DIRECTORS' REPORT Dear Members, Your Directors have pleasure in presenting their 10th Annual Report together with the audited financial statements for the financial year ended March 31, 2015. OVERVIEW OF BUSINESS & FINANCIAL PERFORMANCE Your Company's growth journey continued during the year under review also. The Company opened 9 new showrooms during the year, taking the tally of its total number of showrooms to 50 as on March 31, 2015. The Company opened its Golden Jubilee showroom at Jaipur (Rajasthan). The Company entered into the field of fast growing online space by launching its e-commerce website wwwWearYourShine.com The Company also launched a unique detachable jewellery collection, Flexia, wherein one jewellery set can be worn in 5-6 different unique ways. During the year under review, revenue from operations on standalone basis increased to Rs.6,34,851.64 lacs as compared to Rs.5,32,482.91 lacs in the previous year, representing growth of more than 19%. The profit before tax also increased to Rs.53,931.62 lacs compared to Rs.46,938.27 lacs in the previous year, representing growth of approximately 15%. The share of domestic and export sales in the revenue from operations is Rs.4,53,869.91 lacs & Rs.1,80,981.73 lacs respectively. The share of diamond jewellery in the revenue from domestic operations increased to 31.52% as against 26.45% in the previous year, which shows that your Company is focusing on sale of high margin diamond jewellery. RECENT DEVELOPMENTS After the end of the year, your Company opened remaining 4 new showrooms (one each at Bhagalpur, Durgapur, Siliguri and Yamuna Nagar) out of the 20 showrooms earmarked to be opened from the net Initial Public Offer ("IPO") proceeds of the Company. With this, the Company achieved its IPO objects of opening 20 new retail showrooms and has completely utilized the net IPO proceeds. As on the date of this Report, your Company is having 54 showrooms under 'PC Jeweller1 brand located in 45 cities across India. Your Company has granted 7,26,300 stock options to the eligible employees of the Company on May 14, 2015. Each option entitles the Grantee thereof to apply for and be allotted one equity share of the Company upon vesting. On August 12, 2015, your Company has issued a Circular in the form of Advertisement inviting unsecured deposits from the Public upto Rs.20,000 lacs, in the form of advances for its Jewellery Purchase Scheme "Jewel For Less". The scheme has been rated by Credit Analysis & Research Limited with a rating of CARE A+ (FD), indicating adequate degree of safety regarding timely servicing of financial obligations. With effect from July 21, 2015, the registered office of the Company was shifted within the local limits of city i.e. from 24/2708, Bank Street, Karol Bagh, New Delhi — 110005 to C — 54, Preet Vihar, Vikas Marg, Delhi — 110092. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN END OF THE FINANCIAL YEAR AND DATE OF REPORT There have been no material changes and commitments affecting financial position of the Company between end of the financial year and the date of the report. DIVIDEND Your Directors are pleased to recommend a dividend of Rs.3.20/- per equity share (i.e. @32% of face value Rs.10/- each) for the financial year 2014-15, subject to the approval of Members in the ensuing Annual General Meeting. TRANSFER TO GENERAL RESERVE Your Company proposes to transfer Rs.1,891.13 lacs to the General Reserve. SHARE CAPITAL During the year under review, the authorised and paid-up share capital of the Company remained unchanged. DIRECTORS AND KEY MANAGERIAL PERSONNEL Ms. Kusum Jain was appointed as an Additional Director in the capacity of Non-Executive Director with effect from March 31, 2015. She has wide experience in retail. With her appointment your Company has also complied with the requirement of appointing a women director, according to the Listing Agreement and the Companies Act, 2013. She holds office upto the date of ensuing Annual General Meeting of the Company. The Company has received a notice from a Member proposing her appointment as Director, along with the requisite deposit amount. Shri Ramesh Kumar Sharma, Executive Director & Chief Operating Officer of the Company retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting. Brief resumes of the aforesaid Directors form part of the Notice convening the Annual General Meeting. During the year Shri Balram Garg, Managing Director, Shri Sanjeev Bhatia, Chief Financial Officer and Shri Vijay Panwar, Company Secretary, were designated as Key Managerial Personnel of your Company, in