Notes to Accounts of Keerthi Industries Ltd.

Mar 31, 2024

1.15 Provisions and contingent liabilities

Provisions are recognized when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when 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 are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage of time is recognized as a finance cost.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

1.16 Earnings per share

The Company presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees.

1.17 Foreign Currency transactions

• Functional and Reporting Currency:

The Company''s functional and reporting currency is Indian National Rupee.

• Initial Recognition:

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amounts the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

• Conversion on reporting date:

Foreign currency monetary items are reported using the closing rate. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.

• Exchange Differences:

Exchange difference arising on the settlement of monetary items or on reporting monetary items of Company 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.

1.18 Employee Benefits

• Defined Contribution Plan

Employer''s contribution to Provident Fund/ Employee State Insurance which is in the nature of defined contribution scheme is expensed off when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the fund.

• Defined Benefit Plan

a. Gratuity

Gratuity liability is in the nature of defined benefit obligation. Such liability is provided based on independent actuarial valuation on projected unit credit method made at the end of each financial year as per the requirements of Ind AS 19 “Employee Benefits”. Actuarial gain/ (loss) in the valuation are recognized as other comprehensive income for the period.

b. Compensated absences

Compensated absences which are in the nature of defined benefit obligation are provided for based on estimates of independent actuarial valuation on projected unit credit method made at the end of each financial year as per the requirements of Ind AS 19 “Employee Benefits”.

1.19 Dividends

Annual dividend distribution to the shareholders is recognized as a liability in the period in which the dividend is approved by the shareholders. Any interim dividend paid is recognized on approval by Board of Directors. Dividend payable and corresponding tax on dividend distribution is recognized directly in equity.

1.20 Segment Reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the company''s Chief Operating Decision Maker (“CODM”) to make decisions for which discrete financial information is available. Based on the management approach as defined in Ind AS 108, the CODM evaluates the Company''s performance and

allocates resources based on an analysis of various performance indicators by business segments and geographic segments.

1.21 Exceptional Items

Exceptional items refer to items of income or expense within the statement of profit and loss from ordinary activities which are nonrecurring and are of such size, nature or incidence that their separate disclosure is considered necessary to explain the performance of the Company.

1.22 Recent accounting pronouncements

(i) Adoption of recent accounting pronouncements

The Company applied for the first time these amendments of Ind AS 8 , Ind AS 1 and Ind AS 12 and there is no material impact on financials.

Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31,2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

Note : Dues to MICRO and SMALL Enterprise

The Company has certain dues to suppliers registered under Micro, Small and Medium Enterprises Development Act, 2006 (''MSMED Act''). The disclosures pursuant to the said MSMED Act are as follows:

a) The principal amount remaining unpaid to any supplier at the end of the year

b) Interest due remaining unpaid to any supplier at the end of the year

c) The amount of interest paid by the buyer in terms of section 16 of the MSMED Act, 2006, along with the amount of the payment made to the supplier beyond the appointed day during the year

d) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the MSMED Act, 2006

e) The amount of interest accrued and remaining unpaid at the end of each accounting year

f) The amount of further interest remaining due and payable even in the succeeding years,until such date when the interest dues above are actually paid to the small enterprises, for the purpose of disallowance of a deductible expenditure under section 23 of the MSMED Act, 2006”

Disclosure of payable to vendors as defined under the “Micro, Small and Medium Enterprise Development Act, 2006” is based on the information available with the Company regarding the status of registration of such vendors under the said Act, as per the intimation received from them on requests made by the Company. There are no overdue principal amounts / interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly there is no interest paid or outstanding interest in this regard in respect of payment made during the year or on balance brought forward from previous year.

(ii) A.P General Sales Tax liability of Rs. 18.77 lakhs (Upto 31.03.2023 - Rs. 18.77 lakhs) on packing materials purchased during the accounting years 1990-91 and 1991-92 as the Company preferred appeals before Appellate Authorities and the same are pending.

(iii) In the year 2007-08, A.P Commercial Tax Department had revised the CST Assessment for the year 2000-2001 and demanded Rs. 39.25 lakhs. The company got stayed the demand through an order of Hon''ble High Court of A.P and the department had collected Rs. 19.09 lakhs around 50% of the demand which is grouped under Other Non-Current assets. On Company''s Appeal to the Sales Tax Appellate Tribunal, the Tribunal has set aside the demand and remanded the matter to assessing authorities. No provision is made in the accounts for the disputed tax of Rs. 39.25 lakhs.

(iv) Karnataka Sales Tax demand of Rs. 6.20 lakhs (Upto 31.03.2023 - Rs. 6.20 lakhs,) for the accounting year 1993-94 as the company preferred an appeal in the Hon''ble High Court of Karnataka.

(v) a) Voltage surcharge: In the year 2003-04, Central Power Distribution Company of A.P Ltd. had levied Voltage Surcharge of Rs. 130.29 lakhs for getting the energy through general lines over and above the contracted load instead of dedicated lines. As getting the energy through dedicated line is not within the control of the company, the company challenged the levy before Hon''ble High Court of Andhra Pradesh and the High Court was pleased to pass an order staying the collection of the said levy. However, the Company has paid Rs. 72.06 lakhs (31.03.2023 - Rs. 72.06 lakhs) under protest and shown under Other Non current assets and the said amount was not provided for in the books. The appeal is pending.

b) Fuel Surcharge Adjustment (FSA): FSA for the period from April 2008 to June 2010 amounting to Rs. 248.75 lakhs which were stayed by the Hon''ble High Court of judicature at Hyderabad for the states of Telangana and Andhra Pradesh, was not accounted.

(vi) Commercial tax department, Government of Telangana has issued demand notice for the payment of entry tax Rs.46.89 lakhs pertaining to financial year 2012-13 to 2017-18. Company has filed appals before the Appellate Deputy Commissioner (CT), Hyderabad Rural Division by paying 35% of the disputed tax. As the appeals are dismissed by the Appellate Deputy Commissinoner(CT), Company filed writ petitions before Hon''ble Court of Telangana and Hon''ble Court of Telengana has given stay orders.

(v) Commercial tax department, Government of Telangana has issued a demand notice of Rs. 1445.68 Lakhs towards interest on the delayed repayment of sales tax deferment loan by applying amended Rule 67 of Telangana Value Added Tax Rules. Aggrieved by the order the Company has challenged the demand before Hon''ble High Court of Telangana and the Hon''ble High Court was pleased to pass an order staying the collection of the said levy. Accordingly, no provision is made in these financial statements as of March 31,2024.

32.2 Capital Commitments

Estimated amount of contracts to be executed on capital account - Rs.4.72 Lakhs (Net of advances)

32.3 The National Savings Certificate VIII issue (shown under non- current investments) has been pledged with Sales Tax Department towards Sales Tax Deposit by Electronics Division.

33. Capital Management

The company''s capital management is intended to create value for shareholders by facilitating the meeting of long-term and short-term goals of the company. The objective of the Company''s capital management policy is also to ensure availability of funds at competitive cost for its operational and developmental needs and maintain strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value

The company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity and other long-term/short term borrowings

The company''s policy is aimed at combination of short term and long-term borrowings. The company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the company.

39. Financial Instruments

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into level 1 to level 3 as described below.

Level 1 - Quoted prices in an active market:

This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of mutual fund investments.

Level 2 - Valuation techniques with observable inputs:

This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3 - Valuation techniques with significant unobservable inputs:

This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The Company has transactional currency exposures arising from goods supplied or received that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company''s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The following table demonstrates the sensitivity in the USD to the Indian Rupee with all other variables held constant. The impact on the company''s profit before tax due to changes in the fair value of monetary assets and liabilities is given below:

40. Financial Risk Management Objectives and Policies

The cpmpany is exposed to financial risks arising from its operations and the use of financial investments. The key financial risks include interest rate risk, market risk, credit risk and liquidity risk. The company has risk mamangement policy which not only covers the foreign exchange risks, but also risks associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management framework aims to:

1. Create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the company''s business plan.

2. Achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

The following sections provide the details regarding the Company''s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives policies and processes for the management of these risks.

(i) Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk, currency rate risk, interest rate risk and other price risks such as equity risk. Financial instruments affected by market risk include investments in mutual funds.

a. Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company''s financial instruments will fluctuate because of changes in market interest rates. Since the Company has only fixed interest-bearing debts, exposure to interest rate risk is minimal.

b. Foreign Currency Risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

b. Foreign Currency Risk

Other price risk is the risk that the fair value or future cash flows of the Company''s financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

The Company is exposed to price risk arising mainly from investments in Mutual Funds recognized at FVTPL.

