Your Directors have pleasure in presenting their 25th Annual Report on theAudited Statement of Accounts for the
Financial Year ended March 31 2017.
1. FINANCIAL RESULTS
Amount in Lakhs
| ||Consolidated ||Standalone |
|Particulars ||2016-17 ||2015-2016 ||2016-17 ||2015-2016 |
|Gross Income ||29018.18 ||32645.79 ||29003.05 ||32512.34 |
|Profit Before Interest and Depreciation ||888.31 ||948.88 ||880.13 ||839.81 |
|Finance Charges ||443.76 ||544.17 ||443.76 ||438.05 |
|Provision for Depreciation ||22.10 ||16.12 ||18.78 ||13.24 |
|Net Profit Before Tax ||422.45 ||388.59 ||417.59 ||388.52 |
|Provision for Tax ||133.26 ||118.57 ||130.74 ||120.64 |
|Net Profit After Tax ||289.20 ||270.02 ||286.85 ||267.89 |
|Balance of Profit brought forward ||4590.78 ||4320.76 ||4582.77 ||4314.88 |
|Balance available for appropriation ||0.00 ||0.00 ||0.00 ||0.00 |
|Proposed Dividend on Equity Shares ||0.00 ||0.00 ||0.00 ||0.00 |
|Tax on proposed Dividend ||0.00 ||0.00 ||0.00 ||0.00 |
|Transfer to General Reserve ||0.00 ||0.00 ||0.00 ||0.00 |
|Fixed Assets Written off as per Section ||0.00 ||0.00 ||0.00 ||0.00 |
|123(2) of Companies Act 2013 || || || || |
|Surplus carried to Balance Sheet ||4879.98 ||4590.78 ||4869.62 ||4582.77 |
2. Brief description of the Company's working during the year/State of Company's affairConsolidated:
The consolidate total income decreased from Rs. 32645.79 Lakhs to Rs. 29018.18Lakhs decrease of 11.11% over the previous financial year. The ConsolidatedNet Profit after Tax increase from Rs. 270.02 Lakhs to Rs. 289.20 Lakhs an increaseof 7.10% over the previous financial year. The detailed analysis of the consolidatedresults forms part of the Management Discussion & Analysis Report provided separatelyas part of the Annual Report.
The Standalone total income decrease from Rs. 32512.34 Lakhs to Rs. 29003.05Lakhs decrease of 10.79% over the previous financial year. The standaloneProfit After Tax an increase from Rs. 267.89 Lakhs to Rs. 286.85 Lakhs an increaseof 7.08% over the previous financial year.
3. COMPANY'S PERFORMANCE AND FUTURE OUTLOOK
Your Company's growth declined during the year under review. The Company's Revenuefrom operation has fall to Rs. 28608.53 Lakhs (current year) from Rs. 32099.15 Lakhs(previous year ) which decreased by 10.87%. The share of
Domestic and Export Sales in the revenue from operations is Rs. 159.27 Crores and Rs.125.48 Crores respectively.
During the year under review the Company has opened one branch office in India i.e.Delhi in order to capture the market and expand its business in India. The Company hastaken initiative to utilize its own manufacturing facilities and thereby to reduce theoverall cost of production which results in economies of scale in the manufacturingfacilities.
The shrinking business potential on a long term basis is a cause for concern. Import ofgold are coming down in volume terms does not auger well for the growth of the industry.
Highly fluctuating gold price movement both on account of international price of goldand also on account of INR behavior vs US$.
Extra ordinary Government regulations deployed to control the business in all aspects.
The effect of rupee demonetization is yet to be seen fully.
In a falling interest regime all the assets classes are stagnated including gold thatprompts the customer to postpone purchase of gold as an investment to a future date.
The implementation of central excise and the proposed GST introduction will extremelyaffect the business model followed by many entities.
Continued monsoon failures in the past three consecutive years affected the purchasingpower of the rural community where from we operate most of our retail outlets.
Apart from these new challenges the existing challenges faced by the industry like TCScompulsory furnishing of PAN statutory hallmarking condition exorbitant wage increasenecessitated by Minimum Wages Act local laws & its administration continued in thisyear as well.
Due to strict implementation of various Government restrictions imposed on the trade weare able to see a visible shift in the polarization impact of the industry. It is likelyto gather momentum in the post GST era in a couple of years. A marked reduction in thecost of funds by way of metal loan augers well for the industry in the long run. It givescomfort as a hedging instrument and also as interest saver.
