Management Discussion and Analysis
GENERAL PERFORMANCE REVIEW
Financial Year 2012-13 was a challenging year for the global economy particularly for
India.
India’s economy witnessed a broad – based slowdown in Financial Year 2013
with GDP growing at 5% which is slowest in past ten years. However, as per the economic
survey conducted by the Ministry of Finance, the economy is projected to grow at 6.1
– 6.7% for the current Financial Year 2014.
The RBI is expected to lower policy interest rates which will indeed help to encourage
investment activity and push forward economic growth. Further, growth in bank credit
remained subdued at 14% in Financial Year 2013 compared to 17% in previous Financial Year.
Industrial growth bounced back to 2.5% in March 2013.
INDUSTRY STRUCTURE AND DEVELOPMENT
The Indian gem and Jewellery industry has recorded a marginal growth of 3.18% in FY
2012-2013.
The total gem & Jewellery industry exports were recorded at Rs. 212,638.89 Crores
in FY 2012-2013 as compared to Rs. 206,080.09 Crores in April 2011 – March 2012.
The Market was mainly driven by Coloured Gemstones and Gold Jewellery.
EXPORTS & IMPORTS
Exports of Cut and Polished diamonds continued to decrease to Rs. 94,675.12 Crores in
2012-2013 from Rs. 110,926.77 Crores in 2011-12. The import of Cut and Polished diamonds
also decreased to Rs. 30,309.50 Crores in 2012-13 from Rs. 68,356.40 Crores in 2011-12.
COMPANY’S FINANCIAL PERFORMANCE
The company has recorded a gross sale of Rs. 9,644.21 million during the current
accounting year ended 31st March, 2013 as against Rs. 11,568.99 million for the
previous year.
The Profit Before Tax (PBT) for the current accounting period was Rs. 761.50 million
(Profit of Rs. 4,36.53 million for year ended 31st March, 2012) and the Profit
After Tax (PAT) of Rs. 620.87 million (Profit of Rs. 375.08 million for the year ended 31st
March, 2012).
Rs. in million
| Particulars |
2012-13 |
2011-2012 |
2010-2011 |
2009-2010 |
| Sales |
9,644.21 |
11,568.99 |
10,208.56 |
12,630.68 |
| Profit Before Tax |
761.50 |
436.53 |
766.06 |
894.51 |
| Profit After Tax |
620.87 |
375.08 |
618.58 |
703.99 |
| EPS (Rs.) |
29.90 |
18.06 |
29.79 |
33.91 |
LOOKING AHEAD
The global economic environment in 2012 has been uncertain, but with the US economy and
consumer confidence showing signs of steady recovery the company is hopeful of a stronger
performance in 2013-14. The situation in the emerging markets although a little slower
than anticipated is still showing healthy signs of growth.
The Company is working closely with leading Jewellery retailers and distributors around
the World and is constantly in touch with the end-consumer markets to have an in-depth
understanding of requirements and retail trends. The insights gained are constantly used
to develop and fine-tune products and services for its customers.
The Company’s focus on having a deeper understanding of its Customer and its
Customers has helped in creating customer loyalty with high repeat sales.
The Company has seen good demand and margins in its jewellery business and is
continuing to focus on the same with the idea to capture maximum value through the diamond
pipeline.
USA remains to be the most important and largest market for the Company with quickly
increasing sales from India, Far East and other markets including Australia, South Africa,
and Russia.
DIAMOND & JEWELLERY BUSINESS
The diamond business is having margin pressures due to the disconnect between the rough
diamond and polished diamond prices as an effect of the stiff pricing of rough diamonds by
producers. The relatively slower demand growth in India and China, the Euro-zone financial
crisis and the devaluation of the Indian rupee are adding further pressure.
The Company by virtue of being a Sightholder of Diamonds Trading Companies receives a
continued supply of rough diamonds for its business. The Company also directly purchases
rough diamonds from several other junior miners, producing countries and from the open
markets based on its requirements from its customers. The assured supply of raw material
allows the Group to strategies effectively and aggressively target and market its products
and services to leading customers worldwide. The Company has been investing in increasing
its manufacturing efficiency and flexibility by incorporating techniques to decrease the
manufacturing lead time and manufacture diamonds based on Customer requirements and
insights gathered from different points in the pipeline.
The Company works with several large multiple retail chains in the US, Canada, UK and
other markets around the World. The Company has seen good growth in its Jewellery business
with robust demand from existing customers and expansion of its customer base to several
new markets like Australia, South Africa etc.
