Note : 1 Corporate Information :

Murudeshwar Ceramics Limited (the Company) was established during the year 1983. The Company is manufacturing Ceramic and Vitrified Tiles. The Registered Office of the Company is at 604/B, Murudeshwar Bhavan, Gokul Road, Hubli - 580 030 and the Corporate Office is at Naveen Complex, 7th Floor, 14, M.G.Road, Bengaluru - 560 001. The Company is having 2 manufacturing plants at Sira, Dist. Tumkur and Karaikal, Pondicherry. The Company started trading activities for outsourcing of Vitrified Tiles and Ceramic Tiles. The Company's products are branded as “Naveen Ceramic Tiles” and “Naveen Diamontile”. The Company is having well established marketing network all over the country.

Note : 2 Notes on IND AS Adjustments

a) Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income' includes re-measurement of defined benefit plans the concept of other comprehensive income did not exist under previous GAAP.

b) The Company has valued financial assets/liabilities at fair value which hitherto were accounted for at cost. Impact of fair value changes as on the date of transition, is recognized in opening reserves and changes thereafter are recognized in Statement of Profit and Loss.

c) Under Ind AS, re-measurement of net defined benefit liabilities i.e., actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of statement of profit or loss. Under the previous gAaP, this re-measurement was forming part of the profit or loss for the year.

d) Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. .

The following reconciliations provide quantifications of the effect of significant differences arising as a result of transition from Previous GAAP (IgGaP) to IND AS in accordance with IND AS 101.

(a) Balance Sheet as at 1st April, 2016 (Transition date);

(b) Other Equity as at 1st April, 2016 (Transition date);

(c) Balance Sheet as at 31st March, 2017;

(d) Other Equity as at 31st April, 2017; and

(e) Statement of Profit and Loss for the year ended 31st March, 2017; and

(f) Summary of reconciliation of movement in profit and loss on transition to IND AS for year ended March 31, 2017.

The Company has elected to use fair value of its total assets in its Opening Ind AS Balance Sheet (as at April 01 2016) as deemed cost. Accordingly, the Assets are carried at fair value of Rs.27,820.43 lakhs, Carrying amount reported under previous GAAP was Rs.27,753.99 lakhs. The difference between the fair value and carrying amount reported under previous GAAP of Rs.66.44 lakhs has been taken to Retained Earnings as at April 01, 2016 (Transition Date).

The fair value of the above mentioned assets as at April 01, 2016 has been arrived at, on the basis of a valuation carried out as at March 31, 2016 by Mr. Mohan R Chabbi, Chartered Engineer registered with the Institution of Engineers (India), having appropriate qualification and experience in the valuation of Property, Plant and Equipment after considering various factors like present market price, replacement cost, technical depreciation and obsolescence factors and residual life of assets.

For the land, the fair value was derived using the market approach considering the prevailing market rate in the vicinity of the subject land parcel and also considering available details of recent transactions of similar land parcels adjusted for factors such as negotiation margin, land use, road location etc.

The Term Loans from Banks are repayable in quarterly instalments. Interest is payable on monthly basis. The Term Loans from Banks, namely Canara Bank and Indian Bank are secured by first charge created/to be created on the immovable / Fixed Assets of the Company, and by charges on the other movables including machinery, Spares, Tools, accessories and movable plant and machinery both present and future, save and except book debts and other Deferred Payment Guarantee equipments, assets hypothecated to concerned institutions / Bankers against specific finance for the same. The said charge on the movable properties of the Company in favour of these Bankers is subject to prior charges created in favour of Company's Bankers for working capital requirements. Loans from ICICI Bank Ltd., Kotak Mahindra Ltd., Oriental Bank of Commerce, The Daimler Financial Services and Sundaram Finance Limited for specific assets are secure against hypothecation of specific items of assets financed for. Loan from LIC of India is against pledge of Key-Man Policy. All the secured and unsecured loans other than public deposits have been further secured by way of Personal Guarantees by Promoter Directors of the Company to the extent applicable. The Term Loan from Indiabulls is secured by way of Mortgage of Title Deeds of specific assets.

The Cash Credit and other working capital facilities from the consortium of Bankers namely, Canara Bank, State Bank of India, Bank of Baroda, The Lakshmi Vilas Bank Ltd., Oriental Bank of Commerce and Axis Bank are secured by way of hypothecation of Raw materials, Stock in Process, Finished Goods, Book Debts and Goods meant for export on pari-passu basis and further secured by way of second & subsequent charge on the whole of the immovable / Fixed Assets of the Company. These borrowings are further secured by way of Personal Guarantees by Promoter Directors of the Company to the extent applicable.

Note : 3 Disclosures under Accounting Standards

3.1 Employee benefit plans

3.1.a DEFINED CONTRIBUTION PLANS

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.The Company recognised Rs.40.58 lakhs (Year ended 31st March, 2017 Rs.38.58 lakhs) for Provident Fund contributions and Rs.13.35 lakhs (Year ended 31st March, 2017 Rs.8.64 lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of schemes.

3.1.b DEFINED BENEFIT PLANS

The Company offers the following employee benefit schemes to its employees :

i. Gratuity : The following tables sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements :

4.1 Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily Ceramic Tiles and Vitrified Tiles. Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are Americas (including Canada) and South American countries, Europe, India and others.

Net deferred tax (liability) / asset

The Company has recognised deferred tax asset on unabsorbed depreciation to the extent of the corresponding deferred tax liability on the difference between the book balance and the written down value of fixed assets under Income Tax.

Effect of IND AS adoption on Standalone Statement of Profit and Loss for year ending 31.03.2017.