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Company Information

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ACC Ltd.

May 30, 12:41
1627.80 +4.85 (+ 0.30 %)
 
VOLUME : 11571
Prev. Close 1622.95
Open Price 1630.00
TODAY'S LOW / HIGH
1600.00
 
 
 
1639.20
Bid PRICE (QTY.) 1627.80 (203)
Offer PRICE (Qty.) 1628.95 (42)
52 WK LOW / HIGH
1257.00
 
 
 
1753.85
May 30, 12:34
1633.15 +8.75 (+ 0.54 %)
 
VOLUME : 162552
Prev. Close 1624.40
Open Price 1623.80
TODAY'S LOW / HIGH
1595.05
 
 
 
1639.60
Bid PRICE (QTY.) 1632.60 (16)
Offer PRICE (Qty.) 1633.90 (16)
52 WK LOW / HIGH
1256.55
 
 
 
1756.70
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Market Cap. ( ₹ ) 30668.48 Cr. P/BV 3.55 Book Value ( ₹ ) 460.17
52 Week High/Low ( ₹ ) 1757/1257 FV/ML 10/1 P/E(X) 50.74
Bookclosure 24/03/2017 EPS ( ₹ ) 32.18 Div Yield (%) 1.04
NOTES TO ACCOUNTS
You can view the entire text of Notes to accounts of the company for the latest year
Year End :2016-12 

#These balances are available for use only towards settlement of corresponding unpaid dividend liabilities. *Includes fixed deposit with lien in favour of Competition Appellate Tribunal (COMPAT) of ' 114.76 Crore (Previous Year - ' Nil) {Refer Note - 36 (A) (d)}.

**Margin money deposit is against bank guarantee given to Government authorities.

ii) Miscellaneous expenses includes:

(a) Loss on sale / write off of Fixed Assets (Net) - ' Nil (Previous Year - Rs, 30.45 Crore)

(b) Provision for diminution, other than temporary in the value of long term investment in subsidiary company of Rs, Nil (Previousyear - Rs, 15.15 Crore) {Refer Note - 41}

(c) Grinding facility charges, Commission on sales, Information technology services, Traveling expenses, Other third party services etc.

1. EMPLOYEE BENEFITS:

a) Defined Contribution Plans - Amount recognized and included in Note 25 “Contributions to Provident and

other Funds” of Statement of Profit and Loss Rs, 17.26 Crore (Previous Year - Rs, 18.28 Crore).

b) Defined Benefit Plans - As per actuarial valuation on December 31, 2016

The Company has a defined benefit gratuity, additional gratuity, post employment medical benefit plans and

Trust managed provident fund plan as given below:

i. Every employee who has completed minimum five years of service is entitled to gratuity at 15 days salary for each completed year of services. The scheme is funded with insurance companies in the form of qualifying insurance policies.

ii. Every employee who has joined before 1st December 2005 and separates from service of the Company on Superannuation and on medical grounds is entitled to additional gratuity. The scheme is Non Funded.

iii. Benefits under Post Employment medical Benefit plans are payable for actual domiciliary treatment / hospitalization for employees and their specified relatives. The scheme is Non Funded.

iv. Provident fund for certain eligible employees is managed by the Company through trust “ The Provident Fund of ACC Ltd.”, in line with the Provident Fund and Miscellaneous Provision Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee.

The minimum interest rate payable by the Trust to the beneficiaries every year is being notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate.

The ASB Guidance on Implementing AS-15, Employee Benefits (revised 2005) issued by Accounting Standards Board (ASB) states that benefit plans involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefit plans. As per the Guidance Note from the Actuarial Society of India, the Company has obtained the actuarial valuation of interest rate obligation in respect of Provident Fund and there is no shortfall as at December 31, 2016 and December 31, 2015.

b) Demographic Assumptions

1 Mortality pre-retirement Indian Assured Lives Mortality (2006-08) (Modified) Ultimate

Indian Assured Lives Mortality (2006-08) (Modified) Ultimate

2 Mortality post-retirement Mortality for annuitants LIC (1996-98) ultimate

Mortality for annuitants LIC (1996-98) ultimate

3 Turnover rate 5% p.a. (P.Y. - 5% p.a.)

4 Medical premium inflation 12% p.a. for the first 4 years and thereafter 8% p.a.

12% p.a. for the first 4 years and thereafter 8% p.a.