(ii) Credit Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises from its operation activity primarily from trade receivable and from its financial activity. Customer credit risk is controlled by analysis of credit limit and credit worthiness of the customer on a continuous basis to whom the credit has been granted.

Long outstanding receivable from customer are regularly monitored. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivable.

(iii) Liquidity Risk:

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The company ensures that it has sufficient cash on demand to meet expected operational demands including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted

Note :

i) Decrease in debt service coverage ratio is due to decrease in earning available for debt service in the current year.

ii) Net Capital Turnover ratio has increased due to decrease in working capital on account of decrease in current liabilities.

iii) Decrease in return on equity ratio, net profit ratio and return on capital employed ratio is on account of decrease in profitability due to decrease in revenue and increase in input costs during the current financial year

iv) Decrease in Current Ratio is due to decrease in current assets & increase in current liability in the current year

v) Decrease in Debt Service Coverage Ratio is due to decrease in profitability & increase in repayment of borrowings.

vi) Trade Payables turn ratio has decrease due to increase trade payables during the year.

vii) . Return on investment is increased due to income from Mutual Fund.

43. Additional information

(i) The Company do not have any Benami property and neither any proceedings have been initiated or is pending against the Company for holding any Benami property.

(ii) The Company do not have any transactions with companies struck off.

(iii) As at March 31, 2024, the register of charges of the Company as available in records of the Ministry of Corporate Affairs (MCA) includes charges that were created/modified since the inception of the Company. There are certain charges which are historic in nature and it involves practical challenges in obtaining noobjection certificates (NOCs) from the charge holders of such charges, despite repayment of the underlying loans. The Company is in the continuous process of filing the charge satisfaction e-form with MCA, within the timelines, as and when it receives NOCs from the respective charge holders.

(iv) The Company has not been declared a wilful defaulter by any bank or financial institution or any other lender during the current period.

(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(vii) The loan has been utilised for the purpose for which it was obtained and no short term funds have been used for long term purpose.

(viii) The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017.

(ix) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year

(x) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

44. Previous Year''s figures have been reclassified, wherever necessary so as to conform with those of Current Year.

As per our report of even date For and on behalf of Board Directors

for Brahmayya & CO.

Chartered Accountants Firms'' Registration No.: 000513S

Sd/- Sd/- Sd/-

K.Shravan (J.Triveni) (J.S.Rao)

Partner Executive Chairperson Managing Direcor

Membership No. 215798 DIN:00029107 DIN:00029090

Place: Hyderabad Sd/- Sd/-

Date: 25.05.2024 (Y.Sadasivarao) (Ashdeep Kaur)

Chief Financial Officer Company Secretary

---

Mar 31, 2023

1.15 Provisions and contingent liabilities

Provisions are recognized when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when 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 are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage of time is recognized as a finance cost.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

1.16 Earnings per share

The Company presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees.

1.17 Foreign Currency transactions

v Functional and Reporting Currency:

The Company’s functional and reporting currency is Indian National Rupee.. v Initial Recognition:

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amounts the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

v Conversion on reporting date:

Foreign currency monetary items are reported using the closing rate. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. v Exchange Differences:

Exchange difference arising on the settlement of monetary items or on reporting monetary items of Company 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.

1.18 Employee Benefits

v Defined Contribution Plan

Employer’s contribution to Provident Fund/ Employee State Insurance which is in the nature of defined contribution scheme is expensed off when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the fund. v Defined Benefit Plan

a. Gratuity

Gratuity liability is in the nature of defined benefit obligation. Such liability is provided based on independent actuarial valuation on projected unit credit method made at the end of each financial year as per the requirements of Ind AS 19 “Employee Benefits”. Actuarial gain/ (loss) in the valuation are recognized as other comprehensive income for the period.

b. Compensated absences

Compensated absences which are in the nature of defined benefit obligation are provided for based on estimates of independent actuarial valuation on projected unit credit method made at the end of each financial year as per the requirements of Ind AS 19 “Employee Benefits”.

1.19 Dividends

Annual dividend distribution to the shareholders is recognized as a liability in the period in which the dividend is approved by the shareholders. Any interim dividend paid is recognized on approval by Board of Directors. Dividend payable and corresponding tax on dividend distribution is recognized directly in equity.

1.20 Segment Reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the company’s Chief Operating Decision Maker (“CODM”) to make decisions for which discrete financial information is available. Based on the management approach as defined in Ind AS 108, the CODM evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by business segments and geographic segments.

1.21 Exceptional Items

Exceptional items refer to items of income or expense within the statement of profit and loss from ordinary activities which are nonrecurring and are of such size, nature or incidence that their separate disclosure is considered necessary to explain the performance of the Company.

1.22 Recent accounting pronouncements

(a) Adoption of recent accounting pronouncements

Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:

i) Ind AS 1 - Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the financial statements.

ii) Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ‘accounting estimates’ and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its financial statements.

iii) Ind AS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its financial statement.

Details of Security:

(i) Cash Credit from Axis Bank sanctioned limit of Rs.10.00 crores, is secured by way of hypothecation of work-inprocess, finished goods, raw materials, stores and spares, receivables both present and future and also by a second charge on the immovable properties and other fixed assets of the company. Further working capital loans are guaranteed by two of the directors of the Company individually.

(ii) Working capital facility with Axis Bank obtained for Cement Division is secured against all the chargeable current assets of the Company including raw materials, stock in progress, finished goods, stores and spares and receivables both present and future. To comply with the provisions of loan arrangement, select information relating to trade receivables, inventories, and creditors for purchases are considered relevant. The differences as reported above is mainly attributed to use of information extracted from books prior to book closures. Management has taken necessary steps to minimise such differences by way of seeking extension for submission of information only after formal book closures for the relevant periods.

Note : Dues to MICRO and SMALL Enterprises

The Company has certain dues to suppliers registered under Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’). The disclosures pursuant to the said MSMED Act are as follows:

a) The principal amount remaining unpaid to any supplier at the end of the year - -

b) Interest due remaining unpaid to any supplier at the end of the year - -

c) The amount of interest paid by the buyer in terms of section 16 of the - -

MSMED Act, 2006, along with the amount of the payment made to the

supplier beyond the appointed day during the year

d) The amount of interest due and payable for the period of delay in making - -

payment (which have been paid but beyond the appointed day during the

year) but without adding the interest specified under the MSMED Act, 2006

e) The amount of interest accrued and remaining unpaid at the end of each - -

accounting year

f) The amount of further interest remaining due and payable even in the - -

succeeding years,until such date when the interest dues above are actually

paid to the small enterprises, for the purpose of disallowance of a deductible expenditure under section 23 of the MsMeD Act, 2006”

(ii) A.P. General Sales Tax liability of Rs. 18.77 lakhs (Upto 31.03.2022 - Rs. 18.77 lakhs) on packing materials purchased during the accounting years 1990-91 and 1991-92 as the Company preferred appeals before Appellate Authorities and the same are pending.

(iii) In the year 2007-08, A.P. Commercial Tax Department had revised the CST Assessment for the year 20002001 and demanded Rs. 39.25 lakhs. The company got stayed the demand through an order of Hon’ble High Court of A.P. and the department had collected Rs. 19.09 lakhs around 50% of the demand which is grouped under Other Non-Current assets. On Company’s Appeal to the Sales Tax Appellate Tribunal, the Tribunal has set aside the demand and remanded the matter to assessing authorities. No provision is made in the accounts for the disputed tax of Rs. 39.25 lakhs.

(iv) Karnataka Sales Tax demand of Rs. 6.20 lakhs (Upto 31.03.2022 - Rs. 6.20 lakhs,) for the accounting year 1993-94 as the company preferred an appeal in the Hon’ble High Court of Karnataka.

(v) a) Voltage surcharge: In the year 2003-04, Central Power Distribution Company of A.P. Ltd. had levied

Voltage Surcharge of Rs. 130.29 lakhs for getting the energy through general lines over and above the contracted load instead of dedicated lines. As getting the energy through dedicated line is not within the control of the company, the company challenged the levy before Hon’ble High Court of Andhra Pradesh and the High Court was pleased to pass an order staying the collection of the said levy. However, the Company has paid Rs. 72.06 lakhs (31.03.2022 - Rs. 72.06 lakhs) under protest and shown under Other Non current assets and the said amount was not provided for in the books. The appeal is pending.

b) Fuel Surcharge Adjustment (FSA): FSA for the period from April 2008 to June 2010 amounting to Rs. 248.75 lakhs which were stayed by the Hon’ble High Court of judicature at Hyderabad for the states of Telangana and Andhra Pradesh, was not accounted.

