F i n a n c i a l H i g H l i g H t s - s t a n d a l o n e

operational HigHligHts (` in Million)

Financial Year 2013 - 14 2012 - 13 2011 - 12 2010 - 11 2009 - 10 2008 - 09 2007 - 08 2006 - 07 2005 - 06 2004 - 05

Sales & Other Income 25,276.64 22,401.60 20,250.27 15,551.07 10,365.10 9,119.96 9,878.19 8,841.89 5,573.12 4,894.51

PBDIT 1,513.86 1,465.68 1,399.43 1,159.32 1,030.12 865.15 1,005.15 888.32 503.10 359.90

PBT 493.11 397.48 459.55 425.10 237.44 215.61 477.91 472.93 274.02 173.24

Profi t After Tax 351.39 304.98 343.55 305.20 154.74 132.61 306.26 300.48 176.14 111.68

sources oF Funds

Financial Year 2013 - 14 2012 - 13 2011 - 12 2010 - 11 2009 - 10 2008 - 09 2007 - 08 2006 - 07 2005 - 06 2004 - 05

Shareholder ’s Fund 6,959.62 6,694.19 5,114.00 4,854.54 2,483.09 1,981.13 2,184.47 1,657.41 1,272.29 1,139.67

Share Capital 192.91 192.91 152.82 151.97 138.65 138.65 138.65 125.26 109.06 109.06

Reserves & Surplus 6,766.71 6,501.28 4,961.18 4,702.57 2,344.44 1,842.48 2,045.82 1,532.15 1,163.23 1,030.61

perFormance ratios

Financial Year 2013 - 14 2012 - 13 2011 - 12 2010 - 11 2009 - 10 2008 - 09 2007 - 08 2006 - 07 2005 - 06 2004 - 05

Dividend 30% 30% 32.50% 30% 25% 18% 40% 40% 35% 30%

Earning Per Share* ` 3.64 3.97 4.52 4.03 2.24 1.91 4.37 4.80 3.23 2.05

Book Value Per Share * ` 72.16 69.40 66.93 63.89 35.82 28.58 31.80 26.79 23.33 20.90

Forex Earnings (` In Mn) 19,663.88 15,978.07 16,478.20 11,660.56 7,618.27 7,538.30 9,199.69 8,147.85 5,247.63 4,501.77

* Face Value ` 2/- each

(` in Million)

01

A n n u a l R e p o r t 2 0 1 3 - 1 4

BankersAndhra BankAllahabad BankBank of IndiaBank of BarodaCentral Bank of IndiaCorporation BankExport Import Bank of IndiaICICI Bank Ltd.IDBI Bank Ltd.

Karnataka Bank Ltd.Oriental Bank of CommercePunjab National BankStandard Chartered BankState Bank of HyderabadState Bank of IndiaState Bank of PatialaSyndicate BankUnion Bank of IndiaVijaya Bank

Directors’Report

Management Discussion & Analysis

Corporate Governance Report

Auditors’Report

Balance Sheet

Profit & Loss Account

Cash Flow Statements

Notes to Accounts

Consolidated Accounts

Financials of Subsidiaries

06

22

27

44

48

49

50

55

74

96

c o n t e n t s

02

Group CFO

Shridhar J. Sawant

Chief Compliance Officer & Company Secretary

Sanjay M. Abhyankar

Registrar & Transfer Agents

Sharepro Services (I) Private Limited13AB, Samhita Warehousing Complex2nd Floor, Nr. Sakinaka Tel. Exchange Off. Andheri Kurla Road, Andheri (E)Mumbai 400 072 Tel No: 022 6772 0300 Fax No: 022 2859 1568Website : www.shareproservices.com Email: shrenuj@shareproservices.com

Auditors

Rajendra & Co.Chartered Accountants 1311, Dalamal Towers211, Nariman Point Mumbai 400 021

Solicitors

Talwar Thakore & AssociatesAdvocates & Solicitors 3rd Floor, Kalpataru Heritage 127, M. G. Road, FortMumbai 400 001

Completed 25 years of Listing on BSE and in the interest of shareholders the Board has recommended 1:1 Bonus.

YoY consolidated revenue growth of 20% and PAT by 22%.

The Board has recommended 30% dividend.

The Company has also increased its footprint in the south-east Asia viz. Myanmar, Vietnam by adding more retail markets for Forevermark diamonds, apart from strongly growing markets such as China and Malaysia.

Commencing maiden retail outlet for jewellery at Gabarone Airport in the capital city of Botswana.

The Company has partnered with DTC for beta-testing of the prototype for screening small sized diamonds. In-house diamond testing laboratory set up with Automatic Melee Screening machine.

The Company has been focusing on strengthening its rough diamond sourcing, especially in key mining countries such as Botswana and South Africa.

The Company is ranked amongst top 500 companies listed by The Economic Times.

H i g H l i g H t s

03

A n n u a l R e p o r t 2 0 1 3 - 1 4

Board oF directors

PROFeSSiOnAl

TeAm wORkPASSiOn

leAdeRShiP

viSiOn

nihar n. Parikh keki m. mistry dr. B.R. BarwaleExecutive Director Non Executive Director Independent Director

Suresh n. Talwar minoo R. Shroff h.e. Festus G. mogae Independent Director Independent Director Independent Director

kirtilal k. doshi Shreyas k. doshi vishal S. doshi Chairman Emeritus Chairman & Managing Director Group Executive Director

dr. S.A. dave S. S. Thakur Independent Director Independent Director 3

04

nihar n. Parikh keki m. mistry dr. B.R. BarwaleExecutive Director Non Executive Director Independent Director

Shreyas k. doshi kirtilal k. doshi vishal S. doshiChairman & Managing Director Chairman Emeritus Group Executive Director

Generations of excellence305

A n n u a l R e p o r t 2 0 1 3 - 1 4

d i r e c t o r s ’ r e p o r t

Dear Members,

The Directors have pleasure in presenting the 32nd Annual Report of your Company and the Audited Statement of Accounts for the year ended 31st March, 2014. Financial results:

The performance of the Company for the financial year ended 31st March, 2014 is summarized below:

( ` in Million)

particulars standalone consolidated 2013-14 2012-13 2013-14 2012-13Net Sales/Income from Operations 25,265.82 22,392.98 46,431.80 38,621.47

Other income 10.82 8.62 225.64 158.53

total revenue 25,276.64 22,401.60 46,657.44 38,780.00

Profit before Finance cost 1,447.14 1,402.67 2,614.59 2,481.61

Less: Finance cost 954.03 1,005.19 1,557.28 1,557.41

Profit before tax 493.11 397.48 1,057.31 924.20

Less: Tax 141.72 92.50 161.05 172.80

Net Profit before minority interest 351.39 304.98 896.26 751.40Add/(Less): Share of minority/associates - - 0.86 (17.64)

Net profit after tax 351.39 304.98 897.12 733.76Add: Balance b/f from previous year 1,291.05 1,085.78 2,658.61 2,025.58

Less : Adjusted on liquidation of Subsidiaries/Trf. of interest to minority - - (10.17) -

Profit available for appropriation 1,642.44 1,390.76 3,545.56 2,759.34

appropriations

General Reserve 36.00 32.00 41.48 33.02

Proposed Dividend 57.87 57.87 57.87 57.87

Tax on Proposed Dividend 9.84 9.84 9.84 9.84

Surplus in Profit & Loss Account 1,538.73 1,291.05 3,436.37 2,658.61

total: 1,642.44 1,390.76 3,545.56 2,759.34

06

operations:

The year gone by was a year of consolidation for the Company. The Company was able to offer a more attractive and contemporary product mix to its customers. It also leveraged its designing and manufacturing expertise worldwide to offer a wide range of products to meet global competition.

