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.
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
a) Amendment in Schedule III of the Companies Act, 2013
On 24th March,2021, the Ministry of Corporate Affairs (“MCA”) through a notification
amended Schedule III of the Companies Act, 2012 which is applicable from 01st April,
2021. The effect of said amendment has been incorporated in these Financial Statements
to the extent applicable to the Company.
b) Standards issued but not Effective
Ind AS 16- Proceeds before intended use
The amendments mainly prohibit an entity from deducting the cost of Plant and
Equipment amounts received from selling items produced while the Company is
preparing the asset for its intended use. Instead, an entity will recognize such sale
proceeds and related cost in Profit or Loss. The Company does not expect the
amendments to have any impact in its recognition of its Plant and Equipment in its
financial statements.
Ind AS 106 - Annual Improvements to Ind AS (2021)
The amendment removes the illustration of the reimbursement of leasehold
improvements by the lessor in order to resolve any potential confusion regarding the
treatment of lease incentives that might arise because of how lease incentives were
described in that illustration. The Company does not expect the amendment to have
any significant impact in its Financial Statements.
Ind AS 109 - Annual Improvements to Ind AS (2021)
The amendments clarifies which fees an entity includes when it applies the ‘10
percent’ test of Ind AS 109 in Assessing whether to de-recognized a Financial
Liability. The Company does not expect the amendment to have any significant
impact in its Financial Statements
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
Estimation of Provisions and Contingent Liabilities
Note 22: Earnings Per Share
Basic and Diluted EPS amounts are calculated by dividing the Profit or Loss attributable to
equity holders of the Company by the weighted average number of Equity shares outstanding
during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the
company by the weighted average number of Equity Shares outstanding during the year plus
the weighted average number of Equity Shares that would be issued on conversion of all the
dilutive potential Equity Shares into Equity Shares.
The following reflects the income and share data used in the basic and diluted EPS
computations:
Note 23
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 Items
Exceptional Loss of Rs. 1263.34 Lakhs is on account of short recovery of Insurance claim
on inventory as the said amount cannot be recovered as per the award of Arbitral Tribunal.
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.
Note 32
There are no remittances in foreign currency on account of Dividend during the year 2024-25.
Note 33
Balance of some of the debtors, creditors & loans and advances are subject to
confirmation/reconciliation.
Note 34
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.
Note 37: 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.
Notes 39: Additional information
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 Sd/- Sd/-
Firm Registration No.003109S Dr.Naraiah Naidu Gudaru Narala Satyendra Prasad
Executive Chairman Managing Director & CFO
DIN:00105597 DIN:01410333
Sd/-
C Venkateshwara Rao
Partner
Membership No: 219844
Sd/-
Anji Reddy Devarpalli
Company Secretory and Compliance Officer
Membership No. A57611
Place: Hyderabad
Date: 29.05.2025
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