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Directors Report of Somany Ceramics Ltd.

Mar 31, 2017

Dear Members,

The Directors have pleasure in presenting the 49th Annual Report together with the Annual Audited Financial Statements of the Company for the year ended 31st March 2017.

FINANCIAL RESULTS

(Based on Standalone Financial Statements)

(Rs. in Lakhs)

Particulars

2016-17

2015-16

Gross Revenues from Operations

192,276

179,938

Net Revenues from Operations

184,057

173,070

Other income

1,512

921

Profit before Interest, depreciation and tax (EBIDTA)

17,923

13,221

Interest and finance charges

1,652

1,633

Profit Before Depreciation

16,271

11,588

Less: Depreciation

2,532

2,057

Profit before Exceptional Item

13,739

9,531

Exceptional Item

406

443

Profit before tax (PBT)

13,333

9,088

Less: Provision for tax (net)

4,724

2,982

Profit after tax (PAT)

8,609

6,106

Add: Balance brought forward

19,658

15,325

Surplus available for appropriation

28,267

21,431

Appropriations:

-

-

Proposed dividend on equity shares

-

975

Tax on proposed dividend

-

198

Transferred to general reserve

-

600

Balance Carried to balance sheet

-

19,658

Total

28,267

21,431

FINANCIAL REVIEW

Your Company continued to perform well in the financial year under review, even when it faced multiple odds such as demonetisation, continuing slowdown in the real estate sector etc. adversely affecting building material industry including tiles.

Your Company has always performed better than the industry and the same was reflected this year where the Company’s growth rate of sales was 6.7%, achieving a 5 years’ CAGR of 15.7%.

The net revenues strengthened to 184,056.78 Lakhs in the year under review, which is a growth of 6.5% over the preceeding year. The Earnings before Interest, Depreciation and Tax (EBIDTA), Profit before Tax (PBT) and Profit after Tax (PAT) have also grown substantially during the year under review by 55.6%, 46.7% and 41.0% respectively.

CORPORATE HIGHLIGHTS

Access to Capacity

During the year under review, your Company had access to 60.25 million square meters (msm) of tiles through own plants (25.55 msm), Subsidiaries/ Associates (25.70 msm) and other outsource partners (9 msm).

Capital Expenditure

Your Company continued to invest significantly in expanding and upgrading its plant and machinery and infrastructure. During the year under review, the gross block increased by Rs.5,280.82 Lakhs (previous year Rs.9,642.11 Lakhs) towards meeting routine capital expenditure requirements of own manufacturing plants.

Branding and Distribution

The main objectives to be achieved from brand and distribution were:

- To increase top of mind brand recall and connect

- To be in the top 2 consideration list of consumer/influencer

- Constant brand engagement

Your company followed a focussed communication strategy to reach out to its target group not only through the conventional medium of TV commercial, print, cinema, exhibitions, etc. but also through innovative activities like the studio bus lounge , showroom activations , smart kiosks at Airports and many more . It focussed on making state of the art retail showrooms across the country to enhance customer experience complemented with an upgraded visual merchandising at the stores. The TV commercial was aired in Kerala market owing to the focus we wanted to put in that market and helped create a new persona of our products.

During the year your company also participated in prestigious international and national exhibitions namely CERSAI at Bologna (Italy), Revestir at Sao Paulo (Brazil) and ACETECH at Delhi and Mumbai.

Your company also released new consumer ads for product categories like Duragres, Vitro, Glosstra and French Collection sanitaryware range; considering the latest trends in market and to further strengthen our brand persona as a young, trendy and vibrant brand. The media plan had an equal inclination towards trade and lifestyle magazines.

Many new product launches were done to keep abreast of the latest trends in the dynamic industry e.g. new GVT series, 40x80 Ceramic launch and the biggest launch of the year - The French Collection, a premium sanitaryware range that went on to become a rage and still expanding. The launch led to setting standards within the Indian Sanitary ware Industry which was very well appreciated by internal & external audiences.

The Business Lounge

To reach out to Target Groups (TGs) like Architects, Contractors & Builders we created an experiential lounge in a 40 Feet bus & took it to the doorstep of the TGs. The experiential lounge is stationed at a central hub wherein the targeted audience is invited for engagement and interactions. Also small events are created around the lounge.

Your company also organised the fourth edition of Architecture & Design Summit 2016’ to applaud the creativity in architecture and design which took place in conjunction with Economic Times.

Enhanced brand exposure through a Visualization Software & Mobile App and updated presence on social media platforms is also helping gain a lot of mileage. Also, various online yearly engagement contests like #Har Kahani Mein Somany amplified the brand reach pan India.

INDUSTRY SCENARIO AND OUTLOOK

India was once again the world’s third largest tile producer and consumer country in 2015. National production rose from 825 to 850 million sq. m. ( 10%). Domestic consumption also increased by just 7 million sq. m. to 765 million sq. m. ( 0.9%). Exports from the country witnessed a growth from 92 to 122 million sq. m. ( 52.6%), corresponding to fourfold growth in just 3 years, positioning India 4th in the rankings of top world exporters. Going forward, the anti-dumping duty proposed on certain categories of tiles imported from China will provide a level playing field for domestic players creating sustained demand. The proposed Goods and Services Tax (GST) will create a seamless national market for the organised players, resulting in removal of inter-state barriers and improvement in supply chain, besides reducing the price differential between the organised and unorganised players.

DIVIDEND

Your Directors are pleased to recommend a dividend of 135% i.e Rs.2.70 per equity share for the year under review as against 115% at Rs.2.30 per share in the previous year. This represents a payout ratio of 16%.

TRANSFER TO RESERVES

No amount was transferred to the General Reserve of the Company for the financial year ended 31st March, 2017.

UTILISATION OF PROCEEDS ON ISSUE OF SHARES

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

PUBLIC DEPOSITS

Your Company has not accepted any fixed deposits within the meaning of Section 73 of the Companies Act, 2013.

SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

During the year your company invested in 50% equity of M/s. Sudha Somany Ceramics Private Limited.

During the year under review, your company increased equity stake in associate company, M/s Vintage Tiles Private Limited from 26% to 50%.

There was no business activity in M/s SKPL Ceramics Private Limited (Formerly known as Somany Keraben Private Limited), a 50:50 joint venture between your Company and M/s Keraben Grupo S.A. (Formerly known as M/s Keraben S.A.). The Board decided to terminate the Joint Venture Agreement executed between the Company and M/s. Keraben Grupo S.A.

During the year the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which forms part of this Annual Report.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on Company’s website http://www. somanyceramics.com. These documents will also be available for inspection at our registered office in New Delhi, India, between 3:00 p.m. and 5:00 p.m. in working days till the date of ensuing AGM.

The statement required under Section 134 of the Companies Act, 2013 in respect of the subsidiary companies, associates and joint venture is provided at Annexure 1 to this report, which comprises performance and financial position of each of subsidiaries, associates and joint venture.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All transactions entered with Related Parties during the financial year were on arm’s length basis and were in the ordinary course of business. Further, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the Company at large. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2, is not required. Your directors draw attention of the shareholders to the financial statements which set out related party dosclosures.

Related Party Transactions Policy as approved by the Board has been uploaded on the Company’s website www.somanyceramics.com at the web link: https://www.somanyceramics.com/wp-content/ uploads/2017/06/Related-Party-Policy_Revised_24.01.2017.pdf

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report.

RISK MANAGEMENT

The Company has initiated measures to develop and implement Risk Management Systems in accordance to Section 134(3)(n) of the Companies Act, 2013 post it identified the factors, which in the opinion of the Board could threaten the Company’s existence. The Risk Management process that is followed to identify, assess and prioritise risks that need to be minimised, monitored and mitigated is quite elaborate. These measures help in reducing and controlling the impact of adverse events and maximise the realisation of opportunities. This procedure of Risk Management that has been developed is audited by the Audit Committee post stringent review from time to time, which ensures that the executive management controls risks through means of a properly defined framework. Major risks are identified systematically and mitigated on a continous basis. A few of the identified risks pertain to competitive intensity and cost volatility.

INVESTOR EDUCATION b PROTECTION FUND (IEPF)

The Company is required to transfer dividends which remained unpaid/ unclaimed for a period of seven years to the IEPF established by the Central Government. The unpaid/ unclaimed dividend for the year ended 31st March, 2010 is due for transfer to IEPF on or after 27th August, 2017.

AUDITORS’ REPORT

All the items on which the Auditors’ have commented in their report are self-explanatory and suitably explained in the Notes to the Accounts. The Auditors’ Report to the Shareholders for the year under review does not contain any qualifications.

DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of the knowledge and belief of the Directors of the Company and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013.

(a) In the preparation of the annual accounts for the year ended 31st March, 2017, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(b) The Directors’ have selected such accounting policies, applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2017 and of the profit of the Company for the year ended on that date.

(c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) The Directors have prepared the annual accounts on a going concern basis.

(e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CONSOLIDATED FINANCIAL RESULTS

As required by Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the consolidated financial statements have been prepared in accordance with applicable Accounting Standards. The audited consolidated financial statements together with Auditors’ Report forms part of this Annual Report.

The consolidated net profit of your Company was Rs.9307 Lakhs in the year under review compared to Rs.6470 Lakhs in the corresponding previous year.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Abhishek Somany retires by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment.

In view of the sale of shares by M/s. Latinia Limited held in the Company, M/s Latinia Limited withdrawn the nomination of Mr. Narayan Anand from the Board of Directors of the Company with effect from 12 April, 2017. Consequently, he resigned from the Board on the said date.The Board place on record the valuable contribution made by him during his tenure as director of the Company.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Regulation 16(1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

BOARD EVALUATION

Regulation 4(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. Clause (p) of sub-clause 5 of Section 154 of the Companies Act, 2015, states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and the Directors individually. Schedule IV to the Companies Act, 2015, states that the performance evaluation of Independent Directors shall be done by the entire Board excluding the Directors being evaluated. Performance evaluation was made by the Board on the various parameters and criteria governing performance of the Board and that of its committees and Directors and the same was taken on record.

NOMINATION AND REMUNERATION POLICY

The Company’s Policy on Directors appointment and remuneration as required by Section 134(3)(e) of the Companies Act, 2015 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) read with Part D of Schedule II of the said Listing Regulations has been uploaded on the website of the Company at www.somanyceramics.com at the weblink: https:// www.somanyceramics.com/wp-content/uploads/2016/06/SCL-Nomination-Remuneration-Policy.pdf

MEETINGS OF THE BOARD

Four meetings of the Board of Directors were held during the year the details of which are given in the Corporate Governance Report forming part of this Annual Report.

AUDIT COMMITTEE

The Audit Committee comprises Independent Directors namely Mr. R.K. Daga (Chairman), Dr. Y.K. Alagh, Mr. Salil Singhal, Mr. Siddharath Bindra and a non-independent director Mr. G.L. Sultania. All the recommendations made by the Audit Committee were accepted by the Board.

AUDITORS

M/s. Lodha & Co., Chartered Accountants, Statutory Auditors of the Company, having Firm Registration No. 301051E, were appointed as Statutory Auditors for a period of 3 (three) consecutive years at the 46th Annual General Meeting (AGM) held on 4th September, 2014, to hold office till the conclusion of the 49th AGM of the Company, subject to ratification of their appointment at every AGM, in terms of the first proviso to Section 139 of the Companies Act, 2013, read with Rule 3(7) of Companies (Audit and Auditors) Rules, 2014.

M/s. Lodha & Co., Chartered Accountants, cease to be the Statutory Auditors of the Company at conclusion of the ensuing AGM of the Company. The Company has received a letter from M/s Singhi & Co., Chartered Accountants, conforming that they are eligible for appointment as Statutory Auditors of the Company under Section 139 of the Companies Act, 2013 and meet the criteria for appointment specified in Section 141 of the said Act.

