Notes to Accounts of Saurashtra Cements Ltd.

Mar 31, 2018

A Company Overview:

Saurashtra Cement Limited (the Company) is a Public Limited Company incorporated in India, under the provisions of the Companies Act, 1956, having its registered office at Ranavav, Gujarat, India. The Company is engaged in the business of manufacturing and selling of Cement.

The financial statements for the year ended March 31, 2018 were approved by the Board of Directors and authorised for publication on May 24, 2018.

i. The Company has considered fair value as deemed cost for it''s land located at Ranavav, Dist. - Porbandar, Gujarat - 360 560 in accordance with stipulations of Ind AS 101 with the resultant impact of Rs. 11,236.05 lacs being recognised in Retained Earnings.

ii. The deductions under the gross block of freehold land, for the year ended March 31, 2017, of Rs.237.29 lacs is of certain land which is held for disposal. The same is classified under other current assets in Note 13.

iii. Besides the land specified above, the Company holds other leasehold land for which only ground rent is payable.

iv. Buildings and Jetty include a Private Jetty having a gross block of Rs.2411.45 lacs (net block Rs.120.57 lacs), constructed by the Company under the license to use agreement with Gujarat Maritime Board (GMB) on the land provided by them. The license period of 15 years from October 2000 has expired and the Company has requested to GMB for the renewal of the agreement, which is pending.

v. The deductions under the gross block of Plant & Equipments, for the year ended March 31, 2018, include amount of Rs.255.14 lacs which is in respect of certain machineries held for disposal. The same is classified under other current assets in Note 13.

vi. Plant and equipments include cost of service line of Rs.33.20 lacs (Previous Year and as at April 01, 2016: Rs.33.20 lacs), ownership of which is vested with Paschim Gujarat Vij Company Limited.

vii. Impairment of Assets:

a. The Company had incurred an aggregate sum of Rs.8107.17 lacs (Previous Year and as at April 01, 2016: Rs.8107.17 lacs) towards Expansion Project Assets and shown the same under Capital Work-in-progress (CWIP). The expenditure includes cost of an imported plant purchased (including related stores and spares), civil work carried out and pre-operative expenses (including interest capitalised) as shown in (b) below. However, in the year 2005, due to several adversities, the project was suspended.

c. Considering cash flow constraints, the Company had earlier proposed to dispose off the Expansion Project Assets through the Asset Sale Committee (ASC) constituted under the aegis of BIFR, subject to necessary approvals of Lenders / BIFR. However the proposal was deferred at the advice of the ASC. The Company has the option to install the assets at a later date, depending on market conditions. Therefore, considering utilisation of assets in future, the Expansion Project Assets have got been valued by a project consultant. Based on the valuation report obtained from the project consultant, an additional impairment of Rs.122.04 lacs has been provided during the year ended March 31, 2018. As at March 31, 2018, the aggregate provision for impairment is at Rs.4541.14 lacs.

viii. Refer Note 16.1 and 19.1 for information on Property, Plant and Equipment pledged as security.

1. Rights, Preferences and Restrictions

Equity Shares

i. The Company has only one class of equity shares referred to as equity shares having a par value of Rs.10. Each holder of equity shares is entitled to one vote per share.

ii. The Company declares and pays dividend in Indian rupees. With effect from April 01, 2016, final dividend, if any, proposed by the Board of Directors is recorded as a liability on the date of the approval of the shareholders in the coming Annual General Meeting; in case of interim dividend, it is recorded as a liability on the date of declaration by the Board of Directors of the Company. Board of Directors has recommended equity dividend of Rs.1 per share of face value of Rs.10 each, for the year ended March 31, 2018.

iii. In the event of liquidation, the equity shareholders are eligible to receive the residual assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

iv. In respect of ESOP granted to the employees during the year, refer Note 39.

2. Security and Repayment Terms:

i. Term Loans are repayable in 36 to 60 equated monthly installments carrying varied interest from 8% to 10% p.a. These loans are secured by hypothecation of vehicles financed there under.

ii. The Company''s debt was restructured under Corporate Debt Restructuring (CDR) in 2005 and the restructured debt including Funded Interest Term Loan (FITL) has been fully repaid in the earlier years. One of the conditions of the restructuring was that the Lenders would have a Right of Recompense (ROR) as may be approved by the CDR Empowered Group (EG). Hon''ble BIFR has subsequently sanctioned a Rehabilitation Scheme for the Company which over rides all previous schemes and the same does not envisage payment of recompense. Further RBI has repealed the Circular under which CDR was formed and operating. The Company has filed a Miscellaneous Application with the NCLT, Ahmedabad praying that directions be given to the CDR Lenders that no ROR is payable and to release all securities including personal guarantees and shares pledged by the promoters.

3. Security:

* The Working Capital facilities are secured by first charge by way of hypothecation of current assets, namely stocks of raw materials, semi finished and finished goods, consumable stores and spares, bills receivables, book debts and all other movable properties, both, present and future. They are also secured by second mortgage and charge on the Company''s immovable and movable properties, both, present and future, hypothecation of "Hathi” Brand, pledge of promoter shares and personal guarantee of two Directors of the Company.

4 Employee benefits

As per Ind AS - 19 - "Employee Benefits”, the disclosures of Employee Benefits is given as below:-

4.1 Defined Contribution Plans

The Company''s contribution to Provident Fund and Superannuation Fund aggregating to Rs.245.87 lacs (Previous Year Rs.257.56 lacs) has been recognised in the Statement of Profit and Loss under the head Employee Benefits Expense. (Refer Note 29)

4.2 The fund is a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The trustees are responsible for the governance of the plan. The day-to-day administration of the scheme is carried out by the trustees. It is the trustee''s duty to look after assets on behalf of employees who are entitled to benefit from those assets at some future date. Investment of assets of fund is key responsibility of the trustees.

4.3 Risk to the Plan

i. Actuarial Risk:

The plan is subject to actuarial risk such as adverse salary growth, change in demographic experience, inadequate return on underlying plan assets. This may result in an increase in cost of providing these benefits to employee in future.

ii. Liquidity Risk:

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign / retire from the company there can be strain on the cash flows.

iii. Market Risk:

Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate / government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

iv. Legislative Risk:

Legislative risk is the risk of increase in the plan liablities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratutity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation adn the same will have to be recognized immediately in the year when any such amendment is effective.

4.4 The Present Value of Defined Benefit Obligation and Fair Value of the Plan Assets as at April 01, 2016 is Rs.958.47 lacs and Rs.22.80 lacs respectively.

xi. The estimate of rate of escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors, including supply and demand in the employment market.

xii. Expected rate of return on Plan Assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

xiii. Asset Liability matching strategy

The money contributed by the Company to the Gratuity fund to finance the liabilities of the plan has to be invested.

The trustees of the plan have outsourced the investment management of the fund to an Insurance Company. The Insurance Company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset liability matching strategy.

There is no compulsion on the part of the Company to fully prefund the liability of the Plan. The Company''s philosophy is to fund these benefits based on its own liquidity.

* The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

5 Segment Reporting

The Company has only one business segment ''cement / clinker'' as primary segment.

a. As the liability for gratuity are provided on actuarial basis for the Company as a whole, the amounts mentioned are exclusive of gratuity.

b. The amount represents fair value of employee stock options granted during the year 2017-18 to be vested over a period of three years in terms of ESOS 2017.

C Terms and conditions of transactions and balances with related parties

i. The transactions with related parties are made in the normal course of business and on terms equivalent to those that prevail in arm''s length transactions.

ii. Outstanding balances at the year end are unsecured and interest free except amount receivable from Prachit Holdings Limited and Reeti Investments Private Limited, which carries interest rate @ 10% p.a. and settlement occurs in cash.

iii. There have been no guarantees provided or received for any related party transaction.

iv. For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties.

6 Capital Management:

The primary objective of Company''s Capital Management is to maximize shareholder value without having any adverse impact on interests of other stakeholders. At the same time, company strives to maintain an optimal capital structure to reduce the cost of capital.

For the purpose of the Company''s Capital Management, debt includes borrowings and current maturities of long term debt and equity includes issued equity capital, share premium and all other equity reserves attributable to the equity shareholders of the Company.

7 Share Based Payments

7.1 Saurashtra Employee Stock Option Scheme 2017

During the year, Saurashtra Employee Stock Option Scheme 2017 (ESOS 2017) was approved by the Shareholders at the Annual General Meeting held on July 26, 2017. The Nomination and Remuneration Committee at its meeting held on February 08, 2018 has approved grant of Stock Options under ESOS 2017 to the senior management and executives from middle management for their performance and to motivate them to contribute to the growth and profitability of the company as also to retain them. Each option carries the right to the holder to apply for one equity share of the company at par. The salient features of the Scheme are as below:

Since the options are yet to vest, the question of its exercise does not arise and hence, the exercise price or weighted average exercise price of the option is not given. Weighted average remaining contractual life for the share options outstanding as at March 31, 2018 was 4 years and 4.5 months.

7.2 Fair Valuation

The fair value of option have been done by an independent firm on the date of grant using the Black-Scholes Model. Black-Scholes Model takes into account exercise price, the term of the option, the share price at the grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The Key assumptions in the Black-Scholes Model for calculating fair value as on the date of grant:

i. Risk Free Rate : 7.12% (Vest 1), 7.31% (Vest 2), 7.46% (Vest 3)

ii. Option Life : Average of [Minimum Life (Vesting period) Maximum Life (Vesting period Exercise period)], which is 3.50 Years (Vest 1), 4.51 Years (Vest 2), 5.51 Years (Vest 3)

iii. Expected Volatility * : 52.89% (Vest 1), 55.72% (Vest 2), 58.15% (Vest 3)

iv. Dividend Yield : 1.15%

* Expected volatility on the Company''s stock price on Bombay Stock Exchange based on the data commensurate with the expected life of the option upto the date of grant.

The fair value of Bank Deposits with more than 12 months maturities & earmarked balances and fair value of borrowed funds approximate carrying value as the interest rate of the said instruments are at the prevailing market rate of interest.

The carrying amount of financial assets and financial liabilities (other than borrowed funds) measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.

8. Fair Value Measurement

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

i. Receivables are evaluated by the company based on history of past default as well as individual credit worthiness of the customer. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables, if required.

ii. The fair value of interest free loans given is estimated by discounting future cash flows using rates currently available for loans with similar terms, credit risk and remaining maturities.

iii. The fair values of quoted equity instruments are derived from quoted market prices in active markets.

The Company has established the following fair value hierarchy that categorises the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:

Level 1 - This hierarchy uses quoted (unadjusted) market prices in active markets for identical assets or liabilities.

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

Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

9. Financial Risk Management Framework:

The Company''s principal financial liabilities comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the company''s operations. The Company''s principal financial assets comprises of trade and other receivables, cash and cash equivalents and bank balances other than cash and cash equivalents that are derived directly from its operations.

The Company''s activities exposes it to market risk, credit risk and liquidity risk. Company''s overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the company. The Company''s senior management oversees the management of these risks. They provide assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the company''s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risks - interest rate risk, foreign exchange risk and commodity price risk in a fluctuating market environment. Financial instrument affected by market risks includes foreign currency receivables and payables.

The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.