compliance with the requirement of the Companies Act, 2013. SUBSIDIARY, ASSOCIATES AND JOINT VENTURE COMPANIES As on March 31, 2015, your Company has two wholly owned non-material Indian subsidiary companies: (1) PC Universal Private Limited: It is engaged in manufacturing, trading, import, export of all kinds of gold, silver, diamond jewellery and ornaments. Its turnover and net profit for the year were Rs.1276.70 lacs and Rs.20.86 lacs, respectively. (2) Transforming Retail Private Limited: It was incorporated as wholly owned subsidiary during the year. It is authorised to carry on in India or elsewhere the business to manufacture, buy, sell, distribute or otherwise deal in jewellery, watches, accessories, clothes, gift items etc. through various channels like retail store, online stores, e-commerce, etc. It has not commenced any business activity during the year under review. However, on account of incorporation and ancillary expenses it incurred net loss of T0.31 lacs. In terms of proviso to sub section (3) of Section 129 of the Act, the salient features of the financial statement of the subsidiaries is set out in the Form AOC-1, which forms part of this Annual Report. Your Company does not have any associate or joint venture company. CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with the Companies Act, 2013 and Accounting Standard AS-21, form part of this Annual Report. MANAGEMENT DISCUSSION & ANALYSIS The Management Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the Companies Act, 2013 read with the Schedules and Rules issued there under as well as Clause 49 of the Listing Agreement. NUMBER OF BOARD MEETINGS During the year seven Board meetings were held on May 22, 2014; July 28, 2014; August 8, 2014; September 13, 2014; November 12, 2014; February 6, 2015 and March 31, 2015. For further details, please refer to Report on Corporate Governance. AUDIT COMMITTEE The Audit Committee of the Board comprises of four members, namely Dr. Manohar Lal Singla, Shri Krishan Kumar Khurana, Shri Miyar Ramanath Nayak and Shri Balram Garg. Except Shri Balram Garg, Managing Director, all other members are Independent Directors. Dr. Manohar Lal Singla, an Independent Director, is the Chairperson of the Audit Committee. For further details, please refer to Report on Corporate Governance. INTERNAL FINANCIAL CONTROLS Your Company has put in place adequate internal financial controls with reference to the financial statements commensurate with the size and nature of operations of the Company. The Company has appointed an external professional firm as Internal Auditor to regularly carry out review of the internal control systems and procedures. The internal Audit Reports are periodically reviewed by the Audit Committee. JEWELLERY PURCHASE SCHEME Your Company had been successfully operating two jewellery purchase schemes, namely Jewel for Less and Swarn Manjusha (here-in-after collectively referred to as "Schemes"), which were not covered within the definition of 'Deposits' under the Companies Act, 1956 read with Companies (Acceptance of Deposit) Rules, 1975. However, under the Companies Act, 2013 read with The Companies (Acceptance of Deposits) Rules, 2014, the Schemes fall within the definition of Deposits. In view of this and as an abundant precaution your Company withdrew the Schemes and stopped enrollment of new customers under the Schemes w.e.f. April, 2014. Rs.113.22 lacs received as advance under the Schemes and remaining unclaimed / unpaid as on March 31, 2015, was transferred to an escrow account, which is utilized only for repayment to the existing customers of the Schemes and not for Company's business purposes. Your Company through a Postal Ballot resolution, whose result was declared on March 30, 2015, got the approval of Members to invite / accept / renew from time to time unsecured / secured deposits in the form of advances for the Company's Jewellery Purchase Schemes, from the Members of the Company and the Public, up to permissible limits. However, during the year, the Company has not issued any Circular or Circular in the form of Advertisement inviting Deposits. PARTICULARS OF LOANS, GUARANTEES AND INVESTEMENTS The details of loans / guarantees given and investments made form part of the notes to the financial statements. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All related party transactions that were entered during the year were in the ordinary course of business and on arm's length basis. During the year, your Company had not entered into any contract / arrangement / transaction with related parties, which could be considered as material in accordance with the Company's Policy on Materiality of Related Party Transactions & Dealing with Related Party. Hence, disclosure in Form AOC - 2 is not required. Details of related parties and transactions with them, as required by the Accounting Standards (AS-18) have been disclosed in the Notes forming part of the financial statements. EMPLOYEES STOCK OPTION SCHEME Your Company with the objective of introducing a long term incentive tool to attract, motivate, retain talent and reward loyalty, formulated PC Jeweller Limited Employee Stock Option Plan 2011 ("ESOP 2011"), for grant of a maximum of 26,79,330 stock options to the eligible employees of the Company. The ESOP 2011 was initially approved by the Members in Extra-ordinary General Meeting held on September 26, 2011 and subsequent to the listing of the Company further ratified by them in the 8th Annual General Meeting of the Company held on September 18, 2013. During the year under review, no options were granted, hence, no disclosure as stipulated under the SEBI Guidelines is made. CREDIT RATING CRISIL Limited vide its letter dated August 4, 2014, has reaffirmed CRISIL A/Stable (Long-Term Rating) and CRISIL A1 (Short-Term Rating) to the total bank facilities (T3,65,000 lacs) of the Company and also reaffirmed CRISIL A1 ratings to the Commercial Paper Programme (T5,000 lacs) of the Company. India Ratings & Research Private Limited, a Fitch Group Company, vide its letter dated January 8, 2015, has assigned IND A1+ rating to the Commercial Paper Programme (T5,000 lacs ) of the Company. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO (A) CONSERVATION OF ENERGY In its endeavour towards conservation of energy your Company equipped all its offices, showrooms and manufacturing units with LED lights. The Company is also exploring use of solar energy for its manufacturing units. (B) TECHNOLOGY ABSORPTION The Company has not carried out any research and development activities. (C) FOREIGN EXCHANGE EARNINGS AND OUTGO Foreign Exchange Earnings & Outgo during the year are as under: Earnings : Rs.181098.51 lacs Outgo : Rs.67.68 lacs DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 Your Company has zero tolerance for sexual harassment at workplace and has adopted a Policy against Sexual Harassment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. During the year, the Company had not received any complaints on sexual harassment and no complaints were pending as on March 31, 2015. RISK MANAGEMENT Your Company has put in place a Risk Management Policy to define a framework for identification, assessment and mitigation of risk. In the opinion of the Board, there are no risks which may threaten the existence of the Company. WHISTLE BLOWER POLICY / VIGIL MECHANISM Your Company has formulated a Whistle Blower Policy / Vigil Mechanism, which provides a formal mechanism for all employees and Directors of the Company to report about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or an event he becomes aware of that could have a detriment effect on the business or reputation of the Company and provides reassurance that they will be protected from reprisals or victimization for whistle blowing. The Policy has been posted on the Company's website. No Whistle Blower was denied access to the Audit Committee of the Company. BOARD EVALUATION In accordance with the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of your Company on the recommendation of Nomination and Remuneration Committee, laid down Criteria for evaluation of Board, its Committees and individual Directors and accordingly carried out the evaluation process. The process was based on evaluation forms, which include a rating mechanism. Independent Directors at their separate meeting also reviewed the performance of the Board as a whole, Non-Independent Directors and the Chairman. Ms. Kusum Jain, being appointed as Additional Director on March 31, 2015, was excluded from the process of evaluation. The criteria for performance evaluation of Board and its Committees amongst others includes their structure and composition, processes, information and functioning, terms of reference of the Committees, suggestions / recommendations by the Committees to the Board etc. The criteria for performance evaluation of Directors including Executive & Independent Directors amongst others includes their attendance and contribution at meetings, devotion of time and effort to understand the Company, its business, their duties and responsibilities, leadership qualities and effectiveness of communication with all stakeholders, impact and influence on Board / Committees and adherence to the Code of Conduct etc. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future. CHANGE IN THE NATURE OF BUSINESS, IF ANY There was no change in the nature of business of the Company during the year under review. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors confirm that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed and there are no material departures from the same; b) the Directors had 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 that period; c) the Directors had 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 had prepared the annual accounts on a going concern basis; e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. AUDITORS & AUDITORS REPORT STATUTORY AUDITORS M/s Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. 001076N/N500013) and M/s Sharad Jain Associates, Chartered Accountants (Firm Registration No. 015201N), Joint Statutory Auditors of the Company, are retiring at the conclusion of the ensuing Annual General Meeting and being eligible, offered themselves for re-appointment. The Company has received their consent letters and certificates to the effect that their appointment, if made, would be within the limits prescribed under Section 141 of the Companies Act, 2013 and that they are not disqualified from being appointed as the Joint Statutory Auditors of the Company. The notes to the financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further explanations or comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. SECRETARIAL AUDITOR Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Shri Randhir Singh Sharma, Proprietor M/s R S Sharma & Associates, Company Secretaries, New Delhi to conduct the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report is annexed herewith as "Annexure - 1" to this Report. The Secretarial Audit Report does not contain any qualification, observation or adverse remarks. CORPORATE GOVERNANCE REPORT Your Company believes in the principle of corporate governance and is committed to maintain the highest standards of Corporate Governance. The detailed Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report. The Certificate from the Practicing Company Secretary confirming compliance with the conditions of Corporate Governance is annexed as "Annexure — 2" to this report. PARTICULARS OF EMPLOYEES The information required under Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company, is annexed as "Annexure — 3", to this Report. CORPORATE SOCIAL RESPONSIBILITY Social responsibility has always been at the forefront of your Company's operating philosophy. As a responsible corporate citizen, the Company tries to contribute towards social causes on a regular basis. On the recommendation of Corporate Social Responsibility Committee ("CSR Committee"), the Board of the Company at its meeting held on November 12, 2014, approved the Corporate Social Responsibility Policy, which is also placed on the Company's website www.pcjeweller.com CSR programs or projects to be undertaken by the Company in terms of this Policy, shall relate to one or more activities listed in Schedule VII of the Companies Act, 2013, at present or as may be amended from time to time. The CSR Committee comprises of Dr. Manohar Lal Singla, Independent Director (Chairman), Shri Krishan Kumar Khurana, Independent Director (Member) and Shri Ramesh Kumar Sharma, Executive Director (Member). The Annual Report on CSR activities as per the Companies (Corporate Social Responsibility Policy) Rules, 2014, in the prescribed format, is annexed as "Annexure — 4" to this Report. POLICY ON DIRECTORS' APPOINTMENT & REMUNERATION AND CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES & INDEPENDENCE OF A DIRECTOR The Company's Policy on Directors' appointment & remuneration and Criteria for determining qualifications, positive attributes & independence of a Director are annexed as "Annexure — 5" and "Annexure — 6" to this Report. EXTRACT OF ANNUAL RETURN Extract of Annual Return in Form No. MGT-9 is annexed as "Annexure — 7" to this report. ACKNOWLEDGEMENT Your Directors wish to convey their gratitude and place on record their appreciation for all the employees at all levels for their hard work, cooperation and dedication during the year. Your Directors sincerely convey their appreciation to customers, shareholders, vendors, bankers, regulatory and government authorities for their continued support. For and on behalf of the Board Sd/- (PADAM CHAND GUPTA) Chairman DIN: 00032794 Place: New Delhi Date: August 13, 2015 |