Your Directors have pleasure in presenting their 24th Annual Report on theAudited Statement of Accounts for the Financial Year ended March 31 2016.
1. FINANCIAL RESULTS
Rs in Lacs
| ||Consolidated ||Standalone |
|Particulars ||2015-2016 ||2014-2015 ||2015-2016 ||2014-2015 |
|Gross Income ||32542.50 ||24377.29 ||32515.16 ||24314.61 |
|Profit Before Interest and Depreciation ||778.65 ||812.69 ||775.70 ||793.39 |
|Finance Charges ||371.12 ||328.53 ||371.12 ||328.53 |
|Provision for Depreciation ||16.12 ||13.50 ||13.24 ||11.86 |
|Net Profit Before Tax ||391.41 ||470.66 ||391.34 ||453.00 |
|Provision for Tax ||118.57 ||150.05 ||120.64 ||143.51 |
|Net Profit After Tax ||272.84 ||320.61 ||270.70 ||309.49 |
|Balance of Profit brought forward ||4310.45 ||3990.90 ||4304.58 ||3996.15 |
|Balance available for appropriation ||0.00 ||0.00 ||0.00 ||0.00 |
|Proposed Dividend on Equity Shares ||0.00 ||0.00 ||0.00 ||0.00 |
|Tax on proposed Dividend ||0.00 ||0.00 ||0.00 ||0.00 |
|Transfer to General Reserve ||0.00 ||0.00 ||0.00 ||0.00 |
|Fixed Assets Written off as per Section 123(2) of Companies Act 2013 ||0.00 ||(1.06) ||0.00 ||(1.06) |
|Surplus carried to Balance Sheet ||4583.29 ||4310.45 ||4575.28 ||4304.58 |
2. Brief description of the Companys working during the year/State ofCompanys affair
The consolidate total income increased from Rs 24377.29 Lacs to Rs 32542.50 Lacsincrease of 33.50% over the previous financial year. The Consolidated Net Profit after Taxdecrease from Rs 320.61 Lacs to Rs 272.84 Lacs a decline of 14.90% over the previousfinancial year. The detailed analysis of the consolidated results forms part of theManagement Discussion & Analysis Report provided separately as part of the AnnualReport.
The Standalone total income increase from Rs 24314.61 Lacs to Rs 32515.16 Lacs anincrease of 33.73% over the previous financial year. The standalone Profit After Taxdecrease from `309.49 Lacs to Rs 270.70 Lacs a decline of 12.53 % over the previousfinancial year.
3. COMPANYS PERFORMANCE AND FUTURE OUTLOOK
Your Companys growth journey continued during the year under review. TheCompanys Revenue from operation has risen to Rs 320.99 Crores (current year)from Rs 239.75 crores ( previous year ) which was increased by 25%. The share of Domesticand Export Sales in the revenue from operations is Rs 202.84 Crores and Rs 118.15 Croresrespectively.
During the year under review the Company has opened 2 branches in India i.e. Bangaloreand Kolkata in order to capture the market and expand its business in India. The Companyhas taken initiative to utilize its own manufacturing facilities and thereby to reduce theoverall cost of production which results in economies of scale in the manufacturingfacilities.
The ground realities are far from satisfactory in conduct of operations on sustainablebasis due to prolonged recession in demand side. The shrinking business compelledcompetitors to extend steep and unworkable discounts to keep the business going in allrespects. Due to fluctuation in gold price witnessed in the larger part of financial year2015-16 the investment demand for gold ornaments didnt take off. Governmentregulation like furnishing of PAN card details for purchases above Rs 2 lakhsintroduction of central excise duty TCS under Income Tax Act and mandatory Hallmarkingrequirement also contributed to the reduction in sales. All these challenges arecontinuing even in the current financial year 2016-17 as well.
Even though there is no perceptible change noticed in the local demand for goldornaments the positive movement in the gold price if sustained may bring better volumebusiness in the second half of the financial year 2016-17 due to expectation of furtherincrease in gold prices locally. The continuous cost reduction initiatives undertaken bythe Management and the effectiveness with which the working capital is managed will go along way in improving the financial position of the company. However the addition of 2new branches to our existing branch of our business will ensure better visibility and goodvolume growth in 2016-17.
4. DIVIDEND AND RESERVES
Your Directors do not recommend any dividend for the financial year ended March 312016 in view to conserve the resources of the Company for any future expansion programmes.
