You are here » Home » Companies » Company Overview » Euro Ceramics Ltd

Euro Ceramics Ltd.

BSE: 532823 Sector: Consumer
NSE: EUROCERA ISIN Code: INE649H01011
BSE 00:00 | 15 Apr Euro Ceramics Ltd
NSE 05:30 | 01 Jan Euro Ceramics Ltd
OPEN 1.21
PREVIOUS CLOSE 1.11
VOLUME 2203
52-Week high 3.00
52-Week low 0.91
P/E
Mkt Cap.(Rs cr) 4
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1.21
CLOSE 1.11
VOLUME 2203
52-Week high 3.00
52-Week low 0.91
P/E
Mkt Cap.(Rs cr) 4
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Euro Ceramics Ltd. (EUROCERA) - Director Report

Company director report

To

The Members

Euro Ceramics Limited

Your Directors hereby present the Sixteenth (16 ) Annual Report of the Company togetherwith the Audited Financial Statements for the financial year ended on March 31 2018.

FINANCIAL HIGHLIGHTS FOR THE CONTINUING OPERATIONS:

(Rs. in Lakhs)

Standalone Consolidated
Particulars For the year ended March 31 2018 For the year ended March 31 2017 For the year ended March 31 2018 For the year ended March 31 2017
Revenue from operations 2030.03 1176.96 2036.08 1185.97
Other Income 142.06 202.08 164.36 202.32
Total Income 2172.09 1379.06 2200.44 1388.29
Earnings Before Interest Depreciation and Tax (1184.98) (1072.66) (1196.63) (1080.80)
Less : Interest and other finance expenses 44.14 54.91 44.40 57.75
Less: Depreciation 1971.89 1969.44 1972.17 1969.72
Profit/(Loss) Before Exceptional and Extraordinary Item & Tax (3201.01) (3097.01) (3213.20) (3107.65)
Exceptional items [(Loss)/Gain] 831.11 5004.52 831.11 5004.52
Profit/(Loss) before extraordinary items and tax (2369.90) 1907.21 (2382.09) 1896.87
Less: Extraordinary Item - - - -
Profit/(Loss) Before Tax (2369.90) 1907.21 (2382.09) 1896.87
Less: Tax Expenses
a. MAT Credit Entitlement- Reversal 532.64 - 532.63 -
b. Short provisions of earlier years - - 3.43 -
Profit / (Loss) for the Year from Continuing Operations (A) (2902.54) 1907.21 (2918.15) 1896.87
*Profit / (Loss) for the period from Discontinuing Operations - 583.91 - 583.91
Net Profit from Disposal of Assets of Discontinuing operations - 2715.86 - 2715.86
Less: Tax expenses for discontinuing operations - - - -
Total Profit/(Loss) from Discontinuing Operations (B) - 3299.78 - 3299.78
Other Comprehensive income (C) 26.16 0.55 0.55 26.16
Total Comprehensive Income (A+B+C) 7131.21 5207.54 (2917.59) 5196.65
Add: Balance Brought forward from the previous year (21130.97) (26337.96) (23701.41) (28898.06)
Balance Carried forward to Balance Sheet (24033.51) (21130.97) (26619.56) (23701.41)

*In the previous financial year i.e. F.Y. 2016-17 the Company has sold itssanitaryware division and the same was considered as discontinued operations for thefinancial reporting as per Accounting Standard AS 24 issued by the ICAI. The financialsfor the year under review are given for the continuing operations of tiles which includesvitrified tiles wall tiles and marble division.

NOTES:

Company has adopted Indian Accounting Standards (IND AS) which is applicable from April1 2017. As per the SEBI Circular CIR/CFD/FAC/62/2016 dated July 5 2016 the company hasalso provided IND AS compliant financial results for the year ended March 31 2017.

According to the requirements of SEBI (Listing obligations and DisclosuresRequirements) Regulations 2015 revenue for the year ended March 31 2018 was reportedinclusive of excise duty.

The Good and Service Tax (GST) has been implemented with effect from July 1 2017 whichreplaces Excise Duty and other input taxes. As per INDAS 18 the revenue for the yearMarch 31 2018 is reported net of GST.

FINANCIAL REVIEW:

The turnover of the Company during the year is increased by Rs. 853.07 Lakhs comparedto previous year from Rs. 1176.96 Lakhs to Rs. 2030.03 Lakhs the Loss beforeexceptional items & tax stood at Rs. 3201.01 Lakhs for the year as compared to `3097.31 Lakhs for the previous year.

The brief financial highlights are given above and discussed in detail in ManagementDiscussion and Analysis forming part of this report.

OPERATIONAL REVIEW:

a. Calcareous Tiles/Mable Division :

During the year under review the operational revenue was majorly contributed by Marbledivision. The marble division was under performed due to working capital shortages.

b. Sanitaryware Divisions:

The Company continued the business of Sanitaryware products through trading afterhiving off the manufacturing unit in previous year and generated turnover of Rs. 757.88Lakhs during the year under review.

c. Other Division:

The Company's Vitrified tiles plant Wall tiles plant and Aluminium Extruded Sectionsplants were continued to be inoperative during the year under review due to workingcapital shortages and did not generate any revenue except for sale of old stock in hand.

There was no business in the Realty Division during the year.

