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Notes to Accounts of Somany Ceramics Ltd.

Mar 31, 2016

1. Rupee loan of Rs. 375.00 lacs (Previous Year Rs. 675.00 lacs) from others is secured by first pari passu charge on all fixed assets of the company both present and future except those specifically charged and Government Land at Kassar / Kadi. The aforesaid loan is repayable in 5 equal quarterly installment starting from June, 2016.

2. Rupee Loan of Rs. 2,362.50 lacs (Previous Year Rs. 1,550.00 lacs) from a Bank and Buyers'' credit of Rs. Nil (Previous Year Rs. 732.81 lacs) {Equivalent to Euro Nil (Previous Year Euro 11.66 lacs)} is secured by first pari passu charges by way of hypothecation of all movable fixed assets of the company both present and future, excluding those exclusively charged to other Banks. The aforesaid loan is repayable in 14 equal quarterly installments starting from June, 2016.

3. Rupee loan of Rs. 1,800.00 lacs (Previous Year Rs. 2,000.00 lacs) from a Bank is secured by first pari passu charge by way of hypothecation of all movable fixed assets of the Company, excluding assets exclusively charged to other Banks and second pari passu on all current assets of the company both present and future. The aforesaid loan is repayable in 16 equal quarterly installments starting from June, 2016.

4. Rupee loan of Rs. 1,584.49 lacs (Previous Year Rs. 1,764.14 lacs) from a Bank and Buyers'' credit of Rs. Nil (Previous Year Rs. 397.33 lacs) {Equivalent to Euro Nil (Previous Year Euro 5.82 lacs)} is secured by first pari passu charge by way of hypothecation of Plant & Machinery and other movable fixed assets of the company situated at Kassar and Kadi excluding those exclusively charged to other Banks and second pari passu charge on current assets of the company both present and future. Repayment of aforesaid loan is Rs. 800.00 lacs and 784.48 lacs in FY17 and FY18 respectively.

5. Rupee loan of Rs. 2,000.00 lacs (Previous Year Rs. Nil) from a Bank and Buyers''/Suppliers'' credit of Rs. 2,228.09 lacs (Previous Year Rs. Nil) {Equivalent to aggregate of USD 27.25 lacs and Euro 5.33 lacs (Previous Year Nil)} are secured by first pari passu charges by way of hypothecation of Plant & Machinery and other movable fixed assets of the company situated at Kassar and Kadi plants excluding those exclusively charged to other Banks and second pari passu charge over current assets of the company both present and future. Repayment of aforesaid loan is Rs. 200.00 lacs, Rs. 800.00 lacs, Rs. 1,000.00 lacs, Rs. 1,400.00 lacs and Rs. 828.09 lacs in FY17, FY18, FY19, FY20 and FY21 respectively.

6. Car loan from Banks and others are secured (charged created/ to be created)by hypothecation of cars purchased there under and are repayable in monthly installments over the period of loan.

7. Gross carrying value of plant & equipment includes machinery of Rs. 62.29 Lacs (Previous year Rs. 62.29 Lacs) lying with third parties, pending confirmation [Refer Note 28.3].

8. Pursuant to adoption of useful lives of fixed assets as per Schedule II of the Companies Act, 2013 and in compliance with Notification No. GSR 627(E) dated 29.08.2014, useful lives have been assessed by the management, and accordingly, depreciation for the year is higher by Rs. 146.70 lacs (Previous year is higher by Rs. 449.89 Lacs), out of which, after retaining residual value, the carrying amount of Rs. 50.41 Lacs, net of deferred tax of Rs. 26.67 Lacs (Previous year Rs. 154.08 Lacs, net of deferred tax of Rs. 79.34 Lacs) of certain fixed assets, whose lives have expired as at year end, has been charged to General Reserve.

9. Furniture & Fixtures includes certain expenditure on lease hold premises gross carrying value Rs. 493.34 Lacs, net carrying value Rs. 258.32 Lacs (Previous year Rs. 397.23 Lacs and Rs. 195.57 lacs respectively) which are amortised over the useful life of respective assets.

10. Addition to Plant & Machinery includes foreign exchange loss amounting to Rs. 31.76 Lacs (Previous year foreign exchange gain Rs. 192.97 Lacs)

11. During the financial year 2012-13, a demand of Rs. 925.65 lacs (including interest of Rs. 97.41 lacs) for difference between market rate (Non-APM) and contracted price (APM) of gas for the period from 1st July, 2005 to 31st March, 2010 has been raised by GAIL (India) Limited(GAIL). After considering further debit notes on account of interest / bank charges for the past periods, the total demand increased to Rs. 1,352.79 lacs (including interest of Rs. 524.55 lacs) as on 31st March 2016. The Company along with others filed a Special Civil Application (SCA) which was admitted by the Hon''ble Gujarat High Court on submission of bank guarantee of Rs. 118 lacs. On 4th August, 2014, Hon''ble Supreme Court of India passed an order to transfer the case to this Court on the basis of transfer petition filed by the GAIL. Pending decision / further direction, no provision in this regard is considered necessary by the Company.

12. Other long-term liabilities include encashment of bank guarantee in earlier years amounting to Rs. 202.50 lacs (Previous year Rs. 202.50 lacs) provided by a supplier of machinery. The supplier of machinery has challenged the encashment of bank guarantee and the case is pending before Hon''ble High Court of Delhi and Calcutta. Pending final decision, no adjustment has been carried out in accounts and above amount is shown under long term liabilities.

13. Exceptional item of Rs. 442.92 lacs pertains to:

i) Payment of Rs. 382.81 lacs to GAIL India Limited towards one time settlement of ''Pay For If Not Taken Obligation'' for calendar year 2014.

ii) Loss of inventory of Rs. 60.11 lacs due to fire.

