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Notes to Accounts of Kesoram Industries Ltd.

Mar 31, 2023

(a) Market values in cases of some quoted and unquoted investments are not available, hence the fair value has been considered as market values in such cases

(b) Cost of these equity instruments have been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.

(c) Amount is below the rounding off norm adopted by the Company.

(d) Chese investments are listed on Calcutta Stock Exchange, however, not traded. Accordingly, the fair values of these investments have been derived using level III inputs, available with the management

(i) Che loan to Cygnet Industries Limited, a wholly-owned subsidiary company, was given after complying with the provisions of section 186 (4) of the Companies Act, 2013 (as amended). The loan was given in accordance with the terms and conditions as mutually agreed between the parties for use by the recipient in the normal course of business. The loan is repayable on demand and carries an interest rate of 10.50% p.a. (31 March 2022: 10.50% p.a)

(ii) This pertains to loans given to Birla Tyres Limited, a body corporate, pursuant to the scheme of arrangement and post demerger. This is repayable on demand and carries an interest rate of 5.93% p.a. (31 March 2022: 5.93% p.a.). During the current year, the Company has accounted for '' 2.18 crores (31 March 2022: '' 26.45 crores) as interest income on this loan, which has also been provided for on prudent basis, considering that the principal amount has already been impaired, due to its recoverability being doubtful.

(i) The Board at its Meeting held on August 25, 2022, approved allotment of 66,119,874 fully paid-up Equity Shares of the Company having face value of ''10 each upon conversion of 42,977,918 Zero Coupon Optionally Convertible Redeemable Preference Shares ("OCRPS") of face value of '' 100 each, at a pre-determined ratio to the holders of OCRPS who have opted for conversion as on August 24, 2022 (the record date fixed for the conversion). These Equity Shares have since been accorded both, listing and trading approval by the respective Stock Exchanges.

(ii) The Company, during the previous year ended 31 March 2022, has made a rights issue of 79,997,755 equity shares having face value of '' 10 each at a premium of '' 40 per share, for cash, aggregating to '' 399.99 crores. Allotment of 79,212,822 partly paid-up equity shares having face value '' 5 each and a premium of '' 20 per share, paid on application, was done during the financial year ended 31 March 2022 itself. Further in current financial year 519,626 shares were alloted on payment of first and final call money of '' 25 each. However, on account of non-payment of the first and final call, despite several reminders, 265,307 partly paid-up shares, were finally forfeited, during the current year. These proceeds have been fully utilised and there has been no deviation in use of proceeds from issue objectives as stated in the Rights Issue Offer Document.

(b) Terms and rights attached to shares

The Company has one class of equity shares having a par value of '' 10 per share. All shareholders for fully paid up equity shares are entitled to one vote per share and for partly paid up shares the voting rights considered are in proportion to the actual amount paid on those shares. The Company declares and pays dividend in Indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in ensuing Annual General Meeting except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in the proportion to their shareholdings.

Nature and purpose of other reserves

(i) Securities premium

S ecurities premium is used to record premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Indian Companies Act, 2013 (the "Companies Act").

(ii) Capital reserve

S a) Sertain grants of capital nature had been credited to Capital Reserve

(b) The Company has recognised profit on account of amalgamation in capital reserve.

(iii) Capital redemption reserve

Capital redemption reserve was created on account of reinstatement of certain investments and spares at cost.

(iv) General reserve

S nder the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn.

(v) Revaluation reserve

Revaluation reserve was created on account of revaluation of fixed assets carried out under previous GAAP.

(vi) Fair value through other comprehensive income (FVOCI)- equity instruments

She cumulative gains and losses arising on fair value changes of equity investments measured at fair value through other comprehensive income are recognised in FVOCI - equity instruments reserve. The balance of the reserve represents such changes recognised net of amounts reclassified to retained earnings on disposal of such investments.

(vii) Other reserves

Others primarily include:

(a) Amounts appropriated out of profit or loss for doubtful debts and contingencies.

(b) Share buyback reserve has been created as per the Companies Act, 1956.

(c) Reserve which has arisen on forfeiture of shares.

(viii) Fair valuation of Non-Convertible Cumulative Redeemable Preference Shares

Deemed equity on fair value of Non-Convertible Cumulative Redeemable Preference Shares

(i) Compensated absences

Compensated absences cover the Company''s liability for sick and earned leave.

(ii) Defined benefit plan

a) Gratuity

The Company operates a gratuity plan through the "KICM Gratuity Fund". Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service.

b) Provident fund

Trovident fund for certain eligible employees is managed by the Company through the "B. K. Birla Group of Companies Provident Fund Institution" and "Birla Industries Provident Fund", in line with the Provident Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the employee.

The Company has an obligation to fund any shortfall on the yield of the trust''s investments over the administered interest rates on an annual basis. These administered rates are determined annually predominantly considering the social rather than economic factors and in most cases the actual return earned by the Company has been higher in the past years. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the below provided assumptions there is no shortfall as at 31 March 2023 and 31 March 2022 respectively.

The Company also pays provident fund contributions to publically administered local fund as per the local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due.

The above sensitivity analysis is based on a change in an 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.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(vi) The major categories of plans assets

I n the absence of detailed information regarding plan assets which is funded with Insurance Companies, the composition of each major category of plan assets, the percentage or amount for each category to the fair value of plan assets has not been disclosed.

(vii) Risk exposure

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

Investment risk:

The defined benefit plans are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies.

Interest risk:

A decrease in the interest rate on plan assets will increase the plan liability.

Life expectancy:

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.

Salary growth risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.

(a) The Company has carried out an impairment analysis in respect of its investments and loans to Cygnet Industries Limited, its wholly owned subsidiary. Consequently, it has recognised an additional provision for impairment of '' nil crores (31 March 2022: '' 154.25 crores) which has been presented as an exceptional item in the Statement of Profit and Loss. The assessment was based on the management''s business plans and future projections, approved by the Board of Directors. The key assumptions used for computation of value-in-use were the sales growth rate, gross profit margins, long-term growth rate and the risk-adjusted pre-tax discount rate. The post-tax discount rates were derived from the Company''s weighted average cost of capital, taking into account the cost of capital, to which specific market-related premium adjustments are made. The Company had performed sensitivity analysis by changing the aforementioned variables independently, keeping the other variables constant, based upon which, there would be no material increase to the impairment charge which would impact the decision of the user of the standalone financial statements.

(b) The Management is contemplating a possible disposition of the Company''s factory land comprised in its Hindustan Heavy Chemicals ("HHC") unit that has been under suspension of work, in accordance with the requirements of the debenture trust deed entered between the Company and Vistra ITCL (''Debenture Trustee''), dated 10 March 2021, to sell of its non-core assets. Pursuant to extant provisions of the West Bengal Land Reforms Act, 1955 and the Rules framed thereunder, all parcels of land falling under the ambit of the State Government''s land legislation, requires prior approval from relevant authorities of the State Government for transfer as well as payment of salami upon transfer/change in land use. In view of the same, the expected realization value is estimated to be lower than its carrying value.

T uring the year, the Company has entered into a Memorandum of Understanding (''MoU'') with a potential buyer for the said purpose. While necessary enabling approvals from the shareholders have been obtained on 23 February 2023 towards a possible disposal of this factory land at such terms and conditions as the Board may, at absolute discretion think fit, the Management is in the process of obtaining a final approval from the shareholders prior to consummation of this transaction. Consent has also been obtained from the debenture trustee on behalf of debenture holders and the Board of Directors for the aforementioned transaction. The management is also reasonably certain of receiving the required approvals from the relevant authorities in near future, to complete the proposed disposal.

I n view of the foregoing and as per the principles of Ind AS 105 ''Non-current Assets Held for Sale and Discontinued Operations'', the said land has been classified in these financial statements as ''Assets held for sale'' as on 31 March 2023 amounting to '' 60 crores and its value has been measured at the lower of its carrying value and fair value less costs to sell, which has resulted in a loss of '' 173.07 crores. The loss on such remeasurement has been recognised and presented as an ''Exceptional item'' in the Statement of Profit and Loss.

(i) I n the opinion of the management, no provision is considered necessary for the disputes mentioned above on the ground that there are fair chances of successful outcome of appeals.

(ii) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect to the above pending resolution of the respective proceedings.

(iii) The amounts disclosed above represent the best possible estimates arrived at on the basis of available information and do not include any penalty payable.

(iv) The arbitration case pertains to a legal dispute between the Company and Mintech Global Private Limited. Based on the facts of the matter, supported by independent legal opinion obtained, the management remains fairly confident of a favorable outcome and therefore, does not foresee any material financial liability devolving on the Company in this respect of the aforementioned litigation and accordingly, no provision has been made in these standalone financial statement.

40 Capital Management

(a) Risk management

The capital structure of the Company consists of debt, cash and cash equivalents and equity attributable to equity shareholders of the Company which comprises issued share capital (including premium) and accumulated reserves disclosed in the Statement of Changes in Equity.

The Company''s capital management objective is to achieve an optimal weighted average cost of capital while continuing to safeguard the Company''s ability to meet its liquidity requirements (including its commitments in respect of capital expenditure) and repay loans as they fall due.

41 Financial instruments - fair values and risk management

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

A. Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below:

Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in quoted equity shares.

Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level of hierarchy includes Company''s over-the-counter (OTC) derivative contracts.

Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. This level of hierarchy includes Company''s investment in equity shares which are unquoted or for which quoted prices are not available at the reporting dates. There were no significant inter-relationships between unobservable inputs that materially affect fair values.

B. Valuation technique used to determine fair value

(a) Derivatives are fair valued using market observable rates and published prices together with forecasted cash flow information where applicable.

(b) I nvestments carried at fair value are generally based on market price quotations. However in cases where quoted prices are not available the management has involved valuation experts to determine the fair value of the investments. Different valuation techniques have been used by the valuers for different investments. These investments in equity instruments are not held for trading. Instead, they are held for long term strategic purpose. The Company has chosen to designate this investments in equity instruments at FVOCI since, it provides a more meaningful presentation. Cost of certain investments in equity instruments have been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.

(c) Fair value of borrowings is estimated by discounting expected future cash flows. The carrying amounts of other borrowings with floating rate of interest are considered to be close to the fair value.

(d) The carrying amounts of remaining financial assets and liabilities are considered to be the same as their fair values.

(e) 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 realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.

(f) Market values in cases of some quoted and unquoted investments are not available, hence the fair value has been considered as market values in such cases

C Risk management

In the course of its business, the Company is exposed primarily to fluctuations in foreign currency exchange rates, interest rates, equity prices, liquidity and credit risk, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management policy is approved by the Board of Directors. The risk management framework aims to:

(i) create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the Company''s business plan.

(ii) achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

(a) Trade and other receivables

C ustomer credit risk is managed by the Company through established policy and procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying upto 90 days credit terms. The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation. Trade receivables are consisting of a large number of customers. Where credit risk is high, domestic trade receivables are backed by security deposits. Export receivables are backed by letters of credit.

I n determining the allowances for credit losses of trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix.

Che Company''s exposure to customers is diversified and there is no significant credit exposure on account of any single customer as at 31 March 2023 and 31 March 2022.

(ii) Liquidity risk

Liquidity risk refers to that risk where 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 has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs, non-convertible debentures and other debt instruments. The Company invests its surplus funds in bank fixed deposit and in mutual funds, which carry no or low market risk.

(a) Maturities of financial liabilities

Che tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities:

(a) Foreign currency risk

T he Company deals with foreign currency loan, trade payables etc. and is therefore exposed to foreign exchange risk associated with exchange rate movement.

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas and purchases from overseas suppliers in various foreign currencies.

I nterest 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 debt obligations with floating interest rates.