(vi) Commercial tax department, Government of Telangana has issued demand notice for the payment of entry tax Rs.46.89 lakhs pertaining to financial year 2012-13 to 2017-18. Company has filed appeals before the Appellate Deputy Commissioner (CT), Hyderabad Rural Division by paying 35% of the disputed tax. As the appeals are dismissed by the Appellate Deputy Commissinoner (CT), Company filed writ petitions before Hon’ble Court of Telangana and Hon’ble Court of Telengana has given stay orders.

33.2 Capital Commitments

Estimated amount of contracts to be executed on capital account - Rs.922.85 Lakhs (Net of advances).

33.3 The National Savings Certificate VIII issue (shown under non- current investments) has been pledged with Sales Tax Department towards Sales Tax Deposit by Electronics Division.

34. Capital Management

The company’s capital management is intended to create value for shareholders by facilitating the meeting of longterm and short-term goals of the company. The objective of the Company’s capital management policy is also to ensure availability of funds at competitive cost for its operational and developmental needs and maintain strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value The company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity and other long-term/short term borrowings.

The company’s policy is aimed at combination of short term and long-term borrowings. The company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the company.

The following table summarises debt to equity ratio:

41. Financial Risk Management Objectives and Policies

The company is exposed to financial risks arising from its operations and the use of financial investments. The key financial risks include interest rate risk, market risk, credit risk and liquidity risk. The company has risk management policy which not only covers the foreign exchange risks, but also risks associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management framework aims to:

1. Create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the company’s business plan.

2. Achieve greater predictability to earnings by determining the financial value of the expected earnings in advance. The following sections provide the details regarding the Company’s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives policies and processes for the management of these risks.

(i) Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk, currency rate risk, interest rate risk and other price risks such as equity risk. Financial instruments affected by market risk include investments in mutual funds.

a. Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company’s financial instruments will fluctuate because of changes in market interest rates. Since the Company has only fixed interest-bearing debts, exposure to interest rate risk is minimal.

b. Foreign Currency Risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from goods supplied or received that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company’s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

c. Other price risk

Other price risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

The Company is exposed to price risk arising mainly from investments in Mutual Funds recognized at FVTPL.

(ii) Credit Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises from its operation activity primarily from trade receivable and from its financial activity. Customer credit risk is controlled by analysis of credit limit and credit worthiness of the customer on a continuous basis to whom the credit has been granted.

Long outstanding receivable from customer are regularly monitored. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivable.

(iii) Liquidity Risk:

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The company ensures that it has sufficient cash on demand to meet expected operational demands including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

Maturity profile of Financial liabilities

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:

Notes

i) Increase in debt-equity ratio is due to availment of term loans from Axis Bank for Capital Projects (VRM Project) during the current year.

ii) Decrease in debt service coverage ratio is due to decrease in earning available for debt service in the current year.

iii) Net Capital Turnover ratio has increased due to decrease in working capital on account of increase in current liabilities.

iv) Decrease in return on equity ratio, net profit ratio and return on capital employed ratio is on account of decrease in profitability due to decrease in revenue and increase in input costs during the current financial year.

44. Additional information

(i) The Company do not have any Benami property and neither any proceedings have been initiated or is pending against the Company for holding any Benami property.

(ii) The Company do not have any transactions with companies struck off.

(iii) As at March 31, 2023, the register of charges of the Company as available in records of the Ministry of Corporate Affairs (MCA) includes charges that were created/modified since the inception of the Company. There are certain charges which are historic in nature and it involves practical challenges in obtaining noobjection certificates (NOCs) from the charge holders of such charges, despite repayment of the underlying loans. The Company is in the continuous process of filing the charge satisfaction e-form with MCA, within the timelines, as and when it receives NOCs from the respective charge holders.

(iv) The Company has not been declared a wilful defaulter by any bank or financial institution or any other lender during the current period.

(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) The loan has been utilised for the purpose for which it was obtained and no short term funds have been used for long term purpose.

(viii) The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017.

(ix) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year

(x) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961)..

45. Previous Year’s figures have been reclassified, wherever necessary so as to conform with those of Current Year.

As per our report of even date For and on behalf of Board of Directors

for Brahmayya & Co.

Chartered Accountants Sd/- Sd/-

Firms’ Registration No. 000513S (J.Triveni) (J.S.Rao)

Executive Chairperson Managing Director

Sd/- (DIN:00029107) (DIN:00029090)

K. Shravan Partner

Membership No. 215798

Sd/- Sd/-

Place: Hyderabad (Y. Sadasiva Rao) (Arun Kumar Yadav)

Date: 30.05.2023 Chief Financial Officer Company Secretary

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Mar 31, 2018

CORPORATE INFORMATION

Keerthi Industries Limited (the ‘company’) is a public limited company domiciled and incorporated in India under the Companies Act, 1956. The registered office of the company is located at Mallacheruvu Village & Mandal, Nalgonda district, Telangana - 508246.

The company is engaged in the business of manufacturing, selling and distribution of Cement under the brand name “SUVARNA”. The company also manufactures printed circuit boards and engaged in the generation of wind power.

A. Terms/ rights attached to equity shares

(i) The company has only one class of equity shares having a face value of Rs. 10 per share.

(ii) Each holder of equity share is entitled to one vote per share.

(iii) The dividends recommended by the Board of Directors if any, are subject to the approval of the shareholders in the ensuing Annual General Meeting.

(iv) In the event of liquidation of the Company, the equity share holders are entitled to receive the remaining assets of the Company after distribution of all preferential claims, in proportion to the number of shares held.

A. Secured:

(i) Cash Credit from Axis Bank sanctioned limit of Rs. 700 lakhs, is secured by way of hypothecation of work-in-process, finished goods, raw materials, stores and spares, receivables both present and future and also by a second charge on the immovable properties and other fixed assets of the company.Further working capital loans are guaranteed by two of the directors of company individually and equitable motgage against the residential property of a director of Company.

(ii) Overdraft from State Bank of India was secured by Fixed Deposit Receipt of Rs. 156.81 lakhs

B. Unsecured:

Loan from Directors and Inter corporate deposits carry an interest of 10% per annum and is repayable on demand.

1.1. a) Contingent Liabilities not provided for in respect of:

(ii) A.P. General Sales Tax liability of Rs. 18.77 lakhs (Upto 31.03.2017 - Rs. 18.77 lakhs, Upto 31.03.2016 - Rs. 18.77 lakhs) on packing materials purchased during the accounting years 1990-91 and 1991-92 as the Company preferred appeals before Appellate Authorities and the same are pending.

(iii) In the year 2007-08, A.P. Commercial Tax Department had revised the CST Assessment for the year 2000-2001 and demanded Rs. 39.25 lakhs. The company got stayed the demand through an order of Hon’ble High Court of A.P. and the department had collected Rs19.09 lakhs around 50% of the demand which is grouped under Other Non-Current assets. On Company’s Appeal to the Sales Tax Appellate Tribunal, the Tribunal has set aside the demand and remanded the matter to assessing authorities. No provision is made in the accounts for the disputed tax of Rs. 39.25 lakhs.

(iv) Karnataka Sales Tax demand of Rs. 6.20 lakhs (Upto 31.03.2017 - Rs. 6.20 lakhs, upto 31.03.2016 - Rs. 6.20 lakhs) for the accounting year 1993-94 as the company preferred an appeal in the Hon’ble High Court of Karnataka.

(v) Demand from Central Excise Authorities for Rs. 95.01 lakhs together with penalty of Rs. 95.01 lakhs (31.03.2017 - Rs. 190.02 lakhs, 31.03.2016 - Rs. 190.02 lakhs) against alleged ineligible Cenvat Credit on Capital items by Cement Division, as the Company’s legal counsel opined that the demand is not sustainable and the company has gone an appeal before CESAT, Bangalore on depositing Rs. 20 lakhs (31.03.2017 - Rs. 20 lakhs, 31.03.2016 - Rs. 20 lakhs) as predeposit to hear the case by CESTAT.

(vi) a) Voltage surcharge: In the year 2003-04, Central Power Distribution Company of A.P. Ltd. had levied Voltage Surcharge of Rs. 130.29 lakhs for getting the energy through general lines over and above the contracted load instead of dedicated lines. As getting the energy through dedicated line is not within the control of the company, the company challenged the levy before Hon’ble High Court of Andhra Pradesh and the High Court was pleased to pass an order staying the collection of the said levy. However, the Company has paid Rs. 72.06 lakhs (31.03.2017 - Rs. 72.06 lakhs, 31.03.2016 - Rs. 72.06 lakhs) under protest and shown under Other Non current assets and the said amount was not provided for in the books. The appeal is pending.

b) Fuel Surcharge Adjustment (FSA): FSA for the period from April 2008 to June 2010 amounting to Rs. 248.75 lakhs which were stayed by the Hon’ble High Court of judicature at Hyderabad for the states of Telangana and Andhra Pradesh was not accounted.

