Cera Sanitaryware Ltd Directors Report.

To

The Members,

The Directors have pleasure in submitting the Annual Report together with the Statement of Accounts of your Company for the year ended 31st March, 2020.

Performance

The summary of your Companys financial performance is given below:

Year ended Year ended
March 31, 2020 March 31, 2019
Profit before Depreciation and
Taxes & Exceptional item 17,328.16 20,301.36
Deducting there from Depreciation of 3,267.32 2,284.83
Profit before Tax 14,060.84 18,016.53
Deducting there from taxes of:
- Current Year 3,712.25 6,015.29
- Deferred Tax (1,245.64) 495.91
Profit for the year 11,594.23 11,505.33
Add/Less: Other comprehensive
Income (Net of tax) (148.66) (103.68)
Total Comprehensive
Income for the year. 11,445.57 11,401.65

Transfer to Reserves

The Company has transferred a sum of 5,967.05 Lakhs to General Reserve in the current year (previous year 5,857.61 Lakhs).

Highlights / Performance of the Company

Turnover (Net of GST/Excise) of the Company for the year decreased by 10% to 1,20,366.86 Lakhs as compared to 1,33,943.49 Lakhs previous year.

Profit before Depreciation and Taxes & Exceptional Items for the year decreased by 14.65% to 17,328.16 Lakhs as compared to 20,301.36 Lakhs previous year.

Profit after Tax for the year marginally increased to 11,594.23 Lakhs as compared to 11,505.33 Lakhs previous year.

COVID -19

The outbreak of Corona Virus disease (COVID-19) pandemic globally and in India is causing significant disturbance and slowdown of economic activity. The operations of the Company were impacted due to nationwide lockdown ordered by the Govt. of India in the last fortnight of financial year 2019-20. The management has considered the impact of COVID-19 on its profitability, liquidity, supply chain, receivables, inventories, other financial assets & investments as on March 31, 2020. Based on the current indicators of future economic conditions, the management believes that the impact is likely to be short term in nature and there does not seem to be any medium to long term risks in the Companys ability to recover the carrying amount of these assets in near future.

However, the management will continue to closely monitor any material changes to future economic conditions.

The implications of COVID-19 are not consistent among different countries or even among different regions of India, making it extremely difficult to project an outlook. Therefore, it is not possible at this point of time to provide business outlook of the industry in post lockdown situation in the country. In this evolving situation, the duration and overall adverse impact due to this shut down is not immediately assessable and depends on further directions from the Central / State Governments.

Sanitaryware Unit

During the year, the Companys growth was affected due to general recession in realty and also nation-wide lockdown in the last quarter after the outbreak of COVID-19.

However, the Companys plant continued to operate at an optimum mix of high capacity utilization, except in the last week of the financial year. Several new one-piece WC designs were added in the production line, thereby reducing the dependence on import of such products.

In order to increase the touch points and to enhance the customer experience, the Company has invested in increasing the Cera Style Centres, owned and managed by retailers, in more towns.

Your Company has been in the forefront of technology and automation. After successful implementation of 3D printing and robotic glazing technologies, your company has now added high pressure casting system. These will give your company a technological edge.

Faucetsware Unit

Your Company expects higher growth in the coming times in its Faucets business. With this in view, launching of new designs is being done at regular intervals, in tune with the changing market needs.

Bathware Unit

Your Company continued launch of new products and designs.

Senator by CERA

Distribution of your Companys premium offering, Senator, aimed at discerning customers has been widened to 80 showrooms, to reach more customers.

JEET

New products have been added in JEET, your Companys sanitaryware range aimed at affordable segment.

ISVEA

The Italian luxury designer sanitaryware, ISVEA, launched by your Company, exclusively in India, expected to take off in sales after the Covid pandemic.

Modular Kitchens

Sales of Senator Cucine, Italian modular kitchens, launched by your Company, should hopefully take off after the pandemic.

Tiles Unit

Your company made rapid strides in the Tiles segment by launching the latest Slabs, large format sizes of 1200x2400mm, 1200x1200mm and 800x1600mm and also new designs and sizes in both floor and wall categories.

Joint Ventures

Company has entered into a Joint Venture with Anjani Tiles Ltd at Andhra Pradesh with 51% Equity (since 2015) and Milo Tiles LLP

(earlier Crown Ceramics–an established production facility) at Morbi, Gujarat with 26% Equity (since 2019) for producing high end Glazed Vitrified Floor Tiles aggregating to16000 Sq. Mtr. per day.

