The Directors hereby present the 34th Annual Report of your Company and theAudited Statement of Accounts for the year ended 31st March 2016.
The performance of the Company for the financial year ended 31st March 2016is summarized below:
| || ||(Rs.in Millions) |
|Particulars ||Standalone || |
| ||2015-16 ||2014-15 |
|Net Sales/Income from Operations ||17892.10 ||27118.83 |
|Other income ||7.55 ||3.00 |
|Total Revenue ||17899.65 ||27121.83 |
|Profit before Finance cost ||722.59 ||1348.14 |
|Less: Finance cost ||1112.84 ||1033.63 |
|Profit/ (Loss) before tax ||(390.25) ||314.51 |
|Less: Tax / deferred tax liability ||11.00 ||109.05 |
|Net Profit / (Loss) before minority interest ||(401.25) ||205.46 |
|Add/(Less): Share of Minority/Associates ||- ||- |
|Net Profit/ (Loss) after tax ||(401.25) ||205.46 |
|Add: Balance b/f from previous year ||1635.27 ||1538.73 |
|Profit available for appropriation ||1234.02 ||1744.19 |
|APPROPRIATIONS || |
|General Reserve ||- ||20.00 |
|Amount debited for change in Depreciation Method ||- ||42.52 |
|Proposed Dividend ||- ||38.58 |
|Tax on Proposed Dividend ||- ||7.85 |
|Surplus in Profit & Loss Account ||1234.02 ||1635.24 |
|Total: ||1234.02 ||1744.19 |
The revenue and margins of the Company have faced tremendous pressure from stagnantglobal markets rising costs and declining margins. The tightening of banking norms hasled to a reduced availability of working capital against a backdrop of rising competitionfrom Chinese and South East Asian companies.
The income of the company reduced to ' 1789.96 crores from ' 2712.18 crores in thecorresponding period last year. The finance costs during the period increased from ' 103crores to ' 111 crores with a reduced availability of finance from the banks. This was onaccount of finance limits being constrained due to late receipt of payments from clientsresulting in a few accounts being classified as NPA. The year ended with a net loss of '40.12 crores as against a profit of ' 20.5 crores last year.
The jewellery operations of the company have come to a standstill towards the end ofthe year while the diamond manufacturing operations were operational on a minimal scale.The company had focused on trading of cut and polished diamonds during the second half ofthe year.
The company has been served with notices of recall of working capital facilities atmany of the locations. In some of these locations legal process of recovery has beeninitiated by the financing banks. The company is taking all possible measures to respondto these legal notices and resume operations normally.
DIVIDEND AND AMOUNTS TRANSFERED TO ANY RESERVES:
In order to strengthen the financial viability and to overcome the liquidity crunchyour Directors have expressed their inability to recommend any dividend for the financialyear 2015-16.
ECONOMIC SCENARIO & OUTLOOK:
The year 2015-16 was quite challenging for the diamond industry. Consumer demandcontinued to fall in 2015 after it started in China in 2014 followed by the rest of theworld in 2015 and beyond. Weaker-than-expected consumer demand affected polished- diamondsales as retailers reduced purchases of polished diamonds. The slowdown extended tomidstream companies as they built up inventories and reduced purchases of rough diamonds.
The Bain and Co. data suggests that rough-diamond revenues declined by 24% in 2015 asthe midstream segment sold down accumulated inventories. Manufacturers reacted tosoftening demand by reducing production increasing inventories and cutting rough-diamondprices. ALROSA which increased production in 2015 by 6% saw its inventory levels risewhen rough-diamond sales fell in the second half of 2015. De Beers curtailed production by12% throughout 2015. Rough-diamond prices fell by 15% in late 2015 and remained largelystatic in 2016's first half.