Indian Gems and Jewellery exports slowed down during the first half of the year due to the various measures implemented by the Indian Government, nevertheless the sector still constitutes about 15 per cent of the total exports from India. Concerned over rising current account deficit due to large scale gold imports, the Indian Government progressively hiked import duty on gold to 10 per cent and had made it mandatory for gold importers to export 80 per cent of the gold consignment before placing fresh orders for gold import. Due to these restrictions, the demand for the yellow metal softened and resulted in small decline in business in this segment.

In a difficult Global Environment, the Company’s performance was impressive with rise in sales of 12.8% to ` 25,266 million. Profit After Tax also rose by 15% over the last year to ` 351 million on a standalone basis.

Consolidated revenue at ` 46,657 million recorded a 20% growth and net profit at ` 897 million, a healthy 22% rise over the previous year.

This growth has been achieved under Challenging Global Market conditions and volatility in currencies. The continued focus on diversifying customer base across new geographies and increasing operational efficiencies through improved productivity contributed to this improvement.

07

PROFIT AFTER TAX & DIVIDEND

A n n u a l R e p o r t 2 0 1 3 - 1 4

issue oF Bonus sHares:

To commemorate the Company’s completion of 25 years (Silver Jubilee) of listing at BSE, the Board of Directors of the Company has recommended Bonus Shares in the ratio of 1:1, that is, one new fully paid up Equity Share of ` 2/- each for every one fully paid-up Equity Share of ` 2/- each held by the members as on the Record Date to be determined by the Board for this purpose. After allotment of bonus shares the Issued, Subscribed and Paid-up Share Capital of your Company will be augmented to ` 385.82 million from ` 192.91 million.

diVidend:

The Board of Directors has recommended payment of a final dividend of 30% i.e. 60 paise per share on 96,453,629 Equity Shares of ` 2/- each, for the year ended 31st March, 2014. The dividend will entail an outflow of ` 67.71 million (including dividend tax of ` 9.84 million) on the paid up equity share capital of ` 192.91 million.

While recommending the issue of Bonus Equity shares in the ratio 1:1, the Board decided that if the Bonus Equity shares are issued prior to payment of dividend, the dividend post issue of Bonus Equity Shares would be @ 30 paise per equity shares of ` 2/- each.

economic scenario & outlooK:

The year witnessed divergent growth Globally, led by strengthening of the US economy, uneven and subdued growth in the Euro area and Japan, coupled with a slowdown in developing & emerging markets.

In the Domestic Market, growth continued to be muted with the second successive year of sub 5% GDP growth. The year saw steep currency depreciation in an environment where industrial activity remained in contraction mode, consumption demand continued to weaken, while lackluster capital goods production pointed to stalled investment demand.

With sluggish growth across the larger economy, further compounded by high consumer inflation and weak sentiment, market growth across luxury products moderated throughout the year in both volume and value terms. The discretionary categories and premium segments were particularly under pressure. The operating context for the year was challenging, given the backdrop of a market slowdown, a volatile input cost environment and heightened competitive intensity.

Your Company’s performance for the year 2013-14 has to be viewed in the context of aforesaid economic and market environment.

The long term prospects for the diamonds and jewellery market remain positive. To meet the continuing expansion in growth and demand, the Company continues to invest in strengthening its manufacturing and marketing infrastructure.

High cost of borrowing and delays in securing government approvals have dampened corporate investments while high inflation has impacted consumer confidence resulting in reduced spending. Domestic demand is likely to revive this fiscal year but the recovery will remain week so long as investment demand does not pickup. With a clear mandate to the Government in place, a strong revival is anticipated in the Indian market.

08

Retail operations in India continue to grow as planned. Consolidated revenue from Branded and Retail sales grew by 26% to ` 3,267 million. This segment is expected to contribute more in the coming years.

Hong Kong has emerged as the major trading hub for the Indian Gem and Jewellery industry after the US. The Hong Kong Government projects the bilateral trade with India to grew to $ 50 billion in the next six years from $17 billion at present. In 2013-14, rough diamond prices rose by 7- 8%, but are still lower than 2011 levels and are likely to stabilize at this level. Against this, polished diamond prices have shown only marginal rise last year but are expected to grow on a gradual basis in the coming year. The outlook for the current year is promising, especially with sustained rise in demand from China, CIS and India and stable demand from US and Euro zone.

suBsidiarY companies and consolidated Financial statements:

The Company has 8 subsidiary companies, 2 located in India and 6 outside India. It has 15 step-down overseas subsidiaries across the globe. A few of the overseas subsidiaries viz. Shrenuj Australia Pty Ltd. and Alija International Pty Ltd. have been wound up and their operations merged with others to consolidate regionally.

As required under the Listing Agreement with the Stock Exchanges a consolidated financial statement of the Company and all its subsidiaries is attached. The consolidated financial statement has been prepared in accordance with the Accounting Standards 21, 23 and 27 as notified by the Companies (Accounting Standards) Rules, 2006.

09

Financial Year

A n n u a l R e p o r t 2 0 1 3 - 1 4

general eXemption proVided From not attacHing tHe Balance sHeet oF suBsidiarY companies to tHe annual report oF tHe companY u/s. 212(8) oF tHe companies act, 1956:

The Government of India, Ministry of Corporate Affairs (MCA), New Delhi vide its Circular No.2/2011 dated 8th February, 2011 has granted general exemptions to the Company from annexing to this report, the Annual Reports of the subsidiary companies. The Company has fulfilled the conditions specified in the said circular. Pursuant to the said circular from MCA, a gist of the financial performance of the subsidiary companies is disclosed elsewhere in the Annual Report. If any Member of the Company or any of its subsidiary companies so desires, the Company will make available copies of Annual Accounts of the subsidiary companies and related information. These documents will also be available for inspection during business hours at the Registered Office of the Company except on Saturday, Sunday and National holidays.

conserVation oF energY, researcH and deVelopment, tecHnologY aBsorption, Foreign eXcHange earnings and outgo:

Information required under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure- I to this Report. particulars oF emploYees:

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in the Annexure II to this report.

group For inter se transFer oF sHares:

Based on the information received from the Promoters and as required under Clause 10(1) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, persons constituting ‘Group’ as defined in the Monopolies and Restrictive Trade Practices Act, 1969, for the purpose of Regulation 10 of the aforesaid SEBI Takeover Regulations comprise:

1. Mr. Kirtilal K. Doshi including HUF 8. Dr. Anjali Pradeep Mehta2. Mr. Shreyas K. Doshi including HUF 9. Dr. Pradeep A. Mehta3. Mr. Anuj Kirtilal Doshi 10. Anuj Doshi Trust4. Mr. Vishal Shreyas Doshi 11. Aman Doshi Trust and Aria Doshi Trust5. Smt. Suman Kirtilal Doshi 12. Shrenuj Investments & Finance Pvt. Ltd.6. Smt. Geeta Shreyas Doshi 13. Prest Impex Private Limited7. Smt. Rachna Vishal Doshi 14. Kum. Aditi Shreyas Doshi

management discussion and analYsis:

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis, which forms a part of the Annual Report as Annexure – III.

