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Neogem India Ltd.

BSE: 526195 Sector: Consumer
NSE: N.A. ISIN Code: INE552E01014
BSE 00:00 | 23 Aug 3.15 0.10
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NSE 05:30 | 01 Jan Neogem India Ltd
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OPEN 3.15
CLOSE 3.05
VOLUME 1000
52-Week high 4.55
52-Week low 2.78
P/E
Mkt Cap.(Rs cr) 3
Buy Price 2.92
Buy Qty 31.00
Sell Price 2.90
Sell Qty 1000.00

Neogem India Ltd. (NEOGEMINDIA) - Director Report

Company director report

To

The Members

Neogem India Limited

The Directors presents the Twenty-Seventh Annual Report of the Companyand the Audited Statements of Accounts for the financial year ended 31st March 2018.

1. Financial Summary or highlights/performanceof the Company:

The financial highlights of the Company for the year ended March 312018 is summarized below:

Particulars For the year ended For the year ended
31st March 2018 31st March 2017
1.1 Revenue from Operations 57672965 151488424
1.2 Other Income 7251923 0
1.3 Total Expenditure 82271268 154129060
1.4 Profit for the year before tax -17346380 -2640636
1.5 Less: Current Tax 0 -1827153
Deferred Tax 187149 -14142
1.6 Profit After Tax & before Other comprehensive income (OCI) -17159232 -4481931
1.7 Other comprehensive income 0 0
1.8 Other comprehensive income for the year net of tax 0 0
1.9 Profit after Tax (PAT) & after OCI -17159232 -4481931

Note: In accordance with the notification issued by the Ministry ofCorporate Affairs the Company has adopted Indian Accounting Standards (Ind AS) notifiedunder the Companies (Indian Accounting Standards) Rules 2015 under Section 133 of theAct with effect from 1 April 2017. Till 31 March 2017 the Company used to prepare itsfinancial statements as per Companies (Accounting Standards) Rules 2014 (Previous GAAP)read with rule 7 and other relevant provisions of the Act. The Company has prepared itsfirst Ind AS Financial Statements of the Company.

During the year under review the Sales have decreased fromRs.151488424/-in previous year to Rs. 57672965/ -in current year due to adversemarket conditions. Consequently the loss suffered by the Company was increased from Rs.4481931/- in the previous year to Rs. 17159232/-. The total expenditure of theCompany was reduced to Rs. 82271268/- from Rs. 154129060/- in the previous year.

Further due to financial crunch the Company could not repay theworking capital loan (secured) to Punjab National Bank and Bank of India accordingly theaccounts of the Company has been classified as non-performing assets by the respectivebanks with effect from 31-03-2016. Pending confirmation received of the amount payable toBanks the Company has not provided for interest payable in the financial statement till31-03-2018 since the same is not quantifiable and accordingly the loss for the year isunderstated to that extent.

The Management of the Company has been putting in its best efforts toreduce the loss and is hopeful for better results in the coming years.

2. Dividend:

In view of loss incurred by the Company your Directors do notrecommend any dividend for the financial year ended 2017-18.

3. Reserves:

The Board does not propose to carry any amounts to reserves.

4. Brief description of the Company's working during the year/state of Company's affair:

The Gems and Jewellery sector is witnessing changes in consumerpreferences due to adoption of western lifestyle. Consumers are demanding new designs andvarieties in Jewellery. Therefore the Company is using the services of in-house designersin developing product designs as per emerging market trends. Your Company is thereforeexercising caution in marketing by limiting its exposure to specific customers andregions.

5. Change in the nature of business if any:

During the year there was no change in nature of business.

6. Material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report:

No material changes have occurred subsequent to the close of thefinancial year of the Company to which the balance sheet relates and the date of thereport.

7. Details of significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and Company's operations infuture:

There were no significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and Company's operations infuture.

8. Details of Holding/Subsidiary/Joint Ventures/Associate Companies:

The Company did not have any Holding/Subsidiary Company/JointVenture/Associate Company during the year under review. Accordingly the followingdisclosures of the same are not applicable:

• Form AOC-1 pursuant to first proviso to sub-section (3) ofsection 129 of the Companies Act 2013 read with rule 5 of the Companies (Accounts) Rules2014) under section 134 of the Companies Act 2013 in Form AOC - 1.

• Highlights of performance of subsidiaries associates and jointventure companies and their contribution to the overall performance of the Companypursuant to Rule 8(1) of the Companies (Accounts) Rules 2014) under section 134 of theCompanies Act 2013.

