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Notes to Accounts of Grasim Industries Ltd.

Mar 31, 2015

GENERAL INFORMATION

Grasim Industries Limited (the "Company") is engaged primarily in two businesses, Viscose Staple Fibre (VSF) and in Cement, through its subsidiary UltraTech Cement Limited. It also produces Rayon Grade Pulp, Caustic Soda and allied Chemicals which are used in the manufacture of VSF. The manufacturing plants of the Company, its Subsidiaries and Joint Ventures are located in India, Canada, Sweden, China, Middle East, Sri Lanka and Bangladesh. The Company is a public limited company and its shares are listed on the Bombay Stock Exchange (BSE), India, and the National Stock Exchange (NSE), India, and the Company''s Global Depository Receipts are listed on the Luxembourg Stock Exchange.

1.1.1 Carrying value of the assets whose useful life is already exhausted as on 1st April, 2014, amounting to Rs. 14.14 Crore net off deferred tax credit of Rs. 4.89 Crore has been recognised in Surplus as per Statement of Profi t and Loss as per Schedule II to the Companies Act, 2013. (Refer Note No 2.11.8)

1.1.2 The Board of Directors has recommended a dividend of Rs. 18 per share for the year ended, 31st March, 2015 (Previous Year Rs. 21 per share). The total cash outfl ows on account of the dividend would be Rs. 165.33 Crore (Previous Year Rs. 192.84 Crore) and on account of Corporate Dividend Tax Rs. 3.37 Crore (Previous Year Rs. 7.48 Crore).

1.1.3 Proposed Dividend (including Corporate Dividend Tax) includes Rs. 0.04 Crore (Previous Year Rs. 0.03 Crore) related to Previous Year.

1.2.1 From 1st April, 2014 as per applicable provisions of Schedule II to the Companies Act, 2013, the depreciation has been provided as per the useful life specifi ed in the Act or as re-assessed by the Company. Carrying value of the assets whose useful life is already exhausted as on 1st April, 2014, amounting to Rs. 14.14 Crore and deferred tax credit of Rs. 4.89 Crore has been recognised in the Surplus as per Statement of Profi t and Loss. Had there been no change as stated above, depreciation would have been higher by Rs. 43.47 Crore for the year ended 31st March, 2015

1.3.1 97,142,856 Equity Shares of Rs. 10 each, received in terms of the Scheme of Amalgamation of Samruddhi Cement Limited with UltraTech Cement Limited, were locked in for a period of 3 years from the date of allotment, i.e. 26th August, 2010.

1.3.2 The investment in Company''s Subsidiary, Grasim Bhiwani Textiles Limited; its Joint Ventures, AV Cell Inc., AV Nackawic Inc., AV Terrace Bay Inc., Birla Jingwei Fibres Company Limited, Aditya Group AB; and its Associate, Idea Cellular Limited, are subject to maintenance of specifi ed holding by the Company until the credit facility provided by certain lenders to respective companies are outstanding.

Without guaranteeing the repayment to the lenders, the Company has also agreed that the affairs of the Subsidiary and JVs will be managed through its nominee directors on the boards of respective borrowing companies, in such a manner that they are able to meet their respective fi nancial obligations.

1.3.3 Investment in shares of Larsen & Toubro Limited are non-transferable, pending disposal of appeal fi led in earlier year by Larsen & Toubro Limited and others in Hon''ble Bombay High Court against the single bench order of the court in favour of the Company.

1.3.4 Provision for diminution in previous year represents diminution in value of shares of Aditya Birla Power Ventures Limited, which has been dissloved under section 560 of the Companies Act, 1956 during the current year.

1.3.5 The Company holds 40% stake in Birla Lao Pulp and Plantations Company Ltd. (BLPP), a joint venture of the Company to secure pulp requirement for its VSF business at a cost of Rs. 91.24 Crore. Considering the present overcapacity in both pulp and fi bre businesses, it''s strategic importance to the Company is diminished. Therefore the Company has provided Rs. 26.24 Cr. (being the excess of the cost over the estimated enterprise value) towards diminution, other than temporary, in the value of the said investment which has been disclosed as Exceptional Item.