The Company''s main interest rate risk arises from borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31 March 2023 and 31 March 2022, the Company''s borrowings at variable rate were mainly denominated in INR.

T he Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

(iii) Price risk (a) Exposure

The Company''s exposure to equity securities price risk arises from investments held by the Company and classified in the balance sheet at fair value through OCI. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. In general, these investments are not held for trading purposes.

42 Segment reporting

The Company, at standalone financial statement level, operates in one segment i.e. "Cement". The Company has disclosed segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 4 of INDAS 108 ''Operating Segments'', no disclosure related to segments are presented in this standalone financial statement.

43 The Company has considered possible effects that may result from the ongoing COVID 19 in the preparation of these financial statements including the recoverability of carrying amounts of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of COVID 19 variants, the Company has, at the date of approval of these financial statements, used internal and external sources of information and expects that the carrying amount of the assets will be recovered. The impact of COVID 19 variants on the Company''s financial statements may differ from that estimated as at the date of approval of the same.

44 The Board of Directors ("the Board") of the Company at its meeting held on, May 12, 2022 has approved a Scheme of Arrangement ("the Proposed Scheme") under Sections 230-232 of the Companies Act, 2013 between Kesoram Industries Limited ("Company") and Cygnet Industries Limited ("wholly-owned subsidiary" or "Cygnet") with the Appointed Date being 1 April, 2022. The Proposed Scheme involves demerger of the subsidiary Company from the Group, and is subject to the required statutory and regulatory approvals. The necessary effects would be given in the results upon finalisation of the Proposed Scheme and receipt of requisite approvals. The management is still awaiting the initial approvals from the stock exchanges.


Mar 31, 2022

(a) The Loan to Cygnet Industries Ltd, a wholly owned subsidiary company, was given after complying with the provisions of section 186(4) of the Companies Act, 2013. The loan was given in accordance with the terms and conditions agreed between the parties and is to be used by the recipient in the normal course of business. The loan is repayable on demand. The Rate of Interest on the loan is 10.5% p.a.

(b) Loan has been provided to Birla Tyres Limited, a body corporate, pursuant to the scheme of arrangement and post demerger is repayable on demand and carrying an interest rate of 5.93% p.a. During the current year, the Company has accounted for R 26.45 Crores as interest income on this loan which has been provided for on prudent basis as the particular asset is already impaired.

a. During the financial year 2021-22, subscription for Rights issue of 7,99,97,755 equity shares of R 10 each for cash at a premium of R 40 per share aggregating to R 399.99 Crore was opened, on which R 25 per share was payable on application and remaining R 25 per share on first and final call within six months from the date of allotment. The issue was oversubscribed and allotment of the partly paid up equity shares of R 5 each was made on 21st October 2021 and the trading of the said partly paid up equity shares was available from 28th October, 2021 to 30th November 2021.

The first and final call for the aforesaid partly-paid up shares was made 3 times and the last date for payment was 19th March, 2022. First and final call money for 7,96,35,460 shares was received and the allotment for 7,92,12,822 was made till 31st March, 2022 and for 422,638 shares on 6th April 2022. Out of the aforesaid allotted shares the trading of the 7,86,35,199 equity shares commenced by 31st March, 2022 and 5,28,551 shares on 4th April, 2022 and the balance 4,71,710 shares will take place in due course. For the remaining 3,62,295 partly paid up shares the Board Committee has decided to give a last and final reminder to the shareholders for payment of their first and final call money.

First and final call money on 422,638 has been received which has been shown under share application money pending allotment of R 1.06 Crores. There is no deviation in use of proceeds from the objectives as stated in the Offer Document for rights issue.

b. During the previous year, the Company issued 2,22,21,262 Equity Shares face value of R 10 each to the previous lenders on a preferential basis on 8th March,2021 at the price determined in accordance with the applicable law @ R 65 per share (including securities premium of R 55 per share). Refer Note 29 (b).

Terms and rights attached to equity shares

The Company has two classes of equity shares having a par value of R 10 per share and partly paid up shares of R 5 each. All shareholders for fully paid up equity shares are entitled to one vote per share and for partly paid up shares the voting rights considered are in proportion to the actual amount paid on those shares. The Company declares and pays dividend in Indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in ensuing Annual General Meeting except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in the proportion to their shareholdings.

Nature and purpose of other reserves

(i) Securities premium

Securities premium is used to record premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Indian Companies Act, 2013 (the "Companies Act").

(ii) Capital reserve

(a) Certain grants of capital nature had been credited to Capital Reserve.

(b) The Company has recognised profit on account of amalgamation in capital reserve.

(iii) Capital redemption reserve

Capital redemption reserve was created on account of reinstatement of certain investments and spares at cost.

(iv) General reserve

Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn.

(v) Fair value through other comprehensive income (FVOCI)- equity instruments

The cumulative gains and losses arising on fair value changes of equity investments measured at fair value through other comprehensive income are recognised in FVOCI - equity instruments reserve. The balance of the reserve represents such changes recognised net of amounts reclassified to retained earnings on disposal of such investments.

(vi) Other reserves

Others primarily include:

(a) Amounts appropriated out of profit or loss for doubtful debts and contingencies.

(b) Share buyback reserve has been created as per the Companies Act, 1956.

(c) Reserve which has arisen on forfeiture of shares.

(i) Compensated absences

Compensated absences cover the Company''s liability for sick and earned leave.

(ii) Defined benefit plan

a) Gratuity

The Company operates a gratuity plan through the "KICM Gratuity Fund". Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service.

b) Provident fund

Provident fund for certain eligible employees is managed by the Company through the "B. K. Birla Group of Companies Provident Fund Institution" and "Birla Industries Provident Fund", in line with the Provident Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the employee.

The Company has an obligation to fund any shortfall on the yield of the trust''s investments over the administered interest rates on an annual basis. These administered rates are determined annually predominantly considering the social rather than economic factors and in most cases the actual return earned by the Company has been higher in the past years. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the below provided assumptions there is no shortfall as at 31st March 2022 and 31st March 2021 respectively.

The Company also pays provident fund contributions to publically administered local fund as per the local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due.

The Company contributed R 1.78 Crores and R 2.61 Crores during the year ended 31st March 2022 and 31st March 2021 respectively to the fund.

(iii) Defined contribution plan

Superannuation Fund: The Company has defined contribution superannuation plan for the benefit of its eligible employees. Employees who are members of the defined contribution superannuation plan are entitled to benefits depending on the years of service and salary drawn.

Separate irrevocable trust is maintained for employees covered and entitled to benefits. The Company contributes 15% of the eligible employees'' salary or R 1 Lakh, whichever is lower, in case of NPS participating employees and 15% of the

basic salary in case of Non NPS participating eligible employees to the trust every year. Such contributions are recognised as an expense as and when incurred. The Company does not have any further obligation beyond this contribution.

The Company contributed R 0.02 Crore and R 0.02 Crore during the year ended 31st March 2022 and 31st March 2021 respectively.

The above sensitivity analysis is based on a change in an 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.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(vii) The major categories of plan assets

In the absence of detailed information regarding plan assets which is funded with Insurance Companies, the composition of each major category of plan assets, the percentage or amount for each category to the fair value of plan assets has not been disclosed.

(viii) Risk exposure

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

Investment risk:

The defined benefit plans are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies.

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.

Interest risk:

A decrease in the interest rate on plan assets will increase the plan liability.

Life expectancy:

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.

Salary growth risk:

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.

(ix) Defined benefit liability and employer contributions

Expected contributions to post-employment benefits plans for the year ending 31st March 2023 is R 7.75 Crores.

The weighted average duration of the defined benefit obligation is 13 years (31st March 2021 - 13 years).

a) The Company has carried out an impairment analysis in respect of its Investment and loan to its wholly owned subsidiary Cygnet Industries Limited and consequently recognised an additional provision for impairment of R 154.25 Crores [FY 2020-21: R 78.95 Crore] which has been presented as an Exceptional Item in the Statement of Profit and Loss for the year ended 31st March 2022.

The assessment was based on the management''s business plans/future projections approved by the Board of Directors. The key assumptions used for computation of value in use were the sales growth rate, gross profit margins, long-term growth rate and the risk-adjusted pre-tax discount rate. The post-tax discount rates were derived from the Company''s weighted average cost of capital, taking into account the cost of capital, to which specific market-related premium adjustments are made. The Company had performed sensitivity analysis by changing the aforementioned variables independently, keeping the other variables constant, based upon which, there would be no material increase to the impairment charge which would impact the decision of the user of the financial statements.

b) During the previous year, a Resolution Plan ("the Plan") was approved by the lenders under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 issued by Reserve Bank of India vide its circular 7th June 2019. Pursuant to the Plan, the Company had entered into a Settlement Agreement ("the Agreement") with the lenders dated 20th February, 2021, which was further amended on 15th March, 2021. The Agreement entails settlement of the existing Gross debt aggregating to R 2,181.81 Crores as at 31st January, 2021 in the following manner and divided into three parts:

i) By issuance of 2,22,21,262 numbers of Equity Shares of face value of R 10 each to the lenders on a preferential basis on 8th March, 2021 at the price determined in accordance with the applicable law @ R 65 per share (including securities premium of R 55 per share).

ii) By issuance of 4,48,97,195 numbers of Zero % Optionally Convertible Redeemable Preference Shares (''OCRPS'') of face value of R 100 each issued to the lenders convertible with prior consent of the holder and at the option of the Company during the period of 18 months from the date of allotment, and redeemable at par over the period of five years starting 31st March, 2028 in five equal tranches.

iii)Upfront repayment of Existing facilities to the extent of R 1,670.94 Crores to the lenders.

The Company during the previous year ended 31st March, 2021 had issued OCRPS has been initially recognised at fair value in the books. The resultant net gain of R 277.34 Crores, net of settlement costs, as at the date of implementation of the Plan between the carrying amount of the facility before settlement and on fair value of OCRPS / Equity was recognised in ''the Statement of Profit and Loss'' as an exceptional item.

c) The company consequent to demerger in the financial year 2019-20 had recognised an amount recoverable from the resulting company. As on March 31, 2021, the related outstanding balance is R 493.22 Crores. During the previous year, the Company recognised a provision for impairment in respect of this outstanding balance, as the resulting company was going through a Resolution Process and the outcome of the same was dependent on implementation of the Resolution Process. This impairment loss was considered as an exceptional item in the previous year.

Note 30: Income tax expense

This note provides an analysis of the Company''s income tax expense, shows amounts that are recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible items.

Note 36: Capital management

(a) Risk management

The capital structure of the Company consists of debt, cash and cash equivalents and equity attributable to equity shareholders of the Company which comprises issued share capital (including premium) and accumulated reserves disclosed in the Statement of Changes in Equity.

The Company''s capital management objective is to achieve an optimal weighted average cost of capital while continuing to safeguard the Company''s ability to meet its liquidity requirements (including its commitments in respect of capital expenditure) and repay loans as they fall due.

Note 37 : Fair value measurements

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2 to the financial statements.

(i) Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below:

Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in quoted equity shares.

Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level of hierarchy includes Company''s over-the-counter (OTC) derivative contracts.

Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. This level of hierarchy includes Company''s investment in equity shares which are unquoted or for which quoted prices are not available at the reporting dates.

(ii) Valuation technique used to determine fair value

(a) Derivatives are fair valued using market observable rates and published prices together with forecasted cash flow information where applicable.

(b) Investments carried at fair value are generally based on market price quotations. However in cases where quoted prices are not available the management has involved valuation experts to determine the fair value of the investments. Different valuation techniques have been used by the valuers for different investments. These investments in equity instruments are not held for trading. Instead, they are held for long term strategic purpose. The Company has chosen to designate this investments in equity instruments at FVOCI since, it provides a more meaningful presentation. Cost of certain investments in equity instruments have been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.

