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நிறுவன பெயரின் முதல் சில எழுத்துக்களை நிரப்பி 'கோ' பட்டனை கிளிக் செய்யவும்

Ambuja Cements Ltd. இன் கணக்கு குறிப்புகள்

Dec 31, 2017

1. Corporate Information

Ambuja Cements Limited (the Company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India and its GDRs are listed under the EURO MTF Platform of Luxembourg Stock Exchange. The registered office of the Company is located at Ambujanagar, Taluka Kodinar, Dist. Gir Somnath, Gujarat.

The Company’s principal activity is to manufacture and market cement and cement related products.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (“The Act”) read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016. Up to the year ended 31st December, 2016 the Company prepared its financial statements in accordance with the requirements of previous Generally Accepted Accounting Principles (previous GAAP) which includes standards notified under the Companies (Accounting Standards) Rules, 2006. These financial statements for the year ended 31st December, 2017 are the Company’s first Ind AS financial statements. The date of transition to Ind AS is 1st January, 2016 (transition date). Details of the principal adjustments along with related reconciliations are detailed in note 55 (first-time adoption).

The financial statements have been prepared on a historical cost basis, except for the following:

A. Certain financial assets and liabilities are measured at fair value (refer accounting policy regarding financial instruments).

B. Non-current asset held for sale are measured at the lower of carrying amount and fair value less cost to sell.

C. Employee defined benefit plans, recognised at the net total of the fair value of plan assets and the present value of the defined benefit obligation.

Financial statements are presented in ’ which is the functional currency of the Company and all values are rounded to the nearest crore, except when otherwise indicated.

Notes :

a) Includes

i) Premises on ownership basis of Rs.84.57 crore (31st December, 2016 - Rs.84.57 crore; 1st January, 2016 - Rs.84.57 crore) and Rs.3.21 crore (31st December, 2016 - Rs.1.61 crore; 1st January, 2016 - Rs. Nil) being accumulated depreciation thereon and cost of shares in co-operative societies are Rs.12,630 (31st December, 2016 - Rs.12,630; 1st January, 2016 - Rs.12,630 ).

ii) Rs.15.31 crore (31st December, 2016 - Rs.15.31 crore; 1st January, 2016 - Rs.14.40 crore) being cost of roads constructed by the Company, the ownership of which vests with the government/local authorities and Rs.7.83 crore (31st December, 2016 Rs.5.07 crore; 1st January, 2016 - Nil) being accumulated depreciation thereon.

b) Cost incurred by the Company, the ownership of which vests with the state maritime boards.

c) Includes Rs.70.61 crore (31st December, 2016 - Rs.69.96 crore; 1st January, 2016 - Rs.69.96 crore) being cost of power lines incurred by the Company, the ownership of which vests with the state electricity boards and Rs.4.43 crore (31st December, 2016 - Rs.2.21 crore; 1st January, 2016 - Rs. Nil) being accumulated depreciation thereon.

d) Includes Rs.11.75 crore (31st December, 2016 - Rs.11.75 crore; 1st January, 2016 - Rs.11.75 crore) being cost of railway sidings incurred by the Company, the ownership of which vests with the railway authorities and Rs.3.08 crore (31st December, 2016 - Rs.1.77 crore; 1st January, 2016 - Rs. Nil) being accumulated depreciation thereon.

e) Includes Rs.0.15 crore (31st December, 2016 - Rs.0.15 crore; 1st January, 2016 - Rs. Nil) capitalised as pre-operative expenses.

f) Pertains to goodwill pursuant to amalgamation of HIPL with the Company Rs. Nil (31st December, 2016 - Rs. Nil; 1st January, 2016 Rs.235.63 crore) (Refer note 54).

g) As per the website of the Ministry of Corporate affairs, certain charges aggregating Rs.53.68 crore on properties of the Company are pending for satisfaction due to some procedural issues, although related loan amounts have already been paid in full.

* In respect of these items, future cash outflows are determinable only on receipt of judgements / decisions pending at various forums / authorities.

(i) Royalty on limestone represents additional royalty, consequent to the order passed by Madhya Pradesh State Mining Department, based on the ratio of 1.6 tonnes of limestone to 1.0 tonne of cement produced at its factory in Chhattisgarh. Subsequent to the year 2016, the Hon’ble High Court of Chhattisgarh, Bilaspur has ruled the matter in favour of the Company.

(ii) Includes a matter relating to 75% exemption from sales tax granted by Government of Rajasthan. However, the eligibility of exemption in excess of 25% was contested by the State Government in a similar matter of another Company. In year 2014, pursuant to the unfavourable decision of the Supreme Court in that similar matter, the sales tax department has initiated proceedings for recovery of differential sales tax and interest thereon on the ground that the Company had given an undertaking to deposit the differential amount of sales tax, in case the Supreme Court’s decision goes against the matter referred above. Against the total demand of Rs.247.97 crore, including interest of Rs.134.45 crore (31st December, 2016 - Rs.247.97 crore, including interest of Rs.134.45 crore; 1st January, 2016 Rs.247.97 crore, including interest of Rs.134.45 crore), the Company has deposited Rs.143.52 crore, including interest Rs.30.00 crore (31st December, 2016 - Rs.143.52 crore including interest of Rs.30.00 crore; 1st January, 2016 -Rs.143.52 crore including interest Rs.30.00 crore), towards sales tax under protest and filed a Special Leave Petition in the Supreme Court with one of the grounds that the tax exemption was availed by virtue of the order passed by the Board for Industrial & Financial Reconstruction (BIFR) during the relevant period. On Company’s petition, the Hon’ble Supreme Court has granted an interim stay on the balance interest. Based on the advice of external legal counsel, the Company believes that, it has good grounds for a successful appeal. Accordingly, no provision is considered necessary.

(iii) a) In 2012, the Competition Commission of India (CCI) issued an order imposing penalty on certain cement manufacturers, including the Company concerning alleged contravention of the provisions of the Competition Act, 2002 and imposed a penalty of Rs.1,163.91 crore on the Company. On Company’s appeal, Competition Appellate Tribunal (COMPAT), initially stayed the penalty and by its final order dated 11th December, 2015, set aside the order of the CCI, remanding the matter back to the CCI for fresh adjudication and for passing a fresh order.

After hearing the matter afresh, the CCI had again, by its order dated 31st August, 2016, imposed a penalty of Rs.1,163.91 crore on the Company (31st December, 2016 - Rs.1,163.91 crore; 1st January, 2016 - Rs. Nil). The Company has filed an appeal against the said Order with the COMPAT. The COMPAT, vide its order dated 21st November, 2016 has stayed the penalty with a condition to deposit 10% of the penalty amount, in the form of fixed deposit (the said condition has been complied with) and levy of interest of 12% p.a in case the appeal is decided against the appellant. Pending final disposal of the appeal, the matter has been disclosed as contingent liability along with interest of Rs.175.07 crore (31st December, 2016 - Rs.42.33 crore; 1st January, 2016 - Rs. Nil). Further, pursuant to the notification issued by Central Government on 26 May, 2017, any appeal, application or proceeding before COMPAT is transferred to National Company Law Appellate Tribunal (NCLAT). The matter has been heard by NCLAT and Order is reserved.

b) In a separate matter, pursuant to a reference filed by the Director, Supplies and Disposals, Government of Haryana, the CCI by its Order dated 19th January, 2017 has imposed a penalty of 29.84 crore on the Company. On Company’s appeal, the COMPAT has stayed the operation of CCI’s order in the meanwhile. The matter is listed before NCLAT and is pending for hearing.

Based on the advice of external legal counsels, the Company believes it has good grounds on merit for a successful appeal in both the aforesaid matters. Accordingly, no provision is considered necessary and the same is disclosed as contingent liability.

(iv) The Collector of Stamps, Delhi vide its Order dated 7th August, 2014, directed erstwhile Holcim (India) Private Limited (HIPL), (merged with the Company), to pay stamp duty (including penalty) of Rs.287.88 crore (31st December, 2016 - Rs.287.88 crore, 1st January, 2016 - Rs.287.88 crore) on the merger order passed by Hon’ble High Court of Delhi, approving the merger of erstwhile Ambuja Cement India Private Limited with HIPL. HIPL had filed a writ petition and the Hon’ble High Court of Delhi has granted an interim stay. Based on the advice of external legal counsel, the Company believes that it has a good grounds for success in writ petition. Accordingly, no provision is considered necessary.

Note 3 - Material demand and dispute considered as “remote”

One of the Company’s cement manufacturing plants located in the state of Himachal Pradesh was eligible under the State industrial policy for deferral of its sales tax liability arising on sale of cement manufactured in the said plant. The excise and taxation department of the Government of Himachal Pradesh, disputed the eligibility of the Company to such deferment on the ground that the Company also manufactures an intermediate product, viz. clinker, arising in the manufacture of cement, and such intermediate product was in the negative list. A demand of Rs.66.94 crore (31st December, 2016 - Rs.66.94 crore; 1st January, 2016 - Rs.66.94 crore) was raised. The Company filed a writ petition before Hobn’ble High Court of Himachal Pradesh against the demand. The case has been admitted and the hearing is in process. The Company believes that its case is strong and the demand shall not sustain under law.

The principal business of the Company is of manufacturing and sale of cement and cement related products. All other activities of the Company revolve around its main business. The Executive Committee of the Company, has been identified as the chief operating decision maker (CODM). The CODM evaluates the Company’s performance, allocates resources based on analysis of the various performance indicators of the Company as a single unit. CODM have concluded that there is only one operating reportable segment as defined by Ind AS 108, i.e. cement and cement related products.

B) Information about major customers

No single customer contributes 10% or more to the Company’s revenue during the year ended 31st December, 2017 and 31st December, 2016.

Note 4 - Employee benefits

a) Defined contribution plans

Defined Contribution Plans - amount recognised and included in Note 30 “Contribution to provident and other funds” of statement of profit and loss Rs.28.09 crore (previous year - Rs.27.12 crore).

b) Defined benefit plans - as per actuarial valuation

Funded plan includes gratuity benefit to every employee who has completed service of five years or more, at 15 days salary for each completed year of service (on last drawn basic salary).

c) Inherent risk

The plan typically exposes the Company to actuarial risk such as interest rate risk , demographic risk , salary inflation risk and longevity risk.

i) Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. All other aspects remaining same, if bond yields fall, the defined benefit obligation will tend to increase.

ii) Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, medical cost inflation, discount rate and vesting criteria.

iii) Salary Inflation risk : All other aspects remaining same, higher than expected increases in salary will increase the defined benefit obligation.

iv) Longevity risk : The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

d) Other non funded plan include death & disability benefit, non-funded gratuity and post employment healthcare benefits to certain employees.

Summary of the components of net benefit / expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans:

XI Basis used to determine expected rate of return on assets

The Company has considered the current level of returns declared by LIC, i.e. 8.00% to develop the expected long-term return on assets for funded plan of gratuity.

XII The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

e) Amount recognised as expense in respect of compensated absences is Rs.5.97 crore (previous year - Rs.11.47 crore)

f) The company expects to make contribution of Rs.14.00 crore (31st December, 2016 - Rs.13 crore; 1st January, 2016 -Rs.9 crore) to the defined benefit plans during the next year.

g) Provident fund managed by a trust set up by the Company

The Company has contributed Rs.7.74 crore (previous year Rs.7.72 crore) towards provident fund liability. Deficit of Rs. Nil crore (previous year Rs.0.73 crore) in the accumulated corpus fund is recognised in the statement of profit and loss. Further, considering net surplus in the accumulated corpus fund, liability of Rs.0.20 crore provided in the previous year, has been written back.

Note 5 - Leases

A) Operating Leases - Company as a lessee

i) The Company has entered into various long term agreements for land. The Company does not have an option to purchase the leased land at the end of the lease period. The unamortised operating lease prepayments as at 31st December, 2017 aggregating Rs.38.18 crore (31st December, 2016 - Rs.39.25 crore, 1st January, 2016 - Rs.40.58 crore) is included in other non current / current assets, as applicable.

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

(iii) The lease payments recognised in the statement of profit and loss amounts to Rs.40.89 crore (previous year - Rs.35.39 crore)

(iv) There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

B) Finance Leases - Company as a lessee

The Company has entered into various finance lease agreements for land which have been assessed as finance lease since the present value of the minimum lease payments is substantially similar to the fair value of the leasehold land (Refer note 4). The Company does not have an option to purchase such leasehold land at the end of the lease period. There are no restrictions such as those concerning dividends, additional debts and further leasing imposed by the lease agreement.

