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PC Jeweller Ltd.

BSE: 534809 Sector: Consumer
NSE: PCJEWELLER ISIN Code: INE785M01013
BSE LIVE 15:44 | 17 Nov 362.85 15.95
(4.60%)
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353.00

HIGH

367.00

LOW

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NSE 15:50 | 17 Nov 362.90 16.10
(4.64%)
OPEN

352.05

HIGH

366.95

LOW

351.45

OPEN 353.00
PREVIOUS CLOSE 346.90
VOLUME 178479
52-Week high 398.70
52-Week low 159.35
P/E 28.41
Mkt Cap.(Rs cr) 14,309
Buy Price 0.00
Buy Qty 0.00
Sell Price 362.85
Sell Qty 295.00
OPEN 353.00
CLOSE 346.90
VOLUME 178479
52-Week high 398.70
52-Week low 159.35
P/E 28.41
Mkt Cap.(Rs cr) 14,309
Buy Price 0.00
Buy Qty 0.00
Sell Price 362.85
Sell Qty 295.00

PC Jeweller Ltd. (PCJEWELLER) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting their 12th Annual Report togetherwith the audited financial statements of the Company for the financial year ended March31 2017.

FINANCIAL HIGHLIGHTS

The highlights of the standalone and consolidated financial statements of the Companyfor the financial year ended March 31 2017 are as under:

(Rs. in crores except earnings per share)

Particulars

Standalone

Consolidated

2016-17 2015-16 2016-17 2015-16
Revenue from operations 8104.58 7232.10 8479.55 7303.22
Other income 109.15 50.72 97.25 49.94
total revenue 8213.73 7282.82 8576.80 7353.16
Profit before finance costs depreciation and tax 863.12 803.70 855.19 802.03
Less: Finance cost 274.71 244.65 278.56 244.95
Less: Depreciation & amortisation expense 22.01 22.61 22.48 22.66
Profit before tax 566.40 536.44 554.15 534.42
Less: Tax Expense 135.87 137.13 133.14 136.23
Net profit after tax 430.53 399.31 421.01 398.19
Other comprehensive income for the year net of tax (0.08) 0.35 (4.42) 0.35
Total comprehensive income for the year 430.45 399.66 416.59 398.54
Earnings per share (in rs.):
Basic 24.05 22.32 23.27 22.25
Diluted 22.61 22.28 21.89 22.22

During the year under review revenue from operations on standalone basis grew by 12%to Rs.8104.58 crores. The net profit after tax also registered a growth of about 8% toRs.430.53 crores. The share of domestic and export sales in the revenue from operations onstandalone basis is Rs.5338 crores (66%) and Rs.2766 crores (34%) respectively.

BUSINESS OVERVIEW

Your Company is engaged in the business of manufacturing sale and trading of goldjewellery diamond studded jewellery and silver items and operates in differentgeographical areas i.e. domestic sales and export sales. Your Company continues to moveahead on its well defined growth path of (1) showroom expansion; (2) launching new designsand collections; and (3) strengthening in-house designing and manufacturing capabilities.

Your Company continues to focus on expanding its retail presence across more and morecities of the Country and has opened 15 new showrooms during the year. The Company hastotal 75 showrooms as on March 31 2017. After end of the year under review your Companyhas opened 4 more new showrooms and as on the date of this report the Company is havingtotal 79 showrooms located across 62 cities in India. Out of the 79 showrooms 6 arefranchisee and rest are the Company owned. In addition to the network of showrooms theCompany is also having 5 manufacturing facilities for meeting its in-house requirements.

During the year your Company launched many new jewellery designs and collections like‘Inayat' wedding jewellery Abhigyaan Shakuntalam Twirlyz etc. The Company alsolaunched additional ranges of Flexia its unique detachable jewellery collection.

SHARE CAPITAL

During the year under review the following changes have taken place in the authorisedand paid-up share capital of the Company:

(1) The authorised share capital of the Company was increased from Rs.225 crores toRs.500 crores comprising of 24 crores equity shares of Rs.10/- each and 26 crorespreference shares of Rs.10/- each.

