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Neogem India Ltd.

BSE: 526195 Sector: Consumer
NSE: N.A. ISIN Code: INE552E01014
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Neogem India Ltd. (NEOGEMINDIA) - Director Report

Company director report

BOARD'S REPORT

To

The Members

Neogem India Limited

Your Directors present the Twenty-Sixth Annual Report of the Company and the AuditedFinancial Statement for the year ended March 31 2017.

1. Financial Summary or highlights/performance of the Company:

The financial highlights of the Company for the year ended March 31 2017 issummarized below:

(Rs.)

Particulars For the year ended 31st March 2017 For the year ended 31st March 2016
Revenue from Operations 151488424 239812217
Other Income 0.00 0.00
Total Expenditure 154129060 288471922
Profit for the year before tax (2640636) (48659705)
Less: Income tax of earlier years (1827153) -
Deferred Tax (14142) 185579
Profit/(Loss) after Tax (4481931) (48476825)

During the year under review the Sales have decreased from Rs. 239812217/- inprevious year to Rs.151488424/-in current year due to adverse market conditions.Howeverthe loss incurred by the Company was reduced from Rs. 48446825/- in the previous yearto Rs. 4481931/-. The total expenditure of the Company was reduced to Rs.154129060/-from Rs.288471922/- in the previous year. The performance was hit by nationwide strikefor imposition of central excise duty on gold industry in April/May 16. It was furtheraffected in the months of November /December 2016 due to demonetization of high endcurrencies by the Government of India.

The Management of the Company has been putting in its best efforts to reduce the lossand is hopeful for better results in the coming years.

2. Dividend:

In view of loss incurred by the Company your Directors do not recommend any dividendfor the financial year ended 2016-17.

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'saffair:

The Gems and Jewellery sector is witnessing changes in consumer preferences due toadoption of western lifestyle. Consumers are demanding new designs and varieties injewellery. Therefore the Company is using the services of in-house designers in developingproduct designs as per emerging market trends. Your Company is therefore exercisingcaution in marketing by limiting its exposure to specific customers and regions.

5. Change in the nature of business if any:

There was no change in nature of business.

6. Auditors Report:

There are no observations/ qualifications contained in the Auditors' Report andtherefore there are no explanations to be provided for in this report. However yourDirectors wish to state that with reference to Note no. 2.23 of the Financial Statementthe company has availed working capital (Secured) loans from Punjab National Bank and Bankof India. During the year the accounts has been classified as non-performing assets by therespective banks.

7. Auditors:

M/s. Ashok Bairagra& Associates Chartered Accountants (Firm Registration No.118677W) Statutory Auditors of the Company would retire on the conclusion of this AnnualGeneral Meeting on completion of their term of appointment and since M/s. AshokBairagra& Associates Chartered Accountants are not eligible for re-appointment asStatutory Auditors of the Company as per the provisions of Section 139(2) of the CompaniesAct 2013 read with the Companies (Audit and Auditors) Rules 2014 the Board ofDirectors on recommendation of the Audit Committee recommends the appointment of M/s. DS Solanki& Co Chartered Accountants (Firm Registration No.124118w) as StatutoryAuditors of the Company for a term of 5 years in place of M/s. Ashok Bairagra&Associates to hold office from the conclusion of 26th Annual General Meeting until theconclusion of 31st Annual General Meeting subject to ratification of their appointment atevery Annual General Meeting. Consent letter and certificate from the said firm has beenreceived to the effect that their appointment as Statutory Auditors of the Company ifappointed at ensuing Annual General Meeting would be according to the terms andconditions prescribed under Section 139 of the Act and Rules framed there under.

A resolution seeking their appointment forms part of the Notice convening the 26thAnnual General Meeting and the same is recommended for your consideration and approval.

8. Management Discussion And Analysis:

The Management Discussion and Analysis Report for the financial year under review asstipulated under Regulation 34 of the Listing Regulations is annexed as a part of thisAnnual Report as Annexure 1.

9. Extract of the Annual Return:

In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theAnnual Return in Form MGT –9 is appended as Annexure 2 of the Board's Report.

10. Conservation of energy technology absorption and foreign exchange earnings andoutgo:

A. Conservation of energy:

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

Though our operations are not energy- intensive efforts have been made to conserveenergy by utilizing energy- efficient equipments.

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

The Company is using electricity as the main source of energy and is currently notexploring any alternate source of energy.

iii. The capital investment on energy conservation equipments:

Nil

B. Technology absorption:

i. The efforts made towards technology absorption:

The Directors are in constant touch with ongoing research in the world to upgrade andabsorb improved technology for better line of products and to yield better quality costreduction.

ii. The benefits derived like product improvement cost reduction product developmentor import substitution:

Utilisation of indigenous raw material has led to cost reduction.

iii. In case of imported technology (imported during the last three years reckoned fromthe 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 taking measures forincreasing exports developing new export markets for production and formulating exportplans.

