spinning Mill Ltd 59.38 59.38

- Ramco Systems Limited 145.00 115.00

1.4 Income tax assessments have been completed up to the accounting year ended on 31st March 2009 i.e., Assessment Year 2009-10. The company has preferred appeals before appellate authorities in respect of various disallowances in assessments and the appeals are pending. As against the tax demand of Rs.23.52 Crores (PY: Rs.36.61 Crores), the department has adjusted Rs.10.31 Crores (PY: Rs.23.40 Crores) against refunds claimed. In the opinion of Management, there may not be any tax liability with regard to the said disallowances and the refunds so adjusted are held under "Advances recoverable in cash or kind".

1.5 In respect of Sales Tax matters appeals are pending with the Appellate Authorities in respect of tax demands amounting to Rs.22.52 Crores, (PY: Rs.22.59 Crores) against which Rs.6.63 Crores (PY: Rs.8.94 Crores) have been paid under protest and is held under "Advances recoverable in cash or kind". In the opinion of the management, there may not be any tax liability with regard to the said demands.

1.6 The demands due to CENVAT credit disallowance on some of the inputs, capital goods, service tax on goods transports and levy of differential excise duty with consequential penalty, amounting to Rs.158.76 Crores as at 31-3-2012 (PY Rs.121.90 Crores) remain un-paid, against which the company has replied / preferred appeals. In the opinion of the management, there may not be any liability with regard to the said demands.

1.7 The company's petition filed against the judgement upholding the validity of "The Cess and Other Taxes on Minerals (Validation) Act, 1992" in the Honourable Supreme Court has been ruled in company's favour. Pursuant to the above judgement, the company is entitled to receive a sum of Rs.1.50 Crores from the Government of Tamil Nadu and is held under "Advances recoverable in cash or kind".

1.8 The Writ Petitions filed by the company in the Honourable Madras High Court against Tamil Nadu Electricity Board (TNEB) towards levy of electricity tax at 15% on the generation of power from captive generator sets using furnace oil are pending. The levy pertains to the period 1-1-1992 to 30-10-1997. The amount remaining un-paid is Rs.0.85 Crores.

1.9 TNEB has imposed Rs.1.39 crores towards penalty, alleging shortfall in lifting of flyash as per the terms of MoU entered into with the Company. TNEB has made the calculation based on the estimation of flyash quantity that could have been generated for the quantity of coal used by them, instead of ascertaining the actual availability of flyash generated by them. The Company has obtained stay orders against the penalty from Honourable High Court of Madras.

1.10 The company had entered into MoU with TNEB for sourcing flyash from their thermal power stations. Ignoring the company's right vested under MoU, it was proposed by TNEB to introduce auction unilaterally, for disposal of flyash. Further TNEB has also proposed to increase the rate to Rs.700/- per tonne of flyash. In the writ petitions filed by the Company and other similarly affected companies, the Honourable High Court of Madras, has stayed the proposals.

1.11 TANGEDCO has raised a demand towards compensation charges of Rs.0.75 Crores alleging that the Company has exceeded the quota of power consumption during evening peak hours. The Company has deposited the amount under protest, filed writ petition before the Honourable High Court of Madras and the same has been admitted.

1.12 Government of Karnataka has imposed Environmental Protection Fee of Rs.5.60 crores, in connection with Company's mining leases. In the writ petitions filed by the Company and other similarly affected companies, the Honourable High Court of Karnataka, has stayed the imposition of the fee. As per the order, the Company has deposited a sum of Rs.2.90 crores.

1.13 Competition Commission of India has ordered their Office of Director General to investigate into the matter of alleged increase in the prices of cement by cement manufacturing companies and working as a cartel. The Company has provided the information as required by the Director General. Similar notices have also been served to other cement manufacturing companies. The hearings have been completed and judgement is awaited.

1.14 Southern Power Distribution Company of Andhra Pradesh Limited has demanded an amount of Rs.0.32 Crores towards alleged excess load factor incentives allowed by them. The Company has filed an appeal before Honourable High Court of Andhra Pradesh and obtained an order of interim stay.

