Notes to Accounts of UltraTech Cement Ltd.
Mar 31, 2023
1. Tangible Assets include assets for which ownership is not in the name of the Company - Gross Block of '' 474.91 Crores (March 31, 2022''426.78 Crores).
2. Buildings include ''12.13 Crores (March 31, 2022 ''12.13 Crores) being cost of Debentures and Shares in a company entitling the right of exclusive occupancy and use of certain premises.
3. Opening Gross Block includes Research and Development Assets (Building, Plant and Equipment, Furniture and Fixtures, Office Equipment and Intangible Assets) of '' 45.69 Crores (March 31, 2022''43.49 Crores) and Net Block of '' 18.21 Crores (March 31, 2022''20.02 Crores). Addition for the Research and Development Assets during the year is '' 0.83 Crores (March 31, 2022''1.55 Crores).
The Company had acquired cement business of Century Textiles and Industries Limited (Century Business) at an enterprise value of '' 8,387.71 Crores and accounted as per Ind AS 103 - Business Combinations with effect from May 20, 2018 as per order dated July 3, 2019 by National Company Law Tribunal. The Company had recognised a goodwill of '' 2,208.82 Crores based on the difference between the fair value of consideration transferred and fair value of net assets acquired. Goodwill acquired under business combinations has been allocated to the acquired business as Cash Generating Unit (CGU). Goodwill is tested for impairment annually or more frequently if indicators of impairment exist. Potential impairment is identified by comparing the recoverable value of a CGU to its carrying value.
The carrying amount of goodwill as at March 31, 2023 is '' 2,208.82 Crores (March 31, 2022: '' 2,208.82 Crores) .
The recoverable amount of the CGU was determined using a value-in-use calculation. The key assumptions used in the value-in-use calculation include estimated future cash flows for five years, industry trend, growth rates and weighted average cost of capital.
Based on our impairment testing, the recoverable amount of the CGU exceeds its carrying amount including goodwill. Therefore, no impairment loss was recognized during the year ended March 31, 2023. Sensitivity analysis with 1% change in growth rate and weighted average cost of capital also indicates that no impairment required on carrying amount of goodwill.
(f) Rights, Preferences and Restrictions attached to shares:
The Company has only one class of Equity Shares having a par value of '' 10 per share. Each shareholder is eligible for one vote per share held except for Global Depository Receipts. 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 of the Company after distribution of all preferential amounts, in proportion to their shareholding.
The Description of the nature and purpose of each reserve within equity is as follows:
a) Capital Reserve: Companyâs capital reserve is mainly on account of acquisition of cement business of Larsen & Toubro Ltd., Gujarat Units of Jaypee Cement Corporation Ltd (JCCL) and cement capacities of 21.2 MTPA of Jaiprakash Associates Ltd (JAL) and JCCL, being excess of the net assets acquired over the consideration paid.
b) Securities Premium: Securities premium is credited when shares are issued at premium. It is utilised in accordance with the provisions of the Act, to issue bonus shares, to provide for premium on redemption of shares or debentures, equity related expenses like underwriting costs, etc.
c) Debenture Redemption Reserve (DRR): The Company has issued redeemable non-convertible debentures. Accordingly, the Companies (Share capital and Debentures) Rules, 2014 (as amended), requires the company to create DRR out of profits of the company available for payment of dividend. DRR is required to be created for an amount which is equal to 25% of the value of debentures issued. However, this requirement is no more applicable w.e.f. April 1, 2018 as per the amendment in the Companies (Share capital and Debentures) Rules, 2014 vide dated August 16, 2019; accordingly the Company has not made any new addition in the said reserve and accounted the reversal of outstanding reserve linked to payment of specific non-convertible debentures.
d) General Reserve: The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provision of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
e) Shares Options Outstanding Reserve: The Company has three share option schemes under which options to subscribe for the Companyâs shares have been granted to certain executives and senior employees. The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.
f) Treasury Shares: The Company has formed an Employee Welfare Trust for purchasing Companyâs shares to be allotted to eligible employees under Employees Stock Options Scheme, 2018 (ESOS 2018). As per Ind AS 32 -Financial Instruments: Presentation, Reacquired equity shares of the Company are called Treasury Shares and deducted from equity.
g) Cashflow Hedge Reserve: The Company has designated its hedging instruments as cash flow hedges and any effective portion of cashflow hedge is maintained in the said reserve. In case the hedging becomes ineffective, the amount is recognised in the Statement of Profit and Loss.
The Company had issued unsecured fixed rate US Dollar denominated notes (in the form of âSustainability Linked Bondsâ), aggregating to USD 400 million, due on February 16,2031, bearing coupon of 2.80% per annum payable semiannually. The Bonds are linked to âSustainability Performance Target (SPT) of reducing Scope 1 GHG emissions by 22.2% from a 2017 baseline. If SPT is not achieved by observation date in 2030, the coupon will step-up by 0.75% for last two coupons.The Bonds are listed on the Singapore Exchange Securities Trading Limited.
Cash outflows for the above are determinable only on receipt of judgments pending at various forums / authorities.
(b) The Company had filed appeals against the orders of the Competition Commission of India (CCI) dated 31 August 2016 (Penalty of '' 1,449.51 Crores) and 19 January 2017 (Penalty of '' 68.30 Crores). Upon the National Company Law Appellate Tribunal (âNCLATâ) disallowing its appeal against the CCI order dated 31 August 2016, the Company filed an appeal before Honâble Supreme Court which has, by its order dated 5 October 2018, granted a stay against the NCLAT order. Consequently, the Company has deposited an amount of '' 144.95 Crores equivalent to 10% of the penalty of
'' 1,449.51 Crores. The Company, backed by legal opinions, believes that it has a good case in both the matters and accordingly no provision has been recognised in the financial statements.
(c) Guarantees:
The Company has issued corporate guarantees as under:
In favour of the Banks / Lenders on behalf of some of its Subsidiaries and Joint Venture (JV), as mentioned below, for the purposes of replacing old loans, acquisition financing, working capital and other general corporate purposes:
i. UltraTech Nathdwara Cement Limited: '' 350.00 Crores (March 31, 2022''350.00 Crores).
ii. Bhaskarpara Coal Company Limited (JV) '' 1.70 Crores (March 31, 2022''1.70 Crores).
iii. UltraTech Cement Middle East Investment Limited and its subsidiaries: USD 222.80 Million (Equivalent to '' 1,830.72 Crores) {March 31, 2022 USD 191.30 Million (Equivalent to '' 1,449.89 Crores)}.
(These Corporate Guarantees are issued in different currencies viz. Indian Rupee, USD and UAE Dirham.)
Note 34 - Capital and other commitments:
Estimated amount of contracts remaining to be executed on capital account not provided for (net of advances)
'' 4,199.93 Crores. (March 31, 2022''1,988.69 Crores).
The Supreme Court of India has allowed an appeal filed by the State of Rajasthan in a matter relating to transfer of mining lease in the name of the Companyâs wholly owned subsidiary, Gotan Lime Stone Khanij Udyog Private Limited (âGKUPLâ) and has directed the State of Rajasthan to frame and notify its policy relating to transfer of mining lease and thereafter pass appropriate order in respect of the mining lease of GKUPL. State Government has notified the new policy related to transfer of new mining lease, based on which the Company has requested the State Government to consider reinstatement of the mines in its favour.
Note 36 - Employee Benefits (Ind AS 19):
{A} Defined Benefit Plans:
(a) Gratuity:
The gratuity payable to employees is based on the employeeâs service and last drawn salary at the time of leaving the services of the Company and is in accordance with the Rules of the Company for payment of gratuity.
Inherent Risk
The plan is defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, this exposes the Company to actuarial risk such as adverse salary growth, change in demographic experience, inadequate return on underlying plan assets. This may result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature, the plan is not subject to any longevity risks.
(b) Pension:
The Company considers pension for some of its employees at senior management based on the period of service and contribution for the Company. There is no material risk associated with this plan.
(c) Post-Retirement Medical Benefits:
The Company provides post-retirement medical benefits to certain ex-employees who were transferred under the Scheme of arrangement for acquiring Larsen & Toubro cement business and eligible for such benefits from earlier Company. There is no material risk associated with this plan.
(xii) Discount Rate:
The discount rate is based on the prevailing market rates of Indian government securities for the estimated term of obligations.
(xiii) Salary Escalation Rate:
The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors.
(xiv) Asset Liability matching strategy:
The money contributed by the Company to the Gratuity fund to finance the liabilities of the plan has to be invested.
The trustees of the plan have outsourced the investment management of the fund to an insurance Company. The insurance Company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset liability matching strategy.
There is no compulsion on the part of the Company to fully prefund the liability of the Plan. The Companyâs philosophy is to fund these benefits based on its own liquidity and the level of underfunding of the plan.
(xv) The Companyâs expected contribution during next year is '' Nil (March 31, 2022: '' Nil).
(d) Provident Fund:
The Company is liable for any shortfall in the fund assets based on the Government specified rate of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in the year of incurring the same.
Amount recognized as an expense under the head âContribution to Provident and other Fundsâ of Statement of Profit and Loss '' 96.17 Crores (March 31, 2022: '' 90.07 Crores).
Based on the recommendation of the Nomination, Remuneration and Compensation Committee, all decisions relating to the remuneration of the Directors are taken by the Board of Directors of the Company, in accordance with shareholdersâ approval, wherever necessary.
Terms and Conditions of transactions with Related Parties:
The sales to and purchases from related parties including property, plant and equipment are made in the normal course of business and on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.
The Companyâs inter corporate loan to its subsidiary which is repayable on demand, for the current year the rate of interest is RBI Repo Rate Spread. (March 31, 2022: 1 Month MCLR)
For the year ended March 31, 2023, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
The weighted average remaining contractual life for SAR is 2.66 years (March 31, 2022 : 2.87 years).
The exercise price for outstanding options and SAR is '' 10 per share for RSUâs and ranges from '' 2,318 per share to '' 7,424.70 per share for options.
(D) Fair Valuation:
1,92,664 share options were granted during the year. Weighted Average Fair value of the options granted during the year is '' 3,209.98 per share (March 31, 2022''3,435.96 per share).
The fair value of option has been done by an independent firm of Chartered Accountants on the date of grant using the Black-Scholes Model / Binomial Tree Model.
The Key assumptions in the Black-Scholes Model for calculating fair value as on the date of grant:
Note 44 (B) - Fair Value measurements (Ind AS 113):
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in an orderly transaction in the principal (or most advantageous) market at measurement date under the current market condition regardless of whether that price is directly observable or estimated using other valuation techniques.
The Company has established the following fair value hierarchy that categorizes the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities. The fair value of all bonds which are traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market (For example traded bonds,
over the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on company specific estimates. The mutual fund units are valued using the closing Net Asset Value. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The management assessed that cash and bank balances, trade receivables, loans, trade payables, cash credits,
commercial papers and other financial assets and liabilities approximate their carrying amounts largely due to the shortterm maturities of these instruments.
The following methods and assumptions were used to estimate the fair values:
(a) The fair values of the quoted investments/units of mutual fund schemes are based on market price/net asset value at the reporting date.
(b) The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves and an appropriate discount factor.
(c) The fair value of forward foreign exchange contracts is calculated as the present value determined using forward exchange rates and interest rate curve of the respective currencies.
(d) The fair value of currency swap is calculated as the present value determined using forward exchange rates, currency basis spreads between the respective currencies, interest rate curves and an appropriate discount factor.
(e) The fair value of foreign currency option contracts is determined using the Black Scholes valuation model.
(f) The fair value of the remaining financial instruments is determined using discounted cash flow analysis. The discount rates used is based on management estimates.
The significant unobservable inputs used in the fair value measurement of the fair value hierarchy together with a
quantitative sensitivity analysis as at March 31, 2023 and March 31, 2022 are as shown below:
The Companyâs principal financial liabilities, other than derivatives, comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets, other than derivatives include trade and other receivables, investments and cash and cash equivalents that derive directly from its operations.
The Companyâs activities expose it to market risk, liquidity risk and credit risk. The Companyâs overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. The Company uses derivative financial instruments, such as foreign exchange forward contracts, foreign currency option contracts, principal only swaps, cross currency swaps that are entered to hedge foreign currency risk exposure, interest rate swaps, coupon only swaps to hedge variable interest rate exposure and commodity fixed price swaps to hedge commodity price risks. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
The Company has standard operating procedures and investment policy for deployment of surplus liquidity, which allows investment in debt securities, fixed deposits and mutual fund schemes of debt categories only and restricts the exposure in equity markets.Compliances of these policies and principles are reviewed by the internal auditors/internal risk management committee on periodical basis.
The Corporate Treasury team updates the Audit Committee on a quarterly basis about the implementation of the above policies. It also updates the Risk Management Committee of the Company on periodical basis about the various risks to the business and status of various activities planned to mitigate the risks.
(I) Market Risk:
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.
(A) Foreign Currency Risk:
Foreign currency risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, import of fuels, raw materials and spare parts, capital expenditure, exports of cement and the Companyâs net investments in foreign subsidiaries.
When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
The Company evaluates exchange rate exposure arising from foreign currency transactions. The Company follows established risk management policies and standard operating procedures. It uses derivative instruments like foreign currency swaps, options and forwards to hedge exposure to foreign currency risk.
(B) Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs borrowing with floating interest rates. For all long-term borrowings with floating rates, the risk of variation in the interest rates is mitigated through interest rate swaps. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.
(B) Cash Flow Hedges:
The Company has foreign currency external commercial borrowings / investments and to mitigate the risk of foreign currency and floating interest rates the Company has taken forward contracts, currency options, currency swaps, interest rates swaps and principal only swaps. The Company is following hedge accounting for all the foreign currency borrowings/ investments raised on or after April 01, 2015 based on qualitative approach.
The Company assesses hedge effectiveness based on following criteria:
(i) an economic relationship between the hedged item and the hedging instrument;
(ii) the effect of credit risk; and
(iii) Assessment of the hedge ratio
The Company designates the derivatives to hedge its currency risk and generally applies a hedge ratio of 1:1. The Companyâs policy is to match the critical terms of the forward exchange contracts to match with the hedged item.
(C) Commodity price risk management:
Commodity price risk for the Company is mainly related to fluctuations in coal and pet coke prices linked to various external factors, which can affect the production cost of the Company. Since the Energy costs is one of the primary costs drivers, any adverse fluctuation in fuel prices can lead to drop in operating margin. To manage this risk, the Company enters into fixed price swaps/other derivatives for imported coal, enter into long-term supply agreement for pet coke, identifying new sources of supply etc. While fixed price swaps/ other derivatives are available in the markets for coal but in case of pet coke no such derivative is available; it has to be procured at spot prices. Additionally, processes and policies related to such risks are reviewed and controlled by senior management and fuel requirement are monitored by the central procurement team.
Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing / investing activities, including deposits with banks/financial institutions, mutual fund investments, and investments in debt securities, foreign exchange transactions and financial guarantees. The Company has no significant concentration of credit risk with any counterparty.
Trade receivables
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and based on the evaluation credit limit of each customer is defined. Wherever the Company assesses the credit risk as high the exposure is backed by either bank guarantee / letter of credit or security deposits.
Total Trade receivable as on March 31, 2023 is '' 3,242.17 Crores (March 31, 2022''2,706.82 Crores). The Company does not have higher concentration of credit risks to a single customer. A single largest customer has total exposure in sales 2.93% (March 31, 2022: 2.51%) and in receivables 11.11% (March 31, 2022: 11.60%)
As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
As per policy, receivables are classified into different buckets based on the overdue period ranging from 6 months - one year to more than two years. There are different provisioning norms for each bucket which are ranging from 25% to 100%.
Investments, Derivative Instruments, Cash and Cash Equivalent and Deposits with Banks/Financial Institutions
Credit Risk on cash and cash equivalent, deposits with the banks / financial institutions is generally low as the said deposits have been made with the banks / financial institutions who have been assigned high credit rating by international and domestic rating agencies.
Credit Risk on Derivative Instruments are generally low as Company enters into the Derivative Contracts with the reputed Banks and Financial Institutions.
Investments of surplus funds are made only with approved Financial Institutions / Counterparty. Investments primarily include investment in units of mutual funds, quoted Bonds, Non-Convertible Debentures issued by Government / Semi Government Agencies / PSU Bonds / High Investment grade corporates etc. These Mutual Funds and Counterparties have low credit risk.
Total Non-current and current investments excluding Subsidiaries, Joint Ventures and Associates as on March 31, 2023 is '' 6,246.42 Crores (March 31, 2022''6,114.72 Crores.)
Financial Guarantees
The Company has given corporate guarantees amounting to '' 2,182.42 Crores in favour of its subsidiaries and joint ventures (Refer note 33 (c)).
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Companyâs treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows.
The table below provides details regarding the remaining contractual maturities of financial liabilities and investments held for managing the risk at the reporting date based on contractual undiscounted payments.
Note 48 - Capital Management (Ind AS 1):
The Capital management objective of the Company is to (a) maximise shareholder value and provide benefits to other stakeholders and (b) maintain an optimal capital structure to reduce the cost of capital.
For the purposes of the Companyâs capital management, capital/equity includes issued equity share capital, share premium and all other equity.
The amount spent under CSR which is shown in different heads of financial statements is mainly for projects relating to school education, preventive health care, agriculture, rural infrastructure development, promotion of sports and culture, disaster relief programmes and protection of heritage art and culture.
Note 51 - Government Grant (Ind AS 20):
(a) Other Operating Revenues include Incentives against capital investments, under State Investment Promotion Scheme of '' 356.71 Crores (March 31, 2022''456.43 Crores).