2. Total foreign exchange used and earned:

(Rs. in Lacs)
Particulars 2016-17 2015-16
Foreign exchange earned on F.O.B. basis 149043372 183749474
Foreign exchange outgo (CIF value of Imports) 114931206 129053227

11. Directors and Key Managerial Personnel:

A. Changes in Directors and Key Managerial Personnel:

In accordance with the provisions of the Companies Act 2013 read with the applicablerules thereto including any statutory modification(s) or re-enactment thereof for thetime being in force (‘the Act') Mr. Gaurav Doshi (DIN00166703) who is liable toretire by rotation at the ensuing Annual General Meeting and being eligible seeksreappointment pursuant to the provisions of Section 152 of the Companies Act 2013.

Brief resume of the director proposed to be re-appointedand relevant informationincludingnature of their expertise in specific functional areas qualifications terms ofappointment details of remuneration names of the Companies in which heholds directorshipand the memberships/chairmanships of Committees of the Board hisshareholding in theCompany etc. as stipulated under the Listing Regulations and Secretarial Standardshavebeen furnished separately in the Notice convening this AGM.

Following are the person identified as Key Managerial Personnel of the Company pursuantto the provisions of Section 203 of the Act:

a) Mr. Gaurav Doshi (DIN: 00166703) Chairman & Managing Director
b) Mr. Ronak Doshi (DIN: 00102959) Whole Time Director-cum- CFO

B. Declaration by Independent Directors and re-appointment if any:

The Company has received the declarations u/s 149(7) of the Act from all theIndependent Directors of the Company confirming that they meet the criteria ofIndependence as prescribed under the Act. The Company has also received Disclosure ofInterest by Directors as per the provisions of Section 184 of Companies Act 2013 and andthat they are not disqualified to become Directors under the Act.In the opinion of theBoard of Directors all the Independent Directors fulfill the criteria of independence asprovided under the Act Rules made thereunderand that they are independent of themanagement.

C. Board Evaluation:

i. Independent Directors:

In accordance with the criteria suggested by the Nomination and Remuneration Committeethe performance of each independent director was evaluated by the entire Board ofDirectors (in the absence of the director getting evaluated) on various parameters likeengagement leadership analysis decision making communication governance interest ofstakeholders etc. The Board was of the unanimous view that every Independent Director wasa reputed professional and brought his rich experience to the deliberations of the Board.The Board also appreciated the contribution made by all Independent Directors in guidingthe management to achieving higher growth and continuance of each independent director onthe Board will be in the interest of the Company.

ii. Non-Independent Directors:

The performance of all the non-independent directors was evaluated by the IndependentDirectors at their separate meeting. Further their performance was also evaluated by theBoard of Directors. The various criteria considered for the purpose of evaluation includedleadership engagement transparency analysis decision making functional knowledgegovernance stakeholders etc. The Board was of the unanimous view that all thenon-independent directors were providing good business and people leadership.

iii. Familiarization Programme to Independent Directors:

Though it is not mandatory for the Company to provide any formal familiarizationprogramme however the Company provides suitable familiarization programme to IndependentDirectors so as to associate themselves with the nature of the industry in which theCompany operates and business model of the company in addition to regular presentation ontechnical operations marketing and exports and financial statements. In addition to theabove Directors are periodically advised about the changes effected in the Corporate LawListing Regulations with regard to their roles rights and responsibilities as Directorsof the Company.

12. Details of establishment of vigil mechanism for directors and employees:

The Company has established vigil mechanism pursuant to Section 177(9) of the CompaniesAct 2013 for Directors and Employees to report their concerns and has also taken steps tosafeguard any person using this mechanism from victimization and in appropriate andexceptional cases; there is direct access to approach Mrs. RenuKathuria (DIN: 01669882)Chairperson of the Audit Committee.

The Board of Directors affirms and confirms that no personnel have been denied accessto the Audit Committee. The Policy contains the provision for direct access to thechairperson of the Audit Committee in appropriate or exceptional cases.

13. Details of Committees of the Board:

Currently the Board has 3 Committees: the Audit Committee Nomination and RemunerationCommittee and Stakeholders' Relationship Committee as required under the applicableprovisions of the Companies Act 2013 and the Rules made thereunder the details of thecommittees are as follows:

(A) Audit Committe

The Board has constituted an Audit Committee comprising of Mrs. RenuKathuria(DIN:01669882) Independent Director as the Chairperson of the Committee Mr. JayantNagarkar(DIN: 00131405) Independent Director and Mr. GauravDoshi(DIN-00166703) Managing Directoras the members of the Committee. All the Members of the Audit committee are financiallyliterate and have accounting or relatedfinancial management expertise as required underthe Companies Act 2013.

