Mode of Valuation
Inventories including company's stock held with gold smiths are valued at lower of cost or net realizable value. The cost of raw material inventories is computed on a FIFO basis. The cost of finished goods and work in progress includes cost of conversion and other cost incurred in bringing the Inventories to their present location and condition.
Cost is generally determined on FIFO basis and wherever required, appropriate direct on cost are taken into account. Net Realizable Value is the estimated selling price in the ordinary course of business less the estimated cost necessary to make the sale.
b) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having par value of '10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval by the shareholders at the ensuing Annual General Meeting.
In the event of liquidation, the shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion of their shareholdings.
c) Information regarding aggregate number of equity shares during the five years immediately preceding the date of Balance Sheet.
The aggregate number of equity shares allotted as fully paid up by way of bonus shares in immediately preceding five years ended March 31, 2024 are 137.19 lakhs (previous period of five years ended March 31, 2023 : Nil )
The Company has not allotted any shares pursuant to contract without payment being received in cash.There are no calls unpaid on equity shares and no equity shares have been forfeited.
d) Capital Management
The primary objective of the Company's Capital management is to ensure that it maintains an efficient capital structure and healthy capital ratios to support its business and maximize shareholders value. The Company makes adjustments to its capital structure based on the business environments and its economic conditions.To maintain/ adjust the capital structure the company may make adjustments to dividend paid to its share holders and issue new shares.
Securities premium Reserve
Securities premium reserve is used to record the premium on issue of shares. The reserve is utilized in accordance with the provisions of the Act.
General Reserve
General Reserve is the retained earnings of the Company which are kept aside out of the Company's profits to meet future (Known or unknown) obligations.
Retained earnings
Retained earnings comprise of the Company's prior years undistributed earnings after taxes.
Distributions made and proposed
The Board of Directors, at their meetings held on 23rd January , 2023 declared an interim dividend of '6.00 ( i.e. 60%) per equity share of the face value of '10 each. The Board of Directors at its meeting held on 22nd May ,2023 declared a final dividend of '6.00 (i.e. 60%) per equity share of the face value of '10 each for the financial year ended 31st March, 2023. The total dividend (interim and final dividend) for the financial year 2022-2023 will be '12 (i.e. 120%) per equity share of the face value of '10 each.
The Board of Directors, at their meetings held on 1st February , 2024 declared an interim dividend of '4.00 ( i.e. 40%) per equity share of the face value of '10 each. The Board of Directors at its meeting held on 20th May ,2024 have recommended a payment of final dividend of ' 6.00 (i.e. 60%) per equity share of the face value of '10 each for the financial year ended 31st March, 2024. If approved, the total dividend on the enhanced share capital (interim and final dividend) for the financial year 2023-2024 will be ' 10 (i.e. 100%) per equity share of the face value of '10 each .
Term loan from banks - Federal Bank, Axis Bank and HDFC bank .The term loan availed under Emergency Credit Line Guarantee Scheme( ECLGS) to meet the working capital needs under COVID 19 pandemic situation.
• The above loans are repayable in 60 months with 12 to 24 months moratorium and carries interest of 5.90% to 7.80%
• Regarding securities refer note no 17
• Vehicle Loan secured by Hypothecation of specific assets purchased out of the loans.
## ' 2,273.05 lakhs (' 2,706.51 lakhs) Fixed Deposit carry interest @7.5% and are repayable 2 years from the respective years.
' 3,838.38 lakhs (' 2,196.43 lakhs) Fixed Deposit carry interest @8 % and are repayable 3 years from the respective years.
• The Company availed un-secured loan from directors, which are repayable on demand and carries interest @ 6% p.a
The above working capital loans extended by multiple banking system are secured by a pari passu charge on stocks and book debts of the company .
The loan extended by banks are further collaterally secured by equitable mortgage of Company's properties in the case of HDFC Bank properties at Trichy, Tuticorin, Madurai, Ramnad and in the case of ICICI Bank and Kotak Mahindra Bank
property at Coimabtore on pari-passu basis and in the case of Axis Bank property at Salem and in the case of Yes Bank property at Alwarpurm and in the case Federal Bank property at Nethaji Road and Solanguruni at Madurai.
0.68% (1,25,000 shares) promoters share holding in the company has been pledged as collateral security for IDBI loan.
0.73 % (1,35,000 shares) promoters share holding in the company has been pledged as collateral security for Yes bank loan.
0.97 % (1,80,000 shares) promoters share holding in the company has been pledged as collateral security for Axis bank loan.