SHARE CAPITAL:

There was no change in share capital of the Company during the year 2017-18.The paid upequity share capital of your Company as on March 31 2018 stands as Rs. 3373.77 Lakhsdivided into 33737717 Equity shares of the face value of `10/- (Rupee Ten) each.

LISTING OF SHARES:

The Equity shares of the Company are listed on National Stock Exchange of India Limited(NSE) and BSE Limited (BSE). The Company has paid the requisite listing fees to therespective Stock Exchanges for the financial year 2017-18.

DIVIDEND:

In view of the loss during the year and liquidity crunch felt by the Company yourDirectors do not recommend any dividend for the financial year 2017-18.

PUBLIC DEPOSITS:

Your Company has not accepted any deposits within the meaning of Section 73 and 76 ofthe Companies Act 2013 (‘The Act') read with Companies (Acceptance of Deposits)Rules 2014 for the year ended March 31 2018. However the Company has accepted unsecuredloans from friends and relatives of Directors/Promoters before the commencement of theAct which falls within the meaning of deposits as defined under Sections 74 and 75 of theAct and as per the rules framed thereunder. Due to liquidity crunch coupled with securedlenders restriction the Company could not repay the same and also could not file thestatement as required under Section 74(1)(a) of the Act. The aforesaid non-compliance wasinadvertent and due to absence of Whole-time Company Secretary in the Company.

ACTION AGAINST THE COMPANY BY THE BANKS UNDER SECURITIZATION AND RECONSTRUCTION OFFINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT 2002 (SARFAESI) AND THERECOVERY OF DEBTS DUE TO THE BANKS AND FINANCIAL INSTITUTION ACT 1993:

The Company has been incurring losses since F.Y.2011-12 onwards which has resulted inerosion of its net worth and depletion in its working capital. Eventually there weredefaults in the repayment of obligations to banks and the relevant loan accounts - TermLoans Cash Credits and other Non-Fund Based Credits which are classified asNon-Performing Assets by the Lenders. Consequently the Lenders have called-off theiradvances and issued notice for recovery under Section 19 of Recovery of Debts (DRT) andunder Section 13(2) of the Securitization & Reconstruction of Financial Assets &Enforcement of Security Interest (SARFAESI) Act 2002 to the Company.

However the Company has settled some of the lenders completely by paying one timesettlement amount during the previous year and obtained their No Dues Certificates andreleased the charge from Registrar of Companies as well as Sub Registrar of Assurances.Some of the Lenders have been settled with deferred payment schedule by paying substantialamount upfront. However the amount due till March 2018 is pending to be paid to theselenders. The Company in discussion with these lenders for granting some additional time tosettle the balance amount amicably.

BUSINESS RESTRUCTURING :

Your management in view to revive the Company from losses and to settle the outstandingdues of the Lenders and other creditors the Company has decided through membersapproval to re-organise/ re-structure the business of the Company to meet its presentneeds the members have approved the resolution authorizing the board to sell the Assets ofthe Company subject to lenders and other approvals if deemed appropriate as part ofbusiness restructuring process. The details of the resolution approved and voting resultsof the members of the Company through postal ballot is detailed in Report of CorporateGovernance.

EXTRACT OF ANNUAL RETURN:

An extract of Annual Return in Form MGT 9 is appended to this Report as Annexure I.

HOLDING SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES AND CONCOLIDATEDFINANCIAL STATEMENTS:

As on the financial year ended March 31 2018 the Company has 1(One) wholly ownedsubsidiary company named- M/s. Euro Merchandise (India) Limited and a Subsidiary entityi.e. Partnership Firm named: M/s. Euro Relators. The Company does not have any HoldingAssociate or any Joint Venture Company.

During the year under review the Board of Directors ('the Board') reviewed the affairsof the Subsidiary Company. In accordance with Section 129(3) of the Act ConsolidatedFinancial Statements have been prepared for the Company and its subsidiary companyincluding subsidiary entity i.e. partnership firm which forms part of this Annual Report.Further a statement containing salient features of the financial statements of theWholly-owned subsidiary company and Subsidiary Entity in Form AOC-1 is appended as Annexure-IIto the Financial Statements forming part of this Annual Report.

In accordance with Section 136 of the Act the Audited Financial Statements (includingthe Consolidated Financial Statements) and related information of the Company areavailable on the Company's website http://www.eurovitrified.com/ reports_filing.html .

These documents will also be made available for inspection at the Registered Office ofthe Company during business hours on all working days upto the date of Annual GeneralMeeting.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMPs').

In accordance with the provision of Section 152 of the Act read with the Companies(Management and Administration) Rules 2014 and the Articles of Association of theCompany Mr. Viral Nandu Chairman & Wholetime Director of the Company retires byrotation at the ensuing Annual general Meeting and being eligible has offered himself forre-appointment.

Your Board recommends the appointment of the Mr. Viral Nandu as the Director of theCompany.

Further the tenure of Mr. Viral Nandu as Chairman and Wholetime Director expires onSeptember 29 2018.The Board on recommendation of Nomination & remuneration Committee at its meeting held on August 10 2018 approved the re-appointment of Mr. Viral Nanduas Chairman & Wholetime Director of the Company for a further period of three (3)years w.e.f. September 30 2018 to September 29 2021 at NIL remuneration and such termsand conditions as stated in resolution No. 4 of the Notice of AGM dated August 10 2018subject to approval of members of the Company.

