|Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Inter Segment transfers
Inter segment revenue has been accounted for based on the transaction
price agreed to between segments which is based on current market
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and not allocable to segments on reasonable basis have been
included under 'unallocated revenue / expenses / assets / liabilities'.
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
i) Terms / rights attached to equity shares
The Company has only one class of equity shares having par value of Rs,
10 per share. Each holder of equity shares is entitled to one vote per
share. 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 of the
Company, the holders of equity shares will be entitled to receive
remaining assets of the Company, after distribution of all preferential
amounts. The distribution will be in proportion to the number of equity
shares held by the shareholders.
Both these Companies are subsidiaries of LafargeHolcim Ltd (Formerly
known as Holcim Ltd), Switzerland, the ultimate holding Company.
ii) The Company has issued Nil (Previous Year - 5,064) Equity shares Rs,
10 each fully paid during the period of five years immediately
preceding the reporting date on exercise of options granted under the
employee stock option plan, wherein part consideration was received in
form of employee services.
Mines restoration expenditure is incurred on an ongoing basis and until
the closure of the mine. The actual expenses may vary based on the
nature of restoration and the estimate of restoration expenditure.
1. EMPLOYEE BENEFITS:
a) Defined Contribution Plans - Amount recognized and included in Note
25 "Contributions to Provident and other Funds" of Statement of Profit
and Loss Rs, 18.28 Crore (Previous Year -t 14.82 Crore).
b) Defined Benefit Plans-As per actuarial valuation on December 31,
The Company has a defined benefit gratuity, additional gratuity, post
retirement medical benefit plans and Trust managed provident fund plan
as given below:
i. Every employee who has completed minimum five years of service is
entitled to gratuity at 15 days salary for each completed year of
services. The scheme is funded with insurance companies in the form of
qualifying insurance policies.
ii. Every employee who has joined before 1st December 2005 and
separates from service of the Company on Superannuation and on medical
grounds is entitled to additional gratuity. The scheme is Non Funded.
iii. Benefits under Post Employment Medical Benefit Plans are payable
for actual domiciliary treatment / hospitalization for employees and
their specified relatives. The scheme is Non Funded.
iv. Provident fund for certain eligible employees is managed by the
Company through trust "The Provident Fund of ACC Ltd.", in line with
the Provident Fund and Miscellaneous Provision Act, 1952. The plan
guarantees interest at the rate notified by the Provident Fund
Authorities. The contribution by the employer and employee together
with the interest accumulated thereon are payable to employees at the
time of separation from the Company or retirement, whichever is
earlier. The benefits vests immediately on rendering of the services by
The minimum interest rate payable by the Trust to the beneficiaries
every year is being notified by the Government. The Company has an
obligation to make good the shortfall, if any, between the return from
the investments of the Trust and the notified interest rate.
The ASB Guidance on Implementing AS-15, Employee Benefits (revised
2005) issued by Accounting Standards Board (ASB) states that benefit
plans involving employer established provident funds, which require
interest shortfalls to be recompensed are to be considered as defined
benefit plans. As per the Guidance Note from the Actuarial Society of
India, the Company has obtained the actuarial valuation of interest
rate obligation in respect of Provident Fund and there is no shortfall
as at December 31, 2015 and December 31, 2014.
b) Demographic Assumptions
1 Mortality pre-retirement Indian Assured Lives Mortality (2006-08)
(Modified)ultimate Indian Assured Lives Mortality (2006-08) (Modified)
2 Mortality post-retirement Mortality for annuitants LIC (1996-98)
ultimate Mortality for annuitants LIC (1996-98) ultimate
3 Turnover rate 5% p.a. (P.Y. - 5% p.a.)
4 Medical premium inflation 12% p.a. for the first 4 years and
thereafter 8% p.a. 12% p.a. for the first 5 years and thereafter 8%
(Figures in italics pertain to previous year)
c) Basis used to determine expected rate of return on assets:
The expected return on plan assets is based on market expectation, at
the beginning of the period, for returns over the entire life of the
related obligation. The Gratuity Scheme is invested in Life Insurance
Corporation (LIC) of India's Group Gratuity-cum-Life Assurance cash
accumulation policy and HDFC Standard Life's Group Unit Linked Plan -
For Defined Benefit Scheme.