Gold Metal loan from Banks against Fixed deposit and SBLC of the respective bank.
All the above mentioned collateral securities owned by the company given to the respective banks as indicated above are given on exclusive basis and not on a pari passu charge basis and also is in accordance with sanction terms and conditions of the respective banks.
All the above loans are further secured by personal guarantee of whole time of directors of the company.
The cash credit is repayable on demand and carries interest of 7.00% to 9.00% p.a.
Fixed Deposits from public are repayable within 12 Months from the reporting date.
The Gold Metal Loan carries interest @ 1.80% to 2.80% p.a.
b. An order for demand of less payment of Customs duty on imported goods pertaining to financial year 2011-12 for '154 Lakhs passed by principal Commissioner of Customs, Chennai. The company has moved a Writ petition against the order with Honourable High Court of Madras for quashing the order passed by the Authority. The writ was admitted, and status quo is maintained. Direction is given by High court of Madras to approach Appellate Tribunal / Commissioner (Appeals) to complete the appeals and accordingly company filed appeal which is pending. The company is advised that
it has got a more than a reasonable chance for success and therefore no provision is made in the books. Hence, this liability if any is considered as contingent in nature.
c. In respect of - outstanding Letter of Credit given to bankers ' 1,800 Lakhs (previous year '1,900 lakhs)
d. The Commercial Tax office, Madurai has issued a notice for the Asst year 2011-12 and 2012-13 on the matter of payment of Sec 12 purchase tax and others made a claim aggregating to ' 41 Lakhs. The Company got a favourable order with the Appellate Authority.
Against this order, the Commercial Tax office, Madurai has filed an appeal to Sales tax Appellate Tribunal, Madurai (A.B) which is pending for hearing. The company is advised that it has got a more than a reasonable chance for success and therefore no provision is made in the books. Hence, this liability if any is considered as contingent in nature.
e. The Company has received a demand notice from the income tax department amounting to '591 lakhs for the year 2016-17 and '858 lakhs for the year 2017-18 related to dispute of beaten gold wastage treatment in the books of accounts from the assessing officer, as per order under Section 143 (2) of the Income Tax Act ,1961. Company is in appeal before Commissioner of Appeals against said orders. This dispute arises on account of wrongful understanding of the Accounting of wastage in refining and melting process by the assessing officer. Though the facts are so obvious and consistently followed by the company and completed assessment in the earlier years as per similar submissions made. In the subsequent assessment order for FY 19-20 and FY 20-21, the Company on the same matter got the order without any addition by the assessing officers. Therefore, the company is advised that it has got more than a reasonable chance for success in appeal and therefore no provision is made in the books. Hence, this liability if any is considered as contingent in nature.
f. The Company has received demand notice from the income tax department amounting to '106 lakhs for the year 2020-21 related to dispute of disallowance of legitimate purchases due to no response from the vendor as per order under Section 143(2) of the Income Tax Act ,1961. The Company is in appeal before Commissioner of Appeals against said order. This being a rectifiable in nature, the company is advised that it has got a more than a reasonable chance for success and therefore no provision is made in the books. Hence, this liability if any is considered as contingent in nature.
g. The company has received a demand notice u/s.156 from the Income tax department amounting to ' 7,018 lakhs for the year 2021-22 relating to disallowance of legitimate expenditure incurred on buying of old gold in exchange to new ornaments from the customers at large U/s.69(3) of the Income tax act. The company has moved a writ petition against the order with Honourable High Court of Madras (Madurai bench). The Honourable court had stayed the order and consequently the demand also for an interim period of 6 weeks from the date of order i.e. 24/04/2024. Subsequent to that based on the arguments and merits of legality of the writ, the request called for by the company in quashing the said order will be determined by the Honourable court. For the purpose of better understanding and clarity on the matter by the shareholders, we give hereunder the facts of the dispute. The company in the ordinary course of business used to take the old gold ornaments for exchange into new gold ornaments. This is the trade practice throughout the country. We determine the gold price based on the purity parameters for old gold and apply the rate prevailing on the date of exchange with new ornaments. The assessing officer in spite of our submission of a lot of documentary evidences and clarifications wrongly applied 18ct purity rate for such old gold purchases instead of accepting the real value determined by the proceeds of purity and rate criterion. By wrongly assuming the purity at 18ct the assessing officer disallowed a sum of to ' 7,216 lakhs as excessively paid without considering the actual facts as submitted by us. A great injustice unwittingly caused on the company. Hence, by quoting legal position the writ was filled and the stay was granted. If was "prima facie" a wrong addition to the income and more than the disallowance, the assessing officer went on to tax the so called imaginary disallowance u/s 115E at a highest rate of tax. For the facts stated above, we dealt with 113527 customers at different times in that year with whom no money was involved as actual payout but only by sale of new ornaments.
