DIRECTORS' REPORT DEAR MEMBERS, The Directors take great pleasure in presenting the 26th report on the business and operations of your Company along with the Annual Report and Audited Financial Statements for the Financial Year 2014-15 Dividend The Directors recommend a dividend of 10% i.e. Rs. 1/- per share (last year Rs. 1/- per equity share), subject to approval of the shareholders at the ensuing 26th Annual General Meeting. The total outgo on account of dividend amounts to Rs. 19.08 million. The dividend, if declared at the meeting, shall be paid within the stipulated period, to those members of the Company whose names appear on the Register of Members of the Company as on September 23, 2015. In respect of shares held in Electronic form, the dividend will be paid to the beneficial owners as per details furnished by the Depositories for this purpose at the close of business hours on September 15, 2015. Transfer to Reserves During the year, your Company has transferred Rs. 9.00 crore to General Reserve Account. Material Changes and Commitments No material changes and commitments, affecting the financial position of the Company have occurred after the end of the financial year 2014-15 and till the date of this report. Management's Discussion and Analysis Report Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, is presented in a separate section forming part of this Annual Report. Subsidiaries As on signing date of this report your Company has following direct and indirect subsidiary companies/LLP: Direct Subsidiary Companies: 1. Renaissance Jewelry New York Inc., USA 2. Verigold Jewellery (UK) Ltd., London 3. N. Kumar Diamond Exports Limited, India 4. Renaissance Jewellery Bangladesh Pvt. Ltd., Bangladesh 5. Verigold Jewellery DMCC, Dubai Indirect (Step-down) Subsidiary Companies: 1. House Full International Ltd., India (Subsidiary of N. Kumar Diamond Exports Limited) 2. House Full Supply Chain Management Ltd., India (Subsidiary of House Full International Ltd.) Limited Liability Partnership: 1. Aurelle Jewellery LLP, India Financial Statements/Reports of the Subsidiaries: The Company has seven subsidiaries including five wholly owned subsidiaries and two step-down subsidiaries. The Board of Directors of the Company reviewed the affairs of subsidiaries of the Company. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report. Further, a statement containing the salient features of the financial statement of the subsidiaries in the prescribed format of Form AOC-1, (Pursuant to first Proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, 2014) has been added separately in this Annual Report. The Company will make available the accounts of subsidiaries upon request by any member of the Company. Consolidated Accounts In accordance with the requirements of Companies Act, 2013 and Accounting Standards AS-21 prescribed by the Institute of Chartered Accountants of India, the Consolidated Financial Statements of the Company and its subsidiary is provided in this Annual Report. Issue of equity shares with differential rights During the financial year under review, there was no issue of equity shares with differential rights in terms of Rule 4 (4) of Companies (Share Capital and Debentures) Rules, 2014. Issue of Sweat Equity Shares During the financial year under review, there was no issue of sweat equity shares as provided in Rule 8 (13) of Companies (Share Capital and Debentures) Rules, 2014. Issue of Shares under the Employee Stock Purchase Scheme ESPS Compensation Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employees' Stock Purchase Scheme of the Company in accordance with the applicable SEBI Guidelines. Your Company, through RJL Employee Welfare Trust (ESPS Trust), has offered the ESPS shares to the recommended employees under the Tranch - I and Tranch - II of RJL Employees' Stock Purchase Scheme - 2008 (RJL ESPS - 2008). The Company had opted for trust route for offering ESPS and 720000 shares were issued to the Trust in F.Y. 2008-09 for onward offering to the recommended employees. Hence, basic and Diluted Earning Per Share (EPS) is Rs. 18.06. During the financial year under review, the Company has not issued any ESPS shares as well as shares equal to or exceeding 1% of the issued capital to any of the identified employee. Listing At present 19,079,440 Equity Shares of the Company are listed on the Bombay Stock Exchange Limited (BSE) and National Stock Exchange Limited (NSE). The Company has paid the applicable listing fees to these Stock Exchanges for the financial year 2015-16. The Company's shares are tradable compulsorily in electronic form and the Company has established connectivity with both the depositories, i.e. Central Depository Services (India) Ltd. (CDSL) & National Securities Depository Ltd. (NSDL). Your Company has fully complied with the SEBI Circular - Cir/ISD/3/2011, dated June 17, 2011 by achieving 100% of promoter's and promoter group's shareholding in dematerialized form. Therefore, the securities of companies are traded in the normal segment of the Exchanges. Awards/Recognition Your Company has always strived for the best quality and designs and has been consistently receiving recognition by various Trade Organizations and Councils, for its' performance and achievements. Following are some of the awards/recognition