3.7 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past events
and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and
a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects,
when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost. Provisions are reviewed at each Balance Sheet date and adjusted to
reflect the current best estimates.
Contingent liability is disclosed in the case of:
* a present obligation arising from past events, when it is not probable that an outflow of resources will be required
to settle the obligation.
* a present obligation arising from past events, when no reliable estimate is possible.
Contingent assets are not recognised in the financial statements however, contingent assets, if any, are disclosed in the
financial statements.
3.8 Earnings Per Share
Basic earnings per equity share is calculated by dividing the net profit after tax for the year attributable to equity
shareholders of the Company by the weighted average number of equity shares outstanding during the year.
Diluted earnings per equity share is computed by dividing adjusted net profit after tax by the aggregate of weighted
average number of equity shares and dilutive potential equity shares during the year.
3.9 Foreign Currency Transactions and Translations
Initial Recognition
The Company’s financial statements are presented in INR, which is also the Company’s functional currency. Transactions
in foreign currencies are recorded on initial recognition in the functional currency at the exchange rates prevailing on
the date of the transaction.
In case of advance receipts/payments in a foreign currency, the spot exchange rate to use on initial recognition of the
related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to
advance consideration, shall be the date when an entity has received or paid advance consideration in a foreign currency.
Measurement at the Balance Sheet Date
Foreign Currency monetary items of the Company, outstanding at the Balance Sheet date are restated at the year-end
rates. Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using
the exchange rate at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value is determined.
Treatment of exchange difference
Exchange differences that arise on settlement of monetary items or on reporting at each Balance Sheet date of the
Company’s monetary items at the closing rate are recognised as income or expenses in the period in which they arise.
3.10 Revenue from Contracts with Customers
The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Further, the Company evaluates the performance obligations being distinct to enable separate recognition and can
impact timing of recognition of certain elements of multiple element arrangements.
Revenue arises from sale of goods and rendering of services.
Sale of Goods
Most of the Company’s revenue is derived from selling goods with revenue recognised at a point in time when control of
the goods is transferred to the customer and retains none of the significant risks and rewards of the goods in question.
The Company recognises revenue from the sale of goods upon transfer of control of promised products to customers.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price allocated to
that performance obligation, in accordance with Ind AS 115 " Revenue from contract with customers". Amounts disclosed
as revenue are net of returns and allowances, trade discounts, volume rebates and value added taxes/ Goods and
service tax.
As per Ind AS 115, the Company determines whether there is a significant financing component in its contracts. However,
the Company has decided to use practical expedient provided in Ind AS 115 and not to adjust the promised amount of
consideration for the effects of a significant financing components in the contracts, where the Company expects, at
contract inception that the period of completion of contract terms are one year or less. Therefore, for short-term
advances, the company does not account for a financing component. No long - term advances from customers are
generally received by the Company.
The Company provides for warranties for general repairs and replacement which will be assurance-type warranties
under Ind AS 115, which will continue to be accounted for under Ind AS 37 "Provisions, Contingent Liabilities and
Contingent Assets", consistent with its current practice.
Rendering of Services
The Company is rendering after sales services for its sold products. The after sales services is rendered against
independent contracts with customers or against assurance type warranty for goods sold. Revenue from sale of services
is recognised at an amount entitled in exchange for transferring services at a point in time to a customer.
Interest and Dividends and Other Income
Interest income is reported on an accrual basis using the effective interest method. Dividends are recognised at the time
the unconditional right to receive payment is established. Other income is recognised on accrual basis except where the
receipt of income is uncertain.
3.11 Exceptional Items
An item of income or expense which by its size, nature, type or incidence requires disclosure in order to improve
an understanding of the performance of the Company is treated as an exceptional item and disclosed as such in the
financial statements.
3.12 Leases
The Company’s lease asset classes primarily consist of leases for land and buildings. The Company evaluates if an
arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant
judgment. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration. The determination of whether an arrangement is (or contains) a lease
is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if
fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right
to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Company as a lessee
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits
from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable
discount rate. The determination of whether an arrangement is (or contains) a lease is based on the substance of the
arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is
dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if
that right is not explicitly specified in an arrangement.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (“ROU”) and a corresponding
lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less
(short-term leases) and low value leases.