The Company is confident that in the restoration of natural justice, the Honourable high court finally will revert it back to the faceless assessing department for fresh orders after taking into consideration the facts of the dispute. For the elaborate reasons stated and based on writ admittance and stay obtained no need to provide any real or contingent liabilities for the same.
h) For the financial years 2019-20, 2020-21, and 2021-22, the company has received a show-cause notice under sections 73(5) of the CGST Act and SGST Act 2017. The notice pertains to an additional tax liability on consultancy services received from foreign countries and remuneration paid to directors, along with issues related to the excess input tax
credit claimed by the company. The matter is currently under review and the company has been granted an adjournment with a scheduled hearing on May 21, 2024. The management, in consultation with tax advisors, is actively addressing the queries raised and is preparing to present its case at the upcoming hearing. Given the ongoing nature of the proceedings and based on legal advice, no liability has been recognized in the financial statements as of now, as the outcome is still uncertain. The company will continue to monitor the situation closely and will comply with all statutory requirements in resolving this matter.
Additionally, for the financial year 2018-19, an order has been passed imposing an additional tax liability of '13.04 Lakhs. The company has decided to appeal this order to the Deputy Commissioner of State Taxes (GST Appeal). The company believes that it has valid grounds for the appeal. Therefore, no provision has been made in the financial statements regarding this matter as the final outcome is yet to be determined.
i) The Company has received demand notice under Section 11A(4) of the Central Excise Act, 1944 from Directorate General of GST Intelligence, Coimbatore Zonal Unit, Coimbatore relating to non-payment of Central excise duty for Sale of branded gold coins amounting to ' 97 lakhs and Sale of silver jewellery amounting to ' 31 lakhs and dispute on input service tax credit taken amounting to ' 145 lakhs aggregating to ' 274 lakhs for the period from 01.03.2016 to 30.06.2017. The company has filed an appeal with Customs, Excise and Service Tax Appellate Tribunal. The company is advised that it has got a more than a reasonable chance for success and therefore no provision is made in the books. Hence, this liability if any is considered as contingent in nature.
Note 36 - Segment Report
The company is engaged in the business of Gold Jewellery, Diamond and Silver Articles, which constitutes a single business segment. In view of the above, there are no segment wise reports to be disclosed in terms of Indian Accounting Standard (Ind AS) 108- "Segment Reporting" issued by The Institute of Chartered Accountants of India.
Provision for gratuity fund of ' 38 lakhs (Previous year ' 163 lakhs) being the net liability recognized as per actuarial valuation of gratuity fund.
The expected rate of return on plan assets is based on market expectation, at the beginning of the year, for returns over the entire life of the related obligation.
The assumption of future salary increase, are considered in actuarial valuation, taking into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
Investment Details
The company made annual contributions to the Employee Group Gratuity Trust based on the actuarial valuation. The said Trust is in the process of making investment of Gratuity Fund through Life Insurance Corporation of India according to guidelines of IRDA.
38. The company is collecting advances from customers both in the form of gold and money and no value addition is charged as per terms of agreement at the time of sale of ornaments. The liability for receipt of customer advances in this category is accounted as and when received by the company. At the time of redemption entire value addition will be given as discount to the customers and no provision for such future discount is made in the accounts in accordance with
the material accounting policies of the company as the real time sale is contingent on redemption. As sum of ' 41,916 lakhs (Previous year ' 24,956 lakhs) is outstanding in such scheme as on 31st March 2024. The discount if any payable in future on redemption will be treated as reduction in sales realization. This treatment in accounts is consistently followed by the Company with no material deviation in accounting.
39. Survey was conducted by The Assistant Commissioner of Customs, Customs Preventive Unit, Madurai at the manufacturing units and purchase premises of the company in FY 2020-21. Gold Coin weighing 1,643 grams was taken over by the official under the protest of certain scratches appeared in the items and also resemblance of foreign origin of the items. By virtue of accepting coins from customers after taking due declaration, the company at different point of time accepted the coins that fulfilled purity and other regulatory essentials. The company has received notice from the department and appeared before the Appropriate Authority and produced necessary documents and explanation. The company is of the view that with the submissions made to the authorities, it will come out of the legal tangle, and hence no provision is made in the books of account. The above said quantity was included in the closing stock as of 31st March 2024.