10

directors:

Pursuant to the provisions of Sections 149, 150 and 152 and any other applicable provisions of the Companies Act, 2013 and the rules made thereunder read with Schedule IV of the Act existing Independent Directors viz. Dr. Badrinarayan R. Barwale, Dr. Surendra A. Dave, H.E. Festus G. Mogae, Mr. Minoo R. Shroff, Mr. Shobha Singh Thakur and Mr. Suresh N. Talwar in respect of whom the Company has received a notice in writing from a member proposing their candidature for the office of Director be appointed as an Independent Directors of the Company to hold office for five consecutive years for a term up to 31st March, 2019.

Mr. Keki M. Mistry, Director of the Company will retire by rotation at the ensuing Annual General Meeting and being eligible have offered himself for re-appointment as a Non Executive Director of the Company.

The present term of office of Mr. Nihar N. Parikh, Executive Director of the Company expired on 31st March, 2014. It is proposed to re-appoint him for a further period of five years with effect from 1st April, 2014 to 31st March, 2019.

Brief profiles of the Directors proposed to be re-appointed as required under clause 49 of the Listing Agreement are part of the Notice convening the Annual General Meeting.

11

SALES & OTHER INCOME

Financial Year

A n n u a l R e p o r t 2 0 1 3 - 1 4

FiXed deposits:

During the year under review the Company has not accepted any fixed deposits from the public. The fixed deposits outstanding as on 31st March, 2014 were ` 17 million. As on year end date, there were no unpaid / unclaimed matured public deposits.

Human resource management:

The Gems and Jewellery sector is one of the leading contributors to the country’s exports. Besides, in India alone, it employs over a million skilled and semi-skilled persons. The sector has gained global acceptance and popularity because of its talented craftsmen, attractive designs and its superior practices in cutting and polishing fine diamonds and precious stones. The Company is engaged in sourcing, manufacturing, and processing, which involves cutting, polishing and selling precious gemstones and metals such as diamonds, other precious stones, diamond studded gold, silver and platinum jewellery.

The Company believes in maintaining a high code of ethics in its dealings, in consonance with the Company’s Code of Conduct for its employees. Any violation of these principles and the Company’s Code of Conduct and other Policies relating to employment are dealt with seriousness. The Company has also devised and communicated policies relating to Whistleblower mechanism and protection against Sexual Harassment of women employees at workplace.

The Management has also revised the existing Code of Conduct which governs the behavior, conduct and discipline of all employees of entire Shrenuj Group.

WHistle BloWer policY:

The Board has adopted Whistle Blower Policy w.e.f. 1st January, 2014. Copy of the said policy is available on the Company’s Website www.shrenuj.com.This policy is formulated to provide a secure environment and to encourage the individual to report unethical, unlawful or improper practices, acts or activities that may be taking place in the Company and to prohibit senior managerial personnel from taking any adverse action against those individual who report such practices in good faith. This policy is framed in accordance with the provisions of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered by the Company with the Stock Exchanges.

policY on preVention oF seXual Harassment at WorKplace For Women:

The Board has revised the earlier policy on Prevention of Sexual Harassment at Workplace issued in the year 2004 in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“the Act”) notified in Official Gazette by Ministry of Women and Child Development on 9th December, 2013. This policy has been revised to prohibit, prevent or deter the commission of acts of sexual harassment of women at workplaces and evolved the procedure for the redressal of the complaints pertaining to sexual harassment in the Company.

The Company has constituted Internal Complaint Redressal Committee consisting of 11 members including Presiding Officer, which consists of majority of women members and one outside member who is familiar with the issues relating to Sexual Harassment as required under Section 4(2) of Chapter II of the said Act.

12

The complainant may send a written complaint to any member of the Committee or may also forward the complaint through email at: ic.rc@shrenuj.com in the format mentioned in Schedule II of the said Policy which is available on the Company’s website www.shrenuj.com.

corporate social responsiBilitY committee and adoption oF corporate social responsiBilitY policY:

As required under Section 135 of the Companies Act, 2013 a Corporate Social Responsibility Committee was formed to formulate and recommend to the Board a Corporate Social Responsibility Policy to plan activities to be undertaken by the Company, recommend the amount of expenditure to be incurred on these activities and to monitor the Corporate Social Responsibility Policy of the Company from time to time.

The Corporate Social Responsibility Policy duly approved by the Board at its meeting held on 7th February, 2014 has been placed on the Company’s website www.shrenuj.com for shareholders’ information.

cHange in nomenclature oF remuneration/compensation committee and adoption oF reVised nomination and remuneration policY:

As required under section 178 of the Companies Act, 2013 the nomenclature of Remuneration/Compensation Committee has been changed to Nomination and Remuneration Committee and the said Committee has been reconstituted by inducting Mr.Shreyas K. Doshi, Chairman & Managing Director of the Company as a member of the Committee. The Board amended Nomination and Remuneration Policy on 23rd January, 2014 which was originally framed on 24th October, 2001.

The revised policy was framed to evaluate every Director’s performance and to determine the remuneration of the Directors, Key Managerial Personnel and other Senior Management Executives of the Company. The Committee shall identify persons qualified to become Directors and Senior Executives. The policy has formulated the criteria for determining qualifications, experience and independence of Director. It has also defined role and responsibilities of the Nomination and Remuneration Committee.

cHange in nomenclature oF sHareHolders’/inVestors’ grieVance committee:

As required under section 178 of the Companies Act, 2013 the nomenclature of Shareholders’/Investors’ Grievance Committee has been changed to Stakeholders Relationship Committee. Stakeholders Relationship Committee will consider and resolve the grievances of security holders of the Company and as and when required will resolve any issues/matter raised by any stakeholder to expedite the redressal process of the Company.

insurance:

Properties and assets of the Company are adequately insured. Business risk, credit and other potential risks have also been adequately insured.

13

A n n u a l R e p o r t 2 0 1 3 - 1 4

director’s responsiBilitY statement:

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm;

(i) that in the preparation of Annual Accounts for the year 2013-14, the applicable Accounting Standards, to the extent practicable, have been followed and that there are no material departures;

(ii) that the Directors have adopted such Accounting Policies and have applied them consistently and have made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit of the Company for the financial year end on that date;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared annual accounts on a going concern basis.

corporate goVernance:

The Company is committed to uphold the highest standards of Corporate Governance and adhere to the requirements set out by the Securities and Exchange Board of India. As required by Clause 49 VI of the Listing Agreement, a detailed report on Corporate Governance forms part of the Directors’ Report as Annexure IV. The Auditors’ certificate on compliance with Corporate Governance requirements is attached to the Corporate Governance Report.