(2) The Company has allotted total 257372912 compulsorily convertible preferenceshares by way of preferential allotment on private placement basis to six different fundsof Fidelity group belonging to Non-Promoters category. The Company has also allotted37600 equity shares upon exercise of stock options to the eligible employees of theCompany under PC Jeweller Limited Employee Stock Option Plan 2011. Consequently thepaid-up share capital of the Company has been increased from Rs.1791000000 toRs.4365105120 comprising of 179137600 equity shares of Rs.10/- each and 257372912preference shares of Rs.10/- each.

COMPULSORILY CONVERTIBLE DEBENTURES

During the year under review your Company has also issued and allotted 4269984compulsorily convertible debentures having face value of Rs.1000/- each by way ofpreferential allotment on private placement basis to DVI Fund (Mauritius) Ltd belonging toNon-Promoters category.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.1/- per equity share (i.e.@10% of face value of Rs.10/- each) for the financial year 2016-17 subject to theapproval of Members in the 12th Annual General Meeting.

Your Directors have also recommended a dividend of Rs.1.30 per compulsorily convertiblepreference share (i.e. @13% of face value of Rs.10/- each) for the period from September2 2016 (i.e. date of allotment) to March 31 2017 subject to the approval ofMembers in the 12th Annual General Meeting.

TRANSFER TO GENERAL RESERVE

Your Directors do not propose transfer of any amount to the General Reserves.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on March 31 2017 the Board of your Company comprises of 8 Directors including 4Independent Directors.

During the year under review Shri Muneesh Chawla was appointed as a Non-ExecutiveNominee Director w.e.f. July 4 2016 and Shri Ramesh Kumar Sharma was re-appointed as aWhole-time Director of the Company for a further term of 5 years w.e.f. February 7 2017to February 6 2022.

Mrs. Kusum Jain resigned from the Board of the Company w.e.f. December 30 2016. TheBoard places on record its appreciation for the guidance and contribution made by Mrs.Kusum Jain during her tenure on the Board.

Shri Ramesh Kumar Sharma Director of the Company retires by rotation and beingeligible offered himself for re-appointment at the 12th Annual GeneralMeeting. Brief resume of Shri Ramesh Kumar Sharma forms part of the Notice convening the12th Annual General Meeting.

No changes among Key Managerial Personnel took place during the year. Shri Balram GargManaging Director Shri Sanjeev Bhatia Chief Financial Officer and Shri Vijay PanwarCompany Secretary continues to be Key Managerial Personnel of the Company.

SUBSIDIARYASSOCIATES AND JOINT VENTURE COMPANIES

As on March 31 2017 your Company has following four wholly owned non-materialsubsidiary companies:

Pc universal Private Limited: It is engaged in the business of manufacturing andexport of gold jewellery and ornaments. It is having a manufacturing facility at NoidaSpecial Economic Zone Noida (U.P.).

Transforming retail Private Limited: It is engaged in the business of trading ofall kinds of gold and diamond jewellery through its online sale portalwww.wearyourshine.com.

Luxury Products trendsetter Private Limited: It is engaged in the business ofmanufacturing buying selling etc. of jewellery. It owns the premium gold jewellery brand‘AZVA'.

Pc Jeweller Global Dmcc: It was incorporated as a wholly owned subsidiary of theCompany during the year under review in Dubai (UAE). It is engaged in the business ofjewellery trading.

Pursuant to the provisions of Section 129(3) of The Companies Act 2013 (the “act”)a statement containing salient features of the financial statements of the Company'ssubsidiaries in Form AOC-1 forms part of the Annual Report. The statement also providesthe details of performance and financial position of each of the subsidiary.

Your Company does not have any associate or joint venture company.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company and its subsidiaries have beenprepared in accordance with Ind AS notified by the Companies (Indian Accounting Standards)Rules 2015 and Companies (Indian Accounting Standards) Amendment Rules 2016 and formpart of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS

As stipulated under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (“LoDr regulations”) the Management Discussion andAnalysis Report forms part of the Annual Report.

