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Notes to Accounts of Sagar Cements Ltd.

Mar 31, 2022

(i) I ncludes investment of '' 254 (March 31, 2021: '' 254) on account of fair valuation of corporate guarantee given by the Company on behalf of Jajpur Cements Private Limited, a wholly-owned subsidiary.

(ii) I ncludes investment of '' 470 (March 31, 2021: '' 409) on account of fair valuation of corporate guarantee given by the Company on behalf of Sagar Cements (M) Private Limited (Formerly Known as Satguru Cement Private Limited), a subsidiary Company. Pursuant to the certificate of incorporation dated October 29, 2021, the Company''s subsidiary Satguru Cement Private Limited was renamed to Sagar Cements (M) Private Limited.

(iii) The Company has complied with number of layers prescribed under clause 87 of section 2 of the Companies Act, 2013 read with Companies (Restriction on number of layers) Rules, 2017

(iv) 15,10,972 (as at March 31, 2021: 13,37,143) number of shares held as investments in Sagar Cements (M) Private Limited (Formerly Known as Satguru Cement Private Limited) with carrying amount of '' 7,823 (as at March 31, 2021: '' 6,923) and 96,54,000 (as at March 31, 2021: 96,54,000) number of shares held as investments in Jajpur Cements Private Limited with carrying amount of '' 965 (as at March 31, 2021: '' 965) have been pledged with the lenders towards borrowings of respective subsidiaries.

(a) The Board of Directors, at their meeting held on July 01, 2021, recommended for the sub-division of equity shares of the Company from existing face value of '' 10/- each into face value of '' 2/- each (i.e. split of 1 equity share of '' 10/- each into 5 equity shares of '' 2/-each), and the same has been approved by the shareholders in the Annual General Meeting of the Company held on July 28, 2021. Accordingly, face value of the equity shares of the Company now stand at '' 2/- each w.e.f. the record date namely August 18, 2021.

Pursuant to merger of Sagar Cements (R) Limited with the Company, authorised equity share capital of '' 11,600 and authorised preference share capital of ''4,300 of Transferor Company stand transferred as authorised share capital of the Company (Refer Note 40)

(c) Rights, preferences and restrictions attached to the equity shares:

The Company has only one class of equity shares having a par value of ''2 each per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(f) There are no shares allotted as fully paid-up by way of bonus shares or allotted as fully paid-up pursuant to contract without payment being received in cash, or bought back during the period of five years immediately preceding the reporting date.

(g) There are no securities which are convertible into equity shares. In the previous year 2020-21, the Company had converted 12,25,000 warrants into equal number of equity shares. (Refer Note 44(a))

Nature of reserves:

(a) Capital reserve

This represents subsidies received from the government.

(b) Securities premium

Amounts received on issue of shares in excess of the par value has been classified as securities premium. The utilisation of securities premium is governed by the Section 52 of the Act.

(c) General reserve

This represents appropriation of profit by the Company. As per Companies Act, 2013, transfer of profits to General reserve is not mandatory. General reserve is a free reserve available to the Company.

(d) Retained earnings

Retained earnings comprises of undistributed earnings after taxes.

(e) Other items of other comprehensive income

Other items of other comprehensive income consist of re-measurement of net defined benefit liability.

(f) Money received against share warrants

This represents the moneys received against the share warrants allotted.

1. Term loan is secured by first pari passu charge on the property, plant & equipment owned by or belonging to the Company both present and future, and by second pari passu charge on the current assets of the Company and are guaranteed by Dr. S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director.

2. Term loan is secured by first pari passu charge on the property, plant and equipment owned by or belonging to the Company both present and future excluding fixed assets pertaining to grinding unit at bayyavaram and plant and equipment of Waste heat recovery power plant at mattampally , and by second charge on the current assets of the Company and are guaranteed by Dr S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director.

3. Term loan is secured by exclusive charge of all property, plant and equipment of the grinding unit at Bayyavaram both present and future and by second pari passu charge on the current assets of the Company and are guaranteed by Dr. S. Anand Reddy - Managing Director and S. Sreekanth Reddy - Joint Managing Director.

4. Term loan is secured by exclusive charge of all property, plant and equipment of the grinding unit at Bayyavaram both present and future and are guaranteed by Dr. S. Anand Reddy - Managing Director and S. Sreekanth Reddy - Joint Managing Director.

5. Term loan is secured by exclusive charge on the assets of 6.00 MW Waste heat recovery power plant, hypothecation of plant & machinery and are guaranteed by Dr. S. Anand Reddy - Managing Director and S. Sreekanth Reddy - Joint Managing Director.

6. Term loan is secured by first pari passu charge against all current assets, present and future, and by second pari passu charge on the entire property, plant and equipment of the Company including land and building, excluding Bayyavaram plant and Mattampally WHR plant and are guaranteed by Dr. S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director.

7 Term loan is secured by second pari passu charge against all current assets and property, plant and equipment of the Company, present and future, excluding vehicles purchased under hire purchase agreements and excluding property, plant and equipment pertaining to Mattampally WHR plant and 100% credit guarantee by National Credit Guarantee Trustee Company Ltd.

8. Term loan is secured by second pari passu charge on the property, plant & equipment owned by or belonging to the Company both present and future, and on the current assets of the Company and are guaranteed by Dr. S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director.

9. Term loan is secured by pari passu charge on the property, plant and equipment (including mining land) owned by or belonging to the Company, both present and future, and by a second charge on the current assets of the Company and are guaranteed by Dr. S. Anand Reddy - Managing Director and S. Sreekanth Reddy - Joint Managing Director.

10. This term loan is secured against all current assets, present and future, and by second charge on entire property, plant and equipment of the Company including land and building and are guaranteed by Dr. S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director.

11. This term loan is secured by first pari passu charge on asset to be created through proceeds of the loan and second pari passu charge on the property, plant and equipment (including mining land) owned by or belonging to the Company, both present and future, and by a second charge on the current assets of the Company and are guaranteed by National credit guarantee trustee Ltd.

12. Vehicle Loans from various banks/financial institutions are secured by the hypothecation of specific assets purchased from those loans.

13. The Company has used the borrowings for the purposes for which it was taken.

Note (ii):

1. Non-Convertible Debentures (NCD) have been issued to Investec Bank PLC-VRR 1 and Emerging India Credit Opportunities Fund I. A total of 25,000 NCD''s have been issued ('' 1 lakh each) aggregating '' 25,000. Interest payable on the NCD''s is @11.50%. The NCD''s were issued on November 20, 2021. Interest is payable at half yearly rest with effect from June 01, 2022. Repayment for the NCD''s are to be made in 5 equal half yearly instalments of '' 5,000 starting from December 01, 2022 onwards. The NCD''s are secured by first pari passu charge on the property, plant and equipment owned by or belonging to the Company both present and future excluding fixed assets pertaining to grinding unit at bayyavaram and plant and equipment of Waste heat recovery power plant at mattampally and by second charge on the current assets of the Company and are guaranteed by Dr S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director.

2. Non-Convertible Debentures (NCD) have been issued to International Finance Corporation (IFC). A total of 1,500 NCD''s have been issued ('' 10 lakhs each) aggregating '' 15,000. Interest payable on the NCD''s is @11.60%. The NCD''s were issued on March 23, 2016. Interest is payable at half yearly rest with effect from May 31, 2016. Repayment for the NCD''s are to be made in 13 equal half yearly instalments of '' 1,154 starting from May 2019 onwards. The Company has paid two instalments during the current year, six instalments were paid up to current year. The NCD''s are secured by first pari passu charge on the property, plant and equipment i.e., Land, Buildings, Plant & Machinery and Mining Equipment owned by or belonging to the borrower company both present and future, and by second charge on the current assets of the Company and are guaranteed by Dr. S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director. The Company has furnished a corporate guarantee to IDBI Trusteeship Services Limited to secure the NCD''s.

3. The Company has used the borrowings for the purposes for which it was taken.

1. The Company has availed cash credit facilities from State bank of India. This facility is secured by first pari passu charge against all current assets, present and future, and by second pari passu charge on the entire property, plant and equipment of the Company including land and building, excluding Bayyavaram plant and Mattampally WHR plant and are guaranteed by Dr. S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director. The loans are repayable on demand and carries interest @ 790% p.a. (2020-21: 7.90% p.a.to 8.85% p.a.).”

2. The Company has availed cash credit facilities from Axis Bank Limited. This facility is secured by first pari passu charge against all current assets, present and future, and by second pari passu charge on the property, plant and equipment of the Company (excluding plant and equipment of grinding unit at bayyavaram and WHR unit) and are guaranteed by Dr. S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director. The loans are repayable on demand and carries interest @ 7.60% to 770% p.a. (2020-21: 770% p.a.to 8.40% p.a.).

3. The Company has availed cash credit facilities from HDFC Bank Limited. This facility is secured by first pari passu charge against all current assets, present and future, and by second pari passu charge on the property, plant and equipment of the Company including land and building (excluding plant and equipment of grinding unit at bayyavaram and WHR unit), and post dated cheques aggregating '' 1,000 from any working capital banker and are guaranteed by S. Sreekanth Reddy, Joint Managing Director. The loans are repayable on demand and carries interest @ 720% p.a. to 790% p.a. (2020-21: 7.90% p.a. to 8.40% p.a.).

4. The Company has availed cash credit facilities from State Bank of India. This facility is secured by first pari passu charge against all current assets, present and future, and by second pari passu charge on entire property, plant and equipment of the Company including land and building and are guaranteed by Dr.

S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director. The loans are repayable on demand and carries interest @ 7.90% p.a. (2020-21: 790% p.a to 9.80% p.a.).

5. The Company has availed cash credit facilities from The Federal Bank Limited. This facility is secured by first pari passu charge against all current assets, present and future, and by second pari passu charge on property, plant and equipment (movable and immovable, including mining land) of the Company, present and future, and are guaranteed by Dr. S. Anand Reddy, Managing Director and S. Sreekanth Reddy, Joint Managing Director. The loans are repayable on demand and carries interest @ 7.90% p.a. (2020-21: 790% p.a to 8.95% p.a.).

6. The Company has used the borrowings for the purposes for which it was taken.

7 The quarterly returns of current assets filed by the Company with banks are in agreement with the books of account.

The Finance Minister of Government of India had announced, in the budget for the year 2010-11, imposition of clean energy cess as a duty of excise on coal, lignite and peat. This came into force with effect from July 01, 2010. As advised by the legal experts, the Company took CENVAT credit pertaining to clean energy cess on coal for an amount of '' 1,612 (As at March 31, 2021: '' 1,612) from July 2010 to March 2016. The Department of Central Excise issued an order and asked to reverse the amount on the ground that the clean energy cess is not specified tax for input CENVAT credit, thus the credit availed on cess is irregular. Based on department’s order, the amount of '' 1,601 was reversed, but under protest. The balance of '' 11 pertains to the penalty imposed by the department and disclosed in contingent liabilities under indirect taxes. As at March 31, 2022, the matter is pending before the central excise department and pending resolution, CENVAT credit has not been availed by the Company.

iii) The Honourable Supreme Court, has passed a decision on February 28, 2019 in relation to inclusion of certain allowances in “Basic wages” for the purpose of determining contribution to provident fund under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. The Company is awaiting further clarifications from the judiciary/department in this matter in order to reasonably assess the impact on its financial statements, if any. Accordingly, the applicability of the judgement to the Company, with respect to the period and the nature of allowances to be covered, and resultant impact on the past provident fund liability, cannot be reasonably ascertained, as till the date of approval of these financial statements.

31. Financial Instruments:

The significant accounting policies, including the criteria for recognition, the basis for 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 1(b) (xvii) to the financial statements.

A. Capital Management

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balances. The capital structure of the Company consists of net debt (borrowings as detailed in Notes 15 offset by cash and bank balances) and total equity of the Company. The Company is not subject to any externally imposed capital requirements. The Company’s management reviews the capital structure of the Company on monthly basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital.

C. Financial risk management objectives:

The Company’s corporate finance function monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (includes interest rate risk), credit risk and liquidity risk. The Company seeks to minimise the effects of these risks through continuous monitoring on day to day basis. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The corporate finance function reports monthly to the Company’s management which monitors risks and policies implemented to mitigate risk exposures.

D. Market risk:

The Company’s activities expose it primarily to the financial risk of changes in interest rates. The Company seeks to minimise the effect of this risk through continuous monitoring and take appropriate steps to mitigate the aforesaid risk.

