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Goenka Diamond & Jewels Ltd.

BSE: 533189 Sector: Consumer
NSE: GOENKA ISIN Code: INE516K01024
BSE 00:00 | 24 Apr Goenka Diamond & Jewels Ltd
NSE 05:30 | 01 Jan Goenka Diamond & Jewels Ltd
OPEN 0.28
PREVIOUS CLOSE 0.27
VOLUME 48792
52-Week high 0.42
52-Week low 0.21
P/E 13.00
Mkt Cap.(Rs cr) 8
Buy Price 0.28
Buy Qty 1.00
Sell Price 0.28
Sell Qty 1822.00
OPEN 0.28
CLOSE 0.27
VOLUME 48792
52-Week high 0.42
52-Week low 0.21
P/E 13.00
Mkt Cap.(Rs cr) 8
Buy Price 0.28
Buy Qty 1.00
Sell Price 0.28
Sell Qty 1822.00

Goenka Diamond & Jewels Ltd. (GOENKA) - Director Report


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Company director report

Dear Shareholders

Your Directors are pleased to present the Twenty Eighth Annual Report together with theAudited Financial Statements for the financial year ended March 312019.

Financial Highlights

Particulars 31.03.2019 31.03.2018
Sales and Other Income 808.89 792.96
Less: Expenses 820.60 982.44
Profit / (Loss) before tax and depreciation (11.71) (189.48)
Less: Depreciation 49.92 63.15
Net Profit/(Loss) before Tax (61.63) (252.63)
Less: Income tax provision 0.00 0.00
Less: Deferred Tax 13.37 (3.88)
Less: Earlier Years' Income Tax 0.00 0.00
Less: MAT Credit Entitlement 0.00 0.00
Profit/(Loss) after tax (75.00) (248.74)
Balance brought forward from previous year 12063.21 12311.95
Profit available for appropriation 11988.20 12063.21
Appropriation
Issue of Bonus shares ---- ----
Transfer to General Reserve ---- ----
Proposed Dividend on Equity shares ---- ----
Tax on Proposed Dividend -—
Profit carried over to Balance Sheet 11988.20 12063.21
Earnings per share (0.02) (0.08)

State of Company's Affairs

Your Directors wish to inform you that during the current financial year ended March312019 the sales and other income of the Company were ' 808.89 lakhs and during theprevious year it was ' 792.96 lakhs. During the year the company incurred Net Loss beforetax of ' 61.63 lakhs as against Net loss before tax of ' 252.63 lakhs in the previousyear. The management of the company is of the opinion that company will reinstate itsprofitability in coming years. In the current year company's losses have declined.However company is still facing liquidity crunch and the same shall be done away withincreasing performance of the company. The previous year figures are regrouped /re-arranged due to adoption of Indian Accounting standards ("Ind As") as per theapplicable rules and regulations in force.

Dividend

Due to losses incurred by the company during the year the directors do not recommendany dividend.

IPO Fund Utilization

The Company has utilized major portion of IPO proceeds for expansion as and when thecorrect opportunity and favorable market conditions were available. However insignificantportion of the proceeds allocated for the expansion is left unutilized and the remainingamounts of ' 76.98 lakhs have been attached / adjusted by government authorities againstdisputed dues.

Directors and Key Managerial Personnel

Your Board comprises of 4 directors comprising of 2 promoter directors and 2independent directors including one woman director. Definition of ‘IndependentDirector' is derived from Regulation 16(b) of the SEBI LODR and Section 149(6) of theCompanies Act 2013. Based on the confirmation / disclosures received from the Directorsunder section 149(7) of the Companies Act 2013 and on evaluation of the relationshipsdisclosed the Non-Executive Independent Directors - Mr. Bhau Dhure and Mrs. Dhara AtulShah are considered as Independent Directors who are not liable to retire by rotation.

In compliance with the requirements of Section 203 of the Companies Act 2013 Mr.Nandlal Goenka Chairman Mr. Navneet Goenka Vice Chairman & Managing Director andCFO and Company Secretary & Compliance Officer of the Company continued as KeyManagerial Personnel.