Notes:

1) The company is required to contribute a specified percentage of the employee compensation for eligible employees towards providend fund. For the same the Company makes monthly contributions to a trust specified for this purpose. During the year, the Company has contributed Rs.4.97 crore (previous year -Rs.4.81 crore).

2) Company maintains gratuity trust for the purpose of administering the gratuity payment to its employees. During the year, the Company has contribued Rs.15.50 crore (previous year -Rs.6.29 crore).

3) The performance incentive to Managing Director and Chief Executive Officer is accounted for as and when it is approved by the Board.

B) Fair value measurements

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:

Level 1: This level includes those financial instruments which are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: This level includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: This level includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The Company’s objectives when managing capital are to maximise shareholders value through an efficient allocation of capital towards expansion of business, optimisation of working capital requirements and deployment of balance surplus funds on the back of an effective portfolio management of funds within a well defined risk management framework

The management of the Company reviews the capital structure of the Company on regular basis to optimise cost of capital. As part of this review, the Board considers the cost of capital and the risks associated with the movement in the working capital.

The Company does not have any debt funding and thus meets its capital requirement through internal accruals. The Company is not subject to any externally imposed capital requirements.

Note 6 - Corporate social responsibility

The Company has incurred Rs.58.79 crore (previous year Rs.59.37 crore) towards social responsibility activities. It is included in different heads of expenses in the statement of profit and loss. Further, no amount has been spent on construction / acquisition of an asset of the Company and the entire amount has been spent in cash. The amount required to be spent under Section 135 of the Companies Act, 2013, for the year ended 31st December, 2017 is Rs.27.74 crore (previous year Rs.29.87 crore) i.e 2% of the average net profits for the last three financial years, calculated as per Section 198 of the Companies Act, 2013.

The Company has a system-based approach to risk management, established policies and procedures and internal financial controls aimed at ensuring early identification, evaluation and management of key financial risks such as market risk, credit risk and liquidity risk that may arise as a consequence of its business operations as well as its investing and financing activities. Accordingly, the Company’s risk management framework has the objective of ensuring that such risks are managed within acceptable and approved risk parameters in a disciplined and consistent manner and in compliance with applicable regulations.

The Company’s management is supported by a risk management committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The risk management committee provides assurance to the Company’s management 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 policies for managing each of these risks, which are summarized below.

A) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks a) interest rate risk b) currency risk and c) other price risk. Financial instruments are affected by market risk.

The Company is not an active investor in equity markets. The Company is virtually debt-free and its deferred payment liabilities do not carry interest, the exposure to interest rate risk from the perspective of financial liabilities is negligible. Further, treasury activities, focused on managing investments in debt instruments are administered under a set of approved policies and procedures guided by the tenets of liquidity, safety and returns. This ensures that investments are only made within acceptable risk parameters after due evaluation.

The Company’s investments are predominantly held in fixed deposits and liquid mutual funds (debt market). Mark to market movements in respect of the Company’s investments are valued through the statement of profit and loss account. Fixed deposits are held with highly rated banks and have a short tenure and are not subject to interest rate volatility.

Assumptions made in calculating the sensitivity analysis

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. The analysis excludes the impact of movements in market variables on the carrying values of gratuity and other postretirement obligations and provisions.

a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the security deposit taken from its dealers.

Interest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date have been outstanding for the entire reporting period.

b) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities. The aim of the Company’s approach to manage currency risk is to leave the Company with no material residual risk. The Company is not exposed to significant foreign currency risk and therefore it has not hedged it’s foreign currency payables and receivables.

In the Company’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year / in future years.

c) Other price risk

Other price risk includes commodity price risk. The Company primarily imports coal, pet coke and gypsum. It is exposed to commodity price risk arising out of movement in prices of such commodities. Such risks are monitored by tracking of the prices and are managed by entering into fixed price contracts, where considered necessary.

B) Credit risk

Credit risk is the risk that counter party will 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 financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Company has no significant concentration of credit risk with any counter party.

The Company’s exposure and wherever appropriate, the credit ratings of its counterparties are continuously monitored and spread amongst various counter parties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management of the Company.

Financial instruments that are subject to concentrations of credit risk, principally consist of balances with banks, investments in liquid mutual funds (debt markets), trade receivables and loans. None of the financial instruments of the Company result in material concentration of credit risks.

Balances with banks were not past due or impaired as at year end. In other financial assets that are not past due and not impaired, there were no indication of default in repayment as at year end.

The Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information. Credit risk from balances with banks and financial institutions is managed in accordance with the Company’s policy. As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.

Trade receivables consist of a large number of customers. The Company has credit evaluation policy for each customer and based on the evaluation credit limit of each customer is defined. The exposure in credit risk arising out of major customers is generally backed either by bank guarantee, letter of credit and security deposits.

The Company does not have higher concentration of credit risks since no single customer accounted for 10% or more of the company’s net sales.

Financial instruments and cash deposits

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

Investments of surplus funds are made only with approved financial Institutions. Investments primarily include investment in units of liquid mutual funds (debt market) and fixed deposits with banks having low credit risk.

Total non-current investments and investments in liquid mutual funds as on 31st December, 2017 are Rs.11,844.70 crore and Rs.1,483.22 crore (31st December, 2016 - Rs.11,844.70 crore and Rs.1,065.49 crore; 1st January, 2016 – Rs.11,831.03 crore and Rs.2,185.71 crore)

C) 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. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company’s treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s liquidity position through rolling forecasts on the basis of expected cash flows.

In the month of March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7- Statement of cash flows and Ind AS 102- Share-based payment. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7- Statement of cash flows and IFRS 2 - Share-based payment, respectively. The amendments are applicable to company from 1st January, 2018.

Amendment to Ind AS 7 - Statement of cash flows

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and noncash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

Amendment to Ind AS 102 - Share-based payment

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes. It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the fair values, but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.

The adoption of above amendments will not have material impact on financial statements.

a) HIPL was primarily engaged in the cement business, through its downstream investment in cement manufacturing ventures in India. The Board of Directors and members of the Company had approved the Scheme of amalgamation (the Scheme) between the Company and HIPL from the appointed date, 1st April, 2013. The Scheme was sanctioned by the Hon’ble High Courts of Gujarat and Delhi vide their orders dated 7th April, 2014 and 18th March, 2014 respectively. On 1st August, 2016, Foreign Investment Promotion Board had approved the transaction for acquisition of 24% equity shares of HIPL by the Company and subsequent merger of HIPL through share swap, being the conditions precedent to the Scheme. Pursuant to FIPB approval, the Scheme came into effect on 12th August, 2016 (effective date) when all the conditions precedent to the Scheme were complied with.

b) During the previous year, pursuant to Scheme of Amalgamation, Holcim (India) Private Limited has been amalgamated with the Company with effect from the appointed date 1st April, 2013 and was accounted for, and continues to be accounted for, in accordance with the applicable accounting standards as per the scheme. Pursuant to this the Company has

i) purchased 24% equity shares of HIPL for a cash consideration of Rs.3,500.27 crore.

ii) cancelled 150,670,120 equity shares of Rs.2 each, fully paid up, of the Company held by HIPL

iii) issued 584,417,928 equity shares of Rs.2 each, fully paid up to the equity shareholder of HIPL for the remaining 76% equity shares (without consideration being received in cash) and credited an amount of Rs.10,967.20 crore to securities premium account.

c) The excess of the consideration viz. fair value of new shares issued and cost of shares in HIPL cancelled over the fair value of net assets taken over and the face value of the shares of the Company cancelled amounting to Rs.2,827.48 crore has been recognised as Goodwill and is amortized over a period of three years from the appointed date in accordance with the Accounting Standard AS 14 Accounting for amalgamations as specified in the scheme.

d) Consequent to amalgamation, the following adjustments by way of debit / (credit) have been made in “Retained earning” under “Other equity”

i) Rs.2,591.85 crore being amortization of goodwill from the appointed date till 31st December, 2015, adjusted in opening balance sheet as at 1st January, 2016.

ii) Rs. (41.19) crore, being the net surplus in the statement of profit and loss of HIPL from the appointed date till 31st December, 2015, adjusted in opening balance sheet date as at 1st January, 2016.

iii) Rs.199.96 crore, being interim dividend and tax thereon paid by HIPL during the previous year; and

iv) Rs.(74.69) crore being inter Company elimination of dividend paid by the Company, HIPL and ACC Limited during the previous year.

e) Depreciation and amortisation, in the previous year, includes goodwill amortisation amounting to Rs.235.63 crore.

f) Pursuant to the amalgamation, ACC Limited has become the subsidiary of the Company.

Note 7 - First time adoption of Ind AS (Ind AS 101)

The Company has prepared financial statements which comply with Ind AS applicable for year ended as on 31st December, 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 1st January, 2016, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its previous GAAP financial statements, including the balance sheet as at 1st January, 2016 and the financial statements as at and for the year ended 31st December, 2016 and how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows.

Exemptions availed

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has availed the following exemptions.

a) Past Business Combinations

The Company has elected not to apply Ind AS 103- Business Combinations retrospectively to past business combinations that occurred before the transition date of 1st January, 2016. Consequently, the Company has kept the same classification for the past business combinations as in its previous GAAP financial statements and the Company has tested the goodwill for impairment at the transition date based on the conditions as of the transition date.

b) Deemed cost for property, plant and equipment and intangible assets

The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets as recognised as of 1st January, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

c) Investment in Subsidiary, Joint ventures and Associates

The Company has elected to carry its investment in subsidiaries and joint venture at deemed cost which is its previous GAAP carrying amount at the date of transition to Ind AS.

d) Sales tax deferment loan

The Company has elected to use the previous GAAP carrying amount of the Sales Tax Deferment Loan existing at the date of transition to Ind AS as the carrying amount of the loan in the opening Ind AS Balance Sheet.

e) Fair value of financial assets and liabilities

As per Ind AS exemption the Company has not fair valued the financial assets and liabilities retrospectively and has measured the same prospectively.

Explanatory comments to first time adoption note (Ind AS 101)

1) IND AS adjustments

A) Property, plant and equipment

i) 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:

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

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

Accordingly, spare parts of Rs.2.31 crore for 31st December, 2016 are recognised in PPE, resulting in reduction in other expenses (consumption of spare parts), further related depreciation on spare parts capitalised of Rs.0.05 crore is included in depreciation / amortisation charge for the year.

ii) Under previous GAAP, leasehold lands was included in the property, plant and equipment as AS 19 specifically excluded land from its perview. However, as per Ind AS 17, where the substantial risks and rewards incidental to ownership of an asset have not been transferred in the name of Company, those land leases are reclassified as operating leases and accordingly the amount paid towards such leases of Rs.37.91 crore and Rs.1.34 crore (1st January, 2016 - Rs.39.24 crore and Rs.1.34 crore) shown as prepayments under other non-current assets and other current assets respectively. Depreciation to the extent of Rs.1.33 crore pertaining to leasehold land has been reversed and the same is expensed under the head “other expenses” (rent). This has no impact on statement of profit and loss or total equity.

B) Goodwill

During the year 2016, pursuant to scheme of amalgamation of HIPL with the Company, the excess of the consideration over the fair value of net assets taken over and the face value of the shares of the Company cancelled amounting to Rs.2,827.48 crore was recognised as Goodwill in accordance with the Accounting Standard AS 14 - Accounting for amalgamation. The goodwill was amortized over a period of three years from the appointed date 1st April, 2013. As a result of above Rs.2,591.85 crore, being amount till 31st December, 2015 was charged to “retained earnings” and balance Rs.235.63 crore, as on 1st January, 2016 was recognised as goodwill and amortized in the previous year ended 31st December, 2016 (Refer note 54).

C) Other Intangible assets

Mining leasehold land of Rs.18.10 crore (1st January, 2016 - Rs.19.18 crore) disclosed under Property Plant and Equipment in previous GAAP have been reclassified to other intangible assets, as per Ind AS.

D) Investments

Under Ind AS, investments in liquid mutual funds are required to be measured at fair value in accordance with the principles of Ind AS 109 “Financial Instruments”. Accordingly at the date of transition to Ind AS, difference between the fair value of investment and previous GAAP carrying amount, which is Rs.66.52 crore, has been recognised in retained earnings. Fair value changes subsequent to transition date amounting to ’ (66.03) crore has been recognised in the statement of profit and loss in other income. Effectively impact of fair valuation of liquid mutual funds as on 31st December, 2016 is Rs.0.49 crore. Under Ind AS, joint operation needs to be consolidated in standalone, hence proportionate share in cash and cash equivalents of Wardha Valley Coal Field Private Limited of Rs.0.16 crore (1st January, 2016 - Rs.0.17 crore) has been considered.

