OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our Restated Consolidated Financial Information, which is included in this Draft Red Herring Prospectus. The following discussion and analysis of our financial condition and results of operations are based on our Restated Consolidated Financial Information, including the related notes and reports, which are prepared under Ind AS, in accordance with requirements of the Companies Act, and restated in accordance with the SEBI ICDR Regulations, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries, and our assessment of the factors that may affect our prospects and performance in future periods. Accordingly, the degree to which our Restated Consolidated Financial Information will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Ind AS.
This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward Looking Statements" on pages 38 and 14, respectively.
Unless otherwise indicated or the context requires otherwise, the financial information included herein is based on our Restated Consolidated Financial Information for Fiscals 2023, 2024 and 2025 included in this Draft Red Herring Prospectus. For further information, see "Restated Consolidated Financial Information" on page 289. Our fiscal year ends on March 31 of each year, and references to a particular Fiscal are to the twelve months ended March 31 of that year.
Unless otherwise indicated, or if the context otherwise requires, in this section, references to "the Company" or "our Company" are to Varmora Granito Limited on a standalone basis, and references to "the Group", "we", "us", "our", are to Varmora Granito Limited and its Subsidiaries, Associates and Joint Ventures, on a consolidated basis.
Unless otherwise indicated, industry and market data used in this section have been derived from the report titled "Industry Report on Tiles, Bathware & Sanitaryware Market in India" dated August 7, 2025 (the "Technopak Report") prepared and released by Technopak Advisors Private Limited and exclusively commissioned and paid for by us in connection with the Offer, pursuant to a letter of authorisation dated October 4, 2024. A copy of the Technopak Report is available on the website of our Company at https://varmora.com/investor-relations/industry-report/. The data included herein includes excerpts from the Technopak Report and may have been re-ordered by us for the purposes of presentation. There are no parts, data or information (which may be relevant for the proposed Offer), that has been left out or changed in any manner. Unless otherwise indicated, financial, operational, industry and other related information derived from the Technopak Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For more information, see "Risk Factors Internal Risks 48. Certain sections of this Draft Red Herring Prospectus disclose information from the Technopak Report which has been prepared exclusively for the Offer and commissioned and paid for by us exclusively in connection with the Offer and any reliance on such information for making an investment decision in the Offer is subject to inherent risks." on page 61.
Overview
We are one of the leading players in the Indian tiles market in terms of revenue in Fiscal 2025 among the selected listed peers (Source: Technopak Report). According to the Technopak Report, we are the fastest growing among the selected listed peers in India in terms of revenue CAGR, with tiles as its primary segment, between Fiscals 2023 to 2025. The market leading growth is driven by our forefront position in tile innovation and premiumization in India (Source: Technopak Report). We have consistently leveraged technology to pioneer design and quality advancements in the industry. For instance, according to the Technopak Report, we were the first to launch digitally printed wall tiles in 2010 and one of the first in the industry to introduce homogenous-body slabs ((i) 1170 x 1770 mm; and (ii) 1185 x 1785 mm full-body slabs) in 2006, double charge tiles in 2012, high gloss and rocker in 2017 and kitchen slabs (80x260) in 2020. We are also the first company to commercialize integrated stone technology in Asia in 2024 (Source: Technopak Report), with a technology partnership with SACMI Imola S.C., an Italian tile equipment provider.
For an overview of our business, see "Our Business - Overview" on page 203.
Significant Factors Affecting our Financial Condition and Results of Operations
Our financial condition and results of operations have been, and will continue to be, affected by a number of factors, including the following:
Diversification of Product Portfolio
Our product portfolio comprises a wide range of tiles and bathware as well as tile adhesives and other application equipment accessories. As of March 31, 2025, our product portfolio included over 3,500 stock-keeping units ("SKUs") for tiles including
391
GVT, PVT and ceramic tiles. Our tiles are provided across 20 different surface types, as of March 31, 2025. For further information, see "Our Business Description of our Business" on page 221. Set out below are details of our revenues generated from each of our product offerings for the years indicated:
| Particulars | Fiscal | |||||
| 2025 | 2024 | 2023 | ||||
| Amount ( million) | % of revenue from operations | Amount ( million) | % of revenue from operations | Amount ( million) | % of revenue from operations | |
| GVT | 10,058.44 | 69.56% | 9,408.85 | 65.54% | 8,045.06 | 60.27% |
| PVT | 1,560.40 | 10.79% | 1,820.28 | 12.68% | 1,993.76 | 14.94% |
| Ceramics | 1,160.50 | 8.03% | 1,254.86 | 8.74% | 1,561.28 | 11.70% |
Total - Tiles |
12,779.34 | 88.38% | 12,483.99 | 86.97% | 11,600.10 | 86.90% |
| Bathware | 1,287.55 | 8.90% | 1,432.83 | 9.98% | 1,427.47 | 10.69% |
| Adhesive | 209.27 | 1.45% | 203.81 | 1.42% | 130.21 | 0.98% |
| Others | 184.13 | 1.27% | 234.18 | 1.63% | 191.68 | 1.44% |
Revenue from operations |
14,460.29 | 100.00% | 14,354.81 | 100.00% | 13,349.46 | 100.00% |
* Others include sale of broken tile and samples, revenue from dealer display, insurance facilitation charges and export incentive income
The continuous expansion and diversification of our product portfolio is critical to our growth and profitability. This may be subject to various factors such as availability of adequate funds, financial risk-bearing capacity, availability of skilled workforce, prevailing economic environment and competition. Our ability to expand our product portfolio will also depend on new product development based on emerging market trends and customer needs. Further, a diverse product mix increases sales, reduces risks of dependency on any single or few products or product categories and optimizes costs and resources. It also enables us to meet a wider range of customer needs and creates new sources of revenue leading to economies of scale. In addition, diversification ensures sufficient cash flow from mature product categories to build the market share of newer categories.
Moreover, our primary focus is on selling premium products such as GVT. Moreover, GVT also has a 15-30% higher realisation than ceramic and PVT tiles and changing product mix in favour of GVT is helping manufacturers improve their realization and gross margins (Source: Technopak Report). Accordingly, any fluctuation in the demand and sales of GVT tiles would significantly impact our revenues and profitability.
Distribution network and market penetration
Our distribution network is a critical driver of our market penetration, revenue growth, and overall financial performance. We sell our products through a multi-channel distribution network including B2C retail channel (through EBOs and MBOs which are operated on a franchisee-owned-franchisee-operated model) and B2B channel comprising partnerships with various builders, contractors and government agencies. For further information, see "Our Business Distribution Network" on page 227. The breadth and depth of our distribution network, particularly our B2C channel, enable us to reach a wide spectrum of customers and reduces our dependency on a single or few distributors or geographies.
Set out below are certain details of our revenues from operations by products for the years indicated:
| Fiscal | ||||||
| 2025 | 2024 | 2023 | ||||
| ( million) | % of revenue from operations | ( million) | % of revenue from operations | ( million) | % of revenue from operations | |
India |
||||||
| EBO | 2,631.22 | 18.20% | 2,269.03 | 15.81% | 1,878.97 | 14.08% |
| MBO | 7,130.94 | 49.31% | 6,841.77 | 47.66% | 7,116.14 | 53.31% |
Total domestic tiles |
9,762.16 | 67.51% | 9,110.80 | 63.47% | 8,995.11 | 67.38% |
| Bathware | 1,287.55 | 8.90% | 1,432.83 | 9.98% | 1,427.47 | 10.69% |
| Adhesives | 209.27 | 1.45% | 203.81 | 1.42% | 130.21 | 0.98% |
| Others | 184.13 | 1.27% | 234.18 | 1.63% | 191.68 | 1.44% |
Exports |
||||||
| Total exports tiles | 3,017.18 | 20.87% | 3,373.19 | 23.50% | 2,604.99 | 19.51% |
Revenue from operations |
14,460.29 | 100.00% | 14,354.81 | 100.00% | 13,349.46 | 100.00% |
Set out below are certain details of our revenues by B2C and B2B channels for the years indicated:
| Fiscal | ||||||
| 2025 | 2024 | 2023 | ||||
| ( million) domestic sales | % of total | ( million) domestic sales | % of total | ( million) domestic sales | % of total | |
India |
||||||
| B2B | 3,519.02 | 31.18% | 2595.99 | 24.04% | 2,074.78 | 19.59% |
| B2C | 7,767.33 | 68.82% | 8,204.69 | 75.96% | 8,517.96 | 80.41% |
Total domestic sale |
11,286.35 | 100.00% | 10,800.68 | 100.00% | 10,592.74 | 100.00% |
As of March 31, 2025, our network comprised 286 EBOs and over 2,000 MBOs in India and outside India. Set out below are details of revenue from operations generated from our top 10 EBOs and MBOs for the years indicated:
| Particulars | Fiscal | |||||
| 2025 | 2024 | 2023 | ||||
| Amount ( million) | % of revenue from operations | Amount ( million) | % of revenue from operations | Amount ( million) | % of revenue from operations | |
| Top 10 MBOs | 1,047.56 | 7.24% | 961.31 | 6.70% | 846.89 | 6.34% |
| Top 10 EBOs | 841.60 | 5.82% | 702.09 | 4.89% | 540.60 | 4.05% |
The expansion of our EBOs and MBOs can be impacted by several factors. Fluctuations in consumer demand and changes in consumer preferences can influence the need for additional EBOs or MBOs. Moreover, changes in economic conditions, such as economic downturns and unemployment rates can affect consumer spending habits and consequently, the viability of expanding our EBO or MBO presence. Disruptions or constraints within the supply chain, including issues related to sourcing materials, logistics, or inventory management, can also affect the pace and scale of our B2C retail channel expansion.
Demand for tiles and macroeconomic market conditions
According to the Technopak Report, the Indian domestic tiles market has witnessed significant growth over the past years. Valued at approximately 360.0 billion in Fiscal 2019, the market expanded to 531.0 billion by Fiscal 2025, growing at a CAGR of 6.7% (Source: Technopak Report). The Indian domestic tiles market is projected to further grow to 769.0 billion by Fiscal 2029, representing a CAGR of 9.7% from Fiscals 2025 to 2029 (Source: Technopak Report) Macroeconomic and other market conditions in end-use industries will influence the demand for our products. Our financial performance is significantly impacted by demand for tile products and the general health of the real estate, infrastructure, construction and related sectors.
Cost management and availability and cost of raw materials and packing materials
Our profitability is significantly dependent on our manufacturing excellence, which in turn is dependent on our ability to leverage our advanced technologies, equipment and machinery, together with stringent standards, processes and protocols. Further, continuous cost reduction and cost modification measures are critical to improve our profit margins, including through process optimization and innovation. Our ability to manage our operating costs will significantly impact our manufacturing efficiencies and consequently, our profitability.
We depend on the availability and supply of raw materials including clays, glaze, ink, feldspar, frit and bentonite and packing materials including wooden pallets (for export materials), box/ cartons, corners, strapping rolls and paper sheets from third parties, for our manufacturing processes. We procure our raw materials and packing materials from our suppliers through purchase orders. Our financial condition is dependent upon, among other things, our ability to anticipate and react to any interruptions in the supply of raw materials and packing materials and any fluctuations in the costs of our raw materials and packing materials. Raw material and packing material prices are influenced by changes in global economic conditions, industry cycles, demand-supply dynamics, attempts by individual producers to capture market share and also by speculation in the market. In addition, we purchase low-complexity products such as ceramic and PVT tiles from contract manufacturers.
