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Neogem India Ltd.

BSE: 526195 Sector: Consumer
NSE: N.A. ISIN Code: INE552E01014
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OPEN 5.30
CLOSE 5.24
VOLUME 10
52-Week high 5.61
52-Week low 3.44
P/E
Mkt Cap.(Rs cr) 4
Buy Price 0.00
Buy Qty 0.00
Sell Price 5.30
Sell Qty 1380.00

Neogem India Ltd. (NEOGEMINDIA) - Director Report

Company director report

To

The Members

Neogem India Limited

Your Directors present the Twenty-fifth Annual Report of the Company and theAudited Financial Statement for the year ended March 31 2016.

1. Financial Summary or highlights/performance of the Company:

The financial highlights of the Company for the year ended March 31 2016 issummarized below:

(in Rs.)

Particulars For the year For the year
ended 31st ended 31st
March 2016 March 2015
Revenue from Operations 239812217 566643032
Other Income 0.00 21165
Profit before Depreciation& Tax (47870846) 1973045
Less:Depreciation 788859 1665668
Profit for the year before tax (48659705) 307377
Less: Exceptional Items 2700 0.00
Add/(Less): Provision for Taxation 185579 (245563)
Profit after Tax (48476825) 61815

During the year under review the Sales have decreased from Rs.566643032 in previousyear to Rs. 239812217in current year due to adverse market conditions. However due todip in sales and because of the Bad Debts Written off amounting to Rs. 17312596/-during the year the Company suffered a loss of Rs. 48476825/-. However your Directorsare hopeful of better results in future.

2. Dividend:

In view of the losses your Directors do not recommend any dividend for the financialyear ended 2015-16.

3. Reserves:

The Board does not propose to carry any amounts to reserves.

4. Brief description of the Company’s working during the year/ state ofCompany’s affair:

The overall demand for diamond and jewellery has remained subdued during the year underreview. The global economic uncertainty has directly and indirectly impacted consumers'preference for luxury and lifestyle products. This has resulted in negative growth in someof the key markets. Your Company is therefore exercising caution in marketing by limitingits exposure to specific customers and regions. The Company also uses the services ofin-house designers in developing product designs as per emerging market trends.

5. Change in the nature of business if any:

There was no change in nature of business.

6. Material changes and commitments if any affecting the financial position of theCompanywhich have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report:

No material changes have occurred subsequent to the close of the financial year of theCompany to which the balance sheet relates and the date of the report. However theCompany received Listing approval as on 21st March 2016 and Trading Approvalas on 1st August 2016 for the allotment of 292000 Equity shares of Rs.10/-each as on 31st March 2015 pursuant to conversion of Warrants which wereissued on preferential basis to the promoter group based on the members' approval dated 30thSeptember 2013.

7. Details of significant and material orders passed by the regulators or courts ortribunalsimpacting the going concern status and Company's operations in future: Therewereno significant and material orders passed by the regulators or courts or tribunalsimpacting the going concern status and Company's operations in future.

8. Details of Subsidiary/Joint Ventures/Associate Companies:

The Company did not have any Subsidiary Company/Joint Venture/Associate Company duringthe year under review.

9. Auditors Report:

There are no observations/ qualifications contained in the Auditors' Report andtherefore there are no explanations to be provided for in this report. However yourDirectors wish to state that with reference to Note no. 2.25 of the Financial Statementthe company has availed working capital loans from Punjab National Bank and Bank of India.During the year the accounts has been classified as non-performing assets by therespective banks.

10. Auditors:

At the Annual General Meeting held on September 30 2014 M/s. Ashok Bairagra &Associates (Firm's Registration No. 118677W) Chartered Accountants were appointed asAuditors of the Company for 3 consecutive financial years i.e. till the financial year2016-17. In terms of the first proviso to Section 139 of the Companies Act 2013 theappointment of the auditors shall be placed for ratification at every Annual GeneralMeeting. Accordingly the appointment of M/s. Ashok Bairagra& Associates CharteredAccountants as the Statutory Auditors of the Company for the financial year 2016-17 isto be placed for ratification by the shareholders. In this regard the Company hasreceived a certificate from the auditors to the effect that if their appointment isratified in ensuing Annual General Meeting it would be in accordance with the provisionsof Section 141 of the Companies Act 2013.