E) Interest free loan from state government

Under previous GAAP, there was no specific guidance on accounting for government loans at below market rate of interest. Hence, these were recognised and carried at the amount of the proceeds received. Whereas in Ind AS, the benefit of government loans with below market rate of interest is accounted for as a government grant and is measured as the difference between the initial carrying amount of the loan determined in accordance with Ind AS 109 and the proceeds received from the loan. After initial recognition, the loan has been subsequently carried at amortised cost i.e. interest based on the market rate has been recognised under the effective interest rate method as part of finance costs. Accordingly, the Company has recognised the difference between the amount payable and its present value, which is Rs.2.72 crore, in retained earning as on transition date and subsequently unwinding impact of ’ (0.77) crore and discounting impact of Rs.5.90 crore on account of fresh installment received during the year ended 31st December, 2016 are considered in finance cost and revenue from operation respectively.

F) Provision for mines reclamation expenses

Under previous GAAP, provision for mines reclamation is initially measured at the undiscounted amount to settle the obligation, however, Ind AS 37 requires that where the effect of time value of money is material, the amount of provision should be the present value of the expenditures expected to be required to settle the obligation. The Company has discounted the provision for mines reclamation to present value at the reporting dates resulting in the provisions being decreased by Rs.2.00 crore (1st January, 2016 - Rs.3.02 crore). Consequently, the unwinding of discount has been recognised as a finance cost i.e. Rs.1.04 crore for the year ended 31st December, 2016.

G) Deferred tax

Previous GAAP requires deferred tax accounting using the statement of profit and loss 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 previous GAAP. In addition, the various transitional adjustments lead to temporary differences. And according to the accounting policies, the Company has to account for such differences. Deferred Tax adjustments are recognised in relation such underlying transactions of Rs.4.36 crore (1st January, 2016 - Rs.25.01 crore). Consequently, tax impact on account of Ind AS on the statement of profit and loss is Rs.19.99 crore and on OCI is Rs. (0.66) crore.

H) Other financial liabilities & other current liabilities

Entire impact is on account of consolidation of joint operation.

I) Proposed dividend

Under previous GAAP, proposed dividend including dividend distribution tax 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 along with dividend distribution tax liability associated with it, amounting to Rs.224.14 crore as at the date of transition and for financial year 2016 - Rs.275.31 crore respectively have been reversed and adjusted in retained earnings of respective financial year.

J) Revenue from operations

i) Under previous GAAP, cash discount of Rs.43.21 crore was recognised as part of other expenses which has now been adjusted against the revenue under Ind AS during the year ended 31st December, 2016.

ii) Under previous GAAP, revenue was presented net of excise duty. However, as per Schedule III to the Companies Act, 2013, revenue from operations is to be shown inclusive of excise duty. Accordingly, excise duty of Rs.1,270.33 crore has been included in revenue from operations and shown separately as an expense (refer note - 56).

iii) Excise duty also includes Rs.27.94 crore and Rs.5.93 crore on account of captive consumption of clinker and variation of opening and closing stock recognised under other expenses which has now been regrouped.

K) Employee benefits and finance costs

Under Ind AS, return on plan assets Rs.9.24 crore and net interest expense on the net defined benefit liability Rs. (10.15) crore are reclassified from employee benefits expense to finance costs and re-measurements i.e. actuarial gains and losses of Rs. (1.90) crore are recognised in other comprehensive income from earlier employee benefits expense. Additionally, employee benefits and finance cost includes an impact of Rs.0.02 crore and Rs.0.04 crore on account of consolidation of joint operation.

2) Reclassification

A) Investments in subsidiaries and joint venture

Interest in subsidiaries and joint venture of Rs.11,815.10 crore (1st January, 2016 - Rs.77.30 crore) are accounted as per Ind AS 111 “Disclosure of Interest in other entities”.

B) Non-current tax assets

As per schedule III, non-current income tax assets of Rs.70.43 crore (1st January, 2016 - Rs.79.79 crore) are required to be presented on the face of balance sheet and hence they are reclassified accordingly.

C) Cash and cash equivalents

i) Investments in short term highly liquid mutual funds of Rs.1,065.02 crore (1st January, 2016 - Rs.2,119.23 crore) forming part of cash and cash equivalents.

ii) Fixed deposits with maturity of more than three months but less than twelve months of Rs.158.02 crore (1st January 2016 - Rs.35.91 crore) and earmarked balances with banks amounting to Rs.24.74 crore (1st January 2016 - Rs.24.25 crore) have been reclassified from cash and bank balances to other bank balances as per Schedule III to Companies Act, 2013.

iii) Mainly includes deposit with Housing Development Finance Corporation Limited of Rs.100.00 crore (1st January, 2016 - Rs.100 crore) forming part of cash and cash equivalents.

D) Other financial liabilities

The Company has mainly reclassified the security deposits of Rs.316.63 crore (1st January, 2016 - Rs.305.42 crore) being financial in nature from other current liabilities to other financial liabilities.

E) Current tax liabilities

As per schedule III, current tax liabilities of Rs.886.34 crore (1st January, 2016 - Rs.777.25 crore) are required to be presented on the face of balance sheet and hence they are reclassified accordingly.

F) Other adjustments

To comply with the Companies (Accounting Standard) Rules, 2006, certain account balances have been regrouped as per the format prescribed under Division II of Schedule III to the Companies Act, 2013.

G) Statement of cash flows

The transition from previous GAAP to Ind AS had no material impact on the Statement of cash flows.

Note 8

a) Excise duty includes excise duty paid on sale of goods and excise duty on captive consumption of clinker.

b) The Government of India introduced the Goods and Services tax (GST) with effect from 1st July, 2017. Consequently revenue for the year ended 31st December, 2017, includes excise duty up to 30th June, 2017. Revenue of earlier periods included excise duty which is now subsumed in GST.

Note 9

The opening balance sheet and financial statements for the year ended 31st December, 2016 have been audited by S R B C & CO LLP, the predecessor auditor.

Note 10

a) Other income includes Rs. Nil (previous year - Rs.21.04 crore) written back towards interest on income tax relating to earlier years.

b) Tax expense for earlier years represents write back upon completion of assessments and change in estimate of allowability of certain deductions.

Note 11

Figures below Rs.50,000 have not been disclosed.

Note 12

Previous years’ figures have been regrouped / reclassified wherever necessary, to conform to current year’s classification.


Dec 31, 2016

a) Rights, preferences and restrictions attached to equity shares

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

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

b) Outstanding tradable warrants and right shares kept in abeyance exercisable into 186,690 (previous year -186,690) and 139,830 (previous year - 139,830) equity shares of '' 2 each fully paid-up respectively.

c) Aggregate number of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date:

Pursuant to the Scheme of amalgamation of Holcim (India) Private Limited (HIPL) with the Company, 584,417,928 equity shares were allotted as fully paid up to the equity shareholders of HIPL, without payment being received in cash (Refer note 47).

* In respect of these items, future cash outflows are determinable only on receipt of judgements / decisions pending at various forums / authorities.

1 Royalty on limestone represents additional royalty, consequent to the order passed by Madhya Pradesh State Mining Department, based on the ratio of 1.6 tonnes of limestone to 1.0 tonne of cement produced at its factory in Chhattisgarh. Subsequent to year end, the Hon''ble High Court of Chhattisgarh, Bilaspur has ruled the matter in favour of the Company.

2 Includes a matter relating to 75% exemption from sales tax granted by Government of Rajasthan. However, the eligibility of exemption in excess of 25% was contested by the State Government in a similar matter of another Company. In year 2014, pursuant to the unfavourable decision of the Supreme Court in that similar matter, the sales tax department has initiated proceedings for recovery of differential sales tax and interest thereon on the ground that the Company had given an undertaking to deposit the differential amount of sales tax, in case the Supreme Court''s decision goes against the matter referred above. Against the total demand of '' 247.97 crore (including interest of Rs, 134.45 crore), the Company has deposited an amount of Rs, 143.52 crore (including interest Rs, 30.00 crore) (previous year Rs, 143.52 crore, including interest Rs, 30.00 crore), towards sales tax under protest and filed a Special Leave Petition in the Supreme Court with one of the ground that the tax exemption was availed by virtue of the order passed by the Board for Industrial & Financial Reconstruction (BIFR) during the relevant period. On Company''s petition, the Hon''ble Supreme Court has granted an interim stay on the balance interest. Based on the advice of external legal counsel, the Company believes that, it has good grounds for a successful appeal. Accordingly, no provision is considered necessary.

3 a) In 2012, the Competition Commission of India (CCI) issued an order imposing penalty on certain cement manufacturers, including the Company concerning alleged contravention of the provisions of the Competition Act, 2002 and imposed a penalty of Rs, 1,163.91 crore on the Company. On Company''s appeal, Competition Appellate Tribunal (COMPAT), initially stayed the penalty and by its final order dated 11th December, 2015, set aside the order of the CCI, remanding the matter back to the CCI for fresh adjudication and for passing a fresh order. After hearing the matter afresh, the CCI has again, by its order dated 31st August, 2016, imposed a penalty of Rs, 1,163.91 crore on the Company. The Company has filed an appeal against the said Order with the COMPAT. The COMPAT, vide its order dated 21st November, 2016 has stayed the penalty with a condition to deposit 10% of the penalty amount which has been deposited. Pending final disposal of the appeal, the matter has been disclosed as contingent liability along with with interest of Rs, 42.33 crore. b) In a separate matter, pursuant to a reference filed by the Director, Supplies and Disposals, Government of Haryana, the CCI by its Order dated 19th January, 2017 has imposed a penalty of Rs, 29.84 crore on the Company. The Company is in the process of filing an appeal before COMPAT against the said Order.

Based on the advice of external legal counsels, the Company believes it has good grounds on merit for a successful appeal in both the aforesaid matters. Accordingly, no provision is considered necessary.

4 The Collector of Stamps, Delhi vide its Order dated 7th August, 2014, directed erstwhile Holcim (India) Private Limited (HIPL), (now merged with the Company), to pay stamp duty (including penalty) of Rs, 287.88 crore (previous year Rs, Nil) on the merger order passed by Hon''ble High Court of Delhi, approving the merger of erstwhile Ambuja Cement India Private Limited with HIPL. HIPL had filed a writ petition and the Hon''ble High Court of Delhi has granted an interim stay. Based on the advice of external legal counsel, the Company believes that it has good grounds for success in writ petition. Accordingly, no provision is considered necessary.

5 . Material Demand and dispute considered as "remote" by the Company

One of the Company''s Cement manufacturing plants located in Himachal Pradesh was eligible, under the State Industrial Policy for deferral of its sales tax liability arising on sale of cement manufactured in the said plant. The Excise and Taxation department of the Government of Himachal Pradesh, disputed the eligibility of the Company to such deferment on the ground that the Company also manufactures an intermediate product, viz. Clinker, arising in the manufacture of cement, and such intermediate product was is in the negative list. A demand of Rs, 66.94 crore was raised. The Company filed a writ petition before High Court of Himachal Pradesh against the demand. The case has been admitted and the hearing is in process. The Company believes its case is strong and the demand shall not sustain under law.

6. Related party disclosure (As per Accounting Standard 18 specified under Section 133 of the Companies Act, 2013)

1. Name of related parties

A) Names of the related parties where control exists Nature of Relationship

(i) LafargeHolcim Limited (Formerly known as Holcim

Ltd.), Switzerland............................................................. Ultimate Holding Company

(ii) Holderfin B.V., Netherlands............................................. Intermediate Holding Company

(iii) Holderind Investments Limited, Mauritius ..................... Holding Company

(iv) ACC Limited...................................................................... Subsidiary, (erstwhile Fellow Subsidiary)

pursuant to amalgamation of Holcim (India) Private Limited with the Company w.e.f.12.08.2016 (Appointed date 01.04.2013)

(v) M.G.T. Cements Private Limited...................................... Subsidiary

(vi) Kakinada Cements Limited.............................................. Subsidiary (Liquidated w.e.f 10.05.2016)

(vii) Chemical Limes Mundwa Private Limited....................... Subsidiary

(viii) Dang Cement Industries Private Limited, Nepal............ Subsidiary

29. Related party disclosure (As per Accounting Standard 18 specified under Section 133 of the Companies Act, 2013)(Contd.)

