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Notes to Accounts of The Ramco Cements Ltd.

Mar 31, 2017

1. Corporate Information

The Ramco Cements Limited is a Public Limited company domiciled and headquartered in India and incorporated under the provisions of the Companies Act 1956. The Registered office of the Company is located at “Ramamandiram”, Rajapalayam - 626 117, Tamil Nadu. The Company’s 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.

The financial statements of the Company for the year were approved and adopted by Board of Directors of the Company in their meeting dated 30-05-2017.

2. Basis of Preparation of Separate Financial Statements

2.1 The financial statements for the period up to 31-03-2016 were prepared in accordance with Accounting Standards notified under section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). Pursuant to the mandatory requirement for adoption of Ind AS as notified by MCA, the Company has prepared its financial statements for the year ended 31-03-2017 in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules 2015 as amended from time to time. The comparative figures in the financial statements with respect to the previous year have been restated in accordance with Ind AS requirements. While preparing these financial statements, the Company has first prepared its opening Balance sheet as at 01-04-2015, the date of transition to Ind AS.

2.2 The significant accounting policies used in preparing the financial statements are set out in Note No.5.

2.3 The Company has considered its operating cycle to be 12 months for the purpose of Current or Non-current classification of assets and liabilities.

2.4 An asset is classified as current when it is expected to be realised or intended to be sold or consumed in the normal operating cycle or held primarily for the purpose of trading or expected to be realised within 12 months after the reporting period or cash or cash equivalents unless restricted from being exchanged or used to settle a liability 12 months after the reporting period. All other assets are classified as non-current.

2.5 A liability is classified as current when it is expected to be settled in normal operating cycle or held primarily for the purpose of trading or due for settlement within 12 months after the reporting period or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

2.6 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.

3. First time adoption of Ind AS

The financial statements for the year ended 31-03-2017 are the first financial statements prepared in accordance with Ind AS. The Reconciliation and description of the effect of transition from previous GAAP to Ind AS on Equity, Statement of Profit and Loss and Cash flow are provided in Note 57. The Balance sheet as on the date of transition has been prepared in accordance with Ind AS 101 - First time adoption of Indian Accounting Standards. All applicable Ind AS were applied consistently and retrospectively in preparation of the first Ind AS Financial Statements with certain mandatory exceptions and voluntary exemptions for the specific cases as provided under Ind AS 101.

Estimates

The estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP unless there is objective evidence that those estimates were in error. Accordingly, the Company has not made any changes to estimates made in accordance with previous GAAP.

4 Basis of Measurement

The financial statements have been prepared on accrual basis under historical cost convention except for certain financial instruments (Refer Note 5.18 - Accounting Policy for Financial Instruments) and defined benefit plan assets which are measured at fair value.

5. Significant Estimates and Judgements

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision effects only that period or in the period of the revision for future periods, if the revision affects both current and future years.

Accordingly, the management has applied the following estimates/assumptions/judgements in preparation and presentation of financial statements:

Property, Plant and Equipment, Intangible Assets and Investment Properties

The residual values and estimated useful life of PPEs, Intangible Assets and Investment Properties are assessed by technical team duly reviewed by the management at each reporting date. Wherever the management believes that the assigned useful life and residual value are appropriate, such recommendations are accepted and adopted for computation of depreciation/amortisation. Also, management judgement is exercised for classifying the asset as investment properties or vice versa.

Current Taxes

Calculations of income taxes for the current period are done based on applicable tax laws and management’s judgement by evaluating positions taken in tax returns and interpretations of relevant provisions of law.

Deferred Tax Asset (Including MAT Credit Entitlement)

Significant management judgement is exercised by reviewing the deferred tax assets at each reporting date to determine the amount of deferred tax assets that can be retained/recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Contingent Liabilities

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

Impairment of Trade receivables

The impairment for financial assets are done based on assumptions about risk of default and expected loss rates. The assumptions, selection of inputs for calculation of impairment are based on management judgement considering the past history, market conditions and forward looking estimates at the end of each reporting date.

