Authorised:
 
 8,00,00,000 10% Preference Shares of Rs.10/- each 2,00,00,000 Equity
 Shares of Rs.10/- each
 
 Issued and Subscribed:                                    
 
 1,84,71,670 Equity Shares of Rs.10/-each Paid-up:
 
 1,71,71,670 Equity Shares of Rs.10/- each fully paidup
 
 13,00,000 Equity Shares of Rs.10/- each Partly paidup Re. 1/- per share
 
 Less: Allotment money in arrears (Due from Directors: Nil)
 
 1. Paid-up Capital includes 17,06,880 equity shares of Rs.10/- each
 allotted as bonus shares by capitalisation of general reserve.
 
 2. Paid up Capital includes 34,18,750 shares alloted to the share
 holders of Spartek Granites Limited consequent to amalgamation with
 that company.
 
 3. Paid-up Capita! includes 34,06,250 Equity Shares of Rs.10/- each
 allotted to the Debenture holders on Conversion of Zero Coupon
 Unsecured Fully Convertible Debentures.
 
 4. Paid up capital includes 4,00,000 Equity Shares of Rs.10/- each
 alloted on conversion of 1-5% secured Redeemable partly convertible
 Debentures.
 
 5. Paid-up Capital includes 13,00,000 Equity shares of Rs.10/-each Re.
 1/- each paidup (partly paidup) on conversion of Share warrants issued
 to promoter's associates.
 
 Debentures
 
 2,00,000 14% Secured Redeemable Non-Convertible Debentures of Rs.100/-
 each. (Note 4 below) Add: Interest accrued and due
 
 4,00,000 15 % Secured Redeemable Partly Convertible Debentures of
 Rs.85/- each (Note 3 below) Add: Interest accrued and due
 
 1,24,500 14% Secured Redeemable Non-Convertible Debentures of Rs.100/-
 each (Note 5 (a) & (b) below) Add: Interest accrued and due
 
 Funded interest on Debentures (Note 4 (a) & (b) below) Add: Interest
 accrued and due
 
 3,59,375 14% Secured Redeemable Partly Convertible Debentures of
 Rs.140/- each (Note 6 below)
 
 Less: Allotment money in arrears.  Due from Directors: Nil)
 
 Less: Redemption of Debentures
 
 Notes:
 
 1. The Term Loans and Debentures from an Financial Institution and a
 Bank are secured by first mortgage of all immovable properties both
 present and future and hypothecation of all the movables including
 movable machinery, machinery spares, tools and accessories and a first
 charge on all the remaining assets of the Ceramics Division and
 Granites Division (save and except book debts) subject to prior charge
 created in favour of the Bankers on specified movable assets for
 securing working capital requirements. Loan taken from Financial
 Institution are also secured by pledge of Investments in Neycer India
 Limited at 47,64,800 Equity Shares of Rs. 10/- each. Loan to then
 extent of Rs. 160 lacs is personally guaranteed by the Managing
 Director.
 
 2. As per the Rehabilitation Scheme approved by CDR:-
 
 i) The amounts due to a bank from a bank are repaid annually commencing
 from October, 2003, October, 2004 and by October, 2005.
 
 ii) Loan of Rs.125 lacs from an institution is to be repaid in three
 annual instalments (i.e) by August, 2003, October, 2003 and October,
 2004.
 
 The balance outstanding dues to ah institution are to be repaid in
 twelve quarterly instalment commencing from July 1, 2010.
 
 3. 15% Partly Convertible Debentures of Rs.85/- each secured by Second
 Charge on the Company's fixed assets.
 
 As per Rehabilitation Scheme approved by CDR
 
 Amounts due to Financial institutions along with funded interest due
 are to be repaid in four equal annual instalments commencing from
 October 2003.
 
 4. The 14% Non-Convertible Redeemable Secured Debentures of Rs.100/-
 each aggregating to Rs.200 lakhs issued on private placement basis are
 secured by first mortgage of immovable properties both present and
 future and hypothecation of the movable assets including movable
 machinery, machinery spares, tools and accessories and a first charge
 on all the remaining assets of the Ceramics Division (save and except
 book debts) subject to prior charge created in favour of the bankers on
 specified movable assets for securing working capital requirements. The
 above charges are rank pari passu with those in favour of term lending
 financial institutions.
 
