Mar 31, 2015
Dear Members,
The Directors present the Twenty-Ninth Annual Report together with the
Audited Accounts for the year ended 31st March, 2015.
FINANCIAL RESULTS
(Rs in crore)
Particulars For the year 6 Months
Ended 31st Period
March, 2015 Ended 31st
March, 2014
Total Income 6.38 5.35
Profit before Interest and (4.50) 0.01
Depreciation
Less: Finance Charges (Net) 0.30 253.39
Depreciation 7.48 2.95
Profit before Tax (12.28) (256.33)
Provision for Tax  1.33
Profit after Tax (12.28) (257.66)
Add : Balance in Statement of
Profit and Loss
Brought Forward (335.43) (77.76)
Profit Available for Appropriation (347.71) (335.43)
Proposed Dividend
Corporate Tax on Proposed
Dividend
Short fall of Depreciation as per 0.55
Companies Act
Transfer to General Reserve -
Foreign Exchange/Metal Price - -
Fluctuation
Balance Carried Forward (348.26) (335.43)
Total (348.26) (335.43)
OPERATIONAL REVIEW
The total income of the Company during the current year was ' 638 lacs
as against ' 535 lacs in the previous period (6 months). The Company
continued to incur loss mainly due to higher depreciation as a result of
new Company law provisions and legal expenses incurred
During the preceding two years the Company witnessed unprecedented turn
of events. The failure of overseas customers, from the UAE, in making
payments for Company's exports resulted in the Company defaulting in
meeting its obligations. This had resulted in the Company defaulting in
meeting its obligations. The bankers appointed independent audit firms
for forensic and investigative audit for which the Company offered
explanations.
The Company sent notices to the defaulting overseas customers in October
2013. As no positive actions were received from the defaulting overseas
customers the Company initiated legal proceedings before the
Conciliation Committee of Sharjah Federal Court, the step preceding to
filing of commercial cases before the Sharjah Court in May 2014. The
Reports of the Accounting Experts/
Banking Experts appointed by the Sharjah Federal Court of First
Instance, First Plenary Commercial Department and the Sharjah Federal
Court of First Instance, Second Plenary Commercial Department in various
suits filed by the Company against 13 UAE companies that had defaulted
in payment of dues amounting to USD 1.2 billion. These reports have been
made available on the Company's website i.e. www.winsomeiewellerv.com
and the summary of these reports have been made available on the website
of the Bombay Stock Exchange i.e. www.bseindia.com.
The Sharjah Federal Court has passed orders in respect of the
legal proceedings instituted against the UAE based defaulting
customers in the following 2 out of the 13 cases :
Winsome & Al-Subhi - case no(3511/2014)
Winsome & Al-Ihsan- case no(3431/2014)
Orders of the Sharjah Court on the remaining 11 legal cases are
awaited.
DIVIDEND
The Board of Directors do not recommend any dividend for the
period under consideration due to loss incurred by the Company.
SHARE CAPITAL
The Paid up Equity Capital of the Company as at March 31, 2015
was ' 106.47 crores comprising of 10,66,07,894 shares of ' 10
each. The Company has not issued any shares during the year.
FINANCE
The cash and cash equivalent as at March 31, 2015 stood at
' 16.29 crores. The Company's working capital facilities have been
withheld by the consortium due to non-payment of dues of the
banks, as its overseas customers failed to make payment towards
exports made by the Company during the year 2012-13.
NOTICES FROM BANKS
The Company, which received notice from Standard Chartered
Bank, under the SARFAESI Act, has denied all the allegations
made therein. Some of the banks, in the consortium, have sent
notices to the promoter/ guarantor and also to the companies who
have provided corporate guarantees.
The banks had lodged complaints with the Central Bureau of
Investigation (CBI) and Enforcement Directorate (ED) to carry out
investigations against the Company and its management. The
management and the directors have fully cooperated with the
agencies during their investigations and have submitted all the
information available with them.
LEGAL SUIT
The Company has initiated legal proceedings against its defaulting
overseas customers in Sharjah Federal Court to recover its
outstanding dues. The case is under progress and the experts
appointed by the UAE Court have sought explanations from the
defaulting overseas customers. The court, in its order, has directed
two of the defaulting customers to pay the outstanding amounts
to the Company with interest. The decision against the remaining
eleven overseas customers is yet to be decided/ confirmed by the
Sharjah Court. Your Company is hopeful of an early favourable
outcome from the proceedings.
FIXED DEPOSITS
The Company has not accepted any deposit, within the meaning of Section
73 of the Companies Act, 2013 and the Companies (Acceptance of
Deposits) Rules, 2014 made thereunder.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the
provision of section 186 of the Companies Act, 2013.
The details of investments made by the Company is given in the notes to
financial statements.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has no formal internal control system in place after the
devolvement. All the locations have stopped its activities as at March
31, 2015. The Company, however, has in house internal controls for
administrative and statutory outgoings commensurate with its size and
volume.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has formed a CSR committee. In light of continuing losses
in the preceding two years and with no activities the Company has not
made any contribution towards the same. The Company is committed to
give its due contribution as soon as the situation improves.
CONSERVATION OF ENERGY
The particulars regarding conservation of energy are not applicable to
the Company as the Company has stopped all its manufacturing
activities.
TECHNOLOGY ABSORPTION
In the absence of any production activity there is no need for any
technology absorption.
FOREIGN EXCHANGE EARNINGS AND OUTGO
During the year under review there was no foreign exchange earnings or
outflow.
INDUSTRIAL RELATIONS
There are no activities in any of the units of the Company. However, in
Goa Unit of the Company which was in operation till December, 2014, the
relations with the workmen were cordial.
DIRECTORS
Mr. Harshad Udani (DIN: 07014853) was appointed as an Additional
Director of the Company with effect from 13th January, 2015 under
Section 161 of the Companies Act, 2013 and holds office upto the date
of ensuing Annual General Meeting.
In compliance with the provisions of section 203 of the Companies Act,
2013, Mr. Harshad Udani was appointed as Whole Time Director of the
Company w.e.f 23rd March, 2015 subject to the requisite approvals of
shareholders, banks and Central Govt.
Ms. Ami Kothari ( DIN: 07104331) was appointed as an Additional
Director of the Company w.e.f 23rd March 2015 fulfilling the
requirement for the appointment of a Women Director as per requirements
of Companies Act, 2013.
Mr. Jaikumar Kapoor (DIN: 00337011) resigned from the Company due to
ill-health w.e.f 02nd January, 2015. The Board wishes to place on record
its appreciation of the contribution of Mr. Kapoor during his tenure as
director.
Declaration by Independent Director
The Company has received necessary declarations from each independent
Director under section 149(7) of the Companies Act, 2013 that he/she
meets the criteria of independence laid down in Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
Board Evaluation
The Companies Act, 2013 and Clause 49 of the Listing Agreement mandates
that formal annual evaluation needs to be made by the Board of its own
performance and that of its committees and individual Directors.
Schedule IV of the Companies Act, 2013 states that performance
evaluation of independent Directors shall be done by the entire Board,
excluding the Director being evaluated. A separate meeting of the
Independent Directors (Annual ID meeting) was convened which reviewed
the performance of the Board (as a whole) and the non-independent
Directors without the presence of any member of the management.
Some of the key criteria for the performance evaluation are as follows:
Performance evaluation of Directors :
* Attendance at Board or Committee meetings
* Contribution at the Board and committee meetings
* Guidance/support to management outside Board /committee meetings.
Performance evaluation of Board and Committees:
* Degree of fulfillment of key responsibilities
* Board structure and composition
* Establishment and delineation of responsibilities to committees
* Quality of relationship between Board and Management
* Effectiveness of Board processes, information and functioning.
Policy on Directors appointment and remuneration
The current policy is to have an appropriate mix of executive and
independent Directors to maintain the independence of the Board, and
separate its functions of governance and management. The Board
periodically evaluates the need for change in its composition and size.
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a policy for selection and appointment of Directors,
Senior Management and their remuneration.
The policy of the Company on Director's appointment and remuneration,
including criteria for determining qualification, positive attributes,
independence of a Director and other matters provided under section
178(3) of the Companies Act, 2013, adopted by the Board is appended to
Corporate Governance Report affirming part of the Directors Report. We
affirm that the remuneration paid to the Directors is as per the terms
laid out in the nomination and remuneration policy of the Company.
Meetings
A calendar of meetings is prepared and circulated in advance to the
Directors.
During the year nine Board Meetings (including adjourned meetings) and
four Audit Committee Meetings (including adjourned meetings) were
convened and held. The details of the same are given in the Corporate
Governance Report. The intervening gap between the meetings was within
the period prescribed under the Companies Act, 2013.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors
state that -
* in the preparation of the Annual Accounts, the applicable accounting
standards have been followed;
* the Directors have 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 loss of the
Company for the year under review;
* 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; and
* the Directors have prepared the Annual Accounts on a going concern
basis;
* 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.
* The directors had devised proper system to ensure compliance with the
provisions of all applicable laws and that such system were adequate
and operating effectively
RELATED PARTY TRANSACTIONS
All related party transactions, if any, 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 Management Personnel or other designated persons which
may have a potentially conflict with the interest of the Company at
large.
SUBSIDIARY COMPANIES
The Company does not have any subsidiary during the year under review.
CODE OF CONDUCT
The Board has approved code of conduct in place which is applicable to
all the members of the Board and its employees in the course of day to
day operations of the Company.
All the Board Members and Senior Management personnel have confirmed
compliance with the Code.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has vigil mechanism / whistle blower policy in place to
deal with instances of fraud or mismanagement, if any.
A whistle blower may report any violation or any instances of fraud or
mismanagement to the Chairman of the Audit Committee. The policy
ensures that strict confidentiality is maintained whilst dealing with
concerns also that no discrimination will be meted out to any person
for a genuinely raised concern.
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 required
pre-clearance for dealing the Company's shares and prohibits the
purchase or sale of Company's shares by the Directors and designated
employees while in possession of unpublished sensitive information in
relation to the Company and during the period when the Trading Window
is closed. The Board is responsible for the implementation of the Code.
All Board Directors and designated employees have complied with the
Code.
AUDITOR'S REPORT
The qualifications in the Auditors Report (In Italics) are followed by
appropriate Board's reply and explanations (in bold) as under:
1. Basis for Qualified Opinion
A. In accordance with Accounting Standard -11 (Standard on The Effects
of Changes in Foreign Exchange Rates), the Company is required to
report the monetary items using the closing rate. Accordingly the
Company is required to value the monetary assets and liabilities viz
foreign currency trade receivables, trade payables and foreign currency
loanat the foreign exchange rate prevailing as on the date of the
balance sheet. The Company has not carried out such valuations as at
the year end. Accordingly the exchange loss for the year is overstated
thereby resulting inthe total loss for the year being over
stated/profit understated by Rs. 214,54,39,618(net). Trade receivables
are understated by Rs. 723,73,84,562, trade payables are understated by
Rs. 796,76,830as on the balance sheet date and foreign currency loan is
understated by Rs.74,67,778(Refer Note No. 7, 8 (A5), 14(b),19(c) and
23(b)).
Export Receivables and Overseas Trade Payables had been restated based
on exchange rate as at 31.03.2013. In view of persistent defaults by
overseas customers in clearing outstanding dues, the same have been
carried forward at the same rate (based on exchange rate as at
31.03.2013) as it is deemed expedient not to take cognizance of
depreciation in rupee vis-a-vis US dollar on notional basis when
outstanding amounts are expected to be realized over an uncertain period
of time. Since the Company does not have any other cashflows to arrange
for remittances to overseas trade creditors and expects to defray these
liabilities out of realisation of export receivables, the same also have
not been restated based on exchange rate as at the date of balance sheet
but have been carried forward based on exchange rate as at 31.03.2013.
Had it been restated on the basis of exchange rate as at 31.03.2015, the
amount payable would have been higher by Rs. 74,67,778/-.
B. The Company has made long term investments in Forever Precious
Diamonds and Jewellery Ltd. (Forever) amounting to Rs. 141,17,10,802,
thereby resulting in it holding a 49 % stake in the equity of that
Company. The said investments continue to be valued at cost. As stated
in Note No. 12 A 1 & 2, in the view of the management, provision for
diminution in value of investments as per the requirements of
Accounting Standard -13 (Accounting for Investments) is not considered
necessary and hence not made. We have been provided with the financial
statements of Forever for the year ended 31st March 2014. We have
observed that there are no significant business operations in Forever.
Further the auditors of Forever have qualified the financial statements
and termed the Company as a non-going concern. In view of the above the
Company should have provided the diminution in value of investments
amounting to Rs. 141,17,10,801. Accordingly the loss for the year have
been understated and investments overstated by Rs. 141,17,10,801.
