1.11) Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement are recognized when
there is a present obligation as a result of past events and it is probable that there will be an
outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes
on accounts. Contingent Assets are neither recognized nor disclosed in the Financial
Statements.
1.12) Income Taxes
Income Tax expense comprises current tax and deferred tax charge or credit. The current tax is
determined as the amount of tax payable in respect of the estimated taxable income of the period.
The deferred tax charge or credit is recognised using prevailing enacted or substantively enacted
tax rates. Where there are unabsorbed depreciation or carry forward Losses, deferred tax asset is
recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets
are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax
assets are reviewed at each Balance Sheet date based on the developments during the year and
available case laws, to reassess realisation/liabilities.
MAT Credit is recognized as an asset only when and to the extent there is convincing evidence
that the Company will pay normal Income Tax during the specified period. In the year in which
the Minimum Alternative Tax (MAT) Credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued by the Institute of
Chartered Accountants of India, the said asset is created by way of a credit to the Profit and Loss
account and shown as MAT Credit Entitlement. The Company reviews the same at each Balance
Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is
no longer convincing evidence to the effect that Company will pay normal Income Tax during the
specified period.
1.13) Earnings Per Share
The Company presents basic and diluted Earnings Per Share (“EPS”) data for its ordinary shares.
Basic EPS is calculated by dividing the Profit or Loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the Profit or Loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for the effects of all dilutive
potential ordinary shares, which includes all stock options granted to employees.
1.14) Cash Flow Statement
Cash Flows are reported using the Indirect Method. Whereby Profit for the period is adjusted for
effects of transactions of a non-cash nature, any deferrals are accruals of past or future Operating
cash receipts or payments and item of income or expenses associated with Investing or Financing
cash flows. The cash flows from Operating, Investing and Financing activities of the Company
are segregated.
1.15) Segment Reporting
Segment Reporting is not applicable since the entire operations of the Company are related to one
segment i.e. manufacturing of ceramics tiles in terms of Ind AS 108 on operating segments.
1.16) Exceptional Items
Exceptional items refer to items of Income or Expenses within the Statement of Profit and Loss
from ordinary activities which are non-recurring and are of each size, nature or incidence that
their separate disclosure is considered necessary to explain the performance of the Company.
1.17) Recent Accounting Pronouncements and Adoption
The Company applied for the first time these amendments of Ind AS 8 , Ind AS 1 and Ind AS 12 and there
is no material impact on financials.
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended
March 31, 2024, MCA has not notified any new standards or amendments to the existing standards
applicable to the Company.
1.18) Events after Reporting date
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end
of the reporting period, the impact of such events is adjusted within the Financial Statements. Otherwise,
events after the Balance Sheet date of material size or nature are only disclosed.
1.19) Critical Accounting Estimates and Judgments
The preparation of Financial Statements is in conformity with generally Accepted Accounting Principles
that require management to make estimates and assumptions that affect the reported amounts of Assets
and Liabilities and disclosure of contingent liabilities at the date of the Financial Statements and the result
of operations during the reporting period. Although these estimates are based upon management’s best
knowledge of current events and actions, actual results could differ from these estimates. Revisions in
accounting estimates are recognized prospectively.
The areas involving critical estimates or judgments are -
- Estimates of Useful life of Plant and Equipment and Intangibles
- Measurement of Defined Benefit Obligation
- Recognition of Deferred Taxes
- Estimation of Impairment
Financial Risk Management
The Company’s activities expose it to Market Risk, Credit Risk and Liquidity Risk.
Company’s overall risk management focuses the unpredictability of financial markets and seeks
to minimize potential adverse effects on the financial performance.
i. Market Risk
Market Risk is the risk of Loss of future earnings, fair values or future cash flows that may
result from a change in the price of a Financial Instrument. The value of a Financial
Instrument may change as a result of changes in the interest rates, foreign currency
exchange rates, commodity prices and other market changes that affect Market Risk
sensitive instruments. Market Risk is attributable to all market risk sensitive Financial
Instruments including investments and deposits, foreign currency receivables, payables and
borrowings.
ii. Foreign Currency Risk
Foreign Currency Risk is the risk of impact related to fair value or future cash flows of an
exposure in foreign currency, which fluctuate due to change in foreign currency rates. The
Company’s exposure to the risk of changes in foreign exchange rates is negligible.