Impairment of Non-financial assets (PPE/Intangible Assets/Investment Properties)

The impairment of non-financial assets is determined based on estimation of recoverable amount of such assets. The assumptions used in computing the recoverable amount are based on management judgement considering the timing of future cash flows, discount rates and the risks specific to the asset.

Mine Development

In determining the allocation of mine development cost based on the unit of production method, assumptions and estimates are made by the management, in relation to the estimated mineral reserves available for the remaining period.

Mines Restoration Expenditure

In determining the provision for Mines restoration expenditure, assumptions and estimates are made by the management, in relation to discount rates, the expected mineral reserves, estimated cost to restore the mines and the expected timing of those costs.

Defined Benefit Plans and Other long term benefits

The cost of the defined benefit plan and other long term benefits, and the present value of such obligation are determined by the independent actuarial valuer. Management believes that the assumptions used by the actuary in determination of the discount rate, future salary increases, mortality rates and attrition rates are reasonable. Due to the complexities involved in the valuation and its long term nature, this obligation is highly sensitive to changes in these assumptions.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities could not be measured based on quoted prices in active markets, management uses valuation techniques including the Discounted Cash Flow (DCF) model, to determine its fair value. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is exercised in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.

Interests in other entities

Significant management judgement is exercised in determining the interests in other entities. The management believes that wherever there is a significant influence over certain companies belonging to its group, such companies are treated as Associates even though it holds less than 20% of the voting rights.

6.1.1 Income tax assessments have been completed up to the accounting year ended 31-03-2013 i.e., Assessment Year 2013-14. 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.29.02 Crores (As at 31-03-2016: Rs.3.37 Crores; As at 01-04-2015: Rs.23.76 Crores), the department has adjusted Rs.29.02 Crores (As at 31-03-2016: Rs.3.37 Crores; As at 01-04-2015: Rs.10.55 Crores) against refund due/tax credits. In the opinion of Management, there may not be any tax liability with regard to the said disallowances and the refunds so adjusted for Rs.3.37 Crores are held in “Deposits under protest, in appeals” under other non-current assets and balance amount of Rs.25.65 Crores were adjusted by the department against the tax credits available.

6.1.2 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 writ petitions in the Madurai Bench of Madras High Court and these are pending.

A sum of Rs.3.89 Crores (As at 31-03-2016: Rs.4.26 Crores; As at 01-04-2015: Rs.4.81 Crores) have been paid under protest, as against net tax demands amounting to Rs.11.47 Crores (As at 31-03-2016: Rs.15.85 Crores; As at 01-04-2015: Rs.25.19 Crores), in respect of other statutory appeals with the Appellate Authorities under State Sales tax Acts/VAT Acts & CST Act in various states. The amount paid under protest is held in “Deposits under protest, in appeals” under other non-current assets.

6.1.3 Differential Excise Duty on cement in “Bulk & Cement supplies to industrial consumers” including penalty amounting to Rs.252.42 Crores (As at 31-03-2016: Rs.251.93 Crores; As at 01-04-2015: Rs.268.43 Crores) demanded by the Department, denying the concession provided under relevant notifications, remain unpaid as at 31-03-2017. The Tribunals have allowed company’s appeals in this matter. The Department’s appeal was also dismissed by Karnataka High court in a similar issue pertaining to another cement company. But the department has preferred an appeal before the 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 Supreme Court.

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 on 31-03-2017, amounts to Rs.298.05 Crores (As at 31-03-2016: Rs.280.23 Crores; As at 01-04-2015: Rs.188.87 Crores) remain unpaid, against which the company has objected/preferred appeals that are pending adjudication. Out of the aggregate disputes of Rs.298.05 Crores, the Company had favourable orders from the lower authority for Rs.64.71 Crores (As at 31-03-2016: Rs.30.06 Crores; As at 01-04-2015: Rs.15.55 Crores) against which the Department has preferred appeals. The Company has paid so far Rs.17.29 Crores (As at 31-03-2016: Rs.16.01 Crores; As at 01-04-2015: Rs.11.22 crores) as pre-deposit in compliance of the interim orders by the appellate authorities. Out of Rs.17.29 Crores, a sum of Rs.3.63 Crores were expensed and the balance amount of Rs.13.66 Crores is held in “Deposits under protest, in appeals” under other non-current assets.

