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DIRECTOR'S REPORT

PC Jeweller Ltd.

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Market Cap. (₹) 4135.91 Cr. P/BV 1.07 Book Value (₹) 98.35
52 Week High/Low (₹) 210/47 FV/ML 10/1 P/E(X) 7.72
Bookclosure 29/09/2018 EPS (₹) 13.57 Div Yield (%) 0.48
Year End :2018-03 

Dear Members,

The Directors have pleasure in presenting their 13th Annual Report together with the audited financial statements of the Company for the financial year ended March 31, 2018.

FINANCIAL HIGHLIGHTS

The highlights of the standalone and consolidated financial statements of the Company for the financial year ended March 31, 2018, are as under:

(Rs. in crores, except earnings per share)

Particulars

Standalone

Consolidated

2017-18

2016-17

2017-18

2016-17

Revenue from operations

9,488.97

8,104.58

9,615.44

8,479.55

Other income

98.96

109.15

91.08

97.25

Total income

9,587.93

8,213.73

9,706.52

8,576.80

Profit before finance costs, depreciation and tax

1,091.92

863.12

1,061.93

855.19

Less: Finance cost

301.29

274.71

303.89

278.56

Less: Depreciation & amortisation expense

20.46

22.01

21.46

22.48

Profit before tax

770.17

566.40

736.58

554.15

Less: Tax Expense

202.77

135.87

200.94

133.14

Net profit after tax

567.40

430.53

535.64

421.01

Other comprehensive income for the year, net of tax

0.50

(0.08)

2.51

(4.42)

Total comprehensive income for the year

567.90

430.45

538.15

416.59

Earnings per share (in Rs.):

Basic

14.94

12.03

14.16

11.64

Diluted

14.73

11.31

13.97

10.95

COMPANY’S PERFORMANCE AND BUSINESS OVERVIEW

During the year under review, revenue from operations of your Company on standalone basis grew by 17% to Rs.9,489 crores. The net profit after tax also registered a growth of 32% to Rs.567 crores. The share of domestic and export sales in the revenue from operations on standalone basis is Rs.6,799 crores (72%) and Rs.2,690 crores (28%) respectively.

Your Company is engaged in the business of manufacturing, sale and trading of gold jewellery, diamond studded jewellery and silver items and operates in different geographical areas i.e. domestic sales and export sales. Your Company is continuously moving ahead on its well defined growth path of:

Showroom expansion: The Company continues to focus on expanding its retail presence across the Country. The Company has three types of showrooms i.e. large format, small format and franchisee. As on March 31, 2018, the Company has 92 showrooms, out of which 82 showrooms are Company owned and remaining 10 are franchisee showrooms.

Launching new designs and collections: During the year the Company launched many new jewellery designs and collections like Amalia, Maa, Tattvam, Grecia and La Danza etc.

Strengthening in-house designing and manufacturing capabilities: The Company is having in-house designer’s team and 5 manufacturing facilities for meeting its requirements.

CHANGE IN SHARE CAPITAL

Authorised Share Capital: During the year the authorised share capital of the Company increased from Rs.500 crores to Rs.700 crores, comprising of 44 crores equity shares of Rs.10/- each and 26 crores preference shares of Rs.10/- each.

Paid-Up Share Capital: During the year following changes have taken place in the paid-up share capital of the Company:

a) 75,200 equity shares were allotted to the eligible employees of the Company under PC Jeweller Limited Employee Stock Option Plan 2011.

b) 17,92,12,800 equity shares were allotted to the shareholders as bonus shares in the proportion of 1 : 1.

c) 2,24,73,600 equity shares were allotted to an entity belonging to Non-Promoter category, upon conversion of 42,69,984 compulsorily convertible debentures of Rs.1,000/- each.

d) 1,34,56,000 equity shares were allotted to entities belonging to Non-Promoter category, upon conversion of 25,73,72,912 compulsorily convertible preference shares of Rs.10/- each.

Consequently, the paid-up share capital of the Company has been changed from Rs.436,51,05,120/- comprising of 17,91,37,600 equity shares of Rs.10/- each and 25,73,72,912 preference shares of Rs.10/each to Rs.394,35,52,000/- comprising of 39,43,55,200 equity shares of Rs.10/- each.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.0.50 per equity share (i.e. @5% of face value of Rs.10/- each) for the financial year 2017-18, subject to the approval of Members in the 13th Annual General Meeting.

