|1. COMPANY OVERVIEW
ACC Limited (the Company) is a public limited company incorporated in
India under the provision of Companies Act, 1913. Its shares are listed
on two stock exchanges in India. The Company is engaged in the
manufacturing and selling of Cement and Ready mix concrete. The Company
caters mainly to the domestic market.
(i) Basis of preparation
a) The financial statements of the Company have been prepared in
accordance with the generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
com ply in all material respects with the accounting standards notified
under Section 133 of the Companies Act, 2013 ("the Act"), read together
with Rule 7 of the Companies (Accounts) Rules 2014. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
b) The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
(ii) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of the financial
statements and reported amounts of revenues and expenses for the year.
Although these estimates are based on the management's best knowledge
of current events and actions, uncertainty about these assumptions and
estimates could result in the outcomes different from the estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Any revision to accounting estimates is recognized prospectively in the
current and future periods.
(iii) Tangible fixed assets
a) Fixed assets are stated at cost of acquisition or construction less
accumulated depreciation/amortization and impairment losses, if any.
The cost comprises of the purchase price (net of Convert and VAT credit
wherever applicable) and any attributable cost of bringing the assets
to its working condition for its intended use. Subsequent expenditures
related to an item of tangible asset are added to its gross book value
only if it increases the future benefits from the existing asset beyond
its previously assessed standard of performance.
b) Machinery spares which can be used only in connection with a
particular item of Fixed Assets and the use of which is irregular, are
capitalized at cost.
c) Fixed assets retired from active use and held for disposal are
stated at the lower of their net book value and net realizable value
and are disclosed separately under "other current assets".
d) Losses arising from the retirement of, and gains and losses arising
from disposal of fixed assets which are carried at cost are recognized
in the Statement of Profit and Loss.
e) Tangible assets not ready for the intended use on the date of
Balance Sheet are disclosed as "Capital work-in-progress". Advances
given towards acquisition/construction of fixed assets outstanding at
each Balance Sheet date are disclosed as Capital Advances under
"Long-term loans and advances".
(iv) Depreciation on tangible fixed assets
a) Depreciation on fixed assets, other than Captive Power Plant related
assets (CPP assets), is provided using the straight-line method and on
CPP assets using the written-down value method based on their
respective estimated useful lives. Estimated useful lives of assets are
determined based on technical parameters / assessment
The aforesaid estimated useful lives for computing depreciation is
different in following case from the useful life specified in Schedule
II to the Companies Act, 2013;
Depreciation is calculated on a pro-rata basis from the date of
installation till the date the assets are sold or disposed off.
b) Machinery spares which are capitalized, are depreciated over the
useful life of the related fixed asset. The written down value of such
spares is charged in the Statement of Profit and Loss, on issue for
c) Leasehold land is amortized on a straight-line basis over the period
of lease which is 10 to 99 years.
d) Freehold land used for mining is depreciated on the basis of
quantity of minerals actually extracted during the year with respect to
the estimated total quantity of extractable mineral reserves.
(v) Intangible assets and amortization
Intangible assets are stated at cost of acquisition or construction
less accumulated amortization and impairment losses if any. Intangible
assets are amortized over their estimated useful economic life.
Computer Software cost is amortized over a period of three years using
Gains or losses arising from derecognition of intangible assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the Statement of
Profit and Loss when the asset is derecognized.
(vi) Impairment of assets
The carrying amount of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its estimated recoverable amount. The recoverable
amount is the greater of the asset's net selling price and value in
use. In assessing the value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and
risks specific to the asset.
After impairment, depreciation / amortization is provided on the
revised carrying amount of the asset over its remaining useful life. A
previously recognized impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation / amortization if there
was no impairment.
(vii) Borrowing Costs
Borrowing costs directly attributable to the acquisition and
construction of an asset which takes a substantial period of time to
get ready for its intended use, are capitalized as a part of the cost
of such assets, until such time the asset is substantially ready for
its intended use. All other borrowing costs are recognized in the
Statement of Profit and Loss in the period they occur. Borrowing costs
consist of interest and other costs incurred in connection with
borrowing of funds.
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments. However, that part of long term
investments which are expected to be realized within twelve months from
Balance Sheet date is also presented under "Current Investments" under
"Current portion of long term investments" in consonance with the
current / non-current classification of Schedule III of the Companies
Long term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments. Current investments are carried at the
lower of cost and fair value determined on an individual basis.
On disposal of an investment, the difference between the carrying
amount and the net disposal proceeds is recognized in the Statement of
Profit and Loss.
Inventories are valued after providing for obsolescence, as follows:
a) Raw Materials, Stores & Spare parts, Packing Material and Fuels
Lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written
down below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost. Cost is
determined on a weighted average basis.
b) Work-in-progress, Finished goods and Stock-in-Trade
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty. Cost
of Stock-in-Trade includes cost of purchase and other cost incurred in
bringing the inventories to the present location and condition. Cost is
determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(x) Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprise cash in hand, cash at bank, demand deposits with banks and
other short-term highly liquid investments / deposits with an original
maturity of three months or less.
(xi) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
Sale of goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have been passed to the buyer. Sales are
disclosed net of sales tax / value added tax (VAT), trade discounts and
returns, as applicable. Sales exclude self-consumption of cement.
Excise duties deducted from turnover (gross) are the amounts that are
included in the amount of turnover (gross) and not the entire amount of
liability that arose during the year.
Income from services
Revenue from services is recognized (net of service tax, as applicable)
pro-rata over the period of the contract as and when services are
Interest and Dividend Income
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable. Dividend income
is recognized when the Company's right to receive dividend is
established by the Balance Sheet date.