received by the Company in the past: - GJEPC Award for outstanding Export Performance under the category "Studded Precious Metal Jewellery Exports", in 2012 - GJEPC Award for topping the export performance under the category "Studded Precious Metal Jewellery Exports from EPZ/EOU Complexes" in 2011 - Emerging India Awards 2009 - GJEPC Award for being the largest exporter of studded precious metal Jewellery in 2008 - Wal-Mart's 'International Supplier of the Year' Award - SEEPZ-SEZ Star 2000-2001 Award Corporate Governance The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has taken appropriate steps and measures to comply with all the applicable provisions of Clause 49 and Section 177 of the Companies Act, 2013. A separate report on Corporate Governance, as stipulated under the Listing Agreement, along with a certificate of Practicing Company Secretary of the Company, forms an integral part of this Annual Report. A certificate from the Managing Director and CFO of the Company confirming internal controls and checks pertaining to financial statements for the year ended March 31, 2015 was placed before the Board of Directors and the Board has noted the same. Cash Flow Statement In conformity with the provisions of Clause 32 of the Listing Agreement entered with Stock Exchanges, the cash flow statement for the year ended March 31, 2015 is annexed hereto. Human Resources Employees are the key assets of the Company and the Company has created a healthy and productive work environment which encourages excellence. Your Company has put in place a scalable requirement and human resource management process, which enables it to attract and retain employees of the high caliber. The Company continuously invests in training staff in the latest technology. Implementation of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has constituted Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No instances of Sexual Harassment of Women under the said Act have been reported in any of the units of the Company during the financial year under review. Directors and Key Managerial Personnel As per the provisions Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreements entered into with Stock Exchanges the Company, by appointing Mr. Veerkumar C. Shah, Mr. Vishwas V. Mehendale, Mr. Anil K. Chopra, Mr. Arun P. Sathe and Mrs. Madhavi S. Pethe as Independent Directors of the Company, had complied with the requirement of having at least one-third of the total number of Directors as Independent Directors and one lady director on the Board of the Company. In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Hitesh M. Shah, Executive Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment. The Board recommends re-appointment of Mr. Hitesh Shah. Brief resume of the Director proposed to be re-appointed, nature of his expertise in specific functional areas and names of companies in which he hold Directorships and Membership/ Chairmanship of Board Committees, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges are provided in the Notice forming part of this Annual Report. Pursuant to the provisions of Section 203 of the Companies Act, 2013 and Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 Company have the following whole-time Key Managerial Personnel (KMPs): 1. Mr. Sumit Shah - Managing Director 2. Mr. G. M. Walavalkar - Company Secretary 3. Mr. Dilip Joshi - Chief Financial Officer Declaration by Independent Director: The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under both sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. Nomination and Remuneration Policy The policy on nomination and remuneration of Directors, Key Managerial Personnel and Senior Management has been formulated by the Nomination and Remuneration Committee and approved by the Board of Directors of the Company, in compliance with Section 178 of the Companies Act, 2013 read with the applicable rules thereto and Clause 49 of the Listing Agreement. This policy lays down the criteria for determining qualifications, positive attributes and independence of directors and evaluation of Independent Director and the Board. This policy also includes the Policy on Board diversity. The said Nomination and Remuneration policy is posted on the website of the Company www.renjewellery.com Annual Evaluation of Independent Directors and Board Pursuant to the provision of Section 134(3) (p) read with Rule 8(4) of Companies (Accounts) Rules, 2014 and Clause 49 of the Listing Agreement the Nomination and Remuneration Committee has devised criteria for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the Non-Executive Directors and Executive Directors. The Independent Directors and Non-Independent Directors at their respective meetings evaluated performance of fellow Directors based on factors like leadership quality, attitude, initiatives and responsibility undertaken, decision making, commitment and achievements during the financial year. Meeting of Independent Directors In accordance with the clause VII of Schedule IV of the Companies Act 2013 and Clause 49 (II)(B) (6) of the Listing Agreement, a separate meeting of Independent Directors was held on July 17, 2015 without the attendance of Non-Independent Directors and members of the management. At this meeting the Independent Directors reviewed