Rs. in Crore Current Previous Year Year

2.1 CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

2.1.1 Claims/Disputed Liabilities not acknowledged as Debts:

(a) Custom Duty 11.02 7.06

(b) Sales Tax/Purchases Tax/VAT 0.27 0.10

(c) Excise Duty/Cenvat Credit/Service Tax 86.25 83.16

(d) Water Cess - 17.69

(e) Income Tax 156.88 144.36

(f) Various claims in respect of disputed liabilities of discontinued 34.26 34.26 business in earlier year

(g) Others 32.98 26.95

2.1.2 Out of the 4.1.1 above, disputes pending with revenue and other government authorities challenged/appealed by the Company are:

(a) Income tax demand raised on completion of assessment for 156.88 144.36 Financial Year 2009-10

(b) Excise Duty demanded against Cenvat credit availed in respect of 58.91 54.82 electricity not used for manufacturing

(c) Transfer of Cenvat credit on merger of excise registration of two 21.97 19.44 units disputed by Excise Department

(d) Custom classifi cation dispute on import of coal 9.29 5.11

(e) Water charges for water not made available as per agreement - 17.69

(f) Penalty for not utilising the land within the time limit prescribed 7.93 6.96 as per the sanction document, utilisation of which is delayed due to non-fulfi llment of condition by Gujarat Industrial Development Corporation

(g) Claims arising from disputes of vendors / contractors 7.60 8.26

Cash outfl ows for the above are determinable only on receipt of judgments pending with various authorities/Courts/Tribunals etc.

2.1.3 Other Money for which the Company is contingently liable :

(a) Custom Duty Liability (Net of Cenvat credit), which may arise if 12.41 37.48 obligation for exports is not fulfi lled against import of raw materials and machinery

(b) Bills discounted with banks fully covered by buyers'' letters of - 7.37 credit

2.2 SEGMENT REPORTING

2.2.1 Primary Segment Reporting (by Business Segment)

Primary Segment has been identifi ed based on the nature of products and services, the different risks and returns, and the internal reporting structure. The Company considers Business Segment as the Primary Segment for disclosure. Details of products included in each of the segments are as under:- Fibre and Pulp - Viscose Staple Fibre and Rayon Grade Pulp Chemicals - Caustic Soda, Epoxy and Allied Chemicals

Others - Mainly Textiles

Inter-segment transfers of independent marketable products are at market rates.

Unallocated items include general corporate income, expense, assets and liabilties which are not allocated to any business segment.

(viii) Gratuity:

The Employees'' gratuity fund is managed by a Trust. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method as prescribed by the Accounting Standard (AS)-15 (Revised) - ''Employee Benefi ts'', which recognises each period of service as giving rise to additional unit of employee benefi t entitlement and measure each unit separately to build up fi nal obligation.

(ix) There are no amounts included in the Fair Value of Plan Assets for:

a) Company''s own fi nancial instrument

b) Property occupied by or other assets used by the Company

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

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

(xi) Salary Escalation Rate:

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

2.3.1.1 Compensated Absences:

The obligation for compensated absences is recognised in the same manner as gratuity, amounting to charge of Rs. 11.91 Crore (Previous Year Rs. 0.38 Crore).

2.3.2 Defined Contribution Plans:

Amount recognised as expense and included in the Note 3.7 as "Contribution to Provident and Other Funds" Rs. 26.53 Crore (Previous Year Rs. 23.77 Crore).

2.4.1 The Company has spent Rs. 16.71 Cr. on Corporate Social Responsibility Projects/initiatives during the year including Rs. 0.87 Cr. towards capital expenditure.

2.5 The Board of Directors of the Company at its meeting held on 11th February, 2015 has approved a Scheme of Amalgamation (''the Scheme'') for the merger of Aditya Birla Chemicals (India) Limited (''ABCIL'') with the Company w.e.f. 1st April 2015 (the appointed date) in terms of the provisions of sections 391 to 394 of the Companies Act, 1956 read with other applicable provisions of the Companies Act, 1956 and the Companies Act, 2013.

The Scheme will be effective upon obtaining requisite approvals inter alia, approval of shareholders and creditors, sanction of the Scheme of Arrangement by the Hon''ble High Courts, approval of the Competition Commission of India and other regulatory approvals.

On merger of ABCIL with the Company, the shareholders of ABCIL will receive 1 (one) equity share of the Company of face value Rs. 10 each fully paid-up for every 16 (sixteen) equity shares of ABCIL of face value Rs. 10 each fully paid-up.

