You are here » Home » Companies » Company Overview » KDDL Ltd

KDDL Ltd.

BSE: 532054 Sector: Others
NSE: KDDL ISIN Code: INE291D01011
BSE 00:00 | 19 Jun 538.85 6.50
(1.22%)
OPEN

558.50

HIGH

558.95

LOW

529.00

NSE 00:00 | 19 Jun 537.20 1.70
(0.32%)
OPEN

560.00

HIGH

562.25

LOW

521.00

OPEN 558.50
PREVIOUS CLOSE 532.35
VOLUME 1453
52-Week high 621.00
52-Week low 176.00
P/E 41.55
Mkt Cap.(Rs cr) 584
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 558.50
CLOSE 532.35
VOLUME 1453
52-Week high 621.00
52-Week low 176.00
P/E 41.55
Mkt Cap.(Rs cr) 584
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

KDDL Ltd. (KDDL) - Director Report

Company director report

Dear Members

Your Directors present this 37th Annual Report together with the AuditedAccounts of the Company for the financial year ended 31st March 2017.

OPERATIONS AND PROSPECTS

Financial Results (Standalone and Consolidated)

The summary of operating results for the year 2016-17 and appropriation of divisibleprofits is given below:

(Rs. in million)

Standalone

Consolidated

Particulars 2016-17 2015-16 2016-17 2015-16
Gross Operating Income 1308.3 1234.4 4605.7 4542.2
Profit before interest depreciation and exceptional item 238.7 228.2 301.2 341.5
Less: Finance Cost 55.1 62.2 143.7 150.2
Gross Profit 183.6 166.0 157.5 191.3
Less: Depreciation and amortisation 72.5 68.9 116.7 112.3
Profit before exceptional Items and tax 111.1 97.1 40.8 79.0
Less/(Add): Exceptional items 0.0 0.0 0.0 0.0
Profit Before tax 111.1 97.1 40.8 79.0
Less: Provision for Income Tax Deferred Tax 39.6 313 40.0 37.1
Profit after tax but before minority Interest 71.5 65.8 0.8 41.9
Less: Share in Profit / (Loss) of associates 00 0.0 0.0 0.1
Adjustment for Minority interest 00 0.0 5.7 11.1
Net Profit / (Loss) for the Year 71.5 65.8 6.5 53.1
Add: Profit brought forward from previous year 106.0 78.4 -49.1 -49.1
Profit available for appropriation 177.5 144.2 -42.6 4.0
Appropriated as under:
Deffered tax adjustments for earlier years 0.0 0.0 0.0 2.7
Transfer of Reserves of Joint venture (SJDL) on account of acquisition of remaining 50% shares 0.0 0.0 18.0 0.0
Transfer to Minority reserve 0.0 0.0 -3.9 -3.9
Proposed Dividend 0.0 15.1 0.0 15.1
Corporate Dividend Tax 0.0 3.1 0.0 3.1
Transfer to General Reserve 20.0 20.0 20.0 200
Dividend on Cumulative Preference Shares [Net of Excess Provision] 0.0 0.0 23.5 16.1
Total Appropriation 20.0 38.2 57.6 53.1
Surplus carried forward to Balance Sheet 157.5 106.0 -100.2 -49.1

PERFORMANCE AND PROJECTIONS

During the year under review the Company achieved consolidated sales revenue of Rs.4606 million against Rs. 4542 million in the previous year a growth of 1.4%. Profitbefore tax declined from Rs. 79 million to Rs. 40.8 million.

Sales revenue from manufacturing operations on standalone basis grew by 6% to Rs. 1308Million from Rs. 1234 Million in the previous year. The company earned net profit aftertax of Rs. 72 million against Rs. 66 million in the previous year.

Sales revenue in ETHOS the retail business of the company decreased from Rs. 3287million in the previous year to Rs. 3276 million registering a decline of 0.3%; the lossbefore tax increased to Rs. 74.8 million from Rs. 46.2 million in previous year.

Manufacturing Business Segments

The main revenue of the manufacturing business of from watch components segment. TheSwiss watch market the main destination for our exports faced one of its worst years in3 decades and this impacted our sales significantly. Despite the very soft export marketconditions the revenue of the company from watch components improved marginally by 1%; theimproved domestic market helped significantly. The other major segment of revenue is fromthe precision engineering business wherein the company registered a growth of 28% overthe previous year. The revenue growth from domestic and exports market was 45% and 15%respectively. The revenue from ornamental packaging business of the company witnessed adecline of 3%.