Forever Precious Jewellery and Diamonds Limited has also initiated
legal action against its defaulting overseas customers and is hopeful
of recovering its dues and therefore no diminution in the value of
investments is considered. As informed by the management of Forever
Precious Jewellery and Diamonds Limited, the Sharjah Federal Court has
directed four out of thirteen overseas defaulters to pay to the
Company, its outstanding dues with interest. The Company is hopeful of
getting a favourable decision in the case of remaining overseas
defaulters.
c. Due to the defaults of the Company to the banks, the Company's
accounts have been classified as NPAs by the banks. Most of the banks
have not charged interest on the Company's borrowings / loans, while
some banks have been charging interest at higher rates. The Company was
providing for interest at 12.5 % p.a. on all outstanding which was the
average rate of rupee export finance. During the year under review no
provisions have been made for such interest and provisions made during
the year have been reversed at year end. Accordingly Interest for the
year is understated resulting in total loss of the Company is
understated by Rs. 565,86,78,505.(Refer Note 23 (a)).
The Company has decided, not to provide interest on its outstanding /
borrowings including term loan for windmill as all accounts are
classified as NPA by the Banks. The Interest charged by some banks
during the period under review which is not considered by the Company
amounts to Rs.214,68,53,979. The Company used to provide interest in
its accounts
* 12.5 % p.a. of the outstanding amounts being the average rate for
rupee export finance. Thus interest that should have been charged to
Profit and loss for the year under review amount to Rs. 565,86,78,505.
2. Basis for Disclaimer of Opinion
A. In respect of Trade Receivables amounting to Rs. 4,743,24,55,740
the auditors have not received any confirmations of balances even after
requesting for the confirmations. The management has obtained
confirmation of balances from the respective parties only as on 31st
March, 2013 and none thereafter. There have been defaults on the
payment obligations by the debtors on the due dates. Various attempts
have been made by the management and lenders for recovery, however such
attempts have not resulted into any significant collections or getting
commitment from the parties regarding schedule of payments which are
acceptable to the management / lenders. In view of the above we are
unable to comment on the realisability of the debts and any provision
to be made for unrealisability in the carrying amounts of these
balances and the consequential impact, on the financial statements.
(Refer Note 14 and Note 16 to the financial statements)
Against the defaulting overseas customers the Company had initiated
proceedings before the Conciliation Committee of Sharjah Federal Court.
The Court appointed Accounting and Financial Experts to look into the
activities of the defaulting overseas customers. Based on the findings
of the Experts the Court has directed two of the thirteen overseas
customers to pay the outstanding amounts due to the Company alongwith
interest. Decisions against the remaining defaulting overseas customers
is expected soon and is likely to be favourable to the Company.
B. As mentioned in Note No 1 regarding preparation of accounts on a
Going Concern basis and the reasons stated therein and Note No. 27 of
the financial statements detailing the developments that have happened
in the last 2 years, the Company's operating results have been
materially affected due to various factors including non availability
of finance in view of the consortium bankers recalling the financial
facilities granted. These events cast significant doubts on the ability
of the Company to continue as a going concern since the volumes of
business have also drastically dropped in the last 2 years. The
appropriateness of the going concern assumption is dependent on the
Company's ability to raise adequate finance from alternate means and/or
recoveries from overseas debtors to meet its short term and long term
obligations as well as to establish consistent business operations.
In absence of any convincing audit evidences, no positive steps taken
by the management, non recovery of trade receivables on due date,
non-payment of liabilities including statutory dues, financial
difficulties faced by the Company due to recalling of bank finance
facilities and in view of multiple uncertainties stated above, we are
unable to determine the possible effects on the financial statements.
We are also unable to conclude on the ability of the Company to carry
on as a going concern.
Against the defaulting overseas customers the Company had initiated
proceedings before the Conciliation Committee of Sharjah Federal Court.
The Court appointed Accounting and Financial Experts to look into the
activities of the defaulting overseas customers. Based on the findings
of the Experts the Court has directed two of the thirteen overseas
customers to pay the outstanding amounts due to the Company alongwith
interest. Decisions against the remaining defaulting overseas customers
is expected soon and is likely to be favourable to the Company.
3. Disclaimer of Opinion
Because of the significance of the matters described in the Basis for
Disclaimer of Opinion paragraph, specifically relating to the multiple
uncertainties created due to factors such as non recovery of trade
receivables on due dates, non payments of liabilities including
statutory dues, financial difficulties faced by the Company due to
recalling of bank finance, we have not been able to obtain sufficient
appropriate audit evidence to provide a basis for an audit opinion.
Accordingly, we do not express an opinion on the financial statements.
Against the defaulting overseas customers the Company had initiated
proceedings before the Conciliation Committee of Sharjah Federal Court.
The Court appointed Accounting and Financial Experts to look into the
activities of the defaulting overseas customers. Based on the findings
of the Experts the Court has directed two of the thirteen overseas
customers to pay the outstanding amounts due to the Company alongwith
interest. Decisions against the remaining defaulting overseas
customers is expected soon and is likely to be favourable to the
Company.
4. Emphasis of Matter
A. As mentioned in note no. 27(ii), the Company has not appointed any
Internal Auditors for the year and accordingly no internal audits were
carried out for the year.
The Company has not appointed any internal auditor for the year under
consideration as all the activities of the Company came to standstill,
as the Company did not receive monies against its exports which
resulted in the Company defaulting in its payments to the consortium
banks. The Company is likely to appoint an internal auditor as soon as
the situation improves. The Company, however, has internal control to
check its administrative and statutory expenses.
B. As mentioned in note no. 27 (iii), the Company has not done any
valuation of stocks of Diamonds which are in the joint custody with the
bank. To that extent the increase or decrease in the value of diamond
stocks as at year end, as per AS-2 Valuation of Inventories, is not
determined.
As per point 2(a) of CARO Report
In June 2013, the banks have placed the stock of diamonds belonging to
the Head Office and the Mumbai Branch office of the Company valued at '
39,35,00,031 in the joint custody. The bank had done a test check
valuation as on 30th September, 2013 when officers of the Company were
also present, of the said stock which has been then forwarded to the
Company. During the period the stocks of Chennai & Cochin SEZ were
valued and put in the joint custody of the banks. Confirmation of the
stocks lying with the bank has been confirmed by the management on the
basis of the letter obtained from the bank as on that date. For the
period under consideration, except for the stock lying in joint custody
of the banks at HO, Cochin & Chennai where the management has not
carried out the physical verification of inventory, physical
verification of inventory at other places has been done by the
management at regular intervals.
AUDITOR'S REPORT AND SECRETARIAL AUDIT REPORT
As required under section 204 (1) of the Companies Act, 2013 the
Company has obtained a secretarial audit report. Certain observations
made in the report with regard to late filing of some forms were mainly
due to ambiguity and uncertainty of the applicability of the same for
the relevant period. However, the Company would ensure in future that
all the provisions are complied to the fullest extent.
AUDITORS
The Auditors R C Reshamwala and Co., Chartered Accountants, Mumbai,
retire at the conclusion of the ensuing Annual General Meeting and
being eligible offer themselves for re-appointment.
SECRETARIAL AUDIT
Pursuant to provisions of section 204 of the Companies Act, 2013 and
The Companies (Appointment and Remuneration of Management Personnel )
Rules , 2014 the Company has appointed S G and Associates, a firm of
Company Secretaries in practice to undertake the Secretarial Audit of
the Company. The Secretarial Audit report is annexed herewith as
"ANNEXURE A".
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT-9 is annexed herewith as "ANNEXURE B".
MEETINGS OF THE BOARD
Nine Board Meetings (including adjourned Board Meetings) were held
during the year. For further details please refer report on Corporate
Governance on page no. 23 of this annual report.
RISK MANAGEMENT
Though the Company's operations has come to a grinding halt post
devolvement of Letter of Credits issued in favour of bullion banks, the
probability of any operational risks has come to a naught. However,
pursuant to section 134 (3) of the Companies Act, 2013 & Clause 49 of
the listing agreement, the Company had constituted business risk
management committee. The details of the Committee and its terms of
reference are set out in the corporate governance report forming part
of the Board's report.
PARTICULARS OF REMUNERATION
The Information required under section 197 of the Companies Act, 2013
and the rules made there-under in respect of the employees of the
Company is as under:
(a) the ratio of the remuneration of each director to the median
remuneration of the employees of the Company for the financial year
Nil
(b) the percentage increase in remuneration of each Director, Chief
Executive Officer, Chief Financial Officer, Company Secretary or
Manager, if any, in the financial year;
Nil
(c) the percentage increase in the median remuneration of employees in
the financial year
Nil
(d) the number of permanent employees on the rolls of Company:
Five
(e) the explanation on the relationship between average increase in
remuneration and Company performance;
There are no increase in remuneration during the last 4 years.
(f) comparison of the remuneration of the Key Managerial Personnel
against the performance ofthe Company;
Particulars Rs In lacs
Remuneration of Key Managerial Personnel 27.22
(KMP) during the financial year 2014-15
(aggregated)
Revenue from operations 624
Remuneration (as % of revenue) 2.72
Profit before tax (PBT) (12.28)
Remuneration (as % of PBT) -
(g) variations in the market capitalisation of the Company, price
earnings ratio as at the closing date of the current financial year and
previous financial year and percentage increase over decrease in the
market quotations of the shares of the Company in comparison to the
rate at which the Company came out with the last public offer in case
of listed companies, and in case of unlisted companies, the variations
in the net worth of the Company as at the close ofthe current financial
year and previous financial year;
Not Applicable
(h) average percentile increase already made in the salaries of
employees other than the managerial personnel in the last financial
year and its comparison with the percentile increase in the managerial
remuneration and justification thereof and point out if there are any
exceptional circumstances for increase in the managerial remuneration.
Not Applicable
(i) Comparison of each remuneration of the Key Managerial Personnel
against the performance of the Company
Rs In lacs
Particulars Chief Financial Company
officer Secretary
Remuneration 10.22 17
Revenue 624 624
Remuneration (as % 2.72 2.72
revenue)
Profit before tax (PBT) (12.28) (12.28)
Remuneration (as % of N.A N.A
PBT)
(j) the key parameters for any variable component of remuneration
availed by the directors;
Not Applicable
(k) the ratio of the remuneration of the highest paid director to that
of the employees who are not directors but receive remuneration in
excess of the highest paid director during the year;
Nil
None of the employees receive remuneration in excess of the limits as
prescribed in the information required pursuant to Section 197 read
with sub rule (2) of rule 5 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 in respect of
employees of the Company.
PECUNIARY RELATIONSHIP OR TRANSACTIONS OF NON- EXECUTIVE DIRECTORS
During the year, the Non-Executive Directors of the Company had no
pecuniary relationship or transactions with the Company.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORTS
The Company has been in compliance with the conditions of Corporate
Governance as stipulated in Clause 49 of the Listing Agreement with the
Stock Exchanges, save and except those conditions which could not be
complied with owing to lack of proper composition of Board of
directors.
Report on Corporate Governance, Management Discussion and Analysis and
Secretarial Auditor's Certificate on compliance with the Corporate
Governance requirements have been included in this Annual Report in
separate sections.
ACKNOWLEDGEMENTS
Your Company and Board wish to thank the members of the Company and
staff for their continued patience and co-operation.
On behalf of the Board of Directors
Place: Mumbai H. Udani H. Mehta
Date: 12/08/2015 Director Director
Mar 31, 2014
Dear Members
The Directors present the Twenty-Eighth Annual Report together with the
Audited Accounts for the 6 months accounting period ended 31st March,
2014.
The Company, during the period under review, after the unfortunate and
unforeseen events of the past 18 months, has not been able to resurrect
itself and is not hopeful of a revival in the near future since revival
is dependent on receipt of realization of export bills from defaulting
overseas customers. The salient figures of the 6 month ended March 31,
2014 are produced below.
FINANCIAL RESULTS (Rs.in Crore)
Particulars 6 Months 18 Months
Period Period
Ended 31s1 Ended 30th
March, September,
2014 2013
Total Income 4.29 7130.71
Profit before Interest and Depreciation 0.01 (70.90)
Less: Finance Charges (Net) 253.39 345.49
Depreciation 2.95 11.73
Profit before Tax (256.33) (428.12)
Provision for Tax 1.33 (185)
Profit after Tax (257.66) (426.27)
Add : Balance in Statement of
Profit and Loss
Brought Forward (77.76) 348.51
Profit Available for Appropriation (335.43) (77.76)
Proposed Dividend - -
Corporate Tax on Proposed - -
Dividend
Transfer to General Reserve - -
Transfer to General Reserve -
Foreign Exchange/Metal Price - -
Fluctuation
Balance Carried Forward (335.43) (77.76)
Total (335.43) (77.76)
AUDITORS'' REPORT
The qualifications in the Auditors'' Report (in italics)are followed by
appropriate reply and explanation (in bold) as under.
The Company having liquidity constraints and to save on costs, decided
to conduct the audit internally (Refer Note No. 7 of Annexure to the
Auditors'' Report).
The Company has not paid statutory dues amounting to Rs. 12,37,443/- it
unfortunately got delayed due to liquidity constraints (Refer Note No.
9A of Annexure to the Auditors'' Report).
