Thangamayil Jewellery Ltd Directors Report.

TOTHE MEMBERS OFTHANGAMAYIL JEWELLERY LIMITED

The Directors are pleased to present the 20th Annual Report and the Audited Statement of Accounts for the year ended 31st March 2020:

Rs in Lakhs

Particulars 2019-20 2018-19
Sales 1,69,196 1,44,335
Gross Profit 19,506 14,047
Earnings before Interest, Depreciation and Taxation (EBITDA) 10,075 7,347
Finance Cost 2,115 2,034
Depreciation 1,019 759
Profit Before Tax (PBT) 6,942 4,554
Tax 2,376 1,528
Profit After Tax (PAT) 4,566 3,026
Other comprehensive income (37) (1)
Total comprehensive income for the year, net of tax 4,529 3,025

In March 2020, the World Health Organisation ( WHO) declared COVID 19 to be a pandemic and the companys operations were fully impacted from 23rd March 2020 till end of May 2020, as all its stores, manufacturing units and offices were closed. The Company has considered the possible effects that may result from the pandemic relating to COVID 19 on the financial results of the company. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the company as at the date of approval of these financial results has used internal and external sources of information. The company has performed an analysis on the assumptions used and based on current estimates expects the carrying value of its assets will be recovered. The Company has made detailed assessments of its liquidity position for the next one year and of the recoverability and carrying values of its assets comprising property, plant and equipment, inventories, receivables and other current assets as at the balance sheet date and on the basis of evaluation based on the current estimates has concluded that no material adjustments as required in the financial results.

As on date, all the manufacturing units, stores/ show room and offices are opened.

On an all-time record turnover of Rs 1,69,196 lakhs for the year, the company made an operating profit of Rs 19,506 lakhs as against Rs 14,047 lakhs made in last year. It represents 39% increase over the last year. It is first time in the history of company made EBITDA profit of more than hundred crores at Rs 10075 lakhs.

Inspite of maintaining the volume, the better results in top line are due to increase in gold and silver price realisation and also due to improved diamond sales during the year that significantly increased the operating profits. The contribution from Diamond and silver jewellery, though on a low base is noteworthy.The proportionate increase in EBITDA margin Vs Turnover is brought out for last four years as under:

Year 1 Turn over (in lakhs) 1 1 EBITDA (in lakhs) W EBITDA %
2016-17 130,059 4,958 3.81%
2017-18 138,086 6,090 4.41 %
2018-19 144,622 7,347 5.08%
2019-20 169,499 10,075 5.94%

You may observe that our top line growth increased by 17% compared to previous years thanks to gold price increase.The proactive managerial initiatives taken collectively over a four years period have resulted in a CAGR (Compounded Annual Growth Rate) 7% only. However, in the areas of value addition the company made a gross profit of 16% CAGR in the last 4 years.

The increased volume of Diamond sales & silver jewellery MRP items along with the existing silver articles incrementally contributed to better return on the working capital investment. The year has seen increase in the volume of gold despite the price hike and customs duty hike. In recognition of this fact, your management has taken certain operational initiatives to improve the ROI on gold inventory in the days to come. The year has also seen a good improvement in the inventory turnover.

The major reasons for better bottom line performance are summarized hereunder;

1 Improved contribution from products other than Gold Ornaments like Diamond, Silver ornaments

1 Continuously better gold price realization in the second half of 19-20

1 Supportive marketing strategies helped to enlarge the customer base and turnover

1 Cost effective procurement of products and manufacturing scales enhancement benefits

1 Results would have been better but for the complete lockdown in 9 days in the March 2020month

1 But for the closure of branches that could have contributed nearly Rs.60 Crores to top line and a minimum of Rs.6.92 Crores to bottom-line. The performance in all aspects is significantly better and attained an all time record both in Top Line and EBITDA profits level. The performance in this background is not only note worthy but also encouraging. But for the loss of business in the first 90 days ( 60 days of complete lockdown and 30 days of partial lockdown) of the current year, we hope that the growth is sustainable and scalable in the remaining part of the year and more so in the years to come. The momentum gained in the new gold ornament items of value relevance is expected to increasingly grow as years go by. It is heartening to note that the bottom line growth is more structural in nature and results out of initiatives taken on marketing, adoption of technology, product mix composition and effective working capital management etc.

