48.2.1 I ncome tax assessments have been completed up to the accounting year ended 31-03-2018 i.e., Assessment Year 2018-19. As against the tax demand of Rs. 158.57 Crores (PY: Rs. 156.79 Crores), the Company has paid so far Rs. 18.83 Crores (PY: Rs. 2.54 Crores) as pre-deposit in compliance of Income tax laws for filing appeals with appellate authorities. Besides, the department had appropriated Rs. 2.99 Crores (PY: Rs. 1.97 Crores) against refund due / tax credits. The amount paid and the refunds appropriated so far are held in “Deposits under protest, in appeals” under other non-current assets. The company has preferred appeals before appellate authorities in respect of various disallowances in assessments and the appeals are pending. Out of the disputed tax demands of Rs. 158.57 Crores (PY: Rs. 156.79 Crores), a sum of Rs. 99.93 Crores (PY: Rs. 99.38 Crores) may not crystalize into a liability since the similar issues covered under the appeals are backed by judgements in favour of the company. In respect of issues decided in company’s favour before lower authorities, the department has preferred appeals for the disputed tax amounting to Rs. 48.57 Crores (PY: Rs. 48.57 Crores), which is pending before various appellate fora. The management believes that the above issues may not crystalize into tax liability based on the decisions favourable to the Company.

48.2.2 In respect of statutory appeals with the Appellate Authorities under State Sales Tax Acts / VAT Acts & CST Act in various states, as against net tax demands amounting to Rs. 9.80 Crores (PY: Rs. 9.80 Crores), a sum of Rs. 3.23 Crores (PY: Rs. 3.23 Crores) have been paid under protest. The amount paid under protest is held in “Deposits under protest, in appeals” under other non-current assets.

In respect of GST, the Assessing Officer had raised demand of Rs. 46.01 Crores (PY: Nil) in respect of disallowances of GST on post supply discounts for the period 2018-19, 2019-20, Apr 2022 and May 2022 on the ground of non-submission of confirmation for tax reversals on post supply discounts by the buyers. Besides the department has also levied interest of Rs. 0.19 Crores for delayed filing of return for the month of July 2017 due to technical glitches in the GST portal. As against these demands of Rs. 46.20 Crores (PY: Nil), the Company filed an appeal for Rs. 23.94 Crores and paid Rs. 2.16 Crores (PY: Nil) as pre-deposit and the appeals are pending. The amount paid is held in “Deposits under protest, in appeals” under other non-current assets. The Company has sufficient time to file an appeal for the balance demand of Rs. 22.26 Crores. Consequently, Rs. 44.04 Crores (PY: Nil) remain un-paid as at the reporting date. The Management believes that these demands may not crystalize into a liability since the requisite documentary evidences were collected by the Company subsequently for submission to appellate authorities at the time of hearing.

48.2.3 In respect of levy of differential Excise Duty on bulk cement and supplies to industrial consumers, levy of excise duty on cement / dry mortar based on MRP including interest and penalty amounting to Rs. 140.92 Crores (PY: Rs. 140.98 Crores) demanded by the Department, a sum of Rs. 136.13 Crores (PY: Rs. 136.64 Crores) remain un-paid as at 31-03-2023. The Company has paid so far Rs. 4.79 Crores (PY: Rs. 4.34 Crores) as pre-deposit in compliance of the interim orders by the appellate authorities and is held in “Deposits under protest, in appeals” under other non-current assets as at the

reporting date. The levy of excise duty on cement has been decided by various tribunals in favour of the industry including the company. The management believes that out of the disputed demands of Rs. 140.92 Crores (PY: Rs. 140.98 Crores), a sum of Rs. 128.73 Crores (PY: Rs. 128.79 Crores) may not crystalize into a liability since the issues covered under the appeals are backed by favourable judgements from various tribunals. However, in the matter of levy of excise duty on cement, the department has preferred appeal before the Hon’ble Supreme Court against the favourable order received by the company for one of its units, which is pending.

In respect of disallowance of CENVAT credit on inputs, capital goods, service tax on goods transports agency amounting to Rs. 20759 Crores (PY: Rs. 220.17 Crores), a sum of Rs. 192.13 Crores (PY: Rs. 204.75 Crores) remain un-paid as at 31-03-2023. The Company has paid so far Rs. 15.46 Crores (PY: Rs. 15.42 Crores) as pre-deposit in compliance of the interim orders by the appellate authorities and such pre deposits were held in “Deposits under protest, in appeals” under other non-current assets as at the reporting date. The management believes that out of the disputed demands of Rs. 20759 Crores (PY: Rs. 220.17 Crores), a sum of Rs. 155.89 Crores (PY: Rs. 161.98 Crores) may not crystalize into a liability since the issues covered under the appeals are backed by favourable judgements.