Based on the recommendations of the Audit Committee, the Board of Directors of the Company have recommended the appointment of M/s Singhi & Co., Chartered Accountants, having Firm Registration No. 302049E as Statutory Auditors of the Company for a term of 5 (five) consecutive years from the conclusion of the 49th AGM of the Company, subject to the approval of Shareholders.

CORPORATE GOVERNANCE

Your Company has been following the principles and practices of good Corporate Governance. A separate report on Corporate Governance and a certificate from the Statutory Auditors confirming compliance with the Corporate Governance requirements forms part of this Annual Report.

SECRETARIAL AUDITOR AND THEIR REPORT

The Board had appointed M/s Pinchaa and Company, Company Secretaries having firm registration number P2016RJ051800 to conduct Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2016-17. The Secretarial Audit Report for the financial year ended 31st March, 2017 is annexed and marked as Annexure 2 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as Annexure 3 to this report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility Committee (CSR Committee) of the Company has formulated a Corporate Social Responsibility Policy in terms of provisions of Section 135 of the Companies Act, 2013 read with Corporate Social Responsibility Policy Rules 2014. CSR Committee undertakes CSR activities in accordance with its Corporate Social Responsibility Policy (CSR Policy) uploaded on the Company’s website at www.somanyceramics.com at the weblink: https:// www.somanyceramics.com/wp-content/uploads/pdfs/policies/scl-corporate-social-responsibility-policy.pdf

The CSR initiatives of the Company are implemented directly and through various trusts/societies/NGO’s. The Company also carried out the CSR activities through a Section 8 Company under the Companies Act, 2013 incorporated under the name M/s H. L. Somany Foundation. The Company would also undertake other need based initiatives in compliance with Schedule VII to the Companies Act, 2013.

The 2% of the average net profit of the Company, made during the three immediately preceding financial years comes out to be Rs. 135.92 Lakhs. A report on CSR activities is provided at Annexure 4 to this report.

INTERNAL CONTROL SYSTEMS

The Company has in place adequate internal financial controls with reference to financial statements. During the year, no reportable material weakness in the design or operation was observed.

HUMAN RESOURCE (HR)

In Last few years, we have put consistent efforts to establish standardized processes for each HR deliverable. This has eliminated many redundant and unproductive work flows and enabled us to achieve higher benchmarks in HR operations. Technology combined with process, has supported employee transactions with more speed, ease and transparency. Leveraging on this increased operational effectiveness, we aim to strengthen our focus on strategic talent management, which is a long term talent planning and development practice to foster business competitiveness in future. To realize this aim, we see performance engagement and reinforcement as the key differentiator to business success. Our performance management model has clearly integrated individual performance and potential to the business vision. The Model has founded effective framework to facilitate, assess, distinguish & recognize people’s performance and to engage their capabilities and aspirations with business requirements. The meaningful insights driven from these performance analytics, guide our talent management and performance strategies.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Company has in place a Whistle Blower Policy, in terms of Section 177(9) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which works as Vigil Mechanism for all the directors and employees to report genuine concerns to the appropriate authority. Protected disclosures can be made by a whistle blower through an e-mail, or a letter to a task force referred in the said Policy.

The Whistle Blower Policy may be accessed on the Company’s website www.somanyceramics.com at the weblink: https://www. somanyceramics.com/wp-content/uploads/pdfs/policies/whistel-blower-policy.pdf

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report forms integral part of this Annual Report.

CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, R&D, technology absorption, foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed as Annexure 5 forming part of this Report.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided at Annexure-6.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names of employees and other particulars of the top ten employees and employees drawing remuneration in excess of the limits as provided in the said rules are set out in the Board’s Report as an addendum thereto. However, in terms of provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report is being sent to the members of the Company excluding the aforesaid information. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has a Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto covering all the aspects as contained under “The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013”.

During the period under review, the Company has not received any complaint under this Policy.

BUSINESS RESPONSIBILITY REPORT

The Board of Directors presents the Business Responsibility Report (BR) of the Company for the financial year ended on 31st March, 2017, pursuant to Regulation 34 (2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY

1.

Corporate Identity Number (CIN) of the Company

L40200DL1968PLC005169

2.

Name of the Company

Somany Ceramics Limited

3.

Registered address

82/19, Bhakerwara Road, Mundka, New Delhi - 110041

4.

Website

www.somanyceramics.com

5.

E-mail id

sciinvestors@somanytiies.co.in

6.

Financial Year reported

1st April, 2016 to 31st March, 2017

7.

Sector(s) that the Company is engaged in (industrial activity codewise)

Code as per NIC - 23929 - Ceramic/Vitrified Wall & Floor Tiles, Sanitaryware and Bath Fittings.

8.

List three key products/services that the Company manufactures/ provides (as in balance sheet)

Ceramic/Vitrified Wall & Floor Tiles, Sanitaryware & Bath Fittings.

9.

Total number of locations where business activity is undertaken by

A

Number of International Locations

Nil

the Company

B

Number of National Locations

i

Tile manufacturing locations

Own

2

Subsidiaries/Associates/JVs

7

ii

Sales Depot

19

iii

Display Centers

18

iv

Registered & Corporate offices

2

10.

Markets served by the Company

Local

State

National

International

_/

_/

_/

_/

SECTION B: FINANCIAL DETAILS OF THE COMPANY

1.

Paid up Capital

Rs.847.59 Lakhs

2.

Total Turnover

Rs.190,980.22 Lakhs

3.

Total profit after taxes

Rs.8,608.81 Lakhs

4.

Total Spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%)

Rs.128.80 Lakhs. 1.90% of the average net profit after taxes in the previous three financial years.

5.

List of activities in which expenditure in 4 above has been incurred:-

- Youth Empowerment through Skill Development

- Healthcare and Sanitation Programmes

- Vocational Training

- Women Empowerment

- Promotion of Sports

- Support to Charities/ NGOs

SECTION C: OTHER DETAILS

Does the Company have any Subsidiary Company/ Companies?

Yes

Do the Subsidiary Company/Companies participate in the BR Initiatives of the parent company? If yes, then indicate the number of such subsidiary company(s).

No direct participation. However the Company encourages its subsidiaries to adopt its policies and practices.

Do any other entity/entities (e.g. suppliers, distributors etc.) that the Company does business with, participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity/entities? [Less than 30%, 30-60%, More than 60%]

No

SECTION D: OTHER DETAILS

1. Details of Director/Directors responsible for BR

a) Details of Director responsible for implementation of the BR policy/policies

1. DIN : 00021423

2. Name : Shri Shreekant Somany

3. Designation : Chairman and Managing Director

b) Details of the BR Head

No.

Particulars

Details

1.

DIN (if Applicable)

NA

2.

Name

Shri R.K.Lakhotia

3.

Designation

Vice President-Finance

4.

Telephone number

01276-223300

5.

E-mail id

fin@somanytiles.co.in

2. Principle-wise (as per National Voluntary Guidelines) BR Policy/policies a) Details of compliance (Reply in Y/N)

Principle 1 (P1)

Businesses should conduct and govern themselves with Ethics, Transparency and Accountability

Principle 2 (P2)

Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle

Principle 3 (P3)

Businesses should promote the well-being of all employees.

Principle 4 (P4)

Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized.

Principle 5 (P5)

Businesses should respect and promote human rights

Principle 6 (P6)

Businesses should respect, protect, and make efforts to restore the environment.

Principle 7 (P7)

Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner.

Principle 8 (P8)

Businesses should support inclusive growth and equitable development.

Principle 9 (P9)

Businesses should engage with and provide value to their customers and consumers in a responsible manner.

S.

No.

Questions

P1

P2

P3

P4

P5

P6

P7

P8

P9

1.

Do you have a policy/ policies for.......

Y

Y

Y

Y

Y

Y

Y

Y

Y

2.

Has the policy being formulated in consultation with the relevant stakeholders?

Y

Y

Y

Y

Y

Y

Y

Y

Y

3.

Does the policy conform to any national / international standards? If yes, specify? (50 words)

Company has adopted various national and international standards viz:

1. ISO 9001: 2008 for Quality Management System

2. ISO 14001: 2004 for Environment Management System

3. BS OHSAS 18001: 2007 Occupational Health and Safety Management System.

4. ISO 22000: 2005 for Food Safety Management System

5. 5 ‘S’ Practices: for Shop Floor Management System

4.

Has the policy being approved by the Board? If yes, has it been signed by MD/owner/CEO/appropriate Board Director?

Y

Y

Y

Y

Y

Y

Y

Y

Y

5.

Does the company have a specified committee of the Board/ Director/ Official to oversee the implementation of the policy?

Y

Y

Y

Y

Y

Y

Y

Y

Y

6.

Indicate the link for the policy to be viewed online?

http://www.somanyceramics.com/policies/

7.

Has the policy been formally communicated to all relevant internal and external stakeholders?

The policies have been posted on the Company’s website for information of all stakeholders.

8.

Does the company have in-house structure to implement the policy/policies.

Y

Y

Y

Y

Y

Y

Y

Y

Y

9.

Does the Company have a grievance redressal mechanism related to the policy/ policies to address stakeholders’ grievances related to the policy/ policies?

Y

Y

Y

Y

Y

Y

Y

Y

Y

10.

Has the company carried out independent audit/ evaluation of the working of this policy by an internal or external agency?

Y

Y

Y

Y

Y

Y

Y

Y

Y

(a) If answer to the question at serial number no. 1 against any principle is ‘No’ , explain why: (Tick up to 2 options) : N/A

S.

No.

Questions

P1

P2

P3

P4

P5

P6

P7

P8

P9

1

The company has not understood the Principles

NA

NA

NA

NA

NA

NA

NA

NA

NA

2

The company is not at a stage where it finds itself in a position to formulate and implement the policies on specified principles

NA

NA

NA

NA

NA

NA

NA

NA

NA

3

The company does not have financial or manpower resources available for the task

NA

NA

NA

NA

NA

NA

NA

NA

NA

4

It is planned to be done with in next 6 months

NA

NA

NA

NA

NA

NA

NA

NA

NA

5

It is planned to be done within the next 1 year

NA

NA

NA

NA

NA

NA

NA

NA

NA

6

Any other reason(please specify)

NA

NA

NA

NA

NA

NA

NA

NA

NA

3. Governance related to BR

(a) Indicate the frequency with which the Board of Directors, Committee of the Board or CEO to assess the BR performance of the Company Within 3 months, 3-6 months, Annually, More than 1 year.

This is the first time Company is publishing the Business Responsibility Report. Therefore, there is no defined frequency. However, assessment is an ongoing activity and is an integral part of corporate functions.

(b) Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published?

No.

SECTION E: PRINCIPLE- WISE PERFORMANCE

Principle 1 - Business should conduct and govern themselves with Ethics, Transparency and Accountability.

1. Does the policy relating to ethics, bribery and corruption cover only the company? Yes/ No. Does it extend to the Group/Joint Ventures/ Suppliers/Contractors/NGOs /Others?

Yes, The Company’s policy relating to ethics, bribery and corruption serves as the guiding philosophy for all employees of the company as well as subsidiary companies.

2. How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management? If so, provide details thereof, in about 50 words or so.

During the year 8 complaints were received from the investors. All these investor’s complaints were properly attended and necessary actions were taken. In addition, the company received customer complaints which were addressed suitably from time to time.

Principle 2 - Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle.

1. List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and/or opportunities.

(a) Anti-Slip Floor Tiles with Slip Resistant Coating

(b) Process Waste Recycle

(c) Energy efficient processes

(d) Training of masons on tile laying (Known as Tile Master Programme)

2. For each such product, provide the following details in respect of resource use (energy, water, raw material etc.) per unit of product (optional):

(a) Reduction during sourcing/production/distribution achieved since the previous year throughout the value chain?