5. SHARE CAPITAL
The Paid-up Equity Share Capital of the Company as on 31st March 2016 is Rs208768000/- comprising of 20876800 shares of Rs 10/- each. During the year underreview the Company has not issued any equity shares.
6. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mrs. Asha M. Chordia Director of the Company retires by rotation at the forthcomingAnnual General Meeting and being eligible offers herself for re-appointment.
During the year Ms. Khushbu Gupta resigned as the Company Secretary of the Companyw.e.f. 16.01.2016. Further Ms. Prafulla Devaliya was appointed as the Company Secretaryof the Company w.e.f. 12.03.2016.
Further Mr. Sunderlal L. Bothra resigned as Director of the Company w.e.f. 21.12.2015.Further Mr. Dhruvin B. Shah is appointed as an Additional Director of the Company w.e.f.28.05.2016.
The Board of Directors re-appointed Mr. Mahendra M. Chordia as the Managing Director ofthe Company w.e.f. 01.04.2016 for a period of five years upto 31st March2021 subject to the approval of the Members of the Company at the forthcoming 24thAnnual General Meeting.
7. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) (c) & 134(5) of the Companies Act 2103 the Board ofDirectors of the Company hereby confirms that:
(a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(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 at the end of the financial year and ofthe profit and loss of the company for that period;
(c) the directors have 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 have prepared the annual accounts on a going concern basis; and
(e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
8. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The information required pursuant to Section 197 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Amendment Rules 2016 is enclosedas Annexure I and forms part of this Report.
Further no employee of the Company is earning more than the limits as prescribedpursuant to Section 197 read with Rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Amendment Rules 2016 in respect of employees of the Company.
Further the names of top ten employees in terms of remuneration drawn are disclosed inAnnexure II and forms part of this Report.
9. NUMBER OF BOARD MEETINGS
A calendar of meetings is prepared and circulated in advance to the Directors. Duringthe year 8 (Eight) Board Meetings were convened and held the details of which are givenin the Corporate Governance Report. The intervening gap between the meetings was withinthe period prescribed under the Companies Act 2013 and SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015.
10. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of its Committees. The Directors expressed satisfaction with theevaluation process. The manner in which the evaluation has been carried out has beenexplained in the Corporate Governance Report.
11. INDEPENDENT DIRECTORS
The Independent Directors have submitted their disclosure to the Board that theyfulfill all the requirements as to qualify for their appointment as Independent Directorunder the provisions of Section 149 read with Schedule IV of the Companies Act 2013 aswell the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015.
12. NOMINATION AND REMUNERATION POLICY
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors. This policy also lays down criteria for selection andappointment of Board Members. The details of this policy are explained in the CorporateGovernance Report.
13. DETAILS OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
As at March 31 2016 your Company had following Subsidiary Company (ies) howeverthere was no Joint Venture or Associate Company (ies):
|Name of the Company ||Category ||Date of becoming Subsidiary/ JV/ Associate Company ||Date of ceasing as Subsidiary/ JV/ Associate Company |
|Swarnsarita Realty Private Limited ||Subsidiary ||24/12/2012 ||NIL |
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of financial statements of subsidiary company (ies) in FormNo. AOC-1 is attached separately as an Annexure III to this report.
14. RECONSTITUTION OF THE NOMINATION AND REMUNERATION COMMITTEE OF THE BOARD:
Due to changes in the composition of the Board of Directors the constitution of thenomination and remuneration committee stands reconstituted as under:
|Name of the Director ||Category |
|Mr. Ashok Surana ||Chairman & Non-Executive Independent |
|Mr. Vishal Nolkha ||Non-Executive Independent |
|*Mr. Sunderlal L. Bothra ||Non-Executive Independent |
|**Mr. Dhruvin Shah ||Non-Executive Independent |
(i) * Resigned w.e.f. 21.12.2015
(ii) ** Appointed w.e.f. 28.05.2016.
15. STATUTORY AUDITORS AND AUDITORS REPORT
At the Annual General Meeting held on September 22nd 2014 M/s. SureshAnchaliya & Co. Chartered Accountants were appointed as Statutory Auditors of theCompany to hold office till the conclusion of the Annual General Meeting to be held forthe financial year ended 2019. In the terms of the first proviso to Section 139 of theCompanies Act 2013 the appointment of the Auditors shall be placed for ratification atevery Annual General Meeting. Accordingly the appointment of M/s. Suresh Anchaliya &Co. Chartered Accountants as Statutory Auditors of the Company is placed forratification of the Shareholders. In this regard the Company has received a Certificatefrom the Auditors to the effect that if they are reappointed it would be in accordancewith the provisions of Section 141 of the Companies Act 2013.