6.1.4 The Classification of import of “Steam coal” was challenged by the Customs Department for the period from 17-03-2012 to 28-2-2013 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 to 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 other non-current assets.

6.1.5 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 filed writ petition before the High Court of Madras and the same has been admitted. However the Company had deposited the amount of Rs.0.92 Crores under protest and the same is held in “Deposits under protest, in appeals” under other non-current assets.

6.1.6 Government of Karnataka has imposed Environmental Protection Fee of Rs.5.80 crores, in connection with Company’s mining leases. In the writ petitions filed by the Company and other similarly affected companies, the 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 (As at 31-03-2016: Rs.2.90 Crores; As at 01-04-2015: Rs.2.90 Crores) and the same is held in “Deposits under protest, in appeals” under other non-current assets.

6.1.7 The Competition Commission of India (CCI), vide its order dated 20-06-2012 had imposed a penalty of Rs.258.63 Crores on the Company for alleged cartelisation with select cement manufacturers. Upon appeal filed by the affected companies, the Competition Appellate Tribunal (COMPAT) by its order dated 11-12-2015 set aside the CCI’s order and remitted the matter back for fresh adjudication. After re-hearing, the CCI has restored the same penalty again vide its order dated 31-08-2016. The Company has again filed an appeal before COMPAT. In compliance of interim order of COMPAT, the company has deposited Rs.25.86 Crores, being 10% of the impugned penalty. The said amount so deposited is classified under “Bank Balances other than Cash and Cash Equivalents”. The appeal is pending. Based on the legal opinion, the Company believes that it has a good case and hence no provision is made.

6.1.8 The Writ Petitions filed by the company in the 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 total disputed amount of Rs.1.34 Crores has been paid under protest and the same is held in “Deposits under protest, in appeals” under other non-current assets.

6.1.9 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 High Court of Madras.

6.1.10 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 ton towards cost of fly ash from 01-03-2011. In the writ petitions filed by the Company and other similarly affected companies, the 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.

6.1.11 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 High Court of Andhra Pradesh and obtained an order of interim stay.

6.1.12 Andhra Pradesh Transmission Corporation Limited (APTRANSCO) has levied Rs.5.91 Crores as Fuel Surcharge Adjustment (FSA) for the period from Apr 2008 to Dec 2012. Out of that, the company has paid and expensed Rs.3.85 Crores and the balance amount of Rs.2.06 Crores is not presently enforceable for the reasons that a part of the amount is covered in the appeal filed by the APTRANSCO before Supreme Court and the interim order granted in favour of the company by the AP High court. APERC has ordered that this FSA is not leviable from Jan 2013 onwards.

6.1.13 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 Madras High court has stayed the demands of the Government.

6.1.14 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 High Court of Madras. As per the interim order, the Company has deposited a sum of Rs.0.30 Crores with the Department and the same is held in “Deposits under protest, in appeals” under other non-current assets.

6.1.15 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 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.1.57 Crores, being the 1/3rd portion up to 31-03-2017. The balance amount of Rs.3.15 Crores being 2/3rd portion remain unpaid.

6.1.16 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 30-6-2008, 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 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 before the High Court of Madras.

6.1.17 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 Madras High Court and obtained an interim stay against the implementation of the said regulation.

6.1.18 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 Madras High Court challenging the collection of said charges and obtained an interim stay against the “Scheduling & System operation charges”.

6.1.19 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 Madras High Court challenging the said cancellation of patta and obtained an interim stay.

6.1.20 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 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.

6.1.21 TANGEDCO had raised a demand of Rs.4.28 Crores towards alleged incorrect adjustments of wind energy based on its Audit objections. Against the above demand, a sum of Rs.2.54 crores was appropriated by T ANGEDCO from the Company’s Deposits with them and balance amount of Rs.1.74 crores remain unpaid. 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.