14. During the year, the Company has fully utilized Rs. 5,000.00 lacs raised through private placement of equity shares in February, 2014 for the purposes the funds were so raised.

15. During the year, the Company has raised Rs. 11,999.97 lacs by allotting 35,34,600 equity shares of Rs. 2/- each @ Rs. 339.50 per share (including premium @ Rs. 337.50 per share) through qualified institutions placement. The funds so raised (net of issue expenses of Rs. 307.34 lacs) have been utilized for the purposes for which the same were raised except for Rs. 10,150.00 lacs which have been temporarily invested mainly in the debt instruments/ funds.

16. Sales net of trade discounts / returns includes insurance recovered of Rs. 959.37 lacs (Previous year Rs. 871.89 lacs), export benefits of Rs. 251.04 lacs (Previous year Rs. 150.90 lacs).

17. A sum of Rs. 115.61 lacs (Previous year Rs. 96.84 lacs) towards Corporate Social Responsibility is included under ''Other Expenses''.

18. Research and Development Expenditure on revenue account amounting to Rs. 156.24 lacs (Previous year Rs. 66.82 lacs) has been charged to statement of profit and loss.

19. Trade payables include acceptances of Rs. 9,021.67 lacs (Previous year Rs. 11,445.83 lacs).

20. The business activity of the Company falls within a single business segment viz. ''Ceramic Tiles and Allied products'' and sales of the product is mainly within the country. Hence, the disclosure requirement of Accounting Standard 17 of ''Segment Reporting'' is not considered applicable.

28.12 Since it is not possible to ascertain with reasonable certainty the quantum of accrual in respect of certain insurance and other claims and interest on overdue bills from customers, the same are continued to be accounted for as and when received/settled.

21. The Company has not provided diminution in the value of certain unquoted long term strategic investments, since in the opinion of Board, such diminution in their value is temporary in nature, considering the inherent value, nature of investments, the investees'' assets and expected future cash flow from such investments.

22. In the opinion of the management, current assets, loans and advances have a value on realisation in ordinary course of business at least equal to the amount at which they are stated.

23. Balances of certain trade receivables, advances, trade payables and other liabilities are in the process of confirmation and/or reconciliation.

24. Profit and/or Loss on sale of stores and raw materials remain adjusted in respective consumption accounts

25. The Company has not received full information from vendors regarding their status under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED ACT); hence, disclosure relating to amount unpaid at year end together with interest paid/payable have been given based on the information so far available with the Company/identified by the Company management. The detail of the same is as under:

(b) Amounts recognised as an expense/ (income) and included in the Note Number 24 are as under:

i) ''Salary, Wages, Bonus etc.'' of the statement of Profit and Loss includes Rs. 224.40 lacs (Previous year Rs. 135.99 lacs) towards Earned Leave Encashment and Sick Leave.

ii) ''Contributions to Provident and other Funds'' of the statement of Profit and Loss includes Rs. 444.04 lacs (Previous year Rs. 394.88 lacs) towards contribution to Provident Fund [including Rs. 139.94 lacs (Previous year Rs. 129.05 lacs) towards Somany Provident Fund, a multi-employer plan, refer to (c ) below].

iii) ''Contributions to Provident and other Funds'' of the statement of Profit and Loss includes Rs. 173.12 lacs (Previous year Rs. 207.59 lacs) towards contribution to Gratuity Fund.

(c) The Guidance issued by the Accounting Standard Board (ASB) on implementing AS-15, Employee Benefits (revised 2005) (Guidance Note) states that provident funds set up by employers, the investment and actuarial risk of which fall on the employer, needs to be treated as defined benefit plan. Its effect in this respect has not been ascertained and the same has been accounted for as defined in the Guidance Note. The Fund has a surplus, determined net of investments less corpus (contribution plus interest thereon).

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

(e) The expected return on the plan assets is determined by considering several applicable factors mainly the composition of the plan assets held, assessed risks of assets management, historical results of return on plan assets and the policy for plan assets management.

(f) The principal assumptions are the discount rate and salary growth rate. The discount rate is generally based upon the market yields available on Government Bonds at the accounting date with a term that matches that of the liabilities.

26. Interest in Joint Venture Company

a) Company''s contribution in the joint venture (by the name Somany Keraben Private Ltd.,a 50:50 Joint Venture Company) till 31st March,2016is Rs. 89.30lacs (Previous year Rs 77.30 lacs) towards share capital of Joint Venture entity.

27. The Company has entered into long term supply agreements (LTA or Agreements) with Associates and three Subsidiaries (refer Note No. 28.30). By the said agreements the Company has right to buy and sell the entire production of tiles / sanitaryware of companies stated in/under its Own Brand.

As liability will accrue / arise as and when purchase will be made under LTA. Hence under the agreements there is no material foreseeable losses as on date in the opinion of the management

28. The previous year''s figures have been regrouped, rearranged wherever consider necessary.


Mar 31, 2015

1. Contingent liabilities and commitments (to the extent not provided for) (As certified by the Management)

(RS. in Lacs)

S. No. Particulars 31.03.2015 31.03.2014

A) (i) Estimated amount of contracts remaining to be executed on capital account and not provided for [net of advances] 131.07 712.31

ii) Contingent liabilities not provided for in respect of: (As certified by the Management)

a) Claims and other demands against the Company not acknowledged as debts. 288.76 204.01

b) Sales tax and purchase tax demands, among others against which the Company has preferred appeals. 226.29 247.09

c) Excise and custom duty (excluding interest and penalty) and service tax demands and show-cause 426.59 353.39 notices issued against which the Company/Department has preferred appeals/filed replies.

