Notes to Accounts of Somany Ceramics Ltd.

Mar 31, 2018

3 Rupee loan of Rs. 900.00 lakhs (March 31, 2017 Rs. 1350.00 lakhs, April 1, 2016 Rs. 1,800.00 lakhs) 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 8 equal quarterly instalments starting from June, 2018.

4 Rupee loan of NIL (March 31, 2017 Rs. 784.49 lakhs, April 1, 2016 Rs. 1,584.49 lakhs) 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.

5 Rupee loan of Rs. 2,505.00 lakhs (March 31, 2017 Rs. 3,355.00 lakhs, April 1, 2016 Rs. 2,000.00 lakhs) from a Bank and Buyers''/Suppliers'' credit of Rs. 2,215.56 lakhs (March 31, 2017 Rs. 2,145.66 lakhs, April 1, 2016 Rs. 2,228.09 lakhs). Equivalent to aggregate of USD 27.25 lakhs and Euro 5.33 lakhs (March 31, 2017 equivalent to aggregate of USD 27.25 lakhs and Euro 5.33 lakhs, April 1, 2016 Equivalent to aggregate of USD 27.25 lakhs and Euro 5.33 lakhs) 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. 1,100.00 lakhs, Rs. 1,450.00 lakhs, Rs. 1,700.00 lakhs, and Rs. 470.56 lakhs in FY19, FY20 and FY21 respectively.

6 Rupee loan of Rs. 3,000.00 lakhs (March 31, 2017 Nil, April 1, 2016 Nil) from a Bank and Buyers''/Suppliers'' credit of Rs. 726.51 lakhs (March 31, 2017 Nil, April 1, 2016 Nil) Equivalent to aggregate of USD 11.10 lakhs (March 31, 2017 Nil, April 1, 2016 Nil) are secured by first pari passu charge by way of hypothecation of all movable fixed assets, both present and future, of the Company at Kassar & Kadi excluding assets those exclusively charged to other Banks. Repayment of aforesaid loan is Rs. 1,000.00 lakhs, Rs. 1,000.00 lakhs, Rs. 1,500.00 lakhs and Rs. 226.51 lakhs in FY19, FY20, FY21 and FY22 respectively.

7 Car loan from Banks and others are secured by hypothecation of cars purchased there under and are repayable in monthly instalments over the period of loan.

8 Rate of interest applicable to all term loans is linked with MCLR.

37 Contingent liabilities, contingent assets and commitments (Contd.)

(ii) Others Financial Liabilities includes encashment of bank guarantee in earlier years 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.

(iii) The company has procured certain capital goods under EPCG scheme at concessional rate of duty. As on March 31, 2018 the company is contingently liable to pay differential custom duty of Rs. 121.74 Lakhs (March 31, 2017 - Rs.265.34 Lakhs, April 1, 2016 Rs. 681.17 Lakhs) on such procurement. In view of past export performance and future projections, the management is hopeful of completing the export obligation within stipulated time, and expect no cash outflow on this account.

38 Interest in Joint Venture Company (JVC)

a) Company''s contribution in the joint venture (by the name SKPL Ceramics. Pvt. Ltd. (Formerly Somany Keraben Pvt Ltd.), a 50:50 Joint Venture Company) till June 1, 2017 is Rs. 89.30 lakhs (Previous year Rs 89.30 lakhs) towards share capital of Joint Venture entity. The company is in process of striking off.

The above loans carries interest rate in the range of 10.5% to 14.5%.

b) Details of investments made is given in Note No. 4.

42 Employee benefits

The Company contributes to the following post-employment defined benefit plans in India.

(i) Defined Contribution Plans:

The Company makes contributions towards provident fund to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits.

Contributions to Provident and other Funds'' of the Statement of Profit and Loss includes Rs. 544.12 lakhs (Previous year Rs. 504.78 lakhs) towards contribution to Provident Fund [including Rs. 190.45 lakhs (Previous year Rs. 171.11 lakhs) towards Somany Provident Fund, a multi-employer plan].

(ii) Defined Benefit Plan:

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. Gratuity liability is being contributed to the gratuity fund formed by the company.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2018. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

A. Movement in net defined benefit (asset)/liability

The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset)/liability and its components:

42 Employee benefits (Contd.)

E. Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various risks as follow

A) Salary Increases- Actual salary increases will increase the Plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - Assets and liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate - Reduction in discount rate in subsequent valuations can increase the plan''s liability.

