The formalization of economy continued to receive boost with GST introduction. The
Company is now a major beneficiary with significant market share gains in jewellery.
Wedding jewellery and high value studded being the focus, success of gold exchange
programs and focus on markets will help significant gain in market share. The Company has
continued its cost focus with Quantum Leap.
INDUSTRY STRUCTURE AND DEVELOPMENTS
The Gems & Jewellery ("G & J") sector is one of the very important
sectors of the Indian economy with a significant share of the Gross Domestic Product
("GDP"). One of the fastest growing sectors, it is extremely export oriented and
labour intensive. The Indian G & J sector is a big forex earner for India and
currently contributes 10-12% of total exports.
India has established itself as the worlds largest manufacturing center of cut &
polished diamonds, contributing 60% of the worlds supply in terms of value, 85% in terms
of volume and 92% in terms of pieces. India is also one of the largest gold jewellery
exporters in the world.
The domestic jewellery segment has two major characteristics;
(i) it is highly fragmented and continues to be dominated by a very large number of
small players, the majority of whom are unorganized and outside the regulatory norms;
(ii) a very large percentage of jewellery (almost 70% according to some reports) which
gets sold in the country is on account of weddings and wedding related functions.
In addition to this traditional and steady state of jewellery demand, the jewellery
demand is also increasing steadily due to changes in its role from just being an item of
adornment and as a store of value to a life style and fashion accessory. Rising quality
awareness of customers has provided a fillip to the organized retail segment, which is
banking on its ‘reliability and ‘quality to compete against the highly
fragmented unorganized jewellers. Organized players have steadily chipped away market
share from smaller/ unorganized retailers by addressing the need for enhanced experience
of a demanding customer base, which is marked by shifting demographic and socio-economic
profiles. Jewellery consumption in India has been traditionally driven by the strong
cultural affinity for gold, with it being the preferred form of jewellery worn. Gold
jewellery is an integral part of weddings in India, and is considered as a necessity, with
wedding related demand accounting for substantial portion of overall jewellery demand,
especially in the South. Jewellery demand has also been supported by the increasing
appetite for gold jewellery from rural and non-urban markets. Gold has also served as a
means of savings especially for the rural sector, owing to the lack of any major
alternative investment options supported by its anti-inflationary characteristics.
However, in the past few years the demand for diamond jewellery has also been showing an
increasing trend, especially in the Metros and Tier I cities.
PRODUCT WISE PERFORMANCE
The Company is engaged in the business of manufacturing, sale and trading of jewellery.
However, jewellery is further classified into gold jewellery, diamond jewellery, polki and
others. The Company operates in only domestic sales. For the year ended March 31, 2021,
the share of revenues from sales is Rs.715.93 lakh.
The year 2020-21
The Covid-19 during the financial year has caused adverse effect on the working of the
company. However, the company have made every efforts in reducing the negative impacts of
Covid-19. This beginning was under-pinned by the following factors:
• An attitude of obsessive result orientation and agility across the organization
• A focused brand organization, resulting from the smooth closure of the Gold Plus
brand
• Continuing consumer interest in the category, swaying more and more to the beats
of adornment
• Government regulations sending more and more consumers towards respectable,
organized players and simultaneously constraining the mid-sized jewelers in their ease of
doing business
FY 2020-21
Five platforms for growth had been identified by the business for the 3X ambition
outlined for financial year 2020-21, these are:
• Wedding Segment
• High Value Diamond Jewellery Segment
• World finest Diamond Jewellery
• Regular wearing Jewellery
• Expanding Jewelry Business
Jewellery Exchange
Indian consumers have the largest stock-pile of jewellery and gold in the world,
approximately 25,000+ tonnes
• The exchange value offered by Midas Company is the best and most transparent in
the industry
Operational Excellence
1. Design and Launch of new collections
The Company continues to be the benchmark in the industry. Matured processes,
substantial emphasis on innovation and collaborating teams are taking this continuously
forward
2. Merchandising Effectiveness and Supply Chain Industry-leading thinking,
Processes and IT solutions continue to keep the Division ahead, delivering very good
Gross Margin and Stock Turns
3. Manufacturing and Vendor Partnering Significant investments are being planned to
upgrade various parts of the back-bone
i. Synthetic diamond detection
ii. Warehouse automation
iii. Gold jewellery manufacturing
iv. Vendor partner infrastructure upgradation
4. Bullion Management
After a successful piloting of importing and refining the Dore ore, the Division is
stepping up this part of gold sourcing during FY2020-21 and is hoping to deliver
additional margin to the business over time
OPPORTUNITIES AND THREATS
Some of the opportunities for the retail jewellery industry are as follows:
(a) Growing consciousness amongst customers for branded jewellery.
