euro ceramics ltd share price Directors report

To

The Members,

Euro Ceramics Limited

Your Directors hereby present the Sixteenth (16 ) Annual Report of the Company together with 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	2,030.03	1,176.96	2,036.08	1,185.97
Other Income	142.06	202.08	164.36	202.32
Total Income	2,172.09	1,379.06	2,200.44	1,388.29
Earnings Before Interest, Depreciation and Tax	(1,184.98)	(1,072.66)	(1,196.63)	(1,080.80)
Less : Interest and other finance expenses	44.14	54.91	44.40	57.75
Less: Depreciation	1,971.89	1,969.44	1972.17	1,969.72
Profit/(Loss) Before Exceptional and Extraordinary Item & Tax	(3,201.01)	(3,097.01)	(3,213.20)	(3,107.65)
Exceptional items [(Loss)/Gain]	831.11	5,004.52	831.11	5,004.52
Profit/(Loss) before extraordinary items and tax	(2,369.90)	1,907.21	(2,382.09)	1,896.87
Less: Extraordinary Item	-	-	-	-
Profit/(Loss) Before Tax	(2,369.90)	1,907.21	(2,382.09)	1,896.87
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)	(2,902.54)	1,907.21	(2,918.15)	1,896.87
*Profit / (Loss) for the period from Discontinuing Operations	-	583.91	-	583.91
Net Profit from Disposal of Assets of Discontinuing operations	-	2,715.86	-	2715.86
Less: Tax expenses for discontinuing operations	-	-	-	-
Total Profit/(Loss) from Discontinuing Operations (B)	-	3,299.78	-	3,299.78
Other Comprehensive income (C)	26.16	0.55	0.55	26.16
Total Comprehensive Income (A+B+C)	7,131.21	5207.54	(2,917.59)	5,196.65
Add: Balance Brought forward from the previous year	(21,130.97)	(26,337.96)	(2,3701.41)	(28,898.06)
Balance Carried forward to Balance Sheet	(24,033.51)	(21,130.97)	(26,619.56)	(23,701.41)

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

NOTES:

Company has adopted Indian Accounting Standards (IND AS) which is applicable from April 1, 2017. As per the SEBI Circular CIR/CFD/FAC/62/2016 dated July 5, 2016, the company has also provided IND AS compliant financial results for the year ended March 31, 2017.

According to the requirements of SEBI (Listing obligations and Disclosures Requirements) Regulations, 2015, revenue for the year ended March 31, 2018 was reported inclusive of excise duty.

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

FINANCIAL REVIEW:

The turnover of the Company during the year is increased by Rs. 853.07 Lakhs, compared to previous year from Rs. 1,176.96 Lakhs to Rs. 2,030.03 Lakhs, the Loss before exceptional items & tax stood at Rs. 3,201.01 Lakhs for the year as compared to 3,097.31 Lakhs for the previous year.

The brief financial highlights are given above and discussed in detail in Management Discussion 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 Marble division. The marble division was under performed due to working capital shortages.

b. Sanitaryware Divisions:

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

c. Other Division:

The Companys Vitrified tiles plant, Wall tiles plant and Aluminium Extruded Sections plants were continued to be inoperative during the year under review due to working capital 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 up equity share capital of your Company as on March 31, 2018 stands as Rs. 3,373.77 Lakhs divided into 3,37,37,717 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 the respective Stock Exchanges for the financial year 2017-18.

DIVIDEND:

In view of the loss during the year and liquidity crunch felt by the Company, your Directors 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 of the 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 unsecured loans from friends and relatives of Directors/Promoters , before the commencement of the Act, which falls within the meaning of deposits as defined under Sections 74 and 75 of the Act and as per the rules framed thereunder. Due to liquidity crunch coupled with secured lenders restriction, the Company could not repay the same and also could not file the statement as required under Section 74(1)(a) of the Act. The aforesaid non-compliance was inadvertent and due to absence of Whole-time Company Secretary in the Company.

ACTION AGAINST THE COMPANY BY THE BANKS UNDER SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI) AND THE RECOVERY 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 in erosion of its net worth and depletion in its working capital. Eventually there were defaults in the repayment of obligations to banks and the relevant loan accounts - Term Loans, Cash Credits and other Non-Fund Based Credits which are classified as Non-Performing Assets by the Lenders. Consequently the Lenders have called-off their advances and issued notice for recovery under Section 19 of Recovery of Debts (DRT) and under 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 time settlement amount during the previous year and obtained their No Dues Certificates and released 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 substantial amount upfront. However the amount due till March 2018 is pending to be paid to these lenders. The Company in discussion with these lenders for granting some additional time to settle the balance amount amicably.