BUSINESS RESPONSIBILITY REPORT

As stipulated under LODR Regulations the Business Responsibility Report describing theinitiatives taken by the Company from environmental social and governance perspectiveforms part of the Annual Report.

STATEMENT ON DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS

Your Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the Act read withapplicable Schedules and Rules as well as LODR Regulations.

NUMBER OF BOARD MEETINGS

During the year ten Board meetings were held on April 6 2016; May 24 2016; May 302016; June 30 2016; July 27 2016;

August 3 2016; August 18 2016; September 2 2016; November 23 2016 and February 142017. The time gap between any two Board meetings does not exceed 120 days. For furtherdetails please refer to Report on Corporate Governance.

AUDIT COMMITTEE

Audit Committee of the Board comprises of four members namely Dr. Manohar Lal SinglaShri Krishan Kumar Khurana Shri Miyar Ramanath Nayak and Shri Balram Garg. Except ShriBalram Garg Managing Director all other members are Independent Directors. Dr. ManoharLal Singla Independent Director is the Chairperson of the Committee. For furtherdetails please refer to Report on Corporate Governance.

RISK MANAGEMENT

Your Company has put in place a Risk Management Policy to define a framework foridentification assessment and mitigation of risk. In the opinion of the Board there areno risks which may threaten the existence of the Company.

INTERNAL CONTROL SYSTEMS

Your Company has an effective internal control system which ensures that all theassets of the Company are safeguarded and protected against any loss from unauthorized useor disposition. The Internal Auditors of the Company regularly carry out review of theinternal control systems and procedures. The internal audit reports are periodicallyreviewed by Audit Committee.

Your Company has also put in place adequate internal financial controls with referenceto the financial statements commensurate with the size and nature of operations of theCompany. During the year such controls were tested and no material discrepancy orweakness in the Company's internal controls over financial reporting was observed.

PUBLIC DEPOSITS

Your Company has been accepting deposits from the public under its jewellery purchasescheme “Jewel for Less”. The scheme is to facilitate customers to purchasejewellery by making deposits through monthly installments and also get benefit in the formof discount at the time of purchase of jewellery based on the duration of the scheme. Therequisite details relating to deposits covered under Chapter V of the Act are as under:

(a) Amount of deposits as at April 1 2016 : Rs.30.71 crores
(b) Deposits accepted during the year : Rs.115.04 crores
(c) Deposits repaid during the year : Rs.35.34 crores
(d) Balance deposits outstanding as at March 31 2017 : Rs.110.41 crores
(e) Remained unpaid or unclaimed as at the end of the year:
(i) Deposits that have matured but not claimed : Rs.7 crores
(ii) Deposits that have matured and claimed but not paid : Nil

(f) Whether there has been any default in repayment of deposits or payment of interestthereon during the year and if so number of such cases and the total amount involved:

(i) at the beginning of the year : Nil
(ii) maximum during the year : Nil
(iii) at the end of the year : Nil

The Company has not accepted any deposits which are not in compliance with therequirements of Chapter V of the Act.

STATUS OF UNCLAIMED / UNPAID SHARE APPLICATION MONEY AND DIVIDEND AMOUNTS

The status of unclaimed / unpaid share application money and dividend amounts as onMarch 31 2017 is as under:

- Share application money due for refund in relation to the Initial Public Offer:Rs.2.16 lakh

- Unclaimed / unpaid dividend: Rs.5.16 lakh

PARTICULARS OFLOANS GUARANTEESANDINVESTEMENTS

The details of loans/guarantees given and investments made by the Company form part ofthe notes to the financial statements.

PARTICULARS OF CONTRACTS / ARRANGEMENTS / TRANSACTIONS WITH RELATED PARTIES

All the related party transactions that were entered during the year were on arm'slength basis and your Company had not entered into any contract / arrangement /transaction with related parties which could be considered as material in accordance withthe Company's Policy on Materiality of Related Party Transactions & Dealing withRelated Party. Hence disclosure in Form AOC-2 is not required. The details of relatedparties and transactions with them in accordance with the requirement of IndianAccounting Standard (Ind AS) 24 have been disclosed in the notes forming part of thefinancial statements.

