Auditor Report of Regency Ceramics Ltd.

Mar 31, 2024

We have audited the accompanying financial statements of REGENCY CERAMICS LIMITED
(“the company”), which comprise the Balance Sheet as at March 31, 2024, the Statement of Profit and
Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement
of Cash Flows for the year ended on that date, and a summary of the material accounting policies and
other explanatory information (herein after referred to as “the financial statements”)

In our opinion and to the best of our information and according to the explanations given to us, except
for the possible effects of our observations stated in “Basis for Qualified Opinion” section below, the
accompanying financial statements give the information required by the Companies Act, 2013 (“the
Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting
Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting
Standard) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in
India, of the state of affairs of the Company as at March 31, 2024, the Loss and total comprehensive
income, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

1. Financial statements were prepared without considering the effect of the loss / damage to
Buildings, Plant & Machinery and other assets of the company. The condition of the fixed assets
& its realizable value could not be estimated post declaration of lock out of the plant on
31.01.2012. The Fixed Assets are disclosed at book value after providing depreciation on
account of efflux of time

2. During the year, the company has not provided the provisional liability towards salary, wages
and other benefits to its factory employees. Further, the company has not provided for its
liability towards Gratuity and leave encashment in accordance with Ind AS-19 “Employee
Benefits ”. We are unable to comment upon the impact of non-provision of additional loss of the
company for the year and on the current liabilities as at 31.03.2024.

3. Confirmation of balances was not obtained from Debtors, Creditors, loans and advances and
other current assets.

4. The company did not provide the interest on Unsecured loans received from Directors and Body
Corporates. Also, interest has not been provided in respect of overdue amount payable to Micro,
Small and Medium Enterprises suppliers for a period exceeding 45 days.

5. The company has not provided the liability towards interest and penalties payable on account of

statutory dues.

In view of the above, the liability of the company in this regard could not be ascertained. Consequently,
we are unable to comment about the impact of the same on the loss for the year, income tax and
shareholder’s funds.

We conducted our audit of the financial statements in accordance with the Standards on Auditing
(SAs) specified under Section 143(10) of the Act. Our responsibilities under those standards are
further described in the Auditors responsibility for the Audit of Financial Statements section of our
report. We are independent of the company in accordance with the Code of Ethics issued by the
Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are
relevant to our audit of the financial statements under the provisions of the Act and the Rules made
thereunder, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our qualified opinion on the financial statements.

Material Uncertainty Related to Going Concern

We draw attention to note no. 1 to the financial statements regarding the preparation of the financial
statements on a going concern basis, despite erosion of the net worth. However, the accompanying
financial have been prepared on “Going Concern” basis for the reasons stated in the said note. The
business activities of the Company have been initiated resulting in revenue and consequent cash flows.
Our opinion is not modified in respect of this matter.

Key Audit Matters

Except for the matters described in the Basis for Qualified Opinion section and Material Uncertainty
Related to Going Concern section, we have determined that there are no other key audit matters to
communicate in our report.

Information Other than the Financial Statements and Auditor’s Report Thereon

The Company’s Board of Directors is responsible for the other information. The other information
comprises the information included in the Annual Report, but does not include the financial statements
and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained during the course of our audit or otherwise appears
to be materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have nothing
to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial
Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Act
with respect to the preparation of these financial statements that give a true and fair view of the
financial position, financial performance including other comprehensive income, cash flows and
changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS)

prescribed under Section 133 of the Act read with relevant rules issued there under and other
accounting principles generally accepted in India. This responsibility also includes maintenance of
adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets
of the company and for preventing and detecting the frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and estimates that are reasonable
and prudent; and design, implementation and maintenance of adequate internal financial controls, that
were operating effectively for ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of financial statements that give a true and fair view and
are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors is responsible for assessing the company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Board of Directors either intends to liquidate
the company or to cease operations, or has no realistic alternative but to do so. The Board of Directors
are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with SAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.

• Obtain an understanding of internal financial controls relevant to the audit in order to design audit

procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are
also responsible for expressing our opinion on whether the Company has adequate internal
financial controls in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up

to the date of our auditor’s report. However, future events or conditions may cause the Company
to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit. We also provide those charged with governance with
a statement that we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor’s Report) Order,2020 (“the Order”) issued by the Central
Government of India in terms of sub-section (11) of section 143 of the Act, we give in the
Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the Order, to the
extent applicable.