It is estimated that the cutting and polishing revenues declined by about 2% in 2015.Slowing demand forced midstream players to reduce rough-diamond purchases and unloadinventory accumulated in 2013 and 2014. Polished-diamond prices declined by 10% in 2015and the operating margins of many cutting and polishing manufacturers were at or belowbreakeven.
Global diamond jewellery demand grew 3% in local currencies in 2015 but declined 2% inUS dollar terms. Currency depreciation drove revenue declines in Europe India and Japandespite sales growth in local currency terms. The industry is stepping up its marketingefforts in generic and targeted programs to boost consumer demand for diamond jewellery.
Despite the positive indicators the 2016 outlook for global diamond jewellery demandremains uncertain with retailers reporting minimal sales growth in key markets.
The market experts expect that the medium-term outlook remains challenging as newsupply is expected to come online and uncertainties cloud the social political andeconomic environments in key markets. In the long run the positive macroeconomic outlookis expected to work in the industry's favoras long as diamond producers behaveresponsibly and industry players sustain marketing efforts to support diamond jewellerydemand especially among millennials.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS:
The Company has 8 subsidiary companies 2 located in India and 6 outside India. It has15 step-down overseas subsidiaries across the globe. There are 10 associate companieswithin the meaning of Section 2(6) of the Companies Act 2013. There has been no materialchange in the nature of the business of subsidiaries till March 31 2016.
The provisions of Section 129(3) of the Act could not be complied with due to nonavailability of all accounts from the subsidiaries. This was on account of the disruptionscreated at the US and Hong Kong subsidiaries of the company by court appointed receiverswhile the finalization of the accounts was underway. The management is striving tocomplete the accounts and present it to all stakeholders at the earliest. These accountsshall be placed on the company's website pursuant to the provisions of Section 136 of theAct.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Pursuant to the provisions of sub-sections (6) and (7) of Section 152 of the CompaniesAct 2013 Mr. Vishal S. Doshi Group Executive Director of the Company (holdingDIN:00001474) retires by rotation at the ensuing Annual General Meeting and beingeligible have offered himself for reappointment.
Mr. Nihar N. Parikh Executive Director Mr. Badrinarayan R. Barwale Dr. Surendra A.Dave H.E. Festus G. Mogae Mr. Minoo R. Shroff Dr. M. Y. Khan Independent Directors andMrs. Geeta Shreyas Doshi Non Executive Director of the Company have resigned from theBoard of the Company since the last Annual General Meeting. Mr. Mayank R. Jain resignedfrom the post of Group Chief Financial Officer w.e.f. 1st October 2016.
Mr. Sanjay M. Abhyankar Chief Compliance Officer & Company Secretary of theCompany resigned from the services w.e.f. 12th May 2016 and Mrs. Sujata G.Parab was appointed as Company Secretary & Chief Compliance Officer w.e.f. 10thNovember 2016.
Mr. R. L. Shenoy and Mrs. Aruna Soman were appointed as Independent Directors w.e.f. 21stMarch 2017.
Brief profiles of the Directors proposed to be appointed/re-appointed as required underSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 are annexed tothe Notice convening the Annual General Meeting.
The Company has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of Independence as prescribed under the CompaniesAct 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015.
The Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which includes criteria for performanceevaluation of the Non-Executive and Executive Directors.
The details of programmes for familiarisation of Independent Directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company and related matters are put onthe website of the Company at www.shrenuj.com
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and Individual Directors pursuant to the provisions of the Act and thecorporate governance requirement as prescribed under SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015.
The performance of the Board and Committees was evaluated by the Board after seekinginputs from all the Directors/Committee members on the basis of the criteria such as theBoard/Committee composition and structure effectiveness of Board processes/ Committeemeetings attendance information and functioning.
The Board reviewed the performance of the individual Directors on the basis of thecriteria such as the contribution of the individual Director to the Board and CommitteeMeetings like preparedness on the issues to be discussed meaningful and constructivecontribution and inputs in meetings and attendance. The Chairman & Managing Directorwas also evaluated on the key aspects of his role.