Packaging Unit

The Joint Venture unit for manufacture of corrugated boxes has now achieved stabilized production. The products are now available on a just in time basis, built to the exacting specifications for the Company. The capacity utilization has increased considerably during the year. CERA holds an Equity of 51%.

Polymer Unit

The Joint venture for Polymer Products unit for manufacture of seat covers and cisterns with 51% Equity has started its commercial production. The quality products are available and capacity utilization has increased gradually during the year.

Dubai & Sharjah operations

As business conditions in the Gulf Countries have changed, so has the companys strategy. The company owned Cera Sanitaryware Ltd FZC- Sharjah, UAE is no more required. The Board of Directors at their meeting held on 14th May, 2019 had approved discontinuance of the business operations of Cera Sanitaryware Ltd FZC- Sharjah, UAE and now all formalities for its have been completed.

Green Energy Unit

As a part of national policy and Green initiative, which was initiated in 1995, Company has stabilized power cost by generation of electricity through non-conventional sources for captive use through wind and solar.

The current installed capacity of Non-Conventional Energy unit of the Company stands to 10.325 M.W.

The non-conventional Wind and Solar Power has produced 180.96 lakhs KWH for captive use.

Conservation of energy, technology absorption and foreign exchange earnings and outgo:

Conservation of energy

The Company has two sources of its main energy, viz. Natural Gas - GAIL and Sabarmati Gas Ltd., for operating its Sanitaryware plant. The pricing of both sources differ, as GAIL sources gas from isolated wells in and around Ceras manufacturing facility, and is able to contract gas at a lower price over prevailing market pricing. Medium term contracts with these suppliers are renewed on a periodic basis. For energy conservation, the company has installed fuel efficient burners to control gas consumption and in addition to this, every effort is made by the company to adapt any technological developments in energy conservation.

The second energy, viz. electricity, required for running the machineries, is supplied by the local Discom. To compensate the energy consumption by way of electricity, your Company has an installed capacity of Wind Turbines of 8.325 MW and Solar Plants of 2.00 MW which generates about 90% of the companys electricity requirement and this gets offset against monthly consumption of the energy bill.

Technology absorption and foreign exchange earnings and outgo

The information on technology absorption and foreign exchange earnings and outgo stipulated under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as a separate Annexure- III.

Subsidiary Company

The Company has one Subsidiary Company namely Anjani Tiles Limited which became subsidiary of the Company w.e.f. 23rd November, 2015. The Company has also two subsidiary LLP viz. Packcart Packaging LLP and Race Polymer Arts LLP.

There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). Further there has been no material change in the nature of business of the subsidiary.The Company does not have any material subsidiary. The Policy on Material Subsidiary framed by the Board of Directors of the Company is available on Companys website at the link https:// www.cera-india.com/corporate/policy-for-determining-material-subsidiary/.

Those Shareholders who are interested in obtaining a copy of the audited annual accounts of the subsidiary may write to the Company. The Audited financial statements of all subsidiaries are available on the website of the Company www.cera-india.com

Pursuant to the provisions of Section 129, 134 and 136 of the Companies Act, 2013 with rules made thereunder and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company has prepared consolidated financial statements of the Company and salient features of the financial statement of the subsidiaries is set out in the prescribed form AOC-1 attached herewith as a separate Annexure - IV to this Annual Report.

Particulars of contracts or arrangements with related parties

All transactions entered with Related parties as defined under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 during the financial year were in the ordinary course of business and on an arms length basis, the details of which are included in the notes forming part of the financial statements.

There were no material related party transactions entered during the year. Accordingly, information in form AOC - 2 is not annexed. Further no materially significant related Party transactions were made by the Company with Directors, Key Managerial Personnel or other designated Persons, which may have a Potential Conflict with the interest of the Company at large. All related party transactions were placed before the Audit Committee and also the Board for approval. The Policy on related Party transactions as approved by the Board is uploaded on the Companys website i.e. www.cera-india.com.

Corporate Social Responsibility

Your Company has always laid emphasis on progress with social commitment. We believe strongly in our core values of empowerment and betterment of not only the employees but also our communities.

Following this principle the Company had laid the foundation of a comprehensive approach towards promoting and facilitating various aspects of our surrounding communities.

