BOARD'S REPORT TO THE MEMBERS OF PUNIT COMMERCIALS LIMITED 1. The Directors take pleasure in presenting the Thirty First Annual Report together with the audited financial statements for the year ended 31st March, 2016. 2. HIGHLIGHTS OF PERFORMANCE • Total income for the year decreased by 97.88% to Rs. 8,53,918/- as compared to Rs. 4,03,09,921/- in 2014- 15. • Total net sales for the year was Rs. Nil/- as compared to Rs. 3,30,39,047/- in 2014-15, a decrease of 100.00% • Total profit before tax for the year was Rs. (25,95,432)/- as compared to Rs. 1,03,012/- in 2014-15. 3. BUSINESS OPERATIONS The goal of the Company is to manufacture and market high quality diamond products that excite and attract consumers. The Company believes that the best way of creating value is through a fully integrated business model, benefiting from efficiency gains and better product control. There was no change in nature of business of the Company, during the year under review. 4. DIVIDEND With a view to deploy the profits into the existing operations of the company, Board of Directors recommended any dividend for the year. 5. TRANSFER TO RESERVES The Board of Directors has not recommended transfer of any amount to reserves. 6. SHARE CAPITAL The paid up Equity Share Capital as on 31" March, 2016 was Rs. 24 Lacs. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. There was no change in the Company's share capital during the year under review. 7. DEPOSITS The Company has not accepted deposit from the public and shareholders falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Hence, the requirement for furnishing details of deposits which are not in compliance with the Chapter V of the Act is not applicable. 8. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. 9. SUBSIDIARY COMPANIES The Company has no Subsidiary Company. 10. DIRECTORS 10.1 Retirement by Rotation Pursuant to Section 152 (6) of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Nirav Mehta, Director, retires by rotation at the forthcoming Annual General Meeting. Being eligible, he offers himself for re-appointment. 10.2 Board Evaluation The Board carried out an annual performance evaluation of its own performance, the individual Directors as well as the Board Committees, in due compliance with the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. The performance evaluation of the Independent Directors was carried by the entire Board and the performance evaluation of the Chairman and Non — Independent Directors was carried out by the Independent Directors. The Board evaluation was carried out in accordance with the criteria laid down in the Nomination and Remuneration policy of the Company. 10.3Key Managerial Personnel The following persons have been designated as Key Managerial Personnel of the Company pursuant to Section 2(51) and Section 203 of the Act, read with Rule 8(5) (iii) of the Companies (Accounts) Rules, 2014 framed thereunder. 1. Mr. Nirav Mehta, Managing Director 2. Mrs. Fatima Dsouza, CFO None of the Key Managerial Personnel have resigned during the year under review. 10.4 Remuneration Policy The Board has in accordance with the provisions of sub-section (3) of Section 178 of the Companies Act, 2013, formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and Senior Management Employees. The detail of the same has been disclosed in the Corporate Governance Report. 10.5 Meetings A calendar of Meetings is prepared and circulated in advance to the Directors. During the year the Company has held 4 (Four) Board Meetings which were held on 30th May, 2015; 12th August, 2015; 7th November, 2015 and 12th February, 2016. The maximum interval between any two meetings did not exceed 120 days. 11. 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(3)(c) of the Companies Act, 2013: a) that in the preparation of the financial statements for the year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b) that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistency and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31fl March, 2016 and of the profit of the Company for the year ended on that date; c) that proper and sufficient care has been taken 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) that the annual financial statements have been prepared on a going concern basis; e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. 12. PLEDGE OF SHARES None of the equity shares of the Directors of the Company are pledged with any banks or financial institutions. 13. RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on an arm's 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 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 nature. The transactions entered into 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 the Board of Directors for their approval on a quarterly basis. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. 14. 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. 