For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a
straight-line basis over the term of the lease. The right-of-use assets are initially recognized at cost, which comprises
the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of
the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated
depreciation and impairment losses. Right-of-use assets are depreciated from the commencement date on a straight¬
line basis over the lease term and useful life of the underlying asset. The lease liability is initially measured at amortized
cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit
in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these
leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company
changes its assessment if whether it will exercise an extension or a termination option. Lease liability and ROU asset
have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Further, refer Note No. 46, classification of leases and other disclosures relating to leases.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are
classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of
the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying
amount of the leased asset and recognised over the lease term on the same basis as rental income. Leases are classified
as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee.
Amounts due from lessees under finance leases are recorded as receivables at the Company’s net investment in the
leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the
net investment outstanding in respect of the lease.
3.13 Employee Benefits
Employee benefits include provident fund, pension fund, gratuity and compensated absences and Share based Payments.
Defined Contribution Plans
The Company’s contribution to provident fund and pension fund is considered as defined contribution plan and is
charged as an expense as they fall due based on the amount of contribution required to be made and when services are
rendered by the employees. The Company has no legal or constructive obligation to pay contribution in addition to its
fixed contribution.
Defined Benefit Plans
The Company operates a defined benefit Gratuity Plan with approved Gratuity Fund and contributions are made to a
separately administered approved Gratuity Fund. For defined benefit plans in the form of gratuity, the cost of providing
benefits is determined using ‘the Projected Unit Credit method’, with actuarial valuations being carried out at each
Balance Sheet date. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding
amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts
included in net interest on the net defined benefit liability), are recognised immediately in the Balance Sheet with a
corresponding debit or credit to retained earnings through other comprehensive income in the period in which they
occur. Remeasurements are not reclassified to the Statement of Profit and Loss in subsequent periods. The retirement
benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as
adjusted for unrecognised past service cost.
Short-term Employee Benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered
by employees are recognised during the year when the employees render the service. These benefits include salaries,
wages, performance incentive and compensated absences which are expected to occur within twelve months after
the end of the period in which the employee renders the related service. The cost of such compensated absences is
accounted as under:
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement
of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
Long-term Employee Benefits
Compensated absences and other benefits like gratuity which are allowed to be carried forward over a period in excess
of twelve months after the end of the period in which the employee renders the related service are recognised as a
non-current liability at the present value of the defined benefit obligation as at the Balance Sheet date out of which the
obligations are expected to be settled.
Share Based Payments
The Company recognizes compensation expense relating to share- based payment in statement of profit and loss using
fair value in accordance with Ind AS 102, "Share-based Payments".
Equity- settled share-based payments to employees are measured at the fair value of the employee stock options at the
grant date using an appropriate valuation model which is dependent on the terms and conditions of the grant.
The fair value determined at the grant date of the equity-settled share-based payments is amortised over the vesting
period, based on the Company’s estimate of equity instruments that will eventually vest, with a corresponding increase
in equity.
At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if any, is recognised in the Statement of Profit and Loss
such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled
employee benefits reserve.
Treasury shares
The Company has formed the Cera Sanitaryware Limited Employee Welfare Trust (“ESOP trust”) for purchasing the
Company’s shares to be allotted to eligible employees under Employee Stock Options Scheme, 2024. The Company has
considered the said Employee Welfare Trust as its extension and shares held by the Trust is treated as Treasury Shares.
As per Ind AS 32, the consideration paid for treasury shares including any directly attributable incremental cost is
presented as a deduction from total equity, until they are cancelled, sold or reissued.
3.14 Taxes on Income
Income tax comprises Current and Deferred Tax. It is recognised in the Statement of Profit or Loss except to the extent
that it relates to business combination or to an item recognised directly in equity or in other comprehensive income.
(a) Current Tax
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities
relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on
taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on
tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
(b) Deferred Tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised. Deferred tax liabilities are generally recognised in full.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the
asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the Balance Sheet date.