Moreover, our manufacturing processes require substantial quantities of power and fuel, the cost of which can fluctuate and constitutes a considerable portion of our expenditures. In addition, the geographic spread between the raw materials we use for manufacturing purposes and the distribution channels we use to sell our products is susceptible to the costs of freight and transportation. Lack of availability of transport or a spike in transportation costs could disrupt our production and have a material impact on our results of operations.
Set out below are details of our cost of materials consumed, purchase of stock-in-trade, power and fuel and freight outward and transportation charges for the years indicated:
| Particulars | Fiscal | |||||
| 2025 | 2024 | 2023 | ||||
| Amount ( million) | % of Total income | Amount ( million) | % of Total income | Amount ( million) | % of Total income | |
| Cost of materials consumed | 4,381.71 | 29.35% | 3,442.51 | 23.38% | 3,447.05 | 24.62% |
| Purchase of stock-in-trade | 1,985.93 | 13.30% | 3,283.33 | 22.30% | 2,543.74 | 18.17% |
| Power and fuel | 3,650.72 | 24.46% | 2,844.29 | 19.31% | 3,244.64 | 23.18% |
| Freight outward and transportation charges | 437.14 | 2.93% | 393.04 | 2.67% | 281.88 | 2.01% |
Increasing our brand image and sales and promotion expenses
Brand recognition has played a significant role in the growth and development of our business. We implement a range of sales and marketing initiatives designed to increase awareness and strengthen the reputation of our brand, "Varmora." Our approach includes a combination of above-the-line (ATL) and below-the-line (BTL) marketing strategies, as well as multimedia and digital campaigns. We advertise our products across various channels, including social media, news outlets, cinema, television platforms, and outdoor media, to reach a broad and diverse customer base.
The recognition and reputation of our brand among customers have contributed meaningfully to our business performance. To support future growth, we intend to continue investing in activities that preserve and enhance our brand value. These activities may include substantial investments in television and digital marketing campaigns, as well as other promotional initiatives aligned with market opportunities. For further information, see "Our Business - Marketing" on page 228. We launched and produced our marketing and advertising campaigns in Fiscal 2023. Set out below are details of our advertisement and promotion expense for the years indicated:
| Particulars | Fiscal | |||||
| 2025 | 2024 | 2023 | ||||
| Amount ( million) | % of Total income | Amount ( million) | % of Total income | Amount ( million) | % of Total income | |
| Advertisement and promotion expense | 332.36 | 2.23% | 375.59 | 2.55% | 357.60 | 2.55% |
Sustained investment in marketing and advertising is fundamental to increasing brand recall, supporting the introduction of new products, and expanding our market presence. As a result, marketing and advertising expenses are expected to remain a significant component of our operating costs. The effectiveness and timing of these initiatives, as well as external factors such as market perception and regulatory developments, may influence the overall impact of our brand-related activities on our results of operations.
Manufacturing capacity and capacity utilization
We operate nine strategically located manufacturing facilities in the Morbi cluster in Gujarat, as of March 31, 2025. In Fiscals 2025, 2024 and 2023, 78.55%, 66.83% and 72.51%, respectively, of our products were manufactured in-house. Moreover, to efficiently produce high-volume and offer a wide product portfolio, we outsource low-complexity products such as ceramic and PVT tiles from external third-party contract manufacturers. Our ability to manage our capacity utilization is critical to maintaining our operating efficiencies, which in turn impacts our competitiveness and profitability. Optimum levels of capacity utilization and an enhanced standard of quality at our manufacturing facilities is essential to sustain the growth of our operations. Attaining and maintaining this level of utilization and quality requires considerable expense and planning. Moreover, our actual production volumes may differ from our estimates due to variations in customer demand for our products. Our capacity utilization is also dependent upon our ability to optimally manage our manufacturing facilities, which are subject to various operating risks, including those beyond our control, such as the breakdown and failure of equipment or industrial accidents, severe weather conditions and natural disasters.
The key driver in the growth of our revenue from operations has been the sales volume of products manufactured and sold by us. Increased sales volume, specifically for GVT, favourably affects our results of operations as it enables us to benefit from economies of scale in procurement and manufacturing and improves our operating margins through our ability to leverage our relatively fixed cost base. For details of our actual production volumes and capacity utilization, see "Our Business - Description of our Business - Installed Capacity and Capacity Utilization" on page 224.
Inorganic growth through acquisitions and expansion
Our growth and economies of scale are dependent on our ability to expand our operations. These acquisitions enable expansion in our business and operations including through diversification of product offerings in existing and newer categories, and expansion of our distribution network to newer regions together with consolidation of existing market share. Our ability to succeed will depend on the synergies we are able to achieve through the integration of our acquired businesses. The acquisition of new businesses may also expose us to various challenges including supply chain integration and optimization, alignment of overall operations and restructuring of the organization structure, integration of processes and technology, retention and building of relationships with newly acquired employees and customers, navigation of rules, regulations and other processes customary in the newly expanded geographies. However, once we are able to integrate our strategic acquisitions, we believe that the effect of our acquisitions and the consolidation of the acquired businesses financial results in our financial statements will strengthen our financial performance.
Government regulations
We are subject to extensive regulatory requirements with respect to our products in India. Any change in the laws governing the manufacturing of our products, imposition of additional duties by target markets or laws governing the infrastructure or real estate sector, may have an impact on our operations. Further, our business is also subject to various statutory and regulatory permits, licenses, registrations and approvals. For more details, see "Government and Other Approvals" on page 433. These permits, licenses, registrations and approvals are subject to periodic renewals and may impose certain terms and conditions, both of which require us to incur significant costs. In addition, government regulations and policies of India as well as the other jurisdictions from which where we import our raw materials or export our products can affect the availability of raw materials that are critical to our operations. We have incurred and expect to continue incurring costs for compliance with such laws and regulations. These regulations and policies and the tax regimes to which we are subject could change at any time, with little or no warning or time for us to prepare. Any changes in government policies relating to the tile manufacturing industry could adversely affect our business and results of operations.
Competition
The industry in which we operate is characterized by intense competition and is sensitive to broader macroeconomic market conditions. We face competition from large, organized and branded players. We also compete with smaller, regional and unbranded players in the market that may have more flexibility in responding to changing business and economic conditions than us. Competition in our business is based on various factors including pricing, distribution network, product quality, customization and innovation. Further, the competitive landscape encourages continuous improvement and provides opportunities to differentiate our brands through targeted marketing, product development, and customer engagement initiatives. For further information, see "Industry Overview Operational Benchmarking" on page 185.
Material Accounting Policies
Summary of Material Accounting Policies
Property, plant and equipment
Property, plant and equipment, are stated at cost of acquisition or construction less accumulated depreciation and impairment losses, if any. Freehold land is carried at cost and is not depreciated. Cost of property, plant and equipment comprises its purchase price net of any discounts and rebates, any import duties and other taxes (other than those subsequently recovered from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses, decommissioning costs, if any, and interest on borrowings attributable to acquisition of qualifying asset up to the date the asset is ready for its intended use.
Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to Statement of Profit and Loss during the year in which they are incurred.
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the PPE. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the PPE and is recognised in the Statement of Profit and Loss.
The estimated useful lives and residual values are reviewed on an annual basis and if necessary, changes in estimates are accounted for prospectively. Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata basis with reference to the date of additions/deletions.
Transition to Ind AS
On transition to Ind AS, the Group has elected to continue with the carrying value of all of its property, plant and equipment recognized as at 1 April, 2022 measured as per the Indian GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation methods, estimated useful lives
Based on technical assessment by the management or as useful life prescribed in Schedule II of the Companies Act, 2013, the Group has used following useful lives to provide depreciation of different class of its property, plant and equipment. Freehold land is not depreciated. Depreciation on PPE other than freehold land has been provided on diminishing balance method over the useful lives of the assets except by Simola Tiles LLP.
Simola Tiles LLP provides depreciation using straight line method.
| Property, plant and equipment | Useful Lives |
| Factory building | 30 years |
| Admin building | 60 years |
| Plant and Machinery (Solar Power generating plant) | 25 years |
| Plant and Machinery (Wind Mill) | 22 years |
| Plant and Machinery (Other) | 15 years |
| Electric Installation | 10 years |
| Office equipment | 5 years |
| Computers | 3 years |
| Furniture and fixtures | 10 years |
| Vehicle (Two Wheeler) | 10 years |
| Vehicle (Others) | 8 years |
In respect of additions or extensions forming an integral part of existing assets and insurance spares, including incremental cost arising on account of translation of foreign currency liabilities for acquisition of Property, Plant and Equipments, depreciation is provided as aforesaid over the residual life of the respective assets.
Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date of acquisition. Depreciation on sale/deduction from property plant and equipment is provided up to the date preceding the date of sale, deduction as the case may be. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in Statement of Profit and Loss under ‘Other Income and ‘Other Expenses.
Depreciation methods, useful lives and residual values are reviewed periodically at each financial year end and adjusted prospectively, as appropriate.
Capital work in progress
Projects under which property, plant and equipments are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses.
Intangible Assets and Amortisation
Intangible assets are recognized only if it is probable that future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
Intangible assets are derecognised on disposal or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised in the Statement of Profit and Loss when the asset is derecognised.
Goodwill represents the cost of the acquired business in excess of the fair value of identifiable net assets purchase. Goodwill is not amortised; however it is tested annually for impairment and whenever there is an indication that the unit may be impaired, and carried at cost less accumulated impairment losses. If the recoverable amount of cash generation unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised in profit and loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
Transition to Ind AS
On transition to Ind AS, the Group has elected to continue with the carrying value of all of its all intangible assets recognised as at 1 April, 2022 measured as per the Indian GAAP and use that carrying value as the deemed cost of the intangible assets.
The Group amortized intangible assets over their estimated useful lives using the straight line method. The estimated useful lives of intangible assets are as follows:
Intangible assets |
Useful Life | Amortisation method |
| Brand | 5 Years | Straight Line |
| Design | 5 years | Straight Line |
| ERP software | 10 years | Straight Line |
Intangible assets with finite lives are assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.
Foreign Currency Transactions
a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency). The financial statements are presented in Indian rupee ( ), which is the Groups functional and presentation currency.
b) Transactions and balances
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction. Gains/Losses arising out of fluctuation in foreign exchange rate between the transaction date and settlement date are recognised in the Statement of Profit and Loss.
All monetary assets and liabilities in foreign currencies are restated at the year end at the exchange rate prevailing at the year end and the exchange differences are recognised in the Statement of Profit and Loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability accessible to the Group.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 Inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 Inputs for the assets or liability that are not based on observable market data (unobservable inputs).
Revenue Recognition
Revenue from Contracts with Customers
Revenue from contract with customer is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other incentives, if any, as per contracts with the customers. The Group assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements with the exception being when it facilitates insurance services for the customer. In this scenario, the Group acts as an agent.
Revenue is recognised in the income statement to the extent that it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably.