Foreign Exchange Risk:

Foreign exchange risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the import of fuels, raw materials and spare parts, capital expenditure and export of cement.

The Company evaluates exchange rate exposure arising from foreign currency transactions. The Company follows established risk management policies and standard operating procedures.

Foreign currency sensitivity on unhedged exposure:

Since the exposure is not significant, 1% increase in foreign exchange rates will have negligible impact on profit before tax.

Interest Rate Risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates only to the overdraft facility availed in INR against fixed deposits. The Company doesn''t have foreign currency borrowings. The company parks surplus funds in fixed deposits and avails overdraft facility against same to meet temporary fund requirement. The interest rate on overdraft facility is linked with interest rate on fixed deposit. Any adverse movement in interest rate will not affect profit before tax since the same will be offset by interest income earned on corresponding fixed deposit. Hence the interest rate risk is self mitigated.

Interest rate exposure:

There is no significant interest rate risk as overdraft facility against fixed deposits have fixed margin over the interest rates of fixed deposits.

Commodity Price Risk:

Commodity price risk arises due to fluctuation in prices of coal, pet coke and other products. The company has a risk management framework aimed at prudently managing the risk arising from the volatility in commodity prices and freight costs.

Credit Risk Management:

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities mainly deposits with banks and foreign exchange transactions. The Company has no significant concentration of credit risk with any counterparty.

Trade Receivables:

Customer credit is managed as per Company''s established policy procedures and control related to customer credit risk management. The Company has credit evaluation policy for each customer and based on the evaluation maximum exposure limit of each customer is defined. Wherever the Company assesses the credit risk as high the exposure is backed by either bank guarantee / letter of credit or security deposits.

Export sales is mainly against advance payment or letter of credit.

Generally deposits are taken from domestic debtors. Apart from deposit, there is a third party agent area wise. In case any customer defaults, the amount is first recovered from third party agent, then from the agent''s commission. Each outstanding customer receivable is regularly monitored and if outstanding is above due date, further sales orders are controlled and can only be fulfilled if there is a proper justification. The Company does not have higher concentration of credit risks to a single customer.

Total Trade receivable as on March 31, 2018 is Rs.1,910.07 Lacs Previous year Rs.1,605.21 Lacs, and as at April 01, 2016 Rs.1,562.45 Lacs)

In view of above robust credit policy and considering past history of insignificant bad debts, allowance for expected credit losses based on provision matrix, which uses an estimated default rate, will not give a true picture. Instead company makes allowance for credit losses based on specific identification. This is further substantiated by the fact that entire bad debt written off during the year of Rs.124.48 lacs was fully provided for in earlier years. The movement in allowance for credit losses is as below:

Cash and Cash Equivalent and Bank Deposit:

Credit Risk on cash and cash equivalent, deposits with the banks is generally low as the said deposits have been made with the banks who have been assigned high credit rating by international and domestic rating agencies.

Liquidity Risk:

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company manages liquidity risk by continuously monitoring forecast and actual cash flows on daily, monthly and yearly basis. Loan arrangements, credit limits with various banks including working capital and monitoring of operational and working capital issues are always kept in mind for better liquidity management. In addition, processes and policies related to such risks are overseen by senior management.

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.

10 First-time adoption of Ind AS:

i. These financial statements, for the year ended March 31, 2018, are the first financial statements, the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 01, 2016, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the Balance Sheet as at April 01, 2016 and the financial statements as at and for the year ended March 31, 2017 and how the transition from IGAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.

ii. Exemptions applied:

a) The Company has elected not to apply Ind AS 103 - Business Combinations retrospectively to past business combinations that occurred before the date of transition of April 01, 2016. Consequently, the Company has kept the same classification for the past business combinations as in its previous GAAP financial statements.

b) The Company has elected to measure items of Property, Plant and Equipment and Intangible Assets at Cost except certain class of assets which are measured at fair value as deemed cost as at the date of transition.

c) The Company has designated investment in quoted and unquoted equity shares (other than subsidiaries) held at the date of transition as fair value through OCI.

d) The Company has elected to carry its investment in subsidiaries at deemed cost which is its previous GAAP carrying amount at the date of transition.

iii. Exception applied:

Derecognition of financial assets and liabilities - Financial assets and liabilities derecognized before the date of transition are not re-recognized under Ind-AS. The Company has not chosen to apply the Ind AS 109 - Financial Instruments derecognition criteria to an earlier date.

Notes to the reconciliation of Total Comprehensive Income and Other Equity between Indian GAAP and Ind AS:

1 Property, Plant and Equipment:

i. The Company has elected to measure items of Property, Plant and Equipment at Cost as per Ind AS 16 (Refer (iii) below).

ii. As per Ind AS 16, spare parts, stand-by equipment and servicing equipment are recognised as Property, Plant and Equipment (''PPE'') when they meet the following criteria:

a. Are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and

b. Are expected to be used during more than one period.

Based on the above provision, stores and spares satisfying above criteria are de-recognised from Inventory and capitalized as PPE from the date of purchase.

iii. The Company has considered fair value as deemed cost for it''s land located at Ranavav, Dist. - Porbandar, Gujarat - 360 560 in accordance with stipulations of Ind AS 101 with the resultant impact of Rs.11,236.05 lacs being recognised in Retained Earnings.

2 Investments:

The Company has elected to carry its investment in subsidiaries at deemed cost which is its previous GAAP carrying amount at the date of transition and other investments at Fair Value through Other Comprehensive Income.

3 Loans:

Under IGAAP, the Company had accounted for interest free loan to employees and subsidiary company at the undiscounted amount whereas under Ind AS, such financial assets are recognised at present value.

4 Deferred Tax:

i. IGAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under IGAAP.

In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred Tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or profit and loss respectively.

ii. As per Ind AS 1 2, the Company has considered MAT entitlement credit as deferred tax asset being unused tax credit entitlement.

5 Proposed Dividend:

Under IGAAP, proposed dividend and tax thereon are recognised as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognised as a liability in the period in which it is declared (on approval of shareholders in a general meeting) or paid. In case of the Company, the declaration of dividend occurs after period end. Accordingly, proposed dividend has been reversed as at the date of transition and adjusted in retained earnings.

6 Defined benefit liabilities:

Both under IGAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under IGAAP, the entire cost, including actuarial gains and losses, are charged to Statement of Profit and Loss. Under Ind AS, remeasurements (comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.

7 Stores and Spares:

With reference to Point No. 1, Spare parts meeting criteria of PPE has been reduced from inventory. Further Stores and Spares consumption has been reversed from Statement of Profit and Loss and has been capitalised as PPE. Depreciation on capitalized stores and spares till the date of transition has been accounted for in Retained Earnings and has been charged to Statement of Profit and Loss for the year ended March 31, 2017.

8 Other Comprehensive Income:

In accordance with Ind AS, Other Comprehensive Income includes gain / (loss) on fair valuation of investment in quoted shares and remeasurements of defined benefit plans.

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Mar 31, 2017

1. Rights, Preferences and Restrictions

2. Equity Shares

3. The Company has only one class of equity shares referred to as equity shares having a par value ofRs.10. Each holder of equity shares is entitled to one vote per share.

4. The Company declares and pays dividend in Indian rupees. With effect from, April 1, 2016, final dividend, if any, proposed by the Board of Directors is recorded as a liability on the date of the approval of the shareholders in the coming Annual General Meeting; in case of interim dividend, it is recorded as a liability on the date of declaration by the Board of Directors of the Company. Board of Directors has recommended equity dividend ofRs.1 per share of face value ofRs.10 each, for the year ended March 31, 2017.

5. Dividend atRs.1 per share (including on partly paid-up equity shares on pro-rata basis) was declared for the year ended March 31, 2016. The total dividend appropriation for the year ended March 31, 2016 wasRs.658.26 lacs including corporate dividend tax ofRs.111.34 lacs.

6. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

7. Preference Shares :

8. The Company had only one class of preference shares as 13% Optionally Convertible Cumulative Preference Shares (OCCPS) having a par value ofRs.100, which were redeemed on March 10, 2016.

9. OCCPS carried a fixed cumulative dividend of 13% p.a. from the date of issue. The holders of OCCPS carried a right to dividend ahead of equity share holders.

10. In the event of liquidation, the holders of OCCPS carried preference over equity shareholders in respect of repayment of capital.

11. During the year ended March 31, 2016, the Company paid interim dividend on preference shares including arrears thereof. The total dividend appropriation up till the year ended March 31, 2016 amounted toRs.1228.18 lacs, including corporate dividend tax ofRs.207.74 lacs.

12. Of the total Preference Share Capital ofRs.687.60 lacs, the holders of 1,74,557 OCCPS ofRs.100 par value, aggregating toRs.174.56 lacs, had surrendered their right in the redemption, including the preference dividend thereon for the benefit of the Company, and on redemption, based on a legal advice received the aforesaid amount was transferred to Capital Reserve for the year ended March 31, 2016.

13. Security and Repayment Terms:

14. Borrowings at part I (a) and (b) are generally repayable in 36 equated monthly installments carrying varied interest from 10% to 12% p.a. These loans are secured by hypothecation of vehicles financed there under.

15. The restructured loans fully repaid in earlier years including FITL are subject to recompense clause as may be approved by the Corporate Debt Restructuring Cell constituted as per the relevant Reserve Bank of India Guidelines.

16. Since the adoption of cost model as its accounting policy as specified in the transitional provisions of Accounting Standard 10 on “Property, Plant and Equipment”, introduced by the Companies (Accounting Standards) Amendment Rules, 2016, the earlier revaluations (net of depreciation on revalued amounts) of Rs.221.06 lacs reflected in the carrying amount of items of Property, Plant and Equipment, as detailed here in below, is adjusted to Revaluation Reserve. Further, due to the said adjustment as per the transitional provisions, depreciation for the year is lower byRs.17.39 lacs and the net profit for the year is higher by the like amount. Accordingly, Gross Block includes Rs. Nil (Previous yearRs.4061.10 lacs) added on revaluation of the Company’s freehold and leasehold land, buildings, plant and machinery situated at Ranavav in order to reflect a realistic position of the net replacement cost of such assets, on the basis of valuation made by an external valuer, which had resulted in a net increase of Rs.5722.61 lacs, as at June 30, 1993.

17. The deductions under the gross block of freehold land includesRs.237.29 lacs of a certain land which is held for disposal. The same is classified under other current assets at Note 20.

18. Besides the land specified above, the Company holds other leasehold land for which the only ground rent is payable.

19. Buildings and Jetty includes a Private Jetty having a gross block ofRs.2411.45 lacs (Net blockRs.120.57 lacs), constructed by the Company under the license to use agreement with Gujarat Maritime Board (GMB) on the land provided by them. The license period of 15 years from October 2000 has expired and the Company has requested for the renewal of the agreement, which is pending.

20. Plant and equipments include cost of service line ofRs.33.20 lacs (Previous YearRs.33.20 lacs), ownership of which is vested with Paschim Gujarat Vij Company Limited.

21. Impairment of Assets :

22. The Company had incurred an aggregate sum ofRs.8107.17 lacs (Previous YearRs.8107.17 lacs) towards Expansion Project Assets, and reflected the same under Capital Work-in-progress (CWIP). The expenditure includes cost of an imported plant purchased (including related stores and spares), civil work carried out and pre-operative expenses (including interest capitalized) as shown in (b) below. However, later on in the year 2005, due to several adversities, the project was suspended.

