This report covers the operations and financial performance of the Company for the year
ended March 31, 2022. The Company operates in one segment which is Jewellery
manufacturing. Your Board of Directors places herewith the Management Discussion and
Analysis Report on the business of the Company as applicable to the extent relevant.
GLOBAL PANDEMIC
The Pandemic has left everyone affected globally one way or the other. It has caused
huge disruptions in terms of economic activity as well as the loss of human lives.
Nationwide shutdowns, economic slowdown have impacted various industries. Gems &
jewellery is one of those many industries that have suffered majorly due to it as domestic
demand and exports sharply crashed. One wave after the other is not letting this industry
recover properly.
The production, export, and supply were aligned to encounter the desired goals.
Conversely, the outspread of coronavirus took everyone by shock. The jewelry business
dipped significantly. The high-value diamond pieces and the high-end chunky jewelry widely
popular in the Middle East and far-east agonized a huge downfall.
The lockdown period instigated the feeling of uncertainty. The uncertain economic
future caused an imbalance in the sale and export in the context of the gems and jewelry
industry. During the Lockdown, our workers and artisans returned to their native places
due to the global pandemic and it took considerable time to convince them to return back
to work. Sales were adversely affected due to overall public sentiments. Further due to
ongoing Covid, majority of the travel for festivals and other religious purposes was
impaired, marriages were postponed or became low-key affairs thereby, the light Jewellery
purchases were at a lower ebb of the cycle.
INDUSTRY OVERVIEW:
Indias gems and jewellery export sector is one of the largest in the world. The market
size of the global gems and jewellery sector is likely to expand to US$ 103.06 billion
till 2023. The Government of India is aiming at US$ 70 billion in jewellery export in the
next few years until 2025. Indias Gems and Jewellery sector has been contributing in a
big way to the countrys foreign exchange earnings (FEEs). The government has viewed this
sector as a thrust area for export promotion.
Indias gems and jewellery exports reached US$ 39.14 billion in 2021-22, a 54.13% rise
from the previous year. India ranks first among the top exporters in cut & polished
diamonds, and second in gold jewellery, silver jewellery and lab-grown diamonds.
Cumulative FDI inflows in diamond and gold ornaments stood at US$ 1,213.05 million between
April 2000-March 2022. India has signed an FTA with the UAE which will further boost
exports and is expected to reach the target of US$ 52 billion. In the Budget for FY
2022-23, the Government has reduced custom duty on cut and polished diamond and colored
gemstones from 7.5% to 5% and NIL respectively.
The Government has undertaken various measures recently to promote investment and
upgrade technology and skills to promote ‘Brand India in the international market.
The Government has permitted 100% FDI in the sector under the automatic route. It is
expected that the positive impact of polarization on the organized sector is likely to be
visible operationally within a couple of years that would go a long way in improving the
margin and turnover for the industry in general and the Company. With availability of
further funds, the growth is likely to be accelerated in coming years.
MARKET SIZE:
The Indian Gems and Jewelry Market stood at USD 78.50 billion in FY 2021 and is
expected to grow with a CAGR of 8.34% in the forecast years, FY2023 - FY2027, to achieve a
market value of USD 119.80 billion by FY 2027.
India majorly exports cut & polished diamonds, lab-grown synthetic diamonds,
colored gemstones, synthetic stone, plain and studded gold jewellery, silver &
platinum jewellery, imitation jewellery and articles of gold, silver and others. Western
Region is key exporting hub for the gems and jewellery industry contributing almost 77% of
the total exports in 2021-22.
The global estimated market size of the gems and jewellery sector is expected to reach
over US$ 480 billion by 2025 even though there can be times of slow growth post-pandemic.
INVESTMENTS/ DEVELOPMENTS:
The Company has launched an extension to its already ongoing exclusive jewellery
collection, "Vilandi"
– Flat Polki Diamond Jewellery Collection". The Company is making good
progress towards the strategic choices outlined earlier this year, specifically by
introducing the development of our new product offering with stunning designs and several
varieties in the category of heavy Royal Necklaces. The Company offers Flat Diamond
Jewellery heavily studded with colorful Ruby, Emerald and other precious gemstone which
makes the person feel royal due to its uniqueness and vibrant designs.
