Mar 31, 2018
TO THE MEMBERS OF THANGAMAYIL JEWELLERY LIMITED
The Directors are pleased to present the 18th Annual Report and the Audited Statement of Accounts for the year ended 31st March 2018.
1. FINANCIAL RESULTS:
Pursuant to the notification dated February 16, 2015 issued by the Ministry of corporate affairs, the company has adopted the Indian Accounting Standards (''''Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2017. Financial statements for the year ended and as at March 31, 2017, have been restated to conform to Ind AS.
Rs. (In lakhs)
Particulars |
2017-2018 |
2016-2017 |
Sales |
1,37,929 |
1,29,946 |
Gross Profit |
12,818 |
10,894 |
Earnings before Interest, Depreciation and Taxation (EBITDA) |
6,090 |
4,958 |
Finance Cost |
1,879 |
2,084 |
Depreciation |
817 |
943 |
Profit Before Tax (PBT) |
3,394 |
1,930 |
Tax |
1,106 |
533 |
Profit After Tax (PAT) |
2,287 |
1,397 |
Other comprehensive income |
(13) |
(2) |
Total comprehensive income for the year, net of tax |
2,274 |
1,395 |
On a turnover of Rs.137,929 lakhs for the year, the Company made an operating profit of Rs.12,818 lakhs against '' 10,894 lakhs made in last year. It represents 18% increase over the last year.
The better results are due to stable gold price realisation and also due to better marketing initiatives under taken by the management. The company could perform better due to margin expansion resulted on account of better product mix sales. It is also marginally attributable to better volume of diamond ornaments on a comparable basis with last year.
You may notice that our top line growth over a period of four years remains in a narrow band. However, due to various initiatives taken by the management the value addition to the products sold continuously improved from 3.75% in 2015 to 9.30% in 2018 resulting in the gross profit growth of 150% in the four years period.
Your management is continuously focusing on bottom line growth more than proportionately that of turnover growth and believes on the importance of areas of value creation by optimally exploring all the resources at its disposal. While, we plan to push the top line by enlarging market share of the business moderately, your management also strives to maintain the pricing power in a crowded place of competitive environment. The company consciously decided not to expand branches in haste and strategically played on the brand visibility created over two decades of operations by enlarging the size and inventory of the existing branches one by one for gettng improved results.
You may find from the financials that our size of Balance sheet significantly increased in 17-18 and the fruits of the enlarged Balance sheet would be positively felt in the year to come. To achieve results, going forward a business plan will be implemented with a better product mix, diamond sales promotion, capital productivity improvement and retention of scale of economy to attain improved operating margin.
The major reasons for better bottom line performance are summarized hereunder;
- Stable gold price realisation throughout the year.
- Paradigm shift taken place in marketi''ng& promotional initiatives.
- Improved production from own manufacturing units.
- Higher level of metal loan resultant in interest savings.
- Relaunching of old branches with a view to get facelift and better visibility of brand.
- Better contribution from diamond sales.
- Change in product mix to get optimum result on inventory management.
2.KEY STRATEGIES ADOPTED BY THE MANAGEMENT
- Savings in making cost of jewellery due to change in procurement plan.
- Cost of finance and promotional expenses were relatively reduced.
- The commitments of carrying " Right product for Right Market" that resulted in sales growth.
- Improvement in "same store" growth in turnover
- Planned improvement in gross profit margin by optimizing all resources of the Company.
3. DIVIDEND
The Board of Directors of the Company are pleased to recommend a dividend of Rs.3.50/- (35%) per equity share for 2017-18 (Rs.2 in 201617) on 1,37,19,582 equity shares of Rs.10 each. The proposed dividend is subject to the approval of shareholders in the ensuing Annual General Meeting of the company will result in cash outflow of Rs.579 lakhs including Dividend Distribution tax there on.
4.HEDGING
The company started availing more loan under metal loan category. It acted as a natural hedge for the fluctuations in the gold price movement. Currently, the hedge ratio is around 65:35 as against 50% of the last year. The increase in "Hedging" proportion for the current year augers well for the company. It is our endeavour to take in to 75:25 in future. Some portion of gold under own purchases is a necessity as sudden escalation in gold price often results in liquidity mismatch due to increase in margin calls. Based on our experience and the current gold price movement trend we are of the opinion that the ratio at the most can go up to 75:25 in the overall business / operational interest of the company.
5. CONTINUING CHALLENGES
- Frequent failure of gold companies to meet their liabilities in the recent past makes the industry to suffer for credit entitlements from Banks;
- Exceptional regulatory mechanism placed by the Government on the industry;
- Current account gap in trade perhaps as in the past, may bring restrictions in the gold import by the Government.
- Possible restrictions on gold retail industry in taking customer advances for future delivery post passing of regulatory bill by the parliament.
- Highly fluctuating gold price movement necessitate both on account of incremental gold price and also on account of INR-US$ currency behaviour;
- Enlarged risks associated with bank credit exposure to the industry may compel a reduction in credit rating by the credit rating agencies;
- Monsoon failures, structural changes witnessed in the saving / spending habits of the people, escalation in the minimum wage Act and Income tax regulatory constraints may cumulatively affect the growth and operations of the industry.
6. FUTURE PROSPECTS
- Due to strict implementation of regulatory matters the trade, would become more responsible & disciplined in future. We are also able to see a clear shift in the polarization impact in the industry.
- The year went by, clearly demonstrated your Company''s potentials to improve "same store sales" with better top line and bottom line impact while striving hard to improve the gross margin in operations.
- The inherent strength of the business model comprising of substantial sales of silver ornaments and a moderate improvement in Diamond sales to cover a part of the fixed over heads and to improve the margin of safety while bringing down the BEP level consistently is explored for sustenance of growth.
- In general expanding gross margin, better expected stock turnover times improved "same store sales" and planned reduction in per gram "cost of sales" of gold ornaments, will go a long way in sustaining the growth while improving the profitability of the company.
- Barring unforeseen circumstances, the current year 2018-19 would see a moderate but sustainable growth in performance on all fronts.
Key performance indicators to look at for future;
- Increase in same store sales. Almost all outlets brought in improved sales in 17-18.
- Diamond sales in value have gone up from Rs.236 lakhs to Rs.554 lakhs in 17-18.
- Operating profit margin improved by 90 bps points due to better product-mix realization.
- Net profit before tax also improved by 98 bps due to better cost management and savings in interest outgoes;
- Your Company will focus in further improvement of these factors to improve the overall profitability.
7. POSITIVE IMPACT OF BALANCE SHEET LIABILITY MANAGEMENT
The proactive steps taken in the past to reduce dependence on bank barrowings started to yield better results. The company consistently substituted costlier working capital facilities with metal loan, advance from customers and bill discounting facilities. The effective cost of funds got reduced as seen from below given chart in the past 4 years;
Limit Used vs Interest Payout Rs.. (In lakhs)
Year ended 31st March |
Limit used |
Interest & other charges |
As a % of loan availed |
2015 |
18,043 |
2,525 |
14.00% |
2016 |
13,355 |
1,579 |
11.82% |
2017 |
12,722 |
1,135 |
8.92% |
2018 |
16,805 |
1,064 |
6.33% |
Franchisee Model
For the first time, your company is exploring the avenues for furtherance of business with the help of franchisee model. The company is already working on the modalities of that model by properly evaluating risk/ reward potentials. Your board is of the opinion, atleast on an experimental basis two/ three newly contemplated outlet may be tried with the franchisee model in the current year 2018-19. The progress in this direction as and when put to operation will be informed to the shareholders at appropriate time.
The net internal accruals expected out of operations will be deployed back into business to improve the profits of the company in the years to come.
8. DEFERRED TAX LIABILITIES
As expected in the last year report, Deferred tax assets was fully absorbed by the company. From Rs.547 lakhs deferred tax assets of last year it got changed to Deferred Tax liabilities of Rs.159 lakhs. Under the previous GAAP, deferred tax accounting is done using income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 Income Taxes requires to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on temporary differences which were not required under previous GAAP in addition to the various temporary differences consequent to Ind AS transitional adjustments. Consequently, deferred tax assets (net) is reduced by Rs.216 lakhs as at 1st April 2016 and total equity decreased by Rs.216 lakhs as at 1st April 2017.
9. CONTRIBUTION TO EXCHEQUER
The Company is a regular payer of taxes and other duties to the Government. The Company has paid Value Added Tax and GST of Rs.3396 lakhs as compared to Rs.1,242 lakhs paid in the previous year and Advance income tax of Rs.738 lakhs for financial year 2017-18.
10. CAPITAL EXPENDITURE
During the year, we capitalized ''1058 Lakhs to our gross block comprising of Rs.475 lakhs for Plant & Machinery and Furniture & Fittngs and other assets and balance of Rs.583 lakhs for Computer Equipment''s including Software.
The capital work in progress amount outstanding as on 31st March 2018 is Rs.87 lakhs. This is comprising of interiors and other assets still to be put in use and yet to be capitalised.
For the previous year, we capitalized Rs.441 lakhs to our gross block comprising Rs.349 lakhs for Plant & Machinery and Furniture & Fittngs and others and the balance of Rs.92 lakhs for Computer Equipments including Software.
11. FINANCE
In continuation of last year, this year is the best year wherein the quantum of absolute reduction is commensurate with the quantum of loan exposure. The interest cover ratio has also improved to 3.27 times due to better inventory utilization in this year.
Due to continued thrust and efforts made by the company, interest outgo for every gram of gold ornaments sold to be lower than 17-18 in the years to come.
The secured working capital borrowings of the company as at 31st March 2018 stood up Rs.20,896 lakhs as against Rs.13,586 lacs in the previous year. The existing sanctioned limits along with bill discounting limit of Rs.1,000 lakhs aggregating to Rs.25,000 lakhs is sufficient to take care of current year requirement of the company. Out of Rs.3,000 lacs term loan obtained from Karur Vysya Bank only a sum of Rs.208 lakhs remains to be paid. It is pertinent to note that your company repaid term loan ahead of the schedule of repayment and currently has Rs.208 lakhs as against Rs.3,000 lakhs borrowed as long term loan from bank.
The eligible fixed deposits from public & shareholders is Rs.5302 lakhs. However, the company took only Rs.4686 lakhs as deposits as at 31st March 2018. Besides, the promoters brought in a sum of '' 1240 lakhs at lower interest rate of 6% per annum to support the Company as long term funds. In all, the liquidity position is quite sound and comfortable.
Interest outgoes have decreased marginally. We may have to relate it to the increase in current assets. The per gram interest payment works out to Rs.45 only.
12. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT
The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Companies Act,2013 (including any statutory modification(s) or re-enactment(s) for the time being in force).
13. DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(5) of the Companies Act, 2013:
a) In the preparation of the annual accounts, the applicable accounting standards had been followed and there is no material departure.
b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for the year;
c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) The directors had prepared the annual accounts on a ''going concern'' basis;
e) The directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information; and
f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
14. MANUFACTURING FACILITIES
Utilisation of own manufacturing facilities including on job work basis is around 90% as against 70% of the earlier years. The overall cost of production has come down due to attainment of scale of economics in the manufacturing facilities. It is expected to improve the own manufacturing capacity utilisation in forthcoming years. On a need basis, at short notice handmade items capacity could be commissioned.
15. DEPOSITORY SYSTEM
The trading in the Equity Shares of your Company is under compulsory dematerialization mode. As on March 31, 2018, Equity Shares representing 100% of the equity share capital are in dematerialized form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialization of the Company''s shares.
16. CORPORATE GOVERNANCE
Your Company has been practising the principles of good corporate governance over the years and lays strong emphasis on transparency, accountability and integrity. A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Regulation 27 of SEBI (LODR) 2015 of the Listing Agreement(s) with the Stock Exchange(s) forms part of this report. The Chairman and Managing Director and Joint Managing Directors of the Company have certified to the Board on financial statements and other matters in accordance with Regulation 17 (8) of SEBI (LODR) 2015 of the listing agreement pertaining to CEO certification for the financial year ended 31st March 2018.
17. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report of financial position and results of operations of the Company for the year under review as required under Regulation 17 (7) of SEBI (LODR) 2015 of the Listing Agreement with the Stock Exchanges, is given as a separate statement forming part of this Annual Report.
18. LISTING OF SHARES
The Equity Shares of your Company continue to remain listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The listing fees for the year 2018-19 have been paid to these Stock Exchanges. The Shares of the companies are compulsorily tradable in dematerialized form.
19. INSURANCE
The assets of the Company are adequately insured against fire and such other risks, as are considered necessary by the Management.
20. HUMAN RESOURCE DEVELOPMENT
Many initiatives have been taken to support business through organizational efficiency, development, resourcing, performance & compensation management, competency based development, career & succession planning and organization building. Leadership development is one of the primary key initiatives of the Company. Primary personal development program has been taken up as long term strategy of the Company. A significant effort has also been undertaken to develop leadership as well as administrative / functional capabilities in order to meet future talent requirement. The Company continues to maintain cordial relations without any interruption in work. As on 31st March 2018, the Company has 1434 employees on its rolls as against 1213 employees in the previous year.
21. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In term of the provision of Section 197(12) of Act read with rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report. Disclosures pertaining to remuneration and other details as required under section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014 are provided in the Annexure -1.
Having regard to the provision of the first provision to Section 136(1) of the Act and as advised, the Annual Report, excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the corporate office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The full Annual Report including the aforesaid information is being sent electronically to all those members who have registered their main addresses and is available on the Company''s website.
22. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY
Pursuant to section 134 (3) (n) of the Companies Act, 2013 & under regulation 21 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015, the company has adopted risk management policies to monitor the business. Business Risk Evaluation and Management (BRM) is an on-going process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities.
The objectives and scope of the Risk Management Committee broadly reviews:
- Oversight of risk management performed by the executive management;
- The BRM policy and framework formulated in line with local legal requirements and SEBI guidelines;
- Risks and evaluate treatment including initiating mitigation actions and ownership as per a pre-defined cycle;
- Defining framework for identification, assessment, monitoring, and mitigation and reporting of risks.
- Within its overall scope as aforesaid, the Company shall review risks trends, exposure, and potential impact analysis and mitigation plan.
23. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
INFORMATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 134 (3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8(3) OF THE COMPANIES RULES, 2014.
a) Conservation of Energy
The disclosure of particulars with respect to conservation of energy pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with rule 8(3) of the companies (accounts) rules, 2014 are not applicable as our business is not specified in the Schedule . However, the company makes its best efforts to conserve energy in a more efficient and effective manner.
b) Technology Absorption, Adaptation and Innovation
The company has not carried out any specific research and development activities. The company uses indigenous technology for its operations. Accordingly, the information related to technology absorption, adaptation and innovation is reported to be NIL.
c) Foreign Exchange Outgo Rs. (In lakhs)
Particulars |
2017 -18 |
2016 -17 |
Travelling Expenses |
1.14 |
- |
Potential Risks, Concerns and Mitigation Plan
Risk of loss of Positioning in the market place
Due to competition in the retail trade, there is a possibility that our market share from a particular place of operation or region may decline. A lot of new entrants to the retail trade suffer from lack of knowledge of customer''s preference and on quality parameters and price war. Therefore, your company with its fuller penetration to rural market is well placed to participate in the rural success story of the country. In order to maintain/improve market share in the areas we operate in the light of sagging regressive demand trends, we have cautiously brought down the mark up value for our products moderately and also improved customer service through online and offline mode.
Monsoon
Monsoon failure for successive years in southern parts of Tamilnadu adversely affected the company''s business. The purchasing power with rural people who depend on Agriculture substantially got marginalized. This has resulted in demand compression and led to a period of continuous recession unparalleled in the recent history of jewellery trade. Dwindling customer demands and purchase of other electronic goods by the customers have resulted in purchase of ornaments generally coming down in jewellery business. This has resulted in customer opting for light weight items. The company has decided to stock more of such items in order to get better share from sagging market as in the last year.
Change in lifestyle
The disposable income of both middle class and upper middle class and change in life styles of people leads to shifting of consumer base to branded jewellery. Even though this will be a major risk factor for long term growth of the company, the change in people''s taste and preferences are ascertained through various sources and accordingly change in our product mix were done by well-equipped team.
Economic risk
Economic slowdown can affect the demand and the sales for the company.
Mitigation: The Company has a diversified product portfolio that generates robust sales from either of the category to balance any uncertain circumstances. The present Indian economy is quite strong as commodity prices and bank lending rates have declined. Since jewellery industry is always associated with wedding and other traditional occasions and demand for jewellery remain constant.
Competition risk
Increasing competition from new entrants as well as existing ones.
Mitigation: The Company manufactures quality products and better services and offers that at a reasonable price to reach people through communications via different media. It undertakes extensive promotion and advertising to create value , positioning and recall for the power brands.
Margin risk
Due to lack of control over the cost, may lead to lower profitability and can impact future growth prospects.
The centralised procurement policy, by which our team anticipates stock requirement and make bulk purchases at the time when gold price is low. The economies of scale and correct procurement timing enable the company to significantly reduce the cost of the raw material. The company procures a certain quantum of gold on lease from banks, buying the gold on daily basis on the actual sale made by it. This strategy safeguards the company from gold price fluctuation.
Gold price fluctuation risks
Gold price fluctuation risk could arise on account of frequent changes in gold prices either up or downside momentum. It could have adverse impact on earnings. We are maintaining our inventory price hedging around 65:35 basis. This will help the company with any gold price fluctuation of gold price. Your Board will take appropriate action in managing the fluctuation impact in gold price movement from time to time to increase to 75:25 basis.
Change in Government Policies
New government regulations pertaining to taxation and banking stringent norms will affect the demand and supply chain. Your company with help of well-experienced IT and managerial personnel, the implications of all these regulations are clearly analysed, interpreted and necessary compliance measures are undertaken
Human Resources
Employee attrition may affect the operation of the Company.
Mitigation: The Company encourages new talent and provides specialised training to the sales force to ensure the roots are grounded well, improving the performance standards and positively contribute towards growth of the company.
Seasonal Risk:
Sluggish sales of products due to seasonal changes may affect profitability of the Company.
Mitigation: The wide ranged designed product profile and customer needs product will help against the season ups and down.
Compliance risk
Non-compliance of regulations may raise the operation risk for the Company.
Mitigation: The Company has a structured internal control system in place to ensure all statutory rules and regulations are met including changes in taxation and other regulatory framework.
Cost management:
The Company is improving meticulously its focus on cost through a resourceful operating system, increase in the production Capacity and strengthening of manufacturing units and various sourcing points are being pursued to reduce manufacturing costs and also delivering quality of product at lower price. Logistics facilities are strengthened. Synergy optimization in various cost components is achieved.
24. INTERNAL CONTROL SYSTEMS
The Board of Directors is responsible for ensuring that internal financial controls have been laid down in the Company and that such controls are adequate and is functioning effectively. TMJL has policies, procedures, control frameworks and management systems in place that map into the definition of Internal Financial Controls as detailed in the Companies Act, 2013. These have been established at the entity and process levels and are designed to ensure compliance to internal control requirements, regulatory compliance and appropriate recording of financial and operational information.
Internal Financial Controls that encompass the policies, processes and monitoring systems for assessing and mitigating operational, financial and compliance risks and controls over related party transactions, substantially exist. The management reviews and certifies the effectiveness of the internal control mechanism over financial reporting, adherence to the code of conduct and Company''s policies for which they are responsible and also the compliance to established procedures relating to financial or commercial transactions, where they have a personal interest or potential conflict of interest, if any.
The Audit Division continuously monitors the efficacy of Internal Financial Controls with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organisation''s risk management, control and governance processes. The audit plan is approved by the Audit Committee, which reviews compliance to the plan.
During the year, the Audit Committee met regularly to review reports submitted by the Audit Division. All significant audit observations and follow-up actions thereon were reported to the Audit Committee.
The Audit Committee also met the Company''s Statutory Auditors to ascertain their views on financial statements, including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal controls and systems followed by the Company. The Management acted upon the observations and suggestions of the Audit Committee.
25. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES (CSR)
Based on last three years average Net profit, for the financial year ended 31st March 2018 the company is required to spend CSR expenses for Rs.0.34 lakhs.
With an amount of Rs.19.66 lakhs spent in the previous year a balance of Rs.53.34 lakhs was available in the previous year to spend towards CSR activities. The Company has spent the following categories for the financial year ended 31.03.2018:
Rs. (In lakhs)
1 |
Water seeding to plants and providing water to public use |
0.36 |
2 |
Gaushala funding |
46.21 |
3 |
Education purpose |
2.08 |
4 |
Plant sapling for public benefit |
0.58 |
5 |
Environment cleaning |
0.50 |
6 |
Medical Camp |
2.03 |
Total amount spent |
51.76 |
|
Balance carried over to 2018-19 (Including current year) |
1.92 |
The Company is making further efforts to identify suitable projects under Sch.VII of the Act to spend on CSR as per the Companies Act, 2013.
The Annual Report on CSR activities is annexed herewith as "Annexure 2".
26. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
There were no loans & guarantees given or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review.
Particulars of contracts or arrangements with related parties referred to in Section 188(1)
All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee as also in the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.
The Annual Report on related party is annexed herewith as "Annexure 3".
27. COMPANY''S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES
The Company''s Policy relating to appointment of Directors, payment of Managerial remuneration, Directors'' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Annexure -4 and is attached to this report.
28. ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in Annexure - 5 ( MGT-9 ) and is attached to this report.
29. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
During the year Six Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
30. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiary, Joint venture or Associate Company.
31. DEPOSITS
The details of deposits accepted/renewed during the year under review are furnished hereunder:
Sl.No |
Particulars |
Rs. in Lakhs |
1 |
Amount accepted during the year |
2021.44 |
2 |
Amount remained unpaid or unclaimed as at the end of the year |
46.14 |
3 |
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved |
Nil |
32. DIRECTORS
Smt.Yamuna Vasini Deva Dasi Non-Executive and NonIndependent Director of the Company retires by rotation and being eligible seeks reappointment. Your Board recommends her re-appointment.
33. DECLARATION OF INDEPENDENT DIRECTORS
The Independent Directors have submitted their disclosures to the Board that they fulfil all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.
The Details of familiarisation programme arranged for independent directors have been disclosed on website of the company and are available atwww.thangamayil.com
34. CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviours of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "code of business conduct" which forms an Appendix to the Code. The Code has been posted on the Company''s websitewww.thangamayil.com.
The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance through examples on the expected behaviour from an employee in a given situation and the reporting structure.
All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard.
35. STATUTORY AUDITORS
The Company''s Auditors, M/s Srinivas & Padmanabhan Chartered Accountants, (Firm Reg.No.004021S), Chennai.) were appointed as the Statutory Auditors of the company at the Annual General Meeting held on July 2017 up to 31st March 2022. The Company has received letter from them to the effect that their appointment, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment. The companies amendment Act, 2018 has dispensed with ratification of appointment of auditors under section 139 by shareholders at every general meeting vide their notification 7th May 2018 once approved for five years. Hence no resolution need to be passed for their re appointment.
The Auditor''s Report to the shareholders for the year under review does not contain any qualification.
36. SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. S.Muthuraju, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as "Annexure 6".
37. COMMENTS ON AUDITORS'' REPORT
There are no qualifications, reservations or adverse remarks or disclaimers made by M/s.Srinivas and Padmanabhan, Statutory Auditors, in their report and by Mr. S. Muthuraju, Company Secretary in Practice, in his secretarial audit report.
The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.
38. INTERNAL AUDIT AND CONTROL SYSTEMS
The company has an effective in-house internal audit system. The persons are well trained to cover various areas of verification inspection and system evaluation. All the mandatory compliance required to be followed under various statues are exhaustively covered in their scope. We have effective and adequate internal audit and control systems, commensurate with our business size. Regular internal audit visits to the operations are undertaken to ensure that high standards of internal controls are maintained at each level. Independence of the audit and compliance function is ensured by the auditors'' direct reporting to the Audit Committee. Details on the composition and functions of the Audit Committee can be found in the chapter on Corporate Governance of the Annual Report
39. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
40. ENHANCING STAKEHOLDERS VALUE
Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company''s operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to create value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.
41. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company has a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of women at workplace and matters connected therewith or incidental thereto covering all the aspects as required under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013. There were no such complaints received under the policy during the year.
42. DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM
Pursuant to the provisions of the Companies Act, 2013 and under regulation 25 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
The Audit Committee consists of the following members
a. Mr.S.Rethinavelu - Chairman
b. Mr.V.R.Muthu - Member
c. Mr.Ba.Ramesh - Member
The above composition of the Audit Committee consists of independent Directors viz., Mr. S.Rethinavelu and Mr. V.R.Muthu who form the majority.
The Company has established a vigil mechanism and overseas through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of Company employees and the Company.
43. ANNUAL EVALUATION BY THE BOARD
The evaluation framework for assessing the performance of Directors Comprises of the following key areas:
1. Attendance of Board Meeting and Board Committee Meetings
2. Quality of Contribution to Board deliberations
3. Strategic perspectives or inputs regarding future growth of Company and its performance
4. Providing perspectives and feedback going beyond information provided by the management
5. Commitment to shareholders and other stakeholder interests
The evaluation involves self-evaluation by the Board Members and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/ her evaluation.
44. PREVENTION OF INSIDER TRADING:
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company''s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Directors and the designated employees have confirmed compliance with the Code. The same has been displayed at the company''s website atwww.thangamayil.com
SHARES
a. Buy Back of Securities
The Company has not bought back any of its securities during the year under review.
b. Sweat Equity
The Company has not issued any Sweat Equity Shares during the year under review.
c. Bonus shares
No Bonus Shares were issued during the year under review.
d. Employees Stock Option Plan
The Company has not provided any Stock Option Scheme to the employees.
45. FORWARD-LOOKING STATEMENTS
Statements in the Board''s Report and the Management Discussion & Analysis describing the Company''s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include domestic demand and demand and supply conditions affecting selling prices, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
46. ACKNOWLEDGEMENTS
Your directors express their sincere gratitude and appreciation to the employees of the company who have devotedly and steadfastly stood with the company and for the enduring hard work for the betterment of the company. Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Company''s activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on the Company.