48.2.4 TANGEDCO has raised a demand towards compensation charges of Rs. 0.92 Crores alleging that the Company has exceeded the quota of power consumption during evening peak hours. The Company has filed writ petition before the High Court of Madras and the same has been admitted. However, the Company had deposited the amount of Rs. 0.92 Crores under protest and the same is held in “Deposits under protest, in appeals” under other non-current assets.

48.2.5 Government of Karnataka has imposed Environmental Protection Fee of Rs. 5.80 crores, in connection with Company’s mining leases. In the writ petitions filed by the Company and other similarly affected companies, the High Court of Karnataka, has stayed the imposition of the fee. As per the interim order, the Company has deposited a sum of Rs. 2.90 Crores (PY: Rs. 2.90 Crores) and the same is held in “Deposits under protest, in appeals” under other non-current assets.

48.2.6 The Competition Commission of India (CCI) vide its order dated 31-08-2016 had imposed a penalty of Rs. 258.63 Crores on the company towards alleged cartelisation. Our appeal along with the appeals of other cement companies had been dismissed by NCLAT vide its order dated 25-07-2018. Against the order, the company appealed to the Honourable Supreme Court, which by its order dated 05-10-2018 admitted the appeal and directed to continue the interim order passed by NCLAT. Accordingly, the company re-deposited Rs. 25.86 Crores being 10% of the penalty and the said deposit is classified under “Bank Balances other than Cash and Cash Equivalents’.’ The Company backed by legal opinion, believes that it has a good case and hence no provision is made.

48.2.7 The Writ Petitions filed by the company in the Madras High Court against Tamil Nadu Electricity Board (TNEB) towards levy of electricity tax at 15% on the generation of power from captive generator sets using furnace oil are pending. The levy pertains to the period 01-01-1992 to 30-10-1997 The total disputed amount of Rs. 1.34 Crores has been paid under protest and the same is held in “Deposits under protest, in appeals” under other non-current assets.

48.2.8 Southern Power Distribution Company of Andhra Pradesh Limited has demanded an amount of Rs. 0.32 Crores towards alleged excess load factor incentives allowed by them. The Company has filed an appeal before High Court of Andhra Pradesh and obtained an order of interim stay.

48.2.9 Andhra Pradesh Transmission Corporation Limited (APTRANSCO) has levied Rs. 5.91 Crores as Fuel Surcharge Adjustment (FSA) for the period from Apr 2008 to Dec 2012. Out of that, the company has paid and expensed Rs. 3.85 Crores and the balance amount of Rs. 2.06 Crores is not presently enforceable for the reasons that a part of the amount is covered in the appeal filed by the APTRANSCO before Supreme Court and the interim order granted in favour of the company by the Honourable AP High court. APERC has ordered that this FSA is not leviable from Jan 2013 onwards.

48.2.10 The Director of Geology & Mining, Government of Tamil Nadu had raised additional Royalty demand on limestone, based on production of cement by the company instead of basing it on actual quantity of limestone mined. The demand for the company is Rs. 9.66 Crores for the period from the year 1989 to year 2001. In the Writ petitions filed by the company and other similarly affected companies, the Madras High court has directed the companies to pay the Royalty

as demanded in the impugned notice. Aggrieved by that, the Company has filed a review petition against the impugned order and it is pending.

48.2.11 Water Resources Department of Public Works Department, Government of Tamil Nadu had raised a demand of Rs. 1.13 Crores contending that water charges are to be paid on the contracted quantity and not on the actual quantity of water drawn by the company from Arjuna River in Virudhunagar District. The demand pertains to the period from the year 1990 to year 2009. The company has obtained interim stay from the High Court of Madras. As per the interim order, the Company has deposited a sum of Rs. 0.30 Crores with the Department and the same is held in “Deposits under protest, in appeals” under other non-current assets.

48.2.12 Environment, Forests Science & Technology Department, Government of Andhra Pradesh has increased the Royalty on the Limestone mined from the Forest Area from Rs. 5/- per permit to Rs. 10/- per ton from the year 2010-11 onwards. The company filed a writ petition before the High Court of Andhra Pradesh and obtained an interim order, to pay 1/3^rd of the demand. As per the Court order, the company has paid and expensed Rs. 1.57 Crores, being the 1/3^rd portion up to 31-03-2017 The balance amount of Rs. 3.15 Crores being 2/3^nd portion remain unpaid. However, there is no dispute with effect from 01-04-2017 onwards.

