Your Directors are pleased to present the Thirtieth Annual Report together with theAudited Financial Statements for the financial year ended March 31 2020.
|Particulars ||31.03.2020 ||31.03.2019 |
|Sales and Other Income ||1449.78 ||808.89 |
|Less: Expenses ||1409.41 ||820.60 |
|Profit / (Loss) before tax and depreciation ||40.37 ||(11.71) |
|Less: Depreciation ||44.55 ||49.92 |
|Net Profit/(Loss) before Tax ||(4.18) ||(61.63) |
|Less: Income tax provision ||0.00 ||0.00 |
|Less: Deferred Tax ||5.42 ||13.37 |
|Less: Earlier Years' Income Tax ||0.00 ||0.00 |
|Less: MAT Credit Entitlement ||0.00 ||0.00 |
|Profit/(Loss) after tax ||(9.58) ||(75.00) |
|Balance brought forward from previous year ||11988.20 ||12063.21 |
|Profit available for appropriation ||11978.61 ||11988.20 |
|Appropriation || || |
|Issue of Bonus shares || || |
|Transfer to General Reserve || || |
|Proposed Dividend on Equity shares || || |
|Tax on Proposed Dividend || || |
|Profit carried over to Balance Sheet ||11978.61 ||11988.20 |
|Earnings per share ||(0.00) ||(0.02) |
State of Company's Affairs
Your Directors wish to inform you that during the current financial year ended March31 2020 the sales and other income of the Company were Rs. 1449.78 lakhs in comparisonof Rs. 808.89 Lakhs for the Fianncial Year ended on March 31 2019. During the FianancialYear 2019 20 the company incurred Net Loss before tax of Rs. 4.18 Lakhs against Net lossbefore tax of Rs. 61.63 lakhs in the previous year. The management of the company wouldlike to appraise that the operations of the company are in recovery mode. However due topandemic of COVID 19 hitting the global economy in current financial year theoperations of the company has slowed down along with the global slowdown. However theCompany's operations which were allready materially affected please refer note no
43 of standalone financial statements. The management is of the opinion that companywill reinstate its profitability in coming years. In the current year company's losseshave declined. However company is still facing liquidity crunch and the same shall bedone away with increasing performance of the company. The previous year figures arere-grouped / re-arranged due to adoption of Indian Accounting standards ("IndAs") as per the applicable rules and regulations in force.
Due to losses incurred by the company during the year the directors do not recommendany dividend.
IPO Fund Utilization
The details of IPO proceeds which have been utilized by the Company are as given under.The Company has utilized major portion of IPO proceeds for expansion as and when thecorrect opportunity and favorable market conditions were available. However insignificantportion of the proceeds allocated for the expansion is left unutilized and the remainingamounts of Rs. 76.98 lakhs have been attached / adjusted by government authorities againstdisputed dues.
Directors and Key Managerial Personnel
Your Board comprises of 6 directors comprising of 2 promoter directors 1 professionaldirector and 3 independent directors including one woman director. Definition ofIndependent Director' is derived from Regulation 16(b) of the SEBI LODR and Section149(6) of the Companies Act 2013. Based on the confirmation / disclosures received fromthe Directors under section 149(7) of the Companies Act 2013 and on evaluation of therelationships disclosed the Non-Executive Independent Directors Mr. Bhau Dhure.Mr. Tushar Momaiyah and Mrs. Dhara Atul Shah are considered as Independent Directors whoare not liable to retire by rotation.
In compliance with the requirements of Section 203 of the Companies Act 2013 Mr.Nandlal Goenka Chairman Mr. Navneet Goenka Vice Chairman & Managing Director andCFO and Nidhi Kanoongo Company Secretary & Compliance Officer of the Companycontinued as Key Managerial Personnel.
