shrenuj company ltd Directors report

Dear Members,

The Directors hereby present the 34^th Annual Report of your Company and the Audited Statement of Accounts for the year ended 31^st March, 2016.

FINANCIAL RESULTS:

The performance of the Company for the financial year ended 31^st March, 2016 is summarized below:

		(Rs.in Millions)
Particulars	Standalone
	2015-16	2014-15
Net Sales/Income from Operations	17,892.10	27,118.83
Other income	7.55	3.00
Total Revenue	17,899.65	27,121.83
Profit before Finance cost	722.59	1,348.14
Less: Finance cost	1112.84	1,033.63
Profit/ (Loss) before tax	(390.25)	314.51
Less: Tax / deferred tax liability	11.00	109.05
Net Profit / (Loss) before minority interest	(401.25)	205.46
Add/(Less): Share of Minority/Associates	-	-
Net Profit/ (Loss) after tax	(401.25)	205.46
Add: Balance b/f from previous year	1,635.27	1,538.73
Profit available for appropriation	1,234.02	1,744.19
APPROPRIATIONS
General Reserve	-	20.00
Amount debited for change in Depreciation Method	-	42.52
Proposed Dividend	-	38.58
Tax on Proposed Dividend	-	7.85
Surplus in Profit & Loss Account	1,234.02	1,635.24
Total:	1,234.02	1,744.19

OPERATIONS:

The revenue and margins of the Company have faced tremendous pressure from stagnant global markets, rising costs and declining margins. The tightening of banking norms has led to a reduced availability of working capital against a backdrop of rising competition from Chinese and South East Asian companies.

The income of the company reduced to 1,789.96 crores from 2,712.18 crores in the corresponding period last year. The finance costs during the period increased from 103 crores to 111 crores, with a reduced availability of finance from the banks. This was on account of finance limits being constrained due to late receipt of payments from clients, resulting in a few accounts being classified as NPA. The year ended with a net loss of 40.12 crores as against a profit of 20.5 crores last year.

The jewellery operations of the company have come to a standstill towards the end of the year, while the diamond manufacturing operations were operational on a minimal scale. The company had focused on trading of cut and polished diamonds during the second half of the year.

The company has been served with notices of recall of working capital facilities at many of the locations. In some of these locations, legal process of recovery has been initiated by the financing banks. The company is taking all possible measures to respond to these legal notices and resume operations normally.

DIVIDEND AND AMOUNTS TRANSFERED TO ANY RESERVES:

In order to strengthen the financial viability and to overcome the liquidity crunch, your Directors have expressed their inability to recommend any dividend for the financial year 2015-16.

ECONOMIC SCENARIO & OUTLOOK:

The year 2015-16 was quite challenging for the diamond industry. Consumer demand continued to fall in 2015, after it started in China in 2014, followed by the rest of the world in 2015 and beyond. Weaker-than-expected consumer demand affected polished- diamond sales as retailers reduced purchases of polished diamonds. The slowdown extended to midstream companies as they built up inventories and reduced purchases of rough diamonds.

The Bain and Co. data suggests that rough-diamond revenues declined by 24% in 2015 as the midstream segment sold down accumulated inventories. Manufacturers reacted to softening demand by reducing production, increasing inventories and cutting rough-diamond prices. ALROSA, which increased production in 2015 by 6%, saw its inventory levels rise when rough-diamond sales fell in the second half of 2015. De Beers curtailed production by 12% throughout 2015. Rough-diamond prices fell by 15% in late 2015 and remained largely static in 2016s first half.

It is estimated that the cutting and polishing revenues declined by about 2% in 2015. Slowing demand forced midstream players to reduce rough-diamond purchases and unload inventory accumulated in 2013 and 2014. Polished-diamond prices declined by 10% in 2015, and the operating margins of many cutting and polishing manufacturers were at or below breakeven.

Global diamond jewellery demand grew 3% in local currencies in 2015 but declined 2% in US dollar terms. Currency depreciation drove revenue declines in Europe, India and Japan despite sales growth in local currency terms. The industry is stepping up its marketing efforts in generic and targeted programs to boost consumer demand for diamond jewellery.

