2. The company is operating from its Registered cum Corporate office in Hyderabad and operates through various Depot network across the country. The plant is located at Yanam, Union Territory of Puducherry. The Company delcared lock-out of its plant on 31st January, 2012 and since then, there is no production.

3. The company has recorded a Net Loss of Rs.1341.06 Lakhs for the year and has accumulated loss of Rs.9455.42 Lakhs as on 31.03.2015 resulting in erosion of the net worth. Further, there were no cash flows from the existing business activities. The company has defaulted in payment of dues to banks/financial institution and could not comply with the terms of sanction and/or repayment schedules of the lenders. Consequently, the lenders recalled the loans and initiated legal proceedings for recovery of the debts. However, the company is of the opinion that One Time Settlement package already sanctioned by the lenders where part amount is already paid and the promoters are in the process of arranging the balance amount, will be fulfilled shortly.

4. The matter was referred to Board for Industrial and Financial Reconstruction (BIFR) and the case was registered. The management is hopeful that BIFR will declare the company sick and grant an acceptable and viable rehabilitation package to the company.

5. Further, the company is confident of an amicable settlement with the agitating workers and is also hopeful of receiving insurance claim for refurbishing the plant and to recommence the plant operations. In view of the above, the financial statements have been prepared by the company on a "going concern" basis.

6. The company paid 28.93% of loan Outstanding as One time Settlement (OTS) amount as a compromise towards settlement of dues to the lenders and requested for extension of time for balance payment. However, the lenders issued a Demand Notice under section 13(2) of SARFAESI Act. State Bank of India on behalf of its bank, Corporation Bank and State Bank of Travancore issued a Possession Notice (Symbolic) under Rule 8(1) of Security Interest (Enforcement) Rules, 2002 stating that the undersigned has taken possession of the properties in exercise of powers conferred on him under section 13(4) of the SARFAESI Act on 04.03.2015 State Bank of Bikaner & Jaipur assigned and transferred the facilities sanctioned by them together with all underlying securities interests thereto to Phoenix ARC Private Limited (Trustee of Phoenix Trust - FY15-5). The lenders filed an application under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 in the Debts Recovery Tribunal, Hyderabad for recovery of their dues.

7. In view of the above, the Long Term Borrowings are considered as current maturities of long term borrowings and shown under Note No.10 (Other Current Liabilities). Hypothecation / Hire purchase loans under (D) are repayable within one year and shown under Note No.10 (Other Current Liabilities)

8. Terms of Repayment and Security

The Short term borrowings are repayable on demand, secured by first charge on current assets of the company, ranking paripassu with other member banks and further secured by second charge on the company's fixed assets ranking paripassu with other member banks of the consortium. These Borrowings are further secured by i) pledge of 10% equity shares of the company held by the promoters, ii) tangible collateral security provided by the promoters equivalent to 15% of the share capital of the company and iii) personal guarantee of 3 promoter directors of the company on paripassu basis to all the lenders. Interest is payable on monthly basis.

9. The company paid 28.93% of loan Outstanding as One Time Settlement (OTS) amount as a compromise towards settlement of dues to the lenders and requested for extension of time for balance payment. However, the lenders issued a Demand Notice under section 13(2) of SARFAESI Act. State Bank of India on behalf of its bank, Corporation Bank and State Bank of Travancore issued a Possession Notice (Symbolic) under Rule 8(1) of Security Interest (Enforcement) Rules, 2002 stating that the undersigned has taken possession of the properties in exercise of powers conferred on him under section 13(4) of the SARFAESI Act on 04.03.2015 State Bank of Bikaner & Jaipur assigned and transferred the facilities sanctioned by them together with all underlying securities interests thereto to Phoenix ARC Private Limited (Trustee of Phoenix Trust - FY15-5). The lenders filed an application under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 in the Debts Recovery Tribunal, Hyderabad for recovery of their dues.

10. Term Loans under A,B and C above are repayable in quarterly instalments. Interest is payable on monthly basis.These loans are secured by first paripasu charge by way of mortgage and hypothecation over all the fixed assets of the company, both existing and future, further securedby second paripassu hypothecation charge over current assets of the company both present and future. These loans are further secured by i) pledge of 10% equity shares of the company held by the promoters, ii) tangible collateral security provided by the promoters equivalent to 15% of the share capital of the company and iii) personal guarantee of 3 promoter directors of the company on paripassu basis to all the lenders. Hypothecation / Hire Purchase loans under (A) above are secured by hypothecation of vehicles and guaranteed by the promoter directors of the company.