BY ORDER OF THE BOARD
For Thangamayil Jewellery Limited
BALARAMA GOVINDA DAS - Managing Director
Ba. RAMESH - Joint Managing Director
N.B.KUMAR - Joint Managing Director
Place: Madurai
Date: May 25, 2018
Mar 31, 2017
Dear Shareholders,
The Directors have pleasure in presenting their 17th Annual Report and the audited accounts for the financial year ended 31st March 2017.
1) FINANCIAL RESULTS:
( Rs. In lakhs )
Particulars |
2016 - 17 |
2015 - 16 |
Sales and Other Operating Income |
1,29,478 |
1,27,448 |
Gross Profit |
10,313 |
9,024 |
Earnings before Interest, Depreciation and Taxation (EBIDTA) |
4,955 |
4,599 |
Finance Cost |
2,084 |
2,364 |
Depreciation |
943 |
815 |
Profit/(Loss) Before Tax (PBT) |
1,927 |
1,420 |
Tax |
532 |
367 |
Profit/(Loss) After Tax (PAT) |
1,395 |
1,053 |
On a revenue of Rs.1,29,478 Lakhs for the year, the company made an operating profit of Rs.10,313 Lakhs post expenditure including interest outflow of Rs.2,084 Lakhs . The company made a cash profit of Rs.2,871 Lakhs as against cash profit of Rs.2,235 Lakhs. Though in value terms turnover had increased moderately by 1.60% in volume terms for gold ornaments it had seen a steep reduction by 17% and silver articles registered a marginal volume growth of 2%.
The performance was hit by nationwide strike for imposition of central excise duty on gold industry in April/May 16. It was further affected in the months of November /December 2016 due to demonetization of high end currencies by the Government of India. A near all-time high of gold price in the fourth quarter of the year affected significantly the volume off take. In fact 6 out of 12 months the industry witnessed volume reduction due to different adverse factors.
Under these compelling adverse environment prevailed during the major part of the year, the ultimate bottom line financial performance of the company is satisfactory.
It is pertinent to note that in the last quarter of 2016-17, the company could perform better due to margin expansion resulted on account of better product mix sales. The depressed performance of the third quarter was followed by moderately better demand outlook in the fourth quarter. During the year, the company made "facelift" changes in term of its existing medium sized branches. The recent performance of these branches is encouraging.
Deferred Tax Assets
As at the end of March 2016, we carried a deferred tax asset of Rs.1,295 Lakhs and the same had got subsequently reduced to Rs.763 Lakhs, by virtue of operating profit earned by the company in 2016-17. The company is of the view that the business environment has turned conducive to earn adequate profits and it is hoped that the entire deferred tax asset could be wiped out in 2017-18 itself. The virtual certainty of reversing these losses is being established currently.
Deferred tax asset in accordance with Accounting Standard-22 is recognized in the books in respect of these losses.
The major reasons for better performance are summarized hereunder:
Better offtake in the last quarter coupled with better realization in gold price in spite of overall negative volume growth in the year.
Maximum use of metal loan facility that acted as a natural hedge for the ever fluctuating gold price movement Contribution of sales in silver items.
Better price of small volume items in the product mix of gold ornaments. Marked reduction in the cost of finance from Rs.2364 Lakhs to Rs.2084 Lakhs, a reduction by 12%.
Constant monitoring of expenses as part of better and effective cost management.
A marginal impact of positive polarization effect on the organized sector.
Better stock turnover with a given expanded gross profit margin in the changed business environment.
All these factors cumulatively contributed to the EBITA of Rs.4,955 Lakhs as against Rs.4,599 Lakhs. But for the disturbances witnessed in major part of the year, we could have performed much better operationally.
2. Key strategies & initiatives taken by the management in 2016-17
Marked reduction in the cost of sourcing of manufactured items.
Cost of finance got reduced for the level of activity due to better rotations resulted in the customer gold.
Conversion of a major part of cash credit loans from banks to metal loan. Metal loan portion in the overall liability witnessed an increase from Rs.3,911.66 Lakhs to Rs.8,539.63 Lakhs, that ensured reduction in debt servicing cost.
Completed a massive "repositioning" work of medium sized branches by redesigning its decor & ambience with a view to improve the overall visibility of the company.
Improve the customer base year after year by exploring fresh avenues for visibility improvement.
3. Hedging
The company by experience in the trade is not in favour of full stock hedging either with metal loan facility extended by the bank or in the MCX platform. The company however is inclined to cover up to 60% of the current stock holding and fully cover the incremental inventory under metal loan facility. The balance 40% of the inventory as at March 2017 will be fixed for the definitive price. As indicated in the last year report, INR got depreciated from Rs.66 to Rs.64 currently and with the international price improving from US$ 1050 to US$ 1250 currently, there was no inventory loss in 201617. As expected the Government also did not reduce the customs duty payable on imports. There is no viable alternative platform for metal hedging in India as that of other countries.
Even though apparently the cost of interest on metal loan looks cheaper at 4% but in practice due to extreme price fluctuation of gold price, the effective interest cost moves up to 10% on many occasions. The Indian Gold Price is fixed based on the local supply and demand on a given date. Whenever gold price escalated steeply, the demand receded for the metal. Consequently, the local purchase rate for replenishment for gold sold is quoted with one percent or more as discount to the bank rate. If we convert our entire inventory to metal loan, we are compelled to buy from the banks only, where the price is normally determined with reference to the international rate. The difference in price is acting as a deterrent for the business model.
Therefore, in a dynamic price environment, even though fully equipped to hedge the stock, the company will watch and closely monitor the movement of gold price and take an appropriate call. At the same time, what is sold on a daily basis will be covered on the same day. And therefore, on sale of gold ornament the issue of open position will not arise.
4. Continuing New Challenges
-The shrinking business potential on a long term basis is a cause for concern. Import of gold 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 gold and also onaccount of INR behaviour vs US$.
-Extra ordinary Government regulations deployed to restrict 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 that prompts 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 extremely affect the business model followed by many entities.
-Continued monsoon failures in the past three consecutive years affected the purchasing power of the rural community wherefrom we operate most of our retail outlets.
-Apart from these new challenges, the existing challenges faced by the industry like TCS, compulsory furnishing of PAN, statutory hallmarking condition, exorbitant wage increase necessitated by Minimum Wages Act, local laws & its administration continued in this year as well.
5. Future Prospects
-Due to strict implementation of various Government restrictions imposed on the trade, we are able to see a visible shift in the polarization impact of the industry. It is likely to gather momentum in the post GST era in a couple of years.
- A marked reduction in the cost of funds by way of metal loan augers well for the industry in the long run. It gives comfort as a hedging instrument and also as interest saver.
-The inherent strength of the business model comprising of substantial sale of silver ornaments to cover a part of the fixed over heads increases the margin of safety in the business while bringing down the BEP level consistently.
-If the first 45 days of the current year is to be reckoned for the expected performance it is likely that the year 2017-18 will be promising in spite of constraints faced by the industry.
-In general, expanding gross profit margin, better stock turnover times, improved volume off take and planned reduction in per gram "cost of sale" of gold, will collectively contribute to a sustainable growth in both top & bottom line of the company in the years to come.
-Barring unforeseen circumstances, the current year 2017-18 would see a decent growth in performance on all fronts.
6. Manufacturing Facilities
Utilization of own manufacturing facilities is around 75% as against 70% of the earlier years. The overall cost of production has come down due to attainment of scale of economics in the manufacturing facilities.
It is expected to improve the own manufacturing capacity utilization in forthcoming years. The existing capacity will cater to 40% of our dealt ornaments.
7. Positive Impact Of The Balance Sheet Liability Management
The progressive steps taken in the last couple of years with respect to liability management has started yielding good results. A part of the working capital loan got reduced from Rs.32,610 Lakhs in 2012-13 to Rs.13,586 Lakhs in 201617.
At the same time, low cost metal loan facilities, bill discounting, advance from customers were used as alternative source of funds. All the key financial ratios were improved. The cost of funds from banks got reduced over a period of three years as given below:
( Rs.In lakhs )
Year ended 31st March |
Limits Used(Avg) |
Interest & Other charges |
As a % ( on loan availed ) |
2015 |
18043 |
2525 |
14.00% |
2016 |
13355 |
1579 |
11.82% |
2017 |
12722 |
1135 |
8.92% |
In fact, after a long spell of four years, this is the best year wherein the quantum of absolute reductions is commensurate with the quantum of loan exposure. The interest cover ratio has also improved to 2.38 times due to better inventory management in this year.
Due to continued thrust and efforts made by the company, interest outgo is expected to be much lower than 2016-17 in the years to come.
8. Dividend
The Board of Directors of the Company are pleased to recommend a dividend of Rs.2 /- ( 20% ) per equity share for 2016-17 ( Rs.1 in 2015-16 ) on 1,37,19,582 equity shares of Rs.10 each. The Proposed dividend is subject to the approval of shareholders in the ensuing Annual General Meeting of the company. This will result in cash outflow of Rs.335 Lakhs.
During the previous year, the company has made a provision for the dividend declared by the Board of Directors as per requirement of pre-revised Accounting Standard (AS-4) Contingencies and events occurring after the balance sheet date.
Consequently, no provision has been made in respective of the aforesaid dividend proposed by the Board of Directors for the year ended 31st March 2017. Had the company continued with the creation of provision for the proposed dividend as at the balance sheet date, its balance in surplus would have been lowered by Rs.335 Lakhs and short term provision would have been higher by Rs.335 Lakhs including DDT.
9. Material Changes And Commitment If Any Affecting The Financial Position Of The Company Occurred Between The End Of The Financial Year To Which This Financial Statements Relate And The Date Of The Report. No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and on the date of this report.
10. Capital Expenditure
During the year, we capitalized Rs.441 Lakhs to our gross block comprising of Rs.349 Lakhs for Plant & Machinery and Furniture & Fittings and other assets and balance of Rs.92 Lakhs for Computer Equipment''s including Software.
The capital work in progress amount outstanding at the year end of the previous year is Rs.122 Lakhs. Accordingly, a sum of Rs.49 Lakhs kept under capital work in progress is fully capitalized in this financial year and balance of Rs.73 Lakhs comprising of interiors and other assets still to be put in use are yet to be capitalized.
For the previous year, we capitalized Rs.1,157 Lakhs to our gross block comprising Rs.828 Lakhs for Plant & Machinery and Furniture & Fittings and others and the balance of Rs.329 Lakhs for Computer Equipments including Software.
11. Finance
The secured working capital borrowings of the company as on March 31, 2017 stood at Rs.13,586 Lakhs as against Rs.11,327 Lakhs in the previous year. The existing sanctioned limit of Rs.20,100 Lakhs added with Rs.2,000 Lakhs as bill discounting limit with IDBI bank aggregating to Rs.22,100 Lakhs is sufficient to take care of current year requirement of the company.
Out of Rs.3000 Lakhs, long term loan availed from Karur Vysya Bank, as per the terms of sanction, we have repaid a sum of Rs.750 Lakhs during the year and the balance of Rs.1250 Lakhs is outstanding to be paid back in the next two years. Apart from this, the company availed the eligible fixed deposit from public and shareholders and the amount outstanding as on March 31, 2017 was Rs.4343 Lakhs. Apart from these serviceable borrowings, the company is also taking advances from customers in line with the Rules framed under the Companies Act, 2013. The company is maintaining a healthy current ratio at 1:1.38 as on March 31, 2017. Therefore, the liquidity position of the company under current context of business requirement is comfortable and sufficient.
Post closure of credit facilities extended by State Bank of India due to non-availability of metal loan facilities, the company dismantled the consortium arrangement as the aggregate loan exposure to the banking system got reduced substantially. Currently, the company is enjoying an aggregate credit facility of Rs.22,100 Lakhs under multiple banking arrangements.
12. Contribution To Exchequer
The Company is a regular payer of taxes and other duties to the Government. The Company has paid Value Added Tax of Rs.1,242 Lakhs as compared to Rs.1,220 Lakhs paid in the previous year and Advance income tax of Rs.358 Lakhs for financial year 2016-17.
13. Depository System
The trading in the Equity Shares of your Company is under compulsory dematerialization mode. As on March 31, 2017, Equity Shares representing 99.95% of the equity share capital are in dematerialized form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialization of the Company''s shares.
14. Corporate Governance
Your Company has been practicing the principles of good corporate governance over the years and lays strong emphasis on transparency, accountability and integrity.
A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Regulation 27 of SEBI (LODR) 2015 of the Listing Agreement(s) with the Stock Exchange(s) forms part of this report.
The Chairman and Managing Director and Joint Managing Directors of the Company have certified to the Board on financial statements and other matters in accordance with Regulation 17 (8) of SEBI (LODR) 2015 of the listing agreement pertaining to CEO certification for the financial year ended 31st March 2017.
15. Management Discussion And Analysis Report
The Management Discussion and Analysis Report of financial position and results of operations of the Company for the year under review as required under Regulation 17 (7) of SEBI (LODR) 2015 & the Listing Agreement with the Stock Exchanges, is given as a separate statement forming part of this Annual Report.
16. Listing Of Shares
The Equity Shares of your Company continue to remain listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The listing fees for the year 2017-18 have been paid to these Stock Exchanges. The Shares of the companies are compulsorily tradable in dematerialized form.
17. Insurance
The assets of the Company are adequately insured against fire and such other risks, as are considered necessary by the Management.
18. Human Resource Development
Many initiatives have been taken to support business through organizational efficiency, development, resourcing, performance & compensation management, competency based development, career & succession planning and organization building. Leadership development is one of the primary key initiatives of the Company.
Primary personal development program has been taken up as long term strategy of the Company.
A significant effort has also been undertaken to develop leadership as well as administrative / functional capabilities in order to meet future talent requirement. The Company continues to maintain cordial relations without any interruption in work. As on 31st March 2017, the Company has 1213 employees on its rolls as against 1077 employees in the previous year.
19. Particulars Of Employees And Related Disclosures
In terms of the provisions of Section 197(12) of Act read with rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report.
Disclosures pertaining to remuneration and other details as required under section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014 are provided in the Annexure -1.
Having regard to the provisions of first proviso to Section 136(1) of the Act and as advised, the Annual Report, excluding the aforesaid information is being sent to the members of the Company.
The said information is available for inspection at the Corporate office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
The full Annual Report including the aforesaid information is being sent electronically to all those members who have registered their main addresses and is available on the Company''s website.
20. Statement Concerning Development And Implementation Of Risk Management Policy Of The Company
Pursuant to section 134 (3) (n) of the Companies Act, 2013 & under regulation 21 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015, the company has adopted risk management policies to monitor the business.
Business Risk Evaluation and Management (BRM) is an on-going process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities.
The objectives and scope of the Risk Management
Committee broadly reviews:
1) Oversight of risk management performed by the executive management;
2) The BRM policy and framework formulated in line with local legal requirements and SEBI guidelines;
3) Risks and evaluate treatment including initiating mitigation actions and ownership as per a pre- defined cycle;
4) Defining framework for identification, assessment, monitoring, and mitigation and reporting of risks.
5) Within its overall scope as aforesaid, the Company shall review risks trends, exposure, and potential impact analysis and mitigation plan.
21 Conservation of energy, technology absorption and foreign exchange earnings and outgo:
Information In Accordance With The Provisions Of Section 134 (3)(m) Of The Companies Act, 2013 Read With Rule 8(3) Of The Companies Rules, 2014.
a) Conservation of Energy
The disclosure of particulars with respect to conservation of energy pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with rule 8(3) of the companies (accounts) rules, 2014 are not applicable as our business is not specified in the Schedule . However, the company makes its best efforts to conserve energy in a more efficient and effective manner.
b) Technology Absorption, Adaptation and Innovation
The company has not carried out any specific research and development activities. The company uses indigenous technology for its operations. Accordingly, the information related to technology absorption, adaptation and innovation is reported to be NIL.
c) Foreign Exchange Outgo (Rs. in Lakhs)
Particulars |
2016 -17 |
2015 -16 |
Travelling Expenses |
- |
0.69 |
22. Potential Risks , Concerns And Mitigation Plan
Risk of loss of Positioning in the market place
Due to competition in the retail trade, there is a possibility that our market share from a particular place of operation or region may decline. A lot of new entrants to the retail trade suffer from lack of knowledge of customer''s preference and on quality parameters and price war. Therefore, your company with its fuller penetration to rural market is well placed to participate in the rural success story of the country. In order to maintain/improve market share in the areas we operate in the light of regressive demand trends, we have cautiously brought down the mark up value for our products moderately and also improved customer service through online and offline mode.
Monsoon
Monsoon failure for successive years in southern parts of Tamilnadu adversely affected the company''s business. The purchasing power with rural people who depend on Agriculture substantially got marginalized. This has resulted in demand compression and led to a period of continuous recession unparalleled in the recent history of jewellery trade. Dwindling customer demands and purchase of other electronic goods by the customers have resulted in purchase of ornaments coming down in jewellery business. This has resulted in customer opting for light weight items. The company has decided to stock more of such items in order to get better share from sagging market as in the last year.
Change in lifestyle
The disposable income of both middle class and upper middle class and change in life styles of people leads to shifting of consumer base to branded jewellery. Even though this will be a major risk factor for long term growth of the company, the change in people''s taste and preferences are ascertained through various sources and accordingly change in our product mix were done by a well-equipped team.
Economic risk
General economic slowdown, change in government regulations, availability of disposable income was causing adverse impact in jewellery sales. The present Indian economy is quite strong as commodity prices and bank lending rates have declined. Since jewellery industry is always associated with wedding and other traditional occasions and demand for jewellery remain constant.
Margin risk
Due to lack of control over the cost, may lead to lower profitability and can impact future growth prospects.
The centralized procurement policy, by which our team anticipates stock requirement and make bulk purchases at the time when gold price is low. The economies of scale and correct procurement timing enable the company to significantly reduce the cost of the raw material. The company procures a certain quantum of gold on lease from banks, buying the gold on daily basis on the actual sale made by it. This strategy safeguards the company from gold price fluctuation.
Gold price fluctuation risks
Gold price fluctuation risk could arise on account of frequent changes in gold prices either up or downside momentum. It could have adverse impact on earnings. We are maintaining our inventory price hedging around 50:50 basis. This will help the company with any gold price fluctuation of gold price. Your Board will take appropriate action in managing the fluctuation impact in gold price movement from time to time to increase to 60:40 basis.
Change in Government Policies
New government regulations pertaining to jewellery industry like levy of excise duty on manufactured jewellery, customs duty on import of gold, TCS on sale of jewellery, requirement for furnish of permanent account number, demonetization and implementation of GST are major factors which will affect the demand and supply chain.
Your company with help of well-experienced IT and managerial personnel, the implications of all these regulations are clearly analyzed, interpreted and necessary compliance measures are undertaken.
Human Resources
The non-availability of skilled man power both at the production level and at the management level are critical for growth of this industry. Huge turnover of employees is always a risk because of penetration of large corporate in this industry.
Cost management:
The Company is improving meticulously its focus on cost through a resourceful operating system, increase in the production capacity and strengthening of manufacturing units and various sourcing points are being pursued to reduce manufacturing costs and also delivering quality of product at lower price.
Logistics facilities are strengthened. Synergy optimization in various cost components is achieved.
23. Internal Control Systems
The Board of Directors is responsible for ensuring that internal financial controls have been laid down in the Company and that such controls are adequate and are functioning effectively. TMJL has policies, procedures, control frameworks and management systems in place that map into the definition of Internal Financial Controls as detailed in the Companies Act, 2013.
These have been established at the entity and process levels and are designed to ensure compliance to internal control requirements, regulatory compliance and appropriate recording of financial and operational information.
Internal Financial Controls that encompass the policies, processes and monitoring systems for assessing and mitigating operational, financial and compliance risks and controls over related party transactions, substantially exist. The management reviews and certifies the effectiveness of the internal control mechanism over financial reporting, adherence to the code of conduct and Company''s policies for which they are responsible and also the compliance to established procedures relating to financial or commercial transactions, where they have a personal interest or potential conflict of interest, if any.
The Audit Division continuously monitors the efficacy of Internal Financial Controls with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organisation''s risk management, control and governance processes. The audit plan is approved by the Audit Committee, which reviews compliance to the plan.
During the year, the Audit Committee met regularly to review reports submitted by the Audit Division. All significant audit observations and follow-up actions thereon were reported to the Audit Committee. The Audit Committee also met the Company''s Statutory Auditors to ascertain their views on financial statements, including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal controls and systems followed by the Company. The Management acted upon the observations and suggestions of the Audit Committee.
24. Details Of Policy Developed And Implemented By The Company On Its Corporate Social Responsibility Initiatives ( CSR)
Based on last three years average Net profit, with financial year ended 31st March 2017 since the Company has incurred losses for 13-14, 14-15, there is no addition this year (Nil) - But however the Company has spent a sum of Rs.19.66 Lakhs as follows:
Towards Prime Minister Relief fund as per Sch.VII of the Act - Rs.10.00 Lakhs on 24.11.2016.
Erection of a bore well in Nedunkulam village for the use of villagers - Rs.1.30 Lakhs on 21.01.2017
Laying of electrical cables for the village Vadukankulam, Madurai district for the benefit of the villagers - Rs.1.21 Lakhs on 01.03.2017
Tractor with water tanker to water the trees at and also to meet the needs of water supplies of villagers -Rs.7.15 Lakhs on 13.03.2017
The Company is making further efforts to identify suitable projects under Sch.VII of the Act to spend on CSR as per the Companies Act, 2013.
As against a total sum of Rs.73.00 Lakhs accumulated as on 31.03.2017, the company has spent a sum of Rs.19.66 Lakhs and a sum of Rs.53.34 Lakhs is available as on date and the company will explore avenues to spend as much sum as possible during the financial year 2017-18 to fulfil the CSR policy.
The Annual Report on CSR activities is annexed herewith at "Annexure 2''"
25. Particulars Of Loans, Guarantees Or Investments Made Under Section 186 Of The Companies Act, 2013
There were no loans & guarantees given or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review.
Particulars of contracts or arrangements with related parties referred to in Section 188(1):
All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also in the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive in nature.
The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.
The Annual Report on related party is annexed herewith at "Annexure 3''''
26. Company''s Policy Relating To Directors Appointment, Payment Of Remuneration And Discharge Of Their Duties
The Company''s Policy relating to appointment of Directors, payment of Managerial remuneration, Directors'' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Annexure -4 and is attached to this report.
27. Annual Return
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure 5 (MGT 9) and is attached to this report.
28. Number Of Board Meetings Conducted During The Year Under Review
During the year Six Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
29. Directors Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013:
a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for the year;
c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions ofthis Act f o r safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) The directors had prepared the annual accounts on a going concern basis; and
e) The directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
30. Subsidiaries, Joint Ventures And Associate Companies
The Company does not have any Subsidiary, Joint venture or Associate Company.
31. Deposits
The details of deposits accepted/renewed during the year under review are furnished hereunder :
S. No |
Particulars |
Rs.in Lakhs |
1 |
Amount accepted during the year |
1194.16 |
2 |
Amount remained unpaid or unclaimed as at the end of the year |
11.71 |
3 |
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved |
Nil |
32. Directors
The term of office of the whole time directors viz., Mr.Balarama Govinda Das, Managing Director, Mr.Ba.Ramesh and Mr.N.B.Kumar, Joint Managing Directors of the Company are coming to an end by 30th November 2017 and hence they have to be reappointed for another term of 5 years from 1st December 2017 to 30th November, 2022 and their remuneration to be fixed under the Companies Act, 2013.
Accordingly the Board recommends their reappointment for another 5 years from 1st December, 2017 to 30th November, 2022 and the respective resolutions are given in the notice of Annual General Meeting being sent to the shareholders of the Company.
Smt.Yamuna Vasini Deva Dasi Non-executive and Non-Independent Director of the Company retires by rotation and being eligible seeks reappointment. Your Board recommends her re-appointment.
33. Declaration of Independent Directors
(a)The Independent Directors have submitted their disclosures to the Board that they fulfil all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. The Details of familiarization programme arranged for independent directors have been disclosed on website of the company and are available at www.thangamayil.com
b) Mr. V. Ramasamy, Independent Director appointed in the last AGM (16th) for one year is completing his term by 24th May 2017 and hence his tenure has been extended by another 4 years from 25th May 2017 to 24th May 2021 in terms of Sec.149 of the Companies Act and the Board has recommended his appointment as discussed in the Board meeting held on 18th May 2017 and the same has been placed for your approval in the ensuing AGM to be held on 26th July 2017.
34. Code Of Conduct
The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviours of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "code of business conduct" which forms an Appendix to the Code. The Code has been posted on the Company''s website www.thangamayil.com
The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders.
The Code gives guidance through examples on the expected behaviour from an employee in a given situation and the reporting structure. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard.
35. Statutory Auditors
M/s. B.Thiagarajan & Co, Chartered Accountants, Chennai (Firm reg.No.004371S) were appointed as the Statutory Auditors of the company at the Annual General Meeting held on July 2014 up to 31st March 2017. M/s. B. Thiagarajan & Co., will thus be holding the office of the Statutory Auditors up to the conclusion of the forthcoming Annual General Meeting.
The company is proposing to appoint M/s. Srinivas and Padmanabhan Chartered Accountants, Chennai (Firm reg.No.004021S) as Statutory Auditors for a period of 5years from the conclusion of the 17th Annual General Meeting till the conclusion of the 22th Annual General Meeting.
M/s. Srinivas and Padmanabhan have consented to the said appointment, and confirmed that their appointment, if made, would be within the limits mentioned under Section 141(3)(g) of the Companies Act, 2013 and the Companies ( Audit and Auditors ) Rules , 2014.