23. Though earlier, the Company had decided to dispose of the Expansion Project Assets, through the Asset Sale Committee (ASC) constituted under the aegis of BIFR, subject to necessary approvals of the Company''s Lenders / BIFR, at present it is not highly probable that those assets will be sold within the foreseeable future, at the year end. Accordingly, based on the assessment of recoverable amount (net selling price) of those assets, as per the valuation report obtained from a project consultant, which is not materially varying from the amount determined in the earlier year, no further adjustment to impairment is considered necessary for the year ended March 31, 2017. As at the year end, the aggregate provision for impairment ofRs.4419.10 lacs, made is continued. This provision is as required under Accounting Standard 28 on “Impairment of Assets”.

24. Particulars of Investments - Refer Note 12 on Non-current Investments.

25. There is no guarantee given or security provided by the Company in accordance with Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014 issued there under.

26.1 For the year ended March 31, 2016, an amount ofRs.1037.00 lacs, which was received for the sale of flats in an earlier year, but was forfeited due to non-compliance of the terms and conditions of the tender by the bidder.

27. Other money for which the Company is contingently liable;

28. The impact / outcome of recompense clause as detailed in Note 4.1 (B) (II) (ii), in respect of the restructured loans on the Company is presently unascertainable.

29. Maximum possible obligation on reward points on sale Rs.Nil (Previous YearRs.89.72 lacs).

vii. The estimate of rate of escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors, including supply and demand in the employment market.

30. The Company expects to contribute a sum ofRs.124.34 lacs (Previous YearRs.120.13 lacs) towards gratuity during the year ended March 31, 2017.

31. The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held and historical return on the plan assets. The same are disclosed hereunder to the extent available.

32. Previous Year''s figures have been regrouped / reclassified to conform to the current year''s presentation.

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Mar 31, 2016

ii. Reimbursement expected in respect of the expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.

Hi. Contingent liability is stated in the case of a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation, a possible obligation, unless the probability of outflow of resources is remote.

iv. Contingent assets are neither recognized, nor disclosed.

v. Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

a. Equity Shares

i. The Company has only one class of equity shares referred to as equity shares having a par value of? 10. Each holder of equity shares is entitled to one vote per share.

ii. Dividends, if any, is declared and paid in Indian rupees. The dividend, if any, 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. The Board of Directors has recommended equity dividend of '' 1 per share of face value of '' 10 each, including proportionately on partly paid-up shares. The recommendation is subject to the approval of shareholders at the Annual General Meeting. The total dividend appropriation for the year ended March 31, 2016 would be Rs,'' 658.26 lacs including corporate dividend tax of Rs,'' 111.34 lacs. No dividend was declared on the equity shares for the year ended March 31, 2015.

Hi. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

b. Preference Shares:

i. As on March 31, 2015, the Company had only one class of preference shares as 13% Optionally Convertible Cumulative Preference Shares (OCCPS) having a par value of '' 100. Those preference shares did not carry any voting right. However, as per the provisions of the Companies Act, 2013, if the dividend on such preference shares has not been paid for a period of two years or more, the holders of such preference shares have a right to vote on all resolutions placed before the Company.

ii. OCCPS carried a fixed cumulative dividend of 13% p.a. from the date of issue. The holders of OCCPS carry a right to dividend ahead of equity share holders.

Hi. In the event of liquidation, the holders of OCCPS carried preference over equity shareholders in respect of repayment of capital.

iv. During the year, the Company has paid the interim dividend on preference shares including arrears thereof. The total dividend appropriation up till the year ended March 31, 2016 amounted to Rs,'' 1020.44 lacs including corporate dividend tax of? Rs, 207.74 lacs.

v. OCCPS which were redeemable at par on March 31, 2003, were redeemed on March 10, 2016 of the total Preference Share Capital of? Rs, 687.60lacs, the holders of 1, 74,557 OCCPS of? 100 par value, aggregating to Rs, 174.56 lacs, had surrendered their right in the redemption, including the preference dividend thereon for the benefit of the Company, and on redemption, based on a legal advice received the aforesaid amount has been transferred to Capital Reserve.

1 LONG - TERM BORROWINGS (contd.)

II. Security and Repayment Terms: (For Borrowings as at March 31, 2016)

a. Borrowings at part I (d) and (g) are generally repayable in 36 equated monthly installments carrying varied interest from 10% to 12% p.a. These loans are secured by hypothecation of vehicles financed there under.

III. Security and Repayment Terms: (For Borrowings as at March 31, 2015)

a. Borrowings at part I (a) above is secured by way of pari-passu second mortgage in favor of the Trustees on the Company''s immovable and movable properties, both, present and future, situated at Ranavav (Gujarat), save and except on the equipment / movable assets secured by specific charge of such other lenders financing them and shall rank subservient to existing charges created / to be created in favor of specific and first charge holders. The said debentures are also secured by personal guarantee of two Directors of the Company.

b. Borrowings at part I (b), (c), (e) and (f) above are secured by way of pari-passu first mortgage in favor of the Trustees / lenders on the Company''s immovable and movable properties, both, present and future, situated at Ranavav (Gujarat), save and except on stocks, spares and book debts for securing borrowings for working capital (on which they have a second charge) and on the equipment / movable assets secured by specific charge of such other lenders financing them and shall rank subservient to existing charges created / to be created in favor of specific charge holders. These borrowings are also secured by personal guarantee of two Directors of the Company.

c. All the aforementioned borrowings except part I (d) and (g) are further secured by hypothecation of ''Hathi'' brand on pari-passu first charge basis and pledge of promoter shares in favor of the Trustees.

d. For Part I (a), (b), (c), (e) and (f), interest is payable by the Company on ballooning basis ranging from 2% p.a. to 12% p.a. resulting into an average rate of interest of 8.5% p.a. For the current year, such interest is payable and provided at 12% p.a. The first year interest @ 2% has been funded as Funded Interest Term Loan (FITL-II). The repayment of outstanding principal was to be made over a period of 10 years including the initial moratorium of first three years, i.e. payable from July 14, 2007 till April 14, 2015 on the 14th date after the end of each calendar quarter on ballooning basis ranging from 7.50% to 20% p.a. 50% of the unpaid simple interest on all the loans was converted into FITL-I. Both, FITL I and II, do not carry interest and are repayable 25% in the 9th and 75% in the 10th year, i.e. payable from July 14, 2013 till April 14, 2015.

e. The amount outstanding as at March 31, 2012, in respect of Part I (f) is repayable in 12 quarterly installments of 5% each, commencing from June 30, 2012 and 4 quarterly installments of 10% each, commencing from June 30, 2015. However, these amounts have been paid before the year-end.

f. For Part I (a), (b), (c), (e) and (f);

i. The Company has an option to prepay all the loans without premium on pro-rata basis to all the lenders.

ii. The restructured loans including FITL are subject to recompense clause as may be approved by CDR Cell.

Hi. In the event of default in compliance of restructuring package, after the approval of CDR, the lenders have a right to convert 100% of the defaulted amount of the restructured debt into Equity Shares of the Company, at any time during the currency of assistance, at a price to be determined as per SEBI Guidelines.

iv. The lenders have the right to convert 20% of the loan outstanding (including FITL and WCTL) into Equity Shares of the Company, at a price to be determined as per SEBI Guidelines in one or more occasions after 7 years from the date of approval. As regards zero coupons FITL, remaining outstanding beyond 7 years, such conversion right of lenders would be applicable to the entire amount and the conversion shall be at a price as per SEBI guidelines.

2.

i. Gross Block includesRs, 4061.10 lacs (Previous year Rs, 4061.10 lacs) added on revaluation of the Company''s free-hold and leasehold land, buildings, plant and machinery situated at Ranavav in order to reflect a realistic position of the net replacement cost of such assets, on the basis of valuation made by an external value, which had resulted in a net increase of Rs, 5722.61 lacs, as at June 30,1993.

ii. Besides the land specified above, the Company holds other leasehold land for which the Company pays only ground rent. Hi. Plant and equipments include cost of service line of Rs, 33.20 lacs (Previous Year Rs,'' 33.20 lacs), ownership of which is vested with Paschim Gujarat Vij Company Limited.

iv. Effective April 1, 2014, the Company has provided depreciation on its tangible fixed assets as per the useful lives and residual values specified in Part C of Schedule II to the Companies Act, 2013 or based on the period of use available to the Company (primarily consisting of Jetty). Accordingly, in respect of the tangible fixed assets as on April 1, 2014, the carrying amount, net of residual value, has been depreciated over the remaining useful life as on that date. As a result, the charge for depreciation for the year ended March 31, 2015 is lower by Rs,'' 197.90 lacs. Further, in view of the Notification No. GSR 627(E) of August 29, 2014 amending Schedule II, on the basis of option available, the Company has then decided to charge the carrying amount of assets, after retaining residual value, in cases where the remaining useful life has been completed as on April 1, 2014 by way of depreciation to the Statement of Profit and Loss and accordingly, the sum of? 144.12 lacs is included in depreciation for the year ended March 31, 2015.

v. Based on the policy of Component Accounting adopted by the Company with effect from April 1, 2015, there is no additional or otherwise impact on depreciation for the year.

vi. Impairment of Assets:

a) The Company had incurred an aggregate sum of Rs, 8107.17 lacs (Previous Year Rs, 8107.17 lacs) towards Expansion Project Assets, and reflected the same under Capital Work-in-progress (CWIP). The expenditure includes cost of an imported plant purchased (including related stores and spares), civil work carried out and preoperative expenses (including interest capitalized) as shown in (b) below. However, later on in the year 2005, due to several adversities, the project was suspended.

_Previous Year’s figures have been regrouped / reclassified to conform to the current year’s presentation.

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Mar 31, 2015

1. The accumulated arrears of preference dividend unprovoked for the period from November 2000 till the balance sheet date amounted to Rs. 1281.78 lacs (Previous year Rs. 1192.39 lacs), including Rs. 89.39 lacs, (Previous year Rs. 89.39 lacs) for the year.