BORROWINGS AND DEBT SERVICING

During the year under review your Company has met all its obligations towardsrepayment of principal and interest on loans availed.

CREDIT RATING

Credit Analysis & Research Limited vide its letter dated August 17 2016 hasreaffirmed CARE A+ (FD) to the Company's Fixed Deposit Programme of Rs.500 crores.

CRISIL Limited vide its letter dated August 22 2016 has reaffirmed CRISIL A/Stable(Long-Term Rating) and CRISIL A1 (Short-Term Rating) to the total bank facilities ofRs.3937 crores.

India Ratings & Research Private Limited a Fitch Group Company vide its letterdated February 22 2017 has assigned ‘IND A1+' rating to the Company's additionalRs.300 crores Commercial Paper Programme and has also affirmed ‘IND A1+' rating tothe Company's existing Rs.200 crores Commercial Paper Programme.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN END OF THEFINANCIAL YEAR AND DATE OF REPORT

There have been no material changes and commitments affecting financial position of theCompany between end of the financial year and the date of the report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

( a ) CONSERVATION OF ENERGY

In its endeavour towards conservation of energy your Company ensure optimal use ofenergy avoid wastages and conserve energy as far as possible.

(B) TECHNOLOGY ABSORPTION

The Company has not carried out any research and development activities.

( c ) FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange Earnings & Outgo during the year are as under:

Earnings : Rs.2767.12 crores
Outgo : Rs.1.88 crores

DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013

Your Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy against Sexual Harassment in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder. During the year the Company had not received any complaint on sexualharassment and no complaint was pending as on March 31 2017.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

Your Company has formulated a Whistle Blower Policy / Vigil Mechanism which provides aformal mechanism for all employees and the Directors of the Company to report aboutunethical behavior actual or suspected fraud or violation of the Company's code ofconduct or an event he becomes aware of that could have a detrimental effect on thebusiness or reputation of the Company and provides reassurance that they will be protectedfrom reprisals or victimization for whistle blowing. The Policy has been posted on theCompany's website. No person was denied access to the Chairperson of the Audit Committeeto report any concern.

BOARD EVALUATION

The Board of your Company on the recommendation of Nomination and RemunerationCommittee laid down the criteria for evaluation of the Board its Committees andindividual Directors and accordingly the evaluation process was carried out. The processwas based on evaluation forms which include a rating mechanism. Independent Directorsalso at their separate meeting reviewed the performance of the Board as a wholeNon-Independent Directors and the Chairman.

The criteria for performance evaluation of the Board and its Committees amongst othersincludes their structure and composition processes information and functioning terms ofreference of the Committees suggestions / recommendations by the Committees to the Boardetc.

The criteria for performance evaluation of Directors including Executive andIndependent Directors amongst others includes their attendance and contribution at themeetings devotion of time and efforts to understand the Company its business theirduties and responsibilities leadership qualities and effectiveness of communication withall stakeholders impact and influence on the Board / Committees and adherence to the Codeof Conduct etc.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS

There were no significant/material orders passed by the Regulators or Courts orTribunals impacting the going concern status of your Company and its operations in future.

CHANGE IN THE NATURE OF BUSINESS IF ANY

There was no change in the nature of business of the Company during the year underreview.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Act your Directors confirm that:

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

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 this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

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 and 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.

EMPLOYEES STOCK OPTION PLAN

Your Company with the objective of introducing a long term incentive tool to attractmotivate retain talent and reward loyalty formulated PC Jeweller Limited Employee StockOption Plan 2011 (“EsoP 2011”) for grant of a maximum of 2679330 stockoptions to the eligible employees of the Company. During the year the Company hasallotted 37600 equity shares upon exercise of stock options to the eligible employees ofthe Company under ESOP 2011. The Company has received a certificate from the Auditors ofthe Company that the Scheme has been implemented in accordance with the SEBI Guidelinesand the resolution passed by Members. The certificate would be placed at the AnnualGeneral Meeting for inspection by Members. The necessary disclosure pursuant to Regulation14 of the SEBI (Share Based Employee Benefits) Regulations 2014 is annexed as “annexure– 1.