Overseas customers have confirmed the balances due from them. As the
group of overseas customers have claimed to have suffered heavy losses,
they are unable to pay in time and have sought very long period to meet
their obligations. As a result of this short term funds have got
blocked for long term. (Refer Note No. 17 of Annexure to the Auditors''
Report).
1. Basis for Qualified Opinion
A. In accordance with Accounting Standard - 11 (Standard on The Effects
of Changes in Foreign Exchange Rates), the Company is required to value
its monetary assets and liabilities viz foreign currency trade
receivables and trade payables at the foreign exchange rate prevailing
on the date of the balance sheet. The Company has not carried out such
valuations. Accordingly the exchange gain for the period is
understated, loss for the period is overstated by Rs. 500,48,00,336
(net), trade receivables are understated by Rs. 506,19,59,103 and trade
payables are understated by Rs. 5,71,58,767 (Refer Note No. 7 (b),
14(b) and Note 19(c)).
* Export Receivables and Overseas Trade Payables had been restated
based on exchange rate as at 31.03.2013. In view of persistent defaults
by overseas customers in clearing outstanding dues, the same have been
carried forward at the same rate (based on exchange rate as at
31.03.2013) as it is deemed expedient not to take cognizance of
depreciation in rupee vis-a-vis US dollar on notional basis when
outstanding amounts are expected to be realized over an uncertain
period of time. Since the Company does not have any other cashflows to
arrange for remittances to overseas trade creditors and expects to
defray these liabilities out of realisation of export receivables, the
same also have not been restated based on exchange rate as at the date
of balance sheet but have been carried forward based on exchange rate
as at 31.03.2013. Had it been restated on the basis of exchange rate as
at 31.03.2014, the amount payable would have been higher by Rs.
57,158,767/-.
B. The Company has made long term investments in Forever Precious
Diamonds and Jewellery Ltd. (Forever) amounting to Rs. 1,411,710,802,
thereby resulting in it holding a 49 % stake in the equity of that
company. The said investments continue to be valued at cost. As stated
in Note No. 12 A 2, in the view of the management, provision for
diminution in value of investments as per the requirements of
Accounting Standard -13 (Accounting for Investments) is not considered
necessary and hence not made. We have been provided with the financial
statements of Forever for the period ended September 2013. We have
observed that there are no significant business operations in Forever.
Further the auditors of Forever have qualified the financial statements
and termed the company as a non-going concern. In view of the above the
Company should have provided the diminution in value of investments
amounting to Rs. 1,411,710,801. Accordingly the loss for the year have
been understated and investments overstated by Rs. 1,411,710,801.
* Forever Precious Jewellery and Diamonds Limited is also in the
process of initiating legal action against its defaulting overseas
cutomers and is hopeful of rcovering its dues and therefore no
diminution in the value of investments is considered.
2. Basis for Disclaimer of Opinion.
A. In respect of Trade Receivables amounting to Rs. 4,745,59,96,865
the auditors have not received any confirmations of balances. The
management has obtained confirmations of balances from the respective
parties only as on 31st March, 2013 and none thereafter. There have
been defaults on the payment obligations by the debtors on the due
dates. Various attempts have been made by the management and lenders
for recovery however such attempts have not resulted into any
significant collections or getting commitment from the parties
regarding schedule of payments which are acceptable to the management/
lenders. In view of the above we are unable to comment on the
realisability of the debts and any provision to be made for
unrealisability in the carrying amounts of these balances and the
consequential impact, on the financial statements. (Refer Note 14 and
Note 16 to the financial statements).
* Against the defaulting overseas customers the company has initiated
proceedings before the Conciliation Committee of Sharjah Federal Court,
the step preceding to file commercial cases before the Sharjah Court.
B. As mentioned in Note No 1 regarding preparation of accounts on a
Going Concern basis and the reasons stated therein and Note No. 27 of
the financial statements detailing the developments that have happened
in the previous period and the the period under audit, the Company''s
operating results have been materially affected due to various factors
including non availability of finance in view of the consortium bankers
recalling the financial facilities granted. These events cast
significant doubts on the ability of the Company to continue as a going
concern since the volumes of business have also drastically dropped in
the last 6 months. The appropriateness of the going concern assumption
is dependent on the Company''s ability to raise adequate finance from
alternate means and/or recoveries from overseas debtors to meet its
short term and long term obligations as well as to establish consistent
business operations. In absence of any convincing audit evidences, no
positive steps taken by the management, non recovery of trade
receivables on due date, non payment of liabilities including statutory
dues, financial difficulties faced by the company due to recalling of
bank finance facilities and in view of multiple uncertainties stated
above, we are unable to determine the possible effects on the financial
statements. We are also unable to conclude on the ability of the
company to carry on as a going concern.
* Against the defaulting overseas customers the company has initiated
proceedings before the Conciliation Committee of Sharjah Federal Court,
the step preceding to file commercial cases before the Sharjah Court.
3. Disclaimer of Opinion
Because of the significance of the matters described in the Basis for
Disclaimer of Opinion paragraph, specifically relating to the multiple
uncertainties created due to factors such as non recovery of trade
receivables on due dates, non payments of liabilities including
statutory dues, financial difficulties faced by the Company due to
recalling of bank finance, and non availability of books of accounts of
Surat branch for our audit, we have not been able to obtain sufficient
appropriate audit evidence to provide a basis for an audit opinion.
Accordingly, we do not express an opinion on the financial statements.
* Against the defaulting overseas customers the company has initiated
proceedings before the Conciliation Committee of Sharjah Federal Court,
the step preceding to file commercial cases before the Sharjah Court.
4. Emphasis of Matter
Subsequent to the Balance sheet date, the Central Bureau of
Investigations (CBI) in April 2014 has seized the books of accounts
along with other documents of the Surat Branch of the Company as a part
of its investigations against the Company. We have since been provided
with the backup data for the period maintained by the Company. In view
of the above, since the supporting vouchers and other documents were
not available for our verification we were unable to carry out the
detailed audit of the branch. The management certified trial balance of
the branch has been incorporated in the final financial statements.
Accordingly total assets of Rs. 18,58,22,835 , total liabilities of Rs.
18,58,22,835 , total Income of Rs.74,92,392 and total expenses of Rs.
1,42,57,437 of Surat branch have been incorporated in the financial
statements on the basis of the unaudited trial balance of the Surat
branch.
* The books of Surat Branch were seized by the Central Bureau of
Investigation during their search of the premises at Surat. The company
has provided the financial statements of the branch to the auditors
from the back-up data available. However,the supporting vouchers could
not be provided for reasons mentioned above.
As per point 2(a) of CARO Report
In June 2013, the banks have placed the stock of diamonds belonging to
the Head Office and the Mumbai Branch office of the Company valued at
Rs. 39,35,00,031 in the joint custody. The bank had done a test check
valuation as on 30th September, 2013 when officers of the Company were
also present, of the said stock which has been then forwarded to the
company. During the period the stocks of Chennai & Cochin SEZ were
valued and put in the joint custody of the banks. Confirmation of the
stocks lying with the bank has been confirmed by the management on the
basis of the letter obtained from the bank as on that date. For the
period under consideration, except for the stock lying in joint custody
of the banks at HO, Cochin & Chennai where the management has not
carried out the physical verification of inventory, physical
verification of inventory at other places has been done by the
management at regular intervals.
DIVIDEND
The Board of Directors do not recommend any dividend for the period
under consideration due to loss incurred by the company.
OPERATIONS
The total income of the company during the period (six months) was Rs.
429 lacs as against Rs.713,071 lacs in the previous period (18 months).
The company continued to incur loss due to interest levied by the banks
on the default due to non-receipt of export realization, towards export
bills, from the defaulting overseas customers.
Subsequent to devolvement in the preceding period, the company could
not arrange for payment to the consortium towards Standby Letters of
Credit issued by consortium banks, and as there being no activities in
most of the units of the company during the period under consideration
barring its unit in Goa, the company found it difficult to make the
ends meet.
NOTICES FROM BANKS
Few bankers have classified the company and its directors as willful
defaulters. However, the company has vehemently denied the same and
reiterated that they were victim of circumstances beyond their control
and are taking all possible steps to recover the same. The company,
which had received from Standard Chartered Bank, notice under the
SARFAESI Act, has denied all the allegations made therein. Some of the
banks have sent notices to the promoter/guarantor and also to the
companies who have provided corporate guarantees.
The banks have lodged complaints with the Central Bureau of
Investigation to carry out investigations against the company and its
management. The agencies visited the premises of the directors and also
its branches at Mumbai and Surat. The company has received notice from
Economic Offence Wing (EOW) of Mumbai Police and have submitted
statement for their observations. The management and the directors
(former and present) have fully cooperated with the agencies during
their investigations.
LEGAL SUIT
The company sent notices to the defaulting overseas customers in
October 2013. As no positive actions were received the company
considered filing of legal suit in Mumbai or in the UAE. As the filing
of suit in Indian Court may not give any thrust in company''s endeavor
to impress upon defaulting overseas customers to make payment, it was
decided to file the same in the UAE Court. Accordingly the company has
initiated proceedings before the Conciliation Committee of Sharjah
Federal Court, the step preceding to filing of commercial cases before
the Sharjah Court in May 2014. This definitely is a positive step for
the company to ensure its bankers of their intentions to recover and
pay their dues.
DIRECTORS
Mr. R. Ravichandran and Mr. Ramesh Parikh have resigned from the
position of Director-Operations and Director-Finance with effect from
06.12.2013 and 28.02.2014 respectively. The Board accords its
appreciation for their contributions to the business of the Company
during their tenure as Whole-Time Director of the Company.
In accordance with the Articles of Association of the Company Mr.
Harish Mehta, retire by rotation and being eligible, offer himself for
re-appointment at the forthcoming Annual General Meeting.
Mr. Jaikumar Kapoor and Mr. Harimohan Namdev have been appointed on
10th January, 2014 as Additional Directors of the Company and holds
office upto the date of forthcoming Annual General Meeting.
APPOINTMENT OF COST ACCOUNTANT
M/s. Gangan & Co., Cost Accountants, Mumbai have been appointed to
submit the Compliance Report along with the requisite annexure duly
certified by them for the 6 months accounting period ended 31st March,
2014 as required under rule 2 of the Companies (Cost Accounting Record)
Rules, 2011 to the Central Government within the time prescribed under
above referred rules.
FIXED DEPOSITS
The Company has not accepted any deposit, within the meaning of Section
58-A of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 2013 made thereunder.
INFORMATION PURSUANT TO SECTION 217(2A) OF THE COMPANIES ACT, 1956
None of the employees of the Company were in receipt of remuneration in
excess of the limits as prescribed under Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 including Companies (Particulars of Employees) Amendment
Rules, 2011 and Companies (Amendment) Act, 1988.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
state that.
* in the preparation of the Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures, if any.
* the Directors have 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 6 months period ended 31st March, 2014
and of the loss of the Company for that financial year (6 months
accounting period).
* 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; and
* the Directors have prepared the Annual Accounts on a going concern
basis.
AUDITORS
M/s. R.C. Reshamwala & Co., Auditors of the Company, hold office until
the conclusion of the ensuing Annual General Meeting. The Company has
received letter from them to the effect that their appointment, if
made, would be within the prescribed limits under Section 224(1-B) of
the Companies Act, 1956. The Audit Committee and Board of Directors
recommend their re- appointment.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
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 given in the Annexure forming part of this
report.
INDUSTRIAL RELATIONS
None of the industrial units were functional, during the period under
consideration, excepting Goa where the relations were cordial.
LISTING
The Equity Shares of the Company are listed at BSE Limited and National
Stock Exchange of India Limited. The Company has paid the Annual
Listing fee to BSE Limited. The Board of Directors have unanimously
resolved to delist its equity shares listed at NSE voluntarily under
regulation 6(a) of SEBI (Delisting of Equity Shares) Regulations, 2009.
INTERNAL CONTROL SYSTEM
The Company''s internal control systems, governed by time proven
practices are supplemented by well-established audit process that
assists management in identifying issues and associated risks and
ensures that all assets are safeguarded and protected against any loss.
Internal audit, an independent appraisal function, examines and
evaluates the adequacy and effectiveness of the internal control
system, appraises periodically about activities and audit findings to
the Audit Committee, statutory auditors and the management.
AUDIT COMMITTEE
During the period under review the Audit Committee was reconstituted
after cessation of Mr. Ramesh Parikh as Director- Finance. Mr. Jaikumar
Kapoor had been inducted as member of the Audit Committee replacing Mr.
Ramesh Parikh. The reconstituted Audit Committee comprise of following
Directors.
1. Mr. Harish Mehta, Chairman
2. Mr. Satya Prakash Tanwar, Member
3. Mr. Jaikumar Kapoor, Member
CORPORATE GOVERNANCE
The Company has been in compliance with the conditions of Corporate
Governance as stipulated in Clause 49 of the Listing Agreement with the
Stock Exchanges, save and except those conditions which could not be
complied with owing to lack of proper composition of Board of
directors.
Report on Corporate Governance, Management Discussion and Analysis and
Auditor''s Report on compliance with the Corporate Governance
requirements have been included in this Annual Report in separate
sections.