The Chairman & Managing Director’s declaration regarding compliance with the Business Conduct Guidelines (Code of Conduct) is also attached to the Corporate Governance Report as Annexure 1.

As per the amended Clause 49 of the Listing Agreement a Code of Conduct laid down for Directors and Senior Management Personnel has been revised and adopted by the Board.

general sHareHolder inFormation:

General Shareholder Information is given in Annexure V to this report.

internal control sYstems and risK management plan:

Section 177(4) of the Companies Act, 2013 mandates Audit Committee to evaluate Internal Financial Controls and Risk Management Systems of the Company. The Board has laid down the procedure to inform the Board Members about the Risk Assessment and Minimization on periodical basis since in the year 2005. The revised Risk Management policy was adopted and approved by the Board at its meeting on 23rd May, 2014.

As required under SEBI Circular No. CIR/CFD/POLICY CELL/2/2014 dated April 17, 2014 and as per revised Clause 49 of the Listing Agreement the Board has constituted a Risk Management Committee to

14

inform the Board members about Risk Assessment and minimization procedures and to review and monitor Risk Management Policy and plan of the Company and such other related functions and matters as may be deemed fit from time to time.

The Internal Control Systems of the Company are commensurate with the size, scale and complexity of its operations. These are constantly revised and strengthened. Internal Auditors carry out audit at regular intervals and submit their report to the Audit Committee. Internal Audit plays a key role in providing an assurance to the Board and value adding advisory services to business operations. Pursuant to Section 138 of the Companies Act, 2013 M/s. Prakash S. Doshi & Co., Chartered Accountants, has been re-appointed as Internal Auditors of the Company for the financial year 2014-15.

de-listing oF eQuitY sHares oF tHe companY From mcX stocK eXcHange:

The Company was listed on MCX Stock Exchange Limited with effect from 24th May, 2013. However from the date of listing till date, no trading of Equity Shares of the Company took place on MCX Stock Exchange. Therefore, pursuant to Regulation 6(a) of the Securities and Exchange Board of India (De-listing of Equity Shares) Regulations, 2009 the Board has decided to delist the Company’s Equity Shares from the said Stock Exchange. The Company has made an application for delisting of shares from MCX Stock Exchange and also given a press release as required under Regulation 7(1)(b) of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in this regard.

105.00

60.00

75.00

90.00

30.00

45.00

72.1669.40

66.9363.89

35.82

92.50

59.20

MPS BOOK VALUE

64.00

52.15

39.70

2012-13 2013-142010-11 2011-122009-10

BOOK VALUE AND MARKET PRICE PER SHARE

As on Financial Year End

``

15

A n n u a l R e p o r t 2 0 1 3 - 1 4

succession planning:

The age of superannuation in the Company is 60 years. The Company has laid down the requisite procedure for succession planning.

The search process will begin six months or earlier, prior to the employee attaining superannuation age. Preference is given to promotion from within, failing which outside candidates will be evaluated. For the next 2 years, the appointed successor will be trained under the key manager.

auditors and auditors’ report:

The Statutory Auditors of the Company, M/s. Rajendra & Co., Chartered Accountants, Mumbai, (Firm Registration No.108355W) retire at the conclusion of the ensuing annual general meeting of the Company and have confirmed their willingness and eligibility for re-appointment. They have also confirmed that their re-appointment, if made, will be within the limits prescribed under Section 141 of the Companies Act, 2013.

The Board recommends re-appointment of Auditors of the Company for a term of three years commencing from 1st April, 2014 to hold office as such from the conclusion of this Annual General Meeting (“AGM”) until the conclusion of 35th Annual General Meeting, subject to ratification of the appointment by the members at every AGM held after this AGM.

The Board has duly reviewed the Statutory Auditors’ Report on the Accounts. The observations and comments appearing in the Auditors’ Report are self-explanatory and do not call for any further explanation/clarification by the Board under Section 217(3) of the Companies Act, 1956.

appointment oF cost auditors pursuant to section 233B oF tHe companies act, 1956 For tHe FY 2013-14 and suBmission oF cost compliance report For tHe FY 2012-13:

Pursuant to Section 233B of the Companies Act, 1956 and with the approval of the Central Government M/s. ABK & Associates were appointed as the cost auditors of the Company to conduct audit of Diamonds and Jewellery articles manufactured by the Company at Seepz, Andheri, Tardeo, Charni Road, Bharat Diamond Bourse – Bandra, Surat and Patna for the financial year ended 31st March, 2014. Form No.23D for appointment of cost auditors for the FY 2013-14 was uploaded on MCA portal on 8th October, 2013.

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors recommends the re-appointment of M/s. ABK & Associates, Cost Accountants as cost auditors of the Company for the financial year 2014-15 on a remuneration of ` 1,00,000/- (Rupees One Lac Only) plus service tax as applicable for the said financial year and requested the Members to ratify the remuneration as recommended above.

M/s. ABK & Associates, Cost Accountants, were also appointed to submit compliance report alongwith the requisite annexure duly certified by them for the financial year commencing from 1st April, 2012 to 31st March, 2013 as required under rule 2 of the Companies (Cost Accounting Records) Rules, 2011 of the Central Government within the time prescribed under above referred rules. Form No. A-XBRL – Filing of Cost Compliance Report for the FY 2012-13 was e-filed on MCA portal on 22nd August, 2013 as required under rule 7 of the Companies (Cost Accounting Records) Rules, 2011.

16

transFer to inVestor education and protection Fund (iepF):

The Company sends reminder letters to all shareholders whose dividends are unclaimed so as to ensure that they receive their rightful dues. During the year, the Company has transferred a sum of ` 3,22,839/- to Investor Education & Protection Fund, the amount which was due and payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205C (2) of the Companies Act, 1956. So far a total sum of ` 31,14,533/- has been transferred to the Fund.

secretarial audit report:

As required under Section 204 of the Companies Act, 2013 the Board has appointed M/s.Hemanshu Kapadia & Associates, a Company Secretary in Practice, to submit a secretarial audit report for the FY 2014-15. The said report will be placed before the Board in next Financial Year.

acKnoWledgements:

Your Directors thank the members, financial institutions, banks, foreign patrons, De Beers, regulatory authorities, Stock Exchanges and all stakeholders for their continued co-operation and support. The Directors also record their sincere appreciation to all executives, officers and employees at all levels and locations of the Company for their commitment and continued contribution to the growth of the Company’s business.

For and on behalf of the Board

Place: Mumbai SHREYAS K. DOSHIDate: 23rd May, 2014. CHAIRMAN & MANAGING DIRECTOR

17

A n n u a l R e p o r t 2 0 1 3 - 1 4 18

ANNEXURE-IPARtIcUlARs PURsUANt to comPANIEs (DIsclosURE of PARtIcUlARs IN thE REPoRt of thE BoARD of DIREctoRs) RUlEs, 1988.