The audit committee and the board of Directors recommend the appointment of M/s. Srinivas and Padmanabhan Chartered Accountants, Chennai as Statutory Auditors of the company from the conclusion of the 17th Annual General Meeting, till the conclusion of the 22nd Annual General Meeting subject to confirmation in the respective years of AGMs of the company. The Board places on record its appreciation for the contribution of B.Thiagarajan & Co., Chartered Accountants, during their tenure as the Statutory Auditors of your company.
The Auditor''s Report to the shareholders for the year under review does not contain any qualification.
36. Indian Accounting Standards (Ind As) - IFRS Converged Standards
The Company will adopt Indian Accounting Standards ( Ind AS ) with effect from 1st April 2017 pursuant to Ministry of Corporate Affairs Notification of the Companies ( Indian Accounting Standard) Rules, 2015.
The Company has initiated the modification of accounting and reporting systems to facilitate the changes required. The implementation of Ind AS in FY 2018 will be major change process and company is well positioned to ensure a seamless transition on the back of early completion of impact assessment.
37. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr.S . Muthuraju, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith at "Annexure 6"
38. Comments On Auditors'' Report
There are no qualifications, reservations or adverse remarks or disclaimers made by B.Thiagarajan & Co., Statutory Auditors, in their report and by Mr. S. Muthuraju , Company Secretary in Practice, in his secretarial audit report.
The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.
39. Internal Audit And Control Systems
The company has an effective in-house internal audit system. The persons are well trained to cover various areas of verification inspection and system evaluation. All the mandatory compliances required to be followed under various statues are exhaustively covered in their scope.
We have effective and adequate internal audit and control systems, commensurate with our business size. Regular internal audit visits to the operations are undertaken to ensure that high standards of internal controls are maintained at each level.
Independence of the audit and compliance function is ensured by the auditors'' direct reporting to the Audit Committee. Details on the composition and functions of the Audit Committee can be found in the chapter on Corporate Governance of the Annual Report.
40. Specified Bank Notes (SBN)
Specified Bank Notes (SBN) held and transacted during the period 8-11-2016 to 30-12-2016 are provided in the Table below
( Rs.In lakhs )
Particulars |
SBNs |
Other denomination Notes |
Total |
Closing cash in hand as on 08.11.2016 |
845.64 |
27.81 |
873.45 |
( ) Permitted receipts |
- |
2,977.69 |
2,977.69 |
(-) Permitted payments |
- |
53.34 |
53.34 |
(-) Amount deposited in Banks |
845.64 |
2,952.15 |
3,797.79 |
Closing cash in hand as on 30.12.2016 |
141.13 |
141.13 |
For the purpose of this clause, the term ''Specified bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407 (E), dated the 8th November, 2016
41. Significant And Material Orders Passed By The Regulators Or Courts
There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
42. Enhancing Stakeholders Value
Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company''s operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation.
Your Company is also committed to create value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.
43. Prevention Of Sexual Harassment At Workplace
The Company has a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of women at workplace and matters connected therewith or incidental thereto covering all the aspects as required under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013. There were no such complaints received under the policy during the year.
44. Disclosure Of Composition Of Audit Committee And Providing Vigil Mechanism
Pursuant to the provisions of the Companies Act, 2013 and under regulation 25 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
The Audit Committee consists of the following members:
Mr.S.Rethinavelu - Chairman
Mr.V.R.Muthu - Member
Mr.Ba.Ramesh - Member
The above composition of the Audit Committee consists of independent Directors viz., Mr.S.Rethinavelu and Mr. V.R.Muthu who form the majority.
The Company has established a vigil mechanism and overseas through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns.
The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of Company employees and the Company.
45. Annual Evaluation By The Board
The evaluation framework for assessing the performance of Directors Comprises of the following key areas:
1) Attendance of Board Meeting and Board Committee Meetings
2) Quality of Contribution to Board deliberation
3) Strategic perspectives or inputs regarding future growth of Company and its performance
4) Providing perspectives and feedback going beyond information provided by the management
5) Commitment to shareholders and other stakeholder interests
The evaluation involves self-evaluation by the Board Members and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/ her evaluation.
46. Prevention of insider trading:
In January 2015, SEBI notified the SEBI (Prohibition of insider trading) Regulations, 2015 which came into effect from May 15, 2015. Pursuant thereto, the Company has formulated and adopted a new Code for Prevention of Insider Trading. The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company.
The Code requires pre-clearance for dealing in the Company''s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.
All Directors and the designated employees have confirmed compliance with the Code. The same has been displayed at the company''s website at www.thangamayil.com
SHARES
a. Buy Back Of Securities
The Company has not bought back any of its securities during the year under review.
b. Sweat equity
The Company has not issued any Sweat Equity Shares during the year under review.
c. Bonus shares
No Bonus Shares were issued during the year under review.
d. Employees Stock Option Plan
The Company has not provided any Stock Option Scheme to the employees.
47. Forward-Looking Statements
Statements in the Board''s Report and the Management Discussion & Analysis describing the Company''s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include domestic demand and demand and supply conditions affecting selling prices , input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
48. Acknowledgements
Your directors express their sincere gratitude and appreciation to the employees of the company who have devotedly and steadfastly stood with the company and for the enduring hard work for the betterment of the company. Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Company''s activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on the Company.
BY ORDER OF THE BOARD
For Thangamayil Jewellery Limited
BALARAMA GOVINDA DAS
Managing Director
Ba. RAMESH N.B.KUMAR
Joint Managing Directors
Place - Madurai
Date - May 18, 2017
Mar 31, 2016
Dear Shareholders,
The Directors have pleasure in presenting their 16th Annual Report and the Audited Accounts for the financial year ended March 31, 2016.
1) Financial Results
Highlights of Financial results for the year are as here under:
FINANCIAL RESULTS |
(Rs,In lakhs) |
|
Particulars |
2015 - 2016 |
2014 - 2015 |
Sales and Other Operating Income |
1,27,475 |
1,42,283 |
Gross Profit |
9,052 |
5,170 |
Earnings before Interest, Depreciation and Taxation (EBITDA) |
4,599 |
441 |
Finance Cost |
2,364 |
2,914 |
Depreciation |
815 |
826 |
Profit/(Loss) Before Tax (PBT) |
1,420 |
(3,298) |
Tax |
367 |
(1,070) |
Profit/(Loss) After Tax (PAT) |
1,053 |
(2,228) |
On a revenue of Rs, 1,27,475 lakhs for the year, the Company made a gross profit of Rs, 9,052 lakhs post expenditures including interest outflow of Rs, 2,364 lakhs . The company made cash profit of Rs,2,235 lakhs as against cash loss of Rs, 2472 lakhs. The PBT for the year is Rs, 1,420 lakhs. Under the hostile business environment, the performance is satisfactory.
The reduction in sale is primarily on account of reduced gold price prevailed in the better part of the year and also due to nationwide strike by the industry for the introduction of central excise duty in the entire month of March 2016.
The time based operating overheads mostly of fixed in nature could be earned in the entire month of March 2016.For the current year, we carry the inventory at the cost, whereas the current gold board rate prevailing is higher by Rs, 154 per gram. Hopefully on sustenance of the price, realization in the 16-17 at the current level would yield better results.
During the year one more branch at Virudhunagar was added aggregating the retail outlets in 31 places and two of the old branches namely Karaikudi and Anna Nagar (Madurai) were refurnished in order to get better ambience. The recent performance from these two branches is approximately 40% above the pre remodeling time.
Deferred Tax Assets
As at end of March 2015, we carried a deferred tax asset of Rs, 1,662 lakhs in the books and the same has got reduced to Rs, 1,295 lakhs, by virtue of operating profit earned by the company in 15-16.
The Company is of the view that the business environment will become conducive to earn adequate profits in future years and will be able to recover fully the unabsorbed business and depreciation losses as per Income Tax Act and consequently the virtual certainty of recovering these losses being established. Deferred Tax Asset in accordance with Accounting Standard- 22 is recognized in the books in respect of these losses.
The major reasons for better performance are summarized hereunder
- Constant monitoring of expenses including financial charges as a part of better cost management.
- Better realization of inventory in the last quarter of the year due to steep increase in gold price by 12% in the last quarter in spite of lesser sales.
- Optimum use of metal loan facility that acted as a natural hedge to the fluctuating gold price movement.
- Better sale of silver items both in volume and value.
- A modest favorable price difference in the local market for procurement of gold as against international price followed by the bankers for metal loan settlement.
- A better product mix of low weight but relatively better priced products in the sales composition.
- A marked reduction in the cost of finance from Rs, 2,914 lakhs to Rs, 2,364 lakhs registering a reduction of 23%.
- Increased off take of own manufactured items, that enjoyed an inherent cost advantage.
- All those factors cumulatively resulted in the reporting of EBITA of Rs, 4,599 lakhs as against EBITA profit of Rs, 441 lakhs. But for the steep fall in some months in the gold price, we would have performed much better operationally.
2) Key Initiatives Taken By The Management In 15-16
- To reduce the bankRs,s working capital loan from Rs,15,383 lakhs to Rs,11,327 lakhs that resulted in an interest saving of Rs, 550 lakhs.
- Efforts were made to bring in the customer gold to achieve better rotation.
- More than 180 days gold inventory was brought down from 220 kgs to 142 Kgs n Continued with the labour incentive system to promote sales in a competitive environment.
- Increase in the own manufacturing items resulting in a volume improvement.
- Strictly following "Game Changer" plan business model, as conceived and implemented by the management.
Consequently, the local purchase rate for replenishment for gold sold is quoted with one percent or more as discount to the bank rate.
If we convert our entire inventory to metal loan, we are compelled to buy from the banks only, where the price is normally determined with reference to the international rate. The difference in price is acting as a deterrent for the business model.
Therefore, in a dynamic price environment, even though fully equipped to hedge the stock, the company will watch and closely monitor the movement of gold price and take an appropriate call. At the same time, what is sold on a daily basis will be covered on the same day. And therefore, on sale of gold ornament the issue of open position will not arise.
The company by experience in the trade is not in favour of full stock hedging either with metal loan facility extended by the bank or in the MCX platform.
The company however is inclined to cover up to 60% of the current stock holding and fully cover the incremental inventory under metal loan facility. The balance 40% of the inventory as at March 2016 will be fixed for the definitive price. As indicated in the last year report, INR got depreciated from Rs. 62 to Rs. 67 currently and with the international price improved from US$ 1050 to US$ 1280 currently, there was no inventory loss in 15-16. As expected Government also did not reduce the customs duty payable on imports. There is no viable alternative platform for metal hedging in India as that of other countries.
Even though apparently the cost of interest on metal loan looks cheaper at 4% but in practice due to extreme price fluctuation of gold price, the effective interest cost moves up to 10% on many occasions. The Indian Gold Price is fixed based on the local supply and demand on a given date. Whenever gold price escalated steeply, the demand recedes for the metal.
4) Continuing Challenges
The ground realities are far from satisfactory in conduct of operations on sustainable basis, due to prolonged recession in demand side. The shrinking business compelled competitors to extend steep and unworkable discounts to keep the business going in all respects. Due to falling gold price witnessed in the larger part of 15-16, the investment demand for gold ornament didn''t take off. Excessive capacities built in inventory by new retail chains also added to the pain in the performance. More over a shift in customer''s preference for electronic goods as against gold also resulted in reduction in sales. Government regulation like furnishing of PAN card details for purchases above Rs,2 lakhs, introduction of central excise duty, TCS under Income Tax Act, and mandatory Hall marking requiring also contributed to the reduction in sale. All those challenges are continuing even in the current year 2016-17 as well.
5) Future Prospects
Even though, there is no perceptible change noticed in the local demand for gold ornament, the positive movement in the gold price if sustained may bring better volume business in the second half financial year 2016-17, due to expectation of further increase in gold price locally. The implementation of 7th pay commission salary hike to Government Employees in urban areas and expectation of better monsoon for rural customer''s auger well for the better performance in 2016-17. The continuous cost reduction initiatives undertaken by the company and the effectiveness with which the working capital is managed will go a long way in improving the bottom line of the company. More-over, the proposed five branches addition to retail business along-with the re-fabrication of at-least six existing branches will ensure better visibility and good volume growth in 2016-17. Therefore barring unforeseen circumstances, the management is of the view that a moderate growth in volume off take could be achieved in 16-17.
6) Manufacturing Facilities
Utilization of own manufacturing facilities is around 70% as against 55% of the earlier years. The overall cost of production has come down due to attainment of scale of economics in the manufacturing facilities. It is expected to improve the own manufacturing capacity utilization to at-least 85% in the current year of 16-17.
7) Impact Of The Balance Sheet Liability Management
The proactive steps taken in the last two years is minimizing the working capital exposure with bankers in a demand sagging environment has yielded Good results. The high cost funds got to an extent feasible converted with the low cost metal loans. A substantial part of the working capital loan also got reduced from Rs, 15,383 lakhs to Rs, 11,327 lakhs.
At the same time, low cost funds from bank bill discounting limit, advance from customers were used in the system, to reduce the overall cost of funds. All the key financial parameters were improved. The impact of the interest cost reduction for bank borrowing is given below:
Year ended 31st March |
Limits used (Average during the year) |
Interest & Other charges |
As a % (on loan availed) |
(Rs,. In lakhs) |
|||
2013 |
34,112 |
3,434 |
10.06 % |
2014 |
28,071 |
3,223 |
11.50% |
2015 |
18,043 |
2,524 |
14.00% |
2016 |
13,355 |
1,579 |
11.82% |
In-fact, after long interval, this is the first time wherein the quantum of absolute reduction is commensurate to the quantum of loan exposure. The interest cover ratio is also improved due to better stock turnover ratio obtained due to better inventory management in 15-16 financial year.
The current outstanding limit with member bankers is Rs,11760 lakhs.
A substantial reduction in the interest cost under the current contest has become a reality and it will further fructify positively in the on-going year 16-17 due to continued thrust and efforts made by the company in the areas of effective working capital management.
8) DIVIDEND
The Board of Directors of the Company are pleased to recommend a dividend of Rs,1 /- (10%) per equity share for 2015-16 (Rs, 1 in 2014-15) on 1,37,19,582 equity shares of Rs,10 each. The Proposed dividend is subject to the approval of shareholders in the ensuing Annual General Meeting of the company.
The register of members and share transfer books of the company will remain closed from 21st July 2016 to 27th July 2016 (both days inclusive)
Since there was no unpaid/unclaimed Dividend declared and paid last year, the provisions of Section 125 of the Companies Act, 2013 do not apply.
The company proposes to transfer an amount of Rs, 200 lakhs to the General Reserves. An amount of Rs, 688 lakhs is proposed to be retained in the statement of Profit & Loss Account.
9) Material Changes And Commitment If Any Affecting The Financial Position Of The Company Occurred Between The End Of The Financial Year To Which This Financial Statements Relate And The Date Of The Report
No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and on the date of this report.
10) CAPITAL EXPENDITURE
During the year, we capitalized Rs, 1,157 Lakhs to our gross block comprising of Rs, 828 lakhs for Plant & Machinery and Furniture & Fittings and other assets and balance of Rs, 329 lakhs for Computer Equipment''s including Software.
The capital work in progress of Rs, 769 lakhs as on 31st March 2015 became fully operational by end of the year. Accordingly, a sum of Rs, 648 lakhs is kept under capital work in progress is fully capitalized in this financial year and balance of Rs,121 lakhs comprising of interiors and other assets still to be put in use are yet to be capitalized.
For the previous year, we capitalized Rs, 257 lakhs to our gross block comprising Rs,104 lakhs for Plant & Machinery, Furniture & Fittings and others and the balance of Rs,153 lakhs for Computer Equipment''s including Software.
11) FINANCE
The secured working capital borrowings of the company as on March 31, 2016 stood at Rs,11,327 lakhs as against Rs,15,383 lakhs in the previous year. The reduction was possible with the help of internal accruals and increase in fixed deposit and unsecured loans. The existing sanctioned limit of Rs,12,700 lakhs added with Rs,2,000 lakhs as bill discounting limit with IDBI bank aggregating to Rs,14,700 lakhs is sufficient to take care of current year requirement of the company.
Out of Rs,3,000 lakhs, long term loan availed from Karur Vysya Bank, as per the terms of sanction, we have repaid Rs,1,000 lakhs during the year and the balance of Rs,2,000 lakhs is outstanding to be paid back in the next two years. Apart from this, the company availed the eligible fixed deposit from public and shareholders and the amount outstanding as on March 31, 2016 was Rs, 4,426 lakhs.
Apart from these serviceable borrowings, the company is also taking advances from customers within the permissible limit of the Company Law Regulations. The company is maintaining a healthy current ratio at 1:1.45 as on March 31, 2016. Therefore, the liquidity position of the company under current context of business requirement is adequate and sufficient. Post closure of credit facilities extended by State Bank of India due to non-availability of metal loan facilities, the company dismantled the consortium arrangement as the aggregate loan exposure to the banking system got reduced from the threshold limit followed by the bankers. Currently, the company is enjoying an aggregate credit facility of Rs,.127 crores under multiple banking arrangements.
12) Contribution to Exchequer
The Company is a regular payer of taxes and other duties to the Government. The Company has paid Value Added Tax of Rs,1,220 lakhs for financial year 2015-16, as compared to Rs, 1,400 lakhs paid for last financial year.
13) Depository System
The trading in the Equity Shares of your Company is under compulsory dematerialization mode. As on March 31, 2016, Equity Shares representing 99.95% of the equity share capital are in dematerialized form.
As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialization of the Company''s shares.
14) Listing of Shares
The Equity Shares of your Company continue to remain listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The listing fees for the year 2016-17 have been paid to these Stock Exchanges. The Shares of the companies are compulsorily tradable in dematerialized form.
15) Insurance
The assets of the Company are adequately insured against fire and such other risks, as are considered necessary by the Management.
16) Corporate Governance
Your Company has been practicing the principles of good corporate governance over the years and lays strong emphasis on transparency, accountability and integrity.
A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Regulation 27 of SEBI (LODR) 2015 of the Listing Agreement(s) with the Stock Exchange(s) forms part of this report.
The Chairman and Managing Director and Joint Managing Directors of the Company have certified to the Board on financial statements and other matters in accordance with Regulation 17 (8) of SEBI (LODR) 2015 of the listing agreement pertaining to CEO certification for the financial year ended 31st March 2016.
17) Management Discussion And Analysis Report
The Management Discussion and Analysis Report of financial position and results of operations of the Company for the year under review as required under Regulation 17 (7) of SEBI (LODR) 2015 of the Listing Agreement with the Stock Exchanges, is given as a separate statement forming part of this Annual Report.
18) Human Resource Development
Many initiatives have been taken to support business through organizational efficiency, development, resourcing, performance & compensation management, competency based development, career & succession planning and organization building. Leadership development is one of the primary key initiatives of the Company. Primary personal development program has been taken up as long term strategy of the Company.
A significant effort has also been undertaken to develop leadership as well as administrative / functional capabilities in order to meet future talent requirement.
The Company continues to maintain cordial relations without any interruption in work. As on 31st March 2016, the Company has 1077 employees on its rolls as against 1014 employees in previous year.
19) Conservation Of Energy, Technology Absorption And Foreign Exchange Earnings And Outgo:
Information In Accordance With The Provisions Of Section 134 (3)(m) Of The Companies Act, 2013 Read With Rule 8(3) Of The Companies Rules, 2014.
a) Conservation of Energy:
The disclosure of particulars with respect to conservation of energy pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with rule 8(3) of the companies (accounts) rules, 2014 are not applicable as our business is not specified in the Schedule . However, the company makes its best efforts to conserve energy in a more efficient and effective manner.
b) Technology Absorption, Adaptation and Innovation
The company has not carried out any specific research and development activities. The company uses indigenous technology for its operations. Accordingly, the information related to technology absorption, adaptation and innovation is reported to be NIL.
20) Particulars Of Employees And Related Disclosures
In term of the provision of Section 197(12) of Act read with rules 5(2) and 5(3) of the Companies ( Appointment and Remuneration of Managerial personnel) Rules, 2014 a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report. Disclosures pertaining to remuneration and other details as required under section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014 are provided in the Annexure -1.
Having regard to the provision of the first proviso to Section 136(1) of the Act and as advised, the Annual Report, excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.The full Annual Report including the aforesaid information is being sent electronically to all those members who have registered their main addresses and is available on the Company''s website.
21) Statement Concerning Development And Implementation Of Risk Management Policy Of The Company
Pursuant to section 134 (3) (n) of the Companies Act, 2013 & under regulation 21 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015, the company has constituted a business risk management committee.
Business Risk Evaluation and Management (BRM) is an on-going process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities.
The objectives and scope of the Risk Management
Committee broadly reviews:
1. Oversight of risk management performed by the executive management;
2. The BRM policy and framework formulated in line with local legal requirements and SEBI guidelines;
3. Risks and evaluate treatment including initiating mitigation actions and ownership as per a pre- defined cycle;
4. Defining framework for identification, assessment, monitoring, and mitigation and reporting of risks.
5. Within its overall scope as aforesaid, the Committee shall review risks trends, exposure, and potential impact analysis and mitigation plan.
22) Potential Risks , Concerns And Mitigation Plan
Risk of loss of Positioning in the market place
Due to severe competition in the retail trade, there is a possibility that our market share from a particular place of operation or region may decline. A lot of new entrants to the retail trade suffer from lack of knowledge of customer''s preference and on quality parameters and price war. Therefore, your company with its fuller penetration to rural market is well placed to participate in the rural success story of the country.
In order to maintain/improve market share in the areas we operate in the light of sagging regressive demand trends, we have cautiously brought down the mark up value for our products moderately.
Monsoon
Monsoon failure for successive years in southern parts of Tamilnadu adversely affected the company''s business. The purchasing power with rural people who depend on agriculture substantially got marginalized. This has resulted in demand compression and led to a period of continuous recession unparalleled in the recent history of jewellery trade. Rising inflation and high interest rates are other areas of concern that would deplete the residual income of the people to be spent on discretionary items like gold ornaments.
This has resulted in customer opting for light weight items. The company has decided to stock more of such items in order to get better share from sagging market as in the last year.
Gold price fluctuation risks
Gold price fluctuation risk could arise on account of frequent changes in gold prices either up or downside momentum. It could have adverse impact on earnings. Withdrawal of metal loan facility forced the industry to establish hedge against gold price movement with commodity exchange instruments which are cost prohibitive.
Therefore in the absence of adequate natural hedging facility, the trade is left with no viable alternative except to leave a large portion of gold un-hedged. Your Board will take appropriate action in managing the fluctuation impact in gold price movement from time to time.
Human Capital Risks
Human Resources risks could arise from the no availability of an adequately trained workforce. In order to mitigate this risk, the Company has in-house training programs and Operational development workshops and organized mentoring from management to motivate employees/supervisors and to attract and retain skilled/ trained personnel.
Cost management:
The Company is improving meticulously its focus on cost through a resourceful operating system, increase in the production Capacity and strengthening of manufacturing units and various sourcing points are being pursued to reduce manufacturing costs and also delivering quality of product at lower price.
Logistics facilities are strengthened. Synergy optimization in various cost components is achieved.
23) Internal Control Systems
The Board of Directors is responsible for ensuring that internal financial controls have been laid down in the Company and that such controls are adequate and are functioning effectively. TMJL has policies, procedures, control frameworks and management systems in place that map into the definition of Internal Financial Controls as detailed in the Companies Act, 2013.
These have been established at the entity and process levels and are designed to ensure compliance to internal control requirements, regulatory compliance and appropriate recording of financial and operational information.
Internal Financial Controls that encompass the policies, processes and monitoring systems for assessing and mitigating operational, financial and compliance risks and controls over related party transactions, substantially exist.
The management reviews and certifies the effectiveness of the internal control mechanism over financial reporting, adherence to the code of conduct and Company''s policies for which they are responsible and also the compliance to established procedures relating to financial or commercial transactions, where they have a personal interest or potential conflict of interest, if any.
The Audit Division continuously monitors the efficacy of Internal Financial Controls with the objective of providing to the Audit Committee and the Board of
Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organizationâs risk management, control and governance processes. The audit plan is approved by the Audit Committee, which reviews compliance to the plan.
During the year, the Audit Committee met regularly to review reports submitted by the Audit Division. All significant audit observations and follow-up actions thereon were reported to the Audit Committee.
The Audit Committee also met the Company''s Statutory Auditors to ascertain their views on financial statements, including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal controls and systems followed by the Company. The Management acted upon the observations and suggestions of the Audit Committee.
24) Details Of Policy Developed And Implemented By The Company On Its Corporate Social Responsibility Initiatives (CSR)
Based on last three years average Net profit, with financial year ended 31st March 2016 since the Company has incurred losses for 13-14, 14-15, there is no addition this year (Nil) . But, however for earlier year unspent amount of Rs,73 lakhs the company is working out for schemes that could result in enduring benefits to the community at large.
The Company shall find out ways and means to spend the same in the coming months and shall submit the relevant report in the ensuing year.
The Annual Report on CSR activities is annexed herewith as "Annexure 2".
25) Particulars Of Loans, Guarantees Or Investments Made Under Section 186 Of The Companies Act, 2013
There were no loans & guarantees given or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review.
Particulars of contracts or arrangements with related parties referred to in Section 188(1)
All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also in the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.
The Annual Report on related party is annexed herewith as "Annexure 3''"
26) Company''s Policy Relating To Directors Appointment, Payment Of Remuneration And Discharge Of Their Duties
The Company''s Policy relating to appointment of Directors, payment of Managerial remuneration, Directors'' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Annexure -4 and is attached to this report.
27) Annual Return
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure-5 (MGT-9) and is attached to this report.
28) Number Of Board Meetings Conducted During The Year Under Review
A calendar for Meetings is prepared and circulated in advance to the Directors. During the year Eight Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
29) Directors Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3) (c) of the Companies Act, 2013:
a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for the year;
c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) The directors had prepared the annual accounts on a going concern basis; and
e) The directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
30) Subsidiaries, Joint Ventures & Associate Companies
The Company does not have any Subsidiary, Joint venture or Associate Company.
31) Deposits
The details of deposits accepted/renewed during the year under review are furnished hereunder.