The Board has approved a policy for Corporate Social Responsibility and same has been uploaded on the website i.e.www.cera-india.com

As required under Section 135 of the Companies Act, 2013 and to demonstrate the responsibilities towards Social upliftment in structured way, the Company has formed a Policy to conduct the task under CSR, during the year.

The report on Corporate Social Responsibility (CSR) Activities along with Annexure as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as a separate Annexure–V and separate activity wise CSR Report has been annexed as per Annexure -II.

Directors Responsibility Statement

In compliance of Section 134 (5) of the Companies Act, 2013, the Directors of your Company confirm:

v that in the preparation of annual accounts, the applicable accounting standards have been followed and there are no material departures;

v that such accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2020 and of the Profit of the Company for the year ended on that date.

v that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

v that the annual accounts have been prepared on a going concern basis.

v that internal financial controls have been laid down to be followed by the company and that such internal financial controls are adequate and were operating effectively.

v that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Managerial Remuneration and Employees

Details required pursuant to Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are enclosed as a separate Annexure-VI.

Details of employees required pursuant to Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed as a separate Annexure, however it is not being sent along with this annual report to the members of the company in line with the provisions of Section 136 of the Companies Act, 2013 and rules made there under. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid Annexure is also available for inspection by members at the Registered Office of the Company, 21 days before and up to the date of the ensuing Annual General Meeting during the business hours on working days.

Company has not offered its shares to its employees under ESOS during the year under review.

Company has not sanctioned loan to any of its employees for purchase of Companys shares under any scheme.

Corporate Governance and Management Discussion and Analysis

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, report on Corporate Governance along with Practicing Company Secretarys Certificate on its compliance and Management discussion and Analysis have been included in this Annual Report as per separate Annexure-VIII and Annexure-I respectively.

Business Responsibility Reporting

As required under Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, Business Responsibility Report forms part of the Directors Report and is enclosed as separate Annexure-IX.

Number of Meetings of the Board

The Board of Directors, during the financial year 2019 - 20 duly met 5 times on 14-05-2019, 01-08-2019, 13-11-2019, 05-02-2020 and 14-02-2020 in respect of these meetings, proper notices were given, and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose.

Extract of Annual Return

The details forming part of the extract of the annual return in Form No. MGT-9 is annexed herewith as a separate Annexure - VII, as per provisions of Section-92 of the Companies Act, 2013 read with Rules made thereunder.

Particulars of Loans, guarantees or investments u/s 186.

The loans if any, made by the Company are within the limits prescribed u/s 186 of the Companies Act, 2013 and no guarantee or security is provided by the Company.

Details of Investments covered u/s 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Risk Management Policy

The Board has approved and implemented Risk Management Policy of the Company including identification and element of risks.

Pursuant to amendments in SEBI (Listing Obligations and Disclosure Requirements Regulations), 2015, the Board of Directors of the Company has constituted the Risk Management Committee having its scope and functions as per Risk Management policy. The Committee shall also review cyber security matters of the company at various levels and also take necessary actions from time to time to mitigate the cyber risk to the Company in accordance with SEBI (Listing Obligations and Disclosure Requirements Regulations), 2015. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness.

The Risk Management system is also overseen by the Audit Committee / Board of Directors of the Company on a continuous basis. The major risks identified by the businesses are systematically addressed through mitigation actions on a continual basis. For details please refer to the Management Discussion and Analysis enclosed as separate Annexure - I to this report.

Audit Committee

The Company has constituted Audit Committee. For details please refer Corporate Governance Report attached as a separate

Annexure-VIII.

Internal Control System and its adequacy

The Company has internal control system commensurate with the size, scale and complexity of its business operations. The scope and functions of Internal Auditor are defined and reviewed by the Audit committee. The Internal Auditor reports to the Chairman of the Audit Committee. The Internal Auditor assesses opportunities for improvement of business processes, systems and controls, to provide recommendations, which can add value to the organization.

Dividend

The Board of Directors at their meeting held on 14th February, 2020 declared Interim Dividend of 13/- per share (260%) on 1,30,05,874 equity shares of 5/- each fully paid for the Financial Year 2019-20. The Interim Dividend was paid to the shareholders holding shares as on Record date 27th February, 2020. Considering the payment of Interim Dividend, the final dividend for the year 2019-20 has not been recommended by the Board of Directors and the interim Dividend is considered as final Dividend for the final year 2019-20.