A. coNsERvAtIoN of ENERgy

As the company is not covered in the list of industries required to furnish information in form ‘A’ relating to conservation of Energy, the same is not given. Even though its operations are not energy-intensive, significant measures are taken to reduce energy consumption by using energy-efficient equipment. The Company regularly reviews power consumption patterns across all locations and implement requisite improvements/changes in the process in order to optimize energy/power consumption and thereby achieve cost savings.

Energy costs comprise a very small part of the Company’s total cost of operations. However, as a part of the Company’s conservation of energy programme, the management has appealed to all the employees / workers to conserve energy. The management has set up an on-going process for optimising the utilization of machines. The measures taken have resulted in savings in cost of production, power consumption and processing time.

B. REsEARch AND DEvEloPmENt (R & D)

R & D is focused on the development of new products both for export and domestic markets. Due emphasis is placed on improving quality standards with enhanced customer satisfaction. This was primarily achieved through process improvements, control on systems, reduction of waste and energy conservation. Effective use of tools and small group activities with the technological support resulted in controlling the variations in processes, maximizing the productivity and minimizing the cost of production.

1. SpecificareasinwhichR&DiscarriedoutbytheCompany:

i) Material evaluation/Characterization of raw materials and rough diamonds.

ii) Planning, cutting and polishing of diamonds and manufacturing of jewellery.

iii) In-house development of advance software for preventing human errors.

iv) Cleaving, kerfing and sawing techniques for diamonds.

v) Designing of jewellery and development of new cuts in diamonds.

vi) Waxing, wax setting, casting, sprue grinding, filling and polishing of jewellery.

vii) Capability development for in-house processes, designs and strategic applications of material for product improvement.

Efforts continued in the direction of fine tuning of the jewellery manufacturing and the changes in designs. These resulted in improvements in product performance.

2. BenefitsderivedasaresultofR&Dactivity:

The R & D activities helped to add new quality products to the range viz. Diti, Joliesse, Celebration Fire etc.and to achieve greater customer acceptance in the retail market. These activities also enabled the Company to reduce waste, increase productivity, achieve higher “customer satisfaction” and derive the following benefits:a. Increase product range coupled with technology upgradations and cost reduction;b. Introduction of new products with a focus on achieving global acceptance and in conformity to Indian

and International standards;c. Improved quality in diamond and jewellery manufacturing;d. Increased customer base and additional business volumes;e. Reduction in reworks and elimination of manufacturing rejections in jewellery;f. Improved finish and lustre of diamonds;g. Ability to calculate precisely the yield on each lot of diamonds and offer promised delivery dates, leading

to improvements in buying decisions for rough diamonds and process cycle;

h. Boosting the capabilities, to offer custom-made jewellery and fetching orders in stiff international competition.

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3. Futureplanofaction:

a. Plans to develop new quality products and upgrade existing range of jewellery in order to meet new market trends.

b. The Company will explore various options to adopt latest technology and use of equipment for its operations.

c. Investment in expanding distribution footprint.

Benefits listed below are expected to flow in from initiatives undertaken by the Company:

● High growth in retail segment

● Enhancement of goodwill in B2B segment

● Direct impact on margins by giving access to retailers in target market.

4. Expenditure on R & D for the year ended march 31, 2014.

a. Capital Expenditure - Nil

b. Recurring Expenditure - Nil

c. Total - Nil

d. Total R & D expenditure as a percentage of total turnover - Nil

Expenses incurred on R & D were not material enough to be stated in this report and being an ongoing process, it is difficult to allocate under the above referred heads.

c. tEchNology ABsoRPtIoN, ADoPtIoN AND INNovAtIoN

1. Effortsmadetowardstechnologyabsorption,adoptionandinnovation: Efforts undertaken

The Company values innovation and applies it to every facet of its business. This drives development of distinctive new products, ever-improving quality standards and more efficient processes.

Innovation is embedded in Shrenuj’s DNA. Shrenuj was the first diamond company to introduce laser processing technology in India, back in 1987. It continues to strive for improvement and has currently adopted technology that helps automate the polishing process.

Product development receives primacy in Shrenuj. The Company has created a number of new and unconventional polished diamond cuts, several of which are patented. It has received numerous industry design awards over the years, and introduced exciting new concepts to consumers, such as multi-functional and interchangeable designs.

The Company has augmented its revenues and per unit price realization by deploying innovative marketing strategies and offering exciting new products. The depth of designing capabilities has been the core to our success over the years.

The Company uses the service of in-house designers as well as those of free-lancers in developing product designs as per the emerging market trends. The Company uses innovation in design as well as in technology to develop new products.

2. Benefitsderivedasaresultoftheaboveefforts:

As a result of the above, the following benefits have been achieved:

a. Better efficiency in operations,

b. Reduced dependence on external sources for technology required towards developing new products and upgrading existing products,

c. Expansion of product range and cost reduction,

d. Meeting Global Standards of quality and increased export potential,

e. Greater precision,

f. Retention of existing customers and expansion of customer base,

g. Lower inventory stocks resulting in low carrying costs,

h. Substantial reduction in returns on account of production defects resulting in lesser rework and reduction in overtime.

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3. Incaseofimportedtechnology(importedduringlast5yearsreckonedfromthebeginningofthefinancialyear)followinginformationisfurnished:

a. Technology imported - Computer aided diamond scanner (Galaxy)b. Year of import - 2011c. Has Technology been fully absorbed? - Yes

i If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action

- Not applicable

D. foREIgN EXchANgE EARNINgs AND oUtgo

1. Activities relating to exports; initiatives taken to increase exports; development of new exportmarketsforproductsandservices;exportplans:

The Company has a wide and appealing range of products. Each division has dedicated cells for giving impetus to exports. Various offices and designated executives abroad help to create demand for our products in selected countries and explore new markets. The Company is expanding the reach of new products by synergising with existing products and establishing new projects like the one in Botswana. The Company regularly participates in prestigious international exhibitions and conducts market surveys. Its international presence in 15 countries with a global spread of offices and joint ventures with world leaders offers it a competitive edge.

With India’s growing importance as a low-cost manufacturing base and good health, safety and environment practices, the Company has visualised a great export potential for many of its products across the globe. During the year under review the Company’s exports were ` 19,864.67 million, 78.59% of total sales.

2. TotalForeignExchangeusedandearned:

(` in millions)current year Previous year

Total Foreign Exchange earned on F.O.B. basis 19,663.88 15,978.07Other Foreign Exchange Earned 35.78 7.47Total Foreign Exchange used 18,614.74 15,545.25

ANNEXURE – II

Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of employees) Rules, 1975, and forming part of the Directors’ Report for the year ended 31st March, 2014.

