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Notes to Accounts of Kakatiya Cement Sugar & Industries Ltd.

Mar 31, 2019

1. Background

Kakatiya Cement, Sugar and Industries Limited (the “Company”) was incorporated in 1979 having it’s Registered office in Hyderabad. The Company’s activities are organized into three operating divisions namely Cement, Sugar and Power. The major activity of the company is to produce, manufacture, refine, sell and generally to deal in all kinds of Portland Cement, sugar, generation and distribution of power.

“2.1 Terms/Rights attached to equity shares The Company has only one class of equity shares having a face value of Rs. 10 /-each. Each holder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the distribution will be in proportion to the number of equity shares held by the shareholders.”

1. Security premium reserve is utilised in accordance with the provisions of the Act.

2. General reserve is used for strenthening the financial position and meeting the future contigencies and losses.

3. Amalgamation reserve is created in the process of amalgamation of the company. This reserve is used in accordance with the provisions of the Act.

4. The reserves represent the cumulative profits of the Company and effects of the remeasurement of defined benefit obligations. This Reserve can be utilised in accordance with the provisions of the Companies Act, 2013.

Interest free loan from Andhra Bank to meet timely settlement of cane price for crushing sugar season (2013-14) relating to the fair and remunerative price fixed by the Central Government to the sugar cane growers. Loan is secured by first charge on the fixed assets of sugar division and collatteral security of fixed deposits of Rs.795 lakhs of the company. Repayment Schedule as under:

Note 3.1 : The Company had filed a Writ Petition registered as W.P. No. 20536 of 2009 before the Hon’ble High Court of Telangana questioning levy of Electricy Duty @ 0.25 per unit by the State Government on captive consumption of the electricity generated by the Company. The Writ Petition was dismissed by the Hon’ble High Court on 19.05.2016. The Company preferred a Special Leave Petition before the Supreme Court of India registered as SLP No. 22936 of 2016. As per the Interim Orders of the Supreme Court the Company had paid an amount of Rs.481.32 lakhs to the Credit of Government of Telangana & Andhra Pradesh.

The Appeal before the Supreme Court is yet to come up for hearing and accordingly a provision of Rs.909.54 lakhs (Previous Year Rs.867.22 lakhs) is included in the statutory liabilities.

4 Earnings Per share

Basic and Diluted EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the company by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

5 Notes to Employee Benefits

Defined Benefit Plans Gratuity:

Each employee rendering a continuous service of 5 years or more is entitled to receive gratuity amount equal to 15/26 of the monthly emoluments for every completed year of service at the time of separation from the company subject to the provisions of the Gratuity Act.

Estimates of future compensation increases considered taking into account the inflation, seniority, promotion and other relevant factors.

Discount rate is based on the prevailing market yields of Indian Government securities as at 31st March 2019 for the estimated term of the obligations.

"The sensitivity analysis above have been determined based on a method that extrapolate the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period."

Note.6 Provisions, Contingent Liabilities and Contingent Assets:

Disclosures required by AS-29 “Provisions, Contingent Liabilities & Contingent Assets”

i) The Company had appeated to Appellate Tribunal (CT) against order of ADC on restriction of ITC for the Year 2012-13 of Rs.29,52,639 and for the year 2013-14 of Rs.27,52,164 pending with Appeallate Tribunal. For the year 2014-15 the Assessing Officer had raised a demand for an amount of Rs.198.09 Lakhs for non submission of C-Forms and Way Bills against which the company filed an appeal against the demand before AJC(A) and paid an amount of Rs.24.76 Laks being 12.5% on the disputed Tax.

ii) The Company had filed a Writ Petition registered as W.P. No. 20536 of 2009 before the Hon’ble High Court of Telangana questioning levy of Electricy Duty @ 0.25 per unit by the State Government on captive consumption of the electricity generated by the Company. The Writ Petition was dismissed by the Hon’ble High Court on 19.05.2016. The Company preferred a Special Leave Petition before the Supreme Court of India registered as SLP. No. 22936 of 2016. As per the Interim Orders of the Supreme Court the Company had paid an amount of Rs.481.32 lakhs to the Credit of Government of Telangana & Andhra Pradesh. The Appeal before the Supreme Court is yet to come up for hearing and accordingly a provision of Rs.909.54 lakhs (Previous Year Rs.867.22 lakhs) has been made.

iii) For the Asst. years 1999-00, 2000-01 and 2001-02 Income tax paid was for a sum of Rs.123.98 lakhs under protest against the demand of Rs.136.40 lakhs towards disallowance of un-absorbed depreciation / losses. The matter has been pending in appeal before the High Court of Telangana.

iv) For the Asst. Year 2012-13 there was a demand of Rs.120.68 lakhs towards denial of exemption u/s. 80-IA to Company’s Power Division and the same was adjusted against refund due. The matter has been pending before ITAT, Hyderabad.

v) For the Asst.Year 2009-10 penalty has been imposed and the same was adjusted against the refund due and pending in ITAT Hyderabad. For the Asst.Year 2014-15, CIT (A) disposed off the case in favour of the company allowing 80IA deduction, against which the IT department had filed an appeal in ITAT, Hyderabad, which is pending.

vi) Sales tax paid under protest for the Asst. years 2001-02,2002-03 of Rs.188.56 lakhs against a demand of Rs.188.56 lakhs regarding disputed sales tax on Molasses sales. The matter has been under appeal before the High Court of Telangana.

vii) The Company had paid Rs.1.00 crore as per the directions of Hon’ble High Court against demand of Rs.850.22 lakhs from the forest department towards Net Present Value (NPV) in respect of diverted forest land for renewal of Mining lease under Forest (Conservation) Act, 1980. The matter has been pending in appeal before the High Court of Telangana.

viii) Company had appealed to Addl.Commissioner of Customs vide appeal no.72/2014 dated 05/06/2014 and 28/2014 dated 25/06/2014 against the demand of the department amounting to Rs.65.77 Lakhs excluding interest and Penaltyfor the year 2012-13.