2.6 Previous year (Year ended 31st March, 2014) fi gures have been regrouped/reclassifi ed, wherever necessary, to correspond with the current year (31st March 2015) classifi cation/disclosure.

2.7 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, 2014

GENERAL INFORMATION

Grasim Industries Limited (the "Company") is engaged primarily in two businesses, Viscose Staple Fibre (VSF) and in Cement, through its subsidiary UltraTech Cement Limited. It also produces Rayon Grade Pulp, Caustic Soda and allied Chemicals, which are used in the manufacture of VSF. The manufacturing plants of the Company, its Subsidiaries and Joint Ventures are located in India, Canada, Sweden, China, Middle East, Sri Lanka and Bangladesh. The Company is a public limited company and its shares are listed on the Bombay Stock Exchange (BSE), India, and the National Stock Exchange (NSE), India, and the Company''s Global Depository Receipts are listed on the Luxembourg Stock Exchange.

Rs.in Crore

Current Previous Year Year

1.1 CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

1.1.1 Claims/Disputed Liabilities not acknowledged as Debts:

(a) Custom Duty 7.06 2.07

(b) Sales Tax/Purchases Tax/VAT 0.10 0.01

(c) Excise Duty/Cenvat Credit/Service Tax 83.16 1.98

(d) Water Cess 17.69 23.96

(e) Income Tax 144.36 -

(f) Various claims in respect of disputed liabilities of discontinued 34.26 70.00 business in earlier year

(g) Others 26.95 25.37

1.1.2 Out of the 4.1.1 above, disputes pending with revenue and other government authorities challenged/appealed by the Company are:

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

1.3 SEGMENT REPORTING

1.3.1 Primary Segment Reporting (by Business Segment)

Primary Segment has been identified based on the nature of products and services, the different risks and returns, and the internal reporting structure. The Company considers Business Segment as the Primary Segment for disclosure. Details of products included in each of the segments are as under:

Fibre and Pulp - Viscose Staple Fibre and Rayon Grade Pulp

Chemicals - Caustic Soda, Epoxy and Allied Chemicals

Others - Mainly Textiles

Inter-segment transfers of independent marketable products are at market rates.

Unallocated items include general corporate income, expense, assets and liabilties, which are not allocated to any business segment.

1.4.1 Secondary Segment Reporting (by Geographical Segment):

The Company''s operating facilities are located in India.

(viii) Gratuity:

The Employees'' gratuity fund is managed by a Trust. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method as prescribed by the Accounting Standard (AS)-15 (Revised) - ''Employee Benefits'', which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up final obligation.

(ix) There are no amounts included in the Fair Value of the Plan Assets for:

a) Company''s own financial instrument

b) Property occupied by or other assets used by the Company

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

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

(xi) Salary Escalation Rate:

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

(xiii) The best estimate of the expected Contribution for the next year amounts to Rs. 7.50 Crore (Previous Year Rs. 7.50 Crore).

2.1 Compensated Absences:

The obligation for compensated absences is recognised in the same manner as gratuity, amounting to charge of Rs. 0.38 Crore (Previous Year Rs. 2.88 Crore).

2.2 Defined Contribution Plans:

Amount recognised as expense and included in the Note 3.7 as "Contribution to Provident and Other Funds" Rs. 23.77 Crore (Previous Year Rs. 22.50 Crore).

3 General Description of Leasing Agreements:

(i) Lease Assets: Godowns, Offices, Flats and 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

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

5. 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

GENERAL INFORMATION

Grasim Industries Limited (the "Company") is engaged primarily in two businesses, Viscose Staple Fibre (VSF) and in Cement, through its subsidiary. It also produces Rayon Grade Pulp, Caustic Soda and allied Chemicals, which are used in the manufacture of VSF. The manufacturing plants of the Company, its Subsidiaries and Joint Ventures are located in India, Canada, Sweden, China, Middle East, Sri Lanka and Bangladesh. The Company is a public limited company and its shares are listed on the Bombay Stock Exchange (BSE), India, and the National Stock Exchange (NSE), India, and the Company''s GDRs are listed on the Luxembourg Stock Exchange.

1.1.1.1 Fair Valuation

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

2.1.1 The Board of Directors has recommended a dividend of Rs. 22.50 per share for the year ended, 31st March, 2013 (Previous Year Rs. 22.50 per share). The total cash outflows on account of the dividend would be Rs. 206.52 Crore (Previous Year Rs. 206.36 Crore) and on account of Corporate Dividend Tax Rs. 9.81 Crore (Previous Year Rs. 12.02 Crore).

