Aditya Birla Nuvo

Rs. Crores
                                          Current Year    Previous Year
 
 1.Contingent Liabilities not provided 
   for:
 
 a) Claims against the Company not 
    acknowledged as debts
 i)   Income-Tax                                 84.66            74.18
 ii)  Custom Duty                                 1.11             2.45
 iii) Excise Duty                                28.03            33.30
 iv)  Sales Tax                                  70.66             7.49
 v)   Service Tax                                 1.01             1.11
 vi)  Others                                     54.13            51.06
 b)   Bills discounted with Banks                50.17            80.35
 
 c) Corporate Guarantees given to Banks/
    Financial Institutions for loans
    taken/Preference Shares issued by 
    subsidiary/other companies                  621.21          476.99
 
 d) Customs Duty on capital goods and raw 
    materials imported under advance
    licensing/EPCG scheme, against which 
    export obligation is to be fulfilled         11.34           13.87
 
 e) Under the Jute Packaging Material (Compulsory use of Packing
 Commodities) Act, 1987, a specified percentage of fertilisers
 dispatched was required to be supplied in Jute Bags upto 31.08.2001.
 The Company made conscious efforts to use jute-packaging material as
 required under the Act. However, due to non-availability of material as
 per the Company’s product specifications as well as due to strong
 customer resistance to use of Jute Bags, the specified percentage could
 not be adhered to. The Company has received a show cause notice,
 against which a writ petition has been filed with the High Court, which
 is awaiting hearing. The Company has been advised that the said levy is
 bad in law.
 
 f) Idea Cellular Ltd, in which the Company has the largest
 shareholding, was originally a tripartite joint venture between A.V.
 Birla Group, Tata Group and AT&T Group. With the exit of AT&T and the
 Tata Group, Idea is now part of A.V. Birla Group.
 
 Prior to its exit, Tata Group had alleged that the A.V. Birla Group had
 committed material breach of the Shareholders Agreement and the Tata
 Group invoked the arbitration clause, pursuant to which an Arbitral
 Tribunal has been constituted, which will take up the claims of the
 Tata Group and the counter-claims of the A.V. Birla Group.
 
 When the Tata Group sold its shares in Idea to the Company, they
 claimed to have reserved certain rights under the Share Purchase
 Agreement, which contained a clause for arbitration by the London Court
 of International Arbitration (LCIA). The Company, along with another
 A.V. Birla Group Company, has questioned the reservation and the LCIA
 is seized of the matter. The Company believes that it has a strong case
 to counter the allegations of breach, and it does not contemplate any
 liability to arise on this matter.
 
 2. In accordance with the Members approval in the extra-ordinary
 general meeting of the Company, held on February 06, 2008, the Company
 has, on a preferential basis, issued 20,500,000 Warrants of Rs. 10/-
 each to the Promoter and/ or Promoter Group at a price of Rs. 2007.45.
 The holder of each warrant is entitled to apply for and obtain
 allotment of 1 Equity Share against each warrant at any time after the
 date of allotment but on or before the expiry of 18 months from the
 allotment in one or more tranches. As per SEBI Guidelines, the Company
 has received an amount of Rs 411.53 Crores equivalent to 10% of the
 price and Rs. 307.14 Crores (net of receipt of Rs. 34.13 Crores
 received on allotment of warrant) on exercise of 17,00,000 Share
 Warrants of Rs. 10/- each by the Promoter and/or Promoter Group. Total
 amount of Rs. 718.67 Crores received from the preferential allotment of
 the warrants have been fully utilised.
 
 3. a) Market/Book values of certain long term quoted investments
 aggregating to Rs. 453.10 Crores (Previous Year: Rs. 100.30 Crores) and
 unquoted investments aggregating to Rs. 1,779.38 Crores (Previous Year
 Rs. 970.45 Crores) are lower than its cost.
 
 Considering the strategic and long-term nature of the aforesaid
 investments and asset base and business plan of the investee companies,
 in the opinion of the management, the decline in the market/book value
 of the aforesaid investments is of temporary nature, requiring no
 provision.
 
