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Notes to Accounts of UltraTech Cement Ltd.

Mar 31, 2015



1 The Company has only one class of Equity Shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held except as stated in (f) above. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets ofthe Company after distribution of all preferential amounts, in proportion to their shareholding.

2 Current year charge is after adjusting Rs. 40.10 Crores related to depreciation on certain class of assets whose useful life is already exhausted as on April 1,2014 and depreciation net of tax directly adjusted to Surplus as per Statement of Profit and Loss. 3 Current year charge includes Rs. 49.86 Crores on account of increase in rate of surcharge on Income-tax.

4 Contingent Liabilities not provided for in respect of:

Claims not acknowledged as debts in respect of matters in appeals As at March As at March 31,2015 31,2014

(a) Sales-tax / VAT Matters 305.87 167.45

(b) Excise Duty and Service Tax Matters 726.06 431.61

(c) Royalty on Limestone / Marl / Shale 294.58 233.98

(d) Customs 121.61 113.82

(e) Others 325.61 253.93

Cash outflows forthe above are determinable only on receipt of judgments pending at various forums / authorities.

5 The Competition Commission of India (CCI) upheld the complaint of alleged cartelisation against certain cement manufacturing companies including the Company. The CCI has imposed a penalty of Rs. 1,175.49 Crores on the Company. The Company filed an appeal against the Order before the Competition Appellate Tribunal (COMPAT). COMPAT has granted stay on the CCI order on condition that the Company deposit 10% of the penalty, amounting to Rs. 117.55 Crores. The same has been deposited by the Company. The Company backed by a legal opinion, continues to believe that it has a good case and accordingly no provision has been made in the accounts.

6 The Company has issued corporate guarantees as under:

I. In favour of the Bankers / Lenders on behalf of its following Subsidiaries and Joint Ventures (JV) for the purpose of replacing old loans, acquisition financing, working capital and other general corporate purposes:

* Madanpur (North) Coal Company Private Limited (JV) Rs. Nil (Previous year Rs. 3.65 Crores).

* Bhaskarpara Coal Company Limited(JV) Rs. 4.00 Crores (Previous year Rs. 4.00 Crores).

* UltraTech Cement Middle East Investment Limited and its subsidiaries:

* Equivalent to US$486.62 Millions(Rs. 3,041.26 Crores) {Previous year US$ 525.02 Millions (Rs.3,145.65 Crores)}. These Corporate Guarantees are issued in different currencies viz. US$, UAE Dirham, Bangladesh Taka, Omani Rial, etc.

II. In favour of the Government Authority on behalf of one of the Company's Units for an amount not exceeding Rs. 3.00 Crores towards exemption for payment of excise duty.

III. In favour of the Bank, for assistance in arrangement of interest bearing loan of Rs. 500 Crores to Jaiprakash Associates Ltd. as per their request with approval of Board.

7 Capital and Other Commitments:

Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs. 1,239.25 Crores (Previous Year Rs. 1,903.06 Crores).

8 The Ministry of Textiles, vide its orders dated June 30, 1997 and July 1, 1999 has deleted cement from the list of commodities to be packed in jute bags under the Jute Packaging (Compulsory Use in Packing Commodities) Act, 1987.In view of this, the Company does not expect any liability for non-dispatch of cement in jute bags in respect of earlier years.

9 The Supreme Court of India by its judgment dated August 25, 2014 read with its Order dated September 24, 2014 cancelled 204 coal blocks which had been allocated earlier for the purposes of mining coal for captive consumption. These include two coal blocks allotted to the Company jointly with others, viz. Bhaskarpara and Madanpur (North) in Chhattisgarh. No mining activity has commenced on these blocks and the cancellation will not have any material adverse impact on the Company.

As regards its investment in the cancelled coal blocks, the Company is likely to recover the majority of the amount from the new allottee, once the auction will be conducted for the above mines in terms of the ordinances promulgated by the Central Government.

10 Acquisition of Cement manufacturing units in Gujarat:

The Hon'ble high courts of judicature at Bombay and Allahabad have by their respective orders approved the Scheme of Arrangement between Jaypee Cement Corporation Limited ("JCCL") and the Company and their respective shareholders and creditors ("the Scheme") for the acquisition of demerged Gujarat Units of JCCL comprising of an integrated cement Unit at Sewagram and a grinding Unit at Wanakbori with a combined cement capacity of 4.8 MTPA together with a thermal power plant of 57.5 MW and a packing bag unit.