Despite the positive indicators, the 2016 outlook for global diamond jewellery demand remains uncertain, with retailers reporting minimal sales growth in key markets.

The market experts expect that the medium-term outlook remains challenging, as new supply is expected to come online and uncertainties cloud the social, political and economic environments in key markets. In the long run, the positive macroeconomic outlook is expected to work in the industrys favor—as long as diamond producers behave responsibly and industry players sustain marketing efforts to support diamond jewellery demand, especially among millennials.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS:

The Company has 8 subsidiary companies, 2 located in India and 6 outside India. It has 15 step-down overseas subsidiaries across the globe. There are 10 associate companies within the meaning of Section 2(6) of the Companies Act, 2013. There has been no material change in the nature of the business of subsidiaries till March 31, 2016.

The provisions of Section 129(3) of the Act could not be complied with due to non availability of all accounts from the subsidiaries. This was on account of the disruptions created at the US and Hong Kong subsidiaries of the company by court appointed receivers while the finalization of the accounts was underway. The management is striving to complete the accounts and present it to all stakeholders at the earliest. These accounts shall be placed on the companys website, pursuant to the provisions of Section 136 of the Act.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Pursuant to the provisions of sub-sections (6) and (7) of Section 152 of the Companies Act, 2013, Mr. Vishal S. Doshi, Group Executive Director of the Company (holding DIN:00001474), retires by rotation at the ensuing Annual General Meeting and being eligible have offered himself for reappointment.

Mr. Nihar N. Parikh, Executive Director, Mr. Badrinarayan R. Barwale, Dr. Surendra A. Dave, H.E. Festus G. Mogae, Mr. Minoo R. Shroff, Dr. M. Y. Khan, Independent Directors and Mrs. Geeta Shreyas Doshi, Non Executive Director of the Company have resigned from the Board of the Company since the last Annual General Meeting. Mr. Mayank R. Jain resigned from the post of Group Chief Financial Officer w.e.f. 1^st October, 2016.

Mr. Sanjay M. Abhyankar, Chief Compliance Officer & Company Secretary of the Company resigned from the services w.e.f. 12^th May, 2016 and Mrs. Sujata G. Parab was appointed as Company Secretary & Chief Compliance Officer w.e.f. 10^th November, 2016.

Mr. R. L. Shenoy and Mrs. Aruna Soman were appointed as Independent Directors w.e.f. 21^st March, 2017.

Brief profiles of the Directors proposed to be appointed/re-appointed as required under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 are annexed to the Notice convening the Annual General Meeting.

The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed under the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the Non-Executive and Executive Directors.

The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put on the website of the Company at www.shrenuj.com

BOARD EVALUATION:

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and Individual Directors pursuant to the provisions of the Act and the corporate governance requirement as prescribed under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

The performance of the Board and Committees was evaluated by the Board after seeking inputs from all the Directors/Committee members on the basis of the criteria such as the Board/Committee composition and structure, effectiveness of Board processes/ Committee meetings, attendance, information and functioning.

The Board reviewed the performance of the individual Directors on the basis of the criteria such as the contribution of the individual Director to the Board and Committee Meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings and attendance. The Chairman & Managing Director was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman were evaluated, taking into account the views of the Executive Directors and Non-Executive Directors.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS:

The Companys policy on Directors appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which forms part of the Directors report.

HUMAN RESOURCE MANAGEMENT:

The impact of slowdown in the manufacturing activities has led to a higher rate of attrition amongst employees. The challenge is to control costs while retaining key personnel to be able to revive the business as and when the opportunities present themselves.

Human Resource department has been coping with an immense challenge of sustaining the morale of the employees despite severe headwinds in the business. It is equally challenging to keep them involved during the periods of low work load and declining revenue and profitability. HR department has been constantly engaged during the year to rationalize manpower and manage cost efficiencies in the manpower costs.

VIGIL MECHANISM:

The Board has adouj.com.The/">pted Whistle Blower Policy w.e.f. 1^st January, 2014 and the same is effective. Copy of the said policy is available on the Companys Website The Audit Committee of the Company reviews the functioning of the Whistle Blower Mechanism on regular basis.

POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE FOR WOMEN:

The Company has in place a policy on Prevention of Sexual Harassment of Women at Workplace in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review no complaints have been received from any of the women employees from any location or unit of the Company under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

CORPORATE SOCIAL RESPONSIBILITY:

As required under Section 135 of the Companies Act, 2013 a Corporate Social Responsibility Committee was formed to formulate and recommend to the Board a Corporate Social Responsibility Policy to formulate activities to be undertaken by the Company, recommend the amount of expenditure to be incurred on these activities and to monitor the Corporate Social Responsibility Policy of the Company from time to time.

The Corporate Social Responsibility Policy has been placed on the Companys website www.shrenuj.com for shareholders information.

INSURANCE:

Properties and assets of the Company are adequately insured. Business risk, credit and other potential risks have also been adequately insured.

DIRECTORS RESPONSIBILITY STATEMENT:

As required under Section 134(5) of the Companies Act, 2013, your Directors state that;

(a) in the preparation of Annual Accounts for the year ended 31^st March, 2016, the applicable Accounting Standards, read with the requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(b) the Directors have selected such Accounting Policies and applied them consistently and made judgments 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 March 31, 2016 and of the profit of the Company for the year ended on that date;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared annual accounts on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CORPORATE GOVERNANCE:

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the requirements set out by the Securities and Exchange Board of India. As required under Regulation 27(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, a detailed report on Corporate Governance forms part of the Directors Report as Annexure IX. The Auditors certificate on compliance with Corporate Governance requirements is attached to the Corporate Governance Report.

The Chairman & Managing Directors declaration regarding compliance with the Business Conduct Guidelines (Code of Conduct) is also attached to the Corporate Governance Report.

GENERAL SHAREHOLDER INFORMATION:

General Shareholder Information is given in Annexure X to this report.

EXTRACT OF ANNUAL RETURN:

As provided under Section 92(3) and 134(3)(a) of the Companies Act, 2013 an Extract of Annual Return of the Company is given in Annexure- VII to this Report in prescribed form MGT-9.

MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 is presented in a separate section forming part of the Annual Report as Annexure - VIII.

INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT PLAN:

Section 177(4) of the Companies Act, 2013 mandates Audit Committee to evaluate Internal Financial Controls and Risk Management Systems of the Company. The Board has laid down the procedure to inform the Board Members about the Risk Assessment and minimization on periodical basis since the year 2005. The revised Risk Management policy was adopted and approved on 20^th March, 2015.

The Internal Control Systems of the Company are commensurate with the size, scale and complexity of its operations. These are constantly revised and strengthened. Internal Auditors carry out audit at regular intervals and submit their report to the Audit Committee. Internal Audit plays a key role in providing an assurance to the Board and value adding advisory services to business operations.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis. During the year, the Company had entered into contract/arrangement/transactions with its few of the subsidiaries which were considered material in accordance with Regulation 27(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 and under provisions of Section 188 of the Companies Act, 2013 and for which the Company has obtained prior approval of the Audit Committee, Board and Shareholders as required under the Act and rules made thereunder. Justification for entering into such contracts or arrangements is provided in the Corporate Governance Report. Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies Accounts Rules, 2014 are given in Annexure IV in Form AOC-2 and the same forms part of this report.

AUDITORS AND AUDITORS REPORT:

The Statutory Auditors of the Company, M/s. Rajendra & Co., Chartered Accountants, Mumbai, (Firm Registration No.108355W) hold office as such till the conclusion of the ensuing annual general meeting of the Company and have confirmed their willingness and eligibility for re-appointment. They have also confirmed that their re-appointment, if made, will be within the limits prescribed under Section 141 of the Companies Act, 2013.

The Board has duly reviewed the Statutory Auditors Report on the Accounts.

QUALIFICATIONS IN AUDITORS REPORT AND MANAGEMENT RESPONSE TO THE SAME:

The Statutory Auditors have made certain qualifications in their Report dated 28th May, 2016 for the financial year ended on 31 March, 2016. Most of the observations and comments appearing in the Auditors Report are self-explanatory and do not call for any further explanation/ comments/ clarification by the Board.