If the first 45 days of the current year is to be reckoned for the expected performanceit is likely that the year 2017-18 will be promising in spite of constraints faced by theindustry.
In general expanding gross profit margin better stock turnover times improved volumeoff take and planned reduction in per gram "cost of sale" of gold willcollectively contribute to a sustainable growth in both top & bottom line of thecompany in the years to come.
Barring unforeseen circumstances the current year 2017-18 would see a decent growth inperformance on all fronts.
However the addition of 1 new branches to our existing branch of our business willensure better visibility and good volume growth in 2016-17.
4. DIVIDEND AND RESERVES
Your Directors do not recommend any dividend for the financial year ended March 312017 in view to conserve the resources of the Company for any future expansion programmes.
5. SHARE CAPITAL
The Paid-up Equity Share Capital of the Company as on 31st March 2017 isRs. 208768000.00 comprising of 20876800 shares of Rs. 10.00 each. During the yearunder review the Company has not issued any equity shares.
6. DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company at their meeting held on 28.05.2016 appointed Mr.Dhruvin B. Shah as an
Additional Director of the Company and subsequently he was appointed as an IndependentDirector to hold office for a period of 5 (five) consecutive years at the 24 thAnnual General Meeting.
In accordance with section 152(6) of the Companies Act 2013 and in terms of Articlesof Association of the Company Mr. Mahendra M. Chordia (DIN: 00175686) Director of theCompany retires by rotation and being eligible; offers himself for re-appointment at theforthcoming 25th Annual General Meeting. The Board recommends the saidreappointment for shareholders' approval.
All the directors of the Company have confirmed that they satisfy the fit and propercriteria as prescribed under the applicable regulations and that they are not disqualifiedfrom being appointed as directors in terms of Section 164(2) of the Companies Act 2013.
Mr. Sunil G. Jain has resigned from the post of Whole Time Director of the Company fromthe Directorship of the
Company with effect from 26th July 2017.
7. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) (c) & 134(5) of the Companies Act 2013 the Board ofDirectors of the Company hereby confirms that:
(a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures; (b) thedirectors have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitand loss of the company for that (c) the directors have taken proper and sufficient carefor the maintenance of adequate accounting records in accordance with the provisions ofthis Act for safeguarding the assets of the company and for preventing and detecting fraudand other irregularities; (d) the directors have prepared the annual accounts on a goingconcern basis; and
(e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
8. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The information required pursuant to Section 197 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Amendment Rules 2016 is enclosedas Annexure I and forms part of this
Further no employee of the Company is earning more than the limits as prescribedpursuant to Section 197 read with Rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Amendment Rules 2016 in respect of employees of the Company.
Further the names of top ten employees in terms of remuneration drawn are disclosed inAnnexure II and forms part of this Report.
9. NUMBER OF BOARD MEETINGS
A calendar of meetings is prepared and circulated in advance to the Directors. Duringthe year 5 (Five) Board Meetings were convened and held the details of which are givenin the Corporate Governance Report. The intervening gap between the meetings was withinthe period prescribed under the Companies Act 2013 and SEBI
(Listing Obligation & Disclosure Requirements) Regulation 2015.
10. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligation& Disclosure Requirements)
Regulation 2015 the Board has carried out an annual performance evaluation of its ownperformance the directors individually as well as the evaluation of the working of itsCommittees. The Directors expressed satisfaction with the evaluation process. The mannerin which the evaluation has been carried out has been explained in the CorporateGovernance Report.
11. INDEPENDENT DIRECTORS
The Independent Directors have submitted their disclosure to the Board that theyfulfill all the requirements as to qualify for their appointment as Independent Directorunder the provisions of Section 149 read with Schedule IV of the Companies Act 2013 aswell the SEBI (Listing Obligation & Disclosure Requirements) Regulation 2015.
12. NOMINATION AND REMUNERATION POLICY
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors. This policy also lays down criteria for selection andappointment of Board Members. The details of this policy are explained in the CorporateGovernance Report.
In terms of requirements prescribed under Section 178(3) of the Companies Act 2013the Nomination and Remuneration Policy inter-alia providing the terms for appointment andpayment of remuneration to Directors and Key Managerial Personnel is annexed to thisReport as Annexure III.