2.1.2 Proposed Dividend (including Corporate Dividend Tax) includes Rs. 0.02 Crore (Previous Year Rs. 0.01 Crore) related to Previous Year.

# Net of Deferred Employees'' Compensation Expenses Rs. 0.65 Crore (Previous Year Rs. 1.65 Crore).

3.1 CAPITAL COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided {(Net of Advance paid of Rs. 268.23 Crore (Previous Year Rs. 488.20 Crore)}

3.2 SEGMENT REPORTING

3.2.1 Primary Segment Reporting (by Business Segment)

Primary Segment have been identified based on the nature of products and services, the different risks and returns and the Internal reporting structure. The Company considers Business Segment as the Primary Segment for disclosure. Details of products included in each of the segments are as under:

Fibre and Pulp - Viscose Staple Fibre and Rayon Grade Pulp

Chemicals - Caustic Soda and Allied Chemicals

Others - Mainly Textiles

Inter-segment transfers of independent marketable products are at market rates.

(viii) Gratuity:

The Employee''s gratuity fund is managed by a Trust. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method as prescribed by the Accounting Standard (AS) 15 - Revised ''Employee Benefits'', which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up final obligation.

(ix) There are no amounts included in the Fair Value of Plan Assets for:

a) Company''s own financial instrument

b) Property occupied by or other assets used by the Company

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

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

(xi) Salary Escalation Rate:

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

(xiii) The best estimate of the expected Contribution for the next year amounts to Rs. 7.50 Crore (Previous Year Rs. 7.50 Crore).

3.3.1.1 Compensated Absences:

The obligation for compensated absences is recognised in the same manner as gratuity, amounting to charge of Rs. 2.88 Crore (Previous Year Rs. 2.12 Crore).

3.3.2 Defined Contribution Plans:

Amount recognised as expense and included in the Note 3.7 as "Contribution to Provident and Other Funds" Rs. 22.50 Crore (Previous Year Rs. 20.04 Crore).

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

3.3.4 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

GENERAL INFORMATION

Grasim Industries Limited (the "Company") is engaged primarily in two businesses, Viscose Staple Fibre (VSF) and in cement through its subsidiary. It also produces Caustic Soda and allied Chemicals and Rayon Grade Pulp which are used in the manufacture of VSF. The manufacturing plants of the Company, its Subsidiaries and its Joint Ventures are located in India, Middle East, Sri Lanka, Canada, Bangladesh and China. The Company is a public limited company and its shares are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), and the Company's GDR's are listed on the Luxembourg Stock Exchange.

1.1.1 The Board of Directors has recommended a dividend of Rs 22.50 per share for the year ended 31st March, 2012 (Previous Year Rs 20 per share).

The total cash outflows on account of the dividend Rs 206.36 Crore (Previous Year Rs 183.40 Crore) and on account of Corporate Dividend Tax Rs 12.02 Crore (Previous Year Rs 13.66 Crore).

1.1.2 Proposed Dividend (including Corporate Dividend Tax) for the Current Year includes Rs 0.01 Crore related to Previous Year.

Rs in Crore Current Previous Year Year

2.1 Contingent Liabilities not provided for in respect of :

2.1.1 Claims/Disputed Liabilities not acknowledged as debt:

Custom Duty 3.70 3.70

Sales Tax/Purchase Tax/VAT 0.20 2.01

Excise Duty/Cenvat Credit/Service Tax 7.58 7.65

Water Cess 24.17 22.53

Various claims in respect of disputed liabilities of discontinued business in earlier year 70.00 -

Others 26.81 36.05

Out of the above matter disputes pending with Revenue and other Government authorities challenged/appealed by the Company are:

(a) Water charges for water not made available as per agreement 22.32 20.68

(b) Penalty for not utilising the land within the time limit prescribed as per the sanction document, utilisation of which 5.34 - is delayed due to non-fulfilment of condition by Gujarat Industrial Development Corporation

(c) Claims arising from disputes of vendors/contractors 7.16 7.56

(d) Service Tax on Goods Transport Agency on full amount of service instead on 25% of value of services 5.90 4.81