(Figures in italics pertain to previous year)

c) Basis used to determine expected rate of return on assets:

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligation. The Gratuity Scheme is invested in Life Insurance Corporation (LIC) of India's Group Gratuity-cum-Life Assurance cash accumulation policy and HDFC Standard Life's Group Unit Linked Plan - For Defined Benefit Scheme.

The Trust formed by the Company manages the investments of provident fund plan.

d) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

e) The Company expects to contribute Rs, 18.00 Crore (Previous year - Rs, 11.00 Crore) to Gratuity fund and Rs, 23.00 Crore (Previous year - Rs, 18.84 Crore) to trust managed provident fund in the year 2017.

f) Post employment defined benefit plan expenses are included under employee benefit expenses in the statement of Profit and Loss.

*In respect of Provident Fund, Since there is surplus the same has not been recognized in Balance Sheet, only liability recognized in Balance Sheet.

h) Amount recognized as an expense under employee benefit expenses in the statement of Profit and Loss in respect of other benefits is Rs, 12.31 Crore (Previous Year - Rs, 22.29 Crore).

i) Present value of compensated absences at year end is Rs, 28.03 Crore (Previous YearRs, 38.44 Crore) after net of plan assets of Rs, 88.77 Crore (Previous year - Rs, 77.54 Crore).

j) Present value of Long service award obligation at year end is Rs, 7.63 Crore (Previous Year Rs, 7.17 Crore). This scheme is non funded.

2. SEGMENT REPORTING

The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the differing risks and returns, the organisation structure and internal reporting system. The CompanyRs,s operations predominantly relate to manufacture of Cement and Ready Mix Concrete. The export turnover is not significant in the context of total turnover of the company and further the risk and returns are not significantly different from that of India. As such there is only one geographical segment.

b) Operating lease payment recognized in Statement of Profit and Loss amounting to Rs, 165.37 Crore (Previous Year - Rs, 173.64 Crore)

c) General description of the leasing arrangement:

(i) Leased Assets: Grinding facility, Concrete pumps, Godowns, Transit Mixer, Flats, Office premises and other premises.

(ii) Future lease rentals are determined on the basis of agreed terms.

(iii) There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

(iv) At the expiry of the lease term, the Company has an option either to return the asset or extend the term by giving notice in writing.

3. RELATED PARTY DISCLOSURE

(A) Names of the Related parties where control exists: Nature of Relationship

1 LafargeHolcim Ltd Ultimate Holding Company

2 Holderind Investments Ltd. Holding Company of Holcim (India) Private Limited

(up to August 11, 2016)

Holding Company of Ambuja Cements Limited (w.e.f. August 12, 2016)

3 Holcim (India) Private Limited (Refer Note - 43) Holding Company (Up to August 11, 2016)

4 Ambuja Cements Limited (Refer Note - 43) Fellow Subsidiary up to August 11, 2016 and Holding

Company (w.e.f. August 12, 2016)

5 Bulk Cement Corporation (India) Limited Subsidiary Company

6 ACC Mineral Resources Limited Subsidiary Company

7 Lucky Minmat Limited Subsidiary Company

8 National Limestone Company Private Limited Subsidiary Company

9 Singhania Minerals Private Limited Subsidiary Company

10 OneIndia BSC Private Limited Joint venture Company (w.e.f. August 13, 2015)

(B) Others - With whom transactions have been taken place during the year

(a) Names of other Related parties Nature of Relationship

1 Alcon Cement Company Private Limited Associate Company

2 Asian Concretes and Cements Private Limited Associate Company

Names of the Related parties Nature of Relationship

3 Aakaash Manufacturing Company Private Limited Associate Company

4 Lafarge India Private Limited Fellow Subsidiary

(w.e.f. July 10, 2015 and Up to October 4, 2016)

