Panth Infinity Ltd Management Discussions.


The breakout of COVID-19 in March 2020, the economic environment in FY 2019-20 was marred by slow economic activity and liquidity crunch. This is reflected in the subdued demand, weak consumer sentiment and high rate of unemployment. During the year, Indian government has undertaken various policy measures to arrest the slowdown and boost the economy including the reduction in corporate tax rate, direct benefit transfer. and increased budgetary allocations to key sectors such as infrastructure, agriculture and MSMEs. Furthermore, the Reserve Bank of Indias decision on cutting repo rate by 185 bps on a cumulative basis during FY 2019-20 and another 40 basis points in May 2020 shall support the aggregate demand and private investment as well as ease liquidity given the COVID-19 situation. In particular, the reduction in corporate tax rate is expected to provide a significant impetus to the industry. It makes India much more competitive globally and should accelerate investments in the economy. In Q4 FY 2019-20, real GDP growth of 3.1% was the lowest in over 6 years.

At present, the economy is on a mass formalization drive with the implementation of the Goods and Services Tax (GST). Owing to the introduction of the e-way bill, GST collections have improved. Monthly GST collections have crossed Rs. 1 trillion.

The Company is engaged in only one Business i.e., Trading of Precious Metals, Stones & Jewellery. The Company expects that these businesses will persist in the coming years.

The Company is a part of an Industry, which largely operates through unorganized constituents. However, unlike the industry, the Company has attempted to operate through as systematic and organized manner as possible. Since, Diamond and Jewellery is one industry, in which India holds commendable position in the world, one can look forward to more international involvement coming up in this industry.

The Gems and Jewellery sector plays a significant role in the Indian economy, contributing around 7 per cent of the countrys GDP. It also employs over 4.64 million workers. One of the fastest growing sectors, it is extremely export oriented and labour intensive.

Based on its potential for growth and value addition, the Government of India has declared the Gems and Jewellery sector as a focus area for export promotion. The Government has recently undertaken various measures to promote investments and to upgrade technology and skills to promote ‘Brand India in the international market.

India is deemed to be the hub of the global jewellery market because of its low costs and availability of high-skilled labour. India is the worlds largest cutting and polishing centre for diamonds, with the cutting and polishing industry being well supported by government policies. Moreover, India exports 75 % of the worlds polished diamonds, as per statistics from the Gems and Jewellery Export promotion Council (GJEPC). Indias Gems and Jewellery sector has been contributing in a big way to the countrys foreign exchange earnings (FEEs). The Government of India has viewed the sector as a thrust area for export promotion. The Indian government presently allows 100 % Foreign Direct Investment (FDI) in the sector through the automatic route.


• Opportunities

The industry has shown healthy signs of growth. As per capital income in India has substantial increased, the demand of Diamond and Jewellery among the young generation has also increased. This has helped the Company in developing business opportunities.

Following can be termed as the opportunities for the Company:

I. Growing consciousness amongst customers for branded jewellery.

II. Limited penetration of organized jewellery in the country.

III. Increase in purchasing power of the customers.

IV. Increasing demand for diamond jewellery, which is a high margin product as compared to the gold


V. Favorable demographics leading to increasing demand for jewellery in the country.

• Threats

Some of the key challenges facing by the Diamond & Jewellery Industry are as follows:

I. Stringent government policies cut throat competition remains major concerns for the Gems and Jewellery Business.

II. Adapting to fast changing consumer preferences and buying patterns.

III. Volatility in the market prices of gold and diamonds.

IV. Limited availability of high end retail space.

Indian Jewellery Market is overwhelming with different types of Diamonds, namely Natural Stones, Synthetic Diamonds, Artificial Diamonds, etc. The add-mixture of both - Natural Stones & Artificial Diamonds can adversely affect the reputation of the Companies.

The instability in jewellery retail sales might create imbalance to the financial position of the Company in forthcoming years. Synthetics diamonds can create new threats in high-tech and industrial applications as jewellery inputs as they can co-exist with natural stones. Synthetic Diamonds can lose customers confidence if sold undisclosed. The two major industry initiatives aimed at mitigating this risk, are to increase use of synthetics detection technologies and more frequent certification.


