Your Directors have pleasure in presenting the Thirtieth Annual Report on thebusiness and operations of your Company for the year ended March 31 2016.
(Rs in lacs)
| ||Standalone ||Consolidated |
| ||2015-16 ||2014-15 ||2015-16 ||2014-15 |
|Sales & Other Income ||861443.99 ||720983.03 ||1415326.50 ||1157959.01 |
|Expenditure ||817215.81 ||666305.00 ||1324903.96 ||1047036.68 |
|Finance Cost ||38979.65 ||52365.17 ||72637.04 ||90416.25 |
|Depreciation & Amortization Expenses ||444.07 ||459.11 ||3669.68 ||4688.68 |
|Exceptional Items ||- ||0.28 ||- ||(6975.65) |
|Profit before Taxes ||4804.46 ||1854.03 ||14115.82 ||8841.75 |
|Provision for Current Tax ||1050.00 ||370.00 ||3638.24 ||858.42 |
|Provision for Deferred Tax ||(71.82) ||(32.38) ||(97.57) ||(194.64) |
|Provision for MAT ||(1050.00) ||(370.00) ||(2937.63) ||(780.19) |
|Net Profit/(loss) for the year ||4876.28 ||1886.41 ||13512.78 ||8958.16 |
During the year under review standalone sales and other income stood at Rs.861443.99 lakhs. After meeting all expenditures Company made a net profit of Rs.4876.28 lakhs on standalone basis. Further during the year under review consolidatedsales and other income stood at Rs. 1415326.50 lakhs. After meeting all expendituresCompany made a net profit of Rs. 13512.78 lakhs on consolidated basis.
BUSINESS REVIEW Gitanjali Gems Ltd.(GGL)
"GGL" is the listed entity of the Gitanjali Group. The company wasincorporated in 1986 and was primarily engaged in the traditional diamond cutting andpolishing business. GGL is engaged in sourcing of rough diamonds cutting and polishingdiamonds and manufacturing jewellery. The jewellery manufactured is primarily to servicethe groups international operations.
Over the years GGL has incorporated and acquired businesses to integrate verticallythrough the jewellery value chain and to graduate from diamond and jewellery manufacturingto jewellery branding and retailing. The rough diamonds procured are cut and polished bythe most talented assorters and cutters in the industry. The diamonds which can then beused by the companys own branded jewellery arm are used to manufacture brandedjewellery the rest are sold as loose to other jewellery manufacturers around the world.
GGL is hence not only the flagship company of the group but it also assumes asignificant position in the entire supply chain as the strategic arm of the group whichensures a consistent supply of cut and polished diamonds to the branded jewellerymanufacturing segment of the business thereby fuelling the companys growth in thebranding and retailing space. Spearheaded by a veteran like Mr. Mehul Choksi who has beena visionary the company has over the years expanded via strategic organic and inorganicendeavors and grown to become one of the largest integrated jewellery players in theworld.
Gitanjali Group is one of the worlds largest integrated branded jewellerymanufacturer-retailer with an annual turnover of over USD 2 billion. Established in 1966today its activities are spread across the entire value chain from rough diamond sourcingcutting polishing and distribution jewellery manufacturing to branding and retailinggold and diamond jewellery in India and abroad.
The following key achievements were clocked in the financial year 2016:
The company has reduced its interest cost by nearly 20% YOY and expects the trend tocontinue in the coming year as well.
Net Working Capital to Sales for the group has reduced by 20% on a YOY basis.
As part of its growth strategy the group is focused on its online channel as well ason modern retail. This year the group achieved sales of over Rs. 200 Crore throughits online business. Whereas in Modern Retail (SIS Concept) Gitanjalis market sharehas increased from 58% to 72%. In the coming year the Group plans to expand its globalpresence significantly through this concept and is on track for achieving this.
Diamond and Jewellery Manufacturing
Gitanjali is a vertically integrated player in the jewellery space. Diamond sourcingand diamond and jewellery manufacturing form the first leg of the jewellery value chainfor Gitanjali. The company has been in this business for over five decades now and todayowns two state of the art diamond manufacturing facilities and seven jewellerymanufacturing facilities including a jewellery manufacturing facility in Thailand. Thegroups facility in Thailand is one of the largest in Thailand and manufacturesmodern jewellery collections. Manufacturing is the traditional business of the group andforms the strong back-end of the supply chain which fuels the groups jewellerybranding and retailing endeavours. The groups designing and manufacturing strengthsare considered its key asset and not only allow for immense flexibility in adapting tochanging consumer preferences in a timely manner but also offer a certain degree ofimmunization against price risks. Gitanjali continues to command leadership amongst theworlds largest manufacturers of jewellery and with constantly improving technologyin its factories the company has sufficient capacity for its expansion plans in thefuture. This year the focus was to produce fine jewellery light weight material andintroduce platinum jewellery collections for the Indian market. Gitanjali is looking tofurther strengthen its manufacturing capabilities to enable it to constantly innovate andaddress evolving tastes and preferences.