ix) For the A.Y.2016-17, the company had filed an appeal before the CIT(A) against the orders passed by the Assessing Officer disallowing 80IA deduction under IT Act. The tax amount in dispute is Rs.969.26 Lakhs

Note :7 Capital and other commitments Rs Nil (P.Y Rs Nil)

8 Fair values

Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

The management assessed that fair value of financial assets and liabilities significantly approximate their carrying amounts largely due to the shortterm maturities of these instruments. The fair value ofthe financial assets and liabilities is 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 determines fair values of financial assets or liabilities by discounting the contractual cash inflows / outflows using prevailing interest rates of financial instruments with similar terms. The initial measurement of financial assets and financial liabilities is at fair value. . Further, the subsequent measurements of all assets and liabilities is at amortised cost, using effective interest rate method.

The following methods and assumptions were used to estimate fair values:-

-The fair value ofthe Company’s interest bearings borrowings are determined using discount rate that reflects the entity’s discount rate at the end ofthe reporting period. The own non-performance risk as at the reporting period is assessed to be insignificant.

For other non-current financial assets and liabilities the fair value is the same as the amortized cost, measured using the discount rate at the time of initial recognition of financial assets and liabilities

A one percent change in the unobserved inputs used in fair valuation of level 3 Assets and liabilities does not have a significant impact in its Fair value of financial assets and financial liabilities

The carrying value of the current financial assets and current financial liabilities are considered to be same as their values, due to their short-term nature. The non-current borrowings and securities deposits are carried at amortized cost which is considered as their fair value.

9 Financial risk management objectives and policies Financial Risk Management Framework

The Company’s principal financial liabilities, other than derivatives, comprise loans and 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 include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations.

The Company is exposed primarily to Credit Risk, Liquidity Risk and Market risk (fluctuations in foreign currency exchange rates and interest rate), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

A. Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk.

Trade receivables:

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of statements of financial position whether a financial asset or a Company of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The company is not expecting any credit loss allowance which is calculated on life time expected credit losses for trade receivables. Credit loss provision on security deposits is taken as 12 months expected credit loss and no loss is expected as at 31st March, 2019, 31st March, 2018

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company’s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the authorised person. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

B. Liquidity Risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments

Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk, the Company’s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly. Selective hedging is used within the Company to manage risk concentrations at both the relationship and industry levels.

Collateral : Nil

C. Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits etc.

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 long term and short term borrowings. The company has borrowed funds on fixed rate of interest, there is no impact on the entity due to any interest fuluctuations.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a foreign currency). The exposure of entity to foreign currency risk is very limited on account of limited transactions in foreign currency.

10 Capital Management

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company’s capital management is to maximise the shareholder value. Capital includes equity attributable to the equity holders of the Parent. The primary objective of the Companies capital management is to ensure that it maintains an efficient capital structure and healthy capital ratios in order to support its business and maximise shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31st March, 2019 and 31st March, 2018.

11 Dues to Micro and Small Enterprises

The dues to Micro and Small Enterprises as required under the Micro, Small and Medium Enterprises Development Act, 2006 to the extent information available with the company is given below:

12. Segment information

The Company’s activities are organised into three operating segments namely Cement, Sugar and Power. The Segments are the basis on which the company reports its segment information Cement division - produce, manufacture, refine and prepare the portland cement Sugar division - It deals mainly with the crushing of sugar-cane Power division - It generates and distributes the power

They primarily use a measure of profit before tax to assess the performance of the operating segments. Information about Products:

Revenue from external customers- sale of cement sugar and Power is Rs.11,061.43 lakhs

The company has not made external sales to the customers inexcess of 10% or more of the entities revenue.

Segment revenue and expenses:

The Company has an established basis of allocating Joint/Corporate expenses to the segments, which is reasonable, and followed consistently. All other segment revenue and expenses are attributable to the segments.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions that are reported as direct offsets in the balance sheet. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis. In such cases, the entire revenue and expenses of these assets including depreciation are also allocated to the same segments.Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include deferred income taxes.

Inter segment transfers:

The Company accounts for inter segment sales and transfer at average Market price


Mar 31, 2018

1. Background

Kakatiya Cement, Sugar and Industries Limited was incorporated in 1979 having it’s registered office in Hyderabad. The Company’s activities are organized into three operating divisions namely Cement, Sugar and Power. The major activity of the company is to produce, manufacture, refine, prepare,sell and generally to deal in all kinds of Portland Cement, sugar, generation and distribution of power.

Note 2.1: The Company has taken overdraft facilities from Andhra bank and state bank of India against pledge of fixed deposits valuing INR 10781.21 lakhs (Previous year INR 4948.39 lakhs) of the company at an average rate of 8.25%

3.1 There are no transactions with Micro, small and Medium Enterprises, Hence no disclosures are made under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

Note 4.1: The Company filed an appeal before the Hon,ble High Court of Andhra Pradesh vide W.P.no. 20536 of 2009 for levy of Duty @0.25 per unit of captive consumption of the electricity generated by the company. The appeal was dismissed by the hon,ble High Court of judicature of Telangana and Andhra Pradesh on 19.05.2016 and accordingly a provision of Rs. 867.22(Previ-ous year Rs. 834.05 lakhs) is included in the Statutory liabilities.