1. Name of related parties (Contd.)

A) Names of the related parties where control exists (Contd.) Nature of Relationship

(ix) Dirk India Private Limited................................................ Subsidiary

(x) OneIndia BSC Private Limited......................................... Subsidiary (w.e.f.12.08.2016), Joint

Venture (w.e.f. 13.08.2015 upto 12.08.2016 )

(xi) Wardha Vaalley Coal Field Private Limited..................... Joint Venture

(xii) Counto Microfine Products Private Limited................... Joint Venture

(xiii) ACC Mineral Resources Limited....................................... Subsidiary of ACC Limited

(xiv) Lucky Minmat Limited..................................................... Subsidiary of ACC Limited

(xv) National Limestone Company Private Limited............... Subsidiary of ACC Limited

(xvi) Singhania Minerals Private Limited................................ Subsidiary of ACC Limited

(xvii) Bulk Cement Corporation (India) Limited...................... Subsidiary of ACC Limited

(xviii) Alcon Cement Company Private Limited ....................... Associate of ACC Limited

(xix) Asian Concretes and Cements Private Limited............... Associate of ACC Limited

(xx) Aakaash Manufacturing Company Private Limited....... Associate of ACC Limited

(xxi) MP AMRL (Semaria) Coal Company Limited................... Joint Venture of ACC Mineral Resources Limited

(xxii) MP AMRL (Bicharpur) Coal Company Limited................ Joint Venture of ACC Mineral Resources Limited

(xxiii) MP AMRL (Marki Barka) Coal Company Limited............ Joint Venture of ACC Mineral Resources Limited

(xxiv) MP AMRL (Morga) Coal Company Limited..................... Joint Venture of ACC Mineral Resources Limited

B) Others with whom transactions have taken place during the year

(I) Names of other related parties Nature of Relationship

(a) Holcim (India) Private Limited................................ Fellow Subsidiary amalgamated with the Company w.e.f. 12.08.2016 (Refer note 47)

(b) Holcim (Lanka) Limited, Sri Lanka.......................... Fellow Subsidiary (Upto 10.08.2016)

(c) Holcim Group Services Limited, Switzerland......... Fellow Subsidiary

(d) Holcim Technology Limited, Switzerland.............. Fellow Subsidiary

(e) Holcim Philippines, Inc., Philippines....................... Fellow Subsidiary

(f) Holcim Services (South Asia) Limited ..................... Fellow Subsidiary

(g) Holcim Trading FZCO, UAE..................................... Fellow Subsidiary

(h) LH Trading Pte Limited, Singapore (Formerly known as Holcim Trading Pte Limited) .................. Fellow Subsidiary

(i) Holcim Cement (Bangladesh) Limited, Bangladesh .............................................................. Fellow Subsidiary

(j) Holcim (Romania) S.A., Romania............................ Fellow Subsidiary

(k) LafargeHolcim Energy Solutions S.A.S., France..... Fellow Subsidiary (w.e.f. 01.07.2015)

(l) Holcim Technology (Singapore) Pte Limited, Singapore................................................................. Fellow Subsidiary

(m) Thalamar Shipping AG, Switzerland...................... Fellow Subsidiary

(n) Lafarge India Private Limited................................. Fellow Subsidiary (w.e.f. 10.07.2015 and upto 04.10.2016)

(o) Geocycle (Deutschland) Gmbh., Deutschland....... Fellow Subsidiary

(II) Key Management Personnel

Name of the related parties Nature of Relationship

Mr. Ajay Kapur................................................................. Managing Director & Chief Executive Officer

7. Employment benefits :

a) Defined Contribution Plans

Defined Contribution Plans - Amount recognised and included in note 21 "Contributions to Provident and other Funds" of Statement of Profit and Loss Rs, 27.12 crore (previous year - Rs, 27.52 crore).

b) Defined Benefit Plans - as per actuarial valuation

Funded plan includes gratuity benefit to every employee who has completed service of five years or more, at 15 days salary for each completed year of service (on last drawn basic salary).

Other non funded plan include death & disability benefit, non-funded gratuity and post employment healthcare benefits to certain employees.

Summary of the components of net benefit / expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the balance sheet for the respective plans:

8. Operating lease :

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

9. The Company is eligible for receipt of transport subsidy on inter-state transport of raw materials, clinker and cement in certain units. Accordingly, the Company has accrued an amount and adjusted against the respective expenses as under :

10. (a) Other income includes Rs, 21.04 (previous year Rs, Nil) written back towards interest on income tax relating to earlier years.

(b) Tax expense for earlier years represents write back upon completion of assessments and change in estimate of allowability of certain deductions.

11. The Company has incurred Rs, 59.37 crore (previous year Rs, 40.98 crore) towards Social Responsibility activities. It is included in different heads of expenses in the Statement of Profit and Loss. Further, no amount has been spent on construction / acquisition of an asset of the Company and the entire amount has been spent in cash. The amount required to be spent under Section 135 of the Companies Act, 2013 for the year 2016 is '' 29.78 crore i.e. 2% of average net profits for last three financial years, calculated as per Section 198 of the Companies Act, 2013.

12. Amalgamation of Holcim (India) Private Limited (''HIPL'') with Ambuja Cement Limited (''the Company''):

a) HIPL was primarily engaged in the cement business, through its downstream investment in cement manufacturing ventures in India. The Board of Directors and members of the Company had approved the Scheme of amalgamation (the Scheme) between the Company and HIPL from the appointed date, 1st April, 2013. The Scheme was sanctioned by the Hon''ble High Courts of Gujarat and Delhi vide their orders dated 7th April, 2014 and 18th March, 2014, respectively.

b) On 1st August, 2016, Foreign Investment Promotion Board (FIPB) has approved the transaction for acquisition of 24% equity shares of HIPL by the Company and subsequent merger of HIPL through share swap, being the conditions precedent to the Scheme. Pursuant to FIPB approval, the Scheme came into effect on 12th August, 2016 (effective date) when all the conditions precedent to the Scheme were complied with. Accordingly, HIPL has been amalgamated with the Company on a going concern basis from the effective date. The Company has followed the purchase method of accounting in accordance with Accounting Standard 14, Accounting for Amalgamations, accordingly all the assets and liabilities of HIPL have been transferred to and vested in the Company at their respective fair values on the appointed date.

Pursuant to above, the Company has :

i) purchased 24% equity shares of HIPL for a cash consideration of Rs, 3,500.27 crore;

ii) cancelled 150,670,120 equity shares of Rs, 2 each, fully paid up, of the Company held by HIPL; and

iii) issued 584,417,928 equity shares of Rs, 2 each, fully paid up to the equity shareholder of HIPL for the remaining 76% equity shares (without consideration being received in cash) and credited an amount of Rs, 10,967.20 crore to securities premium account.

c) The excess of the consideration viz. fair value of new shares issued and cost of shares in HIPL cancelled over the fair value of net assets taken over and the face value of the shares of the Company cancelled amounting to Rs, 2,827.48 crore has been recognised as goodwill and is amortized over a period of three years from the appointed date in accordance with Accounting Standard AS 14 notified under the Companies Accounting Standards Rules, 2006, as amended.

d) Consequent to amalgamation, the following adjustments by way of debit / (credit) have been made in the "Surplus in the Statement of Profit and Loss" under "Reserve and surplus":

i) Rs, 2,591.85 crore being amortisation of goodwill from the appointed date till 31st December, 2015;

ii) Rs, (41.19) crore, being the net surplus in the Statement of Profit and Loss of HIPL from the appointed date till 31st December, 2015;

iii) Rs, 199.96 crore, being interim dividend and tax thereon paid by HIPL during the year; and

iv) Rs, (74.69) crore being inter Company elimination of dividend paid by the Company and HIPL during the year.

e) Pursuant to the amalgamation, ACC Limited has become the subsidiary of the Company.

13. During the previous year, the Board of Directors had approved the amalgamation of Dirk India Private Limited, a wholly owned subsidiary, with the Company w.e.f. 1st April, 2015, in terms of the Scheme of amalgamation. During the year, the Board of Directors, in their meeting held on 28th April, 2016, decided not to pursue the Scheme and not to file it with the Hon''ble High Courts for their approval. There is no material implication of this decision on the financial statements of the Company.

14. During the previous year, pursuant to the enactment of the Companies Act 2013 (''the Act''), the Company has, effective 1st January, 2015, reviewed and revised the estimated useful lives of fixed assets, as per the life indicated in the Act. Accordingly, as per the transition provisions of the Act, the Company has adjusted Rs, 106.63 crore (net of tax of Rs, 54.90 crore) in opening balance of "Surplus in the Statement of Profit and Loss" as on 1st January, 2015, in respect of assets, whose useful life is exhausted as at 1st January, 2015. Further, as a result of this change, depreciation for the year ended 31st December, 2015 was higher by Rs, 107.79 crore.

15. During the previous year, the Company had subscribed for Rs, 2.50 crore in equity shares of OneIndia BSC Private Limited (OIBPL). OIBPL was a joint venture Company till previous year, and has now become a subsidiary in the current year, consequent to amalgamation pursuant to which ACC Limited, became a subsidiary of the Company during the year.

16. The Company has only one business segment ''Cement and cement related products'' as primary segment. The export turnover is not significant in the context of total turnover of the Company and further the risk and returns are not significantly different from that of India. As such there is only one geographical segment.

17. The Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) would be applicable to the Company from financial year commencing on 1st January, 2017. Accordingly, the financial statements have been prepared in compliance with Companies (Accounting Standards) Rules, 2006.

18. Figures below Rs, 50,000 have not been disclosed.

19. Previous year''s figures have been regrouped / reclassified wherever necessary, to conform to current year''s classification. Further, the current year figures are not comparable with those of the previous year due to amalgamation of HIPL (Refer note 47).


Dec 31, 2015

1. Material Demand and dispute considered as "remote" by the Company

One of the Company's Cement manufacturing plants located in Himachal Pradesh was eligible, under the State Industrial Policy for deferral of its sales tax liability arising on sale of cement manufactured in the said plant. The Excise and Taxation department of the Government of Himachal Pradesh, disputed the eligibility of the Company to such deferment on the ground that the Company is manufacturing & using a product covered under the negative list and raised a demand of Rs, 66.94 crores (previous year Rs, 66.94 crores). The Company has filed a writ in the High Court of Himachal Pradesh against the demand which has been admitted and arguments completed. The Company believes its case is strong and the demand shall not sustain under law.

2. The Competition Commission of India (CCI), in 2012 had imposed a penalty of Rs, 1,163.91 crores for alleged contravention of the provisions of the Competition Act, 2002. On Company's appeal, Competition Appellate Tribunal (COMPAT), vide an interim order, had stayed the penalty with a condition to deposit 10% of the penalty amount. The Company had deposited the said amount in compliance of the condition of the order. Penalty of Rs, 1,163.91 crores was disclosed as a contingent liability in the financial statements upto the previous year ended December 31, 2014. The COMPAT, vide its final order dated 11th December, 2015, while disposing off the said appeal, set aside the order of the CCI and remanded the matter to CCI for fresh adjudication and for passing a fresh order. Further, in terms of order, the Company has received the refund of deposit, along with accumulated interest.

3. Related party disclosure (As per Accounting Standard 18 specified under Section 133 of the Companies Act, 2013)

1 Name of related parties

(A) Names of the related parties where control exists Nature of Relationship

(I) Lafarge Holcim Limited (Formerly known as Holcim Limited), Switzerland Ultimate Holding Compa

(II) Holder fin BV, Netherlands Intermediate Holding Company

(III) Hold rind Investments Limited, Mauritius Holding Company

(IV) Kakinada Cements Limited (Refer note 52) Subsidiary

(V) M.G.T. Cements Private Limited Subsidiary

(VI) Chemical Limes Mundwa Private Limited Subsidiary

(VII) Dang Cement Industries Private Limited, Nepal Subsidiary

(VIII) Dirk India Private Limited Subsidiary

(IX) Wardha Vaalley Coal Field Private Limited Joint Venture

(X) Count Micro fine Products Private Limited Joint Venture

(XI) One India BSC Private Limited (Refer note 53) Joint Venture (w.e.f.13.08.2015)

(B) Others-with whom transactions have taken place during the year

(I) Names of other related parties Nature of Relationship

(a) ACC Limited Fellow Subsidiary

(b) Holcim (India) Private Limited (Refer note 49) Fellow Subsidiary

(c) Holcim (Lanka) Limited, Sri Lanka Fellow Subsidiary

(d) Holcim Group Services Limited, Switzerland Fellow Subsidiary

(e) Holcim Technology Limited, Switzerland Fellow Subsidiary

(f) Holcim Philippines, Inc., Philippines Fellow Subsidiary

(g) Holcim Services (South Asia) Limited Fellow Subsidiary

(h) Holcim Services (Asia) Limited, Thailand Fellow Subsidiary

(i) Holcim Trading FZCO, UAE Fellow Subsidiary

(j) Holcim Trading Pte Limited, Singapore Fellow Subsidiary

(k) PT Holcim Indonesia Tbk., Indonesia Fellow Subsidiary

(l) Holcim Cement (Bangladesh) Limited, Bangladesh Fellow Subsidiary

(m) Holcim (Romania) S.A. Romania Fellow Subsidiary

(n) Holcim Technology (Singapore) Pte Limited, Singapore .. Fellow Subsidiary

(o) Lafarge India Private Limited Fellow Subsidiary (w.e.f.10.07.2015)

(p) Siam City Cement Public Company Limited, Thailand.... Joint Venture of Fellow Subsidiary (upto 30.03.2015)

(II) Key Management Personnel

Name of the related parties Nature of Relationship

(a) Mr. Ajay Kapur Managing Director & CEO (w.e.f. 25th April, 2014)

Deputy Managing Director & CEO (upto 24th April, 2014)

(b) Mr. Onne van der Weijde Managing Director (upto 24th April, 2014)

b) Defined Benefit Plans - as per actuarial valuation

Funded plan includes gratuity benefit to employees who have completed five years or more of service on departure, at 15 days salary (on last drawn basic salary) for each completed year of service.