11. Management Discussion And Analysis:

The Management Discussion and Analysis Report for the financial year under review asstipulated under Regulation 34 of the Listing Regulations is annexed as a part of thisAnnual Report as Annexure 1.

12. Extract of the Annual Return:

In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theAnnual Return in Form MGT - 9is appended as Annexure 2 of the Board's Report.

13. Conservation of energy technology absorption and foreign exchange earnings andoutgo:

A. Conservation of energy:

i. The steps taken or impact on conservation of energy:

Though our operations are not energy- intensive efforts have been made to conserveenergy by utilizing energy- efficient equipments.

ii. The steps taken by the Company for utilising alternate sources of energy:

The Company is using electricity as the main source of energy and is currently notexploring any alternate source of energy.

iii. The capital investment on energy conservation equipments:

Not applicable

Your Company firmly believes that our planet is in dire need of energy resources andconservation is the best policy.

B. Technology absorption:

i. The efforts made towards technology absorption:

Indigenous/Locally available raw materials are utilized to gain maximum advantage.

ii. The benefits derived like product improvement cost reduction product developmentor import substitution:

Utilisation of indigenous raw material has led to cost reduction.

iii. In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year):

No technology has been imported by the Company.

iv. The expenditure incurred on Research and Development: Nil

C. Foreign exchange Earnings and Outgo:

1. The Company is engaged in activates relating to exports and taking measures forincreasing exports developing new export markets for production and formulating exportplans.

2. Total foreign exchange used and earned:

(In Rs. Lacs)

Particulars 2015-16 2014-15
Foreign exchange earned on F.O.B. basis 183749474 155939435
Foreign exchange outgo (CIF value of Imports) 129053227 142910567

14. Directors and Key Managerial Personnel:

A. Changes in Directors and Key Managerial Personnel:

In accordance with the provisions of the Companies Act 2013 read with the applicablerules thereto including any statutory modification(s) or re-enactment thereof for thetime being in force ('the Act') Mr. RonakDoshi (DIN:00102959) who is liable to retire byrotation at the ensuing Annual General Meeting and being eligible seeks reappointmentpursuant to the provisions of Section 152 of the Companies Act 2013. During the year Mr.Vikas Patel (DIN: 00131285) Non-executive Independent Director of the Company resignedfrom the services of the Company. The resignation was effective from 1stMarch2016.

The Company has received the declarations u/s 149(7) of the Act from all theIndependent Directors of the Company confirming that they meet the criteria ofIndependence as prescribed both under the Act and the Securities and Exchange Board ofIndia (Listing Obligations and Disclosures Requirements) Regulations 2015 ['ListingRegulations'] with Stock Exchanges. The Company has also received Disclosure of Interestby Directors as per the provisions of Section 184 of Companies Act 2013 and and that theyare not disqualified to become directors under the Act; and in the opinion of the Board ofDirectors all the Independent Directors fulfill the criteria of independence as providedunder the Act rules made thereunder read with the Listing Regulationsand that they areindependent of the management.

Brief resume of the director proposed to be re-appointedand relevant informationincludingnature of their expertise in specific functional areas qualifications terms ofappointment details of remuneration names of the Companies in which heholds directorshipand the memberships /chairmanships of Committees of the Board hisshareholding in theCompany etc. as stipulated under the Listing Regulations and Secretarial Standardshavebeen furnished separately in the Notice convening this AGM.

B. Board Evaluation:

Pursuant to the provisions of the Companies Act 2013 and the Securities and ExchangeBoard of India (Listing Obligations and Disclosures Requirements) Regulations 2015['Listing Regulations'] the Board has carried out an annual performance evaluation of itsown performance of individual Directors as well as the evaluation of the working of itsAudit Nomination & Remuneration and Stakeholders' Relationship Committees. The Boardapproved the evaluation results as collated by the Nomination and Remuneration Committee.

