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. () - Director Report

Company director report

Chairmans Speech

The Members of


Your Directors present with pleasure the Twenty Seventh Annual Report together with theAudited Statement of Accounts of the Company for the year ended March 31 2014.


(INR In Million)
Particulars 2013-2014 2012-2013
Gross Profit (32.08) (48.67)
Less: Depreciation 1.49 1.75
Profit before Tax (33.58) (50.41)
Provision for Tax – Current NIL NIL
Deferred NIL NIL
Profit after Tax (33.58) (50.41)
Add: Balance brought forward NIL NIL
Profit available for appropriation (33.58) (50.41)
Appropriations NIL NIL
Proposed Final Dividend NIL NIL
Corporate Dividend Tax NIL NIL
Balance carried to Balance Sheet (33.58) (50.41)


Turnover of the Company is INR. 126.82 million for the year ended 31st March 2014 ascompared to INR 65.27 million for the year ended 31st March 2013.


In order to conserve resources no dividend has been declared for the financial year2013 – 2014.



The Jewellery Industries is going through a slow down and export have shrunk and eventhe domestic market is witnessing a slow down.



About one million craftsmen are associated with this Industry. Their skillscan be utilized for designing and making modern Jewellery.

Availability of abundance of cheap and skilled labour in India.

• Presence of excellent marketing network spread across the world.

• Supportive government Industrail / EXIM Policy.


Small firms lacking technological / export information expertise.

• Low Productivity compared to labour in China Thailand and Srilanka.

• As the major raw material requirements need to be imported companies normallystock huge quantities of inventory carrying costs.


The jewellery industry is growing at a whopping rate with the boom in thedomestic and exports of Indian jewellery the shining materials of India brings moresparkle to the economy.

• Gems and jewellery export stands the second major foreign exchange earner forthe country. India has many natural advantages to emerge as Gems & Jewellery hub ofthe world.

• India has the largest and the best artisan force for designing and crafting thejewellery in the world. There is considerable scope of value addition in terms of capacitybuilding at the domestic front quality management and professionalism.

• India is the world’s largest manufacturing centre for gems and jewelleryand the Industry contributes over 12% to the total export earnings of the country andemploys highly skilled 1.5 million workers. The gems and jewellery industry is a majorexchange exchequer as major portion (around 80%) of its turnover was contributed byexports. Diamonds contribute to nearly 80% of the entire turnover and of this industry andhence many times the terms ‘gems and jewellery industry’ and ‘diamondindustry’ are used as synonyms.


Although India currently enjoys dominance in the world’s cut and polished diamondsmarket China may emerge as a viable rival if not in the near term certainly in thelonger term. An increasing number of diamond processors from Israel and Belgium and evenIndia are setting up facilities in China for a variety of reasons according to thereport on the Indian gems and jewellery industry. The primary reasons for these are:

• The labour force there like in India is cheap and disciplined.

• High economic growth in China over the past decade has resulted in a significantincrease in potential consumers in the high – income segment within the country.

• Quality of workmanship and technological development (technical expertise) arethe other areas where the Indian industry faces a threat from China.


The Company has two segments one is manufacturing and other is trading. The detailedreporting of segment wise performance of the Company is mentioned in Note No. B (12) ofSchedule 17 of the Financial statement attached.


As industry survey stated there has been a slowdown in the economy especially in thedeveloped economies and it may continue for some time due to demand contraction in thedeveloped markets such as the US and the European Union. However very recent figures andincrease in consumer confidence across globe have boosted the industry confidence andexperts are hoping for quick revival of consumer demand and growth in industry. All IndiaGem and Jewellery Trade Federation (GJF) are targeting growth in the forthcoming financialyear.

India possesses the world’s most competitive gems and jewellery market due to itslow cost of production and availability of skilled labour. As per the new research report"Indian Gems and Jewellery Market - Future Prospects to 2011" highly skilledand low cost manpower along with strong government support in the form of incentives andestablishment of SEZs has been the major driver for the Indian gems and jewellery market.The market also plays a vital role in the Indian economy as it is a leading foreignexchange earner and accounts for more than 12% of India’s total exports. Currentlythe Indian market remains highly fragmented but is rapidly transforming into an organizedsector.

