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Notes to Accounts of Cera Sanitaryware Ltd.

Mar 31, 2023

Nature and purpose of Other Reserves

(a) Securities Premium

Securities Premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(b) General Reserve

General Reserve is created out of profit after tax earned by the Company by way of transfer from surplus in the statement of profit and loss. The Company can use this Reserve for payment of dividend and issue of fully paid-up shares. As General Reserve is created by transfer of one component of equity to another and is not an item of other comprehensive income, items included in the General Reserve will not be subesquently reclassified to statement of profit and loss.

22.1 Primary Security

Cash Credit facilities from State Bank of India (SBI) are secured by exclusive hypothecation over entire Current Assets of the Company comprising stock of raw materials, work in process, finished goods, stock in trade, stores & spares and receivables, both present and future.

22.2 Rate of interest on various cash credit facilities from State Bank of India chargeable at 0.15% above 6 months MCLR (Present effective rate 8.55% p.a.) and rate of interest on export packing credit faciltiy is chargeable at ARR 2 bps for 90 days.

22.3 Rate of interest on overdraft working capital facility from HDFC Bank Ltd. is 9.20% p.a.

22.4 Quarterly statements of current assets filed by the company with banks are in agreement with the books of account.

33.1 As per Ind AS 19 âEmployee Benefitsâ, the disclosures of employee benefits as defined in the Indian Accounting Standard are given below:

Defined Contribution Plan :

The Company''s Contribution to provident fund and pension fund is considered as Defined Contribution Plan and is recognised as expenses for the year.

Defined Benefit Plan :

The Company operates a Defined Benefit Gratuity plan with approved Gratuity Fund and contributions are made to a separately administered approved Gratuity Fund. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation for leave encashment is recognized as expense for the year.

The Methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.

Funding arrangements and funding policy :

Gratuity liability is funded whereas leave Benefits Liability is not funded. There are no minimum funding requirements for Leave benefits plans in India and there is no compulsion on the part of the Company to fully pre fund the liability. The Company has purchased an insurance policy to partly provide for payment of gratuity to the employees. The trustees of the plan also make investments in Central / State Govt. securities, high quality Corporate bonds, special deposit scheme etc., as per rules and regulations. Every year, the actuary carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company''s policy for plan assets management.

Note - 40 : FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Overview :

The Company''s Risk Management framework encompasses practices relating to the identification, analysis, evaluation, treatment, mitigation and monitoring of the strategic, external and operational controls risks to achieving the Company''s business objectives. It seeks to minimize the adverse impact of these risks, thus enabling the Company to leverage market opportunities effectively and enhance its long-term competitive advantage. The focus of risk management is to assess risks and deploy mitigation measures.

The Company''s activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to the business operations. The Company''s principal financial liabilities comprise of trade and other payables. The Company''s senior management''s focus is to foresee the unpredictability and minimize potential adverse effects on the Company''s financial performance. The Company''s overall risk management procedures to minimize the potential adverse effects of financial market on the Company''s performance are outlined hereunder:

The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.

The Company''s risk management is carried out by the management in consultation with the Board of Directors and the Risk Management Committee. They provide principles for overall risk management, as well as policies covering specific risk areas.

The note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit Risk :

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and from its financial activities including deposits with banks and other financial instruments. The Company establishes an impairment allowance based on Expected Credit Loss model that represents its estimate of incurred losses in respect of trade and other receivables, advances and investments.

(i) Trade Receivables :

The Company extends credits to customers in normal course of the business. The Company considers the factors such as credit track record in the market of each customer and past dealings for extension of credit to the customers. The Company monitors the payment track record of each customer and outstanding customer receivables are regularly monitored. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located at several jurisdictions and industries and operate in large independent markets. The Company also takes advances and security deposits from customers which mitigate the credit risk to an extent.

The average credit period taken on sales of goods is 30 to 60 days. Generally, no interest has been charged on the receivables. Allowances against doubtful debts are recognised against trade receivables based on estimated irrecoverable amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty''s current financial position.

Before accepting any new customer, the Company uses an internal credit system to assess the potential customer''s credit quality and defines credit limit of customer. Limits attributed to customers are reviewed periodically. There are no customers who represent more than 5 per cent of total net revenue from operations.

The Company generally does not hold any collateral or other credit enhancements over any of its trade receivables excepting a small amount in the nature of security deposits from its dealers, nor does it have a legal right of offset against any amounts owed by the Company to the counterparty.

Expected Credit Loss (ECL) :

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for internal and external information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as per the Company''s provision matrix.

(ii) Cash and cash equivalents and short-term investments :

The Company considers factors such as track record, size of institution, market reputation and service standard to select the banks with which deposits are maintained. The Company does not maintain significant deposit balances other than those required for its day to day operations. Credit risk on cash and cash equivalents is limited as these are generally held or invested in deposits with banks and financial institutions with good credit ratings.

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.

The Company''s objective is to maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company relies on a mix of borrowings, capital and excess operating cash flows to meet its needs for funds. The current committed lines of credit are sufficient to meet its short to medium term expansion needs. The Company monitors rolling forecasts of its liquidity requirements to ensure that it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities so that it does not breach borrowing limits.

The table below provides undiscounted cash flows towards non-derivative financial assets / (liabilities) into relevant maturity based on the remaining period at the Balance Sheet date to the contractual maturity date and where applicable, their effective interest rates.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks : foreign currency risk, interest risk and other price risk such as commodity risk.

(i) Foreign Currency Risk :

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates and arises where transactions are done in foreign currencies. It arises mainly where receivables and payables exist due to transactions entered in foreign currencies. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows approved policy parameters utilizing forward foreign exchange contracts whenever felt necessary. The Company does not enter into financial instrument transactions for trading or speculative purpose.

The Company transacts business primarily in Indian Rupees, USD, Euro and GBP. The Company has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk. Certain transactions of the Company act as a natural hedge as a portion of both assets and liabilities are denominated in similar foreign currencies. For the remaining exposure to foreign exchange risk, the Company adopts a policy of selective hedging based on risk perception of the management.

This is mainly attributable to the exposure outstanding on foreign currency receivables and payables in the Company at the end of each reporting period.

(ii) Interest Rate Risk :

The Company''s exposure to the risk of changes in market interest rates relates primarily to long term debts having floating rate of interest. Its objective in managing its interest rate risk is to ensure that it always maintains sufficient headroom to cover interest payment from anticipated cashflows which are regularly reviewed by the Board. However, the risk is very low due to negligible borrowings by the Company.

The Company''s non-current borrowings from banks are Nil as at 31^st March, 2023 and 31^st March, 2022 respectively. Other non-current financial liabilities have fixed rate of interest where the risk of changes in the interest rates is almost nil. As a result, the sensitivity affecting the profit before tax due to the Company''s exposure to the risk of changes in market interest rates is almost nil.

(iii) Commodity Risk :

The Company is exposed to the movement in the price of key raw materials and other traded goods in the domestic and international markets. The Company has in place policies to manage exposure to fluctuation in prices of key raw materials used in operations. The Company enters into contracts for procurement of raw materials and traded goods, most of the transactions are short term fixed price contracts and a few transactions are long term fixed price contracts.

Capital Management :

The Company manages its capital to be able to continue as a going concern while maximising the returns to shareholders through optimisation of the debt and equity balances. The capital structure consists of debt which includes the borrowings as disclosed in Note No. 22, cash and cash equivalents and current investments and equity attributable to equity holders of the Company, comprising issued share capital, reserves and retained earnings as disclosed in the Statement of Changes in Equity. For the purpose of calculating gearing ratio, debt is defined as non current and current borrowings (excluding derivatives). Equity includes all capital and reserves of the Company attributable to equity holders of the Company. The Company is not subject to externally imposed capital requirements. The Board reviews the capital structure and cost of capital on an annual basis but has not set specific targets for gearing ratios. The risks associated with each class of capital are also considered as part of the risk reviews presented to the Audit Committee and the Board of Directors.

42.1 All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is insignificant to the fair value measurements as a whole.

Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 : valuation techniques for which the lowest level inputs that has a significant effect on the fair value measurement are observable, either directly or indirectly.

Level 3 : valuation techniques for which the lowest level input which has a significant effect on fair value measurement is not based

on observable market data.

There have been no transfers between Level 2 and Level 3 during the period.

42.2 The management assessed that fair value of short term financial assets and liabilities significantly approximate their carrying amounts largely due to the short term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amounts at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

42.3 The Company determines fair values of financial assets or liabilities by discounting the contractual cash inflows / outflows using prevailing interest rates of financial instruments with similar terms. The initial measurement of financial assets and financial liabilities is at fair value.

42.4 The fair value of investments in mutual funds is determined using net assets value of the funds. Further, the subsequent measurements of all assets and liabilities (other than investments in mutual funds) is at amortised cost, using effective interest rate method.

42.5 The following methods and assumptions were used to estimate the fair values :

- The fair value of the Company''s interest bearing borrowings are determined using discount rate that reflects the entity''s discount rate at the end of the reporting period. The own non-performance risk as at the reporting period is assessed to be insignificant.

- The fair value of unquoted instruments and other financial assets and liabilities is estimated by discounting future cash flows using rates currently applicable for debt on similar terms, credit risk and remaining maturities.

Note - 45. COMMITMENTS AND CONTINGENCIES (a) Leases The Company has adopted Ind AS 116, effective from annual reporting period beginning 1^st April, 2019 and applied the Standard to its leases, using the modified restrospective method, with the cumulative effect of initially applying the Standard, recognised on the date of initial application (1^st April, 2019). (i) Changes in the carrying value of right-of-use assets : ('' in lakhs)
Particulars	Category of Right-of-use asset
	Land	Buildings
Balance as at 1^st April, 2021	8.66	1,281.68
Additions during the year	-	1,028.51
Termination during the year	-	(110.13)
Depreciation	(0.60)	(670.51)
Remeasurement of lease liability due to lease modifications	-	(18.25)
Balance as at 31^st March, 2022	8.06	1,511.30
Additions during the year	-	1,727.76
Termination during the year	-	(85.31)
Depreciation	(0.59)	(693.09)
Balance as at 31^st March, 2023	7.47	2,460.66

Note - 47. NOTE ON CORPORATE SOCIAL RESPONSIBILITY

In accordance with the provisions of Section 135 of the Companies Act, 2013, Schedule VII and Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms of the provisions of the said Act, the Company was required to spend '' 298.36 lakhs (previous year '' 289.56 Lakhs) towards CSR activities during the year ended 31^st March, 2023. The Company has spent following amounts towards CSR activities for the benefit of general public and in the neighbourhood of the manufacturing facilities of the Company.