India Jewellery Branding and Retailing
The Group pioneered the jewellery retail revolution in India by launchingGili way back in 1994. It today owns and distributes eight out of the topten jewellery brands in the country including Gili Nakshatra Asmi Sangini Nizam andParineeta to name a few. Gitanjalis extensive network of own storesshop-in-shops and franchise outlets span across 200 cities and 3000 points of sale.Gitanjalis vast array of brands was developed primarily to cater to diverse agegroups occasions price points and geographies.
Gitanjali is known as the creator of brands. Over the years the group has created andbuilt brands which are household names today. They reckon with jewellery in India.Gitanjalis brands enjoy tremendous recall and were valued at nearly USD 1.2 billionby a reputed brand valuation firm in 2011. The group has further leveraged upon thisinherent brand strength by extending its brands to include lifestyle categories such asapparels under the Gili and Diya brands which have been reasonably successful ventures.
Innovation and creation are in the DNA of the group.
The group has always been looking forward to finding new ways of growth. ProductDesign and Channel innovations are a way of life at Gitanjali. In keeping with thisinnovative spirit Gitanjali has been expanding its offerings to resonate with youngeraudiences thereby widening its reach.
The Group also has a very strong omnichannel retail presence. Having explored multipleretail formats over the years the company has the right mix of channels and formats tosupplement its products and propel its growth.
Way back in 1994 Gitanjali changed the way jewellery was viewed in India and todayits changing the way jewellery is bought in India by exploring innovative selling optionssuch as Online marketplaces Television selling Duty free stores at airports In-flightCruise liners Canteens etc. The idea is to bring about a shift in the category fromplanned purchase to impulse purchase. The products channels and designs are allinterspersed in a way to complement this shift. These innovations in entirety promote theconcept and idea of new-age jewellery shopping.
International Jewellery Branding and Retailing
The Group is present in the top five global diamond jewellery markets USAJapan Middle East China and India.
USA continues to be the worlds largest diamond jewellery market contributing tonearly 45% of the global diamond jewellery market. The company is present in the USthrough a 109 doors of Samuels Jewelers Inc. This was Gitanjalis strategicacquisition to set foot in the worlds largest diamond jewellery market. Theintegrated value chain with in-house sourcing allows for immense synergies from thisoperation. Going forward US remains one of the most promising markets for the company.The company plans to expand in this region via brick as well as click and is in theprocess of expanding further by opening another 25 to 30 stores in the coming year.Samuels today is the 4th largest specialty retailer in the US; with the recentconsolidation in the jewellery industry there are multiple opportunities to gain marketshare and introduce new categories. The company is also exploring online market placeoptions to accelerate its growth in the worlds biggest diamond jewellery market.Gitanjali is also focused on growing its presence in other international markets likeChina Middle East Japan etc. Currently there are around 4 stores in Dubai and over 52points of sale through Shop in shops in local malls across the Middle East. In China thegroup is present through Shop-in-shops. China is one of the largest and fastest growingdiamond jewellery markets in the world. Gitanjali has so far managed to penetrate thismarket through its Italian diamond jewellery collections and is looking to expand furtherthrough offline as well as online options.
Japan is another large market for diamond jewellery and offers excellent margins tointegrated players. In Japan the company is a preferred supplier to the 3rdlargest jewellery retail chain Verite through a minority stake in the same. Thecompany also holds 20.2% stake in the largest jewellery selling TV channel - GSTV CompanyLtd. (formerly known as IMACBC Company Ltd.) to exploit one of the largest jewellerymarkets in the world.
The company also caters to the European Region through distribution tie ups with a fewjewellery chains in Europe. Gitanjali also owns popular Italian brands like Stefan HafnerIOSI Porrati Nouvelle Bague and Valente.
The rationale is to create a bouquet of international brands across the rest of theworld using the strength of the Italian brands as well as the American brands while usingthe distribution / fulfillment strength of the Indian parent.
Over the last two decades the Group has expanded operations in USA UK BelgiumItaly the Middle East China Singapore Hong Kong and Japan. It further plans to exploremarkets like Turkey Brazil Australia and Russia as part of its international expansionstrategy.