Note 5.1: Interest Income represents Interest on Fixed Deposits and Interest on Electricity Deposits

Note.6 Provisions, Contingent Liabilities and Contingent Assets:

Disclosures required by AS-29 “Provisions, Contingent Liabilities & Contingent Assets”

i) The Company has filed an appeal to Appellate Tribunal (CT) against order of ADC on restriction of ITC for the Year 2012-13 of Rs. 29,52,639 and for the year 2013-14 of Rs. 27,52,164 pending with Appeallate Tribunal.

ii) Claims against the company by APCPDCL/APSPDCL amounting to ‘907.41 lakhs towards wheeling charges for energy wheeled from company’s bagasse based co-generation unit to cement division for which writ petition filed in the High court of Andhra Pradesh and stay obtained.

iii) For the Asst. years 1999-00, 2000-01 and 2001-02 Income tax paid Rs. 123.98 lakhs under protest against the demand of Rs.136.40 lakhs towards disallowance of un-absorbed depreciation / losses. The matter is pending in appeal before the High Court of Andhra Pradesh.

iv) For the Asst. Year 2012-13 there was a demand of Rs. 120.68 lakhs towards denial of exemption u/s. 80-IA to Company’s Power Division and the same was adjusted against refund due. The matter is pending before CIT (Appeals).

v) For the Asst.Year 2009-10 penalty has been imposed and the same was adjusted against the refund due and pending with Appeal CIT(A). And asst.year there was appeal with CIT(A) against the order of DCIT against disallowance of deduction U/s 80IA for the Asst.Year 2014-15 and the same was pending with CIT(A)

vi) Sales tax paid under protest for the Asst. years 2001-02,2002-03 of Rs.188.56 lakhs against a demand of Rs.188.56 lakhs regarding disputed sales tax on Molasses sales. The matter is under appeal before the High Court of Andhra Pradesh.

vii) The Company has paid Rs.1.00 crore as per the directions of Hon’ble High Court against demand of Rs. 850.22 lakhs from the forest department towards Net Present Value (NPV) in respect of diverted forest land for renewal of Mining lease under Forest (Conservation) Act, 1980. The matter is pending in appeal before the High Court of Andhra Pradesh.

viii) Company had appealed to Addl.Commissioner of Customs vide appeal no.72/2014 dated 05/06/2014 and 28/2014 dated 25/06/2014 against the demand of the department amonting to Rs. 65.77 Lakhs excluding interest and Penaltyfor the year 2012-13.

Note :7 Capital and other commitments Rs. Nil (P.Y Rs. Nil)

8. Financial instruments and risk management Fair values

1. The carrying amounts of trade payables, other financial liabilities(current), borrowings (current),trade receivables, cash and cash equivalents, other bank balances and loans are considered to be the same as fair value due to their short term nature.

2. Borrowings(non-current) consists of loans from banks and government authorities, other financial liabilities(non-current) consists of interest accrued but not due on deposits other financial assets consists of employee advances where the fair value is considered based on the discounted cash flow.

The fair value of financial assets and liabilities is 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.

Set out below, is a comparision by class of the carrying amounts and fair value of the Company’s financial instruments, other than those with carrying amounts that are reasonable approximation of fair values:

*Fair value of instruments is classified in various fair value hierarchies based on the following three levels:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques, which maximise the use of observable market data and rely as little as possible on entity specific estimates. If significant inputs required to fair value an instruments are observable, the instrument is included in Level 2.

Level 3: If one or more of the significant inputs are not based on observable market data, the instruments is included in level 3.

Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date. In respect of investments as at the transaction date, the Company has assessed the fair value to be the carrying value of the investments as these companies are in their initial years of operations obtaining necessary regulatory approvals to commence their business.

9. Financial risk management

The Company is exposed to market risk (fluctuation in foreign currency exchange rates, price and interest rate), liquidity risk and credit risk, which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

(A) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of currency risk, interest rate risk and price risk. Financial instruments affected by market risk include loans and borrowings, trade receivables and trade payables involving foreign currency exposure. The sensitivity analyses in the following sections relate to the position as at March 31, 2018 and March 31, 2017.

The analysis exclude the impact of movements in market variables on the carrying values of financial assets and liabilties .

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2018 and 31 March 2017.

(B) Credit Risk

Credit risk is the risk arising from credit exposure to customers, cash and cash equivalents held with banks and current and non-current held-to maturity financial assets.

With respect to credit exposure from customers, the Company has a procedure in place aiming to minimise collection losses. Credit Control team assesses the credit quality of the customers, their financial position, past experience in payments and other relevant factors. Cash and other collaterals are obtained from customers when considered necessary under the circumstances.

The carrying amount of trade receivables, loans, advances, deposits, cash and bank balances, bank deposits and interest receivable on deposits represents company’s maximum exposure to the credit risk. No other financial asset carry a significant exposure with respect to the credit risk. Bank deposits and cash balances are placed with reputable banks and deposits are with reputable government, public bodies and others.

The credit quality of financial assets is satisfactory, taking into account the allowance for credit losses.

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including default risk associate with the industry and country in which customers operate. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment.

An impairment analysis is performed at each reporting date on an individual basis for major receivables. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company also holds deposits as security from certain customers to mitigate credit risk.

i. Credit risk on cash and cash equivalents and other bank balances is limited as the Company generally invest in deposits with banks with high credit ratings assigned by external agencies.

ii. Credit risk on trade receivables and other financial assets is evaluated as follows:

presentation requirements for the purposes of this note. ended 31 March 2017. Reconciliation of total comprehensive income for the year

(iii) Significant estimates and judgements Impairment of financial assets:

The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

(C) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding to meet obligations when due and to close out market positions. Company’s treasury maintains flexibility in funding by maintaining availability under deposits in banks.

Management monitors cash and cash equivalents on the basis of expected cash flows.

(i) Financing arrangements:

The company had access to the following undrawn borrowing facilities at the end of the reporting period

10. Capital management

A. Capital management and Gearing Ratio

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is debt divided by total capital. The Company includes within debt, interest bearing loans and borrowings.

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2018 and 31 March 2017.