Note - 49. DEFICIT DUE TO SURRENDER OF EXEMPTION GRANTED TO PF TRUST

1 The Company was granted Exemption for certain employees under Para 27 of the Employees'' Provident Fund Scheme,1952. (EPF Scheme, 1952).

2 Because of drastic reduction in rate of return on investments as compared to the rate declared by the Government for employees Provident Fund in last 3 to 4 years, the Company had to make additional Contribution / provision for the deficit sustained, as a legal or constructive obligation. Furthur, credit risk, interest risk, default risk also increased in the recent past in Bond market.

3 The Company had therefore submitted application dated 14^th February, 2022 for surrender of exemption granted w.e.f. 1^st March, 2022 pursuant to resolution passed by the Board of Directors of the Company on 26^th October, 2021, followed by resolution passed by the Board of Trustees of Madhusudan Provident Fund Institution (MPFI) on 28^th November, 2021.

4 By an Order dated 9^th March, 2022, the Regional Provident Fund Commissioner withdrew the exemption granted under Para 27 of the Employees'' Provident Scheme (EPF Scheme) with effect from 1^st March, 2022. The Trust was also required to transfer the Corpus in the name of Central Board of Trustees, EPFO and any loss incurred by MPFI was borne by the Company as per the Order of RPFC. The Company was also directed to comply as an un-exempted establishment w.e.f. 1^st March, 2022. In this process, the Company incurred loss of '' 328.47 lakhs on liquidation of the securities comprised in the Corpus of MPFI which is recognised in Note No. 36 in F.Y. 2021-22.

Note - 50. OPERATING SEGMENTS

The Company operates mainly in manufacturing of Building Products and all other activities are incidental thereto, which have similar risk and

return. Accordingly, there are no separate reportable Segments as required under IND AS 108 âOperating Segment". The Revenue from

transactions with the single external customer amounting to 10% or more of the Company''s Revenue is Nil.

Note - 51.

In the opinion of the Management, current assets have a value on realisation in the ordinary course of business at least equal to the amount

at which they are stated except where indicated otherwise.

Note - 53. ADDITIONAL REGULATORY INFORMATION

The following additional disclosures are made pursuant to notification of Ministry of Corporate Affairs dated 24^th March, 2021.

1. Title deeds of Immovable Properties

The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the company itself.

2. Revaluation of Property, Plant & Equipment

The company has not carried out revaluation of items of Property, Plant & Equipment during the year and accordingly the disclosure as to whether the revaluation is based on the valuation by a registered valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017 is not applicable.

3. Loans / Advances in the nature of loans to Promoters, Directors, KMPâs and Related Parties

The Company has not made any loans or advances in the nature of loans to Promoters, Directors, KMP''s and the related parties which are outstanding as at the end of the current year and previous year.

4. Details of Benami Property held

No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

5. Wilful Defaulter

None of the banks, financial institutions or other lenders from whom the company has borrowed funds has declared the company as a wilful defaulter at any time during the current year or in previous year.

6. Relationship with Struck off Companies

The company has not undertaken any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 during the current year or in previous year.

7. Registration of charges or satisfaction with Registrar of Companies (ROC)

All the charges or satisfaction of which is required to be registered with Registrar of Companies(ROC) have been duly registered within the statutory time limit provided under the provisions of Companies Act, 2013 and rules made thereunder.

8. Compliance with number of layers of companies

The company does not have investment in subsidiary companies and accordingly the disclosure as to whether the company has complied with the number of layers of companies prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017 is not applicable.

9. Compliance with Approved Scheme of Arrangements

No scheme of compromise or arrangement has been proposed between the company & its members or the company & its creditors under section 230 of the Companies Act, 2013 (âThe Actâ) and accordingly the disclosure as to whether the scheme of compromise or arrangement has been approved or not by the competent authority in terms of provisions of sections 230 to 237 of the act is not applicable.

10. Borrowing from Banks and Financial Institutions for Specific Purpose

All the borrowings from banks and financial institutions have been used for the specific purposes for which they have been obtained.

11. Utilisation of Borrowed funds and Share Premium

a) The company has not advanced or loaned or invested funds to any other persons or entities, including foreign entities (Intermediaries) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

b) The company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding, whether recorded in writing or otherwise, that the company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

12. Borrowings on the basis of security of Current Assets

The Company has working capital facilities from banks on the basis of security of current assets & are submitting periodically Financial Information as per the terms & conditions of sanction letters. There are no material discrepancies in the amount of current assets between quarterly Financial Information and books of accounts.

13. There were no transactions which have not been recorded in the books of account, have been surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 (43 of 1961) during the year.

Note - 54.

Consequent to the introduction of Goods and Service Tax (GST) with effect from 1^st July, 2017, Central Excise, Value Added Tax (VAT) etc.

have been subsumed into GST. In accordance with relevant Indian Accounting Standard and Schedule III to the Companies Act, 2013, unlike

Excise Duties, levies like GST, VAT etc. are not part of Revenue from Operations. Revenue for the year ended 31^st March, 2023 and

31^st March, 2022 are net of GST. The following additional information is being provided to facilitate such understanding.

Note - 55.

Previous period figures have been regrouped, re-classified and re-arranged wherever considered necessary to confirm to the current year''s classification.

Mar 31, 2022

a. Previous period''s figures have been re-grouped / re-classified wherever required to current year''s classification.

b. Items of Property, Plant & Equipment situated at 9, GIDC Industrial Estate & Residential Colony - Kadi (Survey No. 417/2 & 420/1,2) are mortgaged (EM) / hypothecated and fixed assets at Kadoli and Kalyanpur Windmills are hypothecated with State Bank of India against working capital facilities availed. (Refer Note No. 22.1)

c. Cost of Buildings includes ownership offices in co-operative societies for '' 2,179.55 lakhs (Previous year '' 2,179.55 lakhs) including 40 shares of '' 50/- each and 10 shares of '' 50/- each in respective Co-operative societies.

d. The amount of Contractual Commitments (Net of Advances) for the acquisition of Property, Plant & Equipment is '' 170.82 lakhs as on 31^st March, 2022 & '' 94.37 lakhs as on 31^st March, 2021. [Refer Note No. 45(b)]

16.1 Pursuant to the Resolution passed at the Board Meeting held on 5^th August, 2021 for consideration of the proposal and in principle approval for divestment of the Company''s entire stake in Anjani Tiles Limited, a subsidiary company, a Memorandum of Understanding (MOU) was executed on 17^th August, 2021 by and amongst Cera Sanitaryware Limited (Cera), Anjani Vishnu Holdings Ltd (AVHL) (Joint Venture Partner and Acquirer Company) and Anjani Tiles Limited (ATL) (Subsidiary Company) for the transfer / divestment of entire stake in Anjani Tiles Limited, consisting of 1,02,00,000 Equity shares of '' 10/- each and 2,42,30,000 1% Cumulative Redeemable Preference shares of '' 10/- each on a fully diluted basis, for a total consideration of '' 2,869.20 Lakhs.

16.2 The Company, AVHL and ATL also entered in to Share Purchase Agreement (SPA) dated 26^th August, 2021 pursuant to which the Company agreed to sell all the Equity and Preference Shares held by it in ATL to AVHL.

16.3 Total consideration as referred above, will be received by the Company in one or more tranches, beginning from 30^th September, 2021 and completing on 31^st March, 2023 through an escrow mechanism and as per the Payment Schedule set out in the MOU. Accordingly, the first tranche of '' 643.00 Lakhs has been received on 28^th September, 2021 from the Acquirer Company and 64,30,000 Preference Shares of ATL have been transferred (off market) to AVHL on 29^th September, 2021.

16.4 Further, pursuant to the MOU and SPA, the Share Escrow Agreement was executed by the Company, AVHL and ATL with Federal Bank Ltd. (Escrow Agent) jointly on 23^rd November, 2021. Both Cera and AVHL have transferred their respective entire Equity shareholding and their respective balance Preference shareholding to the Escrow Account in January, 2022 with lien marked in favour of the Escrow Agent.

16.5 Company''s shareholdings in Equity and Preference shares in ATL have been presented as Non-current Assets classified as Held for Sale as on 31^st March, 2022 as per Indian Accounting Standard - 105 - âNon-current Assets Held for Sale and Discontinued Operationsâ, measured at the lower of its carrying amount and fair value less costs to sell in respect of Equity shares and at fair value in respect of Preference shares as at 31^st March, 2022. The impairment loss of '' 573.80 Lakhs on Equity Shares (Preference shares to be transferred at fair value which is equivalent to carrying amount) due to above arrangements has been recognised in the Statement of Profit and Loss as Exceptional Item.

17.2 Terms / Rights attached to Equity Share :

The Company has only one class of Equity Shares having a par value of '' 5/- per share. Each holder of Equity is entitled to one vote per share and each equity share carries an equal right to dividend. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

22.1 (a) Primary Security

Cash Credit facilities from State Bank of India (SBI) are secured by exclusive hypothecation over entire Current Assets of the Company.

(b) Collateral Security

(i) Hypothecation of entire Fixed Assets including Plant and Machinery situated at Plot no. 9 GIDC, Industrial Estate, Kadi and windmills located at Village Kadoli, Dist: Kutch and at Kalyanpur, Dist: Jamnagar.

(ii) Equitable mortgage on land and buildings of Residential Colony at Kadi and factory land and buildings situated at Kadi factory.

(c) As per the sanction letter of SBI dated 28^th January, 2022, the competent authority of the Bank has approved the release of above collateral securities if ECR does not fall below âAAâ and the Company submitting negative Lien and Free Access Letter to the Bank in respect of factory land and buildings situated at Kadi factory. Accordingly, the Mortgage Release Deed has been executed by SBI on 29^th April, 2022. Original documents of title of above properties will be handed over by the Bank in near future.

22.2 Rate of interest on various cash credit facilities from State Bank of India chargeable at 0.15% above 6 months MCLR (Present effective rate 7.10 % p.a.) and rate of interest on export packing credit faciltiy is chargeable at ARR 2 bps for 120 days.

22.3 Rate of interest on overdraft working capital facility from HDFC Bank Ltd is 6.95% p.a.

22.4 Monthly statements of current assets filed by the company with banks are in agreement with the books of account.

Funding arrangements and funding policy :

Gratuity liability is funded whereas leave Benefits Liability is not funded. There are no minimum funding requirements for Leave benefits plans in India and there is no compulsion on the part of the Company to fully pre fund the liability. The Company has purchased an insurance policy to partly provide for payment of gratuity to the employees. The trustees of the plan also make investments in Central / State Govt. securities, high quality Corporate bonds , special deposit scheme etc., as per rules and regulations. Every year , the actuary carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

39.6 Sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31^st March, 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31^st March, 2021: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

Overview:

The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.