Further during the financial year, the Company was under immense financial pressure and hence could not pay certain statutory dues in time and also defaulted in the repayment of loans or borrowings from banks and financial institutions. Management is hopeful for bringing Companys operations/business on normal level very soon.

Regarding auditors comment on non payment of declared dividend, out of 10,071 shareholders as on the date of last Annual General Meeting, dividend was paid to 10,031 shareholders. Due to financial constraints, dividend could not be paid to promoters and few top shareholders.

The Auditors have also pointed out about the provisions of Section 186 of the Companies Act, 2013. Accordingly Members approval is sought for increasing the limit for making investment or granting loan or providing security or providing guarantee not exceeding 2,000 crores (Rupees Two Thousand Crores) to the wholly owned subsidiaries or group companies through Postal Ballot separately.

COST AUDIT:

Ministry of Corporate Affairs, Government of India, vide Notification dated 31^st December, 2014 amended the Companies (Cost Records and Audit) Rules, 2014. Under the amended rules, cost audit is not applicable to the Company.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

The Company sends reminder letters to all shareholders whose dividends are unclaimed so as to ensure that they receive their rightful dues. During the year, the Company has transferred a sum of 2,09,021/- to Investor Education & Protection Fund, the amount which was due and payable and remained unclaimed and unpaid for a period of seven years, for the FY 2008-09 as provided under the Companies Act, 2013. So far a total sum of 41,07,616/- has been transferred to the Fund.

SECRETARIAL AUDIT REPORT:

As required under Section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014 M/s. Hemanshu Kapadia & Associates had submitted its Secretarial Audit Report in Form MR-3 for the financial year ended 31^st March, 2016 to the Board and copy of the same is attached as Annexure - V to the Directors Report.

The Board has duly reviewed the Secretarial Audit Report. Most of the queries/observations raised by the Secretarial Auditor were also raised by the Statutory Auditors and have been explained by the Management in the response to their qualifications. Higher rate of attrition of employees have resulted into few lapses/delays. However, the Management assures that it would strive to comply to all the applicable laws.

The Board has appointed M/s. Hemanshu Kapadia & Associates, Company Secretary in Practice, to submit a secretarial audit report for the FY 2016-17. The said report will be placed in next Financial Year.

OTHER DISCLOSURES:

Number of meetings of the Board:

Five Board Meetings were held during the year 2015-16. Details of which are provided in the Corporate Governance Report which forms part of this Annual Report.

Audit Committee:

The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this report.

Particulars of Loans given, investments made, Guarantees given and Securities Provided:

Particulars of loans given, investments made, guarantees given and securities provided have been disclosed in the standalone financial statements.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure - I to this report.

Particulars of Employees and related disclosures:

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report as Annexure II.

In terms of the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 a statement showing names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in this Annual Report as Annexure-III.

Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at the Registered Office of the Company during the working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The full Annual Report including aforesaid information is being sent electronically to all those members who have registered their email addresses and is available on the Companys website.

GENERAL:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

• Details relating to deposits covered under Chapter V of the Act: The Company has not accepted any fixed deposits.

• Issue of equity shares with differential rights as to dividend, voting or otherwise.

• Issue of Shares (Including Sweat Equity Shares) to employees of the Company under any Scheme save and except ESOS referred to in this report.

• Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

• No significant or material orders were passed by the Regulators or Courts or Tribunals which would impact the going concern status and Companys operations in future. Hence, disclosure pursuant to Rule 8 (5) (vii) of the Companies (Accounts) Rules, 2014 is not required.

• The Debt Recovery Tribunal has passed an order for seizure of the movable stock of the company.

• There is no change in the nature of business.

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:

The stock in trade has been seized by the Receivers appointed by the Debt Recovery Tribunal in India. Companys subsidiary Shrenuj Far East Limited in Hong Kong, Shrenuj South Africa PTY Ltd in South Africa and Simon Golub and Sons in USA are under the receivership of the local courts. These actions have constrained the main revenue streams of the company.