The Company has newly started 18-karat gold jewelry which offers a good balance between
durability and purity. Considering the business dynamics, it is far more popular as it has
been mixed with more durable metals to make it in itself far more durable which makes it a
very attractive proposition. This will further assist in reaching out to masses and serve
public at large thereby help in increasing margin and capture the untouched market.
The Company is in the process of setting up additional manufacturing capacity at
Basheerbagh, Hyderabad in a premises owned by the promoters for future growth of the
Company to cater to growing demand. The new factory will be more technology oriented and
shall be a state of art facility with well -planned layout and use of high end tech tools
for the designing section. The unit specializes in Gold ornaments studded with flat
diamond and colour gemstones. The said facility of the Company will be well equipped with
state-of-the-art machinery and technology by using Computer Aided Design (CAD and Computer
aided model manufacturing (CAM), increasing the overall capacity and enhanced finishing of
the products. The management is hopeful that production capacity will be increased to
three times. However, the Challenge faced by the Company is shortage of skilled labour.
But the Company is trying hard to overcome the Challenge and therefore, will invest in the
training centres for improving labour skills.
The response to the new range is very encouraging and Company is receiving good number
of sale orders across Country and abroad, and has started dispatching export orders. This
will provide a boost to the top line and bottom line.
GOVERNMENT INITIATIVES:
Government wants to make the gem and jewellery sector self-reliant. Therefore, this
will be a focus area both for domestic growth and for export promotion. The Budget 2022
has paved the road for the sector to grow and expand Indias footprint in the global gem
and jewellery trade.
The sector contributes 7 per cent to the GDP and employs around 50 lakh people. The
proposed policies in the Budget, including reduction in import duty on Cut and Polished
Diamonds to 5 per cent from the earlier 7.5 per cent, extension of emergency credit line
guarantee scheme for MSMEs up to March 2023, acceptance of personal surety bonds in place
of bank guarantee for import of gold, will help facilitate exports through e-commerce
ensuring that small retailers, are aimed at making the sector self-reliant. Some of the
important highlights are mentioned below-
A. The government has reduced the customs duty on colored gemstones from 7.5% to 5%.
B. India has signed an FTA with the UAE which will further boost exports and is
expected to reach the target of US$ 52 billion.
C. The Government has permitted 100% FDI in the sector under the automatic route,
wherein the foreign investor or the Indian company do not require any prior approval from
the Reserve Bank or Government of India. The Government has made hallmarking mandatory for
gold jewellery and artefacts and a period of one year is provided for its implementation.
D. India has 10 special economic zones (SEZ) for gems & jewellery. These zones have
more than 500 manufacturing units, which contribute 30% to the countrys total exports.
E. Gold Monetization Scheme enables individuals, trusts and mutual funds to deposit
gold with banks and earn interest on the same in return.
F. The Gem & Jewellery Export Promotion Council Organized Indias biggest and
second-biggest trade shows, IIJS Premiere, and IIJS Signature for the promotion of export
and trade.
ROAD AHEAD:
The Company fulfills the royal aspirations of the brides with exclusive heritage
jewellery and also accentuates the feeling of Royalty to people who adorn such jewellery.
The Company has newly started 18-karat gold jewelry which offers a good balance between
durability and purity. Considering the business dynamics, it is far more popular as it has
been mixed with more durable metals to make it in itself far more durable which makes it a
very attractive proposition. This will further assist in reaching out to masses and serve
public at large thereby help in increasing margin and capture the untouched market.
In the coming years, growth in Gems and Jewellery sector would be largely contributed
by the development of large retailers/brands. Also, the relaxation of restrictions of gold
import is likely to provide a fillip to the industry.
The demand for jewellery is expected to be significantly supported by the recent
positive developments in the industry. Further the Company is planning to implement
omni-channel approach with focus on digital strategy to boost sales.
Plans to Modify/ Enhance the product Offering: The Management focus to enhance the
product offering to the customers, hence new product innovation is one of the integral
plan of the company.