11. First-time adoption of Ind AS Transition to Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet as at 01 April 2016 (date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting standards) Rules, 2006 (as amended) and other relevant provisions of the Act(previous GAAP or Indian GAAP). An explanation on how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

Exemptions and Exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A. Ind AS optional exemptions

(i) Deemed cost

Ind AS 101 permits a first time adopter to elect to continue with the carrying value for all of its Property, Plant & Equipment as recognised in the Financial Statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition, after making necessary adjustments for decommissioning liabilities. This exemption can also be used for Intangible Assets covered by Ind AS 38.

Accordingly, the Company has elected to measure all of its Property, Plant & Equipment and Intangible Assets at their previous GAAP carrying value.

(ii) Impairment of financial assets

An entity shall apply requirements of Ind AS 109 relating to impairment of Financial Assets retrospectively. However, if at the date of transition, determining whether there is significant increase in credit risk from initial recognition requires undue cost and effort, an entity shall recognise lifetime expected credit losses at each reporting date.

The Company has recognised allowance for credit loss at the date of transition to Ind AS for trade receivables based on lifetime expected credit loss.

B. Ind AS mandatory exceptions

(i) Estimates

An entity’s estimates in accordance with Ind ASs at the date of transition to Ind As shall be consistent with the estimates made for the same date in accordance with previous GAAP(after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following item in accordance with Ind AS at the date of transition as these were not required under previous GAAP: -Impairment of financial asset based on expected credit loss model.

(ii) Classification and measurement of Financial Assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

The Company has calculated fair value of financial assets as the date of transition to Ind AS.

C. Reconciliation between previous GAAP and Ind AS ( as at 31 March 2017 and 1 April 2016)

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods.

The following tables represent the reconciliations from previous GAAP to Ind AS.

D. Notes to first-time adoption:

1) Deferred tax

Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS12 requires entities to account for deferred taxes using the Balance Sheet approach, which focuses on differences between the carrying amount of an asset or liability in the Balance Sheet and its tax base. It requires recognition of tax consequences of differences between the carrying amounts of assets and liabilities and their tax base. As a result Deferred tax liability has been increased by Rs. 1096.4 lakhs as at 1 April 2016 and Rs. 1096.9 lakhs as at 31st March 2017 with a corresponding decrease in retained earnings and net profit respectively.

2) Excise duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31st March 2017 by Rs. 2259.97 lakhs. There is no impact on the total equity and profit.

3) Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. Actuarial gains and losses and the return on plan assets , excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. There is no impact on the total equity as at 31st March 2017.

4) Proposed Dividend

Under the previous GAAP, dividends proposed by the Board of Directors after the balance sheet date but before the approval of the financial statements were considered as an adjusting event. Accordingly, provision for proposed dividend and corporate dividend tax was recognised as liability.

Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend and corporate dividend tax of Rs. 252.62 lakhs included under provisions as at 1 April 2016 has been reversed with corresponding adjustments to retained earnings. Consequently the total equity increased by an equivalent amount.

5) Other equity

Retained earnings as at April 1, 2016 has been adjusted cons quent to the above Ind AS transition adjustments on the date of transition.

6) Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in the profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit or loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans. The concept of ‘other comprehensive income’ did not exist under previous GAAP

11. Segment information

The Company’s activities are organised into three operating segments namely Cement, Sugar and Power. The Segments are the basis on ehich the company reports its segment information Cement division - produce, manufacture, refine and prepare the portland cement Sugar division - It deals mainly with the crushing of sugar-cane Power division - It generates and distributes the power They primarily uses a measure of profit before tax to assess the performance of the operating segments.

Segment revenue and expenses:

The Company has an established basis of allocating Joint/Corporate expenses to the segments, which is reasonable, and followed consistently. All other segment revenue and expenses are attributable to the segments.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions that are reported as direct offsets in the balance sheet. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis. In such cases, the entire revenue and expenses of these assets including depreciation are also allocated to the same segments.Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include deferred income taxes.

Inter segment transfers:

The Company accounts for inter segment sales and transfer at average Market price

(i) Leave obligations

The leave obligation covers the Company’s liability for earned leave which is unfunded.

(ii) Defined contribution plans

The Company has defined contribution plans namely Provident fund. Contributions are made to provident fund at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the Government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the year towards defined contributions plan is as follows:

a) Gratuity

The Company provides for gratuity for employees as per the Payment of Gratuity Act, 1972. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The Company operates post retirement gratuity plan with LIC of India. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation of leave encashment is recognised in the same manner as gratuity.

The following table sets out the amounts recognised in the financial statements in respect of gratuity plan

The above sensitivity analysis is based on a change in each assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

v) Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary inflation risk:

Higher than expected increases in salary will increase the defined benefit obligation.

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

The accompanying notes are an integral part of the financial statements.


Mar 31, 2016

1 : The company has only one class of equity shares having face value of Rs. 10 each. Each shareholder of Equity share entitled to one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by Board of directors is subject to approval of shareholders in ensuing Annual general meeting. During the year ended 31st March,2016, dividend per share recognized as distribution to equity shareholders is Rs. 2.70/- per share (Previous Year Rs. 2.70 per share)

In the event of liquidation of the company, the equity shareholders will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2. Statutory liabilities represent amounts payable towards Excise Duty, Service Tax, Sales tax/VAT and Tax Deducted at Source.

3. The Company filed an appeal before the Hon''ble High Court of Judicature of Telangana and Andhra Pradesh vide W.P. no.20536 of 2009 for levy of Duty at Rs. 0.25 per unit of captive consumption of the electricity generated by the company. The appeal was dismissed by the Hon''ble High Court of Judicature of Telangana and Andhra Pradesh. Hence, a provision of Rs. 1265 lakhs is made in the books of accounts during the year forming part of Statutory Liabilities.