The Indian Diamond Industry is witnessing a divergent trend in the demand for cut andpolished diamonds and maintaining its Global Presence. The Jewellery Industry is alsohaving its presence felt in the local as well as global market. The new Government and itseconomic policies will have an impact on the economic reforms and also on the Gem andJewellery Industry. The Rupees / Dollar fluctuations is having a lot of impact on theperformance of the industry and continues to do so in future also because the exports arelinked to dollar. The overall demand in the world market is excellent but due to problemsfaced by the U.S. economy the demand will be sluggish until and unless there isimprovement in the oil price. Revaluation of Yuan of China will have cost bearing effectin the labour market. This will open up the market for Indian Diamond and Jewellery andincrease its presence. The cash flow of the company is very encouraging with thesignificant growth in terms of turnover as well as profitability. Currently the industryis facing a slowdown due to global economic turmoil. But due to various government effortsand incentives coupled with private sector initiatives the Indian gems and jewellerysector is expected to grow at a CAGR of around 14% from 2012 to 2015. At present theIndian gems and jewellery market is dominated by the unorganized sector; however thetrend is set to change in near future with the branded jewellery market growing at anexpected CAGR of more than 41% in the coming four years.

The outlook for the Industry and consequently for the Company during the currentfinancial year is reasonably good subject however to the effects of prevailing disturbedscenario in the different parts of the world. The Company is putting a lot of efforts tostrengthen its financial position by increasing its working capital so as to expand itsoperations and export business. In view of the demand for Cut and Polished Diamonds andDiamond Studded Jewellery there is a continuous growth in diamond business. There isenough potential in the Indian and Overseas market for the Companies engaged in diamondtrade and export. The Company’s policy is to maintain goodwill in the market andflawless perfection at all levels. Customer’s satisfaction is the top most priority.


Risk is an important element of corporate functioning and governance. Your Company hasestablished the process of identifying analyzing and treating risks which could preventthe Company from effectively achieving its objectives. It ensures that all the risks aretimely defined and mitigated in accordance with the well structured risk managementProcess.


The Company has designed an effective Internal Control System to balance the financialoperational compliance and other risks and explore its business opportunities at thefullest to achieve its desired objectives.


Turnover of the Company is Rs. 126.82 million for the year ended 31st March 2014 ascompared to Rs. 65.27 million for the year ended 31st March 2013. Net loss for the yearended 31st March 2014 is Rs. 33.58 million against Net Loss Rs. 50.41 million for the yearended 31st March 2013.


The Company regards its human resources as one of its prime and critical resources. TheCompany proactively reviews policies and processes by creating a work environment whichencourages initiative provides challenges & opportunities and recognizes theperformance and potentials of its employees.

Comprehensive on-going training is offered to the employees to increase theircompetence level and job capability. There is a strong focus on team work and teambuilding. Employee relations continue to be cordial.

People are our most vital resources of the Company. The success or failure of theorganization is directly linked to the talent of the work force that it is able toattract retain & engage. We have created a favourable work environment thatencourages innovation and meritocracy in our employees which are our greatest resource ofsustainable competitive advantage.

We believe that to enhance the market presence of the Company it is important that newpersonnel entering the organization are highly skilled qualified and emotionally attachedto the organization. The rollout of this initiative has been extremely well received bythe target audience and also by customers opinion leaders and the media.

In our Company the key focus has been to change the mindset from "Human resourceutilization" to "Nurturing and leveraging Talent" Employee engagementremains a key focus of HR initiatives undertaken by our Company. The company helpsemployees to build new skills and competencies and also promotes knowledge sharing andteam building. Harmonious and constructive relations between the management and workmenhelp to maintain a cordial work atmosphere and achieve business growth.


