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Annual Report 2012-13

EIGHTEEN YEARS OF GROWTH

HINDUSTAN COLAS LIMITED

efnbogmleeve keÀesueeme efueefceìs[

~~ megyeerpeb meg#es$es pee³eles mebheÐeles~~

HINCOL is a joint venture of

Hindustan Petroleum Corporation Ltd. and Colas SA France

Business Profile

Corporate Information

Financial Highlights

Performance Profile

Performance at a glance

Sustainability & CSR Reporting

3

4

7

8

10

12

Corporate Governance Report

Directors’ Report

Management Discussion & Analysis

Photo Gallery

Auditors’ Report

Financial Statements

17

23

28

32

33

38

CONTENTS

Eighteen Years of Growth

is a very significant number - it represents growth…..development…..

maturity. More importantly, it is the threshold of a future filled with hope...a

time to start reaping the benefits of a strong foundation. For HINCOL, this year is

special as we turned 18!

Infancy to Adulthood...

The quotation from ‘Manu-Smriti’ “megyeerpeb meg#es$es pee³eles mebheÐeles” - as cited on the

cover literally means “Good seed sown in good soil yields abundant wealth.” The

growth story of HINCOL aptly characterises and proves this old adage.

It was 18 years ago that two giants, Hindustan Petroleum Corporation Ltd, India and

Colas SA, France, identified the market potential in the infrastructure sector of India

and joined hands with a common vision - a vision to cater to the demands of the road

construction industry with innovative and environment friendly products. This vision

led to creation of a Joint Venture in the year 1995 and Hindustan Colas Ltd (HINCOL)

was formed.

As Aeschylus said, “From a small seed, a mighty trunk may grow” Over the last 18

years, we have grown multi-fold, spreading our branches far and wide. Our growth

has been reflected in all the facets of our business - range of products and services …..

customer accounts ….. sales volumes ….. facilities and equipments ….. marketing

network ….. distribution channels ….. human resources ….. finally culminating in

growth in our financial performance and strength.

18

Apart from the financial growth, we have crossed several milestones during this period

and have successfully implemented various ambitious initiatives such as ERP system,

IMS certification, Balanced Score Card and ERM framework to name a few.

Products to Projects

Throughout this time, HINCOL has played a pioneering role in the evolution of

Bitumen Emulsions and Modified Bitumen. Through our untiring efforts, we have

explored uncharted territories of products like Anionic Emulsions, Modified Emulsion,

Warm Bitumen, Pothole repairing ready cold mix (“Road-Bond”), Antistripping agent

(“Bitugrip”) etc. to meet the special needs of our customers. Our high quality products

and customer-centric approach have made us the first choice among leading road

construction companies.

In our eighteenth year, we have embarked on a successful diversification into the Road

Repair and Maintenance segment. This step is towards actualisation of our vision to

become a “one stop shop” providing end to end solutions.

Development to Sustainability

Our country’s roads require the strength to weather the forces of nature and time. They

require a solid foundation. By helping to solve the road-building challenges across the

nation, we are a vital part of that foundation. Our products are everywhere, from the

smallest villages to the largest cities - linking communities, providing connections and

contributing to the development of our country.

As a matured corporate entity, HINCOL consciously pursues causes and initiatives to

discharge its corporate social responsibility. Our focus has now changed from mere

development to sustainable development. On one hand, our environment friendly

production processes and application techniques help the globe going green by meeting

sustainability principles, on the other hand, the triple bottom line approach – economic,

ecological and social – internalised in our philosophy ensures that our organisational

growth is also connected with sustainability practices. Thus, not only we are committed

to conducting business safely, in an ethically, socially and environmentally responsible

manner but we also believe and facilitate sustainable and responsible growth in the

sector we operate.

Yes, at 18, we are imbued with hope for a fulfilling future ahead!

...

...

18th Annual Report 2012-13 3

OUR PRODUCTS AND SERVICES

HINCOL produces bitumen emulsions and modified

bitumen conforming to the highest standards of quality.

Our repertoire also comprises special emulsions and

tailor-made products like PMB (Run-way Grade)

and Warm Bitumen. Our ready cold mix product

ROADBOND has found recognition and appreciation as

an effective solution for pothole repairs.

HINCOL is also looking at opportunities to get into

the business of construction and maintenance of roads

through niche technologies of cold-mix and micro-

surfacing.

OUR FACILITIES

HINCOL has a network of eight manufacturing facilities

strategically located across India. Our reach is further

enhanced by our strong marketing network and storage

depots that take our products closer to our customers.

Our manufacturing plants deploy modern state-of-the-art

production facilities. Technical support from COLAS SA

and marketing support from HPCL ensures excellence in

our operations. Well equipped labs at all HINCOL plants,

supported by the Central Research Laboratory of Colas

SA, ensure strict Quality Control. HINCOL has recently

commissioned a mobile plant for production of modified

bitumen at the site of the customer.

BUSINESS PROFILE

Micro-surfacing paver

Mobile facility for MB Production

Micro-Surfacing of pavement in progress

Road Repair with Cold Mix in progress

NEW FACILITIES

NEW SERVICESNEW SERVICES

4 Hindustan Colas Limited

CORPORATE INFORMATION

Mr. K V RaoDirector (from June '13)

Ms. Nishi Vasudeva Director

Mr. Somchit Sertthin Director

Mr. Jacques LeostAlternate Director to Mr. Hervé Le Bouc

Mr. Bhaswar Mukherjee Director (till May '13)

Mr. Jacques Pastor Director

Mr. S Roy ChoudhuryChairman

Mr. Hervé Le Bouc Director

BOARD OF DIRECTORS


"MANAGER" UNDER THE COMPANIES ACT Tejbir Singh Sawhney (from 18.04.2013)

V K Shrote (from 01.01.2013 to 17.04.2013)

Sanjay Grover (till 31.12.2012)

COMPANY SECRETARYSitaRam Taparia

REGISTERED OFFICED-500, TTC Industrial Area, MIDC.

Opp. HPCL Terminal, Turbhe,

Navi Mumbai – 400 703.

Email: [email protected]

CORPORATE OFFICER&C Building Annexe, Sir J J Road, Byculla,

Mumbai- 400 008 Tel. 91-22-61501000.

Website: www.hincol.com

CORPORATE IDENTITY NUMBERU23200MH1995PLC090671

Tejbir Singh SawhneyChief Executive Officer

V K Shrote Chief Operating Officer

SitaRam Taparia Chief Financial Officer

Ajit Kumar M Head - IT & ERP

Bharat Kaneri Head - Commercial

SENIOR MANAGEMENT

TEAM


Regional

BUSINESS TEAM

V Vijayaraghavan, Southern Region

Subhasis Mohanty, Northern Region

Vikas Gangal, Western Region

Subhendu Kundu, Eastern Region

T K Subhash, Chief Manager-Technical

CORPORATE TEAM LEADS

Nitin Soni, Chief Manager-HR

Vijay Agrawal, Chief Manager- Corporate Finance

Dayanand Patil, Manager-HSE

Bidyut Kumar Das, Business Development Manager

PLANT MANAGERS / IN-CHARGE

Anil Sharma, Savli

Suresh Kumar, Mangalore

M Srinivasan, Irungattukottai

V Sriram, Visakhapatnam

Atul Kumar Misra, Jhansi

Vinod Aggarwal, Bahadurgarh

E B Sajikumar, Vashi

Vijay Kumar, Haldia

MARKETING MANAGERSK.G. Ranganatha, Southern Region

Vikash Anand, Northern Region

Shekhar Wani, Western Region

Avdesh Singh, Eastern Region

STATUTORY AUDITORSM/s Ford, Rhodes, Parks & Co.

Chartered Accountants, Mumbai

COST AUDITORSM/s Kishore Bhatia & Associates

Cost Accountants, Mumbai

INTERNAL AUDITORSM/s G P Kapadia & Co.

Chartered Accountants, Mumbai

BANKERSCorporation Bank

State Bank of India

IDBI Bank

Kotak Mahindra Bank

Standard Chartered Bank


Key Indicators € Millions $ Millions Increase/(Decrease)

FY 12-13 FY 11-12 FY 12-13 FY 11-12 %Change

Revenue from Operations 87.43 59.37 112.49 76.39 47.26

Other Income 0.97 0.94 1.25 1.21 3.50

Total Revenue 88.40 60.31 113.74 77.60 46.56

Cash Profit before tax 8.37 6.55 10.77 8.42 27.92

Depreciation 0.90 0.76 1.16 0.98 19.02

Profit Before Tax 7.47 5.79 9.61 7.44 29.08

Current and Deferred Tax 2.56 2.01 3.29 2.59 27.02

Profit After Tax 4.91 3.78 6.32 4.85 30.18

For sake of comparison, Average Exchange Rate of FY 2012-13 applied to both the years as:1 €= ̀70.041 $ = ̀ 54.44

Key Indicators € Millions $ Millions Increase/(Decrease)

FY 12-13 FY 11-12 FY 12-13 FY 11-12 %Change

Fixed Assets Base 12.67 12.61 16.20 16.13 0.47

Working Capital 7.63 7.08 9.75 9.06 7.67

Total Assets 20.30 19.69 25.95 25.19 3.11

Net Worth 18.89 18.39 24.15 23.51 2.71

Loan Funds 0.22 0.30 0.28 0.39 (25.24)

Deferred Tax Liability 1.19 1.00 1.52 1.29 18.93

Total Liabilities 20.30 19.69 25.95 25.19 3.11

For sake of comparison, Exchange Rate of 31.03.2013 applied to both the years as:1 €= ̀

1 $ = ̀54.39

FINANCIAL HIGHLIGHTS

9

.39

6


(in ̀Lakhs)

Performance Parameter FY12-13 FY11-12 FY10-11 FY 09-10 FY 08-09Gross Fixed Assets 12,260 11,402 8,992 7,668 6,960 Less : Depreciation 3,545 2,970 2,469 2,029 1,657 Net Fixed Assets 8,715 8,432 6,523 5,639 5,303 Capital Works-In-Progress (including advances) 97 339 1,055 501 90

(A) 8,812 8,771 7,578 6,140 5,393

Inventories 3,204 2,606 1,951 1,774 1,473 Trade Receivables 4,430 3,053 1,641 1,676 3,367 Cash and Bank Balances 7,495 7,320 7,100 5,992 3,712 Other Assets 1,521 1,421 1,363 1,096 953 (B) 16,650 14,400 12,055 10,538 9,505 Less : Liabilities & Provisions (C) 11,345 9,473 6,750 5,323 6,561 Net Working Capital (D=B-C) 5,305 4,927 5,305 5,215 2,944 (A+D) 14,117 13,698 12,883 11,355 8,337

Share Capital 945 945 945 945 945 Reserves and Surplus 12,190 11,843 11,121 9,655 6,271 Net Worth 13,135 12,788 12,066 10,600 7,216 Loan Funds 153 206 253 254 646 Deferred Tax Liability 829 704 564 501 475

14,117 13,698 12,883 11,355 8,337

Fixed Assets Turnover (Times) 6.97 5.09 5.16 6.10 7.66 Current Ratio (Times) 1.47 1.52 1.79 1.98 1.45 Liquid Ratio (Times) 1.19 1.25 1.50 1.65 1.22 Debt to Equity Ratio (Times) 0.01 0.02 0.02 0.02 0.09 Capital Employed Turnover Ratio (Times) 4.40 3.13 2.92 3.58 5.05 Book Value per Share (`) 138.99 135.33 127.68 112.18 76.37

PERFORMANCE PROFILE


Performance Parameter FY12-13 FY11-12 FY10-11 FY 09-10 FY 08-09Volumes (in MT)Sales 171,275 127,728 130,230 132,060 135,410 Jobwork 5,926 18,678 28,643 52,606 59,356

177,201 146,406 158,873 184,666 194,766

Operating Margins (in ̀Lakhs)Revenue from Operations 61,237 41,584 35,370 35,204 35,494 Cost of Goods Sold 51,944 34,236 28,012 26,779 28,440 Operating Expenses 1,788 1,393 1,259 873 826

(A) 7,505 5,955 6,099 7,552 6,228 ExpensesEmployee Costs 1,125 1,063 897 782 670 Administrative Expenses 628 579 531 567 666 Selling and Distribution Expenses 562 492 397 410 473 Depreciation 632 531 456 393 315

(B) 2,947 2,665 2,281 2,152 2,124 Profit from operating activities (A-B) 4,558 3,290 3,818 5,400 4,104 Other Income 681 658 427 405 151 Finance Charges 3 3 2 2 1 Exceptional & Extraordinary Items -Gain / (Loss) (3) 109 (67) - - Profit before Tax 5,233 4,054 4,176 5,803 4,254 Provision for Taxation 1,791 1,410 1,338 1,978 1,467 Profit after Tax 3,442 2,644 2,838 3,825 2,787

Operating Margin as % of Revenue from Operations 12.26 14.32 17.24 21.45 17.55 PBT as % of Total Revenue 8.45 9.60 11.67 16.30 11.93 PAT as % of Total Revenue 5.56 6.26 7.93 10.74 7.82 Return on Net Worth% 26.56 21.28 25.04 42.94 47.19 EPS in ` 36.42 27.98 30.04 40.48 29.49 Cash EPS in ` 43.11 33.60 34.86 44.64 32.83


Revenue Profit After Tax

Sales Volumes (in TMT)180

160

120

80

40

0FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13

Emulsions OthersModified BitumenJobworkOwn Production

Production Volumes (in TMT)

200

150

100

50

0FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13

137

6

19

29

52

59

Revenue (in ` lakhs)

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13

35645 35,609 35,797

42,242

61,918 4000

3000

2000

1000

0FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13

2,787

3,825

2,838 2,644

3,442

13013

2

128 17

2

107

108

102

100

109

60

2423

17218 7

5 4

2

PERFORMANCE AT A GLANCE

Depreciation & Finance ChargesEmployee costsAdmin and S&D expenses

Income TaxCOGS & Operating expenses

Interest IncomeHospitality ChargesSales

Revenue Profile for FY12-13 Expenditure Profile for FY12-13

2% 1%

2%

92%

2% 1% 3%

97%

PAT (in ` lakhs)


Net Worth Fixed Asset Base

16000

12000

8000

4000

0FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13

Fixed Asset Base (in ̀lakhs)

7,050 8,169

10,047

11,741 12,357

Cash Position EPS / DPS

60

50

40

30

20

10

0FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13

RONW %

Return on Net Worth PAT to Total Revenue

PAT to Total Revenue %

12

10

8

6

4

2

0FY 08-09 FY 09-10 FY 10-11 FY 10-11 FY 12-13

16000

12000

8000

4000

0FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13

Net Worth (in ̀lakhs)

7,216

10,600 12,066

12,788 13,135

8000

6000

4000

2000

0FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13

Cash Position (in ̀lakhs)

3,712

5,992

7,100 7,320 7,495

47.19 7.82

10.74

7.93

6.26

5.56

42.94

25.0421.28

26.56

Income Tax

50

40

30

20

10

0

Dividend per share ( )̀Earning per share ( )̀

FY 08-09 FY 09-10 FY 10-11 FY 11-12

27.9

8

36.4

2

28.1

0

17.5

0

30.0

4

12.5

0

40.4

8

4.00

29.4

9

1.50

FY 12-13


SUSTAINABILITY & CSR REPORTING

PRODUCTS AND THEIR APPLICATION

The products of the Company as well as application

of these products are friendly to the environment.