Strategizing the Marketing & Business Development:
a. Customer Acquisition Policy: Customer acquisition is important for businesses of any
age and size. The goal of this process is to create a systematic, sustainable customer who
can sell the Companys products in the long term.
b. The credit policies are kept dynamic based on client profiles to allow credit to the
parties which vary from 45- 60 days depending on the retention margin on the products. So,
before adding a new customer, a due diligence is done to understand, the credit worthiness
of the client.
c. Business Development Policy: A Business Development Policy is being evolved to cater
to ever changing market preferences, but with a focus on growth and how to achieve it.
Its a long-term plan that outlines strategies for steady and sustainable business growth
over the coming years.
Its scope covers both the marketing and sales functions, as they are interlinked in the
Jewellery Industry.
The Companys marketing team at present is catering to the following category of buyer
group: National Chains – Retail Chains having National level presence, Local Chains
– Retail Chains having regional/local level presence, Family Jewellers – Well
known Family jewellers having 1 or 2 stores, Distributors and Exports.
The Company is developing new collections to provide a wide range of collection to its
customers and we expect the new collections will help us to penetrate the market. The
strategy of the Company is to target multiple sales channels, online selling of products
and to explore overseas market as the products are contemporary and have a large audience.
The various initiatives taken by the Company in formulating strategies and
implementation on all sphere of business activities will result in a sustainable revenue
and profit growth over a period of time.
In order to meet the rising need for long term financial resources due to increase in
almost all raw material prices and in order to scale up the operations, the Company
requires long- term working capital funds for the business. In this regard, the Company
brought in a further issue capital of issuing share warrants convertible into equity
shares on preferential basis. This would boost its financial resources, facilitate ease of
operations and enhance its business on the whole.
CHALLENGES FACED BY THE INDUSTRY:
It is a tough time for the gems and jewellery sector in India, with the rough patch to
continue until both business sentiment and consumer confidence revives. It is estimated
that the high gold and silver prices will keep retail demand low, even though the
investment demand would continue to remain positive. The fear of the pandemic has created
a subdued environment for rituals, traditions, festivals and occasions.
The Company is exposed to risk in exchange rate fluctuations as the Company is
dependent on exports sales. However, the Company closely monitors and takes appropriate
steps to reduce such risks.
During the Lockdown, our workers and people who work on jewellery designs and related
work returned to their native place due to global pandemic and it took considerable time
to convince them to return back to work. Sales were adversely affected due to overall
public sentiments and the major sale events were seriously hampered due to lockdowns and
related sentiments.
Like other industries, the gems and jewellery industry is also facing many challenges
related to labour. These are mainly shortage of skilled labour, poor working conditions
and pay. Manual methods of cutting, polishing, manufacturing and designing of gems and
jewellery are steadily being substituted with high-end automation using machines and
software. But India being a country where most of the consumer base highly believes in
traditional methods of Jewellery making is a trustworthy one, it is still taking time to
make them adopt to the change that automation in this industry is no less. Lack of
educated labour is also a great challenge in this industry because, use of laser machines,
operating computers and understanding modern techniques require systematic and practical
training.
Considering the low wages in this industry, it is no surprise that young workers are
not attracted towards it. In the last few years the rupee has been highly volatile against
the dollar. A stable currency is necessary for developing countries, for smooth economic
development and foreign inflows. Hence, it is important for the gems and jewellery
industry as well, particularly considering its dependence on imports and exports. It will
also help boost exports and maintain cost competitiveness in the international market.
RISKS AND CONCERNS:
The nature of the Companys business exposes it to several inherent risks and concerns.
The Company strives to closely monitor the risks and to mitigate them by adopting
suitable, pragmatic strategies:
a) Bullion Risk: The volatility in the gold prices exposes the Company to bullion risk
as gold forms approximately 30% to 50% of the cost of the finished product.
b) Strategic risk: Those risks associated with operating in a particular industry and
includes risks arising from demand changes, changes in customers preference, taste and
industry changes.