Interest rate risk management:

The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.

Interest rate sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company’s Profit for the year ended March 31, 2022 would decrease/increase by '' 445 (for the year ended March 31, 2021: decrease/ increase by '' 200). This is mainly attributable to the Company’s exposure to interest rates on its variable rate borrowings.

Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss and other comprehensive income and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the respective entities. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar against the functional currencies of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. There are no outstanding derivative instruments at the end of the current financial year.

E. Credit risk management:

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The Company does not have significant credit risk exposure to any single counterparty. Concentration of credit risk to any counterparty did not exceed 5% of gross monetary assets.

In addition, the Company is exposed to credit risk in relation to financial guarantees given to banks by the Company on behalf of its subsidiary. The Company’s maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on (Refer Note 29(b)). The credit risk on cash and bank balances, derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

F. Liquidity risk management:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. Also, the Company has unutilised credit limits with banks. The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended March 31, 2022 and March 31, 2021. Cash flow from operating activities provides the funds to service the financial liabilities on a day to day basis.

The Company regularly maintains the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest-bearing short-term deposits with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

33. Employee benefits:

The employee benefit schemes are as under:

(i) Defined contribution plan:

Provident Fund

The Company makes provident fund contributions which are defined contribution plans for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the Fund administered and managed by the Government of India. The Company’s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. Total expense recognised during the year aggregated '' 337 (2020-21: '' 313).

Superannuation Fund

Few directors receive benefit under a Superannuation scheme which is a defined contribution scheme wherein the director has an option to choose the percentage of contribution in between 5% to 15% of the basic salary of the covered employee. These contributions are made to a fund administrated by Life Insurance Corporation of India. The Company’s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. Total expense recognised during the year aggregated '' 41 (2020-21: '' 34).

Employee State Insurance

The Company makes employee state insurance contributions which are defined contribution plans for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the funds administered and managed by the Government of India. The Company’s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. The total expense recognised during the year aggregated '' 4 (2020-21: '' 3).

(ii) Defined benefit plan:

Gratuity:

In accordance with the ‘Payment of Gratuity Act, 1972’ of India, the Company provides for gratuity, a defined retirement benefit plan (the ‘Gratuity Plan’) covering eligible employees. Liabilities with regard to such gratuity plan are determined by an independent actuarial valuation and are charged to the Statement of Profit and Loss in the period determined. The gratuity plan is administered by Life Insurance Corporation of India.

The following table sets out the funded status of the gratuity plan and the amounts recognised in the Company’s financial statements as per actuarial valuation as at March 31, 2022 and March 31, 2021:

Compensated absences:

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the period-end. The value of such leave balance eligible for carry forward, is determined by an independent actuarial valuation and charged to the Statement of Profit and Loss in the period determined.

35. Operating Lease

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Operating lease commitments

The Company’s lease asset classes primarily consist of leases for buildings. The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate.

The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.

39. Dividend

The final dividend on shares is recorded as a liability on the date of approval by the shareholders and interim dividend is recorded as liability on the date of declaration by the Company’s Board of Directors.

The Company declares and pays dividend in Indian rupees. Companies are required to pay/distribute dividend after deducting applicable withholding income taxes.

The Board of Directors at their meeting held on May 11, 2022, recommended a dividend of '' 0.70 per equity share of '' 2 each (35%) on the 13,07,07,548 equity shares of the Company. This payment is subject to approval of the shareholders in the upcoming Annual general meeting and if approved would result in the net cash outflow of approximately '' 915.

Effective from April 01, 2020: Dividends will be taxed in the hands of recipient, hence there will be no liability in the hands of Company.

40. On July 12, 2021, the Company had filed a Scheme of Amalgamation under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 for the merger of Sagar Cements (R) Limited (SCRL) (Transferor Company), a wholly-owned subsidiary, with the Company (Transferee Company) with an appointed date of March 30, 2021. The scheme as approved by various regulatory authorities was sanctioned by Hyderabad bench of National Company Law Tribunal (NCLT) on March 15, 2022. The transaction being a common control business combination, merger accounting has been done under the Pooling of Interest Method in accordance with Ind AS 103 - Business combination. Accordingly, the assets and liabilities are reflected in the books of the Company at their respective carrying amounts and prior period amounts have been restated as if the business combination had occurred from the beginning of the preceding period.

41. The Board of Directors at their meeting held on January 28, 2022, approved a proposal to merge its wholly-owned subsidiary “Jajpur Cements Private Limited” with the Company subject to necessary regulatory approvals to be obtained in due course.

42. In the Extra-ordinary General meeting held on April 23, 2022, the shareholders approved the issuance of 1,32,07,548 equity shares at a price of '' 265/- per share, (including premium of '' 263/- per share) on a preferential basis to PI Opportunities Fund -1 Scheme II. Consequently, the Securities Allotment Committee of the Board of Directors allotted the said shares on May 07, 2022. Pursuant to the above allotment, the paid-up equity share capital of the Company increased from '' 2,350/- to '' 2,614/-, divided into 13,07,07,548 equity shares of '' 2/- each.

44. (a) Warrants and proceeds

During the year ended March 31, 2019, the Company made a preferential allotment of 31,00,000 convertible warrants of '' 730 each to promoter and non-promoter entities on January 24, 2019 and received 25% of the consideration of '' 5,658 upon allotment of such warrants. The objective of raising funds through preferential allotment was to invest in Sagar Cements (M) Private Limited (SCMPL) (Formerly known as Satguru Cement Private Limited) and Jajpur Cements Private Limited (JCPL) for setting up a green field integrated cement plant of 1 million MT per annum capacity along with a provision for Waste Heat Recovery power plant at Indore and for setting up of a cement grinding plant of 1.5 million MT per annum at Odisha respectively and for other general corporate purposes.

During the previous year, the warrant holders opted to convert 12,25,000 (March 31, 2020: 18,75,000) warrants to equal number of equity shares and basis of this 75% of the consideration against warrants as converted of '' 6,706 (March 31, 2020: '' 10,266) was received. The entire amount was utilised for the purposes for which funds were raised. With the said conversion, there are no more outstanding warrants requiring further conversion into equity shares.

(b) Investment in subsidiaries

The Company acquired 100% equity stake in JCPL on May 02, 2019 for a consideration of '' 450 and subsequently infused '' 3,450 as additional equity into JCPL. During the year ended March 31, 2021, the Company had infused an amount of '' 4,325 as additional equity into JCPL. Further, the Company has infused an amount of '' 2,575 as additional equity into JCPL during the year ended March 31, 2022.

During the year ended March 31, 2020, the Company had invested an amount of '' 15,000 in SCMPL on May 08, 2019, for acquiring 28,97,143 equity shares (face value of '' 10 each at a premium of '' 507.75) allotted to the Company on preferential basis, which constitutes 65% equity stake in SCMPL. Of the said investment, the Company has disbursed '' 8,900 and the balance amount of '' 6,100 has been disbursed in the year ended March 31, 2021. Further, the Company has subscribed for 3,76,630 shares issued by the SCMPL on preferential basis for an amount of '' 1,949 during the year ended March 31, 2022.

45. On March 24, 2021, the Ministry of Corporate Affairs (MCA) through notification, amended Schedule III of the Companies Act, 2013, applicable for financial periods commencing from April 01, 2021. Pursuant to such amendments, current maturities of long-term borrowings of '' 6,628 as at March 31, 2021 in the financial statements have been reclassified from ‘Other current financial liabilities’ to ‘Short term borrowings’.

1. During the Financial Year ended March 31, 2022, there had been a significant increase in the power and fuel expenses when compared to the previous financial year, this impacted the operating margins, resulting into variations in ratios as reported above.

2. During the Financial Year ended March 31, 2022, the Company had taken loan for inorganic and organic growth, this resulted into variations in ratios as reported above.

3. Company had made investments in subsidiaries, as the subsidiary companies has commenced its operations during the year, the return on investment is reflected as Nil.

48. I n accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.

49. The Code on Social Security, 2020 (“Code”) relating to employee benefits during employment and post-employment benefits received presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

50. COVID-19 is the infectious disease caused by the coronavirus, SARS-CoV-2. In March 2020, the WHO declared COVlD-19 a pandemic. The Company has adopted measures to curb the spread of infection in order to protect the health of the employees and ensure business continuity with minimal disruption. The Company has considered internal and certain external sources of information, including economic forecasts and industry reports, up to the date of approval of the financial results in determining the possible effects on the carrying amounts of Investments made in the subsidiaries, goodwill, Inventories, receivables and other current assets, that may result from the COVID-19 pandemic. The impact of the global health pandemic may be different from that of estimated as at the date of approval of these financial statements and the Company will continue to closely monitor any material changes to future economic conditions.

51. Other statutory information

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

(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

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

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

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

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

(v) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

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

52. These financial statements were approved by the Company’s Board of Directors on May 11, 2022.


Mar 31, 2018

1. The term loan from the bank is secured by pari-passu charge on the property, plant & equipment i.e., land, buildings, plant & machinery and mining equipment owned by or belonging to the Company both present and future, and by second charge on the current assets of the Company and are guaranteed by S. Veera Reddy, Managing Director, Dr. S. Anand Reddy, Joint Managing Director and S. Sreekanth Reddy, Executive Director.

2. The term loan was secured by pari-passu charge on the property, plant and equipment i.e., land, buildings, plant and machinery and mining equipment owned by or belonging to the borrower company both present and future, and by second charge on the current assets of the company and are guaranteed by Dr S. Anand Reddy, Joint Managing Director and S. Sreekanth Reddy, Executive Director.

3. The term loan from the bank is secured by exclusive charge of all property, plant and equipment of the grinding unit at Bayyavaram near Vishakhapatnam, Andhra Pradesh both present and future and second pari-passu charge on current assets of the Company, both present and future and is guaranteed by Dr. S. Anand Reddy - Joint Managing Director and S. Sreekanth Reddy - Executive Director.

4. The term loan from the bank is secured by exclusive charge on the assets of 6.00 MW Waste heat recovery power plant, hypothecation of plant & machinery and is guaranteed by S.Veera Reddy - Managing Director, Dr. S. Anand Reddy - Joint Managing Director and S. Sreekanth Reddy - Executive Director.

5. Vehicle Loans from various banks/financial institutions are secured by the hypothecation of specific assets purchased from those loans.

Note: The Company has availed cash credit facilities from Banks. This facility is secured against stocks of raw materials, finished goods, trade receivables, stores and spares, present and future, and by second charges on property, plant and equipment of the Company and are guaranteed by S. Veera Reddy, Managing Director, Dr. S. Anand Reddy, Joint Managing Director and S. Sreekanth Reddy, Executive Director. The loans are repayable on demand and carries interest @ 7.65% p.a. to 13.20% p.a. (2016-17: 12.5% p.a to 13.25% p.a)

28. Contingent liabilities, corporate guarantees and capital commitments

a) Contingent Liabilities:

Based on legal opinion/advice obtained, no financial implication to the Company with respect to the following cases is perceived as on the Balance Sheet date:

ii) The Finance Minister of Government of India has announced in the budget for the year 2010-11, imposition of clean energy cess as a duty of excise on coal, lignite and peat. This came into force with effect from July 1, 2010. As advised by the legal experts, the Company took CENVAT credit pertaining to clean energy cess on coal for an amount of Rs, 834 (As at March 31, 2017: Rs, 834) from July 2010 to March 2016. The Department of Central Excise issued an order and asked to reverse the amount on the ground that the clean energy cess is not specified tax for input CENVAT credit, thus the credit availed on cess is irregular. Based on departmentRs,s order, the amount of Rs, 823 was reversed, but under protest. The balance of Rs, 11 pertains to the penalty imposed by the department and disclosed in contingent liabilities under indirect taxes. The matter is pending before the Department. Credit will be taken again once the issue is settled in favour of the Company.

b) Corporate Guarantees:

The Company furnished a corporate guarantee of Rs, 15,000 to IDBI Trusteeship Services Limited to secure the 1,500 Non-Convertible Debentures (Rs, 10 lakhs each) aggregating to Rs, 15,000 (2016-17: Rs, 15,000) issued by its wholly-owned subsidiary, Sagar Cements (R) Limited, to International Finance Corporation and a further guarantee to secure the credit facilities aggregating Rs, 6,000 (2016-17: Rs, 14,900) availed by the said subsidiary from its lenders.