Directors' Responsibility Statement

Pursuant to Section 134 of the Companies Act 2013 (‘the Act') in relation to theAnnual Financial Statements for the Financial Year 2018-2019 your Directors to the bestof their knowledge and ability confirm that:

a) i n the preparation of the annual accounts for the year ended March 312019 theapplicable Ind As which is adopted second time in preparation of financial statements forthe year ended March 312019 as per the applicable laws and rules and regulations for thetime being in force the read with requirements set out under Schedule III to the Act havebeen followed along with proper explanation relating to material departures;

b) t he Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 312019 and of the loss ofthe Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets 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. However the Statutory Auditors have expresses doubts on the ability of the companyto continue as a going concern.

e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively except that the credit given to the overseas buyers in the previous year(s).The present outstanding amount of debtor's receivable is majorly due to the credit salesmade in the previous year(s). Likewise the payments of statutory dues and bank dues needto be regularized though the same is the result of the liquidity crunch the company ispresently facing mainly due to extending credit to buyers. The company has initiated legalproceedings against the debtors in the respective courts.

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

Subsidiary Company and Consolidated Financials

In compliance with Section 129 of the Act a statement containing requisite detailsincluding performance and financial position of each of the subsidiary companies isannexed to this report in Form AOC-1.

As per the requirements of the Securities and Exchange Board of India (ListingObligation and Disclosure Requirements) Regulations 2015 and other rules and regulationsas may be applicable from time to time the audited consolidated financial statements ofyour company is prepared in accordance with applicable Indian Accounting Standards (IndAS) are enclosed herewith.

Board Evaluation

Pursuant to the provisions of companies Act 2013 and SEBI LODR the Board has carriedout evaluation of performance of its own the independent directors individually as wellthe evaluation of the working of its ‘Audit' ‘Nomination & Remuneration'and ‘Stakeholders Relationship' committees. The performance evaluation ofnonindependent directors was carried out by the independent directors in a separatemeeting.

The manner in which the evaluation has been carried out has been explained in CorporateGovernance Report.

Remuneration Policy

The current policy is an appropriate mix of executive and independent directors tomaintain the independence of the Board. The Nomination & Remuneration Committee frameda policy for selection and appointment of Directors including determining qualificationsand independence of a Director Key Managerial Personnel Senior Management Personnel andtheir remuneration as part of its charter and other matters provided under Section 178(3)of the Companies Act 2013.

The salient features of the Remuneration Policy are stated in the Corporate GovernanceReport.

Deposits and Unclaimed Dividend

During the year under review your company has not accepted any public deposit underChapter V of the Companies Act 2013.

During the year under review pursuant to section 124 of the Companies Act 2013 andInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 (the "Rules") framed there under your company has transferred sum of' 41643/- & ' 13494/- to Investor Education and Protection Fund ("IEPF")in respect of the dividend remained unclaimed for seven consecutive years or more.

Number of Meetings of the Board

The Board met Four times in financial year 2018-2019 on May 30 2018 August 112018November 03 2018 and February 14 2019. The maximum interval between any two meetings didnot exceed 120 days.

Details of Committees of the Board

The Company has following Committees of the Board:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Relationship Committee

1. Audit Committee

The Present Audit Committee comprises namely Mr. Bhau Dhure Mr. Navneet Goenka andMrs. Dhara Shah. Mr. Bhau Dhure - Chairman Mr. Navneet Goenka - Member.

Mrs. Dhara Shah - Member.

All the recommendations made by the committee were accepted by the Board.

2. Nomination and Remuneration Committee

The Present Nomination and Remuneration Committee comprises namely Mrs. Dhara Shah Mr.Bhau Dhure and Mr. Nandlal Goenka.

Mrs. Dhara Shah - Chairman Mr. Bhau Dhure - Member Mr. Nandlal Goenka - Member

All the recommendations made by the committee were accepted by the Board.

3. Stakeholders Relationship Committee

The Present Stakeholders Relationship Committee comprises namely Mr. Bhau Dhure Mr.Navneet Goenka and Mrs. Dhara Shah.

Mr. Bhau Dhure- Chairperson

Mr. Navneet Goenka - Member

Mrs. Dhara Shah - Member

All the recommendations made by the committee were accepted by the Board.

The details of the meetings held and attendance of the members of the above committeesof the Board are provided in the Corporate Governance report.