In a separate meeting of Independent Directors performance of non-independentDirectors performance of the Board as a whole and performance of the Chairman wereevaluated taking into account the views of the Executive Directors and Non-ExecutiveDirectors.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS:
The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which forms part of the Directors' report.
HUMAN RESOURCE MANAGEMENT:
The impact of slowdown in the manufacturing activities has led to a higher rate ofattrition amongst employees. The challenge is to control costs while retaining keypersonnel to be able to revive the business as and when the opportunities presentthemselves.
Human Resource department has been coping with an immense challenge of sustaining themorale of the employees despite severe headwinds in the business. It is equallychallenging to keep them involved during the periods of low work load and decliningrevenue and profitability. HR department has been constantly engaged during the year torationalize manpower and manage cost efficiencies in the manpower costs.
The Board has adouj.com.The/">pted Whistle Blower Policy w.e.f. 1stJanuary 2014 and the same is effective. Copy of the said policy is available on theCompany's Website The Audit Committee of the Company reviews the functioning of theWhistle Blower Mechanism on regular basis.
POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE FOR WOMEN:
The Company has in place a policy on Prevention of Sexual Harassment of Women atWorkplace in line with the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.
During the year under review no complaints have been received from any of the womenemployees from any location or unit of the Company under Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.
CORPORATE SOCIAL RESPONSIBILITY:
As required under Section 135 of the Companies Act 2013 a Corporate SocialResponsibility Committee was formed to formulate and recommend to the Board a CorporateSocial Responsibility Policy to formulate activities to be undertaken by the Companyrecommend the amount of expenditure to be incurred on these activities and to monitor theCorporate Social Responsibility Policy of the Company from time to time.
The Corporate Social Responsibility Policy has been placed on the Company's websitewww.shrenuj.com for shareholders' information.
Properties and assets of the Company are adequately insured. Business risk credit andother potential risks have also been adequately insured.
DIRECTOR'S RESPONSIBILITY STATEMENT:
As required under Section 134(5) of the Companies Act 2013 your Directors state that;
(a) in the preparation of Annual Accounts for the year ended 31st March2016 the applicable Accounting Standards read with the requirements set out underSchedule III to the Act have been followed and there are no material departures from thesame;
(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 year ended on that date;
(c) the Directors have 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 have prepared annual accounts on a going concern basis;
(e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
(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.
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the requirements set out by the Securities and Exchange Board of India. Asrequired under Regulation 27(2) of SEBI (Listing Obligations and Disclosure Requirements)Regulation 2015 a detailed report on Corporate Governance forms part of the Directors'Report as Annexure IX. The Auditors' certificate on compliance with Corporate Governancerequirements is attached to the Corporate Governance Report.
The Chairman & Managing Director's declaration regarding compliance with theBusiness Conduct Guidelines (Code of Conduct) is also attached to the Corporate GovernanceReport.
GENERAL SHAREHOLDER INFORMATION:
General Shareholder Information is given in Annexure X to this report.
EXTRACT OF ANNUAL RETURN:
As provided under Section 92(3) and 134(3)(a) of the Companies Act 2013 an Extract ofAnnual Return of the Company is given in Annexure- VII to this Report in prescribed formMGT-9.
MANAGEMENT DISCUSSION AND ANALYSIS:
Management Discussion and Analysis Report for the year under review as stipulated underRegulation 34 of SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 is presented in a separate section forming part of the Annual Report as Annexure -VIII.
INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT PLAN:
Section 177(4) of the Companies Act 2013 mandates Audit Committee to evaluate InternalFinancial Controls and Risk Management Systems of the Company. The Board has laid down theprocedure to inform the Board Members about the Risk Assessment and minimization onperiodical basis since the year 2005. The revised Risk Management policy was adopted andapproved on 20th March 2015.