43 Related parties

A. Related parties and their relationships

i Key Managerial Personnel (KMP) and their relatives Name Relationship

Mr. Shreekant Somany Chairman & Managing Director

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

Mrs. Anjana Somany Whole time Director (Wife of Chairman & Managing Director) (w.e.f. May 21, 2016)

Mr. G.G. Trivedi Additional Director w.e.f. September 1, 2017 (CEO upto August 31, 2017)

Mr. T.R. Maheshwari^A CEO w.e.f. January 30, 2018 (Deputy CEO and CFO upto January 29, 2018)

Mr. Saikat MukhopadhyayA CFO w.e.f January 30, 2018

Mr. Ambrish JulkaA DGM (Legal) & Company Secretary

Mrs. Minal Somany Wife of Managing Director

Mr. G. L. Sultania Non- Executive Director

Mr. R.K. Daga Non- Executive Director

Mr. Ravindra Nath Non- Executive Director

Mr. Salil Singhal Non- Executive Director

Mr. Y. K. Alagh Non- Executive Director

Mr. Narayan Anand Non- Executive Director (upto April 12, 2017)

a KMP under the Companies Act, 2013

ii Subsidiary Company

SR Continental Limited Somany Global Limited Amora Tiles Private Limited Somany Fine Vitrified Private Limited Somany Sanitaryware Private Limited Somany Excel Vitrified Private Limited Vintage Tiles Private Limited Commander Vitrified Private Limited

43 Related parties (Contd.)

Vicon Ceramic Private Limited Acer Granito Private Limited

Sudha Somany Ceramics Private Limited (Formerly Sudha Ceramics Private Limited) (w.e.f. November 9, 2016)

Amora Ceramics Private Limited (w.e.f. March 30, 2018)

iii Associate (Joint Venture upto June 01, 2017)

SKPL Ceramics Private Limited (Formerly Somany Keraben Private Limited) upto June 1, 2017*

*The Company has terminated the Joint Venture Agreement with Keraben Grupo S.A. w.e.f. June 1, 2017. Now the Company is under the process of Strike Off.

iv. Enterprise over which Company exercise significant influence and with whom transactions have taken place during the year:

H. L. Somany Foundation

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

Schablona India Limited (w.e.f. January 10, 2018)

Vidres India Ceramics Private Limited

Yogi Cerachem Private Limited

Ishiv India Solutions Private Limited

vi. Other related parties with which Company has transactions:

Name

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

Ashiana Housing Limited Public company in which director is a director

Shree Cement Limited Public company in which director is a director

Wolkem India Limited Public company in which director is a director and holds more than 2% shares alongwith relatives

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

44 Financial instruments - Fair values and risk management (Contd.)

II. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

- credit risk;

- liquidity risk; and

- market risk

i. Risk management framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the processes to control risks through defined framework.

The Company''s risk management policy is established to identify and analyse the risks faced by the Company, to set appropriate controls. Risk management policy is reviewed by the board annually to reflect changes in market conditions and the Company''s activities.

The Company''s Audit Committee oversees compliance with the Company''s risk management policy, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

ii. Credit risk

Financial loss to the Company, arising, if a customer or counterparty to a financial instrument fails to meet its contractual obligations principally from the Company''s receivables from customers and investments in debt securities.

The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk closely both in domestic and export market.

Trade and other receivables

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Company Management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes market check, industry feedback, past financials and external ratings, if they are available, and in some cases bank reference checks are also done. Sales credit limit are set up for each customer and reviewed periodically. "

The Company creates allowances for impairment that represents its expected credit losses in respect of trade and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables.

The gross carrying amount of trade receivables is Rs 38,756.66 Lakhs (31 March 2017 - Rs. 40,741.28 Lakhs, 1 April 2016 - Rs.31,375.50 Lakhs).

Investments

Company invests in Bonds, Debentures, Liquid Mutual Funds etc., in accordance with the Company''s Investment Policy that includes parameters of safety, liquidity and post-tax returns. Company avoids the concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position as well as held to maturity policy. The Company''s exposure and credit ratings of its counterparties are monitored on an on-going basis. Based on historical experience and credit profiles of counterparties, the Company does not expect any significant risk of default.

iii. Liquidity risk

Liquidity risk is the risk that the Company may face difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to manage liquidity is to ensure, as far as possible, sufficient liquidity to meet its obligations, under both normal and stressed conditions.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions.

Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows.