5 Holcim (Malaysia) SDN BHD Fellow Subsidiary

6 Holcim Vietnam Fellow Subsidiary

7 Holcim Technology (Singapore) Pte Ltd Fellow Subsidiary

8 Siam City Cement (Lanka) Ltd {Formerly known as Fellow Subsidiary (Up to August 10, 2016) Holcim (Lanka) Ltd}

9 PT Holcim Indonesia Tbk Fellow Subsidiary

10 Holcim Services (South Asia) Limited Fellow Subsidiary

11 Holcim Cement (Bangladesh) Ltd Fellow Subsidiary

12 Holcim Philippines Fellow Subsidiary

13 Holcim Group Services Ltd Fellow Subsidiary

14 Holcim Technology Ltd Fellow Subsidiary

15 Holcim Trading Pte Ltd Fellow Subsidiary

16 Lafargeholcim Energy Solutions SAS Fellow Subsidiary

17 Holcim (Liban) S.A.L. Fellow Subsidiary

18 Dirk India Private Limited Fellow Subsidiary (w.e.f. August 12, 2016)

(b) Key Management Personnel:

Name of the Related Party Nature of Relationship

1 Mr. Harish Badami CEO & Managing Director

2 Mr. Sunil K. Nayak Chief Financial Officer

3 Mr. Burjor D. Nariman Company Secretary

*Provision for contribution to gratuity fund, leave encashment on retirement and other defined benefits which are made based on actuarial valuation on an overall Company basis are not included in remuneration to key management personnel.

#The Board of Directors at its Meeting held on December 16, 2016 has accepted the resignation of Mr. Harish Badami w.e.f. February 04, 2017. The Board has approved the severance payment of Rs, 5.27 Crore pursuant to the authority conferred on it by the Members of the Company.

In respect of above matters, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums / authorities.

c) The Company had filed writ / appeal petitions against the orders / notices of various authorities demanding Rs, 114.45 Crore (Previous Year - Rs, 114.24 Crore) towards demand of additional Royalty on Limestone based on the ratio of 1.6 tonnes of Limestone to 1 tonne of Cement produced at its factories in Chattisgarh and on cement produced vis a vis consumption of limestone at its factory in Tamil Nadu. The Madhya Pradesh High Court had decided a similar matter in favour of the Company in an earlier year by directing the Authorities to only demand Royalty based on quantity of Limestone actually mined and recorded through statutory documentation, and not based on any ratio.

The Company holds the view that the payment of royalty on limestone is correctly made by the Company based on the actual quantity of limestone extracted, and feels that similar relief can also be expected from the Judiciary and / or Authorities in the cases of Chhattisgarh & Tamil Nadu Units. In view of the demand being legally unjustifiable, and due to the decision of the Madhya Pradesh High Court, directly on this issue, the Company does not expect any liability in above matter .

d) i. In 2012, the Competition Commission of India ('CCI') issued an Order imposing penalty on certain cement manufacturers, including the Company, concerning alleged contravention of the provisions of the Competition Act, 2002, and imposed a penalty of Rs, 1,147.59 Crore on the Company. On Company's appeal, Competition Appellate Tribunal ('COMPAT'), initially stayed the penalty, and by its final order dated 11th December, 2015, set aside the order of the CCI, remanding the matter back to the CCI for fresh adjudication and for passing a fresh order.

