Penta Gold Ltd Directors Report.

To the Members,

The Board of Directors hereby submits the report of the business & operations of your company ("the Company"), along with the audited accounts of the Company for the financial year ended on 31st March, 2019.

1. Financial Results

SN Particulars 01-04-2018 To 31-03-2019 01-04-2017 To 31-03-2018
1. Total Sales/Income 3698266.11 2410106.50
2. Net profit before depreciation & tax 50463.67 30543.63
3. Depreciation 956.67 1257.74
4. Net Profit before Taxation 49507.00 29285.89
5. Provision for tax (incl. deferred taxes) 19653.04 12621.98
6. Net Profit after tax 29853.96 16663.92
7. Balance brought forward 84269.27 67605.35
8. Appropriations - -
9. Balance carried forward 114123.23 84269.27

2. Review of Operations

Your Company has achieved satisfactory performance during the period under review and anticipates further acceleration in the performance in terms of sales and profits. The Company achieved total Revenue of 369.83 Crores (Previous Year 241.01 Crores). These revenues comprise of Jewellery Sales of 367.11 Crores (Previous Year 239.90 Crores). The Net Profit stood at 298.54 lacs (Previous Year 166.64 lacs), The Company inspite of many challenges and competitive market conditions was able to achieve satisfactory Sales & Net Profit (After Tax) figures. The management is of the opinion that similar figures will be replicated in the coming future as the overall situation seems to be improving and your Company is working out the future strategy accordingly.

3. Background on the IPO of the Company.

The issue opened for subscription on March 23, 2018 and closed on March 27, 2018 in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. The equity shares have been listed on the SME Emerge Platform of National Stock Exchange of India Ltd (NSE) w.e.f 25th April, 2018. Consequently, the Companys paid up share capital has increased from 91,250,000/- to 127,250,000/-.

4. Dividend

The overall situation seems to be improving though at very slow pace and your Company is working out the future strategy accordingly. No dividends are recommended for payment to the shareholders for the year.

5. Reserves

The Company has earned profit of . 298.54 Lacs during the year and The company have accumulated profits of . 1141.23 lacs along with Securities Premium of .972 Lacs as on 31st March 2019

6. Deposits

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014 read with Circular No. 05/2015 dated 30th March, 2015.

7. Number Of Board Meetings Held

The Board of Directors duly met Eighteen- times during the financial year from 1st April, 2018 to 31st March, 2019. The dates on which the meetings were held are as follows:

SN Date of Board Meeting SN Date of Board Meeting SN Date of Board Meeting
1. 21/04/2018 8. 30/10/2018 15. 23/02/2019
2. 03/05/2018 9. 15/11/2018 16. 28/02/2019
3. 27/06/2018 10. 05/01/2019 17. 07/03/2019
4. 30/07/2018 11. 13/02/2019 18. 15/03/2019
5. 29/08/2018 12. 19/02/2019
6. 06/09/2018 13. 20/02/2019
7. 29/09/2018 14. 21/02/2019

The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

8. Committees Of The Board:

The Board had constituted various committees which are as follows:

a. Audit Committee:

The Company has constituted an Audit Committee, as per the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The Committee presently comprises of the following members

Name of Members Category Position Held / status in Committee
Mr. Anand Bhagwanji Chaturvedi Independent Director Chairman of the Audit Committee
Mr. Dilip Rajkumar Patodia Independent Director Member
Mrs. Dipti Ketan Shroff Non- Executive Director Member

The Company Secretary of the company shall act as a Company Secretary of the Audit Committee.

The Term of Reference and Power of Audit Committee are as under:

• Oversight of our Companys financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;

• Recommendation for appointment, re-appointment and replacement, remuneration and terms of appointment of auditors of our company.

• Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

• Reviewing, with the management, the annual financial statements and auditors report thereon before submission to the board for approval, with particular reference to:

• Matters required to be included in the Directors Responsibility Statement to be included in the Boards report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013;

• Changes, if any, in accounting policies and practices and reasons for the same;

• Major accounting entries involving estimates based on the exercise of judgement by management;

• Significant adjustments made in the financial statements arising out of audit findings;

• Compliance with listing and other legal requirements relating to financial statements;

• Disclosure of any related party transactions; and

• Modified opinion(s) in the draft audit report.