1.15 In June 2010, Andhra Pradesh Transmission Corporation Limited (APTRANSCO) has demanded Rs.1.13 crores as Fuel Surcharge Adjustment pertaining to the year 2008-09. The Company has filed a writ petition in the Honourable High Court of Andhra Pradesh and obtained an interim stay. The court passed orders in favour of the industries. The APTRANSCO has preferred an appeal to the Honourable Supreme Court.

1.16 Under the Jute Packing Materials (Compulsory use of packing commodities) Act, 1987, 50% of the cement produced should be supplied in jute bags. Failure to do so attracts a maximum fine equal to twice the cost of jute bags not used as required by the Act. In view of the competitive conditions prevailing in the market and consumer preference for paper and HDPE bags, the company was not able to use gunny bags. The Supreme Court upheld the Constitutional validity of the above Act. However, the Madras High Court and also a few other High Courts have stayed the implementation of the Jute Control Order, in the Writ Petitions filed by the Trade Unions, taking into account the health hazards associated with Jute Packing. Subsequently, Cement has been removed from the schedule of items required to be packed in Jute Packing Materials with effect from 1.7.97 vide Government of India Gazette Extraordinary No.472E dated 30.6.97. The amount that may become payable in case it is ultimately held that penalty is leviable for non-compliance of the Act during the intervening period is presently not quantifiable.

1.17 The Andhra Pradesh State Electricity Board (APSEB) had hiked the wheeling charges with effect from 24-3-2002. As a result, the cost of power the company is getting from A P Gas Power Corporation Ltd (APGPCL) had gone up by Rs.0.84 per unit. APGPCL and other affected consumers including Madras Cements Ltd. had filed appeals in the Honourable A P High Court. The court passed orders in favour of the industries. The APSEB has preferred an appeal to the Honourable Supreme Court and no stay has been granted.

1.18 The Director of Geology & Mining, Government of Tamil Nadu had raised additional Royalty demand on limestone, based on production of cement by a company instead of basing it on actual quantity of limestone mined. The demand for the company is Rs.9.66 crores for the period from the year 1989 to 2001.

In the Writ petitions filed by the company and other similarly affected companies, the Honourable Madras High court has stayed the demands of the Government.

1.19 Water Resources Department of Public Works Department, Government of Tamil Nadu had raised a demand of Rs.1.13 crores contending that water charges are to be paid on the contracted quantity and not on the actual quantity of water drawn by the company from Arjuna River in Virudhunagar District. The demand pertains to the period from the year 1990 to 2009. The company has obtained interim stay from the Honourable High Court of Madras. As per the interim order, the Company has deposited a sum of Rs.0.30 Crores with the Department.

1.20 Environment, Forests Science & Technology Department, Government of Andhra Pradesh has increased the Royalty on the Limestone mined from the Forest Area from Rs.5/- per permit to Rs.10/- per tonne. We have filed a writ petition before the Honourable High Court of Andhra Pradesh and obtained an interim order, to pay 1/3rd of the demand. As per the Court order, we have paid Rs.0.24 Crores, being the 1/3rd portion upto 31-3-2012.

1.21 Central Power Distribution Company of Andhra Pradesh Limited has demanded a sum of Rs.0.05 Crores by revising the tariff rate, alleging that the packing plant of the Company near Hyderabad is not engaged in manufacturing / processing activity and hence should be classified under HT Category-II, instead of HT Category-I. Against the demand, the Company has filed a writ petition in the Honourable High Court of Andhra Pradesh and obtained a stay order against the re-classification.