d) Disputed income tax and wealth tax demand (excluding penalty if any) 89.23 194.10

e) Against the imposition of Local Area Development Tax (LADT) levied by Haryana Government,the 676.07 603.30 Hon''ble Supreme Court of India vide its order dated 10th May, 2006 has accepted the Company''s application for stay. Further, Hon''ble Supreme Court vide their order dated 30th October, 2009 stated the assesses to file the LADT returns; however, no recovery of tax will be made till further order. In the meantime, the Haryana Government has repealed the LADT Act and introduced another Act by the name of ''Entry Tax'' on the same line, which was also been held ultra vires by the Hon''ble Punjab and Haryana High court. Pending the final Order of the Hon''ble Supreme Court on the above matter and there is no Act either LADT / Entry Tax prevalent in Haryana, no provision for the same is considered necessary by the Company for the period from 1st April, 2006.

f) Demand notice from ESiC 15.41 -

iii) Bond executed in favour of sales tax/custom authorities. 25.00 25.00

B) Outstanding Corporate Guarantee to banks in respect of various fund/non fund based facilities 3434.00 3720.00 extended to subsidiary/other body corporates.

2 During the financial year 2012-13, a demand of RS. 925.65 lacs (including interest of RS. 97.41 lacs) for difference between market rate (Non-APM) and contracted price (APM) of gas for the period from 1st July, 2005 to 31st March, 2010 has been raised by GAIL (India) Limited(GAIL). After considering further debit notes on account of interest / bank charges for the past periods, the total demand increased to RS. 1,218.56 lacs (including interest of RS. 390.32 lacs) as on 31st March 2015. The Company along with others filed a Special Civil Application (SCA) which was admitted by the Hon''ble Gujarat High Court on submission of bank guarantee of RS. 118 lacs. On 4th August, 2014, Hon''ble Supreme Court of India passed an order to transfer the case to this Court on the basis of transfer petition filed by the GAIL. Pending decision / further direction, no provision in this regard is considered necessary by the Company.

3. in terms of long Term gas supply agreements (GsAs) with Gail (india) limited and indian oil Corporation limited (jointly referred to as ''sellers'') which are valid till period ending April 2028 and December 2016 respectively, there are under drawn quantities of Re-Liquified Natural Gas (RLNG) equivalent to Rs 6090.94 Lacs for the calendar year 2014. Against this the company has received demand notices from Sellers aggregating to RS. 2415.45 lacs only representing an aggregate under drawn quantity of 242490 MMBTU. If these demands are paid, the same will be treated as advance in accounts as the company will be eligible to take under drawn quantities of RLNG including that for calendar year 2014 in subsequent contract years subject to Sellers'' operational flexibility and price adjustments. The Company has also represented to Sellers for reducing the said amounts demanded which is pending resolution.

Further in view of proposed increase in production capacity by 4 million square meters per annum at Kassar unit and also generally a decreasing trend in prices of the said RLNG in recent months, Management is confident about utilization of under drawn RLNG as above in subsequent contract years. Accordingly pending resolution and in view of proposed use of RLNG in future as stated above, no effect of the same has been given in these accounts.

4. Sales includes insurance recovered of RS. 871.89 lacs (Previous year RS. 260.46 lacs), export benefits of RS. 150.90 lacs (Previous year RS. 99.65 lacs) and net of trade discounts and returns.

5. Since it is not possible to ascertain with reasonable certainty the quantum of accrual in respect of certain insurance and other claims and interest on overdue bills from customers, the same are continued to be accounted for as and when received/settled.

6. other long-term liabilities include encashment of bank guarantee in earlier years amounting to RS. 202.50lacs (Previous year RS. 202.50 lacs) provided by the supplier of machinery. The supplier of machinery has challenged the encashment of bank guarantee and the case is pending before Hon''ble High Court of Delhi and Kolkata. Pending final decision, no adjustment has been carried out in accounts and above amount is shown under long term liabilities.

7. out of RS. 5,000.00 lacs raised through private placement of equity shares in February, 2014, the company has so far utilized RS. 2,650.00 lacs (including issue expenses of RS. 145.94 lacs)for the purposes for which the same were raised. The balance RS. 2,350.00 lacs remain temporarily invested in the bonds / debt schemes of mutual funds.

8. Other Advances under Short term Loan and Advances includes amount due from a JV Company Somany Keraben Private Limited (SKPL) amounting to RS. 13.99 lacs (Previous year 13.99 lacs), which is considered good for recovery by the company.

9. EMPLOYEE BENEFITS

(b) Amounts recognised as an expense/ (income) and included in the Note Number 24 are as under:

i) ''Salary, Wages, Bonus etc.'' of the statement of Profit and Loss includes RS. 135.99 lacs (Previous year RS. 129.26 lacs) towards Earned Leave Encashment and Sick Leave.

ii) ''Contributions to Provident and other Funds'' of the statement of Profit and Loss includes RS. 394.88 lacs (Previous year RS. 356.53 lacs) towards contribution to Provident Fund [including RS. 129.05 lacs (Previous year RS. 128.51 lacs) towards Somany Provident Fund, a multi-employer plan, refer to (c ) below].

iii) ''Contributions to Provident and other Funds'' of the statement of Profit and Loss includesRS. 207.59 lacs (Previous year RS. 43.29 lacs) towards contribution to Gratuity Fund.

(c) The Guidance issued by the Accounting Standard Board (ASB) on implementing AS-15, Employee Benefits (revised 2005) states that provident funds set up by employers, the investment and actuarial risk of which fall on the employer, needs to be treated as defined benefit plan. Its effect in this respect has not been ascertained and the same has been accounted for, as defined. The Fund has a surplus, determined net of investments less corpus (contribution plus interest thereon).