The Board of Directors has prescribed norms of ethical practices and code of conductfor the Directors of the Company. The Code of Conduct of the Company lays down theprinciples values standards and rules of behavior that guide the decisions proceduresand systems of the Company in a way that (a) it contributes to the welfare of itsstakeholders and (b) respects the rights of all constituents affected by its operationsThe Code of Conduct is reviewed from time to time by the Board. The Code of Conduct of theCompany has also been posted on the Company’s website –


The statements made in this report describe the Company’s objectives expectationsand projections that may be forward looking statements. The actual results might differmaterially from those expressed or implied depending on the economic conditionsgovernment policies and other incidental factors which are beyond the control of theCompany and Management.


The Companies Act 2013 (the Act) came into force as on 1st April 2014 (in the mannerto the extent notified by the Ministry of Corporate Affairs). The Act has replaced theCompanies Act 1956 and has brought a new set of compliances for companies.

The new Legislation will facilitate greater transparency more Disclosures and enhancedcorporate governance. The Company is taking necessary steps for implementation of theprovisions of the Act.



In accordance with the Articles of Association of the Company and provisions of theCompanies Act 2013 at least two-third of our Directors shall be subject to retirement byrotation. One- third of these retiring Directors must retire from office at each AnnualGeneral Meeting Mr. Surendrakumar Sethi will retire by rotation at the ensuing AnnualGeneral Meeting and being eligible offer himself for re-appointment. Your Directorsrecommend his re–appointment.

The Company has decided to appoint Ms. Rakhi Jain as a Director liable to retire byrotation of the Company in the Annual General Meeting of the Company in respect of whomthe company has received a notice under Section 160 of the Companies Act 2013 from amember proposing her candidature for the office of Director.

The Company has also decided to re-appoint Mr. Varij Sethi and Mr. Surendrakumar Sethias a Managing Directors of the Company for a period of Five year and One year respectivelywith effect from 01st December 2014 liable to retire by rotation.

Pursuant to the provisions of the new Companies Act 2013 and revised Clause 49 of theListing Agreement (effective from October 1 2014) the Company has decided the term ofIndependent Directors as below:

Mr. Sunilkumar Barjatiya (DIN No.02242320) and Mr. Shrance Sethi (DIN No.03230097) beand is hereby appointed as an Independent Director of the Company to hold office for5(five) consecutive years for the term upto March 31st 2019 not liable to retire byrotation.


During the year under review the Company has not accepted any deposit from public asthe Company has stopped accepting deposits w.e.f. 12th September 2003 as per theresolution passed by the Board of Directors.

Total amount of deposits as on 31st March 2014 was Rs.50000/- (Rupees Fifty ThousandOnly). There were no outstanding or unclaimed fixed deposits as on 31st March 2014.Interms of the provisions of Section 58A of the Companies Act 1956 read with the Companies(Acceptance of Deposit Rules) 1975 the Company has not accepted fixed deposits duringthe year.


The Ministry of Corporate Affairs vide its General Circular No. 2 / 2011 dated 8thFebruary 2011 granted general exemption to the Companies from attaching a copy of theBalance Sheet the Profit and Loss Account and other documents of its subsidiary companiesas required to be attached under Section 212 of the Companies Act 1956 to the BalanceSheet of the Company subject to fulfillment of conditions stipulated in the circular.

Therefore the said documents of the following subsidiary companies viz. (1) S. B.& T Designs Ltd. (2) Mimansa Jewellery P. Ltd. will not be attached to the Annualreport. However the aforesaid documents relating to the subsidiary companies and therelated detailed information will be made available upon request by any member or investorof the Company. Further the Annual Accounts of the subsidiary companies will be kept openfor inspection by a member or an investor at the Registered Office of the Company or therespective subsidiary company.


The Consolidated Financial Statements of SB&T International Limited and itssubsidiaries Mimansa Jewellery Private Limited SB&T Designs Limited prepared inaccordance with Accounting Standard 21 is annexed.



Information pursuant to Section 217 (1) (e) of the Companies Act 1956 read with theCompanies (Disclosure of particulars in the Report of the Board of Directors) A rule 1988is annexed hereto and forms part of this report.


Since none of the employees of the Company was drawing remuneration in excess of limitslaid down pursuant to Section 217(2A) of the Companies Act 1956 read with the Companies(Particulars of Employees) Rules 1975 details therewith are not furnished.