We are continuing the move to consolidate and restructure the watch componentsmanufacturing facilities. This is being supplemented by multiple initiatives to enhancecapabilities to manufacture more complex products and improved productivity and deliverycompliance. Better results even in a sluggish market are already visible and we expectlarger gains as the market conditions improve during the year.

The revenue from the precision engineering business of the Company is expected tomaintain a healthy growth as we continue to expand our capabilities and capacity. Yourcompany has established its reputation as a quality supplier with the ability to meetsophisticated customer needs. By focusing on the vital levers of operational performancewhile adding key technical capabilities and show-casing our capabilities at leadinginternational trade exhibitions and on digital platforms we are confident of healthygrowth and returns in the ensuing periods.

The expansion project for the precision engineering business is progressing onschedule. The Company continues to believe that this business segment will be a majorsource of growth and profitability in the future.

Retail Business Segments:-

FY 16-17 has been an extremely challenging year for the luxury watch retail business.Close on the heels of the introduction of PAN requirement for transactions above Rs. 2lakhs there were further regulatory changes that were enacted. In July 2016 a newrequirement for collecting TCS for all transaction in cash above Rs. 3 lakhs wasintroduced. Thereafter on November 8 2017 the government banned all Rs. 500 and Rs.1000 notes. Subsequently an announcement was made in the Union Budget 2017 that cashtransactions above Rs. 2 lakhs would be banned with effect from 1 April 2017.

These changes have had a cumulative impact on the revenues of the company. The sales ofthe company have declined by 3% over the sales of the previous year from Rs. 328.6 croresto Rs. 327.3 crores. The impact of these regulatory changes was also felt on the marginsof the company. The decline in sales and the margins of the company percolated to theEBIDTA level which declined from 2.2% in FY15-16 to 1.2% in FY16-17. The loss for theyear FY16-17 stood at Rs. 7.48 crores.

However the factors that made the market opportunity for luxury watches attractive arestill as robust as they were before these regulatory changes. The penetration of luxurywatches continues to remain low the number of HNI households continues to rise and thedemographics continue to remain favorable. Your Company is recalibrating its strategy torealign with the new environment with a greater emphasis on accessible luxury pricepoints and sharper focus on margin improvement operating leverage and capitalefficiency.

The Company is also investing in its omni-channel capabilities with a view to provide aseamless connect between the digital and physical stores. Further the Company isexpanding its footprint of stores to cities where the Company has little or no presence.In this regard the Company has signed up 7 new locations and continues to scout for moreopportunities for growth.

The Company's Swiss subsidiary Pylania SA in Switzerland reports financial performanceas per the expected levels made possible by adding some new streams of the revenue andcurtailing overheads. The recently implemented "Swiss Made" regulations andguidelines in Switzerland will create new opportunities for the watch component businessof the Company through Pylania.

During the year the former Joint Venture company Satva Jewellery and Design Limited(SJDL) (50:50 with Pascal Vincent Vaucher SA of Switzerland) became a 100% subsidiary ofKDDL. Now the joint venture agreement has been terminated and your company's Board hasapproved merger of this company with KDDL for greater efficiency in operations and betterutilization of resources and assets of SJDL.

LISTING OF SHARES

The equity shares of the company are listed at National Stock Exchange of India Ltd.(NSE) and Bombay Stock Exchange Ltd. (BSE). The Company has paid the Annual Listing Feesto both the stock exchanges for the financial year 2017-18.

DETAILS OF SUBSIDIARY JOINT VENTURE OR ASSOCIATES

As per the provisions of Section 129 of the Companies Act 2013 read with Companies(Accounts)Rules 2014 a separate statement containing the salient features of thefinancial statements of the subsidiary Companies/ Associate Companies is prepared in FormAOC-1 and the same is enclosed as Annexure-1 to this Report.

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated financial statements have been prepared by the Company's Management inaccordance with the requirements of Accounting Standard 21 issued by The Institute ofChartered Accountants of India (ICAI) and as per the provisions of the Companies Act2013.

As per the provisions of Section 136 of the Companies Act 2013 the Company has placedseparate audited accounts of its subsidiaries on its website www.kddl.com and a copy ofseparate audited financial statements of its subsidiaries will be provided to theshareholders at their requests.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return in Form MGT -9 for the Financial Year 2016-17 has beenenclosed with this report as Annexure 2.