The Scheme became effective from June 12, 2014, from which date all the assets and liabilities of the acquired Units have been transferred and vested in the Company.

The scheme has been given effect to in these financial statements as under:

(a) All the assets and transferred liabilities have been accounted for in the books of the account of the Company at the value appearing in the books of account of JCCL as on June 11,2014.

(b) In terms of the Scheme, consideration for the acquisition of the JCCL assets net of borrowings assumed have been discharged by way of issuing equity shares of the Company. 141,643 equity shares of the Company of Rs. 10/- each, fully paid-up, have been allotted to the equity and preference shareholders of JCCL towards the net consideration.

(c) The excess of assets over transferred liabilities and equity shares issued has been credited to capital reserve.

(d) In net, Rs. 117.59 Crores has been credited to the capital reserve account.

In view of acquisition of JCCL assets by the Company with effect from June 12, 2014, the figures for the current year are no tstrictly comparable with those of the previous year.

11 During the year, the Board of Directors has approved acquisition of two cement plants of Jaiprakash Associates Limited (JAL) situated in Satna, Madhya Pradesh (MP) at an enterprise value of Rs. 5,325 Crores. The transaction comprises of the acquisition of:

(a) Integrated cement plant with clinker capacity of 2.1 MTPA and cement grinding capacity of 2.6 MTPA at Bela, MP

(b) Integrated cement plant with clinker capacity of 3.1 MTPA and cement grinding capacity of 2.3 MTPA at Sidhi, MP

(c) 180 MW TPP of which 25 MW is situated at Bela and 155 MW at Sidhi, MP

The transaction is subject to the approval of shareholders and creditors, sanction of the Scheme of Arrangement by the High Courts, approval of the Competition Commission of India and all other statutory authorities.

12 During the year the nominated authority of the Ministry of Coal, Government of India has in accordance with provisions of the Coal Mines (Special Provisions) Second Ordinance, 2014 (the "Ordinance") and the Coal Mines (Special Provisions) Rules, 2014 (the "Rules") conducted the auction of various coal mines and the Company was a successful bidder for Bicharpur Coal Mine ( the "mine").

As per the vesting order dated March 23, 2015, issued by the office of the Nominated Authority under clause (b) of sub-rule (2) of rule 7 and sub-rule (1) of rule 13, following has been, inter-alia, vested with the Company:

(a) the coal bearing land and the land, in or adjacent to the coal mines, used for coal mining operations, acquired by the prior allottee; and

(b) any existing mine infrastructure as defined in clause (j) of sub-section (1) of Section 3 of the Ordinance.

13 During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from April 1,2014,the Company revised the estimated useful life of some of its assets to align the useful life with those specified in Schedule II. Further, hitherto, assets individually costing Rs. 5,000 or less were depreciated fully in the year of purchase and now the threshold is increased to Rs. 10,000.

Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be Nil as on April 1,2014, and has adjusted an amount of Rs. 75.78 Crores (net of deferred tax of Rs. 40.10 Crores) against the opening surplus balance in the Statement of Profit and Loss.

The depreciation expense in the Statement of profit and Loss for the year is lower by Rs. 221.92 Crores consequent to the change in the useful life of the assets.

14 Employee Benefits:

(a)i. Basis used to determine Expected Rate of Return on Plan Assets:

Expected rate of return on Plan Assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

ii. Salary Escalation Rate:

The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors.

(B) Defined Contribution Plans:

Amount recognised as an expense and included in Note 25 under the head "Contribution to Provident and other Funds" of Statement of Profit and Loss v 62.82 Crores (Previous Year Rs. 56.81 Crores).

(C) Amount recognised as an expense in respect of Compensated Absences is Rs. 33.96 Crores (Previous Year Rs. 15.20 Crores).

(D) Amount recognised as expense for other long term employee benefits is Rs. 0.55 Crore (Previous Year Rs. 0.43 Crore).

(E) Fair Valuation:

The fair value of options used to compute proforma net income and earnings per equity share have been done by an independent firm of Chartered Accountants on the date of grant using the Black- Scholes Model.