The societal responsibility of the road network

operators is increasingly moving towards addressing

the needs of the whole community which includes

environmental impact of road works. HINCOL is

helping the operators in discharging this responsibility

through a comprehensive offering of technical inputs

and environment friendly products. Going beyond

pavement maintenance and sustainable pavements,

bitumen emulsions also contribute to sustainable

development by reducing energy consumption and

emissions of greenhouse gases. Models have been

developed and assessed that show the positive impact

of the use of bitumen emulsions on these parameters,

fully in line with the “Declaration on Environment

and Climate Change” adopted by the G-8 countries

in June 2008.

Life cycle analysis is a technique for assessing the

environmental aspects and the environmental

impacts associated with a product, a process or

a material. One of its aspects is to identify and

select adequate indicators, together with the

corresponding measurement methods. In this

respect, both consumption of energy and climate

change may be seen as the most critical areas, as

The role of business in society is being increasingly viewed differently and ‘Sustainable Development’ is replacing economic growth as the primary objective of any business enterprise. Companies now focus not only on enhancing their value through maximising profit but also concentrate on environmental and social issues equally. As such, a triple bottom-line approach of economic, ecological and social growth is being adopted by many companies.

HINCOL understands the significance of concept of sustainability and all the business operations are aligned towards creating a sustainable growth model. The Company very keenly believes in the triple bottom-line approach and recognizes that sustainable development necessarily imbibes taking care of communities and conservation of environment and natural resources.

Tree Plantation at Vashi Plant by Mr. Jacques Pastor


they involve the long term and the whole world

community. Limiting the consumption of energy

as well as the production of CO2 goes beyond the

single pavement preservation concept, and towards

a global sustainable development scheme. Such an

approach will definitively boost the development of

cold technologies, based on the use of emulsions. As

an example, a comparison is made between hot and

cold mix manufacturing.

CO2 emission and energy consumption for cold v/s

hot processes

Manufacturing process Eq. CO2 (kg/MT)

Energy MJ/MT

Hot mix 160°C moisture content 3% 21 277

Cold mix 3 36

As more and more countries continue to

recognize the importance of sustainable

pavement maintenance and start giving due

attention to the two most important challenges

of energy consumption and CO2 emissions,

Bitumen Emulsion techniques will find more and

more support as the appropriate answers to such

challenges.

OPERATING PROCESSES AND PRACTICES

The Company furthers the cause of environment

protection by consciously promoting various green

initiatives which are energy effective and eco-friendly.

The operating team constantly strives to conserve

energy by efficient management of processes and

effective use of energy saving devices. The operations

of the Company do not generate effluents that

Road work in progress at customer site

Fire safety drill at Mangalore Plant

The Company furthers the cause of environment protection by

consciously promoting various green initiatives which are energy

effective and eco-friendly.


cause deterioration of natural resources. Processes

at Company’s Plants do not result in generation of

any waste and hence a formal waste management

framework is not required. The ERP system, IT enabled

workflows and E-communication system ensure

minimum wastage of papers thereby saving precious

forests.

SAFETY HEALTH AND ENVIRONMENT

The Company continues to place special emphasis

on Health, Safety and Environment (HSE) while

handling all its operations. Through the years, Hincol

has displayed its commitment towards responsible

environmental, health and safety management. The

company has adopted ISO 14001 (Environmental

Management System) & OHSAS 18001 (Occupational

Health and Safety Assessment Standard) to raise the

standards of the company's responsibility towards

the environment as well as safety of people working

at our Plants and living in the vicinity. The Company

has been awarded coveted IMS certification for all its

Plants and HQO.

Hincol Plants continue to work safely and completed

696004 man-hours without any reportable accident

during the year 2012-13.

During the year, cross plants IMS audits were

conducted by our qualified and trained internal

auditors across all Hincol plants. The practice of

cross plant audits facilitates the plant functionaries

in sharing and learning best QHSE practices and thus

strengthening our IMS system.

Fire and Safety audit is an important element of

Health, Safety & Environment Management System.

Periodic fire and safety audits are being conducted

at all Plants to ensure safe working conditions,

adherence to safe operating procedures and sharing

best HSE practices across the plants. Risk in plant

operations is being reduced by provision of safe

working conditions.

Training and educating employees on safe operating

practices and safe behavior is very important for

prevention of accidents / incidents at work place.

Training programs on various topics like Behaviour

Based Safety (BBS), IMS awareness, Safety permits,

firefighting, emergency preparedness and response,

were conducted across all plants. Your company

organized focused training programs on Behavioral

Based Safety for all Plant employees internally and

also through National Safety Council and external

safety professionals.

Plant wise statutory compliance requirements are

monitored and 100% compliance is ensured. Our

employees are our biggest asset and Hincol takes

care to ensure health and well being of all employees.

Health checkup is carried out for every employee

on an annual basis. Medical camps are also being

arranged for health checkup of contract workmen.

Fire safety equipments


In line with our commitment to protect our

environment, tree plantations and green belt

development programs are being undertaken at the

plants. Massive tree plantation was done during

monsoon season in open areas at Bahadurgarh, Haldia

and Vashi plants. Our plant equipments such as

thermic fluid heaters, DG sets and hot water generators

are regularly tuned. Emissions through stacks are

monitored and ensured that the emission levels are

within the stipulated norms of Pollution Control

Boards. Our manufacturing processes do not discharge

any solid or liquid wastes and its our endeavor to make

our products more environmental friendly.

CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

Corporate Social Responsibility is the continuing

commitment by business to behave ethically

and contribute to economic development, while

improving the quality of life of the workforce and

their families as well as of the local community

and society at large. As a Joint Venture of two well

respected Companies who contribute towards such

initiatives, HINCOL has also made responsible

contributions to the social causes. Through its social

investments, HINCOL attempts to meet the needs of

communities residing in the vicinity of its facilities,

taking sustainable initiatives in the areas of health,

education, environment conservation etc.

The Company had undertaken the cause of supporting

the education of under privileged children of workers

deployed in quarries, which is located in the vicinity

of Vashi Plant through an NGO namely “The

Association of Rural People for Health and Education

Needs (ARPHEN). The Company has been supporting

this cause for the last 3 years and continues to do

so. The Company has also taken up the initiative

in helping procure education aids for a school for

underprivileged children in Vashi though the Rotary

Club of New Bombay Seaside. The Company has

also contributed few desktops / laptops to a school

in a village at Ratnagiri to enable the school impart

training in information technology.

Another humanitarian initiate taken by the Company

was to donate an Ambulance to Masuria Nabin

Sangha. This service shall benefit residents of 7

Villages in Mahishadal Block,Purba Medinipur district

of West Bengal. The Company has also conducted a

General Medical Camp for a day for the truck crews

and the general public living in the vicinity of the

Irungattukottai Plant near Chennai.

HINCOL attempts to meet the needs of communities residing in the vicinity of its facilities

HINCOL handing over an ambulance to NGO at Haldia


INTEGRATED MANAGEMENT SYSTEM POLICY

Hindustan Colas Ltd., herein referred as HINCOL, manufactures value added bituminous products at its various locations in India. We at HINCOL are deeply committed to strengthen our leadership position in value added bituminous products by meeting and exceeding quality, environmental, health and safety needs of our stakeholders.

HINCOL strives to fulfill its commitment by :

Meeting and exceeding contractual requirements of its customers.

Meeting and exceeding National and International standards in terms of quality and services.

Complying with applicable legal and other requirements.

Designing and developing safe and environmentally sound processes for production and handling of products at all stages.

Operating and maintaining Plants & equipments within designated safety criteria through out their life.

Making continual improvement in Integrated Management System.

Conserving key natural resources like electricity, water, fuels through efficient plant operations.

Preventing injury, occupational illness & environmental pollution by adopting appropriate control measures.

Ensuring safe, healthy & clean working environment to all its employees through periodic audits / inspections.

Educating and empowering employees on safe and environment friendly behaviour.

Management at all levels will be responsible and accountable for deployment of this policy.

Safety Week celebrations at Jhansi Plant

Safety pledge by employees of Visakh Plant

We at Hincol are deeply committed to strengthen our leadership position in value added bituminous products by meeting and exceeding

quality, environmental, health and safety needs of

our stakeholders.



reporting and internal controls, the Remuneration

Committee reviews the remuneration payable

to key managerial person(s). The newly formed

Sustainability & CSR Committee is responsible for

steering various Sustainability & CSR initiatives.

The executive management team under

leadership of the Chief Executive Officer

discharges its responsibilities subject to the

supervision, control and direction of the

Board of Directors. Below the level of the

Board, a Management Committee has been

constituted comprising of CEO, COO, CFO,

Head - Commercial, Head - IT & ERP and all

the Regional Business Heads (RBHs). While the

routine decisions are taken by a sub-committee

named as “Empowered Committee”, the

Management Committee continues to serve

as a think-tank to ponder over broader issues

relating to business and operations.

1. COMPANY’S PHILOSOPHY & PRACTICE ON

CORPORATE GOVERNANCE

HINCOL understands the significance of serving

all the stakeholders with fairness and transparency

and therefore, interest of all stakeholders are kept

in mind at all levels - from Board of Directors to

the lowest executive level. The entire executive

management takes greater responsibility in

taking care of governance, risk management

and compliances (GRC) aspects - right from

conception to execution of any decision.

In the governance framework of HINCOL, the

Board of Directors and various Committees thereof

being at the top of the organizational hierarchy

oversee and approve all the significant corporate as

well as business decisions in line with the Articles

of Association of the Company. While the Audit

Committee of the Board oversees the financial

CORPORATE GOVERNANCE REPORT

Executive Management briefing the Board of Directors

HINCOL understands the significance of serving

all the stakeholders with fairness and transparency and therefore, interest of all stakeholders are kept

in mind at all levels.



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3. MEETINGS OF BOARD OF DIRECTORS

Meetings of Board of Directors are held at least

four times in a year and depending upon the

requirement, meetings are held with greater

frequency. The agenda for the meeting is circulated

2 weeks before the meeting and it includes matters

requiring strategic guidance from the Board,

matters required to be considered by the Board

by various laws, matters reported to the Board as

per internal governance protocols and significant

developments affecting business operations. The

most common matters which are included in the

agenda of Board meetings are given below:

• Annual as well as Long term operating plans

and budgets, capital budgets, business plan

and investment plan

• Annual and Quarterly Financial statements,

Annual Cost Statements and significant changes

in accounting policies and internal controls

• Review of business performance and Pricing

and marketing policies including Exports

• Significant risks and their response plans

• Information on significant ongoing or probable

litigation (including litigation with revenue

authorities) and orders from statutory / judicial

authorities (including demands and penalty)

• Significant matters involving human resources

management – particularly policy matters

including compensation and benefits

• Status of safety and accidents / near-misses

• Matters related to Research and Development

and Intellectual Property Rights and selection

of technology and process know-how

• Matters related to CSR and Sustainability

initiatives

• Appointment of principal bankers and making

of loans and investment of surplus funds

• Write-Offs / disposals (fixed assets, inventories,

receivables, advances etc.)

• Related party transactions and other significant

agreements and contracts including reporting

of Purchase decisions on nomination basis

• Regulatory developments and compliances

• Delegation of powers to Directors / Officers of

Company

• Appointment and resignation of Directors

and General notices of interest received from

Directors

• Appointment and remuneration of Auditors

and considering their reports

• Dividend declaration

• Formation / Reconstitution of Board Committees

with their Terms of reference and Minutes of

meetings of Board Committees

• Convening shareholders meeting and approval

to matters to be taken to such shareholders’

meetings e.g. Amendment(s) to the

Memorandum or Articles of Association etc.

• Proposals for Diversification, investment,

mergers and acquisitions, joint venture or

collaboration agreement



Meetings of Board during FY 2012-13

Meeting No.