(b) Sales Tax deferment loan granted under State Investment Promotion Scheme has been considered as a government grant and the difference between the fair value and nominal value as on date is recognized as an income. Accordingly, an amount of '' 50.26 Crores (March 31, 2022: '' 74.44 Crores) has been recognized as an income. Every year change in fair value is accounted for as an interest expense.
(c) Repairs and maintenance are net of subsidy received, under State Investment Promotion Scheme of '' 1.29 Crores. (March 31, 2022''0.97 Crores).
(d) Cost of materials consumed are net of grants received towards royalty expense amounting to '' Nil Crores (March 31, 2022''13.26 Crores).
Note 52 - Asset Held for disposal (Ind AS 105):
The Company has identified certain assets like Land, Diesel Generator Sets etc. which are available for sale in its present condition. The Company is committed to plan the sale of asset and an active programme to locate a buyer and complete the plan have been initiated. The Company expects to dispose off these assets in the due course.
Note 53 - Revenue from Contract with Customers (Ind AS 115):
(A) The Company is primarily in the Business of manufacture and sale of cement and cement related products. The product shelf life being short, all sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/ delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established, the Company does not give significant credit period resulting in no significant financing component. The Credit period on an average ranges from 15 to 60 days.
The Company, however, has a policy for replacement of the damaged goods.
In terms of a Scheme of Arrangement between Jaiprakash Associates Limited (JAL); Jaypee Cement Corporation Limited (JCCL), the Company (âThe Partiesâ) and their respective shareholders and creditors, sanctioned by the National Company Law Tribunal, Mumbai and Allahabad bench, together with necessary approvals from the stock exchanges, Securities and Exchange Board of India (SEBI), and the Competition Commission of India; the Company had on 27th June, 2017, issued 1,000 Series A Redeemable Preference Shares of '' 1,00,000 each aggregating to '' 1,000 crores to JAL (Series A RPS) for a period of 5 years or such longer period as may be agreed by the Parties (the âTermâ). The Series A RPS were held in escrow until satisfaction of certain conditions precedent in relation to the Dalla Super Plant and mines situated in the state of Uttar Pradesh (Earlier known as JP Super), to be redeemed post the expiry of the Term as per the agreement between The Parties.
Upon expiry of the Term, the Company offered redemption of the Series A RPS within the stipulated number of days, post adjustment of certain costs pertaining to the conditions precedent, as per the terms of the agreement entered into between The Parties. Redemption of the Series A RPS was subject to issuance of a joint notice to the escrow agent. The Series A RPS could not be redeemed due to inaction on the part of JAL in signing the joint instruction notice. This matter has since been referred to arbitration and the arbitration proceedings are pending. The Company has classified the Series A RPS to Other Financial Liabilities as Liability for Capital Goods.
The Board of Directors at the meeting held on April 28, 2023 approved a Scheme of Amalgamation of UltraTech Nathdwara Cement Limited (UNCL) (a wholly-owned subsidiary of the Company) and its wholly-owned subsidiaries viz. Swiss Merchandise Infrastructure Limited (Swiss) and Merit Plaza Limited (Merit) with the Company. The Appointed Date of the Scheme is 1st April, 2023. In terms of the Scheme, the entire equity shares of UNCL, Swiss and Merit will be cancelled without issue and allotment of any new shares in lieu thereof. The Scheme is subject to necessary statutory and regulatory approvals, including sanction by the Honâble National Company Law Tribunal under Sections 230 and 232 of the Companies Act, 2013.
Note 58 - Other Statutory Information:
(i) As on March 31, 2023 there is no unutilised amounts in respect of any issue of securities and long term borrowings from banks and financial institutions. The borrowed funds have been utilised for the specific purpose for which the funds were raised.
(ii) The Company does not have any charges or satisfaction, which is yet to be registered with Registrar of Companies beyond the statutory period.
(iii) The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017.
(iv) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(v) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries), other than mentioned in the financial statements, with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(viii) The Company has not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.)
Note 59 - Changes in Indian Accounting Standards w.e.f April 1, 2023:
On March 31, 2023 the Ministry of Corporate Affairs (âMCAâ) amended the Companies (Indian Accounting Standards) Rules,
2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as
below:
1. Ind AS 1 - Presentation of Financial Statements: The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements.
2. Ind AS 12 - Income Taxes: The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.
3. Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors: The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are âmonetary amounts in financial statements that are subject to measurement uncertaintyâ. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty.
Mar 31, 2022
1. Tangible Assets include assets for which ownership is not in the name of the Company - Gross Block of '' 426.78 Crores (March 31,2021 '' 442.04 Crores).
2. Buildings include '' 12.13 Crores (March 31,2021 '' 12.13 Crores) being cost of Debentures and Shares in a company entitling the right of exclusive occupancy and use of certain premises.
3. Opening Gross Block includes Research and Development Assets (Building, Plant and Equipment, Furniture and Fixtures, Office Equipment and Intangible Assets) of '' 43.49 Crores (March 31,2021 '' 43.19 Crores) and Net Block of '' 20.02 Crores (March 31,2021 '' 21.19 Crores). Addition for the Research and Development Assets during the year is '' 1.55 Crores (March 31,2021 '' 0.30 Crores).
The total cash outflow for leases for year ended March 31, 2022 is '' 159.59 Crores (March 31, 2021 '' 120.71 Crores).
Income from sub leasing of Right to use assets is for the year ended March 31, 2022 is '' 76.39 Crores (March 31, 2021 '' 61.28 Crores).
Impact of Ind AS 116 has resulted in lower expenses in Power and Fuel, Freight and Forwarding and Other Expenses by '' 134.32 Crores (March 31, 2021: '' 115.03 Crores) whereas Finance Costs and Depreciation and Amortisation expenses are higher by '' 72.32 Crores (March 31, 2021: '' 22.08 Crores) and '' 105.76 Crores (March 31,2021: '' 93.95 Crores) respectilvely.
c) Debenture Redemption Reserve (DRR): The Company has issued redeemable non-convertible debentures. Accordingly, the Companies (Share capital and Debentures) Rules, 2014 (as amended), requires the company to create DRR out of profits of the company available for payment of dividend. DRR is required to be created for an amount which is equal to 25% of the value of debentures issued. However, this requirement is no more applicable w.e.f. April 1,2018 as per the amendment in the Companies (Share capital and Debentures) Rules, 2014 vide dated August 16, 2019; accordingly the Company has not made any new addition in the said reserve and accounted the reversal of outstanding reserve linked to payment of specific non-convertible debentures.
The Company has only one class of Equity Shares having a par value of K 10 per share. Each shareholder is eligible for one vote per share held except for Global Depository Receipts. 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 of the Company after distribution of all preferential amounts, in proportion to their shareholding.
d) General Reserve: The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provision of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
e) Shares Options Outstanding Reserve: The Company has three share option schemes under which options to subscribe for the Companyâs shares have been granted to certain executives and senior employees. The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.
f) Treasury Shares: The Company has formed an Employee Welfare Trust for purchasing Companyâs shares to be allotted to eligible employees under Employees Stock Options Scheme, 2018 (ESOS 2018). As per Ind AS 32 - Financial Instruments: Presentation, Reacquired equity shares of the Company are called Treasury Shares and deducted from equity.
g) Cashflow Hedge Reserve: The Company has designated its hedging instruments as cash flow hedges and any effective portion of cashflow hedge is maintained in the said reserve. In case the hedging becomes ineffective, the amount is recognised in the Statement of Profit and Loss.
The Description of the nature and purpose of each reserve within equity is as follows:
a) Capital Reserve: Companyâs capital reserve is mainly on account of acquisition of cement business of Larsen & Toubro Ltd., Gujarat Units of Jaypee Cement Corporation Ltd (JCCL) and cement capacities of 21.2 MTPA of Jaiprakash Associates Ltd (JAL) and JCCL, being excess of the net assets acquired over the consideration paid.
b) Securities Premium: Securities premium is credited when shares are issued at premium. It is utilised in accordance with the provisions of the Act, to issue bonus shares, to provide for premium on redemption of shares or debentures, equity related expenses like underwriting costs, etc.
Cash outflows for the above are determinable only on receipt of judgments pending at various forums / authorities.
(b) The Company had filed appeals against the orders of the Competition Commission of India (CCI) dated 31 August 2016 (Penalty of '' 1,449.51 Crores) and 19 January 2017 (Penalty of '' 68.30 Crores). Upon the National Company Law Appellate Tribunal (âNCLATâ) disallowing its appeal against the CCI order dated 31 August 2016, the Company filed an appeal before Honâble Supreme Court which has, by its order dated 5 October 2018, granted a stay against the NCLAT order. Consequently, the Company has deposited an amount of '' 144.95 Crores equivalent to 10% of the penalty of '' 1,449.51 Crores. The Company, backed by legal opinions, believes that it has a good case in both the matters and accordingly no provision has been recognised in the financial statements.
(c) Guarantees:
The Company has issued corporate guarantees as under:
In favour of the Banks / Lenders on behalf of some of its Subsidiaries and Joint Venture (JV), as mentioned below, for the purposes of replacing old loans, acquisition financing, working capital and other general corporate purposes:
⢠UltraTech Nathdwara Cement Limited: '' 350.00 Crores (March 31, 2021 '' 3,050.00 Crores).
⢠Bhaskarpara Coal Company Limited (JV): '' 1.70 Crores (March 31, 2021 '' 1.70 Crores).
⢠UltraTech Cement Middle East Investment Limited and its subsidiaries: USD 191.30 Million (Equivalent to '' 1,449.89 Crores) {March 31, 2021 USD 161.30 Million (Equivalent to '' 1,179.24 Crores)}.
(These Corporate Guarantees are issued in different currencies viz. Indian Rupee, USD and UAE Dirham.)
Note 34: Capital and other commitments:
Estimated amount of contracts remaining to be executed on capital account not provided for (net of advances)
'' 1,988.69 Crores. (March 31, 2021 '' 2,230.08 Crores).
The Supreme Court of India has allowed an appeal filed by the State of Rajasthan in a matter relating to transfer of mining lease in the name of the Companyâs wholly owned subsidiary, Gotan Lime Stone Khanij Udyog Private Limited (âGKUPLâ) and has directed the State of Rajasthan to frame and notify its policy relating to transfer of mining lease and thereafter pass appropriate order in respect of the mining lease of GKUPL. State Government has notified the new policy related to transfer of new mining lease, based on which the Company has requested the State Government to consider reinstatement of the mines in its favour.
Note 36: Employee Benefits (Ind AS 19):
(A) Defined Benefit Plans:
(a) Gratuity:
The gratuity payable to employees is based on the employeeâs service and last drawn salary at the time of leaving the services of the Company and is in accordance with the Rules of the Company for payment of gratuity.
Inherent Risk
The plan is defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, this exposes the Company to actuarial risk such as adverse salary growth, change in demographic experience, inadequate return on underlying plan assets. This may result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature, the plan is not subject to any longevity risks.
(b) Pension:
The Company considers pension for some of its employees at senior management based on the period of service and contribution for the Company. There is no material risk associated with this plan.
(c) Post-Retirement Medical Benefits:
The Company provides post-retirement medical benefits to certain ex-employees who were transferred under the Scheme of arrangement for acquiring Larsen & Toubro cement business and eligible for such benefits from earlier Company. There is no material risk associated with this plan.
(xii) Discount Rate:
The discount rate is based on the prevailing market rates of Indian government securities for the estimated term of obligations.
(xiii) Salary Escalation Rate:
The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors.
(xiv) Asset Liability matching strategy:
The money contributed by the Company to the Gratuity fund to finance the liabilities of the plan has to be invested.
The trustees of the plan have outsourced the investment management of the fund to an insurance Company. The insurance Company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset liability matching strategy.
There is no compulsion on the part of the Company to fully prefund the liability of the Plan. The Companyâs philosophy is to fund these benefits based on its own liquidity and the level of underfunding of the plan.
(xv) The Companyâs expected contribution during next year is '' Nil. (March 31, 2021 '' Nil).
(d) Provident Fund:
The Company is liable for any shortfall in the fund assets based on the Government specified rate of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in the year of incurring the same.
Amount recognized as an expense under the head âContribution to Provident and other Fundsâ of Statement of Profit and Loss '' 90.07 Crores (March 31, 2021 '' 88.10 Crores).
The actuary has provided for a valuation and based on the below provided assumptions there is no shortfall as at March 31, 2022 (March 31, 2021: Nil):
(e) Contribution to Other Funds:
Amount recognized as an expense under the head âContribution to Other Fundsâ of Statement of Profit and Loss '' 28.62 Crores (March 31,2021 '' 28.47 Crores).
(B) Amount recognized as an expense in respect of Compensated Absences is '' 51.35 Crores {March 31,2021 '' (8.04) Crores}.
(C) Amount recognized as expense for other long-term employee benefits is '' 0.44 Crores (March 31,2021 '' 0.86 Crores).
Terms and Conditions of transactions with Related Parties:
The sales to and purchases from related parties including property, plant and equipment are made in the normal course of business and on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.
The Companyâs inter corporate loan to its subsidiary which is repayable on demand, for the current year the rate of interest is 1 month MCLR. (March 31,2021: 1 month MCLR)
For the year ended March 31,2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
The weighted average share price at the date of exercise for options was '' 7,024.74 per share (March 31, 2021 '' 5,759.93 per share) and weighted average remaining contractual life for the share options outstanding as at March 31, 2022 was 4.62 years (March 31,2021: 5.10 years).
The weighted average remaining contractual life for SAR is 2.87 years (March 31, 2021: 3.22 years).
The exercise price for outstanding options and SAR is '' 10 per share for RSUâs and ranges from '' 1,965 per share to '' 7,424.70 per share for options.
(D) Fair Valuation:
1,24,616 share options were granted during the year. Weighted Average Fair value of the options granted during the year is '' 3,435.96 per share (March 31, 2021 '' 3,091.60 per share).
The fair value of option has been done by an independent firm of Chartered Accountants on the date of grant using the Black-Scholes Model Binomial Model.
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in an orderly transaction in the principal (or most advantageous) market at measurement date under the current market condition regardless of whether that price is directly observable or estimated using other valuation techniques.
The Company has established the following fair value hierarchy that categorizes the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities. The fair value of all bonds which are traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market (For example traded bonds, over the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on company specific estimates. The mutual fund units are valued using the closing Net Asset Value. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The management assessed that cash and bank balances, trade receivables, loans, trade payables, cash credits,
commercial papers and other financial assets and liabilities approximate their carrying amounts largely due to the shortterm maturities of these instruments.
The following methods and assumptions were used to estimate the fair values:
(a) The fair values of the quoted investments/units of mutual fund schemes are based on market price/net asset value at the reporting date.
(b) The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves and an appropriate discount factor.
(c) The fair value of forward foreign exchange contracts is calculated as the present value determined using forward exchange rates and interest rate curve of the respective currencies.
(d) The fair value of currency swap is calculated as the present value determined using forward exchange rates, currency basis spreads between the respective currencies, interest rate curves and an appropriate discount factor.
(e) The fair value of foreign currency option contracts is determined using the Black Scholes valuation model.
(f) The fair value of the remaining financial instruments is determined using discounted cash flow analysis. The discount rates used is based on management estimates.
The significant unobservable inputs used in the fair value measurement of the fair value hierarchy together with a
quantitative sensitivity analysis as at March 31, 2022 and March 31, 2021 are as shown below:
The Companyâs principal financial liabilities, other than derivatives, comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets, other than derivatives include trade and other receivables, investments and cash and cash equivalents that derive directly from its operations.
The Companyâs activities expose it to market risk, liquidity risk and credit risk. The Companyâs overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. The Company uses derivative financial instruments, such as foreign exchange forward contracts, foreign currency option contracts, principal only swaps, cross currency swaps that are entered to hedge foreign currency risk exposure, interest rate swaps, coupon only swaps to hedge variable interest rate exposure and commodity fixed price swaps to hedge commodity price risks. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
The Company has standard operating procedures and investment policy for deployment of surplus liquidity, which allows investment in debt securities, fixed deposits and mutual fund schemes of debt categories only and restricts the exposure in equity markets.
Compliances of these policies and principles are reviewed by the internal auditors/internal risk management committee on periodical basis.
The Corporate Treasury team updates the Audit Committee on a quarterly basis about the implementation of the above policies. It also updates the Risk Management Committee of the Company on periodical basis about the various risks to the business and status of various activities planned to mitigate the risks.
(I) Market Risk:
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.
(A) Foreign Currency Risk:
Foreign currency risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, import of fuels, raw materials and spare parts, capital expenditure, exports of cement and the Companyâs net investments in foreign subsidiaries.
When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
The Company evaluates exchange rate exposure arising from foreign currency transactions. The Company follows established risk management policies and standard operating procedures. It uses derivative instruments like foreign currency swaps, options and forwards to hedge exposure to foreign currency risk.
(B) Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs borrowing with floating interest rates. For all long-term borrowings with floating rates, the risk of variation in the interest rates is mitigated through interest rate swaps. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.
(B) Cash Flow Hedges
The Company has foreign currency external commercial borrowings / investments and to mitigate the risk of foreign currency and floating interest rates the Company has taken forward contracts, currency options, currency swaps, interest rates swaps and principal only swaps. The Company is following hedge accounting for all the foreign currency borrowings/ investments raised on or after April 01, 2015 based on qualitative approach.