Progress in retail outlets expansion

During the year, we commenced operations in twelve retail outlets in addition to the existing 35 branches. The civil work in our own

property inTrichy showroom is ready for operation. But due to Covid- 19 situation the opening of show room got deferred.

LIKELY IMPACT OF COVID 19 ON THE FY 20-21 PERFORMANCE OF THE COMPANY

1 Complete loss of revenue for the first 90 days.This is over and above 9 days lockdown in March 2020.

1 Being a retail outlets dominated Company, the fixed cost associated with rentals, staff compensation, general admin expenses and cost of funds on Idle Inventory are to be met by future operations.

1 Despite major absence of cash flow from operations the Company was able to meet the margin call & MTM funding for hedging operations and metal loan facility. This has resulted in incremental cost of funding upto Rs.101 Lakhs in the first 90 days ( 60 days of complete lockdown and 30 days of partial lockdown) of the current financial year 20-21

1 High gold rate prevailed in the 90 days could not be en-cashed due to complete lockdown administered by Government Authorities

1 Being a consumer discretionary product the immediate demand from customers also is uncertain in the changed business environment

1 It may take some time probably a quarter or so to get back to normal business subject to opening of the economy fully.

1 Even the replacement avenues take more time as the handmade manufacturing activity throughout the country came to a halt that would elongate the working capital cycle.

1 The adverse impact of lack of liquidity among customers that would force them to sell the old gold ornaments to tide over financial difficulties could not be quantified currently.

1 The organized sector will be affected due to gold price differentials between demand driven local price vs International price fixed by banks / importers.

1 The benefits that could have accrued on the seasonality of the First Quarter sales were lost due to closure of shops for 90 days ( 60 days of complete lockdown and 30 days of partial lockdown) in the first quarter 20-21

1 However once normalcy is attained in the trade we may perhaps be left with certain positive factors that may emerge prospectively.

DIVIDEND

The Board of Directors of the Company in their meeting held on 14th March , 2020, declared an interim dividend of Rs 5 (i.e. 50%) per equity share (face value of Rs 10 each ) on the paid up equity share capital of the Company for the-financial year ended 31 March 2020 amounting to Rs 827 lakhs (including dividend distribution tax of Rs 141 lakhs). The Board has not recommended any final dividend and the interim dividend as aforesaid be considered as final dividend for the financial year ended 31 March 2020.

The Board of Directors at its meeting held on May 22, 2019 had declared a dividend of Rs 5.00 per Equity shares ( face value of Rs 10 each) and the same was paid during the year. The proposal was approved by shareholders at the Annual General Meeting held on August 1,2019. This has resulted in a total outflow of Rs 827 lakhs including corporate dividend tax of Rs 141 lakhs.

HEDGING

The company has got a well-defined operative"Hedging" mechanism in place. The company availed more loan under"metal loan" category of finance from banks at concessional rate of interest besides ensuring a natural hedge on such procurement. It is 73% (previous year 62%) as against the internal set target of 75:25. Though we couldnt make any inventory profit in a rising gold price situation it is also equally true that an exceptional non operative inventory loss need not be incurred in a falling price situation. Based on our experience and the current gold price movement trend we are of the opinion that the ratio at the most can go upto 75:25 in the overall operational interest of the company.

Gold metal hedged in Inventory Holding chart

CONTINUING CHALLENGES

1 Extra ordinary regulatory conditions prevailing in the trade environment.

1 The structural issues like competition from other consumer Discretionary items

1 A wide price difference in the Gold Price noticed between small retailers as against organized players

1 The cyclical impact of gold price appreciation on a stable basis restricts the purchasing power of the customers

1 In spite of implementation of GST the price advantage the unorganized retailers get often culminates in stagnation of volume growth in the organized sector

1 Due to reduction in margin of safety the industry not in position to absorb the inflation related cost parameters including wages, transportation & compliances

1 Above all, the recent COVID 19 pandemic has created a major challenge in conduct of business with a lot of restrictions on the movement of men & material etc that could have an adverse impact on the performance

FUTURE PROSPECTS

1 The uncertainty related to the impact of COVID 19 is looming large

1 The loss of revenue for the 90 days of the current year over and above a loss 9 days operations in March,2020 will have an adverse impact on the overall performance of the Company.

1 It all depends on how swiftly we could get back to normalcy and operate all our existing & new retail showrooms that will determine the performance in the next 9 months.