(b) Reduction during usage by consumers (energy, water) has been achieved since the previous year?

Energy efficient process:

a. (1) Installations of Solar Plant of 0.5 Megawatt at Kadi Plant of the Company (2) Installation of LED Lights (5) Installation of variable frequency drives, (4) Installation of temperature sensor and Energy efficient motors.

b. Use of thermal waste energy in different process like pre heating of combustion air and using pre-dryers for pre-drying the tiles.

c. Use of smoke waste by using the equipment’s heat pipe technology require the energy from the stack

Further, the data regarding reduction during usage by consumers (energy, water) is not available with the company.

3. Does the company have procedures in place for sustainable sourcing (including transportation)?

(a) If yes, what percentage of your inputs was sourced sustainably? Also, provide details thereof, in about 50 words or so.

The sourcing practices of the Company are devised to achieve environmental sustainability, cost reduction and social interest. The Company endeavor that the criteria used for vendor selection including transportation are cost effective with high quality standard and are eco-friendly. The selection of the vendors is done on the principles of sustainability, it is always ensured that the vendors adopt best human resource practices and take care of global warming.

4. Has the company taken any steps to procure goods and services from local & small producers, including communities surrounding their place of work?

If yes, what steps have been taken to improve their capacity and capability of local and small vendors?

Company accords priority to local suppliers of goods and services. Company takes steps for capacity building of local and small vendors. Company’s contractors who supply labour and transportation services for plant operations employ workmen from nearby communities. The training is provided to workforce for occupational health and safety.

5. Does the company have a mechanism to recycle products and waste? If yes, what is the percentage of recycling of products and waste (separately as<5%, 5-10%,>10%). Also, provide details thereof, in about 50 words or so.

The Company’s product are Ceramics/Vitrified wall & floor tiles and the Company has taken steps to reuse or recycle the waste. For treatment of water effluents, the company has installed STP Plant and 100% recycled water is used in the processes. Solid waste is used as a raw material in the process.

Principle 3 - Businesses should promote the wellbeing of all employees.

i. Please indicate the Total number of employees.

The total number of permanent employees are 2277 as on 51st March, 2017.

ii. Please indicate the Total number of employees hired on temporary/ contractual/casual basis.

Total temporary/contractual/casual employees are 1058 as on 51st March, 2017.

iii. Please indicate the Number of permanent women employees. There were 50 Permanent women employees as on 51st March, 2017.

iv. Please indicate the Number of permanent employees with disabilities.

There were 2 permanent employees with disabilities as on 51st March, 2017.

v. Do you have an employee association that is recognized by management?

No, there is no employee association which is recognized by Management.

vi. What percentage of your permanent employees is members of this recognized employee association?

N.A

vii. Please indicate the Number of complaints relating to child labour, forced labour, in voluntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year.

No.

Category

No. of complaints filed during the financial year

No. of complaints Pending as on end of the financial year

1

Child labour/forced labour/involuntary

NIL

NIL

2

Sexual harassment

NIL

NIL

3

Discriminatory employment

NIL

NIL

viii. What percentage of your under mentioned employees were given safety & skill up- gradation training in the last year?

1

Permanent Employees

57.8%

II

Permanent Women Employees

42.8%

III

Causal/Temporary/Contractual

81.7%

Employees

IV

Employees with Disabilities

0%

Principle 4 - Businesses should respect the interests of and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized

1. Has the company mapped its internal and external stakeholders? Yes/No

Yes.

2. Out of the above, has the company identified the disadvantaged, vulnerable & marginalized stakeholders?

Yes.

3. Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable and marginalized stakeholders? If so, provide details thereof, in about 50 words or so.

Our CSR approach focuses on the development of communities around the vicinity of our plants. We have also developed innovative programmes that leverage our capabilities as a tile manufacturer.

Our “Tile Master” initiative has cumulatively trained more than 5000 mason workers on tile laying techniques and improved their productivity and livelihood.

Principle 5 - Business should respect and promote human rights.

1. Does the policy of the company on human rights cover only the company or extend to the Group/Joint Ventures/Suppliers/ Contractors/NGOs/Others?

The Policy on Human Rights covers the Company only Company encourages parties associated with its value chain like vendors, suppliers, contractors, etc. to follow the principles stated in the policy.

2. How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the management?

The Company has not received any complaint from any stakeholder except the investor complaints during the period under review.

Principle 6 - Business should respect, protect, and make efforts to restore the environment.

1. Does the policy related to Principle 6 cover only the company or extends to the Group/Joint Ventures/Suppliers/Contractors/NGOs/ others?

The Policy on environment covers the Company only.

2. Does the company have strategies/initiatives to address global environmental issues such as climate change, global warming, etc.? Y/N. If yes, please give hyperlink for webpage etc.

Yes. The Company has Environmental Policy which guides the organization to continually mitigate the impact on climate change and global warming as a result of our operations. The company works continuously to reduce the waste and is focused on creating green infrastructure which are designed for better energy efficiency and efficient operations.

3. Does the company identify and assess potential environmental risks? Y/N

Yes.

4. Does the company have any project related to Clean Development Mechanism? If so, provide details thereof, in about 50 words or so. Also, if Yes, whether any environmental compliance report is filed?

The locations of the Company are certified for requirements under ISO 14001 (Environmental System) and OHSAS18001 (Occupational Health and Safety System). Audit by Independent Auditors are carried out to check the level of compliance.

5. Has the company undertaken any other initiatives on - clean technology, energy efficiency, renewable energy, etc. Y/N. If yes, piease give hyperlink for web page etc.

The initiative taken by the Company are covered under the Directors’ Report, which forms part of the Annual Report.

6. Are the Emissions / Waste generated by the company within the permissible limits given by CPCB / SPCB for the financial year being reported?

Emissions and Waste generated by the company are within the permissible limits.

7. Number of show cause/legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year.

None.

Principle 7 - Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner.

1. is your company a member of any trade and chamber or association? If Yes, Name only those major ones that your business deals with:

Yes, the Company is member of following trade associations which make efforts towards sustainable business development -

(a) Indian Council of Ceramic Tiles and Sanitary ware (ICCTAS)

(b) Confederation of Indian Industry (ClI)

(c) PHD Chamber of Commerce

(d) MCC Chamber of Commerce and Industry

2. Have you advocated/lobbied through above associations for the advancement or improvement of public good? Yes/No; if yes specify the broad areas (drop box: Governance and Administration, Economic Reforms, Inclusive Development Policies, Energy security, Water, Food Security, Sustainable Business Principles, Others)

The Company has represented through above associations from time to time for various economic and corporate governance issues in the interest of the Industry in general and Ceramic Industry in particular.

Principle 8 - Businesses should support inclusive growth and equitable development.

1. Does the company have specified programmes/initiatives/projects in pursuit of the policy related to Principle 8? If yes details thereof. The Company has taken a holistic approach towards the development of the deprived groups of the society. The Company work in the areas of education, vocational skills training and empowerment of women, development of children. To oversee implementation of various initiatives, Company has formed a Board Level Committee called Corporate Social Responsibility (CSR) Committee.

2. Are the programmes/projects undertaken through in-house team/ own foundation/external NGO/government structures/any other organization?

The projects are undertaken by in-house team/ CSR Foundation of the Company and in co-ordination with external agencies like NGOs and trusts.

3. Have you done any impact assessment of your initiative?

The CSR programme and their impacts/outcomes are monitored and reviewed by the Committee.

4. What is your company’s direct contribution to community development Projects-Amount in INR and the details of the projects undertaken?

The company has spent an amount of Rs.298.34 Lakhs in various CSR activities during the year 2016-17 which includes Rs.128.80 Lakhs being the amount required to be spent by the Company in terms of CSR Regulations in the financial year 2016-17. The details of the amount incurred on areas covered are given in Annexure to the report on Corporate Social Responsibility forming part of this Report.

5. Have you taken steps to ensure that this community development initiative is successfully adopted by the community? Please explain in 50 words, or so.

Company has a process of engaging with local community to understand their concerns. The CSR interventions are carried out on a need based approach which is developed after consultations with the local community to ensure that the activities are adopted by them.

Principle 9 - Businesses should engage with and provide value to their customers and consumers in a responsible manner.

1. What percentage of customer complaints/consumer cases are pending as on the end of financial year?

The Company has an effective system for addressing customer complaints. The customer cases filed against the Company for defects in tiles or relating to sales are not significant in number compared with annual sales volume.

2. Does the company display product information on the product label, over and above what is mandated as per local laws? Yes/ No/N.A./Remarks (additional information)

The Company displays all information as mandated by the regulations to ensure full compliance with relevant laws.

3. Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and/or anti-competitive behaviour during the last five years and pending as on end of financial year? If so, provide details thereof, in about 50 words or so.

No, there is no case filed by any stakeholder during last five year regarding unfair trade practices, irresponsible advertising and/or anti-competitive behavior.

4. Did your company carry out any consumer survey/consumer satisfaction trends?

The Company has received various awards for its contribution to the Industry, which represents customer satisfaction.

OTHER DISCLOSURES

I. There were no significant material orders passed by the Regulators / Courts during the financial year 2016-17 which would impact the going concern status of the Company and its future operations.

II. The Board has approved shifting of Registered Office of the Company from National Capital Territory (NCT) of Delhi to the state of West Bengal, subject to approval of Shareholders through Postal Ballot.

III. There were no significant material changes and commitments in terms of Section 134(3) (I) of the Companies Act, 2013, affecting the financial position of the Company.

ACKNOWLEDGEMENT

Your Directors acknowledge with sincere gratitude, the cooperation and help extended by all the stakeholders of your Company including its esteemed shareholders, government departments and agencies, financial institutions and banks, customers, vendors and employees.

For and on behalf of the Board

Place: New Delhi SHREEKANT SOMANY

Dated: 24th May, 2017 Chairman and Managing Director


Mar 31, 2016

Dear Members,

The Directors have pleasure in presenting the 48th Annual Report together with the Annual Audited Financial Statements of the Company for the year ended 3161 March 2016.

FINANCIAL RESULTS

(Based on Standalone Financial Statements)

(Rs. in Lacs)

Particulars 2015-16 2014-15

Gross Revenues from Operations 179938 160803

Net Revenues from Operations 173070 154105

Other income 921 783

Profit before Interest, depreciation and tax 13221 10409 (EBIDTA)

Interest and finance charges 1633 1631

Profit Before Depreciation 11588 8778

Less: Depreciation 2057 2227

Profit before Exceptional Item 9531 6551

Exceptional Item 443 -

Profit before tax (PBT) 9088 6551

Less: Provision for tax (net) 2982 2113

Profit after tax (PAT) 6106 4438

Add: Balance brought forward 15325 12262

Surplus available for appropriation 21431 16700

Appropriations:

Proposed dividend on equity shares 975 777

Tax on proposed dividend 198 158

Transferred to general reserve 600 440

Balance Carried to balance sheet 19658 15325

Total 21432 16700

FINANCIAL REVIEW

During the year under review, your Company once again performed well despite continuing slowdown in the real estate sector adversely affecting building material industry including tiles.

Keeping in with its tradition of growing above the industry average, this year also your Company outperformed average industry growth rate by growing its net sales by 12.4% achieving a 5 years'' CAGR of 19.4%.

Overall net revenues increased to Rs. 173070 lacs in the year under review, registering a growth of 12.3% over corresponding previous year. The Earnings before Interest, Depreciation and Tax (EBIDTA), Profit before Tax (PBT) and Profit after Tax (PAT) also increased significantly during FY16 by 27.0%, 38.7% and 37.6% respectively.

