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Notes to Accounts of Nitco Ltd.

Mar 31, 2023

Note: As on 31st March, 2020 management has considered that the losses suffered by New Vardhman Vitrified Private Limited, a subsidiary company, and suspension of its operations, indicate an impairment in the carrying value of the investment in the subsidiary. Accordingly, management has estimated a provision of Rs. 2,040.13 lakhs as a diminution in the carrying value of its investment. Decision of the management is mainly based on existing market conditions.

The company has sold its stake in New Vardhman Vitrified Private Limited ("NVVPL) and the money against the same has been received. However NVVPL shares that were in the name of company have not been handed over to the buyer due to non receipt of no objection certificate from LIC (one of the lenders of the Company)

Note:

10.1 The Company has used a practical expedient for computing expected credit loss allowance for trade receivables, taking into account historical credit loss experience and accordingly, provisions are made for expected credit loss for amounts due from customers where necessary.

10.2 Allowance includes allowance for expected credit loss and allowance for credit impairment

Note: (i) The Company had advanced money in the past to Nitco Realties Private Limited ("NRPLâ), a wholly owned subsidiary of the company in the form of Equity Investment of Rs. 694.59 lakhs and Loans of Rs. 5,885.10 lakhs, who along with its subsidiaries have acquired land from the money. Due to conditions of Real Estate market and financial crunch in company the proposed real estate project has been temporarily stalled. There is no specific agreement entered into between company and NRPL and hence there are no terms and conditions with respect to repayment or charging interest. Management has done a detailed evaluation on the recoverability of these equity investments/ loans given. The Valuation of Land in NRPL along with its subsidiaries has been conducted by an independent valuer. On the basis of such valuation done, management believes that the loans given are recoverable and accordingly no provision is required to be recorded in respect of these balances as at the year end. The management expects this amount to be recovered in current year.

(ii) There are no loans due from directors or other officers of the Company either severally or jointly with any other person.

C. Terms/Rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 10/- per share. Each holder of the equity share is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note (a) Capital Reserve is created on account of amalgamation of Particle Boards India Limited with the Company pursuant to the Scheme of Amalgamation in the financial year 2010-11 & unexercised share warrants in the financial year 2019-20.

Note (b) Share Premium Account is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

Note (c) Capital Redemption Reserve is created on account of redemption of preference shares. The preference shares were redeemed in the financial years 2003-04.

Note (d) General Reserve is created from time to time by way of transfer of profits from retained earnings. General reserve is created by a transfer from one component of equity to another.

Note (e) Retained earnings/ (losses) represents cumulative profit/ (loss) of the Company. The reserve can be utilised in accordance with the provision of the Companies Act, 2013.

i. Since the preference shares and debentures have been allotted consequent to restructuring of the company''s debt, there is no active market available for the aforesaid financial instruments, therefore the Company has not re-measured Redeemable Non-convertible Preference Shares and Redeemable Non-Convertible debenture

ii. During FY 2017-18, the debt of the Company was restructured to a sustainable level to ensure continuity of business resulting in long-term growth beneficial for all stakeholders. Pursuant to the same the restructuring was implemented as per which loans have been converted into term loans. The Company is negotiating a similar settlement agreement with other lender(s), Pending negotiations no further adjustments have been made. [Also refer Note No. 38 b (iv)]

* The company has windmills located within the State of Maharashtra where the power generated is sold to MSEDCL. During FY 2022-23, the company has sold power to MSEDCL amounting to Rs 259.02 lakhs (previous year Rs. 255.03 lakhs). The power generated through windmills was sold to MSEDCL under 13 year Power Purchase Agreement. Post expiry of initial Power Purchase Agreement, generation from windmill was sold to MSEDCL as prevailing rate (current year Rate Rs. 2.52 per Kwh).

32. Exceptional items

Exceptional items pertains to provision for litigation settlement amounting Rs. 1,585.34 Lakhs for the year ended 31st March, 2023

On 27th January, 2020, lock out was declared in tiles manufacturing unit situated at Alibaug. The Lockout at the Alibaug plant continues. The Management has reached a settlement with the Alibaug Union representing the 250 workmen of the plant. 240 workers have accepted the settlement agreement. Under the settlement agreement the workers have been offered a VRS scheme and paid Exgratia and an additional compensation of Rs. 1,496.01 Lakhs along with their legal dues and Gratuity. Accordingly the case filed by the Union in the labour court and conciliation meeting in the Labour Commissioner''s office post the settlement agreement stands dismissed.

The company has also offered Rs. 89.33 lakhs under settlement agreement to employees on a contractual basis at Alibaug Plant.

35 Employee benefit plans

a) Defined Contribution Plans

Retirement benefits in the form of provident fund, superannuation fund and national pension scheme are defined contribution schemes. The Company''s contribution to the provident fund, superannuation fund and national pension scheme is Rs.199.90 Lakhs for the year ended 31st March 2023 (31st March 2022 Rs. 195.98 Lakhs) [Refer Note 28]

b) Defined benefit Plan

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment of an amount equivalent to 15 days payable for each completed year of service or part thereof in excess of six months in terms of Gratuity scheme of Company or as per payment of the Gratuity Act, whichever is higher. Vesting occurs upon completion of five years of service. The Gratuity plan for the Company is a defined benefit scheme where annual contributions are deposited to an insurer to provide gratuity benefits by taking a scheme of Insurance, whereby these contributions are transferred to the insurer. The Company makes provision of such gratuity asset/liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method. Plan assets also include investments and bank balances used to deposit premiums until due to the insurance company.

The actuarial valuation of plan assets and the present value of defined benefit obligation were carried out at March 31,2023 by the certified actuarial valuer. The present value of the defined benefit obligation, related current service cost and past service cost were measured.

36. Disclosure pursuant to Ind AS 108 âOperating Segment"

The Company''s operating segments are established on the basis of those components of the Company that are evaluated regularly by the Executive Committee (the ''Chief Operating Decision Maker'' as defined in Ind AS 108 - ''Operating Segments''), in deciding how to allocate resources and in assessing performance. These have been identified taking into account nature of products and services, the differing risks and returns and the internal business reporting systems.

The Company has two principal operating and reporting segments; viz. Tiles and related products and Real Estate.

The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional policies for segment reporting.

a. Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and Expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocableâ.

b. Segment Assets and Segment Liabilities represent Assets and Liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocableâ.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted. The fair values of options granted were determined using Black-Scholes option pricing model that takes into account factors specific to the share incentive plans. Expected volatility has been determined by reference to the average volatility for comparable companies for corresponding option term.

38. Commitments & Contingencies (a) Commitments Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as 31 March 2023 are Rs.0.04 Lakhs (31 March 2022 - Rs. 42.25 Lakhs). (b) Contingent Liabilities (Rs. in Lakhs)
	As at March 31, 2023	As at March 31, 2022
a) Bank Guarantee given by the company	3,765.56	3,765.56
b) Demands against the company not acknowledged as debts and not provided for against
i. Penalty levied by DGFT, Delhi (refer to note (ii) below)	16,980.00	16,980.00
ii. Demand order for unearned income (refer to note (iii) below)	5,105.88	5,105.88
iii. In respect ofValue added tax, Service Tax, GST, Custom Duty and Income Tax Demands pending before various authorities and in dispute	4,507.06	4,603.17
c) Legal matters	337.27	241.69
d) Estimated amount of interest on loan which is not provided in the books (refer note v below)	2,639.43	2,428.22

i. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (d) above pending resolution of the arbitration/appellate proceedings.

ii. The Additional Director General Foreign Trade (ADGFT) had levied penalty of Rs. 17,000 lakhs for irregular / non fulfilment of export obligation and the same has been confirmed by the Appellate Bench of DGFT, New Delhi. The company has been advised that the order is bad in law and accordingly has agitated the matter before the appropriate forum. No provision has been made in the Accounts for the same.

iii. Pursuant to scheme of amalgamation sanctioned by the Hon''ble Bombay High Court with Particle Board India Limited during 2011, a land parcel situated at Kanjur Marg, held by Particle Board India Limited was transferred to the Company. Revenue department has raised a demand for unearned income of Rs. 5,105.88 Lakhs in this regard. The company has filed a filed writ petition with the Hon''ble Bombay High Court in respect of same and the writ is pending for hearing. Stay was granted on 26th March,2018. However same was confirmed as interim relief by order dated 09 th September, 2019

iv. In 2018, the Company had received sanction from JM Financial Asset Reconstruction Company Limited (""JMFARC"") for restructuring of Company''s debt vide a Restructuring Agreement dated 27 th March 2018 entered between the Company and JMFARC.