After hearing the matter, the CCI has, by its order dated August 31, 2016, imposed a penalty of Rs, 1,147.59 Crore on the Company. The Company has filed an appeal against the said Order with Competition Appellate Tribunal ('COMPAT'). Pending final disposal of the appeal, the COMPAT has stayed the penalty with a condition to deposit 10% of the penalty amount, which has been deposited and levy of interest of 12% p.a. in case the appeal is decided against the appellant. Interest amount on penalty as on December 31, 2016 is Rs, 45.90 Crore.

Based on the advice of external legal counsel, the Company believes it has good grounds for successful appeal. Accordingly, no provision is considered necessary.

ii. In a separate matter, pursuant to a reference filed by the Government of Haryana, The Competition Commission of India issued an Order dated January 19, 2017 imposing penalty on certain cement manufacturers, including the Company, concerning alleged contravention of the provisions of the Competition Act, 2002, and imposed a penalty of Rs, 35.32 Crore on the Company. The Company is taking steps to file an appeal against the Order with the appropriate authority. Based on the advice of external legal counsel, the Company believes it has good grounds for a successful appeal. Accordingly, no provision is considered necessary.

4. (B) MATERIAL DEMANDS AND DISPUTES CONSIDERED AS “REMOTE” BY THE COMPANY

a) The Company had availed Sales Tax Incentives in respect of it's new 1 MTPA Plant at Gagal (Gagal II) under the HP State Industrial Policy, 1991. The Company had accrued Sales Tax Incentives aggregating ' 56 Crore. The Sales Tax Authorities had introduced certain restrictive conditions after commissioning of the unit stipulating that incentive is available only for incremental amount over the base revenue and production (of Gagal I) prior to the commissioning of Gagal II. The Company contends that such restrictions are not applicable to the unit as Gagal II is a new unit, as decided by the HP High Court and confirmed by the Supreme Court while determining the eligibility for Transport Subsidy. The Department had recovered Rs, 64 Crore (Tax of Rs, 56 Crore and interest of Rs, 8 Crore) and the same is accounted as an amount recoverable.

The HP High Court, had, in 2012, dismissed the Company's appeal. The Company believes the Hon'ble High Court's judgment is based on an erroneous understanding of certain facts and legal positions and that it also failed to consider certain key facts. The Company has been advised by legal experts that there is no change in the merits of the Company's case. Based on such advice, the Company filed a Special Leave Petition before the Hon'ble Supreme Court in, which is pending .

b) The Company was eligible for certain incentives (in the nature of One Time Lumpsum Capital Subsidy and refund of incremental VAT paid) in respect of its investment towards modernization and expansion of the Chaibasa Cement Unit pursuant to confirmation received under the State Industrial Policy of Jharkhand. Accordingly, the company has made claims for refund of VAT paid each financial year. However, no disbursals were made (except an amount of Rs, 7 Crore representing part of the One Time Lumpsum Capital Subsidy Claim of Rs, 15 Crore) as the authorities have raised various new conditions and restriction, that were extraneous to the approvals and confirmations expressly received by the Company. The Company had filed two writ petitions before the Jharkhand High Court against the restrictions and disputes on the extent of the eligible claims now being sought to be effected / raised by the Government.

The division bench of the Jharkhand High Court, while dealing with appeals by both the Company and the State of Government, against a single bench order only partially allowing the Companies claim, in it's order dated February 24, 2015, allowed the Company's Appeal in totality while dismissing the Government's Appeal, thereby confirming that the entire amount claimed by the Company is correct and hence payable immediately. Pursuant to this order, a cumulative amount of ' 235 Crore was standing accrued in the books up to December, 2015.

The Government of Jharkhand had filed an Special Leave Petition in the Supreme Court against the order of the division bench, which was admitted. In its interim order, the Supreme Court had, while not staying the division bench Order, had only stayed disbursement of 40% of the amount due.

The Company also pursued a contempt petition filed in the High Court of Jharkhand against non disbursal of amounts due by the Government. Consequently, as of date, the company received Rs, 64 Crore in part disbursement in the previous year from the Government of Jharkhand.