6.1.22 The Department of Mines and Geology, Government of Karnataka by its order dated 31-10-2014 withdraw its mining lease granted to the company already granted for 30 hectares of forest land on a technical ground. Based on the writ petition filed by the company, the Honourable Karnataka High court has directed the State Government to consider the company’s representation. The Government vide its order dated 10-01-2016 has rejected the company’s representation. Aggrieved by the said order, the Company has again filed a writ petition before the Honourable Karnataka High Court and the same is pending.

6.1.23 The Special Deputy Collector (Stamps), Ariyalur had issued a notice demanding an amount of Rs.0.65 Crores for alleged deficiency in stamp duty in purchase of lands. Against the demand, the Company filed an appeal before Honourable High Court of Madras and it is pending.

6.1.24 As per the Grid Connectivity and Intra State Open Access Regulations, the TNERC has authorised TANGEDCO to collect Parallel Operation Charges of Rs.30,000/- per MW from the power generators whoever availing only parallel operation with grid but without availing open access. Even though the Company had open access approval, TANGEDCO had sent demand notice for parallel operation charges for a sum of Rs.9.17 Crores levied retrospectively from 07-05-2014 to 31-12-2016. The Company has filed writ petition in the Honourable High Court of Madras and obtained the final order directing the TANGEDCO to settle the matter in TNERC within a reasonable period.

7 Disclosure of Fair value measurements

The fair values of financial assets and liabilities are determined at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial instruments approximate their carrying amounts largely due to their short term maturities of these instruments.

Fair value hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1 : Quoted (Unadjusted) prices in active markets for identical assets or liabilities

Level 2 : Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3 : Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

8. Financial Risk Management

The Board of Directors (BOD) has overall responsibility for the establishment and oversight of the Company’s risk management framework and thus established a risk management policy to identify and analyse the risk faced by the Company. Risk Management systems are reviewed by the BOD periodically to reflect changes in market conditions and the Company’s activities. The Company through its training and management standards and procedures develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit Committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the risk management framework. The Audit committee is assisted in the oversight role by Internal Audit. Internal Audit undertakes reviews of the risk management controls and procedures, the results of which are reported to the Audit Committee.

Credit Risk

Credit Risk is the risk of financial loss to the Company if the customer or counterparty to the financial instruments fails to meet its contractual obligations and arises principally from the Company’s receivables, treasury operations and other operations that are in the nature of lease.

Receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer. The Company extends credit to its customers in the normal course of business by considering the factors such as financial reliability of customers. The Company evaluates the concentration of the risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets. The Company maintains adequate security deposits from its customers in case of wholesale and retail segment. In case of institutional segment, credit risks are mitigated by way of enforceable securities. The exposures with the Government are generally unsecured but they are considered as good. However, unsecured credits are extended based on creditworthiness of the customers on case to case basis.

Trade receivables are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company and where there is a probability of default, the company creates a provision based on Expected Credit Loss for trade receivables under simplified approach as below:

Financial Instruments and Cash deposits

Investments of surplus funds are made only with the approved counterparties. The Company is presently exposed to counter party risk relating to short term and medium term deposits placed with banks, and also investments made in mutual funds. The Company places its cash equivalents based on the creditworthiness of the financial institutions.

Liquidity Risk

Liquidity Risks are those risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. In the management of liquidity risk, the Company monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the company’s operations and to mitigate the effects of fluctuations in cash flows.

Fund Management

Due to the dynamic nature of the underlying business, the Company aims at maintaining flexibility in funding by keeping both committed and uncommitted credit lines available. The Company has laid well defined policies and procedures facilitated by robust information system for timely and qualitative decision making by the management including its day to day operations.

Foreign Currency Risk

The Company’s exposure in USD and other foreign currency denominated transactions in connection with import of capital goods, spares and fuel, besides exports of finished goods and borrowings in foreign currency, gives rise to exchange rate fluctuation risk. The Company has following policies to mitigate this risk:

Decisions regarding borrowing in Foreign Currency and hedging thereof, (both interest and exchange rate risk) and the quantum of coverage is driven by the necessity to keep the cost comparable. Foreign Currency loans, imports and exports transactions are hedged by way of forward contract after taking into consideration the anticipated Foreign exchange inflows/ outflows, timing of cash flows, tenure of the forward contract and prevailing Foreign exchange market conditions.