Note: 4. Provisions, Contingent Liabilities and Contingent Assets:

Disclosures required by AS-29 “Provisions, Contingent Liabilities & Contingent Assets”

i) Disputes with regard to Power purchase Tariff and PLF with regard to sale of power to APTRANSCO amounting to Rs. 1772.05 lakhs, out of which Rs. 1042.27 lakhs was considered as income, matter is pending before APERC.

ii) Claims against the company by APCPDCL/APSPDCL amounting to Rs. 907.41 lakhs towards wheeling charges for energy wheeled from company’s bagasse based co-generation unit to cement division for which writ petition was filed in the High Court of Judicature of Telangana and Andhra Pradesh and the stay was obtained.

iii) For the Asst. years 1999-00, 2000-01 and 2001-02 Income tax paid Rs. 123.98 lakhs under protest against the demand of Rs. 136.40 lakhs towards disallowance of un-absorbed depreciation / losses. The matter is pending in appeal before the High Court of Judicature of Telangana and Andhra Pradesh.

iv) For the Asst. Year 2010-11 and 2011-12 there was a demand of Rs. 64.45 lakhs and Rs. 120.68 lakhs towards denial of exemption u/s. 80-IA to Company’s Power Division and other disallowances in Sugar and Cement Divisions. The matter is pending before CIT (Appeals).

v) Sales tax paid under protest for the Asst. years 2001-02, 2002-03 of Rs. 188.56 lakhs against a demand of Rs. 188.56 lakhs regarding disputed sales tax on Molasses sales. The matter is under appeal before the High Court of Andhra Pradesh.

vi) The Company has paid Rs. 1.00 crore as per the directions of Hon’ble High Court against demand of Rs. 850.22 lakhs from the forest department towards Net Present Value (NPV) in respect of diverted forest land for renewal of Mining lease under Forest (Conservation) Act, 1980. The matter is pending in appeal before the High Court of Andhra Pradesh.

Note 5 : CLASSIFICATION

Previous Year figures have been regrouped wherever necessary to conform to current Year''s groupings / classification.


Mar 31, 2014

1.1 Equity Shares of 1,46,862 of Rs.10 each to be alloted to Shareholders of Sree Kailash Sugars and Chemicals Limited based on the outcome of the case pending with the Honorable Andhra Pradesh High Court.

2.1. Other Liabilites repesents liability to Sri S.R Kailash .The Company has filed a Petition in AP High Court against Arbitration award amounting to Rs.129.25 given in favour of Sri S. R. Kailash and pending decision of the AP High court and the same is retained in Fixed deposit with Andhra bank.

3.1 Statutory & Other liabilites represent amounts payable towards Excise Duty, Service Tax, Sales tax VAT and Tax Deducted at Source.

4.1: Other Advances include Income tax paid under protest for AY 2007-08 amounting to Rs. 602.10 Lacs and Sales tax paid under protest amounting to Rs. 200.54 Lakhs.

Note.5.1 : Interest income represents Interest on Fixed Deposits and Interest on eletricity deposits

Note 6 : EMPLOYEE BENEFITS

As per Accounting Standard 15 "Employee Benefits", the disclosures as defined in the Accounting Standard are given below:

Defined Benefit plans:

The company operates post retirement gratuity plan with LIC. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The Company has determined the leave encashment provision based on independent actuary.

Note: 7. Provisions, Contingent Liabilities and Contingent Assets:

Disclosures required by AS-29 "Provisions, Contingent Liabilities & Contingent Assets"

i) Disputes with regard to Power purchase Tariff and PLF with regard to sale of power to APTRANSCO amounting to Rs. 1772.05 lakhs, out of which Rs. 1042.27 lakhs was considered as income, matter is pending before APERC.

ii) Claims against the company by APCPDCL/APSPDCL amounting to Rs.907.41 lakhs towards wheeling charges for energy wheeled from company''s bagasse based co-generation unit to cement division for which writ petition filed in the High court of Andhra Pradesh and stay obtained.

iii) Duty on Electricity generated and consumed was levied by the A.P.Govt. at Rs.0.25 paise per unit from 17.07.2003. The High Court has stayed the operation of A.P. Electricity Duty Amendment Act, but asked to submit monthly returns of generation. The duty amount as on 31.03.2014 was Rs.1106.90 lakhs.

iv) For the Asst. years 1999-00, 2000-01 and 2001-02 Income tax paid Rs. 123.98 lakhs under protest against the demand of Rs.136.40 lakhs towards disallowance of un-absorbed depreciation / losses. The matter pending in appeal before the High Court of Andhra Pradesh.

v) For the Asst. Year 2010-11 and 2011-12 there was a demand of Rs.52.92 and 64.45 lakhs respectively towards denial of exemption u/s. 80-IA to Company''s Power Division and other disallowances in Sugar and Cement Divisions. The matter is pending before CIT (Appeals).

vi) Sales tax paid under protest for the Asst. years 2001-02,2002-03 of Rs.188.56 lakhs against a demand of Rs.188.56 lakhs regarding disputed sales tax on Molasses sales. The matter is under appeal before the High Court of Andhra Pradesh.

vii) The Company has paid Rs.1.00 crore as per the directions of Hon''ble High Court against demand of Rs.850.22 lakhs from the forest department towards Net Present Value (NPV) in respect of diverted forest land for renewal of Mining lease under Forest (Conservation) Act, 1980. The matter is pending in appeal before the High Court of Andhra Pradesh.

The Company accounts for intersegment sales and transfer at average Market Price.

Note 8 : CLASSIFICATION

Previous Year figures have been regrouped wherever necessary to conform to current Year''s groupings / classification.


Mar 31, 2013

Note 1.1 : The company has only one class of equity shares having face value of RS. 10 each. Each shareholder of Equity share entitled to one vote per share. The company delcared and pays dividend in Indian rupees the dividend proposed by board of directors is subject to approval of shareholders in ensuing Annual general meeting.

2.1 Equity Shares of 1,46,862 of RS. 10 each to be alloted to Shareholders of Sree Kailash Sugars and Chemicals Limited based on the outcome of the case pending with the Honorable Andhra Pradesh High Court.