ACKNOWLEDGEMENTS:

Your Directors thank the members, financial institutions, banks, foreign patrons, De Beers, regulatory authorities, Stock Exchanges and all stakeholders for their continued co-operation and support. The Directors also record their sincere appreciation to all executives, officers and employees at all levels and locations of the Company for their commitment and continued contribution to the growth of the Companys business.

	For and on behalf of the Board
Place: Mumbai	SHREYAS K. DOSHI
Date: 21st March, 2017.	CHAIRMAN & MANAGING DIRECTOR

ANNEXURE-I

Particulars as prescribed under Rule 8(3) of Companies (Accounts) Rule, 2014.

A. Conservation of energy

As the Company is not covered in the list of industries required to furnish information in form ‘A relating to Conservation of Energy, the same is not given. Even though its operations are not energy-intensive, significant measures are taken to reduce energy consumption by using energy-efficient equipment. The Company regularly reviews power consumption patterns across all locations and implement requisite improvements/changes in the process in order to optimize energy/power consumption and thereby achieve cost savings.

Energy costs comprise a very small part of the Companys total cost of operations. However, as a part of the Companys conservation of energy programme, the management has appealed to all the employees / workers to conserve energy. The management has set up an on-going process for optimum utilization of machines. The measures taken have resulted in savings in cost of production, power consumption and processing time.

B Research and Development (R & D)

R & D is focused on the development of new products both for export and domestic markets. Due emphasis is placed on improving quality standards with enhanced customer satisfaction. This was primarily achieved through process improvements, control on systems, reduction of waste and energy conservation. Effective use of tools and small group activities with the technological support resulted in controlling the variations in processes, maximizing the productivity and minimizing the cost of production.

1. Specific areas in which R & D carried out by the Company:

i) Material evaluation/Characterization of raw materials and rough diamonds.

ii) Planning, cutting and polishing of diamonds and manufacturing of jewellery.

iii) In house development of advance software for preventing human errors.

iv) Cleaving, kerfing and sawing techniques for diamonds.

v) Designing of jewellery and development of new cuts in diamonds.

vi) Waxing, wax setting, casting, sprue grinding, filling and polishing of jewellery.

vii) Capability development for in- house processes, designs and strategic applications of material for product improvement.

Efforts continued in the direction of fine tuning of the jewellery manufacturing and the changes in designs. These resulted in improvements in product performance.

2. Benefits derived as a result of R & D activity:

The R & D activities helped to add new quality products to the range viz. Diti, Joliesse, Celebration Fire etc. and to achieve greater customer acceptance in the retail market. These activities also enabled the Company to reduce waste, increase productivity, achieve higher "customer satisfaction" and derive following benefits:

a. Increase product range coupled with technology upgradations and cost reduction;

b. Introduction of new products with a focus on achieving global acceptance and in conformity to Indian and International standards;

c. Improved quality in diamond and jewellery manufacturing;

d. Increased customer base and additional business volumes;

e. Reduction in reworks and elimination of manufacturing rejections in jewellery;

f. Improved finish and lustre of diamonds;

g. Ability to calculate precisely the yield on each lot of diamonds and offer promised delivery dates, leading to improvements in buying decisions for rough diamonds and process cycle;

h. Boosting the capabilities, to offer custom-made jewellery and fetching orders in stiff international competition.

3. Future plan of action:

a. Plans to develop new quality products and upgrade existing range of jewellery in order to meet new market trends.

b. The Company will explore various options to adopt latest technology and use of equipment for its operations.

c. Investment in expanding distribution footprint.

Benefits listed below are expected to flow in from initiatives undertaken by the Company:

0 High growth in retail segment 0 Enhancement of goodwill in B2B segment

0 Direct impact on margins by giving access to retailers in target market.

4. Expenditure on R & D for the year ended March 31, 2016.

a. Capital Expenditure	Nil
b. Recurring Expenditure	Nil
c. Total	Nil
d. Total R & D expenditure as a percentage of total turnover	Nil

Expenses incurred on R & D were not material enough to be stated in this report and being an ongoing process, it is difficult to allocate under the above referred heads.