 As per Rehabilitation Scheme approved by CDR
 
 i) Amounts due to Financial institutions are to be paid in four equal
 annual instalments commencing from October 2003.
 
 ii) Amounts due to others, the repayment is in nine equal monthly
 instalments commencing from October, 2003.
 
 5. (a) The 14% Secured Redeemable Non-Convertible Debentures are
 secured by the first mortgage of a piece of land and are to be secured
 by a first mortgage and charge on all the Granites Division's immovable
 and movable properties both present and future subject to a prior
 charge in favour of the bankers on specified movables.
 
 (b). 1,24,500 14% Secured Redeemable Non Convertible Debentures of
 Rs.100/- each to be secured by a first mortgage on the immovables and a
 charge on all the movable of the Granites Division both present and
 future (subject to the prior charge in favour of banks on specified
 movables created/to be created for working capital requirements)
 ranking pari passu.
 
 As per Rehabilitation Scheme approved by CDR
 
 Amounts due to Financial institutions along with funded interest due
 are to be repaid in four equal annual instalments commencing from
 October 2003.
 
 6. The 14% Secured Redeemable Partly Convertible Debentures are secured
 by second mortgage of piece of land and are to be secured by way of
 second and subservient mortgage and charge on all or part of the
 immovable and movable properties of the Granites Division.
 
 As per the resolution passed by debenture holders meeting held on 29th
 November 2001, the convertible portion of Rs.60/- each is redeemable in
 six quarterly installments commencing from 1st April 2004 to 30th
 September 2005.
 
 The non-convertible portion of Rs.80/- each is redeemable at par and
 due for redemption.
 
 7. The loans from Banks are secured against hypothecation of stocks of
 raw materials, semi finished and finished goods, consumable stores and
 book debts and second charge on the fixed assets of the company.
 
 8. Loan from companies are secured by hypothecation of equipment
 finance by the said loans.
 
 
 1. Estimated value of capital contracts not provided for in the Books
 of account Rs.NIL (Rs.3.73 Lacs)
 
 2. Lease rentals for the un-expired period of lease contracts entered
 into Rs.8.82 Lacs (Rs. 125.25 Lacs), inclusive of Rs. Nil (Rs. 63.72
 Lacs) due on lease contracts entered into on behalf of another company.
 
 3. List of Small Scale Industries to whom the company owes a sum as on
 31st March, 2003.
 
 (a) Arunodaya Gears & Industries (b) Auto Parts & Accessories (c)
 Appollo Corrugators P Ltd. (d) Ashwini Trading Corporation (e) Anil
 Minerals (f) Aristo Rubber & products (g) Bhanu Cerglaze Pvt. Ltd. (h)
 Bharath Kumar Mines & Minerals (i) Bhavani Laxmi Mining & Works (j)
 Balaji Saw Mills (k) Chainlink & Wirenetting (I) Columbia Leathers (m)
 Delta Engineering (n) Devi Silicates Pvt. Ltd. (o) Dwaraka Mines &
 Minerals (p) Deepa Enterprises (q) Eastern Engg. Co. (r) G.B.
 Industries (s) GNR Minerals (t) G. Ratanlal Jain (u) Indu Corrugated
 Packaging (v) J.K.S. Engineering Enterprises (w) Joseph Engineering
 Works (x) Jai Hydraulics (y) K.T. Minerals (z) K.R. Minerals (aa)
 Mangal Udyog (ab) M S Packaging (ac) Multimedia Engg Company (ad)
 Manmohan Chemco (ae) Narayanan Mining company (at) Prasad Power System
 (ag) Padmavathy Corrugated (ah) Product Aid Industries (ai) Rajesh
 Industrial Corporation (aj) Sai Lalith Industries (ak) Sri Srinivasa
 Minerals (al) Sri Satya Sai Mines & Minerals (am) South India Mineral
 Industries (an) Surya Chemicals (ao) Sen Minerals (ap) Standard
 Packaging (aq) Sekar electrical works (ar) Senthil Packaging P Ltd (as)
 Shanmugam Zircons (at) Shree Ganesh Minerals (au) Subrapath Printer
 (av) S.E.N. Saw Mills (aw) Sri Devi Minerals (ax) Thalaram & Sons (ay)
 Travancore Clays & Minerals (az) Teknocrat India (ba) T.R. Chandra
 Industrial
 
 Interest due on delayed payment to Small Scale industrial Undertakings
 as per Interest on delayed payment to Small Scale and Ancillary
 Industrial Undertakings Act, 1993 is not provided in the books of
 account and the amount payable is unascertained.
 