The note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit Risk:

(i) Trade Receivables:

(ii) Cash and cash equivalents and short-term investments:

(B) Liquidity Risk:

The table below provides undiscounted cash flows towards non-derivative financial assets/ (liabilities) into relevant maturity based on the remaining period at the Balance Sheet date to the contractual maturity date and where applicable, their effective interest rates.

(i) Foreign Currency Risk:

This is mainly attributable to the exposure outstanding on foreign currency receivables and payables in the Company at the end of each reporting period.

(ii) Interest Rate Risk:

The Company''s non-current borrowings from banks are Nil as at 31^st March, 2022 and 31^st March, 2021 respectively. Other non-current financial liabilities have fixed rate of interest where the risk of changes in the interest rates is almost nil. As a result, the sensitivity affecting the profit before tax due to the Company''s exposure to the risk of changes in market interest rates is almost nil.

(iii) Commodity Risk:

Capital Management:

The Company manages its capital to be able to continue as a going concern while maximising the returns to shareholders through optimisation of the debt and equity balances. The capital structure consists of debt which includes the borrowings as disclosed in Note 22, cash and cash equivalents and current investments and equity attributable to equity holders of the Company, comprising issued share capital, reserves and retained earnings as disclosed in the Statement of Changes in Equity. For the purpose of calculating gearing ratio, debt is defined as non current and current borrowings (excluding derivatives). Equity includes all capital and reserves of the Company attributable to equity holders of the Company. The Company is not subject to externally imposed capital requirements. The Board reviews the capital structure and cost of capital on an annual basis but has not set specific targets for gearing ratios. The risks associated with each class of capital are also considered as part of the risk reviews presented to the Audit Committee and the Board of Directors.

Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 : valuation techniques for which the lowest level inputs that has a significant effect on the fair value measurement are observable, either directly or indirectly.

Level 3 : valuation techniques for which the lowest level input which has a significant effect on fair value measurement is not based

on observable market data.

There have been no transfers between Level 2 and Level 3 during the period.

42.5 The following methods and assumptions were used to estimate the fair values:

Note - 49. DEFICIT DUE TO SURRENDER OF EXEMPTION GRANTED TO PF TRUST

1 The Company was granted Exemption for certain employees under Para 27 of the Employees'' Provident Fund Scheme,1952. (EPF Scheme, 1952).

Note - 50. OPERATING SEGMENTS

The Company operates mainly in manufacturing of Building Products and all other activities are incidental thereto, which have similar risk and

return. Accordingly, there are no separate reportable Segments as required under IND AS 108 âOperating Segment". The Revenue from

transactions with the single external customer amounting to 10% or more of the Company''s Revenue is Nil.

Note - 51

In the opinion of the Management, current assets have a value on realisation in the ordinary course of business at least equal to the amount

at which they are stated except where indicated otherwise.

Note - 54.

Previous period figures have been regrouped, re-classified and re-arranged wherever considered necessary to confirm to the current year''s classification.

Mar 31, 2019

1. Corporate Information

Cera Sanitaryware Limited (the âCompanyâ) is a public limited company domiciled in India having its registered office situated at 9, GIDC Industrial Estate, Kadi - 382715, Dist. Mehsana, Gujarat, India. The Company was incorporated on 17^th July,1998, under the provisions of the Companies Act applicable in India and its equity shares are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited. The Company is engaged in the business of manufacturing, selling and trading of building products and is having non-conventional wind & solar power for captive use in the State of Gujarat.

2. Basis of Preparation

2.1 Statement of Compliance with Ind AS.

The Standalone Financial Statements of the Company are prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 and the subsequent amendments from time to time, notified under Section 133 of the Companies Act, 2013 (the âActâ) and other relevant provisions of the Act.

These Standalone Financial Statements of the Company as at and for the year ended 31^st March, 2019 (including comparatives) were approved and authorised for issue by the Board of Directors of the Company on 14^th May, 2019.

2.2 Functional and Presentation Currency

These Standalone Financial Statements are presented in Indian Rupees (INR), which is also a functional currency. All the values have been rounded off to the nearest lakh, unless otherwise indicated.

2.3 Basis of Measurement

These Standalone Financial Statements have been prepared on a historical cost convention except certain financial assets and liabilities have been measured at fair value as under:-

Notes:

a. Previous periodâs figures have been re-grouped / re-classified wherever required to current yearâs classification.

b. Items of Property, Plant & Equipment situated at 9, GIDC Industrial Estate & Residential Colony - Kadi are mortgaged (EM) and fixed assets at Kadoli and Kalyanpur Windmills are hypothecated with State Bank of India against working facilities availed.

c. Cost of Buildings includes ownership offices in co-operative societies for Rs. 2,179.55 Lakhs (Previous year Rs. 343.35 Lakhs) including 40 shares of Rs. 50/- each and 10 shares of Rs. 50/- each in respective co-operative societies.

d. Capital work-in-progress mainly comprises of costs incurred on Plant & Equipments, Buildings and Furniture & Fixtures which are currently under installation / construction.

e. The amount of Contractual Commitments (Net of Advances) for the acquisition of Property, Plant & Equipment is Rs. 2,192.33 Lakhs as on 31.03.2019 and Rs. 2,642.35 Lakhs as on 31.03.2018.

Notes :

3.1 Trade Receivables are hypothecated to secure working capital facilities from State Bank of India.

3.2 No Trade or other receivables are due from directors or other officers of the Company either severally or jointly with any other person.

3.3 No Trade or other receivables are due from firms or private companies in which any director is a partner, director or a member.

3.4 Trade Receivables are non-interest bearing and are generally on credit terms of 30 to 60 days.

3.5 Refer to Note No. 38 for dues from an Associate. (Unsecured, considered good)

4.1 Terms / Rights attached to Equity Share :

The Company has only one class of Equity Shares having a par value of Rs. 5/- per share. Each holder of Equity is entitled to one vote per share and each equity share carries an equal right to dividend. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

4.2 There are no shares issued pursuant to contract without payment being received in cash, allotted as fully paid up by way of bonus shares and bought back during the last 5 years.

Nature and purpose of Other Reserves

a) Securities Premium

Securities Premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act.

b) General Reserve

General Reserve is created out of profits earned by the Company by way of transfer from surplus in the statement of profit and loss. The Company can use this reserve for payment of dividend and issue of statement of profit and loss. The Company can use this reserve for payment of dividend and issue of fully paid-up shares. As General Reserve is created by transfer of one component of equity to another and is not an item of other comprehensive income, items included in the General Reserve will not be subesquently reclassified to statement of profit and loss.

4.3 The impairment loss recognised on receivables arising from the Companyâs contracts with customers is disclosed in Note No. 11.

4.4 The opening and closing balances of receivables and contract liabilities from contracts with customers are disclosed in Notes No. 11 and 24 respectively. Revenue recognised from opening balance of contract liability is disclosed in Note No. 24.1.

4.5 No amount of the transaction price allocated to the performance obligations are unsatisfied as at the end of the reporting period.

4.6 The impact of application of Ind AS 115 âRevenue from Contracts with Customersâ on the financial statements of the Company for the reporting period is insignificant.

Note :

5.1 As per Ind AS 19 âEmployee Benefitsâ, the disclosures of employee benefits as defined in the Indian Accounting Standard are given below:

Defined Contribution Plan :

The Companyâs Contribution to provident fund and pension fund is considered as Defined Contribution Plan and is recognised as expenses for the year.

Defined Benefit Plan :

The Company operates a Defined Benefit Gratuity plan with approved Gratuity Fund and contributions are made to a separately administered approved Gratuity Fund.The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separtely to build up the final obligation.

The obligation for leave encashment is recognized as expense for the year.

Funding arrangements and funding policy :

Gratuity liability is funded whereas leave Benefits Liability is not funded. There are no minimum funding requirements for Leave benefits plans in India and there is no compulsion on the part of the Company to fully pre fund the liability. The Company has purchased an insurance policy to partly provide for payment of gratuity to the employees. The trustees of the plan also make investments in Central / State Govt. securities, high quality Corporate bonds, special deposit scheme, mutual funds etc., as per rules and regulations. Every year, the actuary carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

5.2 Sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31^st March, 2019, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31^st March, 2018: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

Note - 6 : FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Overview:

The Companyâs Risk Management framework encompasses practices relating to the identification, analysis, evaluation, treatment, mitigation and monitoring of the strategic, external and operational controls risks to achieving the Companyâs business objectives. It seeks to minimize the adverse impact of these risks, thus enabling the Company to leverage market opportunities effectively and enhance its long-term competitive advantage. The focus of risk management is to assess risks and deploy mitigation measures.

The Companyâs activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to the business operations. The Companyâs principal financial liabilities comprise of trade and other payables. The Companyâs senior managementâs focus is to foresee the unpredictability and minimize potential adverse effects on the Companyâs financial performance. The Companyâs overall risk management procedures to minimise the potential adverse effects of financial market on the Companyâs performance are outlined hereunder:

The Companyâs Board of Directors have overall responsibility for the establishment and oversight of the Companyâs risk management framework.

The Companyâs risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.

The note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit Risk:

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Companyâs receivables from customers and from its financial activities including deposits with banks and other financial instruments. The Company establishes an impairment allowance based on Expected Credit Loss model that represents its estimate of incurred losses in respect of trade and other receivables.

(i) Trade Receivables:

The Company extends credits to customers in normal course of the business. The Company considers the factors such as credit track record in the market of each customer and past dealings for extension of credit to the customers. The Company monitors the payment track record of each customer and outstanding customer receivables are regularly monitored. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located at several jurisdiction and industries and operate in large independent markets. The Company also takes advances and security deposits from customers which mitigate the credit risk to an extent.

Before accepting any new customer, the Company uses an internal credit system to assess the potential customerâs credit quality and defines credit limit of customer. Limits attributed to customers are reviewed periodically. There are no customers who represent more than 5 per cent of total net revenue from operations.

The Company does not hold any collateral or other credit enhancements over any of its trade receivables nor does it have a legal right of offset against any amounts owed by the Company to the counterparty.

Expected Credit Loss (ECL):

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows:

(ii) Cash and cash equivalents and Short-term investments:

(B) Liquidity Risk:

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Companyâs approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.

The Companyâs objective is to maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company relies on a mix of borrowings, capital and excess operating cash flows to meet its needs for funds. The current committed lines of credit are sufficient to meet its short to medium term expansion needs. The Company monitors rolling forecasts of its liquidity requirements to ensure that it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities so that it does not breach borrowing limits.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks: foreign currency risk, interest risk and other price risk such as commodity risk.

