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Notes to Accounts of Euro Ceramics Ltd.

Mar 31, 2015

1 Pursuant to the Companies Act 2013, the Company has revised the depreciation rates w.e.f. April 1, 2014, based on the maximum useful life of its various Fixed Assets as prescribed in Part-C of Schedule -II to the Companies Act, 2013. The Company has reworked the estimated useful life of the fixed assets during the current financial year and accordingly in case of fixed assets whose useful life has already been completed as on April 1, 2014, the carrying value (net of residual value) of those Fixed Assets amounting to Rs. 5,934.66 lacs have been debited to the opening balance of General Reserve Account.

2 Extra Ordinary item amounting to Rs. 3,552.17 Lacs debited to profit and loss account during the financial year 2014-15 is on account of provisions made for permanent diminution in value of Investments in its subsidiary and Loans & Advances made to its partnership firm.

3 The Company's financial facilities/arrangements including Term Loans, Working Capital Facilities and Non Fund Based Credit Facilities have expired and the accounts with the Banks have turned into Non Performing Assets since more than 2 years. The Banks have initiated legal proceedings for the recovery from the Company u/s. 19 of the Debt Recovery Tribunal (DRT) and u/s. 13(2) of the Securitization & Reconstruction of Financial Assets & Enforcement of Security (Second) Interest (SARFAESI) Act, 2002. Some of the creditors filed cases against the Company and its Directors for recovey of their dues, including petitions for winding up of the Company, in the High Court of Mumbai. The management has taken and been taking all diligent steps under legal advice, to defend the Company in all the litigation. Since the matters are sub-judice, the exact liability of the Company can't be ascertained at this point of time.

4 The Company on the basis of registration filed u/s. 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, before the Hon'ble Board for Industrial & Financial Reconstruction, and the hearings for which are in process for determination of sickness and on the basis of ongoing negotiations with the lenders for reduction in interest, rephasement in terms of borrowings etc., has not provided for interest to the tune of Rs. 8,758.47 Lacs (calculated based on last sanction letters in hand) on financial facilities, for the year ending March 31, 2015.

Note 5:- Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

Note 6:- The Company does not have a Company Secretary as required under the provision of Section 203 of the Companies Act, 2013. The Company is in the process of appointing a whole time Company Secretary as required by the provision of Section 203 of the Companies Act, 2013.


Mar 31, 2014

1. SHARE CAPITAL

Terms and Rights attached to the Equity Shares:

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. No Dividends were proposed by the Board of Directors for the financial year 2013-2014 / 2012-2013. In the event of liquidation of the company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution shall be in proportion to the number of equity shares held by them.

2. LONG TERM BORROWINGS

FOR YEAR ENDED MARCH 31, 2014

2.1. The Company has been incurring losses since F.Y.2011-12 onwards which has resulted in erosion of its net worth and depletion in its working capital. Eventually there were defaults in the repayment of obligations to banks and the relevant loan accounts - Term Loans, Cash Credits and other Non-Fund Based Credits. Consequently the Lenders have called-off their advances and issued notice for recovery under section 19 of Recovery of Debts (DRT) and under section 13(2) of the Securitization & Reconstruction of Financial Assets & Enforcement of Security (Second) Interest (SARFAESI) Act, 2002 to the Company.

2.2. In the F.Y.2013-14, the Company on the basis of audited accounts for the financial year ended March 31, 2013 and being mandatory requirement has filed the reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 before the Hon''ble Board For Industrial And Financial Reconstruction (BIFR). The above reference has been duly registered by the Learned Registrar of Hon''ble BIFR and hearings of the same are in process for determination of sickness.

2.3. In the light of the above scenario, all the term loans from banks are no longer treated as Long Term Borrowings, but have been classified as Current maturities of Loans & Credit Facilities from Banks under Other Current Liabilities in Note No.6.

3. SHORT TERM BORROWING

3.1. The Company has been incurring lossess since F.Y.2011-12 ownwards which has resulted in erosion of its net worth and depletion in its working capital. Eventually there were defaults in the repayment of obligations to banks and the relevant loan accounts - Term Loans, Cash Credits and other Non-Fund Based Credits. Consequently the Lenders have called-off their advances and issued notice for recovery under section 19 of Recovery of Debts (DRT) and under section 13(2) of the Securitization & Reconstruction of Financial Assets & Enforcement of Security (Second) Interest (SARFAESI)Act, 2002 to the Company.