The Internal Control Systems of the Company are commensurate with the size scale andcomplexity of its operations. These are constantly revised and strengthened. InternalAuditors carry out audit at regular intervals and submit their report to the AuditCommittee. Internal Audit plays a key role in providing an assurance to the Board andvalue adding advisory services to business operations.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:
All contracts/ arrangements/ transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company had entered into contract/arrangement/transactionswith its few of the subsidiaries which were considered material in accordance withRegulation 27(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulation2015 and under provisions of Section 188 of the Companies Act 2013 and for which theCompany has obtained prior approval of the Audit Committee Board and Shareholders asrequired under the Act and rules made thereunder. Justification for entering into suchcontracts or arrangements is provided in the Corporate Governance Report. Information ontransactions with related parties pursuant to Section 134(3)(h) of the Act read with rule8(2) of the Companies Accounts Rules 2014 are given in Annexure IV in Form AOC-2 and thesame forms part of this report.
AUDITORS AND AUDITORS' REPORT:
The Statutory Auditors of the Company M/s. Rajendra & Co. Chartered AccountantsMumbai (Firm Registration No.108355W) hold office as such till the conclusion of theensuing annual general meeting of the Company and have confirmed their willingness andeligibility for re-appointment. They have also confirmed that their re-appointment ifmade will be within the limits prescribed under Section 141 of the Companies Act 2013.
The Board has duly reviewed the Statutory Auditors' Report on the Accounts.
QUALIFICATIONS IN AUDITOR'S REPORT AND MANAGEMENT RESPONSE TO THE SAME:
The Statutory Auditors have made certain qualifications in their Report dated 28th May2016 for the financial year ended on 31 March 2016. Most of the observations and commentsappearing in the Auditors' Report are self-explanatory and do not call for any furtherexplanation/ comments/ clarification by the Board.
Further during the financial year the Company was under immense financial pressure andhence could not pay certain statutory dues in time and also defaulted in the repayment ofloans or borrowings from banks and financial institutions. Management is hopeful forbringing Company's operations/business on normal level very soon.
Regarding auditor's comment on non payment of declared dividend out of 10071shareholders as on the date of last Annual General Meeting dividend was paid to 10031shareholders. Due to financial constraints dividend could not be paid to promoters andfew top shareholders.
The Auditors have also pointed out about the provisions of Section 186 of the CompaniesAct 2013. Accordingly Members approval is sought for increasing the limit for makinginvestment or granting loan or providing security or providing guarantee not exceeding '2000 crores (Rupees Two Thousand Crores) to the wholly owned subsidiaries or groupcompanies through Postal Ballot separately.
Ministry of Corporate Affairs Government of India vide Notification dated 31stDecember 2014 amended the Companies (Cost Records and Audit) Rules 2014. Under theamended rules cost audit is not applicable to the Company.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF):
The Company sends reminder letters to all shareholders whose dividends are unclaimed soas to ensure that they receive their rightful dues. During the year the Company hastransferred a sum of ' 209021/- to Investor Education & Protection Fund the amountwhich was due and payable and remained unclaimed and unpaid for a period of seven yearsfor the FY 2008-09 as provided under the Companies Act 2013. So far a total sum of '4107616/- has been transferred to the Fund.
SECRETARIAL AUDIT REPORT:
As required under Section 204(1) of the Companies Act 2013 and Rule No. 9 of theCompanies (Appointment and Remuneration Personnel) Rules 2014 M/s. Hemanshu Kapadia &Associates had submitted its Secretarial Audit Report in Form MR-3 for the financial yearended 31st March 2016 to the Board and copy of the same is attached asAnnexure - V to the Directors' Report.
The Board has duly reviewed the Secretarial Audit Report. Most of thequeries/observations raised by the Secretarial Auditor were also raised by the StatutoryAuditors and have been explained by the Management in the response to theirqualifications. Higher rate of attrition of employees have resulted into fewlapses/delays. However the Management assures that it would strive to comply to all theapplicable laws.