Maturities of financial liabilities

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and exclude contractual interest payments and the impact of netting agreements.

iv. Market risk

Risk on account of changes in foreign exchange rates, interest rates etc. that may affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk is to optimize the return by managing and controlling the market risk exposures within acceptable parameters.

v. Currency risk

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company''s functional currency (INR). The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and small exposure in EURO. The risk is measured through a forecast of highly probable foreign currency cash flows.

Exposure to currency risk

The summary quantitative data about the Company''s exposure to currency risk as reported to the management of the Company is as follows (Foreign currency in lakhs).

Sensitivity analysis

A reasonably possible strengthening (weakening) of the Rs. against USD & EURO at 31 March would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

47 Exceptional item of Rs. 440.41 Lakhs (Previous Year Rs. 406.25 lakhs) includes Rs. 245.70 Lakhs (Previous Year Rs. 406.25 Lakhs) on account of write off of certain plant and machineries and Rs. 194.71 Lakhs (Previous Year Nil) on account of settlement of demand of wage raise during the year.

48 Out of Rs. 11,999.97 lakhs raised through qualified institutions placement of equity shares in December, 2015, the Company has so far utilized Rs. 1,849.97 lakhs (previous year Rs. 1,849.97 lakhs), including issue expenses of Rs. 307.34 lakhs, for the purpose the fund were so raised and balance Rs. 10,150.00 lakhs (previous year Rs. 10,150.00 lakhs) has been temporarily invested mainly in the debt instruments/ funds.

46 The Company has taken warehouse locations on operating lease. The operating lease arrangements are renewable on periodic basis. Some of these agreements have price escalation clauses.

49 Events after the Balance Sheet Date

Dividend declared and paid by the Company

The Board of directors has recommended dividend of Rs. 2.70 (Previous Year Rs. 2.70) per equity share aggregating Rs. 1,379.45 Lakhs (Previous Year Rs. 1,377.19 Lakhs) including corporate dividend tax of Rs. 235.20 Lakhs (Previous Year Rs. 232.94 Lakhs) for the financial year ended March 31, 2018 and same is subject to approval of shareholders at the ensuing Annual General Meeting.

50 Segment Reporting

According to Ind AS 108, identification of operating segments is based on Chief Operating Decision Maker (CODM) approach for making decisions about allocating resources to the segment and assessing its performance. The business activity of the company falls within one broad business segment viz. "Ceramic Tiles and Allied products" and substantially sale of the product is within the country. The Gross income and profit from the other segment is below the norms prescribed in Ind AS 108. Hence, the disclosure requirement of Ind AS 108 of ''Segment Reporting'' is not considered applicable.

51 Capital management

The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The following table summarises the capital of the Company.

53 First Time Adoption of Ind AS

As stated in note 2, these are the Company''s first financial statements prepared in accordance with Ind AS. The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS statement of financial position at April

1, 2016 (the Company''s date of transition). In preparing its opening Ind AS statement of financial position, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Indian GAAP (previous GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.

Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A. Ind AS optional exemptions

(i) Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

(ii) Effect of changes in exchange rate

In respect of long term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period, the Company has elected to recognise exchange differences on translation of such long term foreign currency monetary items in line with its Previous GAAP accounting policy.

In respect of long term foreign currency monetary items recognised in the financial statements beginning with the first Ind AS financial reporting period, exchange differences are recognised in the statement of profit and loss.

B. Ind AS mandatory exceptions

(i) Estimates

An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP The Company made estimates for Impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP

(ii) Classification and measurement of financial assets and financial liabilities

Ind AS 101 requires an entity to assess classification and measurement of financial assets and financial liabilities on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

C. Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

D. Notes to first-time adoption:

1 Fair valuation of investments

Under previous GAAP, current investments were stated at lower of cost and fair value. Under Ind AS, these financial assets have been classified as Fair Value through Profit or Loss (FVTPL) on the date of transition and fair value changes after the date of transition has been recognised in statement of profit and loss.

2 Proposed Dividend

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting.

3 Remeasurements of post-employment benefit obligations

Under previous GAAP, actuarial gains and losses related to the defined benefit schemes for gratuity were recognised in profit or loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability/asset which is recognised in OCI. Consequently, the tax effect of the same has also been recognised in OCI instead of statement of profit and loss.

4 Retained earnings

Retained earnings as at April 1, 2016 has been adjusted consequent to the above Ind AS transition adjustments

5 Depreciation

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. The Company has further reassessed and realigned the depreciation methodology as per the requirement of IND AS.