30. Financial Instruments:

The significant accounting policies, including the criteria for recognition, the basis for 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 1(b)(xiv) to the financial statements.

A. Capital Management

The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity balances. The capital structure of the Company consists of net debt (borrowings as detailed in Notes 14 and 15 offset by cash and bank balances) and total equity of the Company. The Company is not subject to any externally imposed capital requirements. The Company''s management reviews the capital structure of the Company on monthly basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital.

Note: Debt is defined as current and non-current borrowings as described in Notes 14 and 15.

There are no financial assets and financial liabilities measured at fair value through profit and loss.

C. Fair value hierarchy

Valuation technique and key inputs

Level 1 - Quoted prices (unadjusted) in an active markets for identical assets or liabilities.

Level 2 - 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).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

Quantitative disclosures of fair value measurement hierarchy for financial instruments:

There have been no transfers among Level 1, Level 2 and Level 3 during the year.

The fair values of the unquoted equity shares had been estimated using a DCF model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, earnings growth, discount rate, and probabilities of the various estimates within the range used in management''s estimate of fair value for these unquoted equity investments. During the current year, the Company sold the above unquoted equity shares.

Valuation inputs and relationships to fair value:

The following table summarizes the quantitative information about the significant unobservable inputs used in Level 3 fair value measurements, being investments in unquoted equity shares:

D. Financial risk management objectives:

The Company''s corporate finance function monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (includes interest rate risk), credit risk and liquidity risk. The Company seeks to minimize the effects of these risks through continuous monitoring on day to day basis. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The corporate finance function reports monthly to the Company''s management which monitors risks and policies implemented to mitigate risk exposures.

i) Market risk:

The Company''s activities expose it primarily to the financial risk of changes in interest rates. The Company seeks to minimize the effect of this risk through continuous monitoring and take appropriate steps to mitigate the aforesaid risk.

Interest rate risk management:

The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.

Interest rate sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates. If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company''s Profit for the year ended March 31, 2018 would decrease/increase by '' 131 (for the year ended March 31, 2017: decrease/increase by '' 116). This is mainly attributable to the company''s exposure to interest rates on its variable rate borrowings.

ii) Credit risk management:

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. On-going credit evaluation is performed on the financial condition of accounts receivable.

The Company does not have significant credit risk exposure to any single counterparty. Concentration of credit risk to any counterparty did not exceed 5% of gross monetary assets at any time during the year.

In addition, the Company is exposed to credit risk in relation to financial guarantees given to banks by the Company on behalf of its subsidiary. The Company''s maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on (Refer Note 28).

F. The Company does not have any derivative instruments or unhedged foreign currency exposures as on the balance sheet date.

5. Employee benefits:

The employee benefit schemes are as under:

(i) Defined contribution plan:

Provident Fund

The Company makes provident fund contributions which are defined contribution plans for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the Fund administered and managed by the Government of India. The Company''s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. Total expense recognized during the year aggregated '' 196 (2016-17: '' 156).

Superannuation Fund

Few directors receive benefit under a Superannuation scheme which is a defined contribution scheme wherein the director has an option to choose the percentage of contribution in between 5% to 15% of the basic salary of the covered employee. These contributions are made to a fund administrated by Life Insurance Corporation of India. The Company''s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. Total expense recognized during the year aggregated '' 34 (2016-17: '' 48).

Employee State Insurance

The Company makes employee state insurance contributions which are defined contribution plans for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the funds administered and managed by the Government of India. The company''s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. The total expense recognized during the year aggregated '' 10 (2016-17: '' 10).

(ii) Defined benefit plan:

Gratuity:

In accordance with the ''Payment of Gratuity Act, 1972'' of India, the Company provides for gratuity, a defined retirement benefit plan (the ''Gratuity Plan'') covering eligible employees. Liabilities with regard to such gratuity plan are determined by an independent actuarial valuation and are charged to the Statement of Profit and Loss in the period determined. The gratuity plan is administered by Life Insurance Corporation of India.

The following table sets out the Defined Benefit Plan - as per actuarial valuation as at March 31, 2018 and March 31, 2017:

f) Sensitivity Analysis:

Sensitivity to significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of the defined benefit obligation by one percentage, keeping all other actuarial assumptions constant.

Compensated absences:

The accrual for unutilized leave is determined for the entire available leave balance standing to the credit of the employees at the period-end. The value of such leave balance eligible for carry forward, is determined by an independent actuarial valuation and charged to the statement of profit and loss in the period determined.

The Company has made provision for compensated absences based on the actuarial valuation for the financial year 2017-18, consequent to change in leave policy during the year.

6. The Company is exclusively engaged in the business of cement and cement related products. As per Ind AS 108"Operating Segments", specified under Section 133 of the Companies Act, 2013, there are no reportable business and geographical segment applicable to the Company.

7. Related Party Disclosure:

The list of related parties of the Company is given below:

Name Relationship

Sagar Cements (R) Limited Subsidiary Company

Key managerial personnel (KMP):

Name Relationship

Swaminatha Reddy Onteddu Chairman of the Board of Directors

S. Veera Reddy Managing Director (MD)

Dr. S. Anand Reddy Joint Managing Director (JMD)

S.Sreekanth Reddy Executive Director (ED)

Kolappa Thanu Pillai Director

T.Nagesh Reddy Nominee Director

Valliyur Hariharan Ramakrishnan Director

Rachana Sammidi Director

John Eric Fernand Pascal Cesar Bertrand Director

K.Prasad Chief Financial Officer (CFO)

R.Soundararajan Company Secretary (CS)

Relatives of KMP:

Name Relationship

S. Vanajatha Wife of Shri S. Veera Reddy

Panchavati Polyfibres Limited Enterprise where KMP along with their relatives exercise significant

influence

Sagar Power Limited Enterprise where KMP along with their relatives exercise significant

influence

RV Consulting Services Private Limited Enterprise where KMP along with their relatives exercise significant

influence

Sagarsoft (India) Limited Enterprise where KMP along with their relatives exercise significant

influence

8. Operating Lease

The Company has taken various residential premises, office premises and warehouses under operating lease agreements. These are generally cancellable and are renewable by mutual consent on mutually agreed terms. The operating lease expense recognized in the Statement of Profit and Loss aggregate Rs, 176 (2016-17 Rs, 174)

9. Corporate Social Responsibility (CSR) activities:

As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed by the Company. A company meeting the applicability threshold of this section needs to spend at least 2% of its average net profit for the immediately preceding three financial years on CSR activities. The areas for CSR activities are promoting sports, education, adoption of schools, medical and other social projects. All these activities have been covered under Schedule VII to the Companies Act, 2013. The Company has spent an amount of Rs, 95 (Previous year Rs, 47) towards CSR activities based on the recommendations of CSR Committee constituted by the Board. Expenses incurred on CSR activities are charged to the Statement of Profit and Loss under Other Expense.

10. The Company has certain mining leases granted by the Government for limestone mining in Pedaveedu Village, Mattampally up to August 17, 2024.

39. During the year 2016-17, the Company raised amounts of Rs, 4,896 and Rs, 17,280 through preferential issue of equity shares and Qualified Institutional Placement (QIP) issue respectively. The objective of raising funds through preferential and QIP issue was to meet the capital expenditure requirements for expansion of the grinding unit in Bayyavaram to 1.5 million MT and to setting up a coal based captive power unit of 18 MW capacity at its plant in Matampally, Nalgonda District, for other general corporate purposes and any other purposes as may be permissible under applicable law. A part of the amount was used for the purpose for which it was raised and the balance amount is invested in fixed deposits pending utilization, as at March 31, 2018 and March 31, 2017.

11. Dividends

The Board of Directors declared and paid an interim dividend of Rs, 2.50 per equity share (25%) on 2,04,00,000 equity shares of face value of Rs, 10 each during the year. Further, a final dividend of Rs, 1.50 (2016-17: Rs, 1.50) per equity share (15%) for the year 2017-18 on May 29, 2018 has been recommended by the Board of Directors, subject to the approval of shareholders at the Annual General Meeting. The dividends declared by the Company are based on the profits available for distribution as reported in the financial statements of the Company.

12. The Government of India introduced the Goods and Services Tax (GST) with effect from July 01, 2017. Accordingly, in compliance with Indian Accounting Standards (Ind AS) 18- ''Revenue'', Revenue from operations for the year ended March 31, 2018 is net of GST. For the year ended March 31, 2017, Revenue from operations includes excise duty which is now subsumed in GST.

13. These financial statements were approved by the Company''s Board of Directors on May 29, 2018.

14. Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification/ disclosures.


Mar 31, 2017

Notes

1 Under Indian GAAP, dividends on equity shares recommended by the Board of Directors after the end of the reporting period but before the financial statements were approved for issue were recognized in the financial statements as a liability. Under Ind AS, such dividends along with the dividend distribution tax thereon are recognized as a liability when declared/ approved by the members in a general meeting. This has resulted in increase in equity as on April 1, 2015 by Rs, 523.

2 Under Indian GAAP, transaction costs incurred in connection with borrowings are charged upfront to the statement of profit and loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to the statement of profit and loss using the effective interest method. This has resulted in an increase in equity to Rs, 63 as on April 1, 2015; Rs, 50 as on March 31, 2016 and decrease in profit for the year ended March 31, 2016 by Rs, 12.

3 Under previous GAAP, non-current investments were measured at cost less diminution in value which is other than temporary. Under Ind AS, these financial assets have been classified as FVTOCI. On the date of transition to Ind AS, these financial assets have been measured at their fair value which is higher than the cost as per previous GAAP, resulting in an increase in equity to Rs, 12 as at April 1, 2015; Rs, 24 as at March 31, 2016 and increase in total comprehensive income for the year ended March 31, 2016 by Rs, 12.

4 Under Ind AS, financial guarantee contracts are accounted as financial liabilities and measured at fair value at inception and subsequently measured at the higher of the amortized value or the obligation amount in case it is probable that the guarantee amount is payable. Under Indian GAAP, guarantee issued were not recognized in the Balance Sheet unless it is probable that the guarantee amount is payable. This has resulted in an increase in equity to Rs, 4 as at March 31, 2016; Rs, Nil as at April 1, 2015 and increase in profit by Rs, 4 during the year ended March 31, 2016.

5 Under previous GAAP, actuarial gains and losses were recognized in profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined liability/asset which is recognized in other comprehensive income. Consequently, the tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of the statement of profit and loss. The actuarial loss for the year ended March 31, 2016 were Rs, 63 and the tax effect thereon is Rs, 22. This does not affect total equity or total comprehensive income, but there is a decrease in profit before tax of Rs, 63, and in total profit of Rs, 41 for the year ended March 31, 2016.

6 Under Ind AS, the cost of an item of property, plant and equipment includes the initial estimate of the costs of restoring the site. Accordingly, the cost has been estimated and liability is set up for restoring the mining land. The cost is depreciated over the period of usage of the land. This has resulted in decrease in equity and profit by Rs, 9 as at and for the year ended March 31, 2016.

7 Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income, expense, gain and losses are required to be presented in other comprehensive income.

8 Under previous GAAP, revenue from sale of products was presented net of excise duty under revenue from operations. Whereas, under Ind AS, revenue from sale of products includes excise duty. The corresponding excise duty expense is presented separately on the face of the statement of profit and loss. The change does not affect total equity as at April 1, 2015 and March 31, 2016, profit before tax or total profit for the year ended March 31, 2016.

Notes

1 With effect from March 28, 2017, the name of the wholly-owned subsidiary BMM Cements Limited has been changed to Sagar Cements (R) Limited.

2 Includes investment of Rs, 401 (March 31, 2016: Rs, 401 and April 1, 2015: Nil) on account of fair valuation of corporate guarantee given by the company on behalf of Sagar Cements (R) Limited, a wholly-owned subsidiary.

3 During the year 2016-17, the company converted the outstanding loan balance of Rs, 17,200 given to its wholly owned subsidiary Sagar Cements (R) Limited to 43,000,000 8% cumulative redeemable preference shares of Rs, 10 each at a premium of Rs, 30 each. At initial recognition, the preference shares are measured at fair value. The difference between the fair value at initial recognition and the transaction price is accounted as deemed capital contribution to the subsidiary company. Accordingly, Rs, 6,866 is accounted as the fair value of the preference shares and Rs, 10,334 is accounted as deemed investment on conversion of loan to preference shares at concessional rate and added to the cost of investment in the subsidiary. As at March 31, 2017 Rs, 340 has been accounted as interest income in the preference shares and added to the cost of preference shares.