S. No |
Particulars |
(Rs,. In lakhs) |
|
1 |
Amount accepted during the year |
1,709 |
|
2 |
Amount remained unpaid or unclaimed as at the end of the year |
5.57 |
|
3 |
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved |
Nil |
32) Directors
Mr. Ba.Ramesh, Director of the Company retires by rotation and being eligible seeks reappointment. Your Board commends his reappointment
33) Declaration of Independent Directors
The Independent Directors have submitted their disclosures to the Board that they fulfil all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.
The Details of familiarization programme arranged for independent directors have been disclosed on website of the company and are available at www.thangamayil.com
Mr. T. R. Narayanaswamy, Independent Director of the Company has resigned from the Board due to his pressing business commitments and the same is effective from the board meeting i.e., 25th May 2016. While the board has accepted his resignation and like to place an record its appreciation of his service as a Director in the Company, all these years and the fruitful association as well and the Board wishes him all the best.
In terms of regulation 27 of SEBI (IODR) Regulations, 2015 the Board has appointed Mr. V. Ramasamy, a practicing Company Secretary, New Delhi in the place of Mr. T. R. Narayanaswamy for a period of one year subject to approval of shareholders in the ensuing Annual General Meeting to be held on 27th July 2016.
34) Code of Conduct
The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviors of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "code of business conduct" which forms an Appendix to the Code.
The Code has been posted on the Company''s website www.thangamayil.com. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance through examples on the expected behavior from an employee in a given situation and the reporting structure. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard.
35) Statutory Auditors
The Company''s Auditors, Messrs B.Thiagarajan & Co , Chartered Accountants, Chennai who retire at the ensuing Annual General Meeting of the Company are eligible for reappointment.
The Company has received letter from them to the effect that their appointment, if ratified, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment.
The Board recommends ratification of their appointment from the conclusion of this Annual General Meeting up to the conclusion of next Annual General Meeting of the Company.
36) Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. S. Muthuraju, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as "Annexure 6".
37) Comments on Auditors'' Report
There are no qualifications, reservations or adverse remarks or disclaimers made by B.Thiagarajan & Co., Statutory Auditors, in their report and by Mr. S. Muthuraju, Company Secretary in Practice, in his secretarial audit report.
The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.
38) Internal Audit & Control Systems
The company has an effective in-house internal audit system. The persons are well trained to cover various areas of verification inspection and system evaluation. All the mandatory compliances required to be followed under various statues are exhaustively covered in their scope.
We have effective and adequate internal audit and control systems, commensurate with our business size. Regular internal audit visits to the operations are undertaken to ensure that high standards of internal controls are maintained at each level. Independence of the audit and compliance function is ensured by the auditors'' direct reporting to the Audit Committee. Details on the composition and functions of the Audit Committee can be found in the chapter on Corporate Governance of the Annual Report.
39) Significant & Material Orders Passed By The Regulators or Courts
There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
40) Enhancing Stakeholders Value
Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company''s operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation.
Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.
41) Prevention of Sexual Harrasment At Workplace
The Company has a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of women at workplace and matters connected therewith or incidental thereto covering all the aspects as required under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013.
There were no such complaints received under the aforesaid policy during the year.
42) Disclosure of Composition of Audit Committee & Providing Vigil Mechanism
Pursuant to the provisions of the Companies Act, 2013 and under regulation 25 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees.
The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report
The Audit Committee consists of the following members:
a. Mr.S.Rethinavelu - Chairman
b. Mr.V.R.Muthu - Member
c. Mr.Ba.Ramesh - Member
The above composition of the Audit Committee consists of Independent Directors viz., Mr.S.Rethinavelu and Mr. V.R.Muthu who form the majority.
The Company has established a vigil mechanism and overseas through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of Company employees and the Company.
43) Annual Evaluation By The Board
The evaluation framework for assessing the performance of Directors comprises of the following key areas:
1. Attendance of Board Meeting and Board Committee Meetings
2. Quality of Contribution to Board deliberations
3. Strategic perspectives or inputs regarding future growth of Company and its performance
4. Providing perspectives and feedback going beyond information provided by the management
5. Commitment to shareholders and other stakeholder interests
The evaluation involves self-evaluation by the Board Members and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/ her evaluation.
44) Prevention of Insider Trading:
In January 2015, SEBI notified the SEBI (Prohibition of insider trading) Regulations, 2015 which came into effect from May 15, 2015. Pursuant thereto, the
Company has formulated and adopted a new Code for Prevention of Insider Trading.
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company.
The Code requires pre-clearance for dealing in the Company''s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Directors and the designated employees have confirmed compliance with the Code.
45) SHARES
a. BUY BACK OF SECURITIES
The Company has not bought back any of its securities during the year under review
b. SWEAT EQUITY
The Company has not issued any Sweat Equity Shares during the year under review.
c. BONUS SHARES
No Bonus Shares were issued during the year under review.
d. EMPLOYEES STOCK OPTION PLAN
The Company has not provided any Stock Option Scheme to the employees.
46) Forward-looking Statements
Statements in the Board''s Report and the Management Discussion & Analysis describing the Company''s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations.
Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include domestic demand and demand and supply conditions affecting selling prices , input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
47) Acknowledgements
Your directors express their sincere gratitude and appreciation to the employees of the company who have devotedly and steadfastly stood with the company and for the enduring hard work for the betterment of the company.
Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Company''s activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on the Company.
BY ORDER OF THE BOARD
ForThangamayil Jewellery Limited
BALARAMA GOVINDA DAS
Managing Director
Ba. RAMESH
Joint Managing Director
N.B.KUMAR
Joint Managing Director
Place - Madurai
Date - May 25, 2016
Mar 31, 2015
Dear Shareholders,
The Directors have pleasure in presenting their 15th Annual Report and
the Audited Accounts for the financial year ended March 31, 2015.
1) Financial Results
Highlights of Financial results for the year are as here under:
(Rsln lakhs)
I Particulars 2014-15 2013-14
Sales and Other Operating Income 1,42,283 1,19,611
Gross Profit 5,327 8,236
Earnings before Interest, Depreciation
and Taxation 441 1,959
(EBITDA)
Finance Cost 2,914 3,476
Depreciation 826 565
Profit/(Loss) Before Tax (PBT) (3,298) (2,077)
Tax (1,070) (820)
Profit/(Loss) After Tax (PAT) (2,228) (1,257)
Sales and other income for the year increased by 19% to Rs.1,42,283 lakhs
as compared to Rs.1,19,611 lakhs in 2014. During the year under review
your company improved the volume offtake in gold ornaments by 30% and
in the case of silver articles by 52% growth as against last year. The
company incurred a net loss of Rs.2,228 lakhs in 2014-15 as against loss
of Rs.1,257 lakhs in 2013-14.
On a revenue of Rs.1,42,283 lakhs for the year, the company made a gross
profit of Rs.5,327 lakhs. However, on a metal to metal replacement basis,
without considering inventory loss, the company would have made gross
profit of Rs. 9,167 lakhs. Post expenses including interest outflow of
Rs.7,800 lakhs, the company made a cash profit of Rs.1,367 lakhs. However,
after giving effect to the adverse gold and silver price movement of
Rs.3,840 lakhs witnessed throughout the year, the company's performance
has resulted in a net loss of Rs. 3,298 lakhs before tax. But for the
steep reduction in gold price by 11%(Rs.2,938-2,621 )i.e. Rs.317/= per
gram and silver price by 30% (53-37) i.e. Rs. 16/= per gram, amounting
in aggregate to Rs. 3,840 lakhs in the year the results as attained was
moderate. For the current year, we carry the inventory at the
lowest cost in the year and hopefully as per current indicators,
barring unforeseen circumstances, the management is confident of
achieving better results.
Pursuant to implementation of change in depreciation methodology as per
the Companies Act 2013 adopted in this year by your company has
impacted results as follows.
The Value of Assets whose useful life is exhausted as on 01-04-2014,
calculated under the Companies Act, 2013, amounting to Rs.100.25 lakhs
(excluding Deferred Tax amount of Rs. 48.15 lakhs ) have been adjusted to
opening balance of retained earnings. The depreciation for the year
ended 31st March 2015 is higher by Rs.212.12 lakhs when compared to the
computation methodology under the erstwhile Companies Act, 1956.
Deferred Tax Assets
The Company is of the view that the business environment will become
conducive to earn adequate profits in future years and will be able to
recover fully the unabsorbed business and depreciation losses as per
Income Tax Act and consequently the virtual certainty of recovering
these loses being established. Deferred Tax Asset in accordance with
Accounting Standard- 22 is recognized in the books in respect of these
loses.
The major reasons for adverse performance are summarized hereunder
The company inspite of positive operating results post expenses could
earn only part of the interest cost at EBITDA level due to steep
reduction in inventory realisation on subsequent sales.
- The closing stock of earlier year was sold and realized at a lesser
rate due to consistent fall in gold price witnessed during the major
part of the year.
- A lot of price fluctuations favoured the customers to make use of
every steep fall as a purchase opportunity. With the result,
replacement purchases made at a higher level were sold at a relatively
lower price during the major part of the year on a continuous basis.
- Withdrawal of concessional Metal Loan that was facilitating Natural
Hedge cover forced the Company to settle for costly Cash Credit
Facilities from the lenders that too without any hedging mechanism in
place, even though pronounced reduction noticed in working capital
borrowings.
Monsoon failed for the successive years. All our branches are located
in rural / semi urban areas where the agricultural income being the
main source of income to the people dwindled.
Due to steep increase in interest rate, even for the reduced
utilization of limits, the Company was compelled to part relatively
with huge interest and financial incidentals like processing fee,
consortium charges, key man life cover charges, etc that led to a
situation of under recovery of interest in the overall performance
of the Company.
All these factors cumulatively resulted in the reporting of Net Loss of
Rs.2,228 lakhs for 14-15 as against a net loss ofRs. 1,257 lakhs in 13-14.
2) Key Initiatives taken bv the management in 14-15
- Introduced a labour incentive system to promote sales in a
competitive environment;
Better stock rotation and lower obsolete inventory helped to curtail
expenses;
Participated in bank/ NBFC auctions to reduce the cost of purchase of
primary gold;
- Significantly improved its own manufacturing portion of the finished
inventory;
- Customer relationship management improved so that betterturnover
could be achieved;
- Aggressive pricing strategy followed to beat the competition impact
that enabled to maintain and improve our market share in the areas we
operate;
- Strictly followed the game changer plan business model as conceived
for 14-15 by the Board.
3) Continuing Challenges
The agony is not abated. No tangible shift in metal loan lending
restoration is seen in spite of the fact that Government of India
withdrew the import ban of 80:20 basis. The ground realities are far
from satisfactory in conduct of operations on sustainable basis, due to
prolonged recession in demand side. The shrinking business compelled
competitors to extend steep and unworkable discounts to keep the
business going in all respects. Due to falling gold price witnessed in
the larger part of 14-15, the investment demand for gold ornament
didn't take off. Excessive capacities built in inventory by new retail
chains also added to the pain in the performance.
4) Future prospects
No perceptible changes are noticed in the demand off take for gold
jewellery in the first two months of the current year. However, the
gold price is moving within a narrow range and is not affecting the
inventory realization of the Company. It is hoped that stable gold
price will improve the demand in the months to come. On its part, in a
continuous recessionary trend witnessed in the industry, the Company
had taken some more proactive steps to retain its market share with a
reasonable profit margin on sales. However, falling rural wages and the
near stalemate prevailing in real estate sector, will have its adverse
impact on the performance. The cost reduction initiatives undertaken by
the Company and the effectiveness with which the Working Capital is
managed will go a long way in improving the sagging bottom line of the
Company.
5) Manufacturing facilities
The company improved its utilisation of own manufacturing facilities
and with the overall cost saving obtained in own production, the
company could manage the demand recession witnessed in the industry.
The current capacity utilisation in our own manufacturing outfits is
currently around 55% and is likelytogoupto75%in 15-16.
6) Impact on deleverage of Balance Sheet
Due to demand recession and high cost of funds necessitated by
withdrawal of metal loan facility by lenders forced the company to
deleverage the balance sheet to an extent feasible by market
conditions.The company managed to bring down the working capital
borrowings from Rs. 21,285 lakhs to Rs.15,378 lakhs in 31.03.15. In spite
of this reduction, the gross turnover has improved by 19% in 2014-15 as
against 2013-14.
The steep reduction in working capital borrowing's impact on interest
payment was not felt. The lenders acted smartly by invoking "Risk
reward rationale"and charged higher interest, on the industry that is
already suffering due to rigid Government regulations. To bring out the
ground realities, the extent to which your company was affected by this
shift in stand taken by the lenders is given hereunder:
Year ended Limits used interest & Asa%
31st March (Average Other (on loan
during the charges availed)
year)
2013 34,112 3,434 10.06%
2014 28,071 3,223 11.50%
2015 18,043 2,524 14.00%
It may be seen from the above chart that the quantum of absolute
interest reduction is not commensurate to the quantum of loan exposure
reduction at a given point of time. Banks always ensured to get a more
than reasonable portion of the revenue accretion.This has made the
management to consistently reduce the working capital borrowings even
though due to sharp inventory value reduction in 13-14 and 14-15, the
company could not fully earn the interest outgoes. The steps painful
but in a proactive manner taken in the past two years, resulted in a
steep reduction in working capital borrowings from as high as Rs. 40,400
lakhs in 12-13, to Rs. 15,378 lakhs in 14-15. The current outstanding as
of date is around Rs. 11,850 lakhs only. This was made possible due to
better stock rotation. The company could reduce the cost of sales in
all other components in the last two years. A substantial reduction in
interest cost under the current context, will become a reality in the
on-going year 15-16 due to certain strategy initiatives taken by the
Company in the areas of working capital management.
7) Hedging for gold price fluctuations
In the absence of restoration of full facility under metal loan by
lenders, the natural hedging associated with that kind of trade finance
could not be availed. Slowly, some banks in the consortium started to
issue SBLC to avail metal loan. We are hopeful during the first quarter
of this fiscal, other banks also will fall in line. The company is
inclined to cover at least 60% of
the stock by way of metal loan and customer's gold at creditor's
risks.The balance 40% will be left uncovered in order to avail the cash
credit facility extended by the lenders. The gold price is nearest to
the bottom at 1180 US$ per ounce and we learn that at that price gold
mines would not even breakeven. Moreover, INR is overvalued by 8% based
on the PPP (Purchasing power parity) factor. Of late, INR started to
depreciate by 3 to 4% and expected to be in the band of 63 to 66 per
dollar for some more time. The Government is not in a hurry to reduce
the import duty on gold due to revenue and current account deficit
considerations. The profit on long term sustainable basis for gold
industry is linked to modest appreciation in gold price. This is time
tested phenomenon and therefore, in the absence of viable hedging
mechanism keeping up to 40% of inventory under fixed price that too at
a relatively lower price of purchase is not a bad proposition. At the
same time, in order to protect the companyfrom any steep erosion of net
worth, a major portion of (nearly 60% or more) gold inventory will be
fixed to metal loan / customer advances category. All said and done,
your company will watch and monitor the movement of gold price closely
and take an appropriate call based on the then-emerging situation to
ensure no real time loss / erosion to the net worth of the company in
future. At the same time, what is sold on a daily basis will be covered
on the same day and therefore on sales of gold ornaments, the issue of
open position will notarise.
8) Dividend
The Board of Directors of the Company are pleased to recommend a
dividend of ^1 /- (10%) per equity share for 2014-15 (Rs.1 in 2013-14) on
1,37,19,582 equity shares of Rs.10 each.The Proposed dividend is subject
to the approval of shareholders in the ensuing Annual General Meeting
of the company.
The register of members and share transfer books of the company will
remain closed from 22nd July 2015 to29th July 2015 (both days
inclusive)
Since there was no unpaid/unclaimed Dividend declared and paid last
year, the provisions of Section 125 of the Companies Act, 2013 do not
apply.
9) Material changes and commitment if any affecting the financial
position of the company occurred between the end of the financial year
to which this financial statements relate and the date of the report
No material changes and commitments affecting the financial position of
the Company occurred between the end of the financial year to which
these financial statements relate and on the date of this report.
10) Capital Expenditure
During the year, we capitalized Rs.257 Lakhs to our gross block
comprising Rs.104 lakhs for Plant & Machinery and Furniture & Fittings
and other assets and balance of ^153 lakhs for Computer Equipment's
including Software.
The Capital Work in Progress includes Rs. 644.85 lakhs spent on creating
various infrastructural facilities required for centralized
procurement, manufacturing, processing and warehousing functions
relevant for the business operations that would significantly enable
the competitive positioning of the Company in the Branch Networking
Expansion Plan that would be fully operational in due course of time.
For the previous year, we capitalized ^1367 Lakhs to our gross block
comprising Rs.572 lakhs for Plant & Machinery and Furniture & Fittings
and others and the balance of ^795 lakhs for Computer Equipment's
including Software.
11) Finance
The Secured working capital borrowings of the Company as on March
31,2015 stood at ^15,378 lakhs (previous year Rs. 21,285 lakhs). The
phased reduction was on account of reduction in inventory in line with
business realties. It is also due to withdrawal of metal loan extended
by bankers in the past. The company is able to manage its requirement
comfortably by improving the stock rotations. Cash and cash equivalents
as on 31 st March 2015 stood at Rs.574 lakhs (previous year ^1,685
lakhs). Customer advances supported the company to manage to maintain
its working capital requirement.
12) Contribution to exchequer
The Company is a regular payer of taxes and other duties to the
Government. During the year under review, due to losses, your Company
has not paid any advance tax as against ^200 lakhs paid during the
previous year. The Company also paid Value Added Tax of Rs.1,400 lakhs
for financial year 2014-15, as compared to Rs. 1,135 lakhs paid for last
financial year.
13) Depository system
The trading in the Equity Shares of your Company is under compulsory
dematerialization mode. As on March 31,2015, Equity Shares representing
99.95% of the equity share capital are in dematerialized form. As the
depository system offers numerous advantages, members are requested to
take advantage of the same and avail of the facility of
dematerialization of the Company's shares.
14) Listing of shares
The Equity Shares of your Company continue to remain listed with Bombay
Stock Exchange Limited and National Stock Exchange of India Limited.
The listing fees for the year 2015-16 have been paid to these Stock
Exchanges. The Shares of the companies are compulsorily tradable in
dematerialized form.
15) Insurance
The assets of the Company are adequately insured against fire and such
other risks, as are considered necessary by the Management.
16) Corporate Governance
Your Company has been practicing the principles of good corporate
governance over the years and lays strong emphasis on transparency,
accountability and integrity.
A separate section on Corporate Governance and a certificate from the
statutory auditors of the Company regarding compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement(s) with the Stock Exchange(s) forms part of this report.
The Chairman and Managing Director and Joint Managing Directors of the
Company have certified to the board on financial statements and other
matters in accordance with the Clause 49 (V) of the Listing Agreement
pertaining to CEO certification for the financial year ended 31 st
March 2015.
17) Management Discussion and Analysis Report
The Management Discussion and Analysis Report of financial position and
results of operations of the Company for the year under review as
required under Clause 49 of the Listing Agreement with the Stock
Exchanges, is given as a separate statement forming part of this Annual
Report.
18) Human Resource Development
Many initiatives have been taken to support business through
organizational efficiency, development, resourcing, performance &
compensation management, competency based development, career &
succession planning and organization building. Leadership development
is one of the primary key initiatives of the Company. Primary personal
development program has been taken up as long term strategy of the
Company. A significant effort has also been undertaken to develop
leadership as well as administrative / functional capabilities in
orderto meetfuture talent requirement.
The Company continues to maintain amicable relations without any
interruption in work. As on 31 st March 2015, the Company has 1014
employees on its rolls as against 1053 employees in previous year.
19) Conservation of energy, technology absorption and Foreign Exchange
earnings and outgo:
INFORMATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 134 (3)(M) OF
THE COMPANIES ACT, 2013 READ WITH RULE 8(3) OF THE COMPANIES (ACCOUNTS)
RULES, 2014.
a) Conservation of Energy
The disclosure of particulars with respect to conservation of energy
pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with
rule 8(3) of the Companies (Accounts) rules, 2014 are not applicable as
our business is not specified in the Schedule . However, the company
makes its best efforts to conserve energy in a more efficient and
effective manner.
b) Technology Absorption, Adaptation and Innovation
The company has not carried out any specific research and development
activities. The company uses indigenous technology for its operations.
Accordingly, the information related to technology absorption,
adaptation and innovation is reported to be NIL.
20) Particulars of Employees and Related Disclosures
In term of the provision of Section 197(12) of Act read with rules 5(2)
and 5(3) of the Companies (Appointment and Remuneration of Managerial
personnel) Rules, 2014 a statement showing the names and other
particulars of the employees drawing remuneration in excess of the
limits set out in the said rules are provided in the Annual Report.
Disclosures pertaining to remuneration and other details as required
under section 197(12) of the Act read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules,2014 are
provided in the Annexure -1.
Having regard to the provision of the first proviso to Section 136(1)
of the Act and as advised, the Annual Report excluding the aforesaid
information is being sent to the members of the Company. The said
information is available for inspection at the registered office of the
Company during working hours and any member interested in obtaining
such information may write to the Company Secretary and the same will
be furnished on request.The full Annual Report including the aforesaid
information is being sent electronically to all those members who have
registered their main addresses and is available on the Company's
website.
21) Statement concerning development and Implementation of Risk
Management Policy of the Company
The Company has adopted the following measures concerning the
development and implementation of a
Risk Management Policy after identifying the following elements of
risks which in the opinion of the Board may threaten the very existence
of the Company itself.
22) Potential Risks, Concerns and Mitigation Plan
Risk of loss of Positioning in the market place
Due to severe competition in the retail trade, there is a possibility
that our market share from a particular place of operation or region
may decline. A lot of new entrants to the retail trade suffer from lack
of knowledge of customer's preference and on quality parameters and
price war. Therefore, your company with its fuller penetration to rural
market is well placed to participate in the rural success story of the
country. In order to maintain/improve market share in the areas we
operate in the light of sagging regressive demand trends, we have
cautiously brought down the mark up valuefor our products moderately.
Monsoon
Monsoon failure for successive years in southern parts of Tamilnadu
adversely affected the company's business.The purchasing power with
rural people who depend on agriculture substantially got marginalized.
This has resulted in demand compression and led to a period of
continuous recession unparalleled in the recent history of jewellery
trade. Rising inflation and high interest rates are other areas of
concern that would deplete the residual income of the people to be
spent on discretionary items like gold ornaments.This has resulted in
customer opting for light weight items. The company has decided to
stock more of such items in order to get better share from sagging
market as in the last year.
Gold price fluctuation risks
Gold price fluctuation risk could arise on account of frequent changes
in gold prices either up or downside momentum. It could have adverse
impact on earnings.
Withdrawal of metal loan facility forced the industry to establish
hedge against gold price movement with commodity exchange instruments
which are cost prohibitive. Therefore in the absence of natural hedging
facility, the trade is left with no viable alternative except to leave
a large portion of gold un- hedged. Your Board will take appropriate
action in managing the fluctuation impact in gold price movement from
time to time. Post RBI circular on restoration of metal loan some of
our consortium bankers have reintroduced to SBLC facilities to avail
metal loan and other banks may follow suit in 2015-16.
Human Capital Risks
Human Resources risks could arise from the non- availability of an
adequately trained workforce. In order to mitigate this risk, the
Company has in-house training programs and Operational development
workshops and organised mentoring from management to motivate
employees/supervisors and to attract and retain skilled/trained
personnel.
Cost management
The Company is improving meticulously its focus on cost through a
resourceful operating system, increase in the production Capacity and
strengthening of manufacturing units and various sourcing points are
being pursued to reduce manufacturing costs and also delivering quality
of product at lower price. Logistics facilities are strengthened.
Synergy optimization in various cost components is achieved.
23) Details of policy developed and implemented by the Company on its
Corporate Social Responsibility initiatives
Based on last three years average Net profit, the Company is entitled
to spend a sum of Rs. 73.09 lakhs in the year 2014-15. The company is
working out for schemes that could result in enduring benefits to the
community at large. The Company shall find out ways and means to spend
the same in the coming months and shall submit the relevant report in
the ensuing year.The Company could not spend the money before
finalising this report as the time was too short to identify suitable
projects for spending the same.
The Annual Report on CSR activities is annexed herewith as"Annexure 2".
24) Particulars of Loans, Guarantees or Investments made under Section
186 of the CompaniesAct,2013
There were no loans & guarantees given or investments made by the
Company under Section 186 of the Companies Act, 2013 during the year
under review.
Particulars of contracts or arrangements with related parties referred
to in Section 188(1)
All related party transactions that were entered into during the
financial year were on an arm's length basis and were in the ordinary
course of business.There are no materially significant related party
transactions made by the Company with Promoters, Directors, Key
Managerial Personnel or other designated persons which may have a
potential conflict with the interest of the Company at large. All
Related Party Transactions are placed before the Audit Committee as
also in the Board for approval. Prior omnibus approval of the Audit
Committee is obtained on a quarterly basis for the transactions which
are of a foreseen and repetitive in nature. The transactions entered
into pursuant to the omnibus approval so granted are audited and a
statement giving details of all related party transactions is placed
before the Audit Committee and the Board of Directors for their
approval on a quarterly basis.
The Annual Report on related party is annexed herewith as"Annexure 3".
25) Explanation or comments on qualifications, reservations or adverse
remarks or disclaimers made by the auditors and the practicing company
secretary in their reports
There were no qualifications, reservations or adverse remarks made
either by the Auditors or by the Practicing Company Secretary in their
respective reports.
26) Company's policy relating to directors appointment, payment of
remuneration and discharge of their duties
The Company's Policy relating to appointment of Directors, payment of
Managerial remuneration, Directors' qualifications, positive
attributes, independence of Directors and other related matters as
provided under Section 178(3) of the Companies Act, 2013 is furnished
in "Annexure -4" and is attached to this report.