In accordance with the terms of the Restructuring agreement, the Company was obligated to ensure repayment of the Restructured Facilities, along with interest thereon in the manner specified in the Restructuring Agreement. Upon failure to ensure repayment of restructured facilities, JMFARC shall have an absolute right to revoke the reliefs and concessions granted in the Restructuring agreement. Accordingly, the debts and interest are stated at the restructured values.

The Company had committed default in ensuring the repayments of the restructuring facility. On 19 September 2022, JMFARC has revoked the restructuring of existing facilities (excluding the NCD and RPS facility) and the dues amounting to Rs. 2,42,762.93 Lakhs has been reinstated, however as per books of accounts the loans are not restated and the balance as at 31st March, 2023 is Rs. 66,082.26 Lakhs

The Company is in the process of negotiating with the JMFARC for the restructuring/extension of restructuring of its facilities. Pending negotiations, no further adjustment is made.

Further, Company has received an email on 15 th November 2022 from JM Financial Asset Restructuring Company Limited (acting in its capacity as trustee ofJMFARC-LVB Ceramics September 2014- Trust) - Financial Creditor w.r.t. filing of Application under Section 7 of Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with National Company Law Tribunal (NCLT) to initiate corporate insolvency resolution process. The application is numbered and the C.P. (I B) No. allotted is - C.P. (IB)/1308(MB)2022. The application is listed on the NcLt under cause list.

JMFARC also filed the CIRP against Corporate Guarantors namely Aurella Estate and Investments Pvt. Ltd (entity having significant influence over the Company), Nitco Realities Pvt. Ltd. (Subsidiary) and Megdoot Properties Pvt. Ltd., Feel Better Housing Pvt. Ltd., Maxwealth Properties Private Limited, Silver-Sky Real Estate Pvt. Ltd. (4 Step-down Subsidiaries).

The Company is taking appropriate legal advice and will take all appropriate steps to protect its interest in the aforesaid matter.

The Company has filed a reply with Hon''ble NCLT citing appropriate defence. The matter is listed for hearing on 07 June, 2023.

v. Restructuring of Company''s debt (excluding debts of LIC) was approved by JMFARC on January 23, 2018. The Company is negotiating with LIC for restructuring of its facility (principal outstanding Rs. 1,887.26 Lakhs as on 31.03.2023 on terms similar to restructuring done by JMFARC. Pending negotiations with LIC, no further adjustments , especially the provision of interest amounting to Rs 2,639.43 Lakhs is not made.

Capital of the Company, for the purpose of capital management, include issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximise shareholders value.

40. Financial instruments

The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between the willing parties, other than in a forced or liquidation sale.

The following methods and assumptions have been used to estimate the fair values:

Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to the short term maturities of these instruments

Financial Instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rate and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

Fair value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

There is no fair valuation of financial instruments.

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.

The Company''s principal financial liabilities comprise of loan from banks and financial institutions, finance lease obligations and trade payables. The main purpose of these financial liabilities is to raise finance for the Company''s operations. The Company has various financial assets such as trade receivables, cash and short term deposits, which arise directly from its operations.

The main risks arising from Company''s financial instruments are foreign currency risk, interest rate risk, credit risk and liquidity risk. The Board of Directors review and agree policies for managing each of these risks.

i. Foreign currency risk:

The Company does not have material revenue from overseas operations. However, the entity makes imports of Raw material and capital goods. Further the Company holds monetary assets in the form of investments in currency other than its functional currency i.e. Indian Rupee. Foreign currency risk, as defined in Ind AS 107, arises as the value of future transactions, recognised monetary assets and monetary liabilities denominated in other currencies fluctuate due to changes in foreign exchange rates.

While the company has direct exposure to foreign exchange rate changes on the price of non-Indian Rupee-denominated securities and borrowings. For that reason, the below sensitivity analysis may not necessarily indicate the total effect on the Company''s net assets attributable to holders of equity shares of future movements in foreign exchange rates. The above risks may affect the Company''s income and expenses, or the value of its financial instruments. The objective of the Company''s management of market risk is to maintain this risk within acceptable parameters, while optimising returns. The following tables demonstrate the sensitivity to a reasonably possible change in foreign exchange rates, with all other variables held constant.

ii. Interest Rate Risk

The Company is exposed to interest rate risk because the Company borrows funds at both fixed and floating interest rates. Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates, in cases where the borrowings are measured at fair value through Statement of Profit and Loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

Interest rate sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year.

A 50 basis point increase or decrease is used for the purpose of sensitivity analysis.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company''s profit/(loss) before tax for the year ended March 31,2023 would decrease/increase by NIL (for the year ended March 31,2022: decrease/ increase by NIL)

iii. Credit risk

The Company directly reduces the gross carrying amount of a financial asset when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The amounts of financial assets are net of an allowance for doubtful accounts, estimated by the Company and based, in part, on the age of specific receivable balance and the current and expected collection trends. As such, in addition to the age of its Financial Assets, the Company also considers the age of its orders in progress, as well as the existence of any deferred revenue or down payments on orders on the same project or with the same client. The Company has used practical expedient by computing expected credit loss allowance for trade receivable by taking into consideration historical credit loss experience and adjusted for forward looking information. The Company is still pursuing the recovery for the receivable for which allowance made for bad and doubtful debts.

In addition the Company is exposed to credit risk in relation to the maximum related party credit exposure at March 31,2023 on account of carrying amount of loans /advances /deposit, trade and other receivables and guarantees is disclosed in note 34 on related party transactions. Based on the creditworthiness of the related parties, financial strength of related parties and its parents and past history of recoveries from them, the credit risk is mitigated. Credit risk relating to unrelated parties is minimised as the Company deals only with reputed parties.

Cash and cash equivalents are held with reputable and credit-worthy banks.

iv. Liquidity risk

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Company''s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Liquidity table:

The following tables detail the Company''s remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the cash flows of financial liabilities based on the earliest date on which the Company can be required to pay:

43. Balance confirmation

Balances of sundry debtors, sundry creditors, loans and advances, deposits are subject to confirmation and reconciliation. Accounts receivables are net of advances.

44. Additional regulatory information required by Schedule III of Companies Act, 2013

I. Utilisation of Borrowed funds and share premium:

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

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

b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

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

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

b) Provide any guarantee, security or the like on behalf of the ultimate beneficiaries

II. No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

III. The Company has not been declared wilful defaulter by any bank or financial institution or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.

IV. The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the year.

V. The Company has not recorded any transactions which are not in the books of accounts and has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961

VI. The Company has not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.

VII. The Company has not entered into any scheme of arrangement which has an accounting impact on current and previous year.

VIII. During the year no funds raised on short-term basis have been used for long-term purposes by the Company.

IX. The Company has complied with the number of layers prescribed under the Companies Act, 2013

X. There are no charges or satisfactions which are yet to be registered with the Registrar of Companies beyond the statutory period.

47. LeaseI. As a Lessee

(a) Lease liability at the present value of the remaining lease payments, discounted using the lessee''s incremental borrowing rate for lease as on 31st March, 2023.

(b) Right-of-use asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet

Company has used the practical expedients permitted by the standard:

* applying a single discount rate to a portfolio of leases with reasonably similar characteristics

* accounting for operating leases with a remaining lease term of less than 12 months or with minimal rent payments as short-term leases

* In case of Leases which are having no lock in period or lease are cancellable with short notice by either party or lessee are not treated as lease for the purpose of IND AS 116.

(d) The weighted average lessee''s interest implicit in the lease has been applied to the lease liabilities was 6.75% pa with maturity between 2019-25.