To the best of their knowledge and belief and according to the information andexplanation obtained by them your Directors make the following statement in terms ofSection 217(2AA) of the Companies Act 1956:

(i) That in the preparation of the Annual Accounts for the year ended March 31 2014;the applicable accounting standards have been followed along with proper explanationrelating to material departures if any.

(ii) That the Directors have 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 ended March 31 2014 and of the profit of the Company for the said year.

(iii) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.

(iv) That the Directors have prepared the Annual Accounts for the year ended March 312014 on a going concern basis.


The Cost Audit under Section 233B of the Companies Act 1956 is applicable to theCompany for the Financial Year 2013-14 and accordingly Mr. Naresh Kumar Jethwani wereappointed as the Cost Auditor for the said year.


Pursuant to provisions of Section 139 of the Companies Act 2013 and the rules framedthereunder it is proposed to appoint M/s. M. M. Dubey & Co. Chartered AccountantsMumbai Statutory Auditors of your Company (Firm Registration No. 30453) from theconclusion of the ensuing AGM till the conclusion of Thirtieth AGM to be held in the year2017 subject to annual ratification by members at the Annual General Meeting.

The Auditors have confirmed that their re-appointment if made would be in accordancewith the Section 139 of the Companies Act 2013 and the rules made thereunder and thatthey are not qualified in terms of Section 141 of the Act.


Pursuant to the provisions of the Section 179(3) and 204 of the Companies Act 2013read with Rule 8 of the Companies (Meetings of Board and its Powers) Rules 2014 and as ameasure of good corporate governance practice the Board of Directors of the Companyhereby appoint M/s. Pramod S. Shah & Associates (Membership No. 334) PracticingCompany Secretaries Mumbai as a Secretarial Auditors of the Company for the financialyear 2014-2015 on such remuneration as may be decided by the Board in consultation withthe Secretarial Auditor.


Pursuant to the provisions of Section 138 and 179(3) of the Companies Act 2013 readwith Rule 8 of the Companies (Meetings of Board and its Powers) Rules 2014 the Directorsof the Company hereby appoint M/s. N. K. Suthar & Co. (Membership No.126694) Mumbaias Internal Auditors of the Company for the financial year 2014-2015 on such remunerationas may be decided by the Board in consultation with the Internal Auditor.


The details of the Committees of the Board including their composition are provided inthe Corporate Governance Section of this Annual Report.

Nomination and Remuneration Committee –Companies Act 2013.

Pursuant to the provisions of Section 178 of Companies Act 2013 the Board ofDirectors of the Company has consented the change in nomenclature of existing RemunerationCommittee to ‘Nomination and Remuneration Committee’ as provided under CompaniesAct 2013 and has also approved the revised terms of reference of the Nomination andRemuneration Committee as per the provisions of the Companies Act 2013 (effective from01/04/2014).

As per the said terms of reference approved by the Board the Nomination andRemuneration Committee shall formulate the criteria for determining the qualificationspositive attributes and independence of a director and recommend to the Board a policyrelating to the remuneration for the Director Key Managerial Person (KMP) and otheremployees. The Company’s policy on Directors appointment and remuneration and otherspecifications as mentioned above will be disclosed in the Boards’ Report as providedunder Section 134 (3) (e) once the same is formulated by the Committee.


Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges Report onCorporate Governance is furnished as a part of the Directors’ Report and forms partof this report. Certificate from the Practicing Company Secretaries regarding complianceis annexed hereto and forms part of this report.


Your Directors take this opportunity to express their grateful appreciation for theexcellent assistance and co-operation received from all our customers vendors investorsand bankers for their continued support during the year. We place on record ourappreciation of the contribution made by employees at all levels.

We thank the Government of India the Ministry of Communication and InformationTechnology the State Government various government agencies and the Government of UnitedStates of America where we have operations for their immense support and look forward totheir continued support in the future.

For and on behalf of the Board of Directors
Place: Mumbai Surendra Kumar Sethi
Date: 4th September 2014 Chairman
Registered Office:
Yusuf building 1st floor Room No. 15
Abdulrehman street
Mumbai - 400 003.