the performance of Non-Independent Directors including Executive Chairman and Managing Director and the Board as a whole. Familiarisation Program for Independent Directors The Company has formulated Familiarization Program to familiarise the Independent Directors with the Company and its business. The details of the program and related matters are posted on the website of the Company www.renjewellery.com Disclosure of Pecuniary Relationship There was no pecuniary relationship or transactions of the Non-Executive Directors vis-a-vis the Company during the year. Also, no payment, except sitting fees, was made to any of the Non-Executive Directors of the Company. No convertible instruments are held by any of the Non-Executive Directors. Directors' Responsibility Statement As required under provisions of Section 134 (5) of the Companies Act, 2013 the Directors hereby state that: a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Companies Act, 2013, have been followed and there are no material departures from the same; b) selected accounting policies were applied 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, 2015 and of the profit of the Company for the year ended on that date; c) 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 to the best of the Directors' knowledge and ability; d) t he annual accounts have been prepared on a 'going concern' basis; e) i nternal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and are operating effectively; and f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively M/s. J. K. Shah & Co., Chartered Accountants, the present Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Board, at its meeting held on July 31, 2015, on recommendation of Audit Committee, decided to recommend their re-appointment at the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting and to fix their remuneration. The Company has received a letter from M/s. J. K. Shah & Co., Chartered Accountants expressing their willingness for appointment as Statutory Auditors and to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3) (g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. Auditors' Report The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments by the Board. There is no qualification / reservation / adverse remark / disclaimer made in the Auditors' Report for the financial year 2014-15. Internal Auditors In accordance with provisions of Sections 138 of the Companies Act, 2013 and pursuant to the recommendation of the Audit Committee, M/s. Jayesh Dadia & Associates, Chartered Accountants, Mumbai have been appointed as Internal Auditors of the Company for conducting Internal Audit of the Company for the Financial Year 2014-15. The Internal Auditors independently evaluate the internal controls, adherence to and compliance with the procedures, guidelines and statutory requirements. The Audit Committee of Board of Directors periodically reviews the reports of the internal auditors and corrective actions taken by the Management with regard thereto. Internal Financial Controls The Company has in place adequate internal financial controls with reference to financial statements. During the year under review, such controls were tested and no reportable material weaknesses in the design or operation were observed. Secretarial Auditor In accordance with provisions of Sections 204 of the Companies Act, 2013, the Board has appointed M/s V. V. Chakradeo & Co., Practicing Company Secretary, Mumbai, as Secretarial Auditors of the Company to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is enclosed herewith as Annexure - I forming part of this Director's Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Deposits There was no deposit accepted by the Company within the meaning of Section 58A of the Companies Act, 1956 and Rules made there under. During the financial year under review, the Company has neither invited nor accepted any deposit under Section 73 of the Companies Act, 2013 and the rules made there under and therefore, no amount of principal or interest was outstanding as of the date of the Balance Sheet. 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 arm's length basis. During the year, the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is posed on the Company's website www.renjewellery.com Your Directors draw attention of the members to the related party disclosures sets out in the financial statements of the Company. Corporate Social Responsibility (CSR) The Company has established the Corporate Social Responsibility Committee (CSR Committee) which has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The said CSR Policy is posed on the Company's website www.renjewellery.com The Company has identified four focus areas of engagement which are as under: Medical: Affordable solutions for healthcare through improved access and health awareness Education: Access to quality education, training and skill enhancement Humanitarian: Creating sustainable livelihood, addressing poverty, hunger and malnutrition. Environmental, Animal Welfare, Cultural and Religious: ensuring environmental sustainability, ecological balance, animal welfare, conservation of natural resources and protection of national heritage, art, culture and religion As required under Section 135 of the Companies Act, 2013 read with