The Trust formed by the Company manages the investments of provident
d) The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
e) The Company expects to contribute Rs, 11.00 Crore (Previous Year - Rs,
9.00 Crore) to Gratuity fund and 118.84 Crore (Previous Year -t 19.12
Crore) to trust managed provident fund in the year 2016.
f) Post employment defined benefit plan expenses are included under
employee benefit expenses in the statement of Profit and Loss.
*Since there is surplus, the same has not been recognized in Balance
Sheet, only liability recognized in Balance Sheet.
# Experience adjustments information for the year 2011 is not available,
hence not disclosed.
h) Amount recognized as an expense under employee benefit expenses in
the statement of Profit and Loss in respect of other long term benefits
is Rs, 22.29 Crore (Previous Year - Rs, 39.89 Crore).
i) Present value of compensated absences at year end is Rs, 38.44 Crore
(Previous Year - Rs, 109.22 Crore). During the year, the Company has
contributed Rs, 75 Crore to the fund against provision for compensated
j) Present value of Long service award and other benefit plan
obligation at year end is Rs, 7.17 Crore (Previous Year -t 9.88 Crore).
This scheme is non funded.
2. SEGMENT REPORTING
The Company has disclosed Business Segment as the primary segment.
Segments have been identified taking into account the nature of the
products, the differing risks and returns, the organization structure
and internal reporting system. The Company's operations predominantly
relate to manufacture of Cement and Ready Mix Concrete. The export
turnover is not significant in the context of total turnover of the
company and further the risk and returns are not significantly
different from that of India. As such there is only one geographical
b) Operating lease payment recognized in Statement of Profit and Loss
amounting to Rs, 173.64 Crore (Previous Year -Rs, 133.82 Crore)
c) General description of the leasing arrangement:
(i) Leased Assets: Grinding facility, Concrete pumps, Godowns, Transit
Mixer, Flats, Office premises and other premises.
(ii) Future lease rentals are determined on the basis of agreed terms.
(iii) There is no escalation clause in the lease agreement. There are
no restrictions imposed by lease arrangements. There are no subleases.
(iv) At the expiry of the lease term, the Company has an option either
to return the asset or extend the term by giving notice in writing.
3. RELATED PARTY DISCLOSURE
(A) Names of the Related parties where control exists: Nature of
1 LafargeHolcim Ltd (Formerly known as Holcim Ltd) Ultimate Holding
2 Holderind Investments Ltd Holding Company of Holcim(lndia)Private
3 Holcim (India) Private Limited Holding Company
4 Bulk Cement Corporation (India) Limited Subsidiary Company
5 ACC Mineral Resources Limited Subsidiary Company
6 Lucky Minmat Limited Subsidiary Company
7 National Limestone Company Private Limited Subsidiary Company
8 Singhania Minerals Private Limited Subsidiary Company
9 Oneindia BSC Private Limited Joint venture Company (w.e.f 13 August
(B) Others - With whom transactions have been taken place during the
(a) Names of other Related parties Nature of Relationship
1 Alcon Cement Company Private Limited Associate Company
2 Asian Concretes and Cements Private Limited Associate Company
3 Aakaash Manufacturing Company Private Limited Associate Company
4 Lafarge India Private Limited Fellow Subsidiary (w.e.f 10 July 2015)
5 Ambuja Cements Limited Fellow Subsidiary
6 Holcim Technology (Singapore) Pte Ltd Fellow Subsidiary
7 Holcim (Lanka) Ltd I Fellow Subsidiary
8 P T Holcim Indonesia Tbk Fellow Subsidiary
9 Holcim Services (South Asia) Limited Fellow Subsidiary
10 Holcim Cement (Bangladesh) Ltd Fellow Subsidiary
Names of other Related parties Nature of Relationship
11 Holcim (Vietnam) Ltd Fellow Subsidiary
12 Holcim (Malaysia) SDN Bhd Fellow Subsidiary
13 Holcim Foundation I Entity controlled by LafargeHolcim Ltd
14 Holcim Philippines Fellow Subsidiary
15 Holcim Services (Asia) Ltd Fellow Subsidiary
16 Holcim Group Services Ltd Fellow Subsidiary
17 Holcim Technology Ltd Fellow Subsidiary
18 Holcim Trading Pte Ltd Fellow Subsidiary
19 ALJabor Cement Industries Co. Fellow Subsidiary
20 National Cement Factory Associate Company of Fellow Subsidiary
21 Holcim (Romania) S.A. Fellow Subsidiary
22 Holcim Azerbaijan Fellow Subsidiary
23 Holcim (Canada) Inc. Fellow Subsidiary (b) Key Management
Name of the Related Party Nature of Relationship
1 Mr. Harish Badami CEO & Managing Director (w.e.f 13th August 2014)
2 Mr. Kuldip K. Kaura CEO & Managing Director (Upto 12th August 2014)