3.1. Other Liabilites repesents liability to Sri S.R Kailash .The Company has filed a Petition in AP High Court against Arbitration award amounting to RS. 129.25 given in favour of Sri S. R. Kailash and pending decision of the AP High court and the same is retained in Fixed deposit with Andhra bank.

Note 4 : RELATED PARTY DISCLOSURES

i) Key management personnel:

P.Venkateswarlu. P.Veeraiah.

ii) Relatives of key management personnel:

P.Samrajyam. P.Radha.

iii) Enterprise in which key management personnel and their relatives have control:

Standard Construction Co. (Partnership Company). Kakatiya Finance and Leasing Company Pvt Limited.

Note 5 : EMPLOYEE BENEFITS

As per Accounting Standard 15 "Employee Benefits", the disclosures as defined in the Accounting Standard are given below

Defined Benefit plans:

The company operates post retirement gratuity plan with LIC. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The Company has determined the leave encashment provision based on independent actuary.

Note.6. Provisions, Contingent Liabilities and Contingent Assets:

Disclosures required by AS-29 "Provisions, Contingent Liabilities & Contingent Assets”

i) Disputes with regard to Power purchase Tariff and PLF with regard to sale of power to APTRANSCO amounting to RS. 1387.57 lakhs, out of which RS. 1215.04 lakhs was considered as income, matter is pending before APERC.

ii) Claims against the company by APCPDCL/APSPDCL amounting to RS. 902.97 lakhs towards wheeling charges for energy wheeled from company''s bagasse based co-generation unit to cement division for which writ petition filed in the High court of Andhra Pradesh and stay obtained.

iii) Duty on Electricity generated and consumed was levied by the A.P.Govt. at RS. 0.25 paise per unit from 17.07.2003. The High Court has stayed the operation of A.P. Electricity Duty Amendment Act, but asked to submit monthly returns of generation. The duty amount as on 31.03.2013 was RS. 979.86 lakhs.

iv) For the Asst. years 1999-00, 2000-01 and 2001-02 Income tax paid RS. 123.98 lakhs under protest against the demand of RS. 136.40 lakhs towards disallowance of un-absorbed depreciation/losses. The matter pending in appeal before the High Court of Andhra Pradesh.

v) For the Asst. Year 2010-11 there was a demand of RS. 90.78 lakhs towards denial of exemption u/s. 80-IA to Company''s Power Division and other disallowances in Sugar and Cement Divisions. The matter is pending before CIT (Appeals).

iv) Sales tax paid under protest for the Asst. years 2001-02,2002-03 of RS. 188.56 lakhs against a demand of RS. 188.56 lakhs regarding disputed sales tax on Molasses sales. The matter is under appeal before the High Court of Andhra Pradesh.

vii) The Company has paid RS. 1.00 crore as per the directions of Hon''ble High Court against demand of RS. 850.22 lakhs from the forest department towards Net Present Value (NPV) in respect of diverted forest land for renewal of Mining lease under Forest (Conservation) Act, 1980. The matter is pending in appeal before the High Court of Andhra Pradesh.

Note 7 : CLASSIFICATION

Previous Year figures have been regrouped wherever necessary to conform to current Year''s groupings /classification.


Mar 31, 2012

Note 1.1 : The company has only one class of equity shares having face value of Rs. 10 each. Each shareholder of Equity share entitled to one vote per share. The company declared and pays dividend in Indian rupees. The dividend proposed by board of directors is subject to approval of shareholders in ensuring Annual general meeting .

2.1 Equity Shares of 146862 of Rs. 10 each to be allotted to Shareholders of Sree Kailash Sugars and Chemicals Limited based on the outcome of the case pending with the Honorable Andhra Pradesh High Court.

3.1. Other Liabilities represents liability to Sri S.R. Kailash. The Company has filed a Petition in AP High Court against Arbitration award amounting to Rs. 129.25 given in favour of Sri S.R. Kailash and pending decision of the AP High Court. The same is retained in Fixed Deposit with Andhra Bank.

4.1. The Rupee Term Loans are secured by joint equitable mortgage by way of deposit of title deeds of the Company's all Immovable properties both present and future and by way of hypothecation of all movable assets (Other than book debts), ranking pari-pasu interest, subject to prior charges on movable assets in favor of the company's Bankers for Working Capital facility. There are no amounts repayable outstanding beyond 12 months from the balance sheet date.

4.2. Statutory & other liabilites represent amounts payable towards Excise Duty Service Tax Sales tax and TDS.

Note 12.1 : Aggregate market value of Quoted Investments Rs. 6.33 Lakhs as against (P.Y 8.48Lakhs)

5.1. Deposits Others includes amount retained in Fixed deposit with Andhra Bank amounting to Rs. 129.25 liable to Sri S.R. Kailash against the orders of AP High Court (Refer Note No. 6.1).

6.1: Other Advances include Income tax paid under protest AY 2007-08 amounting to Rs. 602.10 Lacs (PY 27.98 Lacs) and Sales tax paid under protest amounting to Rs. 200.54 Lakhs (PY 200.54 Lacs)

Note.19.1 : Interest income represents Interest on Fixed Deposits and Interest on eletricity deposits

Note 7 : RELATED PARTY DISCLOSURES

i) Key management personnel:

P.Venkateswarlu.

P.Veeraiah.

ii) Relatives of key management personnel:

P.Samrajyam.

P.Radha.

iii) Enterprise in which key management personnel and their relatives have control:

Standard Construction Co. (Partnership Company).

Kakatiya Finance and Leasing Company Pvt Limited.

*Figures in bracket represents previous year.

* As company taken Group Gratuity Policy for the first time comparative figures are not given.