Pursuant to Regulation 36(3) of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 (hereinafter referred to as 'Listing Regulations') andSecretarial Standards on General Meeting (SS-2) issued by the Institute of CompanySecretaries of India (ICSI) brief resume of the Directors proposed to be appointed /re-appointed in the ensuing Annual General Meeting are provided in Notice of 16 AnnualGeneral Meeting of the Company.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Act and Regulation 16(1)(b) of Listing Regulations.

There has been no change among the KMP's during the year under review.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134(3)(c) of the Act the Directors of your Company to the best oftheir knowledge and based on the information and explanations obtained by them statethat:

a. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;

b. the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year March312018 and of the loss of the company for that period;

c. the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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 thecompany and that such internal financial controls are adequate and were operatingeffectively; and

f. the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

MEETINGS OF THE BOARD OF DIRECTORS:

The Board meets at regular intervals to discuss and decide on Company's business policyand strategy apart from other businesses of the Board. During the year under review theBoard met 5 (five) times. The details of the meetings of Board of Directors and theattendance of the Directors at the meetings are provided in the Report on CorporateGovernance. The intervening gap between the two consecutive meetings was within the periodprescribed under the Act.

ANNUAL EVALUATION OF PERFORMANCE BY THE BOARD:

In terms of applicable provisions read with Schedule IV of the Act and Rules framedthereunder and Regulation 17 of Listing Regulations read with Part D of Schedule II of theListing Regulations the Board of Directors has put in place a process to formallyevaluate the effectiveness of the Board along with performance evaluation of each Directorto be carried out on an annual basis.

Pursuant to the provisions of the Act and Listing Regulations the evaluation of theBoard and its performance the directors individually and the working of its AuditCommittee Corporate Social Responsibility (CSR) Committee Stakeholders' RelationshipCommittee and Nomination and Remuneration Committee of the Company was carried out by theBoard. The Board has evaluated the performance of each of Executive Non-Executive andIndependent Directors considering the business of the Company and the expectations thatthe Board have from each of them. The evaluation framework for assessing the performanceof Directors comprises of the following key areas:

i. Attendance at Board Meetings and Committee Meetings;

ii. Quality of contribution to Board deliberations;

iii. Strategic perspectives or inputs regarding future growth of Company and itsperformance;

iv. Providing perspectives and feedback going beyond information provided by themanagement;

v. Ability to contribute to and monitor corporate governance practices.

During the year under review the Nomination and Remuneration Committee reviewed theperformance of all the executive and non-executive directors of the Company.

A separate meeting of the Independent Directors was held for evaluation of performanceof Non-Independent Directors performance of the Board as a whole including Chairman ofthe Company.

COMMITTEES OF THE BOARD:

Subsequent to the changes in the Board of Directors during the year under review theBoard reconstituted its Committees in accordance with the Companies Act 2013 and ListingRegulations. There are currently 4 (four) Committees of the Board which are statedherewith:

a. Audit Committee;

b. Stakeholders' Relationship Committee;

c. Nomination and Remuneration Committee;

d. Corporate Social Responsibility (CSR) Committee.

Details of all the Committees along with their charters composition and meetings heldduring the year are provided in the "Report on Corporate Governance" whichforms part of this Annual Report.

AUDIT COMMITTEE AND ITS COMPOSITION:

The Audit Committee of the Company reviews the reports to be submitted with the Boardof Directors with respect to auditing and accounting matters. It also supervises theCompany's internal control and financial reporting process. The Audit Committee is dulyconstituted as per the provisions of Section 177 of the Companies Act 2013 and Regulation18 of Listing Regulations. The Composition of the Audit Committee is also given in theReport on Corporate Governance which is annexed to this report.

STATUTORY AUDITORS:

M/s Rasesh Shah & Associates Chartered Accountants Surat Gujarat (FRN:108671W)were appointed as Statutory Auditors of the Company at 15 AGM held on September 29 2017for a term of 5 (five) consecutive years pursuant to the provisions of Section 139 of theAct read with Companies (Audit and Auditors) Rules 2014. subject to ratification of theAuditors by the members at every AGM held after his appointment. As per MCA Notificationdated May 07 2018 the requirement to ratify the appointment of the statutory auditors bythe members at AGM has been done away.

The Company has received a consent letter and an eligibility certificate from the saidAuditors confirming that they are willing to continue to act as statutory auditors of theCompany and are eligible to hold the office as Auditors of the Company.

As such on recommendation of the Audit Committee the Board recommends the ratificationof appointment of M/s Rasesh Shah & Associates Chartered Accountants Surat Gujaratas Statutory Auditors of the Company for the remaining term of their appointment to auditthe Financial Statements of the Company and to fix their remuneration for F.Y. 2018-19 toF.Y. 2021-22 as may be agreed between the Board of Directors and the Statutory auditors.

AUDITORS' REPORT:

With reference to the observations made by the Statutory Auditors in their Standaloneand Consolidated Report on the Audited Financial Statements for the year ended March 312018 your Directors would like to reply as under:

a. The Company and its Group Companies ("the Group") current liabilitiesexceeds its current assets and net worth of the group has been fully eroded these eventsindicate a material uncertainty that casts a significant doubt on the Group ability tocontinue as a going concern and therefore it may be unable to realize its assets anddischarge its liabilities in the normal course of business. The financial results do notdisclose the fact that the fundamental accounting assumption of going concern has not beenfollowed.