2. Considering the implementation of the scheme formulated and sanctioned for a sick company and that the net worth of the Company is positive, it no longer being a Sick Industrial Company, the accounts of the Company are prepared on a going concern basis.

i. The estimate of rate of escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors, including supply and demand in the employment market.

ii. The Company expects to contribute a sum of Rs. 110.75 lacs (Previous year Rs. 103.96 lacs) towards gratuity during the year ended March 31, 2016.

iii. The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held and historical return on the plan assets. The same are disclosed hereunder to the extent available.

i. Subsidiary Companies :

a. Agrima Consultants International Limited d. Ria Holdings Limited

b. Pranay Holdings Limited e. Reeti Investments Limited

c. Prachit Holdings Limited f. Concorde Cement P. Limited

iii. Key Management Personnel :

a. Mr. Jay M Mehta – Executive Vice Chairman

b. Mr. M S Gilotra - Managing Director

iv. Relatives of Key Management Personnel with whom Transactions have taken place:

a. Mr. Mahendra N Mehta - Father of Mr. Jay M Mehta

b. Mrs. Narinder Kaur - Wife of Mr. M S Gilotra

c. Mr. Amandeep Singh Gilotra - Son of Mr. M S Gilotra

3 Previous Year's figures have been regrouped / reclassified to conform to the current year's presentation.

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Mar 31, 2014

1. RIGHTS, PREFERENCES AND RESTRICTIONS

a. Equity Shares

i. The Company has only one class of equity shares referred to as equity shares having a par value of Rs. 10. Each holder of equity shares is entitled to one vote per share.

ii. Dividends, if any, is declared and paid in Indian rupees. The dividend, if any, 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. However, in view of the carried forward losses, no dividend is / was declared on the equity shares for the year ended March 31, 2014 / March 31, 2013.

iii. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

b. Preference Shares :

i. The Company has only one class of preference shares referred to as 13% Optionally Convertible Cumulative Preference Shares (OCCPS) having a par value of Rs. 100. The preference shares do not carry any voting right. In terms of Section 87 of the Companies Act, 1956, the holders of cumulative preference shares get entitled to vote on every resolution placed by the Company at any meeting, if the dividend due on such shares or any part thereof has remained unpaid in respect of an aggregate period of not less than two years preceding the date of commencement of the meeting.

ii. OCCPS carried a fixed cumulative dividend of 13% p.a. from the date of issue. The holders of OCCPS carry a right to dividend ahead of equity share holders.

iii. In the event of liquidation, the holders of OCCPS carry preference over equity shareholders in respect of repayment of capital.

iv. OCCPS were redeemable at par on March 31, 2003. Of the total Preference Share Capital of Rs. 687.60 lacs, the holders of 1,74,557 OCCPS of Rs. 100 par value, aggregating to Rs. 174.56 lacs, have surrendered their right in the redemption, including the preference dividend thereon for the benefit of the Company. Based on the advise received, pending the availability of funds / distributable profits for the redemption of capital, the beneficial ownership of these OCCPS has already been transferred in favour of a trust of which the Company is the beneficiary. The accounting effect of such waiver (only in respect of these OCCPS) shall be made as and when such shares will be redeemed. For the balance of OCCPS, the right of conversion lapsed on August 22, 2003.

II. Security:

a. Borrowings at part I (a) above is secured by way of pari-passu second mortgage in favour of the Trustees on the Company''s immovable and movable properties, both, present and future, situated at Ranavav (Gujarat), save and except on the equipment / movable assets secured by specific charge of such other lenders financing them and shall rank subservient to existing charges created / to be created in favour of specific and first charge holders. The said debentures are also secured by personal guarantee of two Directors of the Company.

b. Borrowings at part I (b), (c), (e), (f) and (h) above are secured by way of pari-passu first mortgage in favour of the Trustees / lenders on the Company''s immovable and movable properties, both, present and future, situated at Ranavav (Gujarat), save and except on stocks, spares and book debts for securing borrowings for working capital (on which they have a second charge) and on the equipment / movable assets secured by specific charge of such other lenders financing them and shall rank subservient to existing charges created / to be created in favour of specific charge holders. These borrowings [except I (h)] are also secured by personal guarantee of two Directors of the Company.

c. Borrowings at part I (d) and (g) are generally repayable in 36 equated monthly instalments carrying varied interest from 10% to 12% p.a. These loans are secured by hypothecation of vehicles financed there under.

d. All the aforementioned borrowings except part I (d) and (g) are further secured by hypothecation of ''Hathi'' brand on pari-passu first charge basis and pledge of promoter shares in favour of the Trustees.

III. Repayment Terms:

a. For Part I (a), (b), (c), (e) and (f), interest is payable by the Company on ballooning basis ranging from 2% p.a. to 12% p.a. resulting into an average rate of interest of 8.5% p.a. For the current year, such interest is payable and provided at 12% p.a. The first year interest @ 2% has been funded as Funded Interest Term Loan (FITL-II). The repayment of outstanding principal is to be made over a period of 10 years including the initial moratorium of first three years. (i.e. payable from July 14, 2007 till April 14, 2015 on the 14th date after the end of each calendar quarter on ballooning basis ranging from 7.50% to 20% p.a.). 50% of the unpaid simple interest on all the loans was converted into FITL-I. Both, FITL I and II, do not carry interest and are repayable 25% in the 9th and 75% in the 10th year (i.e. payable from July 14, 2013 till April 14, 2015).

b. The amount outstanding as at March 31, 2012, in respect of Part I (h) is repayable in 12 quarterly instalments of 5% each, commencing from June 30, 2012 and 4 quarterly instalments of 10% each, commencing from June 30, 2015.

c. For Part I (a), (b), (c), (e) and (f);

i. The Company has an option to prepay all the loans without premium on pro-rata basis to all the lenders.

ii. The restructured loans including FITL are subject to recompense clause as may be approved by CDR Cell.

iii. In the event of default in compliance of restructuring package, after the approval of CDR, the lenders have a right to convert 100% of the defaulted amount of the restructured debt into Equity Shares of the Company, at any time during the currency of assistance, at a price to be determined as per SEBI Guidelines.

iv. The lenders have the right to convert 20% of the loan outstanding (including FITL and WCTL) into Equity Shares of the Company, at a price to be determined as per SEBI Guidelines in one or more occasions after 7 years from the date of approval. As regards zero coupon FITL, remaining outstanding beyond 7 years, such conversion right of lenders would be applicable to the entire amount and the conversion shall be at a price as per SEBI GUIDELINES.

2. Security:

The Working capital facilities are secured by first charge by way of hypothecation of current assets, namely, stocks of raw materials, semi finished and finished goods, consumable stores and spares, bills receivables, book debts and all other movables, both, present and future. It is also secured by second mortgage and charge on the Company''s immovable and movable properties both present and future. They are also secured by personal guarantee of two Directors of the Company. Of the above, a cash credit facility from a bank aggregating to Rs. 0.82 lacs (Previous Year Rs. 11.39 lacs), is further secured by shares of Gujarat Sidhee Cement Limited held by subsidiary companies.

3. NOTES:

i. Gross Block includes Rs. 4061.10 lacs (Previous year Rs. 4345.89 lacs) added on revaluation of the Company''s free-hold and leasehold land, buildings, plant and machinery situated at Ranavav in order to reflect a realistic position of the net replacement cost of such assets, on the basis of valuation made by an external valuer, which had resulted in a net increase of Rs. 5722.61 lacs, as at June 30, 1993.

ii. Besides the land specified above, the Company holds other leasehold land for which the company pays only ground rent.

iii. Buildings exclude cost of shares held in a Co-operative Society included under Note 12 of Non-current Investments.

iv. Plant and equipments include cost of service line of Rs. 33.20 lacs (Previous Year Rs. 33.20 lacs), ownership of which is vested with Paschim Gujarat Vij Company Limited.

v. Plant and equipments include cost of assets of Rs. 206.69 lacs (Previous Year Rs. 206.69 lacs), acquired under lease purchase agreements.

vi. Vehicles include assets financed under hire purchase agreements.

viii. Impairment of Assets :

The Company had incurred an aggregate sum of Rs. 7838.15 lacs (Previous Year Rs. 7901.66 lacs) towards Expansion Project Assets, and reflected under Capital Work-in-progress (CWIP). The expenditure includes cost of an imported plant purchased, civil work carried out and pre-operative expenses (including interest capitalised) as shown in Note 11 (vii) above. However, later on in the year 2005, due to several adversities, the project was suspended. At the year end, based on the assessment of the recoverable amount (net selling price) of the said suspended Project and civil works reflected under CWIP carried out by M/s Shinde Engineering Services, project consultants, the aggregate provision for impairment of Rs. 2490.08 lacs (Previous Year Rs. 1983.01 lacs), including Rs. 507.07 lacs (Previous Year Rs. 1326.32 lacs) for the year, is recognised as required under Accounting Standard 28 on "Impairment of Assets".

4. ACCOUNTING FOR TAXES ON INCOME

In terms of paragraph 26 of Accounting Standard 22 on "Accounting for Taxes on Income", the Company has reviewed its Deferred Tax Asset (DTA) recognised till last year.

In terms of AS 22, the Company recognised DTA on the basis of prudence only to the extent it would have sufficient future taxable income (by way of reduction in unabsorbed depreciation and / or carried forward business losses) against which the aggregate DTA recognised as on the Balance Sheet date would be realised. The Company also recognized DTA in respect of the unabsorbed depreciation to the extent of deferred tax liability (DTL) for timing difference for depreciation.

At the year end, the Company has recognised DTA of Rs. 1096.09 lacs (Previous Year Rs. 1332.36 lacs), i.e. to the extent of DTL for the timing difference on account of depreciation.

5. Note:

Write back is in respect of One Time Settlement (OTS) with the Government of Gujarat (GOG), of the outstanding dues as per Option II of the Government Resolution for OTS applicable to sick units under BIFR. Accordingly, the amounts lying as outstanding dues were written back in terms of remission given under OTS during the year ended March 31, 2013. The settlement covering a period of 18 months as per letter Ref IC/IM/BIFR/9351275/699695 dated May 17, 2012 of GOG, 2012 was successfully completed during the current financial year.

6. In view of the carried forward losses and unabsorbed depreciation available, the Company is not liable to tax as per the normal provisions of the Income-tax Act, 1961. Further, as per the provisions of Minimum Alternate Tax (MAT) under Section 115JB of the Income-tax Act, 1961, the Company has provided for MAT during the year and to the extent of convincing evidence the same has been included under MAT Credit Entitlement and shown under "Short- term Loans and Advances" in Note 19.

As at As at March 31, 2014 March 31, 2013 Rs. in lacs Rs. in lacs

7. CONTINGENT LIABILITIES AND COMMITMENTS

i. Contingent liabilities: (to the extent not provided for)

a. Estimated amount of contracts remaining to be executed on capital 709.49 332.79 account (net of advances of Rs. 432.57 lacs, previous year Rs. 388.69 lacs).

b. Matters under disputes / appeals : Sales Tax liabilities 435.67 435.67

Excise Duty 296.71 296.71

Service Tax 105.00 106.16

Royalty 15.12 15.12

Customs Duty 269.89 4.05

Road Tax 26.54 26.54

Claims filed by workmen or their union against the Company 145.39 373.89

On account of Power Supply 440.99 440.99

Other demands and claims against the Company not acknowledged as debts 20.55 20.55

The amounts stated are including interest and penalty, to the extent demanded.

c. The operation of a show cause notice dated August 20, 2002 issued by the Jute Commissioner, stipulating the Company to fulfill the obligation of packing a minimum of 50% of cement in jute bags from March 15, 1995 or pay penalty under Section 3 (1) of the Jute Packing Materials (Compulsory use in Packing Commodities) Act, 1987 is presently stayed by Calcutta High Court, the amount of which is not ascertainable.

ii. Commitments:

The Company has guaranteed a minimum cargo handling of 500,000 M.T from April to March each year at its jetty at Porbander, under the license agreement entered with Gujarat Maritime Board for a period of 15 years from the day Jetty became operational. The failure of such commitment shall make the Company liable to pay the wharfage charges for the remaining cargo at the prevailing wharfage rates. During the year (as also in the previous year) the Company has handled cargo in excess of the minimum requirement.