The Group has applied five step model as per Ind AS 115 ‘Revenue from contracts with customers to recognise revenue in the financial statements. The Group satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
a) The customer simultaneously receives and consumes the benefits provided by the Groups performance as the Group performs; or
b) The Groups performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
c) The Groups performance does not create an asset with an alternative use to the Group and the entity has an enforceable right to payment for performance completed to date.
For performance obligations where one of the above conditions are not met, revenue is recognised at the point in time at which the performance obligation is satisfied.
Revenue is recognised either at point of time and over a period of time based on various conditions as included in the contracts with customers.
(i) Revenue from sale of goods
The Group manufactures and sells ceramic tiles. Sales are recognised when control of the products has transferred, being when the products are delivered to the customers at factory premise. The Group is working as a principal in this arrangement and revenue is being recognised on gross basis. No significant element of financing is deemed present as the sales are made on standard credit period, which is consistent with market practice.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
The Group also offer volume and cash discount to the customers. Accumulated experience is used to estimate and provide for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur.
Revenue from sale of goods is recognised at the point in time when control of the goods is transferred to the customer, generally on dispatch/ delivery of the goods or terms as agreed with the customer. The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of goods, the Group considers the effects of variable consideration, the existence of significant financing components, noncash consideration, and consideration payable to the customer (if any).
The Group is working as a principal in this arrangement and revenue is being recognised on gross basis. No significant element of financing is deemed present as the sales are made on standard credit period, which is consistent with market practice.
Revenue from arranging Insurance service to customer:
The Group is providing services in the capacity of agent and hence revenue is being recognised on net basis.
Income from services rendered is recognised based on agreements / arrangements with the customers as the service is performed and there are no unfulfilled obligations. The Group is providing services in the capacity of agent and hence revenue is being recognised on net basis.
Variable consideration:
If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at the time of completion of performance obligation and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Contract assets:
A contract asset is the right to consideration in exchange for goods transferred to the customer. If the Group performs its obligation by transferring goods to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is unconditional.
Trade receivables: A receivable represents the Groups right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets i.e. Financial instruments initial recognition and subsequent measurement.
Contract liabilities:
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).
(ii) Interest Income
Interest Income is recognised on a basis of effective interest method as set out in Ind AS 109, Financial Instruments, and where no significant uncertainty as to measurability or collectability exists.
Interest income from financial assets is recognised when it is probable that the economic benefit will flow to the Group and the amount of income can be measured reliably. Interest income is recorded using the effective interest rate (EIR). Interest income is accrued on a time basis, by reference to the principal outstanding and the interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assets net carrying amount on initial recognition.
(iii) Revenue from export incentive
Revenue from export incentive are recognised in the year when the right to receive credit is established in respect of export made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realisation/ utilisation of such benefits/ duty credit.
Taxes
Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the year.
(i) Current income tax
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
(ii) Deferred tax
Deferred tax is recognised on temporary differences, being differences between the carrying amount of assets and liabilities and corresponding tax bases used in the computation of taxable profit. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Group has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each balance sheet date for their realisability.
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in Other Comprehensive Income or directly in equity, in which case, the current and deferred tax are also recognised in Other Comprehensive Income or directly in equity respectively.
Leases
Group as a lessee
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Groups incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Groups estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right of-use asset has been reduced to zero.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense over the lease term.
The Groups lease asset classes primarily consist of leases for land, office building and godowns. The Group assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether
the contract involves the use of an identified asset;
the Group has substantially all of the economic benefits from use of the asset through the period of the lease; and the Group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities include these options when it is reasonably certain that they will be exercised.
Inventories
a) Raw material, packing material and stores and spare parts (including Fuel)
Raw materials, packing material and stores & spare parts are carried at cost. Cost includes purchase price excluding taxes those are subsequently recoverable from the concerned authorities, freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. The carrying cost of raw materials and packing material are appropriately written down when there is a decline in replacement cost of such materials and finished products in which they will be incorporated are expected to be sold below cost.
b) Finished goods, stock-in-trade and work in progress
Finished goods, stock-in-trade and work in progress are valued at the lower of cost and net realizable value.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
In determining the cost of raw materials, packing materials, stock-in-trade, stores and spares, trading and other products, weighted average cost method is used.
The basis of determining the value of each class of inventory is as follows:
| Inventories | Determination of cost |
| Work in Process | Raw material cost plus conversion cost and overheads wherever applicable. |
| Finished Goods | Raw material cost plus conversion cost and overheads wherever applicable. |
Impairment of non-financial assets
The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit & Loss. The recoverable amount is the greater of the assets fair value less costs of disposal and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate pre-tax discount rate to determine whether there is any indication that those assets have suffered any impairment loss. When there is an indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.
Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks, cash on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
a) Financial assets
a) Initial recognition and measurement
At initial recognition, all financial assets, except trade receivables, are measured at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Trade receivables that do not contain a significant financing component are measured at transaction price.
b) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
at amortized cost; or
at fair value through other comprehensive income; or at fair value through profit or loss.
The classification depends on the entitys business model for managing the financial assets and the contractual terms of the cash flows.
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method (EIR).
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. Interest income from these financial assets is included in other income.
Equity instruments: All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Group may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Group makes such election on an instrument- by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Group decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Group may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.
Derivative financial Assets: Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.
c) Impairment of financial assets
In accordance with Ind AS 109, Financial Instruments, the Group applies expected credit loss (ECL) model for measurement and recognition of impairment loss on financial assets.
In case of trade receivables, the Group follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognized as loss allowance.
In case of other assets, the Group determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognized as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognized as loss allowance.
Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant increase in credit risk since initial recognition, the Group reverts to recognizing impairment loss allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset. 12-month ECL are a portion of the lifetime ECL which result from default events that are possible within 12 months from the reporting date.
ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a range of outcomes, taking into account the time value of money and other reasonable information available as a result of past events, current conditions and forecasts of future economic conditions.
As a practical expedient, the Group uses a provision matrix to measure lifetime ECL on its portfolio of trade receivables. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. At each reporting date, the historically observed default rates and changes in the forward-looking estimates are updated.
d) Derecognition of financial assets
A financial asset is derecognized only when
the rights to receive cash flows from the financial asset is transferred; or
retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the financial asset is transferred then in that case financial asset is derecognized only if substantially all risks and rewards of ownership of the financial asset is transferred. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
b) Financial liabilities
(i) Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs.
(ii) Subsequent measurement
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
(iii) Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss as finance costs.
c) Embedded derivatives
An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract with the effect that some of the cash flows of the combined instrument vary in a way similar to a derivative. Derivatives embedded in all other host contract are separated if the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host and are measured at fair value through profit or loss. Embedded derivatives closely related to the host contracts are not separated.
d) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.
e) Derivative financial liability
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.
Employee Benefits
a) Short-term obligations
All employee benefits payable wholly within twelve months of rendering the services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is charged to the Statement of Profit and Loss in the period in which such services are rendered.
b) Other long-term employee benefit obligations
(i) Defined contribution plan
Provident Fund: The Groups contributions to statutory provident fund in accordance with the Employees Provident Fund and Miscellaneous Provisions Act, 1952 which is a defined contribution plan, are charged to the Statement of Profit and Loss in the period of accrual. The Group has no obligation, other than the contribution payable to the provident fund.
(ii) Defined benefit plan
The Group provides for retirement benefits in the form of Gratuity. Benefits payable to eligible employees of the Group with respect to gratuity is accounted for on the basis of an actuarial valuation as at the Balance Sheet date. The present value of such obligation is determined by the projected unit credit method and adjusted for past service cost and fair value of plan assets as at the balance sheet date through which the obligations are to be settled.
Remeasurements, comprising of actuarial gains and losses and the return on plan assets (excluding net interest) is reflected immediately in the balance sheet with a charge/credit recognised in Other Comprehensive Income ("OCI") in the period in which they occur.
Remeasurements recognised in OCI is reflected immediately in retained earnings and is not reclassified to profit or loss in subsequent periods.
Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Groups earnings per share is the net profit or loss for the year after deducting preference dividends and any attributable tax thereto for the year. The weighted average number of equity shares outstanding during the year and for all the years presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares.
Government grants
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received. In case of grants relating to assets, the cost of the asset is shown as gross value and grant there on is treated as Government Grant Liability, which are recognized as "Other Income" in the Statement of Profit and Loss over the period.
Government grants includes grants on account of duty saved on import of capital goods (property, plant and equipment) under the EPCG (Export Promotion Capital Goods) scheme. Under such scheme, the Company is committed to export prescribed times of the duty saved on import of capital goods over a specified period of time and accounted in revenue on fulfilment of export obligation. In case such commitments are not met, the Company would be required to pay the duty saved along with interest to the regulatory authorities.
Borrowing Costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs.
All borrowing costs are charged to the Statement of Profit and Loss except:
Borrowing costs directly attributable to the acquisition or construction of assets that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of such assets.
Investment Income earned on the temporary investment of funds of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Segment reporting
According to Ind AS 108, identification of operating segments is based on Chief Operating Decision Maker (CODM) approach for making decisions about allocating resources to the segment and assessing its performance. The business activity of the group falls within one broad business segment viz. "Ceramic Tiles and Allied products" and substantially sale of the products and Non-current assets are within the country.
Employee stock option scheme compensation
Employees of the Group receive share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognised in employee benefits expense, together with a corresponding increase in equity (ESOP reserves), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity- settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
Business combination
Business combinations - common control transactions
Business combinations arising from transfers of interests in entities that are under the common control are accounted in accordance with "Pooling of Interest Method" laid down by Appendix C of Indian Accounting Standard 103 (Ind AS 103) Business combinations of entities under common control, notified under the Companies Act, 2013.
The assets and liabilities of the combining entities are reflected at their carrying amounts. No adjustments are made to reflect fair values, or recognise any new assets or liabilities. The only adjustments that are made are to harmonise accounting policies.
The financial information in the financial statements in respect of prior periods should be restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. However, if business combination had occurred after that date, the prior period information shall be restated only from that date.
The balance of the retained earnings appearing in the financial statements of the transferor is aggregated with the corresponding balance appearing in the financial statements of the transferee. The identity of the reserves shall be preserved and shall appear in the financial statements of the transferee in the same form in which they appeared in the financial statements of the transferor.
The difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor shall be transferred to capital reserve and should be presented separately from other capital reserves with disclosure of its nature and purpose in the notes.
Business combinations - acquisition method
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the
fair values of the assets transferred
liabilities incurred to the former owners of the acquired business equity interests issued by the group
fair value of any asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquired entity on an acquisition-by- acquisition basis either at fair value or at the non-controlling interests proportionate share of the acquired entitys net identifiable assets. Acquisition-related costs are expensed as incurred.
The excess of the:
consideration transferred
amount of any non-controlling interest in the acquired entity
acquisition-date fair value of any previous equity interest in the acquired entity
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised in other comprehensive income and accumulated in equity as capital reserve provided there is clear evidence of the underlying reasons for classifying the business combination as a bargain purchase. In other cases, the bargain purchase gain is recognised directly in equity as capital reserve.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entitys incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirers previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss or other comprehensive income, as appropriate.
Principal Components of our Statement of Profit and Loss
The following descriptions set forth information with respect to the key components of our profit and loss statement.