CORPORATE HIGHLIGHTS

Capacity Expansions

During the year under review, your Company added access to 8.29 million square meters of tiles as follows:

a) Somany Fine Vitrified Private Limited, a subsidiary Company commissioned polished vitrified tiles capacity of 4.29 million square meters per annum in October, 2015.

b) Expanded own plant capacity at Kassar (Haryana) in March, 2016 to produce additional 4 million square meters per annum of glazed vitrified tiles.

Post expansion own tile manufacturing capacity increased from 21.55 million square meters to 25.55 million square meters per annum, subsidiary/associates'' tile manufacturing capacities increased from 20.97 million square meters to 25.70 million square meters per annum at the end of year under review.

In addition, your Company has access to about 9.0 million square meters of tiles through other vendors.

The aggregate access to capacity is about 60.25 million square meters at the end of financial year under review.

In addition to the above, the Board of Directors of your Company approved expansion of existing capacity of Somany Sanitary Ware Pvt. Ltd., which has become subsidiary of your Company during the year under review, from 3.03 lacs pieces per annum to 9 lacs pieces per annum.

Exports

During the year under review, exports of your Company increased to Rs. 8044.69 lacs, a growth of 25% over the previous year. Exports expanded its foot print further during this year. With this your Company is currently exporting to about 60 countries.

Capital Expenditure

Your Company continued to invest significantly in expanding and upgrading its plant and machinery and infrastructure. During the year under review, the gross block increased by Rs. 9642.11 lacs (previous year Rs. 4693.56 lacs) out of which Rs. 8431.29 lacs were invested in expansion of Kassar plant as mentioned earlier and remaining on meeting routine capital expenditure requirements.

Branding and Distribution

Your Company followed a comprehensive plan for its communication and reached out through the medium of TV commercials, print, trade shows, exhibitions, retail showrooms complemented with an upgraded visual merchandising. The TV commercial was aired on most of the TV channels and helped create a new persona of our products. Also, the brand harnessed the potential of Newspaper and Cinema advertising in selected markets.

During the year, your Company also participated in prestigious international and national exhibitions namely CERSAI at Bologna (Italy), Revestir at Sao Paulo (Brazil) and ACETECH at Delhi and Mumbai.

Your Company also released new ads for product categories like Duragres, Vitro, Glosstra and Sanitaryware & Bath Fittings; considering the latest trends in market and to further strengthen our brand positioning as a young, trendy and vibrant brand. The media plan had an equal inclination towards trade and lifestyle magazines.

Your Company launched #NahiPhislenge, one of India''s biggest social campaigns, inspired by Somany Slip Shield. The brand gave ''not slipping'' a whole new meaning. The campaign reached out to masses with relevant issues, such as caring for the elderly, car pool, keeping the city clean, gender equality and organ donation in their day-to-day activities and created an impactful difference amongst the public by making them self-conscious.

Your Company also organised the third edition of Architecture & Design Summit 2015'' to applaud the creativity in architecture and design which took place in conjunction with The Economic Times.

Enhanced brand exposure through a Visualization Software & Mobile App and updated presence on social media platforms is also helping gain a lot of mileage. Also, various online engagement contests like #HarKahaniMeinSomany amplified the brand reach Pan India.

INDUSTRY SCENARIO AND OUTLOOK

The Indian Tile Industry like the other sectors of the economy continued to be subdued. The estimated size of the Indian Tile Industry at 756 million square meters was around Rs. 24000 crores which was equally divided between branded and unbranded players in value terms. The growth of industry in FY 16 was estimated to be under 10%. Your Company however continued to outperform the industry by growing at 12% in FY 16.

The growth drivers to accelerate the business momentum in the years to come include various government initiatives like ''Housing for All by 2022'', ''Smart Cities'', ''Swatch Bharat'', ''Real Estate Bill'' and thrust on infrastructure. Uptick in rural economy, expected good monsoon and rising disposable income and aspiration levels of Indian middle class towards branded products will also drive the growth of the industry.

Though the price hikes of tiles are difficult to come by due to intense competition, the value growth would come by mainly from going up the value chain. This would be possible by higher investment in branding activities to create a stronger brand recall amongst the consumers.

The reduction in fuel prices and also the anti dumping duty on import of Chinese vitrified tiles would help tile industry in strengthening its margin.

DIVIDEND

Your Directors are pleased to recommend a dividend of 115 % i.e Rs. 2.30 per equity shares for the year under review as against 100% at Rs. 2.00 per share in the previous year. This represents a payout ratio of 19.2%.

CHANGES IN SHARE CAPITAL

The paid up share capital of Company as on 31st March, 2016 was Rs. 84,758,852/-. During the year under review, your Company has issued and allotted 35,34,600 equity shares of face value of Rs. 2/- each of the Company on 22nd December, 2015 at a price of Rs. 339.50 per equity share (including share premium of Rs. 337.50 per equity share) to Qualified Institutional Buyers under Qualified Institutional Placement aggregating to Rs. 11999.97 lacs.

TRANSFER TO RESERVES

A sum of Rs. 600 lacs being 9.8% of the Profit after Tax of the financial year ended 31st March, 2016, has been transferred to the General Reserve of the Company.

UTILISATION OF PROCEEDS ON ISSUE OF SHARES

During the year, your Company has fully utilized Rs. 5,000/- lacs raised through private placement of equity shares in February, 2014 for the purposes the funds were so raised.

Your Company has also raised Rs. 11,999.97 lacs by allotting 35,34,600 equity shares of Rs. 2/- each @ Rs. 339.50 per share (including premium @ Rs. 337.50 per share) through qualified institutions placement on 22nd December, 2015. The funds so raised (net of issue expenses of Rs. 307.34 lacs) have been utilized for the purposes for which the same were raised except for Rs. 10,150 lacs which have been temporarily invested mainly in the debt instruments/funds.

PUBLIC DEPOSITS

Your Company has not accepted any fixed deposits within the meaning of Section 73 of the Companies Act, 2013.

SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

M/s SR Continental Limited, a wholly-owned subsidiary Company has closed its manufacturing operations. The trading of ceramic and allied products have also slowed down during the year.

M/s Somany Global Limited, another wholly-owned subsidiary Company continued its operations of selling tiles and sanitary ware till July 2015, post which there is no business activity in the Company.

M/s Amora Tiles Private Limited, a subsidiary Company in which the Company owns 51% equity shareholding has a manufacturing facility to produce 4.58 million square meters of wall tiles per annum.

M/s Somany Fine Vitrified Private Limited, became subsidiary during the year post increasing the equity stake upto 51%, has completed commissioning of 4.29 million square meters per annum of polished vitrfied tiles and had started its production in October, 2015.

M/s Somany Sanitary Ware Private Limited, became subsidiary during the year post increasing the equity stake upto 51%, has a manufacturing facility to produce 3.03 lacs pieces of sanitaryware per annum.

In addition, your Company has formed another wholly owned subsidiary namely Somany Excel Vitrified Private Limited on 30th October, 2015.

There are four associate companies having aggregate capacity to manufacture 16.83 million square meters per annum of tiles.

The Annual Report does not contain the financial statements of Subsidiary Companies pursuant to circular no. 2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs. However, financials of such Subsidiary Companies have been considered in the Consolidated Financial Statements of the Company for the period under review and provided in this Annual Report. The Board of Directors hereby undertakes that the audited accounts and related information of subsidiary companies, where applicable, will be made available upon request. The said documents will also be available for inspection during business hours at registered office of the Company as well as at the registered office of the subsidiary Companies.

The statement required under Section 134 of the Companies Act, 2013 in respect of the subsidiary companies is provided at Annexure 1 to this report.

There was no business activity in M/s Somany Keraben Private Limited, a 50:50 joint venture between your Company and M/s Keraben Grupo S.A. (Formerly known as M/s Keraben S.A.).

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All transactions entered with Related Parties during the financial year were on arm''s length basis and were in the ordinary course of business. Further, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the Company at large. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2, is not required.

Related Party Transactions Policy as approved by the Board has been uploaded on the Company''s website www.somanyceramics.com at the web link: https:// www.somanyceramics.com/wp-content/uploads/pdfs/policies/related-party- transaction-policy.pdf

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report.

RISK MANAGEMENT

The Company has adopted the measures concerning the development and implementation of a Risk Management System in terms of Section 134(3)(n) of the Companies Act, 2013 after identifying the elements of risks which in the opinion of the Board may threaten the very existence of the Company itself. The Company has an elaborate Risk Management process of identification, assessment and prioritisation of risk followed by coordinated efforts to minimise, monitor and mitigate/control the probability and/or impact of unfortunate events or to maximise the realisation of opportunities. The Risk Management procedure is reviewed by the Audit Committee from time to time, to ensure that the executive management controls risks through means of a properly defined framework. Major risks identified are systematically addressed through mitigating actions on a continuing basis. Some of the identified risks relate to competitive intensity and cost volatility.

INVESTOR EDUCATION & PROTECTION FUND (IEPF)

The Company is required to transfer dividends which have remained unpaid/ unclaimed for a period of seven years to the IEPF established by the Central Government. The unpaid/ unclaimed dividend for the year ended 31st March, 2009 is due for transfer to IEPF on or after 29th September, 2016.

AUDITORS'' REPORT

All the items on which the Auditors'' have commented in their report are self- explanatory and suitably explained in the Notes to the Accounts. The Auditors'' Report to the Shareholders for the year under review does not contain any qualifications.

DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of the knowledge and belief of the Directors of the Company and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3) (c) of the Companies Act, 2013.

(a) In the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(b) The Directors'' have selected such accounting policies, applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for the year ended on that date.

(c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) The Directors have prepared the annual accounts on a going concern basis.

(e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CONSOLIDATED FINANCIAL RESULTS

As required by Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the consolidated financial statements have been prepared in accordance with applicable Accounting Standards. The audited consolidated financial statements together with Auditors'' Report forms part of the Annual Report.

The consolidated net profit of your Company was Rs. 6470 lacs in the year under review compared to Rs. 4639 lacs in the corresponding previous year.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Sections 196, 197, 198 & 203 read with Schedule V to the Companies Act, 2013 and all other applicable provisions of the Companies Act, 2013 and the rules made thereunder, Mr. T. R. Maheshwari, Deputy Chief Executive Officer (Dy. CEO) of the Company was appointed as a Key Managerial Personnel and re-designated as Dy. Chief Executive Officer & Chief Financial Officer of the Company w.e.f. 25th January, 2016.

Mrs. Anjana Somany was appointed as a Whole-time Director of the Company, liable to retire by rotation, by the Board of Directors in their meeting held on 21st May, 2016. Mrs. Anjana Somany is related to Mr. Shreekant Somany, Chairman and Managing Director and Mr. Abhishek Somany, Managing Director of the Company. Her appointment as a Whole-time Director of the Company will be subject to approval of shareholders in the ensuing Annual General Meeting of the Company.

Mr. G. L. Sultania retires by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Regulation 16(1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

BOARD EVALUATION

Regulation 4(1) (f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. Clause (p) of sub-clause 3 of Section 134 of the Companies Act, 2013, states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and the Directors individually. Schedule IV to the Companies Act, 2013, states that the performance evaluation of Independent Directors shall be done by the entire Board excluding the Directors being evaluated. Performance evaluation was made by the Board on the various parameters and criteria governing performance of the Board and that of its committees and Directors and the same was taken on record.

NOMINATION AND REMUNERATION POLICY

The Company''s Policy on Directors appointment and remuneration as required by Section 134(3)(e) of the Companies Act, 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) read with Part D of Schedule II of the said Listing Regulations has been uploaded on the website of the Company at www.somanvceramics.com at the weblink: https//wvvw.somanycerarnbs.corrAvp-conten1/uploads/2016/06/SCL- Nornination-Remuneration-P3fcy.pdf

MEETINGS OF THE BOARD

Four meetings of the Board of Directors were held during the year the details of which are given in the Corporate Governance Report forming part of the Annual Report.

