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Hindalco Industries
BSE: 500440|NSE: HINDALCO|ISIN: INE038A01020|SECTOR: Aluminium
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« Mar 13
Notes to Accounts Year End : Mar '14
1.  Share Capital:
 
 (b) Rights, Preferences and Restrictions attached to Equity Shares:
 
 The Company has one class of equity shares having a par value of Rs. 1/-
 per share. Each shareholder is eligible for one vote per share held.
 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, the
 equity shareholders are eligible to receive the remaining assets of the
 Company after distribution of all preferential amounts, in proportion
 to their shareholding.
 
 (d) Shares Reserved for Issue under Options:
 
 The Company has reserved Equity Shares for issue under the Employee
 Stock Options Scheme. Please refer Note No. 41 on Employee Share-Based
 Payment for details of Employee Stock Options Scheme.
 
 2.  Money Received against Share Warrants:
 
 In accordance with the provisions of Chapter VII of the SEBI (Issue of
 Capital and Disclosure Requirements) Regulations, 2009, the Company had
 allotted 150,000,000 warrants on a preferential basis to the Promoter
 Group on 22nd March, 2012, entitling them to apply for and obtain
 allotment of one equity share of Rs. 1/- each fully paid-up at a price of
 Rs. 144.35 per share against each such warrant at any time after the date
 of allotment but on or before the expiry of 18 months from the date of
 allotment in one or more tranches for which the Company has received Rs.
 541.31 crore being 25% against these warrants. The Promoter Group
 Companies applied for conversion of warrants into equity shares at
 pre-determined price, accordingly, the Company has issued and allotted
 150,000,000 equity shares of Rs. 1/- each at a premium of Rs. 143.35 per
 share on 20th September, 2013, to the Promoter Group on payment of
 balance amount of these warrants. The entire amount so received has
 been utilised for various Greenfield and brownfield projects
 expenditure.
 
 3.  Long-Term Borrowings:
 
 (b) Term Loans of Rs. 7,227.54 crore from Banks and Rs. 149.18 crore from
 Other Parties for Aditya Aluminium Project and Term Loan of Rs. 7,046.37
 crore from Banks and Rs. 90.63 crore from Other Parties for Mahan
 Aluminium Project have been prepaid by the Company on 17th September,
 2013 and 3rd January, 2014, respectively.
 
 (c) Term Loans from Banks of Rs. 7,365.00 crore to be secured by a fi rst
 ranking charge/mortgage/security interest in respect of all the movable
 assets of Mahan Aluminium Project (except Current Assets) and all the
 immovable properties of Mahan Aluminium Project, both present and
 future. However, security creation is pending for want of no due
 certifi cate from previous term loan lenders.
 
 Total loan of Rs. 7,500.00 crore carry interest at the State Bank of
 India''s base rate plus 0.50% and are repayable in 40 quarterly
 instalments commencing from 31st March, 2014 and ending on 31st
 December, 2023. The repayment in each financial year in percentage is
 1.8, 7.95, 9.2, 9.2, 10.2, 10.2, 10.2, 10.2, 11.1, 11.4 and 8.55 of the
 loan amount.
 
 (d) Term Loans from Banks of Rs. 8,850.00 crore to be secured by a fi rst
 ranking charge/mortgage/security interest in favour of the State Bank
 of India, in respect of all the movable and immovable properties of
 Aditya Aluminium Project, both present and future. However, security on
 2,579.89 acres of Project land is pending due to non-availability of
 approval from the appropriate authority.
 
 Above loans carry interest at the State Bank of India''s base rate plus
 1.25% till project COD and 0.25% thereafter, and are repayable in 34
 quarterly instalments commencing from 1st June, 2015 and ending on 1st
 September, 2023. The repayment in each financial year in percentage is
 2.32, 4.20, 6.20, 8.60, 9, 11.50, 16, 26 and 16.18 of the loan amount.
 
 The Company will have an option to prepay all or any portion of these
 loans, without payment of Prepayment Penalty within 30 (Thirty) days
 after any annual Interest Reset Date.
 
 (e) Term Loans from Other Parties include Foreign Currency Term Loans
 from Export Development Canada (EDC) of USD 90.70 million (Previous
 year USD 100.00 million) are secured by a fi rst charge on all movable
 assets of the Mahan Aluminium Project and a second charge on the
 current assets of the Company, both present and future.
 
 Total loan of USD 100 million carry interest at the LIBOR plus 3.50%
 and are repayable in 43 quarterly instalments commencing from 30th
 June, 2013 and ending on 31st December, 2023. The repayment in each fi
 nancial year in percentage is 9.30, 9.30, 9.30, 9.30, 9.30, 9.30. 9.30.
 9.30, 9.30, 9.30 and 7 of the loan amount. Subject to the prevailing
 RBI ECB Regulations, the Company may prepay all or any part of these
 loans at any time.
 
 (f) Deferred Payment Liabilities represent sales tax deferral which is
 payable in yearly instalment by FY 2018.
 