(i) Foreign Currency Risk:

(ii) Interest Rate Risk:

The Companyâs exposure to the risk of changes in market interest rates relates primarily to long term debts having floating rate of interest. Its objective in managing its interest rate risk is to ensure that it always maintains sufficient headroom to cover interest payment from anticipated cashflows which are regularly reviewed by the Board. However, the risk is very low due to negligible borrowings by the Company.

The Companyâs non-current borrowings from banks are Nil as at 31^st March, 2019 and 31^st March, 2018 respectively. Other non-current financial liabilities have fixed rate of interest where the risk of changes in the interest rates is almost Nil. As a result, the sensitivity affecting the profit before tax due to the Companyâs exposure to the risk of changes in market interest rates is almost Nil.

(iii) Commodity Risk:

Capital Management:

The Company manages its capital to be able to continue as a going concern while maximising the returns to shareholders through optimisation of the debt and equity balances. The capital structure consists of debt which includes the borrowings as disclosed in Note 21, cash and cash equivalents and current investments and equity attributable to equity holders of the Company, comprising issued share capital, reserves and retained earnings as disclosed in the Statement of Changes in Equity. For the purpose of calculating gearing ratio, debt is defined as non current and current borrowings (excluding derivatives). Equity includes all capital and reserves of the Company attributable to equity holders of the Company. The Company is not subject to externally imposed capital requirements. The Board reviews the capital structure and cost of capital on an annual basis but has not set specific targets for gearing ratios. The risks associated with each class of capital are also considered as part of the risk reviews presented to the Audit Committee and the Board of Directors.

The management assessed that fair value of short-term financial assets and liabilities significantly approximate their carrying amounts largely due to the short term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The Company determines fair values of financial assets or liabilities by discounting the contractual cash inflows / outflows using prevailing interest rates of financial instruments with similar terms. The initial measurement of financial assets and financial liabilities is at fair value.

The fair value of investments in mutual funds is determined using net assets value of the funds. Further, the subsequent measurements of all assets and liabilities (other than investments in mutual funds) is at amortised cost, using effective interest rate method.

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

- The fair value of the Companyâs interest bearing borrowings are determined using discount rate that reflects the entityâs discount rate at the end of the reporting period. The own non-performance risk as at the reporting period is assessed to be insignificant.

7.1 Fair Value Hierarchy

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is insignificant to the fair value measurements as a whole.

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

Level 2 : Valuation techniques for which the lowest level inputs that has a significant effect on the fair value measurement are observable, either directly or indirectly.

Level 3 : Valuation techniques for which the lowest level input which has a significant effect on fair value measurement is not based on observable market data.

Note - 8. COMMITMENTS AND CONTINGENCIES

(a) Leases

Operating lease commitments

The Company has obtained some premises on operating leases. Few of the leases for premises are long term and are non - cancellable. Further, there is an escalation clause in the lease agreement.

Lease payments of Rs. 840.83 lakhs (previous year - Rs. 749.10 lakhs) have been recognized as an expense in the Statement of Profit and Loss during the year.

*The company has paid amounts towards its Capital Contribution.

** The company has given loans for following purposes:

(a) To Race Polymer Arts LLP towards Advance Capital Contribution.

(b) To Anjani Tiles Limited towards Working Capital requirement in F.Y. 2017-18

Note - 9. CORPORATE SOCIAL RESPONSIBILITY

In accordance with the provisions of Section 135 of the Companies Act, 2013, Schedule VII and Companies (Corporate Social Responsibility Policy) Rules, 2014 the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms of the provisions of the said Act, the Company was required to spend Rs. 302.07 lakhs (previous year Rs. 269.44 Lakhs) towards CSR activities during the year ended 31^st March, 2019. The Company has incurred following expenditure towards CSR activities for the benefit of general public and in the neighbourhood of the manufacturing facilities of the Company.

Note - 10. OPERATING SEGMENTS

The Company operates mainly in manufacturing of Building Products and all other activities are incidental thereto, which have similar risk and return. Accordingly, there are no separate reportable Segments as required under Ind AS 108 âOperating Segmentâ.

The Revenue from transactions with the single external customer amounting to 10% or more of the Companyâs Revenue is Nil.

Note - 11.

Balances of certain debtors, creditors, loans & advances and deposits are subject to confirmation. Due adjustments will be made on receipt thereof, if necessary.

Note - 12.

In the opinion of the Management, current assets have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated except where indicated otherwise.

Note - 13.

Consequent to the introduction of Goods and Service Tax (GST) with effect from 1^st July, 2017, Central Excise, Value Added Tax (VAT) etc. have been subsumed into GST. In accordance with relevant Indian Accounting Standard and Schedule III to the Companies Act, 2013, unlike Excise Duties, levies like GST, VAT etc. are not part of Revenue from Operations. Revenue for the year ended 31^st March, 2019 and 31^st March, 2018 are net of GST. The following additional information is being provided to facilitate such understanding.

Note - 14.

Previous period figures have been regrouped, re-classified and re-arranged wherever considered necessary to confirm to the current yearâs classification.

Mar 31, 2018

1. Corporate Information

Cera Sanitaryware Limited (the âCompanyâ) is a public limited company domiciled In India having its registered office situated at 9. GIDC

Industrial Estate, Kadi -382715, Dist. Mehsana, Gujarat, India. The Company was incorporated on 1 7^th July,1998, under the provisions of the Companies Act applicable in India and its equity shares are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited. The Company is engaged in the business of manufacturing, selling and trading of building products and is having non-conventional wind & solar power for captive use in the State of Gujarat.

2. Basis of Preparation

2.1 Statement of Com pliance with Ind AS.

The Standalone Financial Statements of the Company are prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 notified under Section 133 of the Companies Act, 2013 (the âActâ) and other relevant provisions of the Act.

The Company has adopted all the relevant Ind AS and the adoption was carried out in accordance with Ind AS 101, âFirst Time Adoption of Indian Accounting Standardsâ. Accordingly, these Standalone Financial Statements for the year ended 31^st March, 2018 are the Companyâs First Ind AS Standalone Financial Statements.

For all periods up to and including the year ended 31^st March, 2017, the Company prepared its Standalone Financial Statements in accordance with Indian Accounting Principles generally accepted in India including Accounting Standards notified under Section 133of the Act read with paragraph 7 of the Companies (Accounts) Rules, 201 4 (Indian GAAP). Reconciliation and description of the effect of the transition have been summarised in Note No. 42.

The transition to Ind AS has resulted in changes in the presentation of the Financial Statements, disclosures in the notes thereto and accounting policies and principles.

These Standalone Financial Statements of the Company as at and for the year ended 31^st March, 2018 (including comparatives) were approved and authorised for issue by the Board of Directors of the Company on 3^rd May, 201 8.

2.2 Functional and Presentation Currency

These Standalone Financial Statements are presented in Indian Rupees (INR), which is also a functional currency. All the values have been rounded off to the nearest lakh, unless otherwise indicated.

2.3 Basis of Measurement

These Standalone Financial Statements have been prepared on a historical cost convention except where certain financial assets and liabilities have been measured at fair value as under:-

Notes:

a. Previous periodâs figures have been re-grouped /re-classified wherever required to current yearâs classification.

b. Items of Property, Plant & Equipment situated at9, GIDC Industrial Estate & Residential Colony - Kadi are mortgaged and fixed assets at Kadoli, Lamba, Patelka and Kalyanpur Windmills are hypothecated with State Bank of India against term loan availed.

c. Property at Acropolis Mall included in Land & Buildings was mortgaged with Kotak Mahindra Bank Ltd against term loan availed.

d. Capital work-in-progress mainly comprises of costs incurred on Plant & Equipments which are currently under installation/const ruction.

e. The amount of Contractual Commitments (Net of Advances) for the acquisition of Property, Plant & Equipment is Rs.2642.35 lakhs as on 31.03.2018, Rs.2535.60 lakhs as on 31^st March, 2017 and Rs.2044.48 lakhs as on 01^st April, 2016.

3.1 Terms / Rights attached to Equity Share :

The Company has only one class of Equity Shares having a pa rvalue ofRs.5/- per share. Each holder of Equity is entitled to one vote per share and each equity share carries an equal right to dividend. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liqudation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

3.2 There are no shares issued pursuant to contract without payment being received in cash, alloted as fully paid up by way of bonus shares and bought back during the last 5 years.

4.1 Terms of repayment of Term Loans from State Bank of India.

Term Loansfrom State Bank of India are secured by equitable mortgage of Leasehold land and Building situated at 9, GIDC Industrial Estate, Residential Colony at Kadi and charge by hypothecation of entire fixed assets of the Company including windmills situated at villages Kadoli, Lamba, Patelkaand Kalyanpur, repayable in20quarterly installments,from November, 2012 to August, 2017.

4.2 Terms of repayment of Term Loans from Kotak Mahindra Bank Ltd.

Term Loans from Kotak Bank are secured by equitable mortgage of property at Acropolis mall, Ahmedabad, repayable in 36 monthly installments, from December, 2014 to November, 2017.

5.1 Sale of products, include excise duty collected from customers ofRs.1059.66 lakhs (31^st March, 2017: Rs.4761.00 lakhs) Sale of products, net of excise duty is Rs.117808.72 lakhs (31^st March, 2017: Rs.100917.03 lakhs)

6.1 As per Ind AS 19 âEmployee Benefitsâ, the disclosures of employee benefits as defined in the Indian Accounting Standard are given below:

Defined Contribution PlanThe Companyâs Contribution to provident fund and pension fund is considered as Defined Contribution Plan and is recognised as expenses for the year.

Defined Benefit Plan T he Company operates a Defined Benefit Gratuity plan with approved Gratuity Fund and contributions are made to a separately administered approved Gratuity Fund.

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separtely to build up the final obligation.

The obligation for leave encashment is recognized as expense for the year.

Gratuity :The benefits are governed by the Payment of Gratuity Act, 1 972. The key features are as under:

Funding arrangements and funding policy :

Gratuity liability is funded whereas leave Benefits Liability is not funded. There are no minimum funding requirements for Leave benefits plans in India and there is no compulsion on the part of the Company to fully pre fund the liability. The Company has purchased an insurance policy to partly provide for payment of gratuity to the employees. The trustees of the plan also make investments in Central / State Govt. securities, high quality Corporate bonds, special deposit scheme, mutual funds etc., as per rules and regulations. Every year, the actuary carries out a funding valuation based on the latest employee data provided by the Company. Any deficit inthe assets arising as a result of such valuation is funded by the Company.