1.22 New Industries set up in Tamil Nadu were eligible for Power Tariff Concession as per G.O.Ms. No.29 dated 31-1-1995, which was sought to be withdrawn to Industries set up after 14-2-1997 as per G.O.Ms. No.17 dated 14-2-1997. The eligibility for Power Tariff Concession for Alathiyur unit became a dispute between the Company and TNEB. Based on the interim order of the Honourable High Court of Madras, the Company had availed power tariff concession to the tune of Rs.11.41 crores and sought refund of unavailed concession of Rs.1.80 crores. The matter was finally settled by Honourable Supreme Court, vide its judgement dated 16-5-2008, wherein it laid down criteria for ascertaining the eligibility for Power Tariff Concession for new industries and directed the TNEB to decide the eligibility for the Company based on the said criteria. However, vide its order dated 30-6-2008, the TNEB sought to introduce new criteria not enumerated in the Supreme Court judgement. Aggrieved, the Company filed a writ petition (WP No:16348 of 2008) before the Honourable High Court of Madras, which by its judgement dated 13-11-2008 set aside the additional criteria not mentioned in the Supreme Court Judgement and confirmed the eligibility of Power Tariff Concession for the Company. TNEB has filed a writ appeal (WA No:629 of 2010) in the Honourable High Court of Madras against the said order seeking disentitlement of power tariff concession already availed by the Company and matter is pending for hearing at the High Court of Madras.

1.23 Under Tamil Nadu Electricity Regulatory Commission (Renewable Energy Purchase Obligations) Regulations, 2010, consumers owning grid connected captive power generating plants and open access consumers with a sanctioned demand of more than 2 MVA are obligated to consume a minimum of 9% and 0.5% of their energy requirements from wind and solar sources respectively. The non-complainants are required to purchase Renewable Energy Certificates (REC) from markets @ 1 REC per 1000 units of shortage or deposit an equivalent amount in a separate designated fund. Even though the Company is consuming wind energy generated from its wind farms, it has been excluded for reckoning the obligatory consumption, since the company has wheeling and banking arrangement with TNEB. Aggrieved, the Company including other affected producers have approached the Honourable Madras High Court and obtained an interim stay against the implementation of the said regulation.

2. The Company's shares are listed in Madras Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited for which Listing fees for the year 2011-12 have been paid. The Company's application for de-listing from Calcutta Stock Exchange is under process.

3. There are no dues to Micro and Small Enterprises as at 31-3-2012 (PY: Nil). This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

4. The company has invested Rs.22.12 Crores in Andhra Pradesh Gas Power Corporation Ltd (APGPCL) by purchasing its 16,08,000 equity shares. The investment entitles the company to source 6 MW power from APGPCL at economical rates compared to the rates charged by AP State Electricity Board. Considering the availability of captive power sources at Jayanthipuram plant 11,12,200 shares equivalent to 4.15 MW power is being held jointly with the following related parties:

APGPCL will supply the entitled power to the above related parties for which the charges will be paid by them directly. The Company is entitled to receive 10 paise per unit for the power consumed by them by virtue of the joint ownership of the shares.

5. Research and Development expenses for the year are Rs.8.99 Crores (PY: Rs.8.26 Crores) including Rs.5.34 Crores towards Depreciation (PY: Rs.4.15 Crores).

6. The un-adjusted units generated from the windmills as on 31-3-2012 are 7.30 Lacs KWH (PY: 7.48 Lacs KWH) and its monetary value of Rs.0.32 Crores (PY: Rs.0.33 Crores) has been included in "Advances recoverable in cash or kind".

7. The Pre-operative expenses incurred on account of insurance premium of Rs.0.77 Crores (PY: Rs.0.53 Crores) and borrowing costs of Rs.35.06 Crores (PY: Rs.22.24 Crores) relating to acquisition / construction of assets have been capitalized during the year.

8. The Company is eligible for incentives under "West Bengal Incentive Scheme 2004" in respect of the clinker grinding unit at Kolaghat in the State of West Bengal. A sum of Rs.20.36 crores (PY: Rs.11.33 Crores) accrued as Industrial Promotional Assistance (IPA), being 90% of taxes paid, is credited to Statement of Profit and Loss, under other operating Income. The company is also eligible for incentives under "Industrial Investment Promotion Policy, 2005-10 Scheme" in respect of expansion of cement manufacturing capacity in Jayanthipuram plant in the state of Andhra Pradesh for the year 2009-10. A sum of Rs.0.30 crores (PY: Nil) accrued as reimbursement of 25% of incremental VAT paid, is also credited to Statement of Profit and Loss, under other operating income.