8. The accumulated arrears of preference dividend unprovided for the period from November 2000 till the balance sheet date amounted to Rs. 1192.39 lacs (Previous year Rs. 1103.91 lacs), including Rs. 89.39 lacs, (Previous year Rs. 89.39 lacs) for the year.

9. The Company was registered as a Sick Industrial Company with the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). BIFR, vide its order dated June 1, 2012 has formulated and circulated a Sanctioned Rehabilitation Scheme (SS-12) for revival of the Company, inter-alia providing relief and concessions from various agencies including reduction / waivers of interest (including default interest, penal interest and penalties). The Scheme as approved is presently under implementation. The Sanctioned Scheme envisages the following;

i. Lenders covered under Scheme of Compromise and Arrangement u/s 391 to 394 of Companies Act, 1956 to be paid as per the CDR Scheme / Scheme of Compromise u/s 391 to 394 of Companies Act, 1956.

ii. For loans from India Debt Management Private Limited not covered in (i) above, the interest rate has been reset to 12% simple interest with effect from April 1, 2010 and the entire amount outstanding as on March 31, 2012 to be repaid over a period of four years.

iii. Promoters and their associates to infuse fresh equity of Rs. 1800 lacs.

Since the net worth of the Company is positive, it is no longer a Sick Industrial Company, and implementation of sanctioned Corporate Debt Restructuring (CDR) Scheme, the accounts of the Company are prepared on a going concern basis.

10. Expenses on maintenance, etc. incurred during the year for a guest house at Mumbai amounting to Rs. 7.71 lacs (Previous year Rs. 5.99 lacs) have been presently borne by the Company. The guesthouse was under the unauthorised occupation of relatives of the ex-chairman. The Company had filed a suit for recovery of the possession of the guest house, which also includes recovery of expenses incurred. The said suit was decided against the Company by declaring legal heirs of the ex-chairman as tenants. The Company has preferred an appeal before the Division Bench against the said order, which is pending.

However, since the date of the Balance Sheet, under the process of sale through tender, on as is where is basis, a letter of acceptance to the successful bidder for the said guest house has been issued.

i. The estimate of rate of escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors, including supply and demand in the employment market.

ii. The Company expects to contribute a sum of Rs. 103.96 lacs (Previous year Rs. 88.75 lacs) towards gratuity during the year ended March 31, 2015.

iii. The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held and historical return on the plan assets.

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Mar 31, 2013

1 ACCOUNTING FOR TAXES ON INCOME

In terms of paragraph 26 of Accounting Standard 22 on "Accounting for Taxes on Income", the Company has reviewed its Deferred Tax Asset (DTA) recognised till last year.

In terms of AS 22, the Company recognised DTA on the basis of prudence only to the extent it would have sufficient future taxable income (by way of reduction in unabsorbed depreciation and / or carried forward business losses) against which the aggregate DTA recognised as on the Balance Sheet date would be realised. The Company also recognized DTA in respect of the unabsorbed depreciation to the extent of deferred tax liability (DTL) for timing difference for depreciation. Accordingly, upto March 31, 2012, DTA of X 3204.68 lacs was recognised.

In view of the profits during the year, to the extent it sets off the unabsorbed depreciation and business losses, DTA of Rs. 3204.68 lacs so recognised, is reversed.

Upto March 31, 2013, the Company has recognised DTA of Rs. 1332.36 lacs, i.e. to the extent of DTL for the timing difference on account of depreciation.

2 In view of the carried forward losses and unabsorbed depreciation available, the Company is not liable to tax as per the normal provisions of the Income-tax Act, 1961. Further, since the Company is registered under BIFR, though the net worth of the Company is positive as at March 31, 2013, as per the provisions of Minimum Alternate Tax under Section 115JB of the Income-tax Act, 1961, the Company is not liable for tax for the year in which its net worth has turned positive.

3 The accumulated arrears of preference dividend unprovided for the period from November 2000 till the balance sheet date amounted to Rs. 1103.91 lacs (Previous year Rs. 1014.52 lacs), including Rs. 89.39 lacs, (Previous year Rs. 89.39 lacs) for the year.

4 The Company is registered as a sick Industrial Company with the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). BIFR, vide its order dated June 1, 2012 has formulated and circulated a Sanctioned Rehabilitation Scheme (SS-12) for revival of the Company, inter-alia providing relief and concessions from various agencies including reduction / waivers of interest (including default interest, penal interest and penalties). The scheme as approved is presently under operation. Based on overall growth in the cement Industry barring any unforeseen circumstances, the continuation of sanctioned Corporate Debt ¦ Restructuring (CDR) Scheme and with One Time Settlement of GoG, the accounts of the Company are prepared on a going concern basis.

5 Expenses on maintenance, etc. incurred during the year for a guest house at Mumbai amounting to Rs. 5.99 lacs (Previous year Rs. 5.38 lacs) have been presently borne by the Company. The guesthouse was under the unauthorised occupation of relatives of the ex-chairman. The Company had filed a suit for recovery of the possession of the guesthouse, which also includes recovery of expenses incurred. The said suit was decided against the Company by declaring legal heirs of the ex-chairman as tenants. The Company has preferred an appeal before the Division Bench against the said order, which is pending.

6 RELATED PARTY DISCLOSURES List of related parties:

i. Enterprises under control, or are controlled by, or under common control, with the reporting enterprise are;

a. Jagmi Investment Limited

b. Fawn Trading Co. Pvt. Limited

c. Fern Trading Co. Pvt. Limited

d. Willow Trading Co. Pvt. Limited

e. Tejashree Trading Co. Pvt. Limited

f. Pallor Trading Co. Pvt. Limited

g. The Mehta International Limited h. Mehta Private Limited

i. Sameta Exports Pvt. Limited

j. Glenn Investments Limited

k. Sunnidhi Trading Private Limited

I. Sumaraj Holdings Private Limited

m. Clarence Investments Limited

n. TransAsia Investment & Trading Limited

o. Hopgood Investments Limited

p. Sampson Limited

q. Villa Trading Co. Pvt. Ltd.

r. Aber Investments Limited

s. Galaxy Technologies Private Limited

t. Mehta Sports Private Limited

u. The Sea Island Investments Limited

ii. Subsidiary Companies :

a. Agrima Consultants International Limited

b. Pranay Holdings Limited

c. Prachit Holdings Limited

d. Ria Holdings Limited

e. Reeti Investments Limited

f. Concorde Cement R Limited

iii. Key Management Personnel:

a. Mr. Jay M Mehta - Executive Vice Chairman

b. Mr. M S Gilotra - Managing Director

iv. Relatives of Key Management Personnel with whom Transactions have taken place:

a. Mrs. Narinder Kaur - Wife of Mr. M S Gilotra

b. Mr. Amandeep Singh Gilotra - Son of Mr. M S Gilotra

c. Mr. Mahendra N Mehta - Father of Mr Jay M Mehta

v. Enterprise having Key Management Personnel in common:

a. Gujarat Sidhee Cement Limited

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Mar 31, 2012

RIGHTS, PREFERENCES AND RESTRICTIONS

a. Equity shares

i. The Company has only one class of equity shares referred to as equity shares having a par value of Rs 10. Each holder of equity shares is entitled to one vote per share.

ii. Dividends, if any, is declared and paid in Indian rupees. The dividend, if any, 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. However, in view of the losses, no dividend is / was declared on the equity shares for the year ended March 31, 2012 / March 31, 2011.

iii. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

b. Preference shares :

i. The Company has only one class of preference shares referred to as 13% Optionally convertible cumulative preference shares (OCCPS) having a par value of Rs100. The preference shares do not carry any voting right. In terms of Section 87 of the Companies Act, 1956, the holders of cumulative preference shares get entitled to vote on every resolution placed by the Company at any meeting, if the dividend due on such shares or any part thereof has remained unpaid in respect of an aggregate period of not less than two years preceding the date of commencement of the meeting.

ii. OCCPS carried a fixed cumulative dividend of 13% per annum from the date of issue. The holders of OCCPS carry a right to dividend ahead of equity share holders.

iii. In the event of liquidation, the OCCPS holders carry preference over equity share holders in respect of repayment of capital.

iv. OCCPS were redeemable at par on March 31, 2003. Of the total Preference share capital of Rs 687.60 lacs, the holders of 1,74,557 OCCPS of Rs 100 par value, aggregating to Rs 174.56 lacs, have surrendered their right in the redemption, including the preference dividend thereon for the benefit of the Company. Based on the advise received, pending the availability of funds / distributable profits for the redemption of capital, the beneficial ownership of these OCCPS has already been transferred in favour of a trust of which the Company is the beneficiary. The accounting effect of such waiver (only in respect of these OCCPS) shall be made as and when such shares will be redeemed. For the balance of OCCPS, the right of conversion lapsed on August 22, 2003.

C REPAYMENT TERMS AND SECURITY :

a. Debentures:

i. Public debentures aggregating to Rs 2456.07 lacs, together with interest thereon, remuneration of the Trustees, and other amounts payable in respect thereof, are secured by way of pari-passu second mortgage in favour of the Trustees on the Company's immovable and movable properties, both, present and future, situated at Ranavav (Gujarat), save and except on the equipment / movable assets secured by specific charge of such other lenders financing them and shall rank subservient to existing charges created / to be created in favour of specific and first charge holders. It is also secured by personal guarantee of two Directors of the Company.

ii. Private debentures aggregating to Rs 573.75 lacs, together with interest thereon, remuneration of the Trustees, and other amounts payable in respect thereof, are secured by way of pari-passu first mortgage in favour of the Trustees on the Company's immovable and movable properties, both, present and future, situated at Ranavav (Gujarat), save and except on stocks, spares and book debts for securing borrowings for working capital (on which they will have second charge) and on the equipment / movable assets secured by specific charge of such other lenders financing them and shall rank subservient to existing charges created / to be created in favour of specific charge holders. It is also secured by personal guarantee of two Directors of the Company.

b. Term loans:

i. From Banks:

a. Those under CDR are secured by way of pari-passu first mortgage on the Company's immovable and movable properties, both, present and future, situated at Ranavav (Gujarat), save and except on stocks, spares and book debts for securing borrowings for working capital (on which they will have second charge) and on the equipment / movable assets secured by specific charge of such other lenders financing them and shall rank subservient to existing charges created / to be created in favour of specific charge holders. It is also secured by personal guarantee of two Directors of the Company. The term loan from Rajkot Nagarik Sahakari Bank Limited of Rs 16.24 lacs, is further secured by shares of Gujarat Sidhee Cement Limited held by Company's subsidiary.

b Those other than CDR are Vehicle loans which are generally repayable in 36 equated monthly installments carrying varied interest from 10% to 12% p.a. These loans are secured by hypothecation of vehicles financed thereunder and are further secured by personal guarantee by one of the directors of the Company.

ii. From Financial Institutions - Under CDR:

These loans with funded interest term loans, are secured by way of pari-passu first mortgage on the Company's immovable and movable properties, both present and future situated at Ranavav (Gujarat), save and except on stocks, spares and book debts for securing borrowings for working capital (on which they will have second charge) and on the equipment / movable assets secured by specific charge of such other lenders financing them and shall rank subservient to existing charges created / to be created in favour of specific charge holders. It is also secured by personal guarantee of two Directors of the Company.