Directors' Responsibility Statement
Pursuant to Section 134 of the Companies Act 2013 (the Act') in relation to theAnnual Financial Statements for the Financial Year 2019-2020 your Directors to the bestof their knowledge and ability confirm that: a) in the preparation of the annual accountsfor the year ended March 31 2020 the applicable Ind As which is adopted first time inpreparation of financial statements for the year ended March 31 2020 as per theapplicable laws and rules and regulations for the time being in force the read withrequirements set out under
Schedule III to the Act have been followed along with proper explanation relating tomaterial departures; b) the Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at March 31 2020and of the loss of the Company for the year ended on that date; c) the Directors havetaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; d) the directors haveprepared the annual accounts on a "going concern" basis. However the StatutoryAuditors have expresses doubts on the ability of the company to continue as a goingconcern. 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 except that the credit given to the overseas buyers in the previous year(s).The present outstanding amount of debtor's receivable is majorly due to the credit salesmade in the previous year(s). Likewise the payments of statutory dues and bank dues needto be regularized though the same is the result of the liquidity crunch the company ispresently facing mainly due to extending credit to buyers. The company has initiated legalproceedings against the debtors in the respective courts. f) the Directors have devisedproper systems to ensure compliance with the provisions of all applicable laws and thatsuch systems are adequate and operating effectively.
Subsidiary Company and Consolidated Financials
In compliance with Section 129 of the Act a statement containing requisite detailsincluding performance and financial position of each of the subsidiary companies isannexed to this report in Form AOC-1 As per the requirements of the Securities andExchange Board of India (Listing Obligation and Disclosure Requirements) Regulations2015 and other rules and regulations as may be applicable from time to time the auditedconsolidated financialstatements of your company is prepared in accordance with applicableIndian
Accounting Standards (Ind AS) are enclosed herewith.
Pursuant to the provisions of companies Act 2013 and SEBI LODR the Board has carriedout evaluation of performance of its own the independent directors individually as wellthe evaluation of the working of its Audit' Nomination & Remuneration'and Stakeholders Relationship' committees. The performance evaluation ofnon-independent directors was carried out by the independent directors in a separatemeeting.
The manner in which the evaluation has been carried out has been explained in CorporateGovernance Report.
The current policy is an appropriate mix of executive and independent directors tomaintain the independence of the Board. The Nomination & Remuneration Committee frameda policy for selection and appointment of Directors including determining qualificationsand independence of a Director Key Managerial Personnel Senior
Management Personnel and their remuneration as part of its charter and other mattersprovided under Section 178(3) of the Companies Act 2013.
The salient features of the Remuneration Policy are stated in the Corporate GovernanceReport.
Deposits and Unclaimed Dividend
During the year under review your company has not accepted any public deposit underChapter V of the Companies Act 2013.
During the year under review pursuant to section 124 of the Companies Act 2013 andInvestor Education and
Protection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 (the"Rules") framed there under
Number of Meetings of the Board
The Board met Four times in financial year 2019-2020 on May 29 2019 August 14 2019November 14 2019 and February 07 2020. The maximum interval between any two meetings didnot exceed 120 days. However in
Financial Year 2020-21 the first Board meeting of the Company was held on June 302020 which exceeded the gap of 120 Days. This was due to global pandemic of COVID-19. TheMinistry of Corporate Affairs vide general circular no. 11/2020 dated March 24 2020 hasgiven one time relaxation from maximum gap of 120 days in two consecutive meetings uptomaximum gap of 180 days till the next two quarters that is till quarter ending September2020.
Details of Committees of the Board
The Company has following Committees of the Board:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
1. Audit Committee
The Present Audit Committee comprises namely Mr. Bhau Dhure Mr. Navneet Goenka Mrs.Dhara Shah and Mr. Tushar Momaiyah. The committee was reconstituted in the meeting ofBoard of Directors dated February 07 2020.
Mr. Bhau Dhure Chairman Mr. Navneet Goenka Member. Mrs. Dhara Shah Member. Mr. Tushar Momaiyah Member*
*Mr. Tushar Momaiyah appointed as an additional director w.e.f. February 07 2020 Allthe recommendations made by the committee were accepted by the Board.
2. Nomination and Remuneration Committee
The Present Nomination and Remuneration Committee comprises namely Mrs. Dhara Shah Mr.Bhau Dhure and Mr. Tushar Momaiyah. The committee was reconstituted in the meeting ofBoard of Directors dated February 07 2020.
Mr. Tushar Momaiyah Chairman* Mrs. Dhara Shah Member Mr. Bhau Dhure Member
All the recommendations made by the committee were accepted by the Board. *Mr. TusharMomaiyah appointed as an additional director w.e.f. February 07 2020
3. Stakeholders Relationship Committee
The Present Stakeholders Relationship Committee comprises namely Mr. Bhau Dhure Mr.Navneet Goenka and Mrs. Dhara Shah. The committee was reconstituted in the meeting ofBoard of Directors dated February 07 2020.