(vii) Commercial tax department, Government of Telangana has issued demand notice for the payment of entry tax Rs.40.13 lakhs pertaining to financial year 2012-13 to 2016-17. Company has filed an appeal before the appellate Deputy Commissioner (CT), Hyderabad Rural Division by paying 12.5% of the disputed tax.

(viii) Estimated amount of contracts to be executed on capital account - 45.62 (Net of advances)

1.2. Upfront lease amount of Rs. 18 lakhs paid to Karnataka Forest Dept. towards Wind mill land lease is amortized over the lease period of 30 years. Accordingly, Rs. 0.60 lakhs for the current year is amortized (upto previous year - Rs. 6.00 lakhs). Unamortised amount as on each balance sheet date is shown under Other non current assets as “Prepaid Lease rent”.

1.3. The Company could not obtain confirmation of balances as at 31^st March 2018 in respect of Loans and advances Rs. 2657.38 lakhs and the Company hopes that they would be collected, adjusted and paid.

1.4. The National Savings Certificate VIII issue (shown under non- current investments) has been pledged with Sales Tax Department towards Sales Tax Deposit by Electronics Division.

1.5. Disclosures in accordance with Companies (India Accounting Standards) Rules, 2015 notified by the Central Government:

1.5.1. Capital Management

The company’s capital management is intended to create value for shareholders by facilitating the meeting of long-term and short-term goals of the company.

The company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity and other long-term/short term borrowings.

The company’s policy is aimed at combination of short term and long-term borrowings. The company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the company.

1.5.2. Financial Instruments

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into level 1 to level 3 as described below.

Level 1 - Quoted prices in an active market:

This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of mutual fund investments.

Level 2 - Valuation techniques with observable inputs:

This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3 - Valuation techniques with significant unobservable inputs:

This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

1.5.3. Financial Risk Management Objectives and Policies

The company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, market risk, credit risk and liquidity risk. The company has a risk management policy which not only covers the foreign exchange risks, but also other risks associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management framework aims to:

1. Create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the company’s business plan.

2. Achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

The following sections provide the details regarding the Company’s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives policies and processes for the management of these risks.

(i) Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk, currency rate risk, interest rate risk and other price risks such as equity risk. Financial instruments affected by market risk include investments in mutual funds.

a. Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company’s financial instruments will fluctuate because of changes in market interest rates. Since the Company has only fixed interest-bearing debts, exposure to interest rate risk is minimal.

b. Foreign Currency Risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from goods supplied or received that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company’s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The following table demonstrates the sensitivity in the USD to the Indian Rupee with all other variables held constant. The impact on the company’s profit before tax due to changes in the fair value of monetary assets and liabilities is given below:

c. Other price risk

Other price risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

The Company is exposed to price risk arising mainly from investments in Mutual Funds recognized at FVTPL.

(ii) Credit Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises from its operation activity primarily from trade receivable and from its financial activity. Customer credit risk is controlled by analysis of credit limit and credit worthiness of the customer on a continuous basis to whom the credit has been granted.

Long outstanding receivable from customer are regularly monitored. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivable.

(iii) Liquidity Risk:

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The company ensures that it has sufficient cash on demand to meet expected operational demands including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:

(c) Information about major customers

Revenue from transactions with a single customer exceed 10% or more of entity revenues in case of 6 customers in Cement Division and 1 customers in Electronics Division.

1.5.4. Dues to Micro, Small and Medium Enterprises

On the basis of details furnished by the suppliers, there are no amounts to be reported as dues to micro, small and medium enterprises as required under section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (‘‘MSMED Act’).

1.5.5. Previous Year’s figures have been reclassified, wherever necessary so as to conform with those of Current Year.

1.5.6. FIRST TIME ADOPTION OF IND AS

For all periods, up to and including the year ended 31st March 2017 the company has prepared its financial statements in accordance with generally accepted accounting principles and accounting standards notified under section 133 of the Companies Act 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014 (“Previous GAAP”).

These financial statements for the year ended 31st March 2018 are the company’s first annual Ind AS complied financial statements.

The company has prepared financial statements which comply with Ind AS applicable for period beginning on or after 01st April 2016 (transition date) as described in the accounting policies. This note explains the principal adjustment made by the company in restating its Balance Sheets as at 01st April 2016 & 31st March 2017 and Statement of Profit & Loss for the year ended 31st March 2017.

A. Optional Exemptions from retrospective application

Ind AS 101 permits first-time adopters certain exemptions from retrospective application of certain requirements under Ind AS. The Company has elected to apply the following optional exemptions from retrospective application:

(i) Business Combinations:

Ind AS 101 provides the option to apply Ind AS 103 - Business Combinations prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Hence, Business combinations occurring prior to the transition date have not been restated.

(ii) Deemed cost for property, plant & equipment and Intangible asset:

The Company has elected to continue with the Previous GAAP carrying value for all its property, plant and equipment and intangible assets and use that as deemed cost on the date of transition to Ind AS.

B. Mandatory Exceptions from retrospective application

The Company has applied the following exceptions to the retrospective application of Ind AS as mandatorily required under Ind AS 101:

(i) Estimates:

On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.

(ii) Classification and measurement of financial assets:

The classification of financial assets to be measured at amortized cost or fair value through Profit and loss or fair value through other comprehensive income is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.

(iii) Government loans:

The requirements of Ind AS 20 - Accounting for Government Grants and Disclosure of Government Assistance and Ind AS 109 - Financial Instruments in respect of interest free loans from government authorities is opted to be applied prospectively to government loans existing at the date of transition to Ind AS. Consequently, the carrying amount of such interest free loans as per the financial statements of the Company prepared under Previous GAAP is continued as carrying amount in the opening Ind AS Balance Sheet.

C. Transition to Ind AS - Reconciliations

The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:

I. Reconciliation of Equity as at 1st April 2016

II. A. Reconciliation of Equity as at 31st March 2017

B. Reconciliation of Statement of Profit and Loss for the year ended 31st March 2017

III. Adjustments to Statement of Cash Flows for the year ended 31st March 2017

Previous GAAP figures have been reclassified/regrouped wherever necessary to conform with financial statements prepared under Ind AS.

Notes to reconciliation of financial statements as previously reported under Previous GAAP to Ind AS

1. Lease hold land:

Under Previous GAAP leasehold lands were recognized as assets under PPE. As per Ind AS 17, the company has treated leasehold lands as operating leases and premium paid is considered as pre-paid lease rentals. Thereafter, amortization of prepaid lease rentals is charged to Profit and loss.

2. Borrowing cost (Upfront fees):

Under the previous GAAP, the transactions costs relating to origination of term loans raised specifically for acquisition of items of Property, Plant & Equipment were capitalized.

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the proceeds of borrowings on initial recognition. These costs are treated as part of the interest expense by applying the effective interest method.

Hence upfront fees capitalized under Previous GAAP is reversed and reduced from term loan (financial liability). Interest (calculated using effective interest method) upto date of addition is capitalized and after the date of addition, it is charged to Profit and loss account as part of finance cost.

3. Fair valuation of financial liability (sales tax deferment):

Under previous GAAP, the sales tax deferral incentive, which is sales tax collected and repayable after a fixed tenure was recognized at cost. Under Ind AS, sales tax deferment is a financial liability classified as subsequently measured at amortized cost. Hence it is to be measured at fair value and the difference between transaction value and fair value is to be recognized as Government grant. The Company has availed mandatory exception under Ind AS 101 and accordingly, there is no change in accounting treatment on the amount carried forward on the date of transition.

After transition date, the difference between transaction value and fair value has been recognized as Government grant in Balance Sheet. The Government grant has been recognized in the Statement of Profit and Loss on a straight-line basis over the period of grant and unwinding of interest on fair value of sales tax deferment liability has been recognized as finance cost.

4. Preference Shares:

Under Previous GAAP, Preference share capital is treated as part of Share Capital and dividend on redeemable preference shares were adjusted to Reserves when the dividend is declared and paid

As per Ind AS, cumulative redeemable preference shares meet the definition of financial liability. Hence it is reclassified as financial liability (borrowings) and accumulated dividend (including Dividend Distribution Tax - DDT) upto the date of transition to Ind AS is provided for and adjusted to retained earnings. After the date of transition, dividend (including DDT) for the year is recognized as a part of finance cost.

5. Excise duty:

Under the previous GAAP, revenue from sale of products was presented net of excise duty. Excise duty is collected by the company on its own account and hence as per Ind AS, revenue from sale of goods is presented inclusive of excise duty. There is no impact on the total equity and profit.

6. Remeasurement of Defined Benefit Plans:

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss.

