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Madras Cements
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Explore Madras Cements connections « Mar 10
Notes to Accounts Year End : Mar '11
Rs. in lacs
 
                                                     As at        As at
                                                 31-3-2011    31-3-2010
 
 1.  Contingent Liabilities:
 
 1.1 Estimated amount of contracts remaining 
     to be executed on capital account and 
     not provided for                              38736.85    73925.42
 
 1.2 Liability on letters of credit opened 
     by bankers for purchase of :
 
     – Spares, Raw material & Fuel                  4084.89      380.13
 
     – Capital Goods                               11419.68    21719.26
 
 1.3 Liability on guarantees given by the 
     bankers                                        2561.75     3256.08
 
 1.4 Liability on guarantees given to bankers      20538.00    17538.00
 
 Income tax assessments have been completed up to the accounting year
 ended on 31st March 2008 i.e., Assessment Year 2008-09. The company has
 preferred appeals before appellate authorities in respect of various
 disallowances in assessments and the appeals are pending. As against
 the tax demand of Rs.3660.68 lacs, the department has adjusted
 Rs.2339.71 lacs. In the opinion of Management, there may not be any tax
 liability with regard to the said disallowances and the refunds so
 adjusted are held under Loans and advances.
 
 2.  In respect of Sales Tax matters appeals are pending with the
 Appellate Authorities in respect of tax demands amounting to Rs.2259.11
 lacs, (PY: Rs.2122.66 lacs) against which Rs.894.45 lacs (PY:
 Rs.1222.43 lacs) have been paid under protest and is held under Loans
 and advances. In the opinion of the management, there may not be any
 tax liability with regard to the said demands.
 
 3.  The demands due to 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.12189.97 lacs as at 31-3-2011 (PY: Rs.10898.43 lacs) remain unpaid,
 against which the company has replied / preferred appeals.  In the
 opinion of the management, there may not be any liability with regard
 to the said demands.
 
 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 companys 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 levy pertains to the
 period 1-1-1992 to 30-10-1997. The amount remaining unpaid is Rs.84.93
 lacs.
 
 6.  Tamil Nadu Electricity Board (TNEB) has imposed Rs.138.67 lacs
 towards penalty, alleging shortfall in lifting of flyash as per the
 terms of Memorandum of Understanding entered into with the Company.
 TNEB has made the calculation based on the estimation of flyash
 quantity that could have been generated for the quantity of coal used
 by them, instead of ascertaining the actual availability of flyash
 generated by them. The Company has obtained stay orders against the
 penalty from Honourable Madras High Court.
 
 7.  We have entered into MoU with TNEB for sourcing flyash from their
 thermal power stations. Ignoring our right, it was proposed to
 introduce auction unilaterally, for disposal of flyash. Further TNEB
 has also proposed to increase the rate to Rs.700/- per tonne of flyash.
 In the writ petitions filed by the Company and other similarly affected
 companies, the Honourable Madras High Court has stayed the proposals.
 
 8.  Tamil Nadu Generation and Distribution Corporation Limited has
 raised a demand towards compensation charges of Rs.75.05 lacs alleging
 that the Company has exceeded the quota of power consumption during
 evening peak hours. The Company has deposited the amount under protest,
 filed writ petition before the Honourable Madras High Court and the
 same has been admitted.
 
 9.  Government of Karnataka has imposed Environmental Protection Fee
 of Rs.5.60 crores, in connection with Companys mining leases. In the
 writ petitions filed by the Company and other similarly affected
 companies, the Honourable High Court of Karnataka, has stayed the
 imposition of the fee. As per the order, the Company has deposited a
 sum of Rs.2.90 crores and provided bank guarantees for the balance
 amount.
 
 10.  Competition Commission of India has ordered their Office of
 Director General to investigate into the matter of alleged increase in
 the prices of cement by cement manufacturing companies and working as a
 cartel.  The Company has provided the information as required by the
 Director General. Similar notices have also been served to other cement
 manufacturing companies.
 
 11.  Southern Power Distribution Company of Andhra Pradesh Limited has
 demanded an amount of Rs.32.26 lacs towards alleged excess load factor
 incentives allowed by them. The Company has filed an appeal before
 Honourable High Court of Andhra Pradesh and obtained an order of
 interim stay.
 
 12.  In June 2010, Transmission Corporation of Andhra Pradesh Limited
 has demanded Rs.1.13 crores as Fuel Surcharge Adjustment pertaining to
 the year 2008-09. The Company has filed a writ petition in the
 Honourable High Court of Andhra Pradesh and obtained an interim stay.
 
