Madras Cements

1. The tax liability for the company for the financial year 2008-09 is
 under MAT which works out to Rs.6168 Lacs. Out of this, the Company is
 entitled for MAT credit of Rs.848 Lacs.  After Considering the MAT
 credit, the provision for current tax is Rs.5320 Lacs.
 
 Income tax assessments have been completed up to the accounting year
 ended on 31st March 2006 i.e., Assessment Year 2006-07.
 
 2.  In respect of Sales Tax matters appeals are pending with the
 Appellate Authorities in respect of various issues amounting to
 Rs.2129.39 Lacs, (PY Rs.1590.49 Lacs) against which Rs.1113.38 Lacs (PY
 Rs.1028.11 Lacs) has been paid under protest and is held under Loans
 and advances. Based on the earlier favourable decisions on similar
 issues by the Appellate Authorities, in the opinion of the management,
 there may not be any tax liability.
 
 3.  The CENVAT credit disallowance on some of the inputs, capital
 goods, service tax on goods transports and levy of differential excise
 duty with consequential penalty, amounts to Rs.9583.71 Lacs as at
 31-3-2009 (PY Rs.3601.27 Lacs) remain un-paid, against which the
 company has preferred appeals. Based on the earlier favourable
 decisions on similar issues by the Appellate Authorities, in the
 opinion of the management, there may not be any liability.
 
 4.  Our petition filed against the judgement upholding the validity of
 The Cess and Other Taxes on Minerals (Validation) Act, 1992 in the
 Honourable Supreme Court has been ruled in our favour. Pursuant to the
 above judgement, the company is entitled to receive a sum of Rs.150
 Lacs from the Government of Tamil Nadu and Rs.174 Lacs from the
 Government of Andhra Pradesh.
 
 5.  The Writ Petitions filed by the company in the Honourable Madras
 High Court against Tamil Nadu Electricity Board (TNEB) towards levy of
 electricity tax at 15% on the generation of power from captive
 generator sets using furnace oil are pending.  The amount remaining
 un-paid is Rs.84.93 Lacs.
 
 6.  The Chief Controlling Revenue Authority, Stamp and Registration
 Office, Gandhi Nagar, Ahmedabad have issued a show cause notice to the
 Company, demanding a sum of Rs.313 Lacs as additional stamp duty with
 regard to debenture trust deeds executed by the Company at Ahmedabad
 against which the company has obtained a stay order from the Honble
 High court of Gujarat.
 
 7.  Under the Jute Packing Materials (Compulsory use of packing
 commodities) Act, 1987, 50% of the cement produced should be supplied
 in jute bags. Failure to do so attracts a maximum fine equal to twice
 the cost of jute bags not used as required by the Act. In view of the
 competitive conditions prevailing in the market and consumer preference
 for paper and HDPE bags, the company was not able to use gunny bags.
 The Supreme Court upheld the Constitutional validity of the above Act.
 However, the Madras High Court and also a few other High Courts have
 stayed the implementation of the Jute Control Order, in the Writ
 Petitions filed by the Trade Unions, taking into account the health
 hazards associated with Jute Packing. Subsequently, Cement has been
 removed from the schedule of items required to be packed in Jute
 Packing Materials with effect from 1.7.97 vide Government of India
 Gazette Extraordinary No.472E dated 30.6.97.  The amount that may
 become payable in case it is ultimately held that penalty is leviable
 for non-compliance of the Act during the intervening period is
 presently not quantifiable.
 
 The company has incurred Rs.373.04 Lacs during the current year (PY:
 Rs.30.92 Lacs) towards development of certain mines. Thus the total
 expenses of Rs.403.96 lacs will be charged off in subsequent years
 after the commencement of its mining operations.
 
 The company has also incurred Rs.1002.56 lacs during the current year
 (PY: Rs.209.75 lacs) for mining expenses.  Out of Rs.1212.31 lacs,
 incurred so far, Rs.242.46 lacs has been charged off during the current
 year. The balance of Rs.969.85 lacs would be charged off to revenue
 during the next four years.
 
 The company has also charged off Rs.2.04 lacs during the current year
 out of the total amount paid under VRS in earlier years.  The balance
 of Rs.2.03 lacs would be charged off during the next year.
 
 The company has also charged off Rs.18.56 Lacs during the current year
 out of the total amount spent for installation of fly ash handling
 equipments in state owned Thermal power station in connection with
 collection of fly ash in the earlier years.  The balance of Rs.18.57
 lacs would be charged off to revenue during the next year.
 
 The company has incurred Rs.314.33 Lacs during the current year towards
 installation of fly ash handling equipments in Thermal power stations
 in connection with collection of fly ash, out of which Rs.62.87 lacs
 was charged off during the current year. The balance of Rs.251.46 would
 be charged off during next four years.
 