2) As required by Section 143(3) of the Act, we report that:

a) We have sought and, except for the matters described in the Basis for qualified opinion
paragraph, obtained all the information and explanations which to the best of our knowledge
and belief were necessary for the purposes of our audit,

b) Except for the effects of the matters described in the Basis for qualified opinion paragraph
above, in our opinion proper books of account as required by law have been kept by the
Company so far as it appears from our examination of those books.,

c) the balance sheet, the statement of profit and loss including other comprehensive income,
statement of changes in equity and the cash flow statement dealt with by this Report are in
agreement with the books of account,

d) Except for the effects of the matters described in the basis for qualified opinion paragraph, in
our opinion, the aforesaid Ind AS financial statements comply with the Accounting Standards
specified under Section 133 of the Act.

e) The matters described in Basis for Qualified Opinion and Material Uncertainty Relation to
Going Concern above, in our opinion, may have an adverse effect on the functioning of the
Company.

f) On the basis of written representations received from the directors as on March 31, 2024 taken
on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024
from being appointed as a director in terms of Section 164(2) of the Act,

g) The qualification relating to the maintenance of accounts and other matters connected
therewith are as stated in the Basis for Qualified Opinion section and paragraph 2(b) above on
reporting under section 143(3)(b) of the Act.

h) With respect to the adequacy of the internal financial controls with reference to financial
statements of the Company and the operating effectiveness of such controls, we couldn’t
evaluate as Company didn’t have any manufacturing activity only had insignificant trading
operations during the year under review.

i) With respect to the matter to be included in the Auditors'' Report under Section 197(16) of the
Act, in our opinion and according to the information and explanations given to us, no
managerial remuneration was paid to any director during the year. The Ministry of Corporate
Affairs has not prescribed other details under Section 197(16) which are required to be
commented upon by us.

j) With respect to the other matters to be included in the Auditor’s report in accordance with Rule
11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our
information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in
its financial statements - Refer Note 29 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the Investor Education
and Protection Fund by the Company.

iv. a. The Management has represented that, to the best of its knowledge and

belief, no funds (which are material either individually or in the aggregate)
have been advanced or loaned or invested (either from borrowed funds or
share premium or any other sources or kind of funds) by the Company to
or in any other person or entity, including foreign entity (“Intermediaries”),
with the understanding, whether recorded in writing or otherwise, that the
Intermediary shall, whether, directly or indirectly lend or invest in other
persons or entities identified in any manner whatsoever by or on behalf of
the Company (“Ultimate Beneficiaries”) or provide any guarantee, security
or the like on behalf of the Ultimate Beneficiaries;

b. The Management has represented, that, to the best of its knowledge and
belief, no funds (which are material either individually or in the aggregate)
have been received by the Company from any person or entity, including
foreign entity (“Funding Parties”), with the understanding, whether
recorded in writing or otherwise, that the Company shall, whether, directly
or indirectly, lend or invest in other persons or entities identified in any
manner whatsoever by or on behalf of the Funding Party (“Ultimate
Beneficiaries”) or provide any guarantee, security or the like on behalf of
the Ultimate Beneficiaries;

c. Based on the audit procedures that have been considered reasonable and
appropriate in the circumstances, nothing has come to our notice that has
caused us to believe that the representations under sub-clause (a) and (b)
above, contain any material misstatement.

v. The Company had not declared or paid any dividend during the year under
Report.

_vi Based on our examination, the Company has used an accounting software for
maintaining its books of account which has a feature of recording audit trail (edit
log) facility. The audit trail feature has been operated throughout the year for all
transactions recorded in the accounting software. Further, during the course of
our audit, we did not come across any instance of the audit trail feature being
tampered with.

; proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from
April 01, 2023, reporting under Rule 11 (g) of the Companies (Audit and
Auditors) Rules, 2014 on preservation of audit trail as per the statutory
requirements for record retention is not applicable for the financial year ended
March 31, 2024.

for K.S.RAO & CO.