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

2.1.2 Custom Duty (Net of Cenvat Credit) which may arise if obligation for exports is not fulfilled against import of raw materials and machinery 8.06 0.85

2.1.3 Letter of Undertaking-cum-Indemnity, Corporate Guarantees given to Bank/ Financial Institutions for finance provided to subsidiary and joint venture 207.61 378.68

- Amount Outstanding against above 96.69 178.36

2.2 Estimated amount of contracts remaining to be executed on capital account and not provided (Net of Advance paid of Rs 488.20 Crore, Previous Year Rs 44.43 Crore) 1,427.14 226.17

2.3 Segment Reporting

2.3.1 Primary Segment Reporting (by Business Segment)

Segments have been identified in line with the Accounting Standard on Segment Reporting (AS-17), taking into account the organisational reporting structure as well as the differential risks and returns of these segments. Details of products included in each of the segments are as under:

Fibre and Pulp - Viscose Staple Fibre and Rayon Grade Pulp

Chemicals - Caustic Soda and Allied Chemicals

Others - Mainly Textiles

Inter-segment transfers of independent marketable products are at market rates.

Unallocated items include general corporate income, expense, assets and liabilities which are not allocated to any business segment.

2.4.1 During the year ended 31st March, 2012, the revised format of accounts was notified by modifying Schedule VI under the Companies Act, 1956. The new format has been followed for preparation and presentation of the financial statements. The adoption of revised Schedule VI, as aforesaid does not impact recognition and measurement principles followed for preparation of the financial statements. The Company has reclassified the previous year's figures in accordance with the requirements applicable in the current year.

2.4.2 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

(Rs. in Crore)

1. Contingent Liabilities not provided for in respect of:

Current Year Previous Year

(a)Claims/Demands against the Company challenged by the Company and not acknowledged as debts

- Excise Duty/Cenvat Credit/Service Tax 7.65 33.18

- Water Cess 22.53 19.05

- Custom Duty 3.70 1.97

- Sales Tax/VAT 2.01 0.17

- Others 36.05 38.14

(b) Custom Duty which may arise if obligation for exports is not fulfilled against import of raw materials and machinery 0.85 1.43

(c) Letter of Undertaking-cum-Indemnity, Corporate Guarantees given to Bank/ Financial Institutions for finance provided to subsidiaries and joint ventures 378.68 84.00

- Amount outstanding against the above 178.36 65.00

2. Estimated amount of contracts remaining to be executed on capital account and not provided (Net of advance paid Rs. 43.60 crore, Previous Year Rs. 14.63 crore) 226.17 25.74

3. The reported numbers for the previous year ended 31st March, 2010, are not comparable as same include results of the discontinued Sponge Iron and Cement business of the Company, sold/demerged during the Financial Year 2009-10, effective from 22nd May, 2009, and 1st October, 2009, respectively.

4. Idea Cellular Limited (Idea), an Associate of the Company, was originally a tripartite joint venture between A.V. Birla Group, Tata Group and AT&T Group. With the exit of AT&T and the Tata Group, Idea is now part of A.V. Birla Group. Prior to its exit, Tata Group had alleged that the A.V. Birla Group had committed material breach of the Shareholders Agreement and the Tata Group invoked the arbitration clause, pursuant to which an Arbitral Tribunal has been constituted, which has taken up the claims of the Tata Group and the counter-claims of the A.V. Birla Group and proceedings are on going. The Company believes that it has a strong case to counter the allegations of breach and it does not contemplate any liability to arise on this matter.

5. During the year, the Company has entered into a Joint Venture agreement with Essel Mining and Industries Ltd. to form a Joint Venture Company namely Bhubneshwari Coal Mining Company Limited to undertake contract coal mining business.

6. During the year, under a Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956, Samruddhi Cement Limited (SCL), a subsidiary of the Company, has been amalgamated with UltraTech Cement Ltd. (UTCL), another subsidiary of the Company, w.e.f. 1st July, 2010. Accordingly, the shareholders of SCL have been issued 4 (four) equity shares of UTCL of the face value of Rs. 10 each credited as fully paid up, in lieu of 7 (seven) equity shares of SCL of the face value of Rs. 5 each (fully paid up). As a result, shareholding of the Company in UTCL stands increased to 60.34%.