 4.  Deferred Tax Liabilities (Net):
 
 Major components of Deferred Tax arising on account of temporary timing
 differences are given below:
 
 (a) Working Capital Loan for Aluminium Business, granted under the
 Consortium Lending Arrangement, are secured by a fi rst pari passu
 charge on entire stocks of raw materials, work-in-process, fi nished
 goods, consumable stores and spares and also book debts pertaining to
 the Company''s Aluminium business.  Working Capital Loan of State Bank
 of India for the Copper business is secured by a fi rst pari passu
 charge by way of hypothecation of stocks of raw materials,
 work-in-process, fi nished goods and consumable stores and spares, and
 also book debts and other movable assets of Copper business, both
 present and future.
 
 5. Long-Term Loans and Advances:
 
 (Unsecured, Considered Good, unless otherwise stated)
 
 (a) Loans, Advances and Deposits to Related Parties include Rs. 34.45
 crore (Previous year Rs. 34.45 crore) towards balance with Trident Trust
 which represents 16,316,130 equity shares of Rs. 1/- each fully paid-up
 of the Company issued, pursuant to a Scheme of Arrangement approved by
 the Hon''ble High Courts at Mumbai and Allahabad vide their Orders dated
 31st October, 2002 and 18th November, 2002, respectively, to the
 Trident Trust, created wholly for the benefit of the Company and is
 being managed by trustees appointed by it. The tenure of the Trust is
 up to 23rd January, 2017.
 
 (b) Others include CENVAT credit receivable, VAT credit receivable,
 Service Tax credit receivable, etc., primarily relating to ongoing
 projects.
 
 6. Revenue from Operations:
 
 (i) Sales of Copper Products and Precious Metals are accounted for
 provisionally pending fi nalization of price and quantity. Variations
 are accounted for in the year of settlement. Final price receivable on
 sale of above products, for which quotational price was not fi nalized
 in the previous year, were realigned at the year end forward LME/LMBA
 rate and reversal of Rs. 1.84 crore (Previous year Rs. 8.21 crore) was
 accounted for. During the year, fi nal price was settled at Rs. 6.50
 crore (Previous year Rs. 47.27 crore) and further reversal of sales of Rs.
 4.65 crore (Previous year Rs. 39.06 crore) was taken into account. As on
 31st March, 2014, sales of Copper Products and Precious Metals, pending
 for price fi nalization, were realigned at the year end forward LME/
 LMBA and reversal of sales of Rs. 7.83 crore (Previous year Rs. 1.84 crore)
 was accounted for. Actual cash fl ow is expected on fi nalization of
 quotational price and quantity in the subsequent financial year.
 
 (ii) Include sales of DAP including nutrient-based subsidy of P&K Rs.
 273.34 crore (Previous year Rs. 298.27 crore).
 
 7. Cost of Materials Consumed:
 
 (a) Purchase of Copper Concentrate is accounted for provisionally
 pending fi nalization of contents in the concentrate and price.
 Variations are accounted for in the year of settlement. Final price
 payable on purchase of copper concentrate, for which quotational price
 and quantity were not fi nalized in the previous year, was realigned
 based on forward LME and LMBA rate at the year end of copper and
 precious metals, respectively, and accordingly receivable of Rs. 122.82
 crore (Previous year payable Rs. 141.51 crore) was accounted for. During
 the year, fi nal price was settled at Rs. 248.90 crore (Previous year
 payable Rs. 10.78 crore) and accordingly further net receivable of Rs.
 126.08 crore (Previous year Rs. 130.73 crore) has been accounted for. As
 on 31st March, 2014, receivable of Rs. 155.88 crore (Previous year Rs.
 122.82 crore) was accounted for on realignment of unpriced copper
 concentrate. Actual cash fl ow is expected on fi nalization of
 quotational price and quantity in the subsequent financial year.
 
 8. Exceptional Items
 
 (a) Liability of Rs. 324.36 crore under UP Tax on Entry of Goods into
 Local Areas Act, 2007 (UP Entry Tax)
 
 (b) Liability of Rs. 71.62 crore under Madhya Pradesh Gramin Avsanrachna
 Tatha Sarak Vikas Adhiniyam (MPGATSVA).
 
 Both the above levies have been contested by the Company and appeals
 against these are pending before the Hon''ble Supreme Court. In the
 matter of UP Entry Tax, the Hon''ble Supreme Court has granted a stay on
 the adverse order of the Hon''ble Allahabad High Court. In the matter of
 MPGATSVA, the Supreme Court has not stayed the adverse order of the
 Hon''ble Jabalpur High Court in a separate, but similar, case.  Since in
 both these matters an adverse order has been passed by a High Court
 upholding the validity of the levy, and the amount of the levy has
 either been paid or secured by bank guarantees provided by the Company,
 the Statement of Profi t and Loss has been debited with the total
 amount pertaining to these levies following principles of prudence. The
 amount paid towards these levies has been shown as advance recoverable
 in the Balance Sheet.
 
 9.  The Company had formulated a scheme of financial restructuring
 under Sections 391 to 394 of the Companies Act, 1956 (the Scheme)
 between the Company and its equity shareholders approved by the High
 Court of judicature of Bombay to deal with various costs associated
 with its organic and inorganic growth plan.  Pursuant to this, a
 separate reserve account titled as Business Reconstruction Reserve
 (BRR) was created during the year 2008-09 by transferring balance
 standing to the credit of Securities Premium Account of the Company for
 adjustment of certain expenses as prescribed in the Scheme.
 Accordingly, the Company has transferred Rs. 8,647.37 crore from
 Securities Premium Account to BRR and till 31st March, 2013, Rs. 66.98
 crore has been adjusted against BRR.
 