The weighted average fair value of the option, as on the date of grant for ESOS Scheme 2006 works out to be Rs. 476 per stock option and for ESOS Scheme 2013 works out to be Rs. 1,078 per stock option.

15 Revenue expenditure on Research and Development included in different heads of expenses in the Statement of Profit and Loss is Rs. 14.07 Crores. (Previous Year Rs. 10.99 Crores).

16 Expenditure incurred on Corporate Social Responsibility activities, included in different heads of expenses in the Statement of Profit and Loss is Rs. 40.35 Crores and on account of capital expenditure is Rs. 4.11 Crores.

17 (a) Other Operating Revenues include VAT Refund, under State Investment Promotion Scheme of Rs. 168.38 Crores (Previous Year Rs. 102.02 Crores).

(b) Interest and Wages Expenses are net of subsidy received, under State Investment Promotion Scheme of Rs. 66.07 Crores (Previous Year Rs. 61.54 Crores) and Rs. 6.57 Crores (Previous Year Rs. 6.36 Crores) respectively.

18 (a) Operating lease payment recognised in the Statement of Profit and Loss amounting to Rs. 86.18 Crores (Previous Year Rs. 98.72 Crores)

(b) General Description of leasing agreements:

(i) Leased Assets: Godowns, Offices, Flats, Machinery & Others.

(ii) Future Lease rentals are determined on the basis of agreed terms.

(iii) At the expiry of lease terms, the Company has an option to return the assets or extend the term by giving notice in writing.

(iv) Lease agreements are generally cancellable and are renewable by mutual consent on mutually agreed terms.

19 Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year classification / disclosure.

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


Mar 31, 2013

Note 1.1: Current year charge during the year includes Rs. 86.63 crores on account of increase in rate of surcharge on Income-tax as proposed in Finance Bill 2013.

Note 2.1 There is no principal amount and interest overdue to Micro, Small and Medium Enterprises. During the year no interest has been paid to such parties. This information has been determined to the extent such parties have been identified on the basis of information available with the Company and the same has been relied upon by the auditors.

Note 3 (a) - Contingent Liabilities not provided for in respect of:

Rs. in Crores

As at As at

Claims not acknowledged as debts in respect of matters in appeals March 31, March 31, 2013 2012

(a) Sales-tax Liability 139.80 132.83

(b) Excise Duty and Service Tax Matters 374.37 282.84

(c) Royalty on Limestone/ Marl 219.30 200.42

(d) Customs 2.05 2.82

(e) Others 229.35 193.64

Cash outflows for the above are determinable only on receipt ofjudgments pending at various forums / authorities.

Note 3 (b)

The Competition Commission of India (CCI) has vide its Order dated June 20, 2012, upheld the complaint of the Builders'' Association of India alleging cartelisation against certain cement manufacturing companies including the Company. The CCI has imposed a penalty of Rs. 1,175.49 crores on the Company. The Company has filed an appeal against the Order before the Competition Appellate Tribunal (COMPAT), the outcome of which is awaited. The COMPAT has directed that no coercive action be taken in the matter against the Company,

Note 3 (c)

The Company has issued corporate guarantees in favour of Bankers / Lenders / Government Authorities for its Subsidiaries and Joint Ventures; details of which are given below:

(i) Madanpur (North) Coal Company Pvt. Limited (JV) Rs. 3.65 Crores (Previous year Rs. 3.65 Crores).

(ii) Bhaskarpara Coal Company Limited (JV) Rs. 4.00 Crores (Previous year Rs. 4.00 Crores).

(iii) UltraTech Cement Middle East Investment Limited and its subsidiaries US$ 447.11 Mn (Rs. 2,427.14 Crs), {Previous year US$ 440.14 Mn (Rs. 2,239.21 Crores)}.

Note 4 - Capital and other Commitments:

Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs. 1,634.66 Crores, (Previous Year Rs. 2,833.27 Crores).

Note 5

The Ministry of Textiles, vide its orders dated June 30, 1997 and July 1, 1999 has deleted cement from the list of commodities to be packed in Jute bags under the Jute Packaging (Compulsory Use in Packing Commodities) Act 1987. In view of this, the Company does not expect any liability for non-dispatch of cement in Jute bags in respect of earlier years.