DIVIDEND AND APPROPRIATION
Your Directors recommended a dividend of Rs 0.50/- per equity share for the year endedMarch 31 2016. The payment of dividend is subject to the approval of shareholders at theensuing Annual General Meeting. No amount is proposed to be transfer to general reserve.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of provisions of Regulation 34 of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafterreferred to as Listing Regulations) the Management Discussion and Analysis Report is givenunder separate section forming part of this annual report.
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements. The Report on Corporate Governance withauditors certificate thereon in terms of Regulation 34 Listing Regulations read withSchedule V of said regulations forms part of the Annual Report.
As on April 1 2015 the paid up share capital of the Company was Rs. 981204510consisting of 98120451 equity shares of Rs. 10 each. During the previous year theCompany had allotted 23547194 warrants on preferential basis to persons other thanpromoters. The said warrants carried an option / entitlement to subscribe to equivalentnumber of Equity Shares of Rs. 10/- each at a future date not exceeding 18 (eighteen)months from the date of issue of such warrants at a price of Rs. 72.39/- which includes apremium of Rs. 62.39/- per share.
During the year and consequent to year under review 20495554 shares were allotted ata price of Rs. 72.39/- pursuant to conversion of equivalent number of warrants issued topersons other than promoter on preferential basis in different tranches. Consequent toconversion paid up capital of the company as on date stood at Rs. 1186160050/-consisting of 118616005 equity shares of Rs. 10 each.
Holders of remaining 3051640 warrants have not exercised their option to convertwarrants held by them into shares of the Company till its maturity date. Accordingly saidwarrants were cancelled and entire money received from them towards subscription ofcancelled warrants is forfeited.
During the year under review Company has not accepted any deposits from public underchapter V of Companies Act 2013. No deposits which were due remained unpaid as at theend of the year nor there has been any default in repayment of deposits or payment ofinterest thereon during the year. Further there are no deposits which are not incompliance with the requirements of Chapter V of Companies Act 2013.
Out of the total deposits matured during the year 2015-16 deposits worth Rs. 125000remained unclaimed as on March 31 2016. Out of total deposits matured from April 01 2016till date deposits worth Rs.574000 are unclaimed as on date. Further deposits worth Rs.700000 are yet to mature .
NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE SUBSIDIARY ASSOCIATE AND JOINTVENTURE COMPANIES DURING THE YEAR
During the year under review with a view to rationalize the group structure holdingin MobileNxt Teleservices Private Limited (MobileNXt) a step down subsidiary of theCompany was sold off.
The Policy for determining material subsidiaries as approved may be accessed on theCompanys website at following link: http://www.gitanjaligroup.com/images/investor_new/pdf_file/Policies_Codes/Policy%20for%20 determining%20material%20subsidiaries.pdf
A statement containing salient features of the financial statement and relatedinformation of the subsidiaries in the prescribed format AOC-1 is provided as Annexure
A to the consolidated financial statement and hence not repeated here for the sake ofbrevity.
SCHEME OF AMALGAMATION
Your Directors are pleased to inform you that subsequent to year under reviewHonble Bombay High court vide order dated June 17 2016 has approved merger of awholly owned subsidiary Gitanjali Exports Corporation Limited with the Company.
The scheme will be effective from the appointed date i.e April 1 2014.
The exercise of merger would help in streamlining group structure and obtaining synergyof operations by consolidation of manufacturing functions and reduction in overheads andoptimal utilisation of resources.
NUMBER OF MEETINGS OF THE BOARD
The board met five (5) times in financial year 2015-16 the details of which are givenin corporate governance report section that forms part of this annual report. Theintervening gap between two consecutive board meetings did not exceed 120 days.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration from each independent director under section149(7) of Companies Act 2013 that he/she meets the criteria of independence laid down inSection 149(6) of Companies Act 2013.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The current policy is to have an appropriate mix of executive and independent directorsto maintain the independence of the board. The Company has put in place a policy onDirectors appointment and remuneration including criteria for determiningqualifications positive attributes independence of a Director and other matters providedunder section 178(3) of Companies Act 2013 appended as Annexure 1. The same can also beviewed by visiting following link: http://www.gitanjaligroup.com/images/investor_new/pdf_file/Policies_Codes/Nomination%20and%20
FAMILIARISATION PROGRAMMES FOR BOARD MEMBERS
The Board members are provided with necessary documents/brochures reports and internalpolicies to enable them to familiarise with the Companys procedures and practices.