Mar 31, 2010

Rs. in Lacs

As at As at 31-3-2010 31-3-2009

1. Contingent Liabilities:

1.1 Estimated amount of contracts remaining to be executed on capital account and not provided for 73925.42 28436.08

1.2 Liability on letters of credit opened by bankers for purchase of :

– Spares, Raw material & Fuel 380.13 1954.82

– Capital Goods 21719.26 1445.43

1.3 Liability on guarantees given by the bankers 3256.08 1806.48

1.4 Liability on guarantees given to bankers 17538.00 11463.00

2. The tax liability for the company for the financial year 2009-10 is under MAT which works out to Rs.8997 Lacs. Out of this, the Company is entitled for MAT credit of Rs.842 Lacs. After Considering the MAT credit, the provision for current tax is Rs.8155 Lacs.

Income tax assessments have been completed upto the accounting year ended on 31st March 2007 i.e., Assessment Year 2007-08.

3. In respect of Sales Tax matters appeals are pending with the Appellate Authorities in respect of various issues amounting to Rs.2122.66 Lacs, (PY:Rs.2129.39 Lacs) against which Rs.1222.43 Lacs (PY:Rs.1113.38 Lacs) has been paid under protest and is held under “Loans and advances”. Based on the earlier favourable decisions on similar issues by the Appellate Authorities, in the opinion of the management, there may not be any tax liability.

4. The CENVAT credit disallowance on some of the inputs, capital goods, service tax on goods transports and levy of differential excise duty with consequential penalty, amounts to Rs.10898.43 Lacs as at 31-3-2010 (PY:Rs.9583.71 Lacs) and remain unpaid, against which the company has preferred appeals. Based on the earlier favourable decisions on similar issues by the Appellate Authorities, in the opinion of the management, there may not be any liability.

5. Our petition filed against the judgement upholding the validity of The Cess and Other Taxes on Minerals (Validation) Act, 1992 in the Honourable Supreme Court has been ruled in our favour. Pursuant to the above judgement, the company is entitled to receive a sum of Rs.150 Lacs from the Government of Tamil Nadu and Rs.174 Lacs from the Government of Andhra Pradesh.

6. The Writ Petitions filed by the company in the Honourable Madras High Court against Tamil Nadu Electricity Board (TNEB) towards levy of electricity tax at 15% on the generation of power from captive generator sets using furnace oil are pending. The levy pertains to the period 1-1-1992 to 30-10-1997. The amount remaining unpaid is Rs.84.93 Lacs.

7. The Chief Controlling Revenue Authority, Stamp and Registration Office, Gandhi Nagar, Ahmedabad issued a show cause notice to the Company, demanding a sum of Rs.313 Lacs as additional stamp duty with regard to debenture trust deeds executed by the Company in the year 2000 at Ahmedabad against which the company had obtained a stay order from the Honourable High Court of Gujarat. In February 2010, the Honourable High Court of Gujarat had quashed the demand notice of the Chief Controlling Revenue Authority.

8. Extraordinary income represents reversal of provision for diminution in value of investments created in earlier years for Rs.11.07 Lacs (PY: Nil).

9. Under the Jute Packing Materials (Compulsory use of packing commodities) Act, 1987, 50% of the cement produced should be supplied in jute bags. Failure to do so attracts a maximum fine equal to twice the cost of jute bags not used as required by the Act. In view of the competitive conditions prevailing in the market and consumer preference for paper and HDPE bags, the company was not able to use gunny bags. The Supreme Court upheld the Constitutional validity of the above Act. However, the Madras High Court and also a few other High Courts have stayed the implementation of the Jute Control Order, in the Writ Petitions filed by the Trade Unions, taking into account the health hazards associated with Jute Packing. Subsequently, Cement has been removed from the schedule of items required to be packed in Jute Packing Materials with effect from 1.7.97 vide Government of India Gazette Extraordinary No.472E dated 30.6.97. The amount that may become payable in case it is ultimately held that penalty is leviable for non-compliance of the Act during the intervening period is presently not quantifiable.