Note 6

The Company has a coal block, allocated jointly with Electrotherm (India) Limited (joint venture partner), in Bhaskarpara, Chattisgarh. During the year, the Ministry of Coal, Government of India issued an order for de- allocation of the coal block. The Company has filed a writ petition against the order and has obtained a stay.

Note 7

The Company has entered into a Share Purchase Agreement with the shareholders of Gotan Limestone Khanij Udyog Pvt. Ltd (GKU) and has acquired GKU''s entire equity stake. Consequently, GKU has become a wholly owned subsidiary of the Company with effect from July 23, 2012.

Note 8 - Segment Reporting:

Business Segment

The Company is exclusively engaged in the business of cement and cement related products. This in the context of AS 17 "Segment Reporting", notified under the Companies (Accounting Standard) Rules, 2006, constitutes one single primary segment.

Note 9

Revenue expenditure on Research and Development included in different heads of expenses in the Statement of Profit and Loss is Rs. 9.39 Crores. (Previous Year Rs. 6.54 Crores).

Note 10

Other Operating Revenues / Other Income includes VAT Refund / Subsidy, under State Investment Promotion Scheme, of Rs. 37.71 Crores (Previous Year Rs. 110.64 Crores).

Interest and Wages Expenses are net of subsidy received, under State Investment Promotion Scheme, of Rs. 66.59 Crores (Previous Year Rs. 64.60 Crores) and of Rs. 4.97 Crores (Previous Year Rs. 4.25 Crores) respectively,

Note 11

(a) Operating lease payment recognised in the Statement of Profit and Loss amounting to Rs. 80.93 Crores (Previous Year Rs. 68.68 Crores)

(b) General Description of leasing agreements:

(i) Leased Assets: Godowns, Offices, Flats, Land, Machinery & Others.

(ii) Future Lease rentals are determined on the basis of agreed terms.

(iii) At the expiry of lease terms, the Company has an option to return the assets or extend the term by giving notice in writing

Note 12

Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year classification / disclosure.

Note 13

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


Mar 31, 2012

Note 1 (a) - Contingent Liabilities not provided for in respect of:

in Crores

As at As at

Claims not acknowledged as debts in respect of matters in appeals March 31, March 31, 2012 2011

(a) Sales-tax Liability 132.83 134.80

(b) Excise Duty and Service Tax Matters 282.84 159.52

(c) Royalty on Limestone/ Marl 200.42 181.06

(d) Customs 2.82 2.82

(e) Others 193.64 177.90

Cash outflows for the above are determinable only on receipt of judgments pending at various forums / authorities.

Note 2 (a)

The Company has issued corporate guarantees in favour of Bankers / Lenders / Government Authorities for its Subsidiaries and Joint Ventures; details of which are given below:

(i) Madanpur (North) Coal Company Pvt. Limited (JV) Rs. 3.65 Crores (Previous year Rs. 3.65 Crores).

(ii) Bhaskarpara Coal Company Limited Rs. 4.00 Crores (Previous year Rs. 4.00 Crores).

(iii) UltraTech Cement Middle East Investment Limited and its subsidiaries US$ 440.14 Mn (Rs. 2,239.21 Crores), {Previous year US$ 371 Mn (Rs. 1,654.47 Crores)}.

Note 3- Capital and other Commitments:

Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs. 2,833.27 Crores (Previous Year Rs. 1,902.25 Crores).

Note 4

The Ministry of Textiles, vide its orders dated June 30, 1997 and July 1, 1999 has deleted cement from the list of commodities to be packed in Jute bags under the Jute Packaging (Compulsory Use in Packing Commodities) Act 1987.In view of this, the Company does not accept any liability for non- dispatch of cement in Jute bags in respect of earlier years.

Note 5

In view of the Amalgamation of SCL with the Company w.e.f July 1, 2010 figures for the current year are not comparable with those of the previous year.

(i) Basis used to determine Expected Rate of Return on Plan Assets:

Expected rate of return on Plan Assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. (viii) Salary Escalation Rate:

The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors.

(A) Defined Contribution Plans

Amount recognised as an expense and included in Note 25 under the head "Contribution to Provident and other Funds" of Statement of Profit and Loss Rs. 45.74 Crores, (Previous Year Rs. 37.21 Crores).