• Reviewing, the half yearly and annual financial statements with the management before submission to the Board for approval;

• Reviewing, with the management, the statement of uses /application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/ prospectus/ notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;

• Review and monitor the auditors independence and performance, and effectiveness of audit process;

• Approval or any subsequent modification of transactions of our Company with related parties;

• Scrutiny of inter-corporate loans and investments;

• Valuation of undertakings or assets of our company, wherever it is necessary;

• Evaluation of internal financial controls and risk management systems;

• Monitoring the end use of funds raised through public offers and related matters;

• Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;

• Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;

• Discussion with internal auditors of any significant findings and follow up there on;

• Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;

• Discussion with statutory auditors before the commencement of audit, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;

• To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;

• To establish and review the functioning of the whistle blower mechanism;

• Approval of appointment of the chief financial officer (i.e., the whole –time finance director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;

• Carrying out any other terms of reference as may be decided by the Board or specified / provided under the Companies Act,2013 or the SEBI Listing Regulations or by any other regulatory authority; and

• Review of (1) management discussion and analysis of financial condition and results of operations; (2) statement of significant related party transactions (as defined by the audit committee), submitted by management; (3) management letters / letters of internal control weaknesses issued by the statutory auditors; (4) internal audit reports relating to internal control weaknesses; (5) the appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the audit committee; (6) statement of deviations including (a) quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1) of the SEBI Listing Regulations; (b) annual statement of funds utilized for purposes other than those stated in the offer document / prospectus/ notice in terms of Regulation 32(7) of the SEBI Listing Regulations.

Powers of Audit Committee

• To investigate any activity within its terms of reference.

• To seek information from any employee.

• To obtain outside legal or other professional advice.

• To secure attendance of outsiders with relevant expertise, if it considers necessary.

The Audit Committee duly met Five times during the financial year from 1st April, 2018 to 31st March, 2019. The dates on which the meetings were held are as follows:

SN Date of Committee Meeting

1. 29/06/2018

2. 29/08/2018

3. 29/09/2018

4. 15/11/2018

5. 29/03/2019

b. Nomination and Remuneration Committee

The Company has constituted a Nomination and Remuneration Committee as per the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.The Nomination and Remuneration Committee consists of the following members:

Name of Members Category Position Held / status in Committee
Mr. Dilip Rajkumar Patodia Independent Director Chairman of the Nomination and Remuneration
Mr. Anand Bhagwanji Chaturvedi Independent Director Committee Member
Mrs. Dipti Ketan Shroff Non- Executive Director Member

The Company Secretary of the company shall act as a Company Secretary of Nomination and Remuneration Committee.

Scope And Terms Of Reference Of Nomination And Remuneration Committee:

Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees. The Nomination and Remuneration Committee shall, while formulating such policy ensure that (a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

(b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and (c) remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

• Devising a policy on diversity of board of directors.

• Identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall carry out evaluation of every directors performance;

• To extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors.

The Nomination and Remuneration Committee duly met twice during the financial year from 1st April, 2018 to 31st March, 2019. The dates on which the meetings were held are as follows:

SN Date of Committee Meeting

1. 19/11/2018

2. 13/02/2019

c. Stakeholders Relationship Committee

The Company has constituted a Stakeholders Relationship Committee as per the provisions of Section 178(5) of the Companies Act, 2013 and Regulation 20 of the SEBI (Listing Obligation and Disclosure Requirements) Regulation 2015. The Stakeholders Relationship Committee consists of the following members:

Name of Members Category Position Held / status in Committee
Mr. Ketan Madhusudan Shroff Managing Director Chairman of the Stakeholders Relationship Committee
Mr. Dilip Rajkumar Patodia Independent Director Member
Mr. Anand Bhagwanji Chaturvedi Independent Director Member

The Company Secretary of the company shall act as a Company Secretary of Stakeholders Relationship Committee.

The Stakeholder Relationships Committee shall oversee all matters pertaining to investors of our Company. The terms of reference, powers and scope of the Stakeholders Relationship Committee include:

• To look into the redressal of grievances of shareholders, debenture holders and other security holders;

• To investigate complaints relating to allotment of shares, approval of transfer or transmission of shares;

• To consider and resolve the grievances of the security holders of the company including complaints related to transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends; and

• To carry out any other function as prescribed under SEBI ( Listing Obligations and Disclosure Requirements) Regulations,2015 as and when amended from time to time."