Management Reply:- Your Directors would like to state that the Company andgroup companies ("the Group") are operational & Manufacturing Marble andemployed more than 150 employees. The Group & its management with its positive effortscould sale its fixed assets of Sanitaryware business undertaking and some of the landparcels and settled its debt with many of its secured lenders either on one timesettlement basis or with deferred payment schedule with some upfront payment as per theirterms of compromise settlement. It is also taking serious efforts in reviving its tilesdivision operation. The management has taken and been taking all diligent steps underlegal advice to defend the Group in all the litigation. Considering the reduction in debtburden and considering the ample opportunities in the market and growth drivers for theindustry per se Directors are optimistic about the turnaround of the Group with theinfusion of the long term funds and working capital fund with support of the lenders.

b. Some of the bank lenders have initiated legal proceedings against the Company forrecovery of their respective debts at the Debt Recovery Tribunal and have taken symbolicpossession of the securities u/s. 13(4) of the SARFAESI Act 2002. However the Company hasbeen able to renegotiate with the secured lenders and arrive at an amicable settlement ofits debts. The Company has made the settlement of its total debt outstanding with thesecured lenders. Accordingly some of the lenders have been settled completely on one timesettlement basis and others have agreed for deferred payment along with some upfrontpayment based on their respective terms of settlement. In view of the above settlementthe Company has not provided the interest on the outstanding dues payable as per thesettlement terms on the outstanding agreed amount of settlement amounting to Rs. 1119Lakhs for the year ended March 31 2018 and the interest amount not provided cumulativelyfrom the date of settlement upto March 31 2018 was Rs. 2172 Lakhs. Had the same beenaccounted for the net loss (after tax) would have decreased and current liabilities forthe year ended March 31 2018 would have increased by that amount. In addition to thisthe Company has been continuously incurring substantial losses since past few years and ason March 31 2018 the Company's current liabilities exceed its current assets by Rs.25082.40 Lakhs. Further the net-worth of the Company has fully eroded and the Companyhad also filed registration u/s. 15(1) of the erstwhile Sick Industrial Companies (SpecialProvisions) Act 1985 before the erstwhile Hon'ble Board for Industrial & FinancialReconstruction.

Management Reply:- The Company has settled its debts with secured lenderseither on one time settlement basis or compromise settlement with defer payment schedulewith some upfront payment as per the terms of sanction. In view of the absence of adequatecash flows and profits the management of the Company has decided not to charge theinterest in the Profit and Loss Account.

c. The Group has not provided for impairment or diminishing value of itsassets/investment as per 'Ind AS 36 Impairment of Assets' as notified under Section 133 ofthe Companies Act 2013. The effect of such Impairment or diminishing value has not beenquantified by the management and hence the same is not ascertainable.

Management Reply:- The Group has made the provisions for diminution in thevalue of its investments/assets wherever required. Management has a policy to maintain theassets and keep them in working condition so that its value does not get affected in longrun. The management is optimistic about realizing the value of its Assets / Investmentsnearest to its carrying value and there is no further diminution in the value of itsassets / investment other than depreciation /amortization provided for.

d. The financial statements are subject to receipt of confirmation of balances frommany of the debtors loans & advances investments banks sundry creditors and otherliabilities. Pending receipt of confirmation of these balances and consequentialreconciliations / adjustments if any the resultant impact on the financial statements isnot ascertainable.

Management Reply:- Your management would like to state that the Company is inthe process of obtaining the confirmations from debtors creditors lenders and loansadvances in routine course of business and have obtained from some of them. Thereconciliations are made and the effects have been given in the books of accounts whereverrequired.

e. The Holding Company had imported various Capital Goods and Spares and Consumablesfor the Capital Goods under the Export Promotion Capital Goods Scheme (EPCG) of theGovernment of India through various licenses at concessional rates of Custom Duty on anundertaking to fulfil quantified exports within a period of eight years from the date ofrespective licenses. The Custom Duties so saved amounted to `307645374/- and thecorresponding Export obligation to be fulfilled amounted to Rs. 2461162991/- howeveras on March 31 2018 the Export obligation yet to be fulfilled amounted to Rs.1691904058/-. The stipulated period of 8 years to fulfil Export obligation has alreadyexpired and the company is required to pay the said saved Custom Duty together withinterest @ 15% p.a. but the same has not been provided in books of accounts by the Companyand the final liability is presently unascertainable.

Management Reply:- The Holding Company had a good export track record in thepast and has completed its EPCG obligation in more than 8 licenses in the past. Howeverdue to adverse market conditions during the period 2008 2009 and 2010 and global economyslowdown the total exports of the Company were affected drastically and in the later yearsthe financial position of the Holding Company was further affected due to liquiditycrunch which in a way affected the overall revenue of the group including the exportrevenues and also the net worth of the group Company turned negative and the Company hadalso referred to BIFR under the provision of Sick Industrial Companies Act. The group hasapplied for extension of time for export for the said licenses with the authoritieshowever the same was not granted and further the Holding Company has filed a petition withHonourable High Court Mumbai for appropriate remedy in the said matters.

f. As required under Section 203 of the Act the Holding company is yet to appoint aCompany Secretary and the company is not in compliance with Regulation 6 of LODR whichrequires Company Secretary to be appointed as Compliance Officer.