(C) Amount recognised as an expense in respect of Compensated Leave Absences is Rs. 21.82 Crores. (Previous Year Rs. 22.43 Crores)

Note 6 - Segment Reporting:

Business Segment

The Company is exclusively engaged in the business of cement and cement related products. This in the context of AS 17 "Segment Reporting", notified under the Companies (Accounting Standard) Rules, 2006, constitutes one single primary segment.

Note 7

Under the Employee Stock Option Scheme - 2006 (ESOS -2006), the Company has granted 228,473 options to its eligible employees in three Tranches.

During FY 2010-11, in terms of the Scheme of Amalgamation, the Company issued stock options, in Tranche IV & V, to all the eligible employees of SCL in the ratio of 4 (four) Options of the Company for every 7 (seven) Options of erstwhile SCL held by them.

(d) Fair Valuation:

The fair value of options used to compute proforma net income and earnings per equity share have been done by an independent firm of Chartered Accountants on the date of grant using the Black- Scholes Model.

The Key assumptions in the Black-Scholes Model for calculating fair value as on the date of grant are:

1. Risk Free Rate - 8%

2. Option Life - Vesting period (1 Year) Average of exercise period

3. Expected Volatility - Tranche-I: 0.49, Tranche-II: 0.52,Tranche-III: 0.30,

Tranche-IV: 0.30, Tranche-V: 0.30

4. Expected Growth in Dividend - 20%

The weighted average fair value of the option, as on the date of grant, works out to Rs. 469 per stock option.

Note 8

Revenue expenditure on Research and Development included in different heads of expenses in the Statement of Profit and Loss Account is Rs. 6.54 Crores.(Previous Year Rs. 3.19 Crores).

Note 9

During the year ended March 31, 2012, the Company has received subsidy of Rs. 145.69 crores, in terms of State Investment Promotion Scheme, of which Rs. 64.60 crores and Rs. 4.25 crores have been reduced from Interest and Wages respectively and Rs. 76.85 crores, related to earlier years, has been included in Operating / Other Income.

Note 10

The Revised Schedule VI became effective from April 1, 2011 for the preparation of Financial Statements. Hence, current year Financial Statements are prepared in accordance with Revised Schedule VI. Since previous year presentation was made as per Old Schedule VI, the previous year figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.

Note 11

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


Mar 31, 2011

1a. Contingent Liabilities not provided for in respect of:

Rs. in Crores

Claims not acknowledged as debts in respect of matters in appeals

2010-11 2009-10

(a) Sales-tax liability 134.80 61.34

(b) Excise duty 159.52 53.00

(c) Royalty on Limestone/Marl 181.06 42.84

(d) Customs 2.82 0.11

(e) Others 177.90 26.03

lb. The Company has issued corporate guarantees in favour of Bankers / Lenders / Government Authorities for its Subsidiaries and Joint Ventures; details of which are given below : (i) Madanpur (North) Coal Company (Pvt.) Limited (JV) Rs. 3.65 Crores (Previous Year X 3.65 Crores). (ii) Bhaskarpara Coal Company Limited (JV) Rs. 4.00 Crores* (Previous Year Rs. Nil). (iii) UltraTech Cement Middle East Investments Limited and its subsidiaries US$ 371 Mn (Rs. 1,654.47 Crores) (Previous Year US$ Nil).

transferred pursuant to Scheme of Amlgamation of Samruddhi Cement Limited (SCL) with the Company.

2. The Ministry of Textiles, vide its orders dated June 30, 1997 and July 1, 1999 has deleted cement from the list of commodities to be packed in Jute bags under the Jute Packaging (Compulsory Use in Packing Commodities) Act 1987. In view of this, the Company does not accept any liability for non-dispatch of cement in Jute bags in respect of earlier years.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 1,902.25 Crores (Previous Year Rs. 233.29 Crores).

4. Scheme of Amalgamation:

Pursuant to the Scheme of Amalgamation ("the Scheme") of SCL a subsidiary of Grasim Industries Ltd., the holding company, with the Company as sanctioned by the Hon'ble High Courts of Bombay and Gujarat vide their orders dated June 11, 2010 and July 01, 2010 respectively; the entire business and all the assets and liabilities, duties and obligations of SCL have been transferred to and vested in the Company with effect from July 01, 2010 (the appointed date). The Scheme became effective from August 01, 2010.