15. DISCLOSURES UNDER SECTION 134 (3) (1) OF THE COMPANIES ACT, 2013 No material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year of the Company and date of this report. 16. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the year 2015- 16: Particulars Number of Complaints Number of complaints received Nil Number of complaints disposed off Nil 17. COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES There are no companies which have become or ceased to be its Subsidiaries, Joint Venture or Associate Companies during the financial year 2015-16. 18. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES The criteria prescribed for the applicability of Corporate Social Responsibility under Section 135 of the Companies Act, 2013 is not applicable to the Company. 19. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY The paid up share capital of the Company is Rs. 24 Lacs as on 31st March, 2016. The reserve and surplus is Rs. 105.58 Lacs. Accordingly, the paid up capital and net worth is below the prescribed limit for mandatory applicability of Corporate Governance clause. The Company has decided not to opt for compliance of Risk Management policy of Regulation 21 read with regulation 15 of SEBI Regulations for the time being due to the size of the business and the Company has not formed Risk Management Committee as it is not applicable under regulation 21 of the SEBI (LODR) Regulations, 2015. 20. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Company monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective thereby strengthen the controls. 21 VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy are explained in the Corporate Governance Report. 22. AUDITORS 22.1 Statutory Auditors The Company's Auditors, M/s K.P. Mehta & Co., Chartered Accountants, who retire at the forthcoming Annual General Meeting of the Company, are eligible for re-appointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for reappointment as Auditors of the Company. As required under regulation 33 of SEBI (LODR) Regulations, 2015, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. 22.2 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 M/s P. P. Shah & Co., Practicing Company Secretary to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure A". 223 Qualifications in Secretarial Audit Report a) Appointment of Company Secretary: As per section 203 (1) (li), the Company is required to appoint Company Secretary. The Company has not appointed Company Secretary, consequently the annual audited financial statements are not signed by Company Secretary. In this regard the management of the Company has provided the following reply: (i) The Company has appointed Mrs. Fatima Dsouza, CFO as Compliance Officer of the Company who looks after the compliance of Companies Act, 2013 and SEBI Act and rules made thereunder (ii) The Company has availed the services of Practicing Company Secretary for advising on compliance of Companies Act, 2013 and SEBI Act and rules made thereunder (lii) The Volume and Scope of work for the Company Secretary is less and it is not a full time work and the job of Company Secretary is not attractive commensurate with the scope of work and salary b) Appointment of Internal Auditor As per section 138 of the Companies Act, 2013, the Company is required to appoint Internal Auditor. The Company has not appointed Internal Auditor, In this regard the management of the Company has provided the following reply: i) The size of operation of the Company is very small, it is not viable to appoint Internal Auditor but the Company has established the internal control system c) E-Voting in Annual General Meeting: As per rule 20 of Companies (Management and Administration) Rules, 2014, every listed company or a company having more than 1000 members must provide e-voting facility to its members while seeking their approval on resolutions proposed in the General Meeting. The Company did not provide e-voting facility to its members in respect of resolutions passed at the 30th Annual General Meeting held on Friday, 28th August, 2015. In regard the Management has given the following reply: "The Company is having 11 shareholders under public category and 3 shareholders under promoter category. Of the 11 shareholders from public category, 1 is the director of the Company and another is employee of the Company. Hence the cost for availing e-voting is not viable." d) Composition of Audit Committee & Nomination and Remuneration Committee As per section 149 of the Companies Act, 2013, the company is required to have one third of total Directors as Independent Directors, The Company is having 3 Directors of which 2 are promoters (1 is Managing Director and 1 is Non-Executive Director) and 1 is Independent Director. Accordingly, the Company has complied with the provisions of Section 149 of the Companies Act, 2013. However, owing to such composition of the Board of Directors, the composition of Audit Committee & Nomination and Remuneration Committee is not in line with the requirements of Section 177 and 178 of