 During the year, a provision of Rs. 86.06 crore has been made for
 diminution in value of investment in Hindalco- Almex Aerospace Limited,
 a subsidiary of the Company. The entire amount of provision has been
 adjusted against BRR. Had the Scheme not prescribed aforesaid
 treatment, the impact on results would have been as under:
 
 Profi t for the year lower by Rs. 86.06 crore
 
 Basic EPS lower by Rs. 0.43
 
 Diluted EPS lower by Rs. 0.43
 
 10.  For the year ended 31st March, 2014, the Board of Directors of the
 Company have recommended dividend of Rs. 1.00 per share (Previous year Rs.
 1.40 per share) to equity shareholders aggregating to Rs. 241.55 crore
 (Previous year Rs. 313.60 crore) including Dividend Distribution Tax.
 
 11.  Segment Reporting:
 
 A.  Primary Segment Reporting (by Business Segment):
 
 (a) The Company has two reportable segments, viz., Aluminium and
 Copper, which have been identifi ed in line with the Accounting
 Standard-17 on Segment Reporting, taking into account the
 organizational structure as well as differential risk and return of
 these segments. Details of products included in each segments are as
 under:
 
 (i) Aluminium: Hydrate & Alumina, Aluminium and Aluminium Product.
 
 (ii) Copper: Continuous Cast Copper Rods, Copper Cathode, Sulphuric
 Acid, DAP & Complexes, Gold and Silver.
 
 (b) Inter-segment transfers are based on market rates.
 
 12. Employee Share-Based Payment:
 
 Employee Stock Options Scheme 2006 (ESOS 2006)
 
 On 7th December, 2006, the Board of Directors approved the Employee
 Stock Options Scheme 2006 (ESOS 2006) for issue of 3,475,000 stock
 options to its permanent employees in the management cadre, in one or
 more tranches, whether working in India or out of India, including the
 Managing/Whole-time Directors of the Company. Each option when
 exercised would be converted into one fully paid-up equity share of Rs.
 1/- each of the Company. The options will vest in 4 equal annual
 instalments after one year from the date of grant.  The maximum period
 of exercise is 5 years from the date of vesting, and these options do
 not carry rights to dividends or voting rights till the date of
 exercise. Further, on 23rd September, 2011, the ESOS 2006 has been
 partially modifi ed and by which the Company may now issue 6,475,000
 options to its eligible employees.
 
 According to ESOS 2006, so far the Company has granted 4,328,159
 options (Previous year 3,545,550 options) to its eligible employees,
 out of which 1,169,574 options (Previous year 880,145 options) has been
 cancelled/ lapsed and are available for grant as per term of the
 Scheme.
 
 During the year ended 31st March, 2014, the Company has allotted 4,800
 fully paid-up equity share of Rs. 1/- each of the Company (Previous year
 40,760) on exercise of options under ESOS 2006, for which the Company
 has realised Rs. 0.05 crore (Previous year Rs. 0.40 crore) as exercise
 money. The weighted-average share price for the year ended 31st March,
 2014, over which options exercised was Rs. 115.20 (Previous year Rs.
 117.41).
 
 Employee Stock Options Scheme 2013 (ESOS 2013)
 
 During this year, the Company has instituted Employee Stock Options
 Scheme 2013 (ESOS 2013), under which the Company may grant 5,462,000
 stock options and restricted stock units (RSU) to the permanent
 employees in the management cadre and Managing/Whole-time Directors of
 the Company and its subsidiary companies in India and abroad, in one or
 more tranches. The ESOS 2013 is administered by the Compensation
 Committee of the Board of Directors of the Company (the Committee).
 The option exercise price would be determined by the Committee, whereas
 the RSU exercise price shall be the face value of the equity shares of
 the Company as on the date of grant of RSUs. Each option and each RSU
 entitle the holders to apply for and be allotted one fully paid-up
 equity share of Rs. 1/- each of the Company upon payment of exercise
 price during exercise period. The options will vest in 4 equal annual
 instalments after one year of the date of grant, whereas RSU will vest
 at the end of three years from the date of grant. The maximum period of
 exercise is 5 years from the date of vesting and these options/RSUs do
 not carry rights to dividends or voting rights till the date of
 exercise. Further, cancelled/lapsed options and RSUs are also available
 for grant.
 
 The Company has various schemes (funded/unfunded) for payment of
 gratuity to all eligible employees calculated at specifi ed number of
 days (ranging from 15 days to 1 month) of last drawn salary depending
 upon the tenure of service for each year of completed service, subject
 to minimum service of fi ve years payable at the time of separation
 upon superannuation or on exit otherwise.
 