48.2.13 New Industries set up in Tamil Nadu were eligible for Power Tariff Concession as per G.O.Ms. No.29 dated 31-011995, which was sought to be withdrawn to Industries set up after 14-02-1997 as per G.O.Ms. No.17 dated 14-02-1997 The eligibility for Power Tariff Concession for Alathiyur unit became a dispute between the Company and TNEB. Based on the interim order of the High Court of Madras, the Company had availed power tariff concession to the tune of Rs. 11.41 Crores and sought refund of un-availed concession of Rs. 1.80 Crores. The matter was finally settled by the Supreme Court, vide its judgement dated 16-05-2008, wherein it laid down criteria for ascertaining the eligibility for Power Tariff Concession for new industries and directed the TNEB to decide the eligibility for the Company based on the said criteria. However, vide its order dated 30-06-2008, the TNEB sought to introduce new criteria not enumerated in the Supreme Court judgement. Aggrieved, the Company filed a writ petition (WP No: 16348 of 2008) before the High Court of Madras, which by its judgement dated 13-11-2008 set aside the additional criteria not mentioned in the Supreme Court Judgement and confirmed the eligibility of Power Tariff Concession for the Company. TNEB has filed a writ appeal (WA No: 629 of 2010) in the High Court of Madras against the said order seeking disentitlement of power tariff concession already availed. The matter is pending before the High Court of Madras.

48.2.14 Under Tamil Nadu Electricity Regulatory Commission (Renewable Energy Purchase Obligations) Regulations, 2010, consumers owning grid connected captive power generating plants and open access consumers with a sanctioned demand of more than 2 MVA are obligated to consume a minimum of 9% and 0.5% of their energy requirements from wind and solar sources respectively. The non-complainants are required to purchase Renewable Energy Certificates (REC) from markets @ 1 REC per 1000 units of shortage or deposit an equivalent amount in a separate designated fund. Even though the Company is consuming wind energy generated from its wind farms, it has been excluded for reckoning the obligatory consumption, since the company has wheeling and banking arrangement with TNEB. Aggrieved, the Company including other affected producers have approached the Madras High Court and obtained an interim stay against the implementation of the said regulation.

48.2.15 TANGEDCO has levied “Scheduling & System Operation charges” for windmills under “Sale to Board” category at Rs. 600 per day per 2 MW based on their internal circular dated 25-11-2014. The annual impact of “Scheduling & System Operation charges” will be Rs. 1.02 Crores. The Company has filed a Writ Petition before the Madras High Court challenging the collection of said charges and obtained an interim stay against the “Scheduling & System Operation charges”

48.2.16 The Company had purchased around 40.36 acres of lands in Tamil Nadu after verification of title documents based on revenue records of the year 1987 as basis. Thereafter, the revenue officials verified the title documents and transferred the patta in the name of the Company. While this being so, the Sub-Collector, Ariyalur, by the order dated 10-02-2015, cancelled the said patta and reclassified the said land as Government poromboke Anadheenam lands’ by placing reliance on revenue records of the year 1927 The Company has filed a Writ Petition before the Madras High Court challenging the said cancellation of patta and obtained an interim stay.

48.2.17 TANGEDCO had raised a demand of Rs. 4.28 Crores towards alleged incorrect adjustments of wind energy based on its Audit objections. Against the above demand, a sum of Rs. 2.54 crores was appropriated by TANGEDCO from the Company’s Deposits with them and balance amount of Rs. 1.74 crores remain unpaid. The amount appropriated is held in “Deposits under protest, in appeals” under other non-current assets. The Company has challenged the said demand before the TNERC by filing a Petition on 30-05-2014 and the same is pending before the Commission.

48.2.18 The Department of Mines and Geology, Government of Karnataka by its order dated 31-10-2014 withdraw its mining lease granted to the company already granted for 30 hectares of forest land on a technical ground. Based on the writ petition filed by the company, the Honourable Karnataka High court has directed the State Government to consider the company’s representation. The Government vide its order dated 10-01-2016 has rejected the company’s representation. Aggrieved by the said order, the Company has again filed a writ petition before the Honourable Karnataka High Court and the same is pending.

48.2.19 The Special Deputy Collector (Stamps), Ariyalur had issued a notice demanding an amount of Rs. 0.65 Crores for alleged deficiency in stamp duty in purchase of lands. Against the demand, the Company filed an appeal before Honourable High Court of Madras and it is pending.