Cash flow and fair value interest rate risk

Interest rate risk arises from long term borrowings with variable rates which exposed the company to cash flow interest rate risk. The Company’s fixed rate borrowing are carried at amortized cost and therefore are not subject to interest rate risk as defined in Ind AS 107 since neither the carrying amount nor the future cash flows will fluctuate because of the change in market interest rates. The Company is exposed to the evolution of interest rates and credit markets for its future refinancing, which may result in a lower or higher cost of financing, which is mainly addressed through the management of the fixed/ floating ratio of financial liabilities. The Company constantly monitors credit markets to strategize a well-balanced maturity profile in order to reduce both the risk of refinancing and large fluctuations of its financing cost. The Company believes that it can source funds for both short term and long term at a competitive rate considering its strong fundamentals on its financial position.

9. Capital Management

For the purpose of the Company’s capital management, capital includes issued equity share capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximize the shareholders’ wealth.

The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by total equity plus net debt.

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. There have been no breaches in the financial covenants of any interest-bearing loans/borrowing. There are no significant changes in the objectives, policies or processes for managing capital during the years ended 31-03-2017 and 31-03-2016.

10. Details of Specified Bank Notes (SBN) held and transacted during the period 08-11-2016 to 30-12-2016

As per the amendments notified on 30-03-2017 to Ind AS Schedule III, Clause K of Note 6 to General Instructions for Preparation of Balance Sheet, the details of Specified Bank Notes (SBN) held and transacted during the period 08-11-2016 to 30-12-2016 is given in the below table:

Explanatory Notes on preparation and presentation of financial statements upon transition to Ind AS

In preparing these financial statements, the Company’s Opening Balance Sheet was prepared as at 01-04-2015, which is the Company’s date of transition to Ind AS. The following note explains the nature of adjustments made by the Company read with Note No. 3 in restating its previous GAAP Financial Statements including its Balance Sheet as at 01-04-2015 and the financial statements as at and for the year ended 31-03-2016.

A. Depreciation and Amortization expense

Under previous GAAP, the carrying value of significant components of Property, Plant and Equipment which have completed their useful life, have been charged off against opening balance of Retained Earnings for the financial year 2015-16 as permitted by Schedule II to the Companies Act, 2013. However, under Ind AS, this has been taken through profit and loss for the year ended 31-03-2016 as it not a GAAP difference.

B. Leasehold Land

Lease prepayments made for Leasehold land were classified as Leasehold Land under previous GAAP. However, under Ind AS, prepayments made for leasehold land should be classified as lease prepayments under operating lease and the same should be amortized over the tenure of the lease. Accordingly, lease prepayments as at 01-04-2015 are reclassified from Property, Plant and Equipment into Prepaid expenses. The subsequent amortization of lease prepayments for the year ended 31-03-2016 is recognized as ‘Rent’ under classification of ‘Other Expenses’ in the Statement of Profit and Loss.

C. Investment Properties

Under previous GAAP as well as Ind AS, Investment Properties are required to be stated at cost net of accumulated depreciation and impairment loss, if any. Under previous GAAP, it was grouped under non-current investments whereas under Ind AS, the same is required to be disclosed as a separate line item in the Balance Sheet. Accordingly, investment properties are reclassified.

D. Investments

Under previous GAAP, investments in mutual funds were measured at the lower of cost or fair value. Under Ind AS, the Company is required to measure the investments in mutual funds at fair value through profit & loss and accordingly recognized the fair value gain/loss in Opening Equity or in the Statement of Profit and Loss for the year ended 31-03-2016. Under previous GAAP, long term equity instruments were measured at cost less provision for permanent diminution. In respect of investments in companies other than in Subsidiary and Associates, the Company is required to designate such investments necessarily at fair value. Therefore, the Company has designated such investments as FVTOCI Investments. At the date of transition to Ind AS, the excess/deficit of fair value of equity instruments over the previous GAAP carrying amount is recognised as fair value gain/loss, in the FVTOCI reserve/Other Comprehensive Income for the year ended 31-03-2016.

