Shantivijay Jewels Ltd Management Discussions

Economic Overview & Industry Developments

India’s gems and jewellery exports, which contribute about 15 per cent of the country’s overseas shipments, fell by about 9 per cent to USD 39.5 billion in 2013-14. Exporters were already facing a demand slowdown in the western markets and the imposition of curbs on gold imports acted as a double whammy. The government took steps last year to contain gold imports in a bid to narrow the current account deficit. It raised the import duty on the metal to 10 per cent and made it mandatory for traders to export 20 per cent of imported gold, creating a supply crunch in the domestic market. A local supply shortage hit exports as well, with volumes declining on a monthly basis. The gems and jewellery industry in India caters to both domestic and export demand.The gems and jewellery export sector employs 1.5 million people.

With election of new Government at Centre with clear majority, the effects of near term macro instability in the country appears to have diminished with the narrowing of twin deficits current account and fiscal, rebuilding of the foreign exchange reserves, strengthening of the rupee, all of which point towards disinflationary path for Indian economy. However, economic recovery is yet to materialize as more efforts from the Government are required in terms of removing structural impediments, building business confidence and creating environment in the country to support investment.

Growth in the Indian economy has had been spiraling downward from 9.5 in FY 2011 to around 4.5 in FY 2014. The view in business circles is that the negative growth appears to have bottomed out in Q2 and Q3 of FY 2014 recording 4.8 growth with clear signs of recovery yet to emerge.

Global conditions and falling rupee value against US dollar and other foreign currencies had resulted in increased price of gold and diamonds. This had put a pressure both on overall market and on the competitive position.

Financial and Operational Performance

The Company has made Sales of Rs. 7317.82 as compared to Rs. 6332.37 lakhs in the previous year with increase of over 15%. Consolidated Sales & operating Income have been Rs. 10125.58 lakhs as compared to Rs. 8650.43 lakhs in the previous year with increase of over 17%. Operating Profit has been Rs. 108.18 lakhs as against Rs. 34.06 lakhs in the previous year. It may be noted that operating profit for the year 2012-13 had been significantly lower over mainly due to increased raw material prices. With controlled interest costs, newer market development and better designs, the Company has been able to sustain its volumes and improve margins during the year under review. Net profit of Rs. 92.88 lakhs was reported as against Rs. 116.01 lakhs in the previous year mainly due to lower other income. Consolidated Net Profit has been Rs. 215.77 lakhs as against Rs. 280.95 lakhs in the previous year.

The Company has sustained its performance in spite of weak and uncertain global economic conditions on account of better sales efforts and well acceptance of quality products offered by the Company and controlled costs.

Segment-Wise Performance

The Company is engaged in the Gems & Jewellery business, which as per Accounting Standard AS-17 can be considered as the single reportable business segment. Geographically, the Segment Reporting is as under :

		Rs. in Lakhs
EXPORTS to:	Stand Alone	Consolidated
U.S.A.	2297.27	2488.08
EUROPE	761.99	2616.81
MIDDLE EAST	2138.81	2795.96
OTHERS	1775.66	1880.64
LOCAL SALES	340.15	340.15
Total	7313.88	10121.64

Opportunities

The Company on account of its unit located in Special Economic Zone and Dubai is aptly placed to exploit the opportunities to tap demand from local customers and increasing number of visitors to Duty free shopping zones and world tourist traffic.

Threats

The Company is exposed to risk in exchange rate fluctuations as the Company is dependent on exports sales and import of raw material. However, the Company closely monitors and takes appropriate steps to reduce such risks with the help of expert and professional advices in this regard.

Competition which has always been a challenge is countered by better quality and designs, branding, catering to changing customer demands/styles and cost control measures.

Increasing prices of raw materials have affected and can affect the profit margins. However, the Company continuously thrives for improved production efficiency to counter this risk as far as possible.

Risk & Concern

Since the Company is essentially engaged in the business of export of jewellery, the Company is exposed to national and international political and economical events and uncertainties. Further, higher interest rates due to domestic inflationary conditions can also increase finance cost for the Company with increased volume growth.

Internal Control Systems and their Adequacy

The Company has appropriate and adequate Internal control System commensurate with its size and nature of business to provide reasonable assurance that all assets are safeguarded, transactions are authorized, recorded and reported properly complying with the applicable statutes. Financials and related aspects are reviewed by the Audit Committee with a view to achieve optimum resource utilization, veracity of accounts and compliance with various statutes.