Management Reply:- The management would like to state that the Company is inthe process of appointment of Whole time Company Secretary. The Holding Company has alsogiven advertisement in the newspaper for the vacancy however still suitable candidate isawaited.

g. In respect of deposits accepted by the Holding company before the commencement ofthis Act within the meaning of section 74 & 75 of the Act and the Rules framed thereunder the principal amount of such deposits and interest due thereon remained unpaid evenafter expiry of one year from such commencement and the Holding Company has not filed astatement within a period of three months from such commencement or from the date on whichsuch payments are due with the Registrar details as prescribed u/s.74(1)(a).

Management Reply:- To meet working capital requirements the Holding Companyraised funds by accepting unsecured loans from friends and relatives of Directors whichare known to the Group without invitation to public in general after filing Statement inlieu of Advertisement (SLA) pursuant to the provisions of Section 58A of the erstwhileCompanies Act 1956 read with the Companies (Acceptance of Deposits) Rules 1975. As thefinancial position of the Group was under stress and consequently defaulted on itsobligation to secured lenders all the lenders have classified the Company's account asNon-Performing Assets (NPA). The Company suffered losses and cash flow of the Company wasunder stress. Further the Net Worth of the Company eroded completely. The non-compliancerelating to filing of e-form DPT-4 is unintentional and the compliances was missed outinadvertently.

h. Overdue receivables aggregating to Rs. 170 Lakhs as on March 31 2018 towardspurchase of goods included under "Trade Receivables" owed to the Company by itsForeign Customers due for more than 6 months as on March 31 2018. These balances have notbeen settled till March 31 2018. The Company is yet to make an application to theauthorized dealer or Reserve Bank of India (RBI) for overdue receivable balances beyondthe prescribed time limits in accordance with Foreign Exchange Management Act (FEMA). Anypenalties that may be levied by RBI are presently not known and not given effect to in theIND AS financial statements.

Management Reply:- The Company shall initiate the process for compliance of thesame and is expecting to realize the said amount.

i. The Group has interest free borrowings classified under Non-Current FinancialLiabilities which are borrowed from various related parties and other lenders therepayment terms of which have not been agreed between the Group and the lenders. The Grouphas not fair valued such sums received in accordance with the provisions of 'Ind AS 109Financial Instrument' and 'Ind AS 113 Fair Value Measurement'. The effect of suchtreatment has not been quantified by the management and hence the same is notascertainable.

Management Reply:- As the financial position of the Group is under stress andalso it has defaulted on its obligation to secured lenders all the lenders haveclassified the Group's account as Non-Performing Assets (NPA). The Group suffered lossesand cash flow of the Group was under stress. Further the Net Worth of the Group erodedcompletely. In order to continue the operations of the Group the Group in the pastborrowed funds from various relatives and friends of Promoters and Directors. The same wasmutually agreed between the parties and no interest was charged by the lenders on thesame. Also the repayment terms was also not fixed between the Company and the lenders.Therefore the Group would continue to classify such borrowings as Non Current.

j. The non-ascertainment of complete particulars of dues to Micro Small and Mediumenterprises if any under MSMED Act 2006 and provisions towards interest if any is notascertained at this stage which is not in conformity with 'Ind AS 37-Provision ContingentLiabilities and Contingent Assets'.

Management Reply:- The Group is in the process of identifying the creditorswhich are Micro Small and Medium Enterprises under MSMED Act.

k. As stated in Note 48 to the standalone financial statements the Company'snon-current investments as at March 31 2018 include investments aggregating `143lakhs in two of its subsidiaries (of which Rs. 142.50 lakhs has been provided); and loansas at that date include dues from such subsidiaries aggregating Rs. 7608.46 lakhs (ofwhich Rs. 3410 lakhs has been provided) net amount being considered good and recoverableby the management considering the factors stated in the aforesaid note. However thesesubsidiaries either have accumulated losses and their consolidated net worth is fullyeroded or have no transactions. Further these subsidiaries are facing liquidityconstraints due to which they may not be able to realize projections made as per theirrespective business plans. In the absence of sufficient appropriate evidence we areunable to comment upon the carrying value of these non-current investments andrecoverability of the aforesaid dues and the consequential impact if any on theaccompanying standalone financial statements.

Management Reply:- The management would like to state that the loans andadvances are given in the normal course of business to a firm where the Company is apartner with majority share.

Your directors would like to state that the management of the subsidiary Company ishopeful of reviving its business with the changing economic scenario and is negotiatingwith the lender for amicable settlement of its dues.

l. The Group has not provided for interest on financing facilities amounting to Rs.1690 Lakhs for the year ending March 31 2018 and the interest amount not providedcumulatively from the date of settlement upto March 31 2018 was Rs. 4866 Lakhs. Had thesame been provided the loss for the year ending March 31 2018 would have increased byRs. 1690 lakhs. The corresponding current liabilities would have increased by thecumulative amount of interest.