Your Directors have also recommended a dividend of Rs.1.30 per compulsorily convertible preference share (i.e. @13% of face value of Rs.10/- each) for the period from April 1, 2017 to September 1, 2017 (i.e. till the date of conversion of compulsory convertible preference shares), subject to the approval of Members in the 13th Annual General Meeting.

TRANSFER TO GENERAL RESERVE

Your Directors do not propose transfer of any amount to the General Reserves.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on March 31, 2018, the Board of your Company comprises of 8 Directors including 5 Independent Directors, which also includes 1 Woman Director.

During the year under review, Mrs. Sannovanda Machaiah Swathi was appointed as an Independent Director (Additional Director) for a term of 5 years with effect from January 19, 2018, subject to the approval of Members.

Shri Suresh Kumar Jain, Independent Director, whose first term as Independent Director will expire on September 18, 2018, has been re-appointed as an Independent Director (Additional Director) for a term of 5 years with effect from September 19, 2018, subject to the approval of Members by way of special resolutin.

Shri Padam Chand Gupta, Director, retires by rotation and being eligible, offeres himself for re-appointment at the 13th Annual General Meeting.

Brief resumes of Mrs. Sannovanda Machaiah Swathi, Shri Suresh Kumar Jain and Shri Padam Chand Gupta, form part of the Notice convening the 13th Annual General Meeting.

Shri Muneesh Chawla ceased to be a Director of the Company with effect from end of the day on January 20, 2018, due to withdrawal of his nomination by DVI Fund (Mauritius) Ltd. The Board placed on record its appreciation for the guidance and contribution made by Shri Muneesh Chawla during his tenure on the Board.

No changes among Key Managerial Personnel took place during the year. Shri Balram Garg, Managing Director, Shri Sanjeev Bhatia, Chief Financial Officer and Shri Vijay Panwar, Company Secretary continue to be Key Managerial Personnel of the Company.

SUBSIDIARY, ASSOCIATES AND JOINT VENTURE COMPANIES

As on March 31, 2018, your Company has following wholly owned non-material subsidiary and step down subsidiary companies:

PC Universal Private Limited: It is engaged in the business of manufacturing and export of gold jewellery and ornaments. It is having a manufacturing facility at Noida Special Economic Zone, Noida (U.P.).

Transforming Retail Private Limited: It is engaged in the business of trading of all kinds of gold and diamond jewellery.

Luxury Products Trendsetter Private Limited: It is engaged in the business of manufacturing, buying, selling etc. of jewellery. It owns the gold jewellery brands AZVA & LoveGold.

PC Jeweller Global DMCC: It is engaged in the business of jewellery trading.

Comercializadora Internacional PC Jeweller International S.A.S.: It becomes step down subsidiary of the Company during the year under review. It is the wholly owned subsidiary of PC Jeweller Global DMCC and authorised to carry out all activities related with the purchase, sale, export and import of gold, silver and its alloys, and acts related with the commercialization of precious metals and jewellery items.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (the “Act”) a statement containing salient features of the financial statements of the Company’s subsidiaries in Form AOC - 1 forms part of the Annual Report. The statement also provides the highlights of performance of each of the subsidiary.

Your Company does not have any associate or joint venture company.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared in accordance with the Indian Accounting Standards (‘Ind AS’) notified under Section 133 of the Act and the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other pronouncements/provisions of applicable laws and form part of the Annual Report.

COST RECORDS

Your Company is not required to maintain cost records as specified under Section 148 of the Act.

STATEMENT ON DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS

Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the Act read with the applicable Schedules and Rules as well as the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”).

NUMBER OF MEETINGS OF THE BOARD

During the year seven Board meetings were held on May 25, 2017;

August 1, 2017; August 9, 2017; September 8, 2017; November 13, 2017; January 19, 2018 and March 17, 2018. For further details, please refer to Report on Corporate Governance.

AUDIT COMMITTEE

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 Committee members are Independent Directors. Dr. Manohar Lal Singla, Independent Director, is the Chairman of the Committee. For further details, please refer to Report on Corporate Governance.

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.

INTERNAL CONTROL SYSTEMS

Your Company has an effective internal control system, which ensures that all the assets of the Company are safeguarded and protected against any loss from unauthorized use or disposition. The Internal Auditors of the Company regularly carry out review of the internal control systems and procedures. The internal audit reports are periodically reviewed by Audit Committee.

