ACC

1.  Basis of preparation
 
 (i) The financial statements have been prepared to comply in all
 material aspects in respect with the Notified Accounting Standard 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, except where impairment is made and revaluation is
 carried out.
 
 (iii) Accounting policies have been consistently applied by the Company
 and are consistent with those used in the previous year.
 
 2.  Use of estimates
 
 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 at the date of the
 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 results could differ
 from these estimates.
 
 3.  Segment Reporting
 
 Pursuant to the transfer of Ready Mixed Concrete business to its wholly
 owned subsidiary ACC Concrete Limited with effect from 1st January,
 2008, the Company has disclosed only one business Segment as the
 primary segment. Ready Mixed Concrete business has been reported as a
 Discontinued operation. The Company caters mainly to the needs of the
 domestic market. The export turnover is not significant in the context
 of total turnover. As such there are no reportable Geographical
 Segments.
 
 4.  The Company had issued 60,000, 1% Foreign Currency Convertible
 Bonds (FCCBs) of US,000 each aggregating US Million at par.
 During the previous year, conversion option in respect of 1,350 Foreign
 Currency Convertible Bonds was exercised by the bondholders and
 pursuant to this 1,63,124 number of Equity Shares of Rs. 10 each were
 allotted. There were no Foreign Currency Convertible Bonds outstanding
 to be converted into equity shares at the end of previous year. During
 the previous year this exercise of conversion option and the consequent
 allotment of shares resulted in the following:
 
 a) The Share Capital of the Company increased by Rs. 0.17 Crore and the
 Securities Premium Account was credited by Rs. 5.19 Crore.
 
 b) Out of Rs. 20.69 Crore provided from Securities Premium Account, a
 sum of Rs. 0.47 Crore being the premium on redemption of bonds had been
 written-back on account of conversion of FCCBs.
 
 5.  During the previous year, pursuant to a Share Subscription
 Agreement, the Company had acquired 1,45,00,000 equity shares of Shiva
 Cement Limited. Further, the Company was entitled to 2,27,00,000 equity
 share warrants out of which the Company had exercised the option for
 50,00,000 equity share warrants and in respect of balance 1,77,00,000
 equity share warrants, the Company had paid Rs. 1.10 per share warrant
 aggregating to Rs. 1.95 Crore. In the current year the Company has
 decided not to exercise the option and hence Rs. 1.95 Crore has been
 written off.
 
 6. During the previous year, the Company has sold its entire
 investment in ACC Nihon Castings Limited and assigned its receivables
 therein, for a total consideration of Rs. 30 Crore. Accordingly, the
 provision of Rs. 39 Crore towards diminution in value of investments
 and Rs. 10 Crore towards doubtful advances had been adjusted in the
 previous year and net profit of Rs. 3.98 Crore had been accounted.
 
 7. a) Provision for current tax represents estimated tax charge based
 on the aggregate profits of the Company for the quarter ended March 31,
 2008, and nine months ended December 31, 2008. Ultimately, the tax
 liability of the Company would be determined on the basis of its
 results for the fiscal year ending March 31, 2009.
 
 b) The Company has been recognising in the financial statements the
 deferred tax assets / liabilities, in accordance with Accounting
 Standard 22 “Accounting for Taxes on Income” issued by the Institute of
 Chartered Accountants of India. During the year, the Company has
 charged the Profit and Loss Account with Deferred Tax Liability of Rs.
 4.34 Crore (Previous year Rs. 10.73 Crore).
 
 8.  A) Contingent Liabilities Not Provided For –
 
 a) Guarantee given to the Bank for grant of working capital loan on
 behalf of subsidiary companies to the extent of Rs. Nil (Previous Year
 - Rs. 21 Crore).
 
 b) Indemnity, Guarantee/s given to Banks / Financial Institutions,
 Government Bodies and others Rs. 0.93 Crore (Previous Year - Rs. 0.88
 Crore).
 
 c) Sales Tax, Excise Duties & Other Dues Rs. 65.65 Crore (Previous Year
 - Rs. 94.23 Crore).
 
 In respect of item (c) future cash outflows in respect of contingent
 liabilities are determinable only on receipt of judgements pending at
 various forums / authorities.
 
 d) The Company had filed a petition against the orders / notices of
 various authorities demanding Rs. 113.80 Crore (Previous Year - Rs.
 99.06 Crore) 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 factories in Madhya Pradesh and Chattisgarh and on cement
 produced vis a vis consumption of limestone at its factory in Tamil
 Nadu.
 