27) Annual Return
The extracts of Annual Return pursuant to the provisions of Section 92
read with Rule 12 of the Companies (Management and administration)
Rules, 2014 is furnished in "Annexure 5" (MGT 9) and is attached to
this report.
28) Number of Board Meetings conducted during the year under review
The Company had 6 Board meetings during the financial year under
review.
29) Directors Responsibility Statement
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134(3)(c) of the Companies
Act, 2013:
a) in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
b) the directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the company at the end of the financial year and of the profit and loss
of the company for the year;
c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
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 the company and that such internal financial controls are
adequate and were operating effectively. Internal financial control
means the policies and procedures adopted by the Company for ensuring
the orderly and efficient conduct of its business including adherence
to Company's policies, the safeguarding of its assets, the prevention
and detection of frauds and errors, the accuracy and completeness of
the accounting records and the timely preparation of reliable financial
information.
f) the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
30) Subsidiaries, Joint Ventures and Associate
Companies
The Company does not have any Subsidiary, Joint
venture or Associate Company.
31) Fixed Deposits
The details of deposits accepted/renewed during the year under review
are furnished hereunder
Particulars (Rs.In lakhs)
Amount accepted during the year 1274.94
Amount remained unpaid or unclaimed
as at the end of the year 0.53
Whether there has been any default in repayment
of deposits or payment of interest thereon during
the year and if so, number of such cases and Nil
the total amount involved
32) Directors
There was no Director who got re-elected/ reappointed during the year
under review Mrs.Yamuna Vasini Deva Dasi who was appointed as
Additional Director on 04.02.2015 and holds the said office till the
date of the Annual General Meeting. A notice has been received as
required under Companies Act from a shareholder signifying his
intention to propose Mrs.Yamuna Vasini Deva Dasi as director of the
company. The board of directors of the company recommend her
appointment at the ensuing Annual General Meeting.
Mr.N.B.Kumar, director of the Company retires by rotation and being
eligible seeks reappointment. Your Board re commends his
reappointment.
33) Declaration of Independent Directors
The Independent Directors have submitted their disclosures to the Board
that they fulfil all the requirements as stipulated in Section 149(6)
of the Companies Act, 2013 so as to qualify themselves to be appointed
as Independent Directors under the provisions of the Companies Act,
2013 and the relevant rules.
The Details of familiarisation program arranged for independent
directors have been disclosed on website of the company and are
available at www.thangamayil.com
34) Annual Evaluation by the Board
The evaluation framework for assessing the performance of Directors
comprises of the following keyareas:
1. Attendance of Board Meeting and Board Committee Meetings
2. Quality of Contribution to Board deliberations
3. Strategic perspectives or inputs regarding future growth of Company
and its performance
4. Providing perspectives and feedback going beyond information
provided by the management
5. Commitment to shareholders and other stakeholder interests
The evaluation involves self-evaluation by the Board Members and
subsequently assessment by the Board of Directors. A member of the
Board will not participate in the discussion of his/ her evaluation.
35) Statutory Auditors
The Company's Auditors, M/s B.Thiagarajan & Co , Chartered Accountants,
Chennai who retire at the ensuing Annual General Meeting of the Company
are eligible for reappointment.They have confirmed their eligibility
under Section 141 of the Companies Act, 2013 and the Rules framed
thereunder for reappointment as Auditors of the Company. As required
under Clause 49 of the Listing Agreement, the auditors have also
confirmed that they hold a valid certificate issued by the Peer Review
Board of the Institute of Chartered Accountants of India.
36) Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and The Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed Mr. S. Muthuraju, a
Company Secretary in Practice to undertake the Secretarial Audit of the
Company. The Report of the Secretarial Auditor is annexed herewith
as"Annexure6".
37) Internal Audit and Control Systems
The company has an effective in-house internal audit system.The persons
are well trained to cover various areas of verification inspection and
system evaluation. All the mandatory compliances required to be
followed under various statues are exhaustively covered in their scope.
We have effective and adequate internal audit and control systems,
commensurate with our business size. Regular internal audit visits to
the operations are undertaken to ensure that high standards of internal
controls are maintained at each level. Independence of the audit and
compliance function is ensured by the auditors' direct reporting to the
Audit Committee. Details on the composition and functions of the Audit
Committee can be found in the chapter on Corporate Governance of the
Annual Report.
38) Significant and material orders passed bv the Regulators or Courts
There are no significant material orders passed by the Regulators /
Courts which would impact the going concern status of the Company and
its future operations.
39) Enhancing Stakeholders Value
Your Company believes that its Members are among its most important
stakeholders. Accordingly, your Company's operations are committed to
the pursuit of achieving high levels of operating performance and cost
competitiveness, consolidating and building for growth, enhancing the
productive asset and resource base and nurturing overall corporate
reputation. Your Company is also committed to create value for its
other stakeholders by ensuring that its corporate actions positively
impact the socio- economic and environmental dimensions and contribute
to sustainable growth and development.
40) Disclosure of composition of Audit Committee and providing vigil
mechanism
The Audit Committee consists of the following members
a. Shri.S.Rethinavelu - Chairman
b. Shri.V.R.Muthu - Member
c. Shri.Ba.Ramesh - Member
The above composition of the Audit Committee consists of Independent
Directors viz., Shri. S. Rethinavelu and Shri. V.R.Muthu who form the
majority.
The Company has established a vigil mechanism and
overseas through the committee, the genuine concerns expressed by the
employees and other Directors. The Company has also provided adequate
safeguards against victimization of employees and Directors who express
their concerns. The Company has also provided direct access to the
chairman of the Audit Committee on reporting issues concerning the
interests of Company employees and the Company.
41) Shares
a. Buy Back Of Securities
The Company has not bought back any of its securities during the year
under review.
b. Sweat equity
The Company has not issued any Sweat Equity Shares during the year
under review.
c. Bonus shares
No Bonus Shares were issued during the year under review.
d. Employees Stock Option Plan
The Company has not provided any Stock Option Scheme to the employees.
42) Forward - looking Statements
Statements in the Board's Report and the Management Discussion &
Analysis describing the Company's objectives, expectations or forecasts
may be forward-looking within the meaning of applicable securities laws
and regulations. Actual results may differ materially from those
expressed in the statement. Important factors that could influence the
Company's operations include domestic demand and demand and supply
conditions affecting selling prices, input availability and prices,
changes in government regulations, tax laws, economic developments
within the country and other factors such as litigation and industrial
relations.
43) Acknowledgements
Your directors express their sincere gratitude and appreciation to the
employees of the company who have devotedly and steadfastly stood with
the company and for the enduring hard work for the betterment of the
company.
Your Directors place on record their sincere thanks to bankers,
business associates, consultants, and various Government Authorities
for their continued support extended to your Companies activities
during the year under review. Your Directors also acknowledges
gratefully the shareholders for their support and confidence reposed on
your Company.
BY ORDER OFTHE BOARD
ForThangamayil Jewellery Limited
BALARAMA GOVINDA DAS
Managing Director
Ba.RAMESH
Joint Managing Director
N.B.KUMAR
Joint Managing Director
Place-Madurai
Date-May 25,2015
Mar 31, 2014
Dear Members,
Your Directors have pleasure in presenting their 14th Annual Report and
the Audited Accounts for the financial year ended March 31, 2014.
FINANCIAL RESULTS
Highlights of Financial results for the year are as here under:
(Rs . in Lakhs)
Particulars 2013-2014 2012-2013
Sales and Other Operating Income 1,19,611 1,52,479
Gross Profit 8,236 16,527
Earnings before Interest, Depreciation 1,959 8,467
and Taxation (EBITDA)
Finance Cost 3,476 3,702
Depreciation 565 459
Profit/(Loss) Before Tax (PBT) (2,077) 4,306
Tax (820) 1,342
Profit/(Loss) After Tax (PAT) (1,257) 2,963
Financial Performance
Sales and Other Income at Rs 119,611 lakhs were 22% lower than that of
previous year's Rs 152,479 lakhs. However on a comparable basis net
sales (Net of Traded Goods) has come down by 16%. Apart from value
compression, the quantity sold also declined in 2013-14 due to
pronounced demand recession witnessed in the later part of the year.
This reduction is mainly due to wide fluctuations in gold price
movement and failed monsoon in southern part of the Tamilnadu that
crippled the discretionary spending surplus income in the hand of the
customers.
The major reasons for adverse performance are summarized hereunder:
* Withdrawal of metal loan facility (natural hedge) all of a sudden in
August 2013 when the effective gold price was at peak forced the
company to fix the price at the highest level. Post fixation, gold
price declined by 15% that compelled the company to realize lesser
amount on subsequent customer sales.
* Most of the early purchases were made by the customers in the first 4
months of the financial year when the gold price was at recent historic
bottom ( around ' 2,550 per grams ) and in the next 8 months due to
demand recession and fluctuating gold price movement public by and
large refrained from buying. This has resulted in 16% drop in sales
where as for the industry as a whole the drop was around 35% at the
national level.
* Due to non availability of gold the premium for the metal in the
local market shot up. This factor together with increase in customs
duty to 10% from 6% and steep reduction of INR by 12% contributed to
the widening of the local price parity upto 20% compared to
international price. This in turn prompted the customers to source it
from Middle East and Singapore markets at a cheaper price.
* The monsoon has failed for a continuous second year in succession.
All our branches are located in rural/ semi urban area where the
agricultural income is one of the main sources available for
discretionary spending. In the absence of that, heavy weight ornament
items sales drastically dwindled. In fact our average sale weight per
invoice has come down from 12.28 grams to 8.25 grams in 2013-14. Even
though, the customers base and aggregate bills have improved it has not
resulted in increase in the volume based offtake.
* Absence of viable hedging mechanism as an alternative for metal loan
withdrawal that acted as a natural hedge together with nearly 200%
increase in interest cost due to opting for cash credit leverage as
against withdrawal of concessional metal loan credit resulted in nearly
2.50% drop in profit margin. This has in fact resulted in negative
EBIDTA margin in the second half of the year.
* The inventory valuation in accordance with AS-2 method ( Cost or net
realizable value whichever is lower) also contributed to mark to market
losses on the inventory carried forward on the date of reporting ie
31st March 2014 as net realizable value was lower than the cost of gold
ornaments as on that date.
Consequent to these adverse factors, the company could not effectively
utilize its extended infrastructure facilities created in the earlier
years and in some recently opened branches it could not even recover
the operational cost.
All these factors cumulatively resulted in the reporting of net loss of
Rs 1,257 lakhs for 2013-14 as against net profit after tax of Rs 2,963
lakhs in 2012-13.
CONTINUING CHALLENGES
The industry is facing challenges on a continuous manner from July 2013
onwards. No tangible shift is noticed till now in the critical area of
removal of ban on import of gold, extension of metal loan facilities,
improvements in demand & relaxation of controls imposed directly and
indirectly by the lenders.
Apart from these macro issues, the ground realities are far from
satisfactory in conduct of operations on a sustainable basis. Due to
prolonged demand recession the competitors were left with no option
except to offer unhealthy discounts to retail customers. This has
become a trend now and most of the leading organized players are
compelled to forgo profits in the long term interest of sustenance of
business. We do not see any perceptible change for better gold business
and the fact remains that the challenges are extraordinary and
continuing till date. However as a breather to ailing industry the RBI
has come out with a recent notification dated 21st May 2014 where in it
has restored metal loan facilities hitherto extended by banks subject
to continuation of 80:20 policy for import of gold.
HEDGING FOR GOLD PRICE FLUCTUATIONS:
The jewellery industry for the past several years went through a
secular bull run. Therefore, no need was felt to hedge the price to
protect the capital intact. Of late, things are changing
internationally as the gold price started to decline gradually after
hitting a peak price of 1921US$ per ounce in August 2012. Currently, it
is quoting around 1310US$ thereby registering a drop of 32% so far.
Thanks to scores of restrictions brought in by Government and RBI
Authorities, we could see only a marginal drop in local price of gold.
It looks like the Government is in no hurry to relax the ban imposed on
import of gold and to reduce the customs duty from 10% to original
level. However, RBI by its recent notification permitted the banks to
extend metal loan facilities to the jewellery trade borrowers so that
substantial part hedging problem could be resolved in future.
In this back drop, the availability of metal in the local organized
market continues to be dearer. Therefore, this structural shift at
macro level made by the Government will ensure a stable price at
escalated level for some more time as the pricing is left to the local
demand / supply factors and not governed by international pricing. Due
to demand recession and non availability of metal matched with
international price, the industry is left with no option except to
contract the balance sheet so that a lesser inventory could be rotated
faster that would ensure a reasonable profits to the enterprise.
Moreover, in the Indian context, we don't have a viable effective
hedging platform that would ensure least cost and ensure better
liquidity other than the metal loan facility.
On our part, we did resort to some hedging mechanism in the last year
but it could not serve any purpose due to sudden withdrawal of metal
loan facility and also due to steep devaluation of INR Vs US $. In
case, metal loan / consignment sales are permitted, we may take
advantage of the same in lifting delivery under price "unfixed basis".
We arrange with suppliers to fix the price at the time of actual sales
to customers currently. We are also operating metal savings scheme where
in price risk associated with the gold price fluctuations is borne by
the customers. However, a better part of the inventory at any point is
left fixed. We do not anticipate any big / sudden fall in gold price in
local market for the reasons stated above. In the past, whenever gold
prices steeply reduced, it bounced back to its support level and it is
also a fact that we are not going to sell our entire inventory at the
reduced price in one single day or a week.
The long term average of price realization will ensure better stability
to price behaviour even though booking of notional losses as the one
witnessed in second half of the year 13-14 couldn't be avoided in the
absence of natural hedging product like metal loan facility.
Nevertheless, your company will watch and monitor the movement of gold
price closely and take an appropriate call based on the requirement to
ensure no real time erosion to the net worth of the company.
MANUFACTURING FACILITIES
The company during the year increased its own manufacturing facilities
to produce gold ornaments like chains and other low value mass volume
items from 5 kg per day to 10 kg per day at its Madurai and Coimbatore
outlets. This incremental production capacity will increase effective
margin by 0.5% on sales. Similarly, the silver articles manufacturing
capacity at its Salem facility is increased from 10kg to 30kg per day.
This incremental production capacity will reduce the cost of making by
at least 3% in the value of the items sold.
IMPACT ON CONTRACTION/ DELEVERAGE OF BALANCE SHEET
In consonance with decline in volume due to demand recession, your
Company has taken a judicious call to reduce the stock of finished
ornaments of gold by bringing it down to 975 kgs by 31st March 2014 as
against inventory of 1288 kgs of last year. Consequent to this strategy,
the bank borrowing has also declined steeply from higher level of
'35,538 lakhs to ' 21,285 lakhs by 31st March 2014. This proactive
action helped the Company to improve the stock turnover ratio and also
enabled the management to bring down the associated interest cost to a
viable level. The fullest impact of these dual decisions would be
significantly felt in the current year 2014-15. This strategy will also
help to consolidate the business at the current level but facilitate the
company to improve the absolute contribution in this year. In the
absence of any tangible proposal for expansion of branches the entire
cash accretion will be retained in the system to improve the net working
capital deployed.
KEY INITIATIVES TAKEN BY THE MANAGEMENT IN 2013-14
* Better Stock turnover & lower absolute inventory helped the company
to curtail expenses including cost on Hedging mechanism.
* Slow moving stock were systematically removed, melted and converted
into fast moving items ensuring better cost recovery by improvement in
stock rotation.
* Increased the beaten gold portion of procurement to 40% as against
25% of earlier years, in order to partially remove the constraints
caused by non availability of virgin metal in the market.
* Launched E-CAT and E-Commerce platforms to fall in line with
customer's requirements/ preferences.
* Gold stock turnover ratio improved from 3.46 rotations to 4.39
rotations. Similarly, improvement in the silver stock rotation is
established from 2.06 to 3.66 times.
GAME CHANGE PLAN 2014 - 15
The business plan to be followed by the company includes the following:
* De-leverage the balance sheet by making use of stable gold price
scenario and demand recession witnessed currently.
* Improve the "Product Mix" basket with bias on high volume low price
products.
* Concentrate on further improvement in "Silver Articles" in rural area
outlets.
* Continue to concentrate on synergy optimisation issues to get the
optimum utilisation of resources.
* To retain and enlarge customer base, the selling price
rationalisation shall be effected that would result in improved volume
of business and significant increase in absolute contribution.
* Contract the size of the Balance sheet so that exceptional carrying
cost on inventory could be moderated.
Position the company in order to enlarge market share as a low price
deliverer of gold and silver oranaments.
FUTURE PROSPECTS
The initial trend in the first two months so far of the current year is
encouraging in all aspects. The year started well with seasonal demand
picking up. The initiatives taken by the company in the recent past
started to yield results. A perceptible change has taken place in
improvement of market share in the areas we operate. The change in
product mix has resulted in better stock turnover ratio. Post
rationalization of pricing policy, a moderate improvement is noticed in
the volume off take of gold ornaments. In fact, silver volume sales
have increased by 47% in the first two months of the current year
2014-15 as compared to the similar period in 2013-14. Most of the
branches have surpassed BEP level of sales and started contributing to
the bottom line of the company. Currently, the local gold price is
stabilised. But for unforeseen adverse price movement in the later part
of the quarter due to INR appreciation that could be caused by the
change in Governance at the centre, the company is likely to realise
notional valuation loss in the first half of the year 2014-15.
As no concrete positive steps taken by the regulators in relaxation of
import ban (80:20 rationale) and reduction in customs duty, we do not
expect a steep price correction locally as already recession parameters
affecting the industry is priced in the local gold price. In case the
regulators take steps to ease out restrictions in a phased manner the
resultant possible underrealisation of existing inventory will be
compensated by expected volume improvement in sales.
Your company has not only identified the areas that affected the growth
and also positioned itself correctly in gaining market share by
following appropriate strategies and planning in the area like
improvement in the share of own manufacturing, competitive pricing,
effective inventory management, systematic deleveraging initiatives
taken to improve stock rotation, fuller utilization of operational
leverage created that would facilitate the company to deliver better
results in future.
POTENTIAL RISKS , CONCERNS AND MITIGATION PLAN
Risk of loss of Positioning in the market place
Due to severe competition in the retail trade there is a possibility
that our market share from a particular place of operation or region
may decline. A lot of new entrants to the retail trade suffer from lack
of knowledge of customer's preference and on quality parameters and
price war. Therefore, your company with its fuller penetration to rural
market is well placed to participate in the rural success story of the
country. In order to maintain/improve market share in the areas we
operate in the light of sagging regressive demand trends, we have
cautiously brought down the mark up value for our products moderately.
Monsoon
Monsoon failure for successive years in southern parts of Tamilnadu
adversely affected the company's business. The purchasing power with
rural people who depend on agriculture substantially got marginalized.
This has resulted in demand compression and led to a period of
continuous recession unparallel in the recent history of jewellery
trade. Rising inflation and high interest rates are other areas of
concern that would deplete the residual income of the people to be spent
on discretionary items like gold ornaments. This has resulted in
customer opting for light weight items. The company has decided to stock
more of such items in order to get better share from sagging market.
Gold price fluctuation risks
Gold price fluctuation risk could arise on account of frequent changes
in gold prices either up or downside momentum. It could have adverse
impact on earnings. Withdrawal of metal loan facility forced the
industry to establish hedge against gold price movement with commodity
exchange instruments which are cost prohibitive. Therefore in the
absence of natural hedging facility, the trade is left with no viable
alternative except to leave a large portion of gold un-hedged. Your
Board will take appropriate action in managing the fluctuation impact
in gold price movement from time to time.
Human Capital Risks
Human Resources risk could arise from the non-availability of an
adequately trained workforce. In order to mitigate this risk, the
Company has in-house training programs and operational development
workshops and organised mentoring from management to motivate
employees/supervisors and to attract and retain skilled/ trained
personnel.
Cost management
The Company is improving meticulously its focus on cost through a
resourceful operating system, increase in the production Capacity and
strengthening of manufacturing units and various sourcing points are
being pursued to reduce manufacturing costs and also delivering quality
of product at lower price.
Information technology
The Company values the necessity of an efficient and robust Information
Technology system to aid the operations of the Company. The internal IT
department has developed GRAMS ERP and Q LINK application, which is a
state of the art jewellery add-on, on top of SAP Business One. The
application used for Inventory rotations, identification of slow moving
stock as well as branchwise product rotation and arriving at re- order
level of each product. SAP strengthening of Supply chain module, POS
module and a financial module seamlessly interlinked which provides
data on-the-go about each and every store including sales, inventory
levels and the like. We are currently working on re-architecting the
Grams solution as a cross platform application with enhanced features
and functionality. During the year, the Company has successfully
launched E-commerce, e-catalogue and bank payment solutions to Grams
ERP using a middle ware solution.
DIVIDEND
The Board of Directors of the Company are pleased to recommend a
dividend of ' 1 /- (10%) per equity share for 2013-14 (' 5 in 2012-13)
on 1,37,19,582 equity shares of Rs. 10 each. In order to augment
resources in the changed difficult environment of business, the Board
has decided to recommend a reduced payment of '161 lakhs for the year
2013-14 as against Rs 797 lakhs in 2012- 13 (including DDT).
The Proposed dividend is subject to the approval of share holders in
the ensuing Annual General Meeting of the company.
The register of members and share transfer books of the company will
remain closed from 21st July 2014 to 30th July 2014 (Both days
inclusive).
Transfer to Reserve
We propose to transfer ' 200 lakhs to the General Reserve. The balance
is carried forward to the Profit and Loss Account.
CAPITAL EXPENDITURE
During the year, we capitalized ' 1,367 lakhs to our gross block
comprising Rs 572 lakhs for Plant & Machinery and Furniture & Fittings
and others and the balance of Rs 795 lakhs for Computer Equipments
including Software.
For the previous year, we capitalized Rs 1,720 lakhs to our gross block
comprising '1,116 lakhs for show rooms opened during previous year and
the balance of Rs 604 lakhs for Plant and Machinery, Vehicles and other
assets for existing branches and corporate office Capex additions.
FINANCE
The Secured borrowings of the Company as on March 31, 2014 stood at RS
21,285 lakhs (previous year Rs 32,610 lakhs). The phased reduction is
on account of reduction in inventory in line with business realties. It
is also due to withdrawal of metal loan extended by bankers in the
past. The company is able to manage its requirement comfortably.
Cash and cash equivalents as on 31st March 2014 stood at ' 1,685 lakhs
(previous year ' 2,902 lakhs). Customer advances supported the company
to manage to maintain its working capital requirement.
CONTRIBUTION TO EXCHEQUER
The Company is a regular payer of taxes and other duties to the
Government. During the year under review, due to lower profit, your
Company paid ' 200 lakhs towards Income Tax as compared to ' 2,470
lakhs paid during the last financial year. The Company also paid Value
Added Tax of '1,135 lakhs for financial year 2013-14, as compared to Rs
1,482 lakhs paid for last financial year.
OPENING OF BRANCHES
Your Company has opened five more branches during the year as against
eleven branches in the previous financial year. These branches have
been well equipped with lots of choicest varieties to suit the
preference of the customers and enhancing market penetration in and
around tier II cities. The above branches are moderately doing well
with potential for better future prospects in the years to come. For
operational reasons, the company has merged the Vellakovil branch with
that of Dharapuram by transferring the inventory and the customer base
to Dharapuram. As at the end of 31st March 2014 total branches in
operation are thirty consisting of medium/ small formats.
DIRECTORS
Retirement by Rotation
At the ensuing Annual General Meeting, Shri. Ba.Ramesh Joint Managing
Director and Shri. T.R. Narayanaswamy, Director of the Company retires
by rotation and are being eligible seeks re-appointment. Your Board
commends their re-appointment.
MANAGERIAL REMUNERATION
Due to inadequacy of profits, Managing Director and two Joint Managing
Directors being whole time Directors of the Company could not draw
remuneration as approved by the shareholders. As per Schedule XIII of
the Companies Act 1956, they are entitled to draw only up to ' 48 lakhs
each. The remuneration that was paid in excess of the eligibility
criterion under the Act, even though it permits the full payment
subject to Central Government permission, the three whole time
Directors of the company surrendered such excess payment of ' 126 lakhs
voluntarily to the Company.
(Rs . in Lakhs)
Name Designation As approved Restricted to Excess
by Inadequacy amount
Share- of profit surre-
holders ndered
Balarama Govinda Managing 90 48 42
Das Director
Ba.Ramesh Jt. Managing 90 48 42
Director
N.B.Kumar Jt. Managing 90 48 42
Director
SUBSIDIARIES
Your company has no subsidiary and therefore no statement of
consolidation or other details are furnished.
DEPOSITORY SYSTEM
The trading in the Equity Shares of your Company is under compulsory
dematerialization mode. As on March 31, 2014, Equity Shares
representing 99.95% of the equity share capital are in dematerialized
form. As the depository system offers numerous advantages, members are
requested to take advantage of the same and avail the facility of
dematerialization of the Company's shares.
LISTING OF SHARES
The Equity Shares of your Company continue to remain listed with Bombay
Stock Exchange Limited and National Stock Exchange of India Limited.
The listing fees for the year 2014-15 have been paid to these Stock
Exchanges. The Shares of the companies are compulsorily tradable in
dematerialized form.
INSURANCE
The assets of the Company are adequately insured against fire and such
other risks, as are considered necessary by the Management.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956 as amended, the Directors confirm that:
i) In the preparation of the accounts for the financial year ended
March 31, 2014, the applicable accounting standards have generally been
followed along with proper explanation relating to material departures,
if any.
ii) That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that were
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company as on 31st March 2014, and of the statement
of profit and loss account and cash flow of the company for the year
ended 31st March 2014.
iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv) That the Directors have prepared the accounts for the financial
year ended March 31, 2014 on a going concern basis.
AUDITORS
The Company's Statutory Auditors, M/s. B.Thiagarajan & Co., Chartered
Accountants, retire at the ensuing Annual General Meeting. They have
confirmed their eligibility for reappointment in terms of the
provisions of Companies Act, 2013 and rules made there under.