Meeting Date Location Number of Directors attending

the meeting

75 May 7, 2012 Mumbai 5

76 July 26, 2012 Mumbai 6

77 Nov 5, 2012 Mumbai 5

78 Mar 4, 2013 Mumbai 6

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Mr. B Mukherjee 4 4 Y

Mr. Hervé Le Bouc 4 1 N

Mr. Jacques Pastor 4 4 Y

Mr. K S R Prasad 1 1 NA

Ms. Nishi Vasudeva 3 3 Y

Mr. Somchit Sertthin 4 4 Y

Mr. Jacques Leost 3 1 Y

4. COMMITTEES OF THE BOARD

4A. Audit Committee - Constituted on 6th March 2001

Terms of reference

Functions

a. To oversee the company’s financial reporting

process and the disclosure of its financial

information to ensure that the financial

statements are correct, sufficient and credible.

b. To recommend the appointment and removal

of external auditor, fixation of audit fee and

also approval for payment to the auditors for

any other services.

c. To review the half-yearly financial statements

before submission to the Board.

d. To review with management the annual

financial statements before submission to the

board, focusing primarily on:

• Any changes in accounting policies and

practices.

• Major accounting entries based on exercise

of judgement by management.

• Qualification in draft audit report.

• Significant adjustments arising out of audit.

• The going concern assumption.

• Compliance with accounting standards.

• Compliance with legal requirements

concerning financial statements.

• Any related party transactions i.e.

transactions of the company of material

nature with promoters or the management,

their subsidiaries or relatives etc. that may

have potential conflict with the interests of

company at large.



e. To discuss with the auditors periodically about

observations of the auditors.

f. To review periodically with the management,

external and internal auditors, the adequacy of

internal control systems.

g. To ensure compliance of internal control

systems.

h. To review the adequacy of internal audit

function, including the structure of the internal

audit department, staffing and seniority of

the official heading the department, reporting

structure coverage and frequency of internal

audit.

i. To discuss with internal auditors any significant

findings and follow up there on.

j. To review the findings of any internal

investigations by the internal auditors into

matters where there is suspected fraud or

irregularity or a failure of internal control

systems of a material nature and reporting the

matter to the Board.

k. To discuss with external auditors before the

audit commences nature and scope of audit

as well as to have post audit discussion to

ascertain any areas of concern.

l. To review the company’s financial and risk

management policies.

m. To look into the reasons for substantial

defaults in the payment to debenture holders,

shareholders (in case of non payment of

declared dividends) and creditors.

Authority

The Audit Committee shall have all the authorities/

power of the Board of Directors, in discharging the

functions indicated here in above and / or those

mandated by the Companies Act 1956 as well as

any rules/regulations there under.

The authorities of the Audit Committee shall

include the following, as specified in Section 292A

of the Act:

(i) authority to investigate into any matter in

relation to the items specified here in above,

(ii) Full access to information contained in the

records of the company and

(iii) Full access to external professional advice, if

necessary.

Members of Audit Committee

Mr. Jacques Pastor Chairman

Mr. Somchit Sertthin Member

Ms. Nishi Vasudeva Member (from July '12)

Mr. K V Rao Member (from June '13)

Mr. B Mukherjee Member (till May '13)

Mr. K S R Prasad Member (till June '12)

Meetings of Audit Committee during FY 2012-13

Meeting No. Meeting Date Location

23 May 7, 2012 Mumbai

24 July 26, 2012 Mumbai

25 November 5, 2012 Mumbai

26 March 4, 2013 Mumbai



Attendance of Members in the Audit

Committee meetings during FY 2012-13

Name of the member

No. of Committee meetings heldduring tenure

Number of meetings attended

Mr. Jacques Pastor 4 4

Mr. B Mukherjee 4 4

Mr. K S R Prasad 1 1

Ms. Nishi Vasudeva 3 3

Mr. Somchit Sertthin 4 4

4B. Remuneration Committee – Constituted on

16th March 2010

Terms of reference

• To review the remuneration payable to

managerial person(s) e.g. “Manager” appointed

under the Companies Act (CEO)

• To make recommendations to the Board on any

increase in annual remuneration as well as any

variation in the maximum eligibility of profit

sharing in term of percentage towards variable

pay for such managerial person(s)

• To ensure necessary compliances with the

Companies Act in respect of Managerial

Remuneration.

Members of Remuneration Committee

Mr. Jacques Pastor Member

Mr. K V Rao Member (from June'13)


Meetings

There was no meeting of Remuneration Committee

held during FY 2012-13

4C. Committee for Sustainability and CSR

Initiatives - Constituted on 27th March 2012

Terms of reference

• To oversee and direct the sustainability and

CSR initiatives of the company

• To review and recommend changes in the CSR

policy in future.

Members of Sustainability and CSR Committee

Mr. Somchit Sertthin Member

Ms. Nishi Vasudeva Member (from June '13)


Meetings

There was no meeting of the Committee held

during FY 2012-13.

5. DETAILS OF LAST THREE ANNUAL GENERAL

MEETINGS

Meeting No. Meeting Date Location15 July 28, 2010 Mumbai16 August 18, 2011 Mumbai17 July 26, 2012 Mumbai

6. SHAREHOLDING PATTERN

Shareholder % holding

M/s HPCL and its nominees 50%

M/s COLASIE and its nominees 50%



DIRECTORS’ REPORT

our Directors have pleasure in presenting the 18th Annual Report of your Company together with the Audited Balance Sheet as at March

31st, 2013, the Cash Flow Statement and Statement of Profit & Loss for the year ended March 31st, 2013.

FINANCIAL PERFORMANCE

The summary detail of your company’s performance during year is presented below:

(In ` Millions)

Particulars 2012-13 2011-12*

Revenue from Operations (Net) 6,124 4,158

Other Income 68 66

Total Revenue 6,192 4,224

Profits before Tax 523 405

Profit after Tax 344 264

Transfer to General Reserve 34 26

Interim Dividend & tax thereon 172 -

Proposed Dividend & tax thereon 137 192

* Previous year numbers have been regrouped in line with financial statements.

In January 2012, the Hon’ble Supreme Court passed an order in the case of M/s Osnar Chemicals and held that production of Modified Bitumen (MB) cannot be considered as ‘manufacturing’ for the purpose of levying excise duty. Basis the ruling of the Apex Court, your company, in consultation with the industry members, has made necessary changes in pricing policy and accordingly CENVAT paid on purchase of raw material used in making of MB is considered a cost. This has resulted in increase in value of turnover of your company.

Further, your company has also adopted new model of selling crumb rubber modified bitumen (CRMB) to HPCL and discontinued the old model of job-work for HPCL effective 1st April 2012. The new model of sale of CRMB to HPCL has resulted in increase in value of turnover of your company as full value of CRMB is recognised as revenue in the new model as against recognition of revenue to the extent of value addition only (i.e. conversion charges and sales of modifier) in the earlier model of Job-work.

PHYSICAL PERFORMANCE

Your company now has 8 plants under operation at Navi Mumbai, Bahadurgarh (Haryana), Irungattukottai (near Chennai, Tamil Nadu), Savli (near Vadodara, Gujarat), Visakhapatnam (Andhra Pradesh), Mangalore (Karnataka), Jhansi (Uttar Pradesh) and Haldia (West Bengal). The physical performance of the Company during the year is as under:

ProductsSales in TMT

2012-13 2011-12Emulsions 109 100 Modified Bitumen 60 24 Others 2 4 Total Sales Volumes 171 128

Aerial view of Mangalore Plant

Y



Apart from own manufacturing for sales of above products, your company has made best efforts to utilise the capacity by pursuing manufacturing products for others on job work basis at some of the plants. During the year, your company processed a volume of 6 TMT Modified Bitumen for customers (other than HPCL). Also, your Company has commissioned a site blending plant during the year for processing modified bitumen at the site of customers.

SHAREHOLDERS’ VALUE

Your company has enhanced the value for shareholders over the years by consistent wealth creation which is evident from the following data given in respect of equity shares of INR 10 each:

(In `)

Value Parameter 2012-13 2011-12

Earnings Per Share 36.42 27.98

Cash Earnings Per Share 43.11 33.60

Book Value Per share 138.99 135.33

DIVIDEND

Taking into consideration the performance of your Company during financial year 2012-13 and also the future growth plans, your Directors recommend final dividend @ 124 % of the paid up equity share capital. This is in addition to the interim dividend paid @ 157% of the paid up share capital in the month of March 2013.

DIRECTORS

During the year, Mr. K S R Prasad resigned from the Board of the Company effective 30th June 2012 due to his retirement from the parent company viz. HPCL upon attaining the age of superannuation. Based on nomination received from HPCL, Ms. Nishi Vasudeva,

Director – Marketing, HPCL was appointed as Additional Director in place of Mr. Prasad effective 1st July 2012. In the 17th Annual General Meeting held on 26th July 2012, Ms. Vasudeva was appointed as a Director liable to retire by rotation.

During the year 2012-13, Mr. Chaiwat Srivalwat, who was an Alternate Director to Mr. Somchit Sertthin (Original Director) at the beginning of year, vacated the office of Alternate Director (due to visit of Original Director to the state of Maharashtra) and was reappointed as Alternate Director on three occasions ( in May’12, July’12 and Nov’12). Mr. Srivalwat finally vacated the office of Alternate Director on 9th January 2013.

Likewise, Mr. Jacques Leost, who was an Alternate Director to Mr. Hervé Le Bouc (Original Director) at the beginning of year, vacated the office of Alternate Director (due to visit of Original Director to the state of Maharashtra) and was reappointed as Alternate Director in March 2013.

Further, in accordance with provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Hervé Le Bouc and Mr. S Roy

A Board Meeting in progress


Choudhury, Directors of the Company, retire by rotation at the 18th Annual General Meeting of the Company and are eligible for re-appointment.

Your Directors place on record their appreciation for the valuable services rendered by Mr. K S R Prasad and Mr. Chaiwat Srivalwat and extend a warm welcome to Ms. Nishi Vasudeva. Your Company would immensely benefit from the rich experience of Ms. Vasudeva.

‘MANAGER’ UNDER THE COMPANIES ACT

Mr. Sanjay Grover, Chief Executive Officer who had been appointed as “Manager” of the Company under the Companies Act resigned from the services of the Company and consequently was relieved from the position of “Manager” of your Company on 31st December 2012.

Mr. Vinod Kumar Shrote who is Chief Operating Officer of the Company was given additional charge of Chief Executive Officer and was appointed as “Manager” of the Company during 1st January 2013 to 17th April 2013 as an interim arrangement.

On 18th April 2013, Mr. Tejbir Singh Sawhney, an Officer of senior rank from parent company viz. HPCL, joined HINCOL as the Chief Executive Officer on deputation and was appointed as the “Manager” of the Company effective the same date. Mr. Sawhney has around 30 years of rich experience in Oil and Gas sector and has worked in various leadership roles in the parent company.

Your Directors place on record their appreciation for the services rendered by Mr. Sanjay Grover as well as Mr. Vinod Kumar Shrote during their tenure as the “Manager” of the Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956 your Directors give hereunder the Directors' Responsibility Statement pertaining to the accounts of the Company, that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March 2013 and of the profit of the company for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on a going concern basis.

AUDIT COMMITTEE

The Audit Committee of your Company carried out its functions in accordance with Sec 292 A of the Companies Act. During the year there were no instances of any recommendation of the Audit Committee relating to any financial matter that was not accepted by your Board.

STATUTORY AUDITORS

M/s Ford, Rhodes, Parks & Co., Chartered Accountants, Mumbai, the Statutory Auditors of


the Company hold office until the conclusion of ensuing Annual General Meeting and are eligible for reappointment. The firm has confirmed that their re-appointment, if made, shall be within the limits under section 224(1B) of the Companies Act.

COST AUDITORS

M/s Kishore Bhatia & Associates, Cost Accountants, Mumbai were appointed as the Cost Auditors of the Company for FY 2012-13 for audit of the Cost records maintained by the Company under section 209(1)(d) of the Companies Act 1956. The cost audit report would be filed with the Ministry of Corporate Affairs before due date viz. 27th September 2013.

DEPOSITS

The Company has not accepted any deposits from the public.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO AND PARTICULARS OF EMPLOYEES

Pursuant to Section 217 (1) (e) and section 217 (2A) of the Companies Act 1956, read with the Companies

(Disclosure of particulars in the report of Board of Directors) Rules 1988, the relevant information is given in Annexure I.

ACKNOWLEDGMENT

Your Company and its Directors wish to sincerely thank various Ministries of Govt. of India / State Governments for their excellent support and co-operation. Your Board also wishes to thank the promoters for the technology and marketing support. The Board also wishes to place on record their sincere gratitude to MORT&H, CRRI, DGBR, NHAI, NRRDA, AAI, MES and various other Government Agencies. Your Directors also wish to place on record their appreciation for the dedicated services of the employees of the Company including those deputed by HPCL.

For and on behalf of the Board of Directors

S Roy Choudhury Chairman

Place : MumbaiDate : 9th May 2013

Discussions being held with Cost Auditors


b) Consumption per MT of production:

2012-13 2011-12

Electricity Consumed (in kWh) 9.04 10.21

LDO / FO (Litres) 6.62 6.42

B) Technology Absorption

Your company implemented new processes and formulations through a detailed operational research during the year in order to improve safety, efficiency, quality, energy saving and profitability.

Various technological changes were made in the process of making PMB/CRMB and Emulsion such as replacement of high cost additives, modification in the product formulation, use of new modern equipment to reduce the heat loss.

New processes and facilities introduced by your company such as Emulfix Unit , Starch Blending Unit, Heat Exchange Unit, Premix tank for CRMB etc have certainly improved the productivity and profitability of the plants.

C) Foreign exchange earnings & outgo

The details of foreign exchange earnings and outgo are given in the Notes to the Financial Statements in Note 33-35.