(c) Fair value of borrowings is estimated by discounting expected future cash flows. The carrying amounts of other borrowings with floating rate of interest are considered to be close to the fair value.

(d) The carrying amounts of remaining financial assets and liabilities are considered to be the same as their fair values.

(e) 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 realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.

Note 38: Financial risk management

In the course of its business, the Company is exposed primarily to fluctuations in foreign currency exchange rates, interest rates, equity prices, liquidity and credit risk, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management policy is approved by the Board of Directors. The risk management framework aims to:

(i) create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the

Company''s business plan.

(ii) achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

Other receivables as stated above are due from the parties under normal course of the business and as such the Company believes exposure to credit risk to be minimal.

i) Trade and other receivables

Customer credit risk is managed by the Company through established policy and procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying upto 90 days credit terms. The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation. Trade receivables are consisting of a large number of customers. Where credit risk is high, domestic trade receivables are backed by security deposits. Export receivables are backed by letters of credit.

In determining the allowances for credit losses of trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix.

The Company''s exposure to customers is diversified and there is no significant credit exposure on account of any single customer as at 31st March 2022 and 31st March 2021.

(B) Liquidity risk

Liquidity risk refers to that risk where 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 has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs, non-convertible debentures and other debt instruments. The Company invests its surplus funds in bank fixed deposit and in mutual funds, which carry no or low market risk.

(i) Maturities of financial liabilities

The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities.

(i) Foreign currency risk

The Company deals with foreign currency loan, trade payables etc. and is therefore exposed to foreign exchange risk associated with exchange rate movement.

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas and purchases from overseas suppliers in various foreign currencies. Foreign currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies.

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 debt obligations with floating interest rates.

The Company''s main interest rate risk arises from borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31st March 2022 and 31st March 2021, the Company''s borrowings at variable rate were mainly denominated in INR.

The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

(iii) Price risk (a) Exposure

The Company''s exposure to equity securities price risk arises from investments held by the Company and classified in the balance sheet at fair value through OCI. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. In general, these investments are not held for trading purposes.

Note 40:

The Company has considered possible effects that may result from the ongoing COVID 19 in the preparation of these financial statements including the recoverability of carrying amounts of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of COVID 19 variants, the Company has, at the date of approval of these financial statements, used internal and external sources of information and expects that the carrying amount of the assets will be recovered. The impact of COVID 19 variants on the Company''s financial statements may differ from that estimated as at the date of approval of the same.

Note : During the current and previous year, the Company has not earned income on the investments held on account of losses incurred by the respective Investee Company. Accordingly, ratio for Return on Investments has not been presented.

Note 43: Code on Social Security

During the previous year ended 31st March, 2021 the Central Government has published "The Code on Social Security, 2020" and "Industrial Relations Code, 2020" ("the Codes") in the Gazette of India, inter alia, subsuming various existing labour and industrial laws which deals with employees related benefits including post employment. The effective date of the codes thereunder and the rules are yet to be notified. The impact of the legislative changes, if any, will be assessed and recognised post notification of the relevant provisions.

Note 44: Other Statutory Information

(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company do not have any transactions with companies struck off.

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,

(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

(vii) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961

Note 45: Figures for the previous year have been regrouped/reclassified wherever necessary to conform to current period''s classification.

* Amount is below the rounding off norm adopted by the Company


Mar 31, 2019

1. Company Information

Kesoram Industries Limited (the Company) is a public company domiciled and incorporated under the provisions of the Indian Companies Act, 1913. The Company is a flagship company of B. K. Birla group of companies. The Company is a multi-product and multi-location company. Automobile tyre business and Cement are its core businesses. Its shares are listed on three stock exchanges in India (Bombay Stock Exchange, National Stock Exchange and Calcutta Stock Exchange) and its Global Depositary Receipts (GDR) are listed on Luxembourg Stock Exchange. The Company markets its automobile tyres under the brand name “Birla Tyres” and cement is marketed under “Birla Shakti” brand.

The financial statements as at 31st March, 2019 present the financial position of the Company.

The financial statements for the year ended 31st March, 2019 were approved by the Board of Directors and authorised for issue on 15th May, 2019.

(i) Refer note 15 for Property, plant and equipment pledged as security.

(ii) Contractual obligations

Refer to note 33 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(iii) The above balances include:

# market values in cases of some quoted investments are not available, hence the fair value has been considered as market values in such cases

$ cost of these equity instruments have been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.

* Amount is below the rounding off norm adopted by the Company

The Company has made provision of 13.45 crores (31st March, 2018: 11.48 crores) for writing down the value of inventories towards slow moving, non-moving and obsolete inventory.

(b) Deposits more than three months includes Nil (31st March, 2018: 123.51 crores) placed as fixed deposits in an escrow account.

*Amount is below the rounding off norm adopted by the Company

a. During the previous year, the Company allotted 75,00,000 Equity Shares of face value 110 each to IndusInd Bank Ltd by conversion of the existing 7,50,000 Optionally Convertible Preference Shares of 1100 each at the stipulated price of 1120 per Equity Share on account of conversion option exercised by IndusInd Bank Ltd.

b. During the previous year, the Company allotted 1,25,71,429 Equity Shares of face value 110 each on a preferential basis to a promoter group entity at the stipulated price of 1175 per Equity Share.

c. During the year, the Company allotted 52,50,000 Equity Shares of face value 110 each on preferential basis to a promoter group entity by conversion of the existing 52,50,000 convertible warrants of 110 each issued at a premium of 1165 each , on account of conversion option exercised by the promoter group entity.

Terms and rights attached to equity shares

The Company has only one class of equity shares having a par value of 110 per share. All equity shareholders are entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in ensuing Annual General Meeting except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in the proportion to their shareholdings.

# During the previous year, the Company issued and allotted 52,50,000 share warrants at a price of 1175/- (face value: 110 and premium: 1165) per warrant to a promoter group entity on preferential basis under section 42 and 62(1)(c) of the Companies Act, 2013 and other relevant SEBI ICDR Regulations. The Company has received 90% of the subscription amount against the said warrants totalling 182.69 crores. These warrants are convertible within a period of 18 (Eighteen) months from date of allotment of the warrants, subject to payment of the balance 10% of the issue price. The remaining amount was subsequently received and the warrants have been converted on 6th April, 2018.

Nature and purpose of other reserves

(i) Securities premium

Securities premium is used to record premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Indian Companies Act, 2013 (the “Companies Act”).

(ii) Capital reserve

(a) Certain grants of capital nature had been credited to Capital Reserve.

(b) The Company has recognised profit on account of amalgamation in capital reserve.

(iii) Capital redemption reserve

Capital redemption reserve was created on account of reinstatement of certain investments and spares at cost.

(iv) General reserve

Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn.

(v) Fair value through other comprehensive income (FVOCI)- equity instruments

The cumulative gains and losses arising on fair value changes of equity investments measured at fair value through other comprehensive income are recognised in FVOCI - equity instruments reserve. The balance of the reserve represents such changes recognised net of amounts reclassified to retained earnings on disposal of such investments.

(vi) Other reserves

Others primarily include:

(a) Amounts appropriated out of profit or loss for doubtful debts and contingencies.

(b) Share buyback reserve has been created as per the Companies Act, 1956.

(c) Reserve which has arisen on forfeiture of shares.

(c) Repayment terms and nature of securities given for short term borrowings

1 Secured by way of hypothecation, first pari passu charge on current assets of the Company and second charge on movable and immovable property, plant and equipment, of the Company. Pledge of 10% of promoter’s shareholding i.e. 75,82,642 equity shares of Kesoram Industries Limited in favour of Working Capital Consortium.

2 Maximum amount of Commercial Paper outstanding at any point of time during the year was 1Nil (31st March, 2018: 1325 crores).

3 The cash credit and working capital demand loans are repayable on demand.

Goods and Services Tax (GST) has been implemented with effect from 1st July, 2017. Consequently, Central Excise, Value Added Tax (VAT),Service Tax etc. have been replaced by GST. GST, VAT, Service Tax etc. are not included in Revenue from Operations. However, excise duty was included in Revenue from Operations till 30th June, 2017. Hence, reported revenues for the period up to 30th June, 2017 are not comparable with those thereafter.

# The entire revenue is being recorded at a point in time.

(i) Revenue recognised in relation to contract liabilities

The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward contract liabilities and how much relates to performance obligations that were not satisfied in a prior year.

** During the year, the Company received a grant from third party amounting to 131.75 crore (2017-2018: Nil). The grant has been netted off with related cost for which it has been received

During the year, the Company recognised an amount of 113.04 crore (2017-2018: 110.79 crores ) as remuneration to key managerial personnel. The details of such remuneration is as below:

(i) Compensated absences

Compensated absences cover the Company’s liability for sick and earned leave.

(ii) Defined benefit plan

a) Gratuity

The Company operates a gratuity plan through the “KICM Gratuity Fund”. Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service.

b) Provident fund

Provident fund for certain eligible employees is managed by the Company through the “B. K. Birla Group of Companies Provident Fund Institution” and “Birla Industries Provident Fund”, in line with the Provident Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the employee.

The Company has an obligation to fund any shortfall on the yield of the trust’s investments over the administered interest rates on an annual basis. These administered rates are determined annually predominantly considering the social rather than economic factors and in most cases the actual return earned by the Company has been higher in the past years. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the below provided assumptions there is no shortfall as at 31st March, 2019 and 31st March, 2018 respectively.

The Company also pays provident fund contributions to publically administered local fund as per the local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due.

The details of fund and plan asset position are given below:

The Company contributed H3.91 crores and H4.59 crores during the year ended 31st March,2019 and 31st March, 2018 respectively to the fund.

The Company contributed H13.10 crores and H13.92 crores during the year ended 31st March,2019 and 31st March, 2018 respectively to Government Fund.

(iii) Defined contribution plan

Superannuation Fund: The Company has defined contribution superannuation plan for the benefit of its eligible employees. Employees who are members of the defined contribution superannuation plan are entitled to benefits depending on the years of service and salary drawn.

Separate irrevocable trust is maintained for employees covered and entitled to benefits. The Company contributes 15% of the eligible employees’ salary or 11 lakh, whichever is lower, in case of NPS participating employees to the trust and 15% of the basic salary in case of Non NPS participating eligible employees to the administered Government Fund every year. Such contributions are recognised as an expense as and when incurred. The Company does not have any further obligation beyond this contribution.

The Company contributed 1 0.10 crores and 1 0.15 crores during the year ended 31st March, 2019 and 31st March, 2018 respectively.

(iv) Balance sheet recognition a) Gratuity

The amounts recognised in the balance sheet and the movements in the net defined benefit obligation over the year are as follows:

The above sensitivity analysis is based on a change in an 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 when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(vii) The major categories of plans assets

In the absence of detailed information regarding plan assets which is funded with Insurance Companies, the composition of each major category of plan assets, the percentage or amount for each category to the fair value of plan assets has not been disclosed.

(viii) Risk exposure

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

Investment risk:

The defined benefit plans are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies. The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.

Interest risk:

A decrease in the interest rate on plan assets will increase the plan liability.

Life expectancy:

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.

Salary growth risk:

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.

(ix) Defined benefit liability and employer contributions

Expected contributions to post-employment benefits plans for the year ending 31st March, 2019 is 18.46 crores.

The weighted average duration of the defined benefit obligation is 13 years (31st March, 2018 - 13 years).

Exceptional items during the previous year relates to disputed indirect taxes against which a provision has been made pursuant to a court order on similar matter and based upon an opinion obtained from a counsel amounting to 141.37 crores. It also includes 133.86 crores relating to Voluntary Retirement Scheme floated by the Company.

2. Income tax expense

This note provides an analysis of the Company’s income tax expense, shows amounts that are recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible items.

