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Mini Diamonds (India) Ltd.

BSE: 523373 Sector: Consumer
NSE: N.A. ISIN Code: INE281E01010
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OPEN 3.93
PREVIOUS CLOSE 4.13
VOLUME 200
52-Week high 3.93
52-Week low 0.00
P/E 3.78
Mkt Cap.(Rs cr) 1
Buy Price 3.93
Buy Qty 300.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3.93
CLOSE 4.13
VOLUME 200
52-Week high 3.93
52-Week low 0.00
P/E 3.78
Mkt Cap.(Rs cr) 1
Buy Price 3.93
Buy Qty 300.00
Sell Price 0.00
Sell Qty 0.00

Mini Diamonds (India) Ltd. (MINIDIAMONDSI) - Director Report

Company director report

DIRECTORS' REPORT

The Members of

MINI DIAMONDS (INDIA) LIMITED

Your Directors have great pleasure in presenting the 26th Annual Report together withthe Audited Statement of Accounts for the financial year ended 31st March, 2013.

FINANCIAL RESULTS:

PARTICULARS 2012-2013 2011-2012
Total Income from Sales 43,45,59,559 00 29,44,87,350 00
Less Cost of Goods Sold (41,81,25,193.00) (28,13,22,414.00)
Other Income 4,435 00 38,044 00
Total Income 1,64,38,801.00 1,32,02,980 00
Less' Operating Expenditure (83,17,332.00) (65,86,102.00)
Less Financial Expenses (11,50,330 00) (7,37,427 00)
Profit before Depreciation, Interest and Tax 69,71,139 00 58,79,451 00
Less: Depreciation (9,35,587.00) (10,97,964.00)
Less Interest (32,23,126.00) (23,00,593.00)
Profit before Taxes 28,12,426 00 24,80,894 00
Less Income Tax / Fringe Benefit Tax written off - (70,080 00)
Less. Interest on Income Tax
Less: Provision for Taxation-Current/earher years (including FBT) (10,26,977.00) (8,15,540 00)
Net Profit for the year 17,85,449.00 15,95,274.00
Add Balance brought forward from the Previous year 69,60,535 00 53,65,261 00
Balance carried to Balance Sheet 87,45,984 00 69,60,535 00

DIVIDEND:

Your Directors have not recommended any dividend for this financial year.

MANAGEMENT DISCUSSION AND ANALYSIS:

a) Industry Structure and Developments:

The Indian gem and jewellery industry has witnessed a marginal decline of 0.36% in FY2012-2013 owing to the decrease in trading exports of diamonds The total gem &jewellery industry exports were recorded at US$ 42839 million (INR 204823 crores) in FY2012-13 as compared to US$42995 million (INR 195735 crores) in April 2011 - March 2012Though in dollar terms there is a marginal drop of 0.36%, the exports mark an increase of4.6% in rupee value. The gem & jewellery sector accounted for 14% of India's totalmerchandise exports in FY 2012-2013.

The growth in the sector was primarily driven by Gold Jewellery which registered anincrease of 30% in FY '13. The exports grew from US$ 12695 million (INR 57747.67 crores)in 2011-2012 to US$ 16517 million (INR 79430.26 crores) in 2012-2013.

Cut and Polished Diamonds (CPD) witnessed a decline of 17.3% with exports decreasingfrom US$ 28217 million in 2011 -2012 to US$ 23329 million in 2012-2013.

Coloured gemstone exports witnessed an increase of 9.10% in dollar terms with sectorrecording growth from US$ 314.20 million in 2011-2012 to US$ 342.80 million in 2012-2013.

UAE was the largest exporting destination with 44% of Exports to the market, followedby Hong Kong with 25% and USA with 12% of exports.

An increase in import figures of rough diamonds indicates stable growth of trade at themanufacturing level and growth in exports.

There has been a substantial decline in import of polished diamonds during January toMarch 2012 more than 70% in a month post introduction of 2% duty on C&PD In the annualfigure the decline is 30% in 2012-13 in comparison to previous year It is expected thatthe total import of polished diamonds at US$14 3 bn in 2012-13 may eventually come downsignificantly in 2013-14.

b) Opportunities and Threats:

(i) Opportunities:

The jewellery industry is growing at a whopping rate with the boom in the domestic andexports of Indian jewellery, the shining materials of India brings more sparkle to theeconomy. Gems and jewellery export stands the second major foreign exchange earner for thecountry. India has many natural advantages to emerge as Gems & Jewellery hub of theworld. India has the largest and the best artisan force for designing and crafting thejewellery in the world There is considerable scope of value addition in terms of capacitybuilding at the domestic front, quality management and professionalism.