The Company assesses hedge effectiveness based on following criteria:
(i) an economic relationship between the hedged item and the hedging instrument;
(ii) the effect of credit risk; and
(iii) Assessment of the hedge ratio
The Company designates the derivatives to hedge its currency risk and generally applies a hedge ratio of 1:1. The Companyâs policy is to match the critical terms of the forward exchange contracts to match with the hedged item.
(C) Commodity price risk management:
Commodity price risk for the Company is mainly related to fluctuations in coal and pet coke prices linked to various external factors, which can affect the production cost of the Company. Since the Energy costs is one of the primary costs drivers, any adverse fluctuation in fuel prices can lead to drop in operating margin. To manage this risk, the Company enters into fixed price swaps/other derivatives for imported coal, enter into long-term supply agreement for pet coke, identifying new sources of supply etc. While fixed price swaps/other derivatives are available in the markets for coal but in case of pet coke no such derivative is available; it has to be procured at spot prices. Additionally, processes and policies related to such risks are reviewed and controlled by senior management and fuel requirement are monitored by the central procurement team.
(II) Credit Risk Management:
Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing / investing activities, including deposits with banks/financial institutions, mutual fund investments, and investments in debt securities, foreign exchange transactions and financial guarantees. The Company has no significant concentration of credit risk with any counterparty.
Trade receivables
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and based on the evaluation credit limit of each customer is defined. Wherever the Company assesses the credit risk as high the exposure is backed by either bank guarantee / letter of credit or security deposits.
Total Trade receivable as on March 31, 2022 is '' 2,706.82 Crores (March 31, 2021 '' 2,285.99 Crores). The Company does not have higher concentration of credit risks to a single customer. A single largest customer has total exposure in sales 2.51% (March 31, 2021: 2.10%) and in receivables 11.6% (March 31, 2021: 10.7%)
As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
As per policy, receivables are classified into different buckets based on the overdue period ranging from 6 months - one year to more than two years. There are different provisioning norms for each bucket which are ranging from 25% to 100%.
Investments, Derivative Instruments, Cash and Cash Equivalent and Deposits with Banks/Financial Institutions
Credit Risk on cash and cash equivalent, deposits with the banks / financial institutions is generally low as the said deposits have been made with the banks / financial institutions who have been assigned high credit rating by international and domestic rating agencies.
Credit Risk on Derivative Instruments are generally low as Company enters into the Derivative Contracts with the reputed Banks and Financial Institutions.
Investments of surplus funds are made only with approved Financial Institutions / Counterparty. Investments primarily include investment in units of mutual funds, quoted Bonds, Non-Convertible Debentures issued by Government / Semi Government Agencies / PSU Bonds / High Investment grade corporates etc. These Mutual Funds and Counterparties have low credit risk.
Total Non-current and current investments excluding Subsidiaries, Joint Ventures and Associates as on March 31, 2022 is '' 6,114.72 Crores (March 31, 2021 '' 12,022.46 Crores)
Financial Guarantees
The Company has given corporate guarantees amounting to '' 1,801.59 Crores in favour of its subsidiaries and joint ventures (Refer note 33 (c)).
(III) Liquidity risk management:
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Companyâs treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows.
The Capital management objective of the Company is to (a) maximise shareholder value and provide benefits to other stakeholders and (b) maintain an optimal capital structure to reduce the cost of capital.
For the purposes of the Companyâs capital management, capital/equity includes issued equity share capital, share premium and all other equity.
The Company monitors capital using debt-equity ratio, which is total debt less liquid investments and bank deposits divided by total equity.
In addition, the Company has financial covenants relating to the borrowing facilities that it has taken from the lenders to manage interest coverage service ratio, Debt to EBITDA, etc. which is maintained by the Company.
Note 49: Research and Development
Revenue expenditure on Research and Development included in different heads of expenses in the Statement of Profit and Loss is '' 11.68 Crores. (March 31, 2021 '' 15.25 Crores).
(a) Other Operating Revenues include Incentives against capital investments, under State Investment Promotion Scheme of '' 456.43 Crores (March 31, 2021 '' 233.03 Crores).
(b) Sales Tax deferment loan granted under State Investment Promotion Scheme has been considered as a government grant and the difference between the fair value and nominal value as on date is recognized as an income. Accordingly, an amount of '' 74.44 Crores (March 31, 2021: 48.83 Crores) has been recognized as an income. Every year change in fair value is accounted for as an interest expense.
(c) Repairs and maintenance are net of subsidy received, under State Investment Promotion Scheme of '' 0.97 Crores. (March 31, 2021 '' 0.37 Crores).
(d) Cost of materials consumed are net of grants received towards royalty expense amounting to '' 13.26 Crores (March 31, 2021 '' 12.26 Crores)
Note 52: Assets held for Disposal (Ind AS 105):
The Company has identified certain assets like Land, Aggregate Mines, Coal Washery etc. which are available for sale
in its present condition. The Company is committed to plan the sale of asset and an active programme to locate a buyer
and complete the plan have been initiated. The Company expects to dispose off these assets in the due course.
(A) The Company is primarily in the Business of manufacture and sale of cement and cement related products. The product shelf life being short, all sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/ delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established, the Company does not give significant credit period resulting in no significant financing component. The Company, however, has a policy for replacement of the damaged goods.
The above 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 56: COVID-19 (Global Pandemic)
In the face of COVID - 19 pandemic the Companyâs operations across locations were stopped in line with the Government directives. This had an adverse impact on revenues during the quarter ended June 30, 2020, as expected.
Even before the formal announcement of the national lockdown, keeping in mind the well-being of its employees, the Company enabled âwork from homeâ for its employees and taken all necessary steps to ensure a seamless transition to the new ways of working for employees, while at the same time ensuring business continuity. The Company was in continuous engagement with all its stakeholders through various digital platforms. Critical Response Teams were set up across the organisation to plan scenarios and respond to the rapidly changing situation.
With the Government allowing select activities to operate, the Company gradually resumed operations at its establishments after obtaining necessary government approvals and ensuring compliance with the statutory guidelines in line with the standard operating procedure (SOP) announced by the Ministry of Home Affairs, Government of India.
With the easing of lockdown, operations gradually stabilised. The Company has the unique advantage of being able to cater to demand in different parts of the country.
The Companyâs recovery from the Covid-19 led disruption of the economy has been rapid. It Company managed the crisis with a sharp focus on operational efficiencies. It was able to recover the carrying amount of all its inventories, receivables and loans in the ordinary course of business. It was able to service all its debt obligations as per schedule, with its capital and financial resources remaining entirely protected and its liquidity position adequately covered.
(i) As on March 31, 2022 there is no untilised amounts in respect of any issue of securities and long term borrowings from banks and financial institutions. The borrowed funds have been utilised for the specific purpose for which the funds were raised.
(ii) The Company do not have any transactions with struck off companies.
(iii) The Company do not have any charges or satisfaction, which is yet to be registered with Registrar of Companies beyond the statutory period.
(iv) The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017.
(v) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(vi) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(vii) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(viii) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(ix) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961
The figures for the previous periods have been regrouped / rearranged wherever necessary to conform to the current periods classification in order to comply with the requirements of the amended Schedule III to the Companies Act, 2013 effective 1st April, 2021.
Mar 31, 2021
B) 1. Tangible Assets include assets for which ownership is not in the name of the Company - Gross Block of '' 442.04 Crores (March 31,2020''406.72 Crores).
2. Buildings include '' 12.13 Crores (March 31, 2020 '' 12.13 Crores) being cost of Debentures and Shares in a company entitling the right of exclusive occupancy and use of certain premises.
3. Opening Gross Block includes Research and Development Assets (Building, Plant and Equipment, Furniture and Fixtures, Office Equipment and Intangible Assets) of '' 43.19 Crores (March 31,2020''44.54 Crores) and Net Block of '' 21.19 Crores (March 31,2020''24.65 Crores). Addition for the Research and Development Assets during the year is '' 0.30 Crores (March 31,2020''1.12 Crores).
4. Title of immovable properties having Gross Block of '' 3,388.19 Crores (March 31,2020''3,568.28 Crores) and Net
Block of '' 3 263 42 Crorec (March 31 2020''3 418 88 Crorec) is yet to be transferred in the name of the Company
(f) The Weighted average incremental borrowing rate of 9.16% p.a. for local currency borrowings and 3.27% p.a. for foreign currency borrowings has been applied for measuring the lease liability at the date of initial application.
(g) The total cash outflow for leases for year ended March 31,2021 is '' 120.70 Crores (March 31,2020''112.46 Crores).
(h) Income from sub leasing of Right to use assets is for year ended March 31, 2021 is '' 61.28 Crores (March 31, 2020 '' 64.87 Crores).
a) Capital Reserve: Companyâs capital reserve is mainly on account of acquisition of cement business of Larsen & Toubro Ltd., Gujarat Units of JCCL and cement capacities of 21.2 MTPA of Jaiprakash Associates Ltd (JAL) and JCCL, being excess of the net assets acquired over the consideration paid.
b) Securities Premium: Securities premium is credited when shares are issued at premium. It is utilised in accordance with the provisions of the Act, to issue bonus shares, to provide for premium on redemption of shares or debentures, equity related expenses like underwriting costs, etc.
c) Debenture Redemption Reserve (DRR): The Company has issued redeemable non-convertible debentures. Accordingly, the Companies (Share capital and Debentures) Rules, 2014 (as amended), requires the company to create DRR out of profits of the company available for payment of dividend. DRR is required to be created for an amount which is equal to 25% of the value of debentures issued. However, this requirement is no more applicable w.e.f. April 1,2018 as per the amendment in the Companies (Share capital and Debentures) Rules, 2014 vide dated August 16, 2019; accordingly, the Company has not made any new addition in the said reserve and accounted the reversal of outstanding reserve linked to payment of specific non-convertible debentures.
d) General Reserve: The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provision of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
e) Shares Options Outstanding Reserve: The Company has three share option schemes under which options to subscribe for the Companyâs shares have been granted to certain executives and senior employees. The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer to Note 45 for further details of these plans.
f) Treasury Shares: The Company has formed an Employee Welfare Trust for purchasing Companyâs shares to be allotted to eligible employees under Employees Stock Options Scheme, 2018 (ESOS 2018). As per Ind AS 32 -Financial Instruments: Presentation, Reacquired equity shares of the Company are called Treasury Shares and deducted from equity.
g) Cashflow Hedge Reserve: The Company has designated its hedging instruments as cash flow hedges and any effective portion of cashflow hedge is maintained in the said reserve. In case the hedging becomes ineffective, the amount is recognised in the Statement of Profit and Loss.
(b) (i) The Company had filed appeals against the orders of the Competition Commission of India (CCI) dated
31/08/2016 and 19/01/2017. Upon the NCLAT disallowing its appeal against the CCI order dated 31/08/2016, the Honâble Supreme Court has, by its order dated 05/10/2018, granted a stay against the NCLAT order. Consequently, the Company has deposited an amount of '' 144.95 crores equivalent to 10% of the penalty amount. The Company, backed by legal opinions, believes that it has a good case in both the matters and accordingly no provision has been made in the results.
(ii) In the month of December 2020, officers from CCI visited the Companyâs premises seeking information for certain periods under the Competition Act 2002. Company has provided the information sought by them and will co-operate for any further information that may be required. The Company presently believes that this does not have any material impact.
(c) Guarantees:
The Company has issued corporate guarantees as under:
In favour of the Banks / Lenders on behalf of some of its Subsidiaries and Joint Venture (JV), as mentioned below, for the purposes of replacing old loans, acquisition financing, working capital and other general corporate purposes:
⢠UltraTech Nathdwara Cement Limited: '' 3,050.00 Crores (March 31,2020''3,050.00 Crores).
⢠Bhaskarpara Coal Company Limited (JV): '' 1.70 Crores (March 31,2020''4.00 Crores).
⢠UltraTech Cement Middle East Investment Limited and its subsidiaries: USD 161.30 Million (Equivalent to '' 1,179.24 Crores) {March 31,2020 USD 387.05 Million (Equivalent to '' 2,928.59 Crores)}.
(These Corporate Guarantees are issued in different currencies viz. Indian Rupee, USD and UAE Dirham.)
Note 34: Capital and other commitments:
Estimated amount of contracts remaining to be executed on capital account not provided for (net of advances) 2,230.08 Crores. (March 31,2020''832.59 Crores).
The Supreme Court of India has allowed an appeal filed by the State of Rajasthan in a matter relating to transfer of mining lease in the name of the Companyâs wholly owned subsidiary, Gotan Lime Stone Khanij Udyog Private Limited (âGKUPLâ) and has directed the State of Rajasthan to frame and notify its policy relating to transfer of mining lease and thereafter pass appropriate order in respect of the mining lease of GKUPL. State Government has notified the new policy related to transfer of new mining lease, based on which the Company has requested the State Government to consider reinstatement of the mines in its favour.
Note 36: Scheme of Demerger of Cement Business of Century Textiles and Industries Limited (Ind AS 103):
(A) The Scheme of Demerger amongst Century Textiles and Industries Limited (âCTILâ or âthe Demerged Undertakingâ) and the Company and their respective shareholders and creditors (âthe Schemeâ) was made effective from October 1,2019. The National Company Law Tribunal, Mumbai Bench (âNCLTâ) had approved the Scheme by its Order dated July 3, 2019 and fixed May 20, 2018 as the Appointed Date. Consequently, the Company had included the financial results/information of the Demerged Undertaking in its standalone financial statements with effect from May 20,
2018 (which is deemed to be the acquisition date for purpose of Ind AS 103 - Business Combinations) to include the financial results/information of the acquired Cement Business Division of CTIL (âthe Demerged Undertakingâ).
(B) The assets of the Demerged Undertaking comprising of 3 Integrated Units with a total capacity of 12.6 MTPA and 1 Grinding Unit with a grinding capacity of 2.0 MTPA have an enterprise valuation of '' 8,387.71 Crores. The acquisition of the Demerged undertaking continues to support the Company to strengthen its presence in the Eastern & the Central markets and extend its footprint in Western and Southern markets. This also provide synergies in manufacture and distribution process and logistics alignment leading to economies of scale and creation of efficiency by reducing time to market and benefiting customers. The acquisition continues to create value for its shareholders by acquiring ready to use assets which creates operational efficiencies and reducing time to markets vis-a-vis greenfield projects which are time consuming due to challenges in acquisition of land and limestone mining leases.
(C) Fair Value of the Consideration transferred:
As per Ind AS 103 - Business Combinations, purchase consideration has been allocated on the basis of fair valuation determined by an independent valuer. Costs related to acquisition (including stamp duty on assets transferred) had been charged to Statement of Profit and Loss on the appointed date.
Against the total enterprise value of '' 8,387.71 Crores, the Company had taken over borrowings of '' 3,000.00 Crores from CTIL. After taking these liabilities into account, effective purchase consideration of '' 5,387.71 Crores had been discharged on October 16, 2019, being the Record Date in terms of the Scheme, by issue of 1 (one) equity share of the Company of face value '' 10/- each for every 8 (eight) equity shares of CTIL of face value '' 10/- each to the shareholders of CTIL. The Fair value of the shares issued is '' 5,387.71 crores which had been determined based on the last closing price prior to the Appointed Date.
(E) Acquired Receivables:
As on the date of acquisition, gross contractual amount of the acquired Trade and other Receivables was '' 293.06 Crores against which no provision had been considered since fair value of the acquired receivables were equal to carrying value as on the date of acquisition.
(F) Contingent Liabilities
The Company has assumed all the contingent liabilities of the Demerged Undertaking as per the Scheme. Total contingent liability transferred to the Company was '' 806.64 Crores.
(G) Acquisition related costs
During the year ended March 31,2019 acquisition related costs of '' 5.16 Crores had been recognised under Miscellaneous Expenses and Rates and Taxes in the Statement of Profit and Loss. The stamp duty paid / payable on transfer of the assets amounting to '' 113.88 Crores had been charged to the Statement of Profit and Loss and shown as an exceptional item.
Note 37: Employee Benefits (Ind AS 19):
(A) Defined Benefit Plans:
(a) Gratuity:
The gratuity payable to employees is based on the employeeâs service and last drawn salary at the time of leaving the services of the Company and is in accordance with the Rules of the Company for payment of gratuity.
Inherent Risk
The plan is defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, this exposes the Company to actuarial risk such as adverse salary growth, change in demographic experience, inadequate return on underlying plan assets. This may result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature, the plan is not subject to any longevity risks.
(b) Pension:
The Company considers pension for some of its employees at senior management based on the period of service and contribution for the Company. There is no material risk associated with this plan.
(c) Post-Retirement Medical Benefits:
The Company provides post-retirement medical benefits to certain ex-employees who were transferred under the Scheme of arrangement for acquiring Larsen & Toubro cement business and eligible for such benefits from earlier Company. There is no material risk associated with this plan.
(e) Contribution to Other Funds:
Amount recognized as an expense under the head âContribution to Other Fundsâ of Statement of Profit and Loss '' 28.47 Crores (March 31,2020''30.32 Crores).
(B) Amount recognized as an expense in respect of Compensated Absences is '' (8.04) Crores (March 31,2020''59.52 Crores).
(C) Amount recognized as expense for other long-term employee benefits is '' 0.86 Crores (March 31,2020''44.18 Crores).
Note 38: Segment Reporting (Ind AS 108):
The Company has presented segment information in the consolidated financial statements. Accordingly, as per Ind AS 108 âOperating Segmentsâ, no disclosures related to segments are presented in these standalone financial statements.