Periodic presentations are made at the Board Meetings on business and performanceupdates of the Company global business environment business strategy and risks involved.The details of such familiarization programmes imparted to Independent Directors areposted on the website of the Company and can be accessed at the following link :http://www.gitanjaligroup.com/images/investor_new/pdf_file/Corporate_Information/Corporate_Governance/Familiarisation%20programmes%20imparted%20to%20Independent%20Director.pdf Further the policy on familiarization programmes can beaccessed at following link: http://www.gitanjaligroup.com/images/investor_new/pdf_file/Policies_Codes/Familiarisation%20
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review Mr. Swaminathan Sundararajan Mittur and Mr. Nehal Modiresigned from the position of Director of the Company due to pre occupation. The boardrecorded its appreciation for the contribution made by Mr. Swaminathan Sundararajan Mitturand Mr. Nehal Modi during their tenure as Director of the Company.
On August 14 2015 Mr. Vinod Juneja was appointed as an Alternate Director to Mr. NehalModi during his absence from the country. Consequent to resignation of Mr. Nehal Modi asDirector Mr. Vinod Juneja ceased to be Alternate Director of the Company
In accordance with Section 152 and other applicable provisions of Companies Act 2013Mr. Dhanesh Sheth (DIN 00120257) being Non- Executive Director retires by rotation andbeing eligible offers himself for reappointment at the ensuing Annual General Meeting. TheBoard recommends his re appointment for your approval.
As stipulated under the Regulation 36 of the Listing Regulations brief resume of theDirectors proposed to be re-appointed is given in the Notice convening the ensuing AnnualGeneral Meeting.
Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 mandates that board shall monitor and review boardevaluation framework. The Companies Act 2013 states that formal evaluation needs to bemade by the board of its own performance and that of its committees and individualdirectors. Further Schedule IV of Companies Act 2013 states that the performanceevaluation of independent directors shall be done by entire Board of Directors excludingdirector being evaluated. The evaluation of all the directors and the board as a whole wasconducted based on the criteria adopted by the board. The evaluations for the Directorsand the Board were done through circulation of questionnaires which assessed theperformance of the Board on select parameters related to roles responsibilities andobligations of the Board and functioning of the Committees including assessing thequality quantity and timeliness of flow of information between the company management andthe Board that is necessary for the Board to effectively and reasonably perform theirduties. The evaluation criterion for the Directors was based on their participationcontribution and offering guidance to and understanding of the areas which are relevant tothem in their capacity as members of the Board.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134 (5) of the Companies Act 2013 withrespect to Directors Responsibility Statement it is hereby confirmed
(a) in the preparation of the annual accounts for the financial year ended March 312016 the applicable accounting standards have been followed and there are no materialdepartures from the same;
(b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company as at March 31 2016 and of the profit ofthe company for the said period;
(c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
(d) the Directors have prepared the annual accounts on a going concern basis; and (e)the Directors have laid down internal financial controls to be followed by the companyand that such internal financial controls are adequate and are operating effectively.
(f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this Annual Report whichhave been prepared in accordance with relevant Accounting Standards issued by theInstitute of Chartered Accountants of India.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments are given in the notes to the FinancialStatements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION188
None of the transactions with any of related parties were in conflict with theCompanys interest. The Companys major related party transactions are generallywith its subsidiaries. The related party transactions are entered into based onconsiderations of various business exigencies such as synergy in operationsCompanys long-term strategy for investments optimization of that: market shareprofitability liquidity capital resources of subsidiaries etc.
During the year under review the contracts or arrangements with related partiesreferred to in section 188 of Companies Act 2013 have been on arms length and in ordinarycourse of business and they were not material in nature. Accordingly the particulars ofthe transactions as prescribed in Form AOC - 2 of the rules prescribed under Chapter IXrelating to Accounts of Companies under the Companies Act 2013 are not required to bedisclosed as they are not applicable.
The Policy on dealing with related party transactions as approved by the Board may beaccessed on the Companys website at http://www.gitanjaligroup.com/images/investor_new/pdf_file/Policies_Codes/Related%20Party%20
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The brief outline of the corporate social responsibility (CSR) policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure 2 of this report in the format prescribed in the Companies (CorporateSocial Responsibility Policy) Rules 2014.
PARTICULARS OF EMPLOYEES
The details in terms of Section 197 of the Companies Act 2013 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areforming part of this report as Annexure 3A and the statement containing particulars ofemployees as required under Section 197(12) of the Companies Act 2013 read with Rule 5(2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isforming part of this report as Annexure 3B.