Chartered Accountants
Firm’s Regn No. 003109S

(V.VENKATESWARA RAO)

Place : Hyderabad Partner

Date : 30.05.2024 Membership No. 231388

UDIN: 24219209BKATRV1930

---

Mar 31, 2023

We have audited the accompanying financial statements of REGENCY CERAMICS LIMITED (“the company”), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and a summary of the significant accounting policies and other explanatory information (herein after referred to as “the financial statements”)

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of our observations stated in “Basis for Qualified Opinion” section below, the accompanying financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standard) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, the Profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

1. Manufacturing operations of the company were stopped due to riots, strike and malicious

damage at factory since 27.01.2012. The company declared lock out of the plant on 31.01.2012 and the condition of the fixed assets & its realizable value could not be estimated. The machinery and building were not insured during the year and disclosed at book value after providing depreciation on account of efflux of time.

2. During the year, the company has not provided the provisional liability towards salary, wages and other benefits to its factory employees. Further, the company has not provided for its liability towards Gratuity and leave encashment in accordance to Ind AS-19

“Employee Benefits”. Since the company could not compute the liability in the absence of complete records, we are unable to comment upon the impact of non-provision of additional loss of the company for the year and on the current liabilities as at 31.03.2023.

3. Confirmation of balances was not obtained from Debtors, Creditors, loans and advances and other current assets.

4. The company did not provide the interest on Unsecured loans receivedfrom Directors and

Body Corporates. Also, interest has not been provided in respect of overdue amount payable to Micro, Small and Medium Enterprises suppliers for a period exceeding 45 days.

5. The company has not provided the liability towards interest and penalties payable on account of statutory dues. The Company is of opinion that the statutory authorities shall

waive the same in view of the unprecedented incident.

In view of the above, the liability of the company in this regard could not be ascertained. Consequently, we are unable to comment about the impact of the same on the profit for the year, income tax and shareholder’s funds.

Emphasis of Matter

i) We draw attention to note no 28 to the financial results wherein it is stated that the company has received Insurance Claim Rs. 1492.30 Lakhs out which Rs.276.62 Lakhs adjusted against claim receivable for stock damages. The balance amount Rs. 1215.67 Lakhs showing under other current liabilities as insurance claim received for reinstatement/replacement of assets.

ii) We draw attention to note no 1.16 to the financial results wherein it is stated that the company has charged Rs. 1263.64 Lakhs to the profit and loss account under exceptional items as excess insurance claim towards stock value is adjusted according to the award given by Arbitral Tribunal.

We conducted our audit of the financial statements in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditors responsibility for the Audit of Financial Statements section of our report. We are independent of the company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (IC AI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the financial statements.

Material Uncertainty Related to Going Concern

We draw attention to note no. 1 to the financial statements regarding the preparation of the financial statements on a going concern basis, despite erosion of the net worth and no cash inflows from the existing business activities. However, the accompanying financial have been prepared on “Going Concern” basis for the reasons stated in the said note. Our opinion is not modified in respect of this matter.

Key Audit Matters

Except for the matters described in the Basis for Qualified Opinion section and Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our report.

Information Other than the Financial Statements and Auditor’s Report Thereon

The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued there under and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors is responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. The Board of Directors are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit in order to design

audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including

the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor’s Report) Order,2020 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give

in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the

Order, to the extent applicable.

2) As required by Section 143(3) of the Act, we report that:

a) We have sought and, except for the matters described in the Basis for qualified opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit,

b) Except for the effects of the matters described in the Basis for qualified opinion paragraph above, in our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.,

c) the balance sheet, the statement of profit and loss including other comprehensive income, statement of changes in equity and the cash flow statement dealt with by this Report are in agreement with the books of account,

d) Except for the effects of the matters described in the basis for qualified opinion paragraph, in our opinion, the aforesaid Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act.

e) The matters described in Basis for Qualified Opinion and Material Uncertainty Relation to Going Concern above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of written representations received from the directors as on March 31,2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164(2) of the Act,

g) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, we couldn’t evaluate as Company didn’t have any manufacturing and business operations during the year under review.

h) With respect to the matter to be included in the Auditors'' Report under Section 197(16) of the Act, in our opinion and according to the information and explanations given to us, no managerial remuneration was paid to any director during the year. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

i) With respect to the other matters to be included in the Auditor’s report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 29 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. a. The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b. The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

c. Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) above, contain any material misstatement.

v The Company had not declared or paid any dividend during the year under

Report.

for KS.RAO & CO.