7.1 Sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31^st March, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31^st March, 2017: Nil, 1^st April, 2016: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

Note - 8 : FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Overview:

The Companyâs Risk Management framework encompasses practices relating tothe identification, analysis, evaluation, treatment, mitigation and monitoring of the strategic, external and operational controls risks to achieving the Companyâs business objectives. It seeks to minimize the adverse impact of these risks, thus enabling the Company to leverage market opportunities effectively and enhance its long-term competitive advantage. The focus of risk management is to assess risks and deploy mitigation measures.

The Companyâs Board of Directors have overall responsibility for the establishment and oversight of the Companyâs risk management framework.

The note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit Risk:

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers and from its financial activities including deposits with banks and other financial instruments. The Company establishes an impairment allowance based on Expected Credit Loss model that represents its estimate of incurred losses in respect of trade and other receivables.

(i) Trade Receivables:

The Company extends credits to customers in normal course of the business. The Company considers the factors such as credit track record in the market of each customer and past dealings forextension of credit to the customers. The Company monitors the payment track record ofeach customer and outstanding customer receivables are regularly monitored. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located at several jurisdiction and industries and operate in large independent markets. The Company also takes advances and security deposits from customers which mitigate the credit risk to an exte nt.

The Company does not hold any collateral or other credit enhancements overany of its trade receivables nordoes it have a legal right of offset against any amounts owed by the Company to the counterparty.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward- looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows:

(ii) Cash and cash equivalents and short-term investments:

(B) Liquidity Risk

Liquidity risk is the risk that the Company will face in meetings its obligations associated with its financial liabilities. The Companyâs approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.

The table below provides undiscounted cashflows towards non-derivative financial assets/ (liabilities) into relevant maturity based on the remaining period at the Balance Sheet date to the contractual maturity date and where applicable, their effective interest rates.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks: foreign currency risk, interest risk and other price risk such as commodity risk.

(i) Foreign Currency Risk:

This is mainly attributable to the exposure outstanding on foreign currency receivables and payables in the Company at the end of each reporting period.

(ii) Interest Rate Risk

The Companyâs non-current borrowings from banks are Nil as at 31^st March, 201 8and 31^st March, 201 7 respectively. Other non-current financial liabilities have fixed rate of interest where the risk of changes in the interest rates is almost nil. As a result, the sensitivity affecting the profit before tax due to the Companyâs exposure to the risk of changes in market interest rates is almost nil.

(iii) Commodity Risk

Capital Management:

The Company manages its capital to be able to continue as a going concern while maximising the returns to shareholders through optimisation of the debt and equity balances. The capital structure consists of debt which includes the borrowings as disclosed in Note 18, 22 and 24, cash and cash equivalents and current investments and equity attributable to equity holders of the Company, comprising issued share capital, reserves and retained earnings as disclosed in the Statement of Changes in Equity. Forthe purpose of calculating gearing ratio, debt is defined as non current and current borrowings (excluding derivatives). Equity includes all capital and reserves of the Company attributable to equity holders of the Company.The Company is not subject to externally imposed capital requirements. The Board reviews the capital structure and cost of capital on an annual basis but has not set specific targets for gearing ratios. The risks associated with each class of capital are also considered as part of the risk reviews presented to the Audit Committee and the Board of Directors.

The following table summarizes the capital of the Company:

The management assessed that fair value of short term financial assets and liabilities significantly approximate their carrying amounts largely due to the short term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The Company determines fair values of financial assets or liabilities by discounting the contractual cash inflows / outflows using prevailing interest rates of financial instruments with similarterms. The initial measurement of financial assets and financial liabilities is at fair value.

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

- The fair value of the Companyâs interest bearing borrowings are determined using discount rate that reflects the entityâs discount rate at the end of the reporting period. The own non-performance riskas at the reporting period isassessed to be insignificant.

- The fair value ofunquoted instruments and otherfinancial assets and liabilities is estimated by discounting future cash flows using rates currently applicable for debt on similarterms, credit riskand remaining maturities.

9.1 Fair Value Hierarchy

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

Level 2 : Valuation techniques for which the lowest level inputs that has a significant effect on the fair value measurement are observable, either directly or indirectly.

Level 3 : Valuation techniques for which the lowest level input which has a significant effect on fair value measurement is not based on observable market data.

The following table provides the fair value measurement hierarchy of the Companyâs assets.

Note - 10. FIRST TIME ADOPTION OF IND AS

These standalone financial statements, for the year ended 31^st March, 2018 are thefirst financial statements prepared by the Company in accordance with Ind AS. For periods up to and including the year ended 31^st March, 2017, the Company prepared its standalone financial statements in accordance with accounting standards notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (âIndian GAAPâ or previous GAAP)

Accordingly, the Company has prepared standalone financial statements which comply with Ind AS applicable for periods ended 31^st March, 2018 together with the comparative period data as at and for the year ended 31^st March, 2017 as described in the summary of Significant Accounting Policies. In preparing these financial statements, the Companyâs opening Balance Sheet was prepared as at 1^st April, 2016 the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its previous GAAP standalone financial statements including the Balance Sheet as at 1^st April, 2016 and the standalone financial statements asat and for the year ended 31^st March, 2017.

The Company has applied Ind AS 101 in preparing these first standalone financial statements. The effect of transition to Ind AS on equity, total comprehensive income and reported cash flows are presented in this section and are further explained in the notes that accompany the tables.

Exemptions and Exceptions applied

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:

1. Business Combinations

The Company has elected not to apply Ind AS 103 Business Combinations retrospectively to the past business combinations that occurred before the transition date of 1^st April, 2016.

Consequently,

(i) The Company has kept the same classification for the past business combinations as in its previous GAAP financial statements.

(ii) The Company has excluded from its opening Balance Sheet those items recognized in accordance with previous GAAP that do notqualify for recognition as an asset or liability under Ind AS.

2. Deemed Cost - Property, Plant and Equipment and Intangible Assets:

As permitted by Ind AS 101, the Company has elected to continue with the carrying value of its property, plant and equipment and intangible assets recognized as of 1^st April, 201 6 (date of transition) measured as per the previous GAAP and used that carrying value as its deemed cost as of the date of transition.

3. Leases:

Appendix C to Ind AS 17, Leases, requires an entity to assess whether a contract or arrangement contains a lease. As per Ind AS 17, this assessment should be carried out at inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based on conditions in place as at the date of transition.

4. Investments in Subsidiaries:

The Company has availed the optional exemption under Ind AS 101 forthe continuance of the carrying value of Investments in subsidiaries same as under the previous GAAP.

(B) Ind AS Mandatory Exceptions:

1. Es ti mates:

As per Ind AS 101, an entityâs estimates in accordance with Ind AS at the date of transition to Ind AS presented in the entityâs first Ind AS financial statements as the case may be, should be consistent with estimates made for the same date in accordance with the previousGAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.

As per Ind AS 1 01, where application of Ind AS requires an entity to make certain estimates that were not required under the previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS Balance Sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).

The Companyâs estimates underIndASareconsistent withthe above requirements. Key estimates considered in preparation of the financial statements that were not required underthe previous GAAP are listed below:

(i) Fair valuation of financial instruments carried at FVTPL and/or FVOCI.

(ii) Impairment of financial assets based on the Expected Credit Loss model.

(iii) Determination of the discounted value for financial instruments carried at amortised cost.

2. Derecognition of Financial Assets and Liabilities:

As per Ind AS 101, an entity should apply the derecognition requirements in Ind AS 101, Financial Instruments, prospectively for transactions occurring on orafter the date of transition to Ind AS.

However, an entity may apply the derecognition requirements retrospectively from a date chosen by it if the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognized as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has elected to applythe derecognition principles of Ind AS 109 prospectively.

3. Classification and Measurement of Financial Assets:

Financial Instruments:

Financial assets like security deposits received and security deposits paid, have been classified and measured at amortised cost on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Since, it is impracticable for the Company to apply retrospectively the effective interest method in Ind AS 109, the fairvalue of the financial asset or the financial liability at the date of transition to Ind AS by applying amortised cost method, has been considered as the new gross carrying amount of that financial asset or the financial liability at the date of transition to Ind AS.

11.1 Notes to First Time Adoption

(a) Investment :

Under Indian GAAP, investments in Mutual Funds were classified in to current Investments. Current Investments were carried at lower of cost and fair value. Under Ind AS these Investments are required to be measured at Fair Value either through OCI (FVTOCI) or through Profit & Loss (FVTPL). The Company has opted to Fair Value these Investments through Profit & Loss (FVTPL). Accordingly, resulting fairvalue change of these Investments have been recognised in retained earnings as at the date of transition and subsequently in the Statement of Profit & Loss for the year ended 31^st March, 2017.

(b) Deferred Taxes :

Under Indian GAAP, Deferred Taxes were recognised based on Profit & Loss approach i.e. tax impact on difference between the accounting income and taxable income. Under Ind AS, Deferred Tax is recognised by following Balance Sheet approach i.e. tax impact on temporary difference between the carrying value of assets and liabilities in the books and their respective tax base.

Under Indian GAAP, revenue from Sale of Goods was presented exclusive of Excise Duty. Under Ind AS, revenue from Sale of Goods is presented inclusive of Excise Duty. The Excise Duty paid is presented on the face of the Statement of Profit & Loss as part of expenses.

(d) Remeasurement of Post Employment Benefit Obligations :

Under Indian GAAP, cost relating to Post Employment Benefit Obligations including actuarial gain /losses were recognised in Profit & Loss. Under Ind AS, actuarial gain / losses on the net Defined Benefit Liability are recognised in Other Comprehensive Income instead of Profit & Loss.

(e) Security Deposits :

Under Indian GAAP, interest free rent security deposits paid were reported at their nominal values. Under Ind AS, interest free security deposits are measured at fair value on intial recognition and at amortised cost on subsequent recognition.

The difference between the nominal value of such deposits and theirfair value is considered as additional rent payable.

This is expensed on a straight line basis over the term of the rent agreement. The Company also recognises interest income on the deposits using Effective Interest Rate (EIR) through Profit and Loss overthe life of the deposits.

Note - 12 MOVEMENT IN PROVISIONS

Disclosure of Movement in Provisions during the year as per Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets :

Note - 13. COMMITMENTS AND CONTINGENCIES

(a) Leases

Operating lease commitments

The Company has obtained some premises on operating leases. Few of the leases for premises are long term and are non-cancellable. Further, there is an escalation clause in the lease agreement.

Lease payments ofRs.749.10 lakhs (previous year -Rs.652.02 lakhs) have been recognized as an expense in the Statement of Profit and Loss during the year.