ACKNOWLEDGEMENTS
The Board of Directors wishes to thank Government of India, bankers,
customers, suppliers, shareholders, other business associates and
employees of the Company for the continued co-operation and unstinted
support extended to the Company.
On behalf of the Board of Directors
Place : Mumbai Jaikumar Kapoor Harish Mehta
Date : 30th May, 2014 Director Director
Sep 30, 2013
The Directors present the Twenty-Seventh Annual Report together with
the Audited Accounts for the 18 months period ended 30th September,
2013.
The Company, during the period under review, witnessed unprecedented
crisis culminating in complete suspension of its revenue generating
operations, the details whereof along with corrective steps initiated
by the Company and present status are briefy enumerated as under -
Background
1.01 The Company, incorporated in 1985, had been engaged in manufacture
and exports of cut and polished diamonds and plain and studded gold
jewellery and also in imports and local sales of bullion as one of the
Nominated Agencies.
Credit Facilities from Consortium of Banks
2.01 The company had been sanctioned, by the Consortium of 14 banks,
Fund Based (Export Packing Credit and Post Shipment Credit) and Non
Fund Based (StandBy Letters of Credit and Bank Guarantee) credit limits
of Rs.375 crores and Rs.3470 crores respectively and had also been
extended in principle approval for 20% thereof as ad-hoc (stand-by)
limits to take care of peak / seasonal requirement as also to take care
of additional need owing to increase in price of gold and depreciation
of rupee vis-Ã -vis dollar. As at 31.03.2013, the company had availed of
additional ad-hoc FB and NFB limit of Rs.45 crores and Rs.490 crores
respectively. The Fund Based limits were sanctioned for diamond
division whereas Non Fund Based limits were sanctioned for procurement
of gold for Jewellery division. Part of Non Fund Based (SBLC) limits
were allowed to be used as Fund Based limits by 3 of the 14 consortium
banks.
Invocations of SBLCs
3.01 Till March 2013, the company was, inter-alia, engaged in
manufacture and export of gold jewellery. For the purpose, it had been
procuring gold, usually on loan basis and on unfxed price basis as per
industry practice, from overseas bullion banks as also from nominated
agencies / banks in India against StandBy Letters of Credit (SBLCs) of
Consortium of Banks which had sanctioned credit facilities to the
company.
3.02 As per the extant Foreign Trade Policy, maximum tenor for which
gold loans can be availed has been 270 days and accordingly, the member
banks of the consortium usually established SBLCs for 270 days. The
tenor of gold loan was adequate to take care of manufacturing cycle and
trade credit of 180 days that the company usually extended to its
overseas customers.
3.03 The company had executed gold loan agreement with the bullion
banks from whom it regularly procured gold. These agreements contained
a standard enabling provision for recalling of all outstanding gold
loans by the bullion banks in the event of (even single) default by the
company in discharging its obligations as per the terms of the
agreements.
3.04 Owing to delay in receipt of inward remittances from overseas
customers against export bills, the company could not arrange for
payments which were due in March 2013 to the bullion banks. In view of
these events of default, the bullion banks initially invoked SBLCs
which had fallen due, but, later, as defaults persisted, invoked all
SBLCs, during April 2013, including even those in respect of which gold
loans were not due.
3.05 Of the aggregate outstanding SBLCs of Rs.3580.68 crores as at
31.03.2013, SBLCs of Rs.3485.18 crores (excluding SBLCs of Rs.95.50
crores established in favour of State Bank of India) had been invoked
by April-end 2013, although SBLCs worth Rs.958.08 crores only were
falling due till 30.04.2013 whereas SBLCs of Rs.2527.10 crores had been
invoked ahead of the due dates of respective gold loans.
3.06 State Bank of India had invoked SBLCs of Rs.95.50 crores as and
when gold loans got matured.
3.07 All invoked SBLCs of Rs.3580.68 crores have been paid by the
Consortium banks. As a result of invocation and devolvement of SBLCs,
the liabilities had got crystallized in rupee terms and the accounts
were overdrawn. With no gold lines from bullion banks and no fresh
SBLCs from the consortium banks, the operations had been signifcantly
impacted. Further, as defaults of overseas customers persisted, the
company could not repay Export Packing Credit and Post Shipment
Advances that it had availed for diamond division. As such, the company
had been constrained to suspend its manufacturing operations.
3.08 The company did approach the Honorable Bombay High Court for an
Order restraining the Consortium banks from making remittances against
invocations of those SBLCs where Gold Loans had not fallen due.
However, the Standard Bank PLC, one of the bullion banks (banks from
whom the company usually procured gold), obtained an Order from the UK
Court that as the jurisdiction as per the Gold Loan Agreement for any
legal action is a Court in London, it will be deemed as Contempt of
that Court if the company persisted with its application in the Bombay
High Court. The company, accordingly, could not pursue its application
for a Stay Order.
Overseas Customers
4.01 The company''s dealings with overseas customers, till February
2013, have been generally satisfactory and there were no commercial
disputes of any sort. Although there were intermittent delays in
receipt of moneys towards export bills occasionally in the past, there
used to be regular fow of inward remittances and the company did not
have any major problem in realization of its export bills.
4.02 The company''s exports of diamonds as well as jewellery had been
mainly to wholesalers and on clean credit basis.
4.03 Due to negative reports in Diamond Intelligence Brief and other
trade and industry journals about the Group (especially, about the
company''s subsidiaries in USA and Belgium), its exports to USA and
Europe almost dried up since May 2012 resulting in concentration of
exports to UAE market.
4.04 The crisis emerged when inward remittances against export bills
from a Group of 13 customers in UAE, represented by Mr. Haytham Obidah
as director / shareholder / owner or as introducer, were abruptly
suspended since March 2013. The company had been dealing with the group
of customers headed by Mr. Haytham for over 5 years.
4.05 Total amount due from these 13 customers in UAE is approx. USD 875
million (equivalent to about Rs.4760 crores). As the amounts at stake
were very large and as the same were not backed by any tangible
security / incoming LCs, the company''s recovery efforts in the
beginning have been very measured. Immediately after invocations and
devolvement of SBLCs, the company''s Whole-time Director (Operations)
went to Dubai and met Mr. Haytham on 21.03.2013. This was followed by
another visit along with Offcial of Standard Chartered Bank, the Lead
Bank of the Consortium, on 18.04.2013.
4.06 The promoter and guarantor, Mr. Jatin Mehta and Whole-time
Director (Operations) along with senior offcials of the Core Group of
the Consortium of banks (comprising Punjab National Bank, Central Bank
of India, Canara Bank, Standard Chartered Bank and Union Bank of India)
visited Dubai and met Mr. Haytham on 23.05.2013. During the visit by
the offcials of the Core group of the Consortium, Mr. Haytham had
reportedly stated that delay in remittances was attributable to
liquidity constraints (owing to fnancial loss incurred in foreign
exchange and commodity trading by 3 of those customers) which are
sought to be mitigated in due course and that the entire dues shall be
paid in full in phased manner with the timeframe extending up to FY
2025-26.
4.07 Despite regular follow-up for payments through telephonic talks,
e-mails and correspondence, the company, during six month period ended
30.09.2013, received only USD 1,268,118 from those 13 UAE customers as
probably they have not been able to mitigate their liquidity
constraints fully. The company, therefore, served legal notices, in
October 2013, on all the 13 UAE customers as also on Mr. Haytham,
through its Advocates and has sought opinion of a reputed legal frm in
Dubai as to what legal options are available for recovery of
outstanding dues and proposes to initiate legal action in Dubai and /
or in India, in case customers do not demonstrate urgency in sending
remittances of larger sums.
Forensic Audits
5.01 Bankers had appointed M/S. Ernst & Young (EY) for forensic audit
and M/S. Kroll Advisory Solutions (KROLL) for investigative audit. The
report of EY did not contain any adverse remarks and with regard to
certain audit observations, the company had offered satisfactory
explanations. While the banks considered company''s explanations as
satisfactory in respect of most of the audit observations of ''KROLL'',
in case of a few observations, they desired further clarifcations from
Mr. Jatin Mehta. The company, however, is informed by the bankers that
they have not received any clarifcations from Mr. Mehta in this regard.
Corporate Debt Restructuring
6.01 The company had submitted its Financial Restructuring Plan to the
Corporate Debt Restructuring (CDR) Cell. The Flash Report was fled on
17.06.2013. Although the Empowered Group of CDR had initially expressed
certain reservations for admission of Flash Report (at its Meeting held
on 24.06.2013), it reconsidered the company''s proposal at its
subsequent meeting held on 25.07.2013 where although the requisite
mandate (support for admission of fash report) from the banks were in
place, a view emerged that certain issues were needed to be addressed
and execution of legally enforceable Tripartite Agreement between the
company, the overseas customers and banks was one of the issues that
needed to be addressed. However, UAE customers expressed reservations
for execution of Tripartite Agreements as suggested by banks / CDR
Cell. The other issues that needed to be addressed were (a) bringing
promoters contribution upfront in consonance with RBI guidelines for
CDR (b) re-induction of Mr. Jatin Mehta, the promoter an d guarantor,
on the Board of the Company and (c) explanation by Mr. Jatin Mehta for
certain observations contained in the forensic audit reports. As Mr.
Jatin Mehta''s response on the above was not as per the expectations of
the banks, the company''s Flash Report has been withdrawn by them.
Inventory
7.01 Entire inventory of diamonds and pearls (excluding inventory lying
in the company''s units located in the SEZs) has been placed in the
lockers in PNB and is in the joint custody with PNB since 18.06.2013.
The banks arranged for valuation of inventory by Customs approved
valuers on 30.09.2013 and as per their report, the total value of
inventory was Rs.39.35 crores as against its cost, as per records of
the Company, at Rs. 147.24 Crores. Since the valuation was carried out
on the basis of examination of only part of the inventory selected on
random basis, the company has requested PNB to arrange for valuation of
entire inventory. Nonetheless, the value of inventory has been
considered on a conservative basis, while drawing accounts for the 18
month period ended 30.09.2013, so as to take cognizance of depletion in
the value of inventory of diamonds.
Board of Directors
8.01 Mr. Jatin Mehta relinquished Managing Directorship of the company
to join as President of Su-Raj Diamonds And Jewellery DMCC (UAE), one
of the Wholly Owned Subsidiaries of the company, with effect from
19.04.2011, as it was felt at that time that owing to evolving business
scenario and resultant opportunities vis-Ã -vis infrastructure and
business profle of the company and its subsidiaries, that was the
appropriate time for further growth of business globally and that for
the purpose, Mr. Mehta would be required to engage himself
comprehensively with overseas operations which would entail extensive
travel away from India for execution of business plan. While Mr. Mehta
continued as director and Non-Executive Chairman, Mr. Lakhpat Raj
Bhansali, with over 35 years of experience in the industry, was
appointed as Whole-time Director.
8.02 As part of further consolidation process and restructuring
necessitated owing to substantial expansion of capacities by M/S.
Su-Raj Diamond Industries Ltd. (SDIL), a group company, Mr. Lakhpat Raj
Bhansali resigned from the Board with effect from 09.05.2012 as he was
appointed as Whole-time Director of SDIL. Mr. R Ravichandran and Mr.
Ramesh I Parikh, employees of the Company, were inducted on the Board
and appointed as Whole-time Directors (Operations) and (Finance)
respectively.
8.03 Mr. Gian Prakash Gupta and Mr. Kailash Nath Bhandari resigned from
the Board with effect from 08.05.2012 and 24.08.2012 respectively. Mrs.
Shrilekha V. Parikh, who was liable to retire by rotation, did not
offer herself for reappointment at the previous AGM held on 29.09.2012.
8.04 Mr. Jatin Mehta submitted his resignation as Chairman and Director
with effect from 09.11.2012 following his decision to reduce Board
Commitments owing to unavoidable circumstances. The Board, while
respecting his decision, suggested to Mr. Mehta that he could endeavor
to keep sharing critical inputs which are vital for it to discharge its
functions effectively to which Mr. Mehta agreed. Mr. Madan Khurjekar
was, accordingly, appointed as Chairman.
8.05 After invocations and devolvement of SBLCs, all the independent
and non-executive directors on the Board, Mr. Rathnakar Hegde, Mr.
Shard Bhagwat, Mrs. Urvashi Saxena, Mr. Dilip Tikle and Mr. Madan
Khurjekar, resigned during the period 30.03.2013 to 10.06.2013.
Accordingly, the company''s Board, with effect from 10.06.2013,
comprised only 2 Whole-time directors and did not have suffcient number
of directors as required by the Companies Act, 1956.
8.06 Mr. Satya Prakash Tanwar, Nominee of PNB and Mr. Harish Mehta have
been inducted on the Board with effect from 27.09.2013 and 16.10.2013
respectively.
8.07 Mr. Jaikumar Kapoor and Mr. Harimohan Namdev have been inducted on
the Board with effect from 10.01.2014.
8.08 Mr. Ramesh Parikh, Director-Finance, resigned from the Board with
effect from 28.02.2014.