Note 6 : PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Disclosures required by AS-29 "Provisions, Contingent Liabilities & Contingent Assets"

i) Disputes with regard to Power purchase Tariff and PLF with regard to sale of power to APTRANSCO amounting to Rs. 1245.28 lakhs, out of which Rs. 1038.89 lakhs was considered as income, matter is pending before APERC.

ii) Claims against the company by APCPDCL/APSPDCL amounting to Rs. 651.58 lakhs towards wheeling charges for energy wheeled from company's bagasse based co-generation unit to cement division for which writ petition filed in the High court of Andhra Pradesh and stay obtained.

iii) Duty on Electricity generated and consumed was levied by the A.P.Govt. at Rs. 0.25 paise per unit from 17.07.2003. The High Court has stayed the operation of A.P. Electricity Duty Amendment Act, but asked to submit monthly returns of generation. The duty amount as on 31.03.2012 was Rs. 873.56 lakhs.

iv) For the Asst. years 1999-00, 2000-01 and 2001-02 Income tax paid Rs. 123.98 lakhs under protest against the demand of Rs. 136.40 lakhs towards disallowance of un-absorbed depreciation / losses. The matter pending in appeal before the High Court of Andhra Pradesh.

v) For the Asst. Year 2009-10 there was a demand of Rs. 456.45 lakhs towards denial of exemption u/s. 80-IA to Company's Power Division and other disallowances in Sugar and Cement Divisions. The matter is pending before CIT (Appeals).

iv) Sales tax paid under protest for the Asst. years 2001-02,2002-03 of Rs. 188.56 lakhs against a demand of Rs. 188.56 lakhs regarding disputed sales tax on Molasses sales. The matter pis under appeal before the High Court of Andhra Pradesh.

vii) The Company has paid Rs. 1.00 crore as per the directions of Hon'ble High Court against demand of Rs. 850.22 lakhs from the forest department towards Net Present Value (NPV) in respect of diverted forest land for renewal of Mining lease under Forest (Conservation) Act, 1980. The matter is pending

Segment liabilities in respect of secured loans are allocated by the management to each of the segment on a reasonable basis having relation to the utilisation of the loans to the particular segment.

Note 7 : CLASSIFICATION

Previous Year figures have been regrouped wherever necessary to conform to current Year's groupings / classification.


Mar 31, 2011

1. Sugar sales include Rs 336.04 lakhs of bagasse sale by sugar division to power division. Power Division sales includes, sale of power to cement division amounting to Rs 812.85 lakhs and to sugar division amounting to Rs 172.12 lakhs and sale of Steam to Sugar Division amounting to Rs 241.26 lakhs. Cost of inter division transfers were included in power and fuel expenses.

2. Share Capital Suspense represents the outstanding amount earmarked for allotment of shares in the ratio of 1:25, to the holders of shares of Sree Kailas Sugars and Chemicals Limited (SKSCL), which has been merged with the Company pursuant to the Scheme of Rehabilitation sanctioned by the BIFR.

3. The Excise Duty payable on the Closing Stocks of Cement Division, Sugar Division is Rs 2.59 lakhs and Rs 131.08 lakhs respectively is included in the value of closing stocks. There is no impact on Profit of the Company.

4. The liability in respect of Gratuity has been arrived at as on 31st March 2011 for Rs 309.96 lakhs on accrual basis.

5. The Rupee Term loans are secured by joint equitable mortgage by way of deposit of title deeds of the Company's all immovable properties both present and future and hypothecation of all movable assets (other than book debts) ranking pari-passu interse, subject to prior charge on movable assets in favour of Company's bankers for securing working capital facility.

6. Working Capital facilities sanctioned by State Bank of India and Andhra Bank is secured by hypothecation of stocks of raw materials, stock-in-process, finished goods, spares and book debts, second charge on all immovable properties both present and future and also by the personal guarantee of the Managing Director and Jt. Managing Director.

7. As per the information available with the company as on date there are no outstandings to MSMED units.

8. Additional information pursuant to the provisions of paragraph 3,4-C and 4-D of Part II of Schedule VI of the Companies Act, 1956 (as certified by the Management).

(Value - Rs In Lakhs)

The details of the Managerial Remuneration are mentioned in Note No. 6 (a) of the Notes to the Accounts. Sri P. Veeraiah, Jt. Managing Director is related to Sri P. Venkateswarlu, Chairman & Managing Director.

9. ACCOUNTING FOR TAXES:

Deferred Ta x Asset of Rs 135.90 lakhs is recognized as attributable to the timing difference between depreciation as per Companies Act and Income Tax Act.

Income tax comprises Current Tax determined in accordance with the Income Tax Law. Deferred Ta x charged or credited reflecting the tax effect of timing difference between accounting income and Taxable Income for the year.

10. Other Liabilities includes a sum of Rs 129.25 lakhs being balance out of the gross amount of Rs 310.61 lakhs received under an arbitration award. The amount is kept under Fixed Deposit, pending resolution of the outstanding disputes.

11. Contingent Liabilities:

i) Disputes with regard to Power purchase Tariff and PLF with regard to sale of power to APTRANSCO amounting to Rs 1245.28 lakhs, out of which Rs 1038.89 lakhs was considered as income, matter is pending before APERC.

ii) Claims against the company by APCPDCL/APSPDCL amounting to Rs 548.89 lakhs towards wheeling charges for energy wheeled from company's bagasse based co-generation unit to cement division for which writ petition filed in the High court of Andhra Pradesh and stay obtained.

iii) Duty on Electricity generated and consumed was levied by the A.P.Govt. at Rs 0.25 paise per unit from 17.07.2003. The High Court has stayed the operation of A.P. Electricity Duty Amendment Act, but asked to submit monthly returns of generation. The duty amount as on 31.03.2011 was Rs 770.87 lakhs.

iv) For the Asst. years 1999-00,2000-01 and 2001-02 Income tax paid Rs 123.98 lakhs under protest against the demand of Rs 136.40 lakhs towards disallowance of un-absorbed depreciation/ losses. The matter pending in appeal before the High Court of Andhra Pradesh.