Other non funded plan include death & disability benefit, non-funded gratuity and post employment healthcare benefits to certain employees.

c) Amount recognised as expense in respect of compensated absences is Rs, 12.02 crores (previous year - Rs, 20.29 crores).

d) Provident fund managed by a trust set up by the Company The Company has contributed Rs, 7.29 crores (previous year - Rs, 7.34 crores) towards provident fund liability. Deficit of Rs, Nil (previous year - deficit of Rs, 2.13 crores) in the accumulated corpus fund is recognised in the Statement of profit and loss. Further, considering net surplus in the accumulated corpus fund, liability of Rs, 2.13 crores provided in the previous year, has been written back.

4 Basis used to determine expected rate of return on assets :

To develop the expected long-term return on assets assumption, the Company considered the current level of returns declared on its insurance policy. This resulted in the selection of the 8.50 % assumption for gratuity (funded) plan.

5.X The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The weighted average share price at the date of exercise for stock option was Rs, 242.29 (previous year Rs, 208.29) The weighted average share price for the period over which stock option were exercised was Rs, 228.84 (previous year Rs, 205.45)

6. (a) Other income includes Rs, Nil (previous year Rs, 35.79 crores) written back towards interest on income tax relating to earlier years.

(b) Tax expense for earlier years represents write back upon completion of assessments and change in estimate of allow ability of certain deductions.

7. The Company has incurred Rs, 40.98 crores towards Social Responsibility activities. It is included in different heads of expenses in the Statement of Profit and Loss. Further, no amount has been spent on construction / acquisition of an asset of the Company and entire spent is on cash basis.

The amount required to be spent under Section 135 of the Companies Act, 2013 for the year 2015 is Rs, 34.64 crores i.e. 2% of average net profits for last three financial years, calculated as per section 198 of the Companies Act, 2013.

8. During the year 2013, the Board of Directors and members have approved the Scheme of amalgamation of Holcim (India) Private Limited (HIPL) with the Company with effect from 1st April 2013, wherein the Company will acquire HIPL from Hollering Investments Ltd., Mauritius for a cash consideration of Rs, 3,500.00 crores and issue of 58.44 crores equity shares of Rs, 2 each at a premium of Rs, 187.66 per share. During the previous year, Hon'ble High Courts of Gujarat and New Delhi have approved the above scheme. Pending fulfillment of certain conditions precedent specified in the Scheme, no impact of amalgamation has been given in the financial statements.

9. During the year, the Board of Directors has approved the amalgamation of Dirk India Private Limited, a wholly owned subsidiary, with the Company w.e.f. 1st April, 2015, in terms of the scheme of amalgamation. Pending regulatory approvals, no effect of the proposed amalgamation has been given in the financial statements.

10. Pursuant to the enactment of the Companies Act, 2013 ('the Act'), the Company has, effective 1st January, 2015, reviewed and revised the estimated useful lives of fixed assets, as per the life indicated in the Act. Accordingly, as per the transition provisions of the Act, the Company has adjusted Rs, 106.63 crores (net of tax of Rs, 54.90 crores) in opening balance of "Surplus in the statement of profit and loss" as on 1st January, 2015, in respect of assets, whose useful life is exhausted as at 1st January, 2015. Further, as a result of this change, depreciation for the year ended 31st December, 2015 is higher by Rs, 107.79 crores.

11. Kakinada Cements Limited (KCL), a 100% subsidiary of the Company has applied for liquidation with Registrar of Companies, Gujarat under the Companies Act, 2013, and accordingly a provision of Rs, 0.10 crores, being Company's investment in KCL, has been recorded as diminution in value of investment.

12. During the year, the company has subscribed for Rs, 2.50 crores in equity shares of One India BSC Private Limited (OIBPL). OIBPL is a joint venture company, with an equal equity participation with ACC Limited, a fellow subsidiary Company, created with aim to provide business shared services.

13. During the year, the Company has made provision of Rs, 52.08 crores towards contribution to District Mineral Foundation and National Mineral Exploration Trust as per The Mines and Mineral (Development and Regulation) Amendment Act, 2015.

14. Figures below Rs, 50,000 have not been disclosed.

15. Figures of the previous year have been regrouped / rearranged wherever necessary to conform to the current year's presentation.


Dec 31, 2014

1. Basis of Preparation of Financial Statements :

i. The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956, read with General Circular No.8/2014 dated 4th April 2014, issued by the Ministry of Corporate Affairs.

ii. Financial statements are based on historical cost and are prepared on accrual basis.

iii. Accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

iv. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual result could differ from these estimates.

As at As at 31.12.2014 31.12.2013 Rs.in crores Rs.in crores

2. Contingent liabilities and commitments (to the extent not provided for)

(I) contingent liabilities and claims against the company not acknowledged as debts related to*

(i) Labour 20.74 21.74

(ii) Land 58.86 60.30

(iii) Royalty on Limestone1 119.97 102.87

(iv) Sales tax 2. 266.27 19.63

(v) Excise and Customs 67.94 59.55

(vi) Demand from Competition Commission of India3. 1,163.91 1,163.91

(vii) Others. 140.24 115.85

* In respect of items above, future cash outflows are determinable only on receipt of judgements / decisions pending at various forums / authorities.

1 Royalty on limestone represents additional royalty, consequent to the order passed by Madhya Pradesh State Mining Department, based on the ratio of 1.6 tonnes of limestone to 1 tonne of cement produced at its factory in Chhattisgarh. The Company holds the view that the payment of royalty on limestone is correctly made based on the actual quantity of limestone extracted from the mining area. The matter is pending before the Hon''ble High Court of Bilaspur.

2 Includes a matter relating to 75% exemption from sales tax granted by Government of Rajasthan (GOR). However, the eligibility of exemption in excess of 25% was contested by the State Government in a similar matter of another Company. In the current year, pursuant to the unfavourable decision of the Supreme Court in that similar matter, the sales tax department has initiated proceedings for recovery of differential sales tax and interest thereon on the ground that the Company had given an undertaking to deposit the differential amount of sales tax, in case the Supreme Court''s decision goes against the matter referred above. Against the total demand of Rs. 247.97 crores (including interest of Rs. 134.45 crores), the Company has deposited an amount of Rs.123.52 crores towards sales tax under protest and filed a Special Leave Petition in the Supreme Court with one of the grounds that the tax exemption was availed by virtue of the order passed by the Board for Industrial & Financial Reconstruction (BIFR) during the relevant period. Subsequent to the balance sheet date, on Company''s petition, the Hon''ble Supreme Court has granted an interim stay on interest, subject to deposit of Rs. 20 crores. Based on the advice of external legal counsel, the Company believes that, it has good grounds for a successful appeal. Accordingly, no provision is considered necessary.

3 The Competition Commission of India issued an Order dated 20th June, 2012, imposing penalty on certain cement manufacturers, including the Company, concerning alleged contravention of the provisions of the Competition Act, 2002 and imposed a penalty of Rs.1163.91 crores on the Company. The Company had filed an appeal against the said Order with the Competition Appellate Tribunal (COMPAT). Pending final disposal of the appeal, the Hon''ble Tribunal, vide its order dated 17th May, 2013, has stayed the penalty with a condition to deposit 10% of the penalty amount, which has been deposited in the form of bank fixed deposit with lien in favour of COMPAT. The fixed deposit has been renewed along with interest of Rs.14.71 crores. Based on the advice of external legal counsel, the Company believes that it has good grounds for a successful appeal. Accordingly, no provision is considered necessary.

(II) Guarantee given on behalf of joint venture company 7.14 6.60

(III) commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 419.82 647.73

4. Material Demand and dispute considered as "remote" by the Company

One of the Company''s Cement manufacturing plants located in Himachal Pradesh was eligible, under the State Industrial Policy for deferral of its sales tax liability arising on sale of cement manufactured in the said plant. The Excise and Taxation department of the Government of Himachal Pradesh, disputed the eligibility of the company to such deferment on the ground that the company is manufacturing & using a product covered under the negative list and raised a demand of Rs.66.94 crores (previous year Rs.66.94 crores). The Company has filed a writ in the High Court of Himachal Pradesh against the demand which has been admitted and arguments completed. The company believes its case is strong and the demand shall not sustain under law.

IX Basis used to determine expected rate of return on assets :

To develop the expected long-term return on assets assumption, the Company considered the current level of returns declared on its insurance policy. This resulted in the selection of the 8.50 % assumption for gratuity (funded) plan.

X The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

c) Amount recognised as expense in respect of compensated absences is Rs. 20.29 crores (previous year Rs.8.30 crores).

d) Provident fund managed by a trust set up by the Company.

The Company has contributed Rs.7.34 crores (previous year Rs.7.16 crores) towards provident fund liability. Deficit of Rs.2.13 crores (previous year Rs. Nil) in the accumulated corpus fund is recognised in the Statement of profit and loss.

3. Operating lease :

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

4. (a) Other income includes Rs.35.79 crores (previous year Rs.32.19 crores) written back towards interest on income tax relating to earlier years.

(b) Tax adjustments for earlier years represents write back of tax provision (including Deferred Tax reversal of Rs.39.99 crores debited; previous year Rs.14.23 crores credited) upon completion of assessments and change in estimate of allowability of certain deductions.

5. During the previous year, the Company had credited Rs.0.02 crore in ''Cost of raw materials consumed'', Rs.24.54 crores in ''Power and fuel'' and Rs.4.56 crores in ''Stores and spares consumed'', due to change in estimate in respect of recognition of certain CENVAT credit relating to earlier years.

6. During the previous year, the Board of Directors and members have approved the Scheme of amalgamation of Holcim (India) Private Limited (HIPL) with the Company with effect from 1st April 2013, wherein the Company will acquire HIPL from Holderind Investments Ltd., Mauritius for a cash consideration of Rs.3,500 crores and issue of 58.44 crores equity shares of Rs.2 each at a premium of Rs.187.66 per share. During the year, Hon''ble High Courts of Gujarat and New Delhi have approved the above scheme. Pending fulfilment of certain conditions precedent specified in the Scheme, no impact of amalgamation has been given in the financial statements.

7. The Hon''ble Supreme Court vide its Order dated 24th September, 2014 has cancelled number of coal blocks allotted to various companies, including a coal block at Dahegaon, in the State of Maharashtra, allotted to the Company jointly with other parties, the activities in respect of which has not yet commenced. Cancellation of the aforesaid coal block does not have any material impact on financial statements.

8. Figures below Rs.50,000 have not been disclosed.

9. Figures of the previous year have been regrouped / rearranged wherever necessary to conform to the current year''s presentation.


Dec 31, 2013

A) Fixed Assets :

i. Fixed Assets are stated at their original cost of acquisition / installation (net of Modvat / Cenvat credit availed), net of accumulated depreciation, amortisation and impairment losses, except freehold non-mining land which is carried at cost less impairment losses,

ii. Capital work in progress is stated at the amount expended up to the date of Balance Sheet,

iii. Machinery spares which can be used only in connection with a particular item of fixed asset and the use of which is irregular, are capitalised at cost net of Modvat / Cenvat.

iv. Expenditure during construction period (including financing cost relating to borrowed funds for construction or acquisition of qualifying fixed assets) incurred on projects under implementation are treated as Pre-operative expenses, pending allocation to the assets, and are included under Capital work-in-progress. These expenses are apportioned to fixed assets on commencement of commercial production.

b) Depreciation and Amortisation :

I. Tangible Assets :

i. Premium on leasehold land is amortised over the period of lease.

ii. Depreciation on assets, other than Vehicles and Captive Power Plant related assets consisting of Building, Plant & Machinery and Electric Installation (CPP assets), is provided on the "Straight Line Method" in accordance with the provisions of Section 205(2)

(b) of the Companies Act, 1956, and on Vehicles and CPP assets on the "Written Down Value Method" in accordance with the provisions of Section 205(2)(a) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956, except in respect of certain assets at higher rates consequent to management estimate of useful life, Continuous process plants are identified based on technical assessment and depreciated at the specified rate as per Schedule XIV to the Companies Act, 1956. Depreciation on additions to fixed assets is provided on a pro-rata basis from the date of acquisition or installation,and in the case of a new project, from the date of commencement of commercial production,

Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on which the said asset is sold, discarded, demolished or scrapped.

