penta gold ltd share price Management discussions

1. ECONOMY

Indias economy slowed down due to the sudden outbreak of the COVID-19 pandemic. Indian economy was struggling through a subdued economic environment with consumption, exports and private investment witnessing severe slowdown. Exports contracted during the entire financial year and consumption, which was the key growth engine, fell even more. The overall slowdown got further impacted due to the pandemic. After six weeks complete lockdown the government started easing restrictions in a phased manner to give pace to economic activities. The government is also taking initiatives to spur growth and provide support for the economy, along with fostering domestic industries through ‘Atmanirbhar Bharat. The Board and the Management will continue to closely monitor the situation as it evolves and do its best to take all necessary measures, in the interests of all stakeholders of the Company. Indias economy grew at a better-than-expected rate of 1.6% in the January-March quarter from a year ago, but the severe second Covid wave has created economic uncertainty and dampened sentiment. The economy, which was facing a slowdown even before the pandemic broke out last year, contracted by 7.3% during April 2020 to March 2021 fiscal (FY21), weighed down by nationwide lockdown that pummelled consumption and halted most economic activities. This is the first full-year contraction in the Indian economy in the last four decades since 1979-80, when GDP had shrunk by 5.2%. The economy has grown by 4% in the previous 2019-20 fiscal. The Government does not expect the severe second wave to have a large economic impact. However, the outlook appears uncertain.

Looking to the present situation of pandemic, the extent to which the same will impact Companys future financial results is currently uncertain and will depend on future developments.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS:

Indias gems and jewellery export sector—which is one of the largest in the world— contributed ~27% to the global jewellery consumption in 2019. Market size of the global gems and jewellery sector is likely to expand to US$ 103.06 billion between 2019 and 2023. Indias gems and jewellery exports are expected to reach US$ 100 billion by 2025.

In FY21, exports of gems & jewellery stood at US$ 25.30 billion. In March 2021, exports of gems & jewellery stood at US$ 3.42 billion.

In April 2021, India exported gems & jewellery worth US$ 3.37 billion compared with US$ 36.11 million in April 2020.

In September 2020, the US was the largest country (at 44%) to import gems and jewellery (US$ 938.54 million) from India, followed by Hong Kong (~33%) and the UAE (~13%).

In FY21, cut and polished diamonds accounted for 67.75% of the total gems & jewellery exports.

According to Gem and Jewellery Export Promotion Council, between April 2020 and December 2020, gold bars accounted for ~6.8% (US$ 678.77 million) and gold jewellery at ~1.8% (US$ 181.49 million) of the total gems and jewellery imports in India. As per the World Gold Council (WGC), Indias gold demand stood at 446.4 tonnes in 2020.

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.

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.

As per Union Budget 2021, the Gem and Jewellery Export Promotion Council has proposed a reduction in import duty on cut and polished diamonds to 2.5%, from the existing 7.5%, in order to double exports of gems & jewellery to US$ 70 billion by 2025.

Cumulative FDI inflows in diamond and gold ornaments in India stood at US$ 1,190.83 million between April 2000 and March 2021 according to Department for Promotion of Industry and Internal Trade (DPIIT).

3. OPERATIONS OF THE COMPANY :

Although, we have achieved Standalone domestic sales turnover of Rs. 155.45 Crores and Standalone domestic sales turnover of Rs. 155.52 But, due to unprecedented situation of pandemic, we are yet to realize outstanding dues from our overseas buyers as the debtors are lingering the payments terms. Hence, we are refraining to export further shipment to the buyers which results to take pause for our export sales. However, we are hoping to receive our dues in current financial year which enables to export pending orders of our existing buyers. Also, we hope we will engage new buyers and bounce back to our export sales with new record and achievements.

4. CURRENT SCENARIO :

Current year, we all are experiencing COVID-19 effects which is impacting luxury goods and lifestyle industry. Same can have negative impact on our performance for financial year 2021-2022 in the anticipation of so called ‘third wave of the pandemic. Further, COVID-19 has impacted earnings of middle class, higher middle class and working class, which may reduce their disposal surplus and impact on their spending preferences on luxury goods. This behavior also has impacted on our business too. During the financial year of 2020-21, our manufacturing unit was not operational due to lockdown imposed by

Maharashtra Govt in the wake of Covid-19 cases. Subsequently, our exports sales have been impacted adversely. However, the companys domestic sales unit has been working as per Government guidelines and as on date of this report. Overall, our sales unit is not working to full working time capacity. As a precautionary note we can say that current Financial Year will have severe negative impacts on your Companys performance. Company is taking steps to curtail expenses on various heads without compromising to customer satisfaction.

Company is also considering other business opportunities to diversify its business to earn profitability as well pump up the turnover.

5. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has adequate internal control procedures commensurate with its size and nature of the business. These business control procedures ensure efficient use and protection of the resources and compliance with the policies, procedures and statutes. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability of financial reporting. The Company has continued its efforts to align all its processes and controls with global best practices in these areas as well.

6. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The salient parameters of the financial performance of the Company during the year under review are as under:

Financial Results

SN Particulars	Standalone		Consolidated
	Year ended 31st March, 2021	Year ended 31st March, 2020	Year ended 31st March, 2021	Year ended 31st March, 2020*
1. Total Sales/Income	1554473.66	5686526.14	1555194.12	5686526.14
2. Net profit before exceptional/ extraordinary item ,depreciation & tax	5238.10	51324.81	4788.29	51324.81
3. Depreciation	907.53	1004.99	907.53	1004.99
4. Net profit before exceptional/ extraordinary item & tax	4330.57	50319.82	3880.76	50319.82
5. Exceptional/ extraordinary item :Prior Period Income	(82.73)	782.71	(82.73)	782.71
6. Net Profit before Taxation	4247.84	51102.53	3798.04	51102.53
7. Provision for tax (incl. deferred taxes)	3056.08	12753.24	3056.08	12753.24
8. Net Profit after tax	1191.71	38349.28	741.96	38349.28
9. Balance brought forward	152472.52	114123.23	152472.52	114123.23
10. Appropriations	1191.77	38349.28	741.96	38349.28
11. Balance carried forward	153664.29	152472.52	153214.48	152472.52

*Note: figures of the last year is not comparable since this is first year of consolidation

7. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

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 03 full time employees. The industrial relations have remained harmonious throughout the year.

8. DISCLOSURE OF ACCOUNTING TREATMENT:

The Company has followed all the treatments in the Financial Statements as per the prescribed Accounting Standards.

On behalf of the board

PENTA GOLD LIMITED

Sd/- (Ketan M. Shroff)

Chairman & Managing Director

DIN: 00332988

Mumbai, 6^th September, 2021