C. Technology absorption, adoption and innovation

1. Efforts in brief made towards technology absorption, adoption and innovation :

Efforts undertaken

The Company values innovation and applies it to every facet of its business. This drives development of distinctive new products, ever-improving quality standards and more efficient processes.

Innovation is embedded in Shrenujs DNA. Shrenuj was the first diamond company to introduce laser processing technology in India, back in 1987. It continues to strive for improvement and has currently adopted technology that helps automate the polishing process.

Product development receives primacy in Shrenuj. The Company has created a number of new and unconventional polished diamond cuts, several of which are patented. It has received numerous industry design awards over the years, and introduced exciting new concepts to consumers, such as multi-functional and interchangeable designs.

The Company has augmented its revenues and per unit price realization by deploying innovative marketing strategies and offering exciting new products. The depth of designing capabilities was the core to our success over the years.

The Company uses the service of in-house designers as well as those of free-lancers in developing product designs as per the emerging market trends. The Company uses innovation in design as well as in technology to develop new products.

2. Benefits derived as a result of the above efforts :

As a result of the above, the following benefits have been achieved:

a. Better efficiency in operations,

b. Reduced dependence on external sources for technology for developing new products and upgrading existing products,

c. Expansion of product range and cost reduction,

d. Meeting Global Standards of quality and increased export potential,

e. Greater precision,

f. Retention of existing customers and expansion of customer base,

g. Lower inventory stocks resulting in low carrying costs,

h. Substantial reduction in returns on account of production defects resulting in lesser rework and reduction in overtime.

3. In case of imported technology (imported during last 5 years reckoned from the beginning of the financial year) following information is furnished:

a. Technology imported	NONE
b. Year of import	N.A
c. Has Technology been fully absorbed?	N A
i. If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action	Not applicable

D. Foreign Exchange earnings and outgo

1. Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; export plans:

During the year under review the Companys exports were 10,504.33 millions, 58.70% of total sales.

2. Total Foreign Exchange used and earned:

		(Rs.in Millions)
	Current Year	Previous Year
Total Foreign Exchange earned on F.O.B. basis	10,504.33	15,659.47
Other Foreign Exchange Earned	18.61	34.35
Total Foreign Exchange used	6,029.47	12,520.76

ANNEXURE-II

The ratio of remuneration of each director to the median employees remuneration and other details in terms of Sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014:

Sr. No.	Requirements	Disclosure	Ratio
I	The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year	Shreyas K. Doshi	16.61 X
		Chairman & Managing Director
		Nihar N. Parikh	18.37 X
		Executive Director
		Vishal S. Doshi	9.90 X
		Group Executive Director
		Dr. Badrinarayan R. Barwale	1.54X
		Dr. Surendra A. Dave	2.10 X
		Keki M. Mistry	1.18 X
		H. E. Festus G. Mogae	1.35 X
		Minoo R. Shroff	2.05 X
		Suresh N. Talwar	1.66 X
		S. S. Thakur	2.25 X
		Geeta S. Doshi	0.68 X
II	The percentage increase/ (decrease) in remuneration of each Directors, CFO, CEO, CS, if any in the financial year	Chairman & Managing Director	( 67%)
		Executive Director	( 68%)
		Group Executive Director	( 63%)
		Dr. Badrinarayan R. Barwale	( 26%)
		Dr. Surendra A. Dave	( 15%)
		Keki M. Mistry	( 8%)
		H. E. Festus G. Mogae	( 22%)
		Minoo R. Shroff	( 15%)
		Suresh N. Talwar	( 12%)
		S. S. Thakur	(17%)
		Group CFO	8.59%
		Chief Compliance Officer & Company Secretary	7.27%
	In case of Smt. Geeta Shreyas Doshi, increase/ decrease in remuneration cannot be calculated/ compared as she was a Director for a part of the previous financial year.
III	The percentage increase in median remuneration of employees in the financial year	The median remuneration of the employees in financial year was increased by 3.59%.
IV	The number of permanent employees on the rolls of the Company	There were 424 employees as on March 31, 2016.
V	The explanation on the relationship between average increase in remuneration and company performance	Due to financial constraints, remuneration of the employees was not increased barring few cases. Instead remuneration of Whole Time Directors was decreased.
VI	Comparison of the remuneration of Key Managerial Personnel against the performance of the Company.	For the FY 2015-16, KMPs were paid 0.11% of total revenue and % of the net profit could not be calculated as there was a net loss during the year.
VII	Variation in the market capitalization of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer.	The Market Capitalization of the Company has drastically declined from 8246.79 millions as on March 31, 2015 to 1282.83 millions as of March 31, 2016. Over the same period, the price to earnings ratio moved down from 40x to -3.2x. The Companys stock price as at March 31, 2016 has decreased by 84.44% to 6.65 from 42.75 as at March 31, 2015.
VIII	Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration	Remuneration of employees was not increased during FY 2015-16. Remuneration of key managerial persons was increased by 7.93%. There is no exceptional rise in salary of any of the managerial personnel.
IX	Comparison of remuneration of each Key Managerial Personnel against the performance of the Company	The comparison of remuneration of each of the key managerial personnel against the performance of the Company could not be calculated as there was a net loss during the FY 2015-16.
X	The key parameters for any variable component of remuneration availed by the Directors	Decided as per Regulatory guidelines as applicable.
XI	The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year	There are no employees receiving remuneration in excess of the highest paid Director during the year.
XII	Affirmation that the remuneration is as per the remuneration policy of the Company.	The remuneration paid to the Employees of the Company is as per Remuneration Policy of the Company.