ANNEXURE I : CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Sl. Name Designation / nature of duties

Remuneration (incl. Variable Pay, Perquisites and Reimbursement)

Qualification

Expe rience

Date of joining

Age Last employment

Equity holding of Company

1 Mr. Sanjay Grover

Chief Executive Officer and “Manager” under Companies Act

INR 41,89,947 B.E. (Chemical)

28 years 1st May 2008 (Resigned on 31st Dec’12)

48 years

GM- Retail, MRPL

NIL

D) Particulars of the employees covered under Section 217 (2A) of the Companies Act, 1956 for the FY 2012-13

A) Conservation of energy

Energy conservation initiatives like heat exchangers for bitumen tanks, heat recovery from hot emulsions, compressed air facilitated heating of bitumen tankers before unloading, air purging to empty out pipe lines, operational controls such as regular inspection and maintenance of thermic heaters, periodic cleaning of modified bitumen tank coils, optimum utilization of plant capacities, avoiding of product reheating etc are being implemented at plants for improving energy efficiency of the plants.

Heat exchanger for heating bitumen has been taken up and already implemented on pilot basis at one of the location. Heat recovery systems are already functional at 3 locations. Energy conservation awareness programs were conducted at the plants to create awareness and seek greater participation in energy conservation drive.

The details relating to energy consumption and energy consumption per unit of production are as given below:

a) Power & Fuel Consumption:2012-13 2011-12

Electricity purchased / generated as Units (kWh)

1,604,959 1,480,788

Total Amount 18,133,583 12,127,405Rate / Unit (Rs. / kWh) 11.29 8.19


MANAGEMENT DISCUSSION & ANALYSIS

SECTOR REVIEW

India has the third largest road network in

the world; aggregating to 4.69 million KM of

length. Roads form the most common mode

of transportation and account for about 85%

of passenger traffic and close to 62% of freight.

The Indian Government is very particular about

the development and maintenance of this huge

network, more so because the vehicle population

in the country has been growing at an average rate

of 10% over last five years. The vast road network

of India, therefore, offers great opportunity for all

the businesses which are related to construction

and maintenance of roads.

KM of highways in 2012-13 at a rate of 8 KM

per day which is much lower than the set target

of 20 KM highway per day as declared by the

government.

It is however expected that the investments in

roads and highways would be substantial in the

next 5 years due to government's focus on the

sector. According to a CRISIL research report,

`6000 billion of investment is expected to flow in

road sector over 2013-14 to 2016-17. Investments

would largely be driven by expenditure on national

highways and state roads.

(Amount in ` billions)

Projected Investment in Roads and Highways(2013-14 to 2016-17)

Segment 2013-14 2014-15 2015-16 2016-17

National Highways 495 559 614 651

State roads 581 659 750 855

Rural roads 144 182 229 289

Total 1,220 1,400 1,593 1,794

There is a significant development in the Airport

infrastructure as well. Along with the development

of existing high volume Airports in Metros and all

major cities, Govt. of India has recently approved

development of 14 Greenfield Airports to be

developed in coming years.

Thus, the future outlook of road sector is positive

and will have favourable impact on the growth of

your company.

During 2012-13, road infrastructure sector has

experienced a dramatic drop in the execution of

such projects. There has been a lag between the

set target and actual execution in the industry

due to several reasons associated with economic

downturns, problems associated with land

acquisition, lack of funds with contractors etc. For

example, government could construct only 2900


MANAGEMENT DISCUSSION & ANALYSIS

BUSINESS OVERVIEW

Your company has been catering the ever increasing

need and demands from road construction sector.

It has been successful in gaining volumes from

customers belonging to different segments such

as National Highways, State Highways, PWD/

Municipal Corporation, Border Roads Airport

Runways, Rural Roads etc.

There is a significant growth observed in some key

segments like National highways with 50% growth

over historical while Airport Runways have grown

37% over historical. Your company’s share in this

steady growing market of emulsion and modified

bitumen is above 175 TMT .

Your company has expanded its product basket

over a period of time; started with only five grades

of emulsion, today your company is capable of

catering the market with variety of value added

bituminous products with the help of its R&D

activities. Your company is continuously working

toward adding more products and services to its

basket and also simultaneously engaging with the

government agencies to support the products which

not only contributes towards the fast execution of

projects but also are environment friendly.

Your company’s efforts towards promoting cold mix

technology in north eastern region are heading in

positive direction and would leverage on the same

in the coming financial year. In the rural sector with

the road network being constructed under PMGSY

the use of Cold Mix Technology as a convenient,

economical and environment friendly technology,

has a good potential. Your company has got very

positive response from the Govt of Chhattisgarh

RRDA, Tamil Nadu DRDO, Shimla PWD etc for

use of Cold Mix for construction of Rural Roads.

Your Company plans to take road maintenance

An aerial view of facilities at Jhansi Plant


and rejuvenation with emulsion based cold mix

technologies. These are economic, environment

friendly and easy to execute. Your company has

already started taking projects in execution of

Microsurfacing and Cold Mix Application; these two

applications will be the main focus in the coming

year.

Your company is actively promoting its brands

through various media. There has been active

participation in trade shows related to industry like

IRC 2012 (at Coimbatore) and MUNICIPALIKA 2013

(at New Delhi) etc. to showcase the company’s

product line and services. Your company brand

has been promoted and positioned as technically

superior over the competitors through its technical

Newsletter “Customer Connect” - especially

dedicated to various construction techniques related

to bituminous products.

RISK MANAGEMENT AND INTERNAL CONTROLS

Your Company has developed a comprehensive

repository of Standard Operating Procedures (SOPs)

for all the business processes combining global best

practices and customized solutions to specific issues

facing business of the Company. The internal control

system is supplemented by documented policies,

guidelines and procedures. The company reviews

it policies, guidelines and procedures of internal

control on an ongoing basis in view of the ever

changing business environment.

The Company takes all the possible measures to

minimize risks and enhance business controls. To

further strengthen the risk management practices,

the Company has developed a comprehensive Risk

Management Framework and top risks are regularly

reported to the Board.

Regular internal audit reviews are conducted by an

independent professional firm to examine the design

as well as operating effectiveness of the SOPs. The

internal auditors also review all the decisions and

transactions and bring out need of any improvement

in areas of business operations, statutory

compliances, financial discipline, risk management,

process controls, procedural adherence and

reporting mechanism. The internal auditors provide

to the Audit Committee an independent, objective

and reasonable assurance of the adequacy of the

organization’s internal controls and risk management

procedures. The Audit Committee reviews significant

audit findings with the executive management with

a view to provide oversight of the internal control

systems. Your company’s statutory auditors have,

in their report, confirmed the adequacy of internal

control procedures.

Hincol Stall in trade show Municipalika 2013 at New Delhi


Your Company, being a responsible Corporate

Citizen, understands significance of the statutory

compliances and follows the laws of land in letter

and spirit. Special emphasis is laid by the Company

on following the laws of the land and conducting its

business within the legal and ethical boundaries.

The decision making process in HINCOL is governed

by an elaborate ‘Limits of Authority Manual’ (LAM)

approved by the Board of Directors. The matrix given

in LAM defines limits of authority to be exercised at

each level. The decision making process in HINCOL

is by and large based on “collective wisdom” and

all significant decisions having financial implications

are routed for financial concurrence. The authorities

given to the employees are commensurate with the

responsibilities entrusted to them.

The Balanced Score Card (BSC) approach has been

adopted to align individual actions to Corporate

strategy. The Performance management system

demands efficient and effective performance from

all the employees. The design of the profit sharing

component of employee remuneration ensures that

only performance fulfilling all criteria of governance

and compliance gets rewarded.

INFORMATION SYSTEMS

The business operations of your company are by

and large enabled by the technology to bring better

efficiency, controls and quality in all decisions.

The Enterprise Resource Planning (ERP) system

has been supporting main business processes

of HINCOL since 2009. All significant business

processes have been configured in a world class

ERP solution namely SAP which has been deployed

by the Company. ERP system has made it possible

for better operational visibility and controls. The

system enables the decision makers at various

levels in taking timely business decisions based on

on-line & accurate information available from the

system. Various MIS reports available through ERP

ensure that the reporting to stakeholders is correct

and complete.

Though the system has stabilized we conduct

regular training for recruits and short refresher

course for employees. The system is kept up to

date by mapping new plants, lines of business etc

so that all operations are carried out only through

ERP. The authorizations given to various users in

the ERP system are reviewed from time to time to

identify any possible risks due to conflicts in the

segregation of duties. Your company is planning

to embark on initiatives such as e-banking and

business warehousing and intelligence solution.

Mr. S. Roy Choudhury and Mr. Jacques Leost launching the new website


Mr. Jacques Leost and Mr. B. Mukherjee inaugurating new facilties at Vashi plant

Cricket Teams of Inter office Tournament

Felicitation of employees with long service awards

The 17th Annual General Meeting of Shareholders held on 26th July 2012

Mr. S. Roy Choudhury Chairman conducting 17th AGM

PHOTOGALLERY

INA

UGU

RATI

ONSH

ARE

HOLD

ERS

MEE

TIN

GEM

PLOY

EE D

ELIG

HT

33

Report on the Financial Statements for the year ended 31st March, 2013Report on the Financial Statements for the year ended 31st March, 2013

We have audited the accompanying financial statements of Hindustan Colas Limited (“the Company”) which comprise the Balance Sheet as at 31st March 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement’s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’sAuditor’s Responsibility Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionOpinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2013;

ii. in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the

To the members of Hindustan Colas LimitedTo the members of Hindustan Colas Limited

INDEPENDENT AUDITORSINDEPENDENT AUDITORS’’ REPORT REPORT

34

Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227 (3) of the Act, we report that:

i. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

ii. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

iv. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956; and

v. on the basis of written representations received from the directors as on 31st March 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

For Ford, Rhodes, Parks & Co.Ford, Rhodes, Parks & Co. Chartered Accountants Firm Registration No.102860W

A.D. Shenoy A.D. Shenoy Partner Membership No.11549

Place: MumbaiDate: 9th May, 2013

35

1. a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

b) Fixed Assets have been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

c) In our opinion and according to the information and explanations given to us a substantial part of Fixed Assets has not been disposed off by the Company during the year.

2. a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records have been dealt with by the company.

3. The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, clause (iii)of the order is not applicable.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventories and fixed asset and for sale of goods and services. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control system.

5. According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the Act during the year to be entered in the register required to be maintained under that section. Accordingly, the question of commenting on transactions made in pursuance of such contracts or arrangements does not exist.

6. The Company has not accepted any deposits from the public, within the meaning of Sections 58A and 58AA of the Act and the rules framed thereunder.

7. The Company has appointed an Independent Chartered Accountant firm to carry out internal audit. In our opinion, the internal audit system is commensurate with the size and nature of its business.

8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under section 209(1)(d) of the Act, in respect of its products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed examination of the records with a view to determine whether these are accurate or complete.

Annexure to the Auditors’ Reportnnexure to the Auditors’ Report

[Referred to in paragraph pertaining to “Report on Other Legal and Regulatory Requirement” of our Report of even date to the members of Hindustan Colas Limited on the financial statements for the year ended

31st March, 2013]

36

9. a) According to the information and explanations given to us and records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and any other material statutory dues as applicable with the appropriate authorities. There are no undisputed statutory dues payable for a period of more than six months from the date they became payable as at 31st March 2013.

b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income tax, wealth tax, service tax, customs duty and cess as at 31st March 2013, which has not been deposited on account of dispute. The particulars of the dues of sales tax, entry tax and excise duty as at 31st March,2013 which has not been deposited on account of a dispute, is as follows:

Sr. Sr. No.No.

Name of StatuteName of Statute Nature of DuesNature of Dues Net LiabilityNet LiabilityPeriod to which the Period to which the

amount relatesamount relatesForum where dispute is pendingForum where dispute is pending

1 Gujarat Sales Tax Act

Sales Tax (including interest & penalty)

2,69,77,161 2007-08 Joint Commissioner of Sales Tax (appeals), Gujarat at Vadodara

2 Gujarat Sales Tax Act

Sales Tax (including interest & penalty)

2,96,53,629 2007-08 Joint Commissioner of Sales Tax (appeals), Gujarat at Vadodara

3 Orissa VAT & Entry Tax*

VAT 1,78,537 2005-06 to 2009-10 Joint Commissioner of Sales Tax, Orissa at Cuttack

4 The Central Excise Act

Excise Duty (including penalty)

97,50,624 2010-11 The Commissioner of Central Excise, Vishakhapatnam

5 The Central Excise Act

Excise Duty (including penalty)

2,04,44,228 2007-08 to 2011-12 CESTAT, Mumbai

*The company has deposited `66,330/- in respect to this matter. Gross Liability is `2,44,867/-

10. The Company has no accumulated losses as at 31st March 2013 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the information and explanations given to us and records of the Company examined by us the company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

12. According to the information and explanations given to us the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund and nidhi /mutual benefit fund/societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investment.

15. According to the information and explanations given to us the Company has not given any guarantees for loans taken by others from banks or financial institution during the year.

16. The Company has not obtained any term loans.

37

17. On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to information and explanations given to us, we report that no funds obtained on short – term basis have been used by the company for long term investments.

18. The Company has not made any preferential allotment of shares to any parties or companies covered in the Register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that we have not come across any instances of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

For Ford, Rhodes, Parks & CoFord, Rhodes, Parks & Co.Chartered AccountantsFirm Registration No.102860W

A.D. ShenoyA.D. ShenoyPartnerMembership No.11549

Place: MumbaiDate: 9th May, 2013

38

As atAs at

31.03.201331.03.2013

`̀

As at As at 31.03.201231.03.2012

`

Note No.Note No.