Under the previous GAAP, these remeasurements were forming part of the Statement of Profit and Loss for the year. There is no impact on the total equity.

7. Deferred tax

Deferred tax is created on all the temporary differences arising on adjustments arising on adoption of Ind AS.

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Mar 31, 2016

In the event of liquidation of the Company, the equity share holders are entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of shares held. The rights attached to the Equity shareholders are subject to the provisions of Companies Act,1956 and other applicable laws

e. Terms/ rights attached to 9% cumulative redeemable preference shares

Preference shares would not carry any voting rights. Dividends recommended by the Board of Directors for not exceeding the coupon rate, if any, are subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the preferential share holders will have preferential right over the Equity share holders for their principal amount and the dividend, if any, declared thereon on remaining assets of the Company after distribution to the secured and the preferential creditors. The rights attached to the 9% Cumulative Redeemable Preferential shareholders are subject to the provisions of Companies Act,1956 and other applicable laws

* These shares were issued by the Company to preference shareholders of Hyderabad Fletch Limited ( amalgamating Company) on amalgamation, redeemable on the same terms on which these were issued initially by Hyderabad Flextech Limited.

* Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II. Accordingly the unamortized carrying value is being depreciated/ amortized over the revised/remaining useful lives. The written down value of Fixed Assets whose lives have expired as at 1st April 2014 have been adjusted net of tax, in the opening balance of Profit and Loss Account amounting to ''107.75 lakhs

A. All the installments falling due within 12 months from the date of Balance Sheet have been classified as current maturities, the aggregate amounts are shown under ''Other Current Liabilities''.

B. The term loans from Canara bank, Andhra Bank and Indian Bank are secured by: (a) First charge on the fixed assets of the Company, (b) Second Charge on Current Assets of the Company and ( c ) Pledge of equity shares of the company held by the promoters equivalent to 30% of the equity shares of the company. The said charges and the pledge are on pari passu basis. Term Loan from Canra Bank for power project is exclusively secured by way hypothecation of power project machinery and equipment.

C. All the term loans obtained from the banks are guaranteed by two of the directors of the Company in their individual capacities.

D. The term loans from Banks which are restructured are repayable in 30 equal quarterly instilments effective December 2014,Working Capital term loan from Canara Bank are repayable in 36 Monthly installments and effective October 2014,Funded interest term loans from Banks are repayable in 30 Monthly installments and effective April 2014. Canara Bank has sanctioned term loan of Rs,1800 lakhs with a sublimit of Foreign Letter of Credit (F.L.C.) Equivalent to Rs,1065 lakhs, disbursed an amount Rs,617.37 lakhs up to 31st March, 2016. During the year Company has imported plant and machinery for power project on suppliers credit of Rs,1044 lakhs backed by F.L.C. . As and when the suppliers credit is discharged by the Bank, the same will be transferred to term loan account. Other terms of repayment of term loans are given below:

E. Sales Tax Deferment(Cement Division): Consequent to the introduction of VAT from 01.04.2005, the Tax Holiday, being the sales tax incentive, against expanded capacity, had been converted into Deferment and the Company got entitlement to defer tax collections up to Rs,1590.43 lakhs over a period of ten years effective 01.04.2005 and repayable after fourteen years from the end of the relevant financial year. Due dates for repayment are given below.

However the Hon''ble High court of A.P. has granted interim stay against the order of Deputy Commissioner, Commercial Taxes, Nalgonda._ ,

a. Secured: (i) Cash Credit from Canara Bank sanctioned limit of Rs,4.80 crores, is secured by way of hypothecation of work-in-process, finished goods, raw materials, stores and spares, receivables both present and future and also by a second charge on the immovable properties and other fixed assets of the company. Further, working capital loans are guaranteed by two of the directors of company individually and by the corporate guarantee of M/s Hyderabad Bottling Company Limited. and equitable motgage against the residential property of a director of Company. (ii) Overdraft from State Bank of India was secured by Fixed Deposit Receipt of Rs,1.24 crore. (iii) Suplier credit power project is backed by Foreign Letter of Credit issued by Canara Bank. As and when payments made by Canra Bank to supplier, the same will be converted in to term loan.

b. Unsecured: Loan from Directors and Inter corporate deposits carry an interest of 10% per annum and is repayable on demand.

ii) A.P. General Sales Tax liability of Rs,18.77 lakhs( up to Previous year Rs,18.77 lakhs) on packing materials purchased during the accounting years 1990-91 and 1991-92 as the Company preferred appeals before Appellate Authorities and the same are pending

iii) In the year 2007-08 A P Commercial Tax Department had revised the CST Assessment for the year 2000-2001 and demanded Rs,39.25 lakhs. The company got stayed the demand through an order of Hon''ble High Court of A.P. and the department had collected Rs,19.09 lakhs around 50% of the demand which is grouped under long term loans and advances. As the matter is pending in appeal before the A P Sales Tax Appellate Tribunal, no provision is made in the accounts for the disputed tax of Rs,39.25 lakhs.

iv) Karnataka Sales Tax demand of Rs,6.20 lakhs (up to Previous year Rs,6.20 lakhs) for the accounting year 1993-94 as the company preferred an appeal in the Hon''ble High Court of Karnataka.

v) Demand from Central Excise Authorities for Rs,95.01 lakhs together with penalty of Rs,95.01 lakhs (Previous year Rs,190.02 lakhs) against alleged ineligible Cenvat Credit on Capital items by Cement Division, as the Company''s legal counsel opined that the demand is not sustainable and the company has gone an appeal before CESAT, Bangalore on depositing Rs,20 lakhs (Previous year Rs,20 lakhs) as redeposit to hear the case by CESTAT.

vi) a) Voltage surcharge: In the year 2003-04, Central Power Distribution Company of A.P. Ltd. had levied Voltage Surcharge of Rs,130.29 lakhs for getting the energy through general lines over and above the contracted load instead of through dedicated lines. As getting the energy through specified line is not within the control of the company, the company challenged the levy before Hon''ble High Court of Andhra Pradesh and the High Court was pleased to grant staying the collection of the said levy. However the Company has paid Rs,72.06 lakhs (previous year Rs,72.06 lakhs) under protest and shown under Long term loans and advances and the said amount was not provided for in the books. The appeal is pending.

b) Fuel Surcharge Adjustment (FSA) :

FSA for the period from April 2008 to June 2010 amounting to Rs,248.75 lakhs which were stayed by the Hon''ble High Court of judicature at Hyderabad for the states of Telangana and Andhra Pradesh was not accounted.

b) i) Estimated amount of contracts to be executed on capital account Rs,415.47 lakhs (Net of advances)

ii) Arrears of fixed Cumulative Dividends-9% cumulative dividend for the current year is i

Rs,79.96 lakhs (for previous year Rs,79.96 lakhs) (up to Previous year Rs,1058.26 lakhs ).

1. Note on Incentives:

During the year under report Cement Division of the company has received an amount of Rs,109.49 lakhs and Rs,53.07 lakhs amounting to Rs,162.56 lakhs as reimbursement of power cost and sales tax for the years 2012-13& 2013-14 as part of incentives extended by the government of Telangana. These reimbursements were released subject to certain conditions, interalia, the unit should not go out of production within six years from the date of commencement of expanded production capacity. These incentives were shown as exceptional item in Statement of Profit & loss.

2. Upfront lease amount of Rs,18 lakhs paid to Karnataka Forest Dept. towards Wind mill land lease is amortized over the lease period of 30 years. Accordingly Rs,0.60 lakhs for the current year is amortized (up to Previous year Rs,4.80 lakhs).

3. The Company could not obtain confirmation of balances as at 31st March 2016 in respect of trade receivables Rs,223.21 lakhs, Loans and advances Rs, 3022.87 lakhs and Trade payables amounting to Rs,892.23 lakhs ,and the Company hopes that they would be collected, adjusted and paid.

4. The National Savings Certificate VIII issue (shown under investments) has been pledged with Sales Tax Department towards Sales Tax Deposit.

c) The value of consumption of imported and indigenously obtained raw materials, stores and spare parts and the percentage of each to the total consumption:

Disclosures in accordance with Accounting Standards Rules, 2006 notified by the Central Government:

5. Defined Benefit Scheme in accordance with AS-15 "Employee Benefits". As per actuarial valuation as on 31.03.2016 and recognized in financial statements in respect of employee defined benefit scheme.

6. Deferred Tax:

In accordance with accounting standard 22, "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the company worked out taxes on income resulting deferred tax liability of Rs, 973.00 lacs as at 31.03.2016.The components of deferred tax assets and deferred tax liabilities are given hereunder

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Mar 31, 2015

1. Pursant to the Companies Act 2013(the act) being effective from April 1, 2014 the Company has revised depreciation rates on fixed assets as per the use full life specified in Part 'C' of Schedule II of the Act . As a result of this change the depreciation charred for the year ended 31st March 2015 is lower by Rs. 343.50 lakhs accordingly the profit as gone up by same amount.