Mr. Bhau Dhure Chairman *Mr. Tushar Momaiyah Member Mrs. Dhara Shah Member
All the recommendations made by the committee were accepted by the Board. *Mr. TusharMomaiyah is appointed as an Additional Director w.e.f. February 07 2020.
The details of the meetings held and attendance of the members of the above committeesof the Board are provided in the Corporate Governance report.
M/s. Ummed Jain & Co. (Firm Regn. No. 119250W) Chartered Accountant MumbaiStatutory Auditors of the Company hold office till the conclusion of the ensuing AnnualGeneral Meeting.
It is proposed to re-appoint M/s. Ummed Jain & Co. (Firm Regn. No. 119250W)Chartered Accountant Mumbai as statutory auditor of the Company and they have confirmedtheir eligibility to the effect that their appointment if made would be within theprescribed limits under the Act and that they are not disqualified for re-appointment. Theproposal for their appointment is included in the notice of Annual General Meeting sentherewith.
In respect of the observations made by Auditors in their report your Directors wish tostate that the replies in that respect have been given in the Directors Report in aseparate section.
The Board has appointed Mr. Vishal N. Manseta Practicing Company Secretary to conductSecretarial Audit for the financial year 2019-20. The Secretarial Audit Report for thefinancial year ended March 31 2020 is annexed to this Report.
Secretarial Audit Report
In respect of the observations made by Secretarial Auditor in his report yourDirectors wish to state that the replies in that respect have been given in the DirectorsReport in a separate section.
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 not entered into any contract / arrangement /transaction with related parties which could be considered material. Accordingly theparticulars of the transactions as prescribed in Form AOC-2 of the rules prescribed underChapter IX relating to Accounts of Companies under Companies Act 2013 are not required tobe disclosed as they are not applicable. Members are requested to refer Note 35 and 42 tothe Standalone financial statements which sets out related party disclosures.
As per Regulation 23 of the SEBI LODR the Board has adopted a Policy onMateriality of Related Party
Transactions and Dealing with Related Party Transactions' which may be accessed on theCompany's website i.e. www.goenkadiamonds.com
Extract of Annual Return
The extract of Annual Return in Form MGT-9 as required under Section 92(3) of the Actread with Companies (Management & Administration) Rules 2014 is annexed to thisreport as on March 31 2020.
The Company is committed to provide a safe and conducive work environment to itsemployees and has detailed procedure for the redressal of complaints pertaining to sexualharassment. Your Directors further state that during the year under review there were nocases filed pursuant to the sexual harassment at workplace.
Material Changes and Commitments affecting the financial position of the Company
With the impact of COVID 19 pandemic resulting into a major slow down at globallevel the same has affected company's operational cycle adversely. However the Company'soperations which were allready materially affected please refer note no 43 of standalonefinancial statements. At the same time considering the practical situation on humanitarianground the company has neither laid off any staff of the company at the same time therewas no deduction and/or retention of salary payable to the staff of the company. Thispolicy of the company has adversely affected the cash flow of the company. Howeverlooking at the present scenario the management is of the view that in such difficultsituation the laying down activity or reduction / deduction and/or retention of salarypayable would have led entire staff into financial crunch.
There have been no material changes and commitments affecting the financial occurredbetween the end of the financial year to which the financial statements relate and thedate of this report except during the financial year 2018 19 the Corporation Bank one ofthe lenders bank of the company has moved to the NCLT Jaipur for the recovery ofoutstanding dues as company's account has turned NPA. Due to
COVID 19 the next hearing date for the same is not yet certain. The matter beingsub judice the directors of the company are not able to comment on the same. However thedirectors will intimate the members of the company and the regulators from time to time asper the regulations as may be applicable from time to time.
Details of significant and material orders passed by the regulators/ courts/ tribunalsimpacting the going concern status and the Company's operations in future
Thereare nosignificant orders passed by the Regulators/ Courts/ Tribunals which wouldimpact the going concern status of the Company and its future operations.
Corporate Social Responsibility
The provisions related to Corporate Social Responsibility as mentioned in the Act arenot applicable to the company.
Risk Management Policy
The Company manages monitors and reports on the principal risks and uncertainties thatcan impact its ability to achieve its strategic objectives. The Company's managementsystems organizational structures processes standards code of conduct and behaviorsgovern how the company conducts the business and manages associated risks.