48. No provision for Deferred Tax has been made in the books due to accumulated loss

49. Contract with GAIL (India) Limited

The Company as a buyer entered into a Gas Sale Agreement on 03.03.2009 with GAIL (India) Limited as a seller where the seller is a Government Company primarily engaged in the distribution and marketing of gas in India. As per the provisions of the above agreement, the company must pay for the quantity not taken/consumed as per the Buyer''s Take or Pay Obligation Clause. As per provisions of sub-article (c) & (d) of article 18 "Force Majeureâ of Gas Sale Agreement dated 03-03-2009 between GAIL (India) Limited & NITCO Limited: "In the events of Force Majeure, if the lockout continues for at least 3 consecutive days then from the fourth consecutive day of the Force Majeure event under this agreement, the buyer shall be excused from performing its obligations under this agreement, except those specifically provided herein. The Company has received a waiver letter for the period ending December 2022 exempting the Take or Pay claim. Accordingly based on the provisions of the Force Majeure clause and waiver letter, the Company does not expect any cash outflow.

50. The financial statements are approved for issue by the Audit Committee and the Board of Directors at their respective meetings conducted on 30th May, 2023

51. The previous year figures are regrouped/ restated/ reclassified/ rearranged, wherever necessary, to make them comparable.

Mar 31, 2018

1. CORPORATE INFORMATION

NITCO Limited (the ''Company'') is a public limited Company domiciled in India and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Company is one of the leading player in the tiles and marble business. The Company has manufacturing facilities in Maharashtra and Silvassa and sells primarily in India through independent dealers/distributors and modern trade.

During the year, following equity shares were issued by the Company.

1. Conversion of principal loan outstanding of Rs. 15.75 crs payable to Tata Capital Financial Services Limited (assigned to JMFARC) into 1,01,51,908 equity shares of the Company of face value of Rs. 10 each at par. The balance amount of the loan was waived.

2. Fresh issue of 70,07,709 fully paid up Equity shares at face value Rs. 10/- each at a premium of Rs. 104.16 allotted to JMFARC

C. Terms/Rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 10/- per share. Each holder of the equity share is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Issue of 6131745 Convertible Warrants (the "Warrantsâ) at an issue price of Rs. 114.16 per warrant, entitling the Warrant Holder to apply for and get allotted one Equity Share of the face value of Rs. 10/- each fully paid-up at a premium of Rs. 104.16 against each Warrant within a period of 18 months from the date of allotment of Warrants. 25% of the consideration of total the Warrants issued, was payable to the Company on or before allotment of the Warrants and the balance consideration i.e. 75% will be paid at the time of allotment of Equity Shares pursuant to exercise of option of conversion against each such warrant.

i. 15,00,00,000 fully paid Redeemable Non-Convertible Preference Shares of Rs. 10/- each at par amounting to Rs. 15,000.00 lakh issued by the Company during the year. Preference Shares shall carry dividend at the rate of 0.1% per annum. The outstanding principal of Preference Shares shall be repaid at par in 8 equal annual installments commencing from the end of 10 years from the effective date 28 February 2018 (refer note 45 A).

ii. 500 fully paid Secured Redeemable Non-convertible Debentures of Face Value of Rs. 10,00,000 each amounting to Rs. 5,000.00 lakh issued by the Company during the year. The Debenture shall carry interest rate of 5% per annum and shall be redeemed at the end of 10 years from the effective date (refer note 45 A).

iii. Since the preference shares and debentures have been allotted consequent to restructuring of the Company''s debt, there is no active market available for the aforesaid financial instruments, therefore the Company has not re-measured Redeemable Non-convertible Preference Shares and Redeemable Non Convertible debenture.

iv. JMFARC representing 98% of the Company''s debt has restructured the debt of the Company on sustainable basis vide their sanction letter dated 23 January 2018. Based on the sanction received from JMFARC the debts of the Company have been reclassified. The Company is negotiating a similar settlement agreement with the other lender(s).

2. Employee benefit plans

a) Defined Contribution Plans

Retirement benefits in the form of provident fund, superannuation fund and national pension scheme are defined contribution schemes. The Company''s contribution to the provident fund, superannuation fund and national pension scheme is Rs. 333.13 Lakh for the year ended 31 March 2018 (31 March 2017 Rs. 315.81 Lakh)

b) Defined benefit Plan

The actuarial valuation of plan assets and the present value of defined benefit obligation were carried out at 31 March 2018 by the certified actuarial valuer. The present value of the defined benefit obligation, related current service cost and past service cost were measured.

3. Disclosure pursuant to Ind AS 108 âOperating Segment"

The Company has two principal operating and reporting segments; viz. Tiles and related products and Real Estate.

The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional policies for segment reporting.

4. Commitments & Contingencies

(a) Leases

(i) Operating Lease

The Company have entered into a long term lease agreement for land. The Company does not have an option to purchase the leased land at the expiry of the lease period. The unamortised operating lease prepayments as at 31 March 2018 aggregating Rs. 133.62 (31 March 2017 - Rs. 136.63 Lakh, 1 April 2016 - Rs. 139.64 Lakh) is included in other non-current assets.

ii) Finance Leases

The Company have taken certain vehicles under finance lease. Lease term ranges between 3-5 years. There is option to purchase the assets at the end of lease terms. The obligation under finance lease are secured by the leased assets. There is no restriction such as those concerning dividends, additional debts and further leasing imposed by the lease agreement. The interest rate underlying all obligations under finance leases are fixed at respective contract dates.

For net carrying amount of assets acquired under finance lease as at 31 March 2018, refer note 3 Property, Plant and Equipment.

(b) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as on 31 March 2018 are Rs. 17.76 Lakh (31 March 2017 - Rs. 11.33 Lakh, 1 April 2016 - Rs. 84.56 Lakh).

i. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (d) above pending resolution of the arbitration/appellate proceedings.

ii. The Additional Director General Foreign Trade (ADGFT) had levied penalty of Rs. 170 crore for irregular / non fulfilment of export obligation and the same has been confirmed by the Appellate Bench of DGFT, New Delhi. The Company has been advised that the order is bad in law and accordingly will agitate the matter before the appropriate forum. No provision has been made in the accounts for the same.

iii. Pursuant to scheme of amalgamation sanctioned by the Hon''ble Bombay High Court with Particle Board India Limited during 2011, a land parcel held by Particle Board India Limited was transferred to the Company. Revenue department has raised a demand for unearned income of Rs. 5,105.88 Lakh in this regard. The Company has filed writ petition with the Hon''ble Bombay High Court in respect of same and the writ is pending for hearing.

5. Capital Management

The funding requirement is met through a mixture of equity, internal accruals, long term borrowings and short term borrowings. The Company monitors capital using gearing ratio, which is debt divided by total capital plus debt.

# Debt is defined as long term, short term borrowings and current maturities of long term debts and finance lease obligations as prescribed in note 19 and also includes interest accrued but not due on borrowings.

Improved capital gearing ratio reflects increase in equity on account of net profits during the year.

6. Financial instruments

The following methods and assumptions have been used to estimate the fair values:

Fair value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

There is no fair valuation of financial instruments.

7. Financial risk management objectives:

i. Foreign currency risk:

While the Company has direct exposure to foreign exchange rate changes on the price of non-Indian Rupee-denominated securities and borrowings. For that reason, the below sensitivity analysis may not necessarily indicate the total effect on the Company''s net assets attributable to holders of equity shares of future movements in foreign exchange rates. The above risks may affect the Company''s income and expenses, or the value of its financial instruments. The objective of the Company''s management of market risk is to maintain this risk within acceptable parameters, while optimising returns. The following tables demonstrate the sensitivity to a reasonably possible change in foreign exchange rates, with all other variables held constant.

ii. Interest Rate Risk

Exposure to Interest Rate Risk

Interest rate risk of the Company arises from borrowings. The Company endeavor to adopt a policy of ensuring that maximum of its interest rate risk exposure is at fixed rate. The Company''s interest-bearing financial instruments are reported as below:

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used for the purpose of sensitivity analysis.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company''s profit before tax for the year ended 31 March 2018 would decrease/increase by Rs. 11.03 lakh (for the year ended 31 March 2017: decrease/ increase by Rs. 646.70 Lakh)

iii. Credit risk

In addition the Company is exposed to credit risk in relation to the maximum related party credit exposure at 31 March 2018 on account of carrying amount of loans /advances /deposit, trade and other receivables and guarantees is disclosed in note 13 on related party transactions. Based on the creditworthiness of the related parties, financial strength of related parties and its parents and past history of recoveries from them, the credit risk is mitigated. Credit risk relating to unrelating parties is minimised as the Company deals only with reputed parties.