ANNEXURE - III

Information in terms of provisions of Section 197(12) of the Companies Act, 2013 read with rule 5(2) and (3) of Chapter XIII of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors Report for the year ended 31^st March, 2016.

Name	Designation / Nature of Duties	Gross Remuneration (Rupees)	Date of Joining	Age/ Experience (years)	Qualification	Last Employment held	% of equity shares held	Relationship with Director
Mr. Shreyas K. Doshi	Chairman and Managing Director	48,99,600	13.04.1982	64 / 45	F.Y. Science		12.77	Father of Mr. Vishal S. Doshi
* Mr.Nihar N. Parikh	Executive Director	54,20,197	01.10.1992	48 / 24	B.Com	-	-	None
Mr. Vishal S. Doshi	Group Executive Director	29,20,500	01.09.2001	36 / 16	B. Com	-	7.86	Son of Mr.Shreyas K. Doshi

* Mr. Nihar N. Parikh, Executive Director has resigned with effect from 29^th January, 2016. His remuneration includes gratuity.

Note: Gross remuneration as shown above includes basic salary, house rent/ any other allowance, expenditure incurred on providing housing and other facilities, bonus, superannuation, leave travel, incentives, medical and Companys contribution to provident fund.

ANNEXURE - IV

Form No. AOC- 2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules 2014)

Form for disclosure of particulars of contract/arrangements entered into by the Company with related parties referred to in subsection (1) of Section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto.

1. Details of contracts or arrangements or transactions not at arms length basis

Shrenuj & Company Limited (SCL) has not entered into any contract or arrangement or transaction with its related parties which is not at arms length during financial year 2015-16.

2. Details of material contracts or arrangements or transactions at arms length basis

a. Name(s) of the related party and nature of relationship: Shrenuj USA LLC, Shrenuj Far East Limited, Shrenuj DMCC, Shrenuj N.V. and Shrenuj Jewellery (Far East) Limited, wholly owned subsidiary/step down subsidiary companies.

b. Nature of contract/ arrangement/ transaction: Sale, purchase or supply of diamonds, colour stones, precious metals, studded jewellery etc. and services received and/or rendered.

c. Duration of contract/ arrangement/ transaction: No contract has been entered into as all the transactions with related parties are made in the ordinary course of business and on arms length basis.

d. Salient Terms of contract or arrangement or transaction including the value if any: Not applicable.

e. Date(s) of approval by the Board, if any: Contracts were entered into in the ordinary course of business and on arms length basis and hence approval of Board/ Members was not required to be taken.

f. Amount paid as advances, if any : Nil

	For and on behalf of the Board of Directors,
	Shreyas K. Doshi
Mumbai, 21st March, 2017.	Chairman & Managing Director