The Company is pursuing the matter of disbursement of further amounts outstanding.

The Company is of the view, and also has been advised, that the merits are strongly in its favour and it expects that the Special Leave Petition shall be rejected upholding the order of the division bench of the Jharkhand HC by the Apex Court.

c) The Company had set up a captive power plant ('Wadi TG 2') in the year 1995-96. This plant was sold to Tata Power Co Ltd., in the year 1998-99 and was subsequently repurchased from it in the year 2004-05. The Company had purchased another captive power plant ('Wadi TG 3', set up by Tata Power Co Ltd in the year 2002-03) in 2004-05. Both these power plants were eligible for tax holiday under the provisions of Section 80IA of the Income Tax Act, 1961. The Income tax department has disputed the Company's claim of deduction under Section 80IA of the Act, on the ground that the conditions prescribed under the section are not fulfilled. In case of Wadi TG 2, in respect of the demand of Rs, 56.66 Crore (net of provision), the Company is in appeal before the ITAT and in case of Wadi TG 3 in respect of the demand of Rs, 115.62 Crore, which was set aside by the ITAT, the Department is in appeal against the decision in favour of the Company. The Company believes that the merits of the claims are strong and will be allowed.

d) One of the Company's Cement manufacturing plants located in Himachal Pradesh was eligible, under the State Industrial Policy for deferral of its sales tax liability arising on sale of cement manufactured in the said plant. The Excise and Taxation department of the Government of Himachal Pradesh, disputed the eligibility of the company to such deferment on the ground that the company also manufactures an intermediate product, viz. Clinker, arising in the manufacture of cement, and such intermediate product was is in the negative list. A demand of Rs, 82.37 Crore was raised. The Company filed a writ petition before High Court of Himachal Pradesh against the demand. The case has been admitted and the hearing is in process. The Company believes its case is strong and the demand shall not sustain under law.

e) The Company is eligible for incentives for one of its cement plants situated in Maharashtra, under a Package Scheme of Incentives of the Government of Maharashtra. The scheme inter alia, includes refund of royalty paid by the Company on extraction or procurement of various raw materials (Minerals). The Department of Industries has disputed the Company's claim for refund of royalty on an erroneous technical interpretation of the sanction letter issued to the Company, that only the higher of the amount of (i) VAT Refund and (ii) Royalty refund claim amounts, each year, shall be considered. The Company maintains that such annual restriction is not applicable as long as the cumulative limit of claim does not exceed the amount of eligible investment. The Company has accrued an amount of Rs, 133 Crore till December 31, 2016 (Previous year - Rs, 106 Crore) on this account. The Company has filed an appeal before the Bombay High Court challenging the stand of the Government, which is admitted & pending before the Court for hearing on merit. The Company believes that the merits of the claim are strong.

f) Consequent upon the Supreme Court's judgment in Goa Foundation case, restricting the “deemed renewal” provision of captive mining leases to the first renewal period, the Company had received demand from District Mining Officer for Rs, 881 Crore for being penalty for alleged illegal mining activities carried out by the Company during January 1991 to September 2014. The aforesaid demands were challenged by the company and Writ Petition with High Court of Jharkhand was filed. The petition has been admitted subject to a token deposit of Rs, 48 Crore which shall be refundable in case the matter is decided in the Companies favour.

The Company is of the considered view based on legal advice, that this demand does not have merit, and shall not stand the test of judicial scrutiny, considering that the said mining, leases pending State Government's approval, have been automatically extended up to March 31, 2030 by Mines and Minerals (Development and Regulation) (Amendment) Act, 2015 without any recourse being made available to the State Government.

5. INTEREST IN JOINT VENTURE

During the previous year, the Company subscribed 25,01,000 equity shares for a total consideration of Rs, 2.50 Crore in OneIndia BSC Private Limited, which is a jointly controlled entity with an equal equity participation with Ambuja Cements Limited, with aim to provide back office services with respect to routine processes.

