|
GOENKA DIAMOND AND JEWELS LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR'S REPORT
Dear Shareholders,
Your Directors take pleasure in presenting before the members the Twenty
Second Annual Report together with the Audited Statement of Accounts of the
Company for the financial year ended March 31, 2012.
Financial Highlights:
(Rs. In lacs)
31.03.2012 31.03.2011
Sales and Other Income 54120.46 56499.76
Less: Expenses 51638.23 52027.91
Profit before tax and depreciation 2482.23 4471.85
Less: Depreciation 129.30 130.10
Net Profit/(Loss) before Tax 2352.93 4341.75
Less: Income tax and provision 305.45 82.26
Less: Deferred Tax (10.70) (35.16)
Less: Excess Provision of Income Tax W/back 4.46 (1.22)
Less: Reversal of Fringe Benefit Tax - -
Less: MAT Credit Entitlement (25.00) -
Profit/(Loss) after tax 2078.72 4295.87
Balance brought forward from previous year 12376.08 8448.64
Profit available for appropriation 14454.8 12744.50
Appropriation
Issue of Bonus shares - -
General Reserve - -
Proposed Dividend on Equity shares 317.00 317.00
Tax on Proposed Dividend 51.43 51.43
Profit carried over to Balance Sheet 14086.37 12376.08
Earning per share 6.56 13.63
Turnover & Profits:
The Directors wish to inform you that during the current financial year
ended March 31, 2012, the sales and other income of the Company was
Rs.54120.46 lacs and during the previous year it was Rs. 56,499.76 lacs.
The Net Profit before tax stood at Rs. 2,352.93 lacs as against Rs.4,341.75
lacs in the previous year. The Net Profit after tax stood at Rs. 2,078.72
lacs as against Rs. 4,295.87 lacs in the previous year. Though there is a
small decrease in sales and other income as compared to previous year
mainly due to global slowdown and increasing dollar prices, the Company's
performance including sales and margins is still better than many other
major players in diamond industry.
Dividend:
The Board, for the year ended March 31, 2012 has recommended a dividend of
10%. The payment of dividend is subject to the approval of shareholders at
the Annual General Meeting and will be paid on 3,17,00,000 Equity Shares @
Rs. 1 per share.
IPO fund utilization:
The detail of IPO proceeds which has been utilized by the Company is as
given under. The Company has utilized a major portion of IPO proceeds for
expansion as and when the correct opportunity and favorable market
conditions were available. However, insignificant portion of the proceeds
allocated for the expansion is left unutilized and the management of your
Company has infused those funds in to various financial instruments for the
investment purpose. The management has taken this step considering the fact
that as and when the Company will require funds for expansion the requisite
funds will be transferred from investment to expansion and till the time
the shareholders money will fetch good returns which will be further
helpful in future expansion and new projects of the Company.
Amount received from IPO 12650.85
Sr. Particulars of proposed reallocated expenditure amount Rs. in lacs
No.
1. For expansion and establishment of new retails stores
either by way of lease or outright purchase and
increase in production capacity of Diamond and
Jewellery manufacturing facilities & other general
capex required for expansion. 1115.23
2. Funding to subsidiaries and such entities by way of
equity, capital, loans and advances or in any other
manner 310.14
3. Working Capital Requirement for business 8459.96
4. General Corporate Purposes 218.37
5. Issue Expenses 828.68
Total 10932.38
Unutilised Amount Represented by
Investment in Mutual Funds 1218.47
Fixed Deposits 500.00
Subsidiary Company and Consolidated Financials:
The Board is exempted from attaching the balance sheet of subsidiary
company i.e. M. B. Diamonds, a Limited Liability Company, Russia, vide
General Circular No.51/12/2007-CL-III dated February 8, 2011. Any
Shareholder interested in obtaining copy of the financial statements of
subsidiary company may write to the Company Secretary/Compliance Officer at
the Corporate Office or Registered Office address of the Company.
Fixed Deposits:
During the year under review, your Company has neither invited nor accepted
any fixed deposits from the public or its employees within the meaning of
Section 58A of the Companies Act, 1956 and Rules made thereunder.
Related Party Transactions:
Related party transactions have been disclosed in the notes on financial
statements attached with this Annual Report.
Directors:
During the year, there were changes in the Board of directors of your
company.