 B.  In respect of defi ned Contribution Schemes:
 
 (a) As required under Guidance Note on Implementation of Accounting
 Standard-15 (Revised) issued by the ICAI in respect of exempted
 Provident Fund, the Company has carried out actuarial valuation to
 ascertain shortfall in interest, if any, payable to the members of
 Provident Fund, and has made appropriate provision in the books. The
 Company contributes 12% of salary for all eligible employees towards
 Provident Fund managed either by approved trusts or by the Central
 Government. The amount debited to the Statement of Profi t and Loss
 during the year was Rs. 70.90 crore (Previous year Rs. 62.56 crore). In
 view of the typical nature of such Provident Fund scheme involving defi
 ned benefit underpin in respect of interest payable to members as
 declared by the Employees'' Provident Fund Organisation, the defi ned
 benefit obligation relating to interest shortfall is considered to be
 Other Long-Term Employee benefits.
 
 (b) The Company contributes a certain percentage of salary for all
 eligible employees in the managerial cadre towards Superannuation Funds
 managed by approved trusts or by Life Insurance Corporation of India.
 The amount debited to the Statement of Profi t and Loss during the year
 was Rs. 13.05 crore (Previous year Rs. 12.52 crore).
 
 13 Derivative Financial Instruments:
 
 (a) The Company has adopted Accounting Standard-30, Financial
 Instruments: Recognition and Measurement, issued by the Institute of
 Chartered Accountants of India so far as it relates to derivative
 accounting.
 
 (b) In the ordinary course of business, the Company is exposed to risks
 resulting from changes in prices of commodity, exchange rate fl
 uctuation and interest rate movements. It manages its exposure to these
 risks through derivative financial instruments. It uses derivative
 instruments such as forwards, futures, swaps and options to manage
 these risks. These derivative financial instruments reduce the impact
 of both favourable and unfavourable fl uctuations. Except where noted,
 the derivative contracts are marked- to-market (MTM) and the related
 gains and losses are included in the Statement of Profi t and Loss in
 the current accounting period.
 
 The Company''s risk management activities are subject to the management,
 direction and control of Risk Management Board (RMB). The RMB is
 composed of two directors including Managing Director, Chief Financial
 Officer and other offi cers and employees selected by the Managing
 Director. The RMB reports to the Board of Directors on the scope of its
 activities.
 
 The decision of whether and when to execute derivative financial
 instruments along with its tenure can vary from period to period
 depending on market conditions and the relative costs of the
 instruments.  The tenure is always linked to the timing of the
 underlying exposure, with the connection between the two being
 regularly monitored. The Company is exposed to losses in the event of
 non-performance by the counterparties to the derivative contracts. All
 derivative contracts are executed with counterparties that, in our
 judgment, are creditworthy. The credit levels are reviewed to ensure
 that there is not an inappropriate concentration of outstanding to any
 particular counterparty.
 
 Commodity Price Risk
 
 Copper and Precious Metals
 
 This business is conducted under a conversion model. The prices of
 input and output are derived from the same benchmark and/or are linked
 to each other through a defi ned formula. The objective of risk
 management is to attempt to use derivatives to match the price fl
 uctuations arising out of the timing mismatch in pricing the input and
 output so as to ''pass through'' the change in input cost to customers to
 make the margins immune to the fl uctuations in prices of the input and
 output.
 
 Aluminium
 
 This business is vertically integrated. The main raw material, viz.,
 bauxite (mostly mined from own mines) and other purchased raw materials
 do not have any linkage with the output price which is Aluminium LME
 prices. When the prices of input(s) and output(s) do not follow the
 above condition, then the risk management attempts to use derivatives
 so as to protect the margins from adverse movements in prices on either
 side, i.e., from a rise in input cost or from a fall in output price.
 
 As a condition of sale, customers often require the Company to enter
 into fi xed price commitments. These commitments expose the Company to
 the risk of fl uctuating aluminum prices between the time the order is
 committed and the time that the material is shipped. The Company may
 enter into derivative financial instruments to mitigate the risk
 arising out of the fi xed price commitments. Consequently, the gain or
 loss resulting from movements in the price of aluminum on these
 contracts would generally be offset by an equal and opposite impact on
 the net sales and purchases being hedged.
 
 Foreign Currency Exchange Risk
 
 Exchange rate movements, particularly the United States Dollar (USD)
 and Euro (EUR) against Indian Rupee (INR), have an impact on our
 operating results. In addition to the foreign exchange fl ow from
 exports, the commodity prices in the domestic market are derived based
 on the landed cost of imports in India where LME prices and USD/INR
 exchange rate are the main factors. In case of conversion business, the
 objective is to match the exchange rate of outfl ows and related infl
 ows through derivative financial instruments. With respect to
 Aluminium business, where costs are predominantly in INR, the
 strengthening of INR against USD adversely affects the profitability
 of the business and benefits when INR depreciates against USD. The
 Company enters into various foreign exchange contracts to protect profi
 tability. The Company also enters into various foreign exchange
 contracts to mitigate the risk arising out of foreign currency exchange
 rate movement in foreign currency contracts executed with foreign
 suppliers to procure capital items for its project activities.
 