 The basis of classification for the above is as per the vendor
 information available with the company.
 
 4. Contingent Liabilities:
 
 a) Claims against the Company not acknowledged as debts.
 
 i) Demand received from the Sales Tax Authorities for a sum of Rs.37.42
 lacs (Rs.52.39 lacs) against which the company has made representation
 and hence not provided in Books of Account.
 
 ii) Sundry Debtors outstanding for more than six months include Rs. Nil
 (Rs.167.58 lacs) due from parties who have lodged counter claims
 against the Company.
 
 iii) Claims lodged by the foreign collaborators for a sum of Rs.138.57
 lacs (net of foreign exchange currency fluctuations) (as at 30.9.2002
 Rs127.43 lacs) towards services rendered and materials supplied which
 the Company has not accepted pending negotiations.
 
 iv) Demand raised by Excise Authorities for a sum of Rs. 91.45 lacs
 which is disputed and is pending before the High Court of Madras.
 Finished goods worth Rs. 82.30 lacs have been detained by the
 Authorities against this demand.
 
 b) Show cause notice received from Excise Authorities for a sum of Rs.
 279.66 lacs on export obligation, for which company had made
 representation to EPCG Committee for extension of time for fulfilment
 of export obligation and the same is under consideration.
 
 c) Show cause notice received from Excise Authorities for a sum of Rs.
 10.50 lacs against adjustment of Cenvat against duty liability. The
 Company has made representations and is confident of getting the
 Waiver.
 
 d) Guarantee issued in favour of Subsidiaries Rs.2855 Lacs (Rs.1755
 Lacs) against which a sum of Rs.1679 lacs (Rs.1228 lacs) is outstanding
 as on 31s* March, 2003.
 
 e) No provision for Bonus is made for an amount of Rs.4,71,099/-
 arising on account of passing of the Payment of Bonus (Amendment) Act,
 1995 as the company has not accepted same as liability.
 
 f) Claims lodged for Rs.24.98 Lacs towards services rendered for which
 the company has not accepted the claim and which is pending before the
 High Court of Madras.
 
 g) Claims lodged for Rs. 4.92 lacs towards services rendered for which
 the company has not accepted the claim and not provided in the books of
 accounts.
 
 h) Claims lodged for Rs.1.68 lacs towards supply for which the company
 has not accepted the claim and not provided in the books of accounts.
 
 i) No provision has been made for interest/penal interest of
 Rs.54,33,869/- (Rs.73,48,710/-) as the Company is confident of waiver
 of the same by the concerned. Total interest not provided up to 31st
 March, 2003 is 2,02,18,619/-(Rs.1,14,02,910/-).
 
 5. A sum of Rs.7,21,60,659/- being the balance of compensation for non
 fulfilment of contractual obligation is due from the collaborators as
 against Rs.1,60,23,436/- due to them for supply of various items and
 advances.  The net amount receivable amounting-Rs.5,74,66,087/- has
 been provided for as doubtful debts in the books during the current
 period. The Company has adjusted a portion of dues from the
 collaborators against amounts due to them as at 31st March 1995, which
 has not been permitted by RBI.
 
 6. Sundry debtors exceeding six months include Rs.5,35,26,736/- net of
 credit balances for which the Company has provided as doubtful debts
 during the current period. However, necessary steps are being taken for
 recovery of the same.
 
 7. Pending reconciliation of amounts outstanding, credit balances of
 Rs.1,84,59,899/- (Rs.3,94,20,4537-) in sundry debtors and debit
 balances of Rs.92,67,051/- (Rs.55,27,131/-) in sundry creditors have
 been adjusted against outstanding balances in sundry debtors and sundry
 creditors respectively.
 
 8. The Company has received the approval for scheme of Restructuring
 under CORPORATE DEBT RESTRUCTURING (CDR) proposal submitted earlier.
 The package entails One Time Settlement (OTS) payments to some
 institutions and bank, and reschedulement of loan repayments to other
 institutions. As provided in CDR approval letter, the company has
 recognised the reduction in Principal under OTS, deferment of interest
 accrued and waiver/reduction of interest payable. Accordingly, a sum of
 Rs.22,82,59,339/- has been taken as credit in the books of accounts
 under Extraordinary Items for the six months period ended 31st March,
 2003. The Company is yet to receive confirmation for a sum of
 Rs.8,65,58,204/- from one of the institutions. Further, interest has
 been provided only for the term loans availed from IDBI for the current
 period.
 