3 Mr.Sunil K. Nayak__ Chief Financial Officer
4 Mr. Burjor D. Nariman | Company Secretary
c) The Company had filed writ / appeal petitions against the orders /
notices of various authorities demanding Rs, 114.24 Crore (Previous
Year -Rs, 106.59 Crore) towards demand of additional Royalty on
Limestone based on the ratio of 1.6 tonnes of Limestone to 1 tonne of
Cement produced at its factories in Chattisgarh and on cement produced
visa vis consumption of limestone at its factory in Tamil Nadu. The Mad
hya Pradesh High Court has decided this matter in favour of the Company
by directing the Authorities to only demand Royalty based on quantity
of Limestoneactua I ly mined and recorded through statutory
documentation, and not based on any ratio. The Company holds the view
that the payment of royalty on limestone is correctly made by the
Company based on the actual quantity of limestone extracted, and feels
that similar relief can also be expected from the Judiciary and/or
Authorities in the cases of Chattisgarh & Tamil Nadu Units. In view of
the demand being legally unjustifiable, and due to the decision of the
Madhya Pradesh High Court, directly on this issue, the Company does not
expect any liability in above matter.
4. (B) Material Demands and disputes considered as "remote" by the
a) The Company had availed Sales Tax Incentives in respect of it's new
1 MTPA Plant at Gagal (Gagal ll)underthe HP State Industrial Policy,
1991. The Company had accrued Sales Tax Incentives aggregating Rs, 56
Crore. The Sales Tax Authorities had introduced certain restrictive
conditions after commissioning of the unit stipulating that incentive
is available only for incremental amount over the base revenue and
production (of Gagal I) prior to the commissioning of Gagal II. The
Company contends that such restrictions are not applicable to the unit
as Gagal II is a new unit, as decided by the HP High Court and
confirmed by the Supreme Court while determining the eligibility for
Transport Subsidy. The Department had recovered Rs, 64 Crore (Tax of
Rs, 56 Crore and interest ofRs, 8 Crore) and the same is accounted as
an amount recoverable.
The HP High Court, had, in 2012, dismissed the Company's appeal. The
Company believes the Hon'ble High Court's judgment is based on an
erroneous understanding of certain facts and legal positions and that
it also failed to consider certain key facts. The Company has been
advised by legal experts that there is no change in the merits of the
Company's case. Based on such advice, the Company filed a Special Leave
Petition before the Hon'ble Supreme Court in, which is pending.
b) The Company was eligible for certain incentives (in the nature of
One Time Lumpsum Capital Subsidy and refund of incremental VAT paid) in
respect of its investment towards modernization and expansion of the
Chaibasa Cement Unit pursuant to confirmation received under the State
Industrial Policy of Jharkhand. Accordingly, the company has made
claims for refund of VAT paid each financial year. However,
no disbursals were made (except an amount of Rs, 7 Crore representing
part of the One Time Lumpsum capital Subsidy Claim of Rs, 15 Crore) as
the authorities have raised various new conditions and restriction,
that were extraneous to the approvals and confirmations expressly
received by the Company. The Company had filed two writ appeals before
the Jharkhand High Court against the restrictions and disputes on the
extent of the eligible claims now being sought to be effected / raised
by the Government.
The Division Bench of the Jharkhand High Court, while dealing with
appeals by both the Company and the State of Government, against a
single bench order only partially allowing the Companies claim, in it's
order dated February 24, 2015, has allowed the Companies Appeal in
totality while dismissing the Governments Appeal, thereby confirming
that the entire amount claimed by the Company is correct and hence
payable immediately. Pursuant to this order, a cumulative amount of Rs,
235 Crore stand accrued in the books up to December, 2015.
The Government of Jharkhand has filed an SLP in the Supreme Court
against the order of the division bench, which has been admitted. In
its interim order, the Supreme Court had, while not staying the
Division Bench Order, has only stayed disbursement of 40% of the amount
The Company has also pursued a contempt petition filed in the High
Court of Jharkhand against non disbursal of amounts due by the
Government. Consequently, as of date, the company has received Rs, 64
Crore in part disbursement from the Government of Jharkhand.