Overseas Subsidiaries
9.01 During the period under review, the company disinvested its entire
shareholding in its wholly owned subsidiaries in USA, Belgium, Hong
Kong & UAE.
Associate Company
10.01 During the period under review, the company invested in
additional equity share capital of an associate company, Forever
Precious Jewellery & Diamonds Ltd. (FPJDL), wherein the company,
consequent upon fresh investment, is holding 49% of its equity. FPJDL
has been confronted with similar crisis as faced by the company for the
same reasons as aggregate sum of approx. USD 375 million are
outstanding from the same group of 13 UAE customers with invocations
and devolvement of SBLCs of Rs.1800 crores. Mr. Jatin Mehta has given
up directorship of FPJDL in August 2012.
Accounts
11.01 The Company had earlier anticipated that its Debt Restructuring
Plan will get implemented under CDR mechanism by September 2013 and
accordingly, had extended its fnancial year by 6 months. As such, the
accounts have been prepared for 18 month period commencing 01.04.2012
and ending on 30.09.2013 for which it has received requisite approval
from the Registrar of Companies, Ahmedabad, Ministry of Corporate
Affairs, Government of India.
11.02 Since the company''s Board comprised only 2 Whole-time Directors
during 10.06.2013 to 16.10.2013, its operating results for Q5 (Quarter
ended 30.06.2013),of the 18 month period ending 30.09.2013, which were
published, in August 2013, for the beneft of the shareholders and for
ensuring compliance with statutory provisions, were, at that time, not
reviewed by the Audit Committee (which did not exit) and therefore were
not considered by the Board and were not subjected to limited review by
the auditors. The same were reviewed by the Audit Committee and
considered by the Board at their meetings held on 27.11.2013.
Present Status
12.01 The company and its directors, including directors who were on
the Board when devolvement occurred, have been issued, by Punjab
National Bank, Notices wherein it is stated that if entire defaulted
amount is not paid within specifed time frame, then they will be
classifed as ''Willful defaulter''.
12.02 The company and its directors, including directors who were on
the Board when devolvement occurred, have been issued, by Vijaya Bank,
Notice under the SARFAESIA 2002 as part of recovery proceedings.
12.03 Bank of Maharashtra and IDBI Bank Ltd. have issued Notice to the
company recalling entire outstanding amount.
12.04 We understand that the company''s account has been classifed as
Non Performing Asset by all the consortium banks.
12.05 As no signifcant amounts were realized from the overseas
customers after second week of March 2013, CRISIL, the Credit Rating
Agency, had downgraded rating from A1 to A3 in third week of April 2013
and to A4 in fourth week of April 2013 and further to D in frst week of
May 2013.
12.06 We understand that banks are seriously contemplating action
against Company, Mr. Jatin Mehta and present directors (other than
Nominee director) for suspected fraud and diversion of funds. The Board
takes this opportunity to assure members that the company and directors
have acted bona fde, in good faith and have discharged their duties
honestly and sincerely, to the best of their abilities and that if they
have been found wanting, it is only because of their inexperience to
deal with the complexities and enormity of the crisis. The company and
the Board are confdent of surpassing the scrutiny of any investigating
agencies and confrm that they shall be extending full co-operation in
this regard.
12.07 The Board does not have any representation of the Promoter Group.
The Whole-time Directors do not have any fnancial stake and are
professional directors and have only contractual relationship with the
company as employees.
12.08 The Promoter & Guarantor (and former Chairman and Managing
Director), Mr. Jatin Mehta, has contented, in e-mails to one of the
whole-time directors of the company as also in communications to Punjab
National Bank that he was not involved in day-to-day management of the
company since April 2011. The Board respectfully disagrees with his
contentions. Though Mr. Jatin Mehta is not formally on the Board of the
company, he had been and is involved in its affairs and all key
decisions are subject to his informal concurrence.
12.09 The Board, fnding itself wanting with regard to competence,
experience and resources vis-Ã -vis the extent, magnitude and gravity of
the crisis that the company is in, has requested Mr. Jatin Mehta to
immediately extend his consent for being re-inducted on the Board of
the Company not only in deference to the suggestions of the Banks but
also owing to compelling circumstances and to take note of the fact
that he would need to urgently lend active support in terms of required
resources and information / clarifcation / explanations to the bankers
so as to clear misunderstanding or doubts which seem to have arisen
owing to allegations implied in the bank''s communications based on
certain forensic / investigative audit reports which will help raise
comfort level of the Banks and of the company personnel and also in
terms of his commitment and active involvement for resolving all
outstanding issues and formulation of defnitive and credible plan of
action for restructuring of company''s operations and its debt
obligations and most importantly, to take further steps for the
recovery of dues from the defaulting overseas customers in UAE
considering that he (Mr. Jatin Mehta) had been interacting with Mr.
Haytham and had business relations with him for a number of years. It
was also conveyed to Mr. Mehta that the Board feels that left to
itself, it will not, in the absence of his direct and active
involvement, be in a position to discharge its functions effectively
and therefore, it shall be of paramount importance for him to join the
Board without any further loss of time in the larger interest of the
company. The Board has also accorded its consent for the Company
Secretary approaching, in the absence of direct and active involvement
of Mr. Jatin Mehta as requested for, Shareholders and / or Company Law
Board for taking such steps as they may deem appropriate in the given
circumstances.
Management Comments on Auditor''s observations
- The independent internal auditor agreed to carry the audit for latter
half of the year in the month of April, 2013 and was to submit report
subsequently. The company was having liquidity constraints and to save
on costs, decided to conduct the audit internally. The same will be
carried out with retrospective effect. (Refer Note No. 7 of Annexure to
the Auditors'' Report).
- The Company has not paid service Tax amounting to Rs. 3,44,786. The
same shall be paid before March 2014. It unfortunately got delayed due
to liquidity constraints and delays in expected refunds from the
Service Tax Dept. and Income Tax Dept of much larger sums. (Refer Note
No. 9A of Annexure to the Auditors'' Report).
- We have written to Standard Chartered Bank, Mumbai to kindly request
their counter parts in the UAE to release the guarantee or issue a no
dues letter as, we understand, all their dues have since been settled.
(Refer Note No. 15 of Annexure to the Auditors'' Report).
- Overseas customers have confrmed the balances due from them. As the
group of overseas customers have claimed to have suffered heavy losses,
they are unable to pay in time and have sought very long period to meet
their obligations. As a result of this short term funds have got
blocked for long term. (Refer Note No. 17 of Annexure to the Auditors''
Report).
1. Basis for Qualifed Opinion
In accordance with Accounting Standard - 11 (Standard on The Effects of
Changes in Foreign Exchange Rates), the Company is required to value
its monetary assets and liabilities viz foreign currency trade
receivables and trade payables at the foreign exchange rate prevailing
on the date of the balance sheet. The Company has not carried out such
valuations. Accordingly the exchange gain for the period is
understated, loss for the period is overstated by Rs. 636,04,74,798
(net), trade receivables are understated by Rs. 643,26,50,421 and trade
payables are understated by Rs. 7,21,75,623 (Refer Note No. 8 (b),
16(b) and Note 22(c)).
- Export receivables had been restated based on exchange rate as at
31.03.2013. In view of persistent defaults by overseas customers in
clearing outstanding dues, the same have been carried forward at the
same rate (based on exchange rate as at 31.03.2013) while drawing up
accounts for the quarter ended 30.06.2013 and also while drawing up
accounts for the period under review as it is deemed expedient not to
take cognizance of depreciation in rupee vis-Ã -vis US dollar on
notional basis when outstanding amounts are likely to be realized over
uncertain period of time. Had it been restated on the basis of exchange
rate as at 30.09.2013, the export receivables would have been higher by
Rs. 643,26,50,421/-, Trade payables would have been higher by
Rs.7,21,75,623/-and proft would have been higher by or loss would have
been lower by Rs. 636,04,74,798 (net).
2. Basis for Disclaimer of Opinion
A. In respect of Trade Receivables amounting to Rs. 4,759,24,33,182,
the auditors have not received any confrmations of balances. The
management has obtained confrmations of balances from the respective
parties. There have been defaults on the payment obligations by the
debtors on the due date. Various attempts have been made by the
management and lenders for recovery however such attempts have not
resulted into any signifcant collections or getting commitment from the
parties regarding schedule of payments which are acceptable to the
management / lenders, In view of the above we are unable to comment on
the realisability of the debts and any provision to be made for
unreliability in the carrying amounts of these balances and the
consequential impact, on the fnancial statements. (Refer Note 16 and
19 to the fnancial statements)
- Overseas customers have confrmed the balances due from them in their
debt confrmation letter. As the group of overseas customers have
claimed to have suffered heavy losses, they are unable to pay in time
and have sought very long period to meet their obligations which is not
acceptable to the company and the banks. Accordingly legal action at
Dubai is being contemplated.
B. The Company has made long term investments in Forever Precious
Jewellery and Diamonds Ltd.(Forever) amounting to Rs. 1,411,710,802,
thereby resulting in it holding a 49 % stake in the equity of that
company. The said investments continue to be valued at cost. As stated
in Note No. 14 B, in the view of the management, provision for
diminution in value of investments as per the requirements of
Accounting Standard -13 (Accounting for Investments) is not considered
necessary and hence not made. In the absence of availability of audited
fnancial statements of ''Forever'', we are unable to comment on the
carrying costs of such investments and the provision for diminution in
their value as on 30th September 2013. We are unable to comment on the
impact on the fnancial statements of provision for diminution in value
of investments.
- The Company is of the opinion that with the goodwill, reputation,
brand image and retail network of over 125 outlets across the country
that FPJDL had developed has potential to re-establish its fnancial
viability in the long term once it is able to mitigate current crisis
through initiatives from Promoter-Guarantor or other strategic investor
and therefore, it will probably be little premature to consider
depletion in the value of investment at present and accordingly, the
same have been carried at cost without considering any provision in
this regard.
C. As mentioned in Note No 1 regarding preparation of accounts on a
Going Concern basis and the reasons stated therein and Note No. 31 of
the fnancial statements detailing the developments that have happened
during the period under audit, the Company''s operating results have
been materially affected due to various factors including non
availability of fnance in view of the consortium bankers recalling the
fnancial facilities granted. These events cast signifcant doubts on the
ability of the Company to continue as a going concern since the volumes
of business have also drastically dropped in the last 6 months. The
appropriateness of the going concern assumption is dependent on the
Company''s ability to raise adequate fnance from alternate means and/or
recoveries from overseas debtors to meet its short term and long term
obligations as well as to establish consistent business operations. In
absence of any convincing audit evidences, no positive steps taken by
the management, non recovery of trade receivables on due date, non
payment of liabilities including statutory dues, fnancial diffculties
faced by the company due to recalling of bank fnance facilities and in
view of multiple uncertainities stated above, we are unable to
determine the possible effects on the fnancial statements. We are also
unable to conclude on the ability of the company to carry on as a going
concern.
The Company''s presumptions and assumptions are as under :
- The promoter-guarantor, Mr. Jatin Mehta, is professionally expected
eventually to lend tangible support by joining the Board, bringing
funds for resumption of operations, arranging for funds to initiate
legal actions against defaulting customers and with his active
involvement and commitment in any exercise of revival / restructuring
of the company''s business.
- Investigations / substantive proceedings / audits that might be
carried out overseas either through expert to be appointed through
Court in Dubai or by any other agencies will endorse / substantiate
claims of overseas customers about genuineness of (a) transactions so
far as they relate to exports by the company and (b) loss incurred in
commodity and currency transactions.
- The defaulting UAE customers will eventually pay off their entire
dues over a reasonable span of time.
Disclaimer of Opinion
Because of the signifcance of the matters described in the Basis for
Disclaimer of Opinion paragraph, specifcally relating to the multiple
uncertainties created due to factors such as non recovery of trade
receivables on due dates, non payments of liabilities including
statutory dues, fnancial diffculties faced by the Company due to
recalling of bank fnance we have not been able to obtain suffcient
appropriate audit evidence to provide a basis for an audit opinion.
Accordingly, we do not express an opinion on the fnancial statements.
The Company''s presumptions and assumptions are as under :
- The promoter-guarantor, Mr. Jatin Mehta, is professionally expected
eventually to lend tangible support by joining the Board, bringing
funds for resumption of operations, arranging for funds to initiate
legal actions against defaulting customers and with his active
involvement and commitment in any exercise of revival / restructuring
of the company''s business.
- Investigations / substantive proceedings / audits that might be
carried out overseas either through expert to be appointed through
Court in Dubai or by any other agencies will endorse / substantiate
claims of overseas customers about genuineness of (a) transactions so
far as they relate to exports by the company and (b) loss incurred in
commodity and currency transactions.
- The defaulting UAE customers will eventually pay off their entire
dues over a reasonable span of time.
4. Emphasis of Matter
In accordance with Accounting Standard  9 (Revenue Recognition), In
terms of the EXIM policy for Gold Loans and as per the consistent
practice followed by the Company in the past, it is required to raise
revised invoices on its customers on account of the fnal settlement of
its liability of gold loan. As stated in Note No. 16(c), in view of the
uncertainty involved of ultimate realization of such amounts, the
company has not raised the revised invoices amounting to Rs.