The erstwhile SCL was engaged in manufacture and sale of Cement.

The amalgamation has been accounted for under the "Pooling of Interest" method as prescribed by the Accounting Standard (AS) 14 on "Accounting for Amalgamations" notified under the Companies (Accounting Standard) Rules. The scheme has, accordingly, been given effect to in these financial statements as under:

(a) All the Assets, Liabilities, Debenture Redemption Reserve (DRR) and Capital Subsidy Reserve (CSR) of SCL have been transferred to the Company at value appearing in the books of accounts of SCL as on June 30, 2010. Excess of assets over liabilities net of DRR and CSR, amounting to Rs. 4,851.85 Crores is credited to General Reserve.

(b) The cost of transfer of assets from SCL to the Company has been adjusted against the General reserve.

(c) Upon effectiveness of the Scheme, the authorised Share Capital of the Company increased to Rs. 2,800,000,000/- consisting of 280,000,000 equity shares of Rs. 10/- each.

(d) In terms of the Scheme, the shares were to be allotted in the ratio of 4 (four) equity shares of the Company of face value Rs.10/- each fully paid-up for every 7 (seven) equity shares of SCL of face value Rs. 5/- each fully paid-up. Accordingly, 149,533,469 equity shares of Rs. 10/- each have been allotted to the shareholders of erstwhile SCL including the custodian(s) of Global Depository Receipts (GDR).

(e) ESOP options of the Company were also extended to the Option holders of the SCL in the ratio of 4 options of the Company for every 7 options of SCL.

In view of the amalgamation of SCL with the Company w.e.f. July 01, 2010, the figures for the current year are not comparable with those of the previous year.

5. The Company's wholly-owned subsidiary "UltraTech Cement Middle East Investments Limited" has completed the acquisition of ETA Star Cement (ETA) and has acquired management control of ETA's operations in the UAE, Bahrain and Bangladesh.

The Company retains the option to purchase the Non-Convertible Debentures in the secondary market, and cancel, hold, or reissue the same at such price and on such terms as the Company may deem fit or as permitted under the Company Law. Non-Convertible Debentures repurchased have not been kept alive for reissuance as at March 31, 2011.

The Non-Convertible Debentures are secured by way of first charge, having pari passu rights, on the movable and immovable properties situated at certain locations of the Company (save and except book debts and inventories).

(b) Foreign Currency Loans

The foreign currency loans of Rs. 1,095.46 Crores (Previous Year Rs. 285.16 Crores) are secured by way of first charge, having pari passu rights, on the Company's movable and immovable assets situated at certain locations of the company (save and except book debts and inventories). Security creation is pending for loan availed from HSBC Bank (Mauritius) Limited, Mauritius (Facility amount USD 5 Crores; Amount availed till March 31, 2011 USD 1 Crore).

(c) Rupee Term Loan

The Rupee Term loans of Rs. 450.00 Crores (Previous Year Rs. Nil), from banks are secured by way of first charge, having pari passu rights, on movable and immovable properties (save and except book debts and inventories) situated at one of the Company's location.

(d) Sales Tax Deferment Loan

The Sales Tax Deferment Loan of Rs. 8.20 Crores (Previous Year Rs. Nil) transferred pursuant to Scheme of Amalgamation of SCL with the Company and is secured by bank guarantee backed by hypothecation of stocks and book debt of the Company.

6. Disclosure pertaining to Micro, Small and Medium Enterprises:

There is no principal amount and interest overdue to the Micro, Small and Medium Enterprises. During the year no interest has been paid to such parties.

This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

7. Segment Reporting:

Business Segment

The Company is exclusively engaged in the business of cement and cement related products. This is in context of AS 17 "Segment Reporting", notified under the Companies (Accounting Standard) Rules, 2006, constitutes one single primary segment.