 13.  The Cess Commissioner has demanded additional cess amount of
 Rs.0.53 lacs for the year 2008-09, based on theoretical conversion
 factors, instead of taking the actual quantity of minerals used in the
 production. Challenging this demand the Company has filed a writ
 petition before the Honourable Madras High Court and obtained an
 interim stay.
 
 14.  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 1-7-1997 vide Government of India
 Gazette Extraordinary No.472E dated 30-6-1997. 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.
 
 15.  The Andhra Pradesh State Electricity Board (APSEB) had hiked the
 wheeling charges with effect from 24-3-2002.  As a result, the cost of
 power the company is getting from A P Gas Power Corporation Ltd;
 (APGPCL) had gone up
 by Rs.0.84 per unit. APGPCL and other affected consumers including our
 company had filed appeals in the Honourable High Court of Andhra
 Pradesh. The court passed orders in favour of the industries. The APSEB
 has preferred an appeal to the Honourable Supreme Court and no stay has
 been granted.
 
 16.  The Director of Geology & Mining, Government of Tamil Nadu had
 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.9.66 crores for the
 period from the year 1989 to year 2001. In the Writ petitions filed by
 the company and other similarly affected companies, the Honourable
 Madras High court has stayed the demands of the Government.
 
 17.  Water Resources Department of Public Works Department, Government
 of Tamil Nadu had raised a demand of Rs.1.13 crores contending that
 water charges are to be paid on the contracted quantity and not on the
 actual quantity of water drawn by the company from Arjuna River in
 Virudhunagar District. The demand pertains to the period from the year
 1990 to year 2009. The company has obtained interim stay from the
 Honourable Madras High Court. As per the interim order, the Company has
 deposited a sum of Rs.30.00 lacs with the Department.
 
 18.  Environment, Forests Science & Technology Department, Government
 of Andhra Pradesh has increased the Royalty on the Limestone mined from
 the Forest Area from Rs.5/- per permit to Rs.10/- per tonne. We have
 filed a writ petition before the Honourable High Court of Andhra
 Pradesh and obtained an interim order, to pay 1/3rd of the demand. As
 per the Court order, we have paid Rs.0.70 lacs, being the 1/3rd portion
 upto 31-3-2011.
 
 19.  Central Power Distribution Company of Andhra Pradesh Limited has
 demanded a sum of Rs.5.28 lacs by revising the tariff rate, alleging
 that the packing plant of the Company near Hyderabad is not engaged in
 manufacturing / processing activity and hence should be classified
 under HT Category-II, instead of HT Category-I. Against the demand, the
 Company has filed a writ petition in the Honourable High Court of
 Andhra Pradesh and obtained a stay order against the re-classification.
 
 20.  New Industries set up in Tamil Nadu were eligible for Power Tariff
 Concession as per G.O.Ms. No.29 dated 31-1-1995, which was sought to be
 withdrawn to Industries set up after 14-2-1997 as per G.O.Ms. No.17
 dated 14-2-1997. The eligibility for Power Tariff Concession for
 Alathiyur unit became a dispute between the Company and Tamil Nadu
 Electricity Board (TNEB). Based on the interim order of the Honourable
 Madras High Court, the Company had availed power tariff concession to
 the tune of Rs.11.41 crores and sought refund of unavailed concession
 of Rs.1.80 crores. The matter was finally settled by Honourable Supreme
 Court, vide its judgement dated 16-5-2008, wherein it laid down
 criteria for ascertaining the eligibility for Power Tariff Concession
 for new industries and directed the TNEB to decide the eligibility for
 the Company based on the said criteria. However, vide its order dated
 30-6-2008, the TNEB sought to introduce new criteria not enumerated in
 the Supreme Court judgement. Aggrieved, the Company filed a writ
 petition (WP No:16348 of 2008) before the Honourable Madras High Court,
 which by its judgement dated 13-11-2008 set aside the additional
 criteria not mentioned in the Supreme Court Judgement and confirmed the
 eligibility of Power Tariff Concession for the Company. TNEB has filed
 a writ appeal (WA No:629 of 2010) in the Honourable Madras High Court
 against the said order seeking disentitlement of power tariff
 concession already availed by the Company and matter is pending for
 hearing.
 
 21.  Extraordinary income represents reversal of provision for
 diminution in value of investments created in earlier years for Rs.7.29
 lacs (PY: Rs.11.07 lacs).
 