iii. From others - Under CDR:

a. Term Loans from India Debt Management Pvt. Limited (assigned by IFCI to IDM) together with Funded Interest Term Loans and accrued interest thereon, are secured by way of pari-passu first mortgage on the Company's immovable and movable properties, both present and future situated at Ranavav (Gujarat), save and except on stocks, spares and book debts for securing borrowings for working capital (on which they will have second charge) and on the equipment / movable assets secured by specific charge of such other lenders financing them and shall rank subservient to existing charges created / to be created in favour of specific charge holders. It is also secured by personal guarantee of two Directors of the Company.

b. Other Funded Interest Term Loans amounting to Rs 1109.65 lacs, are secured as mentioned above in para C (a) (i) above.

c. Other Loans - Not under CDR

i. Vehicle loans from Reliance Capital Financial Services Limited of Rs 1.61 lacs, carrying interest @ 11% p.a., is repayable in 36 equated monthly installments and is secured by hypothecation of vehicles financed by them and personal guarantee by one of the directors of the Company.

ii. Hire purchase equipment Loans from SREI Infrastructure Finance Limited are repayable in 60 equated monthly installments carrying interest @ 11% p.a., and are secured by hypothecation of assets financed by them and personal guarantee by one of the directors of the Company.

iii. Terms of repayment of secured loans taken from India Debt Management Pvt. Ltd. (IDM) - other than CDR

Term Loans from India Debt Management Pvt. Limited, together with redemption premium due and accrued interest thereon, amounting to Rs 14007.70 lacs, are secured by way of pari-passu first mortgage on the Company's immovable and movable properties, both present and future situated at Ranavav (Gujarat), save and except on stocks, spares and book debts for securing borrowings for working capital (on which they will have second charge) and on the equipment / movable assets secured by specific charge of such other lenders financing them and shall rank subservient to existing charges created / to be created in favour of specific charge holders. These amounts have fully matured as on the balance sheet date. The repayment terms thereof are given hereunder:

a. Term loan of Rs 6705 lacs taken vide loan agreement dated August 20, 2007 was repayable in three annual installments of Rs 2235 lacs, commencing from July 15, 2008. It carries interest @ 12% p.a. till repayment and repayment premium of 10% of the principal value of loan payable alongwith each principal installment.

b. Term loan of Rs 10753.70 lacs (including funded interest) taken vide loan agreement dated November 2, 2006 was payable 20% on July 15, 2008 and 40% each on July 15, 2009 and July 15, 2010. It carries interest @ 10% p.a. from the date of disbursement till January 15, 2007, 11% p.a. till January 15, 2008 and 12% p.a. from thereafter till repayment and redemption premium of 10% of the principal value of loan payable alongwith each principal installment.

c. Bridge loan of Rs 3500 lacs taken vide loan agreement dated September 19, 2008 was payable in 2 equal annual installments commencing from July 15, 2010. It carries interest @ 16% p.a. from the date of disbursement till June 30, 2010 and 18% p.a. from July 1, 2010 till repayment.

d. Debentures included in para C(a)(i) and term loan mentioned under para C(b) (iii) (a) and all the term loans mentioned at C(c)(iii) carries interest for the defaulted periods @ 19% p.a. The rate of interest may undergo change on sanction of the Rehabilitation Scheme referred to in Note 33 (i).

d. All the aforementioned borrowings except vehicle loans from HDFC Bank of Rs 112.09 lacs, vehicle loans from Reliance

Capital Financial Services Limited of Rs 1.61 lacs and hire purchase creditors, are further secured by hypothecation of

'Hathi' brand on pari-passu first charge basis and pledge of promoter shares in favour of the Trustees.

e. Terms of repayment of Loans - Under CDR [Referred to in C(a), C(b)(i)(a), C(b)(ii) and C(b)(iii)]

i. In an earlier year, relief and concessions were granted by Banks, Financial Institutions and others, sanctioned under the Corporate Debt Restructuring (CDR) Scheme for debts outstanding as on July 1, 2005, being the cut off date, including waiver of principal and interest on One Time Settlement under Series A of the CDR Scheme pursuant to the letter no. BY CDR (Ag) /No.1127/2005-06 dated December 26, 2005 of the CDR Cell. Subsequently settlement was also entered into with other lenders which was approved by the Hon'ble High Court of Gujarat vide its order dated December 24, 2007, in the proceedings of the Company u/s 391 and 394 of the Companies Act, 1956 approving the restructuring scheme sanctioned by CDR. All these relief and concessions aggregating to Rs 11501.61 lacs were waived by the respective lenders.

ii. As per the CDR Scheme, interest is payable by the Company on ballooning basis ranging from 2% p.a. to 12% p.a. resulting into an average rate of interest of 8.5% per annum. For the current year, such interest is payable and provided at 12% per annum. The first year interest @ 2% has been funded as Funded Interest Term Loan (FITL-II). The repayment of outstanding principal is to be made over a period of 10 years including the initial moratorium of first three years. (i.e. payable from July 14, 2007 till April 14, 2015 on the 14th date after the end of each calendar quarter on ballooning basis ranging from 7.50% to 20% p.a.) 50% of the unpaid simple interest on all the loans was converted into FITL-I. Both, FITL I and II, do not carry interest and are repayable in the 9th and 10th year.

iii. The Company has an option to prepay all the loans without premium on pro-rata basis to all the lenders.

iv. All the restructured loans including FITL are subject to recompense clause as may be approved by CDR Cell.

v. In the event of default in compliance of restructuring package, after the approval of CDR, the lenders have a right to convert 100% of the defaulted amount of the restructured debt into Equity Shares of the Company, at any time during the currency of assistance, at a price to be determined as per SEBI Guidelines.

vi. The lenders have the right to convert 20% of the loan outstanding (including FITL and WCTL) into Equity Shares of the Company, at a price to be determined as per SEBI Guidelines in one or more occasions after 7 years from the date of approval. As regards zero coupon FITl, remaining outstanding beyond 7 years, such conversion right of lenders would be applicable to the entire amount and the conversion shall be at a price as per SEBI guidelines.

f. The amount of loans referred to for repayment and security are including those reflected in Short-term borrowings and Other current liabilities.

Security:

The working capital facilities from Central Bank of India, Dena Bank and Rajkot Nagarik Sahakari Bank Limited, are secured by first charge by way of hypothecation of the current assets namely, stocks of raw materials, semi finished and finished goods, consumable stores and spares, bills receivables, book debts and all other movables, both present and future. It is also secured by second mortgage and charge on the Company's immovable and movable properties both present and future. They are also secured by personal guarantee of two Directors of the Company. The facility from Rajkot Nagarik Sahakari Bank Limited is further secured by shares of Gujarat Sidhee Cement Limited held by subsidiary companies.

Note:

The Company's request for One Time Settlement (OTS) of Dues payable by sick units under BIFR as per the Government of Gujarat (GoG) GR BFR/(HPC)/102003/3537/P dated May 12, 2004 was under consideration. The Scheme, inter-alia, provided for waiver of interest, penalties, etc. on Sales Tax, Royalty and Electricity Duty. Based on the directions of GoG, the Company had unconditionally deposited a sum of Rs 7000 lacs with Gujarat State Financial Services Limited towards aforesaid settlement. Pending the settlement, dues payable to GoG of Rs18417.16 lacs (Previous year Rs 17022.16 lacs) have been shown net of such deposit, in Statutory dues. The GoG has introduced a new Scheme, in place of its earlier schemes, for relief to the Sick Industrial Units registered with the BIFR vide GR BFR/(HPC)/102009/435690/P dated July 15, 2010. The Company has applied for OTS under the said scheme which is under process.

NOTES

i. Gross Block includes Rs 4602 lacs, added on revaluation of the Company's land, buildings, plant and machinery situated at Ranavav in order to reflect a realistic position of the net replacement cost of such assets, on the basis of valuation made by an external valuer, which had resulted in a net increase of Rs 5722.61 lacs, as at June 30, 1993.

ii. Besides the land specified above, the Company holds other leasehold land in respect of which only ground rent is paid.

iii. Buildings excludes cost of shares held in a Co-operative Society included under note 12 of non-current investments

iv. Plant and equipments include cost of service line of Rs 33.20 lacs (previous year Rs 33.20 lacs), ownership of which is vested with Paschim Gujarat Vij Company Limited.

v. Plant and equipments include cost of assets of Rs 206.69 lacs (Previous year Rs 206.69 lacs), acquired under hire purchase agreements.

vi. Vehicles includes equipment and vehicles financed under hire purchase agreements.

vii. During the year ended March 31, 2012, certain assets which were old and not in use, having gross book value of Rs 548.75 lacs (Net book value Rs 57.99 lacs) and shown as assets discarded, were retired and are included under the head deductions / adjustments above.

viii. During the year ended March 31, 2012, while adopting the Revised Schedule VI formats, computer softwares having a gross book value of Rs 137.07 lacs were transferred from plant and equipments, and included under the head deductions / adjustments above and shown as intangible assets.

x. Impairment of assets

The aggregate sum of Rs 8036.81 lacs spent towards Expansion Project Assets, and reflected under Capital Work- in-progress (CWIP) inter alia, includes cost of an imported plant purchased, civil work carried out and pre-operative expenses (including interest capitalised). However, later on, due to several adversities, the project was suspended in 2005. Since the Project is suspended, based on the assessment of the current value (net selling price) of the said Project and civil works under CWIP by Holtec Consulting Private Limited, an impairment loss of Rs 656.69 lacs, as required under Accounting Standard 28 on "Impairment of Assets" was recognised upto March 31, 2011, and reflected as a separate line item. However, there is no further impairment to the same.

1 ACCOUNTING FOR TAXES ON INCOME

In terms of paragraph 26 of Accounting Standard 22 on "Accounting for Taxes on Income", the Company has reviewed its Deferred Tax Asset (DTA) recognised till last year, and has also, in terms of paragraph 15 to 18 of AS 22, examined the issue of recognising DTA arising during the year on account of unabsorbed depreciation and carried forward busi- ness losses.