Income
Revenue from operations. Revenue from operations includes sale of products and other operating revenue. Sale of products includes the sale of tiles and allied products, such as bathware and adhesives. Other operating revenue includes insurance facilitation charges (which refers to commissions/ services fees earned by us for acting as a facilitator or intermediary in arranging insurance products for our customers) and export incentive income.
Set out below is the disaggregation of our revenue from contracts with customers by geographical markets for the years indicated:
| Fiscal | ||||||
| 2025 | 2024 | 2023 | ||||
| ( million) | % of Sale of products | ( million) | % of Sale of products | ( million) | % of Sale of products | |
Geographical markets |
||||||
| India | 11,286.35 | 78.69% | 10,800.68 | 75.99% | 10,592.74 | 80.01% |
| Outside India | 3,056.27 | 21.31% | 3,413.21 | 24.01% | 2,646.34 | 19.99% |
Sale of Products |
14,342.62 | 100.00% | 14,213.89 | 100.00% | 13,239.08 | 100.00% |
Other income. Other income primarily includes reversal of expected credit loss, government grant income, net gain on foreign currency transactions and interest income on, amongst others, fixed deposits with banks and interest corporate loans.
Expenses
Cost of materials consumed. Cost of materials consumed includes the cost of purchasing: (i) raw materials such as several types of clays, glaze, ink, feldspar, frit and bentonite; and (ii) packing materials such as wooden pallet (for export material), box/ cartons, corners, strapping roll and paper sheet.
Purchase of stock in trade. Purchases of stock in trade primarily consist of cost of procuring low-complexity products such as ceramic and PVT tiles from contract manufacturers.
Changes in inventories of finished goods, work in progress and stock in trade. Changes in inventories of finished goods, work in progress and stock in trade represent the difference between our inventories at the start of the year and the end of the year.
Employee benefits expenses. Employee benefit expenses comprise salaries, wages and bonuses, defined benefit plans, contribution to provident and other funds, share based payment expense and staff welfare expenses.
Finance cost. Finance costs primarily comprise interest expense on borrowings, interest expense on CCPS liability, interest expense on lease liabilities, and other finance costs.
Depreciation and amortisation expenses. Depreciation and amortisation expenses comprise depreciation on property, plant and equipment, depreciation on right of use of assets and amortisation on intangible assets.
Other expenses. Other expenses primarily include: (i) power and fuel; (ii) labour work contract expense; (iii) selling and distribution expense comprising sales promotion expense with respect to EBOs and MBOs; (iv) consumption of stores and spares; (v) freight outward and transportation charges; (vi) expected credit loss; (vii) advertisement and promotion expense; and (viii) repairs and maintenance.
Results of Operations
The following table sets forth selected financial data from our restated consolidated statement of profit and loss for Fiscals 2025, 2024, and 2023, the components of which are expressed as a percentage of total income for such years.
| Fiscal | ||||||
| 2025 | 2024 | 2023 | ||||
| ( million) | % of Total income | ( million) | % of Total income | ( million) | % of Total income | |
Income |
||||||
| Revenue from operations | 14,460.29 | 96.88% | 14,354.81 | 97.48% | 13,349.46 | 95.36% |
| Other income | 466.46 | 3.12% | 371.01 | 2.52% | 649.69 | 4.64% |
Total Income |
14,926.75 | 100.00% | 14,725.82 | 100.00% | 13,999.15 | 100.00% |
Expenses |
||||||
| Cost of materials consumed | 4,381.71 | 29.35% | 3,442.51 | 23.38% | 3,447.05 | 24.62% |
| Purchase of stock-in-trade | 1,985.93 | 13.30% | 3,283.33 | 22.30% | 2,543.74 | 18.17% |
| Changes in inventories of finished goods, work in progress and stock-in-trade | (906.01) | (6.07%) | (36.64) | (0.25%) | (483.13) | (3.45%) |
| Employee benefits expenses | 1,091.16 | 7.31% | 975.06 | 6.62% | 909.16 | 6.49% |
| Finance costs | 424.90 | 2.85% | 290.56 | 1.97% | 417.28 | 2.98% |
| Depreciation and amortisation expense | 1,194.08 | 8.00% | 616.11 | 4.18% | 561.52 | 4.01% |
| Other expenses | 6,391.05 | 42.82% | 5,558.26 | 37.74% | 5,775.52 | 41.26% |
Total expenses |
14,562.82 | 97.56% | 14,129.19 | 95.95% | 13,171.14 | 94.09% |
Profit before share of profit of associates and joint venture and tax |
363.93 | 2.44% | 596.63 | 4.05% | 828.01 | 5.91% |
| Share of profit of associates and joint venture, net of tax | 12.57 | 0.08% | 33.73 | 0.23% | 20.11 | 0.14% |
Profit before tax |
376.50 | 2.52% | 630.36 | 4.28% | 848.12 | 6.06% |
Tax expense |
||||||
| Current tax | 98.20 | 0.66% | 186.64 | 1.27% | 253.63 | 1.81% |
| Deferred tax | (26.95) | (0.18%) | (2.29) | (0.02%) | 42.72 | 0.31% |
| Earlier year tax adjustments | (2.48) | (0.02%) | (3.34) | (0.02%) | 1.13 | 0.01% |
Total Tax Expense |
68.77 | 0.46% | 181.01 | 1.23% | 297.48 | 2.12% |
Profit for the year |
307.73 | 2.06% | 449.35 | 3.05% | 550.64 | 3.93% |
| Other comprehensive income for the year, net of tax | 2.12 | 0.01% | 6.05 | 0.04% | 21.99 | 0.16% |
Total comprehensive income for the year |
309.85 | 2.08% | 455.40 | 3.09% | 572.63 | 4.09% |
Fiscal 2025 compared to Fiscal 2024
Total Income
Our total income increased by 1.36% from 14,725.82 million in Fiscal 2024 to 14,926.75 million in Fiscal 2025 for the reasons discussed below.
Revenue from operations
Our revenue from operations marginally increased by 0.73% from 14,354.81 million in Fiscal 2024 to 14,460.29 million in Fiscal 2025 primarily on account on increase in sale of tiles. Sale of products tiles and allied products marginally increased by 0.91% from 14,213.89 million in Fiscal 2024 to 14,342.62 million in Fiscal 2025 on account of an increase in demand for tiles in India. The increase in sales of our tiles in India in Fiscal 2025 was primarily driven by higher GVT sales and increase in sales through EBOs. In Fiscal 2025, we also experienced an increase in sales from our B2B channels, which are sold either directly to builders or through our EBOs and MBOs.
Set out below are details of our revenues generated from each of our product offerings (including GVT) for the years indicated:
| Particulars | Fiscal | |||
| 2025 | 2024 | |||
| Amount ( million) | % of revenue from operations | Amount ( million) | % of revenue from operations | |
| GVT | 10,058.44 | 69.56% | 9,408.85 | 65.54% |
| PVT | 1,560.40 | 10.79% | 1,820.28 | 12.68% |
| Ceramics | 1,160.50 | 8.03% | 1,254.86 | 8.74% |
Total - Tiles |
12,779.34 | 88.38% | 12,483.99 | 86.97% |
| Bathware | 1,287.55 | 8.90% | 1,432.83 | 9.98% |
| Particulars | Fiscal | |||
| 2025 | 2024 | |||
| Amount ( million) | % of revenue from operations | Amount % of revenue from | ( million) operations | |
| Adhesive | 209.27 | 1.45% | 203.81 | 1.42% |
| Others | 184.13 | 1.27% | 234.18 | 1.63% |
Revenue from operations |
14,460.29 | 100.00% | 14,354.81 | 100.00% |
*Others include sale of broken tile and samples, revenue from dealer display, insurance facilitation charges and export incentive income
Set out below are certain details of our revenues from operations by EBO and MBOs, products and geography for the years indicated:
| Fiscal | ||||
| 2025 | 2024 | |||
| ( million) | % of revenue from operations | ( million) | % of revenue from operations | |
India |
||||
| EBO | 2,631.22 | 18.20% | 2,269.03 | 15.81% |
| MBO | 7,130.94 | 49.31% | 6,841.77 | 47.66% |
Total domestic tiles |
9,762.16 | 67.51% | 9,110.80 | 63.47% |
| Bathware | 1,287.55 | 8.90% | 1,432.83 | 9.98% |
| Adhesives | 209.27 | 1.45% | 203.81 | 1.42% |
| Others | 184.13 | 1.27% | 234.18 | 1.63% |
Exports |
||||
| Total exports tiles | 3,017.18 | 20.87% | 3,373.19 | 23.50% |
Revenue from operations |
14,460.29 | 100.00% | 14,354.81 | 100.00% |
Set out below are certain details of our revenues by B2C and B2B channels for the years indicated:
| Fiscal | ||||
| 2025 | 2024 | |||
| ( million) | % of total domestic sales | ( million) | % of total domestic sales | |
India |
||||
| B2B | 3,519.02 | 31.18% | 2595.99 | 24.04% |
| B2C | 7,767.33 | 68.82% | 8,204.69 | 75.96% |
Total domestic sales |
11,286.35 | 100.00% | 10,800.68 | 100.00% |
The increase in revenue from operations was marginally offset by a decrease in other operating revenue insurance facilitation charges by 24.13%, from 50.02 million in Fiscal 2024 to 37.95 million in Fiscal 2025 and other operating revenue export incentive income by 12.30% from 90.90 million in Fiscal 2024 to 79.72 million in Fiscal 2025 primarily due to a decrease in export sales.
Other Income
Our other income increased by 25.73% from 371.01 million in Fiscal 2024 to 466.46 million in Fiscal 2025 primarily driven by reversal of expected credit loss of 210.45 million in Fiscal 2025 compared to nil in Fiscal 2024 on account of improved collection cycles. This increase was offset by a decrease in government grant income by 42.00% from 152.53 million in Fiscal 2024 to 88.47 million in Fiscal 2025 primarily due to a decrease in export sales and interest income on fixed deposits with banks by 41.45% from 127.76 million in Fiscal 2024 to 74.80 million in Fiscal 2025 primarily due to non-renewal of fixed deposits post maturity.
Total Expenses
Total expenses increased by 3.07%, from 14,129.19 million in Fiscal 2024 to 14,562.82 million in Fiscal 2025 for the reasons discussed below.
Cost of Materials Consumed
Our costs of material consumed increased by 27.28% from 3,442.51 million in Fiscal 2024 to 4,381.71 million in Fiscal 2025 primarily driven by the increase in in-house manufacturing in Fiscal 2025 on account of the full-year operations of Varmora Unit 2 manufacturing facility and Varmora Unit 3, which commenced operations in the final quarter of Fiscal 2024. The contribution of in-house manufacturing to our revenue from operations increased from 66.83% in Fiscal 2024 to 78.55% in Fiscal 2025.
Purchase of Stock-in-Trade
Our purchase of stock-in-trade decreased by 39.51% from 3,283.33 million in Fiscal 2024 to 1,985.93 million in Fiscal 2025 primarily due to the reduction in sourcing of products from contract manufacturers as a result of the full-year operations of Varmora Unit 2 manufacturing facility and Varmora Unit 3, which commenced operations in the final quarter of Fiscal 2024. This resulted in the share of our revenue from outsourced products decreasing from 32.19% in Fiscal 2024 to 20.64% in Fiscal 2025.