Chartered Accountants Firm''s RegnNo. 003109S

Sd/-

(M.NAGA PRASADU)

Place : Hyderabad Partner

Date : 26.05.2023 Membership No. 231388

UDIN: 23231388BGYLDH1735

---

Mar 31, 2015

We have audited the accompanying financial statements of REGENCY CERAMICS LIMITED, HYDERABAD, ("the Company"), which comprise the Balance Sheet as at March 31,2015, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls. That were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provision of the Act, the accounting and auditing standards and matter which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing secified under Section 143(10) of the Act. Those standard require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing and openion on whether the Company has in place and adequate internal financial control system over financial reporting and the operating effectiveness of such controls.

An audit also includes evaluating the appropriateness of accounting polices used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Basis for qualified opinion:

1. Manufacturing operations of the company were stopped due to riots, strike and malicious damage at factory since 27.01.2012. The company declared lock out of the plant on 31.01.2012 and the condition of the fixed assets & its realizable value could not be estimated. The machinery and building were not insured during the year and disclosed at book value after providing depreciation on account of efflux of time.

2. The condition of the raw materials, stores and spares and its realizable value could not be estimated by the company. The stocks were not insured during the year and disclosed at book value.

3. During the year, the company has not provided the provisional liability towards salary, wages and other benefits to its factory employees pending orders / judgement of the industrial Tribunal. Further, the company has not provided for its liability towards Gratuity and leave encashment in accordance to AS-15 "Employee Benefits". Since the company could not compute the liability in the absence of complete records, we are unable to comment upon the impact of non-provision of additional loss of the company for the year and on the current liabilities as at 31.03.2015.

4. Confirmation of balances was not obtained from Debtors, Creditors, loans and advances and other current assets.

5. The company paid 28.93% of loan Outstanding as One Time Settlement (OTS) 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 they have 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 in 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.

6. The company has not provided the liability towards interest and penalties payable on account of statutory dues. The Company is of opinion that the statutory authorities shall waive the same in view of the unprecedented incident.

7. 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 (BIFR) and same has been registered.

8. In view of the above, the Net Loss would increase and the shareholders funds would reduce to this extent.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the basis for qualified opinion paragraph, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March 2015, and its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditors' Report) Order, 2015, ("the order") issued by the Central Government of India in terms of Sub-Section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143 (3) of the Act, we report that:

a) We have sought and, except for the matters described in the Basis for qualified opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

b) Except for the effects of the matter described in the Basis for qualified opinion paragraph above, in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss and Cash Flow statement dealt with by this Report are in agreement with the books of account.

d) Except for the effects of the matter described in the basis for qualified Opinion paragraph, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) The matter described in the Basis for qualified opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of written representations received from the Directors as on 31st March, 2015 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2015, from being appointed as a director in terms of Section 164(2) of the Companies Act.

g) With respect to the other matter to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rule 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 25 (2), (3), (8), (9) to financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were material foreseeable losses.

iii. According to the information and explanations given to us, there were no amounts which were required to be transferred to the investor Education and Protection Fund by the Company.

ANNEXURE TO AUDITOR'S REPORT

The Annexure referred to in Para 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date, to the members of REGENCY CERAMICS LIMITED, Hyderabad, for the year ended March 31, 2015.

1) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) As explained to us, the management could not verify physically the fixed assets situated at Yanam, due to riots, strike and malicious damage.

c) During the year the Company has not disposed off any of the fixed assets.

2) No Physical verification of inventory has been conducted during year.

3) a) During the year the Company has not granted any loans, secured or unsecured to Companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

b) In view of our comment in paragraph (a) above, clause (lll) (a) and (b) of paragraph 3 of the aforesaid order are not applicable to the Company.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5) The Company has not accepted any deposits from the public. Hence, the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under, do not apply to this Company.