Compensation for March 31,2020 includes compensation of Mr. K. K. Maheshwari, who was Managing Director till December 31,2019 and was designated as Vice Chairman and Non-Executive Director w.e.f January, 01,2020. Post- retirement benefits included amount paid to him for Gratuity and Leave Encashment of '' 8.27 Crores. Further the Board had approved one-time payout of '' 9.45 Crores and pension of '' 28,34,000 per month with effect from January 1,2020 for his past services as Managing Director, which is also part of the above Post-employment benefits.
Based on the recommendation of the Nomination, Remuneration and Compensation Committee, all decisions relating to the remuneration of the Directors are taken by the Board of Directors of the Company, in accordance with shareholdersâ approval, wherever necessary.
Terms and Conditions of transactions with Related Parties:
The sales to and purchases from related parties including fixed Assets are made in the normal course of business and on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.
The Companyâs inter corporate loan to its subsidiary which is repayable on demand, for the current year the rate of interest is 1 month MCLR. (March 31,2020: 1 month MCLR)
For the year ended March 31,2021, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
The weighted average share price at the date of exercise for options was '' 5,759.93 per share (March 31,2020 '' 4,181.12 per share) and weighted average remaining contractual life for the share options outstanding as at March 31,2021 was 5.10 years (March 31,2020: 5.12 years).
The weighted average remaining contractual life for SAR is 3.22 years (March 31,2020: 4.22 years).
The exercise price for outstanding options and SAR is '' 10 per share for RSUâs and ranges from '' 1,965 per share to '' 6,735 per share for options.
(D) Fair Valuation:
5,350 share options were granted during the year. Weighted Average Fair value of the options granted during the year is '' 3,091.60 per share (March 31,2020''2,682.45 per share).
The fair value of option has been done by an independent firm of Chartered Accountants on the date of grant using the Black-Scholes Model/ Binomial Model.
The Key assumptions in the Black-Scholes Model for calculating fair value as on the date of grant:
(a) For ESOS 2013:
1. Risk Free Rate - 8.5% (Tranche I), 7.8% (Tranche II-III), 8.56% (Tranche IV)
7.6% (Tranche V), 6.74% (Tranche VI)
2. Option Life - (a) For Options - Vesting period (1 Year) Average of exercise period
(b) For RSU - Vesting period (3 Years) Average of exercise period
3. Expected Volatility* - Tranche-I: 0.29, Tranche-II: 0.27, Tranche-III: 0.28, Tranche-IV: 0.60
Tranche-V: 0.60, Tranche-VI: 0.61
4. Expected Growth in Dividend - Tranche -I: 20%, Tranche II-III: 15%, Tranche-IV: 5%, Tranche-V: 5%,
Tranche-VI: 5%
(b) For ESOS 2018:
1. Risk Free Rate - 7.47% (Tranche I)
2. Option Life - (a) For Options - Vesting period (1 Year) Average of exercise period
(b) For RSU - Vesting period (3 Years) Average of exercise period
3. Expected Volatility* - Tranche-I: 0.24
4. Dividend Yield - Tranche -I: 0.46%
*Expected volatility on the Companyâs stock price on National Stock Exchange based on the data commensurate with the expected life of the options/RSUâs up to the date of grant.
(a) For ESOS - SAR - 2018:
1. Risk Free Rate - 7.47% (Tranche I)
2. Option Life - (a) For Options - Vesting period (1 Year) Average of exercise period
(b) For RSU - Vesting period (3 Years) Average of exercise period
3. Expected Volatility* - Tranche-I: 0.25,
4. Dividend Yield - Tranche -I: 0.46%
(b) For ESOS 2018:
1. Risk Free Rate - 6.78% (Tranche II), 6.72% (Tranche III), 5.84% (Tranche IV & V)
2. Option Life - (a) For Options - Vesting period (1 Year) Average of exercise period
(b) For RSU - Vesting period (3 Years) Average of exercise period
3. Expected Volatility* - Tranche-II: 0.26, Tranche- III: 0.26, Tranche- IV & V: 0.26
4. Dividend Yield - Tranche -II & III: 0.27%; Tranche IV & V: 0.27%
*Expected volatility on the Companyâs stock price on National Stock Exchange based on the data
Note 45 (B): Fair Value measurements (Ind AS 113):
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in an orderly transaction in the principal (or most advantageous) market at measurement date under the current market condition regardless of whether that price is directly observable or estimated using other valuation techniques.
The Company has established the following fair value hierarchy that categorizes the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities. The fair value of all bonds which are traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market (For example traded bonds, over the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on company specific estimates. The mutual fund units are valued using the closing Net Asset Value. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
(a) The fair values of the quoted investments/units of mutual fund schemes are based on market price/net asset value at the reporting date.
(b) The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves and an appropriate discount factor.
(c) The fair value of forward foreign exchange contracts is calculated as the present value determined using forward exchange rates and interest rate curve of the respective currencies.
(d) The fair value of currency swap is calculated as the present value determined using forward exchange rates, currency basis spreads between the respective currencies, interest rate curves and an appropriate discount factor.
(e) The fair value of foreign currency option contracts is determined using the Black Scholes valuation model.
(f) The fair value of the remaining financial instruments is determined using discounted cash flow analysis. The discount rates used is based on management estimates.
The significant unobservable inputs used in the fair value measurement of the fair value hierarchy together with a
quantitative sensitivity analysis as at March 3T 2021 and March 3T 2020 are as shown below:
The Companyâs principal financial liabilities, other than derivatives, comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets, other than derivatives include trade and other receivables, investments and cash and cash equivalents that derive directly from its operations.
The Companyâs activities expose it to market risk, liquidity risk and credit risk. The Companyâs overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. The Company uses derivative financial instruments, such as foreign exchange forward contracts, foreign currency option contracts, principal only swaps, cross currency swaps that are entered to hedge foreign currency risk exposure, interest rate swaps, coupon only swaps to hedge variable interest rate exposure and commodity fixed price swaps to hedge commodity price risks. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
(A) Foreign Currency Risk:
Foreign currency risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, import of fuels, raw materials and spare parts, capital expenditure, exports of cement and the Companyâs net investments in foreign subsidiaries.
When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
The Company has standard operating procedures and investment policy for deployment of surplus liquidity, which allows investment in debt securities, fixed deposits and mutual fund schemes of debt categories only and restricts the exposure in equity markets.
Compliances of these policies and principles are reviewed by the internal auditors/internal risk management committee on periodical basis.
The Corporate Treasury team updates the Audit Committee on a quarterly basis about the implementation of the above policies. It also updates the Risk Management Committee of the Company on periodical basis about the various risks to the business and status of various activities planned to mitigate the risks.
(I) Market Risk:
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.
(B) Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs borrowing with floating interest rates. For all long-term borrowings with floating rates, the risk of variation in the interest rates is mitigated through interest rate swaps. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.
(B) Cash Flow Hedges: The Company has foreign currency external commercial borrowings / investments and to mitigate the risk of foreign currency and floating interest rates the Company has taken forward contracts, currency options, currency swaps, interest rates swaps and principal only swaps. The Company is following hedge accounting for all the foreign currency borrowings/ investments raised on or after April 01,2015 based on qualitative approach.
The Company assesses hedge effectiveness based on following criteria:
(i) an economic relationship between the hedged item and the hedging instrument;
(ii) the effect of credit risk; and
(iii) assessment of the hedge ratio
The Company designates the derivatives to hedge its currency risk and generally applies a hedge ratio of 1:1. The Companyâs policy is to match the critical terms of the forward exchange contracts to match with the hedged item.
(II) Credit Risk Management:
Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing / investing activities, including deposits with banks/financial institutions, mutual fund investments, and investments in debt securities, foreign exchange transactions and financial guarantees. The Company has no significant concentration of credit risk with any counterparty.
Trade receivables
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and based on the evaluation credit limit of each customer is defined. Wherever the Company assesses the credit risk as high the exposure is backed by either bank guarantee / letter of credit or security deposits.
Total Trade receivable as on March 31,2021 is '' 2,285.99 Crores (March 31,2020''1,848.28 Crores)
The Company does not have higher concentration of credit risks to a single customer. A single largest customer has total exposure in sales 2.10% (March 31,2020: 2.4%) and in receivables 10.7% (March 31,2020: 9.5%)
As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
As per policy receivables are classified into different buckets based on the overdue period ranging from 6 months -one year to more than two years. There are different provisioning norms for each bucket which are ranging from 25% to 100%.
(C) Commodity price risk management:
Commodity price risk for the Company is mainly related to fluctuations in coal and pet coke prices linked to various external factors, which can affect the production cost of the Company. Since the Energy costs is one of the primary costs drivers, any adverse fluctuation in fuel prices can lead to drop in operating margin. To manage this risk, the Company enters into fixed price swaps/other derivatives for imported coal, enter into long-term supply agreement for pet coke, identifying new sources of supply etc. While fixed price swaps/other derivatives are available in the markets for coal but in case of pet coke no such derivative is available; it has to be procured at spot prices. Additionally, processes and policies related to such risks are reviewed and controlled by senior management and fuel requirement are monitored by the central procurement team.
Investments, Derivative Instruments, Cash and Cash Equivalent and Deposits with Banks/Financial Institutions
Credit Risk on cash and cash equivalent, deposits with the banks / financial institutions is generally low as the said deposits have been made with the banks / financial institutions who have been assigned high credit rating by international and domestic rating agencies.
Credit Risk on Derivative Instruments are generally low as Company enters into the Derivative Contracts with the reputed Banks and Financial Institutions.
Investments of surplus funds are made only with approved Financial Institutions / Counterparty. Investments primarily include investment in units of mutual funds, quoted Bonds, Non-Convertible Debentures issued by Government / Semi Government Agencies / PSU Bonds / High Investment grade corporates etc. These Mutual Funds and Counterparties have low credit risk.
Total Non-current and current investments excluding Subsidiaries, Joint Ventures and Associates as on March 31,
Financial Guarantees
The Company has given corporate guarantees amounting to '' 4,230.94 Crores in favour of its subsidiaries and joint ventures (Refer note 33 (c).
(III) Liquidity risk management:
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Companyâs treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows.
The Capital management objective of the Company is to (a) maximise shareholder value and provide benefits to other stakeholders and (b) maintain an optimal capital structure to reduce the cost of capital.
For the purposes of the Companyâs capital management, capital/equity includes issued equity share capital, share premium and all other equity.
Revenue expenditure on Research and Development included in different heads of expenses in the Statement of Profit and Loss is '' 15.25 Crores. (March 31,2020''16.34 Crores).
Note 50: Corporate Social Responsibility:Expenditure incurred in cash on Corporate Social Responsibility activities, included in different heads of expenses in the Statement of Profit and Loss is '' 120.68 Crores (March 31,2020''123.55 Crores) and on account of capital expenditure Nil (March 31,2020''0.96 Crores). The said capital expenditure is incurred on acquiring and owning assets which are being used for the purpose of Corporate Social Responsibility. The amount required to be spent under Section 135 of the Companies Act, 2013 for the year ended March 31,2021 is '' 73.72 Crores (March 31,2020''63.50 Crores) i.e. 2% of average net profits for last three financial years, calculated as per section 198 of the Companies Act, 2013.
(a) Other Operating Revenues include Incentives against capital investments, under State Investment Promotion Scheme of '' 233.03 Crores (March 31,2020''381.84 Crores).
(b) Sales Tax deferment loan granted under State Investment Promotion Scheme has been considered as a government grant and the difference between the fair value and nominal value as on date is recognized as an income. Accordingly, an amount of '' 48.83 Crores (March 31,2020: '' Nil Crores) has been recognized as an income.
Every year change in fair value is accounted for as an interest expense.
(c) Repairs and maintenance are net of subsidy received, under State Investment Promotion Scheme of '' 0.37 Crores. (March 31,2020''0.32 Crores).
(d) Cost of materials consumed are net of grants received towards royalty expense amounting to '' 12.26 Crores (March 31,2020''23.44 Crores)
Note 52: Assets held for Disposal (Ind AS 105):
The Company has identified certain assets like Land, Aggregate Mines, Coal Washery etc. which are available for sale in its present condition. The Company is committed to plan the sale of asset and an active programme to locate a buyer and complete the plan have been initiated. The Company expects to dispose off these assets in the due course.
(A) The Company is primarily in the Business of manufacture and sale of cement and cement related products. The product shelf life being short, all sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/ delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established, the Company does not give significant credit period resulting in no significant financing component. The Company, however, has a policy for replacement of the damaged goods.
Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019, announced by the Government of India, the Company has provided a one-time expense of '' 130.66 Crores as part of Rates and Taxes, against various disputed liabilities during the year ended March 31,2020.
Exceptional item of '' 164.00 crores for the year ended March 31,2021 represents a one-time expense upon receiving an order dated July 17, 2020, issued by the Honâble Supreme Court denying the Companyâs claim of capital investment subsidy, sanctioned in 2010 under Rajasthan Investment Promotion Scheme -2003.
Note 57: COVID-19 (Global Pandemic)
In the face of COVID - 19 pandemic the Companyâs operations across locations were stopped in line with the Government directives. This had an adverse impact on revenues during the quarter ended June 30, 2020, as expected.
Even before the formal announcement of the national lockdown, keeping in mind the well-being of its employees, the Company enabled âwork from homeâ for its employees and taken all necessary steps to ensure a seamless transition to the new ways of working for employees, while at the same time ensuring business continuity. The Company was in continuous engagement with all its stakeholders through various digital platforms. Critical Response Teams were set up across the organisation to plan scenarios and respond to the rapidly changing situation.
With the Government allowing select activities to operate, the Company gradually resumed operations at its establishments after obtaining necessary government approvals and ensuring compliance with the statutory guidelines in line with the standard operating procedure (SOP) announced by the Ministry of Home Affairs, Government of India.
With the easing of lockdown, operations gradually stabilised. The Company has the unique advantage of being able to cater to demand in different parts of the country.
The Company recovered the carrying amount of all its assets including inventory, receivables and loans in the ordinary course of business. The Companyâs capital and financial resources remained entirely protected and its liquidity position remain adequately covered. The Company was able to service its debt obligations as per schedule and on due dates.
Previous year figures have been regrouped / reclassified wherever necessary to correspond with current year classification disclosure.
Mar 31, 2019
NOTE 47: FINANCIAL RISK MANAGEMENT OBJECTIVES (Ind AS 107)
The Company''s principal financial liabilities, other than derivatives, comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the company''s operations. The company''s principal financial assets, other than derivatives include trade and other receivables, investments and cash and cash equivalents that derive directly from its operations.
The Company''s activities exposes it to market risk, liquidity risk and credit risk. Company''s overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the company. The company uses derivative financial instruments, such as foreign exchange forward contracts, foreign currency option contracts, principal only swaps, cross currency swaps that are entered to hedge foreign currency risk exposure, interest rate swaps, coupon only swaps to hedge variable interest rate exposure and commodity fixed price swaps to hedge commodity price risks. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
The sources of risks which the company is exposed to and their management is given below:
|
Risk (1) Market Risk |
Exposure Arising From |
Measurement |
Management |
|
A. Foreign Currency Risk |
Committed commercial transaction |
Cash Flow Forecasting |
(a) Forward foreign exchange contracts |
|
Financial asset and Liabilities not denominated in INR |
Sensitivity Analysis |
(b) Foreign currency options |
|
|
(c) Principal only/Currency swaps |
|||
|
B. Interest Rate Risk |
Long Term Borrowings at variable rates |
Sensitivity Analysis, |
(a) Interest Rate swaps, Coupon only swaps |
|
Interest rate movements |
|||
|
Investments in Debt Schemes of Mutual Funds and Other Debt Securities |
(b) Portfolio Diversification |
|
Risk |
Exposure Arising From |
Measurement |
Management |
|
C. Commodity Price Risk |
Movement in prices of commodities mainly Imported Thermal Coal and Pet Coke |
Sensitivity Analysis, |
(a) Commodity Fixed Prices |
|
Commodity price tracking |
(b) Swaps/Options |
||
|
(II) Credit Risk |
Trade receivables, Investments, Derivative Financial instruments, Loans and Bank balances |
Ageing analysis, |
(a) Diversification of mutual fund investments, |
|
Credit Rating |
|||
|
(b) Credit limit & credit worthiness monitoring, |
|||
|
(c) Criteria based approval process |
|||
|
(III) Liquidity Risks |
Borrowings and Other Liabilities and Liquid Investments |
Rolling cash flow forecasts |
(a) Adequate unused credit lines and borrowing facilities |
|
Broker Quotes |
(b) Portfolio Diversification |
The Company has standard operating procedures and investment policy for deployment of surplus liquidity which allows investment in debt securities and mutual fund schemes of debt categories only and restricts the exposure in equity markets.
Compliances of these policies and principles are reviewed by internal auditors on periodical basis.
The Corporate treasury team updates the Audit Committee on a quarterly basis about the implementation of the above policies. It also updates to the Internal Risk Management Committee of the Company on periodical basis about the various risks to the business and status of various activities planned to mitigate the risks.
(I) Market Risk:
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.
A. Foreign Currency Risk:
Foreign currency risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, import of fuels, raw materials and spare parts, capital expenditure, exports of cement and the Company''s net investments in foreign subsidiaries.
When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
The Company evaluates exchange rate exposure arising from foreign currency transactions. The Company follows established risk management policies and standard operating procedures. It uses derivative instruments like foreign currency swaps and forwards to hedge exposure to foreign currency risk.
Note: If the rate is decreased by 100 bps profit will increase by an equal amount.
B. Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s short term borrowing (excluding commercial paper) with floating interest rates. For all long-term borrowings with floating rates, the risk of variation in the interest rates is mitigated through interest rate swaps. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.
|
Particulars |
Total Borrowings |
Floating Rate Borrowings |
Fixed Rate Borrowings |
Non-Interest Bearing Borrowings |
|
INR |
17,105.51 |
11,489.18 |
5,177.56 |
438.77 |
|
USD |
1,012.63 |
- |
1,012.63 |
- |
Note: Interest rate risk hedged for FCY borrowings has been shown under Fixed Rate borrowings
|
Outstanding foreign currency exposure (Gross) as at |
March 31, 2019 |
March 31, 2018 |
|
Trade receivables |
||
|
USD |
1.10 |
0.83 |
|
Euro |
0.08 |
0.10 |
|
Others |
- |
0.01 |
|
Trade Payables |
||
|
USD |
3.14 |
1.30 |
|
Euro |
0.26 |
0.75 |
|
Others |
0.03 |
0.02 |
|
Borrowings |
||
|
USD |
14.64 |
21.14 |
|
Investments |
||
|
USD |
6.92 |
6.92 |
Foreign currency sensitivity on unhedged exposure:
100 bps increase in foreign exchange rates will have the following impact on profit before tax.
Rs in Crores
|
Particulars |
March 31. 2019 |
March 31, 2018 |
|
USD |
(4.79) |
(4.51) |
|
Others |
- |
(0.01) |
Interest rate exposure:
|
Total as at March 31, 2019 |
18,118.14 |
11,489.18 |
6,190.19 |
438.77 |
|
INR |
16,041.51 |
10,563.86 |
5,187.97 |
289.68 |
|
USD |
1,377.99 |
- |
1,377.99 |
- |
|
Total as at March 31, 2018 |
17,419.50I |
10,563.86 |
6,565.96 | |
289.68 |
Interest rate sensitivities for unhedged exposure (impact on profit before tax due to increase in 100 bps):
|
Particulars |
As at March 31, 2019 |
As at March 31, 2018 |
|
INR |
(114.89) |
(105.64) |
Note: If the rate is decreased by 100 bps profit will increase by an equal amount.
Interest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date have been outstanding for the entire reporting period. Further, the calculations for the unhedged floating rate borrowing have been done on the notional value of the foreign currency (excluding the revaluation).
Foreign Currency and Interest Rate Risk Management:
Forward Exchange and Interest Rates Swaps Contracts:
A. Derivatives for hedging currency and interest rates, outstanding are as under:
|
Particulars |
Hedged Item |
Currency |
As at March 31, 2019 |
As at March 31, 2018 |
Cross Currency |
|
(a) Forward Contracts |
Imports |
USD |
10.73 |
6.47 |
Rupees |
|
Imports |
Euro |
0.11 |
0.15 |
Rupees |
|
|
Imports |
Euro |
1.24 |
1.11 |
USD |
|
|
Exports |
USD |
0.71 |
- |
Rupees |
|
|
(b) Other Derivatives: |
|||||
|
i) Currency & Interest Rate Swap (CIRS) |
ECB* |
USD |
7.32 |
9.82 |
Rupees |
|
ii) Principal only Swap |
ECB* |
USD |
7.32 |
11.32 |
Rupees |
|
iii) Interest Rate Swap |
ECB* |
USD |
7.32 |
11.32 |
USD |
* External Commercial Borrowings
B. Cash Flow Hedges: The Company has raised foreign currency external commercial borrowings and to mitigate the risk of foreign currency and floating interest rates the Company has taken forward contracts, currency swaps, interest rates swaps and principal only swaps. The Company is following hedge accounting for all the foreign currency borrowings raised on or after April 01, 2015 based on qualitative approach. The Company assesses hedge effectiveness based on following criteria: (i) an economic relationship between the hedged item and the hedging instrument; (ii) the effect of credit risk; and (iii) assessment of the hedge ratio
The Company designates the derivatives to hedge its currency risk and generally applies a hedge ratio of 1:1. The Company''s policy is to match the critical terms of the forward exchange contracts to match with the hedged item.
Foreign currency cash flows:
|
Particulars |
As at |
Average Exchange Rate (USD/INR) |
Nominal Foreign Currency USD Crores |
Fair Value Assets (Liabilities) Rs in Crores |
|
Buy Currency for External Commercial Borrowings (USD) |
March 31, 2019 |
65.19 |
7.32 |
17.25 |
|
Buy Currency for External Commercial Borrowings (USD) |
March 31, 2018 |
65.19 |
7.32 |
(10.90) |
Interest rates outstanding on Receive Floating and Pay Fix contracts:
|
Particulars |
As at |
Average contracted fixed interest rates* |
Nominal Amount USD Crores |
Fair Value Assets (Liabilities) Rs in Crores |
|
2 to 5 years |
March 31, 2019 |
7.47% |
7.32 |
(0.02) |
|
2 to 5 years |
March 31, 2018 |
7.47% |
7.32 |
7.19 |
Cross Currency and Interest rate Swaps:
|
Particulars |
As at |
Average contracted fixed interest rates* |
Average Exchange Rate (USD/INR) |
Nominal Amount USD Crores |
Fair Value Assets (Liabilities) Rs in Crores |
|
2 to 5 years |
March 31, 2019 |
7.79% |
67.49 |
7.32 |
2.76 |
|
2 to 5 years |
March 31, 2018 |
7.79% |
67.49 |
7.32 |
(23.57) |
* Includes weighted average rate for Cross Currency Interest Rate Swaps, Principal Only Swap and Coupon Swaps
The above Hedging Instruments are included in the Balance Sheet under the head "Other Financial Assets''V''Other Financial Liabilities". Refer Statement of changes in equity for movement on OCI.
Recognition of gains/(losses) under forward exchange and interest rates swaps contracts designated under cash flows hedges:
Rs in Crores
|
1 As at March 31, 2019 |
As at March 31, 2018 |
|||
|
Particulars |
Effective Hedge (OCI) |
Ineffective Hedge (Profit and Loss) |
Effective Hedge (OCI) |
Ineffective Hedge (Profit and Loss) |
|
Gain/(Loss) |
(11.01) |
(3.46) |
- |
|
C. Commodity price risk management:
Commodity price risk for the Company is mainly related to fluctuations in coal and pet coke prices linked to various external factors, which can affect the production cost of the Company. Since the Energy costs is one of the primary costs drivers, any fluctuation in fuel prices can lead to drop in operating margin. To manage this risk, the Company enters into forward covers for imported coal, enter into long-term supply agreement for pet coke, identifying new sources of supply etc. While forward covers are prevailing in the markets for coal but in case of pet coke no such derivative is available; it has to be procured at spot prices. Additionally, processes and policies related to such risks are reviewed and controlled by senior management and fuel requirement are monitored by the central procurement team.
(II) Credit Risk Management:
Credit risk a rises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing/investing activities, including deposits with banks, mutual fund investments, and investments in debt securities, foreign exchange transactions and financial guarantees. The Company has no significant concentration of credit risk with any counterparty.
Trade receivables
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and based on the evaluation credit limit of each customer is defined. Wherever the Company assesses the credit risk as high the exposure is backed by either bank guarantee/letter of credit or security deposits.
Total Trade receivable as on March 31, 2019 is Rs 2,097.59 Crores (March 31, 2018 Rs 1,714.20 Crores)
The Company does not have higher concentration of credit risks to a single customer. A single largest customer has total exposure in sales 2.4% (March 31, 2018: 1.9%) and in receivables 9.9% (March 31, 2018: 8.7%).
As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
As per policy receivables are classified into different buckets based on the overdue period ranging from 6 months - one year to more than two years. There are different provisioning norms for each bucket which are ranging from 25% to 100%.
Movement of provision for doubtful debts:
Rs in Crores
|
Particulars |
March 31, 2019 |
March 31, 2018j |
|
Opening provision |
41.50 |
35.68 |
|
Add: Provided during the year |
10.11 |
5.85 |
|
Less: Utilised during the year |
(0.07) |
(0.03) |
|
Closing Provision |
51.53 |
41.50 |
Investments, Derivative Instruments, Cash and Cash Equivalent and Bank Deposit
Credit Risk on cash and cash equivalent, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions who have been assigned high credit rating by international and domestic rating agencies.
Credit Risk on Derivative Instruments are generally low as Company enters into the Derivative Contracts with the reputed Banks and Financial Institutions.
Investments of surplus funds are made only with approved Financial Institutions/Counterparty. Investments primarily include investment in units of mutual funds, quoted Bonds, Non-Convertible Debentures issued by Government/Semi Government Agencies/PSU Bonds/High Investment grade corporates etc. These Mutual Funds and Counterparties have low credit risk.
Total Non-current and current investments as on March 31, 2019 is Rs 7,064.51 Crores (March 31, 2018 Rs 6,162.90 Crores)
Financial Guarantees
The Company has given corporate guarantees amount ing to Rs 5,790.16 Crores in favour of its subsidiaries and joint ventures (Refer note 32 (c)).
(Ill) Liquidity risk management:
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company''s treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts on the basis of expected cash flows.
The table below provides details regarding the remaining contractual maturities of financial liabilities and investments held for managing the risk at the reporting date based on contractual undiscounted payments.
Rs in Crores
|
As at March 31, 2019 |
Less than 1 Year |
1 to 5 Years |
More than 5 Years |
Total |
|
Borrowings (including current maturities of long-term debts) |
3,178.86 |
4,223.47 |
10,715.81 |
18,118.14 |
|
Trade Payables |
2,653.73 |
- |
- |
2,653.73 |
|
Interest accrued but not due on borrowings |
188.01 |
- |
- |
188.01 |
|
Other Financial Liabilities (excluding Derivative Liability) |
1,719.53 |
- |
- |
1,719.53 |
|
Investments |
1,514.85 |
1,010.81 |
350.44 |
2,876.10 |
|
As at March 31, 2018 |
Less than 1 year |
1 to 5 Years |
More than 5 Years |
Total |
|
Borrowings (including current maturities of long-term debts) |
3,545.16 |
3,182.76 |
10,691.58 |
17,419.50 |
|
Trade Payables |
2,224.16 |
- |
- |
2,224.16 |
|
Interest accrued but not due on borrowings |
161.94 |
- |
- |
161.94 |
|
Other Financial Liabilities (excluding Derivative Liability) |
1,651.55 |
- |
- |
1,651.55 |
|
Derivative Liability |
- |
28.27 |
- |
28.27 |
|
Investments |
3,948.71 |
1,106.72 |
356.66 |
5,412.09 |
NOTE 48: DISTRIBUTION MADE AND PROPOSED (Ind AS 1)
|
Particulars |
Year Ended March 31. 2019 |
Year Ended March 31, 2018 |
|
Proposed dividends on Equity shares: |
||
|
Final dividend for the year ended on March 31 , 2019: Rs 11.50 per share (March 31, 2018: Rs 10.50 per share) |
315.84 |
288.34 |
|
DDT on proposed dividend |
64.92 |
59.27 |
|
Proposed dividends on Preference shares: |
||
|
Final dividend for the year ended on March 31, 2019 |
0.01 |
0.01 |
|
DDT on proposed dividend (FY 2017-2018: Rs 17,098) |
- |
- |
|
Total Dividend proposed |
380.77 |
347.62 |
Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability (including Dividend Distribution Tax thereon) as at March 31.
NOTE 49: CAPITAL MANAGEMENT (Ind AS 1)
The Capital management objective of the Company is to (a) maximise shareholder value and provide benefits to other stakeholders and (b) maintain an optimal capital structure to reduce the cost of capital.
For the purposes of the Group''s capital management, capital includes issued equity share capital, share premium and all other equity.
Rs in Crores
The Company monitors capital using debt-equity ratio, which is total debt less liquid investments and bank deposits divided by total equity.
|
Particulars |
As at March 31, 2019 |
As at March 31, 2018 |
|
Total Debt (Bank and other borrowings) |
18,118.14 |
17,419.50 |
|
Equity |
27,947.72 |
25,923.02 |
|
Liquid Investments and bank deposits |
3,145.80 |
5,555.54 |
|
Debt to Equity (Net) |
0.54 |
0.46 |
In addition, the Company has financial covenants relating to the borrowing facilities that it has taken from the lenders like interest coverage service ratio, Debt to EBITDA, etc. which is maintained by the Company.
NOTE 50: RESEARCH AND DEVELOPMENT
Revenue expenditure on Research and Development included in different heads of expenses in the Statement of Profit and Loss is Rs 17.31 Crores. (March 31, 2018 Rs 14.04 Crores).
NOTE 51: CORPORATE SOCIAL RESPONSIBILITY
Expenditure incurred in cash on Corporate Social Responsibility activities, included in different heads of expenses in the Statement of Profit and Loss is Rs 74.96 Crores (March 31, 2018 Rs 60.71 Crores) and on account of capital expenditure Rs 2.16 Crores (March 31, 2018 Rs 0.96 Crores).
The amount required to be spent under Section 135 of the Companies Act, 2013 for the year ended March 31, 201 9 is Rs 61.17 Crores (March 31, 2018 Rs 58.91 Crores) i.e. 2% of average net profits for last three financial years, calculated as per section 1 98 of the Companies Act, 2013.
NOTE 52: GOVERNMENT GRANT (Ind AS 20)
(a) Other Operating Revenues include Incentives against capital investments, under State Investment Promotion Scheme of Rs 398.43 Crores (March 31, 2018 Rs 300.72 Crores).
(b) Sales Tax deferment loan granted under State Investment Promotion Scheme has been considered as a government grant and the difference between the fair value and nominal value as on date is recognized as an income. Accordingly, an amount of Rs 45.49 Crores (March 31, 2018: Rs 3.86 Crores) has been recognized as an income. Every year change in fair value is accounted for as an interest expense.
(c) Interest and Repairs to plant and machinery are net of subsidy received, under State Investment Promotion Scheme of Rs Nil Crores (March 31, 2018 Rs 5.81 Crores) and Rs 1.46 Crores (March 31, 2018 Rs 0.98 Crores) respectively.
NOTE 53: ASSETS HELD FOR DISPOSAL (Ind AS 105)
The Company has identified certain assets like Aggregate Mines, Pre Grinders, Vibrating Mill, Naptha based power plant etc which are available for sale in its present condition. The Company is committed to plan the sale of asset and an active programme to locate a buyer and complete the plan have been initiated. The Company expects to dispose off these assets within twelve months from its classification.
NOTE 54: OPERATING LEASE (Ind AS 17)
Rs in Crores
(a) Future minimum rental payables under non-cancellable operating lease
|
Sr. No |
Particulars |
* Year Ended March 31, 2019 |
Year Ended March 31, 2018 |
|
(0 |
Not later than one year |
5.32 |
2.45 |
|
(ii) |
Later than one year and not later than five years |
6.42 |
4.14 |
|
(MI) |
More than five years |
- |
- |
(b) Operating lease payment recognised in the Statement of Profit and Loss amounting to Rs 143.32 Crores (March 31, 2018 Rs 141.32 Crores)
(c) General Description of leasing agreements:
⢠Leased Assets: Land, Godowns, Offices, Flats, Machinery and Others.
⢠Future Lease rentals are determined on the basis of agreed terms.
⢠At the expiry of lease terms, the Company has an option to return the assets or extend the term by giving notice in writing.
⢠Lease agreements are generally cancellable and are renewable by mutual consent on mutually agreed terms.
NOTE 55: REVENUE (Ind AS 115)
A. The Company is primarily in the Business of manufacture and sale of cement and cement related products. The product shelf life being short, all sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established, the Company does not give significant credit period resulting in no significant financing component. The Company, however, has a policy for replacement of the damaged goods.
In compliance with Ind AS 115, certain sales promotion schemes are now treated as variable components of consideration and have been recognised as revenue deductions instead of other expenses. Consequently, all comparative period numbers have been restated, adhering to the full retrospective approach under lnd AS 115.
The Revenue and Other expenses for the year ended March 31, 2018 have both been reduced by Rs 432.18 Crores due to the aforesaid regrouping and there is no impact on the Profit, financial position and Cashflow of the Company.
B. Revenue recognised from Contract liability (Advances from Customers):
|
Particulars |
Year Ended March 31, 2019 |
Year Ended March 31, 2018 |
|
Closing Contract liability |
247.21 |
300.35 |
|
The Contract liability outstanding at the beginning of the year has been recognised as revenue during the year ended March 31, 2019. |
||
C. Reconciliation of revenue as per contract price and as recognised in statement of profit and loss:
|
Particulars |
Year Ended March 31, 2019 |
Year Ended March 31, 2018 |
|
Revenue as per Contract price |
38,192.72 |
32,387.94 |
|
Less: Discounts and incentives |
(3,087.96) |
(2,563.72) |
|
Revenue as per statement of profit and loss |
35,104.76 |
29,824.22 |
Rs in Crores
NOTE 56:
Information as per the requirement of Section 22 of The Micro, Small and Medium Enterprises Development Act, 2006
|
Particulars |
As at March 31, 2019 |
As at March 31, 2018 |
|
|
(a) |
(i) The principaI amount remaining unpaid to any supplier at the end of accounting year included in trade payables |
20.28 |
9.73 |
|
(ii) The interest due on above |
- |
0.01 |
|
|
The total of (i) & (ii) |
20.28 |
9.74 |
|
|
(b) |
The amount of interest paid by the buyer in terms of section 16 of the Act |
- |
- |
|
(c) |
The amount of the payment made to the supplier beyond the appointed day during the accounting year |
- |
- |
|
(d) |
The amounts of interest accrued and remaining unpaid at the end of financial year |
0.01 |
|
|
(e) |
The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the due date during the year) but without adding the interest specified under this Act. |
||
|
(f) |
The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006. |
The above 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 57:
Ind AS 116 - on March 30, 2019, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) Amendment Rules, 2019, notifying Ind AS 116 "Leases", which replaces Ind AS 17 "Leases". The new standard introduces a single on-balance sheet lease accounting model for lessee. This will result in the company recognising right of use assets & lease liability in the books.