C. Directors:

i. Independent Directors:

In accordance with the criteria suggested by the Nomination and Remuneration Committeethe performance of each independent director was evaluated by the entire Board ofDirectors (in the absence of the director getting evaluated) on various parameters likeengagement leadership analysis decision making communication governance interest ofstakeholders etc. The Board was of the unanimous view that every Independent Director wasa reputed professional and brought his rich experience to the deliberations of the Board.The Board also appreciated the contribution made by all Independent Directors in guidingthe management to achieving higher growth and continuance of each independent director onthe Board will be in the interest of the Company.

ii. Non-Independent Directors:

The performance of all the non-independent directors was evaluated by the IndependentDirectors at their separate meeting. Further their performance was also evaluated by theBoard of Directors. The various criteria considered for the purpose of evaluation includedleadership engagement transparency analysis decision making functional knowledgegovernance stakeholders etc. The Board was of the unanimous view that all thenon-independent directors were providing good business and people leadership.

iii. Declaration by an Independent Director(s) and re-appointment if any:

All the Independent Directors have provided the declaration of Independence asrequired pursuant to Section 149(7) of the Companies Act 2013 stating that they meet thecriteria of independence as provided in sub-section (6).

iv. Familiarization Programme to Independent Directors:

Though it is not mandatory for the Company to provide any formal familiarizationprogramme however the Company provides suitable familiarization programme to IndependentDirectors so as to associate themselves with the nature of the industry in which theCompany operates and business model of the company in addition to regular presentation ontechnical operations marketing and exports and financial statements. In addition to theabove Directors are periodically advised about the changes effected in the Corporate LawListing Regulations with regard to their roles rights and responsibilities as Directorsof the Company.

15. Details of Committees of the Board:

Currently the Board has 3 Committees: the Audit Committee Nomination and RemunerationCommittee and Stakeholders' Relationship Committee. The Composition of various committeesand compliances as per the applicable provisions of the Companies Act 2013 and the Rulesthereunder and Listing Regulations are as follows:

A. i. Audit Committee:

The Board has constituted an Audit Committee comprising of Mr. Vikas Patel (DIN:00131285) Independent Director as the Chairman of the Committee and Mr. Jayant Nagarkar(DIN: 00131405) Independent Director and Mr. Gaurav Doshi (DIN- 00166703) ManagingDirector as the members of the Committee. However pursuant to the resignation of Mr.Vikas Patel (DIN: 00131285) Independent Director with effect from 1stMarch2016; the Audit Committee was reconstituted comprising of Ms. Renu Kathuria (DIN:01669882) Independent Director as the Chairperson of the Committee and Mr. JayantNagarkar (DIN: 00131405) Independent Director and Mr. Gaurav Doshi(DIN-00166703)Managing Director as the members of the Committee. The recommendations of the AuditCommittee is always welcomed and accepted by the Board and all the major steps impactingthe financials of the Company are undertaken only after the consultation of the AuditCommittee.

A. ii. Details of establishment of vigil mechanism for directors and employees:

The Company has established vigil mechanism pursuant to Section 177(9) of the CompaniesAct 2013 for Directors and Employees to report their concerns and has also taken steps tosafeguard any person using this mechanism from victimization and in appropriate andexceptional cases; there is direct access to approach Ms. Renu Kathuria (DIN: 01669882)Chairperson of the Audit Committee.

B. Nomination and Remuneration Committee:

The Board has constituted Nomination and Remuneration Committee under Section 178 ofthe Companies Act 2013. Mr. Vikas Patel (DIN: 00131285) Independent Director is theChairman of the said Committee and Mr. JayantNagarkar (DIN:00131405) and Ms. RenuKathuria(DIN:01669882) Independent Directorsarethe members of the Committee. However pursuant tothe resignation of Mr. Vikas Patel (DIN: 00131285) Independent Director with effect from1stMarch 2016; the Nomination and Remuneration Committee was reconstitutedcomprising of Ms. RenuKathuria (DIN: 01669882) Independent Director as the Chairperson ofthe Committee andMr. JayantNagarkar (DIN: 00131405) Independent Director as the memberof the Committee.The Committee has framed a policy to determine the qualification andattributes for appointment and basis of determination of remuneration of all theDirectors Key Managerial Personnel and other employees. A copy of the policy is annexedas Annexure 3.