Statutory Auditors

M/s. Ummed Jain & Co. (Firm Regn. No. 119250W) Chartered Accountant MumbaiStatutory Auditors of the Company hold office till the conclusion of the ensuing AnnualGeneral Meeting.

It is proposed to re-appoint M/s. Ummed Jain & Co. (Firm Regn. No. 119250W)Chartered Accountant Mumbai as statutory auditor of the Company and they have confirmedtheir eligibility to the effect that their appointment if made would be within theprescribed limits under the Act and that they are not disqualified for re-appointment. Theproposal for their appointment is included in the notice of Annual General Meeting sentherewith.

Auditors' Report

In respect of the observations made by Auditors in their report your Directors wish tostate that the replies in that respect have been given in the Directors Report in aseparate section.

Secretarial Auditor

The Board has appointed Mr. Vishal N. Manseta Practicing Company Secretary to conductSecretarial Audit for the financial year 2018-19. The Secretarial Audit Report for thefinancial year ended March 312019 is annexed to this Report.

Secretarial Audit Report

In respect of the observations made by Secretarial Auditor in his report yourDirectors wish to state that the replies in that respect have been given in the DirectorsReport in a separate section.

Contracts and Arrangements with Related Parties

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material. Accordingly theparticulars of the transactions as prescribed in Form AOC-2 of the rules prescribed underChapter IX relating to Accounts of Companies under Companies Act 2013 are not required tobe disclosed as they are not applicable.

Members are requested to refer Note 35 and 42 to the Standalone financial statementswhich sets out related party disclosures.

As per Regulation 23 of the SEBI LODR the Board has adopted a ‘Policy onMateriality of Related Party Transactions and Dealing with Related Party Transactions'which may be accessed on the Company's website i.e. www.goenkadiamonds.com

Extract of Annual Return

The extract of Annual Return in Form MGT-9 as required under Section 92(3) of the Actread with Companies (Management & Administration) Rules 2014 is annexed to thisreport as on March 312019.

Sexual Harassment

The Company is committed to provide a safe and conducive work environment to itsemployees and has detailed procedure for the redressal of complaints pertaining to sexualharassment. Your Directors further state that during the year under review there were nocases filed pursuant to the sexual harassment at workplace.

Material Changes and Commitments affecting the financial position of the Company

There have been no material changes and commitments affecting the financial positionof the Company which occurred between the end of the financial year to which the financialstatements relate and the date of this report except the Corporation Bank one of thelenders bank of the company has moved to the NCLT Jaipur for the recovery of outstandingdues as company's account has turned NPA. The next hearing date of NCLT is scheduled onSeptember 3 2019. The matter being sub judice the directors of the company are not ableto comment on the same. However the directors will intimate the members of the companyand the regulators from time to time as per the regulations as may be applicable from timeto time.

Details of significant and material orders passed by the regulators/ courts/ tribunalsimpacting the going concern status and the Company's operations in future

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

Corporate Social Responsibility

The provisions related to Corporate Social Responsibility as mentioned in the Act arenot applicable to the company.

Risk Management Policy

The Company manages monitors and reports on the principal risks and uncertainties thatcan impact its ability to achieve its strategic objectives. The Company's managementsystems organizational structures processes standards code of conduct and behaviorsgovern how the company conducts the business and manages associated risks.

Internal Financial Controls

The Directors have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and are operating effectivelyexcept that the credit given to the overseas buyers in the previous year(s). The presentoutstanding amount of debtor's receivable is majorly due to the credit sales made in theprevious year(s). Likewise the payments of statutory dues and bank dues need to beregularized though the same is the result of the liquidity crunch the company ispresently facing mainly due to extending credit to buyers. The company has initiated legalproceedings against the debtors in the respective courts.

Share Capital

The paid up equity share capital of the Company as on March 312019 was '317000000/- During the year under review the Company has not issued shares withdifferential voting rights and sweat equity shares.

Vigil Mechanism

The Company has established Vigil Mechanism and adopted Whistle blower policy for itsdirectors and employees to report concern about unethical behavior actual or suspectedfraud or violation of the Company's code of conduct or ethics policy. The mechanismprovides adequate safeguards against victimization of persons who use such mechanism.Protected disclosures can be made by a whistle blower through an e-mail or dedicatedtelephone line or a letter to the senior executives or to the Chairman of the AuditCommittee. During year under review no personnel were denied access to the AuditCommittee.