Equity and LiabilitiesEquity and Liabilities

Shareholders' FundsShareholders' FundsShare Capital 2 94,500,00094,500,000 94,500,000 94,500,000 Reserves and Surplus 3 1,218,982,9061,218,982,906 1,184,323,084 1,184,323,084

1,313,482,9061,313,482,906 1,278,823,084 1,278,823,084 Non-Current LiabilitiesNon-Current LiabilitiesLong-Term Borrowings 4 -- 15,356,040 15,356,040 Deferred Tax Liabilities (Net) 5 82,860,76482,860,764 70,424,911 70,424,911 Other Long Term Liabilities 6 1,248,5081,248,508 2,635,251 2,635,251 Long-Term Provisions 7 13,573,97313,573,973 10,385,841 10,385,841

97,683,24597,683,245 98,802,043 98,802,043 Current LiabilitiesCurrent LiabilitiesTrade Payables 657,856,675657,856,675 451,257,367 451,257,367 Other Current Liabilities 8 335,824,911335,824,911 293,372,274 293,372,274 Short-Term Provisions 9 141,449,444141,449,444 195,021,715 195,021,715

1,135,131,0301,135,131,030 939,651,356 939,651,356 TotalTotal 2,546,297,182,546,297,1811 2,317,276,483 2,317,276,483

AssetsAssets

Non-Current AssetsNon-Current AssetsFixed Assets Tangible Assets 10a 869,994,028869,994,028 836,185,657 836,185,657 Intangible Assets 10b 1,541,4261,541,426 7,044,665 7,044,665 Capital Work-in-progress 9,703,2369,703,236 32,809,946 32,809,946 Long-Term Loans and Advances 11 7,505,0037,505,003 26,251,714 26,251,714 Other Non-Current Assets 12 1,324,4131,324,413 442,426,789 442,426,789 890,068,106890,068,106 1,344,718,771 1,344,718,771 Current AssetsCurrent AssetsInventories 13 320,448,693320,448,693 260,577,007 260,577,007 Trade Receivables 14 443,005,767443,005,767 305,279,119 305,279,119 Cash and Bank Balances 15 748,357,932748,357,932 293,427,467 293,427,467 Short-Term Loans and Advances 16 105,551,671105,551,671 105,513,756 105,513,756

Other Current AssetsOther Current Assets 17 38,865,01238,865,012 7,760,363 7,760,363

1,656,229,0751,656,229,075 972,557,712 972,557,712

TotalTotal 2,546,297,1812,546,297,181 2,317,276,483 2,317,276,483

Notes 1 to 40 form an integral part of the Financial Statements

Balance Sheet as at Balance Sheet as at 31st 31st March 2013 March 2013

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

For Ford, Rhodes, Parks & Co.Ford, Rhodes, Parks & Co. S Roy Choudhury B MukherjeeS Roy Choudhury B Mukherjee Chartered Accountants Chairman DirectorFirm Registration No: 102860W

A.D.ShenoyA.D.Shenoy T S SawhneyT S Sawhney Sitaram TapariaSitaram Taparia Bharat KaneriBharat KaneriPartner Chief Executive Officer Chief Financial Officer Head CommercialMembership No : 11549 and "Manager" and Company Secretary

Place : Mumbai Place : MumbaiDate : 9th May 2013 Date : 9th May 2013

FINANCIAL STATEMENTS

39

Statement of Profit and Loss for the year ended 31st March 2013Statement of Profit and Loss for the year ended 31st March 2013

Year endedYear ended Year endedYear ended

31.03.201331.03.2013 31.03.201231.03.2012

Note No.Note No. ` `̀

IncomeIncome

Revenue from Operations (Gross) 18 6,593,368,2596,593,368,259 4,723,153,042 4,723,153,042

Less: Excise Duty 469,647,466469,647,466 564,717,544 564,717,544

Revenue from Operations (Net) 6,123,720,7936,123,720,793 4,158,435,498 4,158,435,498

Other Income 19 68,087,72068,087,720 65,833,389 65,833,389

Total RevenueTotal Revenue 6,191,808,5136,191,808,513 4,224,268,887 4,224,268,887

ExpensesExpenses

Cost of Materials Consumed 20 5,176,612,3805,176,612,380 3,448,606,662 3,448,606,662

Purchases of Stock-in-Trade 21 34,096,94834,096,948 - -

Changes in Inventories of Finished Goods 22 (16,359,901)(16,359,901) (25,013,068)(25,013,068)

Employee Benefits Expense 23 112,543,054112,543,054 106,330,182 106,330,182

Finance Costs 24 340,340340,340 277,357 277,357

Depreciation and Amortisation Expense 10 63,228,39863,228,398 53,122,824 53,122,824

Other Expenses 25 297,796,318297,796,318 246,482,063 246,482,063

Total ExpensesTotal Expenses 5,668,257,5375,668,257,537 3,829,806,020 3,829,806,020

Profit before Exceptional and Extraordinary Items and TaxProfit before Exceptional and Extraordinary Items and Tax 523,550,976523,550,976 394,462,867 394,462,867

Exceptional Items - Gains / (Loss) 26 (266,403)(266,403) 6,544,461 6,544,461

Profit before Extraordinary Items and TaxProfit before Extraordinary Items and Tax 523,284,573523,284,573 401,007,328 401,007,328

Extraordinary Items - Gains / (Loss) 27 - - 4,437,951 4,437,951

Profit before TaxProfit before Tax 523,284,573523,284,573 405,445,279 405,445,279

Tax Expenses - Current Tax 162,357,220162,357,220 120,641,431 120,641,431

- In respect of earlier years 4,303,4254,303,425 6,318,148 6,318,148

- Deferred Tax Charge 12,435,85312,435,853 14,060,906 14,060,906

Profit /(Loss) for the yearProfit /(Loss) for the year 344,188,075344,188,075 264,424,794 264,424,794

Earning per Share - Basic & Diluted (nominal value of share Earning per Share - Basic & Diluted (nominal value of share ` 10) 10)

Weighted average number of Equity shares of ` 10 each 9,450,0009,450,000 9,450,000 9,450,000

Profit attributable to Shareholders excluding extraordinary items (net of tax)

344,188,075344,188,075 261,426,736 261,426,736

Earnings Per Share (excluding extraordinary items) 36.4236.42 27.66 27.66

Profit attributable to Shareholders 344,188,075344,188,075 264,424,794 264,424,794

Earnings Per Share 36.4236.42 27.98 27.98






40

Cash Flow Statement for the year ended 31st March 2013 Cash Flow Statement for the year ended 31st March 2013


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

A.A. CASH FLOW FROM OPERATING ACTIVITIESCASH FLOW FROM OPERATING ACTIVITIES

Profit before Extraordinary items and taxProfit before Extraordinary items and tax 523,284,573523,284,573 401,007,328 401,007,328

Loss on disposal / deletion of assets 852,466852,466 1,858,273 1,858,273

Unrealised Exchange Differences 150,684150,684 (24,041) (24,041)

Depreciation 63,228,39863,228,398 53,122,824 53,122,824

Interest Income (62,749,902)(62,749,902) (64,069,158) (64,069,158)

Write Down of Inventories 773,567 773,567 1,093,753 1,093,753

Provision against doubtful receivables / advances / deposits 6,059,4046,059,404 (16,520,840) (16,520,840)

Operating Profit before Working Capital ChangesOperating Profit before Working Capital Changes 531,599,190531,599,190 376,468,139 376,468,139

Decrease / (Increase) in Trade and Other Receivables (133,882,228)(133,882,228) (99,721,687) (99,721,687)

Decrease / (Increase) in Inventories (60,645,253)(60,645,253) (66,543,436) (66,543,436)

Increase / (Decrease) in Trade and Other Payables 255,531,467255,531,467 265,709,661 265,709,661

Cash Generated from OperationsCash Generated from Operations 592,603,176592,603,176 475,912,677 475,912,677

Direct Taxes Paid (Net) (158,908,355)(158,908,355) (215,802,355)(215,802,355)

Net Cash from Operating Activities before Extraordinary ItemsNet Cash from Operating Activities before Extraordinary Items 433,694,821433,694,821 260,110,322 260,110,322

Extraordinary Items-

Proceeds from Insurance claims -- 4,437,951 4,437,951

Net Cash from Operating ActivitiesNet Cash from Operating Activities [A] 433,694,821433,694,821 264,548,273 264,548,273

B.B. CASH FLOW FROM INVESTING ACTIVITIESCASH FLOW FROM INVESTING ACTIVITIES

Purchase & Creation of Fixed Assets (83,300,045)(83,300,045) (163,360,295)(163,360,295)

Proceeds from sale of fixed assets 1,725,791 1,725,791 264,970 264,970

Investments in Term Deposits (Net) (34,483,233)(34,483,233) 1,371,424 1,371,424

Interest Received 35,233,18735,233,187 63,325,144 63,325,144

Net Cash used in Investing ActivitiesNet Cash used in Investing Activities [B] (80,824,300)(80,824,300) (98,398,757) (98,398,757)

C.C. CASH FLOW FROM FINANCING ACTIVITIESCASH FLOW FROM FINANCING ACTIVITIES

Repayments of Borrowings (5,301,260) (5,301,260) (5,430,461) (5,430,461)

Dividend Paid (313,740,000)(313,740,000) (118,125,000)(118,125,000)

Dividend Tax Paid Dividend Tax Paid (50,896,471)(50,896,471) (19,162,828) (19,162,828)

Net Cash used in Financing ActivitiesNet Cash used in Financing Activities [C] (369,937,731)(369,937,731) (142,718,289)(142,718,289)

41

Cash Flow Statement for the year ended 31st March 2013 Cash Flow Statement for the year ended 31st March 2013






31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Net increase/(decrease) in cash and cash equivalents Net increase/(decrease) in cash and cash equivalents [A+B+C] (17,067,210)(17,067,210) 23,431,22723,431,227

Cash and cash equivalents as at 1st April (Opening) 60,302,31860,302,318 36,871,091 36,871,091

Cash and cash equivalents as at 31st March (Closing) 43,235,10843,235,108 60,302,318 60,302,318

Net increase / (decrease) in cash and cash equivalents Net increase / (decrease) in cash and cash equivalents (17,067,210)(17,067,210) 23,431,22723,431,227

Notes:Notes:

i) i) Cash and Cash Equivalents include:

(a) Balances with Schedule Banks on Current Accounts 39,858,892 39,858,892 53,731,089 53,731,089

(b) Cheques / Drafts in Hand 3,174,6463,174,646 6,339,221 6,339,221

(c) Cash in Hand 201,570 201,570 232,008 232,008

43,235,10843,235,108 60,302,31860,302,318

ii) ii) The above cash flow statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India

42

Notes to Financial Statements for the year ended 31st March 2013Notes to Financial Statements for the year ended 31st March 2013

1. Significant Accounting Policies :1. Significant Accounting Policies :

a. Generala. General

The financial statements are prepared under historical cost convention in accordance with all the applicable accounting principles in India, the applicable accounting standards notified u/s 211(3C) of, revised Schedule VI to, and other relevant provisions of the Companies Act, 1956. All income and expenditure having material bearing are recognised on accrual basis, except where otherwise stated. Necessary estimates and assumptions of income and expenditure are made during the reporting period and difference between the actual and the estimates are recognised in the period in which the results materialize.

The adoption of Revised Schedule VI does not impact recognition and measurement principles followed for preparation of the financial statements. However, it has significant impact on presentation and disclosures made in the financial statements.

b. Tangible & Intangible Assetsb. Tangible & Intangible Assets

Fixed assets are stated at cost less accumulated depreciation. Cost includes all incidental expenditure necessary to bring the fixed asset to its present location and condition. Capital expenditure on assets (enabling facilities) ownership of which is not with the company is charged off to revenue.

The initial cost of software and implementation is capitalised. Any subsequent enhancement is charged off to revenue unless it brings significant improvements in system.

c. Depreciationc. Depreciation

Depreciation is provided pro-rata to the period of use, on Straight Line Method, at the higher of the rates, based on estimated useful lives of the assets and those stipulated in Schedule XIV to the Companies Act,1956. The rates which are higher are as follows :-

AssetAsset Useful Life (Years)Useful Life (Years) Plant & Machinery - COLAS Plant 15 - Office and Lab Equipments 10 - Computers 4 Motor Vehicles (including Cars) 5 Intangible Assets - Software 4 Residential / Office Buildings / Roads 30

Leasehold land is amortised over the period of lease. In case of lease of land / premises from an unrelated party, if the period of lease is less than the useful life of the leasehold assets constructed or leasehold improvements, the depreciation is provided for such assets over the useful life of assets or period of lease, whichever is shorter.

Individual assets acquired for less than ` 5,000 are entirely depreciated in the year of acquisition.

d. Revenue Recognitiond. Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer.

e. Inventoriese. Inventories

Raw materials, packing materials, stores & spares and fuel & lubricants are valued at cost or net realisable value, whichever is lower. The cost of raw materials, packing material, stores & spares and fuels & lubricants is calculated on moving weighted average cost basis. Finished products are valued at cost or net realisable value, whichever is lower. Finished products are valued at standard cost which is calculated every month on the basis of moving weighted average cost of various cost components and includes excise duty payable and an appropriate proportion of production overheads.

Excise Duty paid for specified inputs eligible for CENVAT credit has not been included in purchases and cost of closing inventories. Such accounting treatment, consistently followed by the Company in accordance with Accounting Standard - 2 issued by Institute of Chartered Accountants of India on Valuation of Inventories is revenue neutral.