The Stakeholders Relationship Committee duly met once during the financial year from 1st April, 2018 to 31st March, 2019. The dates on which the meetings were held are as follows:

SN Date of Committee Meeting

1. 26/07/2018

9. WHISTLE BLOWER POLICY/VIGIL MECHANISM:

In compliance with the requirement of the Companies Act, 2013 and SEBI Listing Regulations, the Company has established a Whistle Blower Policy / Vigil Mechanism Policy and the same is placed on the web site of the Company viz. www.pentagold.in

A fraud and corruption free environment in a Company is the objective and in view of that, a Vigil Mechanism (Whistle Blower) Policy has been adopted by the Board for Directors and employees, which is uploaded on the website of the company www.pentagold.in pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013. No complaint of this nature has been received by the Audit Committee during the year under review.

10. Material changes and commitment if any affecting the financial position of the company occurred between the end of the financial year to which this financial statements relate and the date of the report.

Keeping in view the expanded business activities of the company and its future expansion plans, the company has incorporated the following changes:

The company has successfully completed its Initial Public offer by way of an offer for sale of 36,00,000 Equity Shares of Face value of Rs. 10 Each at an issue price of Rs. 37 per equity shares aggregating to Rs. 1,332 lacs on 25th of April 2018.

11. Directors Responsibility Statement

The directors hereby confirm that –

• In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

• They have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2019 and of the profit for the year ended on that date;

• They have taken proper and sufficient care of the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting fraud and other irregularities;

• They have prepared the annual accounts on a going concern basis.

• They have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and

• They have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

12. Particulars Of Conservation Of Energy, Technology Absorption, Foreign Exchange Earnings/Outgo And Employees

Particulars with respect to conservation of Energy, Technology absorption and foreign exchange earning & outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is set out hereunder.

SN Particulars Disclosure
1 Conservation of Energy and Power consumption

Your Company has continued to accord priority to conservation of energy and is continuing its efforts to utilize energy more efficiently.

2 Technology Absorption and Research & Development

Your Companys has developed its own technology base at its office. Your company has not absorbed or imported any technology and no research & development work is carried out.

Earnings Export of goods USD 92,59,841.82 INR 65,13,35,223.10/-
3 Foreign Exchange USD 1,24,39,837.64
Outgo Import of goods GBP 72,183.50
INR 88,19,49,438.21/-

13. Directors and Key Managerial Personnel

Following Directors and / or Key Managerial Personnels were appointed or has resigned –

Change in Company Secretary: Ms. Savita Navik, Company Secretary had resigned from the Company with effect from 15th November, 2018 and Mrs. Dipika Singh was appointed as Company Secretary with effect from 1st February, 2019.

Retirement by rotation: Mrs. Dipti Ketan Shroff, Director of the company, retires under Section 152 of the Companies Act, 2013 at the ensuing Annual General Meeting, and being eligible offer themselves for re-appointment.

14. Declaration by Independent Directors

The Company has received declaration from each independent director under section 149(7) of Companies Act, 2013 that he/she meets the criteria of independence laid down in the section 149(6) of Companies Act, 2013.

15. Performance Evaluation:

In compliance with the Companies Act, 2013, and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the annual evaluation has been carried out by the Board of its own performance, of its committees and Directors by way of individual and collective feedback from Directors. The Directors expressed their satisfaction with the evaluation process.

16. Management Discussion and Analysis Report :

The Management Discussion and Analysis Report as required under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this report and is attached as "Annexure C".

17. Corporate Governance:

Since the Companys securities are listed on SME Emerge Platform of National Stock Exchange of India Limited, by virtue of Regulation 15 of SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015 the compliance with the corporate governance provisions as specified in Regulations 17 to 27 and clauses (b) to (i) of sub- regulation (2) of regulation 46 and Para C, D and E of Schedule V are not applicable to the Company. Hence corporate governance does not form part of this Boards Report.

18. Related Party Transactions

During the financial year 2018-19, your company has entered into transactions with related parties as defined under Section 2 (76) of the Companies Act, 2013 read with Companies (Specifications of Definitions Details) Rules, 2014, which were in ordinary course of business and on arm lengths basis and in accordance with the provisions of Companies Act, 2013, Rules issued thereunder. During the financial year 2018-19, there were no transactions with related parties which qualify as material transactions.

The details of the related party transactions as required under Accounting standard -18 are disclosed in the notes to accounts annexed to the financial statement forming part of this Annual Report.

19. Auditors

Statutory Auditors

In accordance with Sec 139 of the Companies Act, 2013, M/s. R A N K & Associates, Chartered Accountants (FRN. 105589W), were appointed by the shareholders of the Company at the Fifth Annual General Meeting held on 14th August, 2017, as Statutory Auditors for a period of 5 years to hold office until the conclusion of the Tenth Annual General Meeting of the Company to be held in Financial year 2021-22. The requirement for the annual ratification of auditors appointment at the AGM has been omitted pursuant to Companies (Amendment) Act, 2017 notified on May 7, 2018.