Corporate Governance

As per SEBI LODR a separate section on corporate governance practice which is followedby your Company together with a certificate from Mr. Vishal N. Manseta PracticingCompany Secretary is given in this annual report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The prescribed particulars of employees required under section 197 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areattached and form part of this report.

Green Initiatives

Electronic copies of the Annual Report 2018-19 and Notice of the 29th AnnualGeneral Meeting are sent to all members whose email addresses are registered with theCompany/Depository Participant(s). For members who have not registered their emailaddresses are requested to register their email ids with their DPs in order to cooperatewith the company in implementation of green initiative; and help to protect theenvironment.

STATUTORY AUDITORS REMARKS AND MANAGEMENTS REPLIES THEREUPON

a) Auditors observation : We do not express an opinion on the accompanyingstandalone Ind AS financial statements of the Company. Because of the significance of thematter described in the Basis for Disclaimer of Opinion section of our report we have notbeen able to obtain sufficient appropriate audit evidence to provide a basis for an auditopinion on this standalone Ind AS Financial Statements Management Reply: The managementhas provided the major audit evidence to excepting the at certain occasions the accountconfirmation of overseas debtors and creditors and few bank confirmations owing to thefrozen bank accounts and bank accounts converted in NPA. The Company has approachedconsortium bankers and ARC for settlement of loan dues and assumes that Company will haveadequate cash flow from export realisation to defray its entire debt obligation andpayment to creditors in phased manner The promoters of the Company are also ready toinfuse funds in the company and to raise fund from alternate means to meet short term andlong term obligations of the Company.

b) Auditors observation : With reference to Note No. 5(a) 9(b) 12 and 19(b)wherein the company has not restated following monetary items denominated in foreigncurrency as at the year ended closing rate and has been carried forward at the rate as at31st March 2015 31st March 2016 and / or 31st March 2017 which is not in accordancewith Ind-AS -21 ‘The Effect of changes in Foreign Exchange Rates" and accountingpolicy followed by the Company.

Management Reply: It was deemed prudent not to take cognizance of unrealised exchangedifference on notional basis due to uncertainties with regard to expected time frame forrealisation of Trade Receivables and loans & advances to subsidiaries. Consequentlythe payment to creditors is also dependent on recovery from these Trade receivables andloans & advances to subsidiaries. The company shall account for the actual exchangedifference at the time of realization of these trade receivables Loans and advances andat the time of payment to trade payables.

c) Auditors observation : With reference to Note 20 (d) and auditors report point no(b) of standalone financial statements auditors have observed that the company hasdefaulted in repayment of loans taken from the banks due to which the banks have recalledtheir loans and have initiated legal actions. During the previous year the management hasdecided not to provide interest on such loans.

Management Reply: the management has taken requisite steps with regards to legal actioninitiated by the banks and It has been decided by the Board not to provide any interest onworking capital borrowing availed by the Company due to pending proposal for settlementof entire dues envisaging part-payment of principal amount due to the banks alsomanagement is in discussion with ARC for takeover of outstanding dues.

d) Auditors observation : Refer Note No. 9(a) and point no (d) of Auditors Reportregarding non-provision of the expected credit loss/ impairment relating to overdue TradeReceivables of' 69877.78 Lacs has been recognized as per the requirement of Ind- AS 109"Financial Instruments". In view of defaults in payment obligations by the TradeReceivables on due date non-recoveries from Trade Receivables non-confirmations/reconciliation from Trade receivables initiation of legal action/suits against TradeReceivables by the company and in absence of clear forward looking information regardingoutcome of pending legal actions initiated and time frame and quantum of realisability ofthese Trade receivables we are unable to determine the amount of expected credit loss/impairment based on provision matrix as per the requirements of Ind-AS 109 "FinancialInstruments" and its consequential impact on the financial statements.