(a) Income tax expense

(b) Reconciliation of tax expense and the accounting profit multiplied by tax rate:

(c) Tax losses

(a) Unabsorbed depreciation does not have any expiry period.

(b) Business losses have an expiry ranging from 1 to 8 years as at the reporting date

(c) MAT credit entitlement has an expiry period of 6 to 13 years as at the reporting date.

(d) Short term capital loss of 1113.70 crores has arisen due to change in tax position and subsequent filing of revised return for FY 2016-2017.

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the ground that there are fair chances of successful outcome of appeals.

3. The Company has certain dues to suppliers registered under Micro, Small and Medium Enterprises Development Act, 2006. (‘MSMED Act’). The disclosures pursuant to the said MSMED Act are as follows:

The above information regarding Micro and Small enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

4. Non-cancellable operating leases

The Company leases various offices under non-cancellable operating leases expiring within two to eight years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

5. Capital management

(a) Risk management

The capital structure of the Company consists of debt, cash and cash equivalents and equity attributable to equity shareholders of the Company which comprises issued share capital (including premium) and accumulated reserves disclosed in the Statement of Changes in Equity.

The Company’s capital management objective is to achieve an optimal weighted average cost of capital while continuing to safeguard the Company’s ability to meet its liquidity requirements (including its commitments in respect of capital expenditure) and repay loans as they fall due.

6. Fair value measurements

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments. The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2 to the financial statements.

(i) Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below:

Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in quoted equity shares.

Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level of hierarchy includes Company’s over-the-counter (OTC) derivative contracts.

Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. This level of hierarchy includes Company’s investment in equity shares which are unquoted or for which quoted prices are not available at the reporting dates.

(ii) Valuation technique used to determine fair value

(a) Derivatives are fair valued using market observable rates and published prices together with forecasted cash flow information where applicable.

(b) Investments carried at fair value are generally based on market price quotations. However in cases where quoted prices are not available the management has involved valuation experts to determine the fair value of the investments. Different valuation techniques have been used by the valuers for different investments. These investments in equity instruments are not held for trading. Instead, they are held for long term strategic purpose. The Company has chosen to designate this investments in equity instruments at FVOCI since, it provides a more meaningful presentation. Cost of certain investments in equity instruments have been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.

(c) Fair value of borrowings is estimated by discounting expected future cash flows. The carrying amounts of other borrowings with floating rate of interest are considered to be close to the fair value.

(d) The carrying amounts of remaining financial assets and liabilities are considered to be the same as their fair values.

(e) 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 realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.

7. Financial risk management

In the course of its business, the Company is exposed primarily to fluctuations in foreign currency exchange rates, interest rates, equity prices, liquidity and credit risk, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management policy is approved by the Board of Directors. The risk management framework aims to:

(i) create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the Company’s business plan.

(ii) achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

(A) Credit risk

The Company takes on exposure to credit risk, which is the risk that counterparty will default on its contractual obligations resulting in financial loss to the company. Maximum exposure to credit risk of the Company has been listed below:

i) Trade and other receivables

Customer credit risk is managed by the Company through established policy and procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying upto 90 days credit terms. The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation. Trade receivables are consisting of a large number of customers. Where credit risk is high, domestic trade receivables are backed by security deposits. Export receivables are backed by letters of credit.

In determining the allowances for credit losses of trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix.

The Company’s exposure to customers is diversified and there is no significant credit exposure on account of any single customer as at 31st March, 2019 and 31st March, 2018.

The company is making provisions on trade receivables based on Expected Credit Loss (ECL) model. The reconciliation of ECL is as follows:

(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 has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs, non-convertible debentures and other debt instruments. The Company invests its surplus funds in bank fixed deposit and in mutual funds, which carry no or low market risk.

(i) Maturities of financial liabilities

The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

(C) Market risk

(i) Foreign currency risk

The Company deals with foreign currency loan, trade payables etc and is therefore exposed to foreign exchange risk associated with exchange rate movement.

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas and purchases from overseas suppliers in various foreign currencies. Foreign currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies.

Foreign currency risk exposure

The company’s exposure to foreign currency risk at the end of the reporting period expressed in INR (foreign currency amount multiplied by closing rate), are as follows:-

(ii) 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 debt obligations with floating interest rates.

The Company’s main interest rate risk arises from borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31st March, 2019 and 31st March, 2018, the Company’s borrowings at variable rate were mainly denominated in INR.

The Company’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

(a) Interest rate risk exposure On Financial Liabilities:

The exposure of the Company’s financial liabilities to interest rate risk is as follows:

(b) Sensitivity

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of changes in interest rates as below:

(iii) Price risk

(a) Exposure

The Company’s exposure to equity securities price risk arises from investments held by the Company and classified in the balance sheet at fair value through OCI. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. In general, these investments are not held for trading purposes.

(b) Sensitivity

The table below summarizes the impact of increases/decreases of the share prices on the Company’s equity.

8. Segment reporting

The Company’s organizational structure and governance processes are designed to support effective management of Cement and Tyre, the two business segments of the company, with equal focus on both. The two Segments have been reported in a manner consistent with the internal reporting provided to the Board of Directors which is the Chief Operating Decision Maker (CODM).

The amounts reported to CODM are based on the accounting principles used in the preparation of financial statements as per Ind AS. Segment’s performance is evaluated based on segment revenue and segment result viz. profit or loss from operating activities before exceptional items and tax. Accordingly, finance costs / income, non - operating expenses and exceptional items are not allocated to individual segment.

Segment assets / liabilities comprise assets / liabilities directly managed by each segment. Segment assets primarily include receivables, property, plant and equipments, capital work-in-progress, intangibles, non-current investments, inventories, cash and cash equivalents, inter-segment assets. Segment liabilities primarily include operating liabilities. Segment capital expenditure comprises additions to property, plant and equipments and intangible assets.

The reporting segments of the Company are as below:

Tyre: This covers the sale of tyre, tubes, flaps etc. The Company operates its tyre business under the name. ‘Birla Tyres’

Cement: This covers the sale of cement. The Company operates its cement business under the name. ‘Birla Shakti Cement’.

Unallocated: Unallocated items include expenses / results, assets and liabilities (including inter-segment assets and liabilities) of corporate headquarters of the Company, non-current investment, current taxes, deferred taxes and certain financial assets and liabilities, not allocated to the operating segments.

9. Related party transactions List of Related Parties and relationship

A) Subsidiary

Cygnet Industries Limited

B) Joint Venture

Gondkhari Coal Mining Limited

C) Post Retirement Benefit Plan

B.K. Birla Group of Companies Provident Fund Institution.

Birla Industries Provident Fund Institution.

KICM Gratuity Fund Kesoram Superannuation Fund

D) Key Management Personnel

E) Others

a: Entity Controlled, Joint Control by Key Management Personnel

MSK Travels and Tours Limited

Aditya Marketing & Mfg Limited

Arbela Trading and Services Private Limited

Usinara Trading and Services Private Limited

b: One Entity is an Associate of the other Entity (or an Associate of a group of which the other Entity is a member)

Manav Investment & Trading Co Limited & its subsidiaries

(C) Compensation of KMP of the Company

(i) The following transactions were carried out with the KMP in the ordinary course of business.

The details of remuneration paid to key management personnel is provided in Note 25.

Disclosure pursuant to Section 186(4) of the Companies Act, 2013, regarding loans given, Investment made and Guarantee given are mentioned in the respective notes of Non Current Investments (refer note 6), and Non Current Loans and Advances (refer note 7) and Guarantees (refer note 32(a)).

Also refer note 33(b) relating to commitments as on 31st March, 2019 in respect of Cygnet Industries Ltd amounting to 1225 crore (Previous year : 1550 crore) for borrowing / financing obligation.

10. The Loan to Cygnet Industries Ltd, a wholly owned subsidiary company, was given after complying with the provisions of section 186(4) of the Companies Act, 2013. The loan was given in accordance with the terms and conditions agreed between the parties and is to be used by the recipient in the normal course of business. The loan is repayable on demand. The Rate of Interest on the loan is 10.50% p.a.

11. Demerger of business

The Board of Directors has approved a Scheme of Arrangement (‘the Scheme’) under Section 230 and 232 of the Companies Act, 2013 for demerger of the Company’ s Tyre business into Birla Tyres Limited . The Appointed Date is 1st January, 2019. The Scheme will be effective upon receipt of such approvals as may be statutorily required including that of the Kolkata Bench of the National Company Law Tribunal (“NCLT”).The Stock Exchanges have accorded in principle approval to the Scheme. Accordingly, the Company has filed the Scheme with NCLT.

12. The Company has incurred cash losses during the past few financial years and also during the Financial Year 20182019. However, the Company has succeeded in significantly reinforcing its performance during the said Financial Year. This is evident from the significant narrowing of losses before taxes during the Financial Year. This has been achieved through economies of cost and improving operational efficiency. The Company has effected meaningful reduction in its overall debt during the said Financial Year. The Promoter Group, in turn, has consistently demonstrated its financial commitment in the Company and would continue with that support.

13. Research and development expenditure

The Company has incurred 15.63 Crore (2017-2018: 17.41 Crore) on account of Research and Development expenses which has been charged to Statement of Profit and Loss. Capital Expenditure relating to Research and Development amounting to 11.68 crore (2017-2018: 12.01 crore) has been included in property, plant and equipment.

14. Figures for the previous year have been regrouped/reclassified wherever necessary to conform to current period’s classification.


Mar 31, 2018

1. Capital management

(a) Risk management

The capital structure of the Company consists of debt, cash and cash equivalents and equity attributable to equity shareholders of the Company which comprises issued share capital (including premium) and accumulated reserves disclosed in the Statement of Changes in Equity.

The Company''s capital management objective is to achieve an optimal weighted average cost of capital while continuing to safeguard the Company''s ability to meet its liquidity requirements (including its commitments in respect of capital expenditure) and repay loans as they fall due.

2. Fair value measurements

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2 to the financial statements.

(ii) Valuation technique used to determine fair value

(a) Derivatives are fair valued using market observable rates and published prices together with forecasted cash flow information where applicable.

(b) Investments carried at fair value are generally based on market price quotations. However in cases where quoted prices are not available the management has involved valuation experts to determine the fair value of the investments. Different valuation techniques have been used by the valuers for different investments. These investments in equity instruments are not held for trading. Instead, they are held for long term strategic purpose. The Company has chosen to designate this investments in equity instruments at FVOCI since, it provides a more meaningful presentation. Cost of certain investments in equity instruments have been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.

(c) Fair value of borrowings is estimated by discounting expected future cash flows. The carrying amounts of other borrowings with floating rate of interest are considered to be close to the fair value.

(d) The carrying amounts of remaining financial assets and liabilities are considered to be the same as their fair values.

(e) Management uses its best judgment 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, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.

3. Financial risk management

In the course of its business, the Company is exposed primarily to fluctuations in foreign currency exchange rates, interest rates, equity prices, liquidity and credit risk, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management policy is approved by the Board of Directors. The risk management framework aims to:

(i) create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the Company''s business plan.

(ii) achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

Other receivables as stated above are due from the parties under normal course of the business and as such the Company believes exposure to credit risk to be minimal.

i) Trade and other receivables

Customer credit risk is managed by the Company through established policy and procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying up to 90 days credit terms. The Company has a detailed review mechanism of overdue customer receivables at various levels within organization to ensure proper attention and focus for realization. Trade receivables are consisting of a large number of customers. Where credit risk is high, domestic trade receivables are backed by security deposits. Export receivables are backed by letters of credit.

In determining the allowances for credit losses of trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix.

The Company''s exposure to customers is diversified and there is no significant credit exposure on account of any single customer as at 31 March 2018, 31 March 2017 and 1 April 2016.