The Board deeply regrets the passing away of Dr. A C Shah, Independent
Director on January 16,2012. He had been associated with the Company since
July 31, 2009. As a member of the Board and the Chairman of the Audit
Committee he lent his vast knowledge and experience to the Company. His
presence and guidance will be greatly missed. Mr. CD. Arha took his place
in casual vacancy.
Mr. S.N. Sharma has voluntarily resigned from the Board of the Company on
May 30, 2012. The Board places on record its gratitude for the services
rendered by Mr. S.N. Sharma during his tenure as Independent Director of
the Company.
Mr. D. R. Mehta was appointed as an Additional Director with effect from
May 30, 2012 and holds office up to ensuing Annual General Meeting of the
Company. The Company has received a Notice in writing from a member
proposing the candidature of Mr. D. R. Mehta for the office of the Director
of the Company under the provision of Section 257 of the Companies Act,
1956.
Mr. Vijay Kalantri and Mr. CD. Arha Independent Directors of the Company
retire by rotation and being eligible, offer themselves for re-appointment.
Brief resume of the directors to be re-appointed is given in the annexure
to the notice convening the 22nd Annual General Meeting of the Company.
Directors' Responsibilities Statement:
Pursuant to the requirement under Section 217(2AA) of the Companies Act,
1956, with respect to Directors' Responsibilities Statement, your Directors
hereby confirmed that:
a) In the preparation of the annual accounts for the financial year ended
March 31, 2012, the applicable Accounting Standards had been followed along
with proper explanations relating to material departures;
b) The Directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
company at the end of the financial year and of the profit or loss of the
company for that period;
c) The Directors had 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;
d) The Directors had prepared the accounts for the financial year ended
March 31, 2012 on a 'going concern' basis.
Auditors
M/s. Haribhakti & Co., and M/s. B. Khosla & Co., Chartered Accountants,
Joint Auditors of the Company hold office till the conclusion of this
Annual General Meeting and are eligible for re-appointment. The company has
received a letter from M/s. Haribhakti & Co., and M/s. B. Khosla & Co.,
Chartered Accountants to the effect that their reappointment as Joint
Auditors, if made, would be within the limits under Section 224(1-B) of the
Companies Act, 1956.
Auditors' Report:
In respect of the observations made by Auditors in their report, your
Directors wish to state that the respective Notes on Financial Statements
are self-explanatory and do not call for further comments.
Particulars of Employees:
There are no employees in the Company whose particulars are required to be
given under Section 217(2A) of the Companies Act, 1956 read with the
Companies (Particulars of Employees) Rules, 1975, as amended from time to
time.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings
and Outgo:
A. Conservation of Energy:
The Disclosure of particulars with respect of conservation of energy
pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors)Rules, 1988 are not applicable to the Company. However, the
Company makes its best effort for conservation of energy.
B. Technology Absorption, Adaptations & Innovation:
The Company has not carried out any specific research and development
activities.
The Company uses indigenous technology for its operations. Accordingly, the
information related to technology absorption, adaptation and innovation is
reported to be NIL.
C. Foreign Exchange Earnings and Outgo:
The information regarding Foreign exchange earnings and outgo is contained
in the note no. 27 and 28 of Notes on Financial Statements.
Acknowledgment:
Your Directors place on record their gratitude to the Central Government,
State Governments Financial Institutions and Company's Bankers for the
assistance, co-operation and encouragement they extended to the Company.
The Board of Directors is also grateful to the valued customers, esteemed
shareholders and public at large for their patronage and confidence reposed
in the company.
On behalf of the Board of Directors
For Goenka Diamond and Jewels Limited
NAVNEET GOENKA NITIN GOENKA
Vice Chairman & Managing Director
Managing Director
Place: Mumbai
Date : May 29, 2012.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management of the Company is pleased to present this report covering
the activities of the Company during the year 2011-2012.
Our Company is promoted by Mr. Nand Lal Goenka who has over 40 years of
experience in the gems and jewellery business and his two sons, Mr. Navneet
Goenka and Mr. Nitin Goenka. Mr. Navneet Goenka and Mr. Nitin Goenka are
supremely qualified and have acquired professional qualifications in
grading and jewellery designing from Gemological Institute of America, New
York.
OVERVIEW:
The Company is in the business of cutting and polishing of diamonds and
manufacturing and retailing of diamond jewellery. The Company has expanded
its business from export of coloured gem stones in the inception stage to
the stage of setting up two Export Oriented Unit in Surat for manufacturing
of Diamonds to cater the overseas market and a manufacturing unit of
diamond in Mumbai to serve and expand the local market. The Company is also
promoting retail chain store for Jewellery so as to explore the retail
arena.
