To

Euro Ceramics Limited

The Directors hereby present the 13th Annual Report together with the Financial Statements of the Company for the financial year ended March 31, 2015

FINANCIAL RESULTS:                                       (Rs. in Lacs)

Particulars                               Year ended      Year ended
                                          March 31, 2015  March 31, 2014

Revenue from operations                        4,971.09        7,662.85

Other Income                                     271.09          676.95

Total Income                                   5,242.18        8,339.80

Less: Total Expenditure                        4,940.93        8,713.83

Less : Interest and other finance expenses        69.95          164.35

Less: Depreciation                             2,882.80        2,961.60

Profit/(Loss) Before Tax and Extraordinary 
Item                                          (2,651.50)      (3,499.98)

Less: Extraordinary Item                       3,552.17               -

Profit/(Loss) Before Tax                      (6,203.67)       (3499.98)

Less: Provision of Tax                                -           (1.76)

Net Profit/(Loss) After Tax                   (6,203.67)      (3,498.22)

Add: Balance Brought forward from 
the previous year                            (18,906.99)     (15,408.77)

FINANCIAL REVIEW:

The Company achieved a turnover of Rs. 4,971.09 Lacs lower by Rs. 2,691.76 Lacs compared to previous year due to limited working capital and liquidity crunch.

The brief financial highlights are given above and discussed in detail in Management Discussion and Analysis as part of this report.

SHARE CAPITAL :

There was no change in share capital of the Company during the year 2014-15.

OPERATIONAL REVIEW:

a. Tiles Division, Aluminum Extruded Section and Realty Division :

The Company's vitrified tiles plant and Aluminum Extruded Sections plants were continued to be in-operative during the year under review due to working capital shortages and did not generat any significant revenue except for sale of old stock in hand. The Wall tiles plant was also in-operative for a major part of the year.

b. Calcareous Tiles/Mable Division :

The Company presently operating this division on limited scale due to liquidity crunch. The marble division has contributed around 50% in the total revenue with operating capacity utilization of around 12% p.a.

c. Sanitaryware Division:

The turnover of santiaryware division for the FY 2014-15 is increased by Rs. 793.48 Lacs from Rs. 1,665.48 Lacs to Rs.2,458.97 Lacs, showing a growth of 48%. The production of quality product has kept the Company as preferred OEM for many leading players. The Capacity utilization of the division increased to around 48% during the year from 20% in the previous financial year.

DIVIDEND:

In view of losses during the year under review, your Directors do not recommend any dividend for the financial year 2014- 15.

REFERENCE TO BIFR:

The Company on the basis of the audited accounts for the financial year ended as on March 31, 2013, and being mandatory, filed the reference U/s 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 before the Hon'ble Board for Industrial & Financial Reconstruction (BIFR). The above reference has duly been registered by the Registrar of Hon'ble BIFR and hearings of which are in the process for determination of sickness.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014 and the Articles of Association of the Company, Mr. Pratik Kumar Shah, Whole-time Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible offered himself for re-appointment.

Mrs. Usha Jaysheel Kotian was appointed as an Additional Director of the Company with effect from March 28, 2015 and she holds office upto the date of the ensuing Annual General Meeting. The Company has received Notice along with requisite deposit from a member of the Company under Section 160 of the Companies Act, 2013 proposing her candidature for the office of Independent Director of the Company.

The Board of Directors recommend the above appointment /re-appointment.

The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under Section 149 (6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement entered into with the Stock Exchanges.

Brief resume of the Directors proposed to be appointed/re- appointed as stipulated under Clause 49 of Listing Agreement with the Stock Exchanges are given in the Notice convening the 13th Annual General Meeting.

Pursuant to the provisions of Section 203 of the Companies Act, 2013, Mr. Paresh Kanji Shah was appointed as Chief Financial Officer (CFO) of the Company w.e.f. June 1, 2014.

MEETINGS OF THE BOARD:

The Board meets at regular intervals to discuss and decide on Company/ business policy and strategy apart from other business. A tentative annual calendar of the Board and Committee Meetings is informed to the Directors in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. However, in case of a special and urgent business need, the Board's approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting.