Management Reply: There have been defaults on payment obligations by the tradereceivables on due date and recoveries from these trade receivables are not significantdue to certain unfavourable developments in earlier years and economic slowdown especiallyin diamond sector. No confirmations have been received by these trade receivables. TheCompany is taking all possible efforts to recover old trade receivables and had initiatedlegal action wherever considered necessary. However looking at the past record regardingrecovery from Trade receivables the management is of the opinion that looking to theuncertainty regarding time frame and quantum of realisation from these trade receivablesamount of expected credit loss required to be recognised cannot be estimated and thereforeno provision for expected credit loss is required to be made against these tradereceivables.

e) Auditors observation : Refer Note No. 42(c)and point no (e) of Auditor's Reportregarding non-provision for the expected credit loss/ impairment on loan to a subsidiaryamounting to ' 1782.68 Lacs (including accrued interest) and investment in an entity byway of Optionally Convertible Debentures amounting to ' 559.15 Lacs (including accruedinterest) has been recognized as per the requirement of Ind- AS 109 "FinancialInstruments". The net worth of above subsidiary and entity is negative and based onreasonable and supportable information regarding the current financial status and businesscondition of these entities there has been significant increase in credit risk and therecould be delay/default in recovery of these amounts. Considering the above we are unableto comment on the amount of expected credit los/ impairment and its consequential impacton the financial statements.

Management Reply: Loans given to subsidiaries is in the nature of long term loan forset up of business of the subsidiary and is part of net investment in the subsidiary. Theoperation of the subsidiary shall soon be revived and these loans will be recovered innear future and therefore non provision for expected credit loss is required. In respectof investment in OCD the company assumes that the amount shall be recovered as per theterms of repayment and therefore no impairment is required.

f) Auditors observation: The Company's operating results have been materiallyaffected due to various factors including non-realization of Trade receivables defaultsin repayment of loans and interest to banks nonavailability of finance due to recall ofloans by banks in consortium legal actions/ insolvency proceedings initiated by banksagainst company for recovery of its dues notices/ summon from Enforcement DirectorateReserve Bank of India Development Commissioner of Surat SEZ and from other regulatoryauthorities pending proceeding with National Company Law Tribunal Debt RecoveryTribunals and other courts for recovery of banks dues and attachment of company'sproperties assignment and transfer of dues of banks in favor of an asset reconstructioncompany (ARC) pending income tax demands and consequent attachment of bank accounts byIncome tax department outcome of pending legal action initiated against debtors impactof actions and forthcoming actions that may be taken by various legal and statutoryauthorities due to various factors mentioned herein reliance on cash sales for meetingout expenses overall substantial decrease in volume of business and sales non-payment ofstatutory dues and taxes overdue creditors non realization of loan and interest thereonfrom a subsidiary etc.. The appropriateness of the going concern assumption is dependenton the company's ability to raise adequate finance from alternative means and/ orrecoveries from overseas Trade Receivables to meet its short term and long termobligations as well as to establish consistent business operation. The above situationindicates that material uncertainty exist that cast significant doubt on company's abilityto continue as a going concern.

g) Because of the significance of the matters described in the basis of qualifiedconclusions and Material uncertainty related to Going Concern paragraph above it is notpossible to form an opinion on the financial statements due to the potential interactionof the uncertainties and their possible cumulative effect on the financial statements.Accordingly we do not express an opinion on the financial statements

h) Balances of Trade Receivables Trade Payables and Current Assets and Liabilitiesare subject to confirmations and consequential adjustment thereof

Management Reply: Due to certain unfavourable developments and sluggish market inearlier periods there is substantial decrease in sales and volume of the business.Recoveries from trade receivables are slow and there is a temporary mismatch in the cashflow resulting in overdue creditors default in repayment of statutory dues and dues tobanks owing to which all banks have classified the account as NPA and recalled theirloans. The management is hopeful that these old trade receivables shall be recovered asthe company has initiated legal actions against such debtors wherever considerednecessary. The Company has approached consortium bankers and ARC for settlement of loandues and assumes that Company will have adequate cash flow from export realisation todefray its entire debt obligation and payment to creditors in phased manner. Further themanagement is taking all possible steps to revive the business operations and has achievedthe turnover of ' 651.72 lacs during the year. The management is confident that thebusiness modal of the company is still intact and it can carry on the business of thecompany in profitable manner. The Company is trying its best to successfully come out ofthis phase as is hopeful that the bankers and ARC will accept its restructuring/ one-timesettlement proposal and at the same time is also confident that it will have adequate cashflow from export realization and internal accruals to defray its entire debt obligation inphased manner. The promoters of the Company are also ready to infuse funds in the companyand to raise fund from alternate means to meet short term and long term obligations of theCompany. Hence the accounts of the Company are prepared on going concern basis. The matteris pending before NCLT Jaipur the detailed explanation is given in directors reportabove.