During the year, the unclaimed dividend pertaining to the financial year 2011-12 were transferred to the Investor Education and Protection Fund.

Share Capital

The paid-up Equity Share Capital as on 31st March, 2020 was 650.29 Lakhs. During the year under review the Company has not issued any shares.

No shares with differential voting rights, stock or sweat equity shares were issued by the Company during the year under review.

During the year the Company has transferred 5883 Equity Shares to Investor Education and Protection Fund, pursuant to the provisions of sections 124 & 125 of the Companies Act, 2013 and Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016.

Exchequer

The Company has contributed 16,538 Lakhs to the exchequer by way of GST, customs duty, service Tax, income tax, VAT, sales tax and other fiscal levies.

Deposits

The Company has discontinued its Fixed Deposit Scheme from the Financial Year 2012-13. The Company has not accepted fixed deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

Finance

During the year under review, the Company does not have any long term loans/debts from Financial Institutions and Banks.

Directors and KMP

Shri J. K. Taparia, Shri Sajan Kumar Pasari, Shri Lalit Kumar Bohania, Shri Surendra Singh Baid and Ms. Akriti Jain are the Independent Directors of the Company and they will not retire by rotation. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and there has been no change in the circumstances which may affect their status as Independent director during the year under review and have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence. The Company keeps informed independent directors about changes in the Companies Act, 2013 and rules and other related laws from time to time and their role, duties and responsibilities.

Upon the recommendation of Nomination and Remuneration Committee, the Board of Directors has appointed Smt. Deepshikha Khaitan (DIN:03365068) as Joint Managing Director for a period of 5 years w.e.f. 1st April, 2020, subject to approval of the members at the ensuing Annual General meeting of the Company.

The Board of Directors has also upon recommendation of Nomination and Remuneration Committee reappointed Shri Atul Sanghvi (DIN:00045903) as an Executive Director & CEO of the Company for further period of 3 years w.e.f. 1st April, 2020, subject to approval of the members at the ensuing Annual General meeting of the Company.

The resolutions proposing the appointment/reappointment of the Directors are set in the notice convening Annual General Meeting for approval of members.

Smt.Deepshikha Khaitan will retire at the end of the ensuing Annual General Meeting and being eligible, offers herself for re-appointment.

The Board of Directors has appointed Shri Ayush Bagla as an Executive Director of the Company for a period of 3 years w.e.f. 14th May, 2019 and simultaneously the members at their Annual General Meeting held on 31st July, 2019 approved his appointment as an Executive Director.

Brief resumes of the directors who are proposed to be appointed/ reappointed at the ensuring Annual General meeting, as required as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the notice convening this Annual General Meeting of the Company.

Shri Narendra N. Patel ceased to be the Company Secretary and Compliance officer of the Company on account of retirement as per Companys Policy w.e.f. 31st March, 2020. The Board of Directors have appointed Shri Hemal Sadiwala (ACS 20741) as Company Secretary & Compliance officer w.e.f. 1st April, 2020.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Rules made thereunder, Schedule - IV of the Act and SEBI (LODR) Regulations, 2015, the Board has carried the evaluation of its own performance, individual directors, its committees and Key Managerial Personnel, on the basis of attendance, contribution and various criteria as recommended by the Nomination and Remuneration Committee of the Company.

The performance of each of the Independent Director and Non-Independent Director (including the chairperson) was also evaluated by the Independent Directors at the separate meeting of Independent Directors of the Company. The Directors expressed their satisfaction with the evaluation process.

Policy on Directors appointment and remuneration

Criteria determining the qualifications, positive attributes and independence of Directors.

Independent Directors

• Qualifications of Independent Director

An Independent director shall possess appropriate skills, qualifications, experience and knowledge in one or more fields of finance, law, management, marketing, administration, corporate governance, operations or other disciplines related to the Companys business.

• Positive attributes of Independent Directors

An independent director shall be a person of integrity, who possesses knowledge, qualifications, experience, expertise in any specific area of business, integrity, level of independence from the Board and the Company etc. Independent Directors are appointed on the basis of requirement of the Company, qualifications & experience, expertise in any area of business, association with the Company etc. He/She should also devote sufficient time to his professional obligations for informed and balanced decision making; and assist the Company in implementing the best corporate governance practices.

• Independence of Independent Directors

An Independent director should meet the requirements of Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 and give declaration every year to the Board of Directors for the same.