13. DETAILS OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
As at March 31 2017 your Company had following Subsidiary Company (ies) howeverthere was no Joint Venture or Associate Company (ies):
|Sr. No. Name of the Company ||Category ||Date of becoming Subsidiary/ JV/ Associate Company ||Date of ceasing as Subsidiary/ JV/ Associate Company |
|1 Swarnsarita Realty Private Limited ||Subsidiary ||24/12/2012 ||NIL |
- Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of financial statements of subsidiary company (ies) inFormNo. AOC-1 is attached separately as an Annexure IV to this report.
14. RECONSTITUTION OF THE AUDIT NOMINATION AND REMUNERATION COMMITTEE OF THE BOARD:
Due to changes in the composition of the Board of Directors the constitution of theAudit Nomination and Remuneration committee stands reconstituted as under:
|Name of the Director ||Category |
|*Mr. Dhruvin Shah ||Chairman & Non-Executive Independent |
|Mr. Vishal Nolkha ||Non-Executive Independent |
|Mr. Ashok Surana ||Non-Executive Independent |
(i) * Appointed as Chairman with effect from 14th December 2016.
15. STATUTORY AUDITORS' AND AUDITORS' REPORT
At the Annual General Meeting held on September 22nd 2014 M/s. SureshAnchaliya & Co. Chartered Accountants were appointed as Statutory Auditors of theCompany to hold office till the to be held for the financialyear ended 2019. In the termsof the first proviso to Section 139 of the Companies Act 2013 the appointment of theAuditors shall be placed for ratification at every Annual General Meeting. Accordinglythe appointment of M/s. Suresh Anchaliya & Co. Chartered Accountants as StatutoryAuditors of the Company is placed for ratification of the Shareholders. In this regardthe Company has received a Certificate from the Auditors to the effect that if they arereappointed it would be in accordance with the provisions of Section 141 of the CompaniesAct 2013.
The Board has duly reviewed the statutory Auditors' Report on the Accounts. Theobservations and comments appearing in the Auditors' Report are self-explanatory and donot call for any further explanations/comments/ clarification by the Board.
16. SECRETARIAL AUDIT
In terms of Section 204 of the Act and Rules made there under M/s. Deep Shukla &Associates Practicing Company
Secretaries have been appointed Secretarial Auditors of the Company. The SecretarialAudit Report is enclosed as Annexure V to this report.
Explanation under Section 134(3)(f)(ii) of the Companies Act 2013:
- Company is in process of searching suitable candidate for Independent Director onBoard of unlisted Indian material subsidiary as per regulation 24 of SEBI (LODR)Regulations 2015.
- Non filingof e-form MGT-14 on MCA portal with respect to the investment made and loantaken by the company due to Technical Issues in filing of e-forms.
- The process of transfer of shares to IEPF account is in process and is furthersubject to clarifications/notifications as may be issued by the Ministry of CorporateAffairs.
17. INTERNAL AUDIT & CONTROLS
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations.
The scope and authority of the Internal Audit function is definedin the Internal auditManual. To maintain its objectivity and independence the Internal Audit function reportsto the Chairman of the Audit Committee of the Board and to the Managing Director.
The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal the Company its compliance with operating systems accounting procedures andpolicies at all locations of the Company. Based on the report of internal audit functionprocess owners undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observation and recommendations along withcorrective actions thereon are presented to the Audit Committee of the Board.
Further M/s. Hiran & Associates Chartered Accountants issued their Internal AuditReport for the financial year ended 31st March 2017.
18. EMPLOYEES' STOCK OPTION PLAN
The Company has not provided stock options to any employee of the Company.
19. VIGIL MECHANISM
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Company atwww.swarnsarita.com. The employees of the Company are made aware of the said policy at thetime of joining the Company.
20. RISK MANAGEMENT POLICY
The Company has laid down the procedure to inform the Board about the risk assessmentand minimization procedures. These procedures are reviewed by the Board annually to ensurethat there is timely identification and assessment of risks measures to mitigate themand mechanisms for their proper and timely monitoring and reporting.
21. EXTRACT OF ANNUAL RETURN
The details forming part of the Extract of the Annual Return in Form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is included in this Report as AnnexureVI and forms part of this Report.
The Company has not accepted nor renewed any fixed deposits during the FY 2016-2017.