6 Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in statement of profit & loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in statement of profit & loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans and tax thereon. The concept of other comprehensive income was not there under previous GAAP.

7 Deferred Tax

Deferred tax have been recognised on the adjustments made on transition to Ind AS.

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Mar 31, 2017

1. Long-Term Borrowings

Notes

1 Rupee loan of RS.75.00 lakhs (Previous Year RS.375.00 lakhs) from others is secured by first pari passu charge on all fixed assets of the company both present and future except specifically charged and Government Land at Kassar / Kadi. The last installment of aforesaid loan is repayable in June, 2017.

2 Rupee Loan of RS.1,687.50 lakhs (Previous Year RS.2,362.50 lakhs) from a Bank 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 10 equal quarterly installments starting from June, 2017.

3 Rupee loan of RS.1,350.00 lakhs (Previous Year RS.1,800.00 lakhs) 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 12 equal quarterly installments starting from June, 2017.

4 Rupee loan of RS.784.49 lakhs (Previous Year RS.1,584.49 lakhs) from a Bank is 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 excluding those exclusively charged to other Banks and second pari passu on current assets of the company both present and future. The aforesaid loan is repayable fully in FY18.

5 Rupee loan of RS.3,355.00 lakhs (Previous Year RS.2,000.00 lakhs) from a Bank and Buyers’/ Suppliers’ credit of RS.2,145.66 lakhs (Previous Year RS.2,228.09 lakhs) {Equivalent to aggregate of USD 27.25 lakhs and Euro 5.33 lakhs (Previous Year Equivalent to aggregate of USD 27.25 lakhs and Euro 5.33 lakhs)} is 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.850.00 lakhs, RS.1,100.00 lakhs, RS.1,450.00 lakhs, RS.1,700.00 lakhs and RS.400.66 lakhs in FY18, FY19, FY20, FY21 and FY22 respectively.

6 Car loan from Banks and others are secured by hypothecation of cars purchased there under are repayable in monthly installment over the period of loan.

*Working Capital Facilities from Banks are secured by:

1 First charge by way of hypothecation of stocks of raw materials, finished goods and stock in process, stores & spares and book debts and ranking pari-passu; and

2 Second and subservient charge by way of Equitable Mortgage on all other assets, both present and future, of the company, both movable and immovable & ranking pari-passu, excluding assets exclusively charged. Charge over land exchange of about 3 acers at Kassar is to be created.

2. Fixed Assets

Note

1. Plant & equipment includes machinery Gross RS.62.29 Lakhs (Previous year RS.62.29 Lakhs) lying with third parties, pending confirmation [Note No. 28.3].

2. Current year depreciation includes impairment of old Plant & Machinery RS.369.78 Lakhs shown as exceptional item in the statement of Profit & Loss.

3. Furniture & Fixtures includes certain expenditure on lease hold premises Gross RS.813.90 Lakhs WDV RS.538.25 Lakhs (Previous year RS.493.34 Lakhs WDV RS.258.32 Lakhs) which are amortised over the useful life of respective assets.

4. Addition to Plant & Machinery includes foreign exchange gain amounting to RS.88.15 Lakhs decapitalised (Previous year RS.31.76 Lakhs capitalised).

3.1 During the financial year 2012-13, a demand of Rs. 925.65 lakhs (including interest of RS.97.41 lakhs) 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.1,481.22 lakhs (including interest of RS.652.98 lakhs) as on 31st March 2017. 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 lakhs. 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.

3.2 Other long-term liabilities include encashment of bank guarantee in earlier years amounting to RS.202.50 lakhs (Previous year RS.202.50 lakhs) 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.

3.3 Exceptional item of RS.406.25 lakhs primarily pertains to impairment of certain plant and machineries.

3.4 Out of RS.11,999.97 lakhs raised through qualified institutions placement of equity shares in December, 2015, the Company has so far utilized RS.1,849.97 lakhs (including issue expenses of RS.307.34 lakhs) for the purpose the fund were so raised and balance RS.10,150.00 lakhs has been temporarily invested mainly in the debt instruments/ funds.

3.5 Dividend proposed to be distributed for equity shareholders @ RS.2.70 per share amounting to RS.1,377.19 lakhs (including Corporate Dividend Tax of RS.232.94 lakhs) is subject to shareholders approval in General Meeting.