The Audit Committee of the company consists of the
Mr. S. Krishnan - Chairman
Ms. Nazura Ajaney
Mr. Mehul C. Choksi
The board accepted all the recommendations made by the audit committee during the yearunder review. The details of terms of reference number of audit committee meetings heldduring the year under review attendance etc are separately given in the section ofcorporate governance.
In terms of the section 177(9) of companies act 2013 and rules framed thereunder theCompany has framed a Whistle Blower Policy with vigil mechanism with an objective ofencouraging the employees of the Company to raise any concern about Companysoperations and working environment including possible breaches of Companys policiesand standards without fear of adverse managerial action being taken against suchemployees. The details of the Vigil Mechanism Policy are explained in the Report onCorporate Governance and also available on the website of the Company at following link:http://www.gitanjaligroup.com/images/investor_new/pdf_file/Policies_Codes/Whistle%20Blower%20
Policy%20with%20Vigil%20Mechanism%20Policy.pdf It provides a channel to the employeesto report to the management concerns about unethical behavior actual or suspected fraudor violation of any code of conduct or policy in force. The mechanism provides foradequate safeguards against victimization of employees to avail of the mechanism and alsoprovide for direct access to the Chairman of the Audit Committee in exceptional cases. TheCompany has proper process in place to ensure that the reported concerns if foundappropriate are fully investigated and acted upon.
RISK MANAGEMENT POLICY
The Company has adopted a Risk Management Policy duly approved by the Board and alsohas in place a mechanism to identify assess monitor and mitigate various risks to itskey business objectives. Major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuing basis.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure 4 to this Directors Report.
AUDITORS & AUDITORS REPORT
M/s. Ford Rhodes Parks & Co. LLP Chartered Accountants the present StatutoryAuditors retire at the ensuing Annual General Meeting and are eligible for reappointment.The company proposes to re-appoint M/s. Ford Rhodes Parks & Co. LLP CharteredAccountants as Statutory Auditors of the company for Financial year 2016-17.
The Audit Committee and the Board recommend the appointment of M/s. Ford Rhodes Parks& Co. LLP Chartered Accountants as Statutory Auditors of the company.
The Company has received letter from statutory auditors that their re-appointment ifmade would be within prescribed limits under section 141(3)(g) of companies act 2013 andthey are not disqualified for re-appointment. The auditor in their report on standalonefinancial statements for the year ended March 31 2016 have stated emphasis of matter. Theresponse of your directors on the same are as follows:
Response to point (a)
Since 2013 the Company is passing through difficult financial conditions due toextraneous factors beyond its control viz unfavourable regulatory changes and adverseforex movement. Due to liquidity challenges there remained an overdue of principal andinterest amount and liquid reserve was not created. However management is confident ofclearing the outstanding dues shortly and also complying with the requirement of reservecreation.
Response to point (b)
Due to liquidity challenges as mentioned above principal amount of IDBI ECB remainedoverdue. However management is confident of clearing the outstanding dues shortly.
Response to point (c)
Due to liquidity challenges as mentioned above there have been occasions during FY2015-16 where there were few overdrawn position in some accounts. However from time totime the Company has been clearing the said overdrawn positions and is making bestefforts to regularise the status.
Response to point (d)
The Company has been regularly honoring all its debt obligations/ statutory dues withsome delays. Multiple extraneous factors as stated earlier have made significant negativeimpact on the liquidity status of the Company. The Company however is committed to pay allits outstanding undisputed statutory dues and liabilities and will pay the same gradually.
Response to point (e)
Thesubsidiarieshavebeenformedforprovidingsupportof companys business. The termsand conditions of amount given to the subsidiaries are not prejudicial to interest of theCompany. In respect of few subsidiaries efforts are being made to recover the advances;however due to prevailing financial weakness of those subsidiaries they are unable to payand regularise the advance. The Company is exploring the various options to recover theadvances.
With regard to points raised in audit report on consolidated financial statements forthe year ended March 31 2016 on emphasis of matter the directors comments are coveredin reply on emphasis of matter to standalone financial statement for year ended March 312016
SECRETARIAL AUDITORS & THEIR REPORT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed M/s. Manish Ghia & Associates Practicing Company Secretaries to undertakethe Secretarial Audit of the Company for the financial year 2015-2016.
The Secretarial Audit Report has been appended as Annexure 5 to this Report. Theresponse of your directors on the observation made in Secretarial Audit Report is asfollows:
Response to point (a)
The subsidiaries have been formed for providing support to the companys business.The terms and conditions of amount provided to the subsidiaries are not prejudicial tointerest of the Company. In respect of few subsidiaries efforts are being made torecover the advances; however due to prevailing financial weakness of those subsidiariesthey are unable to pay and regularise the advance. The Company is exploring the variousoptions to regularize and recover the advance/s.