AUDIT COMMITTEE

The Audit Committee comprises Independent Directors namely Mr. R.K. Daga (Chairman), Dr. Y.K. Alagh, Mr. Salil Singhal and a non-independent director Mr. G.L. Sultania. All the recommendations made by the Audit Committee were accepted by the Board.

AUDITORS

M/s. Lodha & Company, Chartered Accountants, Statutory Auditors of the Company, having Firm Registration No. 301051E, were appointed as Statutory Auditors for a period of 3 (three) consecutive years at the 46th Annual General Meeting (AGM) held on 4th September, 2014, to hold office till the conclusion of the 49th AGM of the Company, subject to ratification of their appointment at every AGM, in terms of the first proviso to Section 139 of the Companies Act, 2013, read with Rule 3(7) of Companies (Audit and Auditors) Rules, 2014.

In this regard, the Company has received a letter from the Auditors conforming that they are eligible for re-appointment as Auditors of the Company under Section 139 of the Companies Act, 2013 and meet the criteria for appointment specified in Section 141 of the said Act.

Based on the recommendations by the Audit Committee, the Board of Directors of the Company recommend the ratification of re-appointment of M/s. Lodha & Company, Chartered Accountants, Statutory Auditors of the Company, having Firm Registration No. 301051E as Statutory Auditors of the Company for the financial year 2016-17, by the Shareholders at the ensuing AGM.

CORPORATE GOVERNANCE

Your Company has been following the principles and practices of good Corporate Governance. A separate report on Corporate Governance with a certificate from the Statutory Auditors confirming compliance with the Corporate Governance requirements forms part of the Annual Report.

SECRETARIAL AUDITOR AND THEIR REPORT

The Board had appointed M/s Drolia & Company, Practicing Company Secretaries having Certificate of Practice No. 1362, to conduct Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2015-16. The Secretarial Audit Report for the financial year ended 31st March, 2016 is annexed herewith marked as Annexure 2 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as Annexure 3 to this report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility Committee (CSR Committee) undertakes CSR activities in accordance with its Corporate Social Responsibility Policy (CSR Policy) uploaded on the Company''s website atwww.somanvceramics.com at the weblink: https://Www.somanyceramics.corn/Wp-content/uploads/pdfe/policies/ scl<»rpo(ate-social-(esponsibility-policy.pdf

A Section 8 Company under the Companies Act, 2013 was incorporated with the name M/s H. L. Somany Foundation to carry out the Corporate Social Responsibility activities of the Company. The Foundation came into effect on 2nd March, 2015. The Company would also undertake other need based initiatives in compliance with Schedule VII to the Companies Act, 2013.

The 2% of the average net profit of the Company, made during the three immediately preceding financial years comes out to be Rs. 115.61 lacs. A report on CSR activities is provided at Annexure 4 to this report.

INTERNAL CONTROL SYSTEMS

The Company has in place adequate internal financial controls with reference to financial statements. During the year, no reportable material weakness in the design or operation was observed.

HUMAN RESOURCE

In Somany, our HR Initiatives are aimed towards building a performance facilitating culture across the organization. We keep exploring and implementing new initiatives to engage, develop and retain key talent in the organization. We have established standard processes and systems in all HR operations, to provide transparency, clarity & rational approach in all HR activities.

As the world is moving fast, to match the pace of change both inside and outside, we have focused on integrating technology at all relevant employee interfaces, so as to give them ease and speed of working. The core purpose is to enable employees to maximize their potential and to foster individual''s and organization''s performance.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

The Company has in place a Whistle Blower Policy, in terms of Section 177(9) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which works as Vigil Mechanism for all the directors and employees to report genuine concerns to the appropriate authority. Protected disclosures can be made by a whistle blower through an e-mail, or a letter to a task force referred in the said Policy.

The Whistle Blower Policy may be accessed on the Company''s website www. somanvceramics.com at the weblink : https://www.somanyceramics.com/wp- content/uploads/pdfs/policies/whistel-blower-policy.pdf

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report forms integral part of this Annual Report.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, R&D, technology absorption, foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed as Annexure 5 forming part of this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annexure 6 forming part of the Annual report.

Disclosures pertaining to the remuneration and the other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure 6 forming part of the Annual Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has a Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto covering all the aspects as contained under "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013".

Up till date, the Company has not received any complaint under the Policy.

OTHER DISCLOSURES

I. Business Responsibility Report as per clause (f) of sub regulation (2) of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, describing the initiatives taken by the Company from an environmental, social and governance perspective and was not applicable to the Company earlier is now applicable to the Company as per SEBI Circular CIR/CFD/CMD/10/2015, dated 4th November, 2015 and Notification by the SEBI dated 22nd December, 2015, effective from 1st April, 2016.

II. There were no significant material orders passed by the Regulators / Courts during the financial year 2015-16 which would impact the going concern status of the Company and its future operations.

III. There were no significant material changes and commitments in terms of Section 134(3)(l) of the Companies Act, 2013, affecting the financial position of the Company.

ACKNOWLEDGEMENT

Your Directors acknowledge with sincere gratitude, the cooperation and help extended by all the stakeholders of your Company including its esteemed shareholders, government departments and agencies, financial institutions and banks, customers, vendors and employees.



For and on behalf of the Board

SHREEKANT SOMANY

Chairman and Managing Director

Place: New Delhi

Dated: 21st May, 2016


Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the 47th Annual Report together with the Audited Accounts of the Company for the year ended 31st March 2015.

FINANCIAL RESULTS

(RS. in lacs)

Particulars 31.03.2015 31.03.2014

Gross revenues from operations 160803 132946

Net revenues from operations 154105 125967

other income 783 274

Profit before Interest, depreciation and 10409 8438 tax (EBIDTA)

Interest and finance charges (net) 1631 1830

Profit Before Depreciation 8778 6608

Less: Depreciation 2227 2206

Profit before tax (PBT) 6551 4402

Less: Provision for tax (net) 2113 1599

Profit after tax (PAT) 4438 2803

Add: Balance brought forward 12262 10441

Surplus available for appropriation 16700 13244 appropriations:

proposed dividend on equity shares 777 583

Tax on proposed dividend 158 99

Transferred to general reserve 440 300

Balance Carried to balance sheet 15325 12262

Total 16700 13244

FINANCIAL REVIEW

During the year under review, your company once again performed well despite continuing slowdown in the real estate sector adversely affecting building material industry including tiles.

Keeping in with its tradition of growing above the industry average, this year also your company outperformed average industry growth rate by growing its net sales by 21.97% achieving a 5 years'' CAGR of 23.32%.

overall net revenues increased to RS. 154105 lacs in the year under review registering a growth of 22.34% over corresponding previous year. The Earnings before Interest, Depreciation and Tax (EBIDTA), Profit before Tax (PBT) and Profit after Tax (PAT) also increased significantly during FY15 year by 23.36%, 48.82% and 58.33% respectively.

DIVIDEND

Your Directors are pleased to recommend a dividend of 100% on equity shares at RS. 2/- per share (face value of RS. 2/- each) for the year under review as against 75% at RS. 1.50 per share in the previous year. This represents a payout ratio of 21.07%.

CORPORATE HIGHLIGHTS

Capacity Expansions

During the year under review, Your Company added access to 7.90 million square meters of tiles as follows:

a) Expanded own ceramic tiles capacity at Kadi (Gujarat) Plant by 2.40 million square meters per annum.

b) Amora Tiles Private Limited, a subsidiary company expanded ceramic tiles capacity by 2.44 million square meters per annum in November 2014.

c) Acer Granito Private Ltd., an existing associate company expanded polished vitrified tiles capacity by 3.06 million square meters in October 2014.

Post expansion as above, own tile manufacturing capacity increased from 19.15 million square meters to 21.55 million square meters per annum, subsidiary / associates'' tile manufacturing capacities increased from 15.47 million square meters to 20.97 million square meters per annum at the end of year under review. In addition, your company has access to about 9.0 million square meters of tiles through other vendors.

The agreegate access to capacity is about 51.52 million square meters at the end of final year under review.

In addition to above, the Board of Directors of your company approved expansion of Kassar (Haryana) Plant capacity by 4.00 million square meters to produce glazed vitrified / ceramic floor tiles.

Exports

During the year under review, exports of your company increased to RS. 6434.35 lacs, a growth of 201% over the previous year. The exports covered 10 new countries during this year. with this your company is currently exporting to more than 40 countries.

Capital Expenditure

Your Company continued to invest significantly in expanding and upgrading its plant and machinery and infrastructure. During the year under review the gross block increased by RS. 4693.56 lacs (previous year RS. 4117.53 lacs)out of which RS. 2973.35 lacs were invested in expansion of Kadi plant as mentioned earlier and remaining on meeting routine capital expenditure requirements.

Branding and Distribution

Your company followed a comprehensive plan for its communication and reached out through the medium of TV commercials, print, trade shows, exhibitions, retail showrooms complemented with an upgraded visual merchandising. The Tv commercial was aired on most of the Tv channels and helped create a new persona of our products.

During the year your company also participated in prestigious international and national exhibitions namely CERSAI at Bologna (Italy), MosBuild at Moscow (Russia) and ACETECH at Delhi, Mumbai and Bangalore.

Your company also released new ads for product categories like Duragres, Vitro and Glosstra; considering the latest trends in market and to further strengthen our brand positioning as a young, trendy and vibrant brand. The media plan had an equal inclination towards trade and lifestyle magazines.

Your company also organised the second edition of ''Architecture & Design Summit 2014'' to applaud the creativity in architecture and design which took place in conjunction with Economic Times.

Enhanced brand exposure through a refurbished website, Visualization Software and updated presence on social media platforms is also helping gain a lot of mileage.

INDUSTRY SCENARIO AND OUTLOOK

Like other building materials, the fortunes of tile industry are also linked with the performance of real estate sector in India. While the year under review was slow to modarate in terms of ground activity in Real Estate, there are positive indicators towards end of the year which could be potential game changers for the Real Estate Industry going forward. This in turn would spur growth of tile industry also.

The Indian ceramic tile industry is the third largest globally after China and Brazil yet with the lowest per capita consumption.

Tiles industry volumes have a positive correlation with India''s GDP at 1.5 x for past few years. With GDP expected to grow faster, tiles industry is expected to continue to grow in double digits. Government policies such as Housing for all & Smart cities, the rapid urbanization, rising disposable income, commercial, infrastructure and replacement demand would continue to ensure robust growth of tile industry.

Large ad spends, premiumisation and design innovations backed by change in perception towards tiles as lifestyle product will ensure higher than industry growth rates for branded players like your company.

The profit margins of the industry continued to remain under pressure due to inability on the part of industry to fully pass on the cost burden to end consumer due to severe competition.

UTILISATION OF PROCEEDS ON ISSUE OF SHARES

Out of RS. 5000.00 lacs raised through private placement of equity shares to Latinia Limited in February, 2014, the Company has so far utilized RS. 2650.00 Lacs (including Issue Expenses of RS. 145.94 lacs) for the purposes for which the same were raised. The balance RS. 2350.00 lacs remain temporarily invested in Bonds / Debts scheme of Mutual Funds.

PUBLIC DEPOSITS

Your Company has not accepted any fixed deposits within the meaning of Section 73 of the Companies Act, 2013.

SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

M/s SR Continental Limited, a wholly-owned subsidiary company continued its business of manufacturing and selling of refractories, colors used in the ceramic industry and also business of outsourcing and selling of ceramic tiles.

M/s Somany Global Limited, another wholly-owned subsidiary company continued its operations of selling imported and other high-end tiles and sanitary ware through its two show rooms named ''SOMANY GLOBAL''.

M/s Amora Tiles Private Limited (ATPL), a subsidiary company in which the Company owns 51% equity shareholding has a manufacturing facility to produce 4.58 million square meters of wall tiles per annum.