 An amount of Rs. 19.95 Crores is lying in “Investment Reserve” is to be
 used to meet the diminution other than temporary, if any, that may
 arise in future, in the value of present and future long term strategic
 investments.
 
 b) Transfer of investments in Idea Cellular Ltd. (IDEA), Birla Sun Life
 Insurance Co. Ltd., Birla Sun Life Asset Management Company Ltd. and
 Birla Sun Life Trustee Company Pvt Ltd. is restricted by the terms
 contained in their respective joint venture agreements. Non-disposal
 undertakings for IDEA, Aditya Birla Minacs Worldwide Ltd. (ABMWL),
 Madura Garment Exports Ltd. (MGEL), PSI Data Systems Limited, MG
 Lifestyle Clothing Pvt Ltd., Peter England Fashion & Retail Ltd. and
 Madura Garments Lifestyle Retail Company Limited investment have also
 been provided to certain Banks for respective credit facilities
 extended by them.
 
 c) Pursuant to the Shareholders’ Agreement entered into with the Joint
 Venture partner, the Company has in respect of Birla Sun Life Insurance
 Company Limited agreed to infuse its share of capital from time to time
 to meet the solvency requirement prescribed by the regulatory
 authority.
 
 4.  EXCEPTIONAL ITEMS
 
 During the previous year, the Company has sold its undertaking
 Rajashree Syntex (RST), Midnapur, as of June 30, 2007, on a going
 concern basis for a consideration of Rs. 5.06 Crores and profit on sale
 of Rs. 0.73 Crores has been reflected under the head “Gain on sale of
 undertaking”. The RST was reported as a part of “Textiles” business
 segment.
 
 5.  Disclosure in respect of Related Parties pursuant to Accounting
 Standard 18 – Refer Annexure I
 
 6.  For Derivative Information — Refer Annexure II
 
 7.  In September, 2005 the Company had purchased 37.18 crores Equity
 Shares of Idea Cellular Ltd. (IDEA) from M/s. AT&T Cellular Pvt. Ltd.,
 Mauritius and paid consideration of US$ 150 Million without deduction
 of tax at source after obtaining an order under Section 195(2) of the
 Income Tax Act from the Income Tax Department. The Deputy Director of
 Income Tax (International Taxation), (DDIT) Mumbai, has issued order
 under Section 163(1) of the Income Tax Act dated March 25, 2009,
 treating the Company as an agent of New Cingular Wireless Services Inc.
 for the sale of shares of IDEA by its subsidiary AT&T Cellular Private
 Limited, Mauritius. The Company has challenged the order of DDIT before
 the appropriate authority and based on the opinion of Tax Expert, the
 Company is reasonably certain that no tax liability would devolve.
 
 8.  a) Interest earned from Financial Services Activity is included in
 Income from Operations.
 
 b) Other Interest include Interest on Income Tax Refund of Rs. 4.57
 Crores (Previous Year : Rs. 15.91 Crores).
 
 c) Govt. of India has notified the revised New Price Support Scheme
 (NPS-III) for fertiliser on March 8, 2007, with effect from October 1,
 2006, and is in the process of fixing certain norms under the revised
 scheme. Pending fixation of final price, the price support for the year
 has been accounted for provisionally, on an estimated basis, inter
 alia, taking into account input price escalation/de-escalation and
 other claims.
 
 d) The Company is one of the Promoter members of Aditya Birla
 Management Corporation Pvt. Limited, a company limited by guarantee,
 which has been formed to provide a common pool of facilities and
 resources to its members, with a view to optimise the benefits of
 specialisation and minimise cost to each member. The Company’s share of
 expenses under the common pool has been accounted for under the
 appropriate heads.  Total amount outstanding as on 31st March, 2009, is
 Rs. 16.30 Crores (Previous Year : Rs. 16.30 Crores).
 
 9.  Figures of Rs. 50,000 or less have been denoted by .
 
 10.  Figures of previous year have been regrouped/rearranged wherever
 necessary.