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Surana Corporation Ltd.

BSE: 531102 Sector: Consumer
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OPEN 0.86
52-Week high 1.75
52-Week low 0.86
Mkt Cap.(Rs cr) 2
Buy Price 0.86
Buy Qty 400.00
Sell Price 0.94
Sell Qty 300.00
OPEN 0.86
CLOSE 0.90
52-Week high 1.75
52-Week low 0.86
Mkt Cap.(Rs cr) 2
Buy Price 0.86
Buy Qty 400.00
Sell Price 0.94
Sell Qty 300.00

Surana Corporation Ltd. (SURANACORP) - Director Report

Company director report

Directors Report

Your Directors hereby present the Twenty Third Annual Report on the Business Operationsof your Company along with Audited Balance Sheet as on 31st March 2014 and Profit andLoss Account for the year ended 31st March 2014.


(Rs in Lakhs)

PARTICULARS 31.03.2014 31.03.2013
Profit Before Tax (36475.37) 7104.12
Less: Provision for Tax
Current Tax -- 367.17
Deferred Tax Liability (442.86) 1421.09
Profit after Tax (36032.50) 5315.85
Add: Balance in P & L account
Brought Forward from Previous Year 25289.85 20308.34
MAT credit entitlement account -- 563.42
Interim Dividend with Dividend Tax -- --
Proposed Dividend with Dividend Tax -- 512.97
Transfer to General Reserve -- 531.58
Amalgamation Reserve Write Back** -- 146.79
Balance Carried to Balance Sheet (10742.66) 25289.85

** Rs.146.79 lakhs being loss on sale of assets acquired on amalgamation has beenoffset against the amalgamation reserves as all the assets on amalgamation have been soldoff.


Your company’s total turnover during the year ended 31st March 2014 was at Rs.4126.95 Crores as against Rs.8471.24 Crores for the previous year recording a major dipof around 51%. This drop in turnover has been mainly due the restrictions imposed byReserve Bank of India on bullion since May 2013. These restrictions imposed by RBI onbullion trading to control the country’s current Account Deficit (CAD) has virtuallymade the company’s status as Nominated Agency as ornamental and consequently thecompany could not do any Bullion turnover as Nominated Agency. The impact of therestrictions had been so huge that the company had to shut down its Nominated AgencyOperations and also close down the branches which it had opened in the previous year. Thecompany could achieve Sales of only Rs.16.74 crores under Nominated Agency as againstRs.543.75 crores in the previous year. Similarly the non availability of material on SBLCbasis also restricted the company’s ability to do exports. In fact the companyduring the year had made exports of Rs.53.79 crores only against Rs.1550.55 crores in theprevious year. Another reason leading to this fall in exports is the overall recessionarytrend in international markets.

Revenues from wind energy during the year amounted to Rs.6.61 crores as againstRs.11.95 crores. The company’s Loss after Tax was at Rs. 360.33 Crores in the currentyear as against a profit of Rs. 53.16 Crores for the Previous Year.

The financial year has been very distressful for the company as the company suffered adouble blow of fall in turnover due to RBI restrictions and also had to almost bear a twofold increase financial costs due to the re-alignment of limits from Non Fund Based toFund Based. The company further had to face a squeeze in its working capital as thecompany’s debtors overstretched repayments. Further the company keeping inperspective the export market had to make a Provision for Rs. 136.02 Crores as therealization from these debtors have been getting delayed. Similarly the company duringthe year as matter of abundant caution had to securitize domestic debtors of aroundRs.200.00 Crores.

In light of the restrictions on the trade and the losses incurred mainly due toincrease in finance costs the company towards the end of the financial year 2013-2014 hasmade request to its consortium of banks to consider restructuring of the account so as tohelp the company turnaround faster and recover sooner.


Pursuant to the requirement under Section 217 (2AA) of the Companies Act 1956 the Boardof Directors hereby confirm:-

That in the preparation of the Annual Accounts of the Company for the year ended 31stMarch 2014 the applicable accounting standards have been followed along with properexplanations and that no material departures have been made from the same.

That the Directors have taken 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 the end of the financial year as on31st March 2014 and of the Profit and Loss Account for the year ended 31st March 2014.

That the Directors of the Company have taken proper and sufficient care for themaintenance of the accounting records in accordance with the provisions of the CompaniesAct 1956 for the safeguarding of the assets of the Company and for preventing anddetecting frauds and other irregularities if any.