119,35,00,046. (Refer Note No. 16 c and Note 22 c).
- The company was importing gold on loan basis and on unfxed price
basis and likewise, the exports of jewellery were also on unfxed price
basis as per FTP / EXIM policy. Accordingly, both the export invoices
and the invoices for imports of gold used to be revised upon fnal
settlement of liability in respect of gold loan. Considering facts and
circumstances of the case, when export receivables are overdue and are
expected to be realised over a long period, revised invoices have not
been raised in view of uncertainty about realisation of additional
revenue. If the invoices were to be revised, the export receivables
would have been higher by Rs.119,35,00,046/- based on exchange rate as
at 30.09.2013.
DIVIDEND AND APPROPRIATIONS
The Company is facing acute fnancial crisis and therefore, your Board
have not recommended any dividend for the 18 months period ended 30th
September, 2013.
OPERATIONS
Total income from Operations, during the 18 month period, increased to
Rs.7130.71 crores from Rs.5546.67 crores during FY 2011-12. Proft
before Interest and Depreciation during 12 month period ended
31.03.2013 were Rs. (62.36) crores vis-Ã -vis Rs.211.79 crores for FY
2011-12. However, due to virtual closure of revenue generating
activities during six month period ended 30.09.2013, the Proft before
Interest and Depreciation for 18 month period were Rs.(70.90) crores.
DIRECTORS
None of the Directors of the Company are liable to retire by rotation
during the ensuing Annual General Meeting.
APPOINTMENT OF COST ACCOUNTANT
M/s. Gangan & Co., Cost Accountants, Mumbai have been appointed to
submit the Compliance Report along with the requisite annexure duly
certifed by them for the 18 months period ended 30th September, 2013 as
required under rule 2 of the Companies (Cost Accounting Record) Rules,
2011 to the Central Government within the time prescribed under above
referred rules.
FIXED DEPOSITS
The Company has not accepted any deposit, within the meaning of Section
58-A of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 2013 made thereunder.
COMMUNITY DEVELOPMENT AND SOCIAL WELFARE
The Company contributed for social welfare that strives to uplift and
empower humanity.
INFORMATION PURSUANT TO SECTION 217(2A) OF THE COMPANIES ACT, 1956
None of the employees of the Company were in receipt of remuneration in
excess of the limits as prescribed under Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 including Companies (Particulars of Employees) Amendment
Rules, 2011 and Companies (Amendment) Act, 1988.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
state that -
- in the preparation of the Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures, if any;
- the Directors have 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 18 months period ended 30th September,
2013 and of the proft of the Company for that fnancial year;
- that the Directors have taken proper and suffcient 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; and
- the Directors have prepared the Annual Accounts on a going concern
basis.
In view of the foregoing, the Board perceives the following as
impediments so far as going concern status of the company and the
accompanying fnancial statements as refecting the true and fair view of
the statement of affairs and the loss and the cash-fows of the company
- The promoter-guarantor has not responded to the Board''s communication
with regard to (a) rejoining Board (b) formulating credible action plan
for revival of the company''s operations.
- The promoter-guarantor has not indicated as to how one proposes to
provide for / reimburse the expenses for initiating legal action in
Dubai against the defaulting customers.
The promoter-guarantor is wrongfully attempting to distance himself
from the KYC / due diligence / trade references / selection of
customers who have been defaulting, which, however, were always his
decisions and prerogatives.
The promoter-guarantor has not been updating the company about steps,
if any, that he has been taking for recovery of dues.
The promoter-guarantor has not indicated timeframe for bringing funds
for recommencing company''s revenue generating / manufacturing
activities.
As claimed by the banks, the promoter-guarantor and the overseas
customers have failed to provide satisfactory explanations in respect
of certain observations contained in the report of investigative
auditors appointed by the banks.
The concerned employees are not available for ascertaining reasons for
wide variation in the valuation of stock of diamonds held in joint
custody with PNB.
Defaulting UAE customers have not been honoring assurances held out to
the representatives of the core group of consortium of banks in Dubai
on 23.05.2013 with regard to timeframe for clearance of overdue
amounts.
Inward remittances of less than USD 2.5 million during last 11 months
(01.04.2013 to 28.02.2014) are miniscule vis-Ã -vis outstanding dues as
also compared to amounts agreed to be remitted during the FY 2013-14.
The overseas customers have not responded to Legal Notices served on
them by the Company''s advocates in October 2013.
The Board / management is precariously placed and is not in a position
to provide the much needed comfort that the auditors need for
expressing positive opinion.
The present crisis, its nature and extent, call for initiation and
implementation of strong mitigating factors, however, the board /
management, does not have experience and resources to deal with the
same and is at the mercy of Mr. Haytham and is dependent on active
involvement and commitment of Mr. Mehta.
The company is incurring cash loss and is fnding it diffcult to
discharge its statutory obligations in time.
8 out of 14 member banks of the Consortium have issued Notices
recalling advances whereas 5 banks have issued Notices for Willful
Default and a few of them have stated that the company''s replies to
their notices were not convincing.
However, the Board feels that it can still take a pragmatic view and
consider the status of the company as ''going concern'' and the
accompanying fnancial statements as refecting the true and fair view of
the statement of affairs and the loss and the cash-fows of the company
on the presumptions and assumptions that -
The promoter-guarantor, Mr. Jatin Mehta, will eventually lend tangible
support by joining the Board, bringing funds for resumption of
operations, arranging for funds to initiate legal actions against
defaulting customers and with his active involvement and commitment in
any exercise of revival / restructuring of the company''s business.
Investigations / substantive proceedings / audits that might be carried
out overseas either through expert to be appointed through Court in
Dubai or by any other agencies will endorse / substantiate claims of
overseas customers about genuineness of (a) transactions so far as they
relate to exports by the company and (b) loss incurred in commodity and
currency transactions.
The defaulting UAE customers will eventually pay off their entire dues
over a reasonable span of time.
While the Board does concede that the above presumptions and
assumptions are based entirely on its professional expectations and are
not backed by visible intent and demonstrable actions on part of
overseas customers and Mr. Mehta, it is of the opinion that in the
larger interest of all stakeholders, it has but one option to take risk
of relying on above optimistic presumptions and assumptions for the
present.
Accordingly, the fnancial statements comprising Balance Sheet,
Statement of Proft and Loss & Cash-fow Statement are, accordingly, to
be construed only as fnancial / monetary abstracts of the books of
accounts wherein entries have been recorded in respect of transactions
on the basis of relevant documents. The Board, it may be appreciated,
is not in a position to hold out any assurance for action / inaction of
Mr. Mehta and the defaulting overseas customers and its impact on
realisability of overdue export receivables and going concern status.
AUDITORS
M/s. R.C. Reshamwala & Co., Auditors of the Company, hold offce until
the conclusion of the ensuing Annual General Meeting. The Company has
received letter from them to the effect that their appointment, if
made, would be within the prescribed limits under Section 224(1-B) of
the Companies Act, 1956. The Audit Committee and Board of Directors
recommend their re-appointment.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
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 given in the Annexure forming part of this
report.
INDUSTRIAL RELATIONS
Industrial relations at all levels during the year were satisfactory.
The Board wishes to place on record its sincere appreciation of the
efforts put in by all the Company''s employees in achievement of
results.
LISTING
The Equity Shares of the Company are listed at BSE Limited and National
Stock Exchange of India Limited. The Company has paid the Annual
Listing fee to each of the above Stock Exchanges.
INTERNAL CONTROL SYSTEM
The Company''s internal control systems, governed by time proven
practices are supplemented by well-established audit process that
assists management in identifying issues and associated risks and
ensures that all assets are safeguarded and protected against any loss.
Internal audit, an independent appraisal function, examines and
evaluates the adequacy and effectiveness of the internal control
system, appraises periodically about activities and audit fndings to
the Audit Committee, statutory auditors and the management.
BOARD COMMITTEES
During the 18 months period ended 30th September, 2013, subsequent to
resignations of all Independent Directors during 30.03.2013 to
10.06.2013, Audit Committee and Shareholders'' Grievance Committee were
not in place with effect from 11.06.2013. These Committees were
reconstituted on 16.10.2013 consequent upon appointment of independent
directors.
a) Audit Committee
As aforesaid, there was no Audit Committee of Directors as on 30th
September, 2013. However the Audit Committee was reconstituted, after
the Balance Sheet date w.e.f 16.10.2013, comprising of the following
Directors:
1. Mr. Harish Mehta, Chairman
2. Mr. Satya Prakash Tanwar, Member
3. Mr. Ramesh I. Parikh, Member
b) Shareholder/Investor Grievances Committee
As aforesaid, there was no Shareholders'' Grievance Committee of
Directors as on 30th September, 2013. However the Shareholders''
Grievance Committee was reconstituted, after the Balance Sheet date
w.e.f 16.10.2013, comprising of the following Directors:
1. Mr. Harish Mehta, Chairman
2. Mr. Satya Prakash Tanwar, Member
CORPORATE GOVERNANCE
The Company has been in compliance with the conditions of Corporate
Governance as stipulated in Clause 49 of the Listing Agreement with the
Stock Exchanges, save and except those conditions which could not be
complied with owing to lack of proper composition of Board of
directors.
Report on Corporate Governance, Management Discussion and Analysis and
Auditor''s Report on compliance with the Corporate Governance
requirements have been included in this Annual Report in separate
sections.
ACKNOWLEDGEMENTS
The Board of Directors wishes to thank Government of India, bankers,
customers, suppliers, shareholders, other business associates and
employees of the Company for the continued co-operation and unstinted
support extended to the Company.
On behalf of the Board of Directors
Jaikumar Kapoor Harish R. Mehta
Director Director
Mumbai
Date: 5th March, 2014
Mar 31, 2012
The Directors have pleasure in presenting the Twenty-Sixth Annual
Report together with the Audited Accounts for the financial year ended
31st March, 2012.
(Rs. in Crore)
Particulars Financial Financial
Year Year
Ended Ended
31st March, 31st March,
2012 2011
Total Income 5546.67 4320.28
Profit before Interest and
Depreciation 211.79 188.69
Less: Finance Charges (Net) 83.44 63.34
Depreciation 8.06 7.14
Profit before Tax 120.29 118.21
Provision for Tax 24.54 6.56
Profit after Tax 95.75 111.65
Add: Balance in Profit and Loss Account
Brought Forward 257.24 175.33
Profit Available for Appropriation 352.99 286.98
Proposed Dividend - 8.35
Corporate Tax on Proposed Dividend - 1.39
Transfer to General Reserve 2.98 10.00
Transfer to General Reserve-
Foreign Exchange/Metal Price
Fluctuation 1.50 10.00
Balance Carried Forward 348.51 257.24
Total 352.99 286.98
DIVIDEND AND APPROPRIATIONS
The Board of Directors has not recommended any payment of Dividend in
order to plough back the profits for the utilization towards the funds
requirements of the Company. Owing to sharp increase in price of the
gold and steep depreciation of rupee vis-a-vis US Dollar, the
requirement of working capital has increased substantially. Besides,
due to slow down of economies across the globe, there has been
intermittent delay in inward remittances which further accentuates the
liquidity stress.
An amount of Rs. 2.98 Crore has been transferred to General Reserve and Rs.
1.50 Crore to General Reserve à Foreign Exchange/Metal Price
Fluctuation.
OPERATIONS
Total income from operations during the year increased by 28.39% to Rs.
5546.67 Crore from Rs. 4320.28 Crore in the previous year. Profit before
Interest and Depreciation increased to Rs. 211.79 Crore as compared with
Rs. 188.69 Crore during the previous year. Net profit for the year
decreased by 14.25% to Rs. 95.75 Crore as compared to Rs. 111.65 Crore for
the previous year due to higher incidence of Tax owing to applicability
of MAT on profits of units in SEZs.
PREFERENTIAL ISSUE OF EQUITY SHARES AND WARRANTS
During the year under review, the Company has made preferential issue
of 3,63,63,636 Equity Shares of Rs.10/- each fully paid-up at a price
of Rs.55/- per share (including premium) to the Foreign Institutional
Investors (FIIs). An amount of Rs.200 Crores has been raised through
this preferential issue for augmenting the working capital resources
and to meet the requirements of growth of the Company.
Simultaneous with above issue of Equity Shares to FIIs on 1st February,
2012, the Company has issued 4,00,000 Equity Shares of Rs.10/- each
fully paid-up at a price of Rs.70/- per share including premium to
a promoter group company, viz. Kohinoor Diamonds Private Limited upon
conversion of equivalent no. of Optionally Fully Convertible Warrants
(OFCWs) out of 34,00,000 OFCWs issued in October 2010 with an issue
price of Rs.70/- each (including premium). An amount equivalent to 25%
of the price had been paid on each Warrant at the time of allotment of
Warrants and the balance 75% was paid at the time of their conversion.