Cash and cash equivalents are held with reputable and credit-worthy banks.

iv. Liquidity risk

Liquidity table:

8. Exceptional items

A. Debt Restructuring

a. JM Financial Asset Reconstruction Company Limited (JMFARC)

i. In the earlier years, the Company''s lenders (approx. 98%) assigned their debts of Rs. 1,24,032.15 Lakh to an asset reconstruction Company. During the current financial year, based on the Techno Economic Viability (TEV) study conducted by MITCON and its findings thereof, the debt of the Company was required to be restructured to a sustainable level to ensure continuity of business resulting in long-term growth beneficial for all stakeholders. Accordingly a restructuring plan was drawn followed by a business plan reviewed by a reputed financial and tax consultancy firm. Pursuant to the same the restructuring was implemented as per which loans have been converted into term loans, debentures and preference shares. Post successful restructuring, there would be write-off of part of the loans (for the current year, write-off was Rs. 40,000 lakhs)

ii. The Company issued 1,01,51,908 equity shares of face value of Rs. 10 each at par to JMFARC upon conversion of a loan of Rs. 1,575.42 lakh.

iii. The Company issued 15,00,00,000 fully paid Redeemable Non-Covertible Preference Shares of Rs. 10/- each at par amounting to Rs. 15,000.00 lakh during the year.

iv. The Company issued 500 fully paid secured redeemable Non-convertible Debentures of Face Value of Rs. 10,00,000 each amounting to Rs. 5,000.00 lakh during the year.

v. For the current year, the Company has recognized loan waiver of Rs. 40,560.23 Lakh (i & ii above) and has also reversed the interest amounting to Rs. 8,195.90 Lakh receivable from its wholly owned subsidiary. The net amount of Rs. 32,364.33 Lakh has been shown under exceptional item.

b. Further, the Company is negotiating a similar settlement agreement with the other lender(s). Pending negotiations no further adjustments have been made.

B. Write down of the value of certain obsolete, slow-moving and old inventories Rs. 2,381.38 Lakh

C. Consequent to GST implementation and adoption of Ind AS, the Company has charged off pending input tax credits including giving effect to appellate orders Rs. 4,470.31 Lakh.

D. The Company has reviewed current assets and consequently written off as one time charge Rs. 726.23 Lakh.

9. Explanation of transition to Ind AS

These are the Company''s first financial statements prepared in accordance with Ind AS. The accounting policies set out in Note 2.2 "Significant accounting policies note - "pâ have been applied in preparing the financial statements for the year ended 31 March 2018 and the comparative period information.

For all periods upto and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in India and complied with the accounting standards as notified under Section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent applicable, and the presentation requirements of the Companies Act, 2013(Previous GAAP)

The transition to Ind AS was carried out in accordance with Ind AS 101, with 1 April 2016 being the date of transition. Following note explains how the transition from previous GAAP to Ind AS has affected the Company financial position, financial performance and cash flows.

Notes to first time adoption

The following explains the material adjustments made during transition from previous GAAP to Ind AS:

1. Loans and advances given to subsidiary companies

In the financial statements prepared under previous GAAP, the carrying value of Interest free loan given was recognised at the principal amounts receivable by the lender. Interest free loans given and security deposits are repayable on demand and hence these are recorded at carrying value which is equal to transaction price on initial recognition.

2. Impact on Statement of Cash Flows

The Ind AS adjustments are non-cash adjustments. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31 March 2016 as compared with the previous GAAP.

3. Other Comprehensive Income

Under previous GAAP, the Company has not presented Other Comprehensive Income (OCI) separately. Hence, it has reconciled previous GAAP profit & loss to profit or profit & loss as per Ind AS. Further, previous GAAP profit & loss is reconciled to total comprehensive income as per Ind AS.

4. Re-classification

The Company has reclassified previous year figures to conform to Ind AS classification.

Mar 31, 2016

1. Terms, Rights, Preferences and restrictions attached to equity shares:

The Company has only one class of equity shares having a face value of Rs.10 per share. Each holder of equity share is entitled to one vote on show of hands and in case of poll, one vote per equity share. A member shall not have any right to vote whilst any call or other sum shall be due and payable to the Company in respect of any of the shares of such member. All equity shares of the Company rank pari passu in all respects including the right to dividend.

Note:

i. The Company has been incurring losses since FY 2011-12 onwards which has resulted in erosion of its net worth and depletion in its working capital. Accordingly, there were defaults in the payment of obligations to banks and relevant loan accounts - term loans, cash credits and other non-fund based credits.

ii. No provision has been made for interest unpaid to CDR lenders.

iii. Classification of long term borrowings is based on Corporate Debt Restructuring documents.

2. Provision for Taxation

i. Current year charge

No provision for Income tax has been made on account of losses during the year.

ii. Deferred Tax

The Company has been recognizing in the financial statements the deferred tax assets / liabilities, in accordance with Accounting Standard 22 "Accounting for Taxes on Incomeâ issued by the Institute of Chartered Accountants of India. No provision for deferred tax has been made on account of losses during the year.

In the previous financial year, GAIL India Limited had raised a demand of Rs. 1,497.15 Lacs (which was shown under "Contingent Liabilityâ) on the Company towards under drawn quantity of Re-Liquefied Natural Gas (RLNG) pertaining to calendar year 2014. This demand was raised under Take or Pay obligation under the long term supply contract for supply of Re-Liquefied Natural Gas (RLNG). During the current financial year, GAIL has settled the demand at Rs. 252.83 Lacs and accordingly, the same is classified under Exceptional Items.

The Company had incorporated wholly owned subsidiaries in Turkey for procurement of marble and in China in order to promote export of tiles to third countries. The Company had invested an amount of Rs.696.75 Lacs in these subsidiaries by way of Equity and Advances. Due to adverse change in the business environment and as per terms of CDR sanction, the Company had closed down these subsidiaries and balance of Rs. 696.75 Lacs had been written off as Exceptional Items during financial year 2014-15.

3. As per Accounting Standard 15 âEmployee benefitsâ, the disclosures as defined in the Accounting Standard are given below:

The company has defined benefit Gratuity plan. Gratuity (being administered by a Trust) is computed as 15 days salary, for every computed year of service or part thereof in excess of six months and is payable on retirement/termination/resignation. The benefit vests on the employee completing five year of service. The Gratuity plan for the company is a defined benefit scheme where annual contributions are deposited to Gratuity Trust Fund established to provide gratuity benefits. The Trust Fund has taken a scheme of insurance, whereby these contributions are transferred to the insurers. The company makes provision of such Gratuity asset/ liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method. Plan assets also include investments and bank balances used to deposit premium to the insurance company.

4. Segment Information

Segment has been identified in line with the Accounting Standard on Segment Reporting (AS-17) taking into account the organization structure as well as differential risks and returns of these segments. The Company has disclosed Business Segment as Primary Segment. The Business Segment consists of;

a) Tiles and other related products

b) Real Estate

(a) The Company is involved in a number of appellate, judicial and adjudication proceedings concerning matters arising in the course of conduct of the Company''s businesses (including taxation matters). Some of the proceedings in respect of matters under litigation are in early stages and in some other cases the claims are indeterminate. Management is generally unable to reasonably estimate a range of possible loss for proceedings or dispute in such matters.

(b) The Directorate of Revenue Intelligence(DRI) based on its investigations carried out in 2009, had issued a show cause notice in June 2011 claiming Anti Dumping duty of Rs.329 crores on vitrified tiles imported during the period 2006 until 2009. The Designated Authority(DA), Anti Dumping in the Ministry of Commerce is the sole authority for recommending levy of anti-dumping duty. The DA based on its findings had exempted seven producers of tiles from China whose exports to India did not attract anti dumping duty during the relevant period. The Company had imported vitrified tiles from two such producers during the relevant period. DRI had alleged that some of these goods imported were not produced by the Companies which were so exempted and were produced by non exempted producers. Such a practice is known as circumvention of antidumping duty. In terms of Section 9A(1A) of the Customs Tariff Act, 1975 and Rules 25(3) and 26 of the Customs Tariff (Identification, Assessment and Collection of Antidumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, the DA is required to conduct an investigation and recommend application of antidumping duty in such cases. On legal advice, the Company has replied to the Show Cause Notice stating that the duty demand is bad in law on various factual and legal grounds. As on date no order has been passed by the Adjudicating Authority. Accordingly, the show cause notice has not been classified as a contingent liability.