Changes in Inventories of Finished Goods, Work in Progress and Stock in Trade
Changes in inventories of finished goods, work in progress and stock-in-trade was (36.64) million in Fiscal 2024 compared to (906.01) million in Fiscal 2025 primarily due to higher closing stock at the end of Fiscal 2025.
Employee Benefit Expenses
Employee benefit expenses increased by 11.91% from 975.06 million in Fiscal 2024 to 1,091.16 million in Fiscal 2025. This was primarily driven by an increase in share based payment expense by 180.24% from 31.58 million in Fiscal 2024 to 88.50 million in Fiscal 2025 due to ESOP related expense being recorded for the full year in Fiscal 2025 compared to only a certain portion in Fiscal 2024. Salaries, wages and bonus also increased by 5.19% from 902.63 million in Fiscal 2024 to 949.45 million in Fiscal 2025 primarily on account of increase in the number of employees as a result of our two new manufacturing facilities, i.e. Varmora Unit 2 and Varmora Unit 3.
Finance Costs
Finance costs increased by 46.23% from 290.56 million in Fiscal 2024 to 424.90 million in Fiscal 2025. This was primarily due to an increase in interest expense on borrowings by 50.83% from 263.98 million in Fiscal 2024 to 398.17 million in Fiscal 2025 primarily owing to the full year interest charged on the loans availed to set up our two new manufacturing facilities, i.e. Varmora Unit 2 and Varmora Unit 3.
Depreciation and Amortisation Expenses
Depreciation and amortisation expenses increased by 93.81%, from 616.11 million in Fiscal 2024 to 1,194.08 million in Fiscal 2025. This was primarily driven by depreciation on property, plant and equipment on account of our two new manufacturing facilities, i.e. Varmora Unit 2 and Varmora Unit 3.
Other Expenses
Other expenses increased by 14.98% from 5,558.26 million in Fiscal 2024 to 6,391.05 million in Fiscal 2025. This increase was primarily due to an increase in:
power and fuel by 28.35% from 2,844.29 million in Fiscal 2024 to 3,650.72 million in Fiscal 2025 primarily due to increase in in-house manufacturing given the commencement of our two new manufacturing facilities, i.e. Varmora
Unit 2 and Varmora Unit 3;
labour work contract expense by 30.59% from 581.53 million in Fiscal 2024 to 759.41 million in Fiscal 2025 primarily due to increase in in-house manufacturing given the commencement of our two new manufacturing facilities, i.e. Varmora Unit 2 and Varmora Unit 3.
This increase in other expenses was offset primarily due to a decrease in: (i) expected credit loss to nil in Fiscal 2025 compared to 194.07 million in Fiscal 2024 since no additional expected credit loss was recognized in Fiscal 2025 due to changes in management estimates; and (ii) advertisement and promotion expense by 11.51% from 375.59 million in Fiscal 2024 to 332.36 million in Fiscal 2025 on account of reduction in exhibition expenses.
Profit before Tax
For the reasons discussed above, primarily driven by strategic capital expenditures incurred in establishing two additional facilities as well as the related increase in depreciation and amortisation expenses and interest expense from borrowings used to fund these capital investments, our profit before tax significantly decreased by 40.27%, from 630.36 million in Fiscal 2024 to 376.50 million in Fiscal 2025. Share of profit of associates and joint venture, net of tax decreased by 62.73% from 33.73 million in Fiscal 2024 to 12.57 million in Fiscal 2025 driven by the decrease in the share of profits from our Joint Venture, Avalta Granito Private Limited and our Associate, Fiorenza Granito Private Limited.
Total Tax Expense
Our tax expenses decreased by 62.01% from 181.01 million in Fiscal 2024 to 68.77 million in Fiscal 2025 primarily driven by a decrease in current tax on account of decrease in profit before tax.
Profit for the Year
For the reasons discussed above, our profit for the year decreased by 31.52% from 449.35 million in Fiscal 2024 to 307.73 million in Fiscal 2025.
Total Comprehensive Income for the Year
For the various reasons discussed above, our total comprehensive income for the year decreased by 31.96% from 455.40 million in Fiscal 2024 to 309.85 million in Fiscal 2025. Other comprehensive income, net of tax decreased by 64.96% from 6.05 million in Fiscal 2024 to 2.12 million in Fiscal 2025.
Fiscal 2024 compared to Fiscal 2023
Total Income
Our total income increased by 5.19% from 13,999.15 million in Fiscal 2023 to 14,725.82 million in Fiscal 2024 for the reasons discussed below.
Revenue from Operations
Our revenue from operations increased by 7.53% from 13,349.46 million in Fiscal 2023 to 14,354.81 million in Fiscal 2024 primarily on account on increase in sale of tiles. Sale of products tiles and allied products increased by 7.36% from 13,239.08 million in Fiscal 2023 to 14,213.89 million in Fiscal 2024 primarily driven by demand for tiles in India as well as increase in export sales. The increase in tile sales was also due to the full-year operations of Simola Tiles LLP in Fiscal 2024. We acquired a majority stake in Simola Tiles LLP, which manufactures tiles and has global distribution capabilities, in Fiscal 2023. For further information, see "History and Certain Corporate Matters Details regarding material acquisitions or divestments of business/undertakings, mergers, amalgamation, any revaluation of assets, etc. in the last 10 years" on page 247.
The increase in sales of our tiles in India in Fiscal 2024 was primarily driven by higher GVT sales and increase in sales through EBOs. We also experienced an increase in sales from our B2B channels (which are sold either directly to builders or through our EBOs and MBOs) in Fiscal 2024.
Set out below are details of our revenues generated from each of our product offerings (including GVT) for the years indicated:
| Particulars | Fiscal | |||
| 2024 | 2023 | |||
| Amount ( million) | % of revenue from operations | Amount ( million) | % of revenue from operations | |
| GVT | 9,408.85 | 65.54% | 8,045.06 | 60.27% |
| PVT | 1,820.28 | 12.68% | 1,993.76 | 14.94% |
| Ceramics | 1,254.86 | 8.74% | 1,561.28 | 11.70% |
Total - Tiles |
12,483.99 | 86.97% | 11,600.10 | 86.90% |
| Bathware | 1,432.83 | 9.98% | 1,427.47 | 10.69% |
| Adhesive | 203.81 | 1.42% | 130.21 | 0.98% |
| Others | 234.18 | 1.63% | 191.68 | 1.44% |
Revenue from operations |
14,354.81 | 100.00% | 13,349.46 | 100.00% |
* Others include sale of broken tile and samples, revenue from dealer display, insurance facilitation charges and export incentive income
Set out below are certain details of our revenues from operations by EBO and MBOs, products and geography for the years indicated:
| Fiscal | ||||
| 2024 | 2023 | |||
| ( million) | % of revenue from operations | ( million) | % of revenue from operations | |
India |
||||
| EBO | 2,269.03 | 15.81% | 1,878.97 | 14.08% |
| MBO | 6,841.77 | 47.66% | 7,116.14 | 53.31% |
Total domestic tiles |
9,110.80 | 63.47% | 8,995.11 | 67.38% |
| Bathware | 1,432.83 | 9.98% | 1,427.47 | 10.69% |
| Adhesives | 203.81 | 1.42% | 130.21 | 0.98% |
| Fiscal | ||||
| 2024 | 2023 | |||
| ( million) | % of revenue from operations | ( million) | % of revenue from operations | |
| Others | 234.18 | 1.63% | 191.68 | 1.44% |
Exports |
||||
| Total exports tiles | 3,373.19 | 23.50% | 2,604.99 | 19.51% |
Revenue from operations |
14,354.81 | 100.00% | 13,349.46 | 100.00% |
Set out below are certain details of our revenues by B2C and B2B channels for the years indicated:
| Fiscal | ||||
| 2024 | 2023 | |||
| ( million) | % of total domestic sales | ( million) | % of total domestic sales | |
India |
||||
| B2B | 2595.99 | 24.04% | 2,074.78 | 19.59% |
| B2C | 8,204.69 | 75.96% | 8,517.96 | 80.41% |
Total domestic sales |
10,800.68 | 100.00% | 10,592.74 | 100.00% |
In addition, other operating revenue insurance facilitation charges increased by 27.60% from 39.20 million in Fiscal 2023 to 50.02 million in Fiscal 2024 primarily due to an increase in domestic sales and other operating revenue export incentive income by 27.70%, from 71.18 million in Fiscal 2023 to 90.90 million in Fiscal 2024 primarily due to increase in export sales.
Other Income
Our other income decreased by 42.89% from 649.69 million in Fiscal 2023 to 371.01 million in Fiscal 2024 primarily driven by fair value gain of embedded derivative liability (CCPS) of 213.26 million in Fiscal 2023 compared to nil in Fiscal 2024 and amortisation of deferral gain on issue of CCPS of 185.32 million in Fiscal 2023 compared to nil in Fiscal 2024, on account of conversion of CCPS in Fiscal 2023. This decrease was offset by an increase in government grant income by 132.91% from 65.49 million in Fiscal 2023 to 152.53 million in Fiscal 2024 primarily due to receiving the ‘Export Promotion Capital Goods licenses for fulfilling export obligations for our two new manufacturing units, i.e. Varmora Unit 2 and Varmora Unit 3 and interest income on fixed deposits with banks by 61.13% from 79.29 million in Fiscal 2023 to 127.76 million in Fiscal 2024 primarily due to an increase in new fixed deposits created in Fiscal 2024.
Total Expenses
Total expenses increased by 7.27% from 13,171.14 million in Fiscal 2023 to 14,129.19 million in Fiscal 2024 for the reasons discussed below.
Cost of Materials Consumed
Our costs for material consumed marginally decreased by 0.13%, from 3,447.05 million in Fiscal 2023 to 3,442.51 million in Fiscal 2024. This was primarily due to an increase in outsourcing of products from contract manufactures. This resulted in the share of our revenue from products were manufactured in-house decreasing from 72.51% in Fiscal 2023 to 66.83% in Fiscal 2024.
Purchase of Stock-in-Trade
Our purchase of stock-in-trade increased by 29.07% from 2,543.74 million in Fiscal 2023 to 3,283.33 million in Fiscal 2024. This was largely due to increase in sourcing of products from contract manufacturers as a result of the disruption to our manufacturing operations caused by cyclones in the Morbi cluster, where all our manufacturing facilities are located, during the first quarter of Fiscal 2024 and the supply chain disruptions on account of macro-economic developments that delayed commencement of operations for our two new manufacturing units, i.e. Varmora Unit 2 and Varmora Unit 3. This resulted in the share of our revenue from outsourced products increasing from 26.67% in Fiscal 2023 to 32.19% in Fiscal 2024.
Changes in Inventories of Finished Goods, Work in Progress and Stock in Trade
Changes in inventories of finished goods, work in progress and stock-in-trade was (36.64) million in Fiscal 2024 compared to (483.13) million in Fiscal 2023 primarily due to lower closing stock at the end of Fiscal 2024, owing to higher demand and consumption of opening inventory.