Tax relating to items recognised directly in equity/ other comprehensive income is recognised in respective head
and not in the Statement of Profit & Loss.
The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and is adjusted to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
3.15 Fair Value Measurement
The Company measures financial instruments such as investments in mutual funds, certain other investments etc. at
fair value at each Balance Sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability at the measurement date. All
assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement
as a whole.
* Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
* Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable.
* Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
3.16 Financial Instruments
I. Financial Assets
(a) Initial Recognition and Measurement
All financial assets are recognised initially at fair value plus, in case of financial assets not recorded at fair
value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset,
which are not at fair value through profit and loss, are added to fair value on initial recognition. Transaction
costs of financial assets carried at fair value through profit or loss are expensed in Statement of Profit
and Loss.
(b) Subsequent Measurement
(i) Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose
objective is to hold the asset in order to collect contractual cash flows and the contractual terms of
the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
(ii) Financial assets at fair value through Other Comprehensive Income (FVOCI)
A financial asset is subsequently measured at fair value through other comprehensive income if it is
held within a business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets and the contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iii) Financial assets at fair value through Profit or Loss (FVTPL)
A financial asset which is not classified in any of the above categories are subsequently fair valued
through Statement of Profit and Loss.
(c) Impairment of Financial Assets
The Company assesses on a forward looking basis the Expected Credit Losses (ECL) associated with its assets
measured at amortised cost and assets measured at fair value through other comprehensive income. The
impairment methodology applied depends on whether there has been a significant increase in credit risk.
(d) Derecognition of Financial Assets
A financial asset is derecognised when:
* The Company has transferred the right to receive cash flows from the financial assets or
* Retains the contractual rights to receive the cash flows of the financial assets, but assumes a contractual
obligation to pay the cash flows to one or more recipients.
Where the Company transfers the financial asset, it evaluates the extent to which it retains the risk and
rewards of the ownership of the financial assets. If the Company transfers substantially all the risks
and rewards of ownership of the financial asset, the Company shall derecognise the financial asset and
recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. If
the Company retains substantially all the risks and rewards of ownership of the financial asset, the Company
shall continue to recognise the financial asset.
Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards
of the ownership of the financial asset, the financial asset is derecognised if the Company has not retained
control of the financial assets. Where the Company retains control of the financial assets, the asset is
continued to be recognised to the extent of continuing involvement in the financial asset.
II. Financial Liabilities
Initial Recognition and Subsequent Measurement
All financial liabilities are recognised initially at fair value and in case of borrowings and payables, net of directly
attributable cost.
Financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and
other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair
value due to the short maturity of these instruments. Changes in the amortised value of liability are recorded as
finance cost.
III. Fair Value of Financial Instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions
that are based on market conditions and risks existing at each reporting date. The methods used to determine fair
value include discounted cash flow analysis, available quoted market prices. All methods of assessing fair value
result in general approximation of value, and such value may vary from actual realization on future date.
IV. Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a
currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis,
to realise the assets and settle the liabilities simultaneously.
V. Investment in Subsidiaries, Joint Ventures and Associates
The Company has accounted for its investment in subsidiaries, joint ventures and associates at cost less impairment
loss, if any.
3.17 Significant Judgments, Estimates and Assumptions
The preparation of the Company’s financial statements requires management to make judgments, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures,
and the disclosure of contingent liabilities at the date of the financial statements. Estimates and assumptions are
continuously evaluated and are based on management’s experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates
could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in
future periods.
In particular, the Company has identified the following areas where significant judgments, estimates and assumptions are
required. Further information on each of these areas and how they impact the various accounting policies are described
below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.
Judgments
In the process of applying the Company’s accounting policies, management has made the following judgments, which
have the most significant effect on the amounts recognised in the financial statements.
Contingencies
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company,
including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when
one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of
contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome
of future events.
Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are described below. The Company based its assumptions and estimates on parameters available when the
standalone financial statements were prepared. Existing circumstances and assumptions about future developments,
however, may change due to market change or circumstances arising beyond the control of the Company. Such changes
are reflected in the assumptions when they occur.