The Company has received a sum of Rs. 2.10 Crore during the year under
review representing 75 % of the total amount. As on 31st March, 2012,
30,00,000 OFCWs were pending for conversion against which equivalent
no. of Equity Shares of Rs.10/- each fully paid-up were allotted on
13th April, 2012 to Kohinoor Diamonds Private Limited, the warrant
holder, upon payment of balance 75% of the issue price - Rs.15.75 crores.
Accordingly, the paid-up equity share capital of the company has
increased from Rs. 103.61 crores as at 31.03.2012 to Rs.. 106.61 crores as
on date.
CHANGE IN NAME OF THE COMPANY
With evolution of business over the decades and to make its presence
felt in the domestic as well as international market, the members had
approved on recommendation of the Board of Directors, at their meeting
held on 22nd June, 2012, change in name of the Company. Consequent to
the receipt of all relevant approvals, change in name of the Company
from Su-Raj Diamonds and Jewellery Limited to Winsome Diamonds and
Jewellery Limited has become effective from 27th June, 2012.
SUBSIDIARIES
As required under the provisions of Section 212 of the Companies Act,
1956, a statement of the holding company's interest in the subsidiary
companies, namely Su-Raj Diamonds NV, Su-Raj Diamonds and Jewellery
DMCC, Su-Raj Diamonds & Jewelry USA, Inc. and Su-Raj Diamond (H.K.)
Limited is attached as ÃAnnexure' and forms part of this report.
In terms of the general exemption given by Ministry of Corporate
Affairs, Government of India, copies of Balance Sheet, Profit and Loss
Account, Report of the Board of Directors and the Report of the
Auditors of the subsidiary companies have not been attached with the
Balance Sheet of the Company. The Company will make available these
documents upon request by any shareholder.
The Annual Accounts of the subsidiaries are also available for
inspection by the shareholders at the Registered Office of the Company
and also at the respective offices of its subsidiaries. Pursuant to
Accounting Standard 21, issued by the Institute of Chartered
Accountants of India, consolidated financial statements presented by
the Company include the financial information of its subsidiaries.
Pursuant to the decision of the Board at its Meeting held on
14.02.2012, the Company has disinvested, after the balance sheet date,
its 100% shareholding in the following three subsidiary companies:
Su-Raj Diamonds NV
Su-Raj Diamonds & Jewelry USA, Inc.
Su-Raj Diamond (H.K.) Limited
DIRECTORS
Mr. G. P. Gupta, Mr. Lakhpatraj Bhansali and Mr. K. N. Bhandari have
resigned from the Board of the Company with effect from 7th May, 2012,
8th May, 2012 and 24th August, 2012 respectively. The Board accords its
appreciation for their contributions to the business of the Company
during their tenure as Directors of the Company.
The Board of Directors have decided not to appoint any person as a
Director of the Company in the casual vacancy caused by the resignation
of Mr. K. N Bhandari whose office is liable to retire by rotation at
the ensuing Annual General Meeting.
In accordance with the Articles of Association of the Company, Mrs.
Shrilekha V. Parikh is liable to retire by rotation, however Mrs.
Shrilekha V. Parikh has not offered herself for re-appointment at the
forthcoming Annual General Meeting. The Board accords its appreciation
for her contributions to the business of the Company during her tenure
as a Director of the Company.
Mr. Dilip Tikle, is liable to retire by rotation and being eligible,
offers himself for re-appointment at the forthcoming Annual General
Meeting.
Mr. Madan B. Khurjekar and Mr. Sharad B. Bhagwat were appointed as
Director in casual vacancy and are seeking re-appointment as Directors
liable to retire by rotation at the forthcoming Annual General Meeting.
Mrs. Urvashi Saxena and Mr. Harady Rathnakar Hegde have been appointed
on 19th November, 2011 and 14th February, 2012 respectively as
Additional Directors of the Company and hold office up to the date of
forthcoming Annual General Meeting.
Your Directors recommend the above appointments/re-appointments.
Mr. Ramesh I. Parikh and Mr. R Ravichandran have been appointed as
Whole-time Directors of the Company with effect from 9th May, 2012 and
have been designated as Director- Finance and Director- Operations
respectively.
COMPANY SECRETARY
During the year, Mr. Shivprakash K. Singh has resigned as Company
Secretary with effect from 1st September, 2011. Your Directors place on
record their sincere appreciation for the valuable contribution made by
him during his tenure as Company Secretary. Mr. Asish Narayan, a Member
of The Institute of Company Secretaries of India has been appointed as
the Company Secretary of the Company with effect from 22nd September,
2011.
APPOINTMENT OF COST ACCOUNTANT
M/s. Gangan & Co., Cost Accountants, Mumbai have been appointed to
submit the Compliance Report along with the requisite annexure duly
certified by them for the financial year commencing from 1st April,
2011 to 31st March, 2012 as required under rule 2 of the Companies
(Cost Accounting Records) Rules, 2011 to the Central Government within
the time prescribed under above referred rules.
FIXED DEPOSITS
The Company has not accepted any deposit, within the meaning of Section
58-A of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975 made thereunder.
COMMUNITY DEVELOPMENT AND SOCIAL WELFARE
The Company continues to contribute for social welfare through support
to "Veerayatan", a non-profit organization that strives to uplift and
empower humanity.
INFORMATION PURSUANT TO SECTION 217(2A) OF THE COMPANIES ACT, 1956
None of the employees of the Company were in receipt of remuneration in
excess of the limits as prescribed under Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 including Companies (Particulars of Employees) Amendment
Rules, 2011 and Companies (Amendment) Act, 1988.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
state:
(i) that in the preparation of the Annual Accounts, the applicable
accounting standards have 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 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 ended 31st
March, 2012 and of the profit of the Company for that financial year;
(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; and
(iv) that the Directors have prepared the Annual Accounts on a going
concern basis.
AUDITORS
M/s. R.C. Reshamwala & Co., Auditors of the Company, hold office until
the conclusion of the ensuing Annual General Meeting. The Company has
received letter from them to the effect that their appointment, if
made, would be within the prescribed limits under Section 224(1-B) of
the Companies Act, 1956. The Audit Committee and Board of Directors
recommend their re-appointment.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
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 given in the Annexure forming part of this
report.
INDUSTRIAL RELATIONS
Industrial relations at all levels during the year were satisfactory.
The Board wishes to place on record its sincere appreciation of the
efforts put in by all the Company's employees in achievement of
results.
LISTING
The Equity Shares of the Company are listed at BSE Limited and National
Stock Exchange of India Limited. The Company has paid the Annual
Listing fee to each of the above Stock Exchanges.
INTERNAL CONTROL SYSTEM
The Company's internal control systems, governed by well framed
policies and guidelines are supplemented by well-established audit
process that assists management in identifying issues and associated
risks and ensures that all assets are safeguarded and protected against
any loss.
Internal audit, an independent appraisal function, examines and
evaluates the adequacy and effectiveness of the internal control
system, appraises periodically about activities and audit findings to
the Audit Committee, statutory auditors and the management.
BOARD COMMITTEES
In addition to Audit Committee and Shareholder/Investor Grievances
Committee, the Board of Directors has constituted/re-constituted the
following Committees :
1) Risk Management Committee comprising of the following members:
a) Mr. Madan B. Khurjekar, Chairman
b) Mr. Sharad B. Bhagwat, Member
c) Mr. Dilip P. Tikle, Member
2) Executive Committee comprising of the following members:
a) Mr. Madan B. Khurjekar, Member
b) Mr. Sharad B. Bhagwat, Member
c) Mr. R. Ravichandran, Member
CORPORATE GOVERNANCE
The Company has been in compliance with the conditions of Corporate
Governance as stipulated in Clause 49 of the Listing Agreement with the
Stock Exchanges.
Report on Corporate Governance, Management Discussion and Analysis and
Auditor's Report on compliance with the Corporate Governance
requirements have been included in this Annual Report in separate
sections.
ACKNOWLEDGEMENTS
The Board of Directors wishes to thank Government of India, bankers,
customers, suppliers, shareholders and other business associates of the
Company for the continued co-operation and unstinted support extended
to the Company.
On behalf of the Board of Directors
Mumbai Madan B. Khurjekar
27th August, 2012 Chairman
Mar 31, 2011
The Directors have pleasure in presenting the Twenty-fifth Annual
Report together with the Audited Accounts for the financial year ended
31st March, 2011.
FINANCIAL RESULTS (Rs. in Crore)
Financial Financial
Year Year
Ended Ended
31st March, 31st March,
2011 2010
Total Income 4268.66 3045.45
Profit before Interest and Depreciation 141.00 110.89
Less: Finance Charges (Net) 15.63 29.33
Depreciation 7.14 7.82
Profit before Tax 118.23 73.75
Provision for Tax 6.56 8.08
Profit after Tax 111.67 65.66
Add: Balance in Profit and Loss
Account Brought Forward 175.33 123.37
Add: Excess/(Short) provision for Expenses/Income/
Tax for earlier year (0.02) (0.46)
Profit Available for Appropriation 286.98 188.57
Proposed Dividend 8.36 6.19
Corporate Tax on Proposed Dividend 1.39 1.05
Transfer to General Reserve 10.00 3.00
Transfer to General Reserve - Foreign Exchange/
Metal Price Fluctuation 10.00 3.00
Balance Carried Forward 257.23 175.33
Total 286.98 188.57
DIVIDEND AND APPROPRIATIONS
The Board of Directors has recommended payment of Dividend @ 12.5% (One
Rupee and Twenty Five Paise per Equity Share) for the year ended 31st
March, 2011, subject to approval of the Shareholders.
An amount of Rs. 10 Crore has been transferred to General Reserve and
Rs. 10 Crore to General Reserve à Foreign Exchange/Metal Price
Fluctuation.
OPERATIONS
Total income from operations during the year increased by 40% to Rs.
4268.66 Crore from Rs. 3045.45 Crore in the previous year. Profit
before Interest and Depreciation increased to Rs. 141.00 Crore as
compared with Rs. 110.89 Crore during the previous year. Net profit for
the year increased by 70% to Rs. 111.67 Crore as compared to Rs. 65.66
Crore for the previous year.
The improvement in Companys performance was driven by sustained demand
from international markets.
PREFERENTIAL ISSUE OF EQUITY SHARES AND WARRANTS
During the year under review the Company made preferential issue of
50,00,000 Equity Shares of Rs.10 each at a price of Rs.70 per share
(including premium) to the Foreign Institutional Investors (FIIs). An
amount of Rs.35 Crore has been raised through the preferential issue
for augmenting the working capital resources and to meet the
requirements of growth of the Company.
Simultaneous with above issue of Equity Shares to FIIs on 14th October,
2010, 34,00,000 Convertible Warrants have been allotted to promoter
group company, namely Kohinoor Diamonds Private Limited. The price at
which each Warrant shall be exercised in to Equity Share of Rs.10 each
is Rs.70 per instrument (including premium). An amount equivalent to
25% of the price has been paid on each Warrant at the time of allotment
of Warrants and the balance 75% will be payable on allotment of Equity
Share. An amount of Rs.5.95 Crore has been raised through preferential
issue of Warrants. The Warrant holder has, against each Warrant held,
the right to apply for and be allotted one Equity Share of the face
value of Rs. 10, against each Warrant held upon payment in cash of
balance 75% per Warrant, on allotment of Equity Shares at any time
within a period of 18 months from the date of allotment (14th October,
2010) of Warrant.
SUBSIDIARIES
As required under the provisions of Section 212 of the Companies Act,
1956, a statement of the holding companys interest in the subsidiary
companies, namely Su-Raj Diamonds NV, Su-Raj Diamonds and Jewellery
DMCC, Su-Raj Diamonds & Jewelry USA, Inc. and Su-Raj Diamond (H.K.)
Limited is attached as Annexure and forms part of this report.
In terms of approval granted by the Central Government under the
provisions of Section 212(8) of the Companies Act, 1956 and general
exemption given by Ministry of Corporate Affairs, Government of India,
copies of Balance Sheet, Profit and Loss Account, Report of the Board
of Directors and the Report of the Auditors of the subsidiary companies
have not been attached with the Balance Sheet of the Company. The
Company will make available these documents upon request by any
investor.
The Annual Accounts of the subsidiaries are also available for
inspection by the investors at the Registered Office of the Company and
also at the respective offices of its subsidiaries. Pursuant to
Accounting Standard 21, issued by the Institute of Chartered
Accountants of India, consolidated financial statements presented by
the Company include the financial information of its subsidiaries.
DIRECTORS
In accordance with the Articles of Association of the Company, Mr. G.P.
Gupta and Mr. Madan B. Khurjekar, retire by rotation and being
eligible, offer themselves for re-appointment at the forthcoming Annual
General Meeting.
Mr. Sharad B. Bhagwat has been appointed on 14th February, 2011 as
director to fill up the casual vacancy caused by resignation of Gen.
Tej Krishen Kaul. Board of Directors wish to place on record its
gratitude for the contribution made by Gen. Tej Krishen Kaul during his
tenure as a director of the Company.