The notice of Board meeting is given well in advance to all the Directors of the Company. The Meetings of the Board are held in Mumbai, Maharashtra. The agenda of the Board / Committee meetings is circulated 7 days, prior to the date of the meeting. The agenda for the Board and Committee meetings includes detailed notes on the items to be discussed at the meeting to enable the Directors to take an informed decision.

The Board met five times during the year, the details of which are given in the Report on Corporate Governance. The intervening gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013.

AUDIT COMMITTEE AND ITS COMPOSITION

The Audit Committee of the Company reviews the reports to be submitted with the Board of Directors with respect to auditing and accounting matters. It also supervises the Company's internal control and financial reporting process.

As on March 31, 2015, the Audit Committee comprised of Mr. Mahendra Modi and Mr. Karan Rajput, Independent Directors and Mr. Nenshi L. Shah, Chairman and Managing Director of the Company.

Mr. Mahendra Modi is the Chairman of Audit Committee of the Company.

AUDITORS:

M/s. Deepak Maru & Co., Chartered Accountants, Mumbai (FRN: 115678W), the Statutory Auditors of your Company, holds office upto the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from them regarding their willingness to act as Statutory Auditors of the Company. The Company has also received a certificate from them to the effect that their re-appointment, if made, would be in compliance with the conditions as prescribed under Section 139 of the Companies Act, 2013 and they satisfy the criteria as provided under Section 141 of the Act.

Your Directors recommend the appointment of M/s. Deepak Maru & Co., Chartered Accountants, Mumbai as the Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of next Annual General Meeting of and to audit financial statements for the financial year 2015-16.

AUDITORS' REPORT:

With regards to the observations from the Statutory Auditors in their report (on standalone financials), which are self explanatory, your Directors would like to reply as under:

I. The financial statement have been prepared on a "going concern" basis, inspite the fact that the Company's financial facilities/arrangements have expired and the same are overdue for repayment and the networth of the Company fully eroded and the lenders and creditors have initiated legal proceedings against the Company for recovery.

Your Directors would like to state that the Company is operational and Manufacturing Marble and Sanitaryware Products and employed more than 200 manpower. The Company is also making serious efforts in negotiating with the banks and resolving the issues with banks. The management has taken and been taking all diligent steps under legal advice, to defend the Company in all the litigation. Considering the ample opportunities in the market and growth drivers for the industry per say, your Directors are optimistic about the turnaround of the Company with the infusion of the long term funds and with support of the lenders. The Company can derive a comprehensive package under BIFR for the secured and unsecured lenders with potential future earning plans, for resolution of its debts.

II. The Company has not provided for interest on financing facilities amounting to Rs. 8,758.47 Lacs for the year ending March 31, 2015. Had the same been provided, the loss for the year ending March 31, 2015, would have increased by Rs. 8,758.47 Lacs. The corresponding liabilities would also have increased by Rs. 8,758.47 Lacs as at March 31, 2015.

The Company on the basis of registration filed u/s. 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, before the Hon'ble Board for Industrial & Financial Reconstruction, and the hearings for which are in process for determination of sickness and on the basis of negotiation with the lenders for reduction in interest, rephasement in terms of borrowings etc., has not provided for interest to the tune of Rs. 8,758.47 Lacs, (calculated based on last sanction letters in hand) on financing facilities, for the year ending March 31, 2015.

III. The Company has not provided for impairment or diminishing value of its assets/investment as per 'Accounting Standard 28 - Accounting for Impairment of Assets' as notified under the Companies (Accounting Standards) Rules, 2006 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. The effect of such Impairment or diminishing value has not been quantified by the management and hence the same is not ascertainable.

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

IV. There has been delay in transferring unclaimed dividend amounting to Rs. 25,303/- pertaining to financial year 2006- 07 into the Investor Education and Protection Fund, by the Company during the year ended March 31, 2015.

Your management would like to state that the delay in transferring the amounts to the Investor Education and Protection Fund was unintentional and due to oversight.