 22.  The company has incurred Rs.601.13 lacs during the current year
 (PY: Rs.687.44 lacs) towards development of certain mines. The total
 expenses of Rs.1331.88 lacs will be charged off in subsequent years
 after the commencement of its mining operations.
 
 The company has also charged off Rs.242.46 lacs during the current year
 out of the total amount spent for mining expenses in the earlier years.
 The balance of Rs.484.92 lacs would be charged off to revenue during
 the next two years.
 
 The company has also charged off Rs.121.23 lacs during the current year
 out of the total amount spent for mining expenses in the earlier years
 for Rs.360.65 lacs and additional amount of Rs.245.51 lacs incurred
 during current year.  The balance of Rs.484.93 lacs would be charged
 off to revenue during the next four years.
 
 The company has also charged off Rs.62.87 lacs during the current year
 out of the total amount spent for installation of fly ash handling
 equipments in Thermal power stations in connection with collection of
 fly ash in earlier years.  The balance of Rs.125.73 lacs would be
 charged off during next two years.
 
 The company has also charged off Rs.32.82 lacs during the current year
 out of the total amount spent for installation of fly ash handling
 equipments in Thermal power stations in connection with collection of
 fly ash in earlier years.  The balance of Rs.98.46 lacs would be
 charged off during next three years.
 
 The company has incurred Rs.299.39 lacs during the current year (PY:
 Rs.164.10 lacs) towards installation of fly ash handling equipments in
 Thermal power stations in connection with collection of fly ash, out of
 which Rs.59.87 lacs was charged off during the current year. The
 balance of Rs.239.52 lacs would be charged off during next four years.
 
 23.  The Companys 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 2010-11 have been paid.
 The Companys application for de-listing from Calcutta Stock Exchange
 is under process.
 
 24.  There are no dues to Micro and Small Enterprises as at 31-3-2011
 (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.
 
 25.  The company has invested Rs.2211.97 lacs in Andhra Pradesh Gas
 Power Corporation Ltd (APGPCL) by purchasing its 16,08,000 equity
 shares. The investment entitles the company to source 6 MW power from
 APGPCL at economical rates compared to the rates charged by Andhra
 Pradesh State Electricity Board.  Considering the availability of
 captive power sources at Jayanthipuram plant 11,12,200 shares
 equivalent to 4.15 MW power is being held jointly with the following
 related parties:
 
 APGPCL will supply the entitled power to the above related parties for
 which the charges will be paid by them directly. The Company is
 entitled to receive 10 paise per unit for the power consumed by them by
 virtue of the joint ownership of the shares.
 
 26  Research and Development expenses for the year are Rs.825.62 lacs
 (PY: Rs.896.50 lacs) including Rs.415.33 lacs towards Depreciation (PY:
 Rs.473.04 lacs).
 
 27.  The unadjusted units generated from the Windmills as on 31-3-2011
 are 7.48 lacs KWH (PY: 835.99 lacs KWH) and its monetary value of
 Rs.33.18 lacs (PY: Rs.2822.86 lacs) has been included in Loans &
 Advances.
 
 28.  The Pre-operative expenses incurred on account of insurance
 premium of Rs.52.53 lacs (PY: Rs.31.66 lacs) and borrowing costs of
 Rs.2224.49 lacs (PY: Rs.1906.62 lacs) relating to acquisition /
 construction of assets have been capitalized during the year.
 
 29. The Company is eligible for incentives under West Bengal Incentive
 Scheme 2004 in respect of the clinker grinding unit at Kolaghat in the
 State of West Bengal. A sum of Rs.11.33 crores accrued as Industrial
 Promotional Assistance (IPA), being 90% of taxes paid, is credited to
 Profit and Loss Account, under Other Income. Out of this Rs.0.51 crores
 relates to the FY 2009-10.
 
 30. 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 reportable transactions with the above persons by the company are
 furnished in Note No.22 and 23 above.
 
 Enterprises over which the above persons exercise significant influence
 and with which the company had transactions during the year:
 
 Rajapalayam Mills Ltd
 
 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
 
 The Companys transactions with the above related parties are
 summarised below:
 
 1.  Remuneration to Managing Director:
 
     The details are provided under Note No.22
 
 2.  Investments held jointly:
 
     The details are provided under Note No.29
 
 31. The figures of previous year have been regrouped / restated
 wherever necessary.
Source : Dion Global Solutions Limited
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