Name Designation/ Nature of Duties

gross Remuneration

(Rupees)

Date of Joining

Age/ Experience

(years)Qualification

last Employment

held

Mr. Shreyas K. Doshi Chairman and Managing Director 17,866,666 13.04.1982 63 / 44 F.Y. Science -

Mr. Nihar N. Parikh Executive Director 10,930,667 01.10.1992 46 / 22 B.Com -

Mr. Vishal S. Doshi Group Executive Director 10,101,468 01.09.2001 35 / 15 B. Com -

Note: Gross remuneration as shown above includes basic salary, house rent / any other allowance, expenditure incurred on providing housing and other facilities, bonus, superannuation, leave travel incentives, medical and Company’s contribution to provident fund.

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A n n u a l R e p o r t 2 0 1 3 - 1 4 22

Annexure - IIImANAgEmENt DIscUssIoN & ANAlysIsMaCRo-ECoNoMICSCENaRIo:HEalTHySIgNSoFIMpRovEMENT

Year 2013-14 witnessed gradual improvement in the global economy, major contribution being from US and Japan. The year ended with a positive outlook for the coming year. The emerging market economies contributed to about two thirds of the growth, despite a somewhat challenging financial environment. Export growth from emerging markets is expected to get a boost from radical rising demand in advanced economies. The three major risks, identified by International Monetary Fund, that can impede this growth are:

1. Emerging markets risks have increased

2. Risks to activity from lower-than-expected inflation in advanced economies

3. Resurfacing of geo-political risks, with special reference to Ukraine-Russia issue

Despite these risk perceptions, the overall risks have declined as compared to the previous year.

There has been renewed market concern about emerging market fundamentals. Although market pressures were relatively broadly based, countries with higher inflation and wider current account deficits have been generally more affected. Some emerging market economies have tightened macroeconomic policies to shore up confidence and strengthen their commitment to policy objectives. The cost of capital has increased as a result, and this is expected to dampen investment and weigh on growth.

Looking ahead, global economic growth is projected to rise from 3 percent in 2013 to 3.6 percent in 2014 and 3.9 percent in 2015. In advanced economies, average growth is expected to increase to about 2.25 percent in 2014–15, an improvement of about 100 basis points compared with 2013. Key drivers are a reduction in fiscal tightening, except in Japan, and still highly accommodative monetary conditions elsewhere. Growth will be strongest in the United States at about 2.75 percent but subdued and varied in euro area. In emerging market and developing economies, growth is projected to pick up gradually from 4.7 percent in 2013 to about 5 percent in 2014 and 5.25 percent in 2015. Growth will be helped by stronger external demand from advanced economies, but tighter financial conditions will dampen domestic demand growth. In China, growth is projected to remain at about 7.5 percent in 2014. The Indian economic growth is likely to pick up to about 5.5% in the current year.

THEDIaMoNDvaluECHaIN:STEaDyaNDSTaBlE

There was an improvement across all segments of the diamond value chain in 2013 though the numbers were quite similar to 2012. Rough diamond production was at $14.01 billion (for 122 million carats) for the year 2013, as per Kimberly data, with an average price of $114.82 per carat. Rough diamond sales were marginally higher at $15.56 billion (2012: $15.5 billion), while polished diamond sales improved to the level of $21.6 billion (2012: $20.7 billion) at polished wholesale prices (PWP). Global diamond jewellery retail sales rose 3.3 percent from $72.1 billion to $74.48 billion, falling marginally short of the US$ 75 billion figure that was projected for the year.

Among the markets, China witnessed 12 percent growth on the retail side. In the US and Japan, there was small but encouraging growth. In India, however, demand for polished diamonds in the domestic jewellery market declined by some 5 percent due to the imposition of import duty on gold and sustained high prices.

According to industry experts, the diamond manufacturing and trading sector, from rough purchases to polished sales, which cumulatively lost some $400 million in 2012, was able to reverse the trend and returned to profitability of a similar amount.

Although rough diamond prices weakened in the latter part of 2013, polished diamond prices remained more or less constant, helping the improvement in the bottomline. In 2013, the challenge was mostly on account of currency fluctuations rather than price volatility.

The mining output from diamond mines did not change materially from 2012 at about 122 mn carats. The largest supplier, by volume was Alrosa in Russia. It sold some 5 million carats more in 2013, from 33.2 million in 2012 to 38 million carats. Any increase in demand will most likely be offset by the increased production, so no significant price appreciation is expected in either rough or polished diamonds.

Diamond recycling (buying back from consumers) was very much institutionalised during 2013 and has become an integral permanent part of the supplies – albeit figures declined by some 20 percent over 2012. Recycling availability in 2013 was impacted by US mass melting of gold and this, in particular, slowed the supply of carat volumes of smaller and cheaper diamonds across the American market. In these categories, supplies are down by some 25 percent from a very high peak. The overall volumes in recycling are estimated to decline by 20 percent this year.

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The issues of synthetic diamonds were actively discussed throughout 2013. The industry has become very much aware of the need to check synthetic diamonds – and detection machines have become the most sought-after equipment in diamond centers. Shrenuj has set up a full-scale in-house laboratory to test synthetic diamonds and to ensure the integrity of their diamonds and assure customers.

oPERAtIoNAl PERfoRmANcE

The diamond and jewellery market witnessed challenging times during the year with slightly subdued demand and consumer sentiments. This trend started to reverse during the second half of the year but by then, the input prices started climbing, putting pressures on the margins. The rise of rupee against dollar and stability in prices of rough diamonds as well as gold has reversed this trend and the management believes that this is the beginning of a good period for diamond and jewellery segment.

The management is pleased with the operational performance of the Company, especially in the challenging and turbulent market conditions during the year. The overall outlook for the diamond and jewellery market is optimistic for the current year and given the recent stability in prices of gold and diamonds, the Company expects to improve its performance significantly during the year.

With the commissioning of the new diamond cutting and polishing unit in Patna, the Company is preparing itself to meet the projected growth in demand. The Company also augmented its manufacturing capacities in the existing units by further automating the manufacturing processes and installation of new equipment. As a result, during the current year the Company expects to increase its production by about 25% in the diamond manufacturing process.

During the year, the Company has also increased its footprint in the South-East Asia by adding more retail markets of forevermark diamonds. During the current year, the Company is expected to launch its first jewellery retail outlet in South Africa.

The Company recorded a total operating income (consolidated) of ` 4,643.18 crores for the year 2013-14 as compared to revenue of ` 3,862.14 crores in the corresponding last period. The net profit for the period rose by 22% to ` 89.71 crores (` 73.38 crores). Based on the financial performance, the Board recommended a final dividend of 15% (Re.0.30 per share: FV ` 2) after issuing a 1:1 bonus.

CompliancewiththeBestpracticesintheindustry

Shrenuj Group remains committed to compliance with global best practices, statutory as well as voluntary. As a De Beers sightholder, we follow the Best Practices Principles (BPP) Guidelines of De Beers and Forevermark, including but not limited to periodic third party audit of our systems and procedures by internationally accredited independent agencies. We also follow the World Diamond Council’s System of Warranties for polished diamonds and studded jewellery.

We source our diamonds solely from KYS compliant suppliers and do not buy diamonds from any sources involved in conflict, terrorism and illicit trade activity. Our suppliers issue us a warranty that the diamonds/ gold sold to us is conflict free. The diamond procurement is always from verifiable sources, not engaged in money laundering activity. We comply with the Kimberly Process Certification norms in this regard, for all our imports and exports of rough diamonds. We also undertake scheduled internal audits for tracking our products through the operating value chain.