The Board has duly reviewed the statutory Auditors Report on the Accounts. Theobservations and comments appearing in the Auditors Report are self-explanatory anddo not call for any further explanations/comments/clarification by the Board.
16. SECRETARIAL AUDIT
In terms of Section 204 of the Act and Rules made thereunder M/s. Deep Shukla &Associates Practicing Company Secretaries have been appointed Secretarial Auditors ofthe Company. The Secretarial Audit Report is enclosed as Annexure IV to thisreport.
Explanation under Section 134(3)(f)(ii) of the Companies Act 2013:
1. The transfer of unpaid / unclaimed dividend to the Investor Education and ProtectionFund was pending due to technical and procedural difficulties faced by the Company.
2. The composition of NRC fell short due to sudden exit of an Independent Director;however corrective steps were taken by the Company in this regard.
3. Due to some technical reasons the website of the Company faced some difficulties inproper functioning; however the said issues were sorted out and the website is workingeffectively.
4. The Company has faced technical difficulties in filing e-forms on MCA portal andhence the same were pending. However the pending forms were subsequently filed by thecompany.
17. INTERNAL AUDIT & CONTROLS
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function isdefined in the Internal audit Manual. To maintain its objectivity and independence theInternal Audit function reports to the Chairman of the Audit Committee of the Board and tothe Managing Director.
The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal Control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observation and recommendations alongwith corrective actions thereon are presented to the Audit Committee of the Board.
Further M/s. Hiran & Associates Chartered Accountants issued their Internal AuditReport for the financial year ended 31st March 2016.
18. EMPLOYEES STOCK OPTION PLAN
The Company has not provided stock options to any employee of the Company. 19. VIGILMECHANISM
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 Vigil Mechanism Policy has been uploaded on the website of the Company atwww.swarnsarita.com. The employees of the Company are made aware of the said policy at thetime of joining the Company.
20. RISK MANAGEMENT POLICY
The Company has laid down the procedure to inform the Board about the risk assessmentand minimization procedures. These procedures are reviewed by the Board annually to ensurethat there is timely identification and assessment of risks measures to mitigate themand mechanisms for their proper and timely monitoring and reporting.
21. EXTRACT OF ANNUAL RETURN:
The details forming part of the Extract of the Annual Return in Form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is included in this Report as Annexure Vand forms part of this Report.
The Company has not accepted nor renewed any fixed deposits during the FY 2015-2016.
23. LOANS INVESTMENTS & GUARANTEES
Particulars of loan given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the notes to the standalone financial statement.(Please refer to Note Nos. 9 11 & 15 to the standalone financial statement).
24. RELATED PARTY TRANSACTIONS
Details of material transactions with Related Parties on an arms length basiswith respect to transaction covered under Section 188(1) of the Act in the prescribed FormNo. AOC-2 is annexed with this Report and marked as Annexure VI.
Further details of Related Party Transaction as required under to be disclosed byAccounting Standard 18 on "Related Party Disclosures" specified underSection 133 of the Act read with rule 7 of the Companies (Accounts) Rules 2014 are givenin the Notes to the Financial Statements.
25. CORPORATE GOVERNANCE CERTIFICATE
A Report on Corporate Governance along with a certificate from the Auditors of theCompany regarding the compliance of conditions of corporate governance as stipulated underSEBI (Listing Obligation & Disclosure Requirements) Regulation 2015 and forms a partof this Annual Report.
26. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report which gives a detailed state of affairsof the Companys operations forms a part of this Annual Report.
27. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE
(A) Conservation of energy-
Even though its operations are not energy-intensive and manually executed significantmeasures are taken to reduce energy consumption by using energy-efficient equipment. TheCompany regularly reviews power consumption patterns across all locations and implementrequisite improvements/changes in the process in order to optimize energy/ powerconsumption and thereby achieve cost savings. Energy costs comprise a very small part ofthe Companys total cost of operations. However as a part of the Companysconservation of energy programme the management has appealed to all the employees /workers to conserve energy.
(B) Technology absorption-
(i) the efforts made towards technology absorption;
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.
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 freelancers indeveloping product designs as per the emerging market trends. The Company uses innovationin design as well as in technology to develop new products.