The Company is in the process of analyzing the impact of Ind AS 116 on its financials. The amendment will come into force from April 01, 2019.
Others
Ministry of Corporate Affairs ("MCA") has notified following amendments to Ind AS on March 30, 2019 which is effective for the annual period beginning or or after April 01, 2019.
1. Ind AS 12 - Appendix C, Uncertainty over Income Tax Adjustments
The amendment requires an entity to determine probability of the relevant tax authority accepting the uncertain tax treatment that the Company have used in tax computation or plan to use in their income tax filings.
2. Amendment to Ind AS 12 - Income taxes
The amendment clarifies that an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events
3. Ind AS 19 - Plan amendment, curtailment or settlement
The amendments require an entity to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement and to recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognised because of the impact of the asset ceiling.
Based on preliminary assessment, the Company does not expect any significant impact on its financial statements on account of above amendments.
NOTE 58:
Effective July 01, 2017, sales are recorded net of GST whereas earlier sales were recorded gross of excise duty which formed part of expenses.
NOTE 59:
Other income for year ended March 31, 2018 includes reversal of earlier years provision of Rs 103.79 Crores related to contribution towards District Mineral Fund (DMF) under the Mines and Mineral (Development and Regulation) Amendment Act, 2015, on the basis of Supreme Court Judgment dated October 13, 2017.
NOTE 60:
Previous year figures have been regrouped/redassified wherever necessary to correspond with current year classification/disclosure.
Signatures to Note ''1'' to ''60''
|
In terms of our report attached. |
For and on behalf of the |
Board of Directors |
|
|
For BSR & Co. LLP |
For Khimji Kunverji & Co. |
K.K. MAHESHWARI |
S.B. MATHUR |
|
Chartered Accountants |
Chartered Accountants |
Managing Director |
Director |
|
Firm Registration No: 101248W/W-100022 |
Firm Registration No: 105146W |
DIN: 00017572 |
DIN: 00013239 |
|
VIJAY MATHUR |
KETAN VIKAMSEY |
ATUL DAGA |
|
|
Partner |
Partner |
Whole-time Director and CFO |
|
|
Membership No: 46476 |
Membership No: 44000 |
DIN: 06416619 |
|
|
S.K. CHATTERJEE |
|||
|
Mumbai: April 24, 2019 |
Company Secretary |
Mar 31, 2018
Note 1 - Movement of provisions during the year as required by Ind AS - 37 âProvisions, Contingent Liabilities and Contingent Asset" specified under Section 133 of the Companies Act, 2013:
(b) The Company has filed appeals with the Competition Appellate Tribunal (âCOMPAT") against two orders of the Competition Commission of India (âCCI") dated August 31, 2016 and January 19, 2017, and as per the directions of COMPAT, deposited RS, 117.55 Crores, being 10% of the penalty imposed by CCI under its order dated August 31, 2016. COMPAT has granted a stay on both the CCI orders. The Government has made changes in the constitution and operations of Tribunals, under which all matters with COMPAT have been transferred to the National Company Law Appellate Tribunal (âNCLAT"). Hearing of order dated August 31, 2016 is completed at NCLAT and order is awaited. The Company, backed by legal opinion, believes that it has a good case in both the matters and accordingly no provision has been made in the accounts.
(c) Guarantees:
The Company has issued corporate guarantees as under:
(i) In favour of the Banks / Lenders on behalf of some of its Subsidiaries and Joint Venture (JV), as mentioned below, for the purposes of replacing old loans, acquisition financing, working capital and other general corporate purposes:
- Bhaskarpara Coal Company Limited (JV) RS, 4.00 Crores (March 31, 2017 RS, 4.00 Crores).
- UltraTech Cement Middle East Investment Limited and its subsidiaries: Equivalent to USD 395.66 Million (RS, 2,578.71 Crores) {March 31, 2017 USD 381.91 Million RS, 2,476.69 Crores)}.
(These Corporate Guarantees are issued in different currencies viz. USD, UAE Dirham, Bangladesh Taka, Omani Riyal etc.)
(ii) In favour of the Government Authority of an amount not exceeding RS, 3.00 Crores (March 31, 2017 RS, 3.00 Crores) towards exemption from payment of excise duty.
(iii) In favour of the Bank, for assistance in arrangement of interest bearing loan of RS, Nil Crores (March 31, 2017 RS, 500.00 Crores) to JAL.
(iv) Letter of comfort in favour of Binani Industries Ltd. (âBIL"), assuring arrangements of funds amounting to I 7,266.00 Crores, to be used by BIL in support of its application seeking termination of insolvency proceedings relating to its subsidiary Binani Cement Limited (âBCL") which was admitted by the National Company Law Tribunal, Kolkata Bench in terms of the provisions of the Insolvency and Bankruptcy Code and acquiring 98.43% equity shares of BCL, being the total holding of BIL in BCL. This is subject to termination of Insolvency proceedings, entering into definitive agreement and other customary and relevant statutory approvals which are in process.
NOTE 2 - CAPITAL AND OTHER COMMITMENTS :
Estimated amount of contracts remaining to be executed on capital account not provided for (net of advances) RS, 867.73 Crores. (March 31, 2017 RS, 943.28 Crores).
NOTE 3 -
The Supreme Court of India has allowed an appeal filed by the State of Rajasthan in a matter relating to transfer of mining lease in the name of the Company''s wholly-owned subsidiary, Gotan Lime Stone Khanij Udyog Private Limited (âGKUPL") and has directed the State of Rajasthan to frame and notify its policy relating to transfer of mining lease and thereafter pass appropriate order in respect of the mining lease of GKUPL. State Government has notified the new policy related to transfer of new mining lease, based on which the Company has requested the State Government to consider reinstatement of the mines in its favour.
NOTE 4 - ACQUISITION OF IDENTIFIED CEMENT UNITS OF JAL AND JCCL (Ind AS 103):
(A) Pursuant to the Scheme of Arrangement between the Company, JAL, JCCL and their respective shareholders and creditors (âthe Scheme"), the Company has acquired identified cement units of JAL and JCCL on June 29, 2017 at an enterprise valuation of '' 16,189.00 Crores having total cement capacity of 21.2 MTPA including 4 MTPA under construction. The acquisition provides the Company a geographic market expansion with entry into high growth markets where it needed greater reinforcement and creating synergies in manufacturing, distribution and logistics which offers many advantages. This will also create value for shareholders with the ready to use assets reducing time to markets, availability of land, mining leases, fly ash and railway infrastructure leading to overall operating costs advantage.
(B) Fair Value of the Consideration transferred:
Against the total enterprise value of RS, 16,189.00 Crores, the Company has taken over borrowings of RS, 10,189.00 Crores and negative working capital of RS, 1,375.00 Crores from JAL and JCCL. After taking these liabilities into account, effective purchase consideration of RS, 4,625.00 Crores has been discharged as under:
(C) Acquired Receivables:
As on the date of acquisition, gross contractual amount of the acquired Trade Receivables and Other Financial Assets was RS, 17.07 Crores against which no provision has been considered since fair value of the acquired receivables are equal to carrying value as on the date of acquisition.
(F) acquisition related costs:
Acquisition related costs of RS, 5.57 Crores (March 31, 2017 RS, 14.33 Crores) have been recognized under Miscellaneous Expenses and Rates and Taxes in the Statement of Profit and Loss. The stamp duty paid / payable on transfer of the assets RS, 226.28 Crores has been charged to the Statement of Profit and Loss and has been shown as an exceptional item.
(G) The Company runs an integrated operation with material movement across geographies and a common sales organization responsible for existing business as well as acquired business. Therefore, separate sales information for the acquired business is not exactly available and accordingly disclosures for revenue and profit / loss of the acquired business since acquisition date have not been made.
Further, it is impracticable to provide revenue and profit / loss of the combined entity for the current year as though the acquisition date had been April 01, 2017 since these amounts relating to the acquired business for the period prior to the acquisition date are not readily available with the Company.
note 36 - employee BENEFITs (ind as 19):
(A) Defined Benefit Plans:
(a) gratuity
The gratuity payable to employees is based on the employee''s service and last drawn salary at the time of leaving the services of the Company and is in accordance with the Rules of the Company for payment of gratuity.
Inherent risk
The plan is defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, this exposes the Company to actuarial risk such as adverse salary growth, change in demographic experience, inadequate return on underlying plan assets. This may result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature, the plan is not subject to any longevity risks.
(b) Pension
The Company considers pension for some of its employees at senior management based on the period of service and contribution for the Company.
(c) Post-retirement Medical Benefits
The Company provides post-retirement medical benefits to certain ex-employees who were transferred under the Scheme of arrangement for acquiring Larsen & Toubro cement business and eligible for such benefits from earlier Company.
(xi) 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.
(xii) Salary Escalation Rate:
The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors.
(xiii) Asset Liability matching strategy:
The money contributed by the Company to the Gratuity fund to finance the liabilities of the plan has to be invested.
The trustees of the plan have outsourced the investment management of the fund to an insurance Company. The insurance Company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset liability matching strategy.
There is no compulsion on the part of the Company to fully prefund the liability of the Plan. The Company''s philosophy is to fund these benefits based on its own liquidity and the level of underfunding of the plan.
(xiv) The Company''s expected contribution during next year is RS, Nil Crores (March 31, 2017 RS, Nil Crores).
(d) Provident Fund:
The Company is liable for any shortfall in the fund assets based on the Government specified rate of return. Such shortfall, if any, is recognized in the Statement of Profit and Loss as an expense in the year of incurring the same.
Amount recognized as an expense and included in Note 29 under the head âContribution to Provident and other Funds" of Statement of Profit and Loss RS, 85.97 Crores (March 31, 2017 RS, 71.02 Crores).
The actuary has provided for a valuation and based on the below provided assumption there is no interest shortfall as at March 31, 2018 and March 31, 2017.
(B) Amount recognized as an expense in respect of Compensated Absences is RS, 14.97 Crores March 31, 2017 RS,27.85 Crores).
(C) Amount recognized as expense for other long term employee benefits is RS, 0.87 Crores (March 31, 2017 RS, 0.77 Crores).
NOTE 5 - SEGMENT REPORTING (Ind AS 108):
The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, as per Ind AS 108 ''Operating Segments'', no disclosures related to segments are presented in these standalone financial statements.
Terms and Conditions of transactions with Related Parties:
The sales to and purchases from related parties are made in the normal course of business and on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.
For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
(D) fair Valuation:
No options were granted during the year. Weighted Average Fair value of the options granted previous year I 2,366.93.
The fair value of option has 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:
(a) for Esos 2006:
1. Risk Free Rate - 8% (Tranche I-V), 8.14% (Tranche VI)
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, Tranche-VI: 0.25
4. Expected Growth in Dividend - 20%
(b) for Esos 2013:
1. Risk Free Rate - 8.5% (Tranche I), 7.8% (Tranche II-III), 8.56% (Tranche IV)
7.6% (Tranche V), 6.74% (Tranche VI)
2. Option Life - (a) For Options - Vesting period (1 Year) Average of exercise period
(b) For RSU - Vesting period (3 Years) Average of exercise period
3. Expected Volatility* - Tranche-I: 0.29, Tranche-II: 0.27, Tranche-III: 0.28, Tranche-IV: 0.60
Tranche-V: 0.60, Tranche-VI: 0.61
4. Expected Growth in Dividend - Tranche -I: 20%, Tranche II-III: 15%, Tranche-IV: 5%, Tranche-V: 5%,
Tranche-VI: 5%
* Expected volatility on the Company''s stock price on National Stock Exchange based on the data commensurate with the expected life of the options/RSU''s up to the date of grant.
NOTE 8 (B) - FAIR VALUE MEASUREMENTS (Ind AS 113):
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in an orderly transaction in the principal (or most advantageous) market at measurement date under the current market condition regardless of whether that price is directly observable or estimated using other valuation techniques.
The Company has established the following fair value hierarchy that categorizes the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities. The fair value of all bonds which are traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market (For example traded bonds, over the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on company specific estimates. The mutual fund units are valued using the closing Net Asset Value. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The management assessed that cash and bank balances, trade receivables, trade payables, cash credits, commercial papers and other financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The following methods and assumptions were used to estimate the fair values:
(a) The fair values of the quoted investments/units of mutual fund schemes are based on market price/net asset value at the reporting date.
(b) The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves and an appropriate discount factor.
(c) The fair value of forward foreign exchange contracts is calculated as the present value determined using forward exchange rates and interest rate curve of the respective currencies.
(d) The fai r value of currency swap is calculated as the present value determined using forward exchange rates, currency basis spreads between the respective currencies, interest rate curves and an appropriate discount factor.
(e) The fai r value of foreign currency option contracts is determined using the Black Scholes valuation model.
(f) The fai r value of commodity swaps is calculated as the present value determined using the forward price and interest rate curve of the respective currency.
(g) The fair value of the remaining financial instruments is determined using discounted cash flow analysis. The discount rates used is based on management estimates.
The significant unobservable inputs used in the fair value measurement of the fair value hierarchy together with a quantitative sensitivity analysis as at March 31, 2018 and March 31, 2017 are as shown below:
note 9 - financial RIsK management objectives (Ind As 107):
The Company''s principal financial liabilities, other than derivatives, comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the company''s operations. The company''s principal financial assets, other than derivatives include trade and other receivables, investments and cash and cash equivalents that derive directly from its operations.
The Company''s activities exposes it to market risk, liquidity risk and credit risk. Company''s overall risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the company. The company uses derivative financial instruments, such as foreign exchange forward contracts, foreign currency option contracts, principal only swaps that are entered to hedge foreign currency risk exposure, interest rate swaps to hedge variable interest rate exposure and commodity fixed price swaps to hedge commodity price risks. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
The Company has standard operating procedures and investment policy for deployment of surplus liquidity, which allows investment in debt securities and mutual fund schemes of debt categories only and restricts the exposure in equity markets.
Compliances of these policies and principles are reviewed by internal auditors on periodical basis.
The Corporate treasury team updates the Audit Committee on a quarterly basis about the implementation of the above policies. It also updates to the Internal Risk Management Committee of the Company on periodical basis about the various risks to the business and status of various activities planned to mitigate the risks.
I) Market Risk:
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.
A) Foreign Currency Risk:
Foreign currency risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, import of fuels, raw materials and spare parts, capital expenditure, exports of cement and the Company''s net investments in foreign subsidiaries.
When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
The Company evaluates exchange rate exposure arising from foreign currency transactions. The Company follows established risk management policies and standard operating procedures. It uses derivative instruments like foreign currency swaps and forwards to hedge exposure to foreign currency risk.
B) Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s short term borrowing (excluding commercial paper) with floating interest rates. For all long-term borrowings with floating rates, the risk of variation in the interest rates is mitigated through interest rate swaps. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.
Note: If the rate is decreased by 100 bps profit will increase by an equal amount.
Interest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date have been outstanding for the entire reporting period. Further, the calculations for the unhedged floating rate borrowing have been done on the notional value of the foreign currency (excluding the revaluation).
(B) cash Flow hedges: The Company has raised foreign currency external commercial borrowings and to mitigate the risk of foreign currency and floating interest rates the Company has taken forward contracts, currency swaps, interest rates swaps and principal only swaps. The Company is following hedge accounting for all the foreign currency borrowings raised on or after April 01, 2015 based on qualitative approach. The Company assesses hedge effectiveness based on following criteria:
(i) an economic relationship between the hedged item and the hedging instrument
(ii) the effect of credit risk; and
(iii) assessment of the hedge ratio
The Company designates the derivatives to hedge its currency risk and generally applies a hedge ratio of 1:1. The Company''s policy is to match the critical terms of the forward exchange contracts to match with the hedged item.
C) Commodity price risk management:
Commodity price risk for the Company is mainly related to fluctuations in coal and pet coke prices linked to various external factors, which can affect the production cost of the Company. Since the Energy costs is one of
NOTE 10 - FINANCIAL RISK MANAGEMENT OBJECTIVES (Ind AS 107): (Continued)
the primary costs drivers, any fluctuation in fuel prices can lead to drop in operating margin. To manage this risk, the Company enters into forward covers for imported coal, enter into long-term supply agreement for pet coke, identifying new sources of supply etc. While forward covers are prevailing in the markets for coal but in case of pet coke no such derivative available; it has to be procured at spot prices. Additionally, processes and policies related to such risks are reviewed and controlled by senior management and fuel requirement are monitored by the central procurement team.
II) Credit Risk Management:
Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing / investing activities, including deposits with banks, mutual fund investments, and investments in debt securities, foreign exchange transactions and financial guarantees. The Company has no significant concentration of credit risk with any counterparty.
Trade receivables
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and based on the evaluation credit limit of each customer is defined. Wherever the Company assesses the credit risk as high the exposure is backed by either bank guarantee / letter of credit or security deposits.
Total Trade receivable as on March 31, 2018 is RS, 1,714.20 Crores (March 31, 2017 RS, 1,276.17 Crores)
The Company does not have higher concentration of credit risks to a single customer. A single largest customer has total exposure in sales 1.9% (March 31, 2017 2.2%) and in receivables 8.7% (March 31, 2017 7.7%).