The Company’s increased and enhanced its product offering and bespoke services
making it a Supplier of Choice to some of the leading Jewellery retail chains. The new
higher end Bridal jewellery and Gemstone jewellery categories have been growing rapidly.
The Company continues to invest heavily in building its E-commerce business in
association with retail partners in the US and Canada. The Company is also investing to
create a local Ecommerce business using its ‘Ishis’ brand.
OPPORTUNITIES, THREATS, RISKS AND CONCERNS
Opportunities and Challenges
• With an improvement in the customer demand in the US, the Company’s deep
relationships with leading multiple retailers would help boost sales
• Good growth in emerging markets like India, China, Hong Kong and Russia on the
back of continuing economic growth will lead to increased diamond and jewellery
consumption.
• High Growth in E-Commerce sales of jewellery overseas and in India Challenges
• Volatility in the USD – INR exchange rate is a concern
• Sluggish Euro-zone Economy and its impact on the Global scenario.
• Volatility in raw material costs (Gold, Silver, Diamonds)
• Inflationary pressures and slow policy making in India leading to increased
Labour costs and slow growth in local demand and consumption.
Risks and Concerns
The primary business activity of the Company being sale of Diamonds and Jewellery to
the domestic and international market, the Company is exposed to various economic and
political factors including financial downturns, policy making by Governments, consumer
confidence and competition.
The management is effectively monitoring these risks and has put in place adequate
mechanisms to mitigate the risks. There are clearly defined policies with regards precious
metal purchases, foreign currency exposures and sources of rough and polished diamonds.
The Company constantly strives to overcome the risks by adopting a pragmatic and prudent
decision making process.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has well documented operating procedures and authorizations to control and
monitor each and every financial commitments and transactions. The parameters are set for
each department in the Company. The financial and related aspects are being monitored
continuously and are supervised by in-house internal audit team.
The Company has an internal control system commensurate with its size and nature of
business, which provides for:
• Transactions are being accurately recorded, cross verified and promptly
reported.
• Adherence to applicable accounting standards and policies.
• Information technology system which include controls for facilitating the above.
• Efficient use and safeguarding of resources.
• Accurate recording and custody of assets.
• Compliance with applicable statutes, policies, procedures, listing requirements,
management guidelines and circulars in all the Countries where the Company operates.
Internal check and controls are exercised by strictly adhering to the various
procedures laid at the time of delegation of authorities. The delegation clearly indicates
the powers along with the monetary limits, wherever necessary, that can be exercised by
various levels of the Managers in the Company.
HUMAN RESOURCES
The Company continues to focus on its most important asset i.e. Human Resources. During
the year, the Company invested in training, development and career enhancement. The work
environment gives employees the freedom to realize their potential. The appropriate
learning opportunities are provided to employees. We also have in place a robust
Performance Management System which also helps in identifying in-house talent and a number
of vacancies were filled up by promoting deserving candidates from within the
organization. Employees remained motivated and relations remained cordial and harmonious.
Steps have been taken to create a sense of belongingness in the minds of the employees,
which in turn give maximum contribution per employee while gearing them to face the
challenges in the competitive business environment and achieve the desired goals.
BEST PRACTICE
The Company has been committed to follow best corporate governance and ethical
practices in the Industry and also adheres to the rigorous standards set by the Diamond
Trading Company’s (DTC) Best Practice Principles. The Group’s Hong Kong
subsidiary Suashish Diamonds (HK) Ltd is also a certified member of the Responsible
Jewellery Council (www.resposiblejewellery.com)
ACKNOWLEDGEMENT
The Company would like to thank, all the team members of the Suashish family for their
dedication and support, the Diamond Trading Companies for continuous and assured supply of
rough diamonds and also to the banks within the consortium for their unwavering
confidence.
We at Suashish are committed to improving ourselves and finding a better way for a
brighter tomorrow. We are excited for the future and we look forward to your continued
support.
CAUTIONARY NOTE
The statements contained in this discussion are based on certain assumptions and
expectations of future events. The statements which address expectations or projections
about the future prospects related to strategic planning, market segmentation, and revenue
management are in line with the vision of the Group and are forward looking in nature. The
Company undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of a new information, future events, or otherwise.
Investors are cautioned that the discussion based on forward-looking statements involve
risks and uncertainties. Actual results, performances or achievements could differ
materially from those expressed or implied in such forward-looking statements.
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