These risks pose threats or opportunities which materially affect the ability of the
organization to survive. The Company faces the fast changes in tastes and fashion for
customers.
c) Labour availability Risk: Gems and jewels industry is a highly labour-bounded and
export-oriented sector. The labour force shifted back to their native places due to
Covid-19 and lockdown, which is resulted non- availability of Labour for few months.
d) Compliance risk: Those risks associated with the need to comply with Government Laws
and regulations. They also apply to the need to act in a manner which stakeholders and
customers expect. The Company being into manufacturing is clouded with much compliance for
its operations and has been meticulous in its compliance regime.
e) Financial risk: Those associated with financial structure of the company, its
transactions and the financial system in place. Being in jewellery line, the risks of
theft and loss is always looming large.
f) Operational risk: Those associated with the companys operational and administrative
procedures which inter alia include accounting controls, regulations, recruitment, IT
systems, board composition, contractual risks and exposures, organizational risks and
exposures.
The Company has in place a comprehensive risk management framework that helps in
anticipating, identifying, and evaluating business risks and challenges across the Company
and finding ways to mitigate the same.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has proper and adequate systems of internal controls in order to ensure
that all assets are safeguarded against loss from unauthorised use or disposition and that
all transactions are authorised, recorded and reported correctly. Regular internal audits
and checks are carried out to ensure that the responsibilities are executed effectively
and that adequate systems are in place. The Management continuously reviews the internal
control systems and procedures to ensure orderly and efficient conduct of business.
The emphasis of internal control will be further strengthened across functions and
processes, covering the entire gamut of activities including manufacturing, finance,
supply chain sales & distribution, marketing etc. Some significant features of the
internal control systems are:
• Documenting Major Business Process including financial reporting, Computer
Controlling, Security Checks and Top Committee level Plans
• A comprehensive information security policy and continuous upgrades to IT system
with better firewall.
• Audit Committee of the Board of Directors, comprising independent directors,
regularly reviews the audit plans, significant audit findings, adequacy of internal
controls, compliance with Accounting Standards, as well as, reasons for changes in
accounting policies and practices, if any.
• A well established multi-disciplinary Internal Audit team, which reviews and
reports to management and the Audit Committee about the compliance with internal controls
and the efficiency and effectiveness of operations and the key process risks
• Monthly meeting of the top management committee to review operations and plans
in key business areas
• Corporate policies on accounting and major processes.
• Well-defined processes for formulating and reviewing annual and long- term
business plans.
HUMAN RESOURCES & INDUSTRIAL RELATIONS:
The Company considers its human resources as amongst its most valuable assets and
continues to place emphasis on their development. It has been Companys constant endeavour
to impart requisite training and thereby develop and hone the skills and talent of its
personnel and enable them to realize their potential.
With the changing and turbulent business scenario, the Companys basic focus is to
upgrade the skill and knowledge level of the existing human assets to the required level
by providing appropriate leadership at all levels motivating them to face the hard facts
of business, inculcating the attitude for speed of action and taking responsibilities.
In order to keep the employees skill, knowledge and business facilities updated,
ongoing in house and external training is provided to the employees at all levels. The
effort to rationalize and streamline the work force is a continuous process. The
industrial relations scenario remained harmonious throughout the year. The overall
Industrial Relations in the Company have been quite peaceful and cordial.
SWOT ANALYSIS:
Strengths:
1. Adequate manufacturing facilities across the jewellery hub for strengthening of
design
2. Cost competitive logistics
3. Capable to venture into new markets and exploit various opportunities with the help
of strong management team
4. Having huge customer base to explore new markets across the state
5. Customized service gives a unique identity to the company distinct from other
players
6. Use of synergy optimization at various functional verticals gives a huge advantage
7. Advanced Technology strength to support business operations and expansion
8. Mandatory hallmarking will ensure the purity of Gold and hence, transparency can be
maintained.
Weaknesses:
1. Operating in a stiff competitive environment with uncertain profit margins.
2. Unpredicted Gold price movements and its impact on margin of the products.
3. Low margin products
4. Limited line of business is the bottleneck to exploit untapped markets.
5. Frequent change in customer taste and preference for jewellery designs.
6. Mixture of organized and un-organized sector in Jewellery Industry affects profit
margins drastically
Opportunities:
1. Growing preference for online platform
2. Tier II and III cities rising demand
3. Customers preference in choosing hallmarked products over products made by
un-organized manufacturers.