11. The Interest on Term Loans and Working Capital Loans for the year 2014-15 amounting to Rs.1021.93 lakhs (Previous Year Rs.978.11 Lakhs) calculated @ interest rates as per sanction was not provided in the books in line with the treatment made by the banks. The actual interest liability shall vary depending upon the actual date of payment.

12. Creditors for Other Finance and Creditor for Expenses include dues payable to the Statutory Authorities. The liability towards Interest and Penalities payable on account of Statutory Dues were not provided in the books expecting waiver in the current situation.

13. Terms of Repayment and Security:

Term Loans under A,B and C above are repayable in quarterly instalments. Interest is payable on monthly basis.These loans are secured by first paripasu charge by way of mortgage and hypothecation over all the fixed assets of the company, both existing and future, further secured by second paripassu hypothecation charge over current assets of the company both present and future. These loans are further secured by i) pledge of 10% equity shares of the company held by the promoters, ii) tangible collateral security provided by the promoters equivalent to 15% of the share capital of the company and iii) personal guarantee of 3 promoter directors of the company on paripassu basis to all the lenders. Hypothecation / Hire Purchase loans under (A) above are secured by hypothecation of vehicles and guaranteed by the promoter directors of the company.

14. The Interest on Term Loans and Working Capital Loans for the year 2014-15 amounting to Rs.1021.93 lakhs (Previous Year Rs.978.11 Lakhs) calculated @ interest rates as per sanction was not provided in the books in line with the treatment made by the banks. The actual interest liability shall vary depending upon the actual date of payment.

15. The company paid 28.93% of the OTS amount under settlement to all the banks. Corporation Bank had shown the same in the No-lien Account, State Bank of India had shown part of this amount in the No-Lien Account while others have adjusted against the regular Term loan Accounts. The Company made similar treatment in the books in line with the treatment made by the respective banks.

16. The unprecedented industrial violence on 27.1.2012 had resulted in deaths of personnel and destruction of buildings and equipment in the factory. Consequently, a lock-out was declared at the factory from 31.01.2012. The Salary, Wages and other benefits to employees were not considered as provisional liability and not taken in the books under "No Work - No Pay" principle pending orders / judgment of the Industrial Tribunal.

                                               As at            As at
                                          31.03.2015        31.03.2014
                                       (Rs. in lakhs)    (Rs. in lakhs)
17.  Estimated Amount of
contracts remaining to be
executed on Capital
Accounts and
not provided for                               -                  -

i) On account of Letters
of Credit and Bank
Guarantees given by Bankers.                   -                  -

ii) Demand from Directorate of
Enforcement, disputed by the
Company pending in
Appellate Tribunal for
Foreign Exchange.                            5.50                5.50

iv) Demand from Yanam Municipality (Property Tax-With retrospective effect) disputed by the company- pending with commissioner, Yanam Municipality 32.35 32.35

v) Demand from The Deputy Commissioner of Income Tax, Hyderabad, disputed by the Company. Appeal allowed by ITAT,

Hyderabad. DCIT modified the demand to Rs.90.98 Lakhs after giving partial effect to ITAT orders.. The company again requested DCIT to set aside the modified order by giving effect to the entire ITAT orders. 90.98 101.17

19. The company suffered extensive damage to the Buildings, Plant & Machinery and other assets situated at Factory, Yanam due to unprecedented violence, occurred on 27th January, 2012. Stocks of Finished goods, Raw materials, stores and spares, stocks-in-process and other inventories were damaged / looted to a large extent. The Company declared lock-out of the Plant from 31st January 2012.

20. The extent of loss/damage to Plant & Machinery, Buildings and other assets of the company were not considered in the books pending assessment and disclosed at book value after providing depreciation without considering 5% residual value on account of efflux of time. The company could not estimate the condition of the existing fixed assets & its realizable value. As such, the machinery & buildings could not be insured.

21. Similarly, the condition of the raw materials, stores & spares and its realizable value could not be estimated by the company, not insured and disclosed at book value.