The Company is pursuing the matter of disbursement of further amounts
outstanding. The Company is of the view, and also has been advised,
that the merits are strongly in its favor and it expects that the SLP
shall be rejected upholding the order of the Division bench of the
Jharkhand HC by the Apex Court.
c) The Company had set up a captive power plant ('Wadi TG 2') in the
year 1995-96. This plant was sold to Tata Power Co. Ltd., in the year
1998-99 and was subsequently repurchased from it in the year 2004-05.
The Company had purchased another captive power plant ('Wadi TG 3', set
up by Tata Power Co. Ltd. in the year 2002-03) in 2004-05. Both these
power plants were eligible for tax holiday under the provisions of
Section 80IA of the Income Tax Act, 1961. The Income tax department has
disputed the Company's claim of deduction under Section 80IAof the Act,
on the ground that the conditions prescribed under the section are not
fulfill led. In case of Wadi TG 2, in respect of the demand of Rs, 56.66
Crore (net of provision), the Company is in appeal before the ITAT and
in case of Wadi TG 3 in respect of the demand of Rs, 115.62 Crore, which
was set aside by the ITAT, the Department is in appeal against the
decision in favour of the Company. The Company believes that the merits
of the claims are strong and will be allowed.
d) One of the Company's Cement manufacturing plants located in Himachal
Pradesh was eligible, under the State Industrial Policy for deferral of
its sales tax liability arising on sale of cement manufactured in the
said plant. The Excise and Taxation department of the Government of
Himachal Pradesh, disputed the eligibility of the company to such
deferment on the ground that the company also manufactures an
intermediate product, viz. Clinker, arising in the manufacture of
cement, and such intermediate product was is in the negative list. A
demand of Rs, 82.37 Crore was raised. The Company filed a writ petition
before High Court of Himachal Pradesh against the demand. The case has
been admitted and the hearing is in process. The Company believes its
case is strong and the demand shall not sustain under law.
e) The Company is eligible for incentives for one of its cement plants
situated in Maharashtra, under a Package Scheme of Incentives of the
Government of Maharashtra. The scheme inter alia, includes refund of
royalty paid by the Company on extraction or procurement of various raw
materials (Minerals). The Department of Industries has disputed the
Company's claim for refund of royalty on an erroneous technical
interpretation of the sanction letter issued to the Company, that
only the higher of the amount of (i) VAT Refund and (ii) Royalty refund
claim amounts, each year, shall be considered. The Company maintains
that such annual restriction is not applicable as long as the
cumulative limit of claim does not exceed the amount of eligible
investment. The Company has accrued an amount of Rs, 106 Crore till
December 31, 2015 (Rs, 73 Crore till December 31, 2014) on this account.
The Company has filed an appeal before the Bombay High Court
challenging the stand of the Government, which is admitted and pending.
The Company believes that the merits of the claim are strong.
f) Consequent upon the Supreme Court's judgment in Goa Foundation
case, restricting the "deemed renewal" provision of captive mining
leases to the first renewal period, the Company had received demand
from District Mining Officer for Rs, 881 Crore for being penalty for
alleged illegal mining activities carried out by the Company during
January 1991 to September 2014. The aforesaid demands were challenged
by the Company and Writ Petition with High Court of Jharkhand. The
petition has been admitted subject to a token deposit of Rs, 48 Crore
which shall be refundable in case the matter is decided in the
Companies favor. The Company is of the considered view based on legal
advice, that this demand does not have merit, and shall not stand the
test of judicial scrutiny, considering that the said mining, leases
pending State Government's approval, have been automatically extended
up to March 31, 2030 by Mines and Minerals (Development and Regulation)
(Amendment) Act, 2015 without any recourse being made available to the
5. The Competition Commission of India (CCI) in 2012 had imposed a
penalty ofRs, 1,147.59 Crore for alleged contravention of the provisions
of the Competition Act, 2002 (the Act). On the Company's appeal,
Competition Appellate Tribunal (COMPAT).vide its interim order, stayed
the penalty with a condition to deposit 10% of the penalty amount,
which was deposited. The amount of penalty was disclosed as a
contingent liability in the financial statements up to the previous
On December 11, 2015 the COMPAT, vide its final order, set aside the
order of the CCI and remitted the matter to the CCI for fresh
adjudication of the issues relating to the alleged violation of
relevant provisions of the Act, for passing a fresh order. Further, in
terms of the order, the Company has received the refund of deposit,
along- with accumulated interest.