5. Corporate Debt Restructuring

The Company''s business model until FY 2012, was largely dependent on imported tiles outsourced from China. The company suffered losses on account of sudden sharp depreciation of Rupee towards later part of calendar year 2011 which had high impact on the landed cost of tiles, adversely affecting the financial performance of the Company and its cash flow. Consequently the Company made a reference to Corporate Debt Restructuring (CDR) Cell in May 2012 for comprehensive restructuring of its loan liabilities and accordingly CDR cell sanctioned a scheme of restructuring vide letter of approval (LOA) dated December 26, 2012, and the lenders executed Master Restructuring Agreement (MRA) on 6th March 2013. The said package sanctioned Funded Interest Term Loan (FITL) for 18 months from the Cut Off date and moratorium for principal repayment for 24 months. The working capital lenders were to provide additional working capital of Rs.30 crores fund based and Rs. 147 crores non fund based facility. The package also envisaged disposal of non core assets of Rs. 555 crores until March 2016.

However due to adverse market conditions, the non core assets could not be disposed of and the working capital lenders failed to release additional working capital facilities as per the approved CDR package. Consequently the Company defaulted on its obligation to its lenders and all CDR lenders have classified the Company''s debts as Non Performing Asset (NPA). Consequently, due to failure of the package, the Company has exited from CDR mechanism. Thirteen Lenders aggregating approximately 86% of overall CDR debts of the Company have assigned their debts to an Asset Reconstruction Company (ARC). Since the net worth of the Company has been fully eroded , a reference filed under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 before the Hon''ble Board For Industrial and Financial Reconstruction (BIFR) has been duly registered with BIFR vide their letter dated May 12, 2015. In view of the above position and the uncertainty involved in ultimate outflow, the Company has not provided for unpaid interest. Had the interest as per Loan Agreements been provided for, the interest for the year would have been higher by Rs.196.95 crore (previous year Rs.107.40 crore), Losses for the year would have been higher by Rs.196.95 crore (previous year Rs. 107.40 crore), corresponding bank liability would have increased by Rs.196.95 crore (previous year Rs.107.40) and net worth of the Company would have been lower by Rs.196.95 crore (previous year Rs. 107.40).

6. In accordance with the requirement of Schedule II to Companies Act 2013, the Company had reassessed the estimated useful life of fixed assets w.e.f April 01, 2014 and depreciation is provided on the basis of useful lives as prescribed in Schedule II. This had resulted in the depreciation expenses for the year ended March 31, 2015 higher by Rs.2, 213.28 Lacs. Depreciation of Rs.509.72 Lacs on account of assets whose useful life was already exhausted as on April 01, 2014, had been adjusted in Reserves as on April 01, 2014.

7. Previous year''s figures have been regrouped / restated / reclassified / rearranged wherever necessary to make them comparable with those of the current year.

Mar 31, 2015

1. Provision for Taxation:

i. Current year charge:

No provision for Income tax has been made on account of losses during the year

ii. Deferred Tax:

The Company has been recognizing in the financial statements the deferred tax assets / liabilities, in accordance with Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. No provision for deferred tax has been made on account of losses during the year

2. As per Accounting Standard 15 "Employee benefits", the disclosures as defined in the Accounting Standard are given below:

The company has defined benefit Gratuity plan. Gratuity (being administered by a Trust) is computed as 15 days salary, for every computed year of service or part thereof in excess of six months and is payable on retirement/termination/resignation The benefit vests on the employee completing five year of service. The Gratuity plan for the company is a defied benefit scheme where annual contributions are deposited to Gratuity Trust Fund established to provide gratuity benefits. The Trust Fund has taken a scheme of insurance, whereby these contributions are transferred to the insurers. The company makes provision of such Gratuity asset/ liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method. Plan assets also include investments and bank balances used to deposit permiun until de to the insurance company

3. Segment Information:

Segment has been identified in line with the Accounting Standard on Segment Reporting [AS-17) taking into account the organization structure as well as differential risks and returns of these segments. The Company has disclosed Business Segment as Primary Segment. The Business Segment consists off

a) Tiles and other related products

b) Real Estate

The Company is involved in a number of appellate, judicial and adjudication proceedings concerning matters arising in the course of conduct of the Company's businesses (including taxation matters). Some of the proceedings in respect of matters under litigation are in early stages and in some other cases the claims are indeterminate. Management is generally unable to reasonably estimate a range of possible loss for proceedings or dispute in such matters

4. Corporate Debt Restructuring:

The Company's business model until FY12, was largely dependent on imported tiles outsourced from China. The company suffered losses on account of sudden sharp depreciation of Rupee towards later part of calendar year 2011 which had high im pact on the landed cost of tiles, adversely affecting the financial performance of the Company and its cash flow. Consequently the Company made a reference to Corporate Debt Restructuring (CDR) Cell in May 2012 for comprehensive restructuring of its loan liabilities and accordingly CDR cell sanctioned a scheme of restructuring vide LOA dated 26th December 201 2, and the lenders executed Master Restructuring Agreement (MRA) on 6th March 2013. The said package sanctioned Funded Interest Term Loan (FITL) for 18 months from the Cut Off date and moratorium for principal repayment for 24- months. The working capital lenders were to provide additional working capital approximately of Rs. 3000 lacs fund based and Rs. 14-700 lacs non fund based facility. The package also envisaged disposal of non core assets of Rs. 4-4-500 lacs until March 201 5. However due to adverse market conditions, the non core assets could not be disposed of and the working capital lenders failed to release additional working capita I facilities as per the approved CDR package. Consequently the Company defaulted on its obligation to its lenders and most of the lenders have classified the Company's debts as Non Performing Asset (NPA). Some of the Lenders aggregating approximately 40% of overall CDR lenders of the Company assigned their debts to an Asset Reconstruction Company (ARC). Consequently, the Company has exited from CDR mechanism. Since the net worth of the Company has been fully eroded and being mandatory requirement, a reference was filed under section 15(1) of the Sick Industrial Companies [Special Provisions) Act, 1985 before the Hon'ble Board For Industrial and Financial Reconstruction (BIFR) and the same was registered with BIFR vide their letter dated 12th May 2015. In view of the above position, the Company has not provided for interest after the date the loan has become NPA with the respective Banks. Had the interest as per Loan Agreements been provided for, the interest for the year would have been higher by Rs. 107,39.55 lacs and Losses would have been higher by Rs. 1 07,39.55 lacs and corresponding bank liability would have increased byRs. 107,39.55 lacs

5. In accordance with the requirement of Schedule II to Companies Act 2013, the Company has reassessed the estimated useful life of fixed assets w.e.f April 01, 2014 and depreciation is provided on the basis of useful lives as prescribed in Schedule II This has resulted in the depreciation expenses for the year ended 31st March 201 5 higher by Rs. 2,213.28 lacs. Depreciation of Rs. 509.72 Lacs on account of assets whose useful life is already exhausted as on April 01, 2014, has been adjusted in Opening Reserve

6. Previous year's figures have been regrouped / restated / reclassified / rearranged wherever necessary to make them comparable with those of the current year

Mar 31, 2014

1. Terms, Rights, Preferences and restrictions attached to equity shares:

The Company has only one class of equity shares having a face value of Rs. 10 per share. Each holder of equity share is entitled to one vote on show of hands and in case of poll, one vote per equity share. A member shall not have any right to vote whilst any call or other sum shall be due and payable to the Company in respect of any of the shares of such member. All equity shares of the Company rank pari passu in all respects including the right to dividend.

i. Term loans include Working Capital Term Loan (WCTL) and Funded Interest Term loan (FITL).

ii. Loans received from NBFCs and foreign bank have not been restructured.

iii. Repayment of term loan shall be in 32 structured quarterly installments commencing from June 30, 2014 and carrying interest rate at 11.25% per annum; repayment of WCTL shall be in 24 quarterly structured installments commencing from June 30, 2014 and carrying interest rate at 10.75% per annum; repayment of FITL shall be in 24 quarterly structured installments commencing from June 30, 2014 and carrying interest rate at 10.75% per annum;

iv. Working capital loan carries interest at 11% per annum.

2. Security Offered

i. The existing term loans including new WCTL and FITL are secured by first pari passu charge on the fixed assets and parri passu second charge on the current assets of the Company.

ii. The existing and fresh working capital facilities are secured by the first pari passu charge on current assets and second pari passu charge on fixed assets of the Company.

iii. Lenders having exclusive charge over securities prior to restructuring are continuing to have exclusive charge over those securities post restructuring.