3.2. In the F.Y.2013-14, the Company on the basis of audited accounts for the financial year ended March 31, 2013 and being mandatory requirement has filed the reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 before the Hon''ble Board For Industrial And Financial Reconstruction (BIFR). The above reference has been duly registered by the Learned Registrar of Hon''ble BIFR and hearings of the same are in process for determination of sickness.

3.3. In the light of the above scenario, all the Working Capital Loans from banks have been classified as Current maturities of Loans & Credit Facilities from Banks under Other Current Liabilities in Note No.6.

3.4. Working capital loan from banks and buyers credit arrangement are secured against the hypothecation of present and future stocks of Raw Materials, Stock-In-Process, Finished Goods, Stock-In-Trade, Stores & Spares, Consumables and Book Debts and against the collateral securities & Personal Guarantee given by the Directors and Related Parties.

4. TRADE PAYABLES

4.1. The information of amounts outstanding to Micro, Small and Medium Enterprises has been determined to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the MSME.

4.2. No interest is paid/payable during the year to any enterprise registered under the MSME.

5. OTHER CURRENT LIABILITIES

5.1. Current maturities of Loans & Credit Facilities from Banks (refer notes 3.1 to 3.7) in Note 3 - Long-term borrowings and (refer notes 4.1 to 4.4) in Note 4 - Short-term Borrowings for details of rate of interest, repayment schedule, security and guarantee.

6. CONTINGENT LIABILITIES

Particulars As at March 31, 2014 As at March 31, 2013 Rs. Rs.

a. Bank Guarantees - 255,000

b. Guarantees given to the Banks for the loans taken by the Euro Merchandise (India) Ltd., (100% Subsidiary) 162,000,000 162,000,000

c. The Company has imported various Capital Goods under the Export Promotion Capital Goods Scheme (EPCG), of the Government of India, through various licenses, at concessional rates of Custom Duty on an undertaking to fulfill quantified exports within a period of eight years from the date of the respective licenses. The Custom Duty so saved amounts to Rs. 30,76,45,374/- (Previous Year Rs. 30,76,45,374/-) and the corresponding Export Obligation to be fulfilled is Rs. 1,69,53,45,986/- (Previous Year Rs. 1,71,03,91,974/-) as on the Balance Sheet date. If the said export is not made within the stipulated time period, the company is required to pay the Custom Duty corresponding to the balance export obligation to be fulfilled, together with interest @15% p.a. Formal discharge from the obligation by the appropriate authorities is in progress in respect of some of the Licenses of which Export Obligation is entirely fulfilled by the close of the year.

7. Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification/ disclosure.

8. The Company does not have a Company Secretary as required under the provision of Section 383A of the Companies Act, 1956. The Company is in the process of appointing a whole time Company Secretary as required by the provision of Section 383Aof the Companies Act, 1956.


Mar 31, 2013

Note 1:- CONTINGENT LIABILITIES

Particulars As at March 31,2013 As at March 31, 2012



a. Bills Discounted with Banks - 7,160,614

b. Letter of Credit - 19,317,417

c. Bank Guarantees 255,000 42,994,000

d. Guarantees given to the Banks for the loans taken by the Euro Merchandise (India) Ltd., (100 % Subsidiary) 162,000,000 322,000,000

e. The Company has imported various Capital Goods under the Export Promotion Capital Goods Scheme (EPCG), of the Government of India, through various licenses, at concessional rates of Custom Duty on an undertaking to fulfill quantified exports within a period of eight years from the date of the respective licenses. The Custom Duty so saved amounts to Rs.30,76,45,374/- (Previous Year Rs.30,78,61,293/-) and the corresponding Export Obligation to be fulfilled is Rs.1,71,03,91,974/- (Previous Year Rs. 1,72,50,51,747/-) as on the Balance Sheet date. If the said export is not made within the stipulated time period, the company is required to pay the said saved Custom Duty together with interest @15% p.a. Formal discharge from the obligation by the appropriate authorities is in progress in respect of some of the Licenses of which Export Obligation is entirely fulfilled by the close of the year.