 The above scheme approved by CDR is subject to terms & conditions and
 fulfilment of obligations, present and future as laid out in the said
 approval letter.
 
 9. a) The Company has investments in its subsidiary Neycer India
 Limited (Neycer) of 47,64,800 Equity shares of Rs.10/- each at a cost
 of Rs.5,58,77,110/-. Further, Neycer owes the Company a sum of Rs.
 14,76,81,056/- (Rs.13,82,25,412/-) in the form of loans availed from
 the Company, expenses reimbursable, interest and marketing fees
 payable. As per AAIFR order, no Interest was charged on the marketing
 fees receivable from Neycer for the period April, 2002 to March, 2003
 as the same is being converted as Non-interest bearing unsecured loan.
 Also, the company has to convert Rs.4 crores into equity as per the
 directions of AAIFR and pending further action. The Company has also
 issued guarantees in favour of Neycer India Limited to financial
 institutions and banks up to Rs.2655 lakhs against which a sum of
 Rs.1604 lakhs is outstanding.
 
 Neycer is a sick industrial company in terms of Section 3 of Sick
 Industries Companies (Special Provisions) Act, 1985. A package of
 rehabilitation has been approved by the Appellate Authority of
 Industrial and Financial Reconstruction (AAIFR) and the same has been
 implemented. Neycer has earned a profit of Rs.12,17,25,941/- (after
 extraordinary items) for the year ended 31st March, 2003.
 
 b) The company has investments in its subsidiary Stiles India Limited
 (Stiles) of 2,20,00,000 equity shares of Rs.10/- each at a cost of
 Rs.22,00,00,000/-. Further, Stiles owes a sum of Rs.2,55,60,990/-
 (Rs.1,93,34,035/-) in the form of loans availed from the company,
 expenses reimbursable and interest.  The company has also issued
 guarantees in favour of Stiles India Limited to a bank up to Rs. 200
 lakhs against which a sum of Rs.75 lakhs is outstanding.
 
 The operations of Stiles could not be restarted due to non-availability
 of working capital. Recently, Stiles have submitted a proposal for
 working capital facilities to a bank and on the basis, Stiles
 manufacture Spartek Brand Tiles on job work. The application is under
 active consideration by the bank. The company is negotiating with
 Institutions and Banks for an OTS.The response from the institutions
 are positive and already concluded settlement with some of the lenders.
 In view of the above, the accounts are prepared on Going Concern
 basis. Stiles has incurred a net loss of Rs.1,98,02,789/-for the year
 ended 31st March 2003. As efforts are on to tie up working capital
 required, the operation in Stiles is expected to restart at the
 earliest.
 
 c) Considering the long-term involvement and better prospects for the
 Company in the subsidiaries, Neycer and Stiles, no provision is
 considered necessary in the accounts.
 
 10. The Company together with its associates Neycer India Limited and
 Stiles India Limited has centralised certain functions in view of
 operational economies, efficiencies and effectiveness, whereby certain
 common expenses are shared between the Companies. The allocation of the
 expenses is as per estimates made by the Management.
 
 11. The Share and Debenture application, Refund Accounts and the
 collecting bank accounts in connection with the public issue of shares
 and debentures made by erstwhile Spartek Granites Ltd. are under
 reconciliation and the exact quantum of refund would be determined on
 completion of the reconciliation. Reconciliation is in progress in
 respect of debenture interest warrant and dividend warrant accounts.
 Pending reconciliation of these accounts, un reconciled balance was
 kept under other liabilities.
 
 12. The company operates in only one segment i.e. Manufacture and sale
 of Ceramic Tiles.
 
 13. Deferred Tax
 
 Accumulated Deferred Tax Asset of Rs,6,26,30,755/- arising on account
 of timing differences as at 1s1 October, 2002 is not recognised in the
 books of account. For the current six months period ended 31st March,
 2003, timing differences have resulted in a net deferred tax debit
 amounting to Rs. 46,57,528 is also not recognised in the books of
 account.
 
 Accumulated deferred tax asset of Rs.5,79,73,227 as at 31B1 March, 2003
 has not been recognised in the books of account for reasons of abundant
 caution.
 
 14. Figures in brackets represent the figures for the previous year.
 
 15. Previous year's figures have been regrouped wherever necessary for
 comparison purposes.
 
 16. Current period figures are for a period of six months as against 12
 months in the previous year and hence figures are not comparable.