v) For the Asst. Year 2007-08 Income Tax paid Rs 301.50 lakhs under protest against demand of Rs 737.68 lakhs towards denial of exemption u/s. 80-IA to Company's Power Division and other disallowances in Sugar and Cement Divisions. The matter is pending before ITAT,Hyderabad.

vi) For the Asst. Year 2008-09 there was a demand of Rs 319.92 lakhs towards denial of exemption u/s. 80-IA to Company's Power Division and other disallowances in Sugar and Cement Divisions. The matter is pending before CIT(Appeals).

vii) Sales tax paid under protest for the Asst. years 2001-02,2002-03 of Rs 188.56 lakhs against a demand of Rs 188.56 lakhs regarding disputed sales tax on Molasses sales. The matter is under appeal before the High Court of Andhra Pradesh.

viii) The Company has paid Rs 1.00 crore as per the directions of Hon'ble High Court against demand of Rs 850.22 lakhs from the forest department towards Net Present Value (NPV) in respect of diverted forest land for renewal of Mining lease under Forest (Conservation) Act, 1980. The matter is pending in appeal before the High Court of Andhra Pradesh.

12. Certain Sundry Debtors and Creditors are subject to confirmation and reconciliation.

13. Previous Year figures have been regrouped wherever necessary to conform to current Year's groupings / classifications.

14. Figures have been rounded-off to the nearest thousand.


Mar 31, 2010

1. Sales include Rs.116.89 lakhs of bagasse sale by sugar division to power division. Sale of Power Division includes, sale of power to cement division amounting to Rs.831.32 lakhs and to sugar division amounting to Rs.59.39 lakhs and sale of Steam to Sugar Division amounting to Rs.118.55 lakhs. Cost of inter division transfers were included in power and fuel expenses.

2. Share Capital Suspense represents the outstanding amount earmarked for allotment of shares in the ratio of 1:25, to the holders of shares of Sree Kailas Sugars and Chemicals Limited (SKSCL), which has been merged with the Company pursuant to the Scheme of Rehabilitation sanctioned by the BIFR.

3. The Excise Duty payable on the Closing Stocks of Cement Division, Sugar Division is Rs.2.89 lakhs and Rs.23.60 lakhs respectively is included in the value of closing stocks. There is no impact on Profit of the Company.

4. The liability in respect of Gratuity has been arrived at as on 31st March 2010 for Rs.279.24 lakhs on accrual basis.

5. The Rupee Term loans are secured by joint equitable mortgage by way of deposit of title deeds of the Companys all immovable properties both present and future and hypothecation of all movable assets (other than book debts) ranking pari-passu interse, subject to prior charge on movable assets in favour of Companys bankers for securing working capital facility.

6. Working Capital facilities sanctioned by State Bank of India and Andhra Bank is secured by hypothecation of stocks of raw materials, stock-in-process, finished goods, spares and book debts, second charge on all immovable properties both present and future and also by the personal guarantee of the Managing Director and Jt. Managing Director.

7. As per the information available with the company as on date there are no outstandings to MSMED units.

8. ACCOUNTING FOR TAXES:

Deferred Tax Asset of Rs.157.16 lakhs is recognized as attributable to the timing difference between depreciation as per Companies Act and Income Tax Act.

Income tax comprises Current Tax and Fringe Benefit Tax for the period, determined in accordance with the Income Tax Law. Deferred Tax charged or credited reflecting the tax effect of timing difference between accounting income and Taxable Income for the year.

9. Other Liabilities includes a sum of Rs.173.17 lakhs being balance out of the gross amount of Rs.310.61 lakhs received under an arbitration award. The amount of Rs.173.17 lakhs is kept under Fixed Deposit, pending resolution of the outstanding disputes.

10. Contingent Liabilities:

i) Disputes with regard to Power purchase Tariff and PLF with regard to sale of power to APTRANSCO amounting to Rs.1057.40 lakhs, out of which Rs.851.01 lakhs was considered as income, matter is pending before Apex court.

ii) Claims against the company by APCPDCL/APSPDCL amounting to Rs.548.89 lakhs as on 31.03.2010 towards wheeling charges for energy wheeled from companys bagasse based co-generation unit to cement division for which writ petition filed in the High court of Andhra Pradesh and stay obtained.

iii) Claims against the company by Electrical Inspectorate GOVT. of Andhra Pradesh amounting to Rs.676.43 lakhs as on 31.03.2010 towards Electricity Duty on captive consumption w.e.f.17.07.2003 @ Rs.0.25 per unit.

iv) For the Asst. years 1999-00,2000-01 and 2001-02 Income tax paid Rs.123.98 lakhs under protest against the demand of Rs.136.40 lakhs towards disallowance of un-absorbed depreciation / losses. The matter pending in appeal before the High Court of Andhra Pradesh.

v) For the Asst. Year 2007-08 Income Tax paid Rs.150.00 lakhs under protest against demand of 523.92 lakhs towards denial of exemption u/s. 80-IA to Companys Power Division and other disallowances in Sugar and Cement Divisions. The matter is pending before CIT (Appeals).

vi) Sales tax paid under protest for the Asst. years 2001-02,2002-03 and 2005-06 of Rs.200.54 lakhs against a demand of Rs.212.52 lakhs regarding disputed sales tax and input tax credit availed on coal purchases for the period Apr05 to Dec05. The matter is under appeal before the High Court of Andhra Pradesh.

vii) The Company has paid Rs.1.00 crore as per the directions of Honble High Court against demand of Rs.850.22 lakhs from the forest department towards Net Present Value (NPV) in respect of diverted forest land for renewal of Mining lease under Forest (Conservation) Act, 1980. The matter is pending in appeal before the High Court of Andhra Pradesh.

11. Certain Sundry Debtors and Creditors are subject to confirmation and reconciliation.

12. Previous Year figures have been regrouped wherever necessary to conform to current Years groupings / classifications.

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