43

f. Foreign currency translationf. Foreign currency translation

Transactions denominated in foreign currency are recorded using the exchange rate prevailing at the date of transaction. Assets and Liabilities denominated in foreign currency as at Balance Sheet date are converted at the exchange rate prevailing on that date. Exchange differences relating to the acquisition of fixed assets from a country outside India were adjusted to the cost of such assets up to 31st March 2007 and are recognised in the Statement of Profit and Loss thereafter.

g. Employee benefitsg. Employee benefits

Provident Fund is a defined contribution scheme and the contributions as required by the statute are charged to the Statement of Profit and Loss as incurred. The contributions are made to a government administered Provident Fund.

Gratuity and Leave Encashment Liability are defined benefit obligation and are non funded. The Company provides for liability for future gratuity / leave encashment benefits based on valuations, as at the Balance Sheet date, made by independent actuary. Actuarial gains/ losses are charged to the Statement of Profit and Loss.

All employee benefits in case of employees deputed by parent company are accounted based on debit notes raised by their parent company.

h. Government Grants/ Subsidyh. Government Grants/ Subsidy

Government grants receivable / received with reference to total investment in manufacturing facility or by way of contribution towards total capital outlay, are treated as capital reserve.

i. Taxes on Incomei. Taxes on Income

Current tax is determined on the basis of the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

j. Impairmentj. Impairment

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors. An impairment loss will be recognised upon impairment testing wherever the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and its disposal at the end of its useful life.

k. Contingencies / Provisionsk. Contingencies / Provisions

A provision is recognised when there is a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote. Contingent Assets are not recognised.

l. Lease Rentalsl. Lease Rentals

Amount of Lease rental expenses are recognised in the Statement of Profit and Loss.

2.2. Share Capital Share Capital

As atAs at As atAs at

31.03.201331.03.2013 31.03.201231.03.2012` `̀

Authorised

30,000,000 Equity Shares of ` 10 each 300,000,000300,000,000 300,000,000 300,000,000

Issued, Subscribed and Fully Paid up 94,500,00094,500,000 94,500,000 94,500,000

9,450,000 Equity Shares of ` 10 each

94,500,00094,500,000 94,500,000 94,500,000

Notes to Financial Statements for the year ended 31st March 2013 (Contd.)Notes to Financial Statements for the year ended 31st March 2013 (Contd.)

44

Details of shareholders holding more than 5% shares -

(i). HPCL (including 400 shares held by nominee individuals on behalf of HPCL)

4,725,0004,725,000

(ii). Colasie SA (including 400 shares held by nominee indi-viduals on behalf of Colas SA / Colasie SA)

4,725,0004,725,000

9,450,0009,450,000

3. 3. Reserves and SurplusReserves and Surplus

As atAs at31.03.201331.03.2013

`

As atAs at31.03.201231.03.2012

`̀

Capital Reserve 1,500,000 1,500,000 1,500,000 1,500,000

Market Development Reserve 28,001,230 28,001,230 28,001,230 28,001,230

General Reserve :

Balance as per last financial statements 139,780,883139,780,883 113,338,404113,338,404

Add: Transfer from Statement of Profit and Loss

34,418,808 34,418,808 174,199,691 174,199,691 26,442,479 26,442,479 139,780,883 139,780,883

Surplus in the Statement of Profit and Loss :

Balance as per last Financial Statements 1,015,040,971 1,015,040,971 969,261,615969,261,615

Add: Profits / (Loss) for the year 344,188,075 344,188,075 264,424,794264,424,794

Less : Appropriations

Interim Dividend (148,365,000)(148,365,000) --

Tax on Interim Dividend (24,068,512)(24,068,512) --

Proposed final Dividend (117,180,000) (117,180,000) (165,375,000)(165,375,000)

Tax on Proposed Final Dividend (19,914,741) (19,914,741) (26,827,959)(26,827,959)

Transfer to General Reserve (34,418,808)(34,418,808) 1,015,281,9851,015,281,985 (26,442,479)(26,442,479) 1,015,040,971 1,015,040,971

1,218,982,9061,218,982,906 1,184,323,0841,184,323,084

The Board of Directors, in the meeting held on March 4, 2013, declared an interim dividend @ 157%. Further the Board of Directors, in the meeting held on May 9, 2013, proposed a final dividend @ 124%, thus making the total dividend @ 281%.

4.4. Long-Term BorrowingsLong-Term Borrowings


31.03.201331.03.2013 31.03.201231.03.2012` `̀

Deferred Payment Liabilities (Secured) - 15,356,040 15,356,040

[Refer Note 8]

- 15,356,04015,356,040


The company is a Joint Venture of M/s Hindustan Petroleum Corporation Ltd. (HPCL), A Govt. of India Enterprise and M/s Colas SA, A French company. The shares of the company are held by both the joint venture partners & their nominees individuals in the ratio 50:50. In terms of provisions of joint venture agreement, Colas SA has availed opportunity to invest its share of equity in the company through M/s Colasie SA which is a subsidiary company of M/s Colas SA. All the shares issued to the joint venture partners rank pari passu and have same rights and obligations. The rights and obligations of the shareholders are governed by a shareholders' agreement known as Joint Venture Agreement dated 25th November 1994.

45

5. 5. Deferred tax Liabilities (Net)Deferred tax Liabilities (Net)


31.03.201331.03.2013 31.03.201231.03.2012` `̀

Deferred Tax Liability comprises of tax effect of timing differences on a/c of:

Fixed Assets - Excess of Net Block over Written Down Value as per provisions of the Income Tax Act, 1961

89,184,89789,184,897 75,873,301 75,873,301

Predeposits for sales tax appeal 22,54622,546 1,530,088 1,530,088

89,207,44389,207,443 77,403,389 77,403,389

Deferred Tax Asset comprises of tax effect of timing differences on a/c of :

Provision for Employee Benefits (5,702,864)(5,702,864) (3,933,362)(3,933,362)

Provision for Doubtful Debts / Advances / Deposits (269,621)(269,621) (2,228,651)(2,228,651)

Provision for Other Payables (374,194)(374,194) (816,465)(816,465)

(6,346,679)(6,346,679) (6,978,478)(6,978,478)

82,860,76482,860,764 70,424,91170,424,911

6.6. Other Long Term LiabilitiesOther Long Term Liabilities


31.03.201331.03.2013 31.03.201231.03.2012` `̀

Deposits from Customers 1,248,5081,248,508 2,635,251 2,635,251

1,248,5081,248,508 2,635,2512,635,251

7. 7. Long-Term provisionsLong-Term provisions


31.03.201331.03.2013 31.03.201231.03.2012` `̀

For Leave Encashment 7,361,2387,361,238 5,788,877 5,788,877

For Gratuity 6,212,7356,212,735 4,596,964 4,596,964

13,573,97313,573,973 10,385,84110,385,841


46

8. Other Current Liabilities8. Other Current Liabilities


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Advance from Customers 236,291,085236,291,085 202,179,970202,179,970

Payables for purchase & creation of Tangible / Intangible Assets 22,896,33422,896,334 36,243,98436,243,984

Taxes & Duties Payable 40,865,57740,865,577 32,027,52832,027,528

Deposits Refundable 16,183,89016,183,890 13,715,22613,715,226

Current maturities of Deferred Payment Liabilities# 15,356,04015,356,040 5,301,2605,301,260

Payable to Employees 4,231,9854,231,985 3,904,3063,904,306

335,824,911335,824,911 293,372,274293,372,274

#Haryana Sales Tax Authorities granted Interest Free Sales Tax Deferral facility for seven years.The above amount

represents current portion of the said liability which would be payable in monthly installments based on the sales tax liability of corresponding month during availment period. The non-current portion of the said liability is given in Note 4. The deferral facility is secured by charge on all fixed and movable assets other than stocks.

9. Short-Term Provisions9. Short-Term Provisions


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

For Leave Encashment 1,840,3091,840,309 1,031,1901,031,190

For Gratuity 1,363,7821,363,782 706,138706,138

Proposed Dividend 117,180,000117,180,000 165,375,000165,375,000

Tax on Proposed Dividend 19,914,74119,914,741 26,827,95926,827,959

Provision for Wealth Tax 782,032782,032 712,848 712,848

Provision for Litigation 368,580368,580 368,580368,580

141,449,444141,449,444 195,021,715195,021,715

Notes to Financial Statements for the year ended 31st March 2013 (Contd.) Notes to Financial Statements for the year ended 31st March 2013 (Contd.)

47

Note

:

(i)

Res

iden

tial

Build

ing incl

udes

` 2

50

(Pr

evio

us

Yea

r: `

25

0)

repre

senti

ng c

ost

of

unquote

d f

ully

pai

d s

har

es h

eld in c

o-o

per

ativ

e housi

ng s

oci

ety.

(ii) T

he

appro

val fo

r tr

ansf

er o

f le

aseh

old

lan

d a

t V

ashi, in f

avour

of

the

Com

pan

y has

bee

n r

ecei

ved f

rom

MID

C.

How

ever

, tr

ipar

tite

agre

emen

t bet

wee

n H

PCL,

MID

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nd t

he

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pan

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pen

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regis

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wit

h M

IDC

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s to

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the

year

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31

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20

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year

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[R

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b),

(c),

(f),

39

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efer

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1 (

b),

(c),

(f),

39

]A

mount

in `

Gro

ss B

lock

(A

t C

ost

)G

ross

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)D

epre

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Am

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Am

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Net

Blo

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48


11. Long-Term Loans and Advances11. Long-Term Loans and Advances


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Unsecured, Considered GoodUnsecured, Considered Good

Deposits and Other Balances with Tax Authorities 11,87311,873 17,865,87617,865,876

Other Deposits 7,213,8467,213,846 6,914,2866,914,286

Capital Advances [including secured amount ` Nil (Previous Year : ` 27,286)]

10,91410,914 1,079,9691,079,969

Advances recoverable in cash or in kind or for value to be received

233,370233,370 336,583336,583

Advances to Employees 35,00035,000 55,00055,000

7,505,0037,505,003 26,251,71426,251,714

DoubtfulDoubtful

Capital Advances 16,37216,372 --

Less : Provision for Doubtful Advances 16,37216,372 --

- --

7,505,0037,505,003 26,251,71426,251,714

12. Other Non Current Assets12. Other Non Current Assets


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Term Deposits with Banks (having maturity dates falling after one year from the reporting date) 1,122,8621,122,862 438,637,304 438,637,304

Interest Accrued on Term Deposits with Bank 201,551201,551 3,789,4853,789,485

1,324,4131,324,413 442,426,789442,426,789

49


13. Inventories - at Cost or Net Realisable Value whichever is lower 13. Inventories - at Cost or Net Realisable Value whichever is lower (As certified by the management) (As certified by the management)


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Raw Materials 177,875,933177,875,933 139,957,260139,957,260

[Includes Stock-in-transit ` 15,191,436 (Previous Year: ` 36,212,059)]

Packing Materials 18,952,15118,952,151 11,727,56811,727,568

Fuels and Lubricants 5,370,5115,370,511 6,883,6186,883,618

Finished Products 117,768,647117,768,647 101,408,746101,408,746

Stores and Spares 481,451481,451 599,815599,815

320,448,693320,448,693 260,577,007260,577,007

14. Trade Receivables14. Trade Receivables


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Over six months (from the due date) :Over six months (from the due date) :

-Secured, Considered good 103,090103,090 47,388 47,388

-Unsecured, Considered good 6,1276,127 46,576,917 46,576,917

-Doubtful 211,285211,285 6,869,012 6,869,012

320,502320,502 53,493,317 53,493,317

Less: Provision for Doubtful Debts 211,285211,285 6,869,012 6,869,012

109,217109,217 46,624,305 46,624,305

Others :Others :

-Secured, Considered good 167,893,744167,893,744 158,942,882 158,942,882

-Unsecured, Considered good 275,002,806275,002,806 99,711,932 99,711,932

442,896,550442,896,550 258,654,814 258,654,814

443,005,767443,005,767 305,279,119 305,279,119

50


15. Cash and Bank Balances 15. Cash and Bank Balances


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Cash and Cash EquivalentsCash and Cash Equivalents

Balance with Scheduled Banks

on Current account : 39,858,89239,858,892 53,731,089 53,731,089

Cheques /drafts on hand 3,174,6463,174,646 6,339,221 6,339,221

Cash on Hand 201,570201,570 232,008 232,008

43,235,10843,235,108 60,302,31860,302,318

Other Bank Balances (having maturity dates falling within one year from Other Bank Balances (having maturity dates falling within one year from the reporting date)the reporting date)

-Term Deposits with Banks 647,828,023647,828,023 198,031,299 198,031,299

- Margin Money Deposit with Banks 57,294,801 57,294,801 35,093,850 35,093,850

705,122,824705,122,824 233,125,149233,125,149

748,357,932748,357,932 293,427,467293,427,467

All term deposits and margin money deposits shown in this note have original maturity of more than 3 months.

Accordingly, they are not included in Cash & Cash Equivalents as per Accounting Standard 3.