The Company did not enter into any derivative instruments for trading or speculative
purposes.
iii. Interest Rate Risk
Interest Rate Risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Company’s
exposure to the risk of changes in market rates relates primarily to the Company’s Short¬
term borrowing. The Company constantly monitors the credit markets and re-balances its
financing strategies to achieve an optimal maturity profile and financing cost.
iv. Credit Risk
Credit Risk arises when a customer or counterparty does not meet its obligations under a
financial instrument or custom contract, leading to a Financial Loss. The Company is
exposed to credit risk from its operating activities (primarily trade receivables) and from its
financing/investing activities, including deposits with banks. The Company has a prudent
and conservative process for managing its credit risk arising in the course of its business
activities. The Company receives payments regularly from its customers and hence the
Company has no significant credit risk.
v. Liquidity Risk
Liquidity Risk is defined as the risk that the Company will not be able to settle or meet
obligations on time or at a reasonable price. Prudent liquidity risk management implies
maintaining sufficient cash and marketable securities and the availability of funding
through an adequate amount of credit facilities to meet obligations when due. The Company
is responsible for liquidity, funding as well as settlement management. In addition,
processes and policies related to such risks are overseen by senior management.
Management monitors the Company’s liquidity position through rolling forecasts based on
expected cash flows.
Note 24
Capital Management
The Company’s objectives when managing capital are to
I) Safeguard their ability to continue as a going concern, so that they can continue to provide
returns for shareholders and benefits for other stakeholders.
II) Maintain an optimal capital structure to reduce the cost of capital consistent with others
in the industry, the Company monitors capital on the basis of the following gearing ratio:
Note 25
Factory Status
The Company suffered extensive damage to the Buildings, Plant & Machinery and other assets
situated at Factory, Yanam due to unprecedented violence, occurred on January 27, 2012. Stocks of
Finished goods, Raw materials, stores and spares, stocks-in-process and other inventories were
damaged / looted to a large extent. The Company declared lock-out of the Plant from January 31,
2012.
The extent of Loss/damage to Plant & Machinery, Buildings and other assets of the Company were
not considered in the books pending assessment and disclosed at book value after providing
depreciation without considering 5% residual value on account of efflux of time. The Company has
started the process of estimating the condition of the existing fixed assets & its realizable value. As
such, the machinery & buildings have not been insured.
Note 26
Status with lenders
The Company has paid entire OTS amount and thereafter, all the lenders have filed Satisfaction of
Memo in the DRT and Satisfaction of Charge with ROC.
Note 27
Exceptional Loss for FY 2023-24 of Rs. 43 Lakhs is on account of Penalties imposed by BSE
Note 28
Status of Insurance
The claim in respect of Loss/damage to Company’s Plant and Equipment, Finished Goods and Raw
Materials during labour unrest on 27.01.2012 was not settled by the Insurance Company on
reinstatement/ replacement basis. Thereafter, the Company invoked arbitration clause as per the terms
of Policy. The Hon’ble Arbitral Tribunal had pronounced an unanimous award in favour of the
Company. The Insurance Company had filed set-aside petition U/s 34 of the Arbitration and
Conciliation Act 1996 before the court of Principal District Judge, Puducherry. Pending final
Judgement, the Principal District Judge ordered the Insurance Company to pay the amount accepted
by the Insurance Company along with interest to the Company. Accordingly, Rs. 15.17 Crores
including interest of Rs.24.89 Lakhs was received in January, 2023. Out of the said amount, Rs.2.76
crores (claims accepted on Inventories) was adjusted against the claim receivable and the balance is
shown in current liabilities since the same is to be utilized for the reinstatement/ replacement of assets
damaged / destroyed.
Note 30
Confirmation of Balances
The Company could not obtain confirmation of balances in respect of Sundry Debtors & Sundry
Creditors, loans and advances, other current assets and other liabilities.