(b) Rights, preferences and restrictions attached to the equity shares:

The Company has only one class of equity shares having a par value of Rs, 10 per share. Each holder of Equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the holders of Equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity shares held by the shareholders.

Nature of reserves

(a) General reserve

This represents appropriation of profit by the company

(b) Securities premium account

Amounts received on issue of shares in excess of the par value has been classified as securities premium. (c ) Retained earnings

Retained earnings comprises of prior years undistributed earnings after taxes.

(c) Capital reserve

This represents subsidies received from the government.

Note 1: The term loans from the bank is secured by pari-passu charge on the property, plant & equipment i.e., land, buildings, plant & machinery and mining equipment owned by or belonging to the Company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri

S. Veera Reddy, Managing Director, Dr. S. Anand Reddy, Joint Managing Director and Shri S. Sreekanth Reddy, Executive Director.

Note 2: The term loan was secured by pari-passu charge on the property, plant and equipment i.e., land, buildings, plant and machinery and mining equipment owned by or belonging to the borrower company both present and future, and by second charge on the current assets of the company and are guaranteed by Dr

S. Anand Reddy, Joint Managing Director and Shri S. Sreekanth Reddy, Executive Director.

Note 3: The term loan from other parties was secured by pari-passu charge on the property, plant and equipment

i.e., land, buildings, plant & machinery and mining equipment owned by or belonging to the borrower company both present and future, and by second charge on the current assets of the company.

Note 4: The term loan from the bank is secured by exclusive charge of all property, plant and equipment of the grinding unit at Bayyavaram near Vishakhapatnam, Andhra Pradesh both present and future and second pari-passu charge on current assets of the company, both present and future and is guaranteed by Dr. S. Anand Reddy - Joint Managing Director and Shri S. Sreekanth Reddy - Executive Director.

Note 5: The term loan from the bank is secured by exclusive charge on the assets of 6.00 MW Waste heat recovery power plant, hypothecation of plant & machinery and is guaranteed by Shri S.Veera Reddy - Managing Director, Dr. S. Anand Reddy -Joint managing director and Shri S. Sreekanth Reddy - Executive Director.

Note 6: Vehicle Loans from various banks/financial institutions are secured by the hypothecation of specific assets purchased from those loans.

Note 7: Deferred payment liability represents deferred sales tax loan which is interest free and is repayable at the end of the 14th year from the year of deferment.

Note: The Company has availed cash credit facilities from Banks. This facility is secured against stocks of raw materials, finished goods, trade receivables, stores and spares, present and future, and by second charges on property, plant and equipment of the company and are guaranteed by Shri S. Veera Reddy, Managing Director, Dr. S. Anand Reddy, Joint Managing Director and Shri S. Sreekanth Reddy, Executive Director. The Loans are repayable on demand and carries interest @ 12.15% p.a. to 13.25% p.a.

ii) APTRANSCO had raised a demand of Rs, 2,371, on account of Fuel Surcharge Adjustment (FSA) relating to earlier years. Out of which, the company had paid an amount of Rs, 2,137 up to March 31, 2016. The company had filed a writ petition with the High Court of Telangana and Andhra Pradesh. During the year ended March 31, 2017, the company has settled the balance amount based on Supreme Court ruling.

iii) The Finance Minister of Government of India has announced in the budget for the year 2010-11, imposition of clean energy cess as a duty of excise on coal, lignite and peat. This came into force with effect from July 1, 2010. As advised by the legal experts, the company took CENVAT credit pertaining to clean energy cess on coal for an amount of Rs, 834 (As at March 31, 2016: Rs, 530; April 1, 2015: 519) from July 2010 to March 2016. The Department of Central excise issued an order and asked to reverse the amount on the ground that the clean energy cess is not specified tax for input CENVAT credit, thus the credit availed on cess is irregular. Based on department''s order the amount of Rs, 823 was reversed, but under protest. The balance of Rs, 11 pertains to the penalty imposed by the department and disclosed in contingent liabilities under indirect taxes. The matter is pending before the Department. Credit will be taken again once the issue is settled in favour of the company.

b) Corporate Guarantees:

The Company has furnished a corporate guarantee of Rs,15,000 to IDBI Trusteeship Services Limited to secure the 1,500 Non-Convertible Debentures of Rs, 10 each aggregating to Rs, 15,000 issued by its wholly owned subsidiary, Sagar Cements (R) Limited to International Finance Corporation and a further guarantee to secure the credit facilities aggregating Rs, 14,900 availed by the said subsidiary from its lenders.

8. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006:

Dues to Micro, Small and Medium Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors. The amount of dues payable to micro, small and medium enterprises are as follows:

The significant accounting policies, including the criteria for recognition, the basis for 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 1(b)(xiv) to the financial statements.

A. Capital Management

The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity balances.

The capital structure of the company consists of net debt (borrowings as detailed in notes 14 and 15 offset by cash and bank balances) and total equity of the Company.

The company is not subject to any externally imposed capital requirements.

The Company''s management reviews the capital structure of the company on monthly basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital.

Note: Debt is defined as current and non-current borrowings (including interest accrued), as described in notes 14 and 15.

C. Fair value hierarchy

Valuation technique and key inputs

Level 1 - Quoted prices (unadjusted) in an active markets for identical assets or liabilities.

Level 2 - 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).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

There have been no transfers among Level 1, Level 2 and Level 3 during the year.

The fair values of the unquoted equity shares have been estimated using a DCF model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, earnings growth, discount rate, and probabilities of the various estimates within the range used in management''s estimate of fair value for these unquoted equity investments.

The company''s corporate finance function monitors and manages the financial risks relating to the operations of the company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (includes interest rate risk), credit risk and liquidity risk.

The company seeks to minimize the effects of these risks through continuous monitoring on day to day basis. The company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The corporate finance function reports monthly to the company''s management which monitors risks and policies implemented to mitigate risk exposures.

i) Market risk:

The company''s activities expose it primarily to the financial risk of changes in interest rates. The company seeks to minimize the effect of this risk through continuous monitoring and take appropriate steps to mitigate the aforesaid risk.

a) Interest rate risk management:

The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the company by maintaining an appropriate mix between fixed and floating rate borrowings.

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company''s Profit for the year ended March 31, 2017 would decrease/increase by '' 116 (for the year ended March 31, 2016: decrease/increase by '' 90). This is mainly attributable to the company''s exposure to interest rates on its variable rate borrowings.

ii) Credit risk management:

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the company. The company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

The company does not have significant credit risk exposure to any single counterparty. Concentration of credit risk to any counterparty did not exceed 5% of gross monetary assets at any time during the year.

In addition, the company is exposed to credit risk in relation to financial guarantees given to banks by the company on behalf of its subsidiary. The company''s maximum exposure in this respect is the maximum amount the company could have to pay if the guarantee is called on (see note 28).

10. Employee benefits:

The employee benefit schemes are as under:

(i) Defined contribution plan:

Provident Fund

The Company makes provident fund contributions which are defined contribution plans for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the Fund administered and managed by the Government of India. The Company''s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. Total expense recognized during the year aggregated Rs,156 (2015-16 - Rs, 138).

Superannuation Fund

Few directors receive benefit under a Superannuation scheme which is a defined contribution scheme wherein the director has an option to choose the percentage of contribution in between 5% to 15% of the basic salary of the covered employee. These contributions are made to a fund administrated by Life Insurance Corporation of India. The Company''s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. Total expense recognized during the year aggregated Rs, 48 (2015-16 - Rs, 37).

Employee State Insurance

The Company makes employee state insurance contributions which are defined contribution plans for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the funds administered and managed by the Government of India. The company''s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. The total expense recognized during the year aggregated to Rs, 10 (2015-16 - Rs, 5).

(ii) Defined benefit plan:

Gratuity:

In accordance with the ''Payment of Gratuity Act, 1972'' of India, the Company provides for gratuity, a defined retirement benefit plan (the ''Gratuity Plan'') covering eligible employees. Liabilities with regard to such gratuity plan are determined by an independent actuarial valuation and are charged to the Statement of Profit and Loss in the period determined. The gratuity plan is administered by Life Insurance Corporation of India.

11. Corporate Social Responsibility (CSR) activities:

As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed by the Company. A company meeting the applicability threshold of this section needs to spend at least 2% of its average net profit for the immediately preceding three financial years on CSR activities. The areas for CSR activities are promoting sports, education, adoption of schools, medical and other social projects. All these activities have been covered under Schedule VII to the Companies Act, 2013. The Company has spent an amount of '' 47 (Previous year '' 36) towards CSR activities based on the recommendations of CSR Committee constituted by the Board. Expenses incurred on CSR activities are charged to the Statement of Profit and Loss under other expense.

12. Depreciation

During the year ended March 31, 2016, pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013 relating to componentization of fixed assets, the Company has adjusted an amount of '' 735 (net of deferred tax of '' 389) against the opening surplus balance in the Statement of Profit and Loss under Reserves and Surplus.

13. Details on acquisition of Sagar Cements (R) Limited

The Company entered into a Share Purchase Agreement (''SPA'') on November 5, 2014, with the shareholders of Sagar Cements (R) Limited (''formerly known as BMM Cements Limited''). On August 27, 2015, the Company acquired the entire shareholding of Sagar Cements (R) Limited for a purchase consideration of Rs, 7,818 and consequently Sagar Cements (R) Limited has become a wholly owned subsidiary of the company.

14. The Company has certain mining leases granted by the Government for limestone mining in Pedaveedu Village, Mattampally up to August 17, 2024.

15. The Company has raised amounts of Rs, 4,896 and Rs, 17,280 through preferential issue of equity shares and Qualified Institutional Placement (QIP) issue respectively. The objective of raising funds through preferential and QIP issue was to meet the capital expenditure requirements for expansion of the grinding unit in Bayyavaram to 1.5 million MT and to setting up a coal based captive power unit of 18 MW capacity at its plant in Matampally, Nalgonda District, for other general corporate purposes and any other purposes as may be permissible under applicable law. A part of the amount was used for the purpose for which it was raised and the balance amount is invested in fixed deposit pending utilization.

16. Dividends

The Board of Directors have recommended a dividend of Rs, 1.50 per share (15%) on 2,040 equity shares of face value of Rs, 10 each for the year 2016-17 on May 29, 2017 subject to the approval of shareholders at the Annual General Meeting. The dividends declared by the Company are based on the profits available for distribution as reported in the financial statements of the Company.


Mar 31, 2016

(b) Rights, preferences and restrictions attached to the equity shares:

The Company has only one class of equity shares having a par value of '' 10 per share. Each holder of Equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the holders of Equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity shares held by the shareholders.

a) (i) Term Loan of Rs, 4,500 lakhs in Indian Rupees was taken from State Bank of Hyderabad during the year 2010-11 and was repayable in 60 monthly installments from December, 2010. As of March 31, 2016, all the installments have been repaid (As at March 31, 2015, out of 60 installments, 52 installments were paid and balance 8 installments were payable during the year 2015-16). The interest was fixed at 4.25% above base rate. Rate of interest as on March 31, 2015: 14.5%. The term loan from the Bank was secured by Pari-passu charge on the fixed assets i.e., Land, Buildings, Plant and Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and were guaranteed by Shri. S. Veera Reddy, Managing Director, Dr. S. Anand Reddy, Joint Managing Director and Shri S. Sreekanth Reddy, Executive Director.