AUDITORS AND THEIR REPORT

STATUTORY AUDITORS

Walker Chandiok & Co LLP Chartered Accountants (Firm Registration No.001076N/N500013) and Sharad Jain Associates Chartered Accountants (Firm Registration No.015201N) were appointed as Statutory Auditors of the Company for 5 years and 2 yearsrespectively in the 10th Annual General Meeting of the Company held onSeptember 19 2015 subject to ratification by the Members at every Annual GeneralMeeting. Accordingly the current term of appointment of Sharad Jain Associates willexpire on conclusion of 12th Annual General Meeting of the Company.

The Company has received consent letter and eligibility certificate under Sections 139and 141 of the Act from Walker Chandiok & Co LLP. As required under Regulation 33 ofLODR Regulations they have also confirmed that they hold a valid certificate issued by thePeer Review Board of the Institute of Chartered Accountants of India. The Board recommendsthe appointment of Walker Chandiok & Co LLP for ratification in the 12thAnnual General Meeting.

The notes to the financial statements referred to in the Auditors' Report areself-explanatory and do not call for any further explanations or comments. The Auditors'Report does not contain any qualification reservation or adverse remark.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Act read with The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company hasappointed Shri Randhir Singh Sharma Practicing Company Secretary New Delhi to conductthe Secretarial Audit of the Company for the financial year 2016-17. The Secretarial AuditReport is annexed herewith as “annexure - 2” to this Report. TheSecretarial Audit Report does not contain any qualification reservation or adverseremarks except that as on March 31 2017 the Company is under obligation to appoint awoman director on its Board. The Company has initiated the process for identification /induction of new woman director on its Board for filling the vacancy caused by theresignation of earlier woman director in due course.

CORPORATE GOVERNANCE REPORT

Your Company believes in the principle of corporate governance and is committed tomaintain the highest standards of Corporate Governance. The Report on Corporate Governanceas stipulated under LODR Regulations forms part of the Annual Report. The

Certificate from the Practicing Company Secretary confirming compliance with theconditions of Corporate Governance is annexed as “annexure – 3” tothis report.

PARTICULARS OF EMPLOYEES

The information required under Section 197(12) of the Act read with The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company is annexed as “annexure – 4” to thisReport.

CORPORATE SOCIAL RESPONSIBILITY

Social responsibility has always been at the forefront of your Company's operatingphilosophy. As a responsible corporate citizen the Company tries to contribute towardssocial causes on a regular basis. The Corporate Social Responsibility Policy of theCompany is placed on its website www.pcjeweller.com. In terms of the Policy CSR programsor projects to be undertaken by the Company shall relate to one or more activities listedin Schedule VII of the Act at present or as may be amended from time to time. The AnnualReport on CSR activities as per The Companies (Corporate Social Responsibility Policy)Rules 2014 in the prescribed format is annexed as “annexure – 5”to this Report.

POLICY ON DIRECTORS' APPOINTMENT & REMUNERATION AND CRITERIA FOR DETERMININGQUALIFICATIONS POSITIVE ATTRIBUTES & INDEPENDENCE OF A DIRECTOR

The Company's Policy on Directors' appointment remuneration and Criteria fordetermining qualifications positive attributes & independence of a Director areannexed as “annexure – 6” and “annexure – 7”to this Report.

DIVIDEND DISTRIBUTION POLICY

In terms of Regulation 43A of LODR Regulations your Company has formulated a DividendDistribution Policy. The same is annexed as “annexure – 8” to thisreport.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return in Form No. MGT-9 is annexed as “annexure – 9”to this report.

ACKNOWLEDGEMENT

Your Directors wish to convey their gratitude and place on record their appreciationfor all the employees at all levels for their hard work cooperation and dedication duringthe year. Your Directors also sincerely convey their appreciation to customersshareholders vendors bankers regulatory and government authorities for their continuedsupport.

For and on behalf of the Board
Sd/-
Date: August 1 2017 (PaDam cHanD GuPta)
Place: New Delhi Chairman
DIN: 00032794