NUMBER OF BOARD MEETINGS

The detail of number of meetings of the Board held during the financial year 2016-17forms part of the Report on Corporate Governance in terms of Regulation 34(3) ofSecurities & Exchange Board of India ( Listing obligations and Disclosurerequirements) Regulations 2015.

DIRECTOR'S RESPONSIBILITY STATEMENT

In accordance with the provisions of section 134(3)(c) of The Companies Act 2013 theBoard confirms and report that:-

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

NOMINATION & REMUNERATION COMMITTEE POLICY

The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management Personnel of theCompany. This policy also lays down criteria for selection and appointment of BoardMembers. The detail of this policy is explained in the Report on Corporate Governancewhich forms part of this report.

AUDITORS AND THEIR REPORT

As per the provisions of section 139 of The Companies Act 2013 other relevant rulesand as per resolution passed by the shareholders the term of office of M/s WalkerChandiok & Co. LLP Chartered Accountants Statutory Auditors of the Company who wereappointed for a period of two years at the 35th Annual General Meeting of the companyexpires with the conclusion of this Annual General meeting.

Further the company has received offer from M/s BSR & Co. LLP CharteredAccountants (Firm Registration No.101248W/W-100022)for appointment of Statutory auditorsof the company for a period of two years and as per terms of appointment theirappointment is subject to ratification by shareholders in the ensuing Annual GeneralMeeting. The Company has received a letter from them to the effect that their appointmentif made would be within the prescribed limits under section 139 of the Companies Act2013 and that they are not disqualified for such appointment within the meaning of section141 of the Companies Act2013.

The Notes on Accounts referred to in the Auditors' Report are self-explanatory andtherefore do not call for any further comments.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethere under the Company has appointed M/s P. S. Dua & Associates a firm of CompanySecretaries (C.P. No.3934.) to undertake the Secretarial Audit of the Company. TheSecretarial Audit Report in prescribed format MR-3 given by aforesaid Secretarial Auditorsis annexed to this Board Report as Annexure 3 and forms an integral part of this report.

There is no qualification or observation made by the Secretarial Auditors in theirreport.

PARTICULARS OF LOAN GUARANTEES AND INVESTMENTS UNDER SECTION 186

Details of Loans Guarantees and Securities and Investments covered under Section 186of the Companies Act 2013 given during the year under review have been given underAnnexure - 4 to the Directors Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The particulars of contracts or arrangements with related parties referred to inSection 188(1) of the Companies Act 2013 for the Financial Year 2016-17 in the prescribedForm AOC 2 has been enclosed with the report as Annexure-4.

AMOUNTS TRANSFERRED TO RESERVES

The Board of Directors of the Company has decided to transfer Rs 20 million to itsGeneral Reserves.

DIVIDEND

Your directors have recommended a dividend of 15% i.e. Rs. 1.50 per equity share forthe year ended 31st March 2017. The dividend shall be paid after the approval of theshareholders at the Annual General Meeting.

The total financial outgo of the dividend to be paid to shareholders will beapproximately Rs. 19.57 million (inclusive of Dividend Distribution Tax).

The dividend payout for the year under review has been formulated in accordance withthe Company's policy to pay sustainable dividend linked to long term growth objectives ofthe company.

TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 125 of the Companies Act 2013 the company has duly transferredthe Unclaimed Dividend up to the financial years 2007-08 to the Investor Education andProtection Fund established by the Central Government. As no dividend was declared during2008-09 hence no amount was required to be transferred to the said fund during the year.

MATERIAL CHANGES AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no Material changes and commitments in the business operations of the Companyfrom the financial year ended 31st March 2017 to the date of signing of the Director'sReport.

There are no significant and material orders passed by the Regulators and Courts thatwould impact the going concern status of the Company and its future operations.

RISK MANAGEMENT POLICY

The risk management framework defines the risk management approach of the Company andincludes periodic review of such risks and also documentation mitigating controls andreporting mechanism of such risks.