10. The Company’s shares are listed on Madras Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited for which Listing fees for the year 2009-10 has been paid. The Company’s application for de-listing from Calcutta Stock Exchange is under process.

11. There are no dues to Micro and Small Enterprises as at 31-3-2010 (PY: Nil). This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

12. The company has invested Rs.2211.97 Lacs in Andhra Pradesh Gas Power Corporation Ltd (APGPCL) by purchasing its 16,08,000 equity shares. The investment entitles the company to source 6 MW power from APGPCL at economical rates compared to the rates charged by Andhra Pradesh State Electricity Board (APSEB). Considering the availability of power from captive sources at Jayanthipuram plant 11,12,200 shares equivalent to 4.15 MW power is being held jointly with the following related parties:

13. APSEB had hiked the wheeling charges with effect from 24-3-2002. As a result, the cost of power from APGPCL had gone up by Rs.0.84 per unit. APGPCL and other affected consumers including our company had filed appeals in the Honourable Andhra Pradesh High Court. The court passed orders in favour of the industries. APSEB has preferred an appeal to the Honourable Supreme Court and no stay has been granted.

14. Research and Development expenses for the year are Rs.896.50 Lacs (PY:Rs.817.86 Lacs) including Rs.473.04 Lacs towards Depreciation (PY:Rs.368.88 Lacs).

15. The unadjusted units generated from the Windmills as on 31-3-2010 are 835.99 Lacs KWH (PY:357.71 Lacs KWH) and its monetary value of Rs.2822.86 Lacs (PY:Rs.1079.99 Lacs) has been included in Loans & Advances.

16. The Pre-operative expenses incurred on account of insurance premium of Rs.31.66 Lacs (PY:Rs.269.98 Lacs) and borrowing costs of Rs.1906.62 Lacs (PY:Rs.6021.92 Lacs) relating to acquisition / construction of assets have been capitalized during the year.

17. The Director of Geology & Mining, Government of Tamil Nadu had raised additional Royalty demand on limestone, based on production of cement by a company instead of basing it on actual quantity of limestone mined. The demand for the company is Rs.9.66 crores for the period from the year 1989 to year 2001. In the Writ petitions filed by the company and other similarly affected companies, the Hon’ble Madras High court has stayed the demands of the Government.

18. Water Resources Department of PWD, Government of Tamil Nadu had raised a demand of Rs.1.13 crores contending that water charges are to be paid on the contracted quantity and not on the actual quantity of water drawn by the company from Arjuna river in Virudhunagr District. The demand pertains to the period from the year 1990 to year 2009. The company has obtained interim stay from the Honourable Madras High Court.

19. The premium on forward exchange contracts not intended for trading or speculation purpose is amortized as expenses over the life of the contract. During the current year Rs.37.13 Lacs (PY:Rs.43.07 Lacs) has been amortized and the same is included in Interest & Finance charges.

20. Related party transactions:

As per AS-18, the Company’s related parties are given below:

Key Managerial personnel and relatives:

P.R.Ramasubrahmaneya Rajha

P.R.Venketrama Raja

The Company’s transactions with the above persons are furnished in Note No.6 and 7 above.

Enterprises over which the above persons exercise significant influence and with which the company had transactions during the year:

Rajapalayam Mills Limited

The Ramaraju Surgical Cotton Mills Limited

Ramco Industries Limited

Sri Vishnu Shankar Mill Ltd

Ramco Systems Limited

Sandhya Spinning Mill Ltd

Thanjavur Spinning Mill Limited

Sri Harini Textiles Limited

Rajapalayam Spinners Pvt Ltd

The Company’s transactions with the above Related parties are summarised below:

1. Remuneration to Managing Director: The details are provided under Note No.6

2. Investments held jointly:

The details are provided under Note No.16

21. The figures of previous year have been regrouped / restated wherever necessary.

Find IFSC