BUSINESS RESTRUCTURING :

Your management in view to revive the Company from losses and to settle the outstanding dues of the Lenders and other creditors, the Company has decided, through members approval, to re-organise/ re-structure the business of the Company to meet its present needs the members have approved the resolution authorizing the board to sell the Assets of the Company, subject to lenders and other approvals, if deemed appropriate as part of business restructuring process. The details of the resolution approved and voting results of the members of the Company through postal ballot is detailed in Report of Corporate Governance.

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 CONCOLIDATED FINANCIAL STATEMENTS:

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

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

In accordance with Section 136 of the Act, the Audited Financial Statements (including the Consolidated Financial Statements) and related information of the Company, are available on the Companys website http://www.eurovitrified.com/ reports_filing.html .

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

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 the Company, Mr. Viral Nandu, Chairman & Wholetime Director of the Company, retires by rotation at the ensuing Annual general Meeting and being eligible has offered himself for re-appointment.

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

Further, the tenure of Mr. Viral Nandu, as Chairman and Wholetime Director expires on September 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 Nandu, as 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 terms and conditions as stated in resolution No. 4 of the Notice of AGM, dated August 10, 2018, subject to approval of members of the Company.

Pursuant to Regulation 36(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (hereinafter referred to as Listing Regulations) and Secretarial Standards on General Meeting (SS-2) issued by the Institute of Company Secretaries 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 Annual General Meeting of the Company.

The Company has received declarations from all the Independent Directors of the Company confirming 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 KMPs 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 of their knowledge and based on the information and explanations obtained by them, state that:

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

b. the directors have selected such accounting policies and applied them 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 at the end of the financial year March 31,2018 and of the loss of the company for that period;

c. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets 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 the company and that such internal financial controls are adequate and were operating effectively; and

f. the directors have devised proper systems to ensure compliance with the provisions of 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 Companys business policy and strategy apart from other businesses of the Board. During the year under review, the Board met 5 (five) times. The details of the meetings of Board of Directors and the attendance of the Directors at the meetings are provided in the Report on Corporate Governance. The intervening gap between the two consecutive meetings was within the period prescribed under the Act.

ANNUAL EVALUATION OF PERFORMANCE BY THE BOARD:

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

Pursuant to the provisions of the Act, and Listing Regulations, the evaluation of the Board and its performance, the directors individually and the working of its Audit Committee, Corporate Social Responsibility (CSR) Committee, Stakeholders Relationship Committee and Nomination and Remuneration Committee of the Company was carried out by the Board. The Board has evaluated the performance of each of Executive, Non-Executive and Independent Directors considering the business of the Company and the expectations that the Board have from each of them. The evaluation framework for assessing the performance of 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 its performance;

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

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

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

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

COMMITTEES OF THE BOARD:

Subsequent to the changes in the Board of Directors during the year under review, the Board reconstituted its Committees in accordance with the Companies Act, 2013 and Listing Regulations. There are currently 4 (four) Committees of the Board, which are stated herewith:

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 held during the year, are provided in the "Report on Corporate Governance" which forms part of this Annual Report.

AUDIT COMMITTEE AND ITS COMPOSITION:

The Audit Committee of the Company reviews the reports to be submitted with the Board of Directors with respect to auditing and accounting matters. It also supervises the Companys internal control and financial reporting process. The Audit Committee is duly constituted as per the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of Listing Regulations. The Composition of the Audit Committee is also given in the Report 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, 2017, for a term of 5 (five) consecutive years, pursuant to the provisions of Section 139 of the Act read with Companies (Audit and Auditors) Rules, 2014., subject to ratification of the Auditors by the members at every AGM held after his appointment. As per MCA Notification dated May 07, 2018 the requirement to ratify the appointment of the statutory auditors by the members at AGM has been done away.

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

As such on recommendation of the Audit Committee, the Board recommends the ratification of appointment of M/s Rasesh Shah & Associates, Chartered Accountants, Surat, Gujarat as Statutory Auditors of the Company for the remaining term of their appointment, to audit the Financial Statements of the Company and to fix their remuneration for F.Y. 2018-19 to F.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 Standalone and Consolidated Report on the Audited Financial Statements for the year ended March 31, 2018 your Directors would like to reply as under:

a. The Company and its Group Companies ("the Group") current liabilities exceeds its current assets and net worth of the group has been fully eroded, these events indicate a material uncertainty that casts a significant doubt on the Group ability to continue as a going concern and therefore it may be unable to realize its assets and discharge its liabilities in the normal course of business. The financial results do not disclose the fact that the fundamental accounting assumption of going concern has not been followed.