Future minimum rentals payable under non-cancellable operating leases are as follows:

Note - 14. NOTE ON CORPORATE SOCIAL RESPONSIBILITY

In accordance with the provisions of Section 135 of the Companies Act, 2013, Schedule VII and Companies (Corporate Social Responsibility Policy) Rules, 2014 the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms of the provisions of the said Act, the Company was required to spend Rs.269.44 lakhs (previous yearRs.289.96 lakhs) towards CSR activities during the year ended 31^st March, 2018. The Company has incurred following expenditure towards CSR activities for the benefit of general public and in the neighbourhood of the manufacturing facilities of the Company.

Note - 15. OPERATING SEGMENTS

The Company operates mainly in manufacturing of Building Products and all other activities are incidental thereto, which have similar risk and return. Accordingly, there are no separate reportable Segment as required under Ind AS 108 â Operating Segment â.

Note - 16.

Balances of certain debtors, creditors, loans & advances and deposits are subject to confirmation. Due adjustments will be made on receipt thereof, if necessary.

Note - 17.

In the opinion of the Management, current assets have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated except where indicated otherwise.

Note - 18.

The Company had changed the method of valuation of closing stock of raw materials, packing materials, stores and spares, chemicals and traded goods as at 31^st March, 201 7 to âCost or net realisable value whichever is lowerâ following weighted average method which was earlier FIFO method. The effect of increase in consumption and decrease in profits in earlier financial years due to this change is not material and hence not recognised.

Note - 19.

Consequent to the introduction of Goods and Service Tax (GST) with effect from 1^st July, 2017, Central Excise, Value Added Tax (VAT) etc. have been subsumed into GST. In accordance with Indian Accounting Standard-18 on âRevenueâ and Schedule III to the Companies Act, 2013, unlike Excise Duties, levies like GST, VAT etc. are not part of Revenue from Operations. Revenue forthe year ended 31^st March, 2018 and 31^st March, 2017 are net of GST. The following additional information is being provided to facilitate such understanding.

Note - 20.

The Company has reclassified Previous Year figures to conform to Ind AS classification.

Mar 31, 2017

1. The company is receiving balance confirmations from various parties. Due adjustments will be made on receipt thereof, if necessary.

2. Lease of an asset whereby the lessor essentially remains the owner of the asset is classified as operating lease. The payments made by the company as lessee in accordance with operational leasing contracts or rental agreements are expensed proportionally during the lease or rental period respectively. These are generally cancellable and are renewable by mutual consent on mutually agreed terms.

3. Employee Benefits

Details of Employee Benefits as required by the Accounting Standard 15 (Revised) Employee benefits are as under:

1) Brief description of the plans :

The Company has various schemes for long-term benefits such as Provident Fund, Gratuity and Leave Encashment. In case of funded schemes, the funds are recognized by income tax authorities and administered through trustees/appropriate authorities.

The Company''s defined contribution plans are Provident Fund (exempted employees) recognized by the Income Tax Authorities and administered through trustees. The company has no further obligation beyond making contributions and interest shortfall.

Further the pattern of investment for investible funds is as prescribed by the Government. Accordingly other related disclosures in respect of Provident Fund have not been made.

The Company''s contribution plans are Provident Fund (non exempted employees), Employees'' pension scheme (under the Provisions of the employees'' Provident Funds and Miscellaneous Provisions Act,1952), state plans namely Employee''s State Insurance Fund. The company has no further obligation beyond making contributions.

The Company''s defined benefit plans also include Gratuity and leave Encashment for all its employees. Gratuity fund recognized by the Income Tax Authorities is administered through trustees. Liability for Defined Benefit Plan is provided on the basis of valuations, as at Balance sheet date, carried out by an independent actuary. The actuarial valuation method used by independent actuary for measuring the liability is the projected unit credit method.

(4) The Company has provided up to 31.03.2017 Rs, 758.49 Lacs (Rs, 614.42 Lacs) being increment of discounted value of liability for unveiled leave of the employees determined as per Acturial Valuation.

* Included in Donation & CSR - Refer Note no-27

4. a) Anjani Tiles Limited, a company incorporated under the Companies Act, 2013; a Joint Venture Subsidiary company commenced manufacturing tiles from 1^st April, 2016. As on 31^st March, 2017, CERA has invested Rs, 510 Lacs in 51,00,000 Equity Shares and Rs, 2,168 Lacs in 21,680,000, 1% Cummulative Redeemable Preference Shares of Rs, 10/- each.

b) The company has joined on 24^th June, 2016, as 51% partner in Packcart Packaging LLP, manufacturing Corrugated Boxes.

The company purchases firm''s entire production at the rate agreed between the parties. As on 31^st March, 2017 the company''s contribution as capital is Rs, 90.78 Lacs. The Limited Liability Partnership has incurred loss of Rs, 47.94 Lacs. The company has not provided for firm''s loss of first year of business operations.

c) The company has invested and participated to expand Company''s business in UAE. Company has joined with 25% share in âCera Sanitaryware Trading LLCâ, a limited liability company in UAE - Dubai, since 21^st December, 2015 for Tiles, Flooring materials and sanitaryware trading.

d) The company has invested and participated to expand Company''s business in Sharjah. Company has 50% share in âCera Sanitaryware Limited FZCâ, a limited liability company at Hamriyah Free Zone Authority of Government of Sharjah for Tiles, Flooring materials and sanitaryware trading.

5. Disclosure of trade payables as defined under the Micro, Small and Medium Enterprises Development Act, 2006 is based on the information available with the company regarding the status of the suppliers.

6. Change in Stock Valuation Method

The company has changed method of valuing closing stock of Raw-materials, Packing Materials, Stores, Chemicals and traded goods as at 31^st March, 2017 to âCost or Net Realizable Value whichever is lowerâ following Weighted Average Method which was earlier FIFO method.

The change in the method of Inventory valuation has resulted in increase of Rs, 5,286,385/- in the consumption and decrease of profits by Rs, 5,286,385/-.

7. Dividend Declaration for the year 2016-17

The Board has recommended dividend of Rs, 12/- Per Equity share of Rs, 5/- each - i.e. 240% (P.Y. Rs, 9/- per Equity share - i.e. 180%) for the year ended 31^st March, 2017 subject to the approval of the shareholders at the Annual General Meeting.

In pursuance to amended Companies (Accounting Standards) Rules, 2016 effective financial year 2016-17 and revised Accounting Standard-4 on âContingencies and Events occurring after Balance Sheet Dateâ, the proposed dividend of Rs, 1560.70 Lacs and taxes of Rs, 317.72 Lacs thereon are not recognized as liability in the annual accounts of the financial year ending March 31, 2017.

8. Significant accounting policies and practices adopted by the company are disclosed in the statement annexed to these financial statement as Annexure I.

Mar 31, 2016

1. Transfer of Ceramic Division from Madhusudan Industries Limited (MIL)

The Honourable High Court of Judicature at Gujarat vide its order dated 30.10.2001 has sanctioned the Scheme of Arrangement (the Scheme) U/s. 391-394 of the Companies Act, 1956 between Madhusudan Industries Limited ("MIL") and the Company under which all the assets, liabilities and debts of the Ceramic Division as defined in the Scheme ("the Undertaking") of "MIL" comprising of Ceramic Division have been transferred to the Company at net book value with effect from 01.04.2001.

The Name of the Company had been changed from Madhusudan Oils And Fats Limited to Cera Sanitaryware Limited with effect from 01-11-2002 consequent upon the fresh certificate of Incorporation, issued by the Registrar of Companies, Gujarat State, Ahmedabad.

2. The Company is receiving balance confirmations from various parties. Due adjustments will be made on receipt thereof, if necessary.

3. Lease of an asset whereby the lessor essentially remains the owner of the asset is classified as operating lease. The payments made by the company as Lessee in accordance with operational leasing contracts or rental agreements are expensed proportionally during the lease or rental period respectively. These are generally cancellable and are renewable by mutual consent on mutually agreed terms.

4. Employee Benefits

The Company in pursuance to Accounting Standard 15, Employee Benefits (revised 2005) [''the revised AS 15''], notified under sub- section (3C) of section 211 of the Companies Act,1956 obtained acturial reports and based on these reports, following disclosures have been made in the financial statements for the year ended 31st March, 2016.

1) Brief description of the plans :

The Company has various schemes for long-term benefits such as Provident Fund, Gratuity and Leave Encashment. In case of funded schemes, the funds are recognised by income tax authorities and administered through trustees/appropriate authorities.

The Company''s defined contribution plans are Provident Fund (exempted employees) recognised by the Income Tax Authorities and administered through trustees. The Company has no further obligation beyond making contributions and interest shortfall. Further the pattern of investment for investible funds is as prescribed by the Government. Accordingly other related disclosures in respect of Provident Fund have not been made.

The Company''s contribution plans are Provident Fund (non exempted employees), Employees'' pension scheme (under the Provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act,1952), state Employees'' plans namely Employees'' State Insurance Fund. The Company has no further obligation beyond making contributions.

The Company''s defined benefit plans also include Gratuity and leave Encashment for all its employees. Gratuity fund recognised by the Income Tax Authorities is administered through trustees. Liability for Defined Benefit Plan is provided on the basis of valuations, as at Balance sheet date, carried out by an independent actuary. The actuarial valuation method used by independent actuary for measuring the liability is the projected unit credit method.

2) The Company has provided upto 31.03.2016 Rs. 614.42 Lacs (Rs. 510.65 Lacs) being increment of discounted value of liability for unavailed leave of the employees determined as per Acturial Valuation.

5. The Company is to apply 2% of average net profits towards Corporate Social Responsibilty (CSR) as per section 135 of the Companies Act, 2013. The Company has utilised during the year 2015-16 Rs. 165.81 Lacs (previous year Rs. 87.89 Lacs) for CSR activities.

6. a) The Company has entered into Joint Venture through a Subsidiary Company, Anjani Tiles Limited, incorporated under the Companies Act, 2013 into tiles manufacturing business in Andhra Pradesh. The estimated project cost is Rs. 68 crores. Anjani Tiles Limited has commenced manufacturing tiles from 1st April, 2016. CERA has invested Rs. 5.10 crores by taking 51,00,000 Equity Shares and Rs. 14.54 crores in 1% Cummulative Redeemable Preference Shares of Rs. 10/- each.

b) The Company has entered into a Memorandum of Understanding with foreign partners to invest and participate in Joint Venture to expand company''s business in UAE. Company has joined with 25% share in "Cera Sanitaryware Trading LLC", a limited liability Company in UAE - Dubai, on 21st December, 2015 for Tiles, Flooring materials and Sanitaryware trading.

c) The Company has entered into a Memorandum of Understanding with foreign partners to invest and participate in Joint Venture to expand company''s business in Sharjah. Company has joined with 50% share in "Cera Sanitaryware Limited FZC", a limited liability Company at Hamriyah Free Zone Authority of Government of Sharjah for Tiles, Flooring materials and Sanitaryware trading.