In the previous year, under a scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 (the scheme), the erstwhile Cement Business of the Company (Net Asset Value Rs. 4,088.26 crore) was transferred to SCL w.e.f. 1st October, 2009. In term of the scheme, SCL issued one equity share of the face value of Rs. 5 each fully paid for every one fully paid-up equity share of the Company on record date.

7. During the year, the Company has acquired 4,000 additional shares of Birla Lao Pulp and Plantation Company Limited, a Joint Venture of the Company, at a cost of Rs. 17.86 crore.

8. There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006, to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made. The above information regarding Micro, Small and Medium Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.

9. Segment Reporting:

(a) Primary Segment Reporting (by Business Segment)

(i) Segments have been identified in line with the Accounting Standard on Segment Reporting (AS-17), taking into account the organisational structure as well as the differential risks and returns of these segments. Details of products included in each of the segments are as under: Fibre and Pulp - Viscose Staple Fibre and Rayon Grade Pulp

Chemicals - Caustic Soda and Allied Chemicals

Cement - Grey and White Cement (upto 30th September, 2009)

Sponge Iron - Sponge Iron (upto 22nd May, 2009)

Textiles -Yarn

10. Related Party Transactions:

(a) Parties where control exists – Subsidiaries:

Sun God Trading and Investments Limited Samruddhi Swastik Trading and Investments Limited Samruddhi Cement Limited (w.e.f. 4th September, 2009 and upto 30th June, 2010) UltraTech Cement Limited Dakshin Cement Limited UltraTech Cement Lanka Private Limited (previously known as UltraTech Ceylinco (Private) Limited)

UltraTech Cement Middle East Investment Limited (w.e.f. 3rd March, 2010)

Star Cement Co. LLC, Dubai, UAE

Star Cement Co. LLC, RAK, UAE

Al Nakhla Crusher LLC, Fujairah, UAE

Arabian Cement Industry LLC, Abu Dhabi, UAE

Arabian Gulf Cement Co. WLL, Bahrain

Emirates Power Company Ltd., Bangladesh

Emirates Cement Bangladesh Ltd., Bangladesh

Harish Cement Limited

Grasim Bhiwani Textiles Limited

Vikram Sponge Iron Limited (upto 21st May, 2009)

(b) Other Related Parties with whom transactions have taken place during the year:

Joint Ventures:

A.V. Cell Inc., Canada

A.V. Nackawic Inc., Canada

Birla Jingwei Fibres Company Limited

Birla Lao Pulp & Plantations Company Limited

Bhaskarpara Coal Company Limited;

Madanpur (North) Coal Company (Private) Limited; and

Bhubaneswari Coal Mining Limited

Associates:

Aditya Birla Science & Technology Company Limited

Idea Cellular Limited

Key Management Personnel:

Shri Shailendra K. Jain, Whole-Time Director

(upto 31st March, 2010)

Relatives of Shri Shailendra K. Jain:

- Smt. Niharika Jain, Wife

- Shri Suvvrat Jain, Son

- Shri Devavrat Jain, Son

Shri Adesh Gupta, Whole-Time Director and Manager (w.e.f. 3rd October, 2009) Relative of Shri Adesh Gupta:

- Smt. Usha Gupta, Wife

Shri K.K. Maheshwari, Whole-Time Director

(w.e.f. 20th May, 2010)

Shri D.D. Rathi, Whole-Time Director

(upto 31st May, 2009)

Enterprise where significant influence exists:

- Vishal Industries and Chemicals Private Limited

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

12. Additional information required under Part II of Schedule VI to the Companies Act, 1956, is as per Schedule 23.


Mar 31, 2010

Rs.in Crores

1.1 Contingent Liabilities not provided for in respect of: Previous Year

(a) Claims not acknowledged as debts 92.51 387.57 (Includes demands in respect of Excise Duty, Cenvat Credit, Water Cess, Sales Tax/VAT, Electricity Duty etc.)

(b) Custom Duty which may arise if obligation for exports is not fulfilled against import of raw materials and machinery 1.43 --

(c) Custom Duty on import of technical know-how and other services relating to projects against which Bank Guarantee/Bond of Rs.Nil Crores ( Previous Year Rs. 5.36 Crores) is furnished. -- 10.81

1.2 Letter of Undertaking-cum Indemnity, Corporate Guarantee given to Bank/ Financial Institutions for finance provided to subsidiary and joint venture. 84.00 80.00

2. The Ministry of Textiles, vide its orders dated 30th June, 1997 and 1st July, 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-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 (Net of advance paid Rs.14.63 Crores,

Previous Year Rs. 91.84 Crores). 25.74 363.30

4. Land, Building and Plant and Machinery of some of the Units were revalued on 1st April, 1974, 1st April, 1980, 1st April, 1982 and 1st April, 1985, by approved valuers on the basis of assessment about the then current value of similar assets. As a result, book value of such assets was increased, which had been transferred to Capital Reserve.