Human Resource Development and Research Activities

The Company has well experienced, creative, talented and motivated staff to cater to the business demands in terms of better designs, quality and precision in manufacture with minimum possible loss and consistency to meet international standards. The Company focuses on development of employees’ skill at all levels and supports them with safe, pollution free and favourable working conditions. Constant efforts are made to upgrade processes, for conceptual designs and improvement in process of gold/platinum refining to improve efficiencies and meet changing international Standards/ demands. As a result, the Company has been successful in sustaining its exports to developed markets and look forward towards developing new markets for sustained volumes.

Outlook

Going forward, the Company expects growth domestically as well as internationally. The Company expects to further consolidate and sustain volumes and improve profitability by winning the end consumer loyalty.

Cautionary Statement

Certain Statements in the "Management Discussion and Analysis" describing the Company’s initiatives, expectations and estimates regarding future performance may be "forward looking statements". However, these statements are subject to certain future events and uncertainties, which could cause actual results to differ materially from those that may be indicated in such statements.

Compliance Certificate

To,

The Members of

SHANTIVIJAY JEWELS LIMITED

G-37, Gem & Jewellery Complex – III,

Seepz, Andheri(East)

Mumbai 400 096

I/We have examined the registers, records, books and papers of SHANTIVIJAY JEWELS LIMITED ("the Company") as required to be maintained under the Companies Act, 1956, ("the Act") and the rules made there under and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on 31^st March, 2014. In my/our opinion and to the best of my/our information and according to the examinations carried out by me/us and explanations furnished to me/us by the company, its officers and agents, I/we certify that in respect of the aforesaid financial year:

1. The Company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per the provisions and the rules made there under and all entries therein have been duly recorded.

2. The Company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies, Regional Director, Central Government, Company Law Board or other authorities within the time prescribed under the Act and the rules made there under.

3. The Company, being a public limited Company, no comments are required on compliance of conditions of a private company.

4. The Board of Directors duly met 5(five) times respectively on 28.05.2013, 12.06.2013, 29.07.2013, 29.10.2013 and 24.01.2014 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed including the circular resolutions passed in the Minutes Book maintained for the purpose.

5. The Company closed its Register of Members from Saturday, 14th September, 2013 to Saturday, 21st September, 2013 (both days inclusive) and necessary compliance of Section 154 of the Act has been made. The Company has not issued any Debentures.

6. The annual general meeting for the financial year ended on 31^st March, 2013 was duly held on 21.09.2013 after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose.

7. No Extra-Ordinary General Meeting was held during the financial year.

8. The Company has not advanced loan to its directors and/or persons or firms or companies referred in the section 295 of the Act.

9. The Company has not entered into any contracts falling within the purview of Section 297 of the Act.

10. The Company has made necessary entries in the register maintained under Section 301 of the Act.

11. The Company has obtained necessary approval from the members pursuant to Section 314 of the Act wherever applicable. The Company was not required to obtain any approvals from the Board of Directors or Central Government.

12. The Company has not issued any duplicate share certificates during the financial year.

13. The Company:

(i) has delivered all the certificates on lodgement thereof for transfer / transmission or any other purpose in accordance with the provisions of the Act. No allotment of securities was made during the financial year.

(ii) has deposited the amount of dividend declared in a separate bank account on 20.07.2012 which is within five days from the date of declaration of such dividend.

(iii) paid/posted warrants for dividends to all the members within a period of 30 (Thirty) days from the date of declaration and that all unclaimed/unpaid dividend has been transferred to Unpaid Dividend Account of the Company with HDFC Bank, Mumbai on 19.08.2012.

(iv) has no unpaid dividend, application money due for refund, matured deposits, matured debentures or interest accrued thereon due for transfer to Investor Education and Protection Fund, and hence, no comments are required on transfer of such amounts.

(v) has duly complied with the requirements of section 217 of the Act.

14. The Board of Directors of the Company is duly constituted. There was no appointment of directors, additional directors, alternate directors and directors to fill casual vacancy during the financial year.

15. The Company has not made any fresh appointment of Managing Director/Whole time Director / Manager during the financial year.

16. The Company has not appointed any sole-selling agents during the financial year.

17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrars or such other authorities as may be prescribed under the various provisions of the Act during the financial year.

18. The Directors have disclosed their interest in other firms/ companies to the Board of Directors pursuant to the provisions of the Act and the rules made there under. 19. The Company has not issued any shares, debentures or other securities during the financial year.

20. The Company has not bought back any shares during the financial year.

21. The Company has not issued any preference shares/ debentures and hence no comments on redemption are required.

22. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer of shares.