(ii) the benefits derived like product improvement cost reduction product developmentor import substitution; As a result of the above the following benefits have beenachieved:
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. Greater precision
e. Retention of existing customers and expansion of customer base
f. Lower inventory stocks resulting in low carrying costs (iii) in case of importedtechnology (imported during the last three years reckoned from the beginning of thefinancial year)- The Company has not imported any technology during the year under review.
(a) the details of technology imported;
(b) the year of import;
(c) whether the technology been fully absorbed;
(d) if not fully absorbed areas where absorption has not taken place and the reasonsthereof; and
(iv) the expenditure incurred on Research and Development.
The Company has not expended any expenditure towards Research and Development duringthe year under review.
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) Designing of jewellery and development of new cuts in diamonds.
v) Waxing wax setting casting filling and polishing of jewellery.
vi) Capability development for in- house processes designs and strategic applicationsof material for product improvement. Efforts continued in the direction of fine tuning ofthe jewellery manufacturing and the changes in designs. These resulted in improvements inproduct performance.
2. Benefits derived as a result of R & D activity:
The R & D activities helped to add new quality products and to achieve greatercustomer acceptance in the retail market. These activities also enabled the Company toreduce waste increase productivity achieve higher "customer satisfaction" andderive 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. Boosting the capabilities to offer custom-made jewellery and fetching orders instiff international competition.
The Company has transaction in foreign currencies are normally recorded at the averageexchange rate prevailing during the period of transaction.
FOREIGN CURRENCY TRANSACTIONS:
Rs in Lacs
|Particulars ||For the Year Ended on March 31 2016 ||For the Year Ended on March 31 2015 |
|Remittance in Foreign Exchange ||NIL ||NIL |
|Earning in Foreign Exchange ||11273.33 ||7446.08 |
|Export Sales ||11788.48 ||7336.38 |
28. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
During the year the Company has to transfer a sum of `250854/- and Rs 452110/- toInvestor Education & Protection Fund the amount which was due and payable andremained unclaimed and unpaid for a period of seven years for the F.Y. 2007-2008 asprovided under the Companies Act 2013. The said fund Transferred to Investor Educationand Protection Fund Account on 7th July 2016 and 28th July 2016respectively.
29. CORPORATE SOCIAL RESPONSIBILITY
The Company does not meet the criteria of Section 135 of Companies Act 2013 read withthe Companies (Corporate Social Responsibility Policy) Rules 2014 so there is norequirement to constitute Corporate Social Responsibility Committee.
30. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013:
In order to prevent sexual harassment of women at work place a new act The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 hasbeen notified on 9th December 2013. Under the said Act every company isrequired to set up an Internal Complaints Committee to look into complaints relating tosexual harassment at work place of any women employee.
Company has adopted a policy for prevention of Sexual Harassment of Women at workplaceand has set up Committee for implementation of said policy. During the year Company hasnot received any complaint of Sexual Harassment.
During the year under review no revision was made in the financial statement of theCompany.
During the year ended 31st March 2016 there were no cases filed /reportedpursuant to the Sexual Harassment of women at workplace (Prevention Prohibition andRedressal) Act 2013.
The Company confirms that it has paid the Annual Listing Fees for the year 2016-2017 toBSE where the Companys Shares are listed.
During the year under review no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and Companysoperations.
The Securities and Exchange Board of India (SEBI) on 2nd September 2015issued SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 with theaim to consolidate and streamline the provisions of the Listing Agreement for differentsegments of capital markets to ensure better enforceability. The said regulations wereeffective from 1st December 2015. Accordingly all the listed entities wererequired to enter into the Listing Agreement within six months from 1stDecember 2015. The Company has entered into Listing Agreement with BSE Limited incompliance of the said new Regulations.
32. HUMAN RESOURCES
Your Company treats its "human resources" as one of its most importantassets.
Your Company continuously invests in attraction retention and development of talent onan ongoing basis. A number of programs that provide focused people attention are currentlyunderway. Your Company thrust is on the promotion of talent internally through jobrotation and job enlargement.
The Directors would like to thank all shareholders customers bankers suppliers andeverybody else with whose help co-operation and hard work the Company is able toachieve the results. The Directors would also like to place on record their appreciationof the dedicated efforts put in by the employees of the Company.
| ||For Swarnsarita Gems Limited |
| ||Mahendra M. Chordia |
| ||Managing Director |
| ||DIN: 00175686 |
| ||Sunil Jain |
| ||Executive Director |
| ||DIN: 00175748 |
|Place: Mumbai || |
|Date: 20th August 2016 || |