Note 31
Fair Value Measurement Hierarchy
The following table provide analysis of financial instruments that are measured subsequent to
initial recognition at fair value, grouped into level 1 to 3 as described below.
Level 1 -Quoted Prices in an Active Market
Level 1 hierarchy includes financial instruments measured using quoted prices. This included listed
equity instruments, traded bonds, ETFs and mutual funds that have quoted prices. The fair value of
all equity instruments (including bonds) which are traded in the Stock Exchanges is valued using
the closing price as at the reporting period.
Level 2 -Valuation Techniques with Observable Inputs.
The fair value of financial instruments that are not traded in an active market (for example, traded
bonds, over-the counter derivatives) is determined using valuation techniques which maximize the
use of observable market data and really as little as possible and entity-specific estimates if all
significant in put required to fail value an instrument are observable, the instrument is included in
level 2.
Level 3 -Valuation Techniques with Significant unobservable inputs.
This level of hierarchy includes financial assets and liabilities measured using inputs that are not
based on observable market data (unobservable inputs). Fair values are determined in whole or in
part, using a valuation model based on assumptions that are neither supported by prices from
observable current market transactions in the same instruments nor are they based on available market
data. The following table provides the fair value measurement hierarchy of the Company’s assets
and liabilities.
Disclosure in accordance with Ind AS 19 On Employee Benefits
The unprecedented industrial violence on 27.01.2012 resulted in deaths of personnel and destruction
of buildings and Equipment in the factory. Consequent to this, a lock-out was declared at the factory
from 31.01.2012. After series of negotiations with the workers union, Memorandum of settlement was
arrived on 24.10.2019 at Puducherry under Section 12 (3) of the Industrial Disputes Act, 1947 before
the Commissioner of Labour -cum- Chief Conciliation Officer, U T of Puducherry between the
Company and the Regency Ceramics Staff and Workers Union. As per the MOU, the management
has agreed to provide house sites at Yanam to all the displaced workers of the Company in three
categories as proposed by the union. In this connection, two stretches of land owned by ancillary units
to the extent of about 25.35 Acres was registered on 18.10.2019 in favour of the union through
settlement deeds. The conversion of agricultural land into residential plots, development of land, lying
of roads, allotment of plots, etc. is in progress.
Gratuity Provision as per Ind AS-19 and Leave Encashment were not applicable in view of the
Memorandum of settlement duly signed by both the Management and the Union.
Provisions for gratuity if any required under The Payment of Gratuity Act shall be provided for and
paid as and when liability arises.
a) There are no transactions with struck off companies under section 248 or 560
b) No charges or satisfaction is yet to be registered with Registrar of Companies beyond the statutory
period.
c) The Company has complied with the no. of layers prescribed u/s 2(87) read with the applicable
Rules
d) There is no Scheme of Arrangements that has been approved in terms of sections 230 to 237
e) The Company has not advanced /loaned/invested or received funds (either borrowed funds or share
premium or any other sources or kind of funds) to any other person(s) or entity(ies), including
foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise)
that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified
in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide
any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
f) There are no transactions that are not recorded in the books of account to be surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
g) The provisions with respect to Corporate Social Responsibility are not applicable to the Company,
as the Company does not fall within the purview of the section135 of the Companies Act,2013 and
Rules made thereunder.
h) The Company has not traded or invested in Crypto currency or Virtual Currency during the
financial year.
Note 40. Previous year figures have been regrouped /reclassified wherever necessary to suit the current
year's layout.
As per our report of even date.
For K.S.Rao & Co
Chartered Accountants
Firm Registration No.003109S
Sd/- Sd/-
Dr.Naraiah Naidu Gudaru Narala Satyendra Prasad
Executive Chairman Managing Director & CFO
DIN:00105597 DIN:01410333
Sd/-
V Venkateshwara Rao
Partner
Membership No:-219209
Sd/-
Anji Reddy Deverapalli
Company Secretory and Compliance Officer
Membership No.A57611
Place : Hyderabad
Date : 30.05.2024
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