The Company has the following investment, in a jointly controlled entity:

6. ACC Mineral Resources Limited. (AMRL), a wholly-owned subsidiary of the Company, through its joint-venture had secured development and mining rights for four coal blocks allotted to Madhya Pradesh State Mining Corporation Ltd. These allocations stand cancelled pursuant to the order of the Supreme Court ruling that allocation of various coal blocks, including these, was arbitrary and illegal. The Government of India has commenced auctioning process for all such blocks in a phased manner. The auctioning for Bicharpur, being one of the four blocks, was completed, with the block being awarded to the successful bidder on March 23, 2015. Pursuant to a vesting order in this regard, possession of the coal mine was handed over to the successful bidder on April 06, 2015, with which the Company is in discussions for transfer of remaining assets. In respect of other three blocks, auctioning dates have not yet been announced.

7. During the year, the Company has provided Rs, 42.81 Crore in ACC Mineral Resources Limited (Previous year -Rs, 15.15 Crore) for diminution in the value of this investment considering the diminution other than temporary in nature. Current year provision is considered as an exceptional item.

8. The Company has arrangements with an associate company whereby it sells clinker and purchase Cement manufactured out of such clinker. While the transactions are considered as individual sale / purchase transactions for determination of taxable turnover and tax under VAT laws, considering the accounting treatment prescribed under various accounting guidance, revenue for sale of such clinker of Rs, 20.35 Crore (Previous year - Rs, 26.29 Crore) has not been recognized as a part of the Turnover but has been adjusted against cost of purchase of cement so converted.

9. The Company was a subsidiary of Holcim (India) Private Limited. Pursuant to the amalgamation of Holcim (India) Private Limited into Ambuja Cements Limited, effective August 12, 2016, the Company has become a subsidiary of Ambuja Cements Limited.

(b) Details of Investments made are given in Note 11 & 14.

(c) Guarantee given on behalf of Lucky Minmat Limited and Singhania Minerals Private Limited, wholly owned subsidiary companies, of Rs, 0.16 Crore (Previous Year - Rs, 0.12 Crore) for the purpose of approval of mining plan.

(d) The loanees have not made any investments in the shares of the Company

(e) The above loan is repayable on demand and carries rate of interest at 9% p.a.

10. Pursuant to provisions of Schedule II of the Companies Act, 2013, becoming applicable to the Company with effect from January 1, 2015, the Company reviewed and where necessary, revised estimates of useful lives of fixed assets. Accordingly, pursuant to the transitional provisions prescribed in Schedule II to the Companies Act, 2013, an additional charge of Rs, 153.17 Crore, being the carrying amount as of January 1, 2015 of fixed assets with no remaining useful life (as revised) as of that date, was recognized in the Statement of Profit and Loss for the year ended December 31, 2015 and disclosed as an exceptional item.

11. CORPORATE SOCIAL RESPONSIBILITY EXPENSES:

The aggregate amount of expenditure incurred during the year on Corporate Social Responsibility and shown in the respective heads of account is as follows: Further, no amount has been spent on construction / acquisition of an asset of the Company.

The amount required to be spent under Section 135 of the Companies Act, 2013 for the year 2016 is Rs, 21.47 Crore (Previous year - Rs, 27.90 Crore) i.e. 2% of average net profits for last three financial years, calculated as per section 198 of the Companies Act, 2013.

12. The Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) would be applicable to the Company from financial year commencing on January 1, 2017. Accordingly, the financial statements have been prepared in compliance with Companies (Accounting Standards) Rules, 2006.

13. In the previous year, the Company had received approval from the Company Law Board under Section 2(41) of the Companies Act, 2013 permitting the Company to continue having January 1- December 31 as its Financial Year.

14. COMPARATIVE FIGURES

Previous year's figures have been regrouped / reclassified wherever necessary, to conform to current year's classification.