(ii) Term Loan of Rs, 4,000 lakhs in Indian Rupees was taken from State Bank of Hyderabad during the year 2013-14 and is repayable in 96 monthly installments starting from June, 2015. As of March 31, 2016 out of 96 installments, 10 (As on March 31, 2015: Nil) installments have been paid and balance 86 installments of Rs, 41.66 lakhs each to be paid every month up to May, 2023. The interest was fixed at 3.80% above SBH base rate. As at March 31, 2016 base rate of interest was 12.75% (As on March 31, 2015: 14.50%). The term loan from the bank is secured by Pari-passu charge on the fixed assets i.e., Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the Company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri. S. Veera Reddy, Managing Director, Dr. S. Anand Reddy, Joint Managing Director and Shri S. Sreekanth Reddy, Executive Director.

b) Term Loan of Rs, 2,500 lakhs in Indian Rupees was taken from State Bank of India during the year 2012-13 and is repayable in 60 monthly Installments starting from September, 2013. As of March 31, 2016 out of 60 Installments 30 Installments were paid (As at March 31, 2015:18) and balance 30 Installments of Rs, 56 lakhs to be paid every month up to July, 2018 and last installment of Rs, 64 lakhs in August, 2018. The interest was fixed at 4.25% above SBI base rate. Rate of interest as on March 31, 2016 is 12.20% (As on March 31, 2015:14.25%). The term loan from the bank is secured by Pari-passu charge on the fixed assets i.e., Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the Company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri. S. Veera Reddy, Managing Director, Dr. S. Anand Reddy, Joint Managing Director and Shri S. Sreekanth Reddy, Executive Director.

c) Term Loan of Rs, 500 lakhs in Indian Rupees was taken from Andhra Pradesh State Financial Corporation during the year 2010-11 and is repayable in 55 monthly Installments of Rs, 9.10 lakhs each month (First installment of Rs, 8.60 Lakhs). As of March 31, 2016, out of 55 Installments, 55 Installments have been paid (As on March 31, 2015: 46). The interest was fixed at 3% below Bench Mark Prime Lending rate of interest. Rate of interest as on March 31, 2015: 13.00%. The term loan was secured by Pari-passu charge on the fixed assets i.e., Land, Buildings, Plant and Machinery, Mining Equipment owned by or belonging to the borrower company both present and future, and by second charge on the current assets of the company and are guaranteed by Dr S.Anand Reddy, Joint Managing Director and Shri S. Sreekanth Reddy, Executive Director.

d) Term Loan of Rs, 6,500 lakhs in Indian Rupees was taken from ICICI Bank during the year 2015-16 and is repayable in 24 structured quarterly Installments from March, 2017. The interest was fixed at I-Base at 9.7% p.a and spread rate is 2.7% p.a. As at March 31, 2016 rate of interest was 11.90%. The term loan from the bank is secured by Pari-passu charge on the fixed assets i.e., Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the Company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri. S.Veera Reddy, Managing Director, Dr S.Anand Reddy, Joint Managing Director and Shri S. Sreekanth Reddy, Executive Director.

e) Vehicle Loans from various banks/financial institutions are secured by the hypothecation of specific assets purchased from those loans.

f) Loan of Rs, 9,800 lakhs in Indian Rupees was sanctioned by L&T Infrastructure Finance Company Limited during the financial year 2012-13. The principal amount was repayable in 24 quarterly Installments from June, 2015 onwards. The loan was reclosed in the month of October, 2015. The term loan from the bank was secured by Pari-passu charge on the fixed assets i.e., Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the borrower company both present and future, and by second charge on the current assets of the company .

g) Term Loan of Rs, 2,000 lakhs in Indian Rupees was taken from L&T Finance Limited during the year 2012-13 and was repayable in 31 monthly Installments from June, 2013. As of March 31, 2016 out of 31 Installments, 31 Installments (As on March 31, 2015: 22) were paid and loan was closed in the month of December 2015. The term loan from the L&T Finance Ltd was secured by Second Pari-passu charge on the fixed assets i.e., Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Dr. S.Anand Reddy, Joint Managing Director and Shri S. Sreekanth Reddy, Executive Director.

Note (ii)

Deferred payment liability represents deferred sales tax liability which is interest free and is repayable at the end of 14th year from the year of deferment.

Note: The Company has availed cash credit facilities from Banks. This facility is secured against Stocks of raw materials, finished goods, trade receivables, stores and spares, present and future, and by second charges on fixed assets of the company and are guaranteed by Shri S. Veera Reddy, Managing Director, Dr. S. Anand Reddy, Joint Managing Director and Shri S. Sreekanth Reddy, Executive Director. The Loans are repayable on demand and carries interest @ 10.9% p.a. to 12.5% p.a.

1. CONTINGENT LIABILITIES AND COMMITMENTS a) Contingent Liabilities:

Based on legal opinion/advice obtained, no financial implication to the Company with respect to the following cases is perceived as on the Balance Sheet date.

2) APTRANSCO has raised a demand of Rs, 2,371.21 lakhs, on account of Fuel Surcharge Adjustment (FSA) relating to earlier years. Out of which, the Company has paid an amount of Rs, 2,136.79 lakhs up to March 31, 2016. The Company has filed Writ Petition with High Court of Andhra Pradesh. The matter is still pending before the High Court as on March 31, 2016.

3) The Finance Minister of Government of India has announced in the budget for the year 2010-11, imposition of clean energy cess as a duty of excise on coal, lignite and peat. This came into force with effect from July

1, 2010. As advised by the legal experts the company took Cenvat credit pertaining to clean energy cess on coal for an amount of Rs, 530.11 lakhs (As at March 31, 2015: Rs, 518.83 lakhs) from July 2010 to April 2015. The Department of Central excise issued a show cause notice letter and asked to reverse the amount on the ground that the clean energy cess is not specified tax for input Cenvat credit, thus the credit availed on cess is irregular. Based on departments letter the amount of Rs, 530.11 lakhs was reversed, but under protest. The matter is pending before the Department. Credit will be taken again once the issue is settled in favour of the company.

b) Corporate Guarantee:

The Company has furnished a corporate guarantee of Rs, 15,000 lakhs to IDBI Trusteeship Services Limited to secure the 1,500 Non-Convertible Debentures of Rs, 10 lakhs each aggregating to Rs, 15,000 lakhs issued by its wholly owned subsidiary, BMM Cements Limited to International Finance Corporation and a further guarantee to secure the credit facilities aggregating Rs, 14,900 lakhs availed by the said subsidiary from its lenders.

Notes forming part of the Financial Statements for the year ended March 31, 2016 2.36 Employee benefits:

The employee benefit schemes are as under:

(i) Defined contribution plan:

Provident Fund

The Company makes provident fund contributions which are defined contribution plans for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the Fund administered and managed by the Government of India. The Company''s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. Total expense recognized during the year aggregated Rs, 138.04 lakhs (2014-15 - Rs, 122.52 lakhs).

Superannuation Fund

Few directors receive benefit under a Superannuation scheme which is a defined contribution scheme wherein the director has an option to choose the percentage of contribution in between 5% to 15% of the basic salary of the covered employee. These contributions are made to a fund administrated by Life Insurance Corporation of India. The Company''s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. Total expense recognized during the year aggregated Rs, 36.52 lakhs (2014-15 - Rs, 16.13 lakhs).

Employee State Insurance

The Company makes employee state insurance contributions which are defined contribution plans for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the funds administered and managed by the Government of India. The company''s monthly contributions are charged to the Statement of Profit and Loss in the period they are incurred. The total expense recognized during the year aggregated to Rs, 5.14 lakhs (2014-15 - Rs, 6.77 lakhs).

(ii) Defined benefit plan:

Gratuity:

In accordance with the ''Payment of Gratuity Act, 1972'' of India, the Company provides for gratuity, a defined retirement benefit plan (the ''Gratuity Plan'') covering eligible employees. Liabilities with regard to such gratuity plan are determined by an independent actuarial valuation and are charged to the Statement of Profit and Loss in the period determined. The gratuity plan is administered by the Company''s own trust which has subscribed to the "Group Gratuity Life Assurance Plan" of Life Insurance Corporation of India.

The following table sets out the Defined Benefit Plan - as per actuarial valuation as at March 31, 2016 and March 31, 2015:

4. Operating Lease

The Company has taken various residential premises, office premises and warehouses under operating lease agreements. These are generally cancellable and are renewable by mutual consent on mutually agreed terms. The operating lease payment recognized in the Statement of Profit and Loss amounting to Rs, 196.94 lakhs (Previous year Rs, 173.44 lakhs)

5. Corporate Social Responsibility (CSR) activities:

As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed by the Company. The areas for CSR activities are promoting sports, education, adoption of schools, medical and other social projects.All these activities have been covered under Schedule VII to the Companies Act, 2013. The Company has spent an amount of Rs, 36.21 lakhs (Previous year Rs, 23.11 lakhs) towards CSR activities based on the recommendations of CSR Committee constituted by the Board. Expenses incurred on CSR activities are charged to the Statement of Profit and Loss under other expense.

6. Depreciation

During the previous year ended March 31, 2015, pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013 relating to useful of fixed assets, the Company has fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be Nil as on April 1, 2014, and has adjusted an amount of Rs, 51.97 lakhs (net of deferred tax of Rs, 26.76 lakhs) against the opening surplus balance in the Statement of Profit and Loss under Reserves and Surplus.

During the year ended March 31, 2016, pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013 relating to componentization of fixed assets, the Company has adjusted an amount of Rs, 734.86 lakhs (net of deferred tax of Rs, 388.95 lakhs) against the opening surplus balance in the Statement of Profit and Loss under Reserves and Surplus.

7. Details on acquisition of BMM Cements Limited

The Company entered into a Share Purchase Agreement (Rs,SPA'') on November 5, 2014, with the shareholders of BMM Cements Limited (''BMM''). On August 27, 2015, the Company acquired the entire shareholding of BMM for a purchase consideration of Rs, 7,817.94 lakhs. Pursuant to the acquisition, BMM is now a wholly owned subsidiary of the Company.

8. The Company has certain mining leases granted by the Government for limestone mining in Peddaveedu Village, Matampally up to August 17, 2024.

9. Based on the provisions of "The Mines and Minerals (Development and Regulation) Amendment Act, 2015", which is applicable from January 12, 2015 the holder of mining lease granted before the date of commencement of the aforesaid Act, shall in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount not exceeding the royalty paid in terms of the second Schedule in such manner and subject to the categorization of the mining leases and the amount payable by the various categories of lease holders, as may be prescribed by the Central Government.

As on March 31, 2015 the constitution of District Mineral Foundation was pending and modalities pertaining to implementation of the aforesaid provisions were to be notified by the State Government hence the same was not given effect to in the Financial Statement for that year.

The District Mineral Foundation was formed in the State of Telangana on January 20, 2016 and subsequently the provision pertaining to the additional royalty was made in the books from the date of formation of the DMF.

10. Figures for the previous year have been regrouped, reclassified wherever necessary to correspond with the current year''s classification/disclosures.


Mar 31, 2015

1. DEPRECIATION

Depreciation on Fixed Assets has been provided with effect from April 01, 2014 adopting the useful life of the fixed assets in alignment with Schedule II to the Companies Act, 2013.

Adjustment to the tune of Rs.51.97 lakhs, net of deferred taxes have been made to opening balance of retained earnings as on April 01,2014, after retaining the residual value @ 5%, wherever the remaining useful life of an asset was nil as on April 01,2014.

2. OPERATING LEASE

The Company has taken various residential premises, office premises and warehouses under operating lease agreements. These are generally cancellable and are renewable by mutual consent on mutually agreed terms.