C. Stakeholder's Relationship Committee:

The Stakeholder's Relationship Committee comprises of Mr. Vikas Patel (DIN: 00131285)Independent Director as the Chairman of the said Committee and Mr. JayantNagarkar(DIN:00131405) Independent Director as the member of the Committee. However during theyear due to the resignation of Mr. Vikas Patel (DIN: 00131285) Independent Director witheffect from 1stMarch 2016 the Stakeholder's Relationship Committee wasreconstituted comprising of Ms. RenuKathuria (DIN: 01669882) Independent Director as theChairperson of the Committee andMr. JayantNagarkar (DIN: 00131405) Independent Directoras the member of the Committee. The role of the Committee is to consider and resolvesecurities holders' complaint. The meetings of the Committee are held once in a quarterand the complaints are responded within the time frame provided.

Auditor's Observations Reply of Management
1. The Company has not appointed a Whole- time Company Secretary as required pursuant to Section 203 of the Companies Act 2013 and Regulation 6 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ("LODR") The Company is searching for a suitable candidate and shall appoint the Whole-time Company Secretary on finding right candidate.
2. The Nomination and Remuneration Committee is not in conformity with the Companies Act 2013 as according to Section 178 of the Companies Act 2013 the Committee shall comprise of three or more Non-Executive Director while Company has only 2 Non-Executive Director during the period from 1.4.2015 to 1.9.2015 and thereafter from 1.3.2016. At the beginning of the financial year the Company was short of one Independent Director however in the last Annual General Meeting the Company had appointed Ms. RenuKathuria as an Independent Director who is also a member of Company's Nomination and Remuneration Committee thus complying with the said requirement from 2.9.2015. However due to resignation of Mr. Vikas Patel Independent Director effective from 1.3.2016 the Company is again short of one Independent Director and is process of searching the same.
3. The Company has not appointed Woman Director as required under Section 149 of the Companies Act 2013 upto 1.9.2015. At the beginning of the financial year the Company had not appointed a Woman Director however the same has been appointed in the Board meeting held on 2nd September 2015.
4. The Company has not appointed Internal Auditor as required under Section 138 of the Companies Act 2013 Though the Company has not formally appointed Internal Auditor in accordance with the size of the Company the Company has proper internal control system and procedure in place.
5. The Company has not published notice convening Board Meeting for approval of quarterly financial results held on 30th May 2015 14th August 2015 and 13th February 2016 in English and Marathi newspaper as required under Clause 41(MI)(a) of the Listing Agreement/Regulation 47 of the LODR. The Management had noted the Auditor's observations mentioned in previous Secretarial Audit Report and had started complying with the same from September 2015. However inadvertently the same was missed out for the Board Meeting held on 13th February 2016
6. The Company has not paid the listing fees to BSE Limited for the f.y. 2015-16 within time The Company had missed the same and thereafter paid the same on 28-09-2015

16. Secretarial Audit 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 Board of Directorshave appointed M/s Hemanshu Kapadia & Associates Company Secretaries in Practice tocarry out the Secretarial Audit of the Company. The Report of the Secretarial Auditor isannexed herewith as Annexure 4. The management's replies to the observations of theSecretarial Auditors are as under:

17. Number of meetings of the Board of Directors:

The Board of Directors met Six(6) times during the Financial Year. The intervening gapbetween any two meetings was not more than 120 days as prescribed by the Companies Act2013. Details of dates of Board meeting are as under:

Type of Meeting Date
Board Meeting May 30 2015
Board Meeting August 14 2015
Board Meeting September 02 2015
Board Meeting November 09 2015
Board Meeting February 13 2016
Board Meeting March 04 2016

18. Particulars of loans guarantees or investments under section 186:

During the year under review the Company has not provided any loans made investmentsgave guarantees or subscribed/purchased securities under Section 186 of the Companies Act2013.

19. Particulars of contracts or arrangements with related parties:

The Company during the year has not entered into any transaction as specified underSection 188(1) of the Companies Act 2014 with related parties which are not on arms'length basis or are on arms' length basis and material in nature. Accordingly thedisclosure of Related Party Transactions to be provided under section 134(3)(h) of theCompanies Act 2013 in Form AOC - 2 is not applicable.