• Receipt of commission from any holding company or subsidiarycompany by a Director of the Company.

9. Auditors Report:

There are no observations/ qualifications contained in theAuditors' Report and therefore there are no explanations to be provided for in thisreport. However your Directors wish to state that with reference to the Opinion of theAuditor though the Company has stopped its manufacturing activity the management isputting in best efforts to bring a turn around and is hopeful of successful revival andthus the annual accounts are prepared on a going concern basis.

10. Statutory Auditors:

At the 26thAnnual General Meeting held on 29th September 2017 M/s. DS Solanki & Co Chartered Accountants (Firm Registration No.124118W) were appointed asthe Statutory Auditors of the Company to hold office till the conclusion of the 31stAnnualGeneral Meeting to be held in the calendar year 2022. In terms of the first proviso toSection 139 of the Companies Act 2013 the appointment of the Auditors need to be placedfor ratification at every subsequent Annual General Meeting since their first appointment.However pursuant to the notification dated 07th May 2018 of the Companies (Amendment)Act 2017 the said appointment is not required to be ratified every year so long as theAuditors are eligible & qualified to be appointed. However as in the resolutionpassed for their appointment the provision of ratification was provided the resolutionfor ratification of their appointment for their remaining tenure is proposed formembers' approval. In this regard the Company has received a communication from theAuditors to the effect that their appointment is in accordance with the provisions ofSection 141 of the Companies Act 2013.

11. Reporting of fraud by statutory auditors:

Further there was no fraud in the Company which was required toreport by statutory auditors of the Company under sub- section (12) of section 143 ofCompanies Act 2013.

12. Management Discussion And Analysis:

The Management Discussion and Analysis Report for the financial yearunder review as stipulated under Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations (“Listing Regulations”) is annexed as apart of this Annual Report as Annexure 1.

13. Extract of IheAnnual Return:

Pursuant to Section 92(2) and 134(3)(a) of the Companies Act 2013 readwith Rule 12(1) of the Companies (Management and Administration) Rules 2014 the extractof Annual Return is placed on website of the Company at the followinghttp://www.neogemindia.com/pdf/Extract-of-Annual-Report-MGT-9-Neogem-2017-18.pdf and whichshall be treated as part of this Report.

14. Conservation of energy technology absorption and foreign exchangeearnings and outgo:

The information required under Section 134(3)(m) of the Companies Act2013 read with the Companies (Accounts) Rules 2014 with respect to conservation ofenergy technology absorption & foreign exchange earnings / outgo is given below:

A. Conservation of energy:

i. The steps taken or impact on conservation of energy:

Though our operations are not energy- intensive efforts have been madeto conserve energy by utilizing energy- efficient equipments.

ii. The steps taken by the Company for utilising alternate sources ofenergy:

The Company is using electricity as the main source of energy and iscurrently not exploring any alternate source of energy.

iii. The capital investment on energy conservation equipments:

N.A.

B. Technology absorption:

i. The efforts made towards technology absorption:

The Directors are in constant touch with ongoing research to upgradeand absorb improved technology for better line of products and to yield better qualitycost reduction.

ii. The benefits derived like product improvement cost reductionproduct development or import substitution:

Utilisation of indigenous raw material has led to cost reduction.

iii. In case of imported technology (imported during the last threeyears reckoned from the beginning of the financial year):

No technology has been imported by the Company.

iv. The expenditure incurred on Research and Development: Nil

C. Foreign exchange Earnings and Outgo:

1. The Company is engaged in activates relating to exports and takingmeasures for increasing exports developing new export markets for production andformulating export plans.

2. Total foreign exchange used and earned:

Particulars 2017-18 2016-17
Foreign exchange earned on F.O.B. basis 48482695 149043372
Foreign exchange outgo 37065303 114931206

15. Directors and Key Managerial Personnel:

A. Changes in Directors and Key Managerial Personnel:

In accordance with the provisions of the Companies Act 2013 read withthe applicable rules thereto including any statutory modification(s) or re-enactmentthereof for the time being in force (‘the Act') Mr. Ronak Doshi (DIN:00102959) who is liable to retire by rotation at the ensuing Annual General Meeting andbeing eligible seeks reappointment pursuant to the provisions of Section 152 of theCompanies Act 2013.

Brief resume of the director proposed to be re-appointed and relevantinformation including nature of his expertise in specific functional areasqualifications terms of appointment details of remuneration names of the Companies inwhich he holds directorship and the memberships/chairmanships of Committees of the Boardhis shareholding in the Company etc. as stipulated under the Listing Regulations andSecretarial Standards have been furnished separately in the Notice convening this AGM.