16. Short-Term Loans and Advances16. Short-Term Loans and Advances


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Unsecured, Considered GoodUnsecured, Considered Good

Advance Tax (Net of Provision for Income Tax) 18,078,62918,078,629 25,830,919 25,830,919

Deposits and other Balances with Tax Authorities 70,132,37370,132,373 54,560,830 54,560,830

Advances to Suppliers 10,842,20010,842,200 20,796,684 20,796,684

Advances recoverable in cash or in kind or for value to be received 4,475,8964,475,896 3,277,855 3,277,855

Dues from related parties (Refer Note 31 on Related Parties) 1,794,2731,794,273 852,913 852,913

Other Deposits 125,300125,300 135,555 135,555

Advances to Employees 103,000103,000 59,000 59,000

105,551,671105,551,671 105,513,756105,513,756

DoubtfulDoubtful

Advances to Suppliers 487,646487,646 - -

Other Deposits 94,30594,305 - -

581,951581,951 - -

Less : Provision for Doubtful Advances & Other Deposits 581,951581,951 - -

-- - -

105,551,671 105,551,671 105,513,756105,513,756

51

17.17. Other Current AssetsOther Current Assets


31.03.201331.03.2013 31.03.201231.03.2012` `̀

Interest Accrued on Term Deposits with Banks 38,865,01238,865,012 7,760,363 7,760,363

38,865,01238,865,012 7,760,3637,760,363

18.18. Revenue from OperationsRevenue from Operations

Year endedYear ended Year endedYear ended 31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Sale of ProductsSale of Products 6,488,125,4726,488,125,472 4,604,203,545 4,604,203,545 Less: Excise duty 469,647,466469,647,466 564,717,544 564,717,544

6,018,478,0066,018,478,006 4,039,486,0014,039,486,001 Sale of ServicesSale of ServicesProcessing Charges 8,317,7608,317,760 22,113,616 22,113,616 Income from Hospitality Assistance and terminalling services 94,853,57294,853,572 96,080,083 96,080,083 Income from Handling of Bitumen Depot (Net) 51,34651,346 17,153 17,153

103,222,678103,222,678 118,210,852118,210,852

Revenue from Projects' ContractsRevenue from Projects' Contracts

Road Project Execution 471,181471,181 - -

471,181471,181 --

Other Operating RevenueOther Operating Revenue

Sale of scrap 1,247,7131,247,713 672,553 672,553

Freight on Delivered Supplies 301,215301,215 66,092 66,092

1,548,9281,548,928 738,645738,645

6,123,720,7936,123,720,793 4,158,435,4984,158,435,498

Sale of ProductsSale of Products

Emulsions 3,409,990,5433,409,990,543 3,030,448,409 3,030,448,409

Modified Bitumen 2,544,231,3572,544,231,357 912,360,917 912,360,917

Modifier 4,115,9184,115,918 63,714,971 63,714,971

Cutback 6,819,3506,819,350 26,697,929 26,697,929

Cold Mix 18,253,48318,253,483 6,263,775 6,263,775

Antistripping Agent 161,933161,933 - -

Trading Products (Polymers) 30,629,14230,629,142 - -

Trading Products (Non Polymer Modifiers) 4,276,2804,276,280 - -

6,018,478,0066,018,478,006 4,039,486,001 4,039,486,001

Sales Values are net of discounts given through credit notes for ` 58,701,816/- ( Previous Year ` 24,914,953/-). Refer Note 28 for quantitative information.


52

19. Other Income19. Other Income

Year endedYear ended Year endedYear ended31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Interest on term deposits with Banks 62,749,90262,749,902 64,069,158 64,069,158 Other Interest 2,119,2272,119,227 449,310 449,310 Income from Rentals 637,500637,500 - - Other non-operating income 2,581,0912,581,091 1,314,921 1,314,921

68,087,720 68,087,720 65,833,38965,833,389

20. Costs of Materials Consumed (Refer Note 29 for quantitative information)20. Costs of Materials Consumed (Refer Note 29 for quantitative information)


31.03.201331.03.2013 31.03.201231.03.2012` `̀

Raw Materials Consumed 4,876,894,4704,876,894,470 3,203,258,969 3,203,258,969 Packing Materials Consumed 303,913,159303,913,159 245,494,012 245,494,012 Inventory Loss / (Gain)-Raw Materials & Packing Materials (4,840,481)(4,840,481) (271,516)(271,516)Excise Duty on Captive Consumption 645,232645,232 125,197 125,197

5,176,612,3805,176,612,380 3,448,606,662 3,448,606,662 Raw Materials Consumed includes consumption of raw materials in execution of Road Project ` 92,772/- (Previous Year ` Nil)

Excise Duty on captive consumption includes excise duty on

clearance of materials for execution of Road Project ` 39,714/-

(Previous Year ` Nil)

Breakup of Raw Materials Consumed :Breakup of Raw Materials Consumed :Bitumen 4,290,912,8864,290,912,886 2,786,201,4042,786,201,404Emulsifier 61,523,44161,523,441 49,109,25149,109,251Acids 1,165,2681,165,268 1,088,7751,088,775Solvents 220,163,628220,163,628 205,335,096205,335,096Polymers 124,528,903124,528,903 55,899,66455,899,664Non-Polymer Modifiers 166,745,445166,745,445 94,406,44194,406,441Additives 10,788,67410,788,674 5,025,2335,025,233Aggregates 1,066,2251,066,225 371,850371,850Antistripping Agent - - 5,821,2555,821,255

4,876,894,4704,876,894,470 3,203,258,9693,203,258,969

Imported and Indigenous Raw Materials ConsumedImported and Indigenous Raw Materials ConsumedImported 149,167,835149,167,835 91,123,18391,123,183Indigenous 4,727,726,6354,727,726,635 3,112,135,7863,112,135,786

4,876,894,4704,876,894,470 3,203,258,9693,203,258,969

Percentage of Total ConsumptionPercentage of Total ConsumptionImported 3.063.06 2.842.84Indigenous 96.9496.94 97.1697.16

100.00100.00 100.00100.00


53

21. Purchases of Stock-in-Trade (Refer Note 28 for quantitative information21. Purchases of Stock-in-Trade (Refer Note 28 for quantitative information)

Year endedYear ended Year ended Year ended

31.03.201331.03.2013 31.03.201231.03.2012

` `

Polymers 30,255,56830,255,568 - -

Non-Polymer Modifiers 3,841,3803,841,380 --

34,096,94834,096,948 - -

22. Changes in inventories of finished goods (Refer Note 28 for quantitative information)22. Changes in inventories of finished goods (Refer Note 28 for quantitative information)


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Opening Stock of Finished Goods 101,408,746101,408,746 76,395,678 76,395,678

Less : Closing Stock of Finished Goods 117,768,647117,768,647 101,408,746 101,408,746

(16,359,901)(16,359,901) (25,013,068)(25,013,068)

The following items have been included in Changes in Inventories of Finished Goods -Samples distributed ` 312,627 (Previous Year ` 145,091)Inventory Loss ` 3,710,598 (Previous Year ` 1,047,803)Consumption of finished goods in execution of Road Project ` 210,003 (Previous Year ` Nil)Consumption of finished goods for repairs of internal roads ` 30,575 (Previous Year ` Nil)

23. Employee Benefits Expense23. Employee Benefits Expense


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Salaries and Wages [Refer Note 30(b) for post employment benefits] 99,225,77599,225,775 94,489,355 94,489,355

[Includes ` 10,786,748 being reimbursement of personnel cost to HPCL (Previous year ` 13,814,416)]

Contribution to Provident and Other funds [Refer Note 30(a)] 4,321,6284,321,628 3,962,832 3,962,832

Staff Welfare expenses 8,995,6518,995,651 7,877,995 7,877,995

112,543,054112,543,054 106,330,182106,330,182


54

The current compensation package for the employees comprises of variable pay which is determined based on net profit (PAT) of the Company as per audited accounts for the concluded financial year and the performance appraisal rating of the individual employee. As the performance appraisal cycle is concluded in the month of June of subsequent financial year, the amount of variable pay is consistently accounted upon finalization of such rating and consequent payment to employees. The maximum amount payable on this account is restricted to 3% of PAT of concluded financial year. However, in case of growth in profits over last year, 10% of growth in PAT (subject to maximum 2% of PAT of the concluded financial year) can also be added to the maximum amount payable. Accordingly, the employee costs include an amount of ` 79,32,746 towards variable pay paid for FY 2011-12.

24. Finance Costs24. Finance Costs

Year endedYear ended Year endedYear ended31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Interest 144,123144,123 87,963 87,963 Other Borrowing Costs 196,217196,217 189,394 189,394

340,340340,340 277,357277,357 25. Other Expenses 25. Other Expenses


31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Operating ExpensesOperating Expenses

Fuel consumed 69,157,62269,157,622 47,157,622 47,157,622

Lubricants consumed 5,031,5655,031,565 4,731,262 4,731,262

Electricity 16,670,86016,670,860 10,847,814 10,847,814

Water 2,271,6822,271,682 2,312,844 2,312,844

Contract Labour 26,334,66726,334,667 17,029,843 17,029,843

Maintenance and repairs :

Plant and Machinery 15,289,82115,289,821 13,340,313 13,340,313

Buildings 2,320,9232,320,923 2,774,026 2,774,026

Spares Consumed 1,661,3581,661,358 915,572 915,572

Technical Fees 12,894,63912,894,639 11,894,573 11,894,573

Charges for Teminalling Services 20,831,59920,831,599 19,563,268 19,563,268

Increase/(Decrease) in Excise Duty on stock of Finished Goods 1,670,4691,670,469 2,058,548 2,058,548

Other Operating Overheads 4,512,6334,512,633 6,672,263 6,672,263

178,647,838178,647,838 139,297,948 139,297,948

Less : Own material consumption in repairs of internal roads 30,57530,575 - -

178,617,263178,617,263 139,297,948 139,297,948

Expenditure for Projects' ContractExpenditure for Projects' Contract

Cost of Materials consumed 342,489342,489 - -

Cost of labour, equipment hire & others charges 213,174213,174 - -

555,663555,663 - -

Less : Own material consumption in execution of Project Contract 342,489342,489 - -

213,174213,174 --


55

Administrative ExpensesAdministrative Expenses

Rates and Taxes 2,851,1992,851,199 2,977,215 2,977,215

Wealth Tax 782,032782,032 712,848 712,848

Travelling and Conveyance 20,434,23920,434,239 15,501,037 15,501,037

Consultancy and Certification Charges 6,381,2236,381,223 5,600,997 5,600,997

IT Infrastructure Maintenance 4,272,3504,272,350 4,329,979 4,329,979

Telephone and Internet Dedicated Lines 4,334,4194,334,419 3,545,482 3,545,482

Printing and Stationery 1,514,5671,514,567 1,408,225 1,408,225

Rent 3,715,3173,715,317 4,596,053 4,596,053

Security and Surveillance 8,837,9408,837,940 8,171,181 8,171,181

Insurance 1,835,9011,835,901 2,637,873 2,637,873

Contributions & Expenditure towards Corporate Social Responsibility (CSR)

840,860840,860 179,001 179,001

Exchange Variation (Net) 623,031623,031 1,025,435 1,025,435

Employee Recruitment and Training 2,047,1102,047,110 2,476,408 2,476,408

Bank Charges 197,015197,015 207,284 207,284

Other Administrative Expenses 4,509,9334,509,933 3,911,497 3,911,497

Auditors' Remuneration

- Audit Fees 400,000400,000 400,000 400,000

- Other Certifications / Audits 475,000475,000 400,000 400,000

- Reimbursement of expenses (including service tax reversals) 88,08088,080 39,430 39,430

64,140,21664,140,216 58,119,94558,119,945

Selling and Distribution ExpensesSelling and Distribution Expenses

Advertisement and Sales Promotion 4,175,3174,175,317 3,573,186 3,573,186

Commission to agents 7,149,2167,149,216 6,870,972 6,870,972

Expenditure on contractor operated depots 3,345,6973,345,697 2,195,635 2,195,635

Marketing support fees 18,225,53618,225,536 16,572,996 16,572,996

Freight on Stock Transfers 22,331,32822,331,328 19,230,000 19,230,000

Other Selling and Distribution expenses 985,098985,098 772,254 772,254

56,212,19256,212,192 49,215,04349,215,043

Provisions/ Write offsProvisions/ Write offs

Provision against doubtful receivables / advances / deposits (Net) (6,059,404)(6,059,404) (2,782,816)(2,782,816)

Debts written off 3,820,4113,820,411 773,670 773,670

Loss on disposal / deletion of assets 852,466852,466 1,858,273 1,858,273

(1,386,527)(1,386,527) (150,873)(150,873)

297,796,318297,796,318 246,482,063246,482,063


56


26. 26. Exceptional Items - Gains / (Loss)Exceptional Items - Gains / (Loss)

Year endedYear ended Year ended Year ended

31.03.201331.03.2013 31.03.201231.03.2012

` `̀

Provision written back on account of Settlement of sales tax liability - - 6,374,940 6,374,940

Interest paid on settlement of sales tax liability -- (1,604,536)(1,604,536)

Other Payables/ Provisions written back -- 2,073,385 2,073,385

Write Back / (Write Down) in values of Inventories except finished goods

(266,403)(266,403) (299,328)(299,328)

(266,403)(266,403) 6,544,4616,544,461

Closing Stocks of Finished Goods as on 31.03.2013 have been valued after writing down the value for obsolete / slow moving items to the extent of ` 507,164/- (Previous Year ` 794,425) which is included in Statement of Profit & Loss under " Changes in inventories of finished goods".