Internal Financial Controls the Directors have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and are operating effectively except that the credit given to the overseasbuyers in the previous year(s). The present outstanding amount of debtor's receivable ismajorly due to the credit sales made in the previous year(s). Likewise the payments ofstatutory dues and bank dues need to be regularized though the same is the result of theliquidity crunch the company is presently facing mainly due to extending credit to buyers.
The company has initiated legal proceedings against the debtors in the respectivecourts.
The paid up equity share capital of the Company as on March 31 2020 was Rs.317000000/- During the year under review the Company has not issued shares withdifferential voting rights and sweat equity shares.
The Company has established Vigil Mechanism and adopted Whistle blower policy for itsdirectors and employees to report concern about unethical behavior actual or suspectedfraud or violation of the Company's code of conduct or ethics policy. The mechanismprovides adequate safeguards against victimization of persons who use such mechanism.Protected disclosures can be made by a whistle blower through an e-mail or dedicatedtelephone line or a letter to the senior executives or to the Chairman of the AuditCommittee. During year under review no personnel were denied access to the AuditCommittee.
As per SEBI LODR a separate section on corporate governance practice which is followedby your Company together with a certificate from Mr. Vishal N. Manseta PracticingCompany Secretary is given in this annual report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The prescribed particulars of employees required under section 197 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areattached and form part of this report.
Electronic copies of the Annual Report 2019-20 and Notice of the 30th AnnualGeneral Meeting are sent to all members whose email addresses are registered with theCompany/Depository Participant(s). For members who have not registered their emailaddresses are requested to register their email ids with their DPs in order to cooperatewith the company in implementation of green initiative; and help to protect theenvironment.
STATUTORY AUDITORS REMARKS AND MANAGEMENTS REPLIES THEREUPON
a) Auditors observation : We do not express an opinion on theaccompanying standalone Ind AS financial statements of the Company. Because of thesignificance of the matter described in the Basis for Disclaimer of Opinion section of ourreport we have not been able to obtain sufficient appropriate audit evidence to provide abasis for an audit opinion on this standalone Ind AS Financial Statements ManagementReply: The management has provided the major audit evidence to excepting the at certainoccasions the account confirmation of overseas debtors and creditors and few bankconfirmations owing to the frozen bank accounts and bank accounts converted in NPA. TheCompany has approached consortium bankers and ARC for settlement of loan dues and assumesthat Company will have adequate cash flow from export realisation to defray its entiredebt obligation and payment to creditors in phased manner The promoters of the Company arealso ready to infuse funds in the company and to raise fund from alternate means to meetshort term and long term obligations of the Company.
b) Auditors observation : Refer Note 9(b) 19(b) 5(a) and 12(a) of thestandalone Ind AS financial statements wherein the company has not translated followingmonetary items denominated in foreign currency as at the year ended closing rate and hasbeen carried forward at the rate as at 31st March 2015 31st March 2016 and /or 31st March 2017 which is not in accordance with Ind-AS -21 "The Effect of changesin Foreign Exchange Rates" and accounting policy followed by the Company.
Management Reply: It was deemed prudent not to take cognizance of unrealised exchangedifference on notional basis due to uncertainties with regard to expected time frame forrealisation of Trade Receivables and loans & advances to subsidiaries. Consequentlythe payment to creditors is also dependent on recovery from these Trade receivables andloans & advances to subsidiaries. The company shall account for the actual exchangedifference at the time of realization of these trade receivables Loans and advances andat the time of payment to trade payables.
c) Auditors observation : The Company has defaulted in repayment of loanstaken from the banks due to which the banks have recalled their loans and have initiatedlegal actions. Refer Note 20(D)(2) and 20 (D) (3) of standalone Ind AS financial statementwherein its stated that the management has decided not to provide interest on such loansand consequently based on the calculation done by the management total interest amountingto Rs. 13311.46 Lacs determined at estimated rates has not been provided for in the booksof accounts including interest amounting to Rs. 2911.29 Lacs pertaining to the year endedMarch 31 2020. Accordingly finance cost for the year is understated by Rs. 2911.29 Lacs.