i) Auditors observation: Refer Accounting Policy II(E)and auditors report point no(f) and point no (ii) of Annexure - A of Auditors Report regarding valuation of inventoryis based on determination of estimated net realizable value and specific identificationinvolving technical judgment of management and which has been relied upon by us.

Management Reply: Management has put its best efforts in properly valuing the inventorybased on determination of estimated net realizable value and specific identification.

j) Auditors observation: Refer Note No. 20(A) and auditors report point no (c) andpoint no (h) regarding balances of few banks and a asset reconstruction company havingoutstanding dues of' 9770.13 lacs have neither issued bank statements nor confirmedbalance outstanding as at year-end.

Management Reply: Regarding balances of few banks and a asset reconstruction companyhaving outstanding dues of' 9770.13 lacs have neither issued bank statements norconfirmed balance outstanding as at year- end. However the management to the best of itsknowledge and belief have recorded all the transactions.

k) Refer Note No. 40(b) and auditors report point no (g) regarding investment of'2.03 lacs and advance of ' 59.78 lacs to its subsidiary namely M.B. Diamonds LLCand has made investment of' 7.44 lacs in its subsidiary namely Goenka Diamond and JewelsDMCC the net-worth of these subsidiaries as at the year end is negative. No provisionagainst these investments and advance has been made as the management is of the view thatthe investment in subsidiary is long term in nature.

Management Reply: No provision has been made on an investment of ' 2.03 lakhs andadvance given of ' 59.78 lakhs by the Company to its subsidiary namely M/s. M. B. DiamondLLC (Russia) & has made investment of ' 7.44 lacs in its subsidiary namely GoenkaDiamond and Jewels DMCC whose net-worth is negative as the management is of view that theinvestment is in the nature of long term investment and the diminution in value istemporary in nature. The management is confident that the subsidiary shall revive itsbusiness operations in near future.

l) Regarding auditors' observations at point no. (a) to (d) point no. (f) to (g) asreported by them under section 143(3) management replies may be found in the aboveparagraphs.

m) Regarding observation made by Auditors at point No. vii (a) (b) and (c) of theAnnexure "A" to Auditors Report:

Management reply: The company is committed to pay all its outstanding undisputedstatutory dues. Regarding the disputed outstanding taxes the appeal is pending beforeITAT Mumbai and regarding PVAT Company is confident that it will be able to get favorableorders from the concerned appellate authorities.

n) Regarding observation made by the Auditors at Point No. (viii) of the Annexure"A" to Auditors Report Management Reply: The management reply is given inabove points

o) Regarding observation made by the Auditors in the point no (a) of Annexure"B" to Auditors Report whereby they have pointed out internal control weaknessrelating to ascertainment of customers' credit worthiness etc. which has resulted in hugeold outstanding dues from customers

Management Reply: Though the company has taken all due care at the time of sale ofgoods to customers it strongly feels that the internal financial control system in thisregard needs to be improvised. The management is of the view that due to certainunfavourable developments and slugglish market in earlier periods the recovery from tradereceivables is slow. The management is hopeful that these trade receivables shall berecovered as the company has initiated legal action by way of sending legal notices andfiling court cases.

p) Regarding observation made by the Auditors in the point no (b) Annexure"B" to Auditors Report whereby they have pointed out irregularities in paymentof statutory dues / taxes and interest and loan repayment to banks

Management Reply: Due to slow recovery from trade receivable s there is a temporarydeficit in the cash flow resulting in default in payment of statutory dues / taxes; andrepayment of dues to banks. The Company is taking all possible efforts to recover oldtrade receivables and revive its business operations. Nonetheless the management iscommitted to pay all statutory dues/ taxes. Regarding repayment of dues to banks thecompany has approached bankers with proposal of One Time Settlement.