Management Reply:- Your Directors would like to state that the Company and group companies ("the Group") are operational & Manufacturing Marble and employed more than 150 employees. The Group & its management with its positive efforts could sale its fixed assets of Sanitaryware business undertaking and some of the land parcels, and settled its debt with many of its secured lenders either on one time settlement basis or with deferred payment schedule with some upfront payment as per their terms of compromise settlement. It is also taking serious efforts in reviving its tiles division operation. The management has taken and been taking all diligent steps under legal advice, to defend the Group in all the litigation. Considering the reduction in debt burden and considering the ample opportunities in the market and growth drivers for the industry per se, Directors are optimistic about the turnaround of the Group with the infusion 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 for recovery of their respective debts at the Debt Recovery Tribunal and have taken symbolic possession of the securities u/s. 13(4) of the SARFAESI Act, 2002. However the Company has been able to renegotiate with the secured lenders and arrive at an amicable settlement of its debts. The Company has made the settlement of its total debt outstanding with the secured lenders. Accordingly some of the lenders have been settled completely on one time settlement basis and others have agreed for deferred payment along with some upfront payment based on their respective terms of settlement. In view of the above settlement, the Company has not provided the interest on the outstanding dues payable as per the settlement terms on the outstanding agreed amount of settlement amounting to Rs. 1,119 Lakhs for the year ended March 31, 2018 and the interest amount not provided cumulatively from the date of settlement upto March 31, 2018 was Rs. 2,172 Lakhs. Had the same been accounted for, the net loss (after tax) would have decreased and current liabilities for the year ended March 31, 2018 would have increased by that amount. In addition to this, the Company has been continuously incurring substantial losses since past few years and as on March 31, 2018, the Companys current liabilities exceed its current assets by Rs. 25,082.40 Lakhs. Further, the net-worth of the Company has fully eroded and the Company had also filed registration u/s. 15(1) of the erstwhile Sick Industrial Companies (Special Provisions) Act, 1985, before the erstwhile Honble Board for Industrial & Financial Reconstruction.

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

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

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

d. The financial statements are subject to receipt of confirmation of balances from many of the debtors, loans & advances, investments, banks, sundry creditors and other liabilities. Pending receipt of confirmation of these balances and consequential reconciliations / adjustments, if any, the resultant impact on the financial statements is not ascertainable.

Management Reply:- Your management would like to state that the Company is in the process of obtaining the confirmations from debtors, creditors, lenders and loans advances in routine course of business and have obtained from some of them. The reconciliations are made and the effects have been given in the books of accounts wherever required.

e. The Holding Company, had imported various Capital Goods and Spares and Consumables for the Capital Goods under the Export Promotion Capital Goods Scheme (EPCG), of the Government of India, through various licenses, at concessional rates of Custom Duty on an undertaking to fulfil quantified exports within a period of eight years from the date of respective licenses. The Custom Duties so saved amounted to 30,76,45,374/- and the corresponding Export obligation to be fulfilled amounted to Rs. 2,46,11,62,991/-, however as on March 31, 2018, the Export obligation yet to be fulfilled amounted to Rs. 169,19,04,058/-. The stipulated period of 8 years to fulfil Export obligation has already expired and the company is required to pay the said saved Custom Duty together with interest @ 15% p.a. but the same has not been provided in books of accounts by the Company and the final liability is presently unascertainable.

Management Reply:- The Holding Company had a good export track record in the past and has completed its EPCG obligation in more than 8 licenses in the past. However due to adverse market conditions during the period 2008, 2009 and 2010 and global economy slowdown the total exports of the Company were affected drastically and in the later years the financial position of the Holding Company was further affected due to liquidity crunch, which in a way affected the overall revenue of the group, including the export revenues and also the net worth of the group Company turned negative and the Company had also referred to BIFR under the provision of Sick Industrial Companies Act. The group has applied for extension of time for export for the said licenses with the authorities, however the same was not granted and further the Holding Company has filed a petition with Honourable 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 a Company Secretary and the company is not in compliance with Regulation 6 of LODR which requires Company Secretary to be appointed as Compliance Officer.