2. In the year 2007-08 Company paid Rs. 1.47 crores to the land owners for acres 98 and 15 grunts in the vicinity of the Cement factory for surrendering their Pattadar pass Books, to the Revenue authorities, Government of Telangana to facilitate granting of the lease rights in favor of the company, in respect of the said surrendered lands for lime stone mining. Company's application for lease rights in this regard is under process. The said amount of Rs. 1.47 crores is shown as advance for mining lease rights.

3. Upfront lease amount of Rs. 18 lakhs paid to Karnataka Forest Dept. towards Wind mill land lease is amortized over the lease period of 30 years. Accordingly Rs. 0.6 lakhs for the current year is amortized (up to Previous year Rs. 4.20 lakhs).

4. The Company could not obtain confirmation of balances as at 31st March 2015 in respect of trade receivables Rs. 170.35 lakhs, Loans and advances Rs. 2073.52 lakhs and Trade payables amounting to Rs. 1467.71 lakhs ,and the Company hopes that they would be collected, adjusted and paid.

5. The National Savings Certificate VIII issue (shown under investments) has been pledged with Sales Tax Department towards Sales Tax Deposit.

6. Defined Benefit Scheme in accordance with AS-15 "Employee Benefits. As per actuarial valuation as on 31.03.2015 and recognized in financial statements in respect of employee defined benefit scheme.

7. Deferred Tax:

In accordance with accounting standard 22, "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the company worked out taxes on income resulting deferred tax asset of Rs. 0.58 lakhs as at 31.03.2015.The components of deferred tax assets and deferred tax liabilities are given hereunder.

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Mar 31, 2014

A. Terms/ rights attached to equity shares.

Each holder of equity share is entitled to one vote per share. The dividends recommended by the Board of Directors, if any are subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the equity share holders are entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of shares held.The rights attached to the Equity shareholders are subject to the provisions of Companies Act, 1956 and other applicable laws.

B. Terms/ rights attached to 9% cumulative redeemable preference shares.

Preference shares would not carry any voting rights. Dividends recommended by the Board of Directors for not exceeding the copun rate, if any, are subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the preferential share holders will have preferential right over the Equity share holders for their principal amount and the dividend, if any, declared thereon on remaining assets of the Company after distribution to the secured and the preferential creditors.The rights attached to the 9% Cumulative Redeemable Preferential shareholders are subject to the provisions of Companies Act, 1956 and other applicable laws.

A. All the installments falling due within 12 months from the date of Balance Sheet have been classified as current maturities, the aggregate amounts are shown under ''Other Current Liabilities''.

B. The term loans from Canara bank, Andhra Bank and Indian Bank are secured by: (a) First charge on the fixed assets of the Company, (b) Second Charge on Current Assets of the Company and ( c) Pledge of equity shares of the company held by the promoters equivalent to 30% of the equity shares of the company. The said charges and the pledge are on pari passu basis.

C. All the term loans obtained from the banks are guaranteed by two of the directors of the Company in their individual capacities.

D. The term loans from Banks which are restructured are repayable in 30 equal quarterly instalments efective December 2014, Working Capital term loan from Canara Bank are repayable in 36 Monthly installments and effective October 2014,Funded interest term loans from Banks are repayable in 30 Monthly installments and effectve April 2014. Other terms of repayment of term loans are given below:

1.1 a) Contingent Liabilities not provided for in respect of:

Current Year Previous Year rs in lakhs rs in.lakhs

i) Bank Guarantee 183.04 182.84

ii) Income tax demand for Asst.Year 2007-08* 262.59 262.59

(This demand arised mainly on account of treatment of brought forward unabsorbed depreciation. In the opinion of the Company this demand may not be sustained in the appellate forums.)

iii) Incometax demand for Asst.Year 2006-07 183.80 Nil

(This demand arised not showing as income in the reduction in the liability at time of one time settlement of dues to the Financial Institution.)

''However the company has paid Rs. 183 lakhs (Previous year Rs. 183 lakhs) under protest and shown under long term loans and advances.

iv) A.P. General Sales Tax liability of Rs. 18.77 lakhs ( up to Previous year 7 18.77 lakhs) on packing materials purchased during the accounting years 1990-91 and 1991-92 as the Company preferred appeals before Appellate Authorities and the same are pending.

v) Karnataka Sales Tax demand of Rs. 6.20 lakhs (up to Previous year Rs. 6.20 lakhs ) for the accounting year 1993- 94 as the company preferred an appeal in the Hon''ble High Court of Karnataka.

2.1 b) Other Contingent Liabilities:

i) In the year 2007-08 A P Commercial Tax Department had revised the CST Assessment for the year 2000- 2001 and demanded Rs. 39.25 lakhs. The company got stayed the demand through an order of Hon''ble High Court of A.P. and the department had collected Rs. 19.09 lakhs around 50% of the demand which is grouped under long term loans and advances. As the matter is pending in appeal before the A P Sales Tax Appellate Tribunal, no provision is made in the accounts for the disputed tax of Rs. 39.25 lakhs.

ii) Demand from Central Excise Authorities for Rs.95.01 lakhs together with penalty of Rs. 95.01 lakhs (Previous year Rs.190.02 lakhs) against alleged irregular availment of Cenvat Credit on inputs by Cement Division, as the Company''s legal counsel opined that the demand is not sustainable and the matter is pending before CESAT, Bangalore.

iii) Demand from Central Excise Authorities for Rs. 1.38 lakhs together with penalty of Rs.1.38 lakhs against irregular credit of service tax availed and utilized. The same has been stayed by the Commissioner (Appeals -I ) on payment of Rs. 0.33 lakhs.

iv) a) Voltage surcharge: In the year 2003-04, Central Power Distribution Company of A.P. Ltd. had levied Voltage Surcharge of Rs. 130.29 lakhs for getting the energy through general lines over and above the contracted load instead of dedicated lines. As getting the energy through specified line is not within the control of the company, the company challenged the levy before Hon''ble High Court of Andhra Pradesh and the High Court was pleased to grant staying the collection of the said levy. However the Company has paid Rs. 72.06 lakhs ( previous year Rs. 72.06 lakhs) under protest and shown under Long term loans and advances and the said amount was not provided for in the books. The appeal is pending.

b) Fuel Surcharge Adjustment (FSA) : FSA for the period from April 2008 to June 2010 amounting to Rs.248.75 lakhs which were stayed by the Hon''ble High Court of Andhra Pradesh was not accounted.

3.1 c) i) Estimated amount of contracts to be executed on capital on account of Project expansion of Cement Division NIL (Net of advances ) (previous year NIL).

ii) Arrears of fixed Cumulative Dividends-9% cumulative dividend for the current year is Rs. 79.96 lakhs (up to Previous year Rs. 898.34 lakhs).

3.2. In the year 2007-08 Company paid Rs. 1.47 crores to the land owners for acres 98 and 15 guntas in the vicinity of the Cement factory for surrendering their Pattadar pass Books, to the Revenue authorities, Government of A.P. to facilitate granting of the lease rights in favour of the company, in respect of the said surrendered lands for lime stone mining. Company''s application for lease rights in this regard is under process. The said amount of Rs. 1.47 crores is shown as advance for mining lease rights and grouped under long term loans & advances.

3.3. The Company could not obtain confirmation of balances as at 31st March 2014 in respect of trade receivables Rs. 337.95 lakhs, Loans and advances Rs. 1788.32 lakhs and Trade payables amounting to Rs. 1131.50 lakhs, which were subsequently, collected adjusted and paid.

3.4. The National Savings Certificate VIII issue (shown under investments) has been pledged with Sales Tax Department towards Sales Tax Deposit.

3.5. A.S-19:Lease:

Upfront lease amount of Rs. 18 lakhs paid to Karnataka Forest Dept. towards Wind mill land lease is amortised over the lease period of 30 years. Accordingly Rs. 0.6 lakhs for the current year is amortised (up to Previous year Rs. 3.60 lakhs).

3.6. Deferred Tax:

In accordance with accounting standard 22, "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the company worked out taxes on income resulting deferred tax liability of Rs. 1093.30 lakhs as at 31.03.2014.The components of deferred tax assets and deferred tax liabilities are given hereunder.

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Mar 31, 2013

1.1 a) Contingent Liabilities not provided for in respect of:

Current Year Previous Year Rs. in lakhs Rs. in lakhs

i) Bank Guarantee 182.84 219.04

ii) Income tax demand of Asst Year 2007-08 262.59* 290.97

*(Reduction in the liability is due to the appeal order passed by Commissioner of Income tax (Appeals).)