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

(e) The expected return on the plan assets is determined byconsidering several applicable factors mainly the composition of the plan assets held, assessed risks of assets management, historical results of return on plan assets and the policy for plan assets management.

(f) The principal assumptions are the discount rate and salary growth rate. The discount rate is generally based upon the market yields available on Government bonds at the accounting date with a term that matches that of the liabilities.

10. The business activity of the Company falls within a single business segment viz. ''Ceramic Tiles and allied products'' and mainly sale of the product is within the country. Hence, the disclosure requirement of Accounting Standard 17 of ''Segment Reporting not considered applicable.

11. Related Party Transactions (As certified by the Management)

A. Names of related parties where control exists and nature of relationship:

Subsidiary Company

SR Continental Limited

Somany Global Limited

Amora Tiles Private Limited

B. Other related parties with whom transactions have taken place and description of relationship:

1. Joint Venture

Somany Keraban Private Ltd.

2. Key Management Personnel

Mr. Shreekant Somany, Chairman & Managing Director

Mr. Abhishek Somany, Joint Managing Director (Son of Chairman & Managing Director)

Mr. G.G. Trivedi, CEO*

Mr. Ambrish Julka, DGM (Legal) & Company Secretary*

3. Relatives of Key Management Personnel

Mrs. Anjana Somany, Additional Director (w.e.f. 24th March, 2015) (Wife of Chairman & Managing Director)

Mrs. Minal Somany (Wife of Joint Managing Director)

Mrs. Kala Trivedi (Wife of CEO)*

4. Associate Company

Vintage Tiles Private Limited

Commander Vitrified Private Limited

Vicon Ceramic Private Limited

Acer Granito Private Limited

Somany Sanitary Ware Private Limited (w.e.f. 27 th November, 2014)(Formerly Sonec Sanitary Ware Pvt Ltd)

Somany Fine Vitrified Private Limited (w.e.f. 20th January, 2015)(Formerly Fine Vitrified Pvt Ltd)

5. Enterprise over which Key Management Personnel and their relatives exercise significant influence and with whom transactions have taken place during the year*:

Vidres india Ceramics Private Limited

Yogi Cerachem Private Limited

Ishiv india Solutions Private Limited

6. Other related parties with which Company has transactions*:

Biba Apparels Private Limted - Private company in which director is a director

Wolkem india Limited - Public company in which director is a director and holds more than 2% shares along with relatives

G.L. Sultania & Co. - Firm in which director is proprietor

* Related w.e.f. 1st April, 2014 pursuant to the Companies Act, 2013

12. Interest in Joint Venture Company

a) Company''s contribution in the joint venture (by the name Somany Keraben Private Ltd.,a 50:50 Joint Venture Company) till 31st March, 2015 is RS. 77.30 lacs (Previous year RS. 77.30 lacs) towards share capital of Joint Venture entity.

Pursuant to Accounting Standard 27 "Financial Reporting of Interests in Joint Venture" the relevant information relating to Joint Venture Company (JVC) are given below:

Name of the JVC Country of Incorporation Proportion of Ownership Interest

Somany Keraben Private Limited (SKPL) india 50%

c) Both the parties have agreed to contribute in the increased share capital by RS. 12.00 lacs(each) post balance sheet date of the joint venture company.

13. a sum of RS. 96.84 lacs have been provided towards Corporate Social Responsibility (CSR) and same included under Other Expenses. Out of which RS. 9.74 lacs was spent and the balance amount of RS. 87.10 lacs would be utilized for CSR activities in subsequent years.

14. During the current year, the Company has computed depreciation based on useful life of the fixed assets as specified under schedule II of the Companies Act, 2013. The carrying value of the fixed assets which have completed their useful lives as on 1st April, 2014 has been charged against the balance in General Reserve of amounting to RS. 154.08 lacs(net of deferred tax RS. 79.34 lacs). Had there not been any change in the useful life of the fixed assets, the depreciation would have been higher by RS. 216.47 lacs for the year ended 31st March 2015 and to that extent profit would have been lower.

15. The Company has not provided diminution in the value of certain unquoted long term strategic investments, since in the opinion of Board, such diminution in their value is temporary in nature, considering the inherent value, nature of investments, the investees'' assets and expected future cash flow from such investments.

16. Research and development expenditure on revenue account amounting to RS. 66.82 lacs (Previous year RS. 58.32 lacs) has been charged to statement of profit and loss.

17. in the opinion of the management, current assets and loans and advances have a value on realisation in ordinary course of business at least equal to the amount at which they are stated.

18. Balances of certain trade receivables, advances, trade payables and other liabilities are in the process of confirmation and/or reconciliation.

19. Profit and/or Loss on sale of stores and raw materials remain adjusted in respective consumption accounts.

20. Trade payables include acceptances of RS. 11,445.83 lacs (Previous year RS. 9,887.83 lacs).

(ii) in order to increase its shareholding in the above stated two companies to 51% of total issued and subscribed capital in aforesaid companies, the Company has further paid following sums:

Somany Sanitary Ware Pvt. Ltd.* RS. 100.00 lacs

Somany Fine Vitrified Pvt. Ltd.* RS. 200.00 lacs

* stated amount paid has been shown as ''Advance against Share Application Money'' under Long Term Loans and Advances.

By the above said shareholders agreements and supply agreements,the company has right to buy and sell the entire production of tiles / sanitaryware of companies stated in/under its own brand.