(xii) Government Grants and Subsidies
a) Government grants and subsidies are recognized when there is
reasonable assurance that the conditions attached to them will be
complied, and grant/subsidy will be received.
b) Where the Government grants / subsidies relates to revenue, it is
recognized as income on a systematic basis in the statement of profit
and loss over the periods necessary to match them with the related
costs, which they are intended to compensate. Government grants and
subsidies receivable against an expense are deducted from such expense.
c) Grants and subsidies receivable against a specific fixed asset is
deducted from cost of the relevant fixed asset.
d) Government grants of the nature of promoters' contribution are
credited to Capital Reserve and treated as a part of shareholders'
Where the Company is the lessee
Leases where the less or effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
Where the Company is the less or
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Statement of Profit and Loss on a
straight-line basis over the lease term. Costs, including depreciation
are recognized as an expense in the statement of profit and loss.
Initial direct costs such as legal costs, brokerage costs, etc. are
recognized immediately in the Statement of Profit and Loss.
(xiv) Foreign currency transactions
Foreign currency transactions are initially recorded at the rates of
exchange prevailing on the date of transactions. Foreign currency
monetary items are subsequently reported using the closing rate. Non-
monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction. Exchange differences arising on the
settlement of monetary items or on reporting Company's monetary items
at rates different from those at which they were initially recorded
during the year, or reported in previous financial statements, are
recognized as income or as expenses in the year in which they arise.
(xv) Retirement and other employee benefits
a) Short term employee benefits
Short term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the related service is rendered.
b) Defined contribution plans
The Company's Officer's Superannuation Fund scheme, state governed
provident fund scheme, employee state insurance scheme and Labour
Welfare Fund scheme are considered as defined contribution plans. The
contribution under the schemes is recognized as an expense in the
Statement of Profit and Loss, when an employee renders the related
service. There are no other obligations other than the contribution
payable to the respective funds.
c) Defined benefit plans
The Company's Gratuity fund scheme, additional gratuity scheme and post
employment benefit scheme are considered as defined benefit plans. The
Company's liability is determined on the basis of an actuarial
valuation using the projected unit credit method as at Balance Sheet
date. Actuarial gains /losses are recognized immediately in the
Statement of Profit and Loss in the year in which they arise.
In respect of certain employees, provident fund contributions are made
to a trust administered by the Company. Periodic contributions to the
Fund are charged to the Statement of Profit and Loss. The Company has
an obligation to make good the shortfall, if any, between the return
from the investment of the trust and interest rate notified by the
Government of India.
d) Other long term benefits
Silver jubilee and long service awards and accumulated compensated
absences which are expected to be availed or encased beyond 12 months
from the end of the year, are treated as other long term employee
benefits for measurement purposes. The Company's liability is
determined on the basis of an actuarial valuation using the projected
unit credit method as at Balance Sheet date. Actuarial gains /losses
are recognized immediately in the Statement of Profit and Loss in the
year in which they arise.
e) Accumulated compensated absences, which are expected to be availed
or encased within 12 months from the end of the year are treated as
short term employee benefits. The company measures the expected cost of
such absences as the additional amount that it expects to pay as a
result of the unused entitlement that has accumulated at the reporting
f) For the purpose of presentation of Defined benefit plans and other
long term benefits, the allocation between short term and long term
provisions has been made as determined by an actuary. The Company
presents the entire compensated absences as a short term provisions,
since employee has an unconditional right to avail the leave at any
time during the year.
g) Expenses incurred towards voluntary retirement scheme are charged to
the Statement of Profit and Loss as and when accrue.
(xvi) Income taxes
Tax expense comprises of current and deferred tax and includes any
adjustments related to past periods in current and / or deferred tax
adjustments that may become necessary due to certain developments or
reviews during the relevant period. Current income tax is measured at
the amount expected to be paid to the tax authorities in accordance
with the Income-tax Act, 1961.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognized amounts and there
is an intention to settle the asset and the liability on a net basis.
Deferred income taxes reflect the impact of current year's timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date. Deferred
tax assets are recognized only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. The carrying
amount of deferred tax assets are reviewed at each Balance Sheet date.
The Company write- down the carrying amount of a deferred tax asset to
the extent that it is no longer reasonably certain that sufficient
future taxable income will be available against which deferred tax
asset can be realized. Any such write-down is reversed to the extent
that it becomes reasonably certain that sufficient future taxable
income will be available.
(xvii) Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation as
a result of past events, if it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions (excluding retirement benefits) are not discounted to their
present value and are determined based on the best estimate required to
settle the obligation at the reporting date. These estimates are
reviewed at each Balance Sheet date and adjusted to reflect the current
Contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
(xviii) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
(xix) Mines Restoration Expenditure
The Company provides for the estimated expenditure required to restore
quarries and mines. The total estimate of restoration expenses is
apportioned over the estimate of mineral reserves and a provision is
made based on minerals extracted during the year. Mines restoration
expenses is incurred on an ongoing basis and until the closure of the
quarries and mines. The actual expenses may vary based on the nature of
restoration and the estimate of restoration expenditure. The total
estimate of restoration expenses is reviewed periodically, on the basis
of technical estimates.
(xx) Classification of Current / Non Current Assets and Liabilities
All assets and liabilities are presented as Current or Non-current as
per the Company's normal operating cycle and other criteria set out in
Schedule III of the Companies Act, 2013. Based on the nature of
products and the time between the acquisition of assets for processing
and their realization, the Company has ascertained its operating cycle
as 12 months for the purpose of Current / Noncurrent classification of
assets and liabilities.
(xxi) Segment Reporting
Identification of segments
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.