 Embedded Derivatives
 
 Copper concentrate is purchased on future pricing model based on
 month''s average LME (in case of copper)/LBMA (in case of gold and
 silver). Since the value of the concentrate changes with response to
 change in commodity pricing indices, embedded derivatives (ED) are
 identifi ed and segregated in the contract. The ED so segregated is
 treated like commodity derivative and qualify for hedge accounting.
 These derivatives are put into a Fair Value hedge relationship with
 inventory.
 
 The objective of hedge designation of the embedded commodity derivative
 is to offset the volatility in the Statement of Profi t and Loss due to
 change in value of un-priced inventory with response to LME/LBMA.
 
 14. Contingent Liabilities and Commitments:
 
                                                     (Rs. Crore)
 
                                                         As at
                                               31/03/2014    31/03/2013
 
 A.   Contingent Liabilities
 
 (a)  Claims against the Company not 
      acknowledged as debt:
 
      Following demands are disputed by the 
      Company and are not provided for:
 
 (i)  Demand notice by Asstt. Collector, 
      Central Excise, Mirzapur, for
      excise duty on power generated by the
      Company''s captive power plant, Renusagar 
      Power Company Limited (Since amalgamated).   -          9.12
      *Favourable judgment has been received 
      from the Hon''ble Delhi High Court.
 
 (ii) Demand of interest on past dues of the
      Aluminium Regulation Account up to 31st
      December, 1987.                             6.33        6.33
      * The demand is in dispute with the 
      Controller of Aluminium Regulation Account.
 
 (iii) Retrospective Revision of Water Rates by 
       UP Jal Vidyut Nigam Limited (April 1989 
       to June 1993 and January 2000 to 
       January 2001).                             4.08        4.08
       * Write petition pending with Lucknow 
       Bench of Allahabad High Court. The demand
       for arrears stayed vide order dated
       11/05/2001.
 
 (iv)  Transit fees levied by Divisional Forest 
       officer, Renukoot, on Coal and Bauxite.  106.65      134.38
 
 * Appeal pending with the Hon''ble High Court of Allahabad, and payment
 of Transit Fee has been stayed. According to the legal opinion received
 by the Company, the Forest Department has no authority to levy such
 fees. The Company has fi led a transfer application before the Hon''ble
 Supreme Court. The Hon''ble Supreme Court of India on while issuing
 notice on our Transfer Petition stayed the further proceedings of the
 Company''s Writ Petition pending before the Hon''ble Allahabad High
 Court.
 
 (v) M.P. Transit Fee on Coal demanded by 
     Northern Coal Fields Limited.               23.77       23.43
 
 * The Company had challenged the demand towards MP Transit Fee on Coal
 and fi led Writ Petition before the Hon''ble Jabalpur High Court. The
 Hon''ble High Court has struck down the levy and also ordered for refund
 of the amount paid under protest. The State government has fi led an
 Appeal against the order of the Hon''ble Supreme Court of India, and the
 Hon''ble High Court''s order has been stayed. The Counter affi davit in
 the matter has been fi led.  The rejoinder has also been fi led by the
 state. To be listed along with the similar matter before the Supreme
 Court of India.
 
 (vi) Imposition of Cess on Coal by 
      Shaktinagar Special Area Development 
      Authority.                                 11.17        9.38
 
 * The Writ pending before Allahabad High Court, Allahabad.  Demand and
 levy stayed. However, the Company has moved a transfer petition before
 the Hon''ble Supreme Court for tagging the matter with CA No. 1883 of 06
 (ORISED Matter). The matter is tagged with ORISED and to be heard by
 the Nine Judges Bench of the Hon''ble Supreme Court.
 
 (vii) Demand of Royalty on Vanadium by 
       District Mining Officer, Lohardaga.        7.96        8.44
 
 * Appeal is pending with the Hon''ble High Court of Allahabad.  The
 demand has been stayed on certain conditions.
 
 (viii) The demand of Excise Duty on gold.      155.31      155.31
 
 * Part of the demand was confirmed, against which our ROM request is
 pending at CESTAT. Department''s appeal is pending before the Hon''ble
 Supreme Court for the part of the demand and penalty that was dropped.
 
 (ix) Tax under MPGATSVA, 2005 @ 5% on basic 
      price of coal, w.e.f. 30th September, 2005 
      by M.P. State Government.                   -          60.76
 
 * Liability provided in the books of account.
 
 (x) Demand raised on the assessment for entry
     tax with retrospective effect from the 
     period November 1999 to till date.           -         271.96
 
 * Liability provided in the books of account.
 
 (xi) Demand raised on assessment under CST 
      Act and UP Sales Tax Act.                  6.39         6.39
 
 * Demand has been quashed at fi rst appeal and second appeal stage.
 However, Dept. has gone in the revision before the Hon''ble High Court.
 Allahabad.
 
 (xii) Revision of surface rent on land by the 
       Government of Jharkhand, w.e.f. 
       16th June, 2005.                         26.18        22.56
 
 * Matter is in dispute at the Hon''ble High Court of Jharkhand.
 
 (xiii) Demand made by Nayab Tehsildar Kusmi/
        Collector under Chhattisgarh as per 
        Adhosanrachna Vikas evam Parayavaran
         Upkar Adhiniyam, 2005 @ 5% as
        environment tax on royalty plus
        5% as development tax.                   6.60         5.55
 
 * The Writ petition, which has been fi led by the Company before the
 Hon''ble High Court of Chhattisgarh at Bilaspur, has been transferred to
 the Hon''ble Supreme Court and tagged with other Civil Appeals.
 