6) During the year, there is no production and its related activity in the factory and as such, cost records pursuant to sub-section (1) of section 148 of the companies Act, 2013 have not been maintained.

7) a) According to the records of the Company, the company is not regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and any other statutory dues with the appropriate authorities.

b) According to information and explanations given to us, the Company is not regular in depositing with appropriate authorities, the following undisputed dues outstanding as at 31st March, 2015 for a period of more than six months from the date they became payble.

Nature of the dues Amount Rs. Period to (in lakhs) which relates

CST 56.65 2011-12

VAT 360.89 2011-12

Service Tax 44.75 2012-14

Provident Fund 0.95 2014.15

Employees State Insurance 8.64 2012-15

Tax Deducted at Source 0.05 2014-15

Income Tax 58.19 2003-04

c) According to the records of the Company and the information and explanations given to us, the dues of Service Tax / Income Tax / Municipal Taxes which have not been deposited on account of any dispute are as follows.

Nature of the Amount Period to which Forum where dues (Rs. in lakhs) the amount is dispute pending related

Service Tax 35.04 2006-2007 CESTAT, Banglore

Income Tax 90.98 2004-2005 Income Tax Appellate Tribunal

Municipal Tax 32.35 1998-2007 Yanam Municipality

d) According to the records of the Company, there were no amounts which were required to be transferred to Investor Education and Protection Fund. Therefore, the provisions of clause 3 (vii) (c) of the Companies (Auditor's Report) Order, 2015 are not applicable to the Company.

8) The accumulated losses of the Company at the end of the financial year ended 31.03.2015 are in excess of 50% of its net worth. The Company has incurred cash losses during the year covered by our audit and also in the immediately preceding financial year.

9) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of Rs.9857.30 lakhs dues to any financial institutions and Banks.

10) The company has not given any guarantee for the loans taken by others from bank or financial institutions.

11) In our opinion and according to the information and explanations given to us, the Company has not availed any term loans during the year.

12) Based upon the audit procedures performed and according to the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year.

For BRAHMAYYA & CO., Chartered Accountants. Firm Registration No. 000513S

(K.S.RAO) Place: Hyderabad Partner Date : 29.05.2015 Membership No.015850

---

Mar 31, 2014

We have audited the accompanying financial statements of REGENCY CERAMICS LIMITED, HYDERABAD ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements:

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting polices used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for qualified opinion:

1. Manufacturing operations of the company were stopped due to riots, strike and malicious damage at factory since 27.01.2012. The company declared lock out of the plant on 31.01.2012 and the condition of the fixed assets & its realizable value could not be estimated. The machinery and building were not insured during the year and disclosed at book value after providing depreciation on account of efflux of time.

2. The condition of the raw materials, stores & spares and its realizable value could not be estimated by the company. The stocks were not insured during the year and disclosed at book value.

3. During the year, the company has not provided the provisional liability towards salary, wages and other benefits to its factory employees pending orders / judgement of the industrial Tribunal. Further, the company has not provided for its liability towards

Gratuity and leave encashment in accordance to AS-15 "Employee Benefits". Since the company could not compute the liability in the absence of complete records, we are unable to comment upon the impact of non-provision of additional loss of the company for the year and on the current liabilities as at 31.03.2014.

4. There are no confirmatory letters in respect of Debtors, Creditors, loans and advances

and other current assets.

5. During the year, the company has not provided interest on term loans, working capital loans to the extent of Rs.978.11 Lakhs calculated @ interest rates as per sanction. The lenders opted for settlement of dues under OTS as a compromise. The company paid part amount and requested for extension of time. However, the lenders issued a Demand Notice under SARFAESI Act for recovery of their dues. During the year, the company has treated the Long term Borrowings from banks under "Current Maturities of Long term Borrowings".

6. The company has not provided the liability towards interest and penalties payable on account of statutory dues and we were informed by the company that the statutory authorities shall waive the same in view of the unprecedented incident.

7. The company during the year filed a reference under section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 with the Board for Industrial and Financial Reconstruction and same has been registered.