20. Directors' Responsibility Statement:

As stipulated underclause (c) of sub-section (3) of Section 134 of the Companies Act2013 your Directors subscribe to the Directors Responsibility Statement and state that:

a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed and there are no material departures from them;

b) the Directors had 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 at the end of the financial year and ofthe profit and loss of the Company for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down internal financial controls to be followed by theCompany & that such internal financial controls are adequate and were operatingeffectively; and

f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

21. Managerial Remuneration:

A. Details of the remuneration of each director to the median remuneration of theemployees of the Company and other details as required pursuant to Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexedas Annexure 5.

B. Details of the top ten employees in terms of remuneration drawn falling withinthe preview of Section 197 of the Companies Act 2013 read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexedas Annexure 6. Further there were no employees falling under the category ofprescribed remuneration under the said rule and thus none of the disclosures under thesame are provided.

22. Report on Corporate Governance:

As per the provisions of Listing Agreement as well as Listing Regulations CorporateGovernance is not applicable to your Company. So the Company is not required to formulatea Report on Corporate Governance.

23. Corporate Social Responsibility (CSR):

In line with the provisions of the Companies Act 2013 and the rules framed there underwith respect to the Corporate Social Responsibility (CSR) your company is not governed bythe provisions of Section 135 of the Companies Act 2013 and Companies (Corporate SocialResponsibility Policy) Rules 2014. So the Company is not required to formulate a policyon CSR and also has not constituted a CSR Committee.

24. Risk Assessment and Management:

Your Company has a well-defined Risk Management System in place as a part of its goodCorporate Governance practices. Your Company has assigned the ownership of key risks tovarious Risk Owners and has made the concerned departments and officials responsible formitigation plans and review of these risks from time to time. All the risks are identifiedat various departmental levels and suitable mitigation measures are thereafter adopted.These are subjected to a quarterly review by the Board.

25. Internal Financial Control System and their Adequacy:

Adequate internal controls systems and checks are in place commensurate with thesize of the Company and the nature of its business. The management exercises financialcontrol on the operations through a well-defined budget monitoring process and otherstandard operating procedures. In addition to the above the Audit Committee and the Boardspecifically review the Internal Control and Financial Reporting process prevalent in theCompany. On a periodical basis the Board also engages the services of professionalexperts in the said field in order to ensure that the financial controls and systems arein place. At the end of the period the CFO gives a declaration in the appropriate formatto certify that the financial statements prepared are accurate and complete in all aspectsand that there are no significant issues that can impair the financial performance of theCompany.

26. Disclosure under the Sexual Harassment of Women at work place (PreventionProhibition and Redressal) Act 2013:

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. An Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this Policy. The Policy is gender neutral.

No complaints pertaining to sexual harassment were received during the F. Y. 2015-16.

27. Other Disclosures/Reporting:

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:

a) Details relating to deposits covered under Chapter V of the Act.

b) Issue of equity shares with differential rights as to dividend voting or otherwise.

c) Issue of shares (including sweat equity shares) to employees of the Company underany scheme.

d) The Company does not have any Subsidiaries and/or Joint Venture and/or AssociateCompany.

e) Details of payment of remuneration or commission to Managing Director or JointManaging Director of the Company from any of its subsidiaries as the Company does not haveany Subsidiaries/Joint Venture/Associate Company.

f) Voting rights which are not directly exercised by the employees in respect of sharesfor the subscription/purchase of which loan was given by the Company (as there is noscheme pursuant to which such persons can beneficially hold shares as envisaged undersection 67(3)(c) of the Companies Act 2013).

28. Acknowledgements:

The Board of Directors expresses their deep gratitude for the co-operation and supportextended to the Company by its customers suppliers Bankers and various Governmentagencies. Your Directors also place on record the commitment and involvements of theemployees at all levels and look forward to their continuous co-operation.

For and on behalf of the Board of Directors

Gaurav Doshi

Chairman & Managing Director

DIN-00166703

G-32 Gems & Jewellery Complex III

Seepz (SEZ) Andheri (E) Mumbai-400 096

Place: Mumbai

Date: 2nd September 2016

Registered Office:

G-32 Gems & Jewellery Complex III

Seepz (SEZ) Andheri (E) Mumbai-400 096

CIN: L36911MH1991PLC063357