We run an integrated business model that includes sourcing of rough
diamonds from various sources including our Russian Subsidiary, polishing
roughs for export market and internal consumption, jewellery manufacturing
and sale of jewellery through our retail chain branded jewellery retail
resulting in strong presence across the value chain. Going forward, we plan
to strengthen our model by expanding our Russian sourcing operations and
increasing our retail network..
FACTORS AFFECTING OUR RESULTS OF OPERATIONS:
* Global economic scenario:-
Our Diamond Business operations are affected by changes in the global
economy. Our Diamond Business revenues are primarily derived from export to
major diamond markets in the Middle East, Far East and South East Asian
Countries. These countries have shown good growth over last few years.
* Developing Brand Equity:-
We retail our diamond jewellery under two brands viz. CERES and G WILD
catering to specific segments. We retail high end diamond jewellery under
the CERES brand targeting the top-end segment of the society while G WILD
focuses on internationally designed diamond jewellery targeting the youth.
Our product profile includes rings, earrings, pendants, bracelets,
necklaces, etc. which are manufactured using polished diamonds, precious
and other semi precious stones which are set in gold. Our in-house team
along with some select free-lance designers undertake the designing of
jewellery for our brands. We currently have presence in retail through 3
company operated CERES stores, 12 stores under franchisee for G WILD. We
opened the first CERES store in Mumbai in April 2009.
* Foreign currency fluctuations:-
Export constitutes 66% of the Company's turnover and therefore a major
portion of our Company's expenditure was incurred and earnings were
received in foreign currency. The exchange rate between Rupee and US Dollar
has been highly volatile substantially in recent times and therefore have a
huge impact on the Company's results and because of our continued focus on
these growth markets, we have largely remained insulated from the economic
turmoils going on in U.S.A. and Europe.
We may gain or incur a loss due to foreign exchange differences arising on
the settlement of monetary items or on restatement of monetary items at
rates different from those at which they were initially recorded during the
year, or reported in previous financial statements.
* Competition within diamond industry:-
We expect competition in Gems and Jewelry sector from existing and
potential competitors to intensify. In the last few years, we have
diversified our export client base and have entered new markets for our
export business. Our main countries for exports include US, South East
Asia, and Hong Kong. Over the years, we have reduced our exposure to US. We
have focused on untapped markets for export of polished diamonds. This
allows us to earn higher margins due to our early mover advantage. Our
second largest market, Hong Kong primarily acts as hub for re-export to
other countries. We have significantly increased our focus on the South
East Asian region which emerged as our biggest market.
Further, we have increased sales to the local Indian market. Thus we are
less dependent on the vagaries of a single economy.
* Expansion:-
During the Financial year 11-12, the company has set up a new partnership
firm at Surat (SEZ Unit) with 99% share in profits. The company has also
started 9 new G WILD stores under franchisees network and 2 CERES Showroom
for catering the local Indian market.
The company plans to expand its retail presence for both our brands - G
WILD and CERES by opening new stores across India. Further, All the CERES
stores planned will be Company operated. The company has also participated
in various exhibitions across the globe during the FY 2011 -12. The
increased presence would allow us to tap newer markets, increase jewellery
sales and boost our profitability. The launch of exclusive retail showrooms
across new locations would help in increasing our brand visibility and
acceptance. We are also increasing our jewellery manufacturing capacity in
anticipation of increased demand.
Cautionary Statement:
Statements in this report on Management Discussion and Analysis describing
the Company's objectives, projections, estimates, expectations or
predictions may be 'forward looking statements' within the meaning of
applicable laws or regulations. These statements are based on certain
assumptions and reasonable expectation of future events. Actual results
could however differ materially from those expressed or implied. Important
factors that could make a difference to the Company's operations include
changes in the government regulations, tax laws, statues and other
incidental factors.
Acknowledgment:
Your Directors take this opportunity to express their deep sense of
gratitude to the vendors, business associates, investors and banks for
their continued support and co-operation during the year under review. Your
Directors also wish to place on record their appreciation for the sincere
and dedicated services rendered by the employees of the Company at all
levels.
On behalf of the Board of Directors
For Goenka Diamond and Jewels Limited
NAVNEET GOENKA NITIN GOENKA
Vice Chairman & Managing Director
Managing Director
Place: Mumbai
Date : May 29, 2012.
|