Some of the risks that the Company is exposed to are:

Risks of Specific Nature

Company as a part of normal business monitoring review and development plansidentifies the specific risks for each business segment and develops necessary action planto minimise the impact of same on business performance. Based on the present operationsand areas of interest for the company following specific nature risks are identified:

• Risks due to decline in overall demand for watches and over dependence on watchsegment;

• Risks pertaining to over dependence on few customers;

• Foreign Exchange Risks;

• Risk related to availability of Skilled manpower;

• Risks related to compliance and statutory requirements

Risk Strategy

Company recognizes that risk is an integral and unavoidable component of business andis committed to managing the risk in a proactive and effective manner. The Companybelieves that the Risk cannot be eliminated but it can be better managed by

• Transferred to another party who is willing to take risk say by buying aninsurance policy or entering into a forward contract in case of business involving use ofForeign exchange;

• Reduced by adopting good internal controls;

• Avoided by not entering into risky businesses;

• Retained to either avoid the cost of trying to reduce risk or in anticipationof higher profits by taking on more risk and;

• Shared by following a middle path between retaining and transferring risk.

Risk Management Framework

Company adopts systematic approach to mitigate risks associated with accomplishment ofobjectives operations revenues and compliance with the regulations. The Company believesthat this would ensure mitigating steps proactively and help to achieve the riskmanagement effectively.

The Company has constituted a Risk Management Committee of Chief Executive OfficerChief Financial Officer Chief Marketing Officer and Business Heads as its regular membersand other senior functional heads on invitation basis. The Committee is committed toreview periodically the various risks associated with the Company and report the same tothe Board.

Focus of the Company is on the three key elements viz. Risk Assessment /Identification Risk Management and Risk Monitoring.

• Potential Risks are identified and analyzed considering likelihood and itsimpact as a basis for determining how they should be managed.

• Risk Assessment consists of a detailed study of threats and vulnerability andresultant exposure to various risks. Based on the assessment and identification of therisks the committee decided the proactive steps for managing and monitoring these risks.

CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

The Company is committed to discharge its social responsibility as a good corporatecitizen. As part of its social responsibility the Company has contributed to KDDL-Ethosfoundation and the projects are undertaken by the trust formed for the same purpose. Theseprojects have been undertaken to carry services and in compliance to the provision of theSection 135 of the Companies Act 2013 read with Schedule VII and rules made there underand in accordance with Company's CSR Policy. The Report on CSR required under theCompanies (Corporate Social Responsibility Policy) Rules 2014 is set out as Annexure -5forming part of this report.

MECHANISM FOR EVALUATION OF BOARD COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to the provisions of the Companies Act 2013 and regulation 17(10) of SEBI(LODR) Regulations 2015 a structured procedure was adopted after taking intoconsideration the various aspects of the Board's functioning composition of the Board andits various Committees execution and performance of specific duties obligations andgovernance.

The performance evaluation of the Independent Directors was completed in time. Theperformance evaluation of the Chairman and the Non-Independent Directors was carried outby the Independent Directors. The Board of Directors expresses its satisfaction with theevaluation process.

DIRECTORS

During the year Mr. R.K.Saboo has communicated to the Board his desire to relinquishthe position as the Chairman of the Board and the Director of the Company with effect from1st December 2016 with a view to spend more time on social activities in which he isalready involved and also spare more time for himself. The Board agreed to his requestwith great reluctance. The Board noted and placed on record that Mr. R.K.Saboo hasrendered yeoman service and enormous contributions in establishment growth and progressof KDDL Limited and several group companies of Saboo Business Group in past three decades.Under his able leadership as Chairman of the Board for thirty years the Company hasgrown from strength to strength. The Board further decided that in recognition of Mr R KSaboo's invaluable contribution to the Company's affairs over the last three decades thehonorary title of Chairman Emeritus be conferred on him following his stepping down fromthe Board of Directors with effect from 1st December 2016.

Due to his pre-occupations Mr. Chandra Mohan resigned as Director of the companyw.e.f. 7th October 2016.

Mr. Jai Vardhan Saboo and Mr. Sanjiv Sachar were appointed as Additional Directors bythe Board of Directors on 12th December 2016 and 7th March 2017 respectively.

Both of the Additional Directors hold office till conclusion of this Annual Generalmeeting and it is proposed and recommended to appoint Mr. Jai Vardhan Saboo and Mr. SanjivSachar as Non Executive Directors.

Mr. Vishal Sati'nder Sood retires as Director of the company and being eligible offershimself for re-appointment.