21. The Company has entered into long term supply agreements (LTA or Agreements) with Vintage Tiles Pvt. Ltd., Commander Vitrified Pvt. Ltd., Amora Tiles Pvt. Ltd., Acer Granito Pvt. Ltd., Vicon Ceramic Pvt. Ltd., Somany Sanitaryware Pvt. Ltd. and Somany Fine Vitrified Pvt. Ltd. By the said agreements the Company has right to buy and sell the entire production of tiles / sanitaryware of companies stated in/under its Own Brand.

As liability will accrue / arise as and when purchase will be made under LTA. Hence under the agreements there is no material foreseeable losses as on date in the opinion of the management.

22. The previous year''s figures have been regrouped, rearranged wherever consider necessary.


Mar 31, 2013

1.1 Sales are reported net of trade discounts and returns and includes export benefits of Rs. 105.26 lacs (previous year Rs. 67.34 lacs).

1.2 Since it is not possible to ascertain with reasonable certainty the quantum of accrual in respect of certain insurance and other claims and interest on overdue bills from customers, the same are continued to be accounted for as and when received/settled.

1.3 (a) Other long-term liabilities include encashment of bank guarantee in earlier years amounting to Rs. 202.50 lacs (previous year Rs. 202.50 lacs) provided by the supplier of machinery. The supplier of machinery has challenged the encashment of bank guarantee and the case is pending before Hon''ble High Court of Delhi and Kolkata. Pending decision, no adjustment has been carried out in accounts.

(b) During the year, a demand of Rs. 925.65 lacs (including interest Rs. 97.41 lacs) for difference between market rate of gas and contracted price for the period 2005-2010 has been received from GAIL (India) Ltd. The Company along with others have filed a Special Civil Application (SCA) in the Hon''ble Gujrat High Court and the Hon''ble Divisional Bench has admitted the SCA on submission of Bank Guarantee of Rs. 118 lacs. Pending decision/ further direction, no provision in this regard at this stage is considered necessary by the company.

1.4 Trade receivable above six months and advance recoverable in cash/kind (net) includes amount due from JV Company (SKPL) amounting to Rs. 41.17 lacs and Rs. 8.80 lacs respectively (previous year Rs. 41.17 lacs and Rs. 6.17 lacs respectively), for which management is confident about recovery and accordingly the same has been considered good.

1.5 The Company has not received full information from vendors regarding their status under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED ACT); hence, disclosure relating to amount unpaid at year end together with interest paid/payable have been given based on the information so far available with the Company/identified by the Company management. The detail of the same is as under:-

1.6 The business activity of the Company falls within a single primary business segment viz. ''Ceramic Tiles and allied products ''and basically sale of the product is within the country. Hence, the disclosure requirement of Accounting Standard 17 of ''Segment Reporting'' notified under Companies (Accounting Standards) Rules, 2006 is not considered applicable.

1.7 Related Party Transactions (As certified by the Management)

A. Names of related parties where control exists and nature of relationship:

Subsidiary Company : M/s SR Continental Ltd.

M/s Somany Global Ltd. (Formerly Somany Retail Ltd)

B. Other related parties with whom transactions have taken place and description of relationship:

1. Joint Venture : M/s Somany Keraban Private Ltd.

2. Key Management Personnel : Mr. Shreekant Somany, Chairman & Managing Director

Mr. Abhishek Somany, Joint Managing Director (Son of Chairman & Managing Director)

3. Relatives of Key Management Personnel : Mrs. Minal Somany

(Wife of Joint Managing Director)

4. Associates : Vintage Tiles Private Ltd.

Commander Vitrified Private limited

1.8 Interest in Joint Venture Company

a) Company''s contribution in the joint venture (by the name Somany Keraben Private Ltd., a 50:50 Joint Venture Company) till 31st March, 2013 is Rs.77.30 lacs (previous year Rs 77.30 lacs) towards share capital of Joint Venture entity.

1.9 Research and development expenditure on revenue account amounting to Rs. 45.30 lacs (previous year Rs. 21.37 lacs) has been charged to statement of profit and loss.

1.10 In the opinion of the management, current assets and loans and advances have a value on realisation in ordinary course of business at least equal to the amount at which they are stated.

1.11 Balances of certain trade receivables, trade payables, other liabilities and other advances are in process of confirmation or reconciliation.

1.12 Profit and/or Loss on sale of stores and raw materials remain adjusted in respective consumption accounts.

1.13 (a) Foreign exchange derivatives and exposures outstanding at the year-end:

1.14 Trade payables includes acceptance Rs. 8553.13 lacs ( previous year Rs.5521.42 lacs)

1.15 In term of the agreement and on acquisition of 26% of equity stake in M/s Vintage Tiles Pvt. Ltd. (VTPL), the company is having right to buy and sell the entire production of 26.50 lacs square metre per annum of polished vitrified tiles from VTPL.

1.16 In term of the agreement dated 03rd April 2012, the company has acquired 32.50 lacs numbers of fully paid up equity shares of Rs. 10 each at the rate of Rs. 10 per share amounting to Rs. 325 lacs representing 26% equity stake in M/s Commander Vitrified Pvt. Ltd. (CVPL). By this agreement, the company is having right to buy and sell the entire production of CVPL in its own brand.