(a) Impairment of Non-financial Assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If
any indication exists, or when annual impairment testing for an asset is required, the Company estimates the
assets’ recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs
of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount
of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no
such transactions can be identified, an appropriate valuation model is used. The calculations are corroborated
by valuation multiples, quoted share prices for publicly traded securities or other available fair value indicators.
(b) Estimation of Defined Benefit Obligations
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation
are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may
differ from actual developments in the future. These include the determination of the discount rate, future salary
increases, mortality rates and attrition rate. Due to the complexities involved in the valuation and its long term
nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are
reviewed at each reporting date.
(c) Fair Value Measurement of Financial Instruments
When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured
based on quoted prices in active market, their fair value is measured using valuation techniques including the
DCF model. The inputs to these models are taken from observable markets where possible, but where this is
not feasible, a degree of judgment is required in establishing fair values. Judgements include considerations of
inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the
reported fair value of financial instruments.
(d) Estimation of Current Tax and Deferred Tax
Management judgment is required for the calculation of provision for income - taxes and deferred tax assets
and liabilities. The Company reviews at each Balance Sheet date the carrying amount of deferred tax assets. The
factors used in estimates may differ from actual outcome which could lead to adjustment to the amounts reported
in the financial statements.
(e) Impairment of Financial Assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected
credit loss rates (ECL). The Company uses judgments in making these assumptions and selecting the inputs to the
impairment calculation, based on Company’s past history, existing market conditions as well as forward looking
estimates at the end of each reporting period.
(f) Impairment of Investments in Subsidiaries, Joint Ventures and Associates
The Company reviews its carrying value of investments carried at cost (net of impairment, if any) annually. If
the estimated recoverable amount is less than its carrying amount, the impairment loss is accounted for in the
statement of profit and loss.
(g) Useful lives of property, plant and equipment, and intangible assets
Property, plant and equipment, and intangible assets represent a significant proportion of the asset base of the
Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s
expected useful life and the expected residual value at the end of its life. The useful lives and residual values of
Company's assets are determined by the management at the time the asset is acquired and reviewed periodically,
including at each financial year end. The lives are based on historical experience with similar assets as well as
anticipation of future events, which may impact their life, such as changes in technology.
(h) Share based Payments
The Company measures the cost of equity-settled transactions with employees using Black-Scholes model to
determine the fair value of the liability incurred on the grant date. Estimating fair value for share-based payment
transactions requires determination of the most appropriate valuation model, which is dependent on the
terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs
to the valuation model including the expected life of the share option, volatility and dividend yield and making
assumptions about them. The assumptions and models used for estimating fair value for share-based payment
transactions are disclosed in Note 34.2.
3.18 Standards issued but not yet effective
Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to time. As on March 31, 2025 there were no material
amendments to the Companies (Indian Accounting Standards) Rules issued by the MCA which were not yet effective.
7.1 (D) The Company acquired share capital worth Rs. 806 Lakhs for 26% stake in M/s Milo Tile LLP (""Milo"") in FY 2018-19.
During FY 2022-23 Milo had been unable to maintain product quality parameters which has forced the Company to
discontinue procuring tiles from Milo, and raise claims based on inferior quality products supplied by Milo.
Subsequently, the matter was referred to arbitration in accordance with the terms of the agreement between the
parties. However, during the mediation process, both parties agreed to an amicable settlement in March 2025
whereby CERA retired from the LLP without any claim on its capital or share of profits in the LLP and also paid an
amount of Rs. 160 Lakhs as full and final settlement against the Trade Payables due to Milo.
Pursuant to this settlement, the entire investment of Rs. 806 lakhs in Milo Tile LLP was not recoverable, hence
written off by adjusting against the impairment Loss provided (Rs. 500.00 Lakhs in FY 2022-23, Rs. 155.57 Lakhs in
FY 2023-24 and remaining amount of Rs. 150.43 Lakhs in FY 2024-25) and disclosed as an exceptional item in the
respective periods.