DEPOSITS

The details of deposits covered under Chapter V of the Companies Act 2013 is givenhereunder:

1. Deposits Accepted/ renewed during the year : Rs. 54415000
2. Deposits outstanding at the end of the year : Rs. 112482000
3. Deposits remained unpaid or unclaimed as at the end of the year : Nil
4. Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so number of such cases and the total amount involved : NIL
5. The details of deposits which are not in compliance with the : Requirements of Chapter NIL

STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THEFINANCIAL STATEMENTS

A strong internal control culture is an important focus and thrust area in the company.The company has comprehensive internal systems controls and policies for all the majorprocesses to ensure the reliability of financial reporting timely feedback on achievementof operational and strategic goals compliance with policies procedures laws andregulations safeguarding of assets and economical and efficient use of resources.

The formalized systems of control facilitate effective compliance as per applicablelaws. The company also has well documented Standard Operating Procedures (SOPs) forvarious processes which are periodically reviewed for changes warranted due to businessneeds.

The Internal Auditors of the company continuously monitor the efficacy of internalcontrols/ compliance with SOPs with the objective of providing to the Audit Committee andthe Board of Directors an independent objective and reasonable assurance on the adequacyand effectiveness of the organization's risk management control and governance processes.

The scope and authority of the Internal Audit activity are well defined in the InternalAudit scope and guidelines approved by the Audit Committee. Internal Auditors develop arisk based annual audit plan with inputs from major stake holders and the major focusareas as per previous audit reports.

All significant audit observations are reviewed periodically and follow-up actionsthereon are reported to the Audit Committee. The Audit Committee also meet the company'sStatutory Auditors and Internal Auditors to ascertain their views on the financialstatements including the financial reporting system compliance to accounting policiesand procedures the adequacy and effectiveness of the internal controls and systemsfollowed by the company.

The top and senior management of the company also assesses opportunities forimprovement in business processes systems and controls provides recommendationsdesigned to add value to the organization and follow up on the implementation ofcorrective actions and improvements in business processes.

The senior management of the company meets periodically to assess the performance ofeach business segment and key functions of the company and areas for improvement ofperformance / controls are identified and reviewed on continuous basis.

Report on adequacy of Internal Financial Control is annexed with auditors report onfinancial statements.

CHANGES IN SHARE CAPITAL

During the Financial Year ended on 31st March 2017 the paid up equity share capitalof the Company has increased from Rs. 100848700/- to Rs. 108395860/- pursuant to theissue and allotment of 754716 equity shares at the price of Rs 265/- per share (includinga premium of Rs. 255/- per share) by way of preferential allotment to SAIF Partners IndiaV Limited as authorized by the shareholders by way of Special Resolution passed at ExtraOrdinary General Meeting held on 8th November 2016.

Further the Company has neither issued any shares with differential voting rights norany Sweat equity shares.

DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS

Details as required in Rule 12(9) of Companies (Share Capital and Debenture Rules2014) and pursuant to clause 12 (Disclosure in the Directors Report) of SEBI (EmployeeStock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 are enclosed as aAnnexure-6

DECLARATION BY INDEPENDENT DIRECTORS

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16(6) of SEBI (LODR) Regulations 2015.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required under section 134(3)(m) of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 relating to "Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and Outgo" is given in the Annexure - 7 formingan integral part of this Report.

CHANGE IN THE NATURE OF BUSINESS

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

MANAGERIAL REMUNERATION

Disclosure pursuant to section 197(12) of the Companies Act 2013 and Rule 5 ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isenclosed with this report as Annexure -8.

RECEIPT OF ANY COMMISSION BY MD / WTD FROM A COMPANY OR FOR RECEIPT OF COMMISSION /REMUNERATION FROM ITS HOLDING OR SUBSIDIARY

During the year under review Mr. Yashovardhan Saboo CEO received remuneration of Rs.3 lacs per month w.e.f. October 2016 onwards from the subsidiary company Ethos Limited asits Managing Director which is in accordance with the provisions of The Companies Act2013 and relevant rules made there under.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Board of Directors of the Company has adopted Whistle Blower Policy which aims forconducting the affairs in a fair and transparent manner by adopting highest standards ofprofessionalism honesty integrity and ethical behavior. All permanent employees of theCompany are covered under the Whistle Blower Policy.