That the Directors of the Company have prepared the Annual Accounts for the financialyear ended 31st March 2014 on a going concern basis.


India’s fancy for gold has transcended the ages. Gold is considered the onlysaving instrument in rural regions of India. The estimated gold holdings in India would beabout 20000 tonnes valued more than USD 1 trillion. India accounted for 27% of the globalgold demand during FY 2013. Besides the industry is largely dependent on gold imports formeeting its raw material requirements. India’s net imports of gold available fordomestic consumption stood at 700 tonnes during FY 2013-14 declined by 40% Year on Yearprimarily due to various regulatory measures.

Gold is the second largest contributor to India’s imports accounting for 11% ofthe total imports by the country during FY 2013-14. In light of the burgeoning CAD toughregulatory measures were introduced by Government of India and Reserve Bank of India tocurtail increasing gold imports. These measures included increase in import duty on goldbullion to 10% and 15% on import of Gold Jewellery. RBI also prohibited Gold on lease andexport of gold coins and medallions. Further RBI introduced 20:80 scheme whereby importof gold was linked to the overall exports of finished products of gold. Further RBI alsodirected that gold will be made available to only jewelers bullion dealers banksinvolved in gold deposit scheme after payment of upfront cash and credit lines werebanned.

Due to the above measures the CAD significantly contracted by 55.4%. However theseregulations adversely impacted the Industry and also the company by increasing theworking capital requirements of players impacting the gold supply in the short term andthereby rising Gold prices. The various measures resulted in lack of clarity for importsmeant for gold jewellery exports. The Indian gold jewellery exports witnessed a decliningtrend (-32% year on year) during April 2013 – March 2014. Decline in the exports ofgold jewellery was significant (-69.8% year on year) during June-September 2013 mainlydue to supply issues on account of government restrictions on gold imports to curb therising CAD and lack of operational clarity of the regulations. Overall exports in Gem andJewellery sector dropped by 13% during 2013-14.

South India remains the largest consumer of gold in the country with the increasingpreference of retail jewelers for opening new stores in the region. Southern states ofKerala Andhra Tamilnadu and Karnataka account for 37% of the total domestic gold demand.The industry has witnessed emergence of many new players and expansion of existing playersin the organized market. The penetration of organized Gems & Jewellery market isexpected to cross 20-22% by FY 2017 driven by changing lifestyle patterns and mallculture in Tier II and Tier III cities. In the long term key drivers for growth in thissector would be growing disposable income rising young population having higher urge tospend increasing number of working women and conscious marketing efforts by companies inthis sector including online jewellery retailing.


Your Company had already entered into a tripartite agreement with National SecuritiesDepository Limited (NSDL) Mumbai and Central Depository Services (India) Mumbai along withM/s Cameo Corporate Services Limited Chennai for providing electronic connection fordematerialization of shares facilitating the investors to hold their shares in electronicform and trade in those shares. Your Company has appointed M/s Cameo Corporate ServicesLimited as the Registrar & Transfer Agents both for physical and electronic transferof shares from 1st April 2003.


Consequent upon the introduction of Section 292 A of the Companies Act 1956 by theCompanies (Amendment) Act 2000 your Company has already constituted an Audit Committee ofthe Board consisting of three Directors as follows; Shri. Vijayraj Surana.

Shri. S. Guruswamy & Shri. Jagadish Gopal

Shri. Jagadish Gopal has been appointed as Chairman of the Audit Committee. The AuditCommittee reviews the audit findings regularly and it also oversees the adequacy andefficacy of the Internal Control Systems.


The Wind energy division of your Company earned an income of Rs.6.61crores during theyear 2013 – 2014 as compared to an income of Rs.11.95crores in the previous year. Thefall in wind energy division has been mainly due to shutting down of grid for abnormalperiod during the peak season.


As the company during the year has incurred huge losses and also keeping in view theliquidity position of the company the Directors have to inform you that nodividend is being declared for the year. This would be the first instance of thecompany not paying dividend after 9 years. We hope with the new government installedrestriction on gold shall be removed and the company will soon gain sufficient financialstrength to declare dividends in future.