The Audit Committee and the Board of Directors recommend appointment of
M/s. B.Thiagarajan & Co., as the Company's Statutory Auditors for a
residual period of three years from the conclusion of the ensuing
Annual General Meeting. However, such re-appointment is to be confirmed
in every Annual General Meeting to be held thereafter on a yearly
basis.
The notes to the accounts referred to in the Auditors' Report are
self-explanatory and therefore do not require any further comments
under Section 217 (3) of the Companies Act, 1956.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The company is taking initiatives to form a CSR activity committee to
explore various avenues to implement the plan as adopted by the Board
from the current year 2014-15 in order to participate in the discharge
of Corporate Social Responsibility particularly in the areas of
education, health care and care for environment program either by the
company itself or as sponsors of such developers.
FIXED DEPOSITS
Fixed Deposits from the public and shareholders stood at ' 1,968 lakhs
as at March 31, 2014 (Previous year ' 2,210 lakhs). Matured deposits
for which disposal instructions had not been received from the
depositors concerned stood at '13 lakhs as at March 2014.
The company has complied with the provisions of section 58-A of the
Companies Act, 1956 and rules made there under.
The Company is taking necessary steps to fall in line with mandatory
requirement of the Companies Act, 2013 that are applicable to renewal ,
acceptance of fixed deposits as governed by Section 73 to 76 of the
said Act and appropriate rules made there under. The Directors are
happy to inform that our company is an eligible company under section
76 of the said act for acceptance of deposits from general public and
members of the company upto 35% collectively of the effective net worth
of the company as per the financial position reported as at 31.03.2014.
Your company is taking all necessary steps to confirm to the conditions
laid out in the Act and Rules framed for acceptances of deposits.
CORPORATE GOVERNANCE
Your Company has been practicing the principles of good corporate
governance over the years and lays strong emphasis on transparency,
accountability and integrity.
A separate section on Corporate Governance and a certificate from the
statutory auditors of the Company regarding compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement(s) with the Stock Exchange(s) forms part of this report.
The Chairman and Managing Director and Joint Managing Directors of the
Company have certified to the Board on financial statements and other
matters in accordance with the Clause 49 (V) of the Listing Agreement
pertaining to CEO certification for the financial year ended 31st March
2014.
INTERNAL CONTROL AND THEIR ADEQUACY
The Company has a proper and adequate internal control system to ensure
that all the assets of the Company are safeguarded and protected
against any loss and that all the transactions are properly authorized
and recorded, information provided to management is reliable & timely
and statutory obligations are adhered to.
Your Company believes that internal control is a necessarily associated
with the principle of governance that freedom of management should be
exercised within a framework of appropriate checks and balances. Your
Company remains committed to ensuring an effective internal control
environment that provides assurance on the efficiency of operations and
security of assets.
Well established and robust internal audit processes, both at business
and corporate levels, continuously monitoring the adequacy and
effectiveness of the internal control environment across your company
and the status of compliance with operating systems, internal policies,
process and regulatory requirements. In the networked IT environment of
your Company, validation of IT security continues to receive focused
attention of the internal audit team which includes IT specialists.
The Audit Committee of your Board met four times during the year. It
reviewed, inter-alia, the adequacy and effectiveness of the internal
control environment and monitored implementation of internal audit
recommendations including those relating to strengthening of your
Company's risk management policies and systems. It also engaged in
overseeing financial disclosures.
COMPANIES ACT 2013
The Companies Act 2013 which replaces more than five decades old
Companies Act, 1956 was passed by the parliament. Subsequent to
receiving the president's assent, the Ministry of Corporate Affairs
notified 283 sections and also put up various rules under the new Act
for the public comment. The objective behind the Companies Act, 2013 is
lesser government approvals and enhanced self regulations coupled with
emphasis on corporate democracy. The Companies Act, 2013 delinks the
procedural aspects from the substantive law and provides greater
flexibility in Rules making to enable adoption to the changing economic
environment. This will lead to improved compliance and accountability
from the corporate sector and will provide further transparency on the
disclosure. Your Company takes into cognizance the relevant modified /
new regulatory framework and will strictly follow the same with greater
transparency in Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report of financial position and
results of operations of the Company for the year under review as
required under Clause 49 of the Listing Agreement with the Stock
Exchanges, is given as a separate statement forming part of this Annual
Report.
HUMAN RESOURCE DEVELOPMENT
Human resource development is geared through structured approaches for
employee encouragement and development, resourcing, performance &
compensation management, competency based development, career &
succession planning and organization building.
Leadership development is one of the primary key initiatives of the
Company. Primary personnel development program has been taken up as
long term strategy of the Company. Your Company continues to work to
develop capabilities and help its people realize their best potential.
Your Company takes great pride in the commitment, competence and vigour
shown by its workforce across all business realms.
The Company continues to maintain cordial relations without any
interruption in work. As on 31st March 2014, the Company has 1053
employees on its rolls as against 1433 employees in previous year.
HUMAN RESOURCES
No employee of the company was in receipt of remuneration during the
year, in excess of sum prescribed under Sections 217(2A) of the
Companies Act, 1956 read with the Companies (Particular of Employees)
Rules, 1975, as amended vide notification dated 31st March 2011.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
INFORMATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 217(1)(e) OF
THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988.
a) Conservation of Energy
The disclosure of particulars with respect to conservation of energy
pursuant to Section 217 (1) (e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 are not applicable as our business is not
specified in the Schedule . However, the company makes its best efforts
to conserve energy in a more efficient and effective manner.
b) Technology Absorption, Adaptation and Innovation
The company has not carried out any specific research and development
activities. The company uses indigenous technology for its operations.
Accordingly, the information related to technology absorption,
adaptation and innovation is reported to be NIL.
c) Foreig* Exchange Outgo
(Rs in lakhs)
Particulars 2013-14 2012-13
Travelling Expenses 12.03 9.58
Interest on FCNRB Loan - 94.50
Purchase of Goods 2,568.70 -
Purchase of Capital Goods - 60.42
FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements that involve risks and
uncertainties. When used in this Report, the words "expect",
"consider", "estimation", "anticipate", "propose", "will" and other
similar expressions as they relate to the Company and/or its business
are intended to identify such forward- looking statements. The Company
undertakes no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future
events or otherwise. Actual results, performance or achievements could
differ materially from those expressed or implied in such forward-
looking statements. Readers are cautioned not to place undue reliance
on these forward-looking statements that speak only as of now.
This Report should be read in conjunction with the financial statements
included herein and the notes thereto.
ACKNOWLEDGEMENT
The Directors wish to convey their appreciation to the Company's
employees for the massive personal efforts as well as their collective
contribution to the Company's record performance. The Directors would
also like to thank the Customers, Shareholders, Bankers and Suppliers
for their continuous support given to the company and their confidence
in the management.
BY ORDER OF THE BOARD
For Thangamayil Jewellery Limited
BALARAMA GOVINDA DAS Ba. RAMESH N.B.KUMAR
Managing Director Joint Managing Director Joint Managing Director
Place - Madurai
Date - May 26, 2014
Mar 31, 2013
Dear Shareholders,
The Directors have pleasure in presenting their 13th Annual Report and
the Audited Accounts for the financial year ended March 31,2013.
FINANCIAL RESULTS
Highlights of Financial results for the year are as here under:
PARTICULARS 2012-2013 2011-2012
Sales and Other Operating Income 1,52,479 1,13,161
Gross Profit 16,527 15,074
Earnings before Interest, Depreciation 8,467 11,806
and Taxation
(EBITDA)
Finance Cost 3,702 2,848
Depreciation 459 224
Profit Before Tax (PBT) 4,306 8,735
Tax 1,342 2,829
Profit After Tax (PAT) 2,963 5,906
Financial Performance
The operating income declined to Rs.8,467 lakhs as against Rs.11,806
lakhs of last year. This was mainly due to:
¦S Change in accounting policy in charging Advertisement and publicity
expenses from Deferred Revenue Expenditure (DRE) treatment hitherto
followed to full charge out including of earlier years as per
Accounting Standard requirement amounting to Rs.2,817 lakhs.
-S Reduction in Gross profit margin by 250 bases on a comparable basis
due to adverse gold price fluctuation witnessed in the second half of
FY12-13.
But for the fuller write off of Advertisement and publicity of Rs.2,817
lakhs the Profit before tax would have been higher at Rs.7,123 lakhs as
against Rs.8,735,lakhs for 2011-12. Even though, the enduring benefits
of amount spent on Advertisement and publicity is available in the form
of continued "Brand Equity "the Board thought it fit to treat the
entire amount as Revenue Expenditure to fall in line with the
Accounting Standards. This being a one time charge, your Board is
confident of achieving better results in the years to come by fully
exploiting the core competence of the retail business.
Commensurate to the requirement of increase in volume expected in the
gold ornaments portfolio, due to continuous branch expansion, the
company has expanded its own manufacturing capacities in the year ended
March 2013. The product mix between ''own'' vs. ''bought out1 ornaments
would undergo a comparable change in favour of our own manufacturing in
the years to come. Similarly for silver items also, the company has
recently started its own manufacturing facilities to start with for
"Payal" (anklet) items. Both the initiatives will take the company to a
significant stage in the fuller integration of the business model
thereby ensuring cost advantages to the company.
Cost management:
The Company is improving meticulously its focus on cost through a
resourceful operating system, increase in the production Capacity and
strengthening of gold manufacturing units and various sourcing points
are being pursued to reduce manufacturing costs.
Information technology:
The Company values the necessity of an efficient and robust Information
Technology system to aid the operations of the Company. The internal IT
department has developed GRAMS ERP application, which is a state of the
art jewellery add-on on top of SAP Business One. The system has a
supply chain module, POS module and a financial module seamlessly
interlinked which provides data on-the-go about each and every store
including sales, inventory levels and the like. The system throws out
more than 100 different type of MIS reports that aids the decision
making process of the management and the operations team. We are
currently working on re-architecting the Grams solution as a cross
platform application with enhanced features and functionality. Efforts
are also underway to integrate our e-commerce, e-catalogue and bank
payment solutions to Grams ERP using a middle ware solution.
POTENTIAL RISKS AND CONCERNS
Risk of loss of Positioning in the market place
Due to severe competition in the retail trade, there is a possibility
that our market share from a particular place of operation or region
may decline. A lot of new entrants to the retail trade suffer from the
lack of knowledge of customer''s preference and on quality parameters.
Therefore, our company with its fuller penetration to rural market is
well placed to participate in the rural success story of the country.
Monsoon
Monsoon failure has the potential to adversely affect the company''s
business and earnings particularly in south Tamil Nadu, where
agricultural activities are dependent on monsoon. Rising inflation and
high interest rates are other areas of concern that would deplete the
residual income of the people to be spent on discretionary items like
gold ornaments.
Gold price fluctuation risks
Gold price fluctuation risk could arise on account of frequent changes
in gold prices either up or downslide momentum. It could have adverse
impact on earnings. However with the help of sound hedging mechanism in
the form of metal loan arrangement, the adverse impact could be
mitigated and minimised.
From a secular bull run witnessed in the past one decade, gold price
has started to fall in recent months. This has resulted in wide
fluctuations in price movements and, at times, due to marked to market
valuation consideration, it results in loss in inventory value to the
extent the metal price is fixed at the time of delivery. A judicious
mix between fixed and unfixed pricing becomes relevant that would
ensure smooth operations without facing undue exposure on price front.
A committee is constituted at the Board level to completely study the
"pros and cons" of risks associated with the business so that the
opportunities thrown open by the market behaviour in price trends are
optimally exploited by the company. Your Board will take appropriate
decision in managing the downfall in gold price.
Human Capital Risks
Human Resources risks could arise from the non-availability of an
adequately trained workforce. In order to mitigate this risk, the
Company has in-house training programs and Operational development
workshops and organised mentoring from management to motivate
employees/ supervisors and to attract and retain skilled/ trained
personnel.
STRATEGY
Certain strategies formulated and implemented by the management in tune
with the exploitation of functional synergies requirements have
resulted positively in enhancing the bottom line profitability of the
company.
To name a few:
a) Opening of Eleven more branches added to the volume off take.
b) Promoted simultaneously silver products in all branches to get the
benefits of Rural India Penetration fully; Promoted a balanced product
portfolio to cater to the requirements of middle/ lower middle class
customers.
c) Customer friendly schemes like Gold Saving Scheme and Loyalty Bonus
payments.
d) One large branch in a major city supported by four to five clusters
of small branches in that area "business model" has been slated to be
implemented to get the synergy optimization in various resource
management.
The Board of Directors of the Company are pleased to recommend a
dividend of Rs. 5/- (50%) per equity share for 2012-13 ( Rs. 7 in
2011-12) on
- 1,37,19,582 equity shares of Rs. 10 each. In order to
" ensure resources in the changed environment of business, the Board
has decided to recommend a
- reduced payment of Rs. 797 lakhs as against Rs. 1116
" lakhs in 2011-12 (including DDT)
The Proposed dividend is subject to the approval of share holders in
the ensuing Annual General Meeting of the company.
The register of members and share transfer books will remain closed
from 16th July, 2013 to 22nd July, 2013(both days inclusive).
Transfer to Reserve
We propose to transfer Rs. 300 lakhs to the general reserve. The
balance is carried forward to the Profit and Loss Account.
RETAIL EXPANSION PLAN
During the year under review, the efforts in retail expansion plan were
further intensified and the company opened 11 more retail stores during
the year. The company has virtually benefited by this expansion that
helped to promote its brand name through customer satisfaction.
Based on the experience gained, it is decided to intensively play on
the rural economic recovery card in the current year 13-14 as well. We
are planning to open as many as 12 more branches in Tamilnadu spread
over southern & western parts of the State. Silver business is looking
up due to relative price stability and ornament appeal it makes to the
rural womenfolk. In smaller towns, the silver acts as a complementary
for gold ornaments and it makes the Tier 2 & Tier 3 towns branch
expansion more viable and profitable particularly with respect to
Return on capital employed criteria.
FUTURE BUSINESS PLAN
The business plan followed by the company includes the following:
1. Sustained penetration into rural areas by spreading the awareness
of quality parameters in the minds of the customers.
2. Relatively de-leverage the balance sheet by making use of lower
gold price scenario.
3. To consolidate the market position in the areas of operations to
get the benefits of "Brand Loyalty"
4. To fill the gaps in every region so that cluster model adopted by
the company gets the optimum penetration and economic results.
5. Continue to concentrate on synergy optimisation issues to get the
optimum utilisation of resources.
FUTURE PROSPECTS
Going forward, the business model as demonstrated by your company can
easily be replicated in various select towns. With the consumer
awareness improving year after year, for the quality parameters and the
effective polarization taking place on the supply side, the future
prospects of the company is ensured. Though operating in a competitive
environment, the uniqueness of the model ensures a comfortable level of
net margin availability to your company. Price of gold is consolidating
at lower level post steep correction witnessed in April 2013 and it
augers well for reasonable accretion to bottom line by better volume
and off take.
CAPITAL EXPENDITURE
During the year, we capitalized Rs.1,720 Lakhs to our gross block
comprising Rs.1,116 lakhs for new show rooms opened during the year and
the balance of ^604 lakhs for plant and machinery, vehicles and other
assets for existing branches and corporate office Capex additions.
For the previous year, we capitalized Rs. 3,998 Lakhs to our gross
block comprising ^3,037 lakhs for show room opened during previous year
and addition to other show room renovation expenses. Balance of Rs. 961
lakhs for other assets.
FINANCE
The Secured borrowings of the Company as on March 31,2013 stood at Rs.
32,610 lakhs (previous year ^24,903 lakhs).
Cash and cash equivalents as on 31st March 2013 stood at Rs. 2,902
lakhs (previous year Rs. 950 lakhs). Your Company''s financial position
is comfortable. The available internal accruals together with
customer''s advances with a marginal increase in leveraged finance would
be sufficient to achieve the target contemplated for 13-14.
CONTRIBUTION TO EXCHEQUER
The Company is a regular payer of taxes and other duties to the
Government. During the year under review, your Company paid Rs.2,470
lakhs towards Income Tax as compared to Rs.2,258 lakhs paid during the
last financial year. The Company also paid Value Added Tax of Rs.1,482
lakhs for financial year 2012-13, as compared to fl,104 lakhs paid for
last financial year.
OPENING OF BRANCHES
Your Directors are delighted to announce the opening of eleven more
branches during the year as against six branches in the previous
financial year. These branches have been well equipped with lots of
choicest varieties to suit the preference of the customers. These
branches are doing well with potential for better future prospects in
the years to come. As at the end of 31s'' March 2013 total branches in
operation are twenty six consisting of medium/ small formats.
Moreover till 24th May 2013 in the current year your company had opened
2 more branches in Sivagangai (07.04.2013) and Gobichettipalayam
(16.04.2013). Work is progressing simultaneously in four other towns
and is likely that all branches will be opened during the first half of
13-14 financial year.
DIRECTORS
Retirement by Rotation
At the ensuing Annual General Meeting, Sri. Lalji Vora and Sri. N.B.
Kumar Directors of the Company retire by rotation and being eligible
seeks re-appointment. Your Board commends their re-appointment.
SUBSIDIARIES:
Your company has no subsidiary and therefore no statement of
consolidation or other details are furnished.
DEPOSITORY SYSTEM
The trading in the Equity Shares of your Company is under compulsory
dematerialization mode. As on March 31, 2013, Equity Shares
representing 99.95% of the equity share capital are in dematerialized
form. As the depository system offers numerous advantages, members are
requested to take advantage of the same and avail of the facility of
dematerialization of the Company''s shares.
LISTING OF SHARES
The Equity Shares of your Company continue to remain listed with Bombay
Stock Exchange Limited and National Stock Exchange of India Limited.
The listing fees for the year 2013-14 have been paid to these Stock
Exchanges. The Shares of the companies are compulsorily tradable in
dematerialized form.
INSURANCE
The assets of the Company are adequately insured against fire and such
other risks, as are considered necessary by the Management.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to the Directors'' Responsibility Statement, it
is hereby confirmed:
i) That in the preparation of the accounts for the financial year ended
March 31, 2013, the applicable accounting standards have generally been
followed along with proper explanation relating to material departures,
if any.
ii) That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that were
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for the year under review;
iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
iv) That the Directors have prepared the accounts for the financial
year ended March 31,2013 on a ''going concern'' basis.
AUDITORS
M/s. B.Thiagarajan & Co., the present statutory auditors retire at the
ensuing Annual General Meeting and are eligible for reappointment u/s
224(1B) of the Companies Act 1956. The company proposes to reappoint
M/s. B. Thiagarajan & Co., Chartered Accountants as Statutory auditors
of the company from the conclusion of the ensuing Annual General
Meeting up to the conclusion of the next Annual General Meeting of the
company.
CHANGE IN ACCOUNTING POLICIES
The company is effecting changes in accounting policies as follows:
Upto previous year, company accounted Costs incurred on advertisement /
publicity has been deferred to be amortized as 20% both in the year of
incurrence and ensuing year and the balance in equal installments in
next two financial years.
In line with changes in Accounting Treatment and in accordance with
generally accepted
Accounting Standards on Advertisement expenses the company opted to
write off existing
Deferred Revenue expenditure of earlier years in current year together
with fully charging of current year advertisement and publicity
expenses to the profit and loss account of the current year itself.
Consequent to this it has resulted in understatement of profit after
tax for the year ended 31st March 2013 by Rs. 1,903 lakhs on a
comparable basis.
COST AUDITOR
The Company has received a letter from the Cost Auditor, stating that
the appointment, if made, will be within the prescribed limit under
Section 224(1B) of the Companies Act, 1956.
The board of directors, appointed Dr. I Ashok, a Cost Accountant
holding certificate of practice No.M/11929, as a Cost Auditor for
conducting the Cost Audit for the financial year 2012-2013.
FIXED DEPOSITS
Fixed Deposits from the public and shareholders, stood at Rs. 2,210.07
lakhs as at March 31, 2013 (Previous year Rs. 2,314.24 lakhs).
The company has complied with the provisions of section 58-A of the
Companies Act, 1956 and rules made there under.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The company is taking initiatives to form a CSR activity committee to
explore various avenues to implement the plan as adopted by the Board
from the current year 2013-14. Participate in the discharge of
Corporate Social Responsibility particularly in the area of education,
health care and care for environment programme either by the company
itself or as sponsors of such developers.
CORPORATE GOVERNANCE
Your Company has been practicing the principles of good corporate
governance over the years and lays strong emphasis on transparency,
accountability and integrity.
A separate section on Corporate Governance and a certificate from the
statutory auditors of the Company regarding compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement(s) with the Stock Exchange(s) forms part of this report.
The Chairman and Managing Director and Joint Managing Directors of the
Company have certified to the board on financial statements and other
matters in accordance with the Clause 49 (V) of the Listing Agreement
pertaining to CEO certification for the financial year ended 31st March
2013.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO:
INFORMATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 217(1) (E) OF
THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
a) Conservation of Energy
The disclosure of particulars with respect to conservation of energy
pursuant to Section 217 (1) (e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 are not applicable as our business is not
specified in the Schedule.
However, the company makes its best efforts to conserve energy in a
more efficient and effective manner.
b) Technology Absorption, Adaptations and Innovation
The company has not carried out any specific research and development
activities. The company uses indigenous technology for its operations.
Accordingly, the information related to technology absorption,
adaptation and innovation is reported to be NIL.
INTERNAL CONTROL AND THEIR ADEQUACY
The Company has a proper and adequate internal control system to ensure
that all the assets of the Company are safeguarded and protected
against any loss and that all the transactions are properly authorized
and recorded, information provided to management is reliable & timely
and statutory obligations are adhered to.
Your Company believes that internal control is a necessarily associated
with the principle of governance that freedom of management should be
exercised within a framework of appropriate checks and balances. Your
Company remains committed to ensuring an effective internal control
environment that provides assurance on the efficiency of operations and
security of assets.
Well established and robust internal audit processes, both at business
and corporate levels, continuously monitoring the adequacy and
effectiveness of the internal control environment across your company
and the status of compliance with operating systems, internal policies,
process and regulatory requirements, in the Networked IT environment of
your Company, validation of IT security continues to receive focused
attention of the internal audit team which includes IT specialists.
The Audit Committee of your Board met four times during the year. It
reviewed, inter-alia, the adequacy and effectiveness of the internal
control environment and monitored implementation of internal audit
recommendations including those relating to strengthening of your
Company''s risk management policies and systems. It also engaged in
overseeing financial disclosures.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis and results of operations of the
Company for the year under review as required under Clause 49 of the
Listing Agreement with the Stock Exchanges, is given as a separate
statement forming part of this Annual Report.
HUMAN RESOURCE DEVELOPMENT
Human resource development is geared through structured approaches for
employee encouragement and development, resourcing, performance &
compensation management, competency based development, career &
succession planning and organization building.
Leadership development is one of the primary key initiatives of the
Company. Primary personnel development program has been taken up as
long term strategy of the Company. Towards this, the company has taken
HR training development programs as one of the key objectives to
support the sales activities this year in a very aggressive way.
The Company continues to maintain cordial relations without any
interruption in work. As on 31st March 2013, the Company has 1433
employees on its rolls as against 957 employees in previous year.
HUMAN RESOURCES
In terms of the provisions of Sections 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975, as
amended, is annexed forming part of this report.
FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements that involve risks and
uncertainties. When used in this Report, the words "expect",
"consider", "estimation", "anticipate", "propose", "will" and other
similar expressions as they relate to the Company and/or its businesses
are intended to identify such forward-looking statements. The Company
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, or
otherwise. Actual results, performance or achievements could differ
materially from those expressed or implied in such forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of now.
This Report should be read in conjunction with the financial statements
included herein and the notes thereto.
ACKNOWLEDGEMENT
The Directors wish to convey their appreciation to the Company''s
employees for the massive personal efforts as well as their collective
contribution to the Company''s record performance. The Directors would
also like to thank the Customers, Shareholders, Bankers, and Suppliers
for their continued support given to the company and their confidence
in the management.
BY ORDER OF THE BOARD
For Thangamayil Jewellery Limited
-Sd- -Sd-
BALARAMA GOVINDA DAS Ba. RAMESH
Managing Director
Joint Managing Director
Place - Madurai
Date - May 24,2013
Mar 31, 2012
The Directors have pleasure in presenting their 12th Annual Report and
the Audited Accounts for the financial year ended March 31, 2012.
FINANCIAL RESULTS
Highlights of Financial results for the year are as here under:
(Rs.in Crores)
Particulars 2011-2012 2010-2011
Sales and Other Operating Income 1,131.61 658.26
Earnings before Interest,
Depreciation 118.06 58.55
and Taxation
(EBITDA)
Interest and Finance Charges 28.48 10.02
Depreciation 2.24 1.48
Profit Before Tax (PBT) 87.35 47.04
Taxation 28.29 15.71
Profit / (Loss) for the
Year (PAT) 59.06 31.33
YEAR WENT BY:
The company has achieved an all time record turnover of Rs 1,131.61
Crores for the year ended 31.03.2012, as against Rs 658.26 Crores of
previous year, thereby, registering a top line growth of 71.91 %. In
volume terms the company could achieve a quantity of 4,107 Kgs in this
year as against previous year of 3,145 Kgs ,there by registering an
increase on 31% in this year.
This performance was possible due to opening of six more branches
during the financial year and also due to full year operations of
branches opened in the previous year.
Sudden increase in gold price in the month of Aug / Sep 2011 and near
sustenance of the price with small deviations throughout the second
half of the financial year to some extent acted as a deterrent for
achieving sustained volume growth due to customer's resistance for the
higher price.
Your Company could achieve a volume growth of 31% with the help of
additions of outlets. Though international price of gold had fallen
from US$ 1921 per ounce to the current level of US$1656 per ounce, the
domestic price couldn't favorably readjust due to increase in customs
duty to 2% and falling rupee value. It continues to hover around Rs
2630-2680 per gram price band for 22ct gold ornaments.