In respect of an asset for which impairment loss is recognised, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

iii. Machinery spares, which are capitalized, are depreciated over the useful life of the related fixed asset. The written down value of such spares is charged to the statement of profit and loss,on issue for consumption.

iv. Cost of mineral reserve embedded in the cost of freehold mining land is depreciated in proportion of actual quantity of minerals extracted to the estimated quantity of extractable mineral reserves.

v. Fixed assets, constructed by the Company, but ownership of which vests with the Government / Local Authorities :

a) Expenditure on Power lines is depreciated over the period as permitted in the Electricity Supply Act, 1948 / 2003 as applicable.

b) Expenditure on Marine structures is depreciated over the period of agreement,

c) Expenditure on other fixed assets is depreciated at the rate of depreciation specified in Schedule XIV to the Companies Act, 1956.

II. Intangible Assets :

i. Expenditure to acquire Water drawing rights from Government / Local Authorities / other parties is amortised on straight line method over the period of rights to use the facilities ranging from ten to thirty years.

ii. Expenditure on Computer software is amortised on straight line method over the period of expected benefit not exceeding five years.

c) Impairment of Assets :

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the assets. A previously recognised impairment loss is increased or reversed depending on changes in circumstances.

d) Investments :

i. Recognition and Measurement

Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long-term investments and are carried at cost. However,provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of the investments. Investments other than long-term investments being current investments are valued at cost or fair value whichever is lower, determined on an individual basis.

ii. Presentation and Disclosure

Investments, which are readily realisable and intended to be held for not more than one year from balance sheet date, are classified as current investments. All other investments are classified as non-current investments.

e) Inventories :

Inventories are valued as follows

i. Coal, fuel, packing materials, raw materials, stores and spares :

Lower of cost less provision for slow and non-moving inventory, if any, and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a moving weighted average basis.

ii. Work-in-progress, finished goods, stock in trade and trial run inventories :

Lower of cost and net realisable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a monthly moving weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

f) Provisions / Contingencies :

A provision is recognised for a present obligation as a result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate of the amount required to settle the obligation at the Balance Sheet date. A contingent liability is disclosed, unless the possibility of an outflow of resources is remote.

h) Revenue recognition :

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

i . Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Accordingly, domestic sales are accounted on dispatch of products to customers and Export sales are accounted on the basis of date of Bill of Lading. Sales are disclosed net of sales tax / value added tax, discounts and sales returns, as applicable. Sales exclude self- consumption of cement.

ii. Sales include the amount of subsidy due in accordance with the respective incentive schemes,

iii. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable, Dividend income is recognised when right to receive is established by the Balance Sheet date.

i) Mines Reclamation Expenses :

The Company provides for the expenses to reclaim the quarries used for mining. The total estimate of reclamation expenses is apportioned over the estimate of mineral reserves and a provision is made based on the minerals extracted during the year.

Mines reclamation expenses are incurred on an ongoing basis and until the closure of the mine. The actual expenses may vary based on the nature of reclamation and the estimate of reclamation expenditure.

j) Employee Benefits :

i. Defined Contribution Plan

Employee benefits in the form of contribution to Superannuation Fund, Provident Fund managed by Government Authorities, Employees State Insurance Corporation and Labour Welfare Fund are considered as defined contribution plan and the same is charged to the statement of profit and loss for the year when the contributions to the respective funds are due.

ii. Defined Benefit Plan

Retirement benefits in the form of gratuity, post-retirement medical benefit and death & disability benefit are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the balance sheet. Actuarial gains / losses, if any, are recognised in the statement of profit and loss.

Employee Benefit, in the form of contribution to Provident Fund managed by a Trust set up by the Company, is charged to statement of profit and loss as and when the contribution is due. The deficit, if any, in the accumulated corpus of the trust is recognised in the statement of profit and loss based on actuarial valuation.

iii. Other long-term benefits

Compensated absences are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the balance sheet.Actuarial gains / losses, if any, are immediately recognised in the statement of profit and loss.

k) Employee Stock Compensation cost :

The Company measures compensation cost relating to employee stock option using the fair value method. Discount on Equity Shares as compensation expenses under the Employee Stock Option Scheme, is amortised in accordance with Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India and the Guidance Note on Accounting for Employee Share-based payments, issued by the Institute of Chartered Accountants of India,

l) Borrowing Costs and Share Issue Expenses :

i. Borrowing cost attributable to acquisition and construction of assets that necessarily takes substantial period of time are capitalised as part of the cost of such assets up to the date when such assets are ready for intended use.

i i. Expenses on issue of Shares, Debentures and Bonds as well as Premium on Redemption of Debentures are adjusted to Securities Premium Account in accordance with Section 78 of the Companies Act, 1956.

iii. Borrowing cost such as discount or premium and ancillary costs in connection with arrangement of borrowings are amortised over the period of borrowings.

iv. Other borrowing costs are charged as expense in the year in which these are incurred,

m) Taxation :

Tax expense comprises of current income and deferred income tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961.

Deferred income taxes reflect the impact of current year''s timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain that sufficient future taxable income will be available.

n) Leases :

Where the Company is the lessee :

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.

Where the Company is the lessor :

i . Assets given under finance lease are recognised as a receivable at an amount equal to the net investment in the lease. Lease rentals are apportioned between principal and interest on the internal rate of return method. The principal amount received reduces the net investment in the lease and interest is recognised as revenue. Initial direct costs such as legal costs, brokerage costs, etc, are recognised immediately in the statement of profit and loss.

ii. Assets subject to operating leases are included in fixed assets. Lease income is recognised in the statement of profit and loss on a straight-line basis over the lease term. Costs, including depreciation, are recognised as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the statement of profit and loss.

o) Segment Reporting Policies :

i. Identification of segments

The Company has only one business segment ''Cementitious Materials'' as its primary segment. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

ii. Segment Policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

p) Cash and Bank Balances :

i. Cash and Bank balances in the Balance Sheet comprise cash at bank including fixed deposits, cheques in hand and cash on hand,

ii. Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank, cash on hand and short-term investments with an original maturity of three months or less.

q) Government Grants and Subsidies :

i. Grants and subsidies from the Government are recognised when there is reasonable certainty that the grant / subsidy will be received and all attaching conditions will be complied with.

i i. When the grant or subsidy relates to an expense item, it is recognised as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate.

iii. Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset.

iv. Government grants in the nature of Promoters'' contribution are credited to capital reserve and treated as a part of Shareholders'' Funds.

r) Earnings Per Share :

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares,

b) Rights, preferences and restrictions attached to equity shares

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

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

e) Outstanding employee stock options exercisable into 6,381,625 (previous year - 10,165,025) equity shares of '' 2 each fully paid up (Refer note 32 (b)).

f) Outstanding tradable warrants and right shares kept in abeyance exercisable into 186,690 (previous year - 186,690) and 139,830 (previous year - 139,830) equity shares of '' 2 each fully paid-up respectively.

* Secured by bank guarantee and is repayable on 27th February 2020,

** Sales tax deferment loan is interest free and payable in 10 annual installments starting from April 2007 to April 2016 of varying amounts from '' 1.52 crores to '' 13.23 crores.

(a) Includes :

i) Premises on ownership basis of Rs. 101.10 crores (previous year - Rs. 102.91 crores) and Rs. 13.12 crores (previous year - Rs. 11.17 crores) being the depreciation thereon upto 31 st December, 2013 and cost of shares in co-operative societies are Rs. 12,630 (previous year - Rs. 12,630).

ii) Rs. 23.54 crores (previous year - Rs. 23.81 crores) being cost of roads constructed by the Company ownership of which vests with the Government / Local Authorities and Rs. 2.73 crores (previous year - Rs. 2.12 crores) being the depreciation thereon upto 31 st December, 2013.

(b) Cost incurred by the Company ownership of which vests with the State Maritime Boards.

(c) Includes Rs. 38.38 crores (previous year - Rs. 34.55 crores) being cost of bulkers and tippers used as material handling equipment, which are being depreciated under the "written down value method" at the rate applicable to vehicles and Rs. 29.35 crores (previous year - Rs. 26.40 crores) being the depreciation thereon upto 31 st December, 2013.

(d) Includes Rs. 12.18 crores (previous year - Rs. 10.08 crores) being cost of railway sidings constructed by the Company, ownership of which vests with the Railway authorities and Rs. 3.88 crores (previous year - Rs. 3.31 crores) being the depreciation thereon upto 31 st December, 2013.

(e) Railway wagons given on lease to the railway under "Own Your Wagon Scheme".

(f) Cost incurred by the Company ownership of which vests with the State Electricity Boards.

(g) i) Include Rs. 0.30 crore (previous year - Rs. 0.44 crore) capitalised as pre-operative expenses and exceptional item of Rs. Nil (previous year - Rs. 279.13 crores).

ii) Depreciation expense includes credit of Rs. 10.84 crores for the year ended 31 st December, 2013 and includes a charge of Rs. 27.91 crores for the year ended 31 st December, 2012 in respect of earlier years.

As at As at 31.12.2013 31.12.2012 '' in crores '' in crores

29. (A) Contingent liabilities and commitments (to the extent not provided for)

(I) Contingent liabilities

(a) Claims against the Company not acknowledged as debts

(i) Labour matters........................... 21.74 18.9

(ii) Land matters......... ................. 60.30 67.03

(iii) Others............................ 60.94 31.36

(b) Other matters for which the company is contingently liable

(i) Tax matters

(a) Income tax demands (including interest) - matter under appeal ............................. 10.70 5.37

(b) Sales tax demands (including interest and penalty)............. 19.63 16.24

(c) Excise demands under appeal............................ 26.10 27.81

(d) Customs demands........................... 33.45 -

(e) Land tax demands........................... 14.86 14.38

(f) Others................... ........ 16.30 0.80

(ii) Relating to railway freight on cement - matter once decided in favour of the Company by the Honourable High Court of Gujarat was remanded back by the Honourable Supreme

Court pursuant to a Special Leave Petition filed by the railways................ 7.92 7.65

(iii) Relating to coal claims - matter pending in the Honourable High Court of Calcutta

(a) Railway freight on coal............................... 1.60 1.60

(b) Penal freight on excess weight of coal.............................. 0.24 0.24

(c) Interest on premium on coal.............................. 3.29 3.29

(iv) The Competition Commission of India issued an Order dated 20th June, 2012, imposing penalty on certain cement manufacturers, including the Company, concerning alleged contravention of the provisions of the Competition Act, 2002, and imposed a penalty of '' 1,163.91 crores on the Company. The Company had filed an appeal against the said Order with the Competition Appellate Tribunal (COMPAT). Pending final disposal of the appeal, the Hon''ble Tribunal, vide its order dated 17th May, 2013, has stayed the penalty with a condition to deposit 10% of the penalty amount, which has been deposited in the form of bank fixed deposit with lien in favour of COMPAT. The fixed deposit has been renewed along with interest of '' 4.36 crores. Based on the advice of external legal counsel, the Company believes that it has good grounds for a successful appeal. Accordingly, no

provision is considered necessary............................... 1,163.91 1,163.91

In respect of items above, future cash outflows are determinable only on receipt of judgements / decisions pending at various forums / authorities.

(II) Guarantee given on behalf of joint venture company ........................................ 6.60 3.67

(III) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)....................... 647.73 680.85

(B) The Honourable High Court of Himachal Pradesh had passed an order in favour of the Company for its claim in respect of power subsidy in the form of Power Tariff Freeze (PTF) and Peak Load Exemption Charges (PLEC). Against this, Government of Himachal Pradesh had issued 296, 5.13% H P Infrastructure Development Bonds of face value of '' 1,000,000 each, having a value of '' 29.60 crores and balance of '' 0.08 crore was refunded to the Company

The Government of Himachal Pradesh has filed Special Leave Petition in the Honourable Supreme Court against the decision of the Honourable High Court of Himachal Pradesh. The Company has given an undertaking to refund '' 29.68 crores paid by the State Government together with interest thereon up to the date of final judgment in time bound manner, in the event that the matter is decided against the Company....................... 29.68 29.68

(C) The Government of Rajasthan has granted 75% exemption from Sales Tax in respect of Rabriyawas unit.