23. LOANS INVESTMENTS & GUARANTEES
Particulars of loan given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the notes to the standalone financial statement.(Please refer to Note Nos. 3 & 4 to the standalone financial
24. RELATED PARTY TRANSACTIONS
Details of material transactions with Related Parties on an arm's length basis withrespect to transaction covered under Section 188(1) of the Act in the prescribed FormNo. AOC-2 is annexed with this Report and marked as
Further details of Related Party Transaction as required under to be disclosed byAccounting Standard 18 on
"Related Party Disclosures" specified under Section 133 of the Act readwith rule 7 of the Companies (Accounts)
Rules 2014 are given in the Notes to the Financial Statements.
25. CORPORATE GOVERNANCE CERTIFICATE
A Report on Corporate Governance along with a certificate from the Auditors of theCompany regarding the compliance of conditions of corporate governance as stipulated underSEBI (Listing Obligation & Disclosure Requirements)
Regulation 2015 and forms a part of this Annual Report.
26. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report which gives a detailed state of affairsof the Company's operations forms a part of this Annual Report.
27. DISCLOSURE REQUIREMENTS
As per SEBI Listing Regulations the Corporate Governance Report with the Auditor'sCertificate thereon and the
Management Discussion and Analysis are attached which form part of this Report.
28. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE
(A) Conservation of energy-
Even though its operations are not energy-intensive and manually executed significantmeasures are taken to reduce energy consumption by using energy-efficient equipment. TheCompany regularly reviews power consumption patterns across all locations and implementrequisite improvements/changes in the process in order to optimize energy/ powerconsumption and thereby achieve cost savings. Energy costs comprise a very small part ofthe Company's total cost of operations. However as a part of the Company's conservationof energy programme the management has appealed to all the employees / workers toconserve energy.
(B) Technology absorption-
(i) the efforts made towards technology absorption;
The Company values innovation and applies it to every facet of its business. Thisdrives development of distinctive new products ever improving quality standards and moreefficient processes.
The Company has augmented its revenues and per unit price realization by deployinginnovative marketing strategies and offering exciting new products. The depth of designingcapabilities was the core to our success over the years.
The Company uses the service of in-house designers as well as those of freelancers indeveloping product designs as per the emerging market trends. The Company uses innovationin design as well as in technology to develop new products.
(ii) the benefits derived like product improvement cost reduction product developmentor import substitution;
As a result of the above the following benefits have been achieved: a. Betterefficiency in operations b. Reduced dependence on external sources for technology fordeveloping new products and upgrading existing products c. Expansion of product range andcost reduction d. Greater precision e. Retention of existing customers and expansion ofcustomer base f. Lower inventory stocks resulting in low carrying costs
(iii) in case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year)-
The Company has not imported any technology during the year under review.
(a) the details of technology imported; (b) the year of import;
(c) whether the technology been fully absorbed;
(d) if not fully absorbed areas where absorption has not taken place and the reasonsthereof; and (iv) the expenditure incurred on Research and Development.
The Company has not expended any expenditure towards Research and Development duringthe year under review.
RESEARCH AND DEVELOPMENT (R&D):
R & D is focused on the development of new products both for export and domesticmarkets. Due emphasis is placed on improving quality standards with enhanced customersatisfaction. This was primarily achieved through process improvements control onsystems reduction of waste and energy conservation. Effective use of tools and smallgroup activities with the technological support resulted in controlling the variations inprocesses maximizing the productivity and minimizing the cost of production.
1. Specific areas in which R & D carried out by the Company: i) Materialevaluation/Characterization of raw materials and rough diamonds. ii) Planning cutting andpolishing of diamonds and manufacturing of jewellery. iii) In house development of advancesoftware for preventing human errors. iv) Designing of jewellery and development of newcuts in diamonds. v) Waxing wax setting casting filling and polishing of jewellery.vii) Capability development for in- house processes designs and strategic applications ofmaterial for product improvement.
Efforts continued in the direction of fine tuning of the jewellery manufacturing andthe changes in designs.
These resulted in improvements in product performance.