Employee Benefits Expenses
Employee benefit expenses increased by 7.25% from 909.16 million in Fiscal 2023 to 975.06 million in Fiscal 2024. This was primarily driven by an increase in share based payment expense of 31.58 million in Fiscal 2024 compared to nil in Fiscal 2023 on account of ESOPs granted in December 2023 resulting in ESOP related expense being recorded in Fiscal 2024. Salaries, wages and bonus also increased by 3.10% from 875.50 million in Fiscal 2023 to 902.63 million in Fiscal 2024 primarily on account of increase in manpower and annual increments.
Finance Costs
Finance costs decreased by 30.37% from 417.28 million in Fiscal 2023 to 290.56 million in Fiscal 2024. This was primarily on account of conversion of CCPS in Fiscal 2023, which resulted in 182.09 million in interest expense on CCPS liability in Fiscal 2023 compared to nil in Fiscal 2024. The interest expense on CCPS liability is recognised as a non-cash interest expense.
Depreciation and Amortisation Expenses
Depreciation and amortisation expenses increased by 9.72% from 561.52 million in Fiscal 2023 to 616.11 million in Fiscal 2024. This was primarily driven by depreciation on property, plant and equipment on account of our two new manufacturing facilities, i.e. Varmora Unit 2 and Varmora Unit 3, which started in the final quarter of Fiscal 2024.
Other Expenses
Other expenses decreased by 3.76% from 5,775.52 million in Fiscal 2023 to 5,558.26 million in Fiscal 2024. This was primarily due to a decrease in:
power and fuel expenses by 12.34% from 3,244.64 million in Fiscal 2023 to 2,844.29 million in Fiscal 2024 on account of reduction in natural gas and propane prices as well as higher outsourcing of products from contract manufacturing;
loss on extinguishment of liability on CCPS from 216.48 million in Fiscal 2023 compared to nil in Fiscal 2024 on account of conversion of CCPS in Fiscal 2023;
loss on fair value of call option on non controlling interest of Simola Tiles LLP measured at fair value through profit or loss by 95.76% from 106.20 million in Fiscal 2023 compared to 4.50 million in Fiscal 2024; and
legal and professional charges by 59.73% from 103.72 million in Fiscal 2023 to 41.77 million in Fiscal 2024 on account of the stamp duty paid in relation to the merger of certain erstwhile subsidiaries under common control in Fiscal 2024 (for further details, see "History and Certain Corporate Matters Details regarding material acquisitions or divestments of business/undertakings, mergers, amalgamation, any revaluation of assets, etc. in the last 10 years" on page 247).
This decrease was offset by an increase in: (i) selling & distribution by 96.68% from 198.83 million in Fiscal 2023 to 391.05 million in Fiscal 2024 on account of increases in sales promotion expenses in relation to our MBOs and EBOs; (ii) freight outward and transportation charges by 39.44% from 281.88 million in Fiscal 2023 to 393.04 million in Fiscal 2024 on account of increase in sales; (iii) expected credit loss by 116.28% from 89.73 million in Fiscal 2023 to 194.07 million in Fiscal 2024 on account of lower collections in trade receivables; and (iv) labour work contract expense by 30.79% from 444.63 million in Fiscal 2023 to 581.53 million in Fiscal 2024 on account of increase in outsourcing of products from contract manufacturers.
Profit before Tax
For the reasons discussed above, primarily driven by an increase in the share of outsourcing products, our profit before tax decreased by 25.68%, from 848.12 million in Fiscal 2023 to 630.36 million in Fiscal 2024. Share of profit of associates and joint venture, net of tax increased by 67.73% from 20.11 million in Fiscal 2023 to 33.73 million in Fiscal 2024. This was primarily driven by the increase in the share of profits from our Associate, Fiorenza Granito Private Limited.
Total Tax Expense
Our tax expenses decreased by 39.15% from 297.48 million in Fiscal 2023 to 181.01 million in Fiscal 2024 primarily driven by a decrease in current tax on account of decrease in profit before tax.
Profit for the Year
For the reasons discussed above, our profit for the year decreased by 18.39% from 550.64 million in Fiscal 2023 to 449.35 million in Fiscal 2024.
Total Comprehensive Income for the Year
For the various reasons discussed above, our total comprehensive income for the year decreased by 20.47% from 572.63 million in Fiscal 2023 to 455.40 million in Fiscal 2024. Other comprehensive income, net of tax decreased by 72.49%, from 21.99 million in Fiscal 2023 to 6.05 million in Fiscal 2024.
Liquidity and Capital Resources
Our primary liquidity requirements have been for financing our capital expenditure, working capital and repayment of debt needs. In recent periods, we have met these requirements through cash flows from operations, as well as term loans. As of March 31, 2025, we had 821.03 million in cash and cash equivalents. We believe that, after taking into account the expected cash to be generated from operations and our borrowings, we will have sufficient liquidity for our present requirements and anticipated requirements for capital expenditure, working capital, interest obligations and other operating needs under our current business plans for the next 12 months. We continue to assess our liquidity requirements depending on business growth and market developments and take appropriate actions to manage the liquidity through various sources, internal and external.
Cash Flows
The following table sets forth our cash flows for the years indicated:
Particulars Fiscal
2025 2024 2023 ( million)
Net cash flows from/ (used in) operating activities (A) 632.13 882.91 (101.78)* Net cash flow used in investing activities (B) (1,199.47) (3,365.60) (833.14) Net cash flows from financing activities (C) 466.22 1,150.57 2,900.07 Net increase/ (decrease) in cash and cash equivalents (A+B+C) (101.12) (1,332.12) 1,965.15
Cash and cash equivalents at the end of the year 821.03 922.15 2,254.27
* We reported negative cash flows in Fiscal 2023 primarily attributable to the business operations of Simola Tiles LLP, which was acquired during the year.
Net cash flows from/ (used in) operating activities
Fiscal 2025
Net cash flows from operating activities was 632.13 million in Fiscal 2025. Our profit before tax was 376.50 million in Fiscal 2025, which was adjusted primarily for:
depreciation and amortisation expenses of 1,194.08 million; interest expenses on borrowings of 398.17 million; and expected credit loss of (210.45) million.
Our operating profit before working capital changes was 1,693.98 million in Fiscal 2025. Our changes in operating assets and liabilities in Fiscal 2025 were primarily due to an increase in:
trade payables of 174.57 million;
other current and non current liabilities of 81.71 million; and other current and non-current financial liabilities of 51.06 million.
This was offset by an increase in inventories of 956.61 million on account of launch of new products and the full-year operations of Varmora Unit 2 manufacturing facility and Varmora Unit 3, which commenced operations in the final quarter of Fiscal 2024, and increase in trade receivables of 282.54 million.
Cash generated from operations amounted to 762.39 million and income taxes paid, net was (130.26) million.
Fiscal 2024
Net cash flows from operating activities was 882.91 million in Fiscal 2024. Our profit before tax was 630.36 million in Fiscal 2024, which was adjusted primarily for:
depreciation and amortisation expenses of 616.10 million;
interest expenses on borrowings of 263.98 million; expected credit loss of 194.07 million;
interest income on fixed deposits with banks of (127.76) million; and government grant income of (152.53) million.
Our operating profit before working capital changes was 1,436.58 million in Fiscal 2024. Our changes in operating assets and liabilities in Fiscal 2024 were primarily due to:
increase in other current and non current financial liabilities of 154.98 million; and decrease in trade receivables of 91.29 million.
This was offset by a decrease in trade payables of 463.81 million on account of payment of MSME creditors outstanding and increase in other current and non current assets of 73.62 million.
Cash generated from operations amounted to 1,084.09 million and income taxes paid, net was (201.18) million.
Fiscal 2023
Net cash flows used in operating activities was 101.78 million in Fiscal 2023 primarily attributable to the business operations of Simola Tiles LLP, which was acquired during the year. Our profit before tax was 848.12 million in Fiscal 2023, which was adjusted primarily for:
depreciation and amortisation expenses of 561.52 million; interest expenses on borrowings of 214.14 million;
loss on fair value of call option measured at FVTPL of 106.20 million; and expected credit loss of 89.73 million.
Our operating profit before working capital changes was 1,653.01 million in Fiscal 2023. Our changes in operating assets and liabilities in Fiscal 2023 were primarily due to an increase in:
trade receivables of 1,103.80 million primarily attributable to the business operations of Simola Tiles LLP, which was acquired during the year; and
increase in inventories of 441.36 million.
This was partially offset by an increase in trade payables of 102.70 million.
Cash generated from operations amounted to 148.22 million and income taxes paid, net was (250.00) million.
Net cash flows used in investing activities
Fiscal 2025
Net cash flows used in investing activities in Fiscal 2025 was 1,199.47 million, which primarily consisted of:
payment of property, plant and equipment and capital work in progress (including capital creditors and capital advances) amounting to 1,116.69 million in relation to capitalisation of remaining property, plant and equipment of Varmora Unit 2 manufacturing facility and Varmora Unit 3; and
investment in fixed deposit, net amounting to 243.38 million.
Fiscal 2024
Net cash flows used in investing activities in Fiscal 2024 was 3,365.60 million, which primarily consisted of:
payment of property, plant and equipment and capital work in progress (including capital creditors and capital advances) amounting to 3,482.97 million in relation to capitalisation of property, plant and equipment of Varmora Unit 2 manufacturing facility and Varmora Unit 3; and
payment towards acquisition of additional interest in subsidiaries amounting to 146.10 million relating to Covertek Ceramica Private Limited, resulting in it becoming a wholly owned subsidiary (for further details, see "History and Certain Corporate Matters Details regarding material acquisitions or divestments of business/undertakings, mergers, amalgamation, any revaluation of assets, etc. in the last 10 years" on page 247).
This was partially offset by interest received of 143.76 million.
Fiscal 2023
Net cash flows used in investing activities in Fiscal 2023 was 833.14 million, which primarily consisted of:
payment towards acquisition of interest in subsidiaries, net of cash acquired amounting to 487.73 million in relation to acquisition of majority stake in Simola Tiles LLP;
payment of property, plant and equipment and capital work in progress (including capital creditors and capital advances) amounting to 201.37 million;
payment towards acquisition of additional interest in subsidiaries amounting to 193.94 million in relation to Solaris Ceramics Private Limited, Nextile Marbosys Private Limited, Conffi Sanitaryware Private Limited, Tocco Ceramic Private Limited (for further details, see "History and Certain Corporate Matters Details regarding material acquisitions or divestments of business/undertakings, mergers, amalgamation, any revaluation of assets, etc. in the last 10 years" on page 247); and
payments towards purchase of call options amounting to 147.80 million in relation to acquisition of majority stake in Simola Tiles LLP.
This was offset by net proceeds from inter corporate loans of 91.61 million and proceeds from sale of investment of 95.72 million in relation to sale of investment in Sicer India Private Limited and proceeds from sale of property, plant and equipment of 74.00 million.
Net cash flows from financing activities
Fiscal 2025
Net cash flows from financing activities in Fiscal 2025 was 466.22 million, which primarily included:
proceeds from current borrowings, net of 1,090.62 million; and proceeds from long term borrowings of 313.44 million.
This was offset by repayment of long term borrowings of 483.40 million and interest expense paid of 410.48 million.
Fiscal 2024
Net cash flows from financing activities in Fiscal 2024 was 1,150.57 million, which primarily included:
proceeds from long term borrowings of 2,256.20 million.