E. Classification of Financial Instruments

The company has evaluated the facts and circumstances on date of transition to Ind AS for the purpose of classification and measurement of financial assets/financial liabilities. Accordingly, bifurcation of assets/liabilities as financial/ Non-financial is identified and reclassified. However, this reclassification is not presented as transition adjustments.

F. Financial Guarantee Contracts

The Company has issued Corporate Guarantee to Banks for the loans availed by Subsidiary, Associates and other related parties. Where guarantees in relation to loans are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment if the loan is given to Associate/Subsidiary, and recognized as Other expenses if the loan is given to other related parties. The carrying amount of financial guarantee obligation is recognized as other income over the tenure of the corporate guarantee.

G. Recognition & Measurement of Loans & Advances at Amortized Cost

Loans and advances comprise of loans given to employees at zero/concessional interest rates and advances paid to service providers at zero/market interest rates and the said loans are recovered in agreed installments. Under previous GAAP, this has been measured at historical value. However, under Ind AS, when the said loans and advances carry interest below the market rate, it is required to be measured at fair value on initial recognition. The fair value is determined at the present value of EMI, discounted using the market interest rates for similar instruments. The difference between historical value and fair value of such loans and advances are classified under prepaid expenses. Subsequent to initial recognition, the loans and advances are measured at amortized cost using the effective interest rate method with the carrying amount increased over the period upto the recovery of the loans and advances. The amount of increase in the carrying amount of loans and advances is recognized as ‘Interest Income’ and prepaid expenses are amortized over the tenure of loans and advances as ‘Employee cost’ or ‘Other Expenses’, as it may be appropriate.

H. Presentation of MAT Credit Entitlement as ‘Deferred Tax Assets’

Under previous GAAP, MAT credit entitlement was presented under the head ‘Loans and advances’ since there being a convincing evidence of realization of the asset. As per Ind AS 12 on Income Taxes, Deferred Tax Assets include the amounts of income taxes recoverable in future periods in respect of the carry forward of unused tax credits. Accordingly, MAT Credit Entitlement classified as Loans and Advances under previous GAAP, are netted against Deferred Tax Liability under Ind AS.

I. Dividend

Under previous GAAP, dividends proposed by the Board of Directors are recognized as proposed dividend in the financial statements even though it is approved by the shareholders in the AGM. However, under Ind AS, dividend has to be recognized upon approval by the shareholders in the Annual General Meeting. Accordingly, Proposed Dividend (including Dividend Distribution Tax recognized as liability in the financial year 2014-15 as per previous GAAP has been reversed with corresponding credit to Equity as at the date of transition i.e. 01-04-2015 and recognized in the Equity during the year ended 31-03-2016 as declared and paid.

J. Transaction cost on Borrowings

Under previous GAAP, transaction costs (loan processing fees) incurred in connection with borrowings is charged to profit or loss up front. Under Ind AS, transaction cost is to be included in the initial recognition and charged to profit or loss using the effective interest method. Accordingly, transaction cost on borrowings is reversed to Equity, for the loans outstanding as at 01-04-2015 and additional interest expense is recognized in the Opening Equity for the period upto 01-04-2015, using Effective Interest Rate method (EIR). For the year ended 31-03-2016, the Company has reversed the transaction cost pertaining to the Borrowings availed during the year 2015-16 and the additional Interest impact computed using EIR method is recognized as Finance cost.

K. Mines Restoration Obligation

Under previous GAAP, the Company has provided for mines restoration obligation at the undiscounted amount. This being a long term provision in nature, Ind AS 37 requires that the provision should be measured at net present value and further it provides that where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognized as borrowing cost.

L. Recognition and Measurement of Forward Contracts on Mark To Market (MTM)

Under previous GAAP, in respect of forward contracts, the difference between the forward rate and the exchange rate at the inception of the forward exchange contract is recognized as income/expenses over the tenure of such contract. Under Ind AS, the fair value of forward foreign exchange contracts has to be recognized. Accordingly, the assets and liabilities related to forward contracts recognized under previous GAAP are reversed and Mark to Market (MTM) gain/ loss is recognized as other expenses in the Statement of Profit and Loss.