3.6 Sales net of trade discounts / returns includes insurance recovered of RS.1064.78.00 lakhs (Previous year RS.959.37lakhs), export benefits of RS.312.43 lakhs (Previous year RS.251.04 lakhs).

3.7 A sum of RS.135.93 lakhs (Previous year RS.115.61 lakhs) towards Corporate Social Responsibility is included under ‘Other Expenses’.

3.8 Research and Development Expenditure on revenue account amounting to RS.191.56 lakhs (Previous year RS.156.24 lakhs) has been charged to statement of profit and loss.

3.9 Trade payables include acceptances of RS.10,204.26 lakhs (Previous year RS.9,021.67 lakhs).

3.10 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.

3.11 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.

3.12 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.

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

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

3.15 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:

* Based on the actuarial valuation done by an actuary appointed during the year.

(b) Amounts recognised as an expense/ (income) and included in the Note Number 25 are as under:

i) ’Salary, Wages, Bonus etc.’ of the statement of Profit and Loss includes RS.223.30 lakhs (Previous year Rs. 224.40 lakhs) towards Earned Leave Encashment and Sick Leave.

ii) ’Contributions to Provident and other Funds’ of the statement of Profit and Loss includes RS.504.78 lakhs (Previous year RS.444.04 lakhs) towards contribution to Provident Fund [including RS.171.11 lakhs (Previous year RS.139.94 lakhs) towards Somany Provident Fund, a multiemployer plan, refer to (c ) below].

iii) ’Contributions to Provident and other Funds’ of the statement of Profit and Loss includes RS.156.61 lakhs (Previous year RS.173.12 lakhs) 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.

3.16 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, 2017 is RS.89.30 lakhs (Previous year RS.89.30 lakhs) 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:

b) The Company’s share in the aggregate amounts of each of the assets, liabilities, income, expense, contingent liabilities and capital commitments as at/for the years ended 31st March, 2017 in the above company, as per its unaudited financial statements is as under:

3.17 Capital work in progress includes machinery under installation and/or in transit, construction/erection material and pre-operative expenses pending allocation/capitalisation. The details of pre-operative expenses are as follows:

3.18 In accounting year ended 31.03.2007, the Company took an office premises on sub-lease for a term of 75 years. The lease has been recognised as an asset at the present value of the minimum lease payment. Minimum lease payment in future at the balance sheet date and their present value are as under:

3.19 Details of Investment made, Loan and Guarantee given covered under section 186(4) of Companies Act, 2013 Investment made is given under respective heads.

3.20 The Company has entered into long term supply agreements (LTA or Agreements) with Associates and three Subsidiaries (refer Note No. 28.29). By the said agreements the Company has right to buy and sell the entire production of tiles / sanitary ware 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

3.21 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 Somany Fine Vitrified Private Limited Somany Sanitaryware Private Limited Somany Excel Vitrified Private Limited

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

1. Joint Venture

SKPL Ceramics Private Limited (Formerly Somany Keraben Private Limited)

2. Key Management Personnel

Mr. Shreekant Somany, Chairman & Managing Director

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

Mrs. Anjana Somany, Whole time Director (Wife of Chairman & Managing Director) (w.e.f. 21/05/2016)

Mr. G.G. Trivedi, CEO

Mr. T.R. Maheshwari, Deputy CEO & CFO

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

3. Relatives of Key Management Personnel

Mrs. Minal Somany (Wife of Managing Director)

4. Associate Company Vintage Tiles Private Limited Commander Vitrified Private Limited Vicon Ceramic Private Limited Acer Granito Private Limited

Sudha Somany Ceramics Private Limited (Formerly Sudha Ceramics Private Limited) (w.e.f. 9th November, 2016)

5. Enterprise over which Company exercise significant influence and with whom transactions have taken place during the year:

H. L. Somany Foundation

6. 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

7. Other related parties with which Company has transactions:

Biba Apparels Private Limted - Private company in which director is a director Ashiana Housing Limited - Public company in which director is a director Shree Cement Limited - Public company in which director is a director

Wolkem India Limited - Public company in which director is a director and holds more than 2% shares alongwith relatives G.L. Sultania & Co. - Firm in which director is proprietor

3.22 The previous year’s figures have been regrouped, rearranged wherever consider necessary.

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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.

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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.

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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.

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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).

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Mar 31, 2011

(Amount in Rs.)