Based on the expected waivers on one time settlement scheme with the Government of Gujarat (as referred to in Note to the financial statements), and also considering legal advice from an expert, with regard to the recognition of DTA in terms of AS 22, the Company recognised DTA on the basis of prudence only to the extent it will have sufficient future taxable income (by way of reduction in unabsorbed depreciation and / or carried forward business losses) against which the aggregate DTA recognised as on the Balance Sheet date would be realised. The DTA Company has also been advised that DTA in respect of the unabsorbed depreciation to the extent of deferred tax liability for timing dif- ference for depreciation may be recognised. Accordingly, the Company has not recognised any further DTA than what was recognised upto March 31, 2011. DTA of Rs 203.49 lacs (Previous year Rs 765.63 lacs) is reversed due to reduction in DTL for timing difference for depreciation for the like amount. Details of deferred tax is as under:

2 In view of the carried forward losses and unabsorbed depreciation available the Company is not liable to tax as per the normal provisions of the Income-tax Act, 1961. Further, in view of the book losses for the current year, provision for Minimum Alternate Tax under Section 115 JB of the Income-tax Act, 1961, would also not apply. Therefore, no provision is made for current tax. As at As at March 31, 2012 March 31, 2011 Rs in lacs Rs in lacs

3 CONTINGENT LIABILITIES AND COMMITMENTS

i Contingent liabilities: (to the extent not provided for)

a) Estimated amount of contracts remaining to be executed on capital account 106.06 352.11 (net of advances of Rs 481.50 lacs, previous year Rs 318.31 lacs).

b) Matters under disputes / appeals :

Sales tax liabilities 650.16 329.01

Excise duty 174.05 174.05

Service tax 106.16 62.06

Royalty 66.10 66.10

Customs duty 625.55 625.70

Public Premises (Eviction of unauthorised Occupants) Act, 1971 966.05 919.93

Road tax 26.54 26.54

Claims filed by workmen or their union against the Company 354.52 224.80

On account of power supply 440.99 665.26

Other demands and claims against the Company not acknowledged as debts 46.25 47.25

c) The operation of a show cause notice dated August 20, 2002 issued by the Jute Commissioner, stipulating the Company to fulfill the obligation of packing a minimum of 50% of cement in jute bags from March 15, 1995 or pay penalty under Section 3 (1) of the Jute Packing Materials (Compulsory use in Packing Commodities) Act,w 1987 is presently stayed by Calcutta High Court, the amount of which is not ascertainable.

d) The amounts stated are including interest and penalty, to the extent demanded.

ii. Commitments:

The Company has guaranteed a minimum cargo handling of 500,000 M.T on a yearly basis (from April to March each year) at its jetty at porbander, under the license agreement entered with Gujarat Maritime Board on January 17, 1997 for a period of 15 years from the date Jetty became operational i.e. till 2015. The failure of such commitment shall make the Company liable to pay the wharfage charges for the remaining cargo at the prevailing wharfage rates. During the year (as also in the previous year) the Company has handled cargo in excess of the minimum requirement.

4 The accumulated arrears of preference dividend unprovided for, as at the balance sheet date amounted to Rs 1014.52 lacs (Previous year Rs 925.13 lacs), including Rs 89.39 lacs for the year.

5 i The Company is registered as a sick Industrial Company with the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). BIFR, vide its order dated February 23, 2012 has formulated and circulated a Draft Rehabilitation Scheme (DRS) for revival of the Company, inter-alia envisaging relief and concessions from various agencies including reduction / waivers of interest (including default interest, penal interest and penalties).

ii Considering the overall growth in the Cement Industry barring any unforeseen circumstances, the management is confident that the continuation of sanctioned Corporate Debt Restructuring (CDR) Scheme and other factors like One Time Settlement proposed with GoG, the Company would be able to generate sufficient returns to make its net worth positive in the future. Accordingly, the accounts of the Company are prepared on a going concern basis.

6 Expenses on maintenance, etc. incurred during the year for a guest house at Mumbai amounting to Rs 5.38 lacs (Previous year Rs 4.11 lacs) have been presently borne by the Company. The guesthouse was under the unauthorised occupation of relatives of the ex-chairman. The Company had filed a suit for recovery of the possession of the guesthouse, which also includes recovery of expenses incurred. The said suit was decided against the Company by declaring legal heirs of the ex-chairman as tenants. The Company has preferred an appeal before the Division Bench against the said order, which is pending.

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Mar 31, 2011

As at As at March 31, 2011 March 31, 2010

Rs. In lacs Rs. In lacs

1. Contingent liabilities not provided for:

i. Matters under disputes / appeals :

a. Sales Tax Liabilities 329.01 329.01

b. Excise Duty 174.05 174.05

c. Service Tax 62.06 60.89

d. Royalty 66.10 66.10

e. Customs Duty 631.50 625.47

f. Public Premises (Eviction of unauthorised Occupants) Act, 1971 919.93 1,336.53

g. Road Tax 26.54 26.54

h. Claims filed by workmen or their union against the Company 224.80 211.85

i. On account of Power supply 665.26 440.99

The amounts stated herein above are including interest and penalty, to the extent demanded.

ii. Other demands and claims against the Company not acknowledged as debts 47.25 79.66

2. The operation of a show cause notice dated August 20, 2002 issued by the Jute Commissioner, stipulating the Company to fulfill the obligation of packing a minimum of 50% of cement in jute bags from March 15, 1995 or pay penalty under Section 3 (1) of the Jute Packing Materials (Compulsory use in Packing Commodities) Act, 1987 is presently stayed by Calcutta High Court, amount of which is not ascertainable.

3. i. The Company is registered as a sick Industrial Company with the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985. BIFR, on receipt of directions from its Appellate Authority to reconsider its earlier order, vide its record of the proceedings of the hearing held on March 15, 2011, directed -

a. the Company to submit a revised Draft Rehabilitation Scheme (DRS) taking March 31, 2010, as a cut off date.

b. Operating Agency (OA) to submit a fully tied up DRS.

c. Government of Gujarat (GoG) to expedite its decision on the One Time Settlement.

ii. Considering the overall growth in the Cement Industry barring any unforeseen circumstances, the management is confident that considering the continuation of sanctioned Corporate Debt Restructuring (CDR) Scheme and other factors like One Time Settlement proposed with GoG, the Company would be able to generate sufficient returns to make its net worth positive in the future. Accordingly, the accounts of the Company are prepared on a going concern basis.

4. Of the total Preference Share Capital of Rs. 687.60 lacs, the holders of 1,74,557 Optionally Convertible Cumulative Preference Shares (OCCPS) of Rs. 100 each, aggregating to Rs. 174.56 lacs, have surrendered their right in the redemption, including the preference dividend thereon for the benefit of the Company. Based on an advise received, pending the availability of funds / distributable profits for the redemption of capital, the beneficial ownership of these OCCPS has been transferred in favour of a trust of which the Company is the beneficiary. The accounting effect of such waiver (only in respect of these OCCPS) shall be made as and when such shares will be redeemed. For the balance of OCCPS, the right of conversion lapsed on August 22, 2003.

ii. As per the restructuring package, interest is payable by the Company on ballooning basis ranging from 2% p.a. to 12% p.a. resulting into an average rate of interest of 8.5% per annum. For the current year, such interest is payable and provided at 12% per annum. The first year interest @ 2% is been funded as Funded Interest Term Loan (FITL) II. The repayment of outstanding principal is to be made over a period of 10 years including the initial moratorium of first three years. 50% of the unpaid simple interest on all the loans was converted into FITL-I. Both. FITL I and II, do not carry interest and are repayable in the 9th and 10th year.

iii. The Company has an option to prepay all the loans without premium on pro-rata basis to all the lenders.

iv. All the restructured loans including FITL are subject to Recompense Clause as may be approved by CDR.

v. In the event of default in compliance of restructuring package, after the approval of CDR, the lenders have a right to convert 100% of the defaulted amount of the restructured debt into Equity Shares of the Company, at any time during the currency of assistance, at a price to be determined as per SEBI Guidelines.

vi. The Lenders have the right to convert 20% of the loan outstanding (including FITL and WCTL) into Equity Shares of the Company, at a price to be determined as per SEBI Guidelines in one or more occasions after 7 years from the date of approval. As regards zero coupon FITL, remaining outstanding beyond 7 years, such conversion right of lenders would be applicable to the entire amount and the conversion shall be at a price as per SEBI guidelines.

5. The Companys request for One Time Settlement (OTS) of Dues payable by sick units under BIFR as per the Government of Gujarat (GoG) GR BFR/(HPC)/102003/3537/P dated May 12, 2004 was under consideration. The Scheme, inter-alia, provided for waiver of interest, penalties, etc. on Sales Tax, Royalty and Electricity Duty. Based on the directions of GoG, the Company had unconditionally deposited a sum of Rs. 70 Crores with Gujarat State Financial Services Limited towards aforesaid settlement. Pending the settlement, dues payable to GoG ofRs. 170.22 Crores (Previous Period Rs. 161 Crores) have been shown net of such deposit, in Other Liabilities under Schedule 7. The GoG has introduced a new Scheme, in place of its earlier schemes, for relief to the Sick Industrial Units registered with the BIFR vide GR BFR/(HPC)/102009/435690/P dated July 15, 2010. The Company has applied for OTS under the said scheme which is under process.

6. Expenses on maintenance, etc. incurred during the year for a guest house at Mumbai amounting to Rs. 4.11 lacs (Previous year Rs. 5.05 lacs) have been presently borne by the Company. The guesthouse was under the unauthorised occupation of relatives of the ex-chairman. The Company had filed a suit for recovery of the possession of the guesthouse, which also includes recovery of expenses incurred. The said suit was decided against the Company by declaring legal heirs of the ex-chairman as tenants. The Company has preferred an appeal before the Division Bench against the said order, which is pending.

7. i. In view of the carried forward losses and unabsorbed depreciation available under the Income [ax Act. 1961, no provision for income-tax is made.

ii. in view of the book losses for the current year no provision for Minimum Alternate Tax liability under Section 115 JB of the Income-tax Act, 1961 is made.

8. Related Party Disclosures pursuant to Accounting Standard 18:

A. List of related parties:

i. Promoters, Promoter Companies, its Subsidiaries and Associate companies together holding more than 20% of equity capital, having control are:

a. Jagmi Investment Limited

b. Fawn Trading Co. Pvt. Limited

c. Fern Trading Co. Pvt. Limited

d. Willow Trading Co. Pvt. Limited

e. Tejashree Trading Co. Pvt. Limited

f. Pallor Trading Co. Pvt. Limited

g. The Mehta International Limited

h. Mehta Private Limited

i. Sameta Exports Pvt. Limited

j. Clarence Investments Limited

k. Transasia Investment & Trading Limited

I. Hopgood Investments Limited

m. Sampson Limited

n. Villa Trading Co. Pvt. Ltd.

o. Aber Investments Limited

p. Glenn Investments Limited

q. Mr. Mahendra N Mehta

r. Mr. Jay M Mehta

s. Mr. Hemang D Mehta

t. Mrs. Medhaviniben D Mehta

u. Ms. Uma D Mehta

v. Ms. Kamalakshi D Mehta

w. Mrs. Juhi Jay Mehta

x. Ms. Radha M. Mehta

ii. Subsidiary Companies :

a. Agrima Consultants International Limited

b. Pranay Holdings Limited

c. Prachit Holdings Limited

d. Ria Holdings Limited

e. Reeti Investments Limited

f. Concorde Cement (Pvt.) Limited

iii. Key Management Personnel :

a. Mr. Jay M. Mehta - Executive Vice Chairman

b. Mr. M. S. Gilotra - Managing Director

c. Mr. R. K. Poddar - Deputy Managing Director (Resigned in September 2010)

iv. Relatives of Key Management Personnel with whom Transactions have taken place:

a. Mrs. Narinder Kaur - Wife of Mr. M S Gilotra

b. Mr. Amandeep Singh Gilotra - Son of Mr. M S Gilotra

v. Name of a company in which policies are controlled by common Key Management Personnel :

a Gujarat Sidhee Cement Limited

9. i. In terms of paragraph 26 of Accounting Standard 22 on "Accounting for Taxes on Income", the Company has reviewed its Deferred Tax Asset (DTA) recognised till last year, and has also, in terms of paragraph 15 to 18 of AS 22, examined the issue of recognising DTA arising during the year on account of unabsorbed depreciation and carried forward business losses.