18.2 Terms / Rights attached to Equity Share :
The Company has only one class of Equity Shares having a par value of Rs. 5/- per share. Each holder of Equity is entitled
to one vote per share and each equity share carries an equal right to dividend. The dividend proposed by the Board of
Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim
dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company
after distribution of all preferential amounts, in proportion to their shareholding.
Refer Note 53 for the particulars of Dividend Paid / proposed during the year.
18.3 The Board of Directors of the Company at its meeting held on 5th August, 2024 approved the proposal of buyback 1,08,333
fully paid-up Equity Shares of the Company on a proportionate basis, through the tender offer route, at a price of
Rs. 12000/- per Equity Share payable in cash for an amount aggregating to Rs. 12,999.96 Lakhs (excluding transaction
cost and taxes). The Company bought back 1,08,333 fully paid-up Equity Shares and settled all valid bids and extinguished
equity shares bought back during the year.
Nature and purpose of Other Reserves
a) Securities Premium
Securities Premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the
provisions of the Companies Act, 2013.
b) General Reserve
General Reserve is created out of profit after tax earned by the Company by way of transfer from surplus in the statement
of profit and loss. The Company can use this Reserve for payment of dividend and issue of fully paid-up shares. As
General Reserve is created by transfer of one component of equity to another and is not an item of other comprehensive
income, items included in the General Reserve will not be subesquently reclassified to statement of profit and loss.
c) Treasury Shares
Treasury Shares represents cost of shares of the Company purchased by "Cera Sanitaryware Limited Employees Welfare
Trust" to be utilized for the purpose of granting ESOPs to the eligible employees of the Company.
d) Retained Earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends
or other distributions paid to shareholders. Retained earnings is a free reserve available to the Company.
e) Capital Redemption Reserve
In accordance with Section 69 of the Companies Act, 2013, the Company has created capital redemption reserve equal to
the nominal value of the shares bought back as an appropriation from the General Reserve.
f) Share Options Outstanding Reserve
Share Options Outstanding Reserve is created as required by Ind AS 102, 'Share Based Payments' on the employee stock
option scheme operated by the Company for its eligible employees. The share-based payment reserve is used to recognise
the value of equity-settled share-based payments provided to employees, including key management personnel, as part
of their remuneration.
* includes Compensation Expenses under ESOP Scheme Rs. 308.84 Lakhs (PY - Nil). Refer note 34.2
34.1 As per Ind AS 19 “Employee Benefits”, the disclosures of employee benefits as defined in the Indian Accounting Standard
are given below:
A. Defined Contribution Plan
The Company's Contribution to provident fund and pension fund is considered as Defined Contribution Plan and is
recognised as expenses for the year.
B. Defined Benefit Plan
The Company operates a Defined Benefit Gratuity plan with approved Gratuity Fund and contributions are made to
a separately administered approved Gratuity Fund. The present value of obligation is determined based on actuarial
valuation using the Projected Unit Credit method, which recognizes each period of service as giving rise to additional unit
of employee benefit entitlement and measures each unit separately to build up the final obligation.
Note - 41: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Overview
The Company’s Risk Management framework encompasses practices relating to the identification, analysis, evaluation,
treatment, mitigation and monitoring of the strategic, external and operational controls risks to achieving the Company’s
business objectives. It seeks to minimize the adverse impact of these risks, thus enabling the Company to leverage market
opportunities effectively and enhance its long-term competitive advantage. The focus of risk management is to assess risks
and deploy mitigation measures.
The Company's activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company
has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to the
business operations. The Company's principal financial liabilities comprise of trade and other payables. The Company's senior
management's focus is to foresee the unpredictability and minimize potential adverse effects on the Company's financial
performance. The Company's overall risk management procedures to minimize the potential adverse effects of financial
market on the Company's performance are outlined hereunder:
The Company's Board of Directors have overall responsibility for the establishment and oversight of the Company's risk
management framework.
The Company's risk management is carried out by the management in consultation with the Board of Directors and the Risk
Management Committee. They provide principles for overall risk management, as well as policies covering specific risk areas.
The note explains the sources of risk which the entity is exposed to and how the entity manages the risk.