There are four associate companies having aggregate capacity to manufacture 16.39 million square meters of tiles. There is one associate company which is in the process of setting up a manufacturing facility to produce 4.29 million square meters of tiles per annum which is expected to commence production in current financial year 2015-16.

In addition there is one associate company which has a manufacturing facility to produce 3 lacs pieces of sanitary ware per annum.

The Annual Report does not contain the financial statements of Subsidiary Companies pursuant to circular no. 2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs. However, financials of such Subsidiary Companies have been considered in the Consolidated Financial Statements of the Company for the period under review and provided in this Annual Report. The Board of Directors hereby undertakes that the audited accounts and related information of subsidiary companies, where applicable, will be made available upon request. The said documents will also be available for inspection during business hours at registered office of the Company as well as at the registered office of the subsidiary Companies.

The statement required under Section 134 of the Companies Act, 2013 in respect of the subsidiary companies is provided at Annexure 1 to this report.

There was no business activity in M/s Somany Keraben Private Limited, a 50:50 joint venture between your company and M/s Keraben Grupo S.A. (Formerly known as M/s Keraben S.A.).

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All transactions entered with Related Parties during the financial year were on arm''s length basis and were in the ordinary course of business. Further, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the Company at large. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2, is not required.

Related Party Transactions Policy as approved by the Board has been uploaded on the Company''s website www.somanyceramics. com at the web link: httDs://www.somanvceramics.com/wD-content/uDloads/2015/06/ Related-Partv-Transaction-Policv.pdF

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report.

RISK MANAGEMENT

The Company has adopted the measures concerning the development and implementation of a Risk Management Policy in terms of Section 134(3)(n) of the Companies Act, 2013 after identifying the elements of risks which in the opinion of the Board may threaten the very existence of the Company itself. The Company has an elaborate Risk Management process of identification, assessment and prioritisation of risk followed by coordinated efforts to minimise, monitor and mitigate/control the probability and/or impact of unfortunate events or to maximise the realisation of opportunities. The Risk Management procedure is reviewed by the Audit Committee from time to time, to ensure that the executive management controls risks through means of a properly defined framework. Major risks identified are systematically addressed through mitigating actions on a continuing basis. Some of the identified risks relate to competitive intensity and cost volatility.

INVESTOR EDUCATION & PROTECTION FUND (IEPF)

The Company is required to transfer dividends which have remained unpaid/ unclaimed for a period of seven years to the IEPF established by the Central Government. Hence, the Company shall on 1st October, 2015 transfer the unpaid/ unclaimed dividend for the year ended 31st March, 2008 to IEPF.

AUDITORS'' REPORT

All the items on which the Auditors'' have commented in their report are self-explanatory and suitably explained in the Notes to the Accounts. The Auditors'' Report to the Shareholders for the year under review does not contain any qualifications.

DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013.

(a) In the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(b) The directors'' have selected such accounting policies, applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for that date.

(c) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) The directors have prepared the annual accounts on a going concern basis.

(e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CONSOLIDATED FINANCIAL RESULTS

As required by Clause 32 of the listing agreement with the stock exchanges, the consolidated financial statements have been prepared in accordance with applicable Accounting Standards. The audited consolidated financial statements together with Auditors'' Report form part of the Annual Report.

The consolidated net profit of your company was RS. 4639 lacs in the year under review compared to RS. 2887 lacs in the corresponding previous year.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Sections 149, 152, 161 and all other applicable provisions of the Companies Act, 2013 and the rules made thereunder, Mrs. Anjana Somany was appointed as an Additional Director on Board of the Company with effect from 24th March, 2015. Mrs. Anjana Somany is related to Mr. Shreekant Somany, Chairman and Managing Director of the Company and Mr. Abhishek Somany, Joint Managing Director of the Company. Her appointment as Director on the Board of Directors of the Company will be subject to approval of shareholders in the ensuing Annual General Meeting of the Company, liable to retire by rotation. A notice in writing was received from a Member along with requisite deposit under Section 160 of the Companies Act, 2013 proposing candidature of Mrs. Anjana Somany for the office of regular Director.

Mr. Narayan Anand retires by rotation at the ensuing Annual General Meeting and being eligible has offered himself for reappointment.

Mr. R. L. Gaggar, who retired by rotation, at 46th Annual General Meeting of the Company held on 4th September, 2014, did not seek for re-appointment. The Board placed on record its appreciation for the valued contribution made by him, in the various deliberation and discussions and guidance during his association with the Company.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges.

BOARD EVALUATION

Clause 49 of the Listing Agreement mandates that the Board shall monitor and review the Board evaluation framework. Clause (p) of sub-clause 3 of Section 134 of the Companies Act, 2013, states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and the Directors individually. Schedule IV to the Companies Act, 2013, states that the performance evaluation of Independent Directors shall be done by the entire Board excluding the Directors being evaluated. Performance evaluation was made by the Board on the various parameters and criteria''s governing performance of the Board and that of its committees and Directors and the same was taken on record.

EVALUATION CRITERIA

the Committee shall review the performance of every Director on the basis of the criteria laid down by the Committee as detailed below for evaluation of performance and submit its report to the Board.

Criteria for Evaluation of Independent Director and the Board:

The Independent Directors and the Board shall be evaluated on the basis of the following criteria''s i.e. whether they:

(a) Act objectively and constructively while exercising their duties;

(b) Exercise their responsibilities in a bona fide manner in the interest of the Company;

(c) Devote sufficient time and attention to their professional obligations for informed and balanced decision making;

(d) Do not abuse their position to the detriment of the Company or its shareholders or for the purpose of gaining direct or indirect personal advantage or advantage for any associated person;

(e) Refrain from any action that would lead to loss of his independence;

(f) Inform the Board immediately when they lose their independence;

(g) Assist the Company in implementing the best corporate governance practices;

(h) strive to attend all meetings of the Board of Directors and the Committees;

(i) participate constructively and actively in the committees of the Board in which they are chairpersons or members;

(j) Strive to attend the general meetings of the Company;

(k) Keep themselves well informed about the Company and the external environment in which it operates;

(l) Do not to unfairly obstruct the functioning of an otherwise proper Board or Committee of the Board;

(m) Moderate and arbitrate in the interest of the Company as a whole, in situations of conflict between management and shareholder''s interest;

(n) Abide by Company''s Memorandum and Articles of Association, Company''s Policies and procedures including code of conduct, insider trading guidelines etc.

The performance of Executive Directors shall also be evaluated on the basis of Targets / Criteria met by them, as given by the Board from time to time.

NOMINATION AND REMUNERATION POLICY

The Company''s Policy on Directors appointment and remuneration as required by Section 134(3)(e) of the Companies Act, 2013 and Clause 49 of the Listing Agreement is stated in the Corporate Governance Report, forming part of this Report.

MEETINGS OF THE BOARD

Six meetings of the Board of Directors were held during the year the details of which are given in the report on Corporate Governance of this Annual Report.

AUDIT COMMITTEE

the audit Committee comprises independent Directors namely Mr. R.K. Daga (Chairman), Dr. Y.K. Alagh, Mr. Salil Singhal and Mr. G.L. Sultania. All the recommendations made by the Audit Committee were accepted by the Board.

AUDITORS

M/s. Lodha & Company, Chartered Accountants, Statutory Auditors of the Company, having Firm Registration No. 301051E, were appointed as statutory auditors for a period of 3 (three) consecutive years at the 46th annual general Meeting (AGM) held on 4th September, 2014, to hold office till the conclusion of the 49th AGM of the Company, subject to ratification of their appointment at every AGM, in terms of the first proviso to Section 139 of the Companies Act, 2013 read with Rule 3(7) of Companies (Audit and Auditors) Rules, 2014.

In this regard, the Company has received a letter from the Auditors conforming that they are eligible for appointment as Auditors of the Company under Section 139 of the Companies Act, 2013 and meet the criteria for appointment specified in Section 141 of the said Act.

Based on the recommendations by the Audit Committee, the Board of Directors of the Company recommend the ratification of appointment of M/s. Lodha & Company, Chartered Accountants, Statutory Auditors of the Company, having Firm Registration No. 301051E as Statutory Auditors of the Company by the Shareholders at the ensuing AGM.

CORPORATE GOVERNANCE

Your Company has been following the principles and practices of good Corporate Governance. A separate report on Corporate Governance with a certificate from the Statutory Auditors confirming compliance with the Corporate Governance requirements forms part of the Annual Report.

SECRETARIAL AUDITOR AND THEIR REPORT

The Board had appointed M/s Drolia & Company, Practicing Company Secretaries having Certificate of Practice No. 1362, to conduct secretarial audit under the provisions of section 204 of the Companies Act, 2013 the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure 2 to this report.

EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as Annexure 3 to this report

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company''s website at the link: https://www.somanyceramics.com/wp-content/uploads/2015/07/sCL- Corporate-Social-Responsibilitv-Policv.pdf

A Section 8 Company under the Companies Act, 2013 was incorporated with the name M/s H.L. Somany Foundation to carry out the Corporate Social Responsibility activities of the Company. The Foundation came into being on 2nd March, 2015. The Company would also undertake other need based initiatives in compliance with Schedule VII to the Act.

The 2% of the average net profit of the company made during the three immediately preceding financial years comes out to be RS. 96.84 lacs. a report on csr activities is provided at Annexure 4 to this report.

INTERNAL CONTROL SYSTEMS

The Company has in place adequate internal financial controls with reference to financial statements. During the year, no reportable material weakness in the design or operation were observed.

HUMAN RESOURCE

At Somany, employees are considered as our biggest assets and we significantly invest in training and development of all our resources. We nurture our talent pool with enhancing their skills and leadership capabilities. We articulate a career path for our employees and follow a policy of growing leaders within the Company. we provide a very conducive work environment with opportunities for all to grow. These initiatives help us to attract and retain good quality talent.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

The Company has whistle Blower policy in terms of the listing Agreement which works as Vigil Mechanism. Protected disclosures can be made by a whistle blower through an e-mail, or a letter to a task force referred in the policy.

The Policy on vigil mechanism and whistle blower policy may be accessed on the Company''s website.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report forms integral part of this Annual Report.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, R&D, technology absorption, foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules 2014 is annexed as Annexure 5 forming part of this report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annexure Forming part of the Annual report.

Disclosures pertaining to the remuneration and the other details as required under Section 197(12) of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure 6 forming part of the Annual Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto covering all the aspects as contained under "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013".

Up till date, the Company has not received any complaint under the Policy.

OTHER DISCLOSURES

I. There has been no change in the Share Capital of the Company for the year under review.

II. Business Responsibility Report as per Clause 55 of the Listing Agreement with the Stock Exchange, describing the initiatives taken by Company from an environmental, social and governance perspective is not applicable to the Company, as per SEBI Circular CIR/CFD/DIL/8/2012, dated 13th August, 2012.

III. There were no significant material orders passed by the Regulators / Courts during the financial year 2014-15 which would impact the going concern status of the Company and its future operations.

IV. There were no significant material changes and commitments in terms of Section 134(3)(l) of the Companies Act, 2013, affecting the financial position of the Company.

ACKNOWLEDGEMENT

Your Directors acknowledge with sincere gratitude, the cooperation and help extended by all the stakeholders of your Company including its esteemed shareholders, government departments and agencies, financial institutions and banks, customers, vendors and employees.

For and on behalf of the Board

SHREEKANT SOMANY Chairman and Managing Director

Place: New Delhi Dated: The 18th day of May, 2015


Mar 31, 2013

Dear Members

The Directors have the pleasure in presenting the 45th Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2013.