SECRETARIAL AUDITORS REMARKS AND MANAGEMENTS REPLIES THEREUPON

1) Auditors Observation on legal action taken by the banks

Management Reply: the management has taken requisite steps with regards to legal actioninitiated by the banks

2) Auditors Observation on assignment and transfer of dues of two bank in favor of anasset reconstruction company (ARC)

Management Reply : The banks have classified the account as NPA and recalled theirloans. And as consequence two banks dues were assigned and transfer to an assetreconstruction company (ARC)

3) Auditors Observation made on delay in payment of statutory dues:

Management Reply: The management is of the view that due to certain unfavourabledevelopments and slugglish market in earlier periods the recovery from trade receivablesare slow and there is a mismatch in the cash flow resulting in default in payment ofstatutory dues.

4) Auditors Observation made on long outstanding Trade Receivables and non realizationof overseas debtors for more than 180 days:

Management Reply: The Company has already filed legal suits against the major overseasbuyers in respective courts. Legal suits against other overseas buyers are in the processof being filed for the recovery of Export Outstanding.

5) Auditors observation relating to default in repayment of principal and interest tobankers declaration of company's account as NPA; and recall of loans:

Management Reply: Due to slow recovery from trade receivables there is a temporarydeficit in the cash flow resulting in default in repayment of dues to banks owing to whichthe bankers have classified the account as NPA and recalled their loans. The Company istaking all possible efforts to recover old trade receivables and has also initiated legalaction where ever considered necessary. The Company is taking steps to revive its businessoperations and has approached consortium bankers with proposal of One Time Settlement(OTS) and also management is in discussion with ARC.

6) Auditors observation regarding legal actions/ insolvency proceedings initiated bybanks against company for recovery of its dues notices/ summon from EnforcementDirectorate Reserve Bank of India Development Commissioner of Surat SEZ and from otherregulatory authorities pending proceeding with National Company Law Tribunal DebtRecovery Tribunals and other courts for recovery of banks dues

Management Reply: Due to default in repayment of dues to banks owing to which thebankers have classified the account as NPA and recalled their loans. the matter is pendingwith the legal authorities and with regards to NCLT matter is pending before NCLT Jaipurand regarding notice from development commissioner of Surat SEZ matter is pending forhearing. .

Conservation of Energy Technology Absorption Foreign Exchange Earnings and OutgoConservation of Energy:

The Company is engaged in manufacturing of gems and jewellery and as such itsoperations do not account for substantial energy consumption. However the Company istaking all possible measures to conserve energy in its endeavor towards conservation ofenergy your Company ensure optimal use of energy avoid wastages and conserve energy asfar as possible. Several environment friendly measures were adopted by the Company such asminimising air-conditioning usage Shutting off all the lights when not in use

Technology Absorption Adoption and Innovation

The Company continuously monitors and keep track of technological upgradation in thefield of Jewellery manufacturing and the same are reviewed and considered forimplementation. Your Company continued its focus on quality up-gradation and productenhancements. The company uses indigenous technology for its operations.

Research and Development

The nature of the business of the company is categorically end user business of largesize diamonds and high end jewellery wherein research and development expense are more inthe nature of designing rather than development of new technology.

Foreign Exchange Earnings and Outgo

The information regarding foreign exchange earnings and outgo is contained in note no.31 (v) of notes on Financial Statements.

GENERAL

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

1. Issue of sweat equity shares to employees of the company under any scheme.

2. Issue of shares under Employee Stock Option Scheme.

3. Re-appointment of an independent director for second term of five years.

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

5. There were no companies which have become or ceased to be Subsidiaries JointVentures or associate companies during the year.

6. There was no change in nature of business.

7. There were no loans guarantees or investments given / made by the Company underSection 186 of the Act. Acknowledgement

Your Directors place on record their gratitude to Central Government StateGovernments Financial Institutions and Company's Bankers for assistance co-operation andencouragement they extended to the Company. The Directors are also grateful to the valuedcustomers esteemed shareholders dedicated employees and public at large for theirpatronage and confidence reposed in the company.

On behalf of the Board of Directors
For Goenka Diamond and Jewels Limited
NANDLAL GOENKA NAVNEET GOENKA
CHAIRMAN VICE CHAIRMAN & MANAGING DIRECTOR
Place: Mumbai
Date: August 14 2019