(A) Credit Risk:
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the Company's receivables from customers and from its financial
activities including deposits with banks and other financial instruments. The Company establishes an impairment
allowance based on Expected Credit Loss model that represents its estimate of incurred losses in respect of trade and
other receivables, advances and investments.
(i) Trade Receivables:
The Company extends credits to customers in normal course of the business. The Company considers the factors
such as credit track record in the market of each customer and past dealings for extension of credit to the customers.
The Company monitors the payment track record of each customer and outstanding customer receivables are
regularly monitored. The Company evaluates the concentration of risk with respect to trade receivables as low, as
its customers are located at several jurisdictions and industries and operate in large independent markets. The
Company also takes advances and security deposits from customers which mitigate the credit risk to an extent.
The average credit period taken on sales of goods is 30 to 60 days. Generally, no interest has been charged on
the receivables. Allowances against doubtful debts are recognised against trade receivables based on estimated
irrecoverable amounts determined by reference to past default experience of the counterparty and an analysis of the
counterparty's current financial position.
Before accepting any new customer, the Company uses an internal credit system to assess the potential customer's
credit quality and defines credit limit of customer. Limits attributed to customers are reviewed periodically. There
are no customers who represent more than 5 per cent of total net revenue from operations.
The Company generally does not hold any collateral or other credit enhancements over any of its trade receivables
excepting a small amount in the nature of security deposits from its dealers, nor does it have a legal right of offset
against any amounts owed by the Company to the counterparty.
Expected Credit Loss (ECL):
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables
based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted
for internal and external information. The expected credit loss allowance is based on the ageing of the days the
receivables are due and the rates as per the Company’s provision matrix.
(i) Cash and cash equivalents and short-term investments:
The Company considers factors such as track record, size of institution, market reputation and service standard to
select the banks with which deposits are maintained. The Company does not maintain significant deposit balances
other than those required for its day to day operations. Credit risk on cash and cash equivalents is limited as these
are generally held or invested in deposits with banks and financial institutions with good credit ratings.
(B) Liquidity Risk:
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The
Company’s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due
without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
The Company's objective is to maintain optimum levels of liquidity to meet its cash and collateral requirements. The
Company relies on a mix of borrowings, capital and excess operating cash flows to meet its needs for funds. The current
committed lines of credit are sufficient to meet its short to medium term expansion needs. The Company monitors rolling
forecasts of its liquidity requirements to ensure that it has sufficient cash to meet operational needs while maintaining
sufficient headroom on its undrawn committed borrowing facilities so that it does not breach borrowing limits.
The details of the contractual maturities of significant liabilities are shown below
(C) Market Risk:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risks: foreign currency risk, interest risk and other price risk such
as commodity risk.
(i) Foreign Currency Risk:
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign exchange rates and arises where transactions are done in foreign currencies. It arises mainly
where receivables and payables exist due to transactions entered in foreign currencies. The Company evaluates
exchange rate exposure arising from foreign currency transactions and follows approved policy parameters utilizing
forward foreign exchange contracts whenever felt necessary. The Company does not enter into financial instrument
transactions for trading or speculative purpose.
The Company transacts business primarily in Indian Rupees, USD, Euro and GBP. The Company has foreign
currency trade payables and receivables and is therefore, exposed to foreign exchange risk. Certain transactions
of the Company act as a natural hedge as a portion of both assets and liabilities are denominated in similar foreign
currencies. For the remaining exposure to foreign exchange risk, the Company adopts a policy of selective hedging
based on risk perception of the management.
(ii) Interest Rate Risk:
The Company's exposure to the risk of changes in market interest rates relates primarily to long term debts having
floating rate of interest. Its objective in managing its interest rate risk is to ensure that it always maintains sufficient
headroom to cover interest payment from anticipated cashflows which are regularly reviewed by the Board. However,
the risk is very low due to negligible borrowings by the Company.
The Company’s non-current borrowings from banks are Nil as at 31st March, 2025 and 31st March, 2024 respectively.
Other non-current financial liabilities have fixed rate of interest where the risk of changes in the interest rates is
almost nil. As a result, the sensitivity affecting the profit before tax due to the Company’s exposure to the risk of
changes in market interest rates is almost nil.