Financial Results (Rs. in Lacs)

Particulars 2012-13 2011-12

Gross Revenues from Operations 111242 92397

Net Revenues from Operations 105014 87323

Other income 176 106

Profit before Interest, depreciation and tax 8705 7456

Interest and finance charges (net) 1998 2065

Profit Before Depreciation 6707 5391

Less: Depreciation 2040 1822

Profit before tax 4667 3569

Less: Provision for tax (net) 1508 1094

Profit after tax 3159 2475

Add: Balance brought forward 8086 6182

Surplus available for appropriation 11245 8657

Appropriations:

Proposed dividend on equity shares 414 276

Tax on proposed dividend 70 45

Transferred to general reserve 320 250

Balance Carried to balance sheet 10441 8086

Total 11245 8657

Operating Results

Your Company once again outperformed the average industry growth of 12-14% despite sluggish economic growth in almost all sectors of economy including construction. During the year under review, gross revenues increased from Rs. 92,397 lac in previous year to Rs. 11,1242 lac in the current year scaling a growth of 20.4% for the year and a 5 years'' CAGR of 25.9%.This could be achieved due to larger share of value added sales and also expanding volumes from outsourcing business. This in turn could be made possible due to further strengthening of the sales and distribution network backed by higher brand visibility.

However, the profit margins remained under pressure mainly due to substantial increase in cost of fuels (natural gas) and some of the raw materials along with the limited ability to pass on this cost burden to the end consumer due to competition.

Despite of the above, the Earnings before interest, depreciation and tax (EBIDTA), Profit before and after tax increased to Rs. 8,705 lac (16.8%), Rs. 4,667 lac (30.8%) and Rs. 3,159 lac (27.6%) respectively.

Dividend

Encouraged by good operating and financial performance, your Director''s recommended a dividend of 60% on equity shares at Rs.1.20per share (face value of Rs. 2/- each) for the year under review as against 40% at Rs.0.80 per share in the previous year

Corporate Highlights

Capacity Expansion: Your Company forged another joint venture by acquiring 26% equity stake in Commander Vitrified Private Ltd. which has set up a new plant at Morbi, Gujarat with an annual capacity to produce up to 2.65 million square meters of large format polished and glazed vitrified tiles. The plant started production since June 2012.

Vintage Tiles Private Ltd, the first JV with a manufacturing facility to produce up to 2.65 million square meters of polished vitrified tiles in which also your company acquired 26% stake last year continued production of polished vitrified tiles for the full year.

Your Company is entitled to buy and sell the entire production of both the JVs under its own brand name. The combined sales of your company from the products of both the JVs stood at Rs.143.62 crore, which is 12.96% of your company''s gross turnover.

Technological upgradation: Your Company continued to invest significantly in upgrading its plant and machinery. With addition of three more state-of-the-art imported digital printers for producing digital tiles, the total number of the same increased to six during the year under review. New age digital tiles will continue to enhance your Company''s sales realizations over vanilla variants.

Retail outlets: Your Company strengthened its distribution network by further increasing its retail foot prints. During the year under review, fifty four (54) new franchisee-run / self- managed retail outlets were added. With this, the total number of retail outlets (Somany Exclusives, Somany Global and Somany Studios) stood at 181 as on March, 2013.

Recognitions and accreditations: Your Company was awarded with following recognitions and accreditations during the year:

- Participated in LACP (League of American Communication Professionals), a global communication platform and received Gold award for our annual report of FY 12.

- Accredited with OHSAS 18001 (Health and Safety Standard) and ISO 22000 (Food safety management) for both the plants.

- ISO 14001 (Environment friendly manufacturing facility) and 5''S'' certification to Kassar plant.

- Brand ''SOMANY'' recognized as Asia''s most promising brand for the year 2012-13.

Industrial Scenario and Outlook

Despite economic downturn and subdued construction activity, the Indian ceramic tile industry is estimated to grow in double digits in the year under review. The size of the industry is estimated at about Rs.17,000 crore which is almost equally divided between branded national players and unbranded regional players, mostly based out of Morbi(Gujarat). The branded segment is continuing to grow significantly higher than the unbranded players.

Within branded segment, three players including your Company command more than 50% market share.

The long term outlook for the tile industry in India is expected to be good owing to certain factors such as increasing disposable incomes, increasing urbanization, growth in the middle class, huge shortage of housing and commercial space and government''s thrust on building necessary infrastructure to spur economic growth.

The profit margins of the industry continued to be under pressure mainly due to substantial increase in cost of energy (mainly natural gas) and inability on the part of industry to fully pass on this cost burden to end consumer due to severe competition.

On the other hand, faced with cost pressures and lack of brand and distribution set up, more and more unbranded players are willing to partner with branded players producing exclusively for the latter

Having already done two such JVs, your Company would continue to look out for more such alliances.

Human Resource

Your Company remains committed to the enrichment of skill set and upgradation of its human resource through training, performance appraisals and various welfare activities. Industrial relations continued to remain cordial throughout the year However, availability of skilled/semi-skilled human resource and their retention at desired compensation levels continued to be a challenge.

Public Deposits

Your Company has not accepted any fixed deposits and as such no amount of principal and interest was outstanding as on the date of balance sheet.

Subsidiary/Joint Venture Companies

M/s SR Continental Limited, a wholly-owned subsidiary company continued its business of manufacturing and selling of refractories, colours used in the ceramic industry and also business of outsourcing and selling of ceramic tiles.

M/s Somany Global Limited, another wholly- owned subsidiary company continued its operations of selling imported and other high-end tiles and sanitaryware through its three showrooms named ''SOMANY GLOBAL.

The Annual Report does not contain the financial statement of our subsidiaries pursuant to circular no. 2/2011 dated 8th February 2011 issued by the Ministry of Corporate Affairs. The Board of Directors hereby undertakes that the audited accounts and related information of subsidiary companies, where applicable, will be made available upon request. The said documents will also be available for inspection during business hours at registered office of the Company as well as at the registered office of the subsidiary Companies.

The information on two JVs with Commander Vitrified Private Ltd and Vintage Tiles Private Ltd are covered under the sub heading ''Capacity Expansion'' under the main heading ''Corporate Highlights''.

There was no business activity in M/s Somany Keraben Private Limited, a 50:50 joint venture between your Company and M/s Keraben, Spain.

The statement required under Section 212 of the Companies Act 1956 in respect of the subsidiary company is appended.

Auditors'' Report

All the items on which the Auditors'' have commented in their report are self- explanatory and suitably explained in the Notes to the Accounts.

Directors'' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217 (2AA) of the Companies Act 1956.

In the preparation of the Annual Accounts, the applicable accounting standards have been followed.

- The Company has selected such accounting policies, applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

- The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The Company has prepared the attached annual Statement of Accounts for the year ended 31st March, 2013 on a going concern basis.

Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 and other applicable Accounting Standards on Consolidated Financial Statements, your Directors have the pleasure in attaching the Consolidated Financial Statements which form part of the Annual Report and Accounts.

Directors

In accordance with the provisions of the Companies Act, 1956, Mr. Salil Singhal and Dr. Y.K. Alagh retire by rotation at the ensuing Annual General Meeting and both being eligible, offer themselves for reappointment.

Auditors

M/s Lodha & Company, Chartered Accountants and statutory auditors of your Company retired at the conclusion of ensuing Annual General Meeting and are eligible for reappointment. The Company has received a letter from them to the effect that their reappointment, if made, would be within the prescribed limits under Section 224 (1B) of the Companies Act, 1956.

Corporate Governance

Your Company has been following the principles and practices of good Corporate Governance. A separate report on Corporate Governance, with a certificate from the Statutory Auditors confirming compliance with the Corporate Governance requirements, forms part of the Annual Report.

Management Discussion and Analysis

Management Discussion and Analysis report forms part of the Annual Report.

Conservation Of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and Outgo

The information as required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed forming part of this report..

Particulars of Employees

A statement giving the particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particular of Employees) Rules, 1975 is annexed forming part of this report.

Acknowledgements

Your Directors acknowledge with sincere gratitude, the co-operation and help extended by all the stakeholders of your Company including its esteemed shareholders, government departments and agencies, financial institutions and banks, customers, vendors and employees.

For and on behalf of the Board

Shreekant Somany

Place: New Delhi Chairman and

Dated: 21st May, 2013 Managing Director


Mar 31, 2012

The Directors have pleasure in presenting the 44th Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2012.

Financial Results

Rs.in lacs

Particulars 2011-12 2010-11

Gross Revenues from Operations 92,397 75,553

Net Revenues from Operations 87,323 71,433

Other income 107 122

Profit before Interest, depreciation and tax 7,456 6,810

Interest and finance charges (net) 2,065 1,712

Profit Before Depreciation 5,391 5,098

Less: Depreciation 1,822 1,727

Profit before tax 3,569 3,371

Less: Provision for tax (net) 1,094 1,028

Profit after tax 2,475 2,343

Add: Balance brought forward 6,182 4,370

Surplus available for appropriation 8,657 6,713

Appropriations

Proposed dividend on equity shares 276 242

Tax on proposed dividend 45 39

Transferred to general reserve 250 250

Balance carried to balance sheet 8,086 6,182

Total 8,657 6,713

Operating Results

Your Company withstood the slowdown in the construction and real estate industry affected by a deceleration in growth, inflation and rising interest rates. Your Company reported a 22.3% growth in gross revenues at Rs.92,397 lacs compared with Rs.75,553 lacs in the previous year, on account of higher offtake of value-added products in our manufacturing capacity and expansion of outsourced business. The growth was further backed by a robust sales and distribution network and the strong brand recall of your Company. The EBIDTA improved to Rs.7,456 lacs as against Rs.6,810 lacs in the previous year, growing by 9.5%.

The net profit margins continued to remain under pressure throughout the year on account of rising costs of raw materials, power and fuel, rising interest rates and rupee depreciation. As a result of which your Company's profit before and after tax remained at a Rs.3,569 lacs and Rs.2,475 lacs each, registering a growth of 5.9% and 5.6% respectively over the previous year.

Dividend

Spurred by the growth of the business, your Director's recommended a dividend of 40% on equity shares at Rs.0.80 per share (face value of Rs.2/- each) for the year under review as against 35% on equity shares at Rs.0.70 per share in the previous year.

Corporate Highlights

Inorganic capacity expansion: Your Company acquired 26% equity stake in Vintage Tiles Private Ltd. (which has set up a new plant at Morbi, Gujarat) with an annual capacity of producing 2.65 million square meters of polished vitrified tiles (soluble salt and double charge categories) at an investment of Rs.503.10 lacs. The plant has started production since January 2012 and your Company is entitled to buy and sell the entire production of VTPL under its own brand name. This is expected to increase the volumes of value-added large format tiles.

Technological upgradation: Your Company has invested significantly in upgrading its assets by introducing the game changing digital print technology for ceramic wall and floor and glazed vitrified tiles. In the year under review, your Company installed three state-of-the-art digital printers for producing value-added digital tiles which are expected to enhance your Company's realisations over vanilla variants. Two more machines have been ordered and expected to be commissioned by June 2012.

Retail outlets: Your Company strengthened its distribution network by increasing its retail footprint by adding 52 new franchisee-run/self- managed retail outlets during the year under review. With these additions, the total number of Somany retail outlets (Somany Exclusives,

Somany Global and Somany Studios) stood at 127 as on March 2012. This is expected to improve retail sales and maximise offtake of tiles and in turn improve profitability.

Recognitions and accreditations: Your Company was awarded the prestigious Indian Power Brands Award for 2011-12 to facilitate Indian brands which are globally recognised and appreciated. Further, two executives of your Company were conferred with two awards in the field of corporate leadership and marketing excellence. Mr. Abhishek Somany has been awarded as Corporate Leader of the year and Mr. Sanjeev Ranjan was awarded as Marketing leader of the Year.

Industrial Scenario and Outlook

The Indian ceramic tile industry estimated at Rs.14,000 crores is almost equally divided between branded national players and unbranded regional players mostly based out of Morbi (Gujarat). The branded segment is witnessing significantly higher growth than the average industry growth.