8. In view of the above, the Net Loss would increase and the shareholders funds would reduce to this extent.

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the basis for qualified opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b. in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

c. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditors'' Report) Order, 2003, ("the order") issued by the Central Government of India in terms of Sub-Section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. As required by section 227 (3) of the Act, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c) The Balance Sheet, the Statement of Profit and Loss, and Cash Flow statement dealt with by this report are in agreement with the books of account;

d) Except for the effects of the matter described in the basis for qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956;

e) On the basis of written representations received from the Directors as on 31st March, 2014, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

ANNEXURE TO AUDITOR''S REPORT

referred to in paragraph 3 of our report of even date Re : Regency Ceramics Limited, Hyderabad.

1) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) As explained to us, the management could not verify physically the fixed assets situated at Yanam, due to riots, strike and malicious damage.

c) During the year the Company has not disposed off any of the fixed assets.

2) Physical verification of inventory has been conducted in the previous year in the presence of officials of Customs and Central Excise.

3) a) The Company has not granted any loans, secured or unsecured to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) In view of our comment in paragraph 3(a) above, 3(b),(c) & (d) of the aforesaid order are not applicable to the Company.

e) During the year, the Company has taken unsecured loans from a party covered in the register maintained under section 301 of the Companies Act, 1956 and the maximum amount involved during the year was Rs.1053.16 lakhs.

f) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from the other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

g) The Company has not made any stipulation on payment of principal/ interest.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5) a) According to the information and explanations given to us by the Management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register to be maintained under that Section.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6) The Company has not accepted any deposits from the public. Hence, the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable to the Company for the time being.

7) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

8) During the year, there is no production and its related activity in the factory and as such, cost records under Section 209(1)(d) of the companies Act, 1956 have not been maintained.

9) a) According to the records, the Company is not regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

b) According to information and explanations given to us, the Company is not regular in depositing with appropriate authorities, undisputed dues in respect of CST Rs.56.65 Lakhs, VAT Rs.361.51 Lakhs, Service Tax Rs.44.75 Lakhs, ESI Rs.8.21 Lakhs, TDS Rs.13.94 Lakhs and Income Tax Rs.58.19 Lakhs outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

c) According to the records of the Company and the information and explanations given to us, the dues of Service Tax / Income-Tax / Taxes which have not been deposited on account of any dispute are as follows.

Nature of Amount Period to which From where dispute dues (Rs. in Lakhs) the amount is pending relates

Service Tax 35.04 2006-2007 CESTAT, Bangalore

Income Tax 101.17 2003-2004 Income Tax Appellate Tribunal

Municipal Tax 32.35 1998-2007 Yanam Municipality

10) The Company has accumulated losses at the end of the financial year. The Company has incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

11) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to banks.

12) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) The company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) order, 2003 are not applicable to the company.

14) The company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

15) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16) The Company has not availed any term loans during the year.

17) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

18) During the year, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19) During the year, the Company has not issued any Debentures, therefore the question of creating security or charge in respect thereof does not arise.

20) During the year, the company has not made any public issue and therefore the question of disclosing the end use of money raised by public issue does not arise.

21) Based upon the audit procedures performed and according to the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year.

For BRAHMAYYA & CO., Chartered Accountants. Firm Registration No. 000513S

(K.S.RAO) Place:Hyderabad Partner Date :30.05.2014 Membership No.015850

---

Mar 31, 2013

Report on the Financial Statements:

We have audited the accompanying financial statements of REGENCY CERAMICS LIMITED, HYDERABAD ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements:

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting polices used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for qualified opinion:

1. Manufacturing operations of the company were stopped due to riots, strike and malicious damage at factory since 27.01.2012. The condition of the fixed assets and the realizable value could not be estimated. The machinery and building were insured and disclosed at book value after providing depreciation on account of efflux of time.

2. During the year, the company has provided the provisional liability towards salary, wages and other benefits to its factory employees ip the absence of complete records for six months only pending orders / judgment of the industrial Tribunal. Further, the company has not provided for its liability towards Gratuity and leave encashment in accordance to AS-15 "Employee Benefits". Since the company could not compute the liability in the absence of complete records, we are unable to comment upon the impact of non-provision of additional loss of the company for the year and on the current liabilities as at 31.03.2013.