However, the eligibility of exemption in excess of 25% has been contested by the State Government in a similar matter of another Company. The matter is pending before the Honourable Supreme Court. The Company has given an undertaking to the Government of Rajasthan that the Company will deposit the differential amount of Sales tax, in case the Supreme Court''s decision goes against in the matter referred above......................... 82.16 82.16

(D) Writ petition filed against the order of Madhya Pradesh State Mining Department demanding '' 4. 76 crores excluding interest '' 1.13 crores towards payment of additional royalty on limestone based on the ratio of 1.6 tonnes of limestone to 1 tonne of cement produced at its factory in Chhattisgarh. The matter is now pending before Honourable High Court at Bilaspur................................. 102.87 85.02

Notes :

1 Related party relationship is as identified by the Company on the basis of available information.

2 The Company carries its Corporate Social Responsibility (CSR) activities through Ambuja Cement Foundation (ACF) and runs schools at plant locations through Ambuja Vidya Niketan Trust (AVN), a charitable organisation registered under Bombay Public Trust Act, 1950. The Company has contributed '' 32.50 crores (previous year - '' 35.00 crores) to ACF and '' 5.70 crores (previous year - '' 4.80 crores) to AVN during the current year.

IX Basis used to determine expected rate of return on assets :

To develop the expected long-term return on assets assumption, the company considered the current level of returns declared on its insurance policy. This resulted in the selection of the 8.50 % assumption for gratuity (funded) plan.

X The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

XI The Company expects to contribute '' 7.50 crores (previous year - '' 7.50 crores) to gratuity fund in the next year.

c) Amount recognised as expense in respect of compensated absences is '' 8.30 crores (previous year - '' 18.59 crores).

d) Provident fund managed by a trust set up by the Company

The Company has contributed '' 7.16 crores (previous year - '' 6.33 crores) towards provident fund liability. Deficit of '' Nil (previous year - '' 0.15 crore) in the accumulated corpus fund is recognised in the Statement of profit and loss.

* Includes 111,150 options in tranche 2 granted on 1st July 2008 @ '' 82 per option.

# Includes 113,850 options in tranche 2 granted on 19th June 2009 @ '' 96 per option.

The weighted average share price at the date of exercise for stock options was '' 179.36 (previous year '' 188.56)

The weighted average share price for the period over which stock option were exercised was '' 185.01 (previous year '' 177.49)

41. Sale of products includes Sales tax / Value added tax subsidy of '' 7.34 crores (previous year - '' 33.48 crores).

43. Operating lease :

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

45. Dirk India Private Limited''s (DIPL) (a subsidiary company) contract for procurement of key raw material is sub-judice and the supply has been discontinued by the supplier. Based on advice of external legal counsel, the Company believes that DIPL has good case of appeal, hence no adjustment is considered necessary in respect of its investment of '' 21.81 crores and loans & inter corporate deposits of '' 35.68 crores.

46. "Provision for doubtful debts and advances (net)" for the previous year includes '' 31.84 crores pertaining to the period upto 31st December,

2011, towards claims in respect of certain incentives receivable from the government, where there exists an uncertainty with respect to its full recoverability due to government''s contention of non-fulfillment of certain conditions.

47. During the current year, the Company has credited '' 0.02 crore in ''Cost of raw materials consumed'', '' 24.54 crores in ''Power and fuel'' and '' 4.56 crores in ''Stores and spares consumed'', due to change in estimate in respect of recognition of certain CENVAT credit relating to earlier years.

49. (a) Other income includes '' 32.19 crores (previous year '' Nil) written back towards interest on income tax relating to earlier years,

(b) Current tax relating to earlier years represents write back of tax provision upon completion of assessments and change in estimate of allowability of certain deductions.

50. Exceptional item for the previous year, represents additional depreciation charge on account of change in method of providing depreciation on fixed assets pertaining to its Captive Power Plants from the ''Straight Line'' to the ''Written Down Value''.

52. During the year, the Board of Directors and members have approved the Scheme of amalgamation of Holcim (India) Private Limited (HIPL) with the Company with effect from 1st April 2013, wherein the Company will acquire HIPL from Holderind Investments Ltd., Mauritius, for a cash consideration of '' 3,500 crores and issue of 58.44 crores equity shares of '' 2 each at a premium of '' 187.66 per share. Pending regulatory approvals, no impact of the Scheme of amalgamation is given in financial statements.

53. Figures less than '' 50,000 have been shown at actuals, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest lakh.


Dec 31, 2012

1. (A) Basis of preparation of financial statements :

i. The financial statements have been prepared in compliance with all material aspects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.

ii. Financial statements are based on historical cost and are prepared on accrual basis,

iii. Accounting policies have been consistently applied by the Company and are consistent with those used in the previous year and except for the changes in accounting policy stated in 1(B).

iv. The preparation of financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the results of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual result could differ from these estimates.

v. During the year ended 31st December 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. Previous year figures have been reclassified and regrouped in accordance with the requirements applicable in the current year.

(B) Change in accounting policy :

During the year, the Company has retrospectively changed its method of providing depreciation on fixed assets pertaining to its Captive Power Plants from the ''Straight Line'' to the ''Written Down Value'' at the rates prescribed in Schedule XIV to the Companies Act, 1956. This change results in more appropriate presentation and gives a systematic basis of depreciation charge, representative of the time pattern in which the economic benefits flow to the Company. Accordingly, the Company has recognized additional depreciation charge of Rs. 320.14 crores. Amount relating to earlier years of Rs. 279.13 crores has been disclosed as exceptional item.

Had the Company continued to use the earlier method of depreciation, profit after tax for the year ended 31st December, 2012 would have been higher by Rs. 216.27crores.

b) Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is entitled to one vote per equity share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the equity shareholders are eligible to receive remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.

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

e) Outstanding employee stock options exercisable into 10,165,025 (previous year - 18,591,025) equity shares of Rs. 2 each fully paid up (Refer note 32 (b)).

f) Outstanding tradable warrants and right shares kept in abeyance exercisable into 186,690 (previous year- 186,690) and 139,830 (previous year- 139,830) equity shares of Rs. 2 each fully paid-up respectively.

* As on 31.12.2011, equity shares were held by erstwhile Ambuja Cement India Private Limited, subsidiary of HIL, since amalgamated with HIPL. HIL and HIPL are subsidiaries of Holcim Limited, Switzerland, the ultimate holding company (Refer note 40).

Notes :

1 Related party relationship is as identified by the Company on the basis of available information.

2 During the previous year, the Company became a subsidiary of Holderind Investments Limited, Mauritius (HIL), Holderfin BV, Netherlands and Holcim Limited, Switzerland (Holcim group companies) and accordingly all other Holcim group companies have been reported as fellow subsidiaries.

3 The Company carries its Corporate Social Responsibility (CSR) activities through Ambuja Cement Foundation (ACF) and run schools at plant locations through Ambuja Vidya Niketan Trust (AVN), charitable organization registered under Bombay Public Trust Act, 1950. The Company has contributed Rs. 35.00 crores (previous year - Rs. 28.10 crores) to ACF and Rs. 4.80 crores (previous year - Rs. 4.38 crores) to AVN during the current year.

b) Defined benefit plans - as per actuarial valuation

The Company has defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India.

The Company has also agreed to provide certain additional post-employment healthcare benefits to senior employees. These benefits are unfounded.

The following tables summaries the components of net benefit / expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the respective plans :

c) Basis used to determine expected rate of return on assets :

To develop the expected long-term return on assets assumption, the company considered the current level of returns declared on its insurance policy. The fund manager is weighing the expected return for each asset class to determine the actual return on asset for the portfolio. This resulted in the selection of the 8.50 % assumption for gratuity (funded) plan and 8.52% assumption for provident fund plan managed by a trust set by the company.

d) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

e) The Company expects to contribute Rs. 7.50 crores (previous year - Rs. 6.00 crores) to gratuity fund in the next year.

g) Amount recognized as an expense in respect of compensated absences is Rs. 18.59 crores (previous year - Rs. 14.02 crores).

h) Provident fund managed by a trust set up by the Company

The Company has contributed Rs. 6.33 crores (previous year - Rs. 6.66 crores) towards provident fund liability. During the year, in accordance with guidance issued by the Actuarial Society of India for measurement of interest shortfall of provident fund liabilities, interest shortfall of Rs. 0.15 crore is charged to Statement of profit and loss. During the previous year, Rs. 0.76 crore was recognized towards deficit of provident fund liabilities.

2. During the previous year, the Company became a subsidiary of Holderind Investments Limited, Mauritius and Holcim Limited, Switzerland, the ultimate holding company.

3. Capital work in progress includes (a) machinery in transit Rs. 10.38 crores (previous year- Rs. 11.29 crores) and (b) expenditure during construction for project Rs. 10.97 crores (previous year - Rs. 5.82 crores).

4. Sale of products includes Sales tax / VAT remission and subsidy of Rs. 33.48 crores (previous year - Rs. 47.49 crores).

5. Excise duty on sales amounting to Rs. 1,264.74 crores (previous year - Rs. 1,073.81 crores) has been reduced from sales in the Statement of profit and loss and excise duty on change in inventories of finished goods and work-in-progress amounting to Rs. 10.96 crores (previous year - Rs. 2.49 crores) has been considered as other expenses.

6. Loss on assets sold, discarded and written off includes preoperative expenses and capital work in progress incurred on certain capital projects written off during the year amounting to Rs. Nil (previous year - Rs. 8.92 crores).

7. During the year, the Company through its fraud risk management mechanism, has detected certain instances of misappropriation in the nature of receiving undue benefit by employees in collusion with vendors / others which has resulted in a loss to the Company of Rs. 0.73 crore in one instance and amount is not determinable in other instances, which the management believes are insignificant to the size and operations of the Company. Investigations relating to these matters have completed and appropriate actions have been taken by the Company,

8. In the previous year, prior period expenses amounting to Rs. 3.81 crores and Rs. 7.78 crores are included in Miscellaneous expenses and Legal and professional fees respectively.

9. During the previous year, the Company had changed (with retrospective effect) its method of measurement of compensation cost relating to employee stock options from intrinsic value method to fair value method for all outstanding unvested employee stock options at the beginning of the year. Accordingly the Company had recognized an additional expense of Rs. 33.12 crores. Amount relating to earlier years of Rs. 24.25 crores had been disclosed as exceptional item in the previous year.

10. "Provision for doubtful debts and advances (net)" includes Rs. 31.84 crores pertaining to the period upto 31st December, 2011, towards claims in respect of certain incentives receivable from the government, where there exists an uncertainty with respect to its full recoverability due to government''s contention of non-fulfillment of certain conditions.

11. Figures less than Rs. 50,000/- have been shown at actual, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest lakh.

12. Figures of the previous year have been regrouped / rearranged wherever necessary to conform to the current year''s presentation.


Dec 31, 2010

1. (A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

(i) The financial statements have been prepared in compliance with all material aspects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.

(ii) Financial statements are based on historical cost and are prepared on accrual basis.

(iii) Accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

(iv) The preparation of financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the results of operations during the reporting period end. Although these estimates are based upon managements best knowledge of current events and actions, actual result could differ from these estimates.

As at As at 31.12.2010 31.12.2009 Rs. in Crores Rs. in Crores

2. a) Contingent liabilities not provided for in respect of :

(i) Bank Guarantee given to Mines & Geology Dept. Government of Rajasthan for setting up of Cement plant - 2.00

(ii) Claims against the Company not acknowledged as debts

(a) Disputed liability relating to labour matters 38.46 44.09

(b) For acquisition of land 50.25 51.39

(c) For Non Agriculture Assessment Tax - 2.65

(d) Others 4.18 23.38

(iii) Tax matters

(a) Disputed liability in respect of Income-tax demands (including interest) - matters 57.53 60.78 under appeal

(b) Disputed Sales-tax demands (including interest and penalty) 12.26 25.96

(c) Disputed Excise demands - matters under appeal (Deposit with Excise Department 7.61 26.66 Rs. 0.21 crore; Previous year Rs. 0.21 crore)

(d) Disputed Customs demands - matters under appeal 0.52 1.43

(e) Disputed liability of RTO Tax on Mining Machinery 0.80 0.62

(iv) Disputed liabilities relating to Railway Freight on Cement - matter once decided in favour of the Company by the Honourable High Court of Gujarat was remanded back by the Honourable Supreme Court pursuant to a Special Leave Petition filed by the railways. 5.51 5.51

(v) Disputed liabilities relating to Coal claims - matter pending in the Honourable High Court :

(a) Railway freight on Coal 1.60 1.49

(b) Penal freight on Excess Weight of Coal 0.24 0.24

(c) Interest on Premium on Coal 3.29 3.29

In respect of items above, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgements / decisions pending at various forums / authorities.

b) The Honourable High Court of Himachal Pradesh has passed an order in favour of the Company for its claim in respect of power subsidy in the form of Power Tariff Freeze (PTF) and Peak Load Exemption Charges (PLEC). Against this, Government of Himachal Pradesh on 1st May, 2004 has issued 296 5.13% H P Infrastructure Development Bonds of face value of Rs.10 lacs each, having a value of Rs.29.60 crores redeemable after 10 years and balance of Rs.0.08 crore is refunded to the Company.