23. The Company has complied with the provisions of Section 58A read with Companies (Acceptance of Deposits) Rules, 1975 in respect of interest free deposits/unsecured loans taken, amounting to Rs. Nil outstanding as on 31^st March, 2014 and the Company has filed the copy of Statement in lieu of advertisement as required with the Registrar of Companies, Maharashtra on 23.09.2013. The Company has also duly filed Return of Deposits with the Registrar of Companies. Section 58AA did not apply to the Company.

24. The Company has not made any borrowings from public, financial institutions during the financial year ended 31^st March, 2014. The amount borrowed by the Company from Directors/members and/or banks are within the borrowing limits of the Company and that necessary resolution as per section 293(1)(d) of the Act has been passed in duly convened General Meeting in the past.

25. The Company has made investments in or given loans to other bodies corporate in compliance with the provisions of the Act, wherever applicable, and has made necessary entries in the Register kept for the purpose. The Company has not given guarantees or provided securities to other bodies corporate during the financial year.

26. The Company has not altered the provisions of the Memorandum with respect to situation of the Company’s registered office from one state to another during the financial year under scrutiny.

27. The Company has not altered the provisions of the Memorandum with respect to the objects of the Company during the financial year under scrutiny.

28. The Company has not altered the provisions of the Memorandum with respect to name of the Company during the financial year under scrutiny.

29. The Company has not altered the provisions of the Memorandum with respect to share capital of the Company during the financial year under scrutiny.

30. The Company has not altered its Articles of Association during the financial year.

31. No prosecution was initiated against or show cause notices received by the Company for alleged offences under the Act and no fines and penalties or any other punishment imposed on the Company during the financial year for any offences under the Act.

32. The Company has not received any money as security from its employees during the year under certification.

33. Section 418 does not apply to the Company as the Company has not constituted any separate/recognized Provident Fund for its employees and hence no comments are required.

For SUNIL M. DEDHIA & CO.

Company Secretaries

Sd/-

Sunil M. Dedhia

Proprietor

C. P. No. 2031

Place: Mumbai

Date: 29.05.2014

Annexure "A" annexed to and forming part of Compliance

Certificate dated 29^th May, 2014

REGISTERS AS MAINTAINED BY SHANTIVIJAY JEWELS LIMITED

1. Register of Members and Index of Members u/s 150 and 151

2. Registers and Returns u/s 163

3. Minutes Books u/s 193

4. Books of Accounts u/s 209

5. Register of Share Transfers

6. Register of Directors and Managing Directors u/s 303

7. Register of Directors Shareholdings u/s 307

8. Register of Contracts/Disclosures u/s 301

9. Register of Fixed Assets

10. Register of Deposits u/s 58A

11. Register of Investment/Loans u/s 372A

For SUNIL M. DEDHIA & CO.

Company Secretaries

Sd/-

Sunil M. Dedhia

Proprietor

C. P. No. 2031

Place: Mumbai

Date: 29^th May, 2014

Annexure "B" annexed to and forming part of Compliance Certificate dated 29^th May, 2014

Forms and Returns as filed by SHANTIVIJAY JEWELS LIMITED with the Registrar of Companies, Regional Director, Central Government or other authorities during the financial year ending on 31^st March, 2014.

Form No/ Return	Filed Under Section	For	Date of Filing	Whether Filed Within Prescribed Time Yes/No	If Delay In Filing Whether Requisite Additional Fees Paid Yes/No
1 Form 62	58A	Return of Deposit as on 31.03.2013	12.06.2013	Yes	N.A.
2 Form 62	58A	Filing of Statement in lieu of Advertisement	23.09.2013	Yes	N.A.
4 Form 5 INV	Rule 3 of the Investor Education and Protection Fund (Uploading of information regarding unpaidand unclaimed amountslying with companies) Rules, 2012	Statement of unclaimed and unpaid amounts as on 31.03.2013	20.11.2013	Yes	N.A.
5 Form 66	383A	Compliance Certificate for the financial year ended 31.03.2013	01.10.2013	Yes	N.A.
6 Form 20B	159	For Annual Return as on 21.09.2013	06.11.2013	Yes	N.A.
8 Form 23AC and 23ACA (XBRL)	220	For Balance Sheet As at 31.03.2013	11.10.2013	Yes	N.A.

For SUNIL M. DEDHIA & CO.

Company Secretaries

Sd/-

Sunil M. Dedhia

Proprietor

C. P. No. 2031

Place: Mumbai

Date: 29^th May, 2014