Management Reply:- The Company has settled its debts with secured lenderseither on one time settlement basis or compromise settlement with defer payment schedulewith some upfront payment as per the terms of sanction. In view of the absence of adequatecash flows and profits the management of the Company has decided not to charge the samein the Profit and Loss Account.

INTERNAL AUDIT:

Pursuant to the provisions of Section 138 of the Act read with Companies (Accounts)Rules 2014 the Board on recommendation of the Audit Committee re-appointed M/s. KavishShah & Co. Chartered Accountants Mumbai as Internal Auditor of the Company. TheInternal Auditor monitors and evaluates the efficiency and adequacy of internal controlsystem in the Company its compliances with operating systems accounting procedures andpolicies at all locations of the Company and reports the same to the Audit Committee onquarterly basis.

Based on the report of internal audit management undertakes corrective action in theirrespective areas and thereby strengthens the controls. Significant audit observations andcorrective actions thereon are presented to the Audit Committee and the Board.

SECRETARIAL AUDIT REPORT:

Pursuant to the provisions of Section 204 of the Act read with Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 and as recommended by the AuditCommittee M/s. Shivlal Mauraya & Co Company Secretaries Mumbai were appointed asthe Secretarial Auditors of the Company to undertake Secretarial Audit of the Company forthe year 2017-18.The Report of the Secretarial Auditor is appended to this Report as AnnexureIII.

With regard to observations made by the Secretarial Auditors' in their Report yourDirectors would like to state as under:

(a) as required under section 203 of the Act the company is yet to appoint a CompanySecretary;

Managements' Reply: The management would like to state that the Company is in theprocess of appointment of Whole time Company Secretary. The Company has also givenadvertisement in the newspaper for the vacancy however still suitable candidate isawaited.

(b) the company has not complied with the provisions of Section 133 of the Actpertaining to 'Indian Accounting Standard (Ind AS) 36' w.r.t. Accounting for impairment ordiminishing value of its assets and Ind AS 37 w.r.t. non-ascertainment of completeparticulars of dues to Micro Small and Medium enterprises if any under MSMED Act 2006the brief particulars of which are stated in the Statutory Auditor's Report in "pointno c & j" under the heading Basis for Qualified opinion;

Managements' Reply :- The Company has made the provisions for diminution in thevalue of its investments/assets wherever required. Management has a policy to maintain theassets and keep them in working condition so that its value does not get affected in longrun. The management is optimistic about realizing the value of its Assets / Investmentsnearest to its carrying value and there is no further diminution in the value of itsassets / investment other than depreciation /amortization provided for.

(c) in respect of outstanding deposits as at March 31 2017 the company was requiredto file Form DPT-3 latest by June 30 2017 which has not been filed and also I would liketo draw attention towards the fact that in respect Deposit accepted by the Company beforethe commencement of the Act within the meaning of Section 74 and 75 of the Act and rulesframed thereunder the principle of such deposit and interest due thereon remained unpaideven after the expiry;

Managements' Reply :- To meet working capital requirements the Holding Companyraised funds by accepting unsecured loans from friends and relatives of Directors whichare known to the Group without invitation to public in general after filing Statement inlieu of Advertisement (SLA) pursuant to the provisions of Section 58A of the erstwhileCompanies Act 1956 read with the Companies (Acceptance of Deposits) Rules 1975. As thefinancial position of the Group was under stress and consequently defaulted on itsobligation to secured lenders all the lenders have classified the Company's account asNon-Performing Assets (NPA). The Company suffered losses and cash flow of the Company wasunder stress. Further the Net Worth of the Company eroded completely. The non-compliancerelating to filing of e-form DPT-3 is unintentional and the compliances was missed outinadvertently.

(d) as required under Section 135 of the Act the Company has not constituted CSRCommittee;

Management Reply:- In absence of adequate profits the Company has not constitutedCSR Committee. However your Company has duly constituted the CSR Committee in F.Y.2018-19. Details of the committee constituted is disclosed in the Board Report.

(e) pursuant to our observation at "a" above the company is not incompliance with Regulation 6 of LODR which requires Company Secretary to be appointed asCompliance Officer;

Management Reply:- same as given at point (a).

(f) as per the FEMA guidelines issued by Reserve Bank of India (RBI) the holding byForeign Institutional Investors (FIIs) Non-Resident Indians (NRIs) and Persons of IndianOrigin (PIOs) exceeds the ceiling limit as prescribed under the said guidelines. TheCompany was required to obtain approval from members by special resolution however theCompany has not obtained the same.

Management Reply:- Special Resolution for increasing the ceiling limit of holdingby Foreign Institutional Investors (FIIs) Non-Resident Indians (NRIs) and Persons ofIndian Origin (PIOs) has been included for members approval in ensuing AGM to be held onSeptember 28 2018. The delay for the non-compliance was inadvertent and due to absence ofWhole time Company Secretary in the Company.

VIGIL MECHANISM / WHISTLE BLOWER POLICY :

The Company has adopted a Vigil Mechanism / Whistle Blower Policy to deal with instanceof fraud and mismanagement if any in accordance with Section 177 of the Companies Act2013 and Regulation 22 of the Listing Regulations. The mechanism also provides foradequate safeguards against victimization of directors and employees who avails of themechanism and also provide for direct access to the Chairman of the Audit Committee in theexceptional cases. The detail of the Vigil Mechanism / Whistle Blower Policy is explainedin the Report on Corporate Governance and is also available on the website of the Companyat http://www.eurovitrified.com/pdf/Vigil%20 Mechanisum%20Policy.pdf.We affirm that duringthe financial year 2017-18 no employee or Director were denied access to the AuditCommittee.