B. Statement on Independent Directors' declaration and disclosureof disqualification by the Directors:

The Company has received the declarations u/s 149(7) of the Act fromall the Independent Directors of the Company confirming that they meet the criteria ofIndependence as prescribed both under the Act and the Securities and Exchange Board ofIndia (Listing Obligations and Disclosures Requirements) Regulations 2015 [‘ListingRegulations']. The Company has also received Disclosure of Interest by Directors fromMrs. Renu Kathuria as per the provisions of Section 184 of Companies Act 2013 and thatshe is not disqualified to become director under the Act; and in the opinion of the Boardof Directors all the Independent Directors fulfill the criteria of independence asprovided under the Act rules made thereunder read with the Listing Regulations and thatthey are independent of the management.

C. Board Evaluation:

Pursuant to the provisions of the Companies Act 2013 and theSecurities and Listing Regulations the Board has carried out an annual performanceevaluation of its own performance of individual Directors as well as the evaluation ofthe working of its Audit Nomination & Remuneration and Stakeholders'Relationship Committees. The Directors were evaluated on aspects such as attendance andcontribution at Board and Committee meetings communicating inter se board members andguidance and support to the management outside Board and Committee meetings. The Boardapproved the evaluation results as collated by the Nomination and Remuneration Committee.

D. Directors:

i. Independent Directors:

In accordance with the criteria suggested by the Nomination andRemuneration Committee the performance of each independent director was evaluated by theentire Board of Directors (in the absence of the director getting evaluated) on variousparameters like engagement leadership analysis decision making communicationgovernance interest of stakeholders etc. The Board was of the unanimous view that everyIndependent Director was a reputed professional and brought their rich experience to thedeliberations of the Board. The Board also appreciated the contribution made by allIndependent Directors in guiding the management to achieving higher growth and continuanceof each independent director on the Board will be in the interest of the Company.

ii. Non-Independent Directors:

The performance of all the non-independent directors was evaluated bythe Independent Directors at their separate meeting. Further their performance was alsoevaluated by the Board of Directors. The various criteria considered for the purpose ofevaluation included leadership engagement transparency analysis decision makingfunctional knowledge governance stakeholders etc. The Board was of the unanimous viewthat all the non-independent directors were providing good business and people leadership.

iii. Familiarization Programme to Independent Directors:

Pursuant to Regulation 25 (7) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company carries out FamiliarizationProgramme for the Independent Directors on their role rights responsibilities in theCompany the nature of the industry in which the Company operates and business model ofthe company in addition to regular presentation on technical operations marketing andexports and financial statements. In addition to the above Directors are periodicallyadvised about the changes effected in the Corporate Law Listing Regulations with regardto their roles rights and responsibilities as Directors of the Company

16. Details of Committees of the Board:

Currently the Board has 3 Committees: the Audit Committee Nominationand Remuneration Committee and Stakeholders' Relationship Committee. The Compositionof various committees and compliances as per the applicable provisions of the CompaniesAct 2013 and the Rules thereunder and Listing Regulations are as follows:

A. i. Audit Committee:

The Board has constituted an Audit Committee comprising of Mrs. RenuKathuria (DIN: 01669882) Independent Director as the Chairperson of the Committee andMr. Jayant Nagarkar (DIN: 00131405) Independent Director and Mr. Gaurav Doshi(DIN-00166703) Managing Director as the members of the Committee.

The recommendations of the Audit Committee are always welcomed andaccepted by the Board hence there is no further explanation to be provided for in thisReport and all the major steps impacting the financials of the Company are undertaken onlyafter the consultation of the Audit Committee.

A. ii. Details of establishment of vigil mechanism for directors andemployees:

The Company has established vigil mechanism pursuant to Section 177(9)of the Companies Act 2013 for Directors and Employees to report their genuine concerns /instances of any unethical / improper activity directly to Ms. Renu Kathuria (DIN:01669882) Chairperson of the Audit Committee as a Protected Disclosure and has alsotaken steps to safeguard any person using this mechanism from victimization and inappropriate and exceptional cases.