1 Slowing economy likely negative GDP growth environment, reluctant banker to lend incrementally both to the supplier and demand creators of the society would determine the future status of the Industry.

1 The effective management strategies and policies post COVID 19 situation and its implementation success will determine the performance of the Company in 20-21.

1 However barring any other unforeseen adverse impact on operations, we are hopeful of regaining attained prior to COVID 19 pandemic within the shortest time possible subject to lifting of lockdown fully.

1 At the current juncture, due to too many uncertainties we are not able to indicate the growth momentum but however reasonably confident of getting back to revival mood.

DEFERREDTAX ASSETS

The company as per Ind AS requirement has created deferred tax assets Rs 8.51 lakhs as against deferred tax liabilities of Rs 106.61 lakhs of previous year. The company elected to exercise the option permitted under section 115 BAA of the Income Tax Act 1961, as introduced by the Taxation Laws (Amendment) Ordinance, 2019. Accordingly, the company has recognised provision for Income tax for the year ended and re measured its deferred tax basis the rate prescribed in the said section. The full impact of this change has been recognised in the statement of profit & loss accounts. As a consequence, to that the available MAT credit entitlement of Rs.498 lakhs as per books is written off in the current year.To that effect, tax provision is increased by Rs.498 lakhs for the year ended 31st March 2020.

CONTRIBUTION TO EXCHEQUER

The Company is a regular payer of taxes and other duties to the Government. The Company has paid GST of Rs 5,106 lakhs as compared to Rs 4,286 lakhs paid in the previous year and The Income tax and tax on Dividend Distribution amounts to Rs 2,019 lakhs was paid as against Rs 1,025 lakhs for financial year 2018-19.

CAPITAL EXPENDITURE

During the year, we capitalized Rs 784 Lakhs to our gross block comprising of Rs 679 lakhs for Plant & Machinery and Furniture & Fittings and other assets and balance of Rs 105 lakhs for Computer Equipments including Software.

The capital work in progress amount outstanding as on 31st March 2020 is Rs 202 lakhs (previous year Rs 119 lakhs). This comprises of interiors and other assets still to be put in use and are yet to be capitalised.

For the previous year, we capitalized Rs 466 lakhs to our gross block comprising Rs 369 lakhs for Plant & Machinery and Furniture & Fittings and others and the balance of Rs 97 lakhs for Computer Equipments including Software.

FINANCE

For the required working capital for the current year based on the estimates, the company is fully supported by various sources of finance.

The secured working capital outstanding borrowing of the company as at 31st March 2020 stood at Rs 20,655 lakhs as against Rs 181.56 lakhs of the previous year. The aggregate working capital facilities from member bankers are at Rs 24,100 lakhs. The company is not having any term liability with bankers.

The eligible fixed deposits limit from public &shareholders is Rs 6,762 lakhs. However, the company took only Rs 5,216 lakhs as at 31st March 2020. Besides, the promoters unsecured loan of Rs 1,240 lakhs at 6% interest continued to be in the company to support its long-term fund requirements. In all, the liquidity position is quite good and comfortable. Interest outgo have decreased - marginally compared to previous year. The per gram interest payment on sales works out to Rs 49 as against Rs 50 of previous year. This marginal decrease is on account of decrease on interest rate on promoters loan outstanding.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE

WHICH ARE REPORTABLETOTHE CENTRAL GOVERNMENTWHICH ARE REPORTABLETOTHE CENTRAL GOVERNMENT

The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Companies Act,2013 (including any statutory modification(s) or re-enactment(s) for the time being in force).

DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(5) of the Companies Act, 2013:

a) In the preparation of the annual accounts, the applicable accounting standards had been followed and there is no material departure.

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 at the end of the financial year and of the profit and loss of the company for the year;

c) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) The directors have prepared the 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 were operating effectively. Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information; and

f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

MANUFACTURING FACILITIES

Utilisation of own manufacturing facilities including on job work basis is around 95% as against 92% of the earlier years. The overall cost of production has come down due to attainment of scale of economics in the manufacturing facilities. It is expected to improve the own manufacturing capacity utilisation in forthcoming years. On a need basis, at short notice, handmade items capacity could be enlarged.