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

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

Management Reply:- To meet working capital requirements, the Holding Company raised funds by accepting unsecured loans from friends and relatives of Directors which are known to the Group without invitation to public in general after filing Statement in lieu of Advertisement (SLA) pursuant to the provisions of Section 58A of the erstwhile Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975. As the financial position of the Group was under stress and consequently defaulted on its obligation to secured lenders, all the lenders have classified the Companys account as Non-Performing Assets (NPA). The Company suffered losses and cash flow of the Company was under stress. Further, the Net Worth of the Company eroded completely. The non-compliance relating to filing of e-form DPT-4 is unintentional and the compliances was missed out inadvertently.

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

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

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

Management Reply:- As the financial position of the Group is under stress and also it has defaulted on its obligation to secured lenders, all the lenders have classified the Groups account as Non-Performing Assets (NPA). The Group suffered losses and cash flow of the Group was under stress. Further, the Net Worth of the Group eroded completely. In order to continue the operations of the Group, the Group in the past borrowed funds from various relatives and friends of Promoters and Directors. The same was mutually agreed between the parties and no interest was charged by the lenders on the same. 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 Medium enterprises, if any under MSMED Act, 2006, and provisions towards interest, if any, is not ascertained at this stage which is not in conformity with Ind AS 37-Provision, Contingent Liabilities and Contingent Assets.

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

k. As stated in Note 48 to the standalone financial statements, the Companys non-current investments as at March 31, 2018 include investments aggregating 143 lakhs in two of its subsidiaries (of which Rs. 142.50 lakhs has been provided); and loans as at that date include dues from such subsidiaries aggregating Rs. 7,608.46 lakhs (of which Rs. 3,410 lakhs has been provided), net amount being considered good and recoverable by the management considering the factors stated in the aforesaid note. However, these subsidiaries either have accumulated losses and their consolidated net worth is fully eroded or have no transactions. Further, these subsidiaries are facing liquidity constraints due to which they may not be able to realize projections made as per their respective business plans. In the absence of sufficient appropriate evidence, we are unable to comment upon the carrying value of these non-current investments and recoverability of the aforesaid dues and the consequential impact, if any, on the accompanying standalone financial statements.

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

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

l. The Group has not provided for interest on financing facilities amounting to Rs. 1,690 Lakhs for the year ending March 31, 2018 and the interest amount not provided cumulatively from the date of settlement upto March 31, 2018 was Rs. 4,866 Lakhs. Had the same been provided, the loss for the year ending March 31, 2018, would have increased by Rs. 1,690 lakhs. The corresponding current liabilities would have increased by the cumulative amount of interest.

Management Reply:- The Company has settled its debts with secured lenders either on one time settlement basis or compromise settlement with defer payment schedule with some upfront payment as per the terms of sanction. In view of the absence of adequate cash flows and profits, the management of the Company has decided not to charge the same in 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. Kavish Shah & Co., Chartered Accountants, Mumbai, as Internal Auditor of the Company. The Internal Auditor monitors and evaluates the efficiency and adequacy of internal control system in the Company, its compliances with operating systems, accounting procedures and policies at all locations of the Company and reports the same to the Audit Committee on quarterly basis.

Based on the report of internal audit, management undertakes corrective action in their respective areas and thereby strengthens the controls. Significant audit observations and corrective 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 (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and as recommended by the Audit Committee, M/s. Shivlal Mauraya & Co, Company Secretaries, Mumbai were appointed as the Secretarial Auditors of the Company to undertake Secretarial Audit of the Company for the year 2017-18.The Report of the Secretarial Auditor is appended to this Report as Annexure III.

With regard to observations made by the Secretarial Auditors in their Report, your Directors would like to state as under:

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

Managements Reply: The management would like to state that the Company is in the process of appointment of Whole time Company Secretary. The Company has also given advertisement in the newspaper for the vacancy, however still suitable candidate is awaited.

(b) the company has not complied with the provisions of Section 133 of the Act pertaining to Indian Accounting Standard (Ind AS) 36 w.r.t. Accounting for impairment or diminishing value of its assets and Ind AS 37 w.r.t. non-ascertainment of complete particulars of dues to Micro, Small and Medium enterprises, if any under MSMED Act, 2006, the brief particulars of which are stated in the Statutory Auditors Report in "point no c & j" under the heading Basis for Qualified opinion;

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

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

Managements Reply :- To meet working capital requirements, the Holding Company raised funds by accepting unsecured loans from friends and relatives of Directors which are known to the Group without invitation to public in general after filing Statement in lieu of Advertisement (SLA) pursuant to the provisions of Section 58A of the erstwhile Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975. As the financial position of the Group was under stress and consequently defaulted on its obligation to secured lenders, all the lenders have classified the Companys account as Non-Performing Assets (NPA). The Company suffered losses and cash flow of the Company was under stress. Further, the Net Worth of the Company eroded completely. The non-compliance relating to filing of e-form DPT-3 is unintentional and the compliances was missed out inadvertently.