3. There are no confirmatory letters in respect of Debtors, Creditors, loans and advances and other current assets.

4. During the year, the company has not provided interest on term loans, working capital loans to the extent of Rs. 1114.23 Lakhs. We were informed by the company that the lenders opted for settlement of dues under OTS as a compromise and agreed the settlement amount to 60% of the outstanding as on the cutoff date of 08"1 June 2012. The last date for payment of entire settlement amount is lapsed and were informed by the management that the lenders are considering extension of time for payment. During the year, the company has treated the Long term Borrowings from banks under "Current Maturities of Long term Borrowings".

5. The company has not provided the liability towards interest and penalties payable on account of statutory dues and we were informed by the company that the statutory authorities shall waive the same in view of the unprecedented incident.

6. Accordingly, the net loss would increase and the shareholders funds would reduce to this extent.

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the basis for qualified opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b. in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

c. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date

Report on Other Legal and Regulatory Requirements :

1. As required by the Companies (Auditors'' Report) Order, 2003,("the order") issued by the Central Government of India in terms of Sub-Section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. As required by section 227 (3) of the Act, we report that;

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c) The Balance Sheet, the Statement of Profit and Loss, and Cash Flow statement dealt with by this report are in agreement with the books of account;

d) Except for the effects of the matter described in the basis for qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) On the basis of written representations received from the Directors as on 31st March, 2013, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31 " March, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

Re : Regency Ceramics Limited, Hyderabad.

1) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) As explained to us, the management could not verify physically the fixed assets situated at Yanam, due to riots, strike and malicious damage.

c) During the year the Company has not disposed off any of the fixed assets.

2) Physical verification of inventory has been conducted in the previous year in the presence of officials of Customs and Central Excise.

3) a) The Company has not granted any loans, secured or unsecured to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) In view of our comment in paragraph 3(a) above, 3(b),(c) & (d) of the aforesaid order are not applicable to the Company.

e) During the year, the Company has taken unsecured loans from a party covered in the register maintained under section 301 of the Companies Act, 1956 and the maximum amount involved during the year was Rs.321.27 lakhs.

f) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from the other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

g) The Company has not made any stipulation on payment of principal/ interest.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods and services.

During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5) a) According to the information and explanations given to us by the Management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act, 1956 have been entered in the register to be maintained under that Section,

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6) The Company has not accepted any deposits from the public. Hence, the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable to the Company for the time being.

7) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

8) During the year, there is no production and its related activity in the factory and as such, cost records under Section 209(1 )(d) of the companies Act, 1956 have not been maintained.

9) a) According to the records, the Company is not regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

b) According to information and explanations given to us, the Company is not regular in depositing with appropriate authorities, undisputed dues in respect of CST of Rs.56.65 Lakhs, VAT Rs.367.11 Lakhs, Service Tax Rs.48.29 Lakhs, Provident Fund of Rs. 24.83 Lakhs, ESI of Rs.6.53 Lakhs, TDS of Rs.12.94 Lakhs and Income Tax of Rs.58.19 Lakhs outstanding as at 31st March, 2013 for a period of more than six months from the date they became payable.

c) According to the records of the Company and the information and explanations given to us, the dues of Service Tax / Income-Tax / Taxes which have not been deposited on account of any dispute are as follows.

Nature of Amount Period to which From where dues (Rs. in Lakhs) the amount relates dispute is pending

Service Tax 35.04 2006-2007 CESTAT, Bangalore

Income Tax 101.17 2003-2004 Income Tax Appellate

Tribunal

Municipal Tax 32.35 1998-2007 Yanam Municipality

10) The Company has accumulated losses at the end of the financial year. The Company has incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

11) In our opinion and according to the information and explanations given to us, the lenders of the Company opted for settlement of dues under an OTS as a compromise and accordingly the company has not paid the dues to Banks.

12) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) The company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) order, 2003 are not applicable to the company.

14) The company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

15) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16) The Company has not availed any term loans during the year.

17) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

18) During the year, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19) During the year, the Company has not issued any Debentures, therefore the question of creating security or charge in respect thereof does not arise.

20) During the year, the company has not made any public issue and therefore the question of disclosing the end use of money raised by public issue does not arise.