48.2.20 As per the Grid Connectivity and Intra State Open Access Regulations, the TNERC has authorised TANGEDCO to collect Parallel Operation Charges of Rs. 30,000/- per MW from the power generators whoever availing only parallel operation with grid but without availing open access. Even though the Company had open access approval, TANGEDCO had sent demand notice for parallel operation charges for a sum of Rs. 9.17 Crores levied retrospectively from 07-05-2014 to 31-12-2016. The Company has filed writ petition in the Honourable High Court of Madras and obtained the final order directing the TANGEDCO to settle the matter in TNERC within a reasonable period. TNERC ordered that the levy of parallel operation charges was leviable. Aggrieved by the said order, the company has filed an appeal before Appellate Tribunal for Electricity (APTEL) and has obtained interim stay against the order of TNERC.

48.2.21 The company along with other companies have challenged the validity of the “The West Bengal Tax on Entry of Goods into Local Areas Act, 2012” in the writ petitions before the Kolkata High court. The court had held the said Act was ultra-vires. Aggrieved by that, the Government preferred an appeal before the Division bench. The bench had passed an interim order not to enforce any demand until disposal of the writ petitions but permitted the department to do the assessment proceedings. The estimated contingent liability for the period from August, 2013 to June, 2017 is Rs. 9.24 crores. The company has paid and expensed the said taxes upto July, 2013 from its inception.

The Asst. Commissioner (CT) LTU, Vijayawada has issued a demand on 12-02-2019 for Rs. 1.29 crores for the period from April, 2014 to March, 2017 towards entry tax on petroleum products viz., Diesel, Furnace oil under the Andhra Pradesh Tax of Entry of Goods into Local Areas Act, 2001. The company had filed a writ petition before Honourable AP High court, Vijayawada against the demand. As per the interim order, the Company has deposited a sum of Rs. 0.32 Crores (PY: Rs. 0.32 Crores) with the Department and the same is held in “Deposits under protest, in appeals” under other non-current assets. The appeal is pending.

48.2.22 The Company had held Mining Lease for an extent of 18.11.5 Ha for a period of 20 years from 25-10-1993 to 24-10-2013, which holding was later reduced to 4.68 Ha of leasehold area. The Company received a Memorandum dated 26-08-2019 issued by the District Collector, Perambalur, wherein the Company was directed to remit the amount of Rs. 6.59 Crores being the 100% of the cost of mineral of 1.45 Lac metric tons of limestone mined from our leasehold area covering the period from 15-01-2016 to 10-01-2017 allegedly without Environmental Clearance. The Company believes that there is no violation and hence initiated steps to challenge this demand by way of a Writ Petition before the Honourable High Court of Madras, was dismissed. The Company has filed an appeal before division bench against the impugned order and the matter is now pending.

Defined Benefit Plan - Gratuity

The Gratuity payable to employees is based on the employee’s service and last drawn salary at the time of leaving the services of the Company and is in accordance with the rules of the Company read with Payment of Gratuity Act 1972. This is a defined benefit plan in nature. The Company makes annual contributions to “The Ramco Cements Limited Employees’ Gratuity Fund” administered by trustees and managed by LIC of India, based on the Actuarial Valuation by an independent external actuary as at the Balance Sheet date using Projected Unit Credit method. The Company has the exposure of actuarial risk such as adverse salary growth, change in demographic experience, inadequate return on underlying plan assets. This may result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature, the plan is not subject to any longevity risks.

The Board of Directors (BOD) has overall responsibility for the establishment and oversight of the Company’s risk management framework and thus established a risk management policy to identify and analyse the risk faced by the Company. Risk Management systems are reviewed by the BOD periodically to reflect changes in market conditions and the Company’s activities. The Company through its training and management standards and procedures develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit Committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the risk management framework. The Audit committee is assisted in the oversight role by Internal Audit. Internal Audit undertakes reviews of the risk management controls and procedures, the results of which are reported to the Audit Committee.

Receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer. The Company extends credit to its customers in the normal course of business by considering the factors such as financial reliability of customers. The Company evaluates the concentration of the risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets. The Company maintains adequate security deposits from its customers in case of wholesale and retail segment. In case of institutional segment, credit risks are mitigated by way of enforceable securities. The exposures with the Government are generally unsecured but they are considered as good. However, unsecured credits are extended based on creditworthiness of the customers on case to case basis. Besides, the Company also avails factoring facility on non-recourse basis by assigning its rights and privileges to the counterparty.

Financial Instruments and Cash deposits

Investments of surplus funds are made only with the approved counterparties. The Company is presently exposed to counter party risk relating to short term and medium term deposits placed with banks, and also investments made in mutual funds. The Company places its cash equivalents based on the creditworthiness of the financial institutions.