31.03.2011 31.03.2010

1. Estimated amount of contracts remaining to be executed on capital account and not provided for [net of advances] 206,483,680 77,673,352

2. (A) 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. 10,980,253 10,725,245

b) Sales Tax and Purchase Tax demands etc. against which the Company has preferred appeals. 16,476,131 4,582,504

c) Excise/Custom duty and Service Tax demands and show cause notices issued against which the Company/Department has preferred appeals/filed replies. 39,087,188 40,744,718

d) Custom duty, which may arise if obligation for exports is not fulfilled against import of capital under EPCG. - 10,287,165

e) Disputed Income Tax & Wealth Tax Demand (Excluding Penalty if any) 12,265,693 11,378,798

f) Against the imposition of Local Area Development Tax (LADT) levied by Haryana Government, 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 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 accounts up to year 2006-07. Pending, the final Order of the Hon'ble Supreme Court on the above matter, no further provision for the same have been considered necessary at this stage. 31,897,458 25,934,920

(B) Bond executed in favour of Sales Tax/Custom Authorities. 2,500,000 2,500,000

(C) Bond/Guarantee executed on behalf of other body corporate 50,400,000 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 Ltd. (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. 22,426,919 (Previous Year Rs. 21,198,883) and Export Benefits of Rs. 5,529,147 (Previous Year Rs. 5,597,212).

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 Hon'ble High Court of Kolkata. Pending decision, no adjustment has been carried out in accounts.

6. Company has an Investment of Rs. 7,730,000 in the Joint Venture Company (50% - JV Company) Somany Keraben Pvt Ltd. where considerable erosion of net worth is there due to accumulated losses. Considering the future prospects, strategies and long term in nature no provision for dimunition at this stage is considered necessary by the Management. Further, debtors and advance recoverable in cash/kind includes amount due from JV Company amounting to Rs. 9,102,520 and Rs. 687,298 respectively, for which management is confident for full recovery and accordingly the same has been considered good. To expedite the process of recovery, the Company is further negotiating from the JV Company to buy Brand name & assets (including fixed assets).

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.

(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. Nil (Previous Year Rs. 5,285,721) for Gratuity, Rs. 7,063,049 (Previous Year Rs. 6,338,501) for long term Leave Encashment, Rs. 298,429 (Previous Year Rs. 400,265) for other long term benefits.

(II) “Contributions/Provision to and for Provident and other Funds” of Profit and Loss Account includes Rs. 25,897,847 (Previous Year Rs. 19,781,518) (includes Rs. 6,322,103 (Previous Year Rs. 4,520,303) 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.

8. 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.

9. Related Party Transactions:

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 Keraben Private Ltd.

2. Associate M/s Scope Vinimoy Private Ltd.

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

Mr. Abhishek Somany, Joint Managing Director (Son of Chairman and Managing Director) Mr. G. G. Trivedi, Executive Director up to 20/05/09

4. Relatives of Key Management Personnel: Mrs. Anjana Somany (Wife of Chairman and 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 personnel exercise significant influence: M/s Yogi Ceramics Private Ltd.

10. 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, 2011 is Rs. 7,730,000 (Previous Year Rs. 7,730,000) towards share capital of Joint Venture entity.

11. Research & Development expenditure on revenue account amounting to Rs. 2,865,639 (Previous Year Rs. 2,819,655) has been charged to profit and loss account.

12. 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.

13. Balances of certain debtors, loans and advances, creditors and other liabilities are in process of confirmation/reconciliation.

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

15. i) Debtors include due from subsidiaries and joint venture Company amounting to Rs. 1,442,918 (Previous Year Rs. 2,708,587) & Rs. 9,102,520 (Previous Year 8,400,883) 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. Nil (Previous Year Rs. 797,772) & Rs. Nil (Previous Year Rs. Nil) respectively and (b) capital advance Rs. 22,906,223 (Previous Year Rs. 74,033,820)

16. Investment purchased/sold during the year is NIL (Previous Year 200 units of 8.70% PFC 2020 purchased at Rs. 201,621,096 and sold at Rs. 202,485,802)

17. Unsecured Loans repayable within one year are Rs. 5,430,006 (Previous Year Rs. 263,800,000).

18. In terms of the Resolution passed by the shareholders at their meeting held on 30th October, 2010, fully paid Equity Share of Rs. 10/- each of Company has been sub-divided into five fully paid Equity Shares of Rs. 2 each. Further, unissued preference capital of Rs. 100,000,000 has been reclassified into equivalent amount of Authorised equity shares capital and accordingly Authorised Capital of the Company has been modified to that extent.

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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.