India is the world's largest manufacturing centre for gems and jewellery and theIndustry contributes over 12% to the total export earnings of the country and employshighly skilled 1.5 million workers The gems and jewellery industry is a major exchangeexchequer as major portion (around 80%) of its turn over was contributed by exportsDiamonds contribute to nearly 80% of the entire turnover and of this industry and hencemany times the terms 'gems and jewellery industry' and 'diamond industry' are used assynonyms.

(ii) Threats:

Although India currently enjoys dominance in the world's cut and polished diamondsmarket, China may emerge as a viable rival, if not in the near term, certainly in thelonger term. An increasing number of diamond processors from Israel and Belgium, and evenIndia, are setting up facilities in China for a variety of reasons, according to thereport on the Indian gems and jewellery industry. The primary reasons for these are:

(i) The labour force there, like in India, is cheap and disciplined.

(ii) High economic growth in China over the past decade has resulted in a significantincrease in potential consumers

in the high - income segment within the country.

(iii) Quality of workmanship and technological development (technical expertise) arethe other areas where the Indian industry faces a threat from China.

c) Segment wise Performance:

The Company is in the business of Rough Diamonds and Polished Diamonds The Company hastwo segments one is manufacturing and other is trading. The detailed reporting of segmentwise performance of the Company is mentioned in point J Notes to Accounts of the Auditor'sReport.

d) Future Outlook:

As industry survey stated, there has been a slowdown in the economy specially in thedeveloped economies and it may continue for sometime due to demand contraction in thedeveloped markets such as the US and the European Union,. However, very recent figures andincrease in consumer confidence across globe have boosted the industry confidence andexperts are hoping for quick revival of consumer demand and growth in industry. All IndiaGem and Jewellery Trade Federation (GJF) are targeting growth from US$ 16.79 billion toUS$26.23 billion by the year 2013.

India possesses the world's most competitive gems and jewellery market due to its lowcost of production and availability of skilled labour. As per the new research report"Indian Gems and Jewellery Market - Future Prospects to 2011", highly skilledand low cost manpower, along with strong government support in the form of incentives andestablishment of SEZs, has been the major driver for the Indian gems and jewellery market.The market also plays a vital role in the Indian economy as it is a leading foreignexchange earner and accounts for more than 12% of India's total exports Currently theIndian market remains highly fragmented, but is rapidly transforming into an organizedsector

The Indian Diamond Industry is witnessing a divergent trend in the demand for cut andpolished diamonds and maintaining its Global Presence The Jewellery Industry is alsohaving its presence felt in the local as well as global market The new Government and itseconomic policies will have an impact on the economic reforms and also on the Gem andJewellery Industry The Rupees / Dollar fluctuations is having a lot of impact on theperformance of the industry and continues to do so in future also because the exports arelinked to dollar The overall demand in the world market is excellent but due to problemsfaced by the U S economy the demand will be sluggish until and unless there is improvementin the oil price Revaluation of Yuan of China will have cost bearing effect in the labourmarket This will open up the market for Indian Diamond and Jewellery and increase itspresence The cash flow of the company is very encouraging with the significant growth interms of turnover as well as profitability Currently, the industry is facing a slowdowndue to global economic turmoil But due to various government efforts and incentivescoupled with private sector initiatives, the Indian gems and jewellery sector is expectedto grow at a CAGR of around 14% from 2009 to 2012 At present, the Indian gems andjewellery market is dominated by the unorganized sector, however, the trend is set tochange in near future with the branded jewellery market growing at an expected CAGR ofmore than 41 % in the coming four years

The outlook for the Industry and consequently for the Company during the currentfinancial year is reasonably good, subject however, to the effects of prevailing disturbedscenario in the different parts of the world The Company is putting a lot of efforts tostrengthen its financial position by increasing its working capital so as to expand itsoperations and export business In view of the demand for Cut and Polished Diamonds andDiamond Studded Jewellery there is a continuous, growth in diamond business There isenough potential in the Indian and Overseas market for the Companies engaged in diamondtrade and export The Company's policy is to maintain goodwill in the market and flawlessperfection at all levels Customer's satisfaction is the top most priority

e) Risk Management:

Risk is an important element of corporate functioning and governance Your Company hasestablished the process of identifying, analyzing and treating risks, which could preventthe Company from effectively achieving its objectives It ensures that all the risks aretimely defined and mitigated in accordance with the well structured risk managementProcess

f) Internal Control Systems:

The Company has designed an effective internal Control System to balance the financial,operational, compliance and other risks and explore its business opportunities at thefullest to achieve its desired objectives

g) Financial performance with respect to operational performance:

The turnover of the Company has increased to INR 43,45,59,559/- as compared to INR29,44,87,350/- in the previous year Despite the global recession affecting the domesticmarket as well, the Company has established itself in the local market with an increasingsale

h) Human Resources:

People are the most valued assets of the Company They work individually andcollectively contributing to the achievement of the objectives of the business Therelation between the employees and the Company remained cordial throughout the year YourCompany's corporate culture and the vision and values help unite the workforce and providestandards for how your Company conducts the business

i) Code of Conduct:

The Board of Directors has prescribed norms of ethical practices and code of conductfor the Directors of the Company The Code of Conduct of the Company lays down theprinciples, values, standards and rules of behavior that guide the decisions, proceduresand systems of the Company in a way that (a) it contributes to the welfare of itsstakeholders, and (b) respects the rights of all constituents affected by its operationsThe Code of Conduct is reviewed from time to time by the Board

DEMATERIALISATION OF SHARES:

Dematerialisation is the process of converting the physical form of shares intoelectronic form Dematenalisation helps to overcome the problems of delay in transfer ofcertificates, forgery of certificates etc as well as reduces the transaction time ascompared to the physical segment Due to the various benefits of dematerialization ofshares to the investors and the Company as well, your Directors request and recommend youto convert your physical shares in dematerialized form

CORPORATE GOVERNANCE:

Report on Corporate Governance is furnished as a part of the Directors' Report andforms part of this report Certificate from Practicing Company Secretaries regardingcompliance is annexed hereto and forms part of this report

DIRECTORS' RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the information andexplanation obtained by them, your Directors make the following statement in terms ofSection 217(2AA) of the Companies Act, 1956

(i) that in the preparation of the Annual Accounts for the year ended March 31, 2013,the applicable accounting standards have been followed along with proper explanationrelating to material departures, if any

(ii) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year ended March 31, 2013 and of the profit of the Company for that year

(iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956,for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities

(iv) that the Directors have prepared the Annual Accounts for the year ended March 31,2013, on a going concern basis

DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 and Articles ofAssociation of the Company, Mr Sameep Bharat Shah, Director of the Company retire byrotation at the ensuing Annual General Meeting and being eligible offer themselves forre-appointment

STATUTORY AUDITORS:

Your Directors request you to appoint Auditors for the current year and fix theirremuneration The Auditors of the Company, M/s V A Parikh & Associates, CharteredAccountants retire at the ensuing Annual General Meeting of the Company and have giventheir consent for re - appointment The Company has also received a certificate from themunder Section 224 (1B) of the Companies Act, 1956

CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION:

The provisions of Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 are not applicable

FOREIGN EXCHANGE EARNINGS AND OUTGO:

The total exports for the year 2012 - 2013 amounts to Rs 26,01,34,461/- Efforts arebeing made to develop new products keeping in view the international market which issensitive to changing fashions

PARTICULARS OF EMPLOYEES:

There are no such employees pursuant to Section 217 (2A) of the Companies Act, 1956read with the Companies (Particulars of the Employees) Rules 1975 as amended by theCompanies Amendment Act, 1988 Hence, no particulars of such employees are required to beappended to this report

EXPLANATIONS FOR AUDITORS QUALIFICATIONS IN AUDIT REPORT:

With regards to the qualification as stated in the Auditor's Report the Board ofDirectors of the Company accepts suggestion of the Auditors and is of the opinion thatthis is minor non compliance of the mandatory accounting standard and not a majordeviation affecting the financial statements The Board assures that it will be morecompliant with regards to the Auditor's observation in future

Place Mumbai For and on behalf of the Board Directors
Date 21 st September, 2013 Sd/-
Upendra N Shah
Registered Office : Chairman & Managing Director
7-A, Nusser House, Ground Floor,
Opp Panchratna Building,
Opera House, Mumbai- 400 004