The Government of Himachal Pradesh has filed Special Leave Petition in the Honourable Supreme Court against the decision of the Honourable High Court of Himachal Pradesh. The Company has given an undertaking to refund Rs.29.68 crores paid by the State Government together with interest thereon up to the date of final judgment in time bound manner, in the event that the matter is decided against the Company. 29.68 29.68

c) The Government of Rajasthan has granted 75% exemption from Sales Tax in respect of Rabriyawas unit. However, the eligibility of exemption in excess of 25% has been contested by the State Government in a similar matter of another Company and the matter is pending before the Honourable Supreme Court. The Company has given an undertaking to the Government of Rajasthan that the Company will deposit the differential amount of Sales Tax, in case the Supreme Courts decision goes against in the matter referred above. 82.16 82.16

d) Writ petition filed against the order of Madhya Pradesh State Mining Department demanding Rs. 4.76 crores and interest Rs. 1.13 crores towards payment of additional royalty on limestone based on the ratio of 1.6 tonnes of limestone to 1 tonne of cement produced at its factory in Chhattisgarh. The matter is now pending before Honourable High Court at Bilaspur. 56.25 52.51

VIII Provident Fund managed by a Trust set up by the Company

Pending the issuance of the Guidance Note from the Actuarial Society of India, the Companys actuary has expressed his inability to reliably measure the provident fund liability. The Company has recognised an expense of Rs. 0.43 crore (31.12.2009 Rs. 0.17 crore) towards the deficit in the fund.

3. Capital Work in Progress includes (a) machinery in transit Rs. 10.50 crores (31.12.2009 - 8.93 crores) and (b) expenditure during construction for project - Rs.14.13 crores (31.12.2009 - Rs. 110.86 crores).

4. During the current year, the Company has sold its investment in ING Vysya Life Insurance Company Limited and has recognised profit of Rs. 72.63 crores.

5. During the current year, the Company has estimated provision for slow and non moving spares based on age of the inventory. Accordingly, the Company has recognised a provision of Rs.61.03 crores as at December 31, 2010. The provision based on such parameters applied to spares inventory at the beginning of the year amounting to Rs.46.10 crores has been disclosed as an exceptional item in the profit and loss account.

6. During the year, the Company has subscribed to 6.50% Cumulative Redeemable Preference Shares amounting to Rs.15 crores in M/s. Counto Microfine Products Private Limited, India, a joint venture company. As per the Supplementary Share Subscription Agreement, the Company has agreed to buy 4,010,002 equity shares representing 50% equity stake in the Company at an average price of Rs.24.94 per share amounting to Rs.10 crores from the existing shareholders of the joint venture company. The Company has given an advance of Rs.7.50 crores for purchase of the said 50% stake which is included in Advances recoverable in cash or in kind.

7. Excise duty on sales amounting to Rs. 866.82 crores (31.12.2009 Rs.644.55 crores) has been reduced from sales in profit & loss account and excise duty on increase/decrease in stock amounting to Rs.4.92 crores (31.12.2009 Rs.(3.27) crores) has been considered as (income)/ expense in Schedule N of financial statement.

8. During the previous year the Company had prepaid deferred sales tax loan at one of its unit and had recognised discounting income of Rs.46.16 crores.

9. Figures less than Rs. 50,000/- have been shown at actuals, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest lac.

10. Figures of the previous year have been regrouped wherever necessary to conform to the current years presentation.


Dec 31, 2009

(i) The financial statements have been prepared in compliance with all material aspects with the notified Accounting Standards by Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

(ii) Financial statements are based on historical cost and are prepared on accrual basis.

(iii) Accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

(iv) The preparation of financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the results of operations during the reporting period end. Although these estimates are based upon management’s best knowledge of current events and actions, actual result could differ from these estimates.

As at As at 31.12.2009 31.12.2008 Rs. in Crores Rs. in Crores 2. a) Contingent liabilities not provided for in respect of :

(i) Bank Guarantee given to Mines & Geology Dept. Government of Rajasthan for setting up of Cement plant. . ............. 2.00 2.00

(ii) Claims against the Company not acknowledged as debts

(a) Disputed liability relating to labour matters .................. 44.09 26.55

(b> For acquisition of land .......... 51.39 32.87

(c) For Non Agriculture Assessment Tax ................... 2.65 2.65

(d) Others .......................... 24.51 25.33

(iii) Tax matters

(a) Disputed liability in respect of Income-tax demands (including interest) - matters under appeal ................................. 60.78 63.68

(b) Disputed Sales-tax demands (including interest and penalty) ....... 25.96 10.49

(c) Disputed Excise demands - matters under appeal (Deposit with

Excise Department Rs. 0.21 crore; Previous year Rs. 0.40 crore).. 26.66 16.55

(d) Disputed Customs demands - matters under appeal ............ 1.43 2.22

(e) Disputed liability of RTO Tax on Mining Machinery .............. 0.62 0.62

(iv) Disputed liabilities relating to Railway Freight on Cement - matter once decided in favour of the Company by the Honourable High Court of Gujarat was remanded back by the Honourable Supreme Court pursuant to an Special Leave Petition filed by the railways. . ........ 5.51 5.51

(v) Disputed liabilities relating to Coal claims - matter pending in the Honourable High Court :

(a) Railway freight on Coal ............ 1.49 1.49

(b) Penal freight on Excess Weight of Coal ........................ 0.24 0.24

(c) Interest on Premium on Coal ........ 3.29 3.29

In respect of items above, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgements / decisions pending at various forums / authorities.

b) The Honourable High Court of Himachal Pradesh has passed an order in favour of the Company for its claim in respect of power subsidy in the form of Power Tariff Freeze (PTF) and Peak Load Exemption Charges (PLEC). Against this, Government of Himachal Pradesh on 1st May, 2004 has issued 296 5.13% H P Infrastructure Development Bonds of face value of Rs.10 lacs each, having a value of Rs. 29.60 crores redeemable after 10 years and balance of Rs. 0.08 crore is refunded to the Company.

The Government of Himachal Pradesh has filed Special Leave Petition in the Honourable Supreme Court against the decision of the Honourable High Court of Himachal Pradesh. The Company has given an undertaking to refund Rs. 29.68 crores paid by the State Government together with interest thereon up to the date of final judgment in time bound manner, in the event that the matter is decided against the Company. . ................................ 29.68 29.68

c) The Government of Rajasthan has granted 75% exemption from Sales Tax in respect of Rabriyawas unit. However, the eligibility of exemption in excess of 25% has been contested by the State Government in a similar matter of another Company and the matter is pending before the Honourable Supreme Court. The Company has given an undertaking to the Government of Rajasthan that the Company will deposit the differential amount of Sales Tax, in case the Supreme Court’s decision goes against in the matter referred above. . ........ 82.16 82.16

d) Writ petition filed against the order of Madhya Pradesh State Mining Department demanding Rs. 4.76 crores towards payment of additional royalty on limestone based on the ratio of 1.6 tonnes of limestone to 1 tonne of cement produced at its factory in Chhattisgarh. The matter is now pending before Honourable High Court at Bilaspur. . ............................................ 56.54 44.94

3. Estimated amount of Contracts remaining to be executed on Capital Account and not provided for (net of advances) ............................................. 398.50 911.68

4. Related Party Disclosures :

a) List of Related Parties and relationships

Party Relation

A. Names of related parties where control exists

Cement Ambuja International Ltd. . ..............Subsidiary (wound up on 20.02.2009)

Ceylon Ambuja Cements (P) Ltd. . ............... Fellow Subsidiary of Holderind Investments Ltd. Mauritius (Subsidiary till 02.06.2008)

Kakinada Cements Ltd. . .......... Subsidiary

M.G.T. Cements Private Ltd. . .... Subsidiary

Chemical Limes Mundwa Private Ltd. . ................... Subsidiary

Midigama Cements (P) Ltd. . ...... - (Sub-subsidiary till 02.06.2008)

B. Key Management Personnel

Mr. A. L. Kapur ................. Managing Director

Mr. P. B. Kulkarni .............. Whole-time Director (upto 31.01.2009)

Mr. N. P. Ghuwalewala ............Whole-time Director (upto 27.06.2009)

Mr. B. L. Taparia ................Whole-time Director (upto 30.04.2009)

C. Relatives of Key Management Personnel

Mr. Ajay Kapur .................. Son of Mr. A. L. Kapur

D. Enterprises over which significant influence exercised by

(a) Directors

GAL Finance Ltd. . ......... Mr. N. S. Sekhsaria

Radha Krishna Bimalkumar Pvt. Ltd. . ................. Mr. Suresh Neotia (upto 23.09.2009)

(b) Major Shareholders

Holderind Investments Ltd. Mauritius .................. Major shareholder having significant influence

Holcim Ltd. . ................. Holding Company of Holderind Investments Ltd., Mauritius Holcim Trading Pte Ltd., Singapore ................. Fellow Subsidiary of Holderind Investments Ltd., Mauritius Holcim Group Supports Ltd. . ..................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Trading FZCO, Dubai ...... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

PT Holcim Indonesia ............. Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Services (Asia) Ltd. . ....Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Services (South Asia) Ltd. . ................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Lanka Ltd. . ............. Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Siam City Cement, Thailand .......Fellow Subsidiary of Holderind Investments Ltd., Mauritius

St. Lawrence Cement Inc., Canada ................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim (US) Inc. . ............. Fellow Subsidiary of Holderind Investments Ltd., Mauritius

ACC Ltd. . ..................... Associate of Holderind Investments Ltd., Mauritius

ACC Concrete Ltd. . ............ Subsidiary of ACC Ltd.

ACC Machinery Company Ltd. . .... - (Subsidiary of ACC Ltd. (upto 10.03.2008))

5. Employee Defined Benefits:

(a) Defined Contribution Plans -

The Company has recognised an expense of Rs. 15.94 crores (31.12.2008 - Rs. 12.50 crores) towards the defined contribution plans.

VIII. Provident Fund managed by a Trust set up by the Company

Pending the issuance of the Guidance Note from the Actuarial Society of India, the Companys actuary has expressed his inability to reliably measure the provident fund liability. The Company has recognised an expense of Rs. 0.17 crore (31.12.2008 Rs.- Nil) towards the deficit in the fund as as 31st December, 2009.

(c) Amount recognised as an expense in respect of Compensated Leave Absences is Rs. 8.95 crores (31.12.2008 - Rs. 12.85 crores)

(d) Basis used to determine expected rate of return on assets:

To develop the expected long-term return on assets assumption, the company considered the current level of returns declared on its insurance policy. The fund manager is weighing the expected return for each asset class to determine the actual return on assets for the portfolio. This resulted in the selection of the 7.50% assumption.

(e) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

(f) The Company expects to contribute Rs. 8.22 crores (31.12.2008 Rs.- 13.00 crores) to Gratuity Fund in the year 2010.

(g) Contribution to provident and other funds of Rs. 10.50 crores in the current year is net of income in certain staff benefits scheme amounting to Rs. 8.87 crores primarily on account of reversal of actuarial losses.

5. During the year the Company has prepaid deferred sales tax loan at one of its unit and has recognised discounting income of Rs. 46.16 crores.

6. Capital Work-in-Progress includes (a) machinery in transit Rs. 8.93 crores (31.12.2008 - Rs. 3.03 crores) and (b) expenditure during construction for project - Rs. 110.86 crores (31.12.2008-Rs. 44.67 crores).

7. During the year the Company has written off pre-operative expenses incurred on certain capital projects and temporary structures amounting to Rs. Nil (31.12.2008 - Rs. 8.11 crores).

8. During the previous year, the Company has sold its investments in :

a) Ambuja Cement India Private Limited for a sale consideration of Rs. 588.91 crores and has recognised a profit of Rs. 303.20 crores.

b) Ceylon Ambuja Cements Private Limited for a sale consideration of Rs. 0.42 crore and has recognised a loss of Rs. 5.86 crores.

9. Figures less than Rs. 50,000/- have been shown at actuals, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest lac.

10. Figures of the previous year have been regrouped wherever necessary to conform to the current year’s presentation.

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