 8.  The Company’s shares are listed in Madras Stock Exchange Limited,
 Bombay Stock Exchange Limited and National Stock Exchange of India
 Limited for which Listing fees for the year 2009-10 has been paid.  The
 Company’s application for de-listing from Calcutta Stock Exchange is
 under process.
 
 9.  There are no dues to Micro and Small Enterprises as at 31-3-2009
 (PY: Nil). This information as required to be disclosed under the
 Micro, Small and Medium Enterprises Development Act, 2006 has been
 determined to the extent such parties have been identified on the basis
 of information available with the company.
 
 10.  The company has made strategic investment of Rs.2211.97 Lacs in
 Andhra Pradesh Gas Power Corporation Ltd (APGPCL) by purchasing its
 16.08 lacs equity shares. The investment entitles the company to source
 6 MW power from APGPCL at economical rates compared to the rates
 charged by AP State Electricity Board.
 
 11.  The Andhra Pradesh State Electricity Board (APSEB) has hiked the
 wheeling charges. As a result, the cost of power the company is getting
 from A P Gas Power Corporation Ltd, (APGPCL) has gone up by Rs.0.84 per
 unit.  APGPCL and other affected consumers including our company had
 filed appeals in the Hon’ble A P High Court.  The court passed orders
 in favour of the industries. The APSEB has preferred an appeal to the
 Supreme Court and no stay has been granted.
 
 12.  Research and Development expenses for the year are Rs.817.86 Lacs
 (PY Rs.666.95 Lacs) including Rs.368.88 Lacs towards Depreciation (PY
 Rs.307.41 Lacs).
 
 13.  The unadjusted units generated from the Windmills as on 31-3-2009
 are 357.71 Lacs KWH (PY 170.78 Lacs KWH) and its monetary value of
 Rs.1079.99 Lacs (PY Rs.583.97 Lacs) has been included in Loans &
 Advances.
 
 14.  The Pre-operative expenses incurred on account of insurance
 premium of Rs.269.98 Lacs (PY Rs.159.12 Lacs) and borrowing costs of
 Rs.6021.92 Lacs (PY 10.60 Lacs) relating to acquisition / construction
 of assets have been capitalized during the year.
 
 15.  The Director of Geology & Mining, Government of Tamil Nadu have
 raised additional Royalty demand on limestone, based on production of
 cement by a company instead of basing it on actual quantity of
 limestone mined. The demand for the company is Rs.966 Lacs. In the Writ
 petitions filed by the company and other similarly affected companies,
 the Madras High court has stayed the demands of the Government.
 
 16.  Debenture Redemption Reserve written back represents the excess
 reserve consequent to the redemption of debentures made during the
 year.
 
 17.  In April 2008, the company bought back 4300 shares of Rs.10 each.
 On account of buy back of shares during the year, the company has
 created additional Capital Redemption Reserve of Rs.0.43 Lacs (PY:
 Rs.17.52 lacs) towards face value of 4,300 (PY: 1,75,181) shares of
 Rs.10/- each by way of appropriation against General reserve.
 
 18.  In August 2008, the company allotted 100 shares of Rs.10 each, out
 of the un allotted shares of the 1994 Bonus issue. In October 2008, the
 shares of Rs.10 each were sub-divided into 10 shares of Re.1 each and
 11,89,84,690 shares of Rs.1 each were issued as Bonus shares. Thus the
 total amount capitalized from the General reserve is Rs.11,89,85,690.
 With this, the paid up capital of the company is Rs.23,79,69,380
 consisting of 23,79,69,380 shares of Re.1 each.
 
 19.  The premium on forward exchange contracts not intended for trading
 or speculation purpose is amortized as expenses over the life of the
 contract. During the current year Rs.43.07 Lacs (PY: Nil) has been
 amortized and the same is included in Interest & Finance charges.
 
 20.  Related party transactions:
 
 As per AS-18, the Companys related parties are given below:
 
 Key Managerial personnel and relatives:
 
 P.R.Ramasubrahmaneya Rajha
 
 P.R.Venketrama Raja
 
 The Companys transactions with the above persons are furnished in Note
 No.6 and 7 above.
 
 Enterprises over which the above persons exercise significant influence
 and with which the company had transactions during the year:
 
 Rajapalayam Mills Limited
 
 The Ramaraju Surgical Cotton Mills Limited
 
 Ramco Industries Limited
 
 Sri Vishnu Shankar Mill Ltd
 
 Ramco Systems Limited
 
 Sandhya Spinning Mill Ltd
 
 Thanjavur Spinning Mill Limited
 
 Sri Harini Textiles Limited
 
 Rajapalayam Spinners Pvt Ltd