21) Based upon the audit procedures performed and according to the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year.

For Brahmayya & CO.

Chartered Accountants

Firm Registration No. 000513S

KS Rao

Place: Hyderabad Partner

Date : 29.05.2013 Membership No. : 15850

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of REGENCY CERAMICS LIMITED, HYDERABAD (A.P) as at 31st March, 2010, the Profit and Loss Account and also the Cashflow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in para 3 above, we report that:

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit

ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.

iii) The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account.

iv) In our opinion, the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956.

v) On the basis of written representations received from the Directors as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereon subject to Note No.5 of Schedule 19 Notes to accounts regarding confirmation of balances, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

b) In the case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date and

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) As explained to us, the management has physically verified most of the fixed assets during the year and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) During the year the Company has not disposed off any fixed assets and hence, it has not affected the going concern status of the Company.

ii) a) Physical verification was conducted by the management at reasonable intervals in respect of finished goods, stores & spares and raw materials except clay which is prone to change in quantities.

b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventories. The discrepancies noticed on verification between the physical stock and the book records were not material.

iii) a) During the year the Company has not taken or granted any loans, secured or unsecured to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) In view of our comment in paragraph 3(a) above, (b),(c) & (d) of the aforesaid order are not applicable to the Company.

c) In our opinion the rate of interest and other terms and conditions on which loans have been taken from the other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

d) The Company is regular in payment of the principal amount and interest thereon as stipulated.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods. Further, on the basis of our examination of the books and records and according to the information and explanations given to us, we have neither come across nor have been informed of any continuining failure to correct major weaknesses in the internal control system.

v) a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section; and

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi The Company has not accepted any deposits from the public. Hence, the provisions of section 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable.

vii In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

viii The Central Government has not prescribed under Section 209 (1) (d) of the Companies Act, 1956 the maintenance of cost records for the products of the Company.

ix a) According to the records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Investor Education and Protection Fund, Wealth Tax, Customs Duty and other material statutory dues applicable to the Company.

b) According to the information and explanations given to us, the Company is not regular in depositing with appropriate authorities undisputed dues in respect of sales tax of Rs.32.69 lakhs outstanding as at 31.03.2010 for a period of more than six months from the date it became payable.

c) According to the records of the Company and the information and the explanations given to us, the dues of Excise Duty/Service Tax/Provident Fund/Income Tax/Taxes which have not been deposited on account of any dispute are as follows:

Nature of Amount Period to which Forum where dues (Rs. in lakhs) the amount relates dispute is pending

Service Tax 52.39 2005-06 CESTAT, Bangalore

Service Tax 35.04 2006-07 CESTAT, Bangalore

Service Tax 1.22 2008-09 CESTAT, Bangalore Income Tax 130.97 2003-04 Appellate Tribunal

Provident fund 34.69 2003-09 Appellate Tribunal, New Delhi

Municipal Tax 32.35 1998-2007 Yanam Municipality

x) The Company has accumulated losses at the end of the financial year. It has incurred cash losses in the financial year under report and immediately preceding financial year.

xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks.

xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) The Company is neither a chit fund nor a nidhi mutual benefit fund/society. Therefore, the provisions of clause 4

(xiii) of the above referred Order are not applicable to the Company. xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4

(xiv) of the above referred Order are not applicable to the Company.

xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) The Term Loans were applied for the purpose for which the loans were obtained.

xvii) According to the information and explanations given to us and on all overall examination of the balance sheet of the Company funds raised on short-term basis have not been used for long-term investment.

xviii) During the year the Company issued 128,44,786 equity shares in pursuance to the Scheme of Agreement at a face value of Rs.10/- each along with a premium of Rs.2.37 paise per share to the parties covered in the register maintained under section 301 of the Act. In our opinion the price at which the shares have been issued is not prejudicial to the interest of the Company.

xix) Since no Debentures were issued during the year, clause No.XIX of the said Order is not applicable.

xx) During the year, the Company has not raised money by public issues.

xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

Place : Hyderabad for Brahmayya & Co.,

Date : July 31, 2010 Chartered Accountants

Firm Registration No. 000513S

K S Rao

Partner

Membership No.: 15850