 The Company holds the view that the payment of royalty on limestone is
 based on the actual quantity of limestone extracted from the mining
 area. The independent report obtained from the National Council of
 Building Materials supports the Company’s view. In view of the demand,
 being legally unsustainable, the Company does not expect any liability
 in the matter.
 
 B) a) The Company was entitled to receive transport subsidy against
 actual expenditure on freight incurred in respect of its new 1 MTPA
 plant at Gagal, which went into commercial production w.e.f. September
 15, 1994 for a period of five years. Accordingly, the Company accrued
 the subsidy claim (including subsidy on clinker) aggregating Rs. 80.65
 Crore (Previous Year - Rs. 80.65 Crore) for a year up to September
 1999. As against this, the Company had received part disbursement and
 balance of Rs. 46.35 Crore (Previous Year - Rs. 46.35 Crore) is shown
 as receivable under “Sundry Debtors - Schedule 8”. The Company had
 received a demand notice from the Government of Himachal Pradesh asking
 for refund of Rs. 31.19 Crore during the earlier year stating that 1
 MTPA plant at Gagal is not a new unit but a case of expansion of an
 existing unit, thereby, not eligible for subsidy under Transport
 Subsidy Scheme, 1971.
 
 The High Court of Shimla had declared Gagal II as eligible for
 transport subsidy in its judgement dated August 19, 2003 and the
 division bench of Himachal Pradesh High Court has also confirmed the
 same in its judgement dated April 10, 2008.  However the Government has
 filed an appeal in the Supreme Court.
 
 b) The Company had availed Sales Tax incentive with respect to its
 investment in Gagal II under the State Industrial Policy, 1991. The
 Company accrued Sales Tax incentives aggregating to Rs. 56 Crore
 (Previous Year - Rs. 56 Crore). However, the Sales tax authorities of
 the State, interalia, have stipulated that the incentive is admissible
 only for the incremental amount over the base revenue. The Company is
 still pursuing the claim with the Government. The Company is hopeful of
 recovery of the amount paid under protest. The Company is also pursuing
 with its appeal filed before Appellate Authorities. However as a
 measure of abundant caution a sum of Rs. 56 Crore (Previous Year - Rs.
 56 Crore) has been provided by the Company in earlier years.
 
 9.  Estimated amount of contracts remaining to be executed on capital
 account and not provided for (net of advances) Rs. 1,554.69 Crore
 (Previous Year - Rs. 796.38 Crore)
 
 10.  Other Expenses of Schedule 15 include Donation paid of Rs. 1.00
 Crore (Previous Year - Rs. Nil) to Bhartiya Janata Party and Rs. 1.00
 Crore (Previous Year - Rs. Nil) to All India Congress Committee.
 
 11.  Revenue expenditure on Research and Development amounting to Rs.
 3.29 Crore (Previous Year - Rs. 3.05 Crore) has been charged to Profit
 and Loss Account and capital expenditure relating to Research and
 Development amounting to Rs. 1.80 Crore (Previous Year - Rs. 1.64
 Crore) has been included in Fixed Assets.
 
 12.  There are no Micro, Small and Medium Enterprises, as defined in
 the Micro, Small, Medium Enterprises Development Act, 2006, to whom the
 Company owes dues on account of principal amount together with interest
 and accordingly no additional disclosures have been made.
 
 The above information regarding Micro, Small and Medium Enterprises has
 been determined to the extent such parties have been identified on the
 basis of information available with the Company. This has been relied
 upon by the auditors.
 
 13.  A charge has been created on stocks, stores etc. in favour of
 Banks in consideration of guarantees and letters of credit issued / to
 be issued to the limit of Rs. 725 Crore (Previous Year - Rs. 260
 Crore).
 
 14.  Sales include Sales Tax incentive of Rs. 156.90 Crore (Previous
 Year - Rs. 85.31 Crore)
 
 15.  Deferred Payment Liability included in “Unsecured Loans – Schedule
 4” comprises of Rs. 11.36 Crore (Previous Year - Rs. 12.97 Crore)
 payable to the Industrial Development Corporation of Orissa Limited
 (IDCOL) on account of their dues payable by the erstwhile Bargarh
 Cement Ltd. in eight equal annual instalments without interest or
 penalty. The second instalment was due for payment on December 22,
 2008. Pending conclusion of negotiation with IDCOL the instalment is
 yet to be paid.
 
 16. Previous year’s figures have been regrouped / restated wherever
 necessary to make them comparable with current year’s figures.