3. CONTINGENT LIABILITIES

Based on legal opinion/advice obtained, no financial implication to the company with respect to the following cases is perceived as on the Balance Sheet date

Particulars 31 March 2015

Disputed Paid Amount Under Protest

AP TRANSCO Voltage surcharge and grid supporting charges 173.50 108.00 (Refer Note 1)

Demand by Sales tax authorities year 2009-10-Sale of Fixed Assets 109.40 27.40 (Refer Note 2)

Demand by Sales Tax authorities year 1999-2000-Interest 19.60 4.90 on delayed payment (Refer Note 3)

Demand by Central Excise Department benefit of Cenvat credit 225.00 195.00 on capital goods (Refer Note 4)

Demand by Central Excise Department benefit of Cenvat credit 650.80 0.00 on capital goods (Refer Note 5)

Demand by Road Transport Authority, Nalgonda for payment of Life Tax on dumpers 28.50 3.20 used in the mines (Refer Note No. 6)

Demand Raised by Central Excise Department (Refer Note No. 7) 59.41 0.00

Demand Raised by Central Excise Department (Refer Note No. 8) 43.04 0.00

Demand Raised by Central Excise Department (Refer Note No. 9) 146.30 0.00

Demand Raised by Central Excise Department (Refer Note No.10) 7.67 3.84

Disallowed input tax credit on sales made to SEZ units 6.29 0.00 for the year 2010-11. (Refer Note No. 11)

Disallowed input tax credit on steel during the year 2007-08. 144.25 18.03 (Refer Note No. 12)

Disallowed input tax credit on steel during the year 2008-09. 75.68 9.46 (Refer Note No. 13)

Demand raised by Commissioner of Customs Visakhapatnam, 67.92 0.00 relating to coal classification. (Refer Note No. 14)

Demand raised by Commissioner of Customs Guntur, relating to 54.75 0.00 coal classification. (Refer Note No. 15)

Disallowance of Expenditure U/s 14A (Refer Note No. 16) 37.60 0.00



Particulars 31 March 2014

Disputed Paid Amount Under Protest

AP TRANSCO Voltage surcharge and 173.50 108.00 grid supporting charges (Refer Note 1)

Demand by Sales tax authorities 109.40 27.40 year 2009-10-Sale of Fixed Assets (Refer Note 2)

Demand by Sales Tax authorities 19.60 4.90 year 1999-2000-Interest on delayed payment (Refer Note 3)

Demand by Central Excise Department 225.00 195.00 benefit of Cenvat credit on capital goods (Refer Note 4)

Demand by Central Excise 650.80 0.00 Department benefit of Cenvat credit on capital goods (Refer Note 5)

Demand by Road Transport Authority, Nalgonda for payment 28.50 3.20 of Life Tax on dumpers used in the mines (Refer Note No. 6)

Demand Raised by Central Excise 59.41 0.00 Department (Refer Note No. 7)

Demand Raised by Central Excise 0.00 0.00 Department (Refer Note No. 8)

Demand Raised by Central Excise 146.30 0.00 Department (Refer Note No. 9)

Demand Raised by Central Excise 7.67 3.84 Department (Refer Note No.10)

Disallowed input tax credit on 6.29 0.00 sales made to SEZ units for the year 2010-11. (Refer Note No. 11)

Disallowed input tax credit 144.25 18.03 on steel during the year 2007-08. (Refer Note No. 12)

Disallowed input tax credit 75.68 9.46 on steel during the year 2008-09. (Refer Note No. 13)

Demand raised by Commissioner 67.92 0.00 of Customs Visakhapatnam, relating to coal classification. (Refer Note No. 14)

Demand raised by Commissioner of 54.75 0.00 Customs Guntur, relating to coal classification. (Refer Note No. 15)

Disallowance of Expenditure 37.60 0.00 U/s 14A (Refer Note No. 16)

1 APTRANSCO had raised a demand of Rs.173.50 lakhs towards voltage surcharge and grid supporting charges and the company has paid Rs.108.00 lakhs under protest. The said demand is contested by the company and the matter is pending before the Division Bench of the Honorable High Court of Andhra Pradesh.

2 In the year 2009-10, Sales Tax Authorities raised a demand for Rs.109.40 lakhs in respect of tax on sale of fixed assets. The company has paid an amount of Rs. 27.40 lakhs and contested before the Sales Tax Appellate Tribunal.

3 Demand raised by the Sales Tax Authorities for a sum of Rs.19.60 lakhs towards interest U/s.16(3) of the APGST Act, on delayed payment of tax for the AY 1999-2000. The company filed an appeal with Sales Tax Appellate Tribunal by paying an amount of Rs.4.90 lakhs.

4 The Excise Department had raised a demand of Rs.225.00 lakhs denying the benefit of Cenvat credit on dumpers used in captive mines. The company has paid an amount of Rs.195 lakhs under protest and filed an appeal with CESTAT, Bangalore. Matter is pending before CESTAT.

5 The Excise Department had raised a demand of Rs.650.80 lakhs denying the Cenvat credit on MS Steel, Cement, TMT bars etc., used in expansion. The company has contested the same before CESTAT who in turn demanded 50% of the aforesaid amount i.e. Rs.325.40 lakhs to be paid. The company went for an appeal before AP High Court. The AP High Court has granted interim stay order.

6 Show Cause Notice has been received from the RTA, Nalgonda demanding Life Tax on dumpers purchased during year 2006 - 2010 and used in the captive mines. The matter is contested and pending in the Honorable High Court of Andhra Pradesh.

7 Additional Director General Intelligence Hyderabad has issued a Show Cause Notice No.26/2012(OR Mo.53/ 2012) dated 27-03-13 for an amount of Rs.59.41 lakhs and an equal amount of penalty along with interest on the ground that cement has been cleared to the contractors at a rate which is lesser than the price at which the cement was sold in the normal course of transaction, resulting into a short payment of Central excise duty. Matter is pending before CESTAT Bangalore.

8 Commissioner of Central Excise Hyderabad has issued a Show Cause Notice OR No.60/2013 Hyd III dated 0605-13 for an amount of Rs.33.04 lakhs and penalty of Rs. 10 lakhs along with interest on the ground that cement has been cleared to the contractors at a rate which is lesser than the price at which the cement was sold in the normal course of transaction, resulting into a short payment of Central excise duty. Matter is pending before CESTAT Bangalore.

9 The Commissioner of Central Excise, Customs and Service Tax, Hyderabad III Commissionerate has raised a Demand for Rs.136.30 lakhs along with interest and also imposed a penalty Rs.10.00 lakhs on the ground that the Company has availed Cenvat Credit against Service Tax paid on the freight charges incurred for the transportation of cement beyond the place of removal during the period from July 2008 to February 2011. Matter is pending before CESTAT Bangalore.

10 The Commissioner (Appeals) of Central Excise, Customs and Service Tax has disallowed CENVAT credit of Rs.7.67 lakhs availed during the period from December 2006 to March 2010 on the ground that Cenvat Credit had been availed on Input Services such as Advertisement, Audit and Telephone telex services used in relation to the trading activity which did not have any nexus with the manufacturing activity. An amount Rs.3.84 lakhs has been deposited by the company under protest and an appeal has been filed before CESTAT, Bangalore in this regard.

11 Input tax credit on sales made to SEZ units during the year 2010-11 amounting to Rs.6.29 lakhs has been disallowed. Interim stay was granted by AP High court. Final hearing is pending before the AP High Court.

12 Input tax credit on steel, MS Angles, etc. taken at the time of factory expansion during the year 2007-08 has been disallowed by the Commercial Tax authorities. Demand was raised for an amount of Rs.144.25 lakhs. An amount of Rs.18.03 lakhs have been paid in order to maintain the appeal. Matter is pending before Appellate Deputy Commissioner Tribunal.

13 Input tax credit on steel, MS Angles, etc. taken at the time of factory expansion during the year 2008-09 has been disallowed by the Commercial Tax authorities. Demand was raised for an amount of Rs.75.68 lakhs. An amount of Rs.9.46 lakhs have been paid in order to maintain the appeal. Matter is pending before Appellate Deputy Commissioner Tribunal.

14 Commissioner of Customs Visakhapatnam has served a demand order on the ground that imported coal was wrongly classified under steam coal instead of bituminous coal. Demand was raised for an amount of Rs.67.92 lakhs. The company has filed an appeal before CESTAT Bangalore against the said order.

15 Commissioner of Customs Guntur has served a show cause notice on the ground that imported coal was wrongly classified under steam coal instead of bituminous coal. Demand was raised for an amount of Rs. 54.75 lakhs. The matter is pending before Commissioner (Appeals).

16 The Deputy Commissioner of Income Tax Circle-1(1), Hyderabad has disallowed an amount of Rs.37.60 lakhs under Section 14A (Disallowance of expenditure incurred in relation to income which is not included in the total income) claimed as expenditure during the assessment years from 2008-09 to 2010-11 on account of Interest paid on term loans to Financial Institutions. In this regard an appeal is being filed by the company with Appellate Tribunal.

17 Bank Guarantees Pending as on 31.03.15 Rs.153.29 lakhs (Previous year Rs. 418.50 lakhs).

4. APTRANSCO has raised a demand of Rs.23.71 crores, on account of Fuel Surcharge Adjustment (FSA) relating to earlier years. Out of which, the company has paid an amount of Rs.21.37 crores up to 31.3.2015. The company has filed Writ Petition with High Court of Andhra Pradesh. The matter is still pending before the High Court as on 31.03.2015.

5. As required by Accounting Standards AS 18, the related parties' disclosure issued by the Institute of Chartered Accountants of India is as follows:

Related Party Disclosures:

Names of related parties and description of relationship:

S.No Particulars

1 Key Management Personnel a. Shri S.Veera Reddy, Managing Director

b. Dr.S.Anand Reddy, Joint Managing Director

c. Shri S.Sreekanth Reddy, Executive Director

2 Enterprise where key managerial personnel a. Panchavati Polyfibres Ltd. along with their relatives exercise significant influence b. Sagar Power Limited

c. RV Consulting Services Pvt. Ltd.

d. Sagar Priya Housing & Industrial Enterprises Ltd.

e. Sagarsoft (India) Ltd.

f. Smt S.Vanajatha

6. Corporate Social Responsibility (CSR) activities: The Company has spent an amount of Rs.23.11 lakhs towards Corporate Social Responsibility (CSR) activities based on the recommendations of CSR Committee constituted by the Board. All these activities have been covered under Schedule VII to the Companies Act, 2013.

7. In the opinion of the Board, current assets and loans and advances are realizable at a value, which is at least equal to the amount, at which these are stated, in the ordinary course of business. Independent confirmation of balances of sundry debtors, sundry creditors, loans and advances and other parties are in progress as on the date of this report.

8. The Finance Minister of Government of India had announced in the budget for the year 2010-2011, imposition of clean energy cess as a duty of excise on coal, lignite and peat. This came into force with effect from 1.7.2010.

As advised by the legal experts the company took Cenvat credit pertaining to clean energy cess on coal for an amount of Rs.5,18,83,449-00 from July 2010 to March 2015. The Department of Central Excise issued a letter and asked to reverse the amount on the ground that the clean energy cess is not specified tax for input Cenvat credit, thus the credit availed on cess is irregular. Based on departments letter the amount of Rs. 5, 18, 83,449-00 was reversed, but UNDER PROTEST. The matter is pending before the Department. Credit will be taken again once the issue is settled in favour of the company.

9. Based on the provisions of "The Mines and Minerals (Development and Regulation) Amendment Act,2015" which is applicable from 12th January, 2015 the holder of mining lease granted before the date of commencement of the aforesaid Act, shall in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount not exceeding the royalty paid in terms of the second Schedule in such manner and subject to the categorization of the mining leases and the amount payable by the various categories of lease holders, as may be prescribed by the Central Government.

As on the date of Balance Sheet constitution of District Mineral Foundation is pending and modalities pertaining to implementation of the aforesaid provisions are still to be notified by the State Government hence the same have not been given effect to in the financial statements for the current year.

10. Figures for the previous year have been regrouped, recast and rearranged to confirm to those of the current year wherever necessary.


Mar 31, 2014

1.1 CONTINGENT LIABILITIES

Particulars 31 March 2014 31 March 2013 Disputed Paid Disputed Paid Amount Under Amount Under Protest Protest

AP TRANSCO Voltage surcharge and grid supporting charges 173.50 108.00 173.50 108.00 (Refer Note 1)

Demand by Sales tax authorities year 2009-10-Sale of Fixed Assets 109.40 27.40 109.40 27.40 (Refer Note 2)

Demand by Sales Tax authorities year 1999-2000-Interest on 19.60 4.90 19.60 4.90 delayed payment (Refer Note 3)

Demand by Central Excise Department benefit of Cenvat credit on 225.00 195.00 225.00 195.00 capital goods (Refer Note 4)

Demand by Central Excise Department benefit of Cenvat credit on 650.80 0.00 650.80 0.00 capital goods (Refer Note 5)

Demand by Road Transport Authority, Nalgonda for payment of Life Tax on dumpers used in the mines (Refer Note No. 6) 28.50 3.20 28.50 3.20

Demand Raised by Central Excise Department (Refer Note No. 7) 59.41 0.00 59.41 0.00

Demand Raised by Central Excise Department (Refer Note No. 8) 146.30 0.00 146.30 0.00

Demand Raised by Central Excise Department (Refer Note No.9) 7.67 3.84 7.67 3.84

Disallowed input tax credit on sales made to SEZ units 6.29 0.00 0.00 0.00 for the year 2010-11. (Refer Note No. 10)

Disallowed input tax credit on steel during the year 2007-08. 144.25 18.03 0.00 0.00 (Refer Note No. 11)

Disallowed input tax credit on steel during the year 2008-09. 75.68 9.46 0.00 0.00 (Refer Note No. 12)

Demand raised by Commissioner of Customs Visakhapatnam, relating to coal classification. (Refer Note No. 13) 67.92 0.00 0.00 0.00

Demand raised by Commissioner of Customs Guntur, relating to coal classification. (Refer Note No. 14) 54.75 0.00 0.00 0.00

Disallowance of Expenditure U/s 14A (Refer Note No. 15) 37.60 0.00 75.29 0.00

1 APTRANSCO had raised a demand of Rs.173.50 lakhs towards voltage surcharge and grid supporting charges and the company has paid Rs.108.00 lakhs under protest. The said demand is contested by the company and the matter is pending before the Division Bench of the Honorable High Court of Andhra Pradesh.