3. LONG TERM BORROWINGS (contd.)

iv. First pari passu charge over all bank accounts of the Company, including the Trust and Retention Accounts (and all sub- accounts thereof).

v. Pledge of shares in the Company held by both Mr. Vivek Talwar and M/s Aurella Estates & Investments Private Limited.

vi. Personal guarantee from Mr. Vivek Talwar and corporate guarantee from M/s Aurella Estates & Investments Private Limited for the entire debt of the Company including the sacrifices made by the lenders.

vii. The entire debt is further secured by the corporate guarantees from certain subsidiaries who hold real estate assets, offered as additional securities to lenders.

4. PROVISION FOR TAXATION

i. Current year charge:

No provision for Income tax has been made on account of losses during the year.

ii. Deferred Tax:

The Company has been recognizing in the financial statements the deferred tax assets / liabilities, in accordance with Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. No provision for deferred tax has been made on account of losses during the year.

5. CONTINGENT LIABILITY Rs. in Lacs

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

Guarantees / Counter Guarantees given by the company / by banks on behalf of company 5,113.42 5,206.48

Letter of credits opened for which the company is contingently liable 2,019.63 3,306.73

Estimated amount of contracts remaining to be executed on capital 13.77 37.25 account and not provided for ( net of advances )

Demands against the company not acknowledged as debts and not provided for against which the company is in appeal:

Excise Duty 1,899.11 1,476.43

Custom Duty 1574.33 1,591.78

Sales Tax 472.86 -

6. CORPORATE DEBT RESTRUCTURING

The Company''s business model until FY11-12 was dependent on large imports of vitrified tiles from China. However, sudden steep drop in the value of rupee vs USD towards later part of FY 11-12, rendered the business of import of vitrified tiles and distribution within India unviable. The Company at that time was saddled with large inventories which were imported at a higher cost (due to rupee depreciation) and had to take steps to liquidate the inventories at a loss. The Company thereafter took steps to move away from China based sourcing strategy to domestic led sourcing. The China led sourcing strategy required setting up a huge infrastructure in terms of mother warehouses and regional depots across the country to facilitate distribution of imported tiles. With imports suddenly becoming unviable, company had to deal with high distribution costs which had to be scaled down gradually in line with reduction in the inventory. Being a brick and mortar Company, this significant change in the business model has taken time to correct and has resulted in adverse performance during the last two financial years.

The slump in real estate and overall state of the economy has made a quick revival that much more time consuming. Due to competitive pressures and subdued state of the economy ,sales volume could not be increased as desired, consequently the gross sales of the company during year ended 31st March 2014 has dropped.

Due to continued losses for last few quarters for the aforesaid reasons, the Company faced 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 CDR Empowered Group (EG) meeting held on 8th November 2012, and issued the Letter of Approval (LOA) on 26th December 2012 and revised letter dated 31st December 2012, based on which the lenders agreeing to the package has signed the Master Restructuring Agreement (MRA) on March 6, 2013. The significant highlight of the package is as under:

i. The Cut-off-Date (COD) was April 1, 2012.

ii. The total existing term loan of Rs. 408.34 Crores which was restructured is repayable in 32 quarterly structured installments for the period commencing from 30th June 2014 and ending on 31st March 2021. Interest rate is 11.25% per annum.

iii. Working Capital Term Loan (WCTL). is repayable in 24 quarterly structured installments period commencing from 30th June 2014 and ending on 31st March 2020. WCTL carries Interest at 10.75% p.a.

iv. Funded Interest on the term loan (FITL) for a period of 18 months from COD, is repayable in 24 quarterly installments commencing from 30th June 2014 and ending on 31st March 2020. FITL carries Interest at 10.75% p.a.

v. Promoters were required to bring in Rs. 55.69 crores as their contribution under the package which has been brought in by promoters and equity shares have been issued and the said shares have been pledged in favour CDR lenders.

vi. Personal guarantee from Mr. Vivek Talwar and corporate guarantee from M/s Aurella Estates & Investments Private Limited was provided for the entire debt of the Company including the sacrifices made by the lenders.

vii. The entire debt is further secured by the corporate guarantees from certain subsidiaries who hold real estate assets, being offered as additional securities to lenders.

viii. Pledge of shares in the Company held by both Mr. Vivek Talwar and M/s Aurella Estates & Investments Private Limited.

Since the Company has not been able to dispose of the non core assets as envisaged under the approved CDR scheme, the Company has made a request to Banks for rework of the approved package.

7. Share application money pending allotment in the previous year represents promoters'' contribution received under the CDR package prior to 31st March 2013. During the year shares were allotted for the entire promoters contribution received of Rs. 55.69 crores in accordance with the SEBI guidelines and after receipt of approval from the stock exchanges and shareholders'' approval

8. Previous year''s figures have been regrouped / restated / reclassified / rearranged wherever necessary to make them comparable with those of the current year.

Mar 31, 2013

1. The management has identified obsolete, slow moving and defective inventory of Rs. Nil (previousYear Rs. 3,447.47 Lacs) and the same has been written off as exceptional items.

2. PROVISION FOR TAXATION

i. Current year charge:

No provision for Income tax has been made on account of losses during the year

ii. Deferred Tax:

The Company has been recognizing in the financial statements the deferred tax assets / liabilities, in accordance with Accounting Standard 22 "Accounting forTaxes on Income" issued by the Institute of Chartered Accountants of India. No provision for deferred tax has been made on account of losses during the year

3. REMITTANCE IN FOREIGN CURRENCY ON ACCOUNT OF DIVIDEND

The company has paid dividend in respect of shares held by Non Residents on repatriation basis.This inter-alia includes portfolio investment and direct investment, where the amount is also credited to Non Resident External Account (NRE A/C).The exact amount of dividend remitted in foreign currency cannot be ascertained.The total amount remittable in this respect is given below:

4. SEGMENT INFORMATION

Segment has been identified in line with the Accounting Standard on Segment Reporting (AS-17) taking into account the organization structure as well as differential risks and returns of these segments.The Company has disclosed Business Segment as Primary Segment.The Business Segment consists off

a) Tiles and other related products

b) Real Estate

5. CONTINGENT LIABILITY Rs. in Lacs

Guarantees / Counter Guarantees given by the company / by banks on behalf of company 5,206.48 5,206.48

Letter of credits opened for which the company is contingently liable 3,306.73 6,903.88

Export Bills discounted / purchased with the banks 165.34

Estimated amount of contracts remaining to be executed on capital account and not 37.25 711.65 provided for ( net of advances)

Demands against the company not acknowledged as debts and not provided for against which the company is in appeal:

Excise Duty 1,476.43 675.67

Custom Duty 1,591.78 398.30

6. CORPORATE DEBT RESTRUCTURING

Demand for Tiles is primarily linked with growth of Real Estate sector Real Estate sector has been grappling with problems. Slow sales and a glut of properties are hampering the residential real estate market.

Nitco had been following a policy of part in-house manufacturing and part outsourcing from China.The proportion of outsourcing from China had over the years considerably increased. Because of the large lead times in procurement from China and frequent changes in the consumer tastes, there had been a mismatch between products procured and sales achieved. Again, steep depreciation of Indian Rupee against United States Dollar had impacted the landed cost of the outsourced products. Due to competitive pressure the Company was not able to pass on excess burden on account of higher exchange rate to its consumers. Due to continued losses for last few quarters for the aforesaid reasons, the Company faced 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 CDR Empowered Group (EG) meeting held on 8th November 20 12, and issued the Letter of Approval (LOA) on 26th December 20 12 and revised letter dated 31 st December 2012, based on which the lenders agreeing to the package has signed the Master Restructuring Agreement (MRA) on March 6, 20 I 3. The significant highlight of the package is as under:

i. The Cut-off-Date (COD) is April 1, 20 12.

ii. The total existing term loan of Rs. 425.37 Crores outstanding is restructured.The principal repayment shall be in 32 quarterly structured installments for the period commencing from 30th June 2014 and ending on 31st March 2021. Interest rate is I 1.25% per annum, iii. Carving outworking capital irregularities has been converted into Working Capital Term Loan (WCTL). WCTL is Rs. 603.63 crores WCTL is payable in 24 quarterly structured installments period commencing from 30th June 2014 and ending on 3 I st March 2020. WCTL carries Interest at 10.75% p.a. iv Funded Interest on the term loan (FITL) for a period of 18 months from COD, amounting to Rs. 153.18 Crores. Repayment shall be in 24 quarterly installments period commencing from 30th June 2014 and ending on 3 I st March 2020. FITL carries Interest at 10.75% p.a. v. Promoters require to bring in Rs 55.69 crores as their contribution underthe package. Out of the same Rs.28 crores has een brought in by March 3 1, 201 3 and balance to be brought by June 30, 20 13. vi. Personal guarantee from MrVivekTalwar and corporate guarantee from M/s Aurella Investments & Estates Private

Limited for the entire debt of the Company including the sacrifices made by the lenders, vii. The entire debt is further secured by the corporate guarantees from certain subsidiaries who hold real estate assets, being offered as additional securities to lenders, viii. Pledge of shares in the Company held by both MrVivekTalwar and M/s Aurella Investments & Estates Private Limited.

