Today's Top Gainer
Note:Top Gainer - Nifty 50 More
(1) ECONOMIC OVERVIEW
During the financial year 2017-18, India continued to grow on the back of strong economic fundamentals. As per the Ministry of Statistics and Programme Implementation, Indias GDP growth stood at 6.7% for 2017-18. 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.
(2) INDUSTRY STRUCTURE AND DEVELOPMENTS:
The Company is engaged in the Business of Real Estate, Precious Metals, Stones & Jewelry. 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 Jewelry 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.
a. Opportunity and Threats:
The industry has shown healthy signs of growth. As per-capital income in India has substantial increased, the demand of Diamond and Jewelry among the young generation has also increased. This has helped the Company in developing business opportunities.
Following can betermed 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 jewellery. V. Favorable demographics leading to increasing demand for jewellery in the country.
Some of the key challenges facing the retail jewellery industryare as follows :
I. The unfavorable 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 Jewelry 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 jewelry 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 jewelry 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.
Apart from this, due to recession in Real Estate Sector, Company is not being able to do its Business in Real Estate. This also affects Companys Financial Growth adversely.
b. Segment-wise or products-wise performance:
During the year, your Company has earned revenue from Diamond trading business of Rs. 4561.33 Lakh. Further, the Company has made Net Profit after Tax of Rs. 23.15 Lakh from Diamond trading business. The Company has achieved the said turnover especially through overwhelming response of the Customers of its brand "Round Carat". However, your Company has not carried out any business activity in Real Estate.
Indias Gold Jewellery exports registered a growth of nearly 11 % at USD 9673.23 million in F.Y . 2017-18 vis--vis USD 8,721.88 million in F.Y . 2016-17.
Gems and Jewellery exports from India have doubled to USD 41 billion in F.Y . 2017-18 as against USB 21 billion in F.Y . 2007-08.
Cut & polished diamond exports grew at USD 24 billion in FY2017-18 from USD 14 billion in FY07 -08.
(3) Outlook on Risk and concerns:
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 includeregulations 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 ofunorganised 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.
(4) Internal Control System and their adequacy:
The Company has an effective internal control system, which ensures that all the assets of the Company are safeguardedand 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 reportingpractices.
Discussion on financial performance with respect to operational performance:
The Total Income of your Company for the year 2017-18 was decreased to Rs. 4561.33 Lakh as against Total Income of Rs. 7723.28 Lakh of the previous year. Even though reduction in income of the Company, the Companys Net Profit after tax has been increased to Rs. 23.15 Lakh for the year2017 -18 Lakh as against the Net Profit after tax of Rs. 12.87 Lakhof the previous year.
(5) Human Resources:
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 31/03/2018 were 8 (Eight).
(6) Cautionary Statement:
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.
[References -Industry Reports, Gems & Jewellery Export Pro motion Council]
By order of the Board of Directors
For PANTH INFINITY LIMITED
Chairman & Director