However the company has paid Rs. 183 lakhs(Previous year Rs.116.97 lakhs) under protest and shown under long term loans and advances.

iii) A.P. General Sales Tax liability of Rs.18.77 lakhs (up to Previous year Rs.18.77 lakhs) on packing materials purchased during the accounting years 1990-91 and 1991-92 as the Company preferred appeals before Appellate Authorities and the same are pending

iv) In the year 2007-08 A P Commercial Tax Department had revised the CST Assessment for the year 2000- 2001 and demanded Rs. 39.25 lakhs. The company got stayed the demand through an order of Hon''ble High Court of A.P. and the department had collected Rs. 19.09 lakhs around 50% of the demand which is grouped under long term loans and advances. As the matter is pending in appeal before the A P Sales Tax Appellate Tribunal, no provision is made in the accounts for the disputed tax of Rs. 39.25 lakhs.

v) Karnataka Sales Tax demand of Rs. 6.20 lakhs (up to Previous year Rs.6.20 lakhs ) for the accounting year 1993- 94 as the company preferred an appeal in the Hon''ble High Court of Karnataka.

vi) Demand from Central Excise Authorities for Rs. 95.01 lakhs together with penalty of Rs. 95.01 lakhs (Previous year Rs.190.02 lakhs) against alleged irregular availment of Cenvat Credit on inputs by Cement Division, as the Company''s legal counsel opined that the demand is not sustainable and the matter is pending before CESAT, Bangalore.

vii) Demand from Central Excise Authorities for Rs.1.38 lakhs together with penalty of Rs.1.38 lakhs against irregular credit of service tax availed and utilized. The same has been stayed by the Commissioner (Appeals -I ) on payment of Rs. 0.33 lakhs.

viii) a) Voltage surcharge: In the year 2003-04, Central Power Distribution Company of A.P. Ltd. had levied Voltage Surcharge of Rs. 130.29 lakhs for getting the energy through general lines over and above the contracted load instead of dedicated lines. As getting the energy through specified line is not within the control of the company, the company challenged the levy before Hon''ble High Court of Andhra Pradesh and the High Court was pleased to grant staying the collection of the said levy. However the Company has paid Rs. 72.06 lakhs ( previous year Rs. 72.06 lakhs) under protest and shown under Long term loans and advances and the said amount was not provided for in the books. The appeal is pending.

b) Fuel Surcharge Adjustment (FSA) :

FSA for the period from April 2008 to June 2010 amounting to Rs. 248.75 lakhs which were stayed by the Hon''ble High Court of Andhra Pradesh was not accounted.

viii) Claim against the Company:

In the year 2007-08 a supplier filed a suit and obtained an ex-party decree against the Company from District Court Cuddalore, Tamilnadu demanding Rs. 39.50 lakhs against the liability of Rs. 23.59 lakhs towards Lignite supplied in earlier years. Company disputed the liability of Rs.39.50 lakhs and deposited Rs.5.00 lakhs in court as directed by Madras High Court and case is pending before Vriddachalam Additional District Court (FTC).

b) i) Estimated amount of contracts to be executed on capital on account of Project expansion of Cement

Division NIL (Net of advances ) (previous year Rs.158 lakhs).

ii) Arrears of fixed Cumulative Dividends-9% cumulative dividend for the current year is Rs. 79.96 lakhs (up to Previous year Rs.818.39 lakhs ).

1.2. In the year 2007-08 Company paid Rs. 147 lakhs to the land owners for acres 98 and 15 guntas in the vicinity of the Cement factory for surrendering their Pattadar pass Books, to the Revenue authorities, Government of A.P. to facilitate granting of the lease rights in favour of the company, in respect of the said surrendered lands for lime stone mining. Company''s application for lease rights in this regard is under process. The said amount of Rs. 147 lakhs is shown as advance for mining lease rights.

1.3. Upfront lease amount of Rs. 18 lakhs paid to Karnataka Forest Dept. towards Wind mill land lease is amortised over the lease period of 30 years. Accordingly Rs.0.60 lakhs for the current year is amortised (up to Previous year Rs. 3 lakhs).

1.4. Exceptional Item represent the provision made towards fuel surcharge adjustment (FSA) relating to the periods April 2010 to March 2012 in line with the FSA rates approved by Andhra Pradesh Electricity Regulatory Commission.

1.5. The Company could not obtain confirmation of balances in respect of trade receivables Rs. 266.23 lakhs, Loans and advances Rs. 506.77 lakhs and Trade payables amounting to Rs. 1171.60 lakhs which were subsequently collected, adjusted and paid.

1.6. Executive Chairperson and Managing Director were paid up to 12th August 2012, minimum remuneration of Rs. 2 lakhs per month each amounting to Rs. 17.62lakhs. With effect from 13th August 2012 to 31st March 2013, their remuneration is enhanced to Rs. 4 lakhs per month each by the Board of Directors of the Company amounting to Rs. 60.83 lakhs. The enhanced remuneration is subject to the approval of shareholders in the ensuing Annual General Meeting.

1.7. The National Savings Certificate VIII issue (shown under investments) has been pledged with Sales Tax Department towards Sales Tax Deposit.

1.8. Defined Benefit Scheme in accordance with A S-15 "Employee Benefits" issued by ICAI. As per actuarial valuation as on 31.03.2013 and recognised in financial statements in respect of employee defined benefit scheme.

1.9. Deferred Tax:

In accordance with accounting standard 22, "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the company worked out taxes on income resulting deferred tax liability of Rs. 1138.36 lakhs as at 31.03.2013.The components of deferred tax assets and deferred tax liabilities are given hereunder.

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Mar 31, 2012

A. Terms/ rights attached to equity shares

Each holder of equity share is entitled to one vote per share. The dividends recommended by the Board of Directors, if any are subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the equity share holders are entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of shares held.The rights attached to the Equity shareholders are subject to the provisions of Companies Act,1956 and other applicable laws.

b. Terms/ rights attached to 9% cumulative redeemable preference shares

Preference shares would not carry any voting rights. Dividends recommended by the Board of Directors for not exceeding the coupon rate, if any, are subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the preferential share holders will have preferential right over the Equity share holders for their principal amount and the dividend, if any, declared thereon on remaining assets of the Company after distribution to the secured and the preferential creditor' The rights attached to the 9% Cumulative Redeemable Preferential shareholders are subject to the provisions of Companies Act, 1956 and other applicable laws.

A. All the installments falling due within 12 months from the date of Balance Sheet have been classified as current maturities, the aggregate amounts are shown under 'Other Current Liabilities'.

B. The term loans from Candara bank, Andhra Bank and Indian Bank are secured by: (a) First charge on the fixed assets of the Company, (b) Second Charge on Current Assets of the Company and ( c ) Pledge of equity shares of the company held by the promoters equivalent to 30% of the equity shares of the company. The said charges and the pledge are on pari passu basis.

C. All the term loans obtained from the banks are guaranteed by two of the directors of the Company in their individual capacities.

D. The term loans from Banks are repayable in 32 equal quarterly installments and repayment started from June 2009. Other terms of repayment of term loans are given below:

E. Sales Tax Deferment(Cement Division): Conesquent to the introduction of VAT from 01.04.2005, the Tax Holiday, being the sales tax incentive, against expanded capacity, has been converted into Deferment and the Company got entitlement to defer tax collections up to Rs. 1590.43 lakhs over a period of ten years effective 01.04.2005 and repayable after fourteen years from the end of the relevant financial year. Due dates for repayment are given below.

(ii) Electronic Division is allowed to defer its Sales Tax Liability on Domestic sales to Rs. 528 lakhs during the period 01.09.1994 to 31.08.2004. Accordingly, Sales Tax collected on DTA Sales up to 31.08.2004 of Rs.13.15 lakhs is shown as unsecured loan. Repayment dues and the accounting years in which they are due are as given below:

a. Secured: (i) Cash Credit from Canara Bank sanctioned limit of Rs. 480 lakhs, is secured by way of hypothecation of work-in-process, finished goods, raw materials, stores and spares, receivables both present and future and also by a second charge on the immovable properties and other fixed assets of the company. Further, working capital loans are guaranteed by two of the directors of company individually and by the corporate guarantee of M/s Hyderabad Bottling Company Limited.and equitable motgage against the residential property of a director of Company. (ii) Overdraft from State Bank of India was secured by Fixed Deposit Receipt of Rs.103.69 Lakhs.

b. Unsecured: (1) Loan from a director is free of interest and is repayable on demand. (2) Inter corporate deposits to the extent of Rs.430 lakhs carry an interest of 10% per annum and is repayable on demand.