We have built a team of qualified professionals to ensure complete compliance with statutory norms and adoption of international best practices. Also, we have installed systems and procedures to ensure the pipeline integrity.

commitment

We continue to remain very fair employer and do not discriminate between employees on the basis of caste, religion, sex, color or creed. The Company ensures the health and welfare of all its employees by providing a safe and healthy working environment. Shrenuj recognizes that human capital is vital to its long term business sustainability and accordingly, has adopted employee selection and performance appraisal criteria based on objectivity and merit.

fINANcIAl PERfoRmANcE

overview

The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956 and Generally Accepted Accounting Principles (GAAP) in India. The management accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner the form and substance of the transactions, and reasonably present the Company’s state of affairs, profits and cash flows.

A n n u a l R e p o r t 2 0 1 3 - 1 4 24

oUtlook, oPPoRtUNItIEs AND thREAts

outlook

The overall economic situation is now brightened. The pick up is slow but the prices remain firm and the demand for larger sized diamonds is showing a positive upward trend. The prices of superior quality diamonds have plateaued but we expect the demand to improve. The sentiments in EU have improved resulting in higher demand. The US market is expected to perform well during the year. Demand in India is again on the rise and is likely to maintain an upward trend. Markets in Japan and China will continue to perform well during the year. Sales of jewellery products will be affected due to merger of large format retailers in the US. However, it will be compensated by higher growth in other regions. The demand in the lower priced jewellery is expected to rise at a higher rate, with improvement in margins as well.

opportunities

The rise in demand for lower end jewellery in the Euro Zone, China and US is a big opportunity for raising volumes. Indian market has shown signs of improvement in the bridal and mid end jewellery. Middle East and northern Africa will continue to present growth opportunities as well as the CIS region. The success of our new unique collection with the largest retailer in US has led to the launch of it in other markets, leading to improved sales and margins. In the coming year, Forevermark promises to do well in core markets as well as licensee markets.

threats

Shrenuj continues to be subject to various risks in the economic environment, including but not limited to product, marketing, competition, economic downturns, financial risks, consumer demand etc. However, in this fast changing business environment, competitive risks have become predominant.

The management has put in place adequate mechanisms to manage these risks across the various business segments and geographies in which the Company operates. There are clearly defined policies and processes to hedge the purchase of precious metals foreign currency exposures, and sources of supply of rough diamonds. Presence across various geographies and across business segments also helps in containing the risk of weakening demand in a single market or segment.

We have priced our products at a premium over that of the competitor’s. This premium is accepted by our customers on account of our superior product and service quality. We have constantly endeavored to stay at the top of product and service quality grid to ensure this. Shrenuj nurtures, encourages and promotes research and development as well as innovation towards this end.

INtERNAl coNtRols AND thEIR ADEqUAcy

We have adequate systems and processes to safeguard and protect our data and knowledge resources. The systems are updated and monitored on a continuous basis so as to ensure complete alignment with evolving technological requirements. The Company has a well-documented data security policy with pre-defined levels of access authorizations. To ensure safety and security of its strategic locations, the Company employs a comprehensive system of electronic surveillance and physical controls.

The products manufactured and dealt in by the Company, as well as major production inputs are high value in nature. To ensure physical security of such products, the Company has multi-tier security and tracking mechanisms. Regular internal audit is conducted to ensure that all systems and procedures are in place and are followed regularly. We maintain adequate insurance against unforeseeable and predictable risks, given the nature of our products / buisness.

tAlENt AND PEoPlE mANAgEmENt

Employees are our most valuable asset and stakeholder. With hundreds of years of total work experience, we have been able to stay ahead of our competition and be the first choice of our customers for all their diamonds and jewellery needs. We train our employees to enhance their professional knowledge and skills. The staff strength is monitored by all HODs and HR Department and it ensures that our staff is not only optimally utilized but also ensures that the quality staff is retained and no vacuum is created in any departments. The performance appraisal systems are an ongoing process and we offer feedback to all our employees on their strengths and areas for improvement on a regular basis. We have a dedicated People Management team to ensure employee motivation, productivity, innovative spirit and total involvement.

The Company is driven by a professional and experienced team of functional heads. The Company has illustrious members on the Board. During the year under review Industrial Relations were harmonious. All the statutory provisions have been fully complied with. The Company achieved all planned targets in terms of production as well as productivity. Present strength of employees is about 1,700 people in its worldwide operations.

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A n n u a l R e p o r t 2 0 1 3 - 1 4 26

AUDItoR’s cERtIfIcAtE oN coRPoRAtE govERNANcETo,The Members,shRENUJ & comPANy lImItED

We have examined the compliance of conditions of Corporate Governance by SHRENUJ & COMPANY LIMITED for the year ended 31st March, 2014, as stipulated in Clause 49 of the Listing Agreement of the said company with Stock Exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to a review procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance as stipulated in the said Clause. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

for RAJENDRA & co.Chartered Accountants(Firm Registration No. 108355W)

Akshay R. shahPartner

Membership No: 103316MumbaiDated: 23rd May, 2014

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ANNEXURE - IvREPoRt oN coRPoRAtE govERNANcEThe Directors present the Company’s report on Corporate Governance for the year ended 31st March, 2014 as under:

I. comPANy’s coRPoRAtE govERNANcE PhIlosoPhy

The Company’s philosophy of Corporate Governance envisages the highest level of transparency, accountability, integrity and equity in all its dealings with shareholders, employees, clients, government and lenders. The Company adheres to good corporate practices and is constantly striving to improve them and adopt emerging best practices. Directors fulfill fiduciary duties of care, loyalty and good faith, discharge responsibilities of oversight and focus principally on guidance and strategic issues. It is believed that adherence to business ethics and commitment to corporate social responsibility would help the Company achieve its goal of maximising value for all its stakeholders. Your Company has complied with the requirements of Corporate Governance as laid down under Clause 49 of the Listing Agreement with the Stock Exchanges.

DIaMoNDBESTpRaCTICEpRINCIplES:

The sight holders of the De Beers Group are committed to abide by the best practice principles introduced by them to ensure the diamond industry to run its business ethically and in a professional way. The Company has transparent and fully auditable business processes and reporting practices. The Company has formulated its own policies and procedures to adhere to the following principles:

i) Committed to operate diamond business to ensure consumer confidence

ii) To prevent money laundering, terrorism financing and other financial offences

iii) To maintain highest professional and ethical standards and technical skills to ensure that consumer trust is not misplaced

iv) Compliance with international best practice and the related regulatory framework with respect to the environment

v) The Company guarantees that all of diamonds manufactured are entirely natural, untreated products, and their characteristics are represented accurately both to trade customers and consumers.