 (xiv) Service tax paid on Goods Transport 
       Agency and Business Auxiliary Services.  11.27        11.27
 
 * Commissioner has confirmed the demand. Appeal is being filed at
 CESTAT New Delhi.
 
 (xv) M.P. Transit Fee on Bauxite.               1.30         1.30
 
 Company has fi led Writ Petition before the Hon''ble Jabalpur High
 Court. The Hon''ble High Court has struck down the levy and also ordered
 for refund of the amount paid under protest. The State government has
 fi led an appeal against the order of the Hon''ble High court.
 
 (xvi) Demand for Entry Tax relating to valuation 
       dispute of 2004-05 to 2005-06, for which
       appeals have been filed.                  1.18         1.18
 
 * Appeal has been fi led with Additional CCT, Sambalpur.
 
 (xvii) CST demand on reopening of assessments 
        for 1999-00 to 2003-04.                  8.81         8.81
 
 * Appeals have been fi led.
 
 (xviii) Demand of penalty on excess CENVAT 
         Credit taken.                           1.09         1.09
 
 * Appeal is pending with CESTAT, Mumbai.
 
 (xix) Demand for Sales Tax u/s 15B for AYs 
       2001-02 and 2002-03.                      7.96         7.96
 
 * Appeal is pending with J.C. Appellate Authority, Baroda.
 
 (xx) Service Tax on insurance policy 
      attributable to Renusagar.                 3.97         3.97
 
 * Commissioner has confirmed the demand. Appeal is pending before the
 CESTAT, New Delhi.
 
 (xxi) Disallowance of CENVAT credit.            5.29         5.29
 
 * The matter is pending with CESTAT, Ahmedabad.
 
 (xxii) Demand raised on assessment under CST 
        Act and APGST Act for various years.     5.77         6.55
 
 * Appeals have been fi led with appropriate authorities.
 
 (xxiii) Demand for Service Tax on Consulting  
         Engineer Services and Scientific & 
         Tech Service.                           3.84         3.84
 
 * Appeal is pending with Commissioner (Appeals), Ahmedabad.
 
 (xxiv) Excise Duty on Dross.                   19.78        16.16
 
 * Company has challenged the letter issued by Excise Department to pay
 Excise Duty on Dross before the Hon''ble Allahabad High Court.
 
 (xxv) Alleged CENVAT taken without receipt of 
       Alumina Hydrate inside the factory.       3.46         3.46
 
 * Appeal fi les with Hon''ble CESTAT.
 
 (xxvi) Alleged CENVAT availed on the Input 
        services at captive Mines.              36.05        36.07
 
 Appeal is pending with CESTAT.
 
 (xxvii) CENVAT of Service Tax Credit availed 
         on Supplementary Invoices.              3.12         3.12
 
 * Pending with appropriate Authority.
 
 (xxviii) Clearence of Silver at Nil Rate of 
          Duty under Notification No. 5/2006.    8.96         8.96
 
 * Appeal pending before CESTAT.
 
 (xxix) Excess rebate has been sanctioned to
        the extent duty paid by supplementary 
        invoices                                 5.08         7.65
 
 *  Appeal is pending with Commissioner of Customs (Appeals),
    Mumbai.
 
 (xxx) Disallowance of CENVAT on input services. 6.79         5.40
 
 * Pending with appropriate Authority.
 
 (xxxi) Service Tax on reverse charge basis.      -          31.10
 
 * Since provided.
 
 (xxxii) Parallel operation charges on 
 capacity of Captive Power Plant by
 Madhya Pradesh Electricity Regulatory 
 Commission.                                     7.05         -
 
 * Matter is pending before the Hon''ble High Court of Madhya Pradesh at
 Jabalpur. The Hon''ble High Court passed an order on 20.9.2013 and
 stayed the operation of order passed by MPERC subject to deposit of 50%
 of the amount.
 
 (xxxiii) Other Contingent Liabilities in 
          respect of Excise, Customs,
          Sales Tax etc., each being for 
          less than Rs. 1 crore.                  15.51        13.33
 
 * The demands are in dispute at various legal forums.
 
                                               510.72       894.20
 
 (b)   Corporate Guarantees Outstandings     5,287.03       488.98
 
       (Rs. 5,246.47 crore* (Previous year 
       Rs. 448.42 crore) given on behalf of
       subsidiary companies)
 
 * Includes Rs. 5,000 crore given to lender against loan provided to a
 subsidiary company, amount of loan outstanding as on 31st March 2014,
 is Rs. 4,950.
 