As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
As per policy receivables are classified into different buckets based on the overdue period ranging from 6 months - one year to more than two years. There are different provisioning norms for each bucket which are ranging from 20% to 100%.
Investments, Derivative Instruments, Cash and Cash Equivalent and Bank Deposit
Credit Risk on cash and cash equivalent, deposits with the banks / financial institutions is generally low as the said deposits have been made with the banks / financial institutions who have been assigned high credit rating by international and domestic rating agencies.
Credit Risk on Derivative Instruments are generally low as Company enters into the Derivative Contracts with the reputed Banks and Financial Institutions.
Investments of surplus funds are made only with approved Financial Institutions / Counterparty. Investments primarily include investment in units of mutual funds, Quoted Bonds, Non-Convertible Debentures issued by Government / Semi Government Agencies / PSU Bonds / High Investment grade corporate etc. These Mutual Funds and Counterparties have low credit risk.
Total Non-current and current investments as on March 31, 2018 is RS, 6,162.90 Crores (March 31, 2017 RS, 7,408.67 Crores)
III) Liquidity risk management:
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company''s treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts on the basis of expected cash flows.
The table below provides details regarding the remaining contractual maturities of financial liabilities and investments held for managing the risk at the reporting date based on contractual undiscounted payments.
NOTE 11 - CAPITAL MANAGEMENT (IND AS 1):
The Capital management objective of the Company is to (a) maximize shareholder value and provide benefits to other stakeholders and (b) maintain an optimal capital structure to reduce the cost of capital.
For the purposes of the Group''s capital management, capital includes issued equity share capital, share premium and all other equity.
The Company monitors capital using debt-equity ratio, which is total debt less liquid investments and bank deposits divided by total equity.
In addition, the Company has financial covenants relating to the borrowing facilities that it has taken from the lenders like interest coverage service ratio, Debt to EBITDA, etc. which is maintained by the Company.
NOTE 12 - RESEARCH AND DEVELOPMENT:
Revenue expenditure on Research and Development included in different heads of expenses in the Statement of Profit and Loss is RS, 14.04 Crores. (March 31, 2017 RS, 13.31 Crores).
NOTE 13 - CORPORATE SOCIAL RESPONSIBILITY:
Expenditure incurred in cash on Corporate Social Responsibility activities, included in different heads of expenses in the Statement of Profit and Loss is RS,60.71 Crores (March 31, 2017 RS,54.15 Crores) and account of capital expenditure RS, 0.96 Crores (March 31, 2017 RS, Nil Crores).
The amount required to be spent under Section 135 of the Companies Act, 2013 for the year ended March 31, 2018 is RS, 58.91 Crores (March 31, 2017 RS, 53.36 Crores) i.e. 2% of average net profits for last three financial years, calculated as per section 198 of the Companies Act, 2013.
note 14 - government grant (IND as 20):
(a) Other Operating Revenues include Incentives against capital investments, under State Investment Promotion Scheme of RS, 300.55 Crores (March 31, 2017 RS, 126.38 Crores).
(b) Sales Tax deferment loan granted under State Investment Promotion Scheme has been considered as a government grant and the difference between the fair value and nominal value as on date is recognized as an income. Accordingly, an amount of RS, 3.86 Crores (March 31, 2017: RS, 17.82 Crores) has been recognized as an income. Every year charge in fair value is accounted for as an interest expense.
(c) Interest, Wages Expenses and Repairs to plant and machinery are net of subsidy received, under State Investment Promotion Scheme of RS, 5.81 Crores (March 31, 2017 RS, 26.91 Crores), RS, Nil Crores (March 31, 2017 RS, 3.70 Crores) and RS, 0.98 Crores (March 31, 2017 RS, 1.55 Crores) respectively.
NoTE 15 - Assets Held For Disposal (IND As 105):
The Company has identified certain assets like Aggregate Mines, Vibrating Mill, Pre Grinders for cement mill etc which are available for sale in its present condition. The Company is committed to plan the sale of asset and an active programme to locate a buyer and complete the plan have been initiated. The Company expects to dispose of these assets within twelve months from its classification.
(b) Operating lease payment recognized in the Statement of Profit and Loss amounting to RS, 141.32 Crores (March 31, 2017 RS, 130.35 Crores)
(c) General Description of leasing agreements:
- Leased Assets: Land, Godowns, Offices, Flats, Machinery and Others.
- Future Lease rentals are determined on the basis of agreed terms.
- At the expiry of lease terms, the Company has an option to return the assets or extend the term by giving notice in writing.
- Lease agreements are generally cancellable and are renewable by mutual consent on mutually agreed terms.
NOTE 16 -
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115 ''Revenue from Contracts with Customers'', which replaces Ind AS 11 ''Construction Contracts'' and Ind AS 18 ''Revenue''. Except for the disclosure requirements, the new standard will not materially impact the Company''s financial statements. The amendment will come into force from April 01, 2018.
NOTE 17 -
Effective July 01, 2017, sales are recorded net of GST whereas earlier sales were recorded gross of excise duty which formed part of expenses. Hence revenue from operations for the year ended March 31, 2018 is not comparable with the previous year corresponding figures.
NOTE 18 -
a) Other income for year ended March 31, 2018 includes reversal of earlier years provision of Rs, 103.79 Crores related to contribution towards District Mineral Fund (DMF) under the Mines and Mineral (Development and Regulation) Amendment Act, 2015, on the basis of Supreme Court Judgment dated October 13, 2017 (March 31, 2017 Rs, Nil Crores).
b) Other income for year ended March 31, 2017 includes Rs, 137.77 Crores being provisions no longer required.
NOTE 19-
Previous year figures have been regrouped / reclassified wherever necessary to correspond with current year classification / disclosure.
Mar 31, 2017
The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 43.
B) 1. Fixed Assets include assets with net block of '' 320.06 Crores (Previous Year '' 276.61 Crores) not owned by the Company.
2. Buildings include Rs, 12.13 Crores (Previous year Rs, 12.13 Crores) being cost of Debentures and Shares in a company entitling the right of exclusive occupancy and use of certain premises.
3. Opening Gross Block includes Research and Development Assets (Building, Plant and Equipment, Furniture and Fixtures, Office Equipment and Intangible Assets) of Rs, 30.75 Crores (Previous year Rs, 26.89 Crores) and Net Block of Rs, 26.73 Crores (Previous year Rs, 26.89 Crores). Addition for the Research and Development Assets during the year is Rs, 2.90 Crores (Previous year Rs, 4.17 Crores).
4. Immovable properties having Gross Block of Rs, 793.43 Crores and Net Block of Rs, 782.23 Crores is yet to be transferred in the name of the Company.
(f) The Company has only one class of Equity Shares having a par value of ? 10 per share. Each shareholder is eligible for one vote per share held except for Global Depository Receipts. 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 of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(c) Guarantees:
The Company has issued corporate guarantees as under:
(i) In favour of the Bankers / Lenders on behalf of some of its Subsidiaries and Joint Venture (JV), as mentioned below, for the purposes of replacing old loans, acquisition financing, working capital and other general corporate purposes:
- Bhaskarpara Coal Company Limited (JV) Rs, 4.00 Crores (March 31, 2016 Rs, 4.00 Crores, April 1, 2015 Rs, 4.00 Crores).
- UltraTech Cement Middle East Investment Limited and its subsidiaries: Equivalent to USD 381.91 Million (Rs, 2,476.69 Crores) {March 31, 2016 USD 250.63 Million (Rs, 1,660.35 Crores), April 1, 2015 USD 486.62 Million (Rs, 3,041.26 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 CompanyRs,s Unit of an amount not exceeding Rs, 3.00 Crores (March 31, 2016 Rs, 3.00 Crores, April 1, 2015? 3.00 Crores) towards exemption from payment of excise duty.
(iii) In favour of the Bank, for assistance in arrangement of interest bearing loan of Rs, 500 Crores (March 31, 2016 Rs, 500 Crores, April 1, 2015 Rs, 500 Crores) to Jaiprakash Associates Limited.
Note 5 - Capital and other commitments:
Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs, 943.28 Crores (March 31, 2016 Rs, 700.26 Crores, April 1, 2015 Rs, 1,239.25 Crores).
Note 6 :
The Supreme Court of India has allowed an appeal filed by the State of Rajasthan in a matter relating to transfer of mining lease in the name of the Company''s wholly-owned subsidiary, Gotan Lime Stone Khanij Udyog Private Limited ("GKUPL") and has directed the State of Rajasthan to frame and notify its policy relating to transfer of mining lease and thereafter pass appropriate order in respect of the mining lease of GKUPL. State Government has notified the new policy related to transfer of new mining lease, based on which the Company is in the process of making an application for the transfer of mines.
Note 7 - Acquisition of identified cement units of Jaiprakash Associates Limited:
The Board of Directors of the Company has approved a Scheme of Arrangement between the Company, Jaiprakash Associates Limited ("JAL"), JCCL and their respective shareholders and creditors ("the Scheme") for the acquisition of identified cement plants situated in the states of Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh, having a capacity of 21.20 mtpa at an enterprise value of '' 16,189 Crores. The Scheme has received the sanction of the National Company Law Tribunal, Mumbai Bench and the Allahabad Bench and also by the Securities and Exchange Board of India. The Scheme will be made effective by the Board of Directors of the Company, JAL and JCCL upon receipt of the remaining approvals.
Note 8 - Employee Benefits (Ind AS 19):
(A) Defined Benefit Plans:
Gratuity:
The gratuity payable to employees is based on the employee''s service and last drawn salary at the time of leaving the services of the Company and is in accordance with the rules of the Company for payment of gratuity.
Inherent Risk
The plan is defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, this exposes the Company to actuarial risk such as adverse salary growth, change in demographic experience, inadequate return on underlying plan assets. This may result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature, the plan is not subject to any longevity risks.
Pension:
The Company considers pension for some of its employees at senior management based on the period of service and contribution for the Company.
Post-Retirement Medical Benefits:
On account of cement business acquired from transferor under a scheme of amalgamation, there are certain ex-employees of such company who are entitled for post-retirement medical benefits as per the scheme of such company, other employees are not entitled for these benefits.
* These Sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analyses.
@ The plan does not invest directly in any property occupied by the Company nor in any financial securities issued by the Company.
(xi) 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.
(xii) Salary Escalation Rate:
The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors.
(xiii) Asset Liability matching strategy:
The money contributed by the Company to the Gratuity fund to finance the liabilities of the plan has to be invested.
The trustees of the plan have outsourced the investment management of the fund to an Insurance Company. The Insurance Company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed
Note 9 - Employee Benefits (Ind AS 19): (Contd.)
in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset liability matching strategy.
There is no compulsion on the part of the Company to fully prefund the liability of the Plan. The Company''s philosophy is to fund these benefits based on its own liquidity and the level of underfunding of the plan.
(xiv) The Company''s expected contribution during next year is Rs, Nil Crores (March 31, 2016 Rs, 21.06 Crores).
(B) Defined Contribution Plans:
Amount recognized as an expense and included in Note 27 under the head "Contribution to Provident and other Funds" of Statement of Profit and Loss Rs, 71.02 Crores (March 31, 2016 Rs, 65.41 Crores).
(C) Amount recognized as an expense in respect of Compensated Absences is Rs, 27.85 Crores (March 31, 2016 Rs, 29.37 Crores).
(D) Amount recognized as expense for other long-term employee benefits is Rs, 0.77 Crores (March 31, 2016 Rs, 0.67 Crores).
Note 10 - Segment Reporting (Ind AS 108):
The Company is exclusively engaged in the business of cement and cement related products primarily in India. As per Ind AS 108 "Operating Segments", specified under Section 133 of the Companies Act, 2013, there are no reportable operating or geographical segments applicable to the Company.
The weighted average share price at the date of exercise for options was Rs, 3,621.29 per share (March 31, 2016 Rs, 2,845.53 per share) and weighted average remaining contractual life for the share options outstanding as at March 31, 2017 was 4.5 years (March 31, 2016 : 4.2 years).
(D) Fair Valuation:
Weighted Average Fair value of the options granted during the year Rs, 2,366.93 (March 31, 2016 Rs, 2,033.15)
The fair value of option 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:
(a) For ESoS 2006:
1. Risk Free Rate - 8% (Tranche I-V), 8.14% (Tranche VI)
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, Tranche VI: 0.25
4. Expected Growth in Dividend - 20%
(b) For ESoS 2013:
1. Risk Free Rate - 8.5% (Tranche I), 7.8% (Tranche II-III), 8.56% (Tranche IV)
7.6% (Tranche V), 6.74% (Tranche VI)
2. Option Life - (a) For Options - Vesting period (1 Year) Average of exercise period
(b) For RSU - Vesting period (3 Years) Average of exercise period
3. Expected Volatility* - Tranche I: 0.29, Tranche II: 0.27, Tranche III: 0.28, Tranche IV: 0.60
Tranche V: 0.60, Tranche VI: 0.61
4. Expected Growth in Dividend - Tranche I: 20%, Tranche II-III: 15%, Tranche IV: 5%, Tranche V: 5%,
Tranche VI: 5%
*Expected volatility on the Company''s stock price on National Stock Exchange based on the data commensurate with the expected life of the options/RSU''s up to the date of grant.
The fair values of the financial assets and liabilities are included 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.
The Company has established the following fair value hierarchy that categorizes the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities. The fair value of all bonds which are traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market (For example traded bonds, over the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on company specific estimates. The mutual fund units are valued using the closing Net Asset Value. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Note 11 (B) - Fair Value measurements (Ind AS 113): (Contd.)
The management assessed that cash and bank balances, trade receivables, trade payables, cash credits, commercial papers and other financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The following methods and assumptions were used to estimate the fair values:
(a) The fair values of the quoted investments/units of mutual fund schemes are based on market price/net asset value at the reporting date.
(b) The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.
(c) The fair value of forward foreign exchange contracts is calculated as the present value determined using forward exchange rates and interest rate curve of the respective currencies.
(d) The fair value of currency swap is calculated as the present value determined using forward exchange rates, currency basis spreads between the respective currencies and interest rate curves.
(e) The fair value of foreign currency option contracts is determined using the Black Scholes valuation model.
(f) The fair value of commodity swaps is calculated as the present value determined using the forward price and interest rate curve of the respective currency.
(g) The fair value of the remaining financial instruments is determined using discounted cash flow analysis. The discount rates used is based on management estimates.
The significant unobservable inputs used in the fair value measurement of the fair value hierarchy together with a quantitative sensitivity analysis as at March 31, 2017, March 31, 2016 and April 01, 2015 are as shown below:
Note 12 - Financial Risk Management Objectives (Ind AS 107):
The Company''s principal financial liabilities, other than derivatives, comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the company''s operations. The company''s principal financial assets, other than derivatives include trade and other receivables, investments and cash and cash equivalents that derive directly from its operations.
The Company''s activities exposes it to market risk, liquidity risk and credit risk. Company''s overall risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the company. The company uses derivative financial instruments, such as foreign exchange forward contracts, foreign currency option contracts, principal only swaps that are entered to hedge foreign currency risk exposure, interest rate swaps to hedge variable interest rate exposure and commodity fixed price swaps to hedge commodity price risks. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
The Company has standard operating procedures and investment policy for deployment of surplus liquidity, which allows investment in debt securities and mutual fund schemes of debt categories only and restricts the exposure in equity markets.
Compliances of these policies and principles are reviewed by internal auditors on periodical basis.
The Corporate Treasury team updates to the Audit Committee on a quarterly basis about the implementation of the above policies. It also updates to the Internal Risk Management Committee of the Company on periodical basis about the various risk to the business and status of various activities planned to mitigate the risk.
Market Risk:
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.
Foreign Currency Risk:
Foreign currency risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, import of fuels, raw materials and spare parts, capital expenditure, exports of cement and the Company''s net investments in foreign subsidiaries. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
The Company evaluates exchange rate exposure arising from foreign currency transactions. The Company follows established risk management policies and standard operating procedures. It uses derivative instruments like foreign currency swaps and forwards to hedge exposure to foreign currency risk.
(B) Cash Flow Hedges:
The Company has raised foreign currency external commercial borrowings and to mitigate the risk of foreign currency and floating interest rates the Company has taken forward contracts, currency swaps, interest rates swaps and principal only swaps. The Company is following Hedge accounting for all the foreign currency borrowings raised on or after April 01, 2015 based on qualitative approach. The Company assesses hedge effectiveness based on following criteria:
(i) an economic relationship between the hedged item and the hedging instrument;
(ii) the effect of credit risk ; and
(iii) assessment of the hedge ratio
The Company designates the forward exchange contracts to hedge its currency risk and generally applies a hedge ratio of 1:1. The Company''s policy is for the critical terms of the forward exchange contracts to match with the hedged item.
Credit Risk Management:
Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing/ investing activities, including deposits with banks, mutual fund investments and investments in debt securities, foreign exchange transactions and financial guarantees. The Company has no significant concentration of credit risk with any counterparty.
Trade receivables:
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and based on the evaluation credit limit of each customer is defined. Wherever the Company assesses the credit risk as high the exposure is backed by either bank guarantee / letter of credit or security deposits.
Total Trade receivable as on March 31, 2017 is Rs, 1,276.17 Crores (March 31, 2016 Rs, 1,414.89 Crores, April 01, 2015 Rs, 1,203.19 Crores)
The Company does not have higher concentration of credit risks to a single customer. Single largest customers have total exposure in sales 2.2% (March 31, 2016 2.3%) and in receivables 7.7% (March 31, 2016 9.8%, April 01, 2015 5.5%).