B. Nomination and Remuneration Committee:

The Nomination and Remuneration Committee comprises of Mrs. RenuKathuria (DIN: 01669882) Independent Director as the Chairperson of the Committee and Mr.Jayant Nagarkar (DIN: 00131405) Independent Director as the member of the Committee. TheCommittee has framed a policy to determine the criteria and qualification for appointmentof Directors positive attributes independence of Director attributes for appointmentand basis of determination of remuneration and performance evaluation of all theDirectors Key Managerial Personnel and other employees and methods for theirsustainability. The detailed policy is also posted onto the website of the Company at thehttp://www.neogemindia.com/pdf/Nomination-and-Remuneration-Policy.pdf.

C. Stakeholder's Relationship Committee:

The Stakeholder's Relationship Committee comprises of Mrs. RenuKathuria (DIN 01669882) Independent Director as the Chairperson of the said Committee andMr. Jayant Nagarkar (DIN:00131405) Independent Director and Mr. Ronak Doshi (DIN:00102959) Whole-time Director are the members of the Committee. The role of the Committeeis to consider and resolve securities holders' complaint. The meetings of theCommittee are held once in a quarter and the complaints are responded within the timeframe provided.

17. Secretarial Auditor and its Report:

Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theBoard of Directors have appointed M/s Hemanshu Kapadia & Associates CompanySecretaries in Practice to undertake the Secretarial Audit of the Company for FY 2017 -18. The Report of the Secretarial Auditor is annexed herewith as Annexure 2. Themanagement's replies to the observations of the Secretarial Auditors are as under:

Auditor's Observations Reply of Management
1. The Company has not appointed Internal Auditor Though the Company has not formally appointed Internal Auditor in accordance with the size of the Company the Company has proper internal control systems & procedures in place.
2. The Nomination & Remuneration Committee does not have 3 or more Non-Executive Directors. The Nomination & Remuneration Committee has 2 NonExecutive Directors. The Company needs 1 more Director & is in the process of searching for the same.
3. The Company does not have a Company Secretary. The Company is searching for a suitable candidate & shall appoint a Whole-time Company Secretary on finding the right candidate.
4. Mr. Jayant Nagarkar Independent Director stands disqualified u/s 164 of the Companies Act 2013 and thus cannot act as an Independent Director of the Company. Consequently the composition of Audit and Nomination and Remuneration Committee is not as per the Companies Act 2013. The Company is recently made aware of the same and accordingly Mr. Nagarkar is in process of removal of his disqualification. Meanwhile the Company is searching for an Independent Director to enable to comply with points 2 as well as 4 above.

18. Number of meetings of the Board of Directors:

The Board of Directors met four (4) times during the Financial Year.The intervening gap between any two meetings was not more than 120 days as prescribed bythe Companies Act 2013. Details of dates of Board meeting are as under:

Type of Meeting Date
1. Board Meeting May 30 2017
2. Board Meeting September 12017
3. Board Meeting December 14 2017
4. Board Meeting February14 2018

19. Number of meetings of the IndependentDirector:

The Independent director of the company met only once in a year on 1stSeptember 2017 to review the performance of Non-Independent Directors and the board as awhole and discussed other matters covered under their purview.

20. Particulars of loans guarantees orinvestments under section 186:

During the year under review the Company has not provided any loansmade investments gave guarantees or subscribed/purchased securities under Section 186 ofthe Companies Act 2013.

21. Particulars of contracts or arrangements withrelated parties:

The Company during the year has not entered into any transaction asspecified under Section 188(1) of the Companies Act 2014 with any related partiesAccordingly the disclosure of Related Party Transactions to be provided under section134(3)(h) of the Companies Act 2013 in Form AOC - 2 is not applicable.

22. Deposits:

The Company has neither accepted nor invited any deposit from thepublic within the meaning of Section 73 of the Companies Act 2013 read with the Companies(Acceptance of Deposit Rules) 2014.

However as disclosed in Note No. 22(a) forming part of Balance Sheetthe company is having outstanding balance of unsecured loan of Rs. 366320/- as on31.03.2018 from Directors of the Company for which proper declaration has been furnishedby them as required under Rule 2(viii) of the Companies (Acceptance of Deposits) Rules2014 during the period under review.

23. Voting Rights of Employees:

During the year under review the company has not given loan to anyemployee for purchase of its own shares as per section 67 (3) (c) of Companies Act 2013.Therefore the Company not required to made disclosure as per rule 6 (4) of Companies(Share Capital and Debentures) Rules 2014.

24. Disclosure Regarding Issue of Employee StockOptions:

The Company has not issued shares under employee's stock optionsscheme pursuant to provisions of Section Rule 12(9) of Companies (Share Capital andDebenture Rules 2014). So the question does not arise about voting rights not exercisedby employee.