2. Benefits derived as a result of R & D activity:
The R & D activities helped to add new quality products and to achieve greatercustomer acceptance in the retail market. These activities also enabled the Company toreduce waste increase productivity achieve higher "customer satisfaction" andderive following benefits: a. Increase product range coupled with technology upgradationsand cost reduction; b. Introduction of new products with a focus on achieving globalacceptance and in conformity to Indian and International standards; c. Improved quality indiamond and jewellery manufacturing; d. Increased customer base and additional businessvolumes; e. Reduction in reworks and elimination of manufacturing rejections in jewellery;f. Improved finish and lustre of diamonds; g. Boosting the capabilities to offercustom-made jewellery and fetching orders in stiff international competition.
The Company has transaction in foreign currencies are normally recorded at the averageexchange rate prevailing during the period of transaction.
FOREIGN CURRENCY TRANSACTIONS:
Amt. in Lacs
|Particulars ||For the Year Ended on March 31 2017 ||For the Year Ended on March 31 2016 |
|Remittance in Foreign Exchange ||NIL ||NIL |
|Earning in Foreign Exchange ||13120.43 ||11273.33 |
|Export Sales ||12547.75 ||11788.48 |
29. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
During the year the Company has to transfer a sum of Rs. 250854.00 and Rs.452110.00 to Investor Education & Protection Fund the amount which was due andpayable and remained unclaimed and unpaid for a period of seven years for the F.Y. 2007 08as provided under the Companies Act 2013. The said fund transferred to Investor Educationand Protection Fund Account on 7th July 2016 and 28th July 2016 respectively.
30. CORPORATE SOCIAL RESPONSIBILITY
The Company does not meet the criteria of Section 135 of Companies Act 2013 read withthe Companies (Corporate Social Responsibility Policy) Rules 2014 so there is norequirement to constitute Corporate Social Responsibility Committee.
31. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013:
In order to prevent sexual harassment of women at work place a new act The SexualHarassment of Women at
Workplace (Prevention Prohibition and Redressal) Act 2013 has been notified on 9thDecember 2013. Under the said Act every company is required to set up an InternalComplaints Committee to look into complaints relating to sexual harassment at work placeof any women employee. Company has adopted a policy for prevention of Sexual Harassment ofWomen at workplace and has set up Committee for implementation of said policy. During theyear Company has not received any complaint of harassment.
32. COST AUDIT
As per the Cost Audit Orders and in terms of the provisions of Section 148 and allother applicable provisions of the
Companies Act 2013 read with the Companies (Audit and Auditors) Rules 2014 CostAudit is not applicable to our Company.
The Financial Statements of the Company prepared in accordance with Indian AccountingStandards notified under the Companies (Indian Accounting Standards) Rules 2015(Ind AS') form part of the Annual Report.
Up to the year ended 31st March 2016 the Company prepared its Financial Statements inaccordance with generally accepted accounting principles in India including accountingstandards read with Section 133 of the Act notified under the Companies (AccountingStandards) Rules 2006 (Previous GAAP'). These are the Company's first Ind
AS Financial Statements.
During the year ended 31st March 2017 there were no cases filed /reportedpursuant to the Sexual Harassment of women at workplace (Prevention Prohibition andRedressal) Act 2013.
The Company confirms that it has paid the Annual Listing Fees for the year 2017-2018 toBSE where the Company's
Shares are listed.
During the year under review no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and Company'soperations.
The Securities and exchange Board of India (SEBI) on 2nd September 2015issued SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 with theaim to consolidate and streamline the provisions of the
Listing Agreement for different segments of capital markets to ensure betterenforceability. The said regulations were effective from 1st December 2015.Accordingly all the listed entities were required to enter into the Listing Agreementwithin six months from 1st December 2015. The Company has entered into ListingAgreement with BSE Limited in compliance of the said new Regulations.
34. HUMAN RESOURCES
Your Company treats its "human resources" as one of its most importantassets.
Your Company continuously invests in attraction retention and development of talent onan ongoing basis. A number of programs that provide focused people attention are currentlyunderway. Your Company thrust is on the promotion of talent internally through jobrotation and job enlargement.
The Directors would like to thank all shareholders customers bankers suppliers andeverybody else with whose help cooperation and hard work the Company is able to achievethe results. The Directors would also like to place on record their appreciation of thededicated efforts put in by the employees of the Company.
|For Swarnsarita Gems Limited ||For Swarnsarita Gems Limited |
|Mahendra M. Chordia ||Asha M. Chordia |
|Managing Director ||Executive Director |
|DIN: 00175686 ||DIN: 00175804 |
|Place: Mumbai || |
|Date: 22.08.2017 || |