DEPOSITORY SYSTEM

The trading in the Equity Shares of your Company is under compulsory dematerialization mode. As on March 31, 2020, Equity Shares representing 100% of the equity share capital are in dematerialized form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialization of the Companys shares.

CORPORATE GOVERNANCE

Your Company has been practicing the principles of good corporate governance over the years and lays strong emphasis on transparency, accountability and integrity.

A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Regulation 27 of SEBI (LODR) 2015 of the Listing Agreement(s) with the Stock Exchange(s) forms part of this report.

The Chairman and Managing Director and Joint Managing Directors of the Company have certified to the Board on financial statements and other matters in accordance with Regulation 17 (8) of SEBI (LODR) 2015 of the listing agreement pertaining to CEO certification for the financial year ended 31st March 2020.

Large corporate entity :

SEBI vide their notification SEBI /HO/DDHS/CIR/2018/144 dated: 26.11.2018 have made mandatory to all listed entities the initial disclosure with regard to outstanding of long term borrowings of Rs 100 crores and above in the specified format given by them with effect from 01.04.2019. The respective stock exchanges intimated us to give a declaration in case we are not coming under large corporate as per the circular. Accordingly we have confirmed through our declaration that we are not coming under large corporate entity as there is no such long term borrowings of Rs 100 crores as on the date during the financial year ended 31.03.2020.

Independent Women Director :

1) In terms of R.17 of amended SEBI (LODR) Regulations, 2018 and further amendment the Board of Directors of the company of top 1000 listed entities shall have atleast one independent women director by 1st April 2020. We are in the process of appointing such a candidate and due to Covid-19 pandemic and continuous lockdown declared by Tamilnadu Government till July 2020, the appointment is getting delayed. However, the process is continuing and we would meet the requirement at the earliest. We have already intimated this to the concerned Stock Exchanges.

2) U/R 17, with regard to Non-Executive chair person of the Board since we do not come under the top 500 listed entities the same is not applicable to us right now.

3) U/R 25(10), with regard to Directors and officers Insurance for all Independent Directors with effect from 1st October 2018 as we do not fall under the category of top 500 listed entities the same is not applicable to us at present.

4) U/R 34(3), Vide SBEI (LODR) amendment regulation 2018 the company has obtained a certificate from a practicing company secretary with regard to Non-Disqualification certificate and the same has been attached along with Corporate Governance report of the Annual Report as required.

DISCLOSURE REQUIREMENTS

As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors Certificate thereon, and the integrated Management Discussion and Analysis including the Business Responsibility Report are attached, which forms part of this report.

LISTING OF SHARES

The Equity Shares of your Company continue to remain listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The listing fees for the year 2020-21 have been paid to these Stock Exchanges. The Shares of the companies are compulsorily tradable in dematerialized form.

INSURANCE

The assets of the Company are adequately insured against fire and such other risks, as are considered necessary by the Management.

HUMAN RESOURCE DEVELOPMENT

Many initiatives have been taken to support business through organizational efficiency, development, resourcing, performance & compensation management, competency-based development, career & succession planning and organization building. Leadership development is one of the primary key initiatives of the Company. Primary personal development program has been taken up as long term strategy of the Company. A significant effort has also been undertaken to develop leadership as well as administrative / functional capabilities in order to meet future talent requirement.

The Company continues to maintain pleasant relations without any interruption in work. As on 31st March 2020, the Company has 1,342 employees on its rolls as against 1361 employees in the previous year.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

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

Disclosures 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 Annexure -1.

Having regard to the provision of the first provision 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 corporate office of the Company during 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 the aforesaid information is being sent electronically to all those members who have registered their main addresses and is available on the Companys website.

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

Pursuant to section 134 (3) (n) of the Companies Act, 2013 & under regulation 21 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015, the company has adopted risk management policies to monitor the business.

Business Risk Evaluation and Management (BRM) is an on-going process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities.