40. In the opinion of the management, there is no impairment in the carrying cost of property, plant and equipment of the Company in terms of the Indian Accounting Standard (Ind AS) 36 "Impairment of Assets" issued by the Institute of Chartered Accountants of India except for those disclosed in note no. 31.
Note 44
The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active
consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
Note 45 - Financial Risk Management Framework
The Company is exposed predominantly to liquidity risk and market risk which may adversely impact the fair value of its financial instruments. The company assess the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company. The risks and mitigating actions are also placed before the Audit Committee of the Company.
Liquidity Risk
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities when due without incurring unacceptable losses.
The company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31st March. Cash flow from operating activities provides the funds to service the financial liabilities on a day to day basis. The company regularly monitors the rolling forecasts to ensure it has sufficient cash on an ongoing basis to meet operational requirements. Any short term surplus cash generated, over and above the amount required for working capital management and other operational needs, is retained as undrawn from limits ( to the extent required) to ensuring sufficient liquidity to meet liabilities. The company expects to meet their obligations from operating cash flows.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market places. Market risk comprises two types of risk: Interest rate risk, and price risk. Financial instruments affected by market risk include loans and borrowings and deposits.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. This risk exists mainly on account of borrowing of the Company. However, all these borrowings are at flexible interest rate and based on the limit availment and hence the exposure to change in interest rate is insignificant in the current syndrome.
Price risk
Gold price fluctuation risk could arise on account of frequent changes in gold prices either up or downside momentum. It could have adverse impact on earnings. We are maintaining our inventory price hedging around 76:24 basis. This will help the company with any gold price fluctuation. Your Board will take appropriate action in managing the fluctuation impact in gold price movement from time to time to increase to 89:11 basis.
Note 46 - Additional regulatory Disclosures as Per Schedule III of Companies Act, 2013
Additional Regulatory Information pursuant to Clause 6L of General instructions for preparation of Balance sheet as given in part I of Division II of schedule III to the Companies Act, 2013, are given hereunder to the extent relevant and other than those given elsewhere in any other notes to the Financial Statement.
a) The Company does not have any Benami property, where any proceeding has been initiated or pending against the company for holding any Benami property.
b) The company has-fund based and non-fund-based Limits of Working capital from Banks and financial institutions. For the said facility, the revised submissions made by the Company to its multiple bankers based on closure of books of accounts at the year end, the revised quarterly returns or statements comprising stock statements, book debt statements, credit monitoring arrangement reports, statements on ageing analysis of the debtors/others receivables, and other stipulated financial information filed by the Company with such banks or financial institutions are in agreement with the unaudited books of account of the company of the respective quarters and no material discrepancies have been observed.
c) The company has not been declared as a wilful defaulter by any lender who has powers to declare a company as a wilful defaulter at any time during the financial year or after the end of reporting period but before the date when the financial statements are approved.
d) The company has not entered into any transactions with companies struck off under section 248 of the companies Act,2013 or section 560 of company Act, 1956.
e) The company has compiled with the number of layers prescribed under clause (87) of section 2 of the companies (Restrictions on number of layers) Rules, 2017.
f) The company has not advanced or loaned or invested funds to any other persons(s) or entity (is), including foreign entities (intermediaries), with the understanding that the intermediary shall;
i. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by on behalf of the company (Ultimate Beneficiaries) or
ii. Provide any guarantee, security or the like to or on behalf of the Ultimate beneficiaries
g) The company has not received any funds from any persons(s) or entity (ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall;
i. Directly and indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding party (Ultimate beneficiaries) or
ii. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
h) The Company does not have any transactions which is not recorded in the books of accounts but has been surrendered or disclosed as income during the year in the tax assessments under the income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the income Tax Act, 1961).
i) The Company has not traded or invested in crypto currency or virtual Currency during the financial year.
Note-48 Capital Management
For the purpose of the Company capital management, capital includes issued equity capital and other equity reserve attributable to the equity shareholders of the Company. The primary objective of the company's capital management is to maximise the shareholder value.
The company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management's judgement of its strategic and day to day need with a focus on total equity so as to maintain investor, creditors and market confidence.
The company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt is calculated as borrowing less cash and cash equivalents and other bank balances.
All figures have been rounded off to the nearest rupees in lakhs
Previous year figures have been regrouped / reclassified to make them comparable with that current year. Subject to our report of even date