Your Company is exposed to a number of risks such as economic, regulatory, taxation and environmental risks and also towards the investment outlook in Indian Real Estate Sector. Some of the risks that may arise in its normal course of its business and impact its ability for future developments include inter-alia, credit risk, liquidity risk, counter-party risk, regulatory risk, commodity inflation risk, currency fluctuation risk and market risk. Your Company has chosen business strategy of focusing on certain key products and geographical segments are also exposed to the overall economic and market conditions. Accordingly, your Company has established a framework and process to monitor the exposures to implement appropriate measures in a timely and effective manner. 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 unorganised 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, increase in customs duty to 10%, mandatory PAN card requirement on transactions of above Rs.2 Lakh, obligatory hallmarking, levy of 1% excise duty. All these measures would shift the preference towards organised jewellers at the cost of unorganised jewellers.

As the Company is dealing in very high value goods / items, it is always exposed to operational risks. Entire inventory is computerized and is available for tracking at all times. 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.

• Impact of COVID-19:

During the last quarter of FY 2020, COVID-19 spread globally and in India. This had an impact on the business operations of the Company. We started our preparation to respond to this crisis from early March. The company implemented various precautionary measures at each workplace to ensure personal safety and business continuity, such as temperature monitoring, frequent use of hand sanitizers, use of face masks, frequent sanitation of frequently touched surfaces etc. We also enabled key employees across the Company to a Work from Home set-up. This ensured continuity and constant ability to support the business.

We provided Emergency Leaves to employees to take care of any health issues that they may face. We also extended a temporary Hardship Allowance to our staff to help them tide over this crisis.


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 Company also has adequate internal control system commensurate with its size and the nature of the business. The Company has an elaborate system of internal controls to ensure optimal utilization of Companys resources and protection thereof, facilitating accurate and speedy compilation of accounts, management information reports and compliance with laws and regulations. The Committee reviews the implementation of management policies to ensure that transaction has been accurately recorded and promptly reported. The Internal Auditors and Companys Internal Audit Department conduct regular audits to ensure adequacy of internal control system, adherence to management instruction and compliance with laws and regulations of the country as well as to suggest improvements. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit committee of the Board. There were no instances of fraud which necessitates reporting in the financial statements. There have been no communications from regulatory agencies concerning non-compliance with or deficiencies in financial reporting practices.


Your Company is presently engaged in one business i.e. Trading of Precious Metals, Stones & Jewellery. The Total Income of your Company for the year 2019-20 was increased to Rs. 17,68,25,127.18 as against Total Income of Rs. 15,66,72,889.31 of the previous year. Also, the Companys Net Profit after tax has been increased to Rs. 1,43,17,143.76 for the year 2019-20 as against the Net Profit after tax of Rs. 6,97,087.02 of the previous year.


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. The Company firmly believes that Human Resources and knowledge capital are vital for business success and creating value for stakeholders. The Company recognizes the fact that people drive business success, strengthening its efforts to build leadership at all levels. The Company has maintained cordial and harmonious relations with all Employees.

The total numbers of employees as on 31st March, 2020 were 3 (Three).


i. Inventory Turnover Ratio decreased by 31.51% due to increase in Inventory of the Company.

ii. Debtors Turnover Ratio increased by 89.91% due to increase in total Turnover of the Company.

iii. Interest Coverage Ratio increased by 68.44% due to increase in Interest expenses of the Company.

iv. Net Profit Margin Ratio decreased by 81.87% due to increase in Net Profit of the Company.

v. Return on Net Worth of the Company was increased by 1953.85% due to higher net profit after tax in current year compared to the previous year.


Certain statements made in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, predictions and expectations may be forward looking statements, within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Significant factors that make differences to Companys operations include competition, change in Government policies and regulations, tax regimes and economic development within India. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent development, information or events or otherwise.

By order of the Board of Directors For PANTH INFINITY LIMITED


Chairman & Managing Director


Place: Surat

Date: 31/08/2020