(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 has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs, non-convertible debentures and other debt instruments. he Company invests its surplus funds in bank fixed deposit and in mutual funds, which carry no or low market risk.

(i) Maturities of financial liabilities

The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

(ii) 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 debt obligations with floating interest rates.

The Company''s main interest rate risk arises from borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31 March 2018 and 31 March 2017, the Company''s borrowings at variable rate were mainly denominated in INR.

The Company''s fixed rate borrowings are carried at amortized cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

(iii) Price risk

(a) Exposure

The Company''s exposure to equity securities price risk arises from investments held by the Company and classified in the balance sheet at fair value through OCI. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. In general, these investments are not held for trading purposes.

4. Segment reporting

The Company''s organizational structure and governance processes are designed to support effective management of Cement and Tyre, the two business segments of the company, with equal focus on both. The two Segments have been reported in a manner consistent with the internal reporting provided to the Board of Directors which is the Chief Operating Decision Maker (CODM).

The amounts reported to CODM are based on the accounting principles used in the preparation of financial statements as per Ind AS. Segment''s performance is evaluated based on segment revenue and segment result viz. profit or loss from operating activities before exceptional items and tax. Accordingly, finance costs / income, non - operating expenses and exceptional items are not allocated to individual segment.

Segment assets / liabilities comprise assets / liabilities directly managed by each segment. Segment assets primarily include receivables, property, plant and equipment, capital work-in-progress, intangibles, non-current investments, inventories, cash and cash equivalents, inter-segment assets. Segment liabilities primarily include operating liabilities. Segment capital expenditure comprises additions to property, plant and equipment and intangible assets.

The reporting segments of the Company are as below:

Tyre: This covers the sale of tyre, tubes, flaps etc. The Company operates its tyre business under the name. ''Birla Tyres''

Cement: This covers the sale of cement. The Company operates its cement business under the name. ''Birla Shakti Cement''.

Unallocated: Unallocated items include expenses / results, assets and liabilities (including inter-segment assets and liabilities) of corporate headquarters of the Company, non-current investment, current taxes, deferred taxes and certain financial assets and liabilities, not allocated to the operating segments.

*Amount is below the rounding off norm adopted by the Company.

**Ceased to be related party w.e.f 14.04.2016 and hence outstanding as on 31.03.2017 and 31.03.2018 has not been disclosed.

#Joined 10.01.2018

##Joined 10.02.2018

###wef 13.02.2018

####wef 13.02.2018

@uptil 24.01.2018

#####wef 28.03.2018

######uptil 27.03.2018

I (a) a person or a close member of that person''s family is related if that person:

(i) has control or joint control over the reporting entity

(ii) has significant influence over the reporting entity

(iii) is a KMP of KIL or parent of KIL

II (b) an entity is related to a reporting entity if:

(i) the entity and the reporting entity are members of the same group (each parent, subsidiary and fellow subsidiary)

(ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a group of which the other entity is a member)

(iii) Both entities are joint ventures of the same third party

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third party

(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) An entity, or any member of a group of which is a part, provides KMP services to the reporting entity or to the parent of the reporting entity

Disclosure pursuant to Section 186(4) of The Companies Act 2013, regarding loans given, Investment made and Guarantee given are mentioned in the respective notes of Non Current Investments (refer note 6), and Non Current Loans and Advances (refer note 7) and Guarantees (refer note 33(a)).

Also refer note 34(b) relating to commitments as on 31.03.2018 in respect of Cygnet Industries Ltd amounting to Rs. 550 crs (Previousyear : 50 crore) for borrowing / financing obligation.

5. 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 2, 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 at 1 April 2016 (the Company''s 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 of 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.

A. Exemptions and exceptions availed

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

A.1 Ind AS optional exemptions A.1.1 Deemed cost

The Company has elected to treat fair value as deemed cost for certain items of its property, plant and equipment.

A.1.2 Decommissioning liability

Ind AS 101 permits a first-time adopter to measure the decommissioning liability as at the date of transition to Ind AS in accordance with Ind AS 37. Liability is to be recognized by discounting the estimated amount to be recognized to fulfill the decommissioning liability. Accumulated depreciation on the amount which would have been added to the cost of the assets needs to be calculated till the date of transition with the adjustment to retained earnings.

Accordingly, the Company has elected to apply the above exemption while computing the decommissioning liability related to certain assets of the Company.

A.1.3 Leases

The Company applied Appendix C of Ind AS 17 Determining whether an Arrangement contains a Lease to determine whether an arrangement existing at the transition date contains a lease on the bais of facts and circumstances existing at that date.

A.1.4 Investments in subsidiaries, joint ventures and associates

Ind AS 101 permits a first-time adopter to measure its investments in subsidiaries, joint ventures and associates at deemed cost. The deemed cost of such an investment could be either (a) its fair value at the date of transition; or (b) previous GAAP carrying amount at that date. The option may be exercised individually and separately for each item of investment.

Accordingly, the Company has opted to measure its investments in subsidiaries and joint venture at previous GAAP carrying amount as its deemed cost.

A.1.5 Past business combinations

Ind AS 101 permits a first-time adopter, not to apply Ind AS 103 retrospectively to past business combinations (business combinations that occurred before the date of transition to Ind AS).

Accordingly, the Company has elected not to apply Ind As 103 Business combination retrospectively to past business combinations that occurred before the transition date.

A.2 Ind AS mandatory exceptions

A.2.1 Estimates

An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (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 items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Investment in equity instruments carried at FVOCI;

- Impairment of financial assets based on expected credit loss model.

- Decommissioning liability related to certain items of property, plant and equipment.

- Fair value of certain items of property, plant and equipment to consider as deemed cost as on the transition date.

A.2.2 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 fact and circumstances that exits at the date of transition to Ind AS.

B. Reconciliations between previous GAAP and Ind AS

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.

(1) Property, plant and equipment

(a) On transition to Ind AS, the Company has treated fair value as deemed cost for certain items of property, plant and equipment resulting in an increase in carrying value as compared to the previous GAAP. The consequential impact of additional depreciation on fair value increase is recognized in the statement of profit and loss.

(b) On transition to Ind AS, the Company has applied the exemption available in Ind AS 101 while determining decommissioning obligation for certain items of property, plant and equipment. The consequential impact of additional depreciation on recognition of the decommissioning obligation is recognized in the statement of profit and loss.

(2) Financial Instruments

(a) In accordance with Ind AS 109 "Financial Instruments", investments in equity instruments (other than in subsidiaries and joint ventures) have been recognized at fair value at each reporting date through other comprehensive income.

Consequently, on sale of such investments, profit or loss recognized in the statement of profit and loss under the previous GAAP have been reversed as the fair value changes are recognized through other comprehensive income.

(b) In accordance with Ind AS 109 "Financial Instruments", premium payable on redemption, transaction costs on issue of debentures and raising of loans are required to be considered as effective finance costs and recognized in the statement of profit and loss using the effective interest rate.

Consequently, premium on redemption/discounts on issue and transaction costs recognized directly in equity or amortized using a different approach under the previous GAAP has been reversed and are now recognized through the statement of profit and loss using the effective interest rate.

(c) In accordance with Ind AS 109 "Financial Instruments", all derivative financial instruments are recognized at fair value as at each reporting date through the statement of profit and loss except where designated in a hedging relationship.

(d) In accordance with Ind AS 109, "Financial Instruments", the company is required to apply expected credit loss model for recognising the allowance for credit losses. As a result the allowance for doubtful debts has been created in the books of accounts.

(3) Re-classification of Optionally convertible redeemable preference shares

Under Ind AS, Optionally convertible redeemable preference shares have been re-classified from equity to liability based on its substance and the fact that the Company does not have an unconditional right to avoid making payments on the instrument as per the contractual terms. The same would be repaid on the redemption date, unless the holder opts to convert them into equity instrument. Hence, there is a conversion option embedded in the instrument. However, the yield provided on the instrument is not less than the market rate of interest, hence the value of the conversion option is considered as zero and the entire amount has been classified as liability.

(4) Others

Provisions where impact of time value of money is material have been discounted in accordance with the provisions of Ind AS 37.

(5) Employee benefits

(a) In accordance with Ind AS 19, "Employee Benefits" re-measurement gains and losses on post employment defined benefit plans are recognized in other comprehensive income as compared to the statement of profit and loss under the previous GAAP.

(b) Interest expense/income on the net defined benefit liability/asset is recognized in the statement of profit and loss using the discount rate used for defined benefit obligation as compared to the expected rate used for recognising income from plan assets under the previous GAAP

(6) Impact of reversal of foreign currency monetary items translation difference account (FCMITDA)

In accordance with Ind AS 101 a first-time adopter may continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP.

The Company has chosen not to avail the optional exemption and as a result of the same, balance has been reclassified from FCMITDA to retained earnings as at the opening balance sheet date. Subsequent to the transition date, the loan was repaid and the balance was transferred to the statement of profit and loss under the previous GAAP

(7) Deferred Taxes

In accordance with Ind AS 12, "Income Taxes", the Company on transition to Ind AS has recognized deferred tax on temporary differences, i.e. based on balance sheet approach as compared to the earlier approach of recognizing deferred taxes on timing differences , i.e. profit and loss approach. The tax impacts as above primarily represent deferred tax consequences arising out of Ind AS re-measurement changes. As the Company has carry forward business losses and unabsorbed depreciation against which the Company will be able to set-off the related deferred tax liabilities which have arisen on such remeasurement, the Company has recognized deferred tax assets to the extent of the said liabilities.

(8) Other comprehensive Income

Under Ind AS, all items of income and expense recognized during the year are included in the profit or loss for the year, unless Ind AS requires or permits otherwise. Items that are not recognized in profit or loss but are shown in other comprehensive income include remeasurement gains or losses on defined benefit plans and fair value changes of equity investments. The concept of other comprehensive income did not exist under the previous GAAP.

(9) Stores and spares reclassified as property, plant and equipment

In accordance with Ind AS 16 Property, plant and equipments , the Company has capitalized certain items of stores and spares which meet the definition or property, plant and equipment as at opening balance sheet date, however as at 31 March 2017, as per revised AS 10 Property, plant and equipment under previous GAAP, the Company''s policy was same.

(10) Reclassification of financial liability

Under IGAAP the Company had certain deposits from sales promoters, agent, brokers etc. as borrowings, however the same have been considered as ''other financial liabilities'' as per Ind AS 109, hence the movement for the same havee been reclassified from cash flow from financing activities to operating activities. Certain other financing arrangements earlier treated as trade payables have been reclassified to short term borrowings.

(11) Other bank balances and bank overdraft

(a) Other bank balances comprising, deposit with original maturity for more than 3 months but less than 12 months and unpaid dividends were considered as part of cash and cash equivalents under IGAAP, however under Ind AS, the same have been excluded and are being considered for determining cash flow from operating activities.

(b) In accordance with Ind AS 7, where bank overdrafts which are repayable on demand form an integral part of an entity''s cash management, bank overdrafts are included as a component of cash and cash equivalents, under IGAAP the same were treated as borrowings.

6. The Loan to Cygnet Industries Ltd, a wholly owned subsidiary company, was given after complying with the provisions of section 186(4) of the Companies Act, 2013. The loan was given in accordance with the terms and conditions agreed between the parties and is to be used by the recipient in the normal course of business. The loan is repayable on demand. The Rate of Interest on the loan is 10.50% p.a.

7. Asset acquisition

The Company has acquired assets and liabilities related to the undertakings viz. Spun Pipes & Foundries and Hindustan Heavy Chemicals for a cash consideration of Rs. 422 crores, from Camden Industries Limited a domestic Company, through slump sale route. The above acquisition has been accounted as an asset acquisition.

The Company has identified and recognized the individual identifiable assets acquired. The Company has allocated the cost of the group of assets and liabilities to the individual identifiable assets and liabilities on the basis of their relative fair values on the date of purchase.