(iii) Commodity Risk:
The Company is exposed to the movement in the price of key raw materials and other traded goods in the domestic
and international markets. The Company has in place policies to manage exposure to fluctuation in prices of key
raw materials used in operations. The Company enters into contracts for procurement of raw materials and traded
goods, most of the transactions are short term fixed price contracts and a few transactions are long term fixed
price contracts.
Capital Management:
The Company manages its capital to be able to continue as a going concern while maximising the returns to
shareholders through optimisation of the debt and equity balances. The capital structure consists of debt which
includes the borrowings as disclosed in Note 23, cash and cash equivalents and current investments and equity
attributable to equity holders of the Company, comprising issued share capital, reserves and retained earnings as
disclosed in the Statement of Changes in Equity. For the purpose of calculating gearing ratio, debt is defined as non
current and current borrowings (excluding derivatives). Equity includes all capital and reserves of the Company
attributable to equity holders of the Company. The Company is not subject to externally imposed capital requirements.
The Board reviews the capital structure and cost of capital on an annual basis but has not set specific targets for
gearing ratios. The risks associated with each class of capital are also considered as part of the risk reviews presented
to the Audit Committee and the Board of Directors.
Notes:
43.1 All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is insignificant to the fair value measurements as a whole.
Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 : valuation techniques for which the lowest level inputs that has a significant effect on the fair value measurement
are observable, either directly or indirectly.
Level 3 : valuation techniques for which the lowest level input which has a significant effect on fair value measurement
is not based on observable market data.
There have been no transfers between Level 2 and Level 3 during the period.
43.2 The management assessed that fair value of short term financial assets and liabilities significantly approximate their
carrying amounts largely due to the short term maturities of these instruments. The fair value of the financial assets
and liabilities is included at the amounts at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale.
43.3 The Company determines fair values of financial assets or liabilities by discounting the contractual cash inflows /
outflows using prevailing interest rates of financial instruments with similar terms. The initial measurement of financial
assets and financial liabilities is at fair value.
43.4 The fair value of investments in mutual funds is determined using net assets value of the funds. Further, the subsequent
measurements of all assets and liabilities (other than investments in mutual funds) is at amortised cost, using effective
interest rate method.
43.5 The following methods and assumptions were used to estimate the fair values:
- The fair value of the Company’s interest bearing borrowings are determined using discount rate that reflects the
entity’s discount rate at the end of the reporting period. The own non-performance risk as at the reporting period
is assessed to be insignificant.
- The fair value of unquoted instruments and other financial assets and liabilities is estimated by discounting future
cash flows using rates currently applicable for debt on similar terms, credit risk and remaining maturities.
Note - 49. NOTE ON CORPORATE SOCIAL RESPONSIBILITY :
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of
its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities.
The areas for CSR activities are community healthcare, free food, sanitation & hygiene, environmental sustainability and
education. A CSR committee has been formed by the Company as per the Act. The funds were primarily utilized through the
year on these activities which are specified in Schedule VII of the Companies Act, 2013
Note-51. OPERATING SEGMENTS:
The Company operates mainly in manufacturing of Building Products and all other activities are incidental thereto, which
have similar risk and return. Accordingly, there are no separate reportable Segments as required under IND AS 108 "Operating
Segment". The Revenue from transactions with the single external customer amounting to 10% or more of the Company's
Revenue is Nil.
Note-52.
In the opinion of the Management, current assets have a value on realisation in the ordinary course of business at least equal
to the amount at which they are stated except where indicated otherwise.
Note - 54. ADDITIONAL REGULATORY INFORMATION
The following additional disclosures are made pursuant to notification of Ministry of Corporate Affairs dated 24th March 2021.
1. Title deeds of Immovable Properties
The title deeds of all the immovable properties(other than properties where the Company is the lessee and the lease
agreements are duly executed in favour of the lessee) are held in the name of the company itself.