KIMBERlEypRoCESSCoMplIaNCE:

The Kimberley Process came into force when the South African diamond producing nations met at Kimberley in South Africa in May 2000. The Kimberley Process was set up to discuss ways to stop the trade in ‘conflict diamonds’ and to ensure that diamond purchases did not fund violence. The Kimberley Process Certification Scheme (KPCS) was implemented in India on January 1, 2003 to verify the legitimacy of the import / export of rough diamonds as per the UN resolution and to curb the entry of conflict diamonds into the global trade flow. The system of verification and issuance of KPC is administered from the Mumbai and Surat offices of Gem & Jewellery Export Promotion Council (GJEPC).

The Company is one of the active members of the Kimberley Process Certification Scheme (KPCS) that promotes conflict-free diamonds and thrives to prevent smuggling and non-standard trade in diamonds. Under the KPCS, import or export of all rough diamonds in India is permitted only if the shipment is accompanied by the Kimberly Process Certificate, which has not only increased the credibility of diamonds processed in India in the global market but also has boosted its exports.

CoDEoFCoNDuCT:

The Board has laid down a Code of Conduct for all the Directors and Senior Management Personnel of the Company, which is also available on the website of the Company at www.shrenuj.com. The Company has suitably amended the existing code in line with SEBI circular No. CIR/CFD/POLICY CELL/2/2014 dated 17th April, 2014 and revised Clause 49 of the Listing Agreement. The code lays down the standard of conduct which is expected to be followed by the concerned Directors and the designated employees, their duties and responsibilities towards business dealings and in particular on matters relating to conflict of interest, corruption, integrity of accounting and financial reporting, Corporate Social Responsibility, health and safety norms.

All the Board Members and the senior management personnel have confirmed the compliance with the code and a declaration signed by Chairman & Managing Director for the same is appended as Annexure – 1.

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II. BoaRDoFDIRECToRS:

The Directors of the Company are then in a fiduciary position and empowered to oversee management functions with a view to ensure its effectiveness and enhancement of shareholders value. The Board reviews and approves management’s strategic plan and business objectives and monitors the company’s strategic direction.

● CompositionofBoard:

The composition of Board is in conformity with the requirements of Clause 49 of the Listing Agreement. The Board has an optimum combination of Executive and Non-Executive Directors with majority of them being Independent Directors. The Board of your Company consists of ten Directors, comprising Chairman & Managing Director, two executive directors and seven Independent Directors.

The members of our Board are from diverse backgrounds with skills and experience in critical areas like legal, finance, entrepreneurship and general management. A detailed profile of each of our present Directors of the Company is available at ‘Our Company - Team section’ on our website, ‘www.shrenuj.com’

None of the Directors on the Board are members of more than ten committees or Chairman of more than five committees across all companies in which they are Directors. Necessary disclosures regarding committee positions in other companies as on March 31, 2014 have been made by all the Directors.

The details relating to composition and category of Directors, Directorships held by them in other companies and their Membership and Chairmanship on various Committees of Board of other companies as on March 31, 2014 are as follows:

Name of Director category Attendance at meetings held during 2013-14

Directorship and chairman/MembershipofBoardCommitteesin other Indian public limitedcompanies

Board meeting

last Agm

Director committee Member

committee chairman

Mr. Shreyas K. Doshi Chairman & Managing Director

4 Yes 3 - -

Dr. B. R. Barwale NED (I) 3 Yes 6 - 1Dr. Surendra A. Dave NED (I) 4 Yes 8 4 3Mr. Keki M. Mistry NED (I) 3 No 13 5 4H.E. Festus G. Mogae NED (I) 2 No - - -Mr. Minoo R. Shroff NED (I) 4 Yes 1 - -Mr. Suresh N. Talwar NED (I) 2 Yes 14 5 3Mr. S. S. Thakur NED (I) 4 Yes 5 3 3Mr. Nihar N. Parikh Executive Director 3 Yes 5 - -Mr. Vishal S. Doshi Group Executive

Director4 Yes 4 - -

NED(I) : Non-Executive Director (Independent)

Notes: 1. Private Limited Companies, foreign companies and companies incorporated under Section 25 of the

Companies Act, 1956 are excluded for the above purpose.

2. Membership of only mandatory committees considered viz. Audit Committee and Stakeholders Relationship Committee.

● BoardMeetings: Four Board Meetings were held during the year 2013 - 14 and the gap between any of the two board

meetings did not exceed 120 days. The dates on which the said meetings were held are as follows:

serial No. Dates of the Board meetings held No. of Directors present1. 23rd May, 2013 92. 7th August, 2013 93. 1st November, 2013 64. 7th February, 2014 9

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Generally, Board meetings are held within 45 days from the end of the quarter in a manner that it coincides with the announcement of quarterly results. Additional meetings are convened to address specific needs of the Company. In case of business exigencies some resolutions are also passed by circulation. The meetings of the Board are generally held in Mumbai. Presentation is made on business operations to the Board by Chief Financial Officer of the Company.

● InformationmadeavailabletotheBoard:

The Company Secretary prepares the agenda and the explanatory notes, in consultation with the Chairman & Managing Director and other Senior Management Personnel and circulates the same in advance to all the Directors. Where it is not practical to send the relevant information as a part of the agenda papers, the same is tabled at the meeting. Alongwith the agenda papers a statement of information i.e. Annexure 1A is circulated to the Board for its consideration as required under clause 49(C)(i) of the Listing Agreement.

● postmeetingfollow-upmechanism:

Important decisions taken at the Board/Committee Meetings are promptly communicated to the concerned departments /divisions for necessary action. Report on actions taken on decisions made or matters discussed in the previous Board Meeting are reviewed in the succeeding meetings of the Board. Minutes of the Board/Committee Meetings are circulated within 15 days from the date of conclusion of the meeting to the members of the Board or the Committee as the case may be for their comments and approval.

● Details of Directors seeking re-appointment as required under clause 49 Iv (g) of the listing agreemententeredintowiththeStockExchange(s):

Dr.B.R.Barwale

Dr. Badrinarayan R. Barwale is the Chairman of Maharashtra Hybrid Seeds Company Limited. He is a winner of World Food Prize. He has also received “Padma Bhushan” and “Freedom Fighter” award from the President of India and “Annasaheb Chirmule” award for his outstanding contribution to the Indian Agriculture. Business Week recognized Dr. Barwale as “The Star of Asia” in 1999. Dr. B. R. Barwale is on the Boards of several reputed companies. He is dedicated in the field of education, Indian agriculture, particularly the seed industry and the eye care in a big way.

Dr. surendra A. Dave

Dr. Surendra A. Dave, M.A. (Hons.), Ph.D. (Economics) serves as the Chairman of Centre for Monitoring Indian Economy Pvt. Ltd. Dr. Dave was the founder Chairman of Securities and Exchange Board of India. He served as the Chairman of Unit Trust of India from 1990 to 1996. Dr. Dave has worked at RBI, IDBI, SEBI and UTI. He has also served as a Director of Life Insurance Corporation of India Ltd. (LIC).

Dr. Dave has a distinguished career in the Indian financial sector. He served as a Director of CRISIL Research. He has been associated with various Committees of Government of India dealing with reforms in the capital market, mutual funds sector, insurance sector and pensions. By training, he is an Economist and topped the list of students both at a BA and