7. Significant accounting policies and practices adopted by the Company are disclosed in the statement annexed to these financial statement as Annexure - I.

Mar 31, 2014

1. Transfer of Ceramic Division from Madhusudan Industries Limited (MIL)

The Honorable High Court of Judicature at Gujarat vide its order dated 30.10.2001 has sanctioned Scheme of Arrangement (the Scheme) U/s. 391 -394 of the Companies Act. 1956 between Madhusudan Industries Limited ("MIL") and the Company under which all the assets, liabilities and debts of the Ceramic Division as defined in (he Scheme {"the Undertaking") of "MIL" comprising of Ceramic Division have been transferred to the Company al net book value with effect from 01.04.2001.

The Name of the Company had been changed from Madhusudan Oils And Fats Limited to Cera Sanitary ware Limited with effect from Of .1 f .2002 consequent upon the fresh certificate of Incorporation, issued by the Registrar of Companies, Gujarat Stale, Ahmadabad.

2. Contingent liability in respect of :

As on As on 31-03-2014 31-03-2013

a. Claims against the Company not acknowledged as debts (Net of Paymenls). 52.11.760 52,11,780

b. Estimated amount of contracts remaining lo be executed on 5,22,80,444 7,13,93,146 capital account not provided for (Net of advance).

c. Letters of Credit opened and guarantees given by the Bank in favour of 7,80,97,241 5,02.32.172 Parties and Government Authorities.

3. The company is receiving balance confirmations from various parties. Due adjustments will be made on receipt thereof, if necessary.

4. Pursuant lo notification dl.3tsl March 2009 (Further amended by Notification date 29lh December2011} issued by the Ministry of Corporate Affairs. the Company had exercised the option available under the newly inserted Paragraph 46A (1) to the AS-11.

The effect of changes in foreign exchange rates is to add/deduct the foreign exchange fluctuation to capital cost of the asset. Accordingly the net foreign exchange fluctuation loss amounting to 7 0.02 Cr. (P Y Loss amounting to T 0.11 Cr.} has been deducted ,'' (added) respectively lo the cost of capital assets.

5. Employee Benefits

The Company in pursuance to Accounting Standard 15, Employee Benefits (revised 2005) |1he revised AS 15''], notified under sub- section (3C) o! section 211 of the companies Act,1956 obtained actuarial reports and based on these reports, (allowing disclosures have been made in the financial statements for the year ended 31st March, 2014.

1) Brief description of the plans :

The Company has various schemes for long-term benefits such as Provident Fund, Gratuity and Leave Encashment. In case of funded schemes, the funds are recognised by income tax authorities and administered through trustees/appropriate authorities.

The Company''s defined contribution plans are Provident Fund (exempted employees) recognised by the Income Tax Authorities and administered through trustees. The company has no further obligation beyond making contributions and interest shortfall. Further the pattern ol investment for inveslible funds is as prescribed by the Government. Accordingly other related disclosures in respect of Provident Fund have not been made.

The Company''s contribution plans are Provident Fund (non exempted employees), Employees'' pension scheme {under the Provisions of the employees'' Provident Funds and Miscellaneous Provisions Act,1952), state plans namely Employee''s State Insurance Fund. The Company has no further obligation beyond making contributions.

The Company''s defined benefit plans also include Gratuity and Leave Encashment for all its employees. Gratuity fund recognised by the Income Tax Authorities is administered through trustees. Liability for Defined Benefit Plan is provided on the basis of valuations, as at Balance sheet date, carried out by an independent actuary. The actuarial valuation method used by independent actual-y for measuring the liability is the projected unit credit method.

Mar 31, 2013

1. Transfer of Ceramic Division from Madhusudan Industries Limited (MIL)

The Honourable High Court of Judicature at Gujarat vide its order dated 30.10.2001 has sanctioned Scheme of Arrangement (the Scheme) U/s. 391-394 of the Companies Act, 1956 between Madhusudan Industries Limited ("MIL") and the Company under which all the assets, liabilities and debts of the Ceramic Division as defined in the Scheme ("the Undertaking") of "MIL" comprising of Ceramic Division have been transferred to the Company at net book value with effect from 01.04.2001.

The Name of the Company had been changed from Madhusudan Oils And Fats Limited to Cera Sanitaryware Limited with effect from 01-11-2002 consequent upon the fresh certificate of Incorporation, issued by the Registrar of Companies, Gujarat State, Ahmedabad.

2. Contingent liability in respect of :

As on As on 31-03-2013 31-03-2012 Rs. Rs.

a. Claims against the Company not acknowledged as debts (Net of Payments). 52,11,780 35,68,274

b. Estimated amount of contracts remaining to be executed on 7,13,93,146 8,65,92,646 capital account not provided for (Net of advance).

c. Letters of Credit opened and guarantees given by the Bank in favour of 5,02,32,172 7,27,09,618 Parties and Government Authorities.

3. The Company is receiving balance confirmations from various parties. Due adjustments will be made on receipt thereof, if necessary.

4. Persuant to notification dt.31st March, 2009 (Further amended by Notification dt. 29 December, 2011) issued by the Ministry of Corporate Affairs, the company had exercised the option available under the newly inserted Paragraph 46A (1) to the AS-11.

The effect of changes in foreign exchange rates is to add/deduct the foreign exchange fluctuation to capital cost of the asset. Accordingly the net foreign exchange fluctuation loss amounting to Rs. 0.11 Cr. (PY Loss amounting to Rs. 0.53 Cr.) has been deducted / (added) respectively to the cost of capital assets.

5. Employee Benefits

The company has with effect from 1st April, 2007, adopted Accounting Standard 15, Employee benefits (revised 2005), issued by the Institute of Chartered Accountants of India.The disclosure required is as under :

1) Brief description of the plans :

The company has various schemes for long-term benefits such as provident fund, gratuity and leave encashment. In case of funded schemes, the funds are recognised by income tax authorities and administered through trustees/appropriate authorities.

The company''s defined contribution plans are Provident Fund (exempted employees) recognised by the Income Tax Authorities and administered through trustees. The company has no further obligation beyond making contributions and interest shortfall. Further the pattern of investment for investible funds is as prescribed by the Government. Accordingly other related disclosures in respect of Provident Fund have not been made.

The company''s contribution plans are Provident Fund (non exempted employees), Employees'' pension scheme (under the Provisions of the employees'' Provident Funds and Miscellneous Provisions Act,1952), state plans namely Employee''s State Insurance Fund. The company has no further obligation beyond making contributions.

The company''s defined benefit plans also include Gratuity and leave Encashment for all its employees. Gratuity fund recognised by the Income Tax Authorities is administered through trustees. Liability for Defined Benefit Plan is provided on the basis of valuations, as at Balance sheet date, carried out by an independent actuary. The actuarial valuation method used by independent actuary for measuring the liability is the projected unit credit method.

Mar 31, 2012

1. Transfer of Ceramic Division from Madhusudan Industries Limited (MIL)

The Honourable High Court of Judicature at Gujarat vide its order dated 30.10.2001 sanctioned Scheme of Arrangement (the Scheme) U/s. 391-394 of the Companies Act, 1956 between Madhusudan Industries Limited ("MIL") and the Company {Madhusudan Oils and Fats Limited) (MOFL)} under which all the assets, liabilities and debts of the Ceramic Division of MIL as defined in the Scheme ("the Undertaking") has been transferred to the Madhusudan Oils and Fats Limited (MOFL) at net book value with effect from 01.04.2001.

The Name of the Company has been subsequently changed from Madhusudan Oils And Fats Limited to Cera Sanitaryware Limited with effect from 01.11.2002 consequent upon the fresh certificate of Incorporation, issued by the Registrar of Companies, Gujarat State, Ahmedabad.

2. Contingent liability in respect of : As at As at 31-03-2012 31-03-2011 Rs. Rs.

a. Claims against the Company not acknowledged as debts (Net of Payments). 35,68,274 1,13,52,708

b. Estimated amount of contracts remaining to be executed on 8,65,92,646 38,51,330 capital account not provided for (Net of advance).

c. Letters of Credit opened and guarantees given by the Bank in favourof 7,27,09,618 2,63,10,744 Parties and Government Authorities.

3. As notified by Ministry of Corporate Affairs, revised Schedule VI under the Companies Act, 1956 is applicable to the financial statements for the financial year commencing on or after 1st April, 2011. Accordingly, the financial statements for the period ended 31st March, 2012 are prepared in accordance with the revised Schedule VI. The amounts and disclosures included in the financial statements of the previous year have been reclassified to conform to the requirements of revised Schedule VI. Figures in brackets relate to previous year.

4. The company has continous practice to obtain balance confirmations from various parties. Due adjustments on reconciliation will be made on receipt thereof, if necessary.

5. Persuant to notification dt. 31st March, 2009 (Further amended by Notification dt. 29th December, 2011) issued by the Ministry of Corporate Affairs, the company had exercised the option available under the newly inserted Paragraph 46A (1) to the AS-11. The effect of changes in foreign exchange rates is to add/deduct the foreign exchange fluctuation to the cost of capital assets.

Accordingly, the net foreign exchange fluctuation loss amounting to Rs. 0.53 Cr. ((P Y Gain amounting to Rs. 0.09 Cr, Gain amounting to Rs. 1.59 Cr in FY 11 & F Y 10 and Loss amounting to Rs. 1.96 Cr. in FY 08 & FY 09 (net of trf. from General Reserve)) has been deducted/(added) respectively to the cost of capital assets.

6. Employee Benefits

The company has with effect from 1st April, 2007, adopted Accounting Standard 15, Employee benefits (revised 2005), issued by the Institute of Chartered Accountants of India. The disclosure required are as under :

1) Brief description of the plans :

The company has various schemes for long-term benefits such as provident fund, gratuity and leave encashment. In case of funded schemes, the funds are recognised by income tax authorities and administered through trustees/appropriate authorities. The company's defined contribution plans are Provident Fund (exempted employees) recognised by the Income Tax Authorities and administered through trustees. Since the company has no further obligation beyond making contributions and interest shortfall.

Further the pattern of investment for investible funds is as prescribed by the Government. Accordingly, the other related disclosures in respect of Provident Fund have not been made.

The company's other defined contribution plans are Provident Fund (non exempted employees), Employees' pension scheme (under the Provisions of the employees' Provident Funds and Miscellaneous Provisions Act,1952), state plans namely Employees' State Insurance Fund, Since company has no further obligation beyond making contributions.

The company's defined benefit plans are Gratuity and Leave Encashment for all its employees. Gratuity fund is recognised by the Income Tax Authorities and is administered through trustees.