V. In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the register maintained under section 189 of the Act, here are no stipulations made regarding repayment of principal amount and interest. Hence we are unable to comment as to regularity of repayments of principal and interest amount.

Your directors would like to state that the Loans and Advances are given in the normal course of business to a firm where your Company is a partner with majority share.

VI. The Company has accumulated losses at the end of the financial year and at the immediately preceding financial year and the Company has defaulted in repayment of loans and interest to the banks.

Your directors would like to state that the loss is mainly on account of Depreciation and provisions made for diminution in the value of the investment/ assets. However the Company was able to generate marginal cash profit of Rs. 231.30 Lacs during the year under review. The Company had working capital shortages during the year and was unable to run all the plants. Further the plants which were operational during the year were also run at lower capacity due to liquidity crunch, despite of the demand of the products in the market. Due to inadequate cashflows from the operations of the Company, there were defaults in the repayment of the loans and interest to the Banks. However the management is hopeful with the changing economic scenario, of arriving at a comprehensive business restructuring along with the debt realignment proposal with the lenders under BIFR.

VII. The Company has given the guarantee for loans taken by its subsidiary from bank. The terms and conditions of the same are not prejudicial to the interest of the Company. The said subsidiary has been continuously incurring losses and its net worth has been fully eroded and there is substantial doubt whether the said subsidiary would be able to repay its liabilities or realize its assets.

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

INTERNAL AUDIT:

The Company has appointed M/s. Rahul Khanderia & Associates, Chartered Accountants, Mumbai, as its Internal Auditor. However, due to pre-occupation they resigned and M/s. J H Ghumara & Co. Chartered Accountant were appointed as Internal Auditor for the financial year 2014-15. The Internal Auditors have given their report to the Audit Committee.

Based on the report of internal audit function the Board takes corrective action in the specific areas observed and thereby to strengthen the controls on significant audit observations, corrective actions thereon are presented to the Audit Committee of the Board.

DIRECTORS' RESPONSIBILITY STATEMENT:

Your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them and as required under Section 134(3) (c) of the Companies Act, 2013 state that:

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

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

c. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the directors have prepared the annual accounts on a going concern basis;

e. the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

PUBLIC DEPOSITS:

During the year under review, the Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

EXTRACT OF ANNUAL RETURN:

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

LISTING OF SHARES:

The Equity shares of the Company are listed on National Stock Exchange of India Ltd. (NSE) and BSE Ltd. (BSE). The Company has paid the requisite listing fees to the said stock exchanges for the financial year 2015-16.

REMUNERATION POLICY:

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and determination of salary of Directors, Senior Management Personnel and any other employees of the Company. The Remuneration Policy is stated in the Report on Corporate Governance.

RISKS AND AREAS OF CONCERN:

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

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

All Related Party Transactions entered during the year were in Ordinary Course of the Business and on Arm's Length basis. No Material Related Party Transactions, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) of the Companies Act, 2013 in Form AOC-2 is not applicable.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:

The details of loans, guarantee or investment made by your Company under Section 186 of the Companies Act, 2013 during the financial year 2014-15 are given under Notes to Accounts of financial statements.

ANNUAL PERFORMANCE EVALUATION BY THE BOARD:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has adopted a Policy for evaluation of the performance of the Directors, Key Managerial Personnel and Senior Management Personnel. Based on the consideration of various parameters, gathered from all Directors, the performance of the Board and individual Directors is evaluated. Besides, the Board has also developed a system to evaluate the performances of each of executive and non-executive and Independent Directors. Such questions are prepared considering the business of the Company and the expectations that the Board have from each of the Directors and the value addition provided by them.

The Policy, inter alia, provides the criteria for performance evaluation of Directors consisting of;

i. Attendance of the directors at the Meetings and the quality of contribution at Board and it's Committee/s meetings;

ii. Participation of such director in the Company's business and attribution to the strategic plans of the Management;

iii. Relationship with other Board members and other officials of the Senior Management;

iv. Sharing of knowledge and experience for the benefit of the Company.