10. The aggregate sum of Rs. 8036.81 lacs spent towards Expansion Project Assets, and reflected under Capital Work- in-progress (CWIP) inter alia, includes cost of an imported plant purchased, civil work carried out and pre-operative expenses (including interest capitalised), (Refer Note 8 to this Schedule). However, later on, due to several adversities, the project was suspended in 2005. Since the Project is suspended, based on the assessment of the current value (Net Selling Price) of the said Project and civil works under CWIP by an independent consultant, an impairment loss of Rs. 656.69 lacs, as required under Accounting Standard 28 on "Impairment of Assets" is recognised in the Profit and Loss Account and reflected as a separate line item.

11. Current years figures have been rearranged, regrouped and / or reclassified, wherever necessary. The figures of the current year are for the twelve months, and hence are not comparable with those of previous period, which is for fifteen months.

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Mar 31, 2010

1. Durins the period, the Company has settled disputes for claims made in earlier years for rate differences by the then jute bags supplier, based on the report of a mediator. Accordingly, the Company has provided for a consolidated sum of Rs. 650 lacs, in full and final settlement of claims of the principal amount in the civil suit filed in this connection and damages and compensation for unilateral termination / cancellation of contracts. This amount is reflected as Damages and Compensation Claim Settlement under Schedule "9" on Manufacturing and other expenses. The report also provided for withdrawal of all suits against the Company as also by the Company. Since the1 date of the Balance Sheet, these suits have been withdrawn and the aforesaid payment has been made.

2. The operation of a show cause notice dated August 20, 2002 issued by the Jute Commissioner, stipulating the Company to fulfill the obligation of packing a minimum of 50% of cement in jute bags from March 15,1995 or pay penalty under Section 3 (1) of the Jute Packing Materials (Compulsory use in Packing Commodities) Act, 1987 is presently stayed by Calcutta High Court, amount of which is not ascertainable.

3. i. The Company is registered as a sick Industrial Company with the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985. However, BIFR had passed an order declaring the Company as not a sick company. The Company appealed against the said order before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR), which has directed BIFR to reconsider its order, which is pending.

ii. Considering the overall growth in the Cement Industry barring any unforeseen circumstances, the management is confident that considering the continuation of sanctioned Corporate Debt Restructuring (CDR) Scheme and other factors, the Company would be able to generate sufficient returns to make its net worth positive in the future. Accordingly, the accounts of the Company are prepared on a going concern basis.

4. Of the total Preference Share Capital of Rs. 687.60 lacs, the holders of 1,74,557 OCCPS of Rs. 100 each, aggregating to Rs. 174.56 lacs, have surrendered their right in the redemption, including the preference dividend thereon for the benefit of the Company. Based on an advise received, pending the availability of funds / distributable profits for the redemption of capital, the beneficial ownership of these OCCPS has been transferred in favour of a trust of which the Company is the beneficiary. The accounting effect of such waiver (only in respect of these OCCPS) shall be made as and when such shares will be redeemed. The right of conversion on these OCCPS lapsed on August 22, 2003.

5. In earlier years, provision for the diminution in value of investments and other doubtful loans and advances, aggregating to Rs. 2,260.98 lacs were adjusted against Revaluation Reserve (RR). Due to such adjustment, to the extent RR was not available in any year, the additional depreciation on the revalued amounts was charged to the Profit and Loss account; accordingly, the aggregate sum of Rs. 875.63 lacs was so charged. During the period ended on December 31, 2008, those provisions of Rs. 2,260.98 lacs were reversed and charged to the Profit and Loss account, and to that extent RR was reinstated. In terms of the Guidance Note on Treatment of Reserve Created on Revaluation of Fixed Assets, issued by the Institute of Chartered Accountants of India, due to such reinstated RR, during the period, the Company has decided to withdraw from RR the said sum of Rs. 875.63 lacs being the additional depreciation on the revalued amounts and adjusted the same against the brought forward debit balance in Profit and Loss account.

6. Financial Restructuring

i. Reliefs and concessions availed from Banks, Financial Institutions and others under the Corporate Debt Restructuring (CDR) Scheme for debts outstanding as on July 1, 2005, being the cut off date, including waiver of principal and interest on One Time Settlement under Series A of the CDR Scheme pursuant to the letter no. BY CDR (AG) /No.1127/2005-06 dated December 26,2005 of the CDR Cel I and subsequent settlement with other lenders and as approved by the Honble High Court of Gujarat vide its order dated December 24, 2007, in the proceedings of the Company u/s 391 and 394 of the Companies Act, 1956 approving the restructuring scheme sanctioned by CDR were duly accounted upto December 31,2008.

ii. As per the restructuring package, the interest is payable by the Company on ballooning basis ranging from 2% p.a. to 12% p.a. resulting into an average rate of interest of 8.5% per annum. For the current period, the interest is payable and provided at 12% per annum. The first year interest @ 2% is to be funded as Funded Interest Term Loan (FITL) II. The repayment of outstanding principal is to be made over a period of 10 years including the initial moratorium of first three years. 50% of the unpaid simple interest on all the loans was converted into FITL-I. Both FITL I and II do not carry interest and are repayable in the 9th and 10th year.

iii. The Company has an option to prepay all the loans without premium on pro-rate basis to all the lenders.

iv. All the restructured loans including FITL are subject to recompense clause as may be approved by CDR.

v In the event of default in compliance of restructuring package, after the approval of CDR, the lenders have a right to convert 100% of the defaulted amount of the restructured debt into Equity Shares of the Company, at any time during the currency of assistance into Equity Shares, at a price to be determined as per SEBI Guidelines.

vi. The Lenders have the right to convert 20% of the loan outstanding (including FITL and WCTL) into Equity Shares of the Company, at a price to be determined as per SEBI Guidelines in one or more occasions after 7 years from the date of approval. As regards zero coupon FITL, remaining outstanding beyond 7 years, such conversion right of lenders would be applicable to the entire amount and the conversion shall be at a price as per SEBI guidelines.

7. The Companys request for One Time Settlement (OTS) of Dues payable by sick units under BIFR as per the Government of Gujarat (GoG) GR BFR/(HPC)/102003/3537/P dated May 12, 2004 was under consideration. The Scheme, inter-alia, provided for waiver of interest, penalties, etc., on Sales Tax, Royalty and Electricity Duty. Based on the directions of GoG, the Company had unconditionally deposited a sum of Rs. 70 Crore with Gujarat State Financial Services Limited towards aforesaid settlement. Pending the settlement, dues payable of Rs. 161 Crore, to GoG have been shown net of such deposit, in Other Liabilities under Schedule 7. Subsequent to the Balance Sheet date, the GoG has introduced a new Scheme, in place of its earlier schemes, for relief to the Sick Industrial Units registered with the BIFR vide GR BFR/(HPC)/102009/435690/P dated July 15, 2010.

8. Expenses on maintenance, etc. incurred during the period for a guest house at Mumbai amounting to Rs. 5.05 lacs (Previous year Rs. 4.07 lacs) have been presently borne by the Company. The guesthouse was under the unauthorised occupation of relatives of the ex-chairman. The Company had filed a suit for recovery of the possession of the guesthouse, which also includes recovery of expenses incurred. The said suit was decided against the Company by declaring legal heirs of the ex-chairman as tenants. The Company has preferred an appeal before the Division Bench against the said order, which is pending.

ii. In the absence of availability of profits as per section 198 and in terms of Schedule XIII of the Companies Act, 1956, the aforesaid remuneration is payable based on Central sovernment approval. The requisite shareholders approval for this remuneration is already received. Applications to the Central Government for approval of the remuneration payable to Mr. R K Poddar, the Deputy Managing Director for the period January 1,2009 to March 31,2010 and to Mr. Jay Mehta, the Executive Vice Chairman and Mr. M S Gilotra, the Managing Director for the period January 1, 2010 to March 31, 2010 have been made for which the approvals are awaited.

9. i. In view of the carried forward losses.and unabsorbed depreciation available under the Income-tax Act, 1961, no provision for income tax is made.

ii. In view of the deduction available of amount of profits of a sick company under Section 115JB2(viii), there is no Minimum Alternate Tax liability under Section 115 JB of the Income tax Act, 1961.

10. Related Party Disclosures under Accounting Standard -18:

i. List of related parties:

Promoters, Promoter Companies, its Subsidiaries and Associate companies holding more than 20% of equity capital:

a. Jagmi Investments Limited

b. Fawn Trading Co. Pvt. Limited

c. Fern Trading Co. Pvt. Limited

d. Willow Trading Co. Pvt. Limited

e. Tejashree Trading Co. Pvt. Limited

f. Pallor Trading Co. Pvt. Limited

g. The Mehta International Limited h. Mehta Private Limited

i. Sameta Exports Pvt. Limited

j. Clarence Investments Limited

k. TransAsia Investment & Trading Limited

I. Sampson Limited

m. Villa Trading Co. Pvt. Ltd.

n. Aber Investments Limited

o. Mr. Mahendra N. Mehta

p.. Mr. Jay M. Mehta

q. Mr. Hemang D Mehta

r. Mrs. Medhaviniben D. Mehta

s. Ms. Uma D. Mehta

t. Ms. Kamalakshi D Mehta

u. Mrs. Juhi Jay Mehta

v. Ms. Radha M. Mehta

ii. Subsidiary Companies:

a. Agrima Consultants International Limited

b. Pranay Holdings Limited

c. Prachit Holdings Limited

d. Ria Holdings Limited

e. Reeti Investments Limited

f. Concorde Cement (Pvt) Limited

iii. Key Management Personnel:

a. Mr. Jay M. Mehta - Executive Vice Chairman

b. Mr. M. S. Gilotra - Managing Director

c. Mr. R. K. Poddar - Deputy Managing Director

iv. Relatives of Key Management Personnel where Transactions have taken place:

a. Mrs. Narinder Kaur - Wife of Mr. M. S. Gilotra

b. Mr. Amandeep Singh Gilotra - Son of Mr. M. S. Gilotra

v. Name of a Company in which policies are controlled by common Key.Management Personnel:

a. Gujarat Sidhee Cement Limited

11. i. In terms of paragraph 26 of Accounting Standard 22 on "Accounting for Taxes on Income", the Company has reviewed its Deferred Tax Asset (DTA) recognised till last year, and has also, in terms of paragraph 15 to 18 of AS 22, examined the issue of recognising DTA arising during the period on account of unabsorbed depreciation and carried forward business losses.

ii. Based on the projections, outlook for the cement industry, continuing revenues generated out of commissioning of Thermal Power Plant and expected waivers on one time settlement scheme with Government of Gujarat and also considering legal advice, from an expert, with regard to the recognition of DTA in terms of AS 22, the Company is virtually certain that it will have sufficient future taxable income against which the aggregate DTA recognised as on the Balance Sheet date would be realised. Further the Company has also been advised that DTA in respect of the unabsorbed depreciation to the extent of deferred tax liability for timing difference for depreciation can be recognised. Even during the current period, there has been a reversal of DTA recognised earlier. Accordingly DTA as detailed herein below has been recognised as at the fifteen months period ended March 31, 2010.

12. Previous periods figures have been rearranged, regrouped and/or reclassified, wherever necessary. The figures of the current period are for the fifteen months, and hence are not comparable with those of previous period, which is for eighteen months.