Response to point (b)
Since 2013 the Company is passing through difficult financial conditions due toextraneous factors beyond its control viz unfavourable market conditions and unfavorableregulatory changes and adverse movement in forex affecting the long-term and short termfinancial plans of the company and due to such liquidity challenges the required reservewas not possible to be created. However the management is taking adequate steps tocomply with the requirement .
Response to point (c)
The filing of Annual Return on Foreign Liabilities and Assets involved compilationand filing of details of various subsidiaries scattered across the globe. Due to technicaldifficulties in compiling the relevant information the requirement of filing wasunintentionally delayed. The status will soon be regularised.
PARTICULARS OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION EXPENDITURE ON RESEARCH ANDDEVELOPMENT FOREIGN EXCHANGE INFLOW/OUTFLOW ETC.
A. CONSERVATION OF ENERGY
The operations of your company is not energy intensive. However the Company makes itsbest efforts for conservation of energy in its factory and office premises.
B. TECHNOLOGY ABSORPTION ADAPTATIONS & INNOVATION
The Company has not carried out any specific research and development activities. TheCompany uses indigenous technology for its operations. Accordingly the informationrelated to technology absorption adaptation and innovation is reported to be NIL.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of foreign exchange earnings and expenditure are as follows.
|Particulars || |
(Rs. in lakhs)
|Foreign Exchange Earnings ||437717.39 |
|Expenditure in Foreign Exchange ||347815.13 |
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report.
INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
The company has adequate internal financial controls and processes in place withrespect to its financial statements which provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements. Theinternal control and processes are driven through various policies procedures andcertifications. The processes and controls are reviewed periodically.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013
Gitanjalis quest for competitive excellence consists of its commitment to lawfuland ethical conduct and adherence to its values. Integrity honesty and respect for peopleremain some of its core values. The Company is committed to provide a safe & conducivework environment to its employees and has formulated Policy for Prevention of SexualHarassment to prohibit prevent or deter any acts of sexual harassment at workplaceand to provide the procedure for the redressal of complaints pertaining to sexualharassment thereby providing a safe and healthy work environment.
During the year under review no case of sexual harassment was reported.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
1. Issue of equity shares with differential rights as to dividend voting or otherwise.
2. Issue of sweat equity shares to employees of the Company under any scheme
3. Issue of shares under Employee Stock Option Scheme
4. The Managing Director of the Company is not in receipt of any commission from theCompany nor he received any remuneration or commission from any of the subsidiary of theCompany.
5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Companys operations in future.
We thank our customers vendors investors and bankers for their continued supportduring the year. We place on record our appreciation of the contribution made by theemployees at all levels. Our consistent growth was made possible by their hard worksolidarity co-operation and support.
We thank the Governments of various countries where we have operations. We also thankthe Government of India Ministry of Commerce & Industry Ministry of CorporateAffairs Ministry of Finance Department of Economic Affairs Customs & ExciseDepartments Income Tax Department Reserve Bank of India BSE NSE NSDL CDSL andvarious bankers various State Governments and other Government Agencies for theirsupport and look forward to their continued support in the future.
| ||On behalf of the Board of Directors |
| ||Mehul C. Choksi |
|Place: Mumbai ||Chairman and Managing Director |
|Date : August 11 2016 || |
ANNEXURE 1 TO THE DIRECTORS REPORT
POLICY ON NOMINATION AND REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL AND SENIORMANAGEMENT - GITANJALI GEMS LIMITED FOREWORD
A transparent fair and reasonable process for selection of directors key managerialpersonnel and senior management and appropriate remuneration at all levels of the Companyis required to ensure that Shareholders remain informed and confident in the management ofthe Company. The Company also understands the importance of attracting and maintaininghigh quality individuals for managing its affairs from directors level right through tosupport staff.
As per regulation 19 of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 and section 178 of the Companies Act 2013 theBoard of Directors of every listed company shall constitute a Nomination and RemunerationCommittee and the role of the committee shall inter-alia include the following:
1. Formulation of the criteria for determining qualifications positive attributes andindependence of a director and recommend to the Board a policy relating to theremuneration of the directors key managerial personnel and other senior managementemployees;
2. Formulation of criterion for evaluation Directors performance on the Board and alsothe performance of the Board as a whole.
3. Devising a policy on Board diversity;
4. Identifying persons who are qualified to become directors and who may be appointedin senior management in accordance with the criteria laid down and recommend to the Boardtheir appointment and removal. The company shall disclose the remuneration policy and theevaluation criteria in its Annual Report.