22. The Company could not obtain confirmation of balances in respect of Sundry Debtors & Sundry Creditors, loans and advances, other current assets and other liabilities.

23. The company has not provided the provisional liability towards salary, wages and other benefits to its factory employees pending orders/judgment of the industrial Tribunal. Further, the company has not provided for its liability towards Gratuity and leave encashment as per AS-15 due to loss of employee records in the factory during the violent incidence occurred on 27th January, 2012.

24. The company paid part of One Time Settlement (OTS) amount to the lenders and requested for extension of time for balance payment. However, the lenders issued a Demand Notice under section 13(2) of SARFAESI Act. State Bank of India on behalf of its bank, Corporation Bank and State Bank of Travancore issued a Possession Notice (Symbolic) under Rule 8(1) of Security Interest (Enforcement) Rules, 2002 stating that the undersigned has taken possession of the properties in exercise of powers conferred on him under section 13(4) of the SARFaESI Act on 04.03.2015 State Bank of Bikaner & Jaipur assigned and transferred the facilities sanctioned by them together with all underlying securities interests thereto to Phoenix ARC Private Limited (Trustee of Phoenix Trust - FY15-5). The lenders filed an application under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 in the Debts Recovery Tribunal, Hyderabad for recovery of their dues.

In view of the above, the Long Term Borrowings are considered as current maturities of long term borrowings and shown under Other Current Liabilities. Hypothecation / Hire purchase loans are repayable within one year and shown under Other Current Liabilities.

25. The company filed a reference under section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 with the Board for Industrial and Financial Reconstruction. The reference made by the company has been registered in the BIFR as Case No.19/2014.

26. Remittance in foreign currency on account of Dividend:

There is no remittance in foreign currency on account of Dividend during the year 2014-15.

27. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

28.Segment Reporting : The entire operations of the Company relate only to one segment.

29.Related Party Disclosure:

Name of the party Nature of relationship:

1) Regma Ceramics Limited : Company under the same management:

2) Regency Educational Society : Other entities where Directors/their relatives are interested

3) Dr. G.N. Naidur

4) Smt. Bindu G Naidu } Key Management Personnel

5) Sri. N. Satyendra Prasad

30. The Scheduled III to the Companies Act, 2013 has become effective from 1st April, 2014 for the pereparation of Finacial Statements and accordingly, disclosure and presentation have been made in the financial statements.

31. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosere.

32. Members may fill up the Ballot Form printed overleaf and submit the same in a sealed envelope to Mr. K.V.Chalama Reddy, Practicing Company Secretary, Flat No.301, Madhava Apartments, Hill Colony, Khairtabad, Hyderabad-500004, so as to reach by 5.00 pm on September 29, 2015. Ballot Form received thereafter will strictly be treated as if not received.

33. The Company will not be responsible if the envelope containing the Ballot Form is lost in transit.

34. Unsigned, incomplete or incorrectly ticked forms are liable to be rejected and the decision of the Scrutinizer on the validity of the forms will be final.

35. In the event member casts his votes through both the processes i.e. E-voting and Ballot Form, the votes in the electronic system would be considered and the Ballot Form would be ignored.

36. The right of voting by Ballot Form shall not be exercised by a proxy.

37. To avoid fraudulent transactions, the identity/signature of the members holding shares in electronic/demat form is verified with the specimen signatures furnished by NSDL/CDSL and that of members holding shares in physical form is verified as per the records of the share transfer agent of the Company (i.e. XL Softech Systems Pvt Ltd.). Members are requested to keep the same updated.

38. There will be only one Ballot Form for every Folio/DP ID/CLIENT ID irrespective of the number of joint members.

39. In case of joint holders, the Ballot Form should be signed by the first named shareholder and in his/her absence by the next named shareholders. Ballot Form signed by a joint holder shall be treated valid if signed as per records available with the Company and the Company shall not entertain any objection on such Ballot Form signed by other joint holders.

40. representative of the Body Corporate/Trust/Society, etc. a certified copy of the relevant authorization/ Board resolution to vote should accompany the Ballot Form.

41. The voting rights of shareholders shall be in proportion to their shares of the paid up equity share capital of the Company as on the cut-off date 25th September, 2015.