The Board has appointed M/s. Hemanshu Kapadia & Associates Company Secretary inPractice to submit a secretarial audit report for the FY 2016-17. The said report will beplaced in next Financial Year.
Number of meetings of the Board:
Five Board Meetings were held during the year 2015-16. Details of which are provided inthe Corporate Governance Report which forms part of this Annual Report.
The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this report.
Particulars of Loans given investments made Guarantees given and Securities Provided:
Particulars of loans given investments made guarantees given and securities providedhave been disclosed in the standalone financial statements.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided inAnnexure - I to this report.
Particulars of Employees and related disclosures:
Disclosure pertaining to remuneration and other details as required under Section197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annual Report as Annexure II.
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules are provided in this Annual Report asAnnexure-III.
Having regard to the provisions of the first proviso to Section 136(1) of the Act andas advised the Annual Report excluding the aforesaid information is being sent to theMembers of the Company. The said information is available for inspection at the RegisteredOffice of the Company during the working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.The full Annual Report including aforesaid information is being sent electronically to allthose members who have registered their email addresses and is available on the Company'swebsite.
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:
Details relating to deposits covered under Chapter V of the Act: The Company hasnot accepted any fixed deposits.
Issue of equity shares with differential rights as to dividend voting orotherwise.
Issue of Shares (Including Sweat Equity Shares) to employees of the Companyunder any Scheme save and except ESOS referred to in this report.
Neither the Managing Director nor the Whole-time Directors of the Companyreceive any remuneration or commission from any of its subsidiaries.
No significant or material orders were passed by the Regulators or Courts orTribunals which would impact the going concern status and Company's operations in future.Hence disclosure pursuant to Rule 8 (5) (vii) of the Companies (Accounts) Rules 2014 isnot required.
The Debt Recovery Tribunal has passed an order for seizure of the movable stockof the company.
There is no change in the nature of business.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATEAND THE DATE OF THE REPORT:
The stock in trade has been seized by the Receivers appointed by the Debt RecoveryTribunal in India. Company's subsidiary Shrenuj Far East Limited in Hong Kong ShrenujSouth Africa PTY Ltd in South Africa and Simon Golub and Sons in USA are under thereceivership of the local courts. These actions have constrained the main revenue streamsof the company.
Your Directors thank the members financial institutions banks foreign patrons DeBeers regulatory authorities Stock Exchanges and all stakeholders for their continuedco-operation and support. The Directors also record their sincere appreciation to allexecutives officers and employees at all levels and locations of the Company for theircommitment and continued contribution to the growth of the Company's business.
| ||For and on behalf of the Board |
|Place: Mumbai ||SHREYAS K. DOSHI |
|Date: 21st March 2017. ||CHAIRMAN & MANAGING DIRECTOR |
Particulars as prescribed under Rule 8(3) of Companies (Accounts) Rule 2014.
A. Conservation of energy
As the Company is not covered in the list of industries required to furnish informationin form A' relating to Conservation of Energy the same is not given. Even thoughits operations are not energy-intensive significant measures are taken to reduce energyconsumption by using energy-efficient equipment. The Company regularly reviews powerconsumption patterns across all locations and implement requisite improvements/changes inthe process in order to optimize energy/power consumption and thereby achieve costsavings.
Energy costs comprise a very small part of the Company's total cost of operations.However as a part of the Company's conservation of energy programme the management hasappealed to all the employees / workers to conserve energy. The management has set up anon-going process for optimum utilization of machines. The measures taken have resulted insavings in cost of production power consumption and processing time.
B Research and Development (R & D)
R & D is focused on the development of new products both for export and domesticmarkets. Due emphasis is placed on improving quality standards with enhanced customersatisfaction. This was primarily achieved through process improvements control onsystems reduction of waste and energy conservation. Effective use of tools and smallgroup activities with the technological support resulted in controlling the variations inprocesses maximizing the productivity and minimizing the cost of production.