The objectives and scope of the Risk Management Committee broadly reviews:

1. Overseeing of risk management performed by the executive management;

2. The BRM policy and framework formulated in line with local legal requirements and SEBI guidelines;

3. Risks and evaluate treatment including initiating mitigation actions and ownership as per a pre-defined cycle;

4. Defining framework for identification, assessment, monitoring, and mitigation and reporting of risks.

5. Within its overall scope as aforesaid, the Company shall review risks trends, exposure, and potential impact analysis and mitigation plan.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

INFORMATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 134 (3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8(3) OFTHE COMPANIES RULES, 2014.

a) Conservation of Energy

The disclosure of particulars with respect to conservation of energy pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with rule 8(3) of the companies (accounts) rules, 2014 are not applicable as our business is not specified in the Schedule . However, the company makes its best efforts to conserve energy in a more efficient and effective manner.

b) Technology Absorption, Adaptation and Innovation

The company has not carried out any specific research and development activities. The company uses indigenous technology for its operations. Accordingly, the information related to technology absorption, adaptation and innovation is reported to be NIL.

c) Foreign Exchange Earning and Outgo Potential Risks, Concerns And Mitigation Plan Risk of loss of Positioning in the market place

Due to stiff competition in the retail trade, there is a possibility that our market share from a particular place of operation or region may decline. A lot of new entrants to the retail trade suffer from lack of knowledge of customers preference and on quality parameters and price war. Therefore, your company with its fuller penetration to rural market is well placed to participate in the rural success story of the country. In order to maintain/improve market share in the areas we operate in the light of sagging regressive demand trends, we have cautiously brought down the mark up value for our products moderately and also improved customer service through online and offline mode. Providing product knowledge, the customers to buy a quality product in the market.

Monsoon

Monsoon failure for successive years in southern parts of Tamil Nadu adversely affected the companys business. The purchasing power with rural people who depend on Agriculture substantially got marginalized. This has resulted in demand compression and led to a period of continuous recession unparalleled in the recent history of jewellery trade. Dwindling customer demands and purchase of other electronic goods by the customers have resulted in purchase of ornaments generally coming down in jewellery business. This has resulted in customer opting for light weight items. The company has decided to stock more of such items in order to get better share from sagging market as in the last year as well as operating TMJL plus model to carry silver products and articles to encourage customer walkin.

Change in lifestyle

The disposable income of both middle class and upper middle class and change in lifestyles of people leads to shifting of consumer base to branded jewellery. Even though this will be a major risk factor for long term growth of the company, the change

in peoples taste and preferences are ascertained through various sources and accordingly change in our product mix were done by well-equipped team.

Economic risk

Economic slowdown can affect the demand and the sales for the company.

Mitigation: The Company has a diversified product portfolio that generates robust sales from either of the category to balance any uncertain circumstances. The present Indian economy is quite strong as commodity prices and bank lending rates have declined. Since jewellery industry is always associated with wedding and other traditional occasions and demand for jewellery remain constant.

Competition risk

Increasing competition from new entrants as well as existing ones.

Mitigation: The Company manufactures quality products and better services and offers that at a reasonable price to reach people through communications via different media. IT undertakes extensive promotion and advertising to create value , positioning and recall for the power brands.

Margin risk

Lack of control over the cost, may lead to lower profitability and can impact future growth prospects.

The centralised procurement policy, by which our team anticipates stock requirement and make bulk purchases at the time when gold price is low. The economies of scale and correct procurement timing enable the company to significantly reduce the cost of the raw material. The company procures a certain quantum of gold on lease from banks and purchases gold on daily basis on the actual sale made by it.This strategy safeguards the company from gold price fluctuation.

Gold price fluctuation risks

Gold price fluctuation risk could arise on account of frequent changes in gold prices either up or downside momentum. It could have adverse impact on earnings. We are maintaining our inventory price hedging around 73:27 basis. This will help the company with any gold price fluctuation of gold price. Your Board will take appropriate action in managing the fluctuation impact in gold price movement from time to time to increase to 75:25basis.

Change in Government Policies

New government regulations pertaining to taxation and banking stringent norms will affect the demand and supply chain.

Your company with help of well-experienced IT and managerial personnel, the implications of all these regulations are clearly analysed, interpreted and necessary compliance measures are undertaken.

Human Resources

Employee attrition may affect the operation of the Company.

Mitigation:

The Company encourages new talent and provides specialised training to the sales force to ensure the roots are grounded well, improving the performance standards, improving incentive scheme to the employees and positively contribute towards growth of the company.

Seasonal Risk:

Sluggish sales of products due to seasonal changes may affect profitability of the Company.

Mitigation: The wide ranged designed product profile and customer needs product will help against the season ups and down. Compliance risk

Non-compliance of regulations may raise the operation risk for the Company.