Section 178 (4) of the Companies Act 2013 stipulates that while formulating the policythe Committee shall ensure that
(a) The level and composition of remuneration is reasonable and sufficientto attractretain and motivate directors of the quality required to run the company successfully;
(b) Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
(c) Remuneration to directors key managerial personnel and senior management involvesa balance between fixed and incentive pay reflecting short and long-term performanceobjectives appropriate to the working of the company and its goals:
In view of the above a policy is formulated and established for nomination andremuneration of Directors key managerial personnel and senior management of the Company.
This Policy on nomination and remuneration (the "Policy") describes theprocess through which candidates for possible inclusion in the Companys recommendedslate of director key managerial personnel and senior management (the"Candidates") are selected. The Policy is established and administered by theNomination and Remuneration Committee (the "Committee") of Gitanjali GemsLimited (the "Company").
The definitions of some of the key terms used in this Policy are given below.
a) "Board" refers to collective body of board of directors of theCompany. b) "Director" means a director as defined under section 2(34) ofthe act except nominee director and director appointed by small shareholders.
c) "Key Managerial Personnel" means a person appointed pursuant tosection 203 of the act.
d) "Nomination and Remuneration Committee" means a committee formedpursuant to section 178 of the act.
e) "Senior Management" includes all personnel just below one level ofboard of directors of the Company and whose reporting is directly to the executivedirectors of the Company.
f) "The Act" means Companies Act 2013.
g) "The Company" means Gitanjali Gems Limited incorporatedunder Companies act 1956
PART A NOMINATION POLICY
3. BOARD MEMBERSHIP CRITERIA
The Committee is responsible for among other things for identifying individualsqualified to become members of the Companys Board of Directors (the"Board") and recommending to the Board the nominees to stand for election asdirectors. The Nomination Committee shall take into account all of the following criteriawhile determining the qualifications of any candidate for director:
Integrity and Judgment : Directors should have the highest level of integrityethical character and the ability to exercise sound business judgment on a broad range ofissues consistent with the Companys values.
Qualification & Knowledge : Directors should be financially literate andhave a sound understanding of business strategy corporate governance and boardoperations.
Diversity : Directors should be capable of representing the multi-culturalnature of our global corporation with consideration being given to a diverse board interms of gender and ethnic membership. In addition the Committee shall take into accountdiversity in professional experience skills and background.
Independence : Directors who are not current or former management should meetthe spirit as well as the letter of the applicable independence standards. In additionall Directors should be independent in their thought and judgment so that they representthe long-term interests of all shareholders of the Company.
Experience and Accomplishments : Directors should have significant experienceand proven superior performance in professional endeavors whether this experience is inbusiness government academia or with non-profit organizations.
Board Interaction: Directors should value board and team performance overindividual performance demonstrate respect for others and facilitate superior boardperformance. Directors should be willing and able to devote the time required to becomefamiliar with Companys business and to be actively involved in the Board and itsdecision-making.
Skills: Directors should have expertise in one or more of the areas such asaccounting and finance technology management international business compensationlegal HR corporate governance strategy industry knowledge and general businessmatters.
4. IDENTIFICATION OF CANDIDATES FOR BOARD MEMBERSHIP
A. Internal Process for Identifying Candidates.
The Committee has two primary methods for identifying Candidates. First the Committeemay solicit ideas for possible Candidates from a number of sources including presentmembers of the Board; senior level Company executives; individuals personally known to themembers of the Board; and research including database and Internet searches.
B. External Process for Identifying Candidates.
Second the Committee may from time to time retain at the Companys expense one ormore search firms to identify Candidates (and to approve any such firms fees andother retention terms). If the Committee retains one or more search firms such searchfirms may be asked to identify possible Candidates who meet the qualifications expressedin this Policy to interview and screen such candidates (including conducting appropriatebackground and reference checks) to act as a liaison among the Board the Committee andeach Candidate during the screening and evaluation process and thereafter to be availablefor consultation as needed by the Committee.
5. RECOMMENDATION OF CANDIDATE
The Committee will consider all Candidates identified through the processes describedabove and will evaluate each of them based on the criteria set forth above and ifthought fit will recommend their appointment to the Board.
6. CRITERIA FOR APPOINTMENT OF SENIOR MANAGEMENT AND KEY MANAGERIAL PERSONNEL
The Committee is also responsible for identifying individuals qualified to occupyposition of key managerial personnel and in the senior management of the Company andselecting or recommending to the Board their appointment. The Nomination Committee shalltake into account all of the following criteria when determining the qualifications of anycandidate in senior management position:
Integrity and Judgment: Candidate should have the highest level of integrityethical character and the ability to exercise sound business judgment on a broad range ofissues consistent with the Companys values.