8 Research and development expenditure

The Company has incurred Rs. 7.41 Crore (2016-17: Rs.7.60 Crore) on account of Research and Development expenses which has been charged to Statement of Profit and Loss. Capital Expenditure relating to Research & Development amounting to Rs. 2.01 crore (2016-17: Rs 3.72 crs) has been included in property, plant and equipment.


Mar 31, 2017

1. RESEARCH AND DEVELOPMENT EXPENDITURE

The Company has incurred Rs.7.60 crore (2015-16: Rs.5.56 crore) on account of Research and Development expenses which has been charged to Statement of Profit and Loss. Capital Expenditure relating to Research & Development amounting to Rs.3.72 crore (2015-16: Rs.8.96 crore) has been included in Fixed Assets.

2. LEASES

As a lessee:

Operating Lease

Rent expenditure (under Note 23) includes lease payments of Rs.2.03 crore (2015-16: Rs.2.13 crore) relating to non cancellable operating lease. The leasing arrangement is for three to nine years and is in respect of office premises. The significant leasing arrangement inter alia includes option for renewal.

3. The business of Cygnet Industries Ltd was operated by the Company for a period of two months from 1st April, 2016 to 31st May, 2016 on behalf of Cygnet Industries Ltd. Accordingly, the related revenue and expenses in respect of these two months have been excluded from the results of the Company. The related revenue and expenses of Cygnet Industries Ltd for the above period are summarized below.

4. The time frame of completion of expansion of 80 MT/day capacity of car radial project at Balasore is being extended to end of 2017-18.

5. The time frame for grinding facility of 2.5 million MT cement per annum to be situated at Sholapur in the state of Maharashtra is being extended beyond 2017-18.

6. RELATED PARTY DISCLOSURES (contd.)

** Became a subsidiary w.e.f 07.05.2016 @ Ceased to be related party w.e.f 01.04.2016 # Appointed as Whole Time Director w.e.f. 01.04.2016

I Enterprise where control exists due to Key Management Personnel

II Subsidiary

III Joint venture

IV Key Management Personnel

V Relative of Key Management Personnel

VI Enterprise over which person referred to in V above is able to exercise significant influence.

Disclosure pursuant to Section 186(4) of The Companies Act 2013, regarding loans given, Investment made and Guarantee given are mentioned in the respective notes of Non Current Investments (refer note 12), and Non Current Loans and Advances (refer note 13) and Guarantees (refer note 31(a) and 35).

Also refer note 32(b)(iii) relating to commitments as on 31.03.2017 in respect of Cygnet Industries Ltd amounting to H50 crore (Previous year : NIL) for borrowing / financing obligation.

7. The Company has consolidated the 2016-17 Financial Statements of Cygnet Industries Limited, its wholly owned subsidiary.

The Company has no associate company within the meaning of Section 2(6) of the Companies Act, 2013. Gondkhari Coal Mining Limited ("Gondkhari"), a joint venture has not been consolidated for reasons set out below :

Gondkhari, a Special Purpose Vehicle ("SPV") was set up as a joint venture with two other partners as per directions of the Central Government to develop and operate the Gondkhari Coal Block in Maharashtra allocated to the SPV. The allocation of all coal blocks having been cancelled by the Supreme Court vide judgment dated 25th August, 2014 read with Order dated 24th September, 2014, the substratum of the SPV has consequently ceased to exist. The Company is, therefore, in discussion with its venture partners as to the future course of action.

In view of the above and regard being had to the Accounting Standard 27, the Financial Statements of Gondkhari for the year ended 31st March, 2017 have not been consolidated with that of the Company.

8. The Loan to Subsidiary company was given to Cygnet Industries Ltd, a wholly owned subsidiary company after complying with the provisions of section 186(4) of the Companies Act, 2013. The loan was given in accordance with the terms & conditions between the parties to be used by the recipient in the normal course of business. The loan is repayable on demand. The Rate of Interest on the loan is 10.50% p.a.

9. Disclosures pursuant to the Regulation 34(3) read with paragraph A of Schedule V to SEBI Listing Regulations, 2015 (i) Loans and advances in the nature of loans to subsidiary

- Amount is below the rounding off norm adopted by the Company

- Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no S.O.3407(E), dated the 8th November, 2016.

10. Previous Year''s figures have been regrouped or rearranged where considered necessary.


Mar 31, 2016

(b) Rights, preferences and restrictions attached to shares Equity Shares:

The company has equity shares having a par value per share. All equity shareholders are entitled to one vote per share.

The company declares and pays dividend in Indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in ensuing Annual General Meeting except in the case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in the proportion to shareholdings.

Optionally Convertible Redeemable Preference Shares (OCRPS):

The company has during the year issued Optionally Convertible Redeemable Preference Shares (OCRPS) shares having a for value Rs, 100 per share.

OCRPS carry a cumulative dividend of Q00% per annum per OCRPS. Each OCRPS carry a right of conservation value of the company within a time frame not exceeding 18 months of allotment. In case, OCRPS are not converted into equity shares, the company willredeemtheOCRPStogetherwiththecumulativedividendandapplicableyieldwithinaperiod not exceeding 18 months or such extended time as may be legally permissible based upon such term and conditions and at such price as may be mutually agreed.

(a) Gratuity

The Company operates a gratuity plan through the “KICM Gratuity Fund”. Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service. (Also refer Note 2.12)

The Company has charged 3.34 crore (204-205 : '' 8.55 crore) including discontinuing operations of 4.03 crore (204-205 : ''2.11 crore) towards gratuity during the year ended 31st March, 2016 in the Statement of Profit and Loss.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The expected estates on plan assets is based on the portfolio of assets held, investment strategy and market scenario. In order to protect the capital and option returns within acceptable risk parameters, the plan assets are reasonably diversified

(b) Provident Fund

Provident fund for certain eligible employees is managed by the Company through the B. K. Birla Group of Companies Provident Fund Institution” and “Birla Industries Provident Fund”, in line with the Provident Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated there on are payable to employees at the time of their separation from the company or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the employee.

The Guidance on Implementing AS 15, Employee Benefits (Revised 2005) issued by Accounting Standard Board (ASB) states that benefits involving employers established provident funds, which require interest shortfalls to be compensated are to be considered as defined benefit plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities. The actuary has accordingly provided a valuation and there is no shortfall as at31st March, 2016.

The Company has contributed 24.56 crore (204-205 : Rs, 30.41 crore) including discontinuing operations of Rs, 7.29 crore (204-205 : Rs,7.03 crore)towardsprovidentfundduringtheyearended31st March,2016.

(i) The detail of fund and plan assets position are as follows.

Based upon general body approvals accorded under the relevant provisions of the Companies Act, 2013, the Company has, during the Financial Year ended 31st March, 2016, disposed and transferred two Undertakings viz. Spun Pipes & Foundries and Hindustan Heavy Chemicals to Camden Industries Limited, a domestic Indian Company, through the slump sale route. The agreed aggregate consideration off 400 crore has been received during the year and the difference amount .78 crore between the carrying cost in the Company’s books of the two Undertakings and the consideration received has been shown as Exceptional Income in these Financial Statements.

1. LEASES

As a lessee:

Operating Lease

Rent expenditure (under Note 23) includes lease paymentRs, crore (204-20B : Rs, 162 crore) relating to non cancellable operating lease. The leasing arrangement is for three to nine years and is in respect of office premises. The significant leasing arrangement inter alia includes option for renewal.

The Company has given one unit of building on operating lease to Lazarus Hospital for 5 years extendable up to 12 years on mutual consent

The above information regarding Micro and Small enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company

2. The Company had transferred its automotive Tyre manufacturing facility at Laksar, District Haridwar, Uttarakhand, as a going concern on slump sale basis, to Cavendish Industries Limited (Cavendish), a subsidiary whose more than 90% of the share capital was held by the Company.

Pursuant to the execution of a binding term sheet dated 12th September, 2015, between the Company, the subsidiary and the JK Tyre Group, it was agreed that the company would transfer its interest in such subsidiary to the JK Tyre Group at a consideration based on Enterprise Value (EV)2 W5/- crore and had credited an amount of Rs, 409.20 crore, being net consideration receivable over and above the carrying value of the Laksar undertaking, to ‘Exceptional Income in the Statement of Profit and Loss for the year ended 31st March, 2015. Subsequently, the Company had entered into a Share Purchase Agreement dated 28th October, 2015, with the subsidiary and the JK Tyre Group to transfer its interest in the said subsidiary to JK Group. The above mentioned transaction was concluded in April, 2016 and the net consideration received has been used to partially retire the Company’s portfolio of long term borrowings after adjusting Rs,25.15 crore which has since been written off on account of EV adjustment.

3. The time frame of completion of expansion of 80 MT/day capacity of car radial project at Balasore is being extended to end of 2016-17.

4. The time frame for grinding facility of 2.5 million MT cement per annum to be situated at Sholapur in the state of Maharashtra is being extended beyond 206-7.

* Amount is below the rounding off norm adopted by the Company

** Necessary application has been made to central Government for payment of remuneration in excess of the prescribed limits by Rs, 170 crore under section 97

read with Schedule V of the Companies Act, 2013to Mr. K. C. Jain, whole time director of the company for a period of one year with effect from 1st April, 2015to 31st March, 2016.

@ cease to be a related party as on 3 10B.20B at the close of business hours

# Investment in Mangalam Cement Ltd disposed off during the year $ Ceased to be related party w.e.f. 1st April, 2015

I Enterprise where control exists due to Key Management Personnel

II Subsidiary

III Joint venture

IV Key Management Personnel

V Relative of Key Management Personnel

VI Enterprise over which person referred toin V above is able to exercise significant influence.

Disclosure pursuant to Section 186(4) of The Companies Act 2013, regarding loans given, Investment made and Guarantee given are mentioned in the respective notes of Non Current Investments (refer note 12), and Non Current Loans and Advances (refer note 13) and Guarantees (refer note 31 and 35).

* no dividend declared in 2015-2016

50. The Company has chosen to publish standalone financial statements as the provisions of Section 129(3) of the Companies Act, 2013 are not applicable. The Company has no associate company within the meaning of Section 2(6) of the Companies Act, 2013. Gondkhari Coal Mining Limited (“Gondkhari”), a joint venture and Cavendish Industries Limited (“Cavendish”),a subsidiary, have not been consolidated for reasons set out below :

(a) Gondkhari, a Special Purpose Vehicle (“SPV”) was set up as a joint venture with two other partners as per directions of the Central Government to develop and operate the Gondkhari Coal Block in Maharashtra allocated to the SPV. The allocation of all coal blocks having been cancelled by the Supreme Court vide judgment dated 25th August, 2014 read with Order dated 24th September, 2014, the substratum of the SPV has consequently ceased to exist. The Company is, therefore, in discussion with its venture partners for dissolution/winding up of Gondkhari.

In view of the above and regard being had to Accounting Standard 27, the Financial Statements of Gondkhari for the year ended 31st March, 2016 have not been consolidated with that of the Company.

(b) the ownership of Cavendish having been transferred to the IK Tyre Group in the month of April, 2016, consolidation of the financial statements of subsidiaries specifically earmarked for disposal is not contemplated under Accounting Standard 21.

5. Discontinuing Operations

On 26th March, 2016, the Board of Directors of the Company had approved the plan of disposing the Company’s Rayon and Transparent Paper (“Rayon and TP”) business undertaking. The decision was intimated to the Stock Exchanges on the same day.