7. Share application money pending allotment represents promoters'' contribution underthe CDR package. Shares will be allotted in accordance with the SEBI guidelines and approval from the stock exchanges and shareholders'' approval.

8. Previous year''s figures have been regrouped / restated / reclassified / rearranged wherever necessary to make them comparable with those of the current year

Mar 31, 2012

1. SECURED LOANS

A. Term Loans from Banks / Institutions have been secured by a first charge on pari passu basis on all movable and immovable fixed assets at Alibaug, Silvassa or Thane as the case may be. It has been additionally secured by an irrevocable and unconditional personal guarantee from Mr Vivek Talwar, Managing Director of the Company

B. Cash Credit from banks has been secured by hypothecation of the whole of the current assets of the Company including inventories, book debts, consumable stores & spares (not relating to Plant & Machinery), bills receivable and all other movables, both present and future wheresoever situated. It is further secured by a second charge on the Fixed Assets of the ceramic tiles division at Alibaug and is also guaranteed by Mr Vivek Talwar, Managing Director of the Company

C. Hire Purchases have been secured by hypothecation of specific assets.

2. Excise Duty of Rs.422.06 Lacs (Previous year Rs.421.35 Lacs) and custom duty of Rs. 212.98 Lacs (Previous year Nil) has been provided on goods held in bond and consequently included in the valuation of inventories.

3. Balances of Sundry Debtors, Sundry Creditors, Loans and Advances, and Deposits are subject to confirmation and reconciliation. In the opinion of the Board, the Current Assets, Loans and Advances are of the value stated as realisable in the ordinary course of the business. Accounts receivable is net of advances. The provisions for depreciation and all the known liabilities are not in excess of the amount reasonably necessary

4. PROVISION FOR TAXATION

a) Current year charge:

No provision for Income tax has been made on account of losses during the year

b) Deferred Tax:

The Company has been recognising in the financial statements the deferred tax assets / liabilities, in accordance with Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. No provision for deferred tax has been made on account of losses during the year

5. SUNDRY CREDITORS IN SCHEDULE VI TO THE ACCOUNTS INCLUDES: -

a) Rs. 448.10 Lacs (Previous year Rs. 162.95 Lacs) due to Small Scale Industrial Undertakings.

b) Rs. 48859.08 Lacs (Previous year Rs. 24145.84 Lacs) due to other creditors.

6. The management has identified obsolete, slow moving and defective inventory of Rs. 3447.47 Lacs (previous period - NIL) and the same has been written off as exceptional items,

7. Interest Expense is net of Rs. 2520.38 Lacs (previous year Rs. 2559.67 Lacs) being the interest capitalised pertaining to qualifying assets.

8. Previous year's figures have been regrouped / restated / reclassified / rearranged wherever necessary to make them comparable with those of the current year

9 Contingent Liabilities Rupees in lakhs

Particulars 31.03.2012 31.03.2011

Guarantees / Counter Guartantees given by the company / by banks on behalf of company 5,206.48 5,187.61

Letter of credits opened for which the company is contingently liable 6,903.88 14,138.68

Export Bills discounted / purchased with the banks 165.34 219.07

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 711.65 452.50

Demands against the company not acknowledged as debts and not provided for against which the company is in appeal

Excise Duty 675.67 27.37

Custom Duty 398.30 742.00

Disclosure in respect of material related party transactions during the year.

1) Purchase of goods include Foshan Nitco Trading Company Ltd. Rs. 274.77 Lacs (previous year Rs. 221.98 Lacs) and Nitco Terazzo Tiles Pvt. Ltd. Rs. 5.64 Lacs (previous year - Nil )

2) Sale of goods include Nitco Realties Pvt. Ltd. Rs. 0.04 Lacs (previous year - Nil )

3) Rent paid include Eden Garden Builders Pvt. Ltd. Rs. 3.18 Lacs (previous year Rs. 3.18 lacs), Enjoy Builders Pvt. Ltd. Rs. 4.37 Lacs (previous year Rs. 4.37 Lacs), Lavender Properties Pvt. Ltd. Rs. 3.16 Lacs (previous year Rs. 3.16 Lacs), Nitco Tiles and Marble Industries Pvt. Ltd. Rs. 4.49 Lacs (previous year Rs. 17.80 Lacs), Prakalp Properties Pvt. Ltd. Rs. 3.02 Lacs (previous year Rs. 3.02 lacs), Rang Mandir Builders Pvt. Ltd. Rs. 4.18 Lacs (precious year Rs. 4.18 Lacs) and Usha Kiran Builders Pvt. Ltd. Rs. 3.16 Lacs (previous year Rs. 3.16 lacs ).

4) Interest on Loans received / receivable is from wholly owned subsidiary Nitco Realties Pvt. Ltd. Rs. 1814.89 Lacs (previous year Rs. 1998.79 Lacs)

5) Rent Deposit includes Eden Garden Builders Pvt. Ltd. Rs. 150 Lacs (previous year Rs. 150 Lacs), Enjoy Builders Pvt. Ltd. Rs. 205 lacs (previous year Rs. 205 lacs), Prakalp Properties Pvt. Ltd. Rs. 145 Lacs (previous year Rs. 145 Lacs), Rang Mandir Builders Pvt. Ltd. Rs. 200 lacs (previous year Rs. 200 Lacs), Usha Kiran Builders Pvt. Ltd. Rs. 150 Lacs (previous year Rs. 150 lacs) and Lavender Properties Pvt. Ltd. Rs. 150 Lacs (previous year Rs. 150 lacs).

6) Advances include Nitco Realties Pvt. Ltd. Rs. 15160.58 Lacs (previous year Rs. 10243.08 Lacs), Keskinkaya Mermer - Turkey Rs. 308.36 lacs (previous year Rs. 217.53 Lacs) and Nitco Holdings HK company Ltd. Rs. 0.24 Lacs (previous year Rs. 0.24 lacs). The maximum balance during the year was the same as closing balance.

7) Remuneration / sitting fees include remuneration to Mr Vivek Talwar Rs. 58.28 lacs (previous year Rs. 87.65 Lacs), remuneration to Ms. Poonam Talwar Rs. 20.29 Lacs (previous year Rs. 20.18 lacs), sitting fees to Mr S.K. Bhardwaj Rs. 1.30 Lacs (previous year Rs. 1.73 Lacs) and sitting fees to Mr Atul Sud Rs. 1.74 Lacs (previous year Rs. 0.89 lacs).

Mar 31, 2011

1. Secured Loans

A. Term loans from banks/institutions have been secured by a first charge on pari passu basis on all movable and immovable fixed assets at Alibaug, Silvassa or Thane as the case may be. It has been additionally secured by an irrevocable and unconditional personal guarantee from Mr. Vivek Talwar, Managing Director of the Company.

B. Cash credit from banks has been secured by hypothecation of the whole of the current assets of the Company including inventories, book debts, consumable stores and spares (not relating to plant and machinery), bills receivable and all other movables, both present and future wheresoever situated. It is further secured by a second charge on the fixed assets of the ceramic tiles division at Alibaug and is also guaranteed by Mr. Vivek Talwar, Managing Director of the Company.

C. Hire purchases have been secured by hypothecation of specific assets.

2. Excise duty of Rs. 421.35 lakhs (previous year Rs. 601.57 lakhs) has been provided on goods held in bond and consequently included in the valuation of inventories.