the Companies Act, 2013. The same has been explained below: Composition of Audit Committee: As per Section 177 of the Companies Act, 2013, the Board of Directors of every listed company shall constitute an Audit Committee comprising of a minimum of 3 Directors with Independent Directors forming a majority. Since the Company has only 1 Independent Director, hence its Audit Committee is not as per the requirements of Section 177 of the Companies Act, 2013. However, the composition of Board of Directors is as per the provisions of the Section 149 of the Companies Act, 2013. Composition of Nomination and Remuneration Committee: As per Section 178 of the Companies Act, 2013, the Board of Directors of every listed company shall constitute an Nomination and Remuneration Committee comprising of a minimum of 3 Non-Executive Directors of which one half shall be Independent Directors. Since the Company has only 1 Independent Director and 1 Non-Executive Director, hence its Nomination and Remuneration Committee is not as per the requirements of Section 178 of the Companies Act, 2013. However, the composition of Board of Directors is as per the provisions of the Section 149 of the Companies Act, 2013. 23. CORPORATE GOVERNANCE A separate report on Corporate Governance and a certificate from M/s. P. P. Shah & Co., Practicing Company Secretaries regarding compliance with the conditions of Corporate Governance is given in a separate section and forms part of the Annual Report. Further, a declaration signed by the Managing Director, affirming compliance with the code of conduct by all the Board members and senior management personnel along with certificate required under Schedule V (D) of SEBI (LODR) Regulations, 2015, is also given in this Annual Report 24. MANAGEMENT DISCUSSION AND ANALYSIS The Company has opted for exemption under Regulation 15 (2) of SEBI (LODR) Regulation, 2015 in respect of report on Management Discussion and Analysis. 25. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is as under A. Conservation of Energy The operations of the Company are not energy intensive. However, wherever possible the Company strives to curtail the consumption of energy on continued basis. B. Technology absorption, adaptation and innovation No expenditure has been incurred by the Company on research and Development activities during the year under review. C. Foreign Exchange Earning & Outgo Foreign Exchange Earnings/Outgo 31/03/2016 31/03/2015 Foreign Exchange Earned 0 13,52,156 Foreign Exchange Outgo 0 3,96,122 26. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure B". 27. PARTICULARS OF EMPLOYEES There is no employee in the Company drawing monthly remuneration of Rs. 5,00,000/- per month or Rs. 60,00,000/- per annum Hence, the Company is not required to disclose any information as per Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. 28. HUMAN RESOURCES The relations of the employees of the Company have been cordial during the year. Employees are considered to be team members being one of the most critical resources in the business which maximize the effectiveness of the Organization. Human resources build the Enterprise and the sense of belonging would inculcate the spirit of dedication and loyalty amongst them towards strengthening the Company's Polices and Systems. The Company maintains healthy, cordial and harmonious relations with all personnel and thereby enhancing the contributory value of the Human Resources. 29. ENVIRONMENT AND SAFETY The Company is conscious of the importance of environmentally clean and safe operations. The Company's policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources. 30. ENHANCING SHAREHOLDERS VALUE Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company's 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 creating 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. 31. GREEN INITIATIVES Electronic copies of the Annual Report 2015-16 and Notice of the 31" Annual General Meeting are sent to all members whose email addresses are registered with the Company/ Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2015-16 and the Notice of the 31" Annual General Meeting under Section 101 of the Companies Act, 2013 are sent in the permitted mode. Members requiring physical copies can send a request to the Company. Your Company provides e-voting facility to all its members to enable them to cast their votes electronic all resolutions set forth in the Notice. This is pursuant to the Section 108 of the Companies Act 201 20 of the Companies (Management and Administration) Amendment Rules, 2015. 32. ACKNOWLEDGEMENTS Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company. 33. CAUTIONARY STATEMENT Statements in the Board's Report describing the Company's 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 Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations. For and on behalf of the Board of Directors (Sujit Mehta) Director (Nirav Mehta) Managing Director Date: 30th May, 2016 Place: Mumbai |