Your Company has also put in place adequate internal financial controls with reference to the financial statements commensurate with the size and nature of operations of the Company. During the year, such controls were tested and no material discrepancy or weakness in the Company’s internal controls over financial reporting was observed.

PUBLIC DEPOSITS

Your Company has been accepting unsecured deposits from the public under its jewellery purchase scheme “Jewel for Less”. The scheme is to facilitate customers of the Company to purchase jewellery by making deposits through monthly installments and also get benefit in the form of discount at the time of purchase of jewellery, based on the duration of the scheme. The requisite details relating to deposits, covered under Chapter V of the Act are as under:

a) Accepted during the year : Rs.181.75 crores

b) Remained unpaid or unclaimed as at the end of the year:

i) Deposits that have matured but not claimed : Rs.24.76 crores

ii) Deposits that have matured and claimed but not paid : Nil

c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved:

i) at the beginning of the year : Nil

ii) maximum during the year : Nil

iii) at the end of the year : Nil

The Company has not accepted any deposits which are not in compliance with the requirements of Chapter V of the Act.

STATUS OF UNCLAIMED / UNPAID SHARE APPLICATION MONEY AND DIVIDEND AMOUNTS

The status of unclaimed / unpaid share application money and dividend amounts as on March 31, 2018 is as under:

- Share application money due for refund in relation to Initial Public Offer: Rs.2.16 lakh

- Unclaimed / unpaid Dividend: Rs.5.46 lakh

PARTICULARS OF LOANS, GUARANTEES AND INVESTEMENTS

The details of loans / guarantees given and investments made by the Company have been disclosed in the notes forming part of the financial statements.

PARTICULARS OF CONTRACTS / ARRANGEMENTS WITH RELATED PARTIES

All related party transactions entered into during the year under review were on arm’s length basis and 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. The details of transactions with related parties have been disclosed in the notes forming part of the financial statements.

BORROWINGS AND DEBT SERVICING

The Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or any dues to debenture holder during the year.

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.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO A) CONSERVATION OF ENERGY

In its endeavour towards conservation of energy your Company ensures optimal use of energy, avoid wastages and conserve energy as far as possible.

B) TECHNOLOGY ABSORPTION

The Company has not carried out any research and development activities.

C) FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign exchange earnings and outgo during the year are as under:

Earnings : Rs.2,692.42 crores

Outgo : Rs.2,671.03 crores

DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company 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. The Company has constituted an Internal Complaints Committee for redressal of complaints on sexual harassment. During the year, the Company had not received any complaint on sexual harassment and no complaint was pending as on March 31, 2018.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

Your Company has in place a Whistle Blower Policy / Vigil Mechanism, which provides a formal mechanism for all employees and the Directors of the Company to report about unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct etc. 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.

BOARD EVALUATION

The Board of your Company on the recommendation of Nomination and Remuneration Committee had laid down the criteria for evaluation of performance of the Board, its Committees and individual Directors. Accordingly, annual performance evaluation process was carried out based on evaluation forms, which include a rating mechanism. Independent Directors also reviewed the performance of the Board as a whole, NonIndependent Directors and the Chairman.

The criteria for performance evaluation of the Board and its Committees amongst others includes their structure and composition, processes, information and functioning, terms of reference of the Committees, etc. The criteria for performance evaluation of individual Directors including Executive and Independent Directors amongst others includes their attendance and contribution at the meetings, devotion of time and efforts to understand the Company, its business, their duties and responsibilities and adherence to the code of conduct, etc.

SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS

There were 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 Act, your Directors confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed and there were 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.

EMPLOYEES STOCK OPTION PLAN

Your Company has 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. ESOP 2011 is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014. During the year, Members of the Company by a special resolution passed on June 28,

2017 approved grant of stock options under ESOP 2011 to the employees of subsidiary company(ies) and by another special resolution passed on October 26, 2017 approved amendment in Vesting Plan.

The amended Vesting Plan provides that the options granted under ESOP 2011 shall vest not earlier than 1 year and not later than 5 years from the Grant date. Within this period, the Vesting Plan could be different for different eligible employees as may be determined by Nomination and Remuneration Committee. The amended Vesting Plan is applicable only on grants made after passing of the resolution.