 (c) Other money for which the Company is contingently liable:
 
 i.  Bills Discounted with Banks                 3.53         -
 
 ii.  Customs Duty on Capital Goods and Raw 
      Materials imported under EPCG Scheme/
      Advance License, against which export
      obligation is to be fulfi lled 
      (excluding cenvatable portion).          368.51       359.09
 
 iii. The Company has received a notice dated 24th March, 2007, from
 Collector (Stamp), Kanpur, Uttar Pradesh, alleging that stamp duty of Rs.
 252.96 crore is payable in view of order dated 18th November, 2002, of
 the Hon''ble High Court of Allahabad approving scheme of arrangement for
 merger of Copper business of Indo Gulf Corporation Limited with the
 Company. The Company is of the opinion that it has a very strong case
 as there is no substantive/computation provision for levy/calculation
 of stamp duty on court order approving scheme of arrangement under
 Companies Act, 1956, within the provisions of Uttar Pradesh Stamp Act.
 Moreover the properties in question are located in the State of Gujarat
 and thus the Collector (Stamp), Kanpur, has no territorial jurisdiction
 to make such a demand. It is pertinent to note that the Company in
 2003-04 has already paid stamp duty which has been accepted as per the
 provisions of the Bombay Stamp Act 1958 with regard to transfer of
 shareholding of Indo Gulf Corporation Limited as per the Scheme of
 Arrangement. Furthermore, the demand made is on an incorrect
 assumption. The Company''s contention amongst the various other grounds
 made is that the demand is illegal, against the principles of natural
 justice, incorrect, bad in law and malafi de. The Company has fi led a
 writ petition before the Hon''ble High Court of Allahabad, inter alia,
 on the above said grounds, which is pending determination.
 
 iv. Against the notifi cations issued by the State Electricity
 Regulatory Commissions of Uttar Pradesh, Odisha and Madhya Pradesh
 states under the provisions of Electricity Act, 2003, in respect of
 Renewable Purchase Obligation (RPO), the Company has fi led writ
 petitions before the jurisdictional high courts on the ground, inter
 alia, that RPO cannot be made applicable to captive users and the High
 Court(s) at Allahabad, Cuttack and Jabalpur have granted stay on the
 applicability of the RPO. Further, the Company has received favorable
 order from the Appellate Authority and Uttar Pradesh Regulatory
 Commission on applicability of RPO to units with Co-generation
 facility. In view of pending writ petitions and favourable order
 obtained from Appellate Authority, no provision has been considered
 necessary at this stage.
 
 v. The assessing offi cer, while framing the assessment for AYs
 2008-09, 2009-10 and 2010-11, has made adjustment, inter alia,
 amounting to Rs. 270.32 crore, Rs. 1,063.89 crore and Rs. 316.10 crore to
 total income of respective assessment years on account of purported
 arms'' length fee for corporate guarantee provided to foreign banks for
 granting loan to a wholly owned subsidiary of the Company, viz., AV
 Minerals (Netherlands) N.V. The Company has fi led appeals against
 these orders. The Company has been advised that, considering the facts
 of the case, no provision is necessary for these adjustments.
 
 B Commitments
 
 Estimated amount of contracts remaining to be executed on capital
 
 (a) account and not provided for net of advances 1,181.44 2,957.37
 
 (b) The Company, along with Aditya Birla Nuvo Limited, Grasim
 Industries Limited and Birla TMT Holdings Pvt. Limited (the Sponsors),
 being promoters of Idea Cellular Limited (Idea), has given the
 following undertakings to the Facility Agent:
 
 i. The Sponsors shall collectively continue to hold at least 33% of the
 equity capital of Idea till the end of FY 2015-16 and shall not,
 without prior written approval of the Facility Agent, divest, transfer,
 assign, dispose of, pledge, charge, create any lien or in any way
 encumber 33% of shareholdings in Idea. Consequent upon the infusion of
 fresh equity capital of Idea, if the Sponsors'' stake gets diluted from
 40% to 33% in the equity capital of Idea, the Sponsors agree and
 undertake to obtain the prior consent of the Rupee Facility Agent and,
 in other circumstances, the Sponsors agree and undertake to obtain the
 prior consent of the secured lenders representing 51% of the aggregate
 outstanding secured loans.
 
 ii. The Sponsors shall collectively continue to hold 26% of the equity
 capital of Idea after FY 2015-16 and shall not, without the prior
 written approval of the Rupee Facility Agent, divest, transfer, assign,
 dispose of, pledge, charge, create any lien or in any way encumber 26%
 shareholdings in the capital of Idea.
 
 iii. Not without prior approval of the Facility Agent in writing divest
 shareholdings in the equity capital of Idea that may result in a single
 investor along with its affi liates holding more than 25% of the equity
 capital of Idea.
 
 (c) As the Parent Company, Hindalco has given the following
 undertakings to the lenders of Utkal Alumina International Limited
 (UAIL), a wholly owned subsidiary of the Company.
 
 i.  To hold minimum 51% equity shares in UAIL.
 
 ii. To ensure to meet the Financial Covenants, except Fixed Asset
 Coverage Ratio, as provided in the loan agreements.
 
 15.  Both the green field projects of the Company, viz., Aditya
 Aluminium and Mahan Aluminium, as well as the green field project of
 its wholly-owned subsidiary company, Utkal Alumina International
 Limited have started operations during the year and are in the process
 of ramp up.
 