1.17 The previous year''s figures have been regrouped, rearranged wherever consider necessary.


Mar 31, 2012

1.1 Contingent liabilities and commitments (to the extent not provided for)

(As certified by the Management) (Rs. Lacs)

Sr. No. Particulars 31.03.2012 31.03.2011

i) Estimated amount of contracts remaining to be executed on capital account and 829.97 2064.84 not provided for [net of advances]

ii) Contingent liabilities not provided for in respect of: (As certified by the Management)

a) Claims and other demands against the Company not acknowledged as debts. 115.84 109.80

b) Sales tax and purchase tax demands, among others against which 200.72 164.76 the Company has preferred appeals.

c) Excise/custom duty and service tax demands and show-cause notices issued against 361.86 390.87 which the Company/Department has preferred appeals/filed replies.

d) Disputed income tax and wealth tax demand (excluding penalty if any) 166.85 122.66

e) Against the imposition of Local Area Development Tax (LADT) levied by Haryana Government, 439.13 318.97 the Hon'ble Supreme Court of India vide its order dated 10th May 2006 has accepted the Company's application for stay. Further, Hon'ble Supreme Court vide their order dated 30th October 2009 stated the assessees to file the LADT returns; however, no recovery of tax will be made till further order. In the meantime, the Haryana Government has repealed the LADT Act and introduced another Act by the name of 'Entry Tax' on the same line, which was also been held ultra vires by the Hon'ble Punjab and Haryana High Court. Pending the final Order of the Hon'ble Supreme Court on the above matter And there is no act either LADT/Entry Tax prevalent in Haryana, no provision for the same is considered necessary by the Company for the period from 1st April, 2006. In this regard, liability provided but not paid amounting to Rs.60 lacs for the financial year 2006-07 has been written back as advised to the Company.

iii) Bond executed in favour of sales tax/custom authorities. 25.00 25.00

iv) As against a term loan of Rs.1,230 lacs (previous year Rs.504 lacs) by a financial institution to M/s Schablona India Ltd (SIL), the Company has given an undertaking to the former for non-disposal of its shareholding in SIL.

v) The Company has entered into a Memorandum of Undertaking with a party for the purchase of ceramic tiles and accordingly has initially committed to invest up to Rs.325 lacs (till date invested Rs.200 lacs) in a phase manner for acquiring 26% equity stake in the target company.

1.2 Sales are reported net of trade discounts and returns and export benefits of Rs.67.34 lacs (previous year Rs.55.29 lacs).

1.3 Since it is not possible to ascertain with reasonable certainty the quantum of accrual in respect of certain insurance and other claims and interest on overdue bills from customers, the same are continued to be accounted for as and when received/settled.

1.4 Other long-term liabilities include encashment of bank guarantee in earlier years amounting to Rs.202.50 lacs (previous year Rs.202.50 lacs) provided by the supplier of machinery. The supplier of machinery has challenged the encashment of bank guarantee and the case is pending before Hon'ble High Court of Delhi and Kolkata. Pending decision, no adjustment has been carried out in accounts.

1.5 (a) Exceptional item (net) includes provision for diminution in the value of investment of the joint venture company - M/s Somany Keraban Private Limited (SKPL) of Rs.77.30 lacs and write back of liability towards LADT of Rs.60 lacs {Refer note 2.1(ii) (e)}.

(b) Debtors and advance recoverable in cash/kind (net) includes amount due from JV Company (SKPL) amounting to Rs.41.17 lacs and Rs.6.17 lacs respectively, for which management is confident of full recovery and accordingly the same has been considered good.

1.6 The Company has not received full information from vendors regarding their status under Micro, Small and Medium Enterprises Development Act,

(b) Amounts recognised as an expense/(income) and included in the Note Number 24 are as under:

(I) Contributions to Provident and other Funds' of the statement of Profit and Loss Account includes Rs.292.47 lacs (previous year Rs.258.98 lacs) towards contribution to Provident Fund [including Rs.92.55 lacs (previous year Rs.75.69 lacs) towards Somany Provident Fund, a multi-employer plan, refer to (c) below].

(c) The Guidance issued by the Accounting Standard Board (ASB) on implementing AS-15, Employee Benefits (revised 2005) states that provident funds set up by employers, the investment and actuarial risk of which fall on the employer, needs to be treated as defined benefit plan. Pending determination of liability in view of issues in making reasonable actuarial assumptions and due to the non-availability of other sufficient information to use defined benefit accounting for such multi-employer plan. Its effect in this respect has not been ascertained and the same has been accounted for, as defined contribution plan. The Fund has a surplus, determined net of investments less corpus (contribution plus interest thereon). However, according to the management, the impact, if any, that may arise on considering it as defined benefit plan, is not expected to be material.

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

(e) The expected return on the plan assets is determined by considering several applicable factors mainly the composition of the plan assets held, assessed risks of assets management, historical results of return on plan assets and the policy for plan assets management.

(f) The principal assumptions are the discount rate and salary growth rate. The discount rate is generally based upon the market yields available on Government bonds at the accounting date with a term that matches that of the liabilities.

1.7 The business activity of the Company falls within a single primary business segment namely 'Ceramic Tiles and allied products 'and basically sale of the product is within the country. Hence, the disclosure requirement of Accounting Standard 17 of 'Segment Reporting' notified under Companies (Accounting Standards) Rules, 2006 is not considered applicable.

1.8 Related Party Transactions (As certified by the Management)

1.9 Research and development expenditure on revenue account amounting to Rs.21.37 lacs (previous year Rs.28.66 lacs) has been charged to Profit and Loss account.

1.10 In the opinion of the management, current assets and loans and advances have a value on realisation in ordinary course of business at least equal to the amount at which they are stated.

1.11 Balances of certain trade receivables, trade payables, other liabilities and other advances are in process of confirmation or reconciliation.

1.12 Profit and/or Loss on sale of stores and raw materials remain adjusted in respective consumption accounts.

The Company uses derivative instruments for hedging and/or reducing finance cost.