The recommendations of the Audit Committee are always welcomed and accepted by theBoard and all the major steps impacting the financials of the Company are undertaken onlyafter the consultation of the Audit Committee. Further all the recommendations of theAudit Committee were accepted by the Board.

The terms of reference of the Audit Committee are as per the provisions of theCompanies Act.

Total five (5) meetings of the Audit Committee were held during the year 2016-17. Thedates of Meetings of the Audit Committees held during the financial year and attendance atthe meeting by the Committee Members are given in table below:

Name of Directors Date of Meetings and Presence
30.05.2016 13.08.2016 02.09.2016 14.11.2016 14.02.2017
Mrs. Renu Kathuria Yes Yes Yes Yes Yes
Mr. JayantNagarkar Yes Yes Yes Yes Yes
Mr. GauravDoshi Yes Yes Yes Yes Yes

B. Nomination and Remuneration Committee:

The Nomination and Remuneration Committee was constituted comprising of Mrs.RenuKathuria (DIN: 01669882) Independent Director as the Chairperson of the CommitteeandMr. JayantNagarkar (DIN: 00131405) Independent Director as the Member of theCommittee.The appointment and remuneration of the Directors and Key Managerial Personnelis recommended by theNomination & Remuneration Committee to the Board.The Committeehas framed a policy to determine the qualification and attributes for appointment andbasis of determination of remuneration of all the Directors Key Managerial Personnel andother employees. A copy of the policy is annexed as Annexure 3.

The Details of remuneration paid to the Directors are given in form MGT-9.

No Directors has drawn any remuneration during the financial year 2016-17.

There was no meeting of the Nomination and Remuneration Committee held during the year2016-17.

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 and Mr. JayantNagarkar(DIN:00131405) Independent Director as the member of the Committee. The role of theCommittee is 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.

Total four (4) meetings of the Stakeholders' Relationship Committee were held duringthe year 2016-17. The dates of Meetings of the Stakeholders' Relationship Committees heldduring the financial year and attendance at the meeting by the Committee Members are givenin table below:

Name of Directors Date of Meetings and Presence
30.05.2016 13.08.2016 14.11.2016 14.02.2017
Mrs.RenuKathuria Yes Yes Yes Yes
Mr. JayantNagarkar Yes Yes Yes Yes

Mr. Mr. GauravDoshi acted as Compliance Officer of the Company.

14. Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorshave appointed M/s Hemanshu Kapadia & Associates Company Secretaries in Practice tocarry out the Secretarial Audit of the Company for the financial year 2016-17.

The Report of the Secretarial Auditor for the financial year 2016-17 is annexedherewith as Annexure 4. The management's replies to the observations of the SecretarialAuditors are as under:

Sr. no. 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. There are two Non-Executive Directors on the Board and both are the Members of Nomination & Remuneration Committee. The Company needs 1 more Non-executive Director & is in the process of searching for the same. As soon as it appoints one more non-executive Director he/she will be appointed as Member of the Committee.
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.

On the recommendation of the Audit Committee the Board of Directors in their meetingheld on May 30 2017 has appointed M/s. Hemanshu Kapadia & Associates PractisingCompany Secretaries to carry out the Secretarial Audit of the Company for the financialyear 2017-18.

15. Number of meetings of the Board of Directors:

The Board of Directors met five (5) times during the Financial Year. The interveninggap between any two meetings was not more than 120 days as prescribed by the CompaniesAct 2013. Details of dates of Board meeting and attendance of the Directors are given intable below:

Name of Directors Date of Meetings and Presence
30.05.2016 13.08.2016 02.09.2016 14.11.2016 14.02.2017
Mr. GauravDoshi Yes Yes Yes Yes Yes
Mr. RonakDoshi Yes Yes Yes Yes Yes
Mr. JayantNagarkar Yes Yes Yes Yes Yes
Mrs. Renu Kathuria Yes Yes Yes Yes Yes

16. Particulars of contracts or arrangements with related parties:

The Company during the year has not entered into any transaction as specified underSection 188(1) of the Companies Act 2014 with related parties which are not on arms'length basis or are on arms' length basis and material in nature. Accordingly thedisclosure of Related Party Transactions to be provided under section 134(3)(h) of theCompanies Act 2013 in Form AOC – 2 is not applicable.