Unexpected customs duty increase from 2 to 4% in the recent budget
coupled with certain regulatory initiatives taken by the Government
could not go well with the trade. The nationwide strike organized by
various jewellers association had crippled the business more or less
fully in the second fortnight of March 2012. By now, things are clear
that increased customs duty will remain that but however the proposed
levy of Central Excise on gold ornaments is shelved.
GOLD PRICE MOVEMENT:
During the year, gold price increased significantly registering a steep
increase of around 30%. The increase in gold price has to some extent
affected the volume off take particularly in the second half of the
financial year. The gold price is almost stabilized during the later
part of the year and getting consolidated at the current level well
over 4 months. Continuation of stable gold price will go a along away
in improving the volume off take in the trade in the years to come.
HIGHER INTEREST IMPACT
RBI continuously increased the repo interest rate that resulted in
commercial banks steeply increasing the lending rate. Certain
concessional credit products extended by banks upto 10-11 years were
withdrawn. The effective interest rate has gone upto 14 % as against 10
% in last year. On a fuller utilization of limits, the effective
interest increase was at Rs 18.45 Crores for the current level of
exposure. Relatively lesser stock turnover due to prevailing high gold
price coupled with high interest cost has affected the profitability of
the company on a comparable basis. But for this escalation in interest
cost the normal profitability might have increased better than the
Actuals. However it is expected that interest rate may come down by at
least 200 basis in 12-13 and judicious mix of cash credit with metal
loans would result in considerable reduction in effective interest cost
in 2012-13.
Certain strategies formulated and implemented by the management in tune
with the exploitation of functional synergies requirements have
resulted positively in the bottom line of the company. To name a few,
a) Opening of six more branches at Coimbatore, Salem, Palani, Thenkasi,
Aruppukottai, and Cumbum significantly added to the volume off take;
b) Promoted simultaneously silver products in all branches to get the
benefits of Rural India Penetration fully;
c) Promoted a balanced product portfolio to cater to the requirements
of middle/lower middle class customers;
d) Introduced customer friendly schemes like Gold Saving Scheme and
Loyalty Bonus payments in a big way;
e) One big branch in a major city supported by four to five clusters of
small branches in that area "business model" started to be implemented
to get the synergy optimization in the areas of advertisement and
publicity.
In this background your Company made an EBIDTA of Rs118.06 Crores as
against Rs 58.55 Crores achieved in the previous year registering a
significant growth of 102% at EBITDA level of the Company. Consequently
the Profit after tax also increased to Rs59.06 crores as against Rs 31.33
Crores in the previous year registering an increase of 89% over last
year.
DIVIDEND
The Board of Directors of the Company are pleased to recommend a
dividend of Rs 7.00 /- (70%) per equity share for 2012 on 1,37,19,582
equity shares of Rs. 10 each.
The Proposed dividend is subject to the approval of share holders in
the ensuing Annual General Meeting of the company.
The register of members and share transfer books will remain closed
from 9th July, 2012 to 18th July, 2012(both days inclusive).
Transfer to Reserve
We propose to transfer Rs 600.00 lakhs to the general reserve. The
balance is carried forward to the Profit and Loss Account.
RETAIL EXPANSION PLAN
During the year under review, the efforts in retail expansion plan were
further intensified and the company opened 6 more retail stores during
the year. The company has virtually benefited by this expansion that
helped to develop its brand name through customer satisfaction.
Based on the experience gained, it is decided to intensively play on
the Rural economic recovery card in the current year 12-13 as well. We
are planning to open as many as 12 branches in Tamilnadu spread over
southern & western parts of the state. Silver business is looking up
due to relative price stability and ornament appeal it makes to the
rural womenfolk. In smaller towns, the silver acts as a complementary
for gold ornaments and it makes the tier 3 & 4 town branch expansion
more viable and profitable particularly with respect to Return on
capital employed criteria.
"Rural India Growth Story" is taken forward penetrating deeper into
rural towns particularly in the southern and western districts of
Tamilnadu where a significant gold jewellery business takes place.
Your directors are actively considering the proposal of opening up of
customer care centres in smaller towns attached to our main branches
and also seriously considering a proposal of appointment of "Franchisee
dealers" model in unrepresented areas in order to fully optimize the
various synergies already established. All these "Retail area expansion
plans" now implemented would bear fruits in the years to come and
enable the company to maintain the leadership position in some parts of
the State of Tamilnadu.
FUTURE BUSINESS PLAN
The business plan as followed by the company includes the following:
1. Sustained penetration into rural areas by spreading the awareness
of quality parameters in the minds of the customers.
2. A proper mix between gold and silver to get the optimum results.
3. To follow one major city with four or five clusters business model
for getting better synergies.
4. Slowly get into high value products including diamond in major
cities to cater to the elite category customers.
5. Continue to concentrate on synergy optimization issues to get the
optimum utilization of resources.
FUTURE PROSPECTS
Going forward, the business model as demonstrated by your company can
easily be replicated in various selected towns. With the consumer
awareness improving year after year, for the quality parameters on the
one hand and the effective polarization taking place in the supply side
on the other hand, the future prospects of the company is ensured.
Though operating in a competitive environment, the uniqueness of the
model ensures a comfortable level of net margin availability to your
company. The improved visibility of our stores in existing towns
coupled with new branches expansion will ensure the growth momentum
experienced by the company in coming years.
FINANCE
The borrowings of the Company as on March 31, 2012 stood at Rs 250.93
Crores (previous year Rs121.46 Crores). Cash and cash equivalents as on
31st March 2012 stood at Rs 9.50 Crore (previous year Rs 5.58 Crores).
Your Company's financial position is comfortable. The Company has
obtained sanctions from new banks and submitted enhancement proposals
with the existing bankers towards working capital requirements for the
financial year 2012-13 aggregating to Rs406 Crores. With the available
internal accruals and undrawn limit fixed for 12-13 from banks, the
company should be in a position to comfortably complete the ongoing
retail expansion plan for forthcoming year and meet its working capital
requirements fully.
CAPITAL EXPENDITURE
During the year, we capitalized Rs 3998 Lakhs to our gross block
comprising Rs 3037 lakhs for new show rooms opened during the year and
addition to Madurai existing show room renovation and the balance of Rs
961 lakhs for plant and machinery, vehicles and other assets for
existing branches and corporate office Capex additions.
During the previous year, we capitalized Rs.1138.73 Lakhs to our gross
block comprising Rs.436.12 lakhs for Tuticorin and Madurai Anna Nagar
Show room cost and the balance of Rs223.93 lakhs for plant and
machinery, vehicles and other assets for existing branches. We have
acquired lands in Trichy and Salem for Show rooms for Rs.478.68 lakhs.
CONTRIBUTION TO EXCHEQUER
The Company is a regular payer of taxes and other duties to the
Government. During the year under review, your Company paid Rs. 22.58
Crores towards Income Tax as compared to Rs. 13.58 crores paid during
the last financial year. The Company also paid Value Added Tax of Rs.
11.34 Crores for financial year 2011-12, as compared to Rs.6.51 Crores
paid for last financial year.
OPENING OF BRANCHES
Your Directors are delighted to announce the opening of the Six more
branches at Cumbum ( 15th June 2011) , Aruppukottai( 15th August 2011),
Salem (30th September 2011), Tenkasi (13th October 2011), Palani (2nd
November 2011) and Coimbatore (7th December 2011). These branches have
been well equipped with lot of choicest varieties to suit the
preference of the customers. The above branches are doing well with
potential for better future prospects in the years to come.
Moreover till 16th May 2012 in the current year your company had opened
2 more branches in Vellakovil (16.04.2012) and Dharapuram (07.05.2012).
Work is progressing simultaneously in 7 other towns and is likely that
all branches will be opened during 20 12-13 financial year. DIRECTORS
Retirement by Rotation At the ensuing Annual General Meeting,
Sri.S.Rethinavelu and Sri. Ba. Ramesh Directors of the Company retires
by rotation and being eligible seeks re-appointment. Your Board
commends their re-appointment.
SUBSIDIARIES:
Your company has no subsidiary and therefore no statement of
consolidation or other details are furnished.
DEPOSITORY SYSTEM
The trading in the Equity Shares of your Company is under compulsory
dematerialization mode. As on March 31, 2012, Equity Shares
representing 99.95% of the equity share capital are in dematerialized
form. As the depository system offers numerous advantages, members are
requested to take advantage of the same and avail of the facility of
dematerialization of the Company's shares.
LISTING OF SHARES
The Equity Shares of your Company continue to remain listed with Bombay
Stock Exchange Limited and National Stock Exchange of India Limited.
The listing fees for the year 2012-13 have been paid to these Stock
Exchanges. The Shares of the companies are compulsorily tradable in
dematerialized form.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to the Directors' Responsibility Statement, it
is hereby confirmed:
i) That in the preparation of the accounts for the financial year ended
March 31, 2012, the applicable accounting standards have generally been
followed except for small deviations as explained in the Notes on
accounts;
ii) That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that were
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for the year under review;
iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
iv) That the Directors have prepared the accounts for the financial
year ended March 31, 2012 on a 'going concern' basis.
AUDITORS
M/s. B.Thiagarajan & Co., the present statutory auditors retire at the
ensuing Annual General Meeting and are eligible for reappointment u/ s
224(1B) of the Companies Act 1956. The company proposes to reappoint M/
s.B.Thiagarajan & Co., Chartered Accountants as Statutory auditors of
the company from the conclusion of the ensuing Annual General Meeting
up to the conclusion of the next Annual General Meeting of the company.
In respect of the observations made by the Auditors in their report,
your Directors wish to state that the respective notes to the accounts
read with relevant Accounting policies are self explanatory and
therefore do not call for any further comments.
INSURANCE
The assets of the Company are adequately insured against fire and such
other risks, as are considered necessary by the Management.
FIXED DEPOSITS
Fixed Deposits from the public and shareholders, stood at Rs2314.24
lakhs as at March 31, 2012 (Previous year Rs 1280.61 lakhs).
The company has complied with the provisions of section 58-A of the
Companies Act, 1956 and rules made there under.
CORPORATE GOVERNANCE
Your Company has been practicing the principles of good corporate
governance over the years and lays strong emphasis on transparency,
accountability and integrity.
A separate section on Corporate Governance and a certificate from the
statutory auditors of the Company regarding compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement(s) with the Stock Exchange(s) form part of this report.
The Chairman and Managing director and Joint Managing Directors of the
Company have certified to the board on financial statements and other
matters in accordance with the Clause 49 (V) of the Listing Agreement
pertaining to CEO certification for the financial year ended 31st March
2012.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO:
INFORMATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 217(1)(E) OF
THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
a) Conservation of Energy
The disclosure of particulars with respect to conservation of energy
pursuant to Section 217 (1) (e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 are not applicable as our business is not
specified in the Schedule . However, the company makes its best efforts
to conserve energy in a more efficient and effective manner.
b) Technology Absorption, Adaptations and Innovation
The company has not carried out any specific research and development
activities. The company uses indigenous technology for its operations.
Accordingly, the information related to technology absorption,
adaptation and innovation is reported to be NIL.
c) Foreign Exchange Outgo
(Rs.in lakhs)
Particulars 2011-12 2010-11
Travelling Expenses 3.50 7.47
Interest on FCNRB Loan 198.20 271.76
INTERNAL CONTROL SYSTEMS
Your Company has proper and adequate system of internal controls. The
Internal Audit team conducts both Systems and Financial Audits which
are carried out in Manufacturing unit, branches and corporate offices.
The audit findings are reviewed by the Audit Committee of Directors and
corrective action, as deemed necessary is taken. Your Company also has
laid down procedures and authority levels with suitable checks and
balances encompassing the entire operations of the Company.
Your Company has identified various business risks and periodic reviews
are conducted by the Management regarding the adequacy of mitigation
procedures for the same.
PERSONNEL
The HR policies and procedures of your Company are geared towards
encouragement and development of Human Capital. Your Company has
transparent processes for rewarding performance and retaining talent.
Skill Gap Analysis and other systems are also in place to identify the
training interventions required. Priority is given to succession
planning and talent management.
Employee relations continued to be cordial during the year. As on 31st
March, 2012 your Company has 957 employees.
RISKS AND CONCERNS
The continued increase in gold price and huge fluctuations of gold
price in India can lead to volume downturn. Gold price is influenced by
USD movement and safe heaven considerations. A better Euro will
increase the price of gold, whereas, a rising USD will impact adversely
gold price movement. As for as India is concerned a falling rupee will
increase the local gold price and rising rupee will positively
influence the gold pricing. There are so many variable factors both
quantitatively and sentimentally, that influence the pricing behavior
of gold internationally.
Any failure of monsoon could trigger a significant rise in inflation
and interest rates thus squeezing the disposable income of the
customer. A further rise in interest rate would be detrimental to
industry growth.
Company engaged in the business of gold trading, this will not have a
greater impact on the bottom line as the replacement cost will take
care of the fluctuation in the gold price even though overall volume
growth is dependent on gold price movement.
However, your Company is able to counteract this threat to a
considerable extent through consistency in maintaining quality of its
products and efficient after sales services.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report of financial position and
results of operations of the Company for the year under review as
required under Clause 49 of the Listing Agreement with the Stock
Exchanges, is given as a separate statement forming part of this Annual
Report.
FUND UTILISATION:
India l Public Offering (IPO)
Members may be recalled of the fact that your company completed its
Initial Public Offer (IPO) and listed its shares on the National Stock
Exchange of India Ltd. (NSE) and Bombay Stock Exchange Ltd. (BSE),
Mumbai.
In conformity with the terms of prospectus, board is empowered to
reschedule the place of branch and increase or decrease the CAPEX to be
spent for a particular purpose via -a- vis current plans at the
discretion of the management. Accordingly certain changes required in
the plan got approved by the board and the balance of unspent amount
from IPO proceeds well spent for the same purpose on the basis for
which approved modification of place of branch/ manner of expenditure
was given.
The IPO proceeds of Rs2875.25 lakhs, the Company has utilized fully as
on 31 /3/2012.The detailed statement of utilization of fund vis-a-vis
IPO objects as given in the prospectus is given hereunder:
(Rs.in lakhs)
Objects of IPO as projected in the Prospectus Utilization
till March
S
No Purpose Total 31, 2012
1. Cost of setting up of retail
outlets (Branches) 2250.59 1557.49
2. Working capital requirements 2278.00 2944.67
3. To meet the expenses of Issue 255.00 281.43
Total 4783.59 4783.59
The above cost of the project as modified and completed out of the
following source of finance is given here under :
(Rs.in lakhs)
Particulars Amount
Proceeds from IPO 2875.25
Proceeds from Pre IPO 624.75
Internal Accruals 1283.59
Total 4783.59
Necessary resolution together with explanatory statement for the
utilization of IPO funds is enclosed to be passed as a special
resolution in the ensuing AGM Notice.
HUMAN RESOURCES
No employee of the company was in receipt of remuneration during the
year , in excess of the sum prescribed under Section 217(2A) of the
Companies Act, 1956 and read with the Companies (Particulars of
Employees) Rules, 1975, as amended vide notification dated 31st March
2012.
ACKNOWLEDGEMENT
The Directors wish to convey their appreciation to the Company's
employees for the massive personal efforts as well as their collective
contribution to the Company's record performance. The Directors would
also like to thank the Customers, Shareholders, Bankers, and Suppliers
for their continuous support given to the company and their confidence
in the management.
BY ORDER OF THE BOARD
For Thangamayil Jewellery Limited
-sd- -sd-
BALARAMA GOVINDA DAS Ba. RAMESH
Managing Director Joint Managing Director
-sd-
Place: Madurai N. B. KUMAR
Date: 17.05.2012
Mar 31, 2011
The Directors have pleasure in presenting their 11th Annual Report and
the Audited Accounts for the financial year ended March 31, 2011.
FINANCIAL RESULTS
Highlights of Financial results for the year are as here under:
(Rs.. in Lakhs)
Particulars 2010-2011 2009-2010
Sales and Other Operating Income 65,826.24 45,140.57
Earnings before Interest, Depreciation 5,841.73 3,092.04
and Taxation(EBITDA)
Interest and Finance Charges 989.34 649.99
Depreciation 148.08 90.65
Profit Before Tax (PBT) 4,704.31 2,351.40
Taxation 1,571.08 742.88
Profit/ (Loss) for the Year (PAT) 3,133.23 1,608.52
The company has achieved an all time record turnover of Rs. 65,826.24
Lakhs for the year ended 31.03.2011 as against Rs. 45,140.57 lakhs of
previous year, thereby registering a top line growth of 45.82 %. In
volume terms the company could achieve a quantity of 3,145 Kgs in this
year as against previous year of 2,636 Kgs there by registering an
increase of 20 % in this year.
This performance was possible due to opening of two more branches at
Tuticorin, and Anna Nagar, Madurai during the financial year and also
due to full year performance of branches opened in the previous year.
The Company made an EBIDTA of Rs.5,841.73 Lakhs as against Rs.3,092.04
Lakhs achieved in the previous year registering a significant growth of
89% in the EBITDA of the Company.
Consequently the Profit after tax also increased to Rs. 3,133.23 Lakhs
as against Rs. 1,608.52 Lakhs in the previous year. After tax and
dividend distribution the retained profit of Rs. 2,333.85 lakhs is
added to the Reserve and surplus of the company. The networth of the
company net of Deferred Revenue Expenditure stands at of Rs. 8,988.57
lakhs as against Rs. 6,926.72 in previous year. Registering healthy
net worth increased by 30%.Similarly Net current assets also increased
from Rs. 12,688.49 lakhs to Rs. 20,206.21 lakhs registering an
improvement by 59 %.
Certain structural changes & strategies followed as given below by the
management helped the company to post all time record turnover and
profit after tax in the financial year.
1) Worked for volume improvement by bringing down the price in
conformity to the competitors pricing.
2) Effective inventory management with the help of SAP system and close
monitoring of inventory movement.
3) Significant improvement was made in the synergy optimization in the
area of advertisement and publicity.
4) A better product mix in the areas of design, varities, and ranges is
made.
5) Opening of two more branches at Tuticorin and Anna Nagar, Madurai
added to the volume off take.
6) Introduction of "Customer Loyalty" discount cards to promote future
sales.
DIVIDEND
The board of directors of the Company at their meeting held on 14th
March 2011, declared interim dividend of Rs.4/- per share (40%)
amounting to a sum of Rs.639.93 lakhs including dividend distribution
tax for the year 2010-11. It was paid to the shareholders on 27th March
2011. The Board of Directors of the Company have recommended a final
dividend of Rs.1/- per share (10%) on the paid up share capital as on
31st March 2011. With this the total dividend for the year works out to
50 % on the paid up capital (Rs.5 per share of Rs.10 face value)
involving an aggregate pay out of Rs.799.38 lakhs inclusive of dividend
tax payable (Tax free in the hands of share holders). Payment of final
dividend is subject to the approval of the shareholders in the ensuing
Annual General Meeting.
The register of members and share transfer books will remain closed
from 20th June, 2011 to 29th June, 2011(both days inclusive).
Transfer to Reserve
We propose to transfer Rs. 320.00 lakhs to the general reserve. The
balance is carried forward in the Profit and Loss Account.
RETAIL EXPANSION PLAN
During the year under review, the efforts in retail expansion plan were
further intensified and the company opened 2 more retail stores during
the year. The company has virtually benefited by this expansion that
helped to develop its brand name through customer satisfaction.
This business plan of exploiting potentials of tier 2 cities / town in
the State of Tamilnadu on implementation, not only yielded results but
also gave reasonable confidence to the management to complete the
branch expansion plan as scheduled in the remaining places as mentioned
in the Public issue Prospectus document and also in cities like Trichy
and Salem.
We are now operating from Nine outlets and likely to improve our
presence in Fifteen places by end of March 2012. We are placed in a
vantage position to fully exploit the Rural India Growth Story by
penetrating deeper into Rural towns particularly in the southern and
western districts of
Tamilnadu where a significant gold jewellery business takes place.
Your directors are actively considering the proposal of opening up of
customer care centers in smaller towns attached to our main branches
and also are seriously considering a proposal of appointment of
Franchisee dealers model in unrepresented areas in order to fully
optimize the various synergies already established. All these Retail
area expansion plans now implemented would bear fruits in the years to
come and enable the company to maintain the leadership position in some
parts of the State of Tamilnadu.
FUTURE BUSINESS PLAN
The envisaged business plan to be followed in the next five years
"inter alia" includes the following.
Setting up commercial grade branches in and around major cities/ towns
in the state of Tamil Nadu.
Setting up high value fashion oriented jewellery made out of Diamond
and Precious stones to cater to the needs of the upcountry market.
Extension of Franchisee Model for marketing our products in the
identified areas within the ambit of our overall operations to get the
benefit of marketing expenses synergy optimization.
Sustained penetration into rural areas by spreading the awareness of
quality criteria among rural people with a view to expand the loyal
customer base for the company.
FUTURE PROSPECTS
Going forward, the business model as demonstrated by your company can
easily be replicated in various selected towns. With the consumer
awareness improving year after year, for the quality parameters on the
one hand and the effective polarization taking place in the supply side
on the other hand the future prospects of the company is ensured.
Though operating in a competitive environment, the uniqueness of the
model ensures a comfortable level of net margin availability to your
company.
FINANCE
Your companys financial position is comfortable. As against the
combined sanctioned working capital limit from banks of Rs.239 crores,
the company utilized only up to Rs.121.43 crores. With the available
internal accruals and balance un utilised money from IPO and with the
undrawn limit from banks, the company should be in a position to
comfortably complete the ongoing retail expansion plan for forth coming
year and meet its working capital requirements fully.
CAPITAL EXPENDITURE
During the year, we capitalized Rs. 1138.73 Lakhs to our gross block
comprising Rs. 436.12 lakhs for Tuticorin and Madurai Anna Nagar Show
room cost and the balance of Rs. 223.93 lakhs for plant and machinery,
vehicles and other assets for existing branches. We have acquired lands
in Trichy and Salem for Show rooms for Rs. 478.68 lakhs.
During the previous year, we capitalized Rs. 583.50 lakhs to our gross
block, consists of Plant and Machinery and Furniture & Fittings of
Rs.381.04 lakhs and lease hold Building of Rs.28.91 lakhs , Rs.38.58
lakhs on Ramnad Show room Building , Rs. 134.97 lakhs towards Computer
and Motor vehicles.
OPENING OF BRANCHES
Your Directors are delighted to announce the opening of the two more
branches at Tuticorin (20lh August 2010) and Madurai Anna Nagar (14th
March 2011). These branches have been well equipped with the lot of
choices and various preferences and facilities. The above branches are
doing extremely well and their performance has been excellent with
potential growth and better future prospects. The company has
successfully completed its renovation and modernization at Madurai Main
Branch and opened the same for public on and from 29th April 2011. Work
in other branches is at different stages of completion.
FUND UTILISATION:
Initial Public Offering (IPO)
Members might be recalled of the fact that your company completed its
Initial Public Offer (IPO) and listed its shares on the National Stock
Exchange of India Ltd. (NSE) and Bombay Stock Exchange Ltd.(BSE),
Mumbai.
In conformity with the term of prospectus, board is empowered to
reschedule the place of branch and increase or decrease the CAPEX to be
spent for a particular purpose vis -a- vis current plans at the
discretion of the management. Accordingly certain changes required in
the plan got approved by the board and the balance of unspent amount
from IPO proceeds would be spent for the same purpose on the basis of
approved modification of place of branch/ manner of expenditure.
Out of the IPO proceeds of Rs.2875.25 lakhs, the Company has utilised
Rs.2,629.74 lakhs up to 31/3/2011.The detailed statement of utilization
of fund vis-a-vis IPO objects as given in the prospectus is given
hereunder:
S No Objects of IPO as projected in the Prospectu Total
Purpose
1. Cost of setting up of retail outlets (Branches) 1353.25
2. Working capital requirements 1267.00
3. To meet the expenses of Issue 255.00
Total
S No Objects of IPO as projected in the
Prospectus Purposse Utilisation Balance
till March
31,2011
1. Cost of setting up of retail outlets
(Branches) 1220.83 132.42
2. Working capital requirements 1127.48 139.52
3. To meet the expenses of Issue 281.43 (26.43)
Total 2629.74 245.51
*Escalation in Printing and Advertisement cost
The unutilized amount is parked with Banks in conformity with the
modification approved / consented by the empowered board and in
accordance with terms of prospectus.
DIRECTORS
Retirement by Rotation
At the ensuing Annual General Meeting, Sri.V.R.Muthu, Sri. Lalji Vora,
and Sri. N.B.Kumar Directors of the Company, retires by rotation and
being eligible seeks re-appointment. Your Board commends their
re-appointment.
The Board at its meeting held on July 15th , 2010, appointed Mr.
T.R.Narayanaswamy as an independent Director, w.e.f that date, in
accordance with section 260 of the Companies Act, 1956 and Article 151
of the Articles of Association of the Company. Notice has been received
from a member signifying his intention to propose his appointment as a
Director whose office of directorship is liable to retirement by
rotation.
SUBSIDIARIES:
Your company has no subsidiary and therefore no statement of
consolidation or other details are furnished.
DEPOSITORY SYSTEM
The trading in the Equity Shares of your Company is under compulsory
dematerialization mode. As on March 31, 2011, Equity Shares
representing 99.75% of the equity share capital are in dematerialized
form. As the depository system offers numerous advantages, members are
requested to take advantage of the same and avail of the facility of
dematerialization of the Companys shares.
LISTING OF SHARES
The Equity Shares of your Company continue to remain listed with Bombay
Stock Exchange Limited and National Stock Exchange of India Limited.
The listing fees for the year 2011-12 have been paid to these Stock
Exchanges. The Shares of the companies are compulsorily tradable in
dematerialized form.
DEPOSITORY SYSTEM
The trading in the Equity Shares of your Company is under compulsory
dematerialization mode. As on March 31, 2011, Equity Shares
representing 99.75% of the equity share capital are in dematerialized
form. As the depository system offers numerous advantages, members are
requested to take advantage of the same and avail of the facility of
dematerialization of the Companys shares.