Mr. Dilip P. Tikle has been appointed on 14th February, 2011 as an
Additional Director of the Company and holds office upto the date of
forthcoming Annual General Meeting.
Mr. Lakhpatraj Bhansali has been inducted on Board as an Additional
Director of the Company with effect from 19th April, 2011 and holds
office upto the date of forthcoming Annual General Meeting. Mr.
Lakhpatraj Bhansali has also been appointed as "Whole-time Director" by
the Board of Directors, subject to the approval of members of the
Company.
The Company has business interests overseas and operates globally
through subsidiaries in U.S.A., Antwerp, U.A.E. and Hong Kong. Owing to
evolving business scenario and resultant opportunities vis-ÃÂ -vis
infrastructure and over-all business profile of the Company and its
overseas subsidiaries Mr. Jatin R. Mehta is required to engage himself
comprehensively with overseas operations which would entail extensive
travel away from India for execution of business plans and accordingly
Mr. Jatin R. Mehta relinquished the position of "Managing Director" of
the Company on 19th April, 2011 and continues as Non-Executive Director
and oversee operations as "Chairman". Mr. Mehta continues to devote
his full time and attention to the Groups over-all business and lead
the Groups global operations.
FIXED DEPOSITS
The Company has not accepted any deposit, within the meaning of Section
58-A of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975 made thereunder.
ISO CERTIFICATION
The Companys units at Bangalore (EOU) and Chennai have been accredited
with ISO certification.
The certification indicates Companys commitment in meeting, in a
sustainable manner, quality, as per international standards and
management systems.
COMMUNITY DEVELOPMENT AND SOCIAL WELFARE
The Company continues to contribute for social welfare through support
to "Veerayatan", a non-profit organization that strives to uplift and
empower humanity.
INFORMATION PURSUANT TO SECTION 217(2A) OF THE COMPANIES ACT, 1956
None of the employees of the Company were in receipt of remuneration in
excess of the limits as prescribed under Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 including Companies (Particulars of Employees) Amendment
Rules, 2011 and Companies (Amendment) Act, 1988.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
state:
(i) that in the preparation of the Annual Accounts, the applicable
accounting standards have been followed;
(ii) that the Directors have 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 ended 31st
March, 2011 and of the profit of the Company for that financial year;
(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 Annual Accounts on a going
concern basis.
AUDITORS
M/s. R.C. Reshamwala & Co., Auditors of the Company, hold office until
the conclusion of the ensuing Annual General Meeting. The Company has
received letter from them to the effect that their appointment, if
made, would be within the prescribed limits under Section 224(1-B) of
the Companies Act, 1956. Your Directors recommend their re-appointment.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
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 given in the Annexure forming part of this
report.
GROUP FOR INTER-SE TRANSFER OF SHARES
As required under Clause 3(e) of Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997,
persons constituting Group (within the meaning as defined in the
Monopolies and Restrictive Trade Practices Act, 1969) for the purpose
of availing exemption from applicability of the provisions of
Regulation 10 to 12 of aforesaid SEBI Regulations, are given in the
Annexure - I attached herewith and form part of this report.
INDUSTRIAL RELATIONS
Industrial relations at all levels during the year were satisfactory.
The Board wishes to place on record its sincere appreciation of the
efforts put in by all the Companys employees in achievement of
results.
LISTING
The Equity Shares of the Company are listed at Bombay Stock Exchange
Limited and National Stock Exchange of India Limited. The Company has
paid the Annual Listing fee to each of the above Stock Exchanges.
INTERNAL CONTROL SYSTEM
The Companys internal control system, governed by well framed policies
and guidelines, is supplemented by well-established audit process that
assists management in identifying issues and associated risks and
ensure that all assets are safeguarded and protected against any loss.
Internal audit, an independent appraisal function, examines and
evaluates the adequacy and effectiveness of the internal control
system, appraises periodically about activities and audit findings to
the Audit Committee, statutory auditors and the management.
BOARD COMMITTEES
In addition to Audit Committee and Shareholders/Investors Grievances
Committee, the Board of Directors on 19th April, 2011 has constituted
following Committees:
(i) Executive Committee
Executive Committee comprising of Mr. Jatin R. Mehta, Mr. Madan B.
Khurjekar and Mr. Lakhpatraj Bhansali, Directors of Company to carry on
the executive authority in management of the Company.
(ii) Remuneration Committee
Remuneration Committee comprising of Mr. Jatin R. Mehta, Mr. Madan B.
Khurjekar and Mr. Sharad B. Bhagwat, Directors of Company to deal with
and approve remuneration of executive directors including pension
rights and any compensation payment.
(iii) Nomination Committee
Nomination Committee comprising of Mr. Jatin R. Mehta, Mr. Madan B.
Khurjekar and Mr. Sharad B. Bhagwat, Directors of Company to deal with
criteria for appointment of new directors, searches for new directors
who meet the criteria and develop a policy on the size and composition
of the Board.
CORPORATE GOVERNANCE
The Company has been in compliance with the conditions of Corporate
Governance as stipulated in Clause 49 of the Listing Agreement with the
Stock Exchanges.
Report on Corporate Governance, Management Discussion and Analysis and
Auditors Report on compliance with the Corporate Governance
requirements have been included in this Annual Report in separate
sections.
ACKNOWLEDGEMENTS
The Board of Directors wishes to thank Government of India, bankers,
customers, suppliers, shareholders and other business associates of the
Company for the continued co-operation and unstinted support extended
to the Company.
On behalf of the Board of Directors
Jatin R. Mehta
Chairman
Mumbai
10th May, 2011
Mar 31, 2010
The Directors have pleasure in presenting the Twenty-fourth Annual
Report together with the Audited Accounts for the financial year ended
31st March, 2010.
FINANCIAL RESULTS (Rs. in Crore)
Financial Financial
Year Year
Ended Ended
31st March, 31st March,
2010 2009
Total Income 3045.45 2422.34
Profit before Interest and
Depreciation 110.89 76.50
Less: Finance Charges (Net) 29.32 32.60
Depreciation 7.82 8.13
Profit before Tax 73.75 35.77
Provision for Tax 8.08 2.32
Profit after Tax 65.67 33.45
Add: Balance in Profit and Loss
Account Brought Forward 123.37 96.17
Add: Excess/(Short) provision for
Expenses/Income Tax for earlier year
(0.47) (0.25)
Profit Available for Appropriation 188.57 129.37
Proposed Dividend 6.19 --
Corporate Tax on Proposed Dividend 1.05 --
Transfer to General Reserve 3.00 3.00
Transfer to General Reserve - Foreign
Exchange/Metal Price Fluctuation 3.00 3.00
Balance Carried Forward 175.33 123.37
Total 188.57 129.37
DIVIDEND AND APPROPRIATIONS
The Board of Directors has recommended a Dividend of 10% (Rupee 1 per
Equity Share) for the year ended 31st March, 2010, subject to approval
of the Shareholders.
An amount of Rs.3.00 crore has been transferred to General Reserve and
Rs.3.00 crore to General Reserve à Foreign Exchange/Metal Price
Fluctuation.
OPERATIONS
Total income from operations during the year increased by 26% to
Rs.3045.45 crore from Rs.2422.34 crore during the previous year. Profit
before Interest and Depreciation increased to Rs.110.89 crore as
compared with Rs.76.50 crore during the previous year. Net profit for
the year increased by 96% to Rs.65.66 crore as compared to Rs.33.45
crore for the previous year.
The CompanyÃs improved performance was primarily due to revival in
demand from markets in U.S.A. and Europe.
During the year under review Company has entered into Bullion Business
to pursue growth opportunities which are synergistic to its operations
and strategic to its intents.
PREFERENTIAL ISSUE OF EQUITY SHARES
During the year under review the Company made preferential issue of
18,000,000 equity shares of Rs.10 each at a price of Rs.43.12 per share
(including premium) to the Foreign Institutional Investors (FIIs). An
amount of Rs.77.62 crore has been raised through the preferential
issue.
SUBSIDIARIES
As required under the provisions of Section 212 of the Companies Act,
1956, a statement of the holding companyÃs interest in the subsidiary
companies, namely Su-Raj Diamonds NV, Su-Raj Diamonds and Jewellery
DMCC, Su-Raj Diamonds & Jewelry USA, Inc. and Su-Raj Diamond (H.K.)
Limited is attached as ÃAnnexureà and forms part of this report.
In terms of approval granted by the Central Government under the
provisions of Section 212(8) of the Companies Act, 1956, copies of
Balance Sheet, Profit and Loss Account, Report of the Board of
Directors and the Report of the Auditors of the subsidiary companies
have not been attached with the Balance Sheet of the Company. The
Company will make available these documents upon request by any
investor.
The Annual Accounts of the subsidiaries are also available for
inspection by the investors at the Registered Office of the Company and
also at the respective offices of its subsidiaries. Pursuant to
Accounting Standard 21, issued by the Institute of Chartered
Accountants of India, consolidated financial statements presented by
the Company include the financial information of its subsidiaries.
DIRECTORS
In accordance with the Articles of Association of the Company, Mrs.
Shrilekha V. Parikh and Mr. K.N. Bhandari, Directors, retire by
rotation and being eligible, offer themselves for re-appointment at the
forthcoming Annual General Meeting.
Mr. Madan B. Khurjekar has been appointed as director to fill up the
casual vacancy caused by demise of Mr. G. Bharakatia who passed away on
15th December, 2009. Board of Directors wish to place on record its
gratitude for the contribution made by Mr. G. Bharakatia during his
tenure as a director of the Company.
FIXED DEPOSITS
The Company has not accepted any deposit, within the meaning of Section
58-A of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975 made thereunder.
ISO CERTIFICATION
The CompanyÃs units at Bangalore (EOU) and Chennai have been accredited
with ISO certification.
The certification indicates CompanyÃs commitment in meeting, in a
sustainable manner, quality, as per international standards and
management systems.
COMMUNITY DEVELOPMENT AND SOCIAL WELFARE
The Company continues to contribute for social welfare through support
to ÃVeerayatanÃ, a non-profit organization that strives to uplift and
empower humanity.
PARTICULARS OF EMPLOYEES
Pursuant to the provisions of Section 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975,
the particulars are given in the statement which forms part of this
Report. However, as per the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Directorsà Report is being sent to the
shareholders excluding the aforesaid information. Any shareholder
interested in obtaining a copy of the statement may write to the
CompanyÃs Registered Office at Surat or to its Administrative Office at
Mumbai.
DIRECTORSÃ RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
state:
(i) that in the preparation of the Annual Accounts, the applicable
accounting standards have been followed;
(ii) that the Directors have 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 ended 31st
March, 2010 and of the profit of the Company for that financial year;
(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 Annual Accounts on a going
concern basis.
AUDITORS
M/s. R.C. Reshamwala & Co., Auditors of the Company, hold office until
the conclusion of the ensuing Annual General Meeting. The Company has
received letter from them to the effect that their appointment, if
made, would be within the prescribed limits under Section 224(1-B) of
the Companies Act, 1956. Your Directors recommend their re-appointment.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
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 given in the Annexure forming part of this
report.
GROUP FOR INTER-SE TRANSFER OF SHARES
As required under Clause 3(e) of Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997,
persons constituting Group (within the meaning as defined in the
Monopolies and Restrictive Trade Practices Act, 1969) for the purpose
of availing exemption from applicability of the provisions of
Regulation 10 to 12 of aforesaid SEBI Regulations, are given in the
Annexure - I attached herewith and form part of this report.
INDUSTRIAL RELATIONS
Industrial relations at all levels during the year were satisfactory.
The Board wishes to place on record its sincere appreciation of the
efforts put in by all the CompanyÃs employees for achievement of
results under challenging conditions.
LISTING
The Equity Shares of the Company are listed at Bombay Stock Exchange
Limited, National Stock Exchange of India Limited and Ahmedabad Stock
Exchange Limited. The Company has paid the Annual Listing fee to each
of the above Stock Exchanges.
INTERNAL CONTROL SYSTEM
The CompanyÃs internal control systems governed by well framed policies
and guidelines is supplemented by well-established audit processes that
assists management in identifying issues and associated risks and
ensure that all assets are safeguarded and protected against any loss.
Internal audit, an independent appraisal function, examines and
evaluates the adequacy and effectiveness of the internal control
systems, appraises periodically about activities and audit findings to
the Audit Committee, statutory auditors and the management.
CORPORATE GOVERNANCE
The Company has been in compliance with the conditions of Corporate
Governance as stipulated in Clause 49 of the Listing Agreement with the
Stock Exchanges.
Report on Corporate Governance, Management Discussion and Analysis and
AuditorÃs Report on compliance with the Corporate Governance
requirements have been included in this Annual Report in separate
sections.
ACKNOWLEDGEMENTS
The Board of Directors wishes to thank Government of India, bankers,
customers, suppliers, shareholders and other business associates of the
Company for the continued co-operation and unstinted support extended
to the Company.
On behalf of the Board of Directors
Mumbai Jatin R. Mehta
11th May, 2010 Chairman-cum-Managing Director