1.13 i) Debtors include due from subsidiaries and joint venture Company amounting to Rs.11.04 lacs (previous year Rs 14.43 lacs) and Rs.41.17 lacs (previous year Rs.91.03 lacs) respectively.

ii) The Company has investment of Rs.50 lacs in its wholly-owned subsidiary - M/s Somany Global Limited (SGL) which has substantial carry forward losses. In view of this the management, considering the profit in SGL in past two years and Company's long-term strategic investment, no provision of diminution in the value of investment in SGL has been considered in these financial statements.

1.14 In view of option allowed by the Ministry of Corporate Affairs vide its notification dated 29th December, 2011 on Accounting Standard -11 'The Effects of Changes in Foreign Exchange Rates', the Company during the year has charged to cost of depreciable assets the exchange difference on loan/liability (long-term foreign currency monetary items) used for depreciable assets which were hitherto charged to the statement of profit and loss. Accordingly, the exchange difference of Rs.89.95 lacs has been charged to the cost of depreciable fixed assets and to the extent profit for the year is higher.

1.15 In terms of agreement dated 13th January 2012, the Company has acquired Rs.23.40 lacs fully paid up equity shares of Rs.10 each at the rate of Rs 21.50 per share, amounting to Rs.503.10 lacs, representing 26% equity stake in M/s Vintage Tiles Private Limited (VTPL). By this agreement, the Company is having right to buy entire production of 26.50 lacs square metre per annum of polished vitrified tiles from VTPL.

1.16 The previous year's figures have been regrouped, rearranged and recast as per Revised Schedule VI as notified by notification number S.O. 447(E) dated 28th February 2011 (as amended by F. No 2/6/2008-CL-V dated 30th March 2011).


Mar 31, 2010

(Amount in Rs.)

31.03.2010 31.03.2009

1. Estimated amount of contracts remain ing to be executed on capital account and not provided for [net of advances] 77,673,352 18,670,136

2 (A) Contingent liabilities not provi ded for in respect of: (As certified by the Management)

a) Claims and other demands against the Company not acknowledged as debts. 10,725,245 12,112,187

b) Sales Tax and Purchase Tax demands etc. against which the Company has preferred appeals. 4,582,504 4,582,990

c) Excise/Custom duty and Service Tax demands and show cause notices issued against which the Company/Depa rtment has preferred appeals/filed replies. 40,744,718 46,483,632

d) Custom duty, which may arise if obl igation for exports is not fulfilled against import of capital under EPCG. 10,287,165 31,781,081

e) Disputed Income Tax & Wealth Tax Demand (Excluding Penalty if any) 11,378,798 -

f) Against the imposition of Local Area Development Tax (LADT) levied by Haryana Govt., the Honble Supreme Court of India vide its order dated 10th May, 2006 has accepted the Companys application for stay. Further Honble Supreme Court vide their order dated 30th October, 2009 stated the assesses to file the LADT returns, however no recovery of tax will be made till further order. Liability in this regard of Rs. 60 Lacs have been provided in the accou nts up to year 2006-07. Pending, the final Order of the Honble Supreme Court on the above matter, no further provision for the same have been considered necessary at this stage.25,934,920 16,579,221

(B) Bond executed in favour of Sales Tax/ Custom Authorities. 25,00,000 25,00,000

(C) Bond/ Guarantee executed on behalf of other body corporate 60,400,000 60,400,000

(D) As against a term loan of Rs. 504 Lacs (previous year Rs. 504 lacs) by a Financial Institution to M/s. Schablona India Limited (SIL), the Company has given an undertaking to the former for non disposal of its shareholding in SIL.

3. Sales are reported net of trade discounts and returns and include Miscellaneous Sales of Rs. 21,198,883 (previous year Rs. 29,013,222) and Export Benefits of Rs. 5,597,212 (previous year Rs. 2,934,852).

4. Since it is not possible to ascertain with reasonable certainty the quantum of accrual in respect of certain insurance and other claims and interest on overdue bills from customers, the same are continued to be accounted for as and when received/settled.

5. Other Liabilities include encashment of performance bank guarantee in earlier years amounting to Rs. 20,250,000 (previous year Rs. 20,250,000) provided by the supplier of machinery (read with note no. 3 of Schedule 5). The supplier of machinery has challenged the encashment of bank guarantee and the case is pending before Honble High Court of Kolkata. Pending decision, no adjustment has been carried out in accounts.

6. (a) Company has an Investment of Rs. 7,730,000 in the Joint Venture Company (50% - JV Company) Somany Keraben Private Limited (negative net worth) & Rs. 5,000,000 in Subsidiary Company Somany Global Limited where considerable erosion of net worth is there in view of losses. Considering the future payment prospects and long term in nature no provision for diminution at this stage is considered necessary by the Management.

(b) Debtors include amount due from JV Company amounting to Rs. 8,400,883 for which Management is confident for full recovery and accordingly the same has been considered good.

7. Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force from 2nd October, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. The Company has initiated the process for obtaining relevant information from its suppliers about their coverage under the said act. Since the relevant information is not readily available, no disclosures have been made in these accounts. However, in view of the management, the impact of interest, if any, that may be payable in accordance with the provision of this act is not expected to be material.

8. The major components of Deferred Tax Liability and Deferred Tax Assets are as under:

9 Employee Benefits:

(a) The status of the gratuity, leave encashment and sick leave as at 31st March, 2010 is as follows:

I Expense recognized in the statement of profit and loss.

II Net Assets/(liability) recognised in the Balance Sheet as at 31st March, 2010.

III Change in present value of obligation.

IV Changes in the fair value of plan assets.