Liquidity Risk

Liquidity Risks are those risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. In the management of liquidity risk, the Company monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the company’s operations and to mitigate the effects of fluctuations in cash flows. Besides, the Company also avail supplier financing facility through reverse factoring arrangements for early payment to suppliers / service providers and the company shall pay such outstanding to the finance providers on the due date along with interest.

Due to the dynamic nature of the underlying business, the Company aims at maintaining flexibility in funding by keeping both committed and uncommitted credit lines available. The Company has laid well defined policies and procedures facilitated by robust information system for timely and qualitative decision making by the management including its day to day operations.

Notes

(a) The above table has been drawn up based on the undiscounted contractual maturities of the financial liabilities.

(b) Security deposits do not have a contractual payment term but are repayable on demand. Since, the Company does not have an unconditional right to defer the payment beyond 12 months from reporting date, these deposits have been classified under current financial liabilities. For including these amounts in the above-mentioned maturity analysis, the Company has assumed that these deposits will be repayable at the end of the next reporting period. The actual maturity period for the deposit amount can differ based on the date on which these deposits are settled to the customers.

Foreign Currency Risk

The Company’s exposure in USD and other foreign currency denominated transactions in connection with import of capital goods, spares and fuel, besides exports of finished goods and borrowings in foreign currency, gives rise to exchange rate fluctuation risk. The Company has following policies to mitigate this risk:

Decisions regarding borrowing in Foreign Currency and hedging thereof, (both interest and exchange rate risk) and the quantum of coverage is driven by the necessity to keep the cost comparable. Foreign Currency loans, imports and exports transactions are hedged by way of forward contract after taking into consideration the anticipated Foreign exchange inflows/outflows, timing of cash flows, tenure of the forward contract and prevailing Foreign exchange market conditions.

Cash flow and fair value interest rate risk

Interest rate risk arises from long term borrowings with variable rates which exposed the company to cash flow interest rate risk. The Company’s fixed rate borrowing are carried at amortized cost and therefore are not subject to interest rate risk as defined in Ind AS 107 since neither the carrying amount nor the future cash flows will fluctuate because of the change in market interest rates. The Company is exposed to the evolution of interest rates and credit markets for its future refinancing, which may result in a lower or higher cost of financing, which is mainly addressed through the management of the fixed/floating ratio of financial liabilities. The Company constantly monitors credit markets to strategize a well-balanced maturity profile in order to reduce both the risk of refinancing and large fluctuations of its financing cost. The Company believes that it can source funds for both short term and long term at a competitive rate considering its strong fundamentals on its financial position.

Commodity price risk

Commodity price risk arises on account of fluctuations in price of raw materials and fuels viz. coal and pet coke, which are linked to various external factors. Since these are primary costs in cement production, any adverse fluctuation in these prices can lead to significant drop in operating profitability.

To mitigate this risk, the Company closely observe the prices and buy when the prices tend to come down and also taken steps to maintain three to four months inventory to beat the impact of upward cycle of commodity index, usage of other alternate fuels and optimum fuel mix to manage over fuel cost. The Company also enters into long term contracts with suppliers at competitive prices. These processes and procedures are reviewed by the management at regular intervals and measures have been taken to curb it.

(g) Undisclosed Income

The Company do not have any transaction which are not recorded in the books of accounts that has been surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 during any of the years.

(h) Relationship with Struck off Companies

The Company did not have any transactions with Companies struck off under Section 248 of Companies Act, 2013 or Section 560 of Companies Act, 1956 considering the information available with the Company.

(i) Details of Crypto Currency or Virtual Currency

The Company did not trade or invest in Crypto Currency or virtual currency during the financial year. Hence disclosure relating to it are not applicable.

(j) Benami property

The Company did not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(k) The Company has neither advanced or loaned or invested, nor received any fund, to or from, any other persons or entities including foreign entities (intermediaries) with the understanding that the intermediary shall:

i. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company or

ii. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

I n order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. There have been no significant breaches in the financial covenants of any interest-bearing loans/borrowing. The Company is not subjected to any externally imposed capital requirements. There are no significant changes in the objectives, policies or processes for managing capital during the years ended 31-03-2023 and 31-03-2022.

64. Closure of foreign branch in Srilanka

The Company has closed the operations of foreign branch in Srilanka effective from 27-07-2021, in view of its unviability. The completion of unwinding activities is in progress. There is no material impact in the financial statements because of closure of said branch operation.