Qualification & Knowledge: Candidate should have expert knowledge in hisfield of work and should have industry knowledge and general business matters.
Independence: The candidate should be independent in his thought and judgment sothat he represents the long-term interests of the Company.
Experience and Accomplishments : The candidate should have significantexperience and proven superior performance in his professional endeavors
7. IDENTIFICATION OF CANDIDATES FOR SENIOR MANAGEMENT AND KEY MANAGERIAL PERSONNELROLE
A. Internal Process for Identifying Candidates.
The Committee may solicit ideas for possible Candidates from a number of sourcesincluding present members of the Board; senior level Company executives; individualspersonally known to the members of the Board; and research including database andInternet searches.
B. Identification through Human Resource Department
The Committee may instruct human resource department to search through its availableresources/network an appropriate candidate for the required position in senior management.
C. External Process for Identifying Candidates.
The Committee may from time to time retain at the Companys expense one or moresearch firms to identify Candidates (and to approve any such firms fees and otherretention terms). If the Committee retains one or more search firms such search firms maybe asked to identify possible Candidates who meet the qualifications expressed in thisPolicy to interview and screen such candidates (including conducting appropriatebackground and reference checks) to act as a liaison among the Board the Committee andeach Candidate during the screening and evaluation process and thereafter to be availablefor consultation as needed by the Committee.
The Committee shall consider all Candidates identified through the processes describedabove and shall evaluate each of them based on the criteria set forth above and ifthought fit will recommend their appointment to the Board.
PART B REMUNERATION POLICY
9. EXECUTIVE DIRECTOR REMUNERATION
The Remuneration and Nomination Committees reward policy reflects its obligationto align executive directors remuneration with shareholders interests and toengage appropriately qualified executive talent for the benefit of the group. Thenomination and remuneration committee shall consider following criteria beforerecommending the remuneration of executive directors:
Reward reflects the competitive global market in which the company operates.
Individual reward should be linked to performance criteria.
Executives should be rewarded for both financial and non-financial performance.
Elements of Remuneration
The executive directors total remuneration consists of the following:
Salary - each executive director receives a fixed sum payable monthly in cash.
Perquisites and allowances if deem fit by remuneration committee
Other benefits - executive directors are eligible to participate insuperannuation schemes and such other benefits as may be prescribed by the nomination andremuneration committee.
Overall Director Remuneration
Overall managerial remuneration shall not exceed 11% of net profit of the Company for aparticular financial year.
No remuneration (except sitting fees) shall be paid to any director of the companyunless it is recommended to the board by remuneration committee of the Company and otherapplicable statutory provisions are complied with.
10. NON-EXECUTIVE DIRECTOR REMUNERATION
No remuneration shall be paid to non executive directors except sitting fees in themanner and as per the terms as approved by board of directors of the Company. TheNomination and remuneration Committee if deem fit may recommend to the boardremuneration to non executive directors not exceeding 1% of net profit of the Company.
11. FORMS OF REMUNERATION
The Board in consultation with the Nomination & Remuneration Committee will fromtime to time determine the fixed remuneration level for all Directors key managerialpersonnel and senior management. For other employees respective department heads underan intimation to Human Resource Department are allowed to fix such remuneration as theydeem fit. Such remuneration levels will be determined according to industry standardsrelevant laws and regulations labour market conditions and scale of Companysbusiness relating to the position.
The fixed remuneration will reflect the core performance requirements andexpectationsof the Company.
Performance based Remuneration
In addition to fixed remuneration the Company may implement a system of bonuses andincentives designed to create a strong relationship between performance and remuneration.Performance based remuneration will be linked to specific performance targets which willdisclosed to relevant employees regularly.
12. EMPLOYEE ENTITLEMENTS
The Company will comply with all legal and industrial obligations in determining theappropriate entitlement to long service annual personal and parental leave.
The Nomination & Remuneration Committee is responsible for the monitoringimplementation and review of this policy. The Nomination & Remuneration Committee willprovide recommendations to the Board as to how to effectively structure and facilitate aremuneration strategy which will meet the needs of the Company.
This Policy is intended to provide a set of flexible nominations process for directorsKMPs and senior management. The Committee intends to review this Policy at least annuallyand anticipates that modifications may be necessary from time to time as theCompanys needs and circumstances evolve and as applicable legal or listingregulation change. The Committee may modify or amend this Policy at any time withoutadvance notice.