10 Employee Benefits:

(a) The status of the gratuity, leave encashment and sick leave as at 31st March, 2010 is as follows (Contd.):

V The Major Category of plan assets as a percentage to total plan

VI Actuarial Assumptions

(b) Amounts recognised as an expense/(income) and included in the Schedule 14 are as under:

(I) "Salaries, Wages, Dearness Allowance and Bonus" of Profit and Loss Account includes Rs. 52,85,721(previous year Rs. 9,765,273) for Gratuity, Rs. 6,338,501 (previous year Rs. 5,736,192) for long term Leave Encashment, Rs. 400,265 (previous year Rs. 150,814) for other long term benefits.

(II) "Contributions/Provision to and for Provident and other Funds" of Profit and Loss Account includes Rs. 19,781,518 (previous year Rs. 16,677,554) (includes Rs. 4,520,303 (previous year Rs. 4,525,430) towards Somany Provident Fund, a multi employer plan, refer (c) below.)

(c) The Guidance issued by the Accounting Standard Board (ASB) on implementing AS-15, Employee Benefits (revised 2005) states that provident funds set up by employers, the investment and actuarial risk of which fall on the employer, needs to be treated as defined benefit plan. Pending determination of liability in view of issues in making reasonable actuarial assumptions and due to the non-availability of other sufficient information to use defined benefit accounting for such multi-employer plan, effect in this respect has not been ascertained and the same has been accounted as defined contribution plan. The Fund has a surplus, determined net of investments less corpus (contribution plus interest thereon). However, in view of the management, the impact, if any, that may arise on considering it as defined benefit plan, is not expected to be material.

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

(e) The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of assets management, historical results of return on plan assets and the policy for plan assets management.

(f) The principal assumptions are the discount rate & salary growth rate. The discount rate is generally based upon the market yields available on Government bonds at the accounting date with a term that matches that of the liabilities.

11. The business activity of the Company falls within a single primary business segment viz. Ceramic Tiles and allied products and basically sale of the product is within the country. Hence the disclosure requirement of Accounting Standard 17 of Segment Reporting issued by the Institute of Chartered Accountants of India is not considered applicable.

12. Related Party Transactions:

A. Names of related parties where control exists and nature of relationship: Subsidiary Company: M/s. SR Continental Limited

M/s. Somany Global Limited (Formerly Somany Retail Limited)

B. Other related parties with whom transactions have taken place and description of relationship:

1. Joint Venture: M/s. Somany Keraben Private Limited

2. Associates: M/s. Bhilwara Holdings Limited

M/s. Scope Vinimoy Private Limited

3. Key Management Personnel: Mr. Shreekant Somany, Chairman & Managing Director

Mr. Abhishek Somany, Joint Managing Director (Son of Chairman & Managing Director) Mr. G. G. Trivedi, Executive Director up to 20.05.2009

4. Relatives of Key Management Personnel : Mr. Hira Lall Somany, (Father of Chairman & Managing Director and Grandfather of Joint Managing Director)

Mrs. Anjana Somany, (Wife of Chairman & Managing Director and Mother of Joint Managing Director) Mrs. Minal Somany, (Wife of Joint Managing Director) Mrs. Kala Trivedi, (Wife of Executive Director)

5. Enterprises over which relative of Key Management

personal exercise significant influence : M/s. Yogi Ceramics Private Limited

C. Details of transactions with related parties

C. Details of transactions with related parties (Contd.)

C. Details of transactions with related parties (Contd.)

13. Interest in Joint Venture Company

a) Companys contribution in the joint venture (by the name Somany Keraben Private Limited, a 50:50 Joint Venture Company) till 31.03.2010 is Rs. 7,730,000 (previous year Rs. 1,580,000) towards share capital (out of which Rs. Nil (previous year Rs. 6,150,000) pending allotment) of Joint Venture entity. Pursuant to Accounting Standard 27 "Financial Reporting of Interests in Joint Venture" the relevant information relating to Joint Venture Company (JVC) are given below:

14. Earning Per Share: The numerators and denominators used to calculate Basic and Diluted Earning Per Share:

15. Capital work in progress include technical know-how fee,machinery under installation and/or in transit, construction/erection material and pre-operative expenses pending allocation/appropriation :- (Amount in Rs.)

16. Research & Development expenditure on revenue account amounting to Rs. 2,819,655 (previous year Rs. 3,155,165) has been charged to profit and loss account.

17. In the opinion of the management, Current Assets and Loans & Advances have a value on realisation in ordinary course of business at least equal to the amount at which they are stated.

18. Balances of certain debtors, loans and advances and current liabilities are in process of confirmation/reconciliation.

19. Profit and/or loss on sale of stores and raw materials remain adjusted in respective consumption accounts.

20. (a) Foreign Exchange derivatives and exposures outstanding at the year end :

21. i) Debtors include due from subsidiaries and joint venture Company amounting to Rs. 2,708,587 (previous year Rs. 75,392) & Rs. 8,400,883 (previous year Rs. 26,926,556) respectively. ii) Advances recoverable in cash & kind include (a) due from subsidiaries and joint venture Company in respect of receivables on account of expenses reimbursed amounting to Rs. 797,772 (previous year Rs. 786,934) & Rs. Nil (previous year Rs. Nil) respectively and (b) capital advance Rs. 74,033,820 (previous year Rs. 5,003,268)

22. Details of Investment purchased/sold during the year:

23. Unsecured Loans repayable with in one year are Rs. 263,800,000 (previous year Rs. 17,736,000).

24. Directors Remuneration:

25. Payments to Auditors (Excluding Service Tax)

26. Additional information pursuant to the provisions of paragraph 3 and 4 of Schedule VI of the Companies Act, 1956.

27. Figures for the previous year have been regrouped and rearranged wherever considered necessary.

28. Schedules 1 to 17 form an integral part of Balance Sheet and Profit and Loss Account.

 
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