Statement pursuant to section 217 (1) (e) of the Companies Act 1956 read with theCompanies (Disclosure of Particulars in the Report of the Board of Directors) Rules 1988and forming part of the Directors’ Report for the year ended 31st March 2014.


(a) Energy conservation measures taken:

Appropriate measures have been initiated to conserve energy. The Company has alwaysbeen conscious about the need for conservation of energy.

(b) Additional investments and proposals if any being implemented for reduction ofenergy consumption: The efforts for conservation of energy are on an ongoing basisthroughout the year.

(c) The impact of the measures at (a) and (b) above for reduction of energy consumptionand consequent impact on the cost of production of goods:

The measures taken have resulted in savings in the cost of production.


(a) Efforts made in technology absorption:

Research & Development (R & D)

1. Specific areas in which R & D carried out by the Company:

The Company’s technical collaboration with S. B. & T. Gems Imports Inc. USAprovides for ongoing transfer of technology. Through Company’s R & D emphasis hasbeen laid on adaptation of technology to suit local conditions mainly in areas of processimprovement optimization of material usage and development of new designs.

2. Benefits derived as a result of above R & D:

Cost reduction Technology Upgradation Development of new designs in productsand processes.

3. Future plan of action:

Continuation of the present work in R & D for introduction of new products andprocesses and improvement in the existing products and processes in various areas in whichthe Company is operating.

4. Expenditure on R & D:

As part of its development process the Company incurs ongoing expenditure of a revenuenature on developing new products. This expenditure forms part of the general factoryoverheads of the Company hence the precise amount is not quantifiable.

(b) Technology absorption adoption and innovation:

1. Efforts in brief made towards technology absorption adaptation andinnovation:

Imparting training to personnel by visiting technicians of the Foreign Collaborators invarious manufacturing techniques. The Company is also constantly investing in newequipments from time to time to keep abreast with international standards and technology.

2. Benefits derived as a result of above efforts:

Improvement of systems in existing products/processes in related manufacturing areasCost reduction Introduction of new products.


The total exports for the year 2013 – 2014 amounts to Rs. 119023533/-. Effortsare being made to develop new products keeping in view the international market which issensitive to changing fashions.

For and on behalf of the Board of Directors

Surendra Kumar Sethi


Place: Mumbai

Date: 4th September 2014


Information and explanation on reservation qualification or adverse remarks containedin the Auditors Report

We invite your attention to point 19 20 and point 22 of the Auditor’s Report andexplanation etc. thereon are as under:

1) Refer point 19 of the Auditors Report:

As pointed out by the Statutory Auditor the Assessing officer has done the taxassessment in the Company from the Financial Year 2009-10 to Financial Year 2013- 2014 andthe amounts which was demanded by the Assessing officer are not justifiable and forjustifying the same the Company has filed the review application with the concerndepartment also presented the facts and submitted all the information or other relateddocuments as required by the concerned department from time to time. The case is stillpending with the concerned department and once the final order is made the Company willmake the payment of all undisputed amount in respect of dues which are outstanding for aperiod of more than six months.

2) Refer point 20 of the Auditors Report:

As pointed out by the Statutory Auditor the company has suffered huge losses due to asteep fall in the business of the company the Company was delayed in making payment ofCustom duty and due to the delayed payment made the Custom department has charged highpenalties and interest the Company has filed the review application with the concerndepartment and has requested for charging reasonable penalties and interest and the caseis still pending. However once the final order is made the Company will make the paymentof outstanding dues. The management is making every effort to grow the business of thecompany and assuring that the business of the company will be brought back on track in thecoming years.

3) Refer point 22 of the Auditors Report:

As pointed out by the Statutory Auditor the company has suffered huge losses due to asteep fall in the business of the company and due to financial difficulties the Companywas irregular in repayment of dues however the Company has asked for one time settlementfor the default made by the Company in repayment of banks Loans from the Bank and thereply is to be made by the Bank on the same. However the Company will clear all repaymentof dues once the reply is made by the Bank.

For and on behalf of the Board of
S.B. & T. International Limited
Varij Sethi Surendra Kumar Sethi
Managing Director Chairman & Managing Director
Place: Mumbai
Date: 4th September 2014