1. Specific areas in which R & D carried out by the Company:
i) Material evaluation/Characterization of raw materials and rough diamonds.
ii) Planning cutting and polishing of diamonds and manufacturing of jewellery.
iii) In house development of advance software for preventing human errors.
iv) Cleaving kerfing and sawing techniques for diamonds.
v) Designing of jewellery and development of new cuts in diamonds.
vi) Waxing wax setting casting sprue grinding filling and polishing of jewellery.
vii) Capability development for in- house processes designs and strategic applicationsof material for product improvement.
Efforts continued in the direction of fine tuning of the jewellery manufacturing andthe changes in designs. These resulted in improvements in product performance.
2. Benefits derived as a result of R & D activity:
The R & D activities helped to add new quality products to the range viz. DitiJoliesse Celebration Fire etc. and to achieve greater customer acceptance in the retailmarket. These activities also enabled the Company to reduce waste increase productivityachieve higher "customer satisfaction" and derive following benefits:
a. Increase product range coupled with technology upgradations and cost reduction;
b. Introduction of new products with a focus on achieving global acceptance and inconformity to Indian and International standards;
c. Improved quality in diamond and jewellery manufacturing;
d. Increased customer base and additional business volumes;
e. Reduction in reworks and elimination of manufacturing rejections in jewellery;
f. Improved finish and lustre of diamonds;
g. Ability to calculate precisely the yield on each lot of diamonds and offer promiseddelivery dates leading to improvements in buying decisions for rough diamonds and processcycle;
h. Boosting the capabilities to offer custom-made jewellery and fetching orders instiff international competition.
3. Future plan of action:
a. Plans to develop new quality products and upgrade existing range of jewellery inorder to meet new market trends.
b. The Company will explore various options to adopt latest technology and use ofequipment for its operations.
c. Investment in expanding distribution footprint.
Benefits listed below are expected to flow in from initiatives undertaken by theCompany:
0 High growth in retail segment 0 Enhancement of goodwill in B2B segment
0 Direct impact on margins by giving access to retailers in target market.
4. Expenditure on R & D for the year ended March 31 2016.
|a. Capital Expenditure ||Nil |
|b. Recurring Expenditure ||Nil |
|c. Total ||Nil |
|d. Total R & D expenditure as a percentage of total turnover ||Nil |
Expenses incurred on R & D were not material enough to be stated in this report andbeing an ongoing process it is difficult to allocate under the above referred heads.
C. Technology absorption adoption and innovation
1. Efforts in brief made towards technology absorption adoption and innovation :
The Company values innovation and applies it to every facet of its business. Thisdrives development of distinctive new products ever-improving quality standards and moreefficient processes.
Innovation is embedded in Shrenuj's DNA. Shrenuj was the first diamond company tointroduce laser processing technology in India back in 1987. It continues to strive forimprovement and has currently adopted technology that helps automate the polishingprocess.
Product development receives primacy in Shrenuj. The Company has created a number ofnew and unconventional polished diamond cuts several of which are patented. It hasreceived numerous industry design awards over the years and introduced exciting newconcepts to consumers such as multi-functional and interchangeable designs.
The Company has augmented its revenues and per unit price realization by deployinginnovative marketing strategies and offering exciting new products. The depth of designingcapabilities was the core to our success over the years.
The Company uses the service of in-house designers as well as those of free-lancers indeveloping product designs as per the emerging market trends. The Company uses innovationin design as well as in technology to develop new products.
2. Benefits derived as a result of the above efforts :
As a result of the above the following benefits have been achieved:
a. Better efficiency in operations
b. Reduced dependence on external sources for technology for developing new productsand upgrading existing products
c. Expansion of product range and cost reduction
d. Meeting Global Standards of quality and increased export potential
e. Greater precision
f. Retention of existing customers and expansion of customer base
g. Lower inventory stocks resulting in low carrying costs
h. Substantial reduction in returns on account of production defects resulting inlesser rework and reduction in overtime.