A mechanism has been established for employees to report concerns about unethicalbehavior actual or suspected fraud or violation of Code of Conduct and Ethics. It alsoprovides for adequate safeguards against the victimization of employees who avail of themechanism and allows direct access to the Chairperson of the Audit Committee inexceptional cases. The Whistle Blower Policy of the Company is available at the link http://www.kddl.com/pdf/2015/KDDL_Whistle_Blower_Policy.pdf.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& RE-DRESSAL ) ACT 2013

The Company is employing about 259 women both permanent as well as contractual invarious fields within the factory premises and offices. The Company has in place a policyin line with the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition & Re-dressal) Act 2013. There was no complaint received from any employeeduring the financial year 2016-17 and hence no complaint is outstanding as on 31st March2017.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed Report on Management Discussion and Analysis pursuant to Schedule-V of SEBI(LODR) Regulations 2015 is annexed to this report as Annexure - 9.

CORPORATE GOVERNANCE

The Company has complied with all the conditions of Corporate Governance as stipulatedin SEBI (LODR) Regulations 2015 during the year ended on 31st March 2017 as per Reporton Corporate Governance annexed as Annexure -10 and a Certificate from the Auditors tothis effect for the year ended on 31st March 2017 is also enclosed with this report.

CASH FLOW ANALYSIS

In conformity with the provisions of Clause 34(2) of SEBI (LODR) Regulations 2015 theCash Flow Statement for the year ended on 31st March 2017 forms an integral part of theFinancial Statements.

PERSONNEL

Your Directors place on record their appreciation for the significant contribution madeby all the employees who through their competence hard work solidarity andco-operation have enabled the Company to perform better.

TRADE RELATIONS

The Board wishes to place on record its appreciation for the support and co-operationthat the Company received from its suppliers distributors retailers and otherassociates. The Company has always looked upon them as partners in its progress and hashappily shared with them rewards of growth. It will be Company's endeavor to build andnurture strong links based on mutuality respect and co-operation with each other andconsistent with customer interest.

ACKNOWLEDGMENTS

Your Directors take this opportunity to thank all the investors clients vendorsbanks regulatory and government authorities for their continued support.

For and on behalf of the Board of Directors
Date : 30th May 2017 (Yashovardhan Saboo)
Place : Chandigarh Vice-Chairman-cum-Managing Director

Annexure - 7

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGOPURSUANT TO THE PROVISIONS OF SECTION 134(3)(M) OF THE COMPANIES ACT 2013 READ WITH THECOMPANIES (ACCOUNTS) RULES 2014:

A. CONSERVATION OF ENERGY :

a) Steps taken for conservation: The Company continues to give highpriority to conservation of energy on an on-going basis. A few significant measures takenare:

i) Periodical and preventive maintenance of electric equipments and ensured optimumutilization of electric energy.

ii) Phased balancing of heating and lighting load.

iii) Increase in power factor by installing capacitor at the individual machines.

b) Steps taken for utilizing alternate sources of energy :- Cost of power isnegligible in total cost of production.

c) Capital investment on energy conservation equipments:-

Further energy conservation is planned through replacement of and modification ofinefficient equipments and by providing automatic controls to reduce idle running ofequipments.

B. TECHNOLOGY ABSORPTION:

Efforts made for technology absorption

1. Research and Development (R & D):

a) Specific areas on which R & D carried on by the Company: Research andDevelopment has been carried out for quality improvement new product developments andproductivity improvement.

b) Benefits derived as a result of the above R & D: Increase in overallefficiency productivity and quality of outgoing product and a wider range of watchcomponents along with incremental business from customers

c) Future plan of action: Further improvement in productionprocesses to develop new dial finishes new types of index development of tools andcomponents and reduction of costs would continue.

d) Expenditure on R&D: No separate account is being maintained by thecompany for the expenditure incurred on R&D. However the Company is incurringrecurring expenditure towards development activities.

2. Technology Absorption Adaptation & Innovation :

Efforts in brief made towards technology absorption adaptation and innovation: TheCompany is constantly engaged in in-house R&D and is in constant touch with the newtechnologies.

Benefits derived as a result of the above efforts: Due to continuous developmentalefforts the Company has been able to produce much more complicated dials which were beingimported until now.

3. i) Technology imported: None after 1995.
ii) Year of Import: N.A.
iii) Has technology been fully absorbed? : Yes.

iv) If not absorbed area where this has not taken place reasons thereof and futureplans of action: N.A.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO (Rupees in Millions)
2016-17
Foreign Exchange earnings 688.45
Foreign Exchange outgo 55.09