Management Reply: The management has taken requisite steps with regards to legal actioninitiated by the banks and It has been decided by the Board not to provide any interest onworking capital borrowing availed by the Company due to pending proposal for settlementof entire dues envisaging part-payment of principal amount due to the banks alsomanagement is in discussion with ARC for takeover of outstanding dues.
d) Auditors observation : Refer Note No. 9(a) of standalone Ind AS financialstatements regarding non-provision of the expected credit loss/ impairment relating tooverdue Trade Receivables of Rs. 69806.99 Lacs as per the requirement of Ind- AS 109"Financial Instruments". In view of defaults in payment obligations by the TradeReceivables on due date non-recoveries from Trade Receivables non-confirmations/reconciliation from Trade receivables initiation of legal action/ suits against TradeReceivables by the company notices/ summon to the Company from Enforcement DirectorateReserve Bank of India Development Commissioner of Surat SEZ and in absence of clearforward looking information regarding outcome of pending legal actions initiated and timeframe and quantum of realisability of these Trade receivables we are unable to determinethe amount of expected credit loss/ impairment based on provision matrix as per therequirements of Ind-AS 109 "Financial Instruments" and its consequential impacton the financial statements..
Management Reply: There have been defaults on payment obligations by the tradereceivables on due date and recoveries from these trade receivablesarenotsignificant dueto certain unfavourable developments in earlier years and economic slowdown especially indiamond sector. No confirmations have been received by trade receivables. The Company istaking all possible efforts to recover old trade receivables and had initiated legalaction wherever considered necessary. However looking at the past record regardingrecovery from Trade receivables the management is of the opinion that looking to theuncertainty regarding time frame and quantum of realisation from these trade receivablesamount of expected credit loss required to be recognised cannot be estimated and thereforeno provision for expected credit loss is required to be made against these tradereceivables.
e) Auditors observation : Refer Note No. 5(b) and 40(c) of standalone Ind ASfinancial statements regarding non-provision of the expected credit loss/ impairment onloan to a subsidiary amounting to Rs. 1943.49 Lacs
(including accrued interest) and investment in an entity by way of OptionallyConvertible Debentures amounting to Rs. 621.91 Lacs (including accrued interest) as perthe requirement of Ind- AS 109 "Financial Instruments". The net worth of abovesubsidiary and entity is negative and based on reasonable and supportable informationregarding the current financial status and business condition of these entities there hasbeen significant increase in credit risk and there could be delay/default in recovery ofthese amounts. Considering the above we are unable to comment on the amount of expectedcredit loss/ impairment and its consequential impact on the financial statements.
Management Reply: Loans given to subsidiaries is in the nature of long term loan forset up of business of the subsidiary and is part of net investment in the subsidiary. Theoperation of the subsidiary shall soon be revived and these loans will be recovered innear future and therefore non provision for expected credit loss is required.
In respect of investment in OCD the company assumes that the amount shall be recoveredas per the terms of repayment and therefore no impairment is required.
f) Auditors observation: The Company's operating results have beenmaterially affected due to various factors including non-realization of Trade receivablesdefaults in repayment of loans and interest to banks non-availability of finance due torecall of loans by banks in consortium legal actions/ insolvency proceedings initiated bybanks against company for recovery of its dues notices/ summon from EnforcementDirectorate Reserve Bank of India Development Commissioner of Surat SEZ and from otherregulatory authorities pending proceeding with National Company Law Tribunal DebtRecovery Tribunals and other courts for recovery of banks dues andpossession/attachment/sale of company's properties assignment and transfer of dues ofbanks in favor of an asset reconstruction company (ARC) pending income tax demands andconsequent attachment of bank accounts by Income tax department reliance on cash salesfor meeting out expenses overall substantial decrease in volume of business and salesnon-payment of statutory dues and taxes overdue creditors non realization of loan andinterest thereon from a subsidiary etc.. We are also unable to determine the impact ofactions and forthcoming actions that may be taken by various legal and statutoryauthorities due to various factors mentioned herein above. These events cause significantdoubts on the ability of the company to continue as a going concern. The appropriatenessof the going concern assumption is dependent on the company's ability to raise adequatefinance from alternative means settlement of its dues to banks and ARC and recoveriesfrom overseas Trade Receivables to meet its short term and long term obligations as wellas to establish consistent business operation. The above situation indicates that materialuncertainty exist that cast significant doubt on company's ability to continue as a goingconcern.
g) Auditors observation: Because of the significance of the matters describedabove in the "Basis of Disclaimer of Opinion" section of our report absence ofsufficient appropriate audit evidences and Material uncertainty related to Going Concernparagraph above it is not possible to form an opinion on the financial statements due tothe potential interaction of the multiple uncertainties and their possible cumulativeeffect on the financial statements. Accordingly we do not express an opinion on thefinancial statements
h) Auditors observation: Balances of Trade Receivables Trade Payablesand Current Assets and Liabilities are subject to confirmations and consequentialadjustment thereof
Management Reply: Due to certain unfavourable developments and sluggish market inearlier periods there is substantial decrease in sales and volume of the business.Recoveries from trade receivables are slow and there is a temporary mismatch in the cashflow resulting in overdue creditors default in repayment of statutory dues and dues tobanks owing to which all banks have classified the account as NPA and recalled theirloans.