3. In case of imported technology (imported during last 5 years reckoned from thebeginning of the financial year) following information is furnished:
|a. Technology imported ||NONE |
|b. Year of import ||N.A |
|c. Has Technology been fully absorbed? ||N A |
|i. If not fully absorbed areas where this |
has not taken place reasons therefore and future plans of action
|Not applicable |
D. Foreign Exchange earnings and outgo
1. Activities relating to exports; initiatives taken to increase exports; developmentof new export markets for products and services; export plans:
During the year under review the Company's exports were ' 10504.33 millions 58.70% oftotal sales.
2. Total Foreign Exchange used and earned:
| || ||(Rs.in Millions) |
| ||Current Year ||Previous Year |
|Total Foreign Exchange earned on F.O.B. basis ||10504.33 ||15659.47 |
|Other Foreign Exchange Earned ||18.61 ||34.35 |
|Total Foreign Exchange used ||6029.47 ||12520.76 |
The ratio of remuneration of each director to the median employee's remuneration andother details in terms of Sub-section 12 of Section 197 of the Companies Act 2013 readwith Rule 5(1) of the Companies (Appointment and Remuneration of Managerial personnel)Rules 2014:
|Sr. No. ||Requirements ||Disclosure ||Ratio |
|I ||The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year ||Shreyas K. Doshi ||16.61 X |
|Chairman & Managing Director || |
|Nihar N. Parikh ||18.37 X |
|Executive Director || |
|Vishal S. Doshi ||9.90 X |
|Group Executive Director || |
|Dr. Badrinarayan R. Barwale ||1.54X |
|Dr. Surendra A. Dave ||2.10 X |
|Keki M. Mistry ||1.18 X |
|H. E. Festus G. Mogae ||1.35 X |
|Minoo R. Shroff ||2.05 X |
|Suresh N. Talwar ||1.66 X |
|S. S. Thakur ||2.25 X |
|Geeta S. Doshi ||0.68 X |
|II ||The percentage increase/ (decrease) in remuneration of each Directors CFO CEO CS if any in the financial year ||Chairman & Managing Director ||( 67%) |
|Executive Director ||( 68%) |
|Group Executive Director ||( 63%) |
|Dr. Badrinarayan R. Barwale ||( 26%) |
|Dr. Surendra A. Dave ||( 15%) |
|Keki M. Mistry ||( 8%) |
|H. E. Festus G. Mogae ||( 22%) |
|Minoo R. Shroff ||( 15%) |
|Suresh N. Talwar ||( 12%) |
|S. S. Thakur ||(17%) |
|Group CFO ||8.59% |
|Chief Compliance Officer & Company Secretary ||7.27% |
| ||In case of Smt. Geeta Shreyas Doshi increase/ decrease in remuneration cannot be calculated/ compared as she was a Director for a part of the previous financial year. || |
|III ||The percentage increase in median remuneration of employees in the financial year ||The median remuneration of the employees in financial year was increased by 3.59%. |
|IV ||The number of permanent employees on the rolls of the Company ||There were 424 employees as on March 31 2016. |
|V ||The explanation on the relationship between average increase in remuneration and company performance ||Due to financial constraints remuneration of the employees was not increased barring few cases. Instead remuneration of Whole Time Directors was decreased. |
|VI ||Comparison of the remuneration of Key Managerial Personnel against the performance of the Company. ||For the FY 2015-16 KMP's were paid 0.11% of total revenue and % of the net profit could not be calculated as there was a net loss during the year. |
|VII ||Variation in the market capitalization of the Company price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer. ||The Market Capitalization of the Company has drastically declined from ' 8246.79 millions as on March 31 2015 to ' 1282.83 millions as of March 31 2016. Over the same period the price to earnings ratio moved down from 40x to -3.2x. The Company's stock price as at March 31 2016 has decreased by 84.44% to ' 6.65 from ' 42.75 as at March 31 2015. |
|VIII ||Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration ||Remuneration of employees was not increased during FY 2015-16. Remuneration of key managerial persons was increased by 7.93%. There is no exceptional rise in salary of any of the managerial personnel. |