Note: Balances with banks include i) Rs. 158.54 lakhs (previous year: Rs. 157.15 lakhs kept as margin money deposits against the guarantee giben by bankeRs. ii ) Fixed Deposit Receipts for Rs. 103.69 lakhs (previous year Rs.103.69 lakhs) are held by the bankers with a lien marked in their favour towards overdraft sanctioned by the a bank.

Fixed Deposits receipts are with the bankers with alien marked in their favor towards the overdraft/bank guarantee limits sanctioned by them.

1.1 a) Contingent Liabilities not provided for in respect of:

Current Year Previous Year Rs. in lakhs Rs. in lakhs

i) Bank Guarantee 219.04 214.24

ii) During the year Income tax department has raised demand for Rs. 290.97 lakhs for the Assessment year 2007- 08 disallowing unabsorbed depreciation relating to the Assessment years 1997-98 to 2001-02 which was set off in the Assessment year 2007-08 by the company. The company has not recognized this liability in the books of accounts as the company preferred an appeal before the Commissioner (appeals). However the company has paid Rs. 116.97 lakhs under protest and shown under long term loans and advances..

iii) A.P. General Sales Tax liability of Rs. 18.77 lakhs ( up to Previous year Rs. 18.77 lakhs) on packing materials purchased during the accounting years 1990-91 and 1991-92 as the Company preferred appeals before Appellate Authorities and the same are pending

iv) Karnataka Sales Tax demand of Rs. 6.20 lakhs (up to Previous year Rs. 6.20 lakhs) for the accounting year 1993- 94 as the company preferred an appeal in the Hon'ble High Court of Karnataka.

v) Demand from Central Excise Authorities for Rs.95.01 lakhs together with penalty of Rs.95.01 lakhs (Previous year Rs.190.02 lakhs) against alleged irregular availment of Cenvat Credit on inputs by Cement Division, as the Company's legal counsel opined that the demand is not sustainable.

vi) In the year 2003-04, Central Power Distribution Company of Andhra Pradesh had levied Voltage Surcharge of Rs. 130.29 lakhs for getting the energy through general lines over and above the contracted load instead of dedicated lines. As getting the energy through specified line is not within the control of the company, the company challenged the levy before Hon'ble High Court of Andhra Pradesh and the High Court was pleased to grant staying the collection of the said levy. However the Company has paid Rs. 72.06 lakhs ( previous year Rs. 72.06 lakhs) under protest and shown under Long term loans and advances and the said amount was not provided for in the books. The appeal is pending.

vii) In the year 2007-08 A P Commercial Tax Department had revised the CST Assessment for the year 2000- 2001 and demanded Rs. 39.25 lakhs. The company got stayed the demand through an order of Hon'ble High Court of A.P. and the department had collected Rs. 19.09 lakhs around 50% of the demand which is grouped under long term loans and advances. As the matter is pending in appeal before the A P Sales Tax Appellate Tribunal, no provision is made in the accounts for the disputed tax of Rs. 39.25 lakhs.

viii) In the year 2007-08 a supplier filed a suit and obtained an ex-party decree against the Company from District Court Cuddalore, Tamilnadu demanding Rs. 39.50 lakhs against the liability of Rs. 23.59 lakhs towards Lignite supplied in earlier yeaRs. Company disputed the liability of Rs. 39.50 lakhs and deposited Rs. 5.00 lakhs in court as directed by Madras High Court and case is pending before Vriddachalam Additional District Court (FTC).

b) i) Estimated amount of contracts to be executed on capital on account of Project expansion of Cement Division Rs. 158 lakhs (Net of advances ) (previous year Rs. 9.30 lakhs).

ii) Arrears of fixed Cumulative Dividends-9% cumulative dividend for the current year is Rs. 93.46 lakhs (up to Previous year Rs. 864.81 lakhs).

1.2. In the year 2007-08 Company paid Rs. 147 lakhs to the land owners for acres 98 and 15 guntas in the vicinity of the Cement factory for surrendering their Pattadar pass Books, to the Revenue authorities, Government of A.P. to facilitate granting of the lease rights in favour of the company, in respect of the said surrendered lands for lime stone mining. Company's application for lease rights in this regard is under process. The said amount of Rs. 147 lakhs is shown as advance for mining lease rights.

1.3. Upfront lease amount of Rs. 18.00 lakhs paid to Karnataka Forest Dept. towards Wind mill land lease is amortised over the lease period of 30 yeaRs. Accordingly Rs. 0.60 lakhs for the current year is amortised (up to Previous year Rs. 2.40lakhs).

1.4. The National Savings Certificate VIII issue (shown under investments) has been pledged with Sales Tax Department towards Sales Tax Deposit.

1.5. Foreign Exchange Earnings and Expenditure:

1.6 During the year ended 31st March, 2012, the revised format of accounts was notified by modifying Schedule VI under the Companies Act, 1956. The new format has been followed for preparation and presentation of the financial statements. The adoption of revised Schedule VI, as aforesaid, does not impact recognition and measurement principles followed for preparation of the financial statements. The Company has reclassified the previous year's figures in accordance with the requirements applicable in the current year.

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Mar 31, 2010

1. A.R State Government had paid capital investment subsidy of Rs.20.00 lakhs to erstwhile Hyderabad Flextech Ltd with a basic stipulation that the unit should be in continuous production for 20 years. On Amalgamation this is transferred to the company and shown in Electronics Division.

2. 9% Cumulative Redeemable Preference Shares 5,00,000 Nos. allotted on 24.10.2001 and 2,70,100 Nos. allotted on 31.10.2002 are redeemable at par at the end of 11th ,12th andl3th year from the date of allotment and the amount payable per share is Rs.30, Rs.35 and Rs.35 respectively.

3. Secured Loans:

(i) Term loans are secured by an equitable mortgage of immovable properties and a charge by way of hypothecation of all the movable properties (save and except Book Debts) including movable machinery, spares, tools and accessories both present and future subject to prior charges created in favour of respective bank on specific movable assets for Working Capital loans sanctioned together with interest and commitment charges.

(ii) Working Capital Loans are secured by hypothecation of raw-materials, work-in-process, finished goods, stores and spares and receivables both present and future and also by a second charge on the immovable properties and other fixed assets of the company.

Further the the Term Loan and Working Capital Loans are guaranteed by two of the directors of the company individually and by the Corporate guarantee of M/s.Hyderabad Bottling Company Limited.

4. Consequent to the introduction of VAT from 01.04.2005,the Tax Holiday, being the sales tax incentive, against expanded capacity, has been converted into Deferment and the Company got entitlement to defer tax collections up to Rs. 1590.43 lacs over a period of ten years effective 01.04.2005 and repayable after fourteen years from the end of the relevant financial year.

5. In the year 2007-08 Company paid Rs.1.47 crores to the land owners in the vicinity of the Cement factory for surrendering their Pattadar pass Books, for acres 98 and 15 guntas, to the Revenue authorities, Government of A.P to facilitate granting of the lease rights in favour of the company, in respect of the said surrendered lands for lime stone mining. Companys application for lease rights in this regard is under process. The said amount of Rs.1.47 crores is shown as advance for mining lease rights.

6. Up front lease amount of Rs. 18,00,000-/ paid to Karnataka Forest Dept. towards Wind mill land lease is amortised over the lease period of 30 years.Accordingly Rs.60,000/- for the current year is amortised( up to Previous year Rs. 1,20,000/-).

7. The National Savings Certificate VIII issue (shown under investments) has been pledged with Sales Tax Department towards Sales Tax Deposit.

8. Fixed deposit receipts are with the bankers with a lien marked in their favor of the overdraft/ bank guarantee limits sanctioned by them.

9. There were no outstanding payable to micro and small enterprises as on 31.03.2010.

10. AS -18 Related party disclosures:

Related party disclosures as required by AS-18 are given below: i) Particulars of Associate Companies :

Name of the Related Party Nature of Relationship

a. Hyderabad Bottling Co.Ltd

b. Triveni Capital Leasing &

Investments Pvt Limited Associate Companies

c. I 0 (J Projects Limited

ii) Key Management Personnel

Mrs. J. Triveni Managing Director

Mr. J.S.Rao Managing Director of erstwhile Hyderabad Flextech Ltd

Late Mr. J. S. Krishna Executive Chairman (since deceased 19.09.2009)

iii) Transaction with Associate Companies

11. Deferred Tax:

In accordance with accounting standard 22, "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the company worked out taxes on income resulting deferred tax liability of Rs.596.69 lacs as at 31.03.2010.The components of deferred tax assets and deferred tax liabilities are given hereunder.

12. Previous year figures have been regrouped wherever necessary.