 16.  Information related to Micro, Small and Medium Enterprises, as
 defi ned in the Micro, Small and Medium Enterprises Development Act,
 2006 (MSME Development Act), are given below. The information given
 below have been determined to the extent such enterprises have been
 identifi ed on the basis of information available with the Company:
 
 17. The Company is one of the promoter members of Aditya Birla
 Management Corporation Private Limited (ABMCPL), a Company limited by
 guarantee which has been formed to provide common facilities and
 resources to its members, with a view to optimize the benefits of
 specialization and minimize cost for each member. The Company is one of
 the participants in the common pool and shares the expenses incurred by
 ABMCPL and accounted for under appropriate heads.
 
 18. Related Party Disclosures:
 
 A.  List of Related Parties:
 
 (a) Enterprises where control exists: i.  Subsidiaries:
 
 1 Hindalco Guniea SARL
 
 2 Minerals & Minerals Limited
 
 3 Aditya Birla Chemicals (India) Limited
 
 4 Utkal Alumina International Limited
 
 5 Utkal Alumina Technical and General Services Limited
 
 6 Suvas Holdings Limited
 
 7 Renukeshwar Investments & Finance Limited
 
 8 Renuka Investments & Finance Limited
 
 9 Dahej Harbour and Infrastructure Limited
 
 10 Lucknow Finance Company Limited
 
 11 Hindalco-Almex Aerospace Limited
 
 12 Hindalco do Brasil Indústria e Comércio de ALumina Ltda., (w.e.f.
 1st August, 2013)
 
 13 Tubed Coal Mines Limited
 
 14 East Coast Bauxite Mining Company Private Limited
 
 15 Mauda Energy Limited
 
 16 Birla Resources Pty. Limited
 
 17 Aditya Birla Minerals Limited
 
 18 Birla Maroochydore Pty. Limited
 
 19 Birla Nifty Pty. Limited
 
 20 Birla Mt. Gordon Pty. Limited
 
 21 A V Minerals (Netherlands) N.V.
 
 22 A V Metals Inc.
 
 23 Novelis Inc.
 
 24 Novelis (India) Infotech Ltd.
 
 25 Novelis No. 1 Limited Partnership
 
 26 4260848 Canada Inc.
 
 27 4260856 Canada Inc.
 
 28 8018227 Canada Inc.
 
 29 8018243 Canada Limited
 
 30 Novelis Cast House Technology Ltd.
 
 31 Novelis Corporation (Texas)
 
 32 Aluminum Upstream Holdings LLC (Delaware)
 
 33 Eurofoil Inc. (USA) (New York)
 
 34 Logan Aluminium Inc. (Delaware)
 
 35 Novelis Acquisitions LLC (Delaware)
 
 36 Novelis Brand LLC (Delaware)
 
 37 Novelis PAE Corporation
 
 38 Novelis North America Holdings Inc.
 
 39 Novelis South America Holdings LLC
 
 40 Novelis Delaware LLC (Delaware)
 
 41 ALBRASILIS - Aluminio do Brasil Industria e Comércio Ltda.
 
 42 Novelis do Brasil Ltda.
 
 43 Novelis Laminés France SAS
 
 44 Novelis PAE SAS
 
 45 Novelis Aluminium Beteiligungs GmbH
 
 46 Novelis Deutschland GmbH
 
 47 Novelis Sheet Ingot GmbH
 
 48 Novelis Aluminium Holding Company
 
 49 Novelis Italia SpA
 
 50 Al Dotcom Sdn Berhad
 
 51 Alcom Nikkei Specialty Coatings Sdn Berhad
 
 52 Aluminum Company of Malaysia Berhad
 
 53 Novelis de Mexico S.A. de C.V.
 
 54 Novelis Madeira, Unipessoal, Limited
 
 55 Novelis Korea Limited
 
 56 Novelis AG
 
 57 Novelis Switzerland SA
 
 58 Novelis UK Ltd.
 
 59 Novelis Europe Holdings Limited
 
 60 Novelis Services Limited
 
 61 Novelis (Shanghai) Aluminum Trading Co., Ltd.
 
 62 Novelis (China) Aluminum Products Co., Ltd.
 
 63 Novelis MEA Ltd. (Dubai)
 
 64 Novelis Vietnam Company Limited
 
 65 Novelis Asia Holdings (Singapore) Pte. Ltd., w.e.f. 5th December,
 2013 (b) Other Related Parties:
 
 i.  Associates:
 
 1 Aditya Birla Science and Technology Company Limited
 
 2 Idea Cellular Limited
 
 3 Aluminum Norf GmbH
 
 4 Consorcio Candonga
 
 5 Deutsche Alumnum Verpackung Recycling GmbH
 
 6 France Aluminum Recyclage SA ii.  Joint Ventures:
 
 1 Mahan Coal Limited
 
 2 Hydromine Global Minerals (GmbH) Limited
 
 3 MNH Shakti Limited iii.  Trust of the Company:
 
 1 Trident Trust
 
 iv.  Key Managerial Personnel:
 
 Mr. D. Bhattacharya - Managing Director
 
 Mr. Satish Pai - Deputy Managing Director (w.e.f. 13th August, 2013)
 
 19. Previous year''s figures have been reclassified/regrouped to
 conform to this year''s classification.
Source : Dion Global Solutions Limited
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