8. Disclosure of related parties / related party transactions:

Parties Relationship

(a) Parties where control exists:

Grasim Industries Limited. Holding Company

UltraTech Cement Lanka (Pvt.) Ltd. Subsidiary

Dakshin Cements Limited. Wholly Owned Subsidiary

Harish Cement Limited. (HCL) (w.e.f.01.07.2010) Wholly Owned Subsidiary

UltraTech Cement Middle East Investments Limited. (UCMEIL)

Wholly Owned Subsidiary

Star Cement Co. LLC, UAE (w.e.f. 31.08.2010) Subsidiary's Subsidiary - UCMEIL

Star Cement Co. LLC, RAK Ras-AI-Khaimah UAE (w.e.f. 31.08.2010)

Subsidiary's Subsidiary - UCMEIL

Al Nakhla Crusher LLC, Fujairah (w.e.f. 06.09.2010)Subsidiary's Subsidiary - UCMEIL

Arabian Cement Industry LLC, Abu Dhabi (w.e.f. 15.09.2010)

Subsidiary's Subsidiary - UCMEIL

Arabian Gulf Cement Co W.L.L, Bahrain (w.e.f. 27.09.2010)

Subsidiary's Subsidiary - UCMEIL

Emirates Power Company Ltd., Bangladesh (w.e.f. 27.08.2010)

Subsidiary's Subsidiary - UCMEIL

Emirates Cement Bangladesh Ltd., Bangladesh (w.e.f. 27.08.2010)

Subsidiary's Subsidiary - UCMEIL

Madanpur (North) Coal Company (Pvt.) Limited. Joint Venture

Bhaskarpara Coal Co. Limited, (w.e.f. 01.07.2010) Joint Venture

(b) Other Related Parties with whom there were transactions during the year:

Parties Relationship

Samruddhi Cement Limited (upto 30.06.2010) Fellow Subsidiary

Samruddhi Swastik Trading & Investment Ltd. Fellow Subsidiary

Vikram Sponge Iron Ltd (VSIL) (Upto 21.05.2009) Fellow Subsidiary

Sun God Trading & Investment Limited Fellow Subsidiary

Grasim Bhiwani Textiles Ltd. Fellow Subsidiary

Harish Cement Limited (upto 30.06.2010) Fellow Subsidiary

Mr. O. P. Puranmalka, Whole-time Director Key Management Personnel (KMP)

Mrs. Sita Puranmalka Relative of Mr. O.P. Puranmalka (Wife)

Mr. S. Misra, Managing Director (upto 31.03.2010) Key Management Personnel (KMP)

(vii) Basis used to determine Expected Rate of Return on Plan Assets:

Expected rate of return on Plan Assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

(viii) Salary Escalation Rate:

The estimates of future salary increases are considered taking into account the inflation, seniority, promotion and other relevant factors.

(b) Defined Contribution Plans:

Amount recognised as an expense and included in Schedule 18 under the head "Contribution to Provident and other Funds" of Profit and Loss account Rs. 37.21 Crores, (Previous Year Rs. 13.98 Crores).

(c) Amount recognised as an expense in respect of Compensated Leave Absences is Rs. 22.43 Crores, (Previous Year Rs. 6.75 Crores).

9. Under the Employees Stock Option Scheme - 2006 (ESOS -2006), the Company has granted 228,473 options to its eligible employees in three Tranches.

During the year, in terms of the Scheme of Amalgamation, the Company issued stock options, in Tranche IV & V, to all the eligible employees of SCL in the ratio of 4 (four) Options of the Company for every 7 (seven) Options of erstwhile SCL held by them.

(d) Fair Valuation:

The fair value of options used to compute proforma net income and earnings per equity share have been done by an independent firm of Chartered Accountants on the date of grant using the Black-Scholes Model.

The Key assumptions in the Black-Scholes Model for calculating fair value as on the date of grant are:

1. Risk Free Rate - 8%

2. Option Life - Vesting period (1 Year) Average of exercise period

3. Expected Volatility - Tranche-I: 0.49, Tranche-ll: 0.52, Tranche-Ill: 0.30,

Tranche-IV: 0.30, Tranche-V: 0.30

4. Expected Growth in Dividend - 20%

The weighted average fair value of the option, as on the date of grant, works out to Rs. 469 per stock option.

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

11. Revenue expenditure on Research and Development included in different heads of expenses in the Profit and Loss Account is Rs. 3.19 Crores. (Previous Year Rs. Nil).

12. Previous year's figures have been regrouped and rearranged wherever necessary to conform to this year's classification.

 
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