This information has been determined to the extent such parties have
been identified on the basis of information available with the Company.
6. INTEREST IN JOINT VENTURE
During the year, the Company subscribed 25,01,000 (Previous Year - Nil)
equity shares for a total consideration of Rs, 2.50Crore (Previous Year -
Nil) in One India BSC Private Limited, which is a jointly controlled
entity with an equal equity participation with Ambuja Cements Limited,
a fellow subsidiary Company, with aim to provide back office services
with respect to routine processes.
7. ACC Mineral Resources Limited (AMRL), a wholly-owned subsidiary of
the Company, through its joint-venture had secured development and
mining rights for four coal blocks allotted to Madhya Pradesh State
Mining Corporation Ltd. These allocations stand cancelled pursuant to
the order of the Supreme Court ruling that allocation of various coal
blocks, including these, was arbitrary and illegal. The Government of
India has commenced auctioning process for all such blocks in a phased
manner. The auctioning for Bicharpur, being one of the four blocks, is
completed, with the block being awarded to the successful bidder.
Pursuant to a vesting order in this regard, possession of the coal mine
has been handed over to the successful bidder, with which the Company
is in discussions for transfer of remaining assets. In respect of other
three blocks, auctioning dates have not yet been announced.
8. During the year, the Company has provided Rs, 15.15 Crore in ACC
Mineral Resources Limited (Previous year -Rs, 4.13 Crore in National
Limestone Company Private Limited) for diminution in the value of these
investment considering the diminution other than temporary nature.
9. In the previous year, 'Tax adjustments for earlier years'
aggregating Rs, 309.23 Crore comprises write-back of provision for income
tax arising on conclusion of assessment of a year, and upon a
consequential review of tax provisions for unassisted years.
10. The Company has arrangements with few third parties whereby it
sells clinker to them and purchases Cement manufactured by them out of
such clinker. While the transactions are considered as individual sale
/ purchase transactions for determination of taxable turnover and tax
under VAT laws, considering the accounting treatment prescribed under
various accounting guidance, revenue for sale of such clinker of Rs,
26.29 Crore (Previous year -Rs, 22.84 Crore) has not been recognized as a
part of the Turnover but has been adjusted against cost of purchase of
cement so converted.
(b) Details of Investments made are given in Note 11 & 14.
(c) Guarantee given on behalf of Lucky Minmat Limited, wholly owned
subsidiary company, of Rs, 0.12 Crore (Previous Year -Rs, 0.12 Crore) for
the purpose of renewal of mining lease.
(d) The loanees have not made any investments in the shares of the
11. Pursuant to provisions of Schedule II of the Companies Act, 2013,
becoming applicable to the Company w.e.f. January 1, 2015, the Company
has reviewed and where necessary, revised estimates of useful lives of
fixed assets. Accordingly, Pursuant to the transition provisions
prescribed in Schedule II to the Companies Act, 2013, an additional
charge of Rs, 153.17 Crore, being the carrying amount as of January 1,
2015 of fixed assets with no remaining useful life (as revised) as of
that date, is recognized in the Statement of Profit and Loss for the
year ended December 31, 2015 and disclosed as an exceptional item.
Had this change in the useful life of fixed assets not been made,
depreciation for the year ended December 31, 2015 would have been lower
byRs, 111.61 Crore and the profit after-tax would have been higher byRs,
12. The Company has received approval from the Company Law Board under
Section 2(41) of the Companies Act, 2013 permitting the Company to
continue having 1st January - 31st December as its Financial Year.
13. COMPARATIVE FIGURES
Previous year's figures have been regrouped / reclassified wherever
necessary, to conform to current year's classification.