The management is hopeful that these old trade receivables shall be recovered as thecompany has initiated legal actions against such debtors wherever considered necessary.The Company has approached consortium bankers and ARC for settlement of loan dues andassumes that Company will have adequate cash flow from export realisation to defray itsentire debt obligation and payment to creditors in phased manner. Further the managementis taking all possible steps to revive the business operations and has achieved theturnover of
Rs. 651.72 lacs during the year. The management is confident that the business modal ofthe company is still intact and it can carry on the business of the company in profitablemanner. The Company is trying its best to successfully come out of this phase as ishopeful that the bankers and ARC will accept its restructuring/ onetime settlementproposal and at the same time is also confident that it will have adequate cash flow fromexport realization and internal accruals to defray its entire debt obligation in phasedmanner. The promoters of the Company are also ready to infuse funds in the company and toraise fund from alternate means to meet short term and long term obligations of theCompany. Hence the accounts of the Company are prepared on going concern basis. The matteris pending before NCLT Jaipur the detailed explanation is given in directors report above
. i) Auditors observation: The Inventory has been taken on the basis ofphysical verification carried out by the management as at the year-end and its valuationis based on determination of estimated net realizable value and specific identificationwhich involves technical judgment of management. We have relied upon by the physicalverification and valuation of the Inventory as certified and determined by the management.
Management Reply: Management has put its best efforts in properly valuing the inventorybased on determination of estimated net realizable value and specific identification.
j) Auditors observation: Balances with Banks amounting to Rs 39.14 lacs(debit balances) and Rs. 2471.64 lacs (credit balance) at the year end Trade Payables andOther Current Assets and Liabilities are subject to confirmations and consequentialadjustment thereof
Management Reply: Regarding balances of few banks and a asset reconstruction companyhaving outstanding dues of Rs. 9770.13 lacs have neither issued bankstatements nor confirmed balance outstanding as at year-end.
However the management to the best of its knowledge and belief have recorded all thetransactions.
k) Auditors observation: Refer Note No. 40(b) regarding investment of Rs.2.03 lacs and advance of Rs. 59.78 lacs to subsidiary namely M.B. Diamonds LLC andinvestment of Rs. 7.44 lacs in its subsidiary namely Goenka Diamond and Jewels DMCC thenet-worth of these subsidiaries as at the year end is negative. The Company has not madeany provision for Impairment against these investments and advance.
Management Reply: No provision has been made on an investment of Rs. 2.03 lakhs andadvance given of Rs.
59.78 lakhs by the Company to its subsidiary namely M/s. M. B. Diamond LLC (Russia)& has made investment of Rs. 7.44 lacs in its subsidiary namely Goenka Diamond andJewels DMCC whose net-worth is negative as the management is of view that the investmentis in the nature of long term investment and the diminution in value is temporary innature. The management is confident that the subsidiary shall revive its businessoperations in near future.