17. Directors' Responsibility Statement:

As stipulated underclause (c) of sub-section (3) of Section 134 of the Companies Act2013 your Directors subscribe to the Directors Responsibility Statement and state that:

a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed and there are no material departures from them;

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 Act 2013 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;

e) the Directors had laid down internal financial controls to be followed by theCompany & that such internal financial controls are adequate and were operatingeffectively; and

f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

18. Change in the Registrar & Share Transfer Agent (R & TA) of the Company:

The Registrar & Share Transfer division of the Company's R & TA i.e. SystemSupport Services was merged with Link Intimew.e.f. 15th October 2016.

19. Managerial Remuneration:

A. Details of the remuneration of each director to the median remuneration of theemployees of the Company and other details as required pursuant to Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areannexed asAnnexure 5.

B. Details of the top ten employees in terms of remuneration drawn falling within thepreview of Section 197 of the Companies Act 2013 read with Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexed as Annexure6.

20. Report on Corporate Governance

Your Company is committed to maintain the highest standards of corporate governance. Webelievesound corporate governance is critical to enhance and retain investor trust. Wehave implementedbest corporate governance practices in the Company to enhance long-termshareholder value andrespect minority rights in all our business decisions.

As per regulation 15 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015the Corporate Governance provisions contained in the said Regulations arenot applicable to theCompany hence your Company is not required to give report onCorporate Governance. Even thoughthe provisions of Corporate Governance are not applicableto the Company the Company is in wordsand spirit follows the most of the provisions ofCorporate Governance.

21. Risk Assessment and Management:

Your Company has a well-defined Risk Management System in place as a part of its goodCorporate Governance practices. Your Company has assigned the ownership of key risks tovarious Risk Owners and has made the concerned departments and officials responsible formitigation plans and review of these risks from time to time. All the risks are identifiedat various departmental levels and suitable mitigation measures are thereafter adopted.These are subjected to a quarterly review by the Board.

22. Internal Financial Control System and their Adequacy:

Internal Financial Controls are an integrated part of the risk management processaddressing financial and financial reporting risks. The management exercises financialcontrol on the operations through a well-defined budget monitoring process and otherstandard operating procedures. In addition to the above the Audit Committee and the Boardspecifically review the Internal Control and Financial Reporting process prevalent in theCompany. Assurance on the effectiveness of internal financial controls is obtained throughmanagement reviews control self-assessment and continuous monitoring by functionalexperts.At the end of the period the CFO gives a declaration in the appropriate format tocertify that the financial statements prepared are accurate and complete in all aspectsand that there are no significant issues that can impair the financial performance of theCompany.

23. Disclosure under the Sexual Harassment of Women at work place (PreventionProhibition and Redressal) Act 2013:

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. An Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this Policy. The Policy is gender neutral.

No complaints pertaining to sexual harassment were received during the F. Y. 2016-17.

24. Other Disclosures/Reporting:

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:

a) Details relating to deposits covered under Chapter V of the Act.

b) Issue of equity shares with differential rights as to dividend voting or otherwise.

c) Issue of shares (including sweat equity shares) to employees of the Company underany scheme.

d) Details of payment of remuneration or commission to Managing Director or JointManaging Director of the Company from any of its subsidiaries as the Company does not haveany Subsidiaries/Joint Venture/Associate Company.

e) Voting rights which are not directly exercised by the employees in respect of sharesfor the subscription/ purchase of which loan was given by the Company (as there is noscheme pursuant to which such persons can beneficially hold shares as envisaged undersection 67(3)(c) of the Companies Act 2013).

f) Details in respect of frauds reported by Statutory Auditors under section 143(12)other than those which are reportable to the Central Government.

g) Material changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report.

h) Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.

i) Details of Subsidiary/Joint Ventures/Associate Companies.

j) Particulars of loans guarantees or investments under Section 186.

k) Reporting on Corporate Social Responsibility as the Company does not attract any ofthe criteriaas mentioned in Section 135(1) of the Act

25. Acknowledgements:

The Board of Directors expresses their deep gratitude for the co-operation and supportextended to the Company by its customers suppliers Bankers and various Governmentagencies. Your Directors also place on record the commitment and involvements of theemployees at all levels and look forward to their continuous co-operation.

For and onbehalf of the Board of Directors
GauravDoshi
Chairman & Managing Director
DIN-00166703
G-32 Gems & Jewellery Complex III
Seepz (SEZ) Andheri (E) Mumbai-400 096
Date:1st September 2017
Place: Mumbai
Registered Office:
G-32 Gems & Jewellery Complex III
Seepz (SEZ) Andheri (E) Mumbai-400 096
CIN: L36911MH1991PLC063357