Further, due to corporate actions undertaken by the Company during the year, to make a fair and reasonable adjustments to the options granted earlier, Nomination and Remuneration Committee on January 19, 2018 granted 7,82,537 additional options under ESOP 2011 with regard to the options already granted but not yet vested / exercised by the option holders till the date of corporate actions. Accordingly, the total number of options reserved under ESOP 2011 also increased from 26,79,330 to 34,61,867.

The certificate from Statutory Auditors that the Scheme i.e. ESOP 2011 has been implemented in accordance with the SEBI Guidelines and the resolution passed by Members would be available for inspection by Members at the ensuing Annual General Meeting. The information required to be disclosed pursuant to the provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014 read with SEBI Circular No. CIR/CFD/ POLICY CELL/2/2015 dated June 16, 2015 is available on the Company’s website www.pcjeweller.com in the Investor Section.

POLICY ON DIRECTORS’ APPOINTMENT & REMUNERATION AND CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES & INDEPENDENCE OF A DIRECTOR

Your Company has always considered human resources as invaluable assets of the Company.The Nomination & Remuneration Policy of the Company is designed to identify the persons for appointment as Director, Key Managerial Personnel and other Senior Management Personnel and to attract, motivate, improve productivity and retain manpower by creating a congenial work atmosphere, encouraging initiatives and team work by creating a sense of belonging and involvement, besides offering appropriate remuneration packages.

The objective of the Policy on Criteria for determining Qualifications, Positive Attributes and Independence of a Director is to determine qualifications, positive attributes and independence of a director.

The Nomination & Remuneration Policy as well as Criteria for determining Qualifications, Positive Attributes and Independence of a Director are placed on the Company’s website www.pcjeweller.com in the Investor Section.

MANAGEMENT DISCUSSION AND ANALYSIS

As stipulated under the LODR Regulations, the Management Discussion and Analysis Report forms part of the Annual Report.

BUSINESS RESPONSIBILITY REPORT

As stipulated under the LODR Regulations, the Business Responsibility Report forms part of the Annual Report.

AUDITORS AND THEIR REPORT STATUTORY AUDITORS

M/s Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. 001076N/N500013) was appointed as Statutory Auditors of the Company for 5 years in the 10th Annual General Meeting of the Company held on September 19, 2015, subject to ratification by Members at every Annual General Meeting. However, pursuant to amendment in Section 139 of the Act, the requirement of ratification of the appointment of Statutory Auditors at every Annual General Meeting has been omitted and accordingly the proposal for ratification of the appointment of M/s Walker Chandiok & Co LLP has not been considered.

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 Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Shri Randhir Singh Sharma, Practicing Company Secretary, New Delhi to conduct the Secretarial Audit of the Company for the year under review. The Secretarial Audit Report is annexed herewith as “Annexure - 1” to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remarks except that 1) no Woman Director was on the Board for part of the year under review; and 2) the balance of deposit repayment reserve account was short by Rs.1.90 crore as at March 31, 2018. The Company has already appointed Woman Director on its Board during the year under review and had complied with the requirement. Further, after March 31, 2018 the requisite amount was deposited in Deposit Repayment Reserve Account and the Company had complied with the requirement.

During the year under review, the Statutory Auditors and the Secretarial Auditor have not reported any instance of fraud under Section 143(12) of the Act and rules made thereunder.

CORPORATE GOVERNANCE REPORT

The Report on Corporate Governance as stipulated under the LODR Regulations forms part of the 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 Act 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

As a responsible corporate citizen, the Company tries to contribute towards social causes on a regular basis. The Corporate Social Responsibility Policy of the Company is placed on its website www.pcjeweller.com. The brief outline of the Corporate Social Responsibility Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year, in the prescribed format, as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as “Annexure - 4” to this Report.

DIVIDEND DISTRIBUTION POLICY

In terms of Regulation 43A of the LODR Regulations, your Company has formulated a Dividend Distribution Policy. The same is placed on the website of the Company and is annexed as “Annexure - 5” to this report.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return in Form No. MGT - 9 is annexed as “Annexure - 6” to this report.

ACKNOWLEDGEMENT

Your Directors wish to convey their gratitude and place on record their appreciation for the valuable support and cooperation of the Company’s employees, bankers, government and other statutory authorities, customers, suppliers and shareholders, who have reposed their continued trust and confidence in the Company.

For and on behalf of the Board

Sd/-

Date: August 27, 2018 (PADAM CHAND GUPTA)

Place: New Delhi Chairman

DIN: 00032794

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