In the current period the Company has reinstated revalued amounts (net of withdrawals) at their original cost to bring them in line with its accounting policy of valuing at cost. Accordingly unamortised revaluation amount of Rs. 3.24 Crores has been adjusted from fixed assets with corresponding adjustment to revaluation reserve. This change does not have any impact on the profits for the year.

5. A Scheme of Arrangement for sale of Sponge Iron Unit of the Company has become effective on 22nd May, 2009, on completion of the necessary formalities.

In terms of the scheme, on effective date:

(a) Welspun Power and Steel Limited (Welspun) has infused the required funds into Vikram Sponge Iron Limited (VSIL) for payment of consideration to the Company and has accordingly acquired 99.75% equity share capital of VSIL and as such VSIL has ceased to be a Subsidiary of the Company.

(b) The Company has transferred the Sponge Iron Unit of the Company to VSIL, on going concern basis, on receipt of the consideration of Rs. 1,030 crores and the Unit ceases to be part of the Company.

(c) The profit of sale of the Sponge Iron Unit amounting to Rs. 336.07 Crores (Net of Tax Rs. 8.65 Crores) has been accounted for as an extraordinary item.

6. The Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 (the scheme) to transfer Cement Business (inter-alia comprising of Grey Cement, White Cement, Ready Mix Concrete Businesses) on a going concern basis to its subsidiary Samruddhi Cement Limited (SCL) w.e.f. 1st October, 2009, the appointed date has become effective on 18th May, 2010, on getting requisite approvals and completion of necessary formalities.

In terms of the Scheme, the shareholders of the Company will receive 1 (one) equity share of SCL of the face value of Rs. 5 each, credited as fully paid up, for every 1 (one) fully paid up equity share of the Company held on 28th May, 2010, the record date to be fixed for the purpose.

Consequent to vesting of the Cement Business of the Company in terms of the Scheme, the Financial Statements of the Company for the year ended 31st March, 2010, do not include the operations of the Cement Business for the period of six months from 1st October, 2009 to 31st March, 2010, and are therefore strictly not comparable with the figures of the previous year ended 31st March, 2009.

All the assets and liabilities of the Cement Business of the Company, on the appointed date, have been transferred to SCL. The excess of assets over liabilities relating to the cement business (net of Debenture Redemption Reserve of Rs. 27.50 Crores and Capital Subsidy Reserve of Rs. 0.30 Crores transferred as liabilities pertaining to Cement Business) transferred as on 1st October, 2009, has been adjusted in terms of the Scheme against the Reserves of the Company as under:

7. Idea Cellular Limited (Idea), an Associate of the Company, was originally a tripartite joint venture between A.V. Birla Group, Tata Group and AT&T Group. With the exit of AT&T and the Tata Group, Idea is now part of A.V. Birla Group. Prior to its exit, Tata Group had alleged that the A.V. Birla Group had committed material breach of the Shareholders Agreement and the Tata Group invoked the arbitration clause, pursuant to which an Arbitral Tribunal has been constituted, which has taken up the claims of the Tata Group and the counter- claims of the A.V.Birla Group and proceedings are on going. The Company believes that it has a strong case to counter the allegations of breach and it does not contemplate any liability to arise on this matter.

8. During the year, the shareholding of the Company in Idea, has changed from 5.26% to 5.18% w.e.f. from 1st March, 2009, as Idea has issued new shares to the shareholders of Spice Communication Limited on merger of Spice Communication Limited with Idea.

9. During the year, the Company has purchased 5,077,603 equity shares of Rs 10 each of UltraTech Cement Limited from Samruddhi Swastik Trading and Investments Limited, a wholly owned subsidiary of the Company at book value of Rs. 172.04 Crores.

The Company has also acquired additional shares in its joint ventures as under:

(a) 45,000 ‘A class equity shares of A V Nackawic, Canada at a cost of Rs. 39.96 Crores.