Mitigation: The Company has a structured internal control system in place to ensure all statutory rules and regulations are met including changes in taxation and other regulatory framework.

Disruption and Uncertainty in Business due to COVID -19 pandemic

The COVID 19 pandemic has created a major challenge in conduct of business with a lot of restrictions on the movement of men & material etc that could have an adverse impact on the performance. This is likely to affect the companys earnings in the short term and medium term.

Mitigation: Guidance and mandate of appropriate social distancing measures and work places. Regular communication with big ticket customers about measures taken to maintain sales services. Drawing up of plans and identification of opportunities for proposing new solution post Covid -19 disruption.

Cost management:

The Company is improving meticulously its focus on cost through a resourceful operating system, increase in the production Capacity and strengthening of manufacturing units and various sourcing points are being pursued to reduce manufacturing costs and also delivering quality of product at lower price. Logistics facilities are strengthened. Synergy optimization in various cost components is achieved.

INTERNAL CONTROL SYSTEMS

The Board of Directors is responsible for ensuring that internal financial controls have been laid down in the Company and that such controls are adequate and is functioning effectively. TMJL has policies, procedures, control frameworks and management systems in place that map into the definition of Internal Financial Controls as detailed in the Companies Act, 2013. These have been established at the entity and process levels and are designed to ensure compliance to internal control requirements, regulatory compliance, and appropriate recording of financial and operational information.

Internal Financial Controls that encompass the policies, processes, and monitoring systems for assessing and mitigating operational, financial and compliance risks and controls over related party transactions, substantially exist. The management reviews and certifies the effectiveness of the internal control mechanism over financial reporting, adherence to the code of conduct and Companys policies for which they are responsible and also the compliance to established procedures relating to financial or commercial transactions, where they have a personal interest or potential conflict of interest, if any.

The Audit Division continuously monitors the efficacy of Internal Financial Controls with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organisations risk management, control and governance processes. The audit plan is approved by the Audit Committee, which reviews compliance to the plan.

During the year, the Audit Committee met regularly to review reports submitted by the Audit Division. All significant audit observations and follow-up actions thereon were reported to the Audit Committee.

The Audit Committee also met the Companys Statutory Auditors to ascertain their views on financial statements, including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal controls and systems followed by the Company. The Management acted upon the observations and suggestions of the Audit Committee.

Details Of Policy Developed And Implemented ByThe Company On Its Corporate Social Responsibility Initiatives (CSR)

Based on the financial year ended 31st March 2020 Company required to spend CSR expenses for Rs 65.85 lakhs and with an amount of Rs 45.98 lakhs unspent in the previous year 18-19 , company has spent Rs 67.24 lakhs towards CSR activities for financial year 19-20. The details of expenses CSR activities as mentioned at annexure 2 of the report which may kindly be referred to for more details.

The company has spent a sum of Rs.67.24 lakhs towards the following activities in the financial year ended 31.03.2020

S.No Details Rs. In lakhs
1 Gosala funding 54.55
2 Towards medical / Eye camp to poor 5.00
3 Food and Water to the public 5.28
4 Plants sapling for public benefits 0.82
5 Storm relief ( Gaja Puyal) 1.59
Total 67.24

As against Rs.111.83 lakhs to be spent, the company has spent a sum of Rs.67.24 lakhs as per above details thereby there is a balance amount of Rs.44.59 lakhs to be spent.

The Annual Report on CSR activities is annexed herewith as "Annexure 2".

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OFTHE COMPANIES ACT, 2013

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

Particulars of contracts or arrangements with related parties referred to in Section 188(1)

All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel, or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee as also in the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive in nature. The transactions entered pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

The Annual Report on related party is annexed herewith as"Annexure 3".

COMPANYS POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

The Companys Policy relating to appointment of Directors, payment of Managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Annexure -4 and is attached to this report.

ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is available in Company website.

NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

During the year Six Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary, Joint venture or Associate Company.

S.No Particulars in Lakhs
1 Amount remained unpaid or unclaimed as at the end of the year 90.95
2 Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved Nil

DEPOSITS

The details of deposits remain unpaid during the year under review are furnished hereunder:

DIRECTORS

Smt.Yamuna Vasini Deva Dasi Non - executive and Non - Independent Director of the Company retires by rotation and being eligible seeks reappointment.Your Board recommends her re-appointment.

DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfil all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

The Details of familiarisation programme arranged for independent directors have been disclosed on website of the company and are available atwww.thangamayil.com

CODEOFCONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviours of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as"code of business conduct" which forms an Appendix to the Code.The Code has been posted on the Companys website www.thangamayil.com. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance through examples on the expected behaviour from an employee in a given situation and the reporting structure.

All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard.

STATUTORY AUDITORS

The Companys Auditors, Messrs Srinivas & Padmanabhan Chartered Accountants, (Firm Reg.No.004021S) Chennai were appointed as the Statutory Auditors of the company at the Annual General Meeting held on July 2017 up to 31st March 2022. The Company has received letter from them to the effect that their appointment, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment. The Auditors Report to the shareholders for the year under review does not contain any qualification.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr.S .Muthuraju, a Company Secretary in Practice to undertake the Secretarial Audit of the Company.The Report of the Secretarial Auditor is annexed herewith as"Annexure 6".

COMMENTS ON AUDITORS REPORT

There are no qualifications, reservations or adverse remarks or disclaimers made by Srinivasan and Padmanabhan, Statutory Auditors, in their report and by Mr. S. Muthuraju , Company Secretary in Practice, in his secretarial audit report.

The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.

INTERNAL AUDIT AND CONTROL SYSTEMS

The company has an effective in-house internal audit system. The persons are well trained to cover various areas of verification inspection and system evaluation. All the mandatory compliances required to be followed under various statutes are exhaustively covered in their scope. We have effective and adequate internal audit and control systems, commensurate with our business size. Regular internal audit visits to the operations are undertaken to ensure that high standards of internal controls are maintained at each level. Independence of the audit and compliance function is ensured by the auditors direct reporting to the Audit Committee. Details on the composition and functions of the Audit Committee can be found in the chapter on Corporate Governance of the Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

ENHANCING STAKEHOLDERS VALUE

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Companys operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to create value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company has a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of women at workplace and matters connected therewith or incidental thereto covering all the aspects as required under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013. There were no such complaints received under the policy during the year.

DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDINGVIGIL MECHANISM

Pursuant to the provisions of the Companies Act, 2013 and under regulation 25 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

The Audit Committee consists of the following members

a. Mr.S.Rethinavelu - Chairman
b. Mr.V.R.Muthu - Member
c. Mr.Ba.Ramesh - Member

The above composition of the Audit Committee consists of independent Directors viz., Mr. S.Rethinavelu and Mr.V.R.Muthu who form the majority.

The Company has established a vigil mechanism and overseas through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of Company employees and the Company.

ANNUAL EVALUATION BYTHE BOARD

The evaluation framework for assessing the performance of Directors Comprises the following key areas:

1. Attendance of Board Meeting and Committee Meetings

2. Quality of Contribution to Board deliberations

3. Strategic perspectives or inputs regarding future growth of Company and its performance

4. Providing perspectives and feedback going beyond information provided by the management

5. Commitment to shareholders and other stakeholder interests

The evaluation involves self-evaluation by the Board Members and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/ her evaluation.

PREVENTION OF INSIDER TRADING:

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when theTrading Window is closed.The Board is responsible for implementation of the Code. All Directors and the designated employees have confirmed compliance with the Code.The same has been displayed at the companys website atwww.thangamayil.com

SHARES

a. Buy Back Of Securities

The Company has not bought back any of its securities during the year under review.

b. Sweat equity

The Company has not issued any Sweat Equity Shares during the year under review.

c. Bonus shares

No Bonus Shares were issued during the year under review.

d. Employees Stock Option Plan

The Company has not provided any Stock Option Scheme to the employees.

FORWARD-LOOKING STATEMENTS

Statements in the Boards Report and the Management Discussion & Analysis describing the Companys objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include domestic demand and the demand & supply conditions affecting selling prices, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

ACKNOWLEDGEMENTS

Your directors express their sincere gratitude and appreciation to the employees of the company who have devotedly and steadfastly stood with the company and for the enduring hard work for the betterment of the company.

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

BY ORDEROFTHEBOARD
For Thangamayil Jewellery Limited
BALARAMA GOVINDA DAS Ba. RAMESH , N.B. KUMAR
Managing Director Joint Managin Directors
Place: Madurai
Date: June 29, 2020