This was offset by repayment of long term borrowings of 652.43 million, interest expense paid of 277.46 million and repayment of current borrowings, net of 147.68 million.
Fiscal 2023
Net cash flows from financing activities in Fiscal 2023 was 2,900.07 million, which primarily included:
proceeds from issue CCPS of 3,515.17 million received from Katsura Investments;
proceeds from issue of equity share capital of 427.29 million received pursuant to a rights issue; and proceeds from long term borrowings of 262.02 million.
This was offset by repayment of long term borrowings of 793.39 million, buy back of shares by subsidiaries of 245.00 million, interest expense paid of 217.90 million and redemption of non-cumulative redeemable preference shares (NCRPS)/ redeemable preference shares of 131.81 million.
Capital Expenditures
In Fiscals 2025, 2024 and 2023, our capital expenditures towards additions to property, plant and equipment and intangible assets (including capital work in progress and capital advances) were 1,116.69 million, 3,482.97 million and 201.37 million, respectively.
Indebtedness
The following table sets forth a summary of our aggregate outstanding borrowings as of March 31, 2025:
| As of March 31, 2025 | |
| ( million) | |
| Current borrowings | 2,838.84 |
| Non-current borrowings | 2,212.71 |
Total Borrowings |
5,051.55 |
For further information on our indebtedness, see "Financial Indebtedness" on page 424.
Contractual Obligations, Contingent Liabilities and Commitments
Contractual Obligations
The following table sets forth a summary of the maturity profile of our contractual obligations as of March 31, 2025:
| As of March 31, 2025 | ||||
| Less than 1 year | 1 - 5 years | More than 5 years | Total | |
| Borrowings | 2,838.84 | 1,822.07 | 390.64 | 5,051.55 |
| Trade payables | 2,098.85 | - | - | 2,098.85 |
| Lease liabilities | 18.01 | 36.52 | 105.36 | 159.89 |
| Other financial liabilities | 412.08 | - | - | 412.08 |
Total |
5,367.78 | 1,858.59 | 496.00 | 7,722.37 |
Contingent Liabilities
The following sets forth the principal components of our contingent liabilities as of the dates indicated:
| As of March 31, 2025 | As of March 31, 2024 | As of March 31, 2023 | |
| ( million) | |||
Claims against the company not acknowledged as a debt |
|||
| - Claims under Central Sales Tax Act | - | 2.70 | 2.70 |
| - Claims under Central Excise Duty Act | 58.96 | 56.64 | 56.64 |
| - Claims under Income Tax Act | 139.44 | 556.71 | 556.71 |
| - Claims under Goods and Service Tax Act | 18.65 | - | - |
| - Penalty demanded by Joint Director General of Foreign Trade Rajkot for non- submission of documents of EODC against EPCG authorisation | - | - | 20.00 |
| - Others (National Green Tribunal) | 13.68 | 13.68 | 13.68 |
| - Interim Compensation demanded by National Green Tribunal and GPCB for the | 18.40 | 18.40 | 18.40 |
| usage of Coal Gasifier Plant | |||
| - Other business litigation | 0.11 | 61.34 | 61.34 |
Bank Guarantee |
|||
| - Guarantee given by Company to Bank on behalf of the subsidiaries | - | - | 959.41 |
For further information, see "Restated Consolidated Financial Information Note 46(a) Contingent Liabilities" on page 349.
Commitments
The following table sets forth our commitments as of the dates indicated:
| As of March 31, 2025 | As of March 31, 2024 | As of March 31, 2023 | |
| ( million) | |||
| Estimated amount of contracts remaining to be executed on capital account (net of advances) | 108.01 | 244.17 | 820.00 |
For further information, see "Restated Consolidated Financial Information Note 46(b) Capital Commitments" on page 349.
Non-GAAP Measures
EBITDA, EBITDA margin, Gross Profit, Gross Profit Margin, Profit for the Year Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Return on Net Worth, Net Debt, Return on Capital Employed, Return on Equity, Net Asset Value per Equity Share and other non-GAAP measures, (together, "Non-GAAP Measures"), presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, Indian GAAP, IFRS or US GAAP. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/(loss) for the years or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, IFRS or US GAAP. In addition, such Non-GAAP Measures are not standardized terms, hence a direct comparison of these Non-GAAP Measures between companies may not be possible. Other companies may calculate these Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although such Non-GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that they are useful to an investor in evaluating us as they are widely used measures to evaluate a companys operating performance.
Reconciliation for the following non-GAAP financial measures (based on Restated Consolidated Financial Information) included in this Draft Red Herring Prospectus are set out below for the years indicated:
Reconciliation of EBITDA and EBITDA Margin
| Particulars | Fiscal | ||
| 2025 | 2024 | 2023 | |
| ( million) | |||
| Profit before Share of profit of associates and joint venture and tax (A) | 363.93 | 596.63 | 828.01 |
| Finance costs (B) | 424.90 | 290.56 | 417.28 |
| Depreciation and amortisation expense (C) | 1,194.08 | 616.11 | 561.52 |
EBITDA (D = A+B+C) |
1,982.91 | 1,503.30 | 1,806.81 |
| Total income (E) | 14,926.75 | 14,725.82 | 13,999.15 |
EBITDA Margin (F=D/E) |
13.28% | 10.21% | 12.91% |
Reconciliation of Gross Profit and Gross Margin |
|||
| Particulars | As of and for the financial year ended March 31, | ||
| 2025 | 2024 | 2023 | |
| ( million) | |||
| Revenue from operations (A) | 14,460.29 | 14,354.81 | 13,349.46 |
| Other income (B) | 466.46 | 371.01 | 649.69 |
Total Income (C=A+B) |
14,926.75 | 14,725.82 | 13,999.15 |
| Cost of materials consumed (D) | 4,381.71 | 3,442.51 | 3,447.05 |
| Purchases of stock-in-trade (E) | 1,985.93 | 3,283.33 | 2,543.74 |
| Change in inventories of finished goods, work in progress and stock- | (906.01) | (36.64) | (483.13) |
| in-trade (F) | |||
| Power & Fuel (G) | 3,650.72 | 2,844.29 | 3,244.64 |
Gross Profit (H=C-D-E-F-G) |
5,814.40 | 5,192.33 | 5,246.85 |
| Total income (C) | 14,926.75 | 14,725.82 | 13,999.15 |
Gross Margin (I=H/C) |
38.95% | 35.26% | 37.48% |
Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin |
|||
Particulars |
Fiscal | ||
| 2025 | 2024 | 2023 | |
| ( million) | |||
| Profit before Share of profit of associates and joint venture and tax (A) | 363.93 | 596.63 | 828.01 |
| Finance costs (B) | 424.90 | 290.56 | 417.28 |
| Depreciation and amortisation expense (C) | 1,194.08 | 616.11 | 561.52 |
EBITDA (D = A+B+C) |
1,982.91 | 1,503.30 | 1,806.81 |
| Share based payment expense (E) | 88.50 | 31.58 | - |
Adjusted EBITDA (F = D+E) |
2,071.41 | 1,534.88 | 1,806.81 |
| Total income (G) | 14,926.75 | 14,725.82 | 13,999.15 |
Adjusted EBITDA Margin (H=F/G) |
13.88% | 10.42% | 12.91% |
Reconciliation of Return on Capital Employed |
|||
| Particulars | As of and for the financial year ended March 31, | ||
| 2025 | 2024 | 2023 | |
| ( million) | |||
| Profit before Share of profit of associates and joint venture and tax (A) | 363.93 | 596.63 | 828.01 |
| Finance Cost (B) | 424.90 | 290.56 | 417.28 |
Earnings Before Interest and Tax (C=A+B) |
788.83 | 887.19 | 1,245.29 |
| Total equity (D) | 7,431.95 | 7,033.61 | 6,692.74 |
| Non-current Borrowings (E) | 2,212.71 | 2,623.55 | 994.52 |
| Current Borrowings (F) | 2,838.84 | 1,505.33 | 1,681.97 |
Capital Employed (G=D+E+F) |
12,483.50 | 11,162.49 | 9,369.23 |
Return on Capital Employed (H = C/G) |
6.32% | 7.95% | 13.29% |
Reconciliation of Net Debt |
|||
| Particulars | As of March 31, | ||
| 2025 | 2024 | 2023 | |
| ( million) | |||
| Non-current Borrowing (A) | 2,212.71 | 2,623.55 | 994.52 |
| Current Borrowings (B) | 2,838.84 | 1,505.33 | 1,681.97 |
Total Borrowings (C=A+B) |
5,051.55 | 4,128.88 | 2,676.49 |
| Cash and cash equivalents (D) | 821.03 | 922.15 | 2254.27 |
| Bank balance other than cash and cash equivalent (E) | 330.42 | 61.06 | 117.42 |
Net Debt (F=C-D-E) |
3,900.10 | 3,145.67 | 304.80 |
Reconciliation of Net Worth and Return on Net Worth |
|||
| Particulars | As of and for the financial year ended March 31, | ||
| 2025 | 2024 | 2023 | |
| ( million) | |||
| Equity share capital (A) | 403.25 | 399.66 | 133.22 |
| Instruments entirely equity in nature (B) | - | 175.76 | 175.76 |
| Other equity (C) | 6,917.24 | 6,301.96 | 6,204.80 |
| Capital reserve (D) | 25.77 | 25.77 | 25.77 |
| Capital redemption reserve account (E) | 65.74 | 65.74 | 65.74 |
Net Worth (F= A+B+C-D-E) |
7,228.98 | 6,785.87 | 6,422.27 |
| Profit attributable to the owners of the Holding Company (G) | 352.47 | 441.70 | 509.56 |
Return on Net Worth (%) (H=G/F) |
4.88% | 6.51% | 7.93% |
Reconciliation of Net Asset Value per Equity Share |
|||
| Particulars | As of March 31, | ||
| 2025 | 2024 | 2023 | |
| ( million) | |||
| Equity share capital (A) | 403.25 | 399.66 | 133.22 |
| Instruments entirely equity in nature (B) | - | 175.76 | 175.76 |
| Other equity (C) | 6,917.24 | 6,301.96 | 6,204.80 |
| Capital reserve (D) | 25.77 | 25.77 | 25.77 |
| Capital redemption reserve account (E) | 65.74 | 65.74 | 65.74 |
Net Asset Value (F= A+B+C-D-E) |
7,228.98 | 6,785.87 | 6,422.27 |
| Weighted average number of equity shares used as the denominator in calculating basic earnings per share (G) (numbers in million) | 201.63 | 201.62 | 182.00 |
Net Asset Value per Equity Share ( ) (H= F/G) |
35.85 | 33.66 | 35.29 |
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that we believe have or are reasonably likely to have a current or future material effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Related Party Transactions
We enter into various transactions with related parties in the ordinary course of business. Related party transactions principally include the buyback of shares and remuneration, commissions, and advances given to certain key managerial personnel, the purchase and sale of goods with enterprises controlled by key management personnel or their relatives, and the purchase and sale of goods as well as advances, loans and deposit interest with partners, associates or joint ventures. For further information relating to our related party transactions, see "Restated Consolidated Financial Information Note 50 Related Party Disclosures" on page 355.