(b) 2,000 shares of Birla Lao Pulp & Plantation Company Ltd at a cost of Rs. 9.68 Crores.

10. Research and Development Expenditure

Revenue Expenditure on Research and Development included in the different heads of expenses in the Profit and Loss Account is Rs. 4.39 Crores (Previous Year Rs. 5.50 Crores).

11. In terms of the Scheme of Arrangement as mentioned in Note 6 of Schedule 21(B), a Compensatory Employee Stock Option Scheme (CESOS) will be formulated by SCL under which the stock option holders, of the Company will be entitled to one employee stock option of SCL for every employee stock option held by them in the Company. The CESOS is an outcome of the Scheme and is in no way a modified or a new ESOS.

The impact on account of CESOS has been accounted for on provisional basis, based on the divided grant price of the stock options to be issued by SCL under CESOS, as per the division of stock option grant price under the Employee Stock Option Scheme, 2006 (ESOS 2006) recommended by the Merchant Bankers to ESOS 2006. Adjustments, if any, required on final approval of grant price by Compensation Committee of the Board of Directors of the Company in consultation with the Board of Directors of SCL, will be carried out in the next year.

The provisional revised grant price considered for the Company s stock option under ESOS 2006 is Rs. 1,523 per stock option granted under the Tranche I and Rs. 2,279 per stock option granted under Tranche II of ESOS 2006.

12. Segment Reporting

a . Primary Segment Reporting (by business segment)

(i) Segments have been identified in line with the Accounting Standard on Segment Reporting (AS 17), taking into account the organizational structure as well as the differential risks and returns of these segments. Details of products included in each of the segments are as under:- Fibre & Pulp - Viscose Staple Fibre & Rayon Grade Pulp Chemicals - Caustic Soda & Allied Chemicals Cement - Grey & White Cement (upto 30th September, 2009) Sponge Iron - Sponge Iron (upto 22nd May, 2009) Textiles -Yarn

(ii) Inter-segment transfers of independent marketable products are at market rates.

13. Related Party Transactions:

a. Parties where control exists - Subsidiaries:

Sun God Trading And Investment Limited

Samruddhi Swastik Trading And Investment Limited

Samruddhi Cement Limited (w.e.f. 4th September, 2009)

UltraTech Cement Limited

Dakshin Cement Limited

UltraTech Cement Lanka Private Limited (previously known as UltraTech Ceylinco (Private) Limited)

UltraTech Cement Middle East Investment Limited (w.e.f. 3rd March, 2010)

Harish Cement Limited

Grasim Bhiwani Textiles Limited

Vikram Sponge Iron Limited (upto 21st May 09)

b. Other Related Parties with whom transactions have taken place during the year: Joint Ventures:

AV Cell Inc., Canada

A V Nackawic Inc., Canada,

Birla Jingwei Fibres Co. Limited

Birla Lao Pulp & Plantations Company Limited

Bhaskarpara Coal Co. Limited

Madanpur (North) Coal Company (Pvt.) Limited Associates:

Aditya Birla Science & Technology Company Limited

Idea Cellular Limited Key Management Personnel: i) Shri Shailendra K. Jain, Whole-Time Director

Relatives of Shri Shailendra K. Jain:

- Smt. Niharika Jain, Wife

- Shri Suvvrat Jain, Son

- Shri Devavrat Jain, Son

ii) Shri Adesh Gupta, Whole-Time Director (w.e.f. 3rd October, 2009) Relatives of Shri Adesh Gupta

- Smt. Usha Gupta, Wife

iii) Shri D. D. Rathi, Whole-Time Director (upto 31st May, 2009) Enterprise where significant influence exists:

- Vishal Industries and Chemicals Private. Limited (upto 31st May, 2009)

(vii) There are no amounts included in the Fair Value of Plan assets for:

b) The obligation for compensated absence is recognised in the same manner as gratuity, amounting to Rs. 9.32 Crores (Previous Year Rs. 13.30 Crores) for the year ended 31st March, 2010.

B Defined Contribution Plans :

Amount recognised as expense and included in the Schedule 18 - "Contribution to Provident and Other Funds" - Rs. 29.21 Crores (Previous Year Rs. 38.80 Crores).

14. Previous years figures have been regrouped and rearranged wherever necessary to conform to this years classification.

15. Additional information required under Part II of Schedule VI to the Companies Act, 1956 is as per Schedule 22.

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