l) Auditors observation: Refer Note No. 43 of standalone Ind AS financialstatements which describes management's assessment of the impact of the COVID-19 pandemicon the standalone financial statements of the Company. However in view of highlyuncertain economic environment a definitive assessment of the impact on the subsequentperiods is highly dependent upon the circumstances as they evolve
Management Reply: The Company has considered internal and external information up tothe date of approval of these standalone financial statements including economic forecastexpected recoveries from trade receivables and settlement of its dues with banks/ARC andexpects to recover the carrying value of property plant & equipment investmentsinventories and other current assets appearing in the financial statements of the Company.The impact of the global health pandemic may be different from that estimated as at thedate of approval of these standalone financial statements and the Company will continue toclosely monitor any material changes to future economic conditions m) Regarding auditors'observations at point no. (a) to (d) point no. (f) to (g) as reported by them undersection 143(3) management replies may be found in the above paragraphs. n) Regardingobservation made by Auditors at point No. vii (a) (b) and (c) of the Annexure"A" to Auditors Report:
Management reply: The company is committed to pay all its outstanding undisputedstatutory dues. Regarding the disputed outstanding taxes the appeal is pending beforeITAT Mumbai and regarding PVAT Company is confident that it will be able to get favorableorders from the concerned appellate authorities. o) Regarding observation made by theAuditors at Point No. (viii) of the Annexure "A" to Auditors Report
Management Reply: The management reply is given in above points p) Regardingobservation made by the Auditors in the point no (a) of Annexure "B" to AuditorsReport whereby they have pointed out internal control weakness relating to ascertainmentof customers' credit worthiness etc. which has resulted in huge old outstanding dues fromcustomers
Management Reply: Though the company has taken all due care at the time of sale ofgoods to customers it strongly feels that the internal financial control system in thisregard needs to be improvised. The management is of the view that due to certainunfavourable developments and slugglish market in earlier periods the recovery from tradereceivables is slow. The management is hopeful that these trade receivables shall berecovered as the company has initiated legal action by way of sending legal notices andfiling court cases. q) Regarding observation made by the Auditors in the point no (b)Annexure "B" to Auditors Report whereby they have pointed out irregularities inpayment of statutory dues / taxes and interest and loan repayment to banks
Management Reply: Due to slow recovery from trade receivables there is a temporarydeficit in the cash flow resulting in default in payment of statutory dues / taxes; andrepayment of dues to banks. The Company is taking all possible efforts to recover oldtrade receivables and revive its business operations. Nonetheless the management iscommitted to pay all statutory dues/ taxes. Regarding repayment of dues to banks thecompany has approached bankers with proposal of One Time Settlement.
SECRETARIAL AUDITORS REMARKS AND MANAGEMENTS REPLIES THEREUPON
1) Auditors Observation on legal action taken by the banks
Management Reply: the management has taken requisite steps with regards to legal actioninitiated by the banks
2) Auditors Observation on assignment and transfer of dues of three bank in favor of anasset reconstruction company (ARC)
Management Reply : The banks have classified the account as NPA and recalled theirloans. And as consequence two banks dues were assigned and transfer to an assetreconstruction company (ARC)
3) Auditors Observation made on delay in payment of statutory dues:
Management Reply: The management is of the view that due to certain unfavourabledevelopments and slugglish market in earlier periods the recovery from trade receivablesare slow and there is a mismatch in the cash flow resulting in default in payment ofstatutory dues.
4) Auditors Observation made on long outstanding Trade Receivables and non realizationof overseas debtors for more than 180 days:
Management Reply: The Company has already filedlegal suits against the major overseasbuyers in respective courts. Legal suits against other overseas buyers are in the processof being filed for the recovery of Export
5) Auditors observation relating to default in repayment of principal and interest tobankers declaration of company's account as NPA; and recall of loans:
Management Reply: Due to slow recovery from trade receivables there is a temporarydeficit in the cash flow resulting in default in repayment of dues to banks owing to whichthe bankers have classified the account as
NPA and recalled their loans. The Company is taking all possible efforts to recover oldtrade receivables and has also initiated legal action where ever considered necessary. TheCompany is taking steps to revive its business operations and has approached consortiumbankers with proposal of One Time Settlement (OTS) and also management is in discussionwith ARC.
6) Auditors observation regarding legal actions/ insolvency proceedings initiated bybanks against company for recovery of its dues notices/ summon from EnforcementDirectorate Reserve Bank of India Development Commissioner of Surat SEZ and from otherregulatory authorities pending proceeding with National Company
Law Tribunal Debt Recovery Tribunals and other courts for recovery of banks dues
Management Reply: Due to default in repayment of dues to banks owing to which thebankers have classified the account as NPA and recalled their loans. the matter is pendingwith the legal authorities and with regards to NCLT matter is pending before NCLT Jaipurand regarding notice from development commissioner of Surat
SEZ matter is pending for hearing.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and OutgoConservation of Energy:
The Company is engaged in manufacturing of gems and jewellery and as such itsoperations do not account for substantial energy consumption. However the Company istaking all possible measures to conserve energy in its endeavor towards conservation ofenergy your Company ensure optimal use of energy avoid wastages and conserve energy asfar as possible. Several environment friendly measures were adopted by the Company such asminimising air-conditioning usage Shutting off all the lights when not in use
Technology Absorption Adoption and Innovation
The Company continuously monitors and keep track of technological upgradation in thefield of Jewellery manufacturing and the same are reviewed and considered forimplementation. Your Company continued its focus on quality up-gradation and productenhancements. The company uses indigenous technology for its operations.