3. Balances of sundry debtors, sundry creditors, loans and advances, and deposits are subject to confirmation. In the opinion of the Board, the current assets, loans and advances are of the value stated as realisable in the ordinary course of the business. Accounts receivable is net of advances. The provisions for depreciation and all the known liabilities are not in excess of the amount reasonably necessary.

4. Provision for Taxation

a) Current year charge:

As per provisions of Income Tax Act, provision for the year was Rs. 580.39 lakhs (previous year NIL on account of losses). MAT credit entitlement of Rs. 580.39 lakhs has been recognised during the year.

b) Deferred Tax:

The Company has been recognising in the financial statements the deferred tax assets/liabilities, in accordance with Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. During the year, the Company debited the Profit and Loss Account with Deferred Ta x Liability of Rs. 204.78 lakhs (previous year NIL on account of

5. Sundry creditors in Schedule VI to the accounts includes: -

a) Rs. 162.95 lakhs (previous year Rs. 125.30 lakhs) due to small scale industrial undertakings.

6. Foreign exchange gain for the current year was Rs. 363.26 lakhs (previous year Rs. 302.46 lakhs) and the same has been included in interest and other financial charges.

7. Pursuant to the Scheme of Amalgamation ("the Scheme") under Sections 391 to 394 of the Companies Act, 1956 sanctioned by the Honourable Bombay High Court vide Order dated July 08, 2011 and filed with the Registrar of Companies (RoC) on August 01, 2011, Particle Boards India Limited (ÃPBIL'), a step down subsidiary of the Company has been amalgamated into the Company with effect from the appointed date as April 01, 2010. Upon the scheme becoming effective:

a) All the assets and liabilities as appearing in the books of PBIL as on the appointed date have been recorded at their respective fair values by the Company.

b) The difference between the fair values of the assets and liabilities of PBIL, after adjusting inter-company balances, if any and the revision in the value of assets and liabilities of Nitco Limited, as considered appropriate by the Board, cost incurred for implementing the Scheme and after adjusting the consideration paid to the share holders of PBIL, amounting to Rs. 125.10 lakhs is credited to capital reserve as per the Scheme of Amalgamation approved by the Honourable Bombay High Court.

c) Pursuant to the Scheme, 4,76,580 equity shares of Rs.10 each of the Company were required to be issued to the shareholders of PBIL in the proportion of 47 equity shares of the face value of Rs. 10 each in the Company for every 100 equity shares of the face value of Re. 1 each held in PBIL. Pending allotment of the same until date, an amount of Rs. 47,65,800, representing the face value of the shares to be issued, has been disclosed under the Share Capital Suspense Account as at March 31, 2011.

8. Previous year's figures have been regrouped/restated/reclassified/rearranged wherever necessary to make them comparable with those of the current year.

Mar 31, 2010

1. SECURED LOANS

A. Term Loans from Banks / Institutions have been secured by a first charge on pari passu basis on all movable and immovable fixed assets at Alibaug, Silvassa or Thane as the case may be. It has been additionally secured by an irrevocable and unconditional personal guarantee from Mr. Vivek Talwar, Managing Director of the Company.

B. Cash Credit from banks has been secured by hypothecation of the whole of the current assets of the Company including inventories, book debts, consumable stores & spares (not relating to Plant & Machinery), bills receivable and all other movables, both present and future wheresoever situated. It is further secured by a second charge on the Fixed Assets of the ceramic tiles division at Alibaug and is also guaranteed by Mr. Vivek Talwar, Managing Director of the Company.

C. Hire Purchases have been secured by hypothecation of specific assets.

2. Excise Duty of Rs. 601.57 Lakhs (Previous year Rs. 195.02 Lakhs) has been provided on goods held in bond and consequently included in the valuation of inventories.

3. Balances of Sundry Debtors, Sundry Creditors, Loans and Advances, and Deposits are subject to confirmation. In the opinion of the Board, the Current Assets, Loans and Advances are of the value stated as realisable in the ordinary course of the business. Accounts receivable is net of advances. The provisions for depreciation and all the known liabilities are not in excess of the amount reasonably necessary.

4. Provision for Taxation

a) Current year charge:

No provision for Income tax has been made on account of losses during the year.

b) Deferred Tax:

The Company has been recognising in the financial statements the deferred tax assets / liabilities, in accordance with Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. No provision for Deferred tax has been made on account of losses during the year.

5. Sundry Creditors in Schedule VI to the accounts includes: -

a) Rs. 125.30 Lakhs (Previous year Rs. 94.5 Lakhs) due to Small Scale Industrial Undertakings.

b) Rs. 18,753.85 Lakhs (Previous year Rs. 13,309.87 Lakhs) due to other creditors.

The disclosure is based on the information available with the Company regarding the status of suppliers under the Industries Development & Regulation Act, 1951. Names of small scale industrial undertakings to whom an amount of Rs. 1 lakh or more was payable and outstanding for more than 30 days is as follows:-

6. Foreign exchange gain for the current year was Rs. 302.46 lakhs against foreign exchange loss of Rs. 837.38 lakhs in the previous year and the same has been included in Interest and Other Financial Charges.

7. A search was conducted by the Department of Revenue Intelligence ("DRI") on various premises of the Company on 27th and 28th August 2009 to investigate certain import and export transactions and had seized all the imported materials lying both at the ports and the warehouses of the Company.

The Company had "Under Protest" voluntarily paid Rs. 25 crores by way of revenue deposit to the customs authorities and also provided Bank Guarantees to the extent of Rs. 45.80 crores based on which the seized imported goods at the port and warehouses were released. As per the extant regulations under the Customs Act, upon completion of the investigation, DRI is required to issue a show cause notice detailing the breach if any, of any provisions/ regulations relating to imports / exports conducted by the Company and the amount of duty payable by the Company. As on date, no show cause notice has been received by the Company. Upon receipt of show cause notice, if any, the Company wishes to litigate the matters or present itÃs case before appropriate authorities (including settlement commission), based on the advice of the its tax advisors and senior counsels. The amount of Rs. 25 crores is treated as a Deposit with Customs Authorities. Margin Money amounting to Rs. 5.35 crores paid to banks for issuing guarantees have been included in Bank Balances Ã Margin Money account. In view of the above facts and based on the criteria specified in Para 14 of AS Ã 29 for recognisation of a provision, the Company has not recognised any provision in its books on account of DRI action.

8. As per Notification No. 26/2009 (NT) dated 17th March 2009 issued by The Central Board of Excise and Customs, Custom Cargo Service Providers are not entitled to charge any rent or demurrage on the goods seized or detained or confiscated by the proper officer of the Customs Department. In order to avoid delay in release of material, the Company paid detention and demurrage amounting to Rs. 1,909.23 lakhs under protest to various parties. The Company is following up for refund of aforesaid detention and demurrage charges. Hence the said charges are recoverable and the same are shown under ÃAdvance Recoverable in Cash or KindÃ.

9. Previous years figures have been regrouped / restated / reclassified / rearranged wherever necessary to make them comparable with those of the current year.

Note: No commission is payable to MD due to losses incurred in FY 2009-10.

In view of the losses made during the year, the managerial remuneration paid is in excess of the limits specified in Section II of Part II of Schedule XIII to the Companies Act, 1956. The Company is in process of making an application to the Central Government for necessary approval under Section 198 of the Companies Act, 1956.

Advances to Subsidiary shown above falls under the category of Loans where there is no repayment schedule and are repayable on demand.

10. Remittance in foreign currency on account of dividend

The Company has paid dividend in respect of shares held by Non Residents on repatriation basis. This inter-alia includes portfolio investment and direct investment, where the amount is also credited to Non Resident External Account (NRE A/C). The exact amount of dividend remitted in foreign currency cannot be ascertained. The total amount remittable in this respect

Notes:

1 The cashflow statement has been prepared under the indirect method as set out in Accounting Standard - 3 (AS-3) on Cash Flow Statements issued by the Institute of Chartered Accountants of India.

2 Cash and Cash Equivalents consists of Cash on Hand - Rs. 57.26 Lakhs (Previous Year Rs. 30.93 lakhs). Balance in Current Account - Rs. 850.56 Lakhs (Previous Year Rs. 332.98 Lakhs) and Balance in Margin Money - Rs. 1,050.80 Lakhs (Previous Year Rs. 317.79 Lakhs)

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