Rayon and TP business undertaking is a separate business segment as per AS-17 ‘Segment Reporting’. This disposal is consistent with Company’s long term business strategy of realigning and restructuring its existing business activities. Accordingly, a business transfer agreement was entered into between the Company and Cygnet Industries Limited (“Cygnet”), a domicile Indian Company to transfer the Company’s Rayon and TP business undertaking on a going concern basis through slump sale route effective close of the business 31st March, 2016 at a total consideration of Rs, 541.14 crore, which is shown as receivable from Cygnet Industries Ltd as at31st March, 2016 in these Financial Statements.

Pursuant to such business transfer agreement, Cygnet has, after close of the Financial Year, issued and allotted tcy‘ the Coi 3,00,00,000 Equity Shares of Rs,0 each at par amounting toRs, 30 crore without consideration being received in cash and out of the balance amount of Rs, 511.14 crore from Cygnet as at 31st March 2016, Rs, 480 crore has since been received by the Company. The transaction having been deemed to have concluded as on 31st March, 2016, the Company has, as per the provisions of Accounting Standard (“AS”) 4, shown the difference amounting to Rs, 381.41 crore between the carrying cost of the Kesoram Rayon Undertaking in the Company’s books as on 31st March, 2016 and the total consideration receivable as on this date as an Income from disposal of discontinuing operations in these Financial Statements.

In accordance with the principles enunciated in AS-4, the assets and liabilities of the Kesoram Rayon Undertaking stands transferred to Cygnet as at close of business 31st March, 2016 and the Company’s Financial Statements for the year ended as on this date has been drawn up accordingly.

The general body approvals under the relevant provisions of the Companies Act, 2013, inter alia, for transfer and disposal of the Kesoram Rayon Undertaking obtained through postal ballot were received on 30th April, 2016. Pursuant to subsequent acquisition of shares by the Company on such approval, Cygnet has become a wholly owned subsidiary of the Company after close of the Financial Year.

6. Previous Year’s figures have been regrouped or rearranged where considered necessary. However, in view of sell off of certain business units during the year, the assets and liabilities are not comparable with one another.


Mar 31, 2014

1 DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

a) Pursuant to the Announcement on Accounting for Derivatives issued by the Institute of Chartered Accountants of India in March, 2008, the Company has accounted for during the year net loss amounting to Rs. 1.15 crore (31st March, 2013 - Rs. 2.57 crore) in respect of outstanding derivative contracts at the Balance Sheet date by marking them to market as indicated in Note 2.9 above and the resultant excess gain of Rs. 1.44 crore net of realised loss (Net ) of Rs. 1.71 crore during the year arising from derivative contracts are provided for and included in Finance Cost ''under Note 23 to accounts.

2. LEASES As a lessee:

Operating Lease

Rent expenditure (under Note 22) includes lease payments of Rs. 0.97 crore (2012-13 - Rs. 1.64 crore) relating to non cancellable operating lease. The leasing arrangement is for three to nine years and is in respect of office premises. The significant leasing arrangement inter alia includes option for renewal.

3. Certain records/documents pertaining to production, raw materials, purchase records etc. of the Company''s Assam Cotton Mills Unit were seized by the Excise Authorities and are presently not available with the Company.

4. The time frame of completion of expansion of 80 MT/day capacity of car radial project at Balasore is being extended to end of 2014-15 and 85 MT/day capacity of truck radial tyre project at Uttrakhand are being extended beyond 2014-15.

5. The time frame for grinding facility of 2.5 million MT cement per annum to be situated at Solapur in the state of Maharashtra is being extended beyond 2014-15.

6. The Company''s Spun Pipes and Foundries Unit is under suspension of work effective 2nd May, 2008.

7. The Company intends to hive off its Hindusthan Heavy Chemicals unit (the Unit) as reflected in the Board Resolution of 31st January, 2006 and later on consented by the shareholders by postal ballot of 24th March, 2006. The Unit is not significant in terms of the Company''s total assets/ liabilities/ revenue/ expenses/ cash flows. Pending disposal of the Unit, the Unit is in operation and results thereof, have been reflected in these Accounts. The Company had to declare suspension of work at the unit effective 8th December,2010 in consequence of illegal strike/activities by workmen.

8. Previous Year''s figures have been regrouped or rearranged where considered necessary.


Mar 31, 2013

1. GENERAL INFORMATION

Kesoram Industries Limited (the Company) is a public company domiciled and incorporated under the provisions of the The Indian Companies Act,1913. The Company is flagship company of B. K. Birla group of companies. The Company is a multiproduct and multi location company. Cement and automobile tyre business are its core businesses and it also has interest in rayon and cellulose paper, cast iron spun pipes and caustic soda & allied chemicals. Its shares are listed on three stock exchanges in India ( Bombay Stock Exchange, National Stock Exchange and Calcutta Stock Exchange) and its Global Depositary Receipts (GDR) are listed on Luxembourg Stock Exchange. The Company markets its automobile tyres under the brand name "Birla Tyres" and cement is marketed under "Birla Shakti" brand.

2. CONTINGENT LIABILITIES 31st March, 2013 31st March, 2012

(a) Guarantees given -

(i) to excise authorities 0.12 0.12

(ii) by Banks on behalf of the Company 68.78 58.40 (excluding relating to joint venture referred to in note 33 below)

(b) Claims against the Company not acknowledged as debts :

(i) Rates, Taxes, Duties etc. demanded by various Authorities 230.75 213.95

(ii) Amount demanded by Provident Fund Authorities which is sub judice 0.87 0.87

(c) Rates, Taxes, Duties etc. 16.06 15.80

(d) Amount payable in connection with reorganisation of the Company in earlier year 3.37 3.49

3. Legal action initiated by the company against an erstwhile management official and others in respect of certain transactions in one of the unit of the Company continue to be sub judice. The Company has initiated the detailed follow up investigation in the matter which has since been completed indicating no requirement for any disclosures/ adjustment.

4. DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

Pursuant to the Announcement on Accounting for Derivatives issued by the Institute of Chartered Accountants of India in March, 2008, the Company has accounted for during the year net loss amounting to Rs. 2.57 crore (31st March, 2012 - Rs. 4.09 crore) in respect of outstanding derivative contracts at the Balance sheet date by marking them to market as indicated in Note 2.9 above and the resultant excess liability of Rs. 1.52 crore net of realised loss (net) of Rs. 2.06 crore during the year arising from derivative contracts are provided for and included in Finance Cost ''under Note 23 to accounts. In 2011-12, the aforesaid mark to market loss along with realised loss (net) of Rs. 6.27 crore was included in ''Finance Cost'' under Note 23 to accounts.

5. LEASES As a lessee:

Operating Lease

Rent expenditure (under Note 22) includes lease payments of Rs. 1.64 crore (2011-12 - Rs. 1.26 crore) relating to non cancellable operating lease. The leasing arrangement is for three to nine years and is in respect of office premises. The significant leasing arrangement inter alia includes option for renewal.

6. Certain records/documents pertaining to production, raw materials, purchase records etc. of the Company''s Assam Cotton Mills Unit were seized by the Excise Authorities and are presently not available with the Company.

7. The time frame of completion of expansion of 80 MT/day capacity of car radial project at Balasore is being extended to end of 2013-14 and 85 MT/day capacity of truck radial tyre project at Uttrakhand are being extended beyond 2013-14

8. The time frame for grinding facility of 2.5 million MT cement per annum to be situated at Solapur in the state of Maharashtra is being extended beyond 2013-14


Mar 31, 2011

(1) Government Grants

Grants of Capital nature and related to specific Fixed Assets are deducted from gross value of assets. Other grants of Capital nature are credited to Capital Reserve. Grant related to revenue are recognised in the Profit and Loss Account on a systematic basis to match them with related costs.

2 (a) Radial car tyre project with 80 MT/day capacity at Balasore and further expansion of radial truck tyre by 85 MT/day at Uttarakhand taken up during the year 2009-10 are expected to commence commercial production by the end of 2011- 2012.

( b) The time frame for completion of expansion of Vasavadatta cement unit of the Company (clinker production capacity of 1.71 million MT/year together with captive power plant of 18 MW capacity at an estimated cost of Rs.925.00 crores and related grinding facility of 2.5 million MT cement per annum to be situated at Solapur in the state of Maharashtra at estimated cost of Rs. 200.00 crores) is being extended beyond 2012-13.

3 (a) The Company intends to hive off its Hindusthan Heavy Chemicals unit (the Unit) as reflected in the Board Resolution of 31st January, 2006 and later on consented by the shareholders by postal ballot of 24th March, 2006. The Unit is not significant in terms of the Companys total assets/liabilities/revenue/expenses/cash flows. Pending disposal of the Unit, the Unit is in operation and results thereof, have been reflected in these Accounts. The Company had to declare suspension of work at the unit effective 8th December, 2010 in consequence of illegal strike/activities by workmen.

(b) The Companys Spun Pipes and Foundries Unit is under suspension of work effective 2nd May, 2008.

31st March, 2011 31st March, 2010 Rs. Rs.

4 Contingent Liabilities:

(a) Guarantees given -

(i) to excise authorities 11,73,223 11,73,223

(ii) by Banks on behalf of the Company 64,62,00,803 70,38,54,755

(excluding relating to joint venture referred to in note 15 below)

(b) Claims against the Company not acknowledged as debts :

Rates, Taxes, Duties etc. demanded by various Authorities 1,37,76,47,666 1,20,94,00,083

Amount demanded by Provident Fund 86,86,000 86,86,000

Authorities which is sub judice

1,38,63,33,666 1,21,80,86,083

(c) Rates, Taxes, Duties etc. 30,29,87,802 8,14,89,255

(d) Amount payable in connection with reorganisation of the Company in earlier year 3,59,00,565 3,71,22,132

13 Miscellaneous expenses (Schedule 15) include Rs. 21,05,881 (Net) (2009-10 Rs. 10,91,48,160) excise duty related to the difference between the closing stock and opening stock.

14 A. In keeping with the Guidance on implementing Accounting Standard (AS) 15 on Employee Benefits issued by the Accounting

Standards Board of the Institute of Chartered Accountants of India (ASB Guidance), employer-established provident fund trusts are treated as Defined Benefit Plans since the Company is obligated to meet interest shortfall, if any, with respect to covered employees. According to the management, in consultation with Actuary, actuarial valuation cannot be applied to reliably measure provident fund liabilities in absence of guidance from Actuarial Society of India. Accordingly, the Company is currently not in a position to provide other related disclosures as required by the aforesaid AS 15 read with the ASB Guidance, however, having regard to the position of the Fund (for covered employees) and confirmation from the Trustees of such Fund there is no shortfall as at the year end.

14 B. In keeping with the Companys gratuity scheme (a defined benefit plan), eligible employees are entitled to gratuity benefit (at one half months eligible salary for each completed year of service) on retirement/death/incapacitation/termination. Also refer Note 1 (j) for accounting policy relating to gratuity. Following are the further particulars with respect to gratuity.

17.1 7.30% secured redeemable non-convertible debentures aggregating Rs. 1,00,00,00,000 (31.03.2010 Rs. - 1,00,00,00,000), privately placed (allotment date -17th November, 2009) have been redeemed at par during the year. On the aforesaid redemption, Rs. 25,00,00,000 being 25% of the aforesaid value of debentures in Debenture Redemption Reserve, has been transferred from Debenture Redemption Reserve to the Profit and Loss Account.

17.2 Short-term loans from others (Schedule 4) include :-

(a) Zero coupon unsecured redeemable non-convertible debentures aggregating Rs. 1,10,00,00,000 (31.03.2010 - Rs. 1,10,00,00,000), privately placed (allotment date 15th March, 2010) are due for redemption at par at the end of 396 days from the date of allotment.

(b) 7.75% unsecured redeemable non convertible debentures aggregating Rs. 50,00,00,000 (31.03.2010 - Rs. 50,00,00,000) privately placed (allotment date -19th March, 2010) are due for redemption at par on 5th April,2011

(c) 7 % unsecured redeemable non convertible debentures aggregating Rs. 1,00,00,00,000 privately placed (allotment date -17th May, 2010) are due for redemption at par at the end of 396 days from the date of allotment.