25. Disclosure regarding issue of sweat equityshares:

The Company has not issued sweat equity shares pursuant to provisionsof Section 54 read with Rule 8 of Companies (Share Capital and Debenture Rules 2014)during the financial year.

26. Directors' Responsibility Statement:

Pursuant to Sections 134(3)(c) & 134(5) of the Companies Act 2013the Board of Directors of the Company hereby confirm that:

a) in the preparation of the Annual Accounts the applicable AccountingStandards have been followed along with proper explanation relating to materialdepartures if any;

b) the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period;

c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concernbasis;

e) the Directors had laid down internal financial controls to befollowed by the Company & that such internal financial controls are adequate and wereoperating effectively; and

f) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

27. Managerial Remuneration:

A. Details of the remuneration of each director to the medianremuneration of the employees of the Company and other details as required pursuant toRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are not applicable as the Company does not have any employees on its payroll as at31st March 2018 and none of the Directors or Key Managerial Personnel has drawn anyremuneration during the financial year 2017-18.

B. Details of the top ten employees in terms of remuneration drawnfalling within the preview of Section 197 of the Companies Act 2013 read with Rule 5(2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areannexed as Annexure 3.

28. Report on Corporate Governance:

As per the provisions of Securities and Exchange Board of India(Listing Obligations and Disclosures Requirements) Regulations 2015 the provisions ofCorporate Governance are not applicable to your Company. Thus the Company is not requiredto annex a Report on Corporate Governance.

29. Corporate Social Responsibility (CSR):

In line with the provisions of the Companies Act 2013 and the rulesframed there under with respect to the Corporate Social Responsibility (CSR) your Companyis not governed by the provisions of Section 135 of the Companies Act 2013 and Companies(Corporate Social Responsibility Policy) Rules 2014. So the Company is not required toformulate a policy on CSR and was not required to constitute a CSR Committee.

30. Risk Assessment and Management:

Your Company has a well-defined Risk Management System in place as apart of its good Corporate Governance practices. Your Company has assigned the ownershipof key risks to various Risk Owners and has made the concerned departments and officialsresponsible for mitigation plans and review of these risks from time to time. All therisks are identified at various departmental levels and suitable mitigation measures arethereafter adopted. These are subjected to a quarterly review by the Board.

31. Internal Financial Control System and theirAdequacy:

Internal Financial Controls are an integrated part of the riskmanagement process addressing financial and financial reporting risks. The managementexercises financial control on the operations through a well-defined budget monitoringprocess and other standard operating procedures. In addition to the above the AuditCommittee and the Board specifically review the Internal Control and Financial Reportingprocess prevalent in the Company. Assurance on the effectiveness of internal financialcontrols is obtained through management reviews control self-assessment and continuousmonitoring by functional experts. At the end of the period the CFO gives a declaration inthe appropriate format to certify that the financial statements prepared are accurate andcomplete in all aspects and that there are no significant issues that can impair thefinancial performance of the Company.

32. Secretarial Standards:

The Company complies with the Secretarial Standards 1 and 2 issued byInstitute of Company Secretaries of India.

33. Disclosure under the Sexual Harassment ofWomen at work place (Prevention Prohibition and Redressal) Act 2013:

As at 31st March 2018 there are no employees on the payroll of theCompany and thus the Company was not required to constitute Internal Complaints Committeeunder the Sexual Harassment of Women at work place (Prevention Prohibition and Redressal)Act 2013.

No complaints pertaining to sexual harassment were received during theF. Y 2017-18.

34. Cost Audit:

The Company does not fall within the provisions of Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules therefore nosuch records required to be maintained.

35. Other Disclosures/Reporting:

Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear under review:

a) Issue of equity shares with differential rights as to dividendvoting or otherwise.

b) Names of the Companies who have become or ceased to be itsSubsidiaries joint ventures or associate companies during the year.

36. Acknowledgements:

The Board of Directors expresses their deep gratitude for theco-operation and support extended to the Company by its customers suppliers Bankers andvarious Government agencies. Your Directors also place on record the commitment andinvolvements of the employees at all levels and look forward to their continuousco-operation.

For and on behalf of the Board of Directors
Gaurav Doshi
Chairman & Managing Director
DIN-00166703
G-32 Gems & Jewellery Complex III
Seepz (SEZ) Andheri (E) Mumbai-400 096
Date: 1st September 2018
Place: Mumbai
Registered Office:
G-32 Gems & Jewellery Complex III
Seepz (SEZ) Andheri (E) Mumbai-400 096
CIN: L36911MH1991PLC063357