The tile industry in India is expected to grow at a CAGR of about 15% from 2010-15. This trend is likely to continue owing to certain factors such as increasing disposable incomes, increasing urbanisation, growth in the Indian middle class, housing shortage in the country and government's thrust on building infrastructure, which will catalyse the robust demand of tiles from a medium-term perspective.

Your Company is ready to capitalise on these emerging opportunities owing to its proactive approach and sound marketing strategies. It has shown its capability by outperforming the average industry growth and reporting a five year CAGR of 25.6%.

The pressure on profit margins is likely to remain owing to:

- increase in various cost components like raw materials, energy and manpower

- interest and rupee depreciation and

- competitive pressures due to continuing creation/expansion of more capacities

The creation of more capacities in the unbranded segment is however continuing to throw up great opportunities for the leading branded manufacturers like your Company to take strategic equity stakes in these entities. This will expand and further strengthen the outsourced segment of the business and in turn augment market share, without investing a huge capital outlay in putting up fresh capacities.

Following this trend, your Company, in April 2012, signed another MOU to acquire a 26% strategic stake at Rs.325 lacs in Commander Vitrified Private Limited (CVPL), a Gujarat based tile manufacturing company. The deal gives your Company complete access to CVPL's production capacity of 2.65 million square meters per annum of large format polished and glazed vitrified tiles. This state-of-the-art plant is expected to start production in June 2012.

Additionally, your Company shall continue to invest in upgrading existing plants and introducing new technologies to further enhance the basket of value-added products at relatively lower costs.

Human Resource

Your Company continues to be committed to the skill development and upgradation of its human resource through in house and outside training programmes, periodical performance appraisals and welfare activities and creating an environment conducive for optimum performance and results. Industrial relations as always remained cordial throughout the year.

However, availability of skilled/semi-skilled human resource, their retention at desired compensation levels continues to be a challenge and a cause of concern.

Public Deposits

Your Company has not accepted any fixed deposits and as such no amount of principal and interest was outstanding as on the date of balance sheet.

Subsidiary/Joint Venture Companies

M/s SR Continental Limited, a wholly-owned subsidiary company continued its business of manufacturing colours used in the ceramic industry and also business of outsourcing and selling of ceramic tiles. During the year, it discontinued trading/outsourcing of tile adhesive/grouts.

M/s Somany Global Limited, another wholly- owned subsidiary company continued its operations of selling imported and other high- end tiles and sanitaryware through its own and franchisee retail showrooms named 'SOMANY GLOBAL'.

The Annual Report does not contain the financial statement of our subsidiaries pursuant to circular no 2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs. The Board of Directors hereby undertakes that the audited accounts and related information of subsidiary companies, where applicable, will be made available upon request. The said documents will also be available for inspection during business hours at registered office of the Company as well as at the registered office of the subsidiary Companies.

There was no business activity in M/s Somany Keraben Private Limited, a 50:50 joint venture between your Company and M/s Keraben, Spain.

Vintage Tiles Private Limited, a company of which 26% equity share capital is held by your Company, started production in January, 2012 at its new tiles plant at Morbi with an annualised capacity of 2.65 mn sqm.

The statement required under Section 212 of the Companies Act 1956 in respect of the subsidiary company is appended.

Auditors' Report

All the items on which the Auditors' have commented in their report are self explanatory and suitably explained in the Notes to the Accounts.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217 (2AA) of the Companies Act 1956.

In the preparation of the Annual Accounts, the applicable accounting standards have been followed.

- The Company has selected such accounting policies, applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The Company has prepared the attached annual Statement of Accounts for the year ended 31st March, 2012 on a going concern basis.

Consolidated Financial Statements

In accordance with the Accounting Standard AS-

21 and other applicable Accounting Standards on Consolidated Financial Statements, your Directors have pleasure in attaching the Consolidated Financial Statements which form part of the Annual Report and Accounts.

Directors

In accordance with the provisions of the Companies Act, 1956, Mr. R. L. Gaggar, and Mr. G. L. Sultania retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment.

Auditors

M/s Lodha & Company, Chartered Accountants statutory auditors of your Company retire at the conclusion of ensuing Annual General Meeting and are eligible for reappointment. The Company has received a letter from them to the effect their re appointment, if made, would be within the prescribed limits under Section 224 (1B) of the Companies Act, 1956.

Corporate Governance

Your Company has been following the principles and practices of good Corporate Governance. A separate report on Corporate Governance with a certificate from the Statutory Auditors confirming compliance with the Corporate Governance requirements, forms part of the Annual Report.

Management Discussion And Analysis

Management Discussion and Analysis report forms part of the Annual Report.

Conservation Of Energy, Research And Development, Technology Absorption, Foreign Exchange Earnings And Outgo

The information as required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed forming part of this report.

Particulars of Employees

A statement giving the particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particular of Employees) Rules, 1975 is annexed forming part of this report.

Acknowledgements

Your Directors acknowledge with sincere gratitude, the cooperation and help extended by the stakeholders including government departments and agencies, financial institutions and banks, customers, vendors and employees. The Directors are also thankful to the esteemed shareholders for their unwavering support and confidence reposed in your Company and its management.

For and on behalf of the Board

Shreekant Somany

Chairman and Managing Director

Place: New Delhi Dated: 19th May, 2012


Mar 31, 2010

The Directors have pleasure in presenting the 42nd Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2010.

Financial results Rs. in Lacs

2009-10 2008-09

Gross sales 56,302 46,277

Sales net of excise 53,694 44,209

Other income 292 158

Profit before interest, depreciation and tax 5,832 4,354

nterest and finance charges (net) 1,329 1,603

Profit before depreciation 4,503 2,75

Less: Depreciation 1,447 1,404

Profit before tax 3,056 1,347

Less: Provision for tax (net) 1,010 473

Profit after tax 2,046 874

Add: Balance brought forward 2,772 2,089

Surplus available for appropriation 4,818 2,963 Appropriations

Proposed dividend on equity shares 207 103

Tax on proposed dividend 36 18

Transferred to general reserve 205 70

Balance carried to balance sheet 4,370 2,772

Total 4,818 2,963

Operating results

Your Company maintained the growth momentum and continued to perform significantly well on all parameters.

A strong market presence in all customer segments, a very wide range of product offerings and a growing brand visibility resulted in the increase in sales turnover to Rs. 56,302 lacs from Rs. 46,277 lacs in the previous year, a growth of 21.66%.

Improving profit margins, cost reduction and higher volume of business as mentioned above contributed to higher profit before and after tax to Rs. 3,056 lacs and Rs. 2,046 lacs from Rs. 1,347 lacs and Rs. 874 lacs, respectively in the previous year, a growth of 126.87% and 134.10% respectively.

Expansion / Diversification

The expansion at Kassar (Haryana) plant to additionally produce about 2.45 millions square meters of tiles per annum is at advanced stage of commissioning and is likely to start trial runs in June 2010.

In addition three new gas based power generators of about one MW each are under commissioning and will start producing power in the month of June 2010.

Your Company also acquired land admeasuring 14.42 acres in Gujarat near its existing plant location at Kadi to take care of future expansion / diversification plans.

Dividend

Your Directors are pleased to recommend a higher dividend

of Rs. 3/- per share (30%) for the year compared to Rs. 1.50 per share (15%) for the previous year. The payment of dividend is however subject to necessary approvals as may be required.

Industrial scenario and future outlook

The growth of ceramic tile industry is mostly dependant on the growth of real estate sector. All segments of real estate industry from apartments, independent houses and villas, among others, to shopping malls, offices, plazas, SEZs commercial complexes, retail outlets, food chains, entertainment zones have been developing rapidly.

This will be further accelerated by Governments plans for large investment up to USD 1 trillion in building infrastructure in 12th five year plan (2012-17).

The changing consumers perspective towards the decorative use of ceramic tiles and its application in indoor and outdoor areas has brought in new trends and developments in the market, which your Company has been able to innovate and harness upon.

In view of above developments, the growth prospects of your Company and the industry continue to be very good for next couple of years.

Human resources

In line with one of the guiding visions for your Company to be the best employer in the tile industry your Company is continuing with various human resource development plans including training and skill up gradation of its employees. Industrial relations, as always, remained cordial throughout the year.

Public deposit

Your Company has not accepted any fixed deposits and as such no amount of principal and interest was outstanding as on the date of balance sheet.

Subsidiary / Joint Venture Companies

During the year under review, the name of wholly-owned subsidiary, M/s. Somany Retail Limited has changed to M/s. Somany Global Limited. It continued its operations of selling ceramic tiles and sanitaryware through its retail showrooms under the brand "SOMANY GLOBAL".

M/s. SR Continental Limited, another wholly-owned subsidiary continued its business of manufacturing colors used in ceramic industry and trading / outsourcing of tile adhesives / grouts.

M/s. Somany Keraben Private Limited a 50:50 joint venture between your Company and M/s. Keraben, Spain continued to market Spanish designs in India manufactured in the plants of your Company under the brand name "Synergy".

The statement required under Section 212 of the Companies Act, 1956 in respect of subsidiary companies is appended.

Auditors Report

All the items on which the Auditors commented in their report are self-explanatory and suitably explained in the Notes to the Accounts. As far as clause 1(a) of Auditors Report, fixed assets records of certain locations are in process and will be completed shortly.

Directors Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956.

In the preparation of the Annual Accounts, the applicable accounting standards have been followed.

- The Company has selected such accounting policies, applied them consistently, made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period.

- The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The Company has prepared the attached annual Statement of Accounts for the year ended 31st March, 2010 on a going concern basis.

Consolidated financial statements

In accordance with the Accounting Standard AS-21 and other applicable Accounting Standards on Consolidated Financial Statements, your Directors have pleasure in attaching the Consolidated Financial Statements which form part of the Annual Report and Accounts.

Directors

In accordance with the provisions of the Companies Act, 1956, Shri G. L. Sultania and Shri Salil Singhal retire by rotation at the ensuing Annual General Meeting and are eligible for re- appointment.

Shri G. G. Trivedi resigned from the Board w.e.f. 20th May, 2009, however, he is continuing as Chief Executive Officer of the Company.

Your Board of Directors welcomes Dr. Y. K. Alagh who has been appointed as an Additional Director on 30th October, 2009. He is a noted Indian economist and former Union Minister of Government of India. Currently, he is Chairman of Institute of Rural Management, Anand (IRMA). Your Company has received a notice in writing alongwith a deposit of Rs. 500 from a member under Section 257 of the Companies Act, 1956 signifying his intention to propose Dr. Y. K. Alagh as Director of the Company at the ensuing Annual General Meeting of the Company.

Auditors

M/s. Lodha & Company, Chartered Accountants, statutory auditors of your Company, retire at the conclusion of ensuing Annual General Meeting and are eligible for reappointment. The Company has received a letter from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1-B) of the Companies Act, 1956.

Corporate Governance

Your Company has been following the principles and practices of good Corporate Governance. A separate report on Corporate Governance, together with a certificate from the Statutory Auditors confirming compliance with the Corporate Governance requirements, forms part of the Annual Report.

Management Discussion and Analysis

Management Discussion and Analysis report forms part of the Annual Report.

Conservation of energy, Research and Development, technology absorption foreign exchange earnings and outgo.

The information as required under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed forming part of this report.

Particulars of Employees

A statement giving the particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particular of Employees) Rules, 1975 is annexed forming part of this report.

Acknowledgements

Your Directors acknowledge with sincere gratitude the cooperation and assistance extended by the central government, state governments, financial institutions, banks, customers, dealers, vendors and employees.

For and on behalf of the Board

Place : New Delhi Shreekant Somany Dated : 17th May, 2010 Chairman and Managing Director

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