Liability for Defined Benefit Plan is provided on the basis of valuations, as at Balance sheet date, carried out by an independent actuary. The actuarial valuation method used by independent actuary for measuring the liability is the projected unit credit method.

(4) The Company has provided upto 31.03.2012 Rs. 244.71 Lacs (Rs. 179.70 Lacs) being increment of discounted value of liability for unavailed leave of the employees determined as per Acturial Valuation.

Mar 31, 2011

1. Transfer of Ceramic Division from Madhusudan Industries Limited (MIL)

The Honourable High Court of Judicature at Gujarat vide its order dated 30.10.2001 has sanctioned Scheme of Arrangement (the Scheme) U/s. 391 -394 of the Companies Act, 1956 between Madhusudan Industries Limited (ÃMILÃ) and the Company under which all the assets, liabilities and debts of the Ceramic Division as defined in the Scheme (Ãthe UndertakingÃ) of ÃMILÃ comprising of Ceramic Division have been transferred to the Company at net book value with effect from 01.04.2001.

The Name of the Company has been changed from Madhusudan Oils And Fats Limited to Cera Sanitaryware Limited with effect from 01-11-2002 consequent upon the fresh certificate of Incorporation, issued by the Registrar of Companies, Gujarat State, Ahmedabad.

2. Contingent liability in respect of :

31.03.2011 31.03.2010 Rs. Rs.

a. Claims against the Company not acknowledged as debts (Net of Payments). 1,13,52,708 35,67,974

b. Estimated amount of contracts remaining to be executed on 38,51,330 11,47,109 capital account not provided for (Net of advance)

c. Letters of Credit opened and guarantees given by the Bank in favour 2,63,10,744 1,60,62,009 of Parties and Government Authorities.

3. Previous yearÃs figures have been regrouped wherever necessary.

4 . The Company has yet to obtain balance confirmations from various parties. Due adjustments will be made on receipt thereof, if necessary.

5. Employees Stock Option Scheme

Employees Stock Options are evaluated and accounted on intrinsic value method as per the accounting treatment prescribed under Guidence Note on ÃAccounting for Employee Share-based paymentsÃ issued by ICAI read with SEBI (Employee Stock Option Scheme & Employee Stock Purchase scheme) Guidelines, 1999 issued by Securities and Exchange Board of India. Accordingly the excess of market value of the stock options as on the date of grant over the exercise price of the option is recognised as deferred employee compensation and is charged to profit and loss account on graded vesting basis over the vesting period of the options. The unamortised portion of the Deferred Employee Compantation is reduced from Employee Stock Option Outstanding which is shown under Reserves & Surplus.

Consequently an amount of Rs. Nil (Rs.4.56) lacs has been amortised for the Current Year and the company has taken credit of Rs.5.13 (Rs. 40.28) lacs for 6427 (50471) options lapsed due to non exercise by employees during the exercise period (18 months) ended on 09.07.2010.

6. Persuant to notification dt.31st March, 2009 (Further amended by notification dt.11th May, 2011) issued by the Ministry of Corporate Affairs, the company had exercised the option available under the newly inserted Paragraph 46 to the AS-11. The effect of changes in foreign exchange rates is to add/deduct the foreign exchange fluctuation to capital cost of the asset. Accordingly the net foreign exchange fluctuation gain amounting to Rs.0.09 Cr. ((PY. Gain amounting to Rs.1.50 Cr. and Loss amounting to Rs.1.96 Cr.in FY 08 & FY 09 (net of trf. from General Reserve)) has been deducted/(added) respectively to the cost of capital assets.

7. Employee Benefits

The Company has with effect from 1st April, 2007, adopted Accounting standard 15, Employee benefits (revised 2005), issued by the Institute of Chartered Accountants of India. The disclosure required are as under :

1) Brief description of the plans :

The Company has various schemes for long-term benefits such as provident fund, gratuity and leave encashment. In case of funded schemes, the funds are recognised by income tax authorities and administered through trustees/appropriate authorities.

The CompanyÃs defined contribution plans are Provident Fund (exempted employees) recognised by the Income Tax Authorities and administered through trustees. Since the company has no further obligation beyond making contributions and interest shortfall. Further the pattern of investment for investible funds is as prescribed by the Government. Accordingly other related disclosures in respect of Provident Fund have not been made.

The CompanyÃs other defined contribution plans are Provident Fund (non exempted employees), EmployeesÃ pension scheme (under the Provisions of the employeesÃ Provident Funds and Miscellneous Provisions Act,1952), state plans namely EmployeeÃs State Insurance Fund, since Company has no further obligation beyond making contributions.

The CompanyÃs defined benefit plans are Gratuity and leave Encashment for all its employees. Gratuity fund is recognised by the Income Tax Authorities and is administered through trustees.

Liability for Defined Benefit Plan is provided on the basis of valuations, as at Balance sheet date, carried out by an independent actuary. The actuarial valuation method used by independent actuary for measuring the liability is the projected unit credit method.

(4) The Company has provided upto 31.03.2011 Rs. 179.70 Lacs (Rs. 130.98 Lacs) being increment of discounted value of liability for unavailed leave of the employees determined as per Acturial Valuation.

8. Related party disclosures

Notes :

Names of related parties and description of relationship :

1. Fellow Subsidiaries -

2. Associates 1. Madhusudan Industries 4.Vikram Ltd. Investment Co. Ltd.

2. Madhusudan Fiscal Ltd. 5.Madhusudan Holdings Ltd.

3. Cera Foundation 6.Swadeshi Fan Ind.Ltd.

3.Key Management Personnel Vikram Somany, Vidush Somany,,Dr.K.N. Maiti & M. K. Bhandari

4.Relatives of Key Smiti Somany, Pooja Jain Management Personnel Somany

Mar 31, 2010

1. Transfer of Ceramic Division from Madhusudan Industries Limited (MIL)

The Honourable High Court of Judicature at Gujarat vide its order dated 30.10.2001 has sanctioned Scheme of Arrangement (the Scheme) U/s. 391 -394 of the Companies Act, 1956 between Madhusudan Industries Limited ("MIL") and the Company under which all the assets, liabilities and debts of the Ceramic Division as defined in the Scheme ("the Undertaking") of "MIL" comprising of Ceramic Division have been transferred to the Company at net book value with effect from 01.04.2001.

The Name of the Company has been changed from Madhusudan Oils And Fats Limited to Cera Sanitaryware Limited with effect from 01-11-2002 consequent upon the fresh certificate of Incorporation, issued by the Registrar of Companies, Gujarat State, Ahmedabad.

2. Impairment of Assets

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the amount may not be recoverable. An impairment loss is recognized for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the assets net selling price and its value in use.

3. Contingent liability in respect of : 31.03.2010 31.03.2009

Rs. Rs. a. Claims against the Company not acknowledged as debts. 35,67,974 52,55,266

b. Estimated amount of contracts remaining to be executed on 11,47,109 - capital account not provided for (Net of advance)

c. Letters of Credit opened and guarantees given by the Bank in favour 1,60,62,009 2,85,20,582 of Parties and Government Authorities.

4. Preferential Warrants for Equity Shares

During the year ended on 31 st March, 2009 the company has forfeited 3,40,000 Preferential Warrants issued to promoters on preferential basis ; since the option of conversion of warrants was not exercised by the due date 26.07.2008. Rs. 41.82 Lacs received as 10% of subscription value of preferential warrants is transferred to Share Premium Account.

5. Employees Stock Option Scheme

Employees Stock Options are evaluated and accounted on intrinsic value method as per the accounting treatment prescribed under Guidence Note on "Accounting for Employee Share-based payments" issued by ICAI read with SEBI ( Employee Stock Option Scheme & Employee Stock Purchase scheme) Guidelines, 1999 issued by Securities and Exchange Board of India. Accordingly the excess of market value of the stock options as on the date of grant over thfe exercise price of the option is recognised as deferred employee compensation and is charged to profit and loss account on graded vesting basis over the vesting period of the options. The unamortised portiontf the Deferred Employee Compantation is reduced from Employee Stock Option Outstanding which is shown under Reserves & Surplus.

Consequently an amount of Rs.4.56 (40.58) lacs has been amortised for the Current Year and the company has taken credit of Rs.40.28 lacs for 50471 options lapsed due to non exercise by employees during the exercise period (18 months) ended on 09.07.2009.

Notes :

(1) Above Remuneration includes payment as Directors and not for the period as an employee.

(2) As the liability for Gratuity and Leave Encashment is provided for on an Acturial Basis for the company as a whole, the amont pertaining to directors is not ascertainable and therefore not included.

Computation of Profit in accordance with section 309 read with section 349 of the Companies Act, 1956 for calculation of Managerial Remuneration

5. The exceptional item in previous year represents the one time, non recurring loss suffered by the company consequent to having entered into certain foreign currency swap transactions which have been settled during the year.

6. Persuantto notification dt.31st March, 2009 issued by the Ministry of Corporate Affairs, the company had exercised the option available under the newly inserted Paragraph 46 to the AS-11. The effect of changes in foreign exchange rates is to add/deduct the foreign exchange fluctuation to capital cost of the asset. Accordingly the net foreign exchange fluctuation gain amounting to Rs.1.50 Cr. ((PY. Loss amounting to Rs.1.96 Cr. (FY 08 & FY 09) (net of trf. from General Reserve)) has been deducted/(added) respectively to the cost of capital assets.

7. Employee Benefits

The Company has with effect from 1st April 2007, adopted Accounting Standard 15, Employee Benefits (revised 2005), issued by the Institute of Chartered Accountants of India. The disclosure as required are as under:

1) Brief description of the plans :

The Company has various schemes for long-term benefits such as provident fund.gratuity and leave encashment. In case of funded schemes, the funds are recognised by Income Tax Authorities and administered through trustees/appropriate authorities.

The Companys defined contribution plans are Provident Fund (exempted employees) recognised by the Income Tax Authorities and administered through trustees. Since the Company has no further obligation beyond making contributions and interest shortfall. Further the pattern of investment for investible funds is as prescribed by the Government. Accordingly other related disclosures in respect of Provident Fund have not been made.

The Companys other defined contribution plans are Provident Fund (non exempted employees), Employees Pension Scheme (under the Provisions of the employees Provident Funds and Miscellneous Provisions Act, 1952), state plans namely Employees State Insurance Fund, Since Company has no further obligation beyond making contributions.

The Companys defined benefit plans are Gratuity and leave Encashment for all its employees. Gratuity fund is recognised by the Income Tax Authorities and is administered through trustees.

Liability for Defined Benefit Plan is provided on the basis of valuations, as at Balance sheet date, carried out by an independent actuary. The actuarial valuation method used by independent actuary for measuring the liability is the projected unit credit method.

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