|IX ||Comparison of remuneration of each Key Managerial Personnel against the performance of the Company ||The comparison of remuneration of each of the key managerial personnel against the performance of the Company could not be calculated as there was a net loss during the FY 2015-16. |
|X ||The key parameters for any variable component of remuneration availed by the Directors ||Decided as per Regulatory guidelines as applicable. |
|XI ||The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year ||There are no employees receiving remuneration in excess of the highest paid Director during the year. |
|XII ||Affirmation that the remuneration is as per the remuneration policy of the Company. ||The remuneration paid to the Employees of the Company is as per Remuneration Policy of the Company. |
ANNEXURE - III
Information in terms of provisions of Section 197(12) of the Companies Act 2013 readwith rule 5(2) and (3) of Chapter XIII of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 and forming part of the Directors' Report for the yearended 31st March 2016.
|Name ||Designation / Nature of Duties ||Gross Remuneration (Rupees) ||Date of Joining ||Age/ Experience (years) ||Qualification ||Last Employment held ||% of equity shares held ||Relationship with Director |
|Mr. Shreyas K. Doshi ||Chairman and Managing Director ||4899600 ||13.04.1982 ||64 / 45 ||F.Y. Science || ||12.77 ||Father of Mr. Vishal S. Doshi |
|* Mr.Nihar N. Parikh ||Executive Director ||5420197 ||01.10.1992 ||48 / 24 ||B.Com ||- || |
|Mr. Vishal S. Doshi ||Group Executive Director ||2920500 ||01.09.2001 ||36 / 16 ||B. Com ||- ||7.86 ||Son of Mr.Shreyas K. Doshi |
* Mr. Nihar N. Parikh Executive Director has resigned with effect from 29thJanuary 2016. His remuneration includes gratuity.
Note: Gross remuneration as shown above includes basic salary house rent/ any otherallowance expenditure incurred on providing housing and other facilities bonussuperannuation leave travel incentives medical and Company's contribution to providentfund.
ANNEXURE - IV
Form No. AOC- 2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014)
Form for disclosure of particulars of contract/arrangements entered into by the Companywith related parties referred to in subsection (1) of Section 188 of the Companies Act2013 including certain arm's length transactions under third proviso thereto.
1. Details of contracts or arrangements or transactions not at arm's length basis
Shrenuj & Company Limited (SCL) has not entered into any contract or arrangement ortransaction with its related parties which is not at arm's length during financial year2015-16.
2. Details of material contracts or arrangements or transactions at arm's length basis
a. Name(s) of the related party and nature of relationship: Shrenuj USA LLC ShrenujFar East Limited Shrenuj DMCC Shrenuj N.V. and Shrenuj Jewellery (Far East) Limitedwholly owned subsidiary/step down subsidiary companies.
b. Nature of contract/ arrangement/ transaction: Sale purchase or supply of diamondscolour stones precious metals studded jewellery etc. and services received and/orrendered.
c. Duration of contract/ arrangement/ transaction: No contract has been entered into asall the transactions with related parties are made in the ordinary course of business andon arm's length basis.
d. Salient Terms of contract or arrangement or transaction including the value if any:Not applicable.
e. Date(s) of approval by the Board if any: Contracts were entered into in theordinary course of business and on arm's length basis and hence approval of Board/ Memberswas not required to be taken.
f. Amount paid as advances if any : Nil
| ||For and on behalf of the Board of Directors |
| ||Shreyas K. Doshi |
|Mumbai 21st March 2017. ||Chairman & Managing Director |