Auditors Observation
Our Statutory Auditors reports on our consolidated financial statements contain certain modifications, qualifications, emphasis of matter for Fiscal 2023 which do not require any adjustments in the Restated Consolidated Financial Information, as set forth below:
Our Statutory Auditors audit report on the audited Indian GAAP consolidated financial statements of our Company as of and for the year ended March 31, 2023 includes the following qualification with respect to the adequacy of the internal financial controls:
For year ended March 31, 2023:
Qualification
According to the information and explanation given to us, and consideration of the reports of the other auditor on internal financial controls with reference to financial statements of subsidiary companies, the following material weakness has been reported by the other auditor on internal financial controls with reference to financial statements of Nextile Marbosys Private Limited, Solaris Ceramics Private Limited, Conffi Sanitaryware Private Limited, Covertek Ceramica Private Limited and Tocco Ceramic Private Limited, which are subsidiaries of the Holding Company, as at 31 March 2023. The possible effects of the material weakness has been assessed as material but not pervasive to these consolidated financial statements:
"The Company is working on strengthening/enhancing supporting documentation to facilitate thorough testing of the operating effectiveness of internal financial controls pertaining to processes viz. customer creation, credit evaluation, establishing customer credit limits for sales, vendor creation, approval of sales/purchase order and recording of issuance of material. In light of above, we have not been able to obtain sufficient appropriate audit evidence on operating effectiveness of above-referred controls for the year ended March 31, 2023."
The report on internal financial controls with reference to financial statements of Nextile Marbosys Private Limited, Solaris Ceramics Private Limited, Conffi Sanitaryware Private Limited, Covertek Ceramica Private Limited and Tocco Ceramic Private Limited has been qualified with respect to the above matter, issued by another firm of chartered accountants vide their audit report dated 11 September 2023, 12 September 2023, 11 September 2023, 09 September 2023 and 11 September 2023, respectively.
Company response
In response to the material weakness identified in our Statutory Auditors audit report on our consolidated financial statements for the year ended March 31, 2023, our Subsidiaries, i.e., Nextile Marbosys Private Limited, Solaris Ceramics Private Limited, Conffi Sanitaryware Private Limited, Covertek Ceramica Private Limited and Tocco Ceramic Private Limited undertook remedial actions, including increasing the frequency of internal audits, updating the risk control matrix, conducting meetings on a quarterly basis with the internal auditors and conducting third-party physical verification of inventory. As a result of these measures, the identified weakness was addressed and, accordingly, was not included in our Statutory Auditors audit report on the consolidated financial statements for the years ended March 31, 2024 and 2025.
Our Statutory Auditors audit report on the audited special purpose consolidated Ind AS financial statements of our Company as of and for the year ended March 31, 2023 includes the following emphasis of matter and other matter paragraphs:
For year ended March 31, 2023:
Emphasis of Matter- Basis of Accounting and Restriction on Distribution or Use
We draw attention to Note 2.01(a) to the accompanying Special Purpose Consolidated Ind AS Financial Statements, which describes the basis of its preparation. These Special Purpose Consolidated Ind AS Financial Statements have been prepared by the Holding Companys management solely for the preparation of Restated Consolidated Financial Information of the Group, its associates and its joint ventures for the year ended 31 March 2023, to be included in the Draft Red Herring Prospectus (‘DRHP) as per the requirements of Section 26 of Part I of Chapter Ill of the Act, read with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulations, 2018, as amended from time to time and the general directions issued by Securities and Exchange Board of India ("SEBI") on 28 October 2021 through the Association of Investment Banking of India to the Lead Managers of the Holding Company, which is to be filed with the SEBI, National Stock Exchange of India Limited and BSE Limited, in connection with the proposed Initial Public Offer (‘IPO) of equity shares of the Holding Company. Accordingly, these Special Purpose Consolidated Ind AS Financial Statements may not be suitable for any other purpose. Our report is issued solely for the aforementioned purpose, and accordingly, should not be used, referred to or distributed for any other purpose or to any other party without our prior written consent. Further, we do not accept or assume any liability or any duty of care for any other purpose for which or to any other person to whom this report is shown or into whose hands it may come without our prior consent in writing. Our opinion is not modified in respect of this matter.
Other Matter
The Holding Company had prepared separate set of statutory consolidated financial statements for the year ended 31 March 2023 in accordance with Accounting Standards prescribed under Section 133 of the Act, read with the Companies (Accounting Standards) Rules, 2021 (as amended) (hereinafter referred to as ‘Indian GAAP financial statements) on which we had issued unmodified opinion vide our audit report dated 14 September 2023 to the members of the Holding Company. The Special Purpose Consolidated Ind AS Financial Statements for the year ended 31 March 2023 has been prepared by the management based on aforesaid Indian GAAP financial statements after adjusting for the differences in the accounting principles adopted by the Group on transition to Ind AS using 1 April 2022 as transition date adopted by the Group for the preparation its of first Ind AS compliant financial statements, which have been audited by us and the other auditors of subsidiaries, associates and joint ventures, as mentioned in paragraph 12 below. Our opinion is not modified in respect of this matter.
For further details, see "Risk Factors Internal Risks 16. Our Statutory Auditors have included certain qualifications (with respect to the adequacy of internal financial controls) and emphasis of matter in their audit report for Fiscal 2023. Further, our audit reports include certain observations in the annexure to the report prescribed under the Companies (Auditors Report) Order, 2020 for Fiscals 2025, 2024 and 2023. There can be no assurance that our audit reports for any future periods or financial years will not contain qualifications, matters of emphasis or other observations, including any observations that may have an effect on our financial statements and which could adversely affect our business, financial condition, cash flows and results of operations" on page 48.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to various financial risks. These risks are categorized into market risk, credit risk and liquidity risk. Our risk management is coordinated by our Board of Directors and focuses on securing long term and short term cashflows. We do not engage in trading of financial assets for speculative purposes. Our Board of Directors has overall responsibility for the establishment and oversight of our risk management framework.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The exposure of our financial instruments as of March 31, 2025 to interest rate risk is as follows:
| Particulars | As of March 31, 2025 | |||
| Floating rate financial | Fixed rate financial instruments | Non-interest bearings | Total | |
Financial liabilities |
||||
| Current borrowings | 2,830.32 | 8.52 | - | 2,838.84 |
| Non-current borrowings | 2,021.73 | 8.14 | 182.84 | 2,212.71 |
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Our exposure to the risk of changes in foreign exchange rates relates primarily to any purchase or sale denominated in a foreign currency. Our foreign currency transactions are mainly in United States Dollars
(USD), Australian Dollars (AUD), Ruble (RUB) and Euro (EUR). Consequently, we are exposed to the risk that the exchange rate of the Indian Rupee (INR) relative to these currencies may change in a manner which has a material effect on the reported values of our INR-denominated assets and liabilities.
Foreign currency denominated financial assets and liabilities (unhedged) which expose us to currency risk are disclosed below:
Particulars As of March 31, 2025 As of March 31, 2024 As of March 31, 2023 Receivable/ Receivable/ Receivable/ Receivable/ Receivable/ Receivable/ (Payable) in (Payable) in (Payable) in (Payable) in (Payable) in (Payable) in Foreign Currency Foreign Currency Foreign Currency (million)
AUD 0.10 5.47 - - - - EUR 1.57 145.17 3.51 316.38 1.28 114.29 USD 13.22 1,131.64 9.19 763.46 12.00 984.38 GBP 0.37 40.96 - - 0.15 14.39 RUB 7.86 7.93 1.17 1.05 - -
Credit Risk
Credit risk is the risk of financial loss to us if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
The objective of managing counterparty credit risk is to prevent losses in financial assets. We assess the credit quality of our counterparties, taking into account their financial position, past experience and other factors.
Our expected credit loss in respect of trade receivables as of March 31, 2025:
| Ageing | Less than 90 days | 90-180 days | 180-270 days | 271-360 days | 361 days and above | Total |
| Gross Carrying amount | 3,618.32 | 148.14 | 83.47 | 55.47 | 380.23 | 4,285.63 |
| Expected credit losses (loss allowance provision) | (28.80) | (27.71) | (39.95) | (31.84) | (335.18) | (463.48) |
| Expected loss rate | 0.80% | 18.71% | 47.86% | 57.40% | 88.15% | 10.81% |
Carrying amount of trade receivables (net of impairment) |
3,589.52 | 120.43 | 43.52 | 23.63 | 45.05 | 3,822.15 |
Liquidity Risk
Liquidity risk is the risk that we will not be able to meet our financial obligations as they become due. We manage our liquidity risk by ensuring, as far as possible, that we will have sufficient liquidity to meet our liabilities when due.
Capital Management
For the purpose of our capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders. The primary objective of our capital management is to maximize the shareholder value and to ensure our ability to continue as a going concern.
For further information, see "Restated Consolidated Financial Information Note 54. Business Combination" on page 369.
Unusual or Infrequent Events or Transactions
Except as disclosed in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent" that led to a material adverse effect on our business and operations.
Known Trends or Uncertainties
Our business has been subject, and we expect it to continue to be subject, to significant economic changes. To our knowledge, except as discussed in this Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on income from our continuing operations. For further information regarding trends and uncertainties, please see "- Significant Factors Affecting Our Financial Condition and Results of Operations" on page 391 and
" Risk Factors" on page 38.
Future Relationship between Cost and Income
Except as disclosed in this Draft Red Herring Prospectus, there are no known factors that will have a material adverse impact on our operations and finances. For further information, see "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 38, 203 and 391, respectively.
Seasonality of Business
Our operations are not impacted by seasonality.
Significant Dependence on a Single or Few Customers or Suppliers
We depend on certain of our suppliers for a portion of our raw materials. In Fiscals 2025, 2024 and 2023, our top 10 suppliers accounted for 11.83%, 14.53% and 16.29% of our total expenses, respectively. For further information, see "Risk Factors - Internal Risks - Our operations are subject to volatility in the supply and pricing of raw materials and packing materials. We are also dependent on our top suppliers for the supply for certain raw materials (top 10 suppliers contributed to 11.83% of our total expenses in Fiscal 2025). Any loss of suppliers or interruptions in the timely delivery of supplies or price escalations could have an adverse impact on our business, financial condition, cash flows and results of operations" on page 42.
Segment Reporting
According to Ind AS 108, identification of operating segments is based on Chief Operating Decision Maker (CODM) approach for making decisions about allocating resources to the segment and assessing its performance. Our business activity falls within one broad business segment viz. "Ceramic Tiles and Allied products" and substantially sale of the products and non-current assets are within India.
Significant Economic Changes
Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect income from continuing operations. See "Risk Factors" and " Significant Factors Affecting Our Financial Condition and Results of Operations" on pages 38 and 391, respectively.
New Products or Business Segment
Apart from the disclosures in "Our Business" on page 203, we currently have no plans to develop new products or establish new business segments that are expected to have a material impact on our business, results of operations or financial condition.
Competitive Conditions
We operate in a competitive environment. Please refer to the sections "Industry Overview", "Our Business", and "Risk Factors" on pages 151, 203 and 38, respectively, for further information on our industry and competition.
Significant Developments subsequent to March 31, 2025
Except as disclosed elsewhere in this Draft Red Herring Prospectus, no circumstances have arisen since the date of the last financial statements as disclosed in this Draft Red Herring Prospectus which materially or adversely affect or are likely to affect, our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next 12 months.
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