2 In the year 2009-10, Sales Tax Authorities raised a demand for Rs.109.40 lakhs in respect of tax on sale of fixed assets. The company has paid an amount of Rs. 27.40 lakhs and contested before the Sales Tax Appellate Tribunal.

3 Demand raised by the Sales Tax Authorities for a sum of Rs.19.60 lakhs towards interest U/s.16(3) of the APGST Act, on delayed payment of tax for the AY 1999-2000. The company filed an appeal with Sales Tax Appellate Tribunal by paying an amount of Rs.4.90 lakhs.

4 The Excise Department had raised a demand of Rs.225.00 lakhs denying the benefit of Cenvat credit on dumpers used in captive mines. The company has paid an amount of Rs.195 lakhs under protest and filed an appeal with CESTAT, Bangalore. Matter is pending before CESTAT.

5 The Excise Department had raised a demand of Rs.650.80 lakhs denying the Cenvat credit on MS Steel, Cement, TMT bars etc., used in expansion. The company has contested the same before CESTAT who in turn demanded 50% of the aforesaid amount i.e. Rs.325.40 lakhs to be paid. The company went for an appeal before AP High Court. The AP High Court has granted interim stay order.

6 Show Cause Notice has been received from the RTA, Nalgonda demanding Life Tax on dumpers purchased during year 2006 – 2010 and used in the captive mines. The matter is contested and pending in the Honorable High Court of Andhra Pradesh.

7 Additional Director General Intelligence Hyderabad has issued a Show Cause Notice No.26/2012(OR Mo.53/ 2012) dated 27-03-13 for an amount of Rs.59.41 lakhs and an equal amount of penalty along with interest on the ground that cement has been cleared to the contractors at a rate which is lesser than the price at which the cement was sold in the normal course of transaction, resulting into a short payment of Central excise duty. Matter is pending before CESTAT Bangalore.

8 The Commissioner of Central Excise, Customs and Service Tax, Hyderabad III Commissionerate has raised a Demand for Rs.136.30 lakhs along with interest and also imposed a penalty Rs.10.00 lakhs on the ground that the Company has availed Cenvat Credit against Service Tax paid on the freight charges incurred for the transportation of cement beyond the place of removal during the period from July 2008 to February 2011. Matter is pending before CESTAT Bangalore.

9 The Commissioner (Appeals) of Central Excise, Customs and Service Tax has disallowed CENVAT credit of Rs.7.67 lakhs availed during the period from December 2006 to March 2010 on the ground that Cenvat Credit had been availed on Input Services such as Advertisement, Audit and Telephone telex services used in relation to the trading activity which did not have any nexus with the manufacturing activity. An amount Rs.3.84 lakhs has been deposited by the company under protest and an appeal has been filed before CESTAT, Bangalore in this regard.

10 Input tax credit on sales made to SEZ units during the year 2010-11 amounting to Rs.6.29 lakhs has been disallowed. Interim stay was granted by AP High court. Final hearing is pending before the AP High Court.

11 Input tax credit on steel, MS Angles, etc. taken at the time of factory expansion during the year 2007-08 has been disallowed by the Commercial Tax authorities. Demand was raised for an amount of Rs.144.25 lakhs. An amount of Rs.18.03 lakhs have been paid in order to maintain the appeal. Matter is pending before Appellate Deputy Commissioner Tribunal.

12 Input tax credit on steel, MS Angles, etc. taken at the time of factory expansion during the year 2008-09 has been disallowed by the Commercial Tax authorities. Demand was raised for an amount of Rs.75.68 lakhs. An amount of Rs.9.46 lakhs have been paid in order to maintain the appeal. Matter is pending before Appellate Deputy Commissioner Tribunal.

13 Commissioner of Customs Visakhapatnam has served a demand order on the ground that imported coal was wrongly classified under steam coal instead of bituminous coal. Demand was raised for an amount of Rs.67.92 lakhs. The company has filed an appeal before CESTAT Bangalore against the said order.

14 Commissioner of Customs Guntur has served a show cause notice on the ground that imported coal was wrongly classified under steam coal instead of bituminous coal. Demand was raised for an amount of Rs. 54.75 lakhs. The matter is pending before Commissioner (Appeals).

15 The Deputy Commissioner of Income Tax Circle-1(1), Hyderabad has disallowed an amount of Rs.37.60 lakhs under Section 14A (Disallowance of expenditure incurred in relation to income which is not included in the total income) claimed as expenditure during the assessment years from 2008-09 to 2010-11 on account of Interest paid on term loans to Financial Institutions. In this regard an appeal is being filed by the company with Appellate Tribunal.

16 Bank Guarantees Pending as on 31.03.14 Rs.418.50 lakhs ( Previous year Rs. 376.93 lakhs).

2.1 APTRANSCO has raised a demand of Rs.21.59 crores, on account of Fuel Surcharge Adjustment (FSA) relating to earlier years. Out of which, the company has paid an amount of Rs.16.94 crores up to 31.3.2014. The company has filed Writ Petition with High Court of Andhra Pradesh. The matter is still pending before the High Court as on 31.03.2014

2.2 The disclosures required under Accounting Standard 15 “Employee Benefits” notified in the Companies (Accounting Standards) Rules, 2006 are given below:

Investment details: 100% invested in LIC Group gratuity (cash accumulation policy) Actuarial assumptions

a) Mortality table (LIC) 2008-10 (ultimate)

b) Discounting rate – 8.20 %

c) Expected rate of return on plan asset – 9.25%

d) Expected average remaining working lives of employees–18 Years

e) Rate of escalation in salary – 5 %

2.3 As required by Accounting Standards AS 18, the related parties’ disclosure issued by the Institute of Chartered Accountants of India is as follows:

Related Party Disclosures:

Names of related parties and description of relationship:

S.No Particulars

1 Associates Vicat Sagar Cement Private Limited

2 Key Management Personnel a. Shri S.Veera Reddy, Managing Director

b. Dr.S.Anand Reddy, Joint Managing Director

c. Shri S.Sreekanth Reddy, Executive Director

3 Enterprise where key managerial personnel a. Panchavati Polyfibres Ltd. along with their relatives exercise significant influence b. Sagar Power Limited

c. RV Consulting Services Pvt. Ltd.

d. Sagar Priya Housing & Industrial Enterprises Ltd.

e. Sagarsoft (India) Ltd.

f. Smt S.Vanajatha


Mar 31, 2012

1. The company had issued 2,385,714 equity shares during the year ended 31.03.2012 to the equity shareholders of erstwhile Amareswari Cements Limited pursuant to the Scheme of Arrangement for Merger approved by the shareholders on 7th March 2011 and later sanctioned by the Honorable High Court of Andhra Pradesh. The amount was shown as Equity Share Capital Suspense Account during the year ended 31.03.2011 pending allotment of the same.

2. The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of Equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

3. For the year ended 31 March 2012, the amount of per share dividend recognized as distribution to equity shareholders is Rs.3 (31 March 2011: Rs.2 per share).

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

As per records of the company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

1. Term Loan of Rs.1000 Million in Indian Rupees was taken from IDBI Bank during the year 2008-09 and is repayable in 60 monthly installments of Rs.16.70 Million each. The loan was sanctioned with interest at 175 bps below Bench Mark Prime Lending rate and is payable at monthly rests. As of 31.03.2012, out of 60 installments, 39 installments have been paid and the balance installments to be paid are 21. Present rate of interest as on 31.03.2012 is 14% (31.03.2011: 12.75%). The term loan from the bank is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

2. Term Loan of Rs.450 Million in Indian Rupees was taken from State Bank of India during the year 2008-09 and

is repayable in 60 monthly installments of Rs.7.50 Million each. The loan was sanctioned with interest at 0.50% below Stat Bank Advance Rate and is payable at monthly rests. As of 31.03.2012 out of 60 installments 39 installments have been paid and the balance installments to be paid are 21. Present rate of interest as on 31.03.2012 is 14.75% (31.03.2011: 13.00%). The term loan from the bank is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

3. Term Loan of Rs.500 Million in Indian Rupees was taken from State Bank of Hyderabad during the year 2008- 09 and is repayable in 60 monthly installments of Rs.7.50 Million each. The loan was sanctioned with interest at 75 base points below prime lending rate of the Bank and is payable at monthly rests. As of 31.03.2012, out of total 60 installments, 39 installments have been paid and the balance installments to be paid are 21. Present rate of interest as on 31.03.2012 is 14.25% (31.03.2011 : 13.00%). The term loan from the bank is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

4. Term Loan of Rs.450 Million in Indian Rupees was taken from State Bank of Hyderabad during the year 2010- 11 and is repayable in 60 monthly installments from December, 2010. As of 31.03.2012 out of 60 installments, 16 Installments have been paid and balance 44 installments to be paid every month at Rs.2.50 Million for first 9 Installments and Rs.10 Million for next 27 installments and Rs.15 Million for next 7 installments and last installment of Rs.12.50 Million. The interest was fixed at 4.25% above Basic Rate of interest. Present rate of interest as on 31.03.2012 is 14.75% (31.03.2011: 13.25%). The term loan from the bank is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

5. Term Loan of Rs.100 Million in Indian Rupees was taken from Andhra Pradesh State Financial Corporation Ltd., during the year 2008-09 and is repayable in 22 Quarterly installments from January, 2009 @ Rs.4.40 Million. As of 31.03.2012 out of Quarterly 22 installments, 19 have been paid and the balance 3 installments are to be paid. The interest was fixed at 2.75% below Bench Mark Prime Lending rate of interest. Present rate of interest as on 31.03.2012 is 11.75% (31.03.2011: 11.75%). The term loan from the APSFC is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

6. Term Loan of Rs.50 Million in Indian Rupees was taken from Andhra Pradesh State Financial Corporation Ltd., during the year 2010-11 and is repayable in 55 monthly installments of Rs.91 Million each. As of 31.03.2012 out of 55 installments, 11 installments have been paid and balance installments to be paid are 44. The interest was fixed at 3% below Bench Mark Prime Lending rate of interest. Present rate of interest as on 31.03.2012 is 13% (31.03.2011: 13.00%). The term loan from the APSFC is secured by pari-passu charge on the fixed assets i.e, Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the company both present and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

7. Sales Tax Deferred amount payable pertains to Amareswari Cements Limited. This is pursuant to the Scheme of Merger approved by the shareholders on 7th March 2011 and later sanctioned by the Honorable High Court of Andhra Pradesh. The repayment schedule is as below:

8. Vehicle Loans from L & T Finance and various Banks is secured by the Hypothecation of Specific assets purchased from that loan and further secured by personal guarantees of Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

Cash credit Loans from Banks are secured against Stocks of Raw materials, Finished goods and Trade Receivables, Stores & Spares, present and future, and by second charge on fixed assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director. The cash credit is repayable on demand and carries interest @ 13% to 14.5%.

Out of the said amount Rs.0.13 Million (Previous Year : Nil) pertain to Micro, Small and Medium enterprises as defined in Micro, Small and Medium Enterprises Development Act, 2006 based on the information available with the Company. There is no interest payable to such parties as at 31st March 2012 (Previous Year: Nil).

1. Up to the Accounting Year ending 31.03.2011 taxes on Sale of Products were included in sale. For the year ending 31.03.2012 Sale of Products is recognised excluding taxes on sale. The change does not impact the profit. However, it would impact the figures shown as ''Sale of Products'' above.

2. As per Andhra Pradesh State Industrial Policy 2005-10, the Company has made an application to the General Manager, District Industries Centre, Nalgonda, Andhra Pradesh claiming the Incentives on Value Added Tax and Power Consumption. General Manager, DIC, Nalgonda has recommended an amount of Rs.112.87 Million (Previous year 104.12 Million) during the year to the State Level Committee. This amount has been considered as Other Operating income.