Mar 31, 2012

Terms and Rights attached to the Equity Shares:

The Company has only one class of equity shares having a par value of Rs 10/- per share. Each holder of equity shares is entitled to one vote per share. No Dividends were proposed by the Board of Directors for the financial year 2011-2012 / 2010-2011. In the event of liquidation of the company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution shall be in proportion to the number of equity shares held by them.

1.1 Working capital loan from banks and buyers credit arrangement are secured against the hypothecation of present and future stocks of Raw Materials, Stock-In-Process, Finished Goods, Stock-In-Trade, Stores & Spares, Consumables and Book Debts and against the collateral securities & Personal Guarantee given by the Directors and Related Parties.

1.2 Overdraft Facility from Banks is secured against the Tertiary Charge on the entire Fixed Assets and Current Assets.

2.1 The information of amounts outstanding to Micro, Small and Medium Enterprises has been determined to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the MSME.

2.2 No interest is paid / payable during the year to any enterprise registered under the MSME.

3.1 Current maturities of long-term debt (refer notes 3.1 to 3.4) in Note 3 - Long-term borrowings for details of rate of interest, repayment schedule, security and guarantee.

3.2 Current maturities of long-term debt for the year eneded March 31,2011 includes:

(a) Rs 4,05,00,000/- Non Convertible Debentures secured by way of exclusive charge on the assest situated at Ankleshwar, Gujarat and tertiary charge on on the current assets and fixed assets both moveable and immoveable, present and future, located at Kutch, Gujarat and repayable in equal monthly installments ending on June 11.

(b) Rs 5,00,00,000/- Bank Term Loan Secured by way of tertiary charge on on the current assets and fixed assets both moveable and immoveable, present and future, located at Kutch, Gujarat, and repayable in equal 6 monthly installments starting from Oct 2010 to March 2011.

4 CORPORATE DEBT RESTRUCTURING

The economic slowdown, adverse overall market scenario in general and real estate and infrastructure in particular, the slower off take of the Company's products by the end user industry and customers, has adversely affected the Dusiness of the Company and the Company has suffered significant losses in ceramics business. Due to continued losses, the Company is continuously facing the difficulties in managing its cash flows and working capital requirements. In order to correct its working capital position and liquidity challenges arising out of the mismatch of the loan maturities and potential projected earnings, the Company approached the lenders for restructuring of its entire debt for suitable realignment under Corporate Debt Restructuring (CDR) mechanism. The CDR Cell approved the proposal of debt restructuring with super majority of the lenders on September 29, 2011, and issued the Letter of Approval (LOA), based on which the lenders agreeing to the package has signed the Master Restructuring Agreement (MRA) on February 25, 2012. The significant highlight of the package is as under:

a TheCut-off-Date(COD)is April 1,2011.

b The total existing term loan ofRs 335.77 Crores outstanding as on COD is restructured.

c The principal repayment in 38 structured quarterly installment in stepped up manner starting from October 1,2011 to March 31, 2021, after considering 6 months moratorium from COD.

d Funding of Interest for a period of 6 months from COD, amounting to Rs 21.20 Crores. Out of which Rs 18.80 Crores to be converted into Equity or Compulsory Convertible Debentures (CCDs). The CCDs to be convertible in to equity within 18 months from the date of allotment.

e The rate of interest is starting from 3.50 % p.a. to 14.00 % p.a. increasing in a stepped up manner till the tenure of debt.

f Carving out working capital irregularities to the tune of Rs 13 Crores into a Working Capital Term Loan, repayable in 34 structured installments with 18 months of moratorium from COD with interest rate as described for other Term Loans.

g Additional working capital loans ofRs 12 Crores and critical capex loan ofRs 5 Crores to be shared by some of the lenders.

h The existing security structure is continued and more specifically covered under the MRA.

i The Company to issue Zero Coupon Bonds amounting to Rs 3.85 Crores to one of the lenders for their sacrifices, repayable after March 2021.