As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
Investments, Derivative Instruments, Cash and Cash Equivalent and Bank Deposit:
Credit Risk on cash and cash equivalent, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions who have been assigned high credit rating by international and domestic rating agencies.
Credit Risk on Derivative Instruments are generally low as Company enters into the Derivative Contracts with the reputed Banks and Financial Institutions. Investments of surplus funds are made only with approved Financial Institutions/ Counterparty. Investments primarily include investment in units of mutual funds, Quoted Bonds, Non-Convertible Debentures issued by Government/ Semi Government Agencies/ PSU Bonds/ High Investment grade corporate etc. These Mutual Funds and Counterparties have low credit risk.
Total Non-current and current investments as on March 31, 2017 is Rs, 7,408.67 Crores (March 31, 2016 Rs, 5,793.18 Crores; April 01, 2015 Rs, 5,648.29 Crores)
Liquidity risk:
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company''s treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts on the basis of expected cash flows.
The table below provides details regarding the remaining contractual maturities of financial liabilities and investments at the reporting date based on contractual undiscounted payments.
In addition the Company has financial covenants relating to the borrowing facilities that it has taken from the lenders like interest coverage service ratio, Debt to EBITDA, etc. which is maintained by the Company.
Note 13 - Research and Development:
Revenue expenditure on Research and Development included in different heads of expenses in the Statement of Profit and Loss is Rs, 13.31 Crores. (March 31, 2016 Rs, 14.27 Crores).
Note 14 - Corporate Social Responsibility:
Expenditure incurred on Corporate Social Responsibility activities, included in different heads of expenses in the Statement of Profit and Loss is Rs, 54.15 Crores (March 31, 2016 Rs, 46.27 Crores) and on account of capital expenditure is Rs, Nil Crores (March 31, 2016 Rs, 4.62 Crores).
The amount required to be spent under Section 135 of the Companies Act, 2013 for the year ended March 31, 2017 is Rs, 53.36 Crores (March 31, 2016 Rs, 57.82 Crores) i.e. 2% of average net profits for last three financials years, calculated as per section 198 of the Companies Act, 2013.
Note15 - Government Grant (Ind AS 20):
(a) Other Operating Revenues include Incentives against capital investments, under State Investment Promotion Scheme of Rs, 126.38 Crores (March 31, 2016 Rs, 135.86 Crores).
(b) Interest, Wages Expenses and Repairs to plant and machinery are net of subsidy received, under State Investment Promotion Scheme of Rs, 26.91 Crores (March 31, 2016 Rs, 65.10 Crores), Rs, 3.70 Crores (March 31, 2016 Rs, 7.11 Crores) and Rs, 1.55 Crores (March 31, 2016 Rs, Nil) respectively.
(c) Sales Tax deferment loan granted under State Investment Promotion Scheme has been considered as a government grant and the difference between the fair value and nominal value as on date is recognized as an income. Accordingly, an amount of Rs, 17.82 Crores (March 31, 2016: Rs, 2.24 Crores) has been recognized as an income. Every year charge in fair value is accounted for as an interest expense.
Note 16 - Assets held for Disposal (Ind AS 105):
The Company has identified certain assets to be disposed off like Packaging Plant, DG Set, Vertical Roller Press Mill, etc. which are not in use by the Company. The Company is in the process of discussion with various potential buyers and expects the same to be disposed off within next twelve months.
(b) Operating lease payment recognized in the Statement of Profit and Loss amounting to Rs, 130.35 Crores (March 31, 2016 Rs, 130.63 Crores)
(c) General Description of leasing agreements:
- Leased Assets: Land, Godowns, Offices, Flats, Machinery and Others.
- Future Lease rentals are determined on the basis of agreed terms.
- At the expiry of lease terms, the Company has an option to return the assets or extend the term by giving notice in writing.
- Lease agreements are generally cancellable and are renewable by mutual consent on mutually agreed terms.
Note 17:
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of cash flows'' and Ind AS 102, ''Share-based payment.'' These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of cash flows'' and IFRS 2, ''Share-based payment,'' respectively. The amendments are applicable to the company from April 1, 2017. The Company is evaluating the requirements of the amendment and the effect on the consolidated financial statements is being evaluated.
(A) Amendment to Ind AS 7:
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
(B) Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
Note 18 - First-time adoption of Ind AS (Ind AS 101):
As stated in Note 1, these financial statements, for the year ended March 31, 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (IGAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 01, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its IGAAP financial statements, including the balance sheet as at April 01, 2015 and the financial statements as at and for the year ended March 31, 2016 and how the transition from IGAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.
Exemptions Availed:
Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has availed the following exemptions:
(a) Past Business Combinations:
The Company has elected not to apply Ind AS 103- Business Combinations retrospectively to past business combinations that occurred before the transition date of April 1, 2015. Consequently, the Company has kept the same classification for the past business combinations as in its previous GAAP financial statements.
(b) Deemed cost for property, plant and equipment and intangible assets:
The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets as recognized as of April 01, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
(c) Share-Based Payments:
The Company has opted not to apply Ind AS 102, Share based payment to equity instruments that vested before date of transition to Ind AS and to liabilities arising from share-based payment transactions that were settled before the date of transition to Ind ASs.
(d) Investment in Subsidiary, Joint ventures and Associates:
The Company has elected to carry its investment in subsidiary, joint venture and associates at deemed cost which is its previous GAAP carrying amount at the date of transition to Ind AS.
(e) Decommissioning liabilities included in the cost of property, plant and equipment:
The Company has measured the liability as at the date of transition to Ind AS as per Ind AS 37 to the extent that the liability is within the scope of Ind AS 16, estimated the amount that would have been included in the cost of the related asset when the liability first arose, by discounting the liability to that date using its best estimate of the historical risk-adjusted discount rate that would have applied for that liability over the intervening period and calculated the accumulated depreciation on that amount, as at the date of transition to Ind AS, on the basis of the current estimate of the useful life of the asset, using the depreciation policy adopted by the entity in accordance with Ind AS.
(f) Sales Tax Deferment Loan:
The Company has elected to use the previous GAAP carrying amount of the Sales Tax Deferment Loan existing at the date of transition to Ind AS as the carrying amount of the loan in the opening Ind AS Balance Sheet.
(g) Fair Value of Financials Assets and Liabilities:
As per Ind AS exemption the Company has not fair valued the financial assets and liabilities retrospectively and has measured the same prospectively.
Notes to the Reconciliation of equity as at April 1, 2015 and March 31, 2016 and Total Comprehensive Income for the year ended March 31, 2016:
(a) Property, Plant and Equipment:
(i) As per Ind AS 16, spare parts, stand- by equipment and servicing equipment are recognized as Property, Plant and Equipment (''PPE'') when they meet the following criteria:
- Are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
- Are expected to be used during more than one period.
Based on the above provision, stores and spares satisfying above criteria are de-recognized from Inventory and capitalized as PPE from the date of purchase.
(ii) Under IGAAP, Leasehold Land were classified as Fixed Assets as the standard on leases excluded Land. However, as per Ind AS 17, where the substantial risks and rewards incidental to ownership of an asset has not been transferred in the name of Company, the Company has classified such land under Operating Leases. The amount paid towards such leases has been shown as Prepayments under Other noncurrent assets.
(iii) As per Ind AS 38, right to use jetty has been classified as Intangible asset as on the date of transition.
(iv) As per Appendix A to Ind AS 16, the cost of an item of property, plant and equipment includes the initial estimate of the cost of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.
(b) Investments:
The Company has designated investments other than Investment in Subsidiary, Joint Arrangements and Associates at Fair Value through Profit and Loss (FVTPL). Ind AS requires FVTPL investments to be measured at fair value. At the date of transition to Ind AS, difference between the fair value of investment and IGAAP carrying amount has been recognized in Retained Earnings.
(c) Fixed deposit with maturity greater than twelve months shown in IGAAP under other non-current assets have been reclassified as other noncurrent financial assets as per Schedule III to Companies Act, 2013.
(d) Fixed deposit with maturity less than twelve months and those earmarked for debentures redemption and specific purpose have been reclassified from Cash and Cash equivalents to Other Bank Balances as per Schedule III to Companies Act, 2013.
(e) Financial Instruments:
The Company uses derivative financial instruments, such as forward currency contracts, interest rate swaps, currency swaps, principal only swaps and commodity fixed price swap contracts, to hedge its foreign currency risks, interest rate risks and commodity price risks, respectively and Hedge accounting as permitted under Ind AS 109 and as per Company accounting policy is applied for the purpose of Accounting in the financial statements.
Note 19 - First-time adoption of Ind AS (Ind AS 101): (Contd.)
As per Ind AS 109, such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
(f) loans/other Financial Assets/ other Current Assets:
(i) As per Schedule III, Security Deposits are to be classified under Loans or Other Non-current/Current Assets respectively.
Accordingly, Security Deposits which are financial in nature are classified under Loans and other deposits are classified under Non-current/ Current Assets respectively.
(ii) Under IGAAP, Loans and Advances were shown together under Loans and Advances. However, as per Schedule III, Loans are classified under other Non-current/Current Assets.
(g) Borrowings:
As per Ind AS 109, the Company has classified Foreign Currency Loans as financial liabilities to be measured at amortized cost. The Company has executed derivative contracts to hedge foreign currency risk of borrowings. The borrowings have been restated as at the date of transition.
(h) Provisions:
Under IGAAP, Provision for Asset Retirement Obligation is initially measured at the undiscounted amount to settle the obligation, however, Ind AS 37, requires that where the effect of time value of money is material, the amount of provision should be the present value of the expenditures expected to be required to settle the obligation.
(i) For Forward Covers and Commodity Derivatives, MTM reclassified to Derivative Liability as on the date of transition. The resulting gains or losses as on the date of transition are included in Retained earnings.
(j) Deferred Tax:
(i) IGAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under IGAAP.
In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred Tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or profit and loss respectively.
(ii) As per Ind AS 12, the Company has considered MAT entitlement credit as deferred tax asset being unused tax credit entitlement.
(k) Proposed Dividend:
Under IGAAP, proposed dividends including DDT are recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognized as a liability in the period in which it is declared (on approval of shareholders in a general meeting) or paid. In case of the Company, the declaration of dividend occurs after period end. Accordingly, proposed dividend has been reversed as at the date of transition and for financial year 2015-16 respectively and adjusted in retained earnings in financial year 2015-16 and 2016-17 respectively when paid.
(l) Sales Tax Deferment Loan:
Under IGAAP, sales tax deferment loan is recognized at the original amount without imputing interest and disclosed as borrowings. As per Ind AS 109 and Ind AS 20, Sales Tax Deferment Loan results into an interest-free loan from the government. Accordingly, the Company has prospectively measured the Sales Tax Deferment Loan at its fair value which is the discounted amount of the loan computed using the market rate of interest for a similar loan for the period for which the entity is not required to deposit the sales tax amount with the government.
(m) Revenue from operations:
(i) Under IGAAP, cash discounts and other discounts directly attributable to sales was recognized as part of other expenses which has been adjusted against the revenue under Ind AS during the year ended March 31, 2016.
(ii) Under IGAAP, revenue was presented net of excise duty. However, as per Schedule III to the Companies Act, 2013, revenue from operations is to be shown inclusive of excise duty. Accordingly, excise duty has been included in revenue from operations and shown separately as an expense.
(n) Sales Tax Deferment Loan:
The Company has recognized the difference between the amount payable for Sales Tax Deferment Loan and its present value in Profit and Loss Account.
(o) Fair Valuation of Investments other than Investment in Subsidiary, Joint Arrangements and Associates:
The Company has recognized the difference between the fair value of investments and IGAAP carrying amount in Other Income.
(p) Mines Restoration Expenses:
Under IGAAP, Mines Restoration expense booked in financial year 2015-16 has been now reversed as it is accounted for as per Ind AS 16.
(q) Share Based Payments:
Under IGAAP, the Company opted for the option to recognize the intrinsic value of the long-term incentive plan as an expense. Ind AS 102 requires the fair value of the share options to be determined using an appropriate pricing model recognized over the vesting period.
(r) Defined Benefit Liabilities:
Both under IGAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under IGAAP, the entire cost, including actuarial gains and losses, are charged to Statement of Profit and Loss. Under Ind AS, remeasurements (comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.
(s) Other Expenses and Depreciation:
(i) Stores and Spares:
With reference to Point (a), Stores and Spares consumption has been reversed from Profit & Loss which has been capitalized as PPE. Depreciation on capitalized stores and spares till the date of transition has been accounted for in Retained Earnings and has been charged to Statement of Profit and Loss for the year ended March 31, 2016.
(ii) Derivative Instruments:
- In continuation to Point (e), the method of recognizing the resulting gain or loss on fair valuation of derivative instruments depends on whether the derivative is designated as a hedging instrument, and if so, on the nature of the item being hedged. The resulting gains or losses arising from changes in the fair value of derivatives as on the date of transition is included in Retained earnings and for the year ended March 31, 2016 in Statement of Profit and Loss.
- With reference to Point (i), the resulting gain or loss on Forward Covers is credited in Statement of Profit and Loss for the year ended March 31, 2016.
(iii) leasehold land Prepayments:
With reference to Point (aii), depreciation on leasehold land is reversed and charged as Rent expense in Statement of Profit and Loss for the year ended March 31, 2016.
(iv) Asset Retirement obligation:
With reference to Point (a), depreciation is charged in Statement of Profit and Loss for the year ended March 31, 2016.
(t) Finance Costs:
With reference to Point (a-iv), Ind AS 37 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 finance cost in Statement of Profit and Loss for the year ended March 31, 2016. (u) other Comprehensive Income:
In accordance with Ind AS, Movement in Other Comprehensive Income includes effective portion of gains and loss on hedging instruments in a cash flow hedge and remeasurements on defined benefit liability which was charged to Statement of Profit and Loss as per the IGAAP.
Note 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 Rs, in lakhs.
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.
Mar 31, 2010
1. Contingent Liabilities not provided for in respect of:
Rs. in Crores
Previous Year
Claims not acknowledged as debts in respect of matters in appeals
(a) Sales-tax liability 61.34 60.72
(b) Excise duty 53.00 46.71
(c) Royalty on Limestone / Marl 42.84 41.01
(d) Customs 0.11 0.1
(e) Others 29.68 40.08
The Company has issued Corporate guarantee of Rs. 3.65 Crores (Previous
Year Rs. 3.65 Crores) in favour of the banker of its Joint Venture
Company i.e. Madanpur (North) Coal Company (Pvt.) Ltd.
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-despatch 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. 233.29 Crores
(Previous Year Rs. 170.09 Crores).
4. The Board of Directors at its meeting held on November 15, 2009
approved the Scheme of Amalgamation ( the Scheme ) of Samruddhi Cement
Limited ( Samruddhi ) with the Company with effect from July 1, 2010 or
such other date as may be determined by the Board of Directors of the
Company and Samruddhi.
Further, the shareholders of the Company have also approved the Scheme
at a meeting held on March 19, 2010 convened under the directions of
the Hon ble Bombay High Court. Samruddhi, a wholly owned subsidiary of
Grasim Industries Limited ( Grasim ), has received an exemption from
the Hon ble Gujarat High Court for convening a meeting of its
shareholders for approving the Scheme. Both the companies have filed
petitions in the Hon ble Bombay High Court and Hon ble Gujarat High
Court for approval of the Scheme. The effectiveness of the scheme is
subject to receiving the approval of the respective High Courts and
also the effectiveness of the Scheme of Arrangement between Samruddhi
and Grasim in relation to transfer of cement business to Samruddhi.
Upon effectiveness of the Scheme, shareholders of Samruddhi will
receive 4 (four) equity shares of the Company of face value Rs.10/-
each fully paid-up for every 7 (seven) equity shares of Samruddhi of
face value Rs. 5/- each fully paid-up.
5. 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.
6. Segment Reporting:
Business Segment
The Company is exclusively engaged in the business of cement. This is
in context of AS 17 ÃSegment ReportingÃ, notified under the Companies
(Accounting Standard) Rules, 2006, constitutes one single primary
segment.
7. Disclosure of related parties / related party transactions:
Parties Relationship
(a) Parties where control exists:
Grasim Industries Limited Holding Company
UltraTech Cement Lanka (Pvt.) Ltd. (UCLPL)
{Formerly known as UltraTech Ceylinco (Pvt.) Ltd.} Subsidiary
Dakshin Cements Ltd. (DCL) Wholly Owned Subsidiary
UltraTech Cement Middle East Investments Ltd.
(w.e.f.03.03.2010) Wholly Owned Subsidiary
Madanpur (North) Coal Company (Pvt.) Ltd. Joint Venture
(b) Other Related Parties with whom there were transactions during the
year:
Samruddhi Swastik Trading & Investment Ltd.(SSTIL) Fellow Subsidiary
Vikram Sponge Iron Ltd (VSIL) (Upto 21.05.2009) Fellow Subsidiary
Grasim Bhiwani Textiles Ltd. Fellow Subsidiary
Mr. S. Misra, Managing Director of the Company Key Management Personnel
(KMP)
8. Figures less than Rs.50,000 have been shown at actuals, wherever
statutorily required to be disclosed, as the figures have been rounded
off to the nearest lakh.
9. Previous yearÃs figures have been regrouped and rearranged wherever
necessary to conform to this yearÃs classification.
10. Additional information required under Part II of Schedule VI to the
Companies Act, 1956 (as certified by the Executives of the respective
Divisions) is as per Schedule 22.
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