Other Directors and Senior Management

The Nomination and Remuneration Committee shall identify and ascertain the qualifications, expertise and experience of the person for appointment as Director or at Senior Management level and recommend to the Board his / her appointment.

The Company shall not appoint or continue the employment of any person as Whole-time Director or Senior Management Personnel if the evaluation of his/her performance is not satisfactory.

Other details are disclosed in the Corporate Governance Report under the head Nomination and Remuneration Committee and details of Remuneration (Managing Director / Whole Time Director(s) and Non-Executive Directors) are attached as a separate Annexure-VIII to this Report.

Remuneration / commission from Holding or Subsidiary Company

Managing Director or Whole Time Director is not receiving any remuneration / commission from any Holding Company or Subsidiary Company.

Remuneration Policy

It is separately disclosed in the Corporate Governance Report attached as a separate Annexure-VIII to this Report.

Auditors and their Observations

N.M. Nagri & Co., Chartered Accountants are the statutory auditors of the Company. They are appointed for a period of five years, from the conclusion of 19th AGM till the conclusion of the 24th AGM (AGM of financial year 2021-22).

Pursuant to amendment to section 139 of the Companies Act, 2013 effective from May 7, 2018, ratification of Statutory Auditors appointment is not required at every Annual General Meeting. Accordingly, resolution for ratification of Statutory Auditors is not proposed.

The Auditors Report and Secretarial Audit Report to the members for the financial year under review does not contain any qualification,reservation or adverse remarks or disclaimer.

The Statutory Auditors have not reported any fraud during the year under review.

Cost Records and Cost Auditors

The Company is required to maintain cost records under Companies (Cost Records and Audit) Rules, 2014. Accordingly, cost records have been maintained by the Company.

The Company has appointed K.G. Goyal & Co., as Cost Auditors for conducting cost audit for the year 2020-21.

Secretarial Audit

Pursuant to provisions of Section 204 of Companies Act, 2013 and rules made there under, the Company had appointed Umesh Parikh and Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for the year 2019-20.

The Secretarial Audit Report for the year 2019-20 given by Umesh Parikh and Associates, Company Secretaries in practice is annexed with this report.

The Company is complying with the applicable Secretarial Standards.

Insurance

Your Company has adequately insured all its properties including Plant and Machinery, Building and Stocks.

Industrial Relations

The Company has successfully signed a Long-Term Settlement (LTS) under section 12(3) of Industrial Disputes Act,1947, for 4 years with workers Union on 4th August, 2017 which was due on 01st September, 2017. The LTS was signed in harmonious environment and without any labour unrest and loss of production. The next LTS will fall due on 01st September, 2021. The industrial relations in the Companys plant had been cordial and peaceful throughout the year.

The Company has adequate skilled & trained workforce for its various areas of operations and the skills upgradation of which is being done on continuous basis for improving the plant operations and quality process.

The Company has taken sufficient measures to maintain Industrial Health and Safety at its workplace for employees as laid in the Gujarat State Factories Rules, 1963. The Company is also complying and maintaining all applicable Industrial and Labour laws/ rules.

The Company has in place a Policy against Sexual Harassment at workplace in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committees have been set up to redress complaints received regarding sexual harassment. The Company has received no complaints during the year under the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has organized 2 workshops under the said Act during the year under review.

Material changes affecting financial position of the Company

No material changes or commitments, affecting the financial position of the Company have occurred between the end of the financial year of the Company to which the financial statements relate, i.e. 31st March, 2020 and the date of the Boards Report.

Change in nature of business

No changes have been made in nature of business carried out by the Company during the financial year 2019-20.

Orders passed by Regulatory Bodies or Courts

No regulatory body or court or tribunal has passed any significant and material orders impacting the going concern status and operations of the Company.

Vigil Mechanism

The Company has implemented Vigil Mechanism. For details please refer Corporate Governance Report attached as a separate

Annexure-VIII.

Appreciation

Your Directors thank the Financial Institutions and Bankers for extending timely assistance in meeting the financial requirements of the Company. They would also like to place on record their gratitude for the co-operation and assistance given by State Bank of India, Yes Bank Ltd. and various departments of both State and Central Governments.

For and on behalf of the Board of Directors,
For Cera Sanitaryware Limited
Ahmedabad. Vikram Somany
30th June, 2020 Chairman and Managing Director
(DIN:00048827)