Your Directors are pleased to inform you that your Company has an adequate andsufficient internal controls as well as Internal Audit Systems commensurate with the sizeand nature of the Company’s day to day operations. The Internal policies and controlsdo ensure efficient use of Company’s productive assets. These internal guidelinesalso help protection of the assets of the Company. They also ensure that the activities ofthe Company are in accordance with the stated policies guidelines and other statutes andregulations in force.

Independent audit functions and compliances of the various stipulations of theStatutory Authorities are strictly adhered to by the Company and this aspect is monitoredby the Audit Committee. The Internal Control Mechanism also provides for well documentedpolicies and approved procedures for guiding the company’s operations.

As a part of the efforts to evaluate the effectiveness of the Internal Control Systemsyour Company’s internal audit system reviews all the control measures periodicallyand recommends improvements wherever appropriate. All the systems are being reviewedregularly by the Audit Committee.


Your Company attaches utmost importance to the continuous development of HumanResources. Human Resources are the backbone for the welfare and growth of the Company.High priority is being given for imparting good training to the personnel and updatingtheir knowledge and skills along with automation. Personnel are being sent for intensivetraining programmes outside. These developmental programmes for the Executives Officersand Staff Members would bring improved efficiency in future.


The Securities and Exchange Board of India (SEBI) had constituted a Committee on theCorporate Governance to promote and raise the standard of Corporate Governance in respectof all the Listed Companies. Your Company has been complying with all the guidelinesissued by the SEBI in respect of Corporate Governance. A Certificate from the StatutoryAuditors of the Company regarding compliance of the conditions of the Corporate Governanceis also attached to this Report.


Your Directors are pleased to state that your Company has taken adequate steps in thematter of Conservation of Energy and Technology Absorption during the year under Review.The information in accordance with the Provisions of Section 217 (1)(e) of the CompaniesAct 1956 read with the Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules 1988 are given below:


Particulars 2013-2014 2012-2013
Electricity Purchased (units) 171436 288849
Total amount (Rs.) 1210142 1742890
Rate per unit (Rs.) 7.06 6.03


During the period under Review your Company earned Foreign Exchange to the extent ofRs.53.79 Crores on account of export of Gold Jewellery. Your Company has also incurredexpenditure in foreign exchange to the tune of Rs.51.06 Crores for import of Gold formanufacture of Jewellery.


During the year ended 31.03.2014 in terms of the provisions of Section 217(2A) of theCompanies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 asamended the names and other particulars of the employees are set out in the annexure tothe Directors’ Report. Having regard to the provisions of Section 219(1)(b)(iv) ofthe said Act the Annual Report excluding the aforesaid information is being sent to allthe members of the Company and others entitled thereto. Any member interested in obtainingsuch particulars may write to the Company Secretary at the registered office of theCompany.


Shri. Shri. Jagadish Gopal and S. Guruswamy retire by rotation and being eligible forreappointment as directors.


Messrs C.S.P Jain & Co. Chartered Accountants Chennai Auditors of the Companyretire at the ensuing Annual General Meeting and being eligible offer themselves forre-appointment.


Your Company has taken adequate steps to adhere to all the stipulations laid down inClause 49 of the Listing Agreement. A report on Corporate Governance is included as a partof this Annual Report.

Certificate from the Statutory Auditors of the company M/s CSP Jain & Co.Chartered Accountants confirming the compliance with the conditions of CorporateGovernance as stipulated under Clause 49 of the Listing Agreement is attached to thisreport.


In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a vigil mechanism for directors and employees to report genuine concerns has beenestablished.


The Board of Directors of your Company wish to place on record their deep sense ofappreciation for the excellent support received from the esteemed Shareholders of theCompany for its various activities. Their valuable suggestions given to us from time totime have indeed helped the Company to plan its growth and improve its Profitability.

The Board of Directors also would like to thank all the valuable Customers bothdomestic and international and Suppliers domestic as well as international for theirabiding support to the company and for their services in making available imported goldand silver to meet the company’s requirements from time to time. We value ourcustomers’ suggestions for further improvement in the quality of our products andservices.

The Board would also like to express its sincere thanks to all the esteemed Bankersincluding its Present and Past members of the consortium for their valuable support to theCompany.

Further the Board would also like to place on record their deep sense of appreciationto the excellent work put forward by all the Executives Officers Staff Members all theArtisans and other Workers in the factory and other establishments for their dedicated andloyal work.

For & On Behalf of the Board of Directors




Place : Chennai

Date : 27.05.2014