Rule 8 of the Company (Corporate Social Responsibility Policy) Rules, 2014, the Annual Report on CSR activities is enclosed herewith as Annexure - II forming part of this Director's Report. Risk Management The Board of Directors has adopted Risk Management Policy for the Company which provides for identification, assessment and control of risks which in the opinion of the Board may threaten the existence of the Company. The Management identifies and controls risks through a properly defined framework in terms of the aforesaid policy. Your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board. The Committee manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The primary responsibilities of this committee are to: - Discuss with senior management, the Company's Enterprise Risk Management (ERM) and provide oversight as may be needed; - Ensure it is apprised of the most significant risks along with the action management is taking and how it is ensuring effective ERM; - Reviewing risk disclosure statements in any public documents or disclosures. The Audit Committee and the Board periodically discuss the significant business risks identified by the Risk Management Committee and review the measures taken for their mitigation. Other Disclosures: CSR Committee The CSR Committee comprises Mr. Niranjan A. Shah (Chairman), Mr. Hitesh M. Shah and Mr. Anil K. Chopra, as other members. Audit Committee The Audit Committee comprises Independent Directors namely Mr. Veekkumar C. Shah (Chairman), Mr. Arun P. Sathe and Mr. Vishwas V. Mehendale, as other members. All the recommendations made by the Audit Committee were accepted by the Board. Meetings of the Board Five meetings of the Board of Directors were held during the financial year under review. For further details, please refer report on Corporate Governance enclosed in this Annual Report. Particulars of Loans given, Investments made, Guarantees given and Securities provided Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient, as required under Section 186 of the Companies Act, 2013 are provided in the standalone financial statement (Please refer to Note 40 to the Standalone Financial Statement). Particulars of Employees The disclosure pursuant to Section 197(12) read with Rule 5(1)(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed herewith as Annexure - III forming part of this Director's Report. Extract of Annual Return An extract of Annual Return in Form MGT-9 as provided under sub-section (3) of Section 92 of the Companies Act, 2013 read with and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, is enclosed herewith as Annexure - IV forming part of this Director's Report. Transfer of Unclaimed IPO Refund/Dividend to Investor Education and Protection Fund In terms of Section 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend relating to the financial year 2007-08 is due for remittance on October 5, 2015 to the Investor Education and Protection Fund (IEPF) established by the Central Government. For the unclaimed dividend relating to other financial years and the respective IEPF Transfer due dates, please refer the statement of IEPF transfer provided in Report on Corporate Governance. During the financial year under review, the Company has transferred unclaimed IPO refund money amounting to Rs. 54,000/-, to the IEPF. Details of Significant and Material orders passed by the Regulators or Courts During the financial year under review, no order had been passed by the regulators/courts or tribunals which have an effect on the going concern status of the Company and its operations. Cautionary Statement Statements in this Directors Report and Management Discussion & Analysis describing the Company's objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable Securities laws and regulations. Actual results could differ materially from those expressed or implied due to risk of uncertainties associated with our expectations with respect to, but not limited to, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business, technological changes, exposure to market risks, general economic and political conditions in India and which have an impact on our business activities or investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, the performance of the financial markets in India and globally and raw material availability and prices, demand & pricing in the Company's principal markets, and other incidental factors. Acknowledgements Your Directors take this opportunity to thank the Company's customers, members, vendors and Bankers for their continued support during the year. Your Directors also wish to thank the Government of India and its various agencies, the Santacruz Electronics Export Processing Zone (SEEPZ), the Customs and Excise department, the Reserve Bank of India, the State Governments of Maharashtra, and other local Government Bodies for their support and look forward to their continued support in the future. Your Directors also place on record their appreciation for the excellent contribution made by all employees of the Company through their commitment, competence, co-operation and diligence to duty in achieving consistent growth for the Company. For and on behalf of the Board, Sumit Shah Managing Director Hitesh Shah Executive Director Place ; Mumbai, date : July 31, 2015 |