27.27. Extraordinary Items - Gains / (Loss)Extraordinary Items - Gains / (Loss)


31.03.201331.03.2013 31.03.201231.03.2012

` ` `

Insurance Claims -- 4,437,951 4,437,951

-- 4,437,9514,437,951

57

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59


30. Employee benefits30. Employee benefits (a) During the year, the Company has recognised the following defined contribution obligations :

2012-132012-13 2011-122011-12

` `̀ 1. Contribution to Provident Fund 4,166,1384,166,138 3,770,374

2. Contribution to Employee State Insurance Corporation 154,086154,086 190,838

(b ) Defined Benefit Obligation

GratuityGratuity Leave EncashmentLeave Encashment

2012-132012-13 2011-122011-12 2012-132012-13 2011-122011-12

` `̀ ` `̀

I. Change in the Present Value of the I. Change in the Present Value of the Defined Benefit ObligationDefined Benefit Obligation

Opening Defined Benefit Obligation 5,303,102 5,303,102 3,774,299 3,774,299 6,820,067 6,820,067 5,444,793 5,444,793

Interest Cost 394,396 394,396 316,688 316,688 434,302 434,302 360,254 360,254

Current Service Cost 1,829,007 1,829,007 1,563,511 1,563,511 1,318,584 1,318,584 1,064,157 1,064,157

Benefit Paid (831,823)(831,823) (200,845)(200,845) (2,876,772)(2,876,772) (2,531,032)(2,531,032)

Actuarial (Gain)/Loss 881,835 881,835 (150,551)(150,551) 3,505,366 3,505,366 2,481,895 2,481,895

Closing Defined Benefit ObligationClosing Defined Benefit Obligation 7,576,5177,576,517 5,303,1025,303,102 9,201,5479,201,547 6,820,0676,820,067

II. Change in Fair value of Plan AssetsII. Change in Fair value of Plan Assets

Fair Value of Plan Assets (Opening) - - - - - -

Fair Value of Plan Assets (Closing) - - - - - - III. Net Liability recognised in the Balance III. Net Liability recognised in the Balance

SheetSheet

Present Value of Defined Benefit Obligation 7,576,517 7,576,517 5,303,102 5,303,102 9,201,5479,201,547 6,820,067 6,820,067

Fair Value of Plan Assets (Closing) - - - - - - -

Difference 7,576,517 7,576,517 5,303,1025,303,102 9,201,547 9,201,547 6,820,0676,820,067

Amount recognised in the Balance Sheet 7,576,517 7,576,517 5,303,1025,303,102 9,201,547 9,201,547 6,820,0676,820,067

IV. Expenses recognised in the Statement of IV. Expenses recognised in the Statement of Profit & Loss Profit & Loss

Current Service Cost 1,829,0071,829,007 1,563,511 1,563,511 1,318,5841,318,584 1,064,157 1,064,157

Interest Cost 394,396394,396 316,688 316,688 434,302434,302 360,254 360,254

Net Actuarial (Gain)/Loss 881,835881,835 (150,551)(150,551) 3,505,3663,505,366 2,481,895 2,481,895

Expense recognised in the Statement of Profit & Loss

3,105,238 3,105,238 1,729,6481,729,648 5,258,252 5,258,252 3,906,3063,906,306

AssumptionsAssumptions

Discounting Rate 8.07%8.07% 8.62%8.62% 8.07%8.07% 8.62%8.62%

Salary Escalation Rate 15.00%15.00% 10.50%10.50% 10.00%10.00% 7.50%7.50%

60

31. Related party disclosures31. Related party disclosures

(A) Names of related parties and nature of relationship:(A) Names of related parties and nature of relationship:

a) Enterprises where control exists

Parties having substantial interest in the Company

1. M/s Hindustan Petroleum Corporation Limited, India (Holds 50% of the share capital of the Company) 2. M/s COLASIE SA, France (Holds 50% of the share capital of the Company)

b) Other Parties related to (a) above with whom the Company had transactions

M/s COLAS SA, France (Holding Company of M/s COLASIE SA, France)

c) Key Management Personnel ("Manager" under Companies Act, 1956) Mr. Sanjay Grover (from 01.04.2012 to 31.12.2012) Mr. V K Shrote (from 01.01.2013 to 31.03.2013)

(B) Transactions with Related Parties*(B) Transactions with Related Parties*

Particulars Year endedYear ended31.03.201331.03.2013

`

Year endedYear ended31.03.201231.03.2012

`̀

M/s Hindustan Petroleum Corporation LimitedM/s Hindustan Petroleum Corporation Limited

Income:Income:

Sales 1,157,358,081 1,157,358,081 63,823,159 63,823,159

Hospitality assistance and Terminalling services 94,853,572 94,853,572 96,080,083 96,080,083

Processing charges for job work - - 22,113,616 22,113,616

Handling of Bitumen depot 1,680,674 1,680,674 2,528,126 2,528,126

Income from Road Project Execution 471,181 471,181 - -

ExpenditureExpenditure

Purchases (Net of Discount and Cenvat differential) 3,879,076,175 3,879,076,175 2,593,642,706 2,593,642,706

Other Expenses

- Salary cost for personnel deputed 10,273,390 10,273,390 13,814,416 13,814,416

- Compensation for marketing support 18,225,536 18,225,536 16,572,996 16,572,996

- Rent 801,695 801,695 1,905,840 1,905,840

- Water Charges 416,937 416,937 685,955 685,955

- IT Infrastructure Support 2,014,205 2,014,205 1,921,984 1,921,984

- Electricity (Transmission Losses) 175,129 175,129 - -

Balance Receivable/(Payable) (298,293,312) (298,293,312) (262,674,645) (262,674,645)

Provision for Doubtful Debts - - (1,097,784) (1,097,784)

M/s COLAS SAM/s COLAS SA


Purchases

- Spares 748,699 748,699 29,466 29,466

- Commissioning charges (capitalised) - - 633,135 633,135

Other Services

- Technical Assistance 11,958,947 11,958,947 11,430,591 11,430,591

Balance Receivable/(Payable) (12,201,460) (12,201,460) (3,071,896) (3,071,896)


61

* The related party transactions do not include transactions of pure reimbursement nature towards activities undertaken on behalf of related parties.

Mr. Sanjay GroverMr. Sanjay Grover


Fixed Salary & Entitlements/Other Benefits 1,931,531 1,931,531 2,508,988 2,508,988

Leave Encashment / Gratuity# 679,819 679,819 - -

Special Incentive / Profit Sharing 770,399 770,399 926,589 926,589

Valuation of Perquisites 808,198 808,198 497,229 497,229

IncomesIncomes

Sale of Assets & other items 292,226 292,226 - -

Rent 637,500 637,500 - -

Balance Receivable/(Payable) 564,040 564,040 - -

# The above includes leave encashment and gratuity for which there were no separate disclosures in earlier years on accrual basis.

Mr. V.K.ShroteMr. V.K.Shrote

Salary /Other Benefits$ 769,933 769,933 - -

$ The above are based on debit notes received from HPCL for the period from Jan'13 to Mar'13. The remuneration is also included (for full year) under the Head "Salary cost for deputed personnel" in transactions with HPCL.


32. Contingent Liabilities and Commitments (to the extent not provided for)32. Contingent Liabilities and Commitments (to the extent not provided for) A. A. Contingent LiabilitiesContingent Liabilities As at As at As atAs at

31.03.2013 31.03.2013 31.03.201231.03.2012

` `̀

Sales Tax/VAT (including interest & penalty) 59,500,50659,500,506 60,706,13160,706,131

Excise Duty* (including penalty) 33,273,44533,273,445 -

Claims from third parties 13,240,71413,240,714 236,490

Local Levies 377,687377,687 377,687

Income Tax -- 6,279,3456,279,345

Claims for utilities -- 555,456

Total 106,392,352106,392,352 68,155,10968,155,109

* The amount of contigent liability for this item excludes interest payable. Further, this amount includes contingent liability of ` 10,909,768 which, being on account of goods processed for others, is likely to be reimbursed by Principal Manufacturer in the eventuality of materialisation of liability.

(i). Future cash outflow in respect of above are determinable only on receipt of judgements/decisions pending with various forums / authorities.

(ii). Show cause notices issued by tax authorities are not considered for liability or contingent liability until they are converted in demand.

(iii). Liability towards pending collection of concessional sales tax forms is not considered for the purpose of contingent liability disclosures.

(iv). Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

62

34. Value of Imports calculated on CIF basis 34. Value of Imports calculated on CIF basis

Year ended Year ended Year endedYear ended

31.03.2013 31.03.2013 31.03.201231.03.2012

` `

Spares 748,699748,699 29,466

Capital Goods 763,047763,047 10,671,720

Raw Material 169,266,246169,266,246 81,639,513


B. Estimated amount of contracts remaining to be executed on capital account and not provided for ` 24,709,773 (Previous year: ` 45,982,796)

C. C. Other CommitmentsOther Commitments (i) The company has entered into a Terminalling Services Agreement for the use of terminal facilities and

services for handling import and storage of Bulk Bitumen. Pursuant to this agreement, the company has started availing terminalling services wef 7th May 2010. The total of future minimum assured payments:

As atAs at

31.03.201331.03.2013

`

As atAs at

31.03.201231.03.2012

`̀

Within one year 21,602,52821,602,528 20,573,69020,573,690

Later than one year and not later than five years 24,955,65824,955,658 46,558,186

These charges are reported under "Charges for Teminalling Servicing" under Note 25-"Other Expenses". The agreement shall remain in force for a period of sixty months. However, our Company can terminate the contract at the end of thirty six months by giving six months' notice in advance and by paying a compensation of ` 24,000,000 as early termination fees to the lessor. Any extension after sixty months will be on mutually agreed terms and conditions, with first right of refusal to our company.

(ii) The company has undertaken road repair works and has provided the performance guarantee of the resurfaced pavement for a period of six months from the date of completion of the works.

33. 33. The Micro, Small and Medium Enterprises (MSME) for the purpose of MSME Development Act, 2006 have been identified on the basis of information available with the Company and the same is relied upon by the auditors. The information as required by the MSME Development Act is given below :


31.03.2013 31.03.2013 31.03.201231.03.2012

` `̀

Amount due and payable at year end

- Principal 5,701,0705,701,070 4,322,0294,322,029

- Interest on above Principal -- -

Payments made during the year after the due date

- Principal 5,175,9785,175,978 630,538

- Interest -- 4,299

Interest due and payable for principals already paid 13,12013,120 5,466

Total interest accrued and remaining unpaid at year end 13,12013,120 1,167

63




For Ford, Rhodes, Parks & Co.Ford, Rhodes, Parks & Co. S Roy Choudhury B MukherjeeS Roy Choudhury B Mukherjee Chartered Accountants Chairman DirectorFirm Registration No: 102860WA.D.ShenoyA.D.Shenoy T S SawhneyT S Sawhney Sitaram TapariaSitaram Taparia Bharat KaneriBharat KaneriPartner Chief Executive Officer Chief Financial Officer Head CommercialMembership No : 11549 and "Manager" and Company Secretary


Year endedYear ended

31.03.201331.03.2013

`

Year ended Year ended 31.03.201231.03.2012

`̀

1 11

35. Expenditure in foreign currency35. Expenditure in foreign currency


31.03.2013 31.03.2013 31.03.201231.03.2012 ` `̀

a. Technical Assistance 10,021,38610,021,386 9,362,6439,362,643

b. Travel 231,363231,363 402,133

c. Membership and subscriptions 806,434806,434 462,763

d. Conference Fees -- 69,564 36. Remittance of Dividend in foreign currency to non-resident shareholders36. Remittance of Dividend in foreign currency to non-resident shareholders

Number of equity shares of ` 10 each 4,725,0004,725,000 4,725,000

Final Dividend for the year ended 31.03.201231.03.2012 31.03.2011

Amount of Final Dividend in ` 82,687,50082,687,500 59,062,500

Interim Dividend declared in the year ended 31.03.201331.03.2013 -

Amount of Interim Dividend in ` 74,182,50074,182,500 -

Number of non-resident shareholders

37.37. Unhedged Foreign Currency exposures as on 31st March 2013 are ` 12,896,901 (Previous Year ` 5,627,825).

38.38. The Company deals in different products classified as 'Bitumen mixtures based on Petroleum Bitumen' and all the

activities of the Company revolve around the above main activity. While the company had undertaken one road project contract during the year to gain experience, the same is considered as being incidental to main business. As such, there are no reportable segments as defined by Accounting Standard 17 - Segment Reporting, issued by the Institute of Chartered Accountants of India.

39.39. In case of lease of land / premises from an unrelated party, the useful life of the assets constructed (immovable properties) or leasehold improvements have been reassessed and the depreciation is provided for such assets over the useful life of assets or period of lease, whichever is shorter. The impact of such reassessment has resulted in charge of ` 1,019,133, being arrears of depreciation till 31.03.2012.

40.40. Previous year figures have been regrouped/reclassified wherever necessary.

64

NotesNotes


Roorkee

Bahadurg arh

Jaipur

Delhi

Jhansi

Baroda

Vashi

Mumbai

Mangalore

CochinMadhuri

Irungattukottai

Head Office

Plants

Depots

Regional Office

Sales Representatives

Coimbatore

Bangalore

HyderabadVizag

Bhilai

RaipurHaldia

Cuttack

Kolkata

Patna

Bokaro

Meghalaya

Trichy

Bhopal

• VashiPlant&Office: D-500, TTC industrial Area, MIDC,

Opp. HPCL Terminal, Turbhe, Navi Mumbai - 400 705

Maharashtra

• BahadurgarhPlant: Near HPCL LPG Plant, Village Asauda, Bahadurgarh, District Jhajjar-124 507, Haryana

• IrungattukottaiPlant&Office: Plot A 9, SIPCOT Industrial Park

Irungattukottai - 602 105, Dist- Kancheepuram, Tamil Nadu

• BarodaPlant&Office: Plot No.426-430,

GIDC Industrial Area, Village Manjusar, Savli,

Baroda-381 770, Gujarat

• VisakhapatnamPlant&Office: Near HPCL Terminal ‘B1’, Malkapuram, Visakhapatnam-530 011,

Andhra Pradesh

• MangalorePlant&Office: Adjacent HPCL POL Terminal,

Village Bala, Via Katipalla, Mangalore - 575 030, Karnataka

• JhansiPlant&Office: Adjacent to HPCL Karari Depot,

Gwalior Road, Jhansi - 284 419 Uttar Pradesh

• HaldiaPlant&Office: Mouza Alichak, J. L. No. 128, Plot No: 221-246, Ward No. 5,

Haldia Purba Medinipur-721 602. West Bengal

• DelhiOffice: C/o HPCL UCO Bank Building,

3rd Floor, Sansad Marg, New Delhi- 110 001

HINCOL Locations

HINDUSTAN COLAS LIMITED

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