Internal Auditor

Pursuant to Section 138 of the Companies Act, 2013, read with relevant rules, if any, M/s. Nimesh Thakkar & Co. (Formerly known as HVN & Associates, Chartered Accountants), were appointed as an Internal Auditor of the Company for the financial year 2019-2020.

Secretarial Auditor

Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company appointed Mr. Anoop Kumar Jain, Practicing Company Secretary (Membership No. 30202, COP: 10955) as a Secretarial Auditor for the Financial Year 2018-2019. The Report of the Secretarial Auditor is annexed to this report as "Annexure D".

The Board of Directors of the Company have further appointed Mr. Anoop Kumar Jain, Practicing Company Secretary (Membership No. 30202, COP: 10955) to undertake the Secretarial Audit of the Company for the financial year 2019-20

20. Details of fraud as per Auditors Report

There is no fraud in the Company during the F.Y. ended 31st March, 2019. This is also being supported by the report of the Auditors of the Company as no fraud has been reported in their audit report for the F.Y. ended 31st March, 2019.

21. Explanation or comments on qualifications, reservations or adverse remarks or disclaimer made by the auditors and the Practicing Company Secretary in their report.

The Report given by the Auditors on the financial statements of the Company is part of the Annual Report. The notes to the Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further explanation. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

Comments mentioned in Secretarial Audit Report are self-explanatory except for which are stated below:

1. Pursuant to Regulation 33 of SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015, i.e. submission of financial results, The company has delayed in filing its financial results for the quarter /half year ended September 30, 2018 by 16 days due to technical glitches on NSE website further all the penalties were waived off by the NSE considering the above genuine cause.

2. Regulation 31 of SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015 according to which the listed entity is required to submit Shareholding Pattern within 21 days from the end of the quarter, There was an unintentional delay of four days in compliance with submitting shareholding pattern for the quarter ended September 30, 2018 and hence a penalty of Rs. 9440/- was paid to the credit of exchange.

3. Regulation 29(2)(3) of SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015 according to which the listed entity is required to give prior intimation to the Stock Exchange about the meeting of Board of Directors. The company delayed in filing prior intimation for the meeting of Board of Directors held on November 15, 2018 and hence a penalty of Rs. 11800/- was paid to the credit of exchange.

22. Extract Of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure A".

23. Particulars of loans, guarantees or investments made under section 186 of the companies act, 2013

There were no loans and guarantees made by the Company under Section 186 of the Companies Act, 2013 during the year under review.

24. Development and implementation of a risk management policy

Your Company has put in place Risk Management Policy to define a framework for identification, assessment and mitigation of risk. In opinion of the Board there are no risks which may threaten the existence of the Company.

25. The Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013

In Compliance with Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013, your Company has constituted an ‘Internal Complaints Committee (‘Committee). Because the number of complaints filed during the year was NIL, the Committee prepared a NIL complaints report. This is in compliance with Section 22 of the Act.

26. Disclosure for maintenance of Cost Records as specified by the Central Government under section 148(1) of the Companies Act, 2013.

The Provision of section 148(1) of Companies Act, 2013 is not applicable to our Company.

27. Particulars Of Employee:

The Company has no employee who is in receipt of remuneration of 8,50,000/-per month or 1,02,00,000/- per annum and hence the Company is not required to give information under Sub Rule 2 and 3 of Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Disclosure under Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are disclosed in "Annexure B".

28. Secretarial Standards

During the Financial Year 2018-19, the company is in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India with respect to Board and General Meetings.

29. Internal Financial Controls Systems and Their Adequacy

Your 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.

30. Issue of Equity Shares with differential rights

During the year Company has not issued any equity shares with differential rights.

31. Issue of Equity Shares

The Company entered the capital market with its SME Initial Public Offering (IPO) of 36,00,000 equity shares of 10.00/- each and at a premium 27.00 per Equity share, aggregating to 1,332.00 Lakhs on 25th April,2018 and has successfully completed its IPO.

32. Acknowledgements

Your Directors place on record their sincere thanks to employees, bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Companies activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company.

On behalf of the board of Directors of

PENTA GOLD LIMITED

(Ketan M. Shroff)

Chairman & Managing Director

(DIN: 00332988)

Mumbai, 15th July, 2019