2. Revaluation of Property, Plant & Equipment
The company has not carried out revaluation of items of Property, Plant & Equipment during the year and accordingly
the disclosure as to whether the revaluation is based on the valuation by a registered valuer as defined under rule 2 of the
Companies (Registered Valuers and Valuation) Rules, 2017 is not applicable.
3. Loans / Advances in the nature of loans to Promoters, Directors, KMP's and Related Parties
The Company has not made any loans or advances in the nature of loans to Promoters, Directors, KMP's and the related
parties which are outstanding as at the end of the current year and previous year.
4. Details of Benami Property held
No proceedings have been initiated or pending against the company for holding any benami property under the Benami
Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
5. Wilful Defaulter
None of the banks, financial institutions or other lenders from whom the company has borrowed funds has declared the
company as a wilful defaulter at any time during the current year or in previous year.
6. Relationship with Struck off Companies
The company has not undertaken any transactions with companies struck off under section 248 of the Companies Act
2013 or section 560 of Companies Act 1956 during the current year or in previous year.
7. Registration of charges or satisfaction with Registrar of Companies (ROC)
All the charges or satisfaction of which is required to be registered with Registrar of Companies(ROC) have been duly
registered within the statutory time limit provided under the provisions of Companies Act 2013 and rules made thereunder.
8. Compliance with number of layers of companies
The company does not have investment in subsidiary companies and accordingly the disclosure as to whether the
company has complied with the number of layers of companies prescribed under clause (87) of section 2 of the Act read
with the Companies (Restriction on number of Layers) Rules, 2017 is not applicable.
9. Compliance with Approved Scheme of Arrangements
No scheme of compromise or arrangement has been proposed between the company & its members or the company & its
creditors under section 230 of the companies act 2013("The Act") and accordingly the disclosure as to whether the scheme
of compromise or arrangement has been approved or not by the competent authority in terms of provisions of sections
230 to 237 of the act is not applicable.
10. Borrowing from Banks and Financial Institutions for Specific Purpose
All the borrowings from banks and financial institutions have been used for the specific purposes for which they have
been obtained.
11. Utilisation of Borrowed funds and Share Premium
a) The company has not advanced or loaned or invested funds to any other persons or entities, including foreign
entities (Intermediaries) with the understanding, whether recorded in writing or otherwise, that the Intermediary
shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the
Ultimate Beneficiaries.
b) The company has not received any fund from any persons or entities, including foreign entities (Funding Party) with
the understanding , whether recorded in writing or otherwise, that the company shall directly or indirectly lend or
invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate
Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
12. Borrowings on the basis of security of Current Assets
The Company has working capital facilities from banks on the basis of security of current assets & are submitting
periodically Financial Information as per the terms & conditions of sanction letters.There are no material discrepancies
in the amount of current assets between quarterly Financial Information and books of accounts.
13. There were no transactions which have not been recorded in the books of account, have been surrendered or disclosed
as income in the tax assessments under the Income Tax Act, 1961 (43 of 1961) during the year.
Note-55:
Consequent to the introduction of Goods and Service Tax (GST) with effect from 1st July, 2017, Central Excise, Value Added
Tax (VAT) etc. have been subsumed into GST. In accordance with relevant Indian Accounting Standard and Schedule III to the
Companies Act, 2013, unlike Excise Duties, levies like GST, VAT etc. are not part of Revenue from Operations. Revenue for the
year ended 31st March, 2025 and 31st March, 2024 are net of GST.
Note-56:
Previous period figures have been regrouped, re-classified and re-arranged wherever considered necessary to confirm to the
current year's classification.
As per our report of even date attached.
For Singhi & Co. Vikram Somany
Chartered Accountants Chairman & Managing Director
(Firm Registration. No.: 302049E) DIN: 00048827
Sudesh Choraria Vikas Kothari Deepshikha Khaitan
Partner Chief Financial Officer Vice Chairman & Joint Managing Director
Membership No. 204936 Mem. No. ACA 114368 DIN: 03365068
Hemal Sadiwala Anupam Gupta
Place: Ahmedabad Company Secretary Executive Director (Technical)
Date: 9th May, 2025 Mem. No. ACS 20741 DIN: 09290890
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