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

Management Reply:- In absence of adequate profits, the Company has not constituted CSR 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 in compliance with Regulation 6 of LODR which requires Company Secretary to be appointed as Compliance Officer;

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

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

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

VIGIL MECHANISM / WHISTLE BLOWER POLICY :

The Company has adopted a Vigil Mechanism / Whistle Blower Policy to deal with instance of fraud and mismanagement, if any, in accordance with Section 177 of the Companies Act, 2013 and Regulation 22 of the Listing Regulations. The mechanism also provides for adequate safeguards against victimization of directors and employees who avails of the mechanism and also provide for direct access to the Chairman of the Audit Committee in the exceptional cases. The detail of the Vigil Mechanism / Whistle Blower Policy is explained in the Report on Corporate Governance and is also available on the website of the Company at http://www.eurovitrified.com/pdf/Vigil%20 Mechanisum%20Policy.pdf.We affirm that during the financial year 2017-18, no employee or Director were denied access to the Audit Committee.

PARTICULARS OF REMUNERATION:

During the year under review, no employee was in receipt of remuneration exceeding the limits as prescribed under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

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

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

INTERNAL FINANCIAL CONTROL:

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

The Audit Committee evaluates the efficiency and adequacy of financial control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and strives to maintain the Standard in Internal Financial Controls.

RISKS AND AREAS OF CONCERN:

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

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT, 2013:

All the transactions with related parties were in the ordinary course of the business and on arms length basis and are reported in the Notes to the Financial Statements. No material 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, the Company has formulated the Related Party Transactions Policy and the same is uploaded on the Companys website http://www.eurovitrified.com/ pdf/Policy% 20on%20Related%20Person%20Transaction.pdf.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

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

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:

There was no significant or material order passed by any regulator or court or tribunal, which impacts the going concern status of the Company or will have bearing on companys operations in future.

MATERIAL CHANGES AND COMMITMENT, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENT RELATES AND THE DATE OF THE REPORT:

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

REPORT ON CORPORATE GOVERNANCE:

Pursuant to the provisions of Regulation 34 read with Schedule V of Listing Regulations, the following have been made a part of the Annual Report and are appended to this 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, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has constituted an Internal Complaint Committee under Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There was no complaint received 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 applicable Secretarial Standards issued by the Institute of Company Secretaries of India and the Company strives to comply with all the applicable provisions of the same.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information in terms of requirement of clause (m) of Sub-Section (3) of Section 134 of the Companies Act, 2013 regarding Conservation of Energy, Technology Absorption and Foreign 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 SOCIAL RESPONSIBILITY 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 FY 2017-18 as the Companys 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 average net loss during the three preceding financial years.

As a good Corporate Governance initiative, the Board of Directors at its meeting held on May 29, 2018 had constituted the CSR Committee. The Committee comprises of the following 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 Policy and amount of expenditure to be incurred as when the Company has aggregated net profits. The CSR Policy is also placed on the Companys website and the link for the same is http://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 Annexure VI.

APPRECIATION:

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

Your Directors place on record their deep appreciation of the dedication and commitment of your Companys employees at all levels and look forward to their continued support in the 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 of Companies (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 companys 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	19,00,000
6.	Reserves & surplus	(23,91,96,739)
7.	Total Assets	3,54,62,619
8.	Total Liabilities	27,27,59,360
9.	Investments	1,00,000
10.	Turnover	6,05,316
11.	Profit/(loss) before taxation	(12,14,819)
12.	Provision for taxation	(3,42,604)
13.	Profit/(loss) after taxation	(15,57,423)
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) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

The ratio of the remuneration of each director to the median remuneration of the employees 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 31,2018	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) read with Rule 5(2) and Rules 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

In pursuant to the provisions of Section 197(12) of the Companies Act,2013 read with Rule 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 remuneration drawn is provided in a separate annexure forming part of this Report. Pursuant to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013 the Annual Report 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 Company during working hours and any member interested in obtaining such information may write to the 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 remuneration policy recommended by Nomination and Remuneration Committee of the Company and adopted by the 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 EARNING AND OUTGO PURSUANT TO THE PROVISIONS OF SECTION 134 OF THE COMPANIES ACT, 2013 READ WITH THE COMPANIES (ACCOUNTS) RULES, 2014

The information required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 for the year ended March 31, 2018 is given 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 for energy conservation.

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

The efforts undertaken by the Company has enabled the Company in increasing its product output 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