5 CONTINGENT LIABILITIES

Particulars As at March 31, 2012 As at March 31, 2011

a. Bills Discounted with Bank 7,160,614 28,433,423

b. Letter of Credit 19,317,417 23,428,403

c. Bank Guarantees 42,994,000 42,994,000

d. Guarantees given to the Banks for the loans taken by the 322,000,000 325,000,000 Euro Merchandise (India) Ltd., (100 % Subsidiary)

e- The Company has imported various Capital Goods under the Export Promotion Capital Goods Scheme (EPCG), of the Government of India, through various licenses, at concessional rates of Custom Duty on an undertaking to fulfill quantified exports within a period of eight years from the date of the respective licenses. The Custom Duty so saved amounts to Rs 30,78,61,293/- (Previous Year Rs 31,12,05,280/-) and the corresponding Export Obligation to be fulfilled is Rs 1,72,50,51,747/- (Previous YearRs 1,69,23,44,848/-) as on the Balance Sheet date. If the said export is not made within the stipulated time period, the company is required to pay the said saved Custom Duty together with interest @15% p.a. Formal discharge from the obligation by the appropriate authorities is in progress in respect of some of the Licenses of which Export Obligation is entirely fulfilled by the close of the year.

- Figures of the Previous Year have been given in brackets.

- No amounts in respect of the related parties have been written off/back.

- Related party relationship have been identified by the management and relied upon by the auditors.

6 The Revised Schedule VI has become effective from April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements.

Previous years figures have been regrouped /reclassified wherever necessary to correspond with the current years classification / disclosure.

7 The Company does not have a Company Secretary as required under the provision of Section 383Aof the Companies Act, 1956.The Company is in the process of appointing a whole time Company Secretary as required by the provision of Section 383Aof the Companies Act, 1956.


Mar 31, 2011

1. Contingent Liabilities not provided for in the books of accounts:

Current Year PreviousYear

a. Bills Discounted with Banks 2,84,33,423 1,94,45,133

b. Letter of Credit 2,34,28,403 12,49,37,135

c. Bank Guarantees 4,29,94,000 4,94,000

d. Guarantees given to 32,50,00,000 32,50,00,000 the Banks forthe loans taken by the Euro Merchandise (India) Ltd., (100% Subsidiary)

e. The Company has imported various Capital Goods under the Export Promotion Capital Goods Scheme (EPCG), of the Government of India, through various licenses, at concessional rates of Custom Duty on an undertaking to fulfill quantified exports within a period of eight years from the date of the respective licenses. The Custom Duty so saved amounts to Rs. 31,12,05,280/- (Previous Year Rs. 33,87,48,010/-) and the corresponding Export Obligation to be fulfilled is Rs. 1,69,23,44,848/- (Previous Year Rs. 2,04,49,34,503/-) as on the Balance Sheet date. If the said export is not made within the stipulated time period, the company is required to pay the said saved Custom Duty together with interest @15% p.a. Formal discharge from the obligation by the appropriate authorities is in progress in respect of some of the Licenses of which Export Obligation is entirely fulfilled by the close of the year.

2. Unsecured Loans from Banks and Financial Institutions of Rs. NIL (Previous YearRs. 31,32,93,086/-) are payable within a period of one year.

3. Sundry Debtors include amount in respect of which the Company holds Letter of Credit / Guarantees from Banks of Rs.1,18,20,052 I- (PreviousYearRs. 3,23,60,118/-).

4. Fixed Deposits of Rs. 4,41,26,721/- (Previous YearRs. 3,95,52,761/-) are pledged with banks as Margin Money against Guarantees / Letter of Credit issued and Credit facilities sanctioned by the Bank.

5. Pursuant to scheme of demerger of Mumbai Realty Division (MRD) of Ethix Realtors Private LimitedI (ERPL) on a going concern basis with Euro Ceramics Limited as approved by the Hon'ble High Court of Judicature at Bombay dated April 15,2011, the Mumbai Realty Division of Ethix Realtors Private Limited has been merged with the Company with effect from October 1,2009.

The merger has been accounted for under the "Pooling of interest method" as prescribed by Accounting Standard (AS-14) Accounting for Amalgamation issued by The Institute of Chartered Accountants of India

In accordance with the said Scheme, all the assets, debts, liabilities, duties and obligations of MRD have been vested in the Company with effect from October 1,2009 and have been recorded at their respective book values. There were no material difference in the accounting 93,28,134 Equity shares of Rs. 10/-each fully paid, have to be allotted to the shareholders of ERPL in the ratio of 340 equity shares of Rs. 107- each of the Company for every 182.244332 equity share of Rs. 107- each of ERPL. Pending the allotment of the said Equity shares pursuant to the Scheme, the amount has been shown as "Share Capital Suspense".