18 Pursuant to the Announcement on Accounting for Derivatives issued by the Institute of Chartered Accountants of India in March, 2008, the Company has accounted for during the year net loss amounting to Rs.5,10,63,967 (31.03.10 - Rs. 1,43,41,747) in respect of outstanding derivative contracts at the Balance Sheet date by marking them to market as indicated in Note 1 (g) above and the resultant short liability of Rs. 3,67,22,220 net of realised gain(net) of Rs. 53,28,800 during the year arising from derivative contracts are provided for and included in Miscellaneous Expenses under Schedule 15 to accounts. In 2009-10, the aforesaid mark to market loss along with realised Gain (net) of Rs. 15,05,46,781 was included in Miscellaneous Income under Schedule 13 to accounts.

19 a) Rent expenditure (Schedule 15) includes lease payments of Rs. 85,15,640 (2009-10 - Rs. 18,19,595) relating to non-cancellable operating lease. The leasing arrangement is for three to nine years and is in respect of office premises. The significant leasing arrangement inter alia includes option for renewal.

(i) not later than one year - Rs. 1,25,93,640 (2009-10 - Rs. 25,68,840)

(ii) later than one year but not later than five years - Rs. 4,14,16,105 (2009-10 - Rs. 33,18,085)

(iii) later than five years - Rs. 4,12,15,264 (2009-10 - Nil)

20 Information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 is given in Schedule 18, which forms an integral part of this Schedule.

25 Certain records/documents pertaining to production, raw materials, purchase records etc. of the Companys Assam Cotton Mills Unit were seized by the Excise Authorities and are presently not available with the Company.

26 Previous years figures have been regrouped or rearranged where considered necessary.


Mar 31, 2010

1 Amalgamation of Bulland Buildmart Private Limited, a wholly owned subsidiary Company (Transferor Company) with Kesoram Industries Limited (transferee Company)

1.1 Pursuant to a scheme of Amalgamation (the Scheme) sanctioned by the High Court at Calcutta in July 2009 under the provisions of the Companies Act, 1956, the Transferor Company has been amalgamated with Transferee Company in these accounts with retrospective effect from 1st October, 2008 (Appointed Date.). The Scheme has been accounted for using the Purchase Method set out in Accounting Standard 14 on Accounting for Amalgamation.

1.2 The Transferor Company was primarily engaged in the business of purchasing land for sale/ development and civil & constructional work relating to building, roads, bridges etc.

1.3 In accordance with the scheme, ail assets and liabilities of the Transferor Company immediately preceding the Appointed Date have been incorporated in the books of-account of Transferee Company at their respective book values on the basis of audited accounts of the Tranferor Company. The net assets as per the books of account of the Transferor Company after cancellation of investment of the Transferee Company in Tranferor Company as on 30th September, 2008 has been credited to Capital Reserve of the Transferee Company in 2009-10 and the results of the Tranferor Company for the period 1st October,2008 to 31st March,Transferee Company.

2(a) Expansion activities taken up in 2006-07 relating to fourth production line at Companys Vasavadatta Cement Unit for 1.65 million tons capacity increase of cement has commenced commercial production on 7th August, 2009. The related clinker plant commenced commercial production on 1st June, 2009

(b) Radial truck tyre (140 MT/day) and motor cycle tyre (95 MT/day) projects taken in 2008-09 at Uttarakhand commenced commercial production in March, 2010 and in phases from October, 2009 to March, 2010 respectively. Further expansion in bias tyre at Uttarakhand by 60 MT/day taken up in 2008-09 has been completed during the year.

(c) Radial car tyre project with 80 MT/day capacity at Balasore and further expansion of radial truck tyre by 85 MT/day at Uttarakhand taken up during the year are expected to commence commercial production by the end 2010-2011.

3 The Company intends to hive off its Hindusthan Heavy Chemicals unit (the Unit) as reflected in the Board Resolution of 31st January, 2006 and later on consented by the shareholders by postal ballot of 24th March, 2006. The Unit is not significant in terms of the Companys total assets/ liabilities/ revenue/ expenses/ cashflows. Pending disposal of the Unit, the Unit is in operation and results thereof, have been reflected in these Accounts.

The Companys Spun Pipes and Foundries Unit is under suspension of work effective 2nd May,2008.

31st March, 2010 31st March, 2009 Rs. Rs. 4A Contingent Liabilities:

(a) Guarantees given -

(i) to excise authorities 11,73,223 11,73,223 (ii) by Banks on behalf of the Company 70,38,54,755 45,96,01,210 (excluding relating to joint venture referred to in Note 16 below)

(b) Claims against the Company not acknowledged as debts:

Rates, Taxes, Duties etc. demanded by various Authorities 1,20.94,00.083 1,20,64,70,509

Amount demanded by Provident Fund and Employees State Insurance 86,86,000 1,24,00,913

Authorities which is subjudice 1,21,80,86,083 1,21,88,71,422

(c) Rates, Taxes, Duties etc. 8, 14,89.255 8,91,12,673

(d) Amount payable in connection with reorganisation of 3,71,22,132 3,79,65,159 the Company in earlier year

5 (a) Provision for Current Tax for the current year 2009-2010 is net of MAT credit of Rs.44,50,00,000 (2008-2009 - Rs.Nil) as the Company is confident to generate sufficient taxable income in the next few years available for set off of the aforesaid credit within the stipulated time.

(b) Provision for Current Tax for the year 2009-2010 is net of write back of Rs.Nil (2008-2009 - Rs.40,92,26,444) in respect of earlier years.

6 Miscellaneous expenses (Schedule 15) include Rs. 10,91,48,160 [2008-09 - net of Rs.3,80,73,336] excise duty related to the difference between the closing stock and opening stock

7 A. In keeping with the Guidance on implementing Accounting Standard (AS) 15 on Employee Benefits issued by the Accounting Standards Board of the Institute of Chartered Accountants of India (ASB Guidance), employer-established provident fund trusts are treated as Defined Benefit Plans since the Company is obligated to meet interest shortfall, if any, with respect to covered employees. According to the management, in consultation with Actuary, actuarial valuation cannot be applied to reliably measure provident fund liabilities in absence of guidance from Actuarial Society of India. Accordingly, the Company is currently not in a position to provide other related disclosures as required by the aforesaid AS 15 read with the ASB Guidance, however, having regard to the position of the Fund (for covered employees) and confirmation from the Trustees of such Fund there is no shortfall as at the year end.

B. In keeping with the Companys gratuity scheme (a defined benefit plan), eligible employees are entitled to gratuity benefit (at one half months eligible salary for each completed year of service) on retirement / death / incapacitation / termination. Also refer Note 1 (i) for accounting policy relating to gratuity. Following are the further particulars with respect to gratuity:-

8. 13% Secured redeemable non convertible debentures aggregating Rs. 1,00,00,00,000 (2008-09 - Rs.Nil), privately placed (allotment date -17th November,2008)| have been redeemed at par by exercising put option during the year. On the aforesaid redemption, Rs.25,00,00,000, being 25% of the aforesaid value of debentures in Debenture Redemption Reserve, has been tranferred from Debenture Redemption Reserve to the Profit and Loss Account.

8.1 7.3% secured redeemable non convertible debentures aggregating Rs,1,00,00,00,000-(31.03.2009 - Rs. Nil), privately placed (allotment date -17th November,2009) are due for redemption at par at the end of 13 months from the date of allotment. Debenture Redemption Reserve of Rs.25,00,00,000, being 25% of the aforesaid value of debentures, has been created out of the profits for the year.

9.1 Short term loans from banks (Schedule 4) include Commercial Paper of Rs.50,00,00,000 (31.03.09 - Rs.Nil). Short term loans from others (Schedule 4) comprise :- (a) Commercial Paper - Rs.2,40,00,00,000 (31.03.09 - Rs.Nil)

(b) 6.4% redeemable non convertible debentures aggregating Rs.50,00,00,000 (31.03.09 - Rs.Nil), privately placed (allotment date -17th March,2010) are due for redemption at par on 16th April, 2010.

(c) 6.2% redeemable non convertible debentures aggregating Rs.15,00,00,000 (31.03:09 - Rs.Nil), privately placed (allotment date -24th February,2010) are due for redemption at par on 24th May, 2010.

(d) 6% redeemable non convertible debentures aggregating Rs.25,00,00,000. (31.03:09 - Rs.Nil) and Rs.25,00,00,000 (31.03.09 - Rs.Nil), privately placed (allotment dates -15th February, 2010 & 17th February, 2010) are due for redemption at par on 14th May, 2010 and.17th May, 2010 respectively.

(e) 5.71 % redeemable non convertible debentures aggregating Rs.30,00,00,000 (31.03.09 - Rs.Nil), privately placed (allotment date -15th February,2010) are due for redemption at par on 12th May, 2010.

10. Other loans from banks {Schedule 4) include:-

(a) Zerocaupon unsecured redeemate placed (allotmentdate -15th March, 2010) are due for redemption at par at the end of 396 days from the date of allcrtment

(b) 7.75% unsecured redeemable non convertible debentures aggregating Rs 50,00,00,000 (31.03.2009 - Rs.Nil) privately placed (allotment date -19th March, 2010) are due for redemption at par on 5th April, 2011.

(c) 8.35 % unsecured redeemable non convertible debentures aggregating Rs 1,00,00,00,000 (31.03.2009 - Rs.Nil) privately placed (allotment date-22nd September, 2009) are due for redemptron at par at the end of 377 allotment.

10.1 Debenture redemption reserve of Rs 1,01,25,00,000, being 25% of the value debentures referred to in Notes 19.1 and 19.2 above has been created out the of profit of the Company.

11.Pursuant to the Announcement on Accounting for Derivatives issued by the Institute of Chartered Accountants of India in March,2008,the company has accounted for during the year net less amounting to Rs. 1,43,41,747 (31.03.09-Rs17,38,12,270) in respect of outstanding derivative contracts at the Balance sheet date by maring therm to market as indicacated in Note 1 (g) above and the resultant excess liability of Rs.15,92,70,523 net of realised loss (net) of Rs.87,23,742 during the year arising from derivative contracts is written back and included in Miscellaneous Income under Schedule 13 to accounts.in 2908-09, the aforesaid mark to market loss along with realised loss (net) of Rs.77,02,500 was included Miscellaneous Expenses under schedule 15 to accounts.

12 a) Rent expenditure (Schedule 15) includes tease payments of Rs.18,19,595,(2008^-Rs.Nil)relating to mm cancellable operating lease. This leasing arrangement is for three years and is in respect of office premises. The significant leasing arrangement interalia includes option for renewal.

The total of future minimum lease payments under this non cancellable operating lease:

(i) not later than one year - Rs.25,68,840 (200849 - Rs.Nil)

(ii) later than one year but not later than five years -Rs.33,18,085 (2008-09 - Rs.Nil)

(iii) later than five years - Rs.Nil (2008-09 - Rs.Nil)

b) The Company has given a unit of building on operating lease to Lazarus Hospital duririg me year for 5 years extendable up to 12 years on mutual consent

13 Information pursuant to the provisions of paragraph 3,4C and 4D of Part II of Schedule VI to the Companies Act 1956 in given in Schedule 18, which forms an integral part of this Schedule,

14 Shares of Jay Shree Tea & Industries Ltd. held by the Company at face value being bonus shares remaining unclaimed.

15 Certain records/ documents pertaining to production, rew materials, purchase records etc. of the Companys Assam Cotton Milts Unit were Seized by the Excise Authorities and are presently not available with the Company

16 Previous years figures have been regrouped or rearranged where considered necessary,

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