M. Deferred Tax

Deferred tax is accounted using income statement approach by computing the differences between taxable profits and accounting profits for the period under previous GAAP. As per Ind AS 12, the deferred tax is to be computed using the balance sheet approach, which is based on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Deferred tax adjustments are recognized either in retained earnings or a separate component of equity.

N. Government Loans

The interest free loan/soft loan from Government were recognised under “Borrowings” at historical value and the interest benefit below the market rate were not recognised separately in the financial statements. Consequent to the adoption of Ind AS, the quantification of interest benefits as per the fair value measurement in accordance with Ind AS 109 is recognised under Government Grants. In accordance with Ind AS 101, the Company has opted to measure the said interest benefit for the loans availed prospectively from 01-04-2015 which is recognised as “Deferred Grant” under “Non-current liabilities” and accordingly, such interest benefit is not recognised for the loans availed prior to the transition date (i.e) 01-04-2015. Upon availment of soft loan with effect from 01-04-2015, the said Deferred Grant is adjusted by way of recognition of “Grant Income”, prorated to the extent of expired useful life of the underlying assets. The balance deferred grant will be adjusted by way of recognition as revenue in the future periods in line with the remaining useful life of the underlying assets.

O. Security Deposits from Customers & Service Providers

The company has presented the Security deposits from Customers & Service providers as Non-current liability under previous GAAP as per the FAQ on Schedule III to the Companies Act 2013 issued by ICAI based on the fact that company’s past record shows that these deposits are not generally claimed and hence it was appropriate to treat it as non-current liability. However, as per Educational material issued by ICAI on Ind AS 1 Presentation of Financial Statements, such deposits have to be classified under Current Financial Liability only in view of the fact that the Company does not have the unconditional right to defer settlement of the liability. Accordingly, the Company has reclassified Security Deposits from Customers/Service providers from non-current liability to other current financial liabilities.

P. Defined Benefit Plan

Under previous GAAP, actuarial gains and losses are charged to profit or loss. Under Ind AS re-measurements of net defined benefit asset/liability comprising of actuarial gains or losses are arising from experience adjustments and changes in actuarial assumption are charged/credited to other comprehensive income. There is no impact on the total equity as at

31-03-2016. However for the period upto the date of transition, the Company has transferred all re-measurement costs recognized in the past periods within accumulated profits or loss (a component of equity), in accordance with provisions of Para 122 of Ind AS 19.

Q. Excise Duty

Under previous GAAP, Sale of goods and scraps was presented as net of excise duty. However, under Ind AS, sale of goods and scraps includes excise duty. Excise duty on sale of goods and scraps is separately shown as a line item in the Statement of Profit and Loss as part of expenses. However, there is no impact on the total equity and profit.

R. Dealer Awards

Under previous GAAP, Dealer awards were recognized as part of Sales Promotion Expenses. However, under Ind AS, the same has to be netted against Revenue. Accordingly, dealer awards have been netted against Revenue from Operations in the Statement of Profit and Loss.

S. Other Comprehensive Income (OCI)

This is a new classification under Ind AS. Any income or expense that are not required to be recognized in profit or loss are shown under OCI in the Statement of Profit and Loss. It comprises of re-measurements of defined benefit plans, gains and losses from investments in equity instruments designated at fair value through other comprehensive income, gains and losses on financial assets measured at fair value through other comprehensive income, gain or loss on financial instruments that qualify for hedge accounting, changes in revaluation surplus and gains and losses arising from translating the financial statements of a foreign operation.

T. Bank Overdraft

Under previous GAAP, bank overdrafts were considered as part of borrowings and movements in the same were shown as part of financing activities. Under Ind AS, Bank overdrafts repayable on demand are to be treated as an integral part of the cash management process. Accordingly, Bank overdraft is included in Cash and Cash equivalents for the purpose of presentation of Statement of Cash Flows.


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.

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