4. Concentrating in one sector makes the company mature in the industry and gain
efficiency in operations.
5. Scaling of economy resultant out of Brand/ Advertisement & Publicity /
Procurement of Gold, Product Mix, designs, etc.
Threats:
1. Presence of Small and un-organized industry players affect a sustained growth in the
industry.
2. Depending on bank finance and customer advances
3. Existing competitors
4. Penetration of large corporate jewellery traders cutting down margins.
5. Macro-economic factors such as Rupee fluctuations, enactment of new laws such as
GST, KYC norms and global demand
6. Recession affects the industry growth in general.
7. Acute shortage of skilled labour increases the production cost significantly.
8. Highly fluctuating gold price movement acts as a hinderance.
9. Increasing duties and cess following GST implementation
10. Unpredictable Covid situation may lead to unavailability of Artisans/ workers.
PERFORMANCE DURING THE YEAR
The Company delivered a great performance in the Financial Year 2021-22 despite the
pandemic-related disruptions during parts of the year. The COVID-19 pandemic, continued to
be a global challenge, creating disruption across the world. The Company witnessed strong
demand across its businesses achieving significant revenue uplift and ending the year on a
strong note. The Company reported a Net Profit of Rs. 345.87 Lakhs as against Rs. 202.98
Lakhs earned during previous year registering growth of 70.40%.
FINANCIAL SYNOPSIS OF THE COMPANY:
Share Capital:
The Authorised Share Capital of your Company is Rs. 21,50,00,000/- divided into
2,15,00,000 Equity shares of Rs. 10/- each as on 31st March, 2022. The total Paid up
capital of the Company stands at Rs. 21,15,73,100 divided into 2,11,57,310 Equity shares
of Rs. 10 each as on date.
During the period under review, Preferential Issue of 91,00,000 Warrants of Rs. 17
each, convertible into equal Equity shares of Rs. 10 each with premium of Rs. 7 per share
have been approved. In-Principle approval received from BSE Ltd. on 01.01.2021 and
Warrants were allotted on 13.01.2021. Out of such warrants, on 30.03.2021 as first
tranche, 26,23,000 Equity Shares were allotted to Promoters and Promoter group upon
conversion and 5,00,000 Equity Shares were allotted to Non-Promoter/ Public upon
conversion. Thereafter, 24,94,000 equity Shares were allotted to Promoters/ Non-Promoters
on 23.11.2021 and remaining 34,83,000 Equity Shares were allotted on 24.05.2022. Hence,
all warrants have been converted and listed at BSE Limited. The proceeds from the said
issue were solely utilized to meet the working capital requirements of the business.
Secured Loans:
Secured Loan is Rs. 149.11 Lakhs during the financial year 2021-22.
Fixed Assets:
Fixed Assets (Net Block) is Rs. 117.95 Lakhs during the financial year 2021-22.
CAUTIONARY STATEMENT:
Statements in the Management Discussion and Analysis describing Companys objective,
projections, estimates and expectations may be "forward looking statements"
within the meaning of applicable securities laws and regulations. Forward looking
statements embedded in the Management Discussion and Analysis above is based on certain
assumptions and expectations of future events. The Company cannot guarantee that these
assumptions and expectations are accurate or will be realized. The Companys actual
results, performance or achievements could thus differ materially from those projected in
any such forward looking statements. The Company assumes no responsibility to publicly
amend, modify or revise any forward-looking statements, on the basis of any subsequent
developments, information or event.
|
For and on behalf of Board of Diectors |
|
Sd/- |
Sd/- |
|
Sanjay Kumar Sanghi |
(Ritesh Kumar Sanghi) |
|
Managing Director |
Director |
|
DIN: 00629693 |
DIN: 00628033 |
| Date: 18.08.2022 |
|
|
| Place: Hyderabad. |
|
|
+91-9892691696