In accordance with the said scheme, any excess/ shortfall of the Net Assets Value taken over by the Company over the paid up value of equity shares to be issued and allotted has been transferred to Capital Reserve on Demerger Account.

6. The Company has received intimations from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and accordingly the amounts outstanding to such suppliers has been disclosed. The Company has received interest waiver certificate for interest on overdue outstanding payments for parties to whom the amount in overdue underthe MSME Act

7. Disclosure in respect of Related Parties pursuant to Accounting Standard 18:

(a) Subsidiary

Euro Merchandise (India) Limited

(b) Name of the enterprises having same Key Management Personnel and/ortheir relatives as the Reporting enterprises:

Eurobond Industries Private Euro Flooring Pvt. Ltd. Limited

Euro Decor Pvt. Ltd Euro Multivision Ltd

Euro Developers Pvt. Ltd. Subhnen Ply Pvt. Ltd.

Euro Pratiklspat Pvt. Ltd. Euro Solo Energy Systems Pvt. Ltd,

EuroAgro Subhnen Finance & Investments Pvt Ltd.

Kevin Impex Pvt. Ltd. Kanch Ghar

Neelam Metal Laxmi Ply Agency

Metro Stationery Mart Neelam Ply & Laminates

NLS Enterprise Pvt Ltd. Gurukul Enterprises Pvt. Ltd.

Tangent Furniture Pvt Ltd Lyons Technologies Ltd

Ladhabhai Sanganbhai Gala Monex Stationers Charitable Trust

Disti Multimedia & Communications Pvt Ltd Vaman International (P) Ltd.

National Ply & Laminates Zenith Corporation

Nova Enterprises National Laminate Corporation

Gala Enterprises Euro Foundation

Euro Conventional Energy Euro Mineral Corporation Pvt. Ltd.

Euro Solar Power Pvt. Ltd. Euro India Cylinders Ltd.

Euro Realtors Euro Glass Pvt. Ltd.

Link Estate Pvt. Ltd. Euro Steel & Minerals Ltd.

Euro Polaad Minerals & Euro Buildtech LLP Steel LLP

Subhnen Realtors LLP Jainy Glass & Veneer

Janata Industries Drashti Veneers

Maxim Enterprises Rahul Sales

EMVTechnosysLtd.

(c) Relatives of Key Management Personnel:

Nenshi L. Shah H.U.F. Shantilal L. Shah H.U.F.

Laljibhai K. Shah H.U.F. Pinank N. Shah H.U.F.

Gunvantiben N. Shah Laljibhai K. Shah

Manjari H. Shah Hitesh S. Shah

Sushila H. Gala Nitesh P. Shah

Jayantilal Nishar Rekhaben Nishar

Dhaval L. Shah Forum D. Shah

Kasturben T. Nandu Shantaben L. Shah

Urmi P. Shah Viral T. Nandu

Sonalben L. Shah Parag K. Shah

Hitesh S. Shah H.U.F. Pinank N. Shah

Devika P. Shah Dhaval S. Shah H.U.F.

ParitaV. Nandu Anish K. Shah

Dimple A. Shah Dhruti N. Shah

Hiral N. Shah Mahek H. Shah

(d) Key Management Personnel:

Nenshi L Shah Kumar P. Shah Talakshi L Paresh K. Shah Nandu

AmitG.Shah Anil M. Mandevia Shivji K. Shantilal Vikamsey L. Shah

Raichand Shah Deepak G. Savla Jatin Chhadva

During the yearfollowing transactions were carried out with the related parties in the ordinary course of business:

8. a) For additional information as required under para 3,4C and 4D of Part II of Schedule VI to the Companies Act, 1956 ReferAnnexure I.

b) For Segment Information ReferAnnexure II

c) ForCash Flow Statement ReferAnnexure III

d) For information as required under part IV of schedule Vl to the Companies Act, 1956 Refer Annexure IV.

9. Previous years figures have been regrouped, rearranged and recasted wherever necessary to make them comparable with those of current year.

 
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