Research and Development
The nature of the business of the company is categorically end user business of largesize diamonds and high end jewellery wherein research and development expense are more inthe nature of designing rather than development of new technology.
Foreign Exchange Earnings and Outgo
The information regarding foreign exchange earnings and outgo is contained in note no.31 (v) of notes on Financial Statements.
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:
1. Issue of sweat equity shares to employees of the company under any scheme.
2. Issue of shares under Employee Stock Option Scheme.
3. Re-appointment of an independent director for second term of five years.
4. Neither the Managing Director nor the Whole-time Directors of the Company receivedany remuneration or commission from any of its subsidiaries.
5. There were no companies which have become or ceased to be Subsidiaries JointVentures or associate companies during the year.
6. There was no change in nature of business.
7. There were no loans guarantees or investments given / made by the Company underSection 186 of the Act.
Your Directors place on record their gratitude to Central Government StateGovernments Financial Institutions and Company's Bankers for assistance co-operation andencouragement they extended to the Company. The Directors are also grateful to the valuedcustomers esteemed shareholders dedicated employees and public at large for theirpatronage and confidence reposed in the company.
|On behalf of the Board of Directors |
|For Goenka Diamond and Jewels Limited |
|NANDLAL GOENKA ||NAVNEET GOENKA |
|CHAIRMAN ||VICE CHAIRMAN & |
| ||MANAGING DIRECTOR |
Date: November 11 2020
Particulars of Employees pursuant to section 197 of the Companies Act 2013 read withRules 5 (1) of the Companies (Appointment and Remuneration of Managerial personnel) Rules2014
|Sr. No. Requirement of Rule 5(1) ||Details || |
|(i) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year; ||Directors || |
| ||1. Mr. Nandlal Goenka : ||2.00 |
| ||2. Mr. Navneet Goenka : ||1.60 |
| ||3. Mr. Bhau Dhure : ||0.22 |
| ||4. Mrs. Dhara Shah : ||0.22 |
|(ii) the percentage increase / (decrease) in remuneration of each director Chief Financial ||Directors || |
| ||1. Mr. Nandlal Goenka : ||N.A. |
|Officer Chief Executive Officer Company ||2. Mr. Navneet Goenka : ||N.A. |
|Secretary or Manager if any in the financial year; ||3. Mr. Bhau Dhure : ||N.A. |
| ||4. Mrs. Dhara Shah : ||N.A. |
| ||Chief Financial Officer || |
| ||5. Mr. Navneet Goenka : ||N.A. |
| ||Company Secretary || |
| ||6. Ms. Nidhi Kanoongo : ||0.00% |
|(iii) the percentage increase in the median remuneration of employees in the financial year; ||0.00% || |
|(iv) the number of permanent employees on the rolls of company; ||16 Employees as on 31.03.2020 || |
|(v) variations in the market capitalisation of the company and previous financial year; ||Market capitalization (Rs. / Crore): || |
| ||As on As on % || |
| ||31.03.2020 31.03.2019 Increase/ decrease |
| ||6.97 9.83 (29.09%) || |
|(vi) Price earnings ratio as at the closing date of the current financial year and previous financial year ||As on As on || |
| ||31.03.2020 31.03.2019 || |
| ||N.A. N.A. (Due to negative EPS) |
|(vii) Percentage increase or 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 ||99.99% decline in the market quotation of the company's share in comparison to the last public offer. |
|(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 ||Average increase of Non Managerial || |
| ||Remuneration : 00.00% || |
| ||Average increase in Managerial Remuneration : N.A. || |
|(ix) affirmation that the remuneration is as per the remuneration policy of the company. ||It is hereby affirmed that the remuneration paid during the year ended March 31 2020 is as per the Remuneration Policy of the Company. |
Particulars of Employees pursuant to section 197 of the Companies Act 2013 read withRules 5 (2) and (3) of the Companies (Appointment and Remuneration of Managerialpersonnel) Rules 2014: Not Applicable.
Note - : Mr. Tushar Momaiyah Independent Director was appointed on February 072020 and Mr. Sanjeev Kumar Jain Executive Director was appointed on August 21 2020.