LISTING OF SHARES
The Equity Shares of your Company continue to remain listed with Bombay
Stock Exchange Limited and National Stock Exchange of India Limited.
The listing fees for the year 2011-12 have been paid to these Stock
Exchanges. The Shares of the companies are compulsorily tradable in
dematerialized form.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to the Directors Responsibility Statement, it
is hereby confirmed:
i) That in the preparation of the accounts for the financial year ended
March 31, 2011, the applicable accounting standards have generally been
followed except for small deviations as explained in the Notes on
accounts;
ii) That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that were
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for the year under review;
iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
iv) That the Directors have prepared the accounts for the financial
year ended March 31,2011 on a going concernbasis.
AUDITORS
M/s. B.Thiagarajan & Co., the present statutory auditors retire at the
ensuing Annual General Meeting and are eligible for reappointment u/s
224(1B) of the Companies Act 1956. The company proposes to reappoint
M/s.B.Thiagarajan & Co., Chartered Accountants as Statutory auditors of
the company from the conclusion of the ensuing Annual General Meeting
up to the conclusion of the next Annual General Meeting of the company.
In respect of the observations made by the Auditors in their report,
your Directors wish to state that the respective notes to the accounts
read with relevant Accounting policies are self explanatory and
therefore do not call for any further comments.
INSURANCE
The assets of the Company are adequately insured against fire and such
other risks, as are considered necessary by the Management.
FIXED DEPOSITS
Fixed Deposits from the public and shareholders, stood at Rs. 1280.61
lakhs from 1,383 persons including members of the company as at March
31, 2011 (Previous year Rs. 415.10 lakhs). Matured Deposits for which
disposal instructions had not been received from the Depositors
concerned stood at Rs. 1.75 lakhs as at March 2011. The same amount has
been paid as per instructions received after the year end.
The company has complied with the provisions of section 58-A of the
Companies Act, 1956 and rules made there under.
INTANGIBLES
- Brand "Thangamayil" is a powerful retail brand in the southern
districts of Tamil nadu.
- Leadership is established in all branches of operations.
- Satisfied customer base of well over 1 lakh spread over Seven
Southern Districts of Tamil Nadu.
- Carries huge sentimental and relationship based business association
from the rural customers.
- Enjoys the patronage of around 20,000 chit customers pledging their
support for future purchase of gold ornaments.
- Maintaining the products brand premium over the immediate
competitors in the area of operation.
- Huge potential for multiple retail showrooms penetration by
exploiting the under utilised brand visibility in new areas.
- Huge potential for introduction of franchisee model in smaller towns
where the brand is very popular as a house hold name.
- Brand is well known in the area of operations that would facilitate
marketing of high value diamond products going forward.
- Brand loyalty is visible as evidenced by repeat purchase made by
customers.
- Inspite of penetration of popular state level brands the uniqueness
of Thangamayil Brand "ensures to maintain its "Number one "slot in most
of the places it operates.
CORPORATE GOVERNANCE
Your Company has been practicing the principles of good corporate
governance over the years and lays strong emphasis on transparency,
accountability and integrity.
A separate section on Corporate Governance and a certificate from the
statutory auditors of the Company regarding compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement(s) with the Stock Exchange(s) form part of this report.
The Chairman and Managing director and Joint Managing Directors of the
Company have certified to the board on financial statements and other
matters in accordance with the Clause 49 (V) of the Listing Agreement
pertaining to CEO certification for the financial year ended 31st March
2011.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO:
INFORMATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 217(1) (E) OF
THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
a) Conservation of Energy
The disclosure of particulars with respect to conservation of energy
pursuant to Section 217 (1) (e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 are not applicable as our business is not
specified in the Schedule. However, the company makes its best efforts
to conserve energy in a more efficient and effective manner.
b) Technology Absorption, Adaptations and Innovation
The company has not carried out any specific research and development
activities. The company uses indigenous technology for its operations.
Accordingly, the information related to technology absorption,
adaptation and innovation is reported to be NIL.
c) Foreign Exchange Outgo
Particular
2010 -11 2009 -10
Travelling Expenses 7.47 4.70
Interest on FCNRB Loan 271.76 260.82
INTERNAL CONTROL SYSTEMS
The Company has a proper and adequate internal control system to ensure
that all the assets of the Company are safeguarded and protected
against any loss and that all transactions are properly authorized
recorded and reported.
PERSONNEL
Employee relations continued to be cordial during the year. The company
continued its thrust on Human Resource Development. The Board wishes to
place on record its sincere appreciation to all employees in the
Company for their sustained efforts and immense contribution to the
high level of performance and growth of the business during the year.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report of financial position and
results of operations of the Company for the year under review as
required under Clause 49 of the Listing Agreement with the Stock
Exchanges, is given as a separate statement forming part of this Annual
Report.
HUMAN RESOURCES
No employee of the company was in receipt of remuneration during the
year, in excess of the sum prescribed under Section 217(2A) of the
Companies Act, 1956 and read with the Companies (Particulars of
Employees) Rules, 1975, as amended vide notification dated 31st March
2011.
THANKYOU
The Directors wish to convey their appreciation to the Companys
employees for the massive personal efforts as well as their collective
contribution to the Companys record performance. The Directors would
also like to thank the Customers, Shareholders, Bankers, and Suppliers
for their continuous support given to the company and their confidence
in the management.
BY ORDER OF THE BOARD
For Thangamayil Jewellery Limited
-sd- -sd-
BALARAMA GOVINDA DAS Ba. RAMESH
Managing Director Joint Managing Director
-sd-
N. B. KUMAR
Joint Managing Director
Place - Madurai
Date-May 9,2011
Mar 31, 2010
The Directors have pleasure in presenting their 10th Annual Report and
the Audited Accounts for the financial year ended March 31, 2010.
FINANCIAL RESULTS
Highlights of Financial results for the year are as here under:
(Rs. in Lakhs)
Particulars 2009-2010 2008-2009
Sales and Other Operating Income 45,140.57 24,685.56
Earnings before Interest, Depreciation 3,092.04 1,877.87
and Taxation (EBITDA)
Interest and Finance Charges 649.99 460.49
Depreciation 90.65 62.22
Profit Before Tax (PBT) 2,351.40 1,355.14
Taxation 744.70 467.62
Profit / (Loss) for the Year (PAT) 1,606.70 887.52
OPERATIONAL REVIEW
The company has achieved a turnover of Rs.45,140.57 Lakhs for the year
ended 31.03.2010 as against Rs.24,685.56 lakhs of previous year,
thereby registering a top line growth of 83%. This tremendous growth
was attained as the company opened three more Branches at Dindigul,
Theni and Sivakasi, during the financial year 2009-2010.
The Company could make an EBIDTA of Rs.3,092.04 Lakhs as against
Rs.1,877.87 Lakhs achieved in the previous year registering a
significant growth of 65% in the EBITDA of the Company.
Consequently the Profit after tax also increased to Rs.1606.70 Lakhs as
against Rs.887.52 Lakhs in the previous year.
For a better comprehension of the results of the year, we wish to
report that certain structural changes and strategies as given below
followed by the management helped the company to post all time record
turnover and Profit after tax in the financial year.
a) A better product mix consists of improved varieties and ranges.
b) Gold price stability management practiced in the major part of the
year enabled the company to improve the operating profits at gross
level.
c) Successful implementation of cost effective initiatives undertaken
by the management in all areas of operations.
d) Significant improvement was made in the synergy optimization in
cost/efforts and opportunities, and other areas of operations.
e) The decision to expand in the Tier II and Tier III class towns
enabled the company to maintain the operating profit margin at EBITDA
level, inspite of competition prevailed in the retail market place.
DIVIDEND
Members may be aware that the company has already declared and paid an
interim dividend of 30%on equity shares (Rs. 3 per Share) in March
2010. The Board of Directors of the Company has recommended a final
dividend of 10 %( Rs. 1 per share) on the paid up share capital as on
31st March 2010. With this the total dividend for the year works out to
40 % on the paid up capital (Rs.4 per share) involving an aggregate of
Rs.641.52 lakhs inclusive of dividend tax payable (Tax free in the
hands of share holders). Payment of final dividend is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
The register of members and share transfer books will remain closed
from 18th June, 2010 to 24th June, 2010 (both days inclusive).
Transfer to Reserve
We propose to transfer Rs. 175.00 lakhs to the general reserve. The
balance is carried forward in the Profit and Loss Account.
RETAIL EXPANSION PLAN
During the year under review, the efforts in retail expansion plan were
further intensified and the company opened 3 more retail stores during
the year. The company had launched a new chain of retail stores dealing
in Fashion Jewellery, Silver items, accessories and gift items
targeting at the medium-end customers. The company has virtually
benefited by this expansion that helped to develop its brand name
through customer satisfaction.
This business plan of exploiting the business potentials of tier 2
cities / town in the State of Tamilnadu on implementation, not only
yielded results but also given reasonable confidence to the management
to complete the branch expansion plan as scheduled in the remaining
places as mentioned in the Public issue Prospectus document.
We are now operating from seven outlets and likely to improve our
presence in eleven places by end of March 2011. We are suitably placed
in a vantage position to fully exploit the Rural India Growth Story by
penetrating deeper into Rural towns particularly in the southern
districts of Tamilnadu where a significant gold jewellery business
takes place.
Your directors are considering a proposal of opening up of customer
care centers in smaller towns attached to our main branches and also
are seriously considering a proposal of appointment of Franchise
dealer model in unrepresented areas in order to fully optimize the
various synergies already established. All these Retail area expansion
plans evolved would bear fruits in the years to come and enable the
company to maintain the leadership position in southern parts of the
State of Tamilnadu.
FUTURE PROSPECTS
Going forward, the business model as demonstrated by your company can
easily be replicated in various selected towns. With the consumer
awareness improving year after year, for the quality parameters on the
one hand, and the effective polarization taking place in the supply
side on the other hand the future prospects of the company is ensured.
Though operating in a competitive environment, the uniqueness of the
model ensures a comfortable level of net margin availability to your
company.
FINANCE
Your companys financial position is comfortable. As against the
combined sanctioned working capital limit of Rs.120 crores, the company
utilized only up to Rs.63.24 crores as at the end of financial year.
With the available resource garnered out of IPO, together with internal
accruals and with the undrawn limit from banks, the company should be
in a position to comfortably complete the ongoing retail expansion plan
and meet its working capital requirements fully.
SIGNIFICANT EVENTS
1) Initial Public Offer (IPO)
During the year under review, the Company made an initial public offer
(IPO) of its Equity Shares in terms of prospectus dated 7th February
2010. The Company had issued and allotted 38,33,667 Equity Shares
through Initial Public Offer (IPO) and 833,000 Equity Shares through
Pre IPO placements at an issue price of Rs.75/- per share.
The post issue paid up capital of the Company stands at Rs. 13,
71,95,820 (Rupees Thirteen Crores Seventy One Lacs Ninety Five Thousand
and Eight Hundred Twenty Only) divided into 1,37,19,582 equity Shares
of Rs. 10/- each which is well within the Authorized Capital of the
Company (Rs.20 crores) . The new shares are listed on the Bombay Stock
Exchange Limited and the National Stock Exchange of India Limited,
Mumbai on 19/02/2010.
The Company has duly complied with all the necessary requirements under
the Companies Act, 1956, Securities and Exchange Board of India
(Disclosure & Investor Protection) Guidelines, 2000, Foreign Exchange
Management Act, 1999, Reserve Bank of India Act, 1934 and all the other
related laws and regulations in respect of the composite issue.
The Company has incurred expenses of Rs. 281.43 lakhs in connection
with its Initial Public Offer. In terms of Section 78 of the Companies
Act, 1956, the same has been adjusted against the Securities Premium
Account.
2) Opening of Branches
Your Directors are pleased to announce the opening of the three more
branches at Dindigul (08/11/2009) and Theni (04/02/2010), and Sivakasi
(14/03/2010). These branches have been well equipped with the choicest
of various preferences. The above branches are doing extremely well and
their performance has been excellent with potential growth and better
future prospects.
DIRECTORS
Retirement by Rotation
At the ensuing Annual General Meeting, Sri. S. Rethinavelu & Sri. Ba.
Ramesh, Directors of the Company, retire by rotation and being eligible
seeks re-appointment. Your Board recommends their re-appointment.
Mr.L.Sivakumar who was the director of the board resigned on Jul y 09,
2009 and the same was taken on record by the board.
Subsidiaries:
Your company has no subsidiary and therefore no statement of
consolidation or other details are furnished
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to the Directors Responsibility Statement, it
is hereby confirmed:
i) That in the preparation of the accounts for the financial year ended
March 31, 2010, the applicable accounting standards have generally been
followed except for small deviations as explained in the Notes on
accounts;
ii) That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that were
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for the year under review;
iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
iv) That the Directors have prepared the accounts for the financial
year ended March 31, 2010 on a going concern basis.
CHANGE IN ACCOUNTING POLICIES
The company is effecting changes in accounting policies as follows:
i) Advertisement and Publicity expenses
The company was following the accounting policy upto last year of
deferring the cost incurred on advertisement/publicity to be amortised
over a five-year period commencing from the succeeding financial year.
It is decided to change the accounting policy of Deferred Revenue
expense to amortize the cost incurred on advertisement/publicity as 20%
in both of the year in which it is incurred and in the ensuing year and
the balance to be amortised equally in next two years, (i.e. in the
ratio of 20:20:30:30). Consequent to this change, the selling expenses
is overstated by Rs.278.45 Lakhs resulting in understatement of Net
Profit (Net of DTL) by Rs.183.81 lakhs. In the opinion of the
directors, after taking into consideration the enduring life span of
unexploited Advertisement and Publicity expenses the residual Deferred
Revenue Expenditure as reflected in the Balance sheet is fair and
proper.
ii) Bonus and Gratuity
The company was following cash basis of accounting for certain employee
costs such as Bonus and Gratuity. It is now decided to change the above
accounting policy as; to account bonus on accrual basis and adopting
actuarial valuation for accounting the liability for gratuity under
projected unit credit method.
The above effect has understated the Net profit after Tax by Rs. 14.20
lakhs for the year ended 31/3/2010.
The above changes in accounting policy were made in consonance with the
applicability of Accounting Standard 15 on Accounting for Employee
Benefits .
AUDITORS
B.Thiagarajan & Co., the present statutory auditors retire at the
ensuing Annual General Meeting and are eligible for reappointment u/s
224(1B) of the Companies Act 1956. The company proposes to reappoint
M/s.B.Thiagarajan & Co., Chartered Accountants as Statutory auditors of
the company from the conclusion of the ensuing Annual General Meeting
up to the conclusion of the next Annual General Meeting of the company.
The Audit committee and the Board recommend the appointment of
M/s.B.Thiagarajan & Co., Chartered Accountants, as Statutory Auditors
of the company.
In respect of the observations made by the Auditors in their report,
your Directors wish to state that the respective notes to the accounts
read with relevant Accounting policies and the change in accounting
policies note forming part of this report (Point No.l of change in
accounting policies) and are self explanatory and therefore do not call
for any further comments.
INSURANCE
The assets of the Company are adequately insured against fire and such
other risks, as are considered necessary by the Management.
FIXED DEPOSITS
During the financial year 2008-09, the Company launched a public fixed
deposit scheme to meet a part of the funding requirements of the
Company. The scheme has received an overwhelming response and the
management of the Company is thankful to all the depositors for
participating in the scheme and the faith reposed in the Company. The
aggregate amount collected under fixed deposit scheme as on March 31,
2010 was Rs. 415.10 Lakhs from 488 depositors. (Previous year
-Rs.40.65 lakhs).
The Company has no overdue deposits and unclaimed deposits as on date.
The company has complied with the provisions of section 58-A of the
Companies Act, 1956 and rules made there under.
CORPORATE GOVERNANCE
Your Company has been practicing the principles of good corporate
governance over the years and lays strong emphasis on transparency,
accountability and integrity.
A separate section on Corporate Governance and a certificate from the
statutory auditors of the Company regarding compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement(s) with the Stock Exchange(s) form part of this report.
The Chairman and Managing director and Joint Managing Directors of the
Company have certified to the board on financial statements and other
matters in accordance with the Clause 49 (V) of the Listing Agreement
pertaining to CEO certification for the financial year ended 31st March
2010.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO:
INFORMATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 217(1)(E) OF
THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
a) Conservation of Energy
The disclosure of particulars with respect to conservation of energy
pursuant to Section 217(e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 are not applicable to the company. However, the
company makes its best efforts for conservation of energy.
b) Technology Absorption, Adaptations and Innovation
The company has not carried out any specific research and development
activities. The company uses indigenous technology for its operations.
Accordingly, the information related to technology absorption,
adaptation and innovation is reported to be NIL.
INTERNAL CONTROL SYSTEMS
The Company has a proper and adequate internal control system to ensure
that all the assets of the Company are safeguarded and protected
against any loss and that all transactions are properly authorized
recorded and reported.
PERSONNEL
Employee relations continued to be cordial during the year. The company
continued its thrust on Human Resource Development. The Board wishes to
place on record its sincere appreciation to all employees in the
Company for their sustained efforts and immense contribution to the
high level of performance and growth of the business during the year.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report of financial position and
results of operations of the Company for the year under review as
required under Clause 49 of the Listing Agreement with the Stock
Exchanges, is given as a separate statement forming part of this Annual
Report.
FUND UTILISATION:
Initial Public Offering (IPO)
In January 2010, your company completed its Initial Public Offer (IPO)
and listed its shares on the National Stock Exchange of India Ltd.
(NSE) and Bombay Stock Exchange Ltd.(BSE), Mumbai. Out of the IPO
proceeds of Rs.2875.25 lakhs, the Company has utilised Rs.1416.19 lakhs
up to 31/3/2010.The detailed statement of utilization of fund vis-a-vis
IPO objects as given in the prospectus is as follows:
(Rupees in Lakhs)
Objects of IPO as projected in
the Prospectus Utilisation Balance
Total till March
S No Purpose 31,2010
1. Cost of setting up of retail
outlets (Branches) 1353.25 409.76 943.49
2. Working capital requirements 1267.00 725.00 542.00
3. To meet the expenses of Issue 255.00 281.43 (26.43)*
Total 2875.25 1416.19 1459.06
* Escalation in Printing and Advertisement cost
The unutilized amount is parked with Banks in accordance with terms of
prospectus
PARTICULARS UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956
In terms of the provisions of Sections 217(2A) of the Companies Act,
1956 read with the Companies (Particular of Employees) Rules, 1975, as
amended, the names and other particulars of the employees are set out
in the Annexure A to the Directors report.
LISTING OF SHARES AND FEE
The Companys shares are listed at the Bombay Stock Exchanges Ltd.(BSE)
and The National Stock Exchange of India Ltd.(NSE), Mumbai. The Company
confirms that it has paid annual listing fee due to the above said
Stock Exchanges, for the financial year 2010-2011.The Shares of the
companies are compulsorily tradable in dematerialized form.
ACKNOWLEDGEMENTS
The Directors wish to convey their appreciation to all the Companys
employees for the massive personal efforts as well as their collective
contribution to the Companys record performance. The Directors would
also like to thank the Customers, Shareholders, Bankers, and Suppliers
for their continuous support given to the company and their confidence
in the management.
BY ORDER OF THE BOARD
For Thangamayil Jewellery Limited
sd/- sd/-
BALARAMA GOVINDADAS Ba. RAMESH
Managing Director Joint Managing
Director
-sd-
N. B. KUMAR
Joint Managing Director
Place - Madurai
Date - May 10, 2010
Mar 31, 2009
The Directors have pleasure in presenting their Ninth Annual Report
and the Audited Accounts for the financial year ended March 31,2009.
FINANCIAL RESULTS
Highlights of Financial results for the year are as under:
(Rs. in Lakhs)
Particulars 2008-2009 2007-2008
Sales and Other Operating Income 24,685.56 22,460.11
Profit before Interest, Depreciation
and 1,877.87 1,269.74
Taxation (PBITDA)
Interest and Finance Charges 460.49 197.34
Depreciation 62.22 29.94
Profit Before Tax 1,355.14 1,042.46
Taxation 467.62 356.38
Profit/ (Loss) for the Year (PAT) 887.52 686.07
OPERATIONAL REVIEW
In spite of recessionary tendencies witnessed in the economy, the
Company could do a turnover of Rs.246.86 Crores as against Rs.224.60
Crores thereby registering a growth of around 10% in topline. Due to
better operational synergies attained resultant on operationalization
of three more branches in the financial year, the Company could make an
PBIDTA profit of Rs.18.78 Crores as against Rs.12.70 Crores in the
previous year registering a significant growth of 48% in the PBITDA
profits of the Company.
The results are highly gratifying particularly in the context of
fluctuating gold price movement experienced in the year passed by that
was unprecedented in the history of gold trade.
A better product mix, speedier stock turnaround and cost effectiveness
initiatives implemented in a systematic manner by the management are
other main reasons for the all time record post tax profits earned by
the Company.
DIVIDEND
Considering the Companys financial performance and growth plans
envisaged, Directors have recommended for declaration of a dividend of
10% on the equity shares fully paid up for the financial year 2008
-2009.
RETAIL EXPANSION PLAN
During the year under review, the efforts in retail expansion plan were
further intensified and the company opened totally 3 retail stores
during the year. The company had launched a new chain of retail stores
dealing in Fashion Jewellery, Silver items, accessories and gift items
targeting at the medium-end customers. The company has virtually
benefited by this expansion that helped to develop its brand name
through customer satisfaction.
This revised business plan of exploiting the business potentials of
tier 2 cities / town in the State of Tamilnadu on implementation not
only yielded results but also given reasonable confidence to the
management to complete the branch expansion plan as scheduled in the
remaining places.
SIGNIFICANT EVENTS
Business Takeover of Balusamy Silvears Jewellery Private Limited
During the year, the business of Balusamy Silvears Jewellery Private
Limited (BSSJ) was taken over by the Company via a Business Takeover
Agreement dated August 1,2008. The business in silver will act as a
good complementary to the main trade in gold. Besides, this takeover
also would help the Company to optimize the synergies in marketing,
promoting & distribution aspects of conduct of business.
2. Opening of Branches:
Your Directors are pleased to announce the opening of the two more
branches at Karaikudi (since 11/09/08) and Ramnad (since 13/03/09),
besides Rajapalayam (since 16/04/08). These branches have been well
equipped with the choicest of amenities and staff who are well trained
in the job. In such short span of inauguration, these branches have
seen good sales in all the divisions.
3. Increase in Equity Share Capital
During the year, the paid up share capital of the Company was raised to
Rs. 905.29 lakhs from Rs. 867.20 lakhs after obtaining the requisite
consents, approvals and sanctions wherever required, by:
a) Issue of 2,46,300 Equity shares at a premium of Rs. 55 per share,
through cash.
b) Issue of 84,615 Equity shares at a premium of Rs. 55 per share, to
an associate company M/s. Balusamy Silvears Jewellery Private Limited;
and
c) Issue of 50,000 Equity shares at a premium of Rs.55 per share on
preferential basis to an associate company of M/s.Thangamayil Gold and
Diamond Private Limited.
DIRECTORS
Retirement by Rotation
At the ensuing Annual General Meeting, Sri. Lalji Vora, & Sri. L.
Sivakumar, Directors of the Company, retire by rotation and being
eligible seek re-appointment. Your Board commends their re-appointment.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to the Directors Responsibility Statement, it
is hereby confirmed.
i) That in the preparation of the accounts for the financial year ended
March 31, 2009, the applicable accounting standards have generally been
followed except for small deviations as explained in the Notes on
accounts;
ii) That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that were
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit or loss of the Company for the year under review;
iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
iv) That the Directors have prepared the accounts for the financial
year ended March 31, 2009 on a going concern basis.
AUDITORS
B.Thiagarajan & Co., (BT&Co) , who are the Statutory Auditors of the
Company hold office until the ensuing Annual General Meeting. It is
proposed to re - appoint them to examine and audit the accounts of the
Company for the Financial Year 2009 -2010. BT&Co have, under section
224 (1) of the Companies Act, 1956, furnished a certificate of their
eligibility for re-appointment.
INSURANCE
The assets of the Company are adequately insured against fire and such
other risks, as are considered necessary by the Management.
FIXED DEPOSITS
During this year, the company invited Fixed Deposits from the Share
holders and the Public . The Fixed Deposits mobilized/ renewed and
outstanding from the public and shareholders aggregated to Rs. 40.65
Lacs as on 31 st March 2009 (Previous year Nil).
The company has complied with the provisions of section 58-A of the
Companies Act, 1956 and rules made there under.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO:
Information in accordance with the provisions of Section 217(1) (e) of
the Companies Act, 1956, read with the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988 regarding
conservation of Energy, Technology absorption and Foreign Exchange
earnings and outgo is not applicable to the company, and hence not
presented.
INTERNAL CONTROL SYSTEMS
The Company has adequate internal control systems and procedures,
commensurate with its nature and size of business. The Board believes
that appropriate procedures and monitoring mechanisms are in place.
PARTICULARS UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956
No employee of the company was in receipt of remuneration during the
financial year 2008-09, in excess of the sum prescribed under section
217(2A) of the Companies Act, 1956 and read with the Companies
(Particulars of Employees) Rules, 1975, as amended vide notification
GSR 288 (E) dated 17th April 2002.
ACKNOWLEDGEMENTS
The Directors wish to convey their appreciation to all the Companys
employees for the massive personal efforts as well as their collective
contribution to the Companys record performance. The Directors would
also like to thank the employees, Customers, Shareholders, Bankers, and
Suppliers for the continuous support given by them to the company and
their confidence in their management.
BY ORDER OF THE BOARD
For Thangamayil Jewellery Limited
BALARAMA GOVINDADAS Ba. RAMESH
Managing Director Joint Managing Director
N.B.KUMAR
Joint Managing Director
Place - Madurai
Date -04th May 2009