(b) Limited penetration of organized jewellery in the country.
(c) Increase in purchasing power of the customers in the Tier I & II locations.
(d) Increasing demand for diamond jewellery, which is a high margin product as compared
to the gold jewellery.
(e) Favorable demographics leading to increasing demand for jewellery in the country.
Some of the key challenges facing the retail jewellery industry are as follows:
(a) Adapting to fast changing consumer preferences and buying patterns.
(b) Volatility in the market prices of gold and diamonds.
(c) Limited availability of high end retail space.
OUTLOOK
At the domestic level, the organised retailers are expected to fare well, mainly due to
the ongoing structural changes together with strong macro-demographic trends. Regulatory
changes introduced by the Government of India over last few years are likely to increase
the preference towards branded jewellery and shift the scales in favour of organised
sector at the cost of the un-organised sector. These changes include regulations such as
introduction and reversal of 80:20 ruling on gold imports, introduction and reversal of
abolition of gold on lease scheme, introduction of gold monetisation, mandatory PAN card
requirement on transactions of above Rs.2 lakh, obligatory hallmarking, levy of GST.
All these measures would shift the preference towards organized jewellers at the cost
of unorganized jewellers. The onset of GST is only expected to hasten the shift from the
unorganised players. According to the World Gold Council ("WGC"), Indias gold
jewellery demand fell. We believe that the underlying theme for the jewellery demand
remains robust, given Indias demographics and the consumers affinity towards gold for
both wedding related purchases and as store of value. Similarly the diamond and light
weight jewellery is also gaining in popularity as more women join the work force.
RISKS AND CONCERNS
As the Company is dealing in very high value goods / items, it is always exposed to
operational risks. The Company therefore always ensures that its entire inventory, from
raw material to finished goods is insured at all times, whether under transit, at
showrooms or at the manufacturing facilities. Entire inventory is computerized and is
available for tracking at all times. All of its showrooms have strong rooms for overnight
safe custody of the inventory. In addition all the showrooms have CCTV vigilance and armed
guards. The Company is exposed to price risk movements both in gold as well as its forex
exposure. However, it has put rigorous systems and procedures in place to take care of
these concerns. The Company has in place a comprehensive risk management framework that
helps anticipate, identify and evaluate business risks and challenges across the Company
and finding ways to mitigate the same. The Company has also put in place a strong team to
take care of all the required compliances and hence mitigate any compliance risk.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an effective internal control system, which ensures that all the assets
of the Company are safeguarded and protected against any loss from unauthorized use or
disposition. The Internal Auditors of the Company regularly carry out review of the
internal control systems and procedures. The internal audit reports are periodically
reviewed by Audit Committee. The Company has also put in place adequate internal financial
controls with reference to the financial statements commensurate with the size and nature
of operations of the Company. Based on the assessment carried out by the management and
the evaluation of the results of the assessment the Board of Directors are of the opinion
that the Company has adequate Internal Financial Controls systems that are operating
effectively as of March 31, 2021. There were no instances of fraud which necessitates
reporting in the financial statements. There have been no communications from regulatory
agencies concerning noncompliance with or deficiencies in financial reporting practices.
FINANCIAL PERFORMANCE
The financial statements of the Company have been prepared in accordance with Ind AS
notified by the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian
Accounting Standards) Amendment Rules, 2016. Accordingly, the financial statements for the
year ended March 31, 2021 as prepared on such basis.
HUMAN RESOURCES & INDUSTRIAL RELATIONS
The Company believes in establishing and building a strong performance and competency
driven culture amongst its employees with greater sense of accountability and
responsibility. The Company has taken various steps for strengthening organizational
competency through the involvement and development of employees as well as installing
effective systems for improving their productivity and accountability at functional
levels. The Company acknowledges that its principal asset is its employees. Ongoing
in-house and external training is provided to the employees at all levels to update their
knowledge and upgrade their skills and abilities. As on March 31, 2021, the Company had
total 32 full time employees. The industrial relations have remained harmonious throughout
the year.
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