9.1 CONTINGENT LIABILITIES_ Disputed Paid Disputed Paid

Amount under Amount Under

Protest Protest

APTRANSCO Voltage surcharge and grid 17.35 10.80 17.35 10.80

supporting charges (Refer Note 1)

Demand by Sales tax authorities year 2009-10-Sale 10.94 2.74 10.94 2.74

of Fixed Assets (Refer Note 2)

Demand by Sales Tax authorities year 1.96 0.49 1.96 0.49

1999-2000-Interest on delayed payment (Refer Note 3)

Demand by Income tax Department Assessment 7.50 0.00 7.50 0.00

year 2006-07 disallowances (Refer Note 4)

Demand by Central Excise Department benefit of 22.50 19.50 22.50 19.50

Cenvat credit on capital goods (Refer Note 5)

Demand by Central Excise Department benefit of 65.08 0.00 0.00 0.00

Cenvat credit on capital goods (Refer Note 6)

Demand by Road Transport Authority, Nalgonda for 2.85 0.32 0.00 0.00

payment of Life Tax on dumpers used in the mines (Refer Note No. 7)

Bank Guarantees 33.53 0.00 29.21 0.00

1. APTRANSCO had raised a demand of Rs.17.35 Million towards voltage surcharge and grid supporting charges and the company has paid Rs.10.80 Million under protest. The said demand is contested by the company and the matter is pending before the Division Bench of the Honorable High Court of Andhra Pradesh.

2. In the year 2009-10, Sales Tax Authorities raised a demand for Rs.10.94 Million in respect of tax on sale of fixed assets. The company has paid an amount of Rs. 2.74 Million and contested before the Sales Tax Appellate Tribunal.

3. Demand raised by the Sales Tax Authorities on Amareswari Cements Limited for a sum of Rs.1.96 Million (this is consequent to the merger of Amareswari Cements Limited with Sagar Cements Limited) towards interest u/s.16(3) of the APGST Act, on delayed payment of tax for the AY 1999-2000. The company filed an appeal with Sales Tax Appellate Tribunal by paying an amount of Rs.0.49 Million.

4. The Income Tax Department has raised a demand of Rs.7.50 Million on disallowances of certain expenditure related to the AY 2006-07 and the same is contested before the Commissioner Appeals.

5. The Excise Department has raised a demand of Rs.22.50 Million denying the benefit of Cenvat credit on dumpers used in captive mines. The company has paid an amount of Rs. 19.50 Million under protest and filed an appeal with CESTAT, Bangalore. Matter is pending before CESTAT.

6. The Excise Department has raised a demand of Rs.65.08 Million denying the Cenvat credit on MS Steel, Cement, TMT bars etc., used in expansion. The company has contested the same before CESTAT and the matter is pending for hearing.

7. Show cause notice has been served by the RTA, Nalgonda demanding Life Tax on 8 dumpers purchased during year 2006-2010 and used in the captive mines. The matter is contested and pending in the Honorable High Court of Andhra Pradesh.

Actuarial assumptions

a) Mortality table (LIC) 1994-96 (ultimate)

b) Discounting rate 8.60 %

c) Expected rate of return on plan asset 9.25%

d) Expected average remaining working lives of employees! 8 Years

e) Rate of escalation in salary 5 %

9.10 As required by Accounting Standards AS 18, the 'related parties' disclosure issued by the Institute of Chartered Accountants of India is as follows:


Mar 31, 2011

1. CONTINGENT LIABILITIES

a) Estimated amount of contracts to be executed on capital account and not provided for Rs.l 92.39 Lakhs (Previous Year: Rs. 857.45 Lakhs).

b) Demand raised by APTRANSCO towards voltage surcharge and grid supporting charges is Rs.l,73,50,747/- and the company paid Rs.l,08,02,441/- under protest. The said demand is contested by the company with Division Bench of High Court of Andhra Pradesh.

c) Bank Guarantees: Rs.292.05 Lakhs (Previous year: Rs.90 lakhs).

d) Letter of Credit: Rs. Nil. (Previous year: Rs.NIL Lakhs).

e) During the year 2009-10, demand raised by Sales Tax Authorities for a sum of Rs.l,09,40,297/- in respect of tax on sale of fixed assets. We have paid an amount of Rs.27,35,074/- and contested before the State Appellate Tribunal.

f) The Income Tax Department has raised a demand of Rs. 74.98 Lakhs on disallowances of certain expenditure relating to the Assessment Year 2006-07 and the same was contested before the Commissioner Appeals.

g) The Income Tax Department has raised a demand of Rs.l 1.42 Lakhs on disallowances of certain expenditure relating to the Assessment Year 2008-09 and the same was contested before the Commissioner Appeals.

h) The Excise Department has raised a demand of Rs.2,24,95,200/- denying the benefit of Cenvat credit on capital goods. The Company has paid an amount of Rs.l,95,00,000/- and filed an appeal with CESTAT Bangalore.

i) Demand raised by the Sales Tax Authorities for a sum of Rs.l 9,60,832/- towards interest on delayed payment of tax amount for the year 1999-2000 and filed an appeal before the Appellate Tribunal by paying an amount of Rs.4,90,208/-.

2. SECURED LOANS

a) The term loans from the Banks and Financial Institutions are secured by the fixed assets i.e., Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the borrower company both proposed and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

b) Cash Credit from State Bank of Hyderabad, State Bank of India and IDBI Bank Ltd., are secured by hypothecation of raw materials, goods-in-process, finished goods, stores and spares and receivables, present and future, and by second charge on fixed assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

c) Loan from L&T Finance Limited is secured by the mortgage of specific assets purchased from that loan and further secured by personal guarantees of Dr.S.Anand Reddy, joint Managing Director and Shri S.Sreekanth Reddy Executive Director.

d) Vehicle loans from bank are secured by the mortgage of specific vehicle purchased from that loan and further secured by personal guarantees of Dr.S.Anand Reddy, joint Managing Director and Shri S.Sreekanth Reddy Executive Director.

3. As per Andhra Pradesh State Industrial Policy 2005-10, Company has made an application to the General Manager, District Industries Centre, Nalgonda, Andhra Pradesh for claiming the incentives on Value Added Tax and power consumption. General Manager, DIC, Nalgonda has verified and recommended an amount of Rs. 1018 lakhs (previous year Rs.400.07 Lakhs) during the year to the State Level Committee. This amount has been considered as income during the current year and shown in Schedule 14 'Other Income'.

e) Investment details

100% invested in LIC Group gratuity (cash accumulation policy)

f) Actuarial assumptions

Mortality table (LIC) 1994-96 (ultimate)

Discounting rate - 8%

Expected rate of return on plan asset - 9.25%

Expected average remaining working lives of employees-!8 Yrs

Rate of escalation in salary - 4%

4. Scheme of Amalgamation

a) Pursuant to the Scheme of Arrangement for merger of ACL with SCL, which was approved by the Shareholders on 7th March 2011 and later sanctioned by the Honorable High Court of Andhra Pradesh, the entire assets and liabilities, rights and obligations etc., of ACL (Transferor Company) as detailed in the Scheme stand transferred to and vested in Sagar Cements Limited (the Transferee Company) with effect from 1- April 2010 (Appointed Date). A copy of the Scheme was filed with the Registrar of Companies on 20* May 2011 (Transferor Company) i.e., after the end of the Financial Year 2010-11. This is an amalgamation in the nature of merger and has been given effect to in these accounts under the pooling of interest method.

b) In accordance with the above said Scheme, the Company is required to allot 32,85,714 equity shares of Rs.10/- each at par as fully paid up to the equity shareholders of Amareswari Cements Limited, in the ratio of 10 equity share of Rs 10/- each fully paid up of the Company for every 14 equity shares of the face value of Rs.10/- each fully paid up, held in Amareswari Cements Limited towards consideration for the aforesaid transfer. Pending the above allotment of shares as at the year end, the face value of 32,85,714 shares i.e., Rs 3,28,57,140 has been credited to Share Capital Suspense.

c) The difference between the amounts recorded as purchase consideration and the value of the net identifiable assets acquired has been adjusted against reserves.

d) In accordance with The Scheme, all assets and liabilities pertaining to the business of the Transferor Company have been incorporated in the books of the Company (Transferee Company) at the book values as on the appointed date.

e) Under the Scheme, upon the effective date 9,00,000 Equity Shares held in the Transferee Company by the Transferor Company shall stand extinguished and no equity shares shall be allotted to the Transferor Company. To reflect this, Share Suspense Account was debited with the face value of 9,00,000 equity shares of Rs.10/- each.

5. There are no amounts due to micro and small enterprises.

6. Previous year's figures have been regrouped, recast and reclassified wherever necessary to conform with those of the current year.

7. Paise have been rounded to the nearest rupee.


Mar 31, 2010

1. CONTINGENT LIABILITIES

a) Estimated amount of contracts to be executed on capital account and not provided for Rs.857.45 Lakhs (Previous Year: Rs.3785 Lakhs).

b) Demand raised by APTRANSCO towards voltage surcharge and grid supporting charges is Rs. 1,73,50,747/- and the company paid Rs. 1,08,02,441/- under protest. The said demand is contested by the company with Division Bench of High Court of Andhra Pradesh.

c) Bank Guarantees: Rs.90 Lakhs (Previous year: Rs.72.36 lakhs).

d) Letter of Credit: Rs. Nil. (Previous year: Rs.NIL Lakhs).

e) There is a demand from Sales Tax authorities for a sum of Rs.31,00,933 /- in respect of Input Tax Credit on Coal Consumption availed by the company from April, 2005 to December, 2005, claiming that the company is not eligible for the said credit. (Paid under protest in the year 2006 Rs. 15,50,466/-). The said demand is contested by the company.

f) Demand raised by Sales Tax authorities for a sum of Rs.8,08,656/- in respect of input tax credit availed on closing stock of coal held on 31st March, 2005 and filed writ petition before the High Court of Andhra Pradesh on payment of 50% of the disputed tax amount i.e. Rs.4,04,328/-. (Paid under protest in the year 2007 is Rs.4,04,328/-).

g) During the year 2009-10, demand raised by Sales Tax Authorities for a sum of Rs. 1,09,40,297/- in respect of tax on sale of fixed assets. We have paid an amount of Rs.27,35,074/- and contested before the State Appellate Tribunal.

h) Show cause notices were issued by the Central Excise Authorities for an amount of Rs. 19.44 lakh, pertaining to various issues under Central Excise and Service Tax Act and for an amount of Rs.203.44 lakhs for availment of service tax credit. The company has replied to the show cause notices and the matter is pending before the Department for adjudication.

2. SECURED LOANS

a) The term loans from the Banks and Financial Institutions are secured by the fixed assets i.e., Land, Buildings, Plant & Machinery, Mining Equipment owned by or belonging to the borrower company both proposed and future, and by second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

b) Cash Credit from State Bank of Hyderabad, Punjab National Bank, State Bank of India and IDBI Bank Ltd., are secured by hypothecation of raw materials, goods-in-process, finished goods, stores and spares and receivables, present and future, and by second charge on fixed assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.

c) Loan from L&T Finance Limited is secured by the mortgage of specific assets purchased from that loan and further secured by personal guarantees of Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy Executive Director.

d) Vehicle loans from bank are secured by the mortgage of specific vehicle purchased from that loan and further secured by personal guarantees of Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy Executive Director.

3. a) As per Andhra Pradesh State Industrial Policy 2005-10, Company has made an application to the General Manager, District Industries Centre, Nalgonda, Andhra Pradesh for claiming the incentives on Value Added Tax and power consumption. General Manager, DIC, Nalgonda has verified and recommended an amount of Rs.400.07 lakhs during the year to the State Level Committee. This amount has been considered as income during the current year and shown in Schedule 13 Other Income.

b) Other income includes Rs. 1.45 crores receivable from insurance company.

4. The disclosures required under Accounting Standard 15 "Employee Benefits" notified in the Companies (Accounting Standards) Rules, 2006 are given below

e) Investment details

100% invested in LIC Group gratuity (cash accumulation policy)

f) Actuarial assumptions

Mortality table (LIC) 1994-96 (ultimate)

Discounting rate - 8%

Expected rate of return on plan asset - 9.25%

Expected average remaining working lives of employees-18 Yrs

Rate of escalation in salary - 4%

5. There are no amounts due to micro and small enterprises.

6. Previous years figures have been regrouped, recast and reclassified wherever necessary to conform with those of the current year.

7. Paise have been rounded to the nearest rupee.

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