During the year under review, a separate meeting of the Independent Directors was held for evaluation of performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman.

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

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

WHISTLE BLOWER POLICY:

The Company has a Vigil mechanism / Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The mechanism also provides for adequate safeguards against victimization of directors and employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in the exceptional cases. The details of the Vigil Mechanism Policy is explained in the Corporate Governance Report and also posted on the website of the Company. We affirm that during the financial year 2014-15, no employee or Director was denied access to the Audit Committee.

SECRETARIAL AUDIT REPORT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Secretarial Audit Report received from M/s. Manish Ghia & Associates, Practising Company Secretaries, Mumbai is appended as Annexure - II and forms part of this report.

With regards to the observations from the Secretarial Auditors in their report, which are self explanatory, your Directors would like to reply as under:

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

The Company is in process of appointment of Whole time Company Secretary.

(b) the Company has extended loans/advances which are interest free in nature and there are no stipulation as to its repayment;

Your directors would like to state that the Loans and Advances are given in the normal course of business to a firm where your Company is a partner with majority share.

(c) on account of default in payment of interest/repayment of deposits in the earlier financial years by the Company, some of the directors of the Company are disqualified to act as directors under section 164 of the Act;

The Company is facing liquidity crunch due to losses in the Company since couple of years. The Company has also filed for registration u/s. 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, before the Hon'ble Board for Industrial & Financial Reconstruction, and the hearings for determination of sickness are in process and will arrive at the comprehensive package to settle the secured and unsecured creditors.

(d) in respect of outstanding deposits as at March 31, 2014, the Company was required to file Form DPT-3 latest by June 30, 2014 which is yet to be filed;

(e) in respect of unpaid/unclaimed amount of dividend /interest / matured deposits, the Company is yet to file Form 5INV relevant to the financial year ended March 31, 2014 and also to upload the same on its website; the said Form 5INV is required to be filed within 90 days from the date of Annual General Meeting which was held on September 30, 2014;

(f) there has been a delay of 408 days in transferring amounts (Rs. 25303/-), required to be transferred to the credit of Investor Education and Protection Fund by the Company during the year ended March 31, 2015; and

(g) as required under clause 32 of the Listing Agreement, the details of inter corporate loans have not been disclosed in the Company's annual report for the year ended March 31, 2014.

For point numbers (d), (e), (f) and (g), in the absence of Whole time Company Secretary the compliances were missed out inadvertently.

REPORT ON CORPORATE GOVERNANCE:

Pursuant to Clause 49 of the Listing Agreement entered into with the stock exchanges, the following have been made a part of the Annual Report and are attached to this report:

a. Management Discussion and Analysis

b. Report on Corporate Governance.

c. Auditors' Certificate regarding compliance of conditions of Corporate Governance

COMMITTEES OF THE BOARD:

During the year, in accordance with the Companies Act, 2013, the Board re-constituted some of its Committees. There are currently three Committees of the Board, as follows:

1) Audit Committee

2) Stakeholders' Relationship Committee

3) Nomination and Remuneration Committee

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

PARTICULARS OF REMUNERATION:

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

Disclosure with respect to the remuneration of Directors and employees as required under Section 197 of the Companies Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been appended as Annexure III to this Report.

INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has zero tolerance for sexual harassment at workplace and adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. There was no complaint on sexual harassment during the year under review.

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

As required under Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules 2014, the information relating to the foregoing matters is given as under:

Details regarding Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is given in Annexure IV.

SUBSIDIARY COMPANIES:

Euro Merchandise (India) Limited is a Wholly owned Subsidiary of the Company. The Company does not have any Associate Company. M/s. Subhnen Sanitaryware Pvt Ltd., a wholly owned subsidiary of the Company has been voluntarily striked off under section 560 of the Companies Act, 1956 w.e.f. March 31, 2014.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Wholly owned Subsidiary in Form AOC 1 is attached as Annexure V to this report.

APPRECIATION:

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

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

                                  By Order of the Board of Directors

Place: Mumbai                                         Nenshi L. Shah

Date: August 14, 2015                   Chairman & Managing Director