PARTICULARS OF REMUNERATION:

During the year under review no employee was in receipt of remuneration exceeding thelimits as prescribed under provisions of Section 197 of the Companies Act 2013 and Rule5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules2014.

Details as required under provisions of Rule 5(2) and Rule 5(3) ofCompanies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed tothis Report as Annexure IV

Disclosure with respect to the ratio of remuneration of each Director to the medianemployees' remuneration as required under Section 197 of the Companies Act 2013 read withRule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is appended to this Report as Annexure IV.

INTERNAL FINANCIAL CONTROL:

The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to Company Policies safeguardingof assets prevention and detection of frauds and errors the accuracy and completeness ofthe accounting records and timely preparation of reliable financial disclosures.

The Audit Committee evaluates the efficiency and adequacy of financial control systemin the Company its compliance with operating systems accounting procedures and policiesat all locations of the Company and strives to maintain the Standard in Internal FinancialControls.

RISKS AND AREAS OF CONCERN:

The Company has laid down a well-defined Risk Management Policy covering the riskmapping trend analysis risk exposure potential impact and risk mitigation process. Adetailed exercise is being carried out to identify evaluate manage and monitor bothbusiness and non-business risks. The Audit Committee and Board periodically reviews therisk and suggest steps to be taken to control and mitigate the same through a properlydefined framework.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION188(1) OF THE COMPANIES ACT 2013:

All the transactions with related parties were in the ordinary course of the businessand on arm's length basis and are reported in the Notes to the Financial Statements. Nomaterial transactions were entered with the related parties during the year under review.Accordingly the disclosure of Related Party Transactions as required under Section 134(3)of the Act in Form AOC-2 is not applicable.

In accordance with the provisions of Regulation 23 of the Listing Regulations theCompany has formulated the Related Party Transactions Policy and the same is uploaded onthe Company's website http://www.eurovitrified.com/ pdf/Policy%20on%20Related%20Person%20Transaction.pdf.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013:

The details of loans guarantees or investments made by the Company under Section 186of the Act are provided in the Notes to Financial Statements.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

There was no significant or material order passed by any regulator or court ortribunal which impacts the going concern status of the Company or will have bearing oncompany's operations in future.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENT RELATESAND THE DATE OF THE REPORT:

No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year 2017-18 to which this financial statementrelates and the date of this report except the matters which are disclosed in thefinancial statements and its reports.

REPORT ON CORPORATE GOVERNANCE:

Pursuant to the provisions of Regulation 34 read with Schedule V of ListingRegulations the following have been made a part of the Annual Report and are appended tothis report:

a. Management Discussion and Analysis;

b. Report on Corporate Governance;

c. Declaration on Compliance with Code of Conduct;

d. Auditors' Certificate regarding compliance with conditions of Corporate Governance.

INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:

The Company adopted a Policy on prevention prohibition and redressal of sexualharassment at workplace in line with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. The Company has constitutedan Internal Complaint Committee under Section 4 of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. There was no complaintreceived by committee on sexual harassment during the year under review.

COMPLIANCE WITH SECRETARIAL STANDARDS:

The Company has devised proper systems to ensure compliance with the applicableSecretarial Standards issued by the Institute of Company Secretaries of India and theCompany strives to comply with all the applicable provisions of the same.

PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO:

Information in terms of requirement of clause (m) of Sub-Section (3) of Section 134 ofthe Companies Act 2013 regarding Conservation of Energy Technology Absorption andForeign Exchange Earnings and Outgo read along with Rule 8 of the Companies (Accounts)Rules 2014 are given in

Annexure V.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON CORPORATE SOCIALRESPONSIBILITY INITIATIVES:

The statutory provisions of Section 135 of the Companies Act 2013 read with Companies(Corporate Social Responsibility Policy) Rules 2014 has become effective during the FY2017-18 as the Company's net profit during the FY 2016-17 exceeded the threshold limit.However the Company is not obligated to spend on CSR activities as it had incurred averagenet loss during the three preceding financial years.

As a good Corporate Governance initiative the Board of Directors at its meeting heldon May 29 2018 had constituted the CSR Committee. The Committee comprises of thefollowing members :

Name of the member Designation
Ms. Lata Mehta Chairperson
Mr. Dhaval Gada Member
Mr. Gautam Pandit Member (w.e.f May 30 2017)

The Committee recommends to the Board of Directors for their perusal the CSR Policyand amount of expenditure to be incurred as when the Company has aggregated net profits.The CSR Policy is also placed on the Company's website and the link for the same ishttp://www.eurovitrified.com/ pdf/Euro-Ceramics-Limited-CSR-Policy.pdf.

However a report on Corporate Social Responsibility (CSR) as per Rule 8 of Companies(Corporate Social Responsibility Policy) Rules 2014 is annexed as a separate AnnexureVI.

APPRECIATION:

Your Directors acknowledges with gratitude and wish to place on record their deepappreciation of continued support and co-operation received by the Company from thevarious Government authorities Shareholders Bankers Lenders Business AssociatesDealers Customers Financial Institutions and Investors during the year.

Your Directors place on record their deep appreciation of the dedication and commitmentof your Company's employees at all levels and look forward to their continued support inthe future as well.

By Order of the Board of Directors
Viral Nandu
Chairman & Whole Time Director
DIN 01767620
Place: Mumbai
Date: August 10 2018

Annexure II

Form AOC-1

(Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 ofCompanies (Accounts) Rules 2014)

Statement containing salient features of the financial statement of Subsidiaries/Associate Companies/Joint Ventures

Part "A": Subsidiaries

(Information in respect of each subsidiary to be presented with amounts in `)

Sr. No. Particulars Details
1. Name of the subsidiary Euro Merchandise (India) Limited
2. The date since when the subsidiary was acquired. December 31 2005
3. Reporting period for the subsidiary concerned if different from the holding company's reporting period March 31 2018
4. Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries Indian Rupees
5. Share capital 1900000
6. Reserves & surplus (239196739)
7. Total Assets 35462619
8. Total Liabilities 272759360
9. Investments 100000
10. Turnover 605316
11. Profit/(loss) before taxation (1214819)
12. Provision for taxation (342604)
13. Profit/(loss) after taxation (1557423)
14. Proposed Dividend Nil
15. Extent of shareholding (in percentage) 100%

Notes:

1. Names of subsidiaries which are yet to commence operations : NA

2. Names of subsidiaries which have been liquidated or sold during the year : NA

Part "B": Associates and Joint Ventures

Not Applicable as the Company does not have any Associate and Joint Venture

For and on behalf of the Board of Directors
Place: Mumbai Viral Nandu Paresh Shah
Date: August 10 2018 Chairman & Whole Time Director Chief Financial Officer
DIN: 01767620

Annexure IV

I. Disclosure as per Section 197 (12) of the Companies Act 2013 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014:

The ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year 2017-18 :-

Name of the Key Managerial Personnel Ratio of remuneration to the median remuneration of the employees
Company has not provided any remuneration to Directors. Hence the ratio of the remuneration of each directors to the Median Remuneration of the Employee can not be determine. Non-Executive Director of the Company are not paid any sittings fees or commission.
(ii) The percentage increase in remuneration of each director CFO CEO Company Secretary or Manager if any in the financial year 2017-18 During the current financial year there were no increments in the remuneration of Director CFO CEO Company Secretary or Manager
(iii) The percentage increase in the median remuneration of employees in the financial year 2017-18 13% to 14%
(iv) The number of permanent employees on the rolls of the company as on March 312018 119
(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration Average percentile increase in the salaries of employees other than the managerial personnel in the last financial year is 13% to 14% as against the no increment in the salary of the Chairman & Whole Time Director & Executive Director (Managerial Personnel as defined under the Act). Annual increase if any in remuneration is based on different grades industry pattern qualification & experience responsibilities shouldered and individual performance of managerial personnel and other employees.

II. Statement showing details of Employees of the Company as per Section 197 (12) readwith Rule 5(2) and Rules 5 (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014:

In pursuant to the provisions of Section 197(12) of the Companies Act2013 read withRule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 a statement showing the names of top ten employees in terms of remunerationdrawn is provided in a separate annexure forming part of this Report. Pursuant to theprovisions of the first proviso to Section 136(1) of the Companies Act 2013 the AnnualReport excluding the aforesaid information is being sent to the members of the Company.The said information is available for inspection at the Registered Office of the Companyduring working hours and any member interested in obtaining such information may write tothe Compliance Officer of the Company and the same will be furnished without any fee.

I hereby confirm that the remuneration paid during the year is as per the remunerationpolicy recommended by Nomination and Remuneration Committee of the Company and adopted bythe company.

For and on behalf of the Board of Directors
Viral Nandu Lata Mehta
Place: Mumbai Chairman & Whole Time Director Chairperson of Nomination & Remuneration Committee
Date: August 10 2018 DIN:01767620 DIN: 02027592

Annexure V

STATEMENT OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGAND OUTGO PURSUANT TO THE PROVISIONS OF SECTION 134 OF THE COMPANIES ACT 2013 READ WITHTHE COMPANIES (ACCOUNTS) RULES 2014

The information required under Section 134 (3)(m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 for the year ended March 31 2018 isgiven below which forms part of the Boards' Report.

A. Conservation of Energy: -

During the year under review Company has adhered to the measures taken earlier forenergy conservation.

In marble division Company has used high-end cutting blades for cutting the block toimprove the efficiency of the machine and reducing process time and thereby saving on theenergy cost.

The efforts undertaken by the Company has enabled the Company in increasing its productoutput in turn resulting in saving of the product cost.

B. Research & Development and Technology Absorption : NIL

C. Foreign Exchange Earnings and Outgo:-

The information on foreign exchange earnings and outgo are disclosed under Notes No.27 28 & 29 forming part of the Financial Statements.

D. Future plan of action are as under:

-To use more of green and renewable energy ;

-To produce quality product with best efficiency;

-To develop new designs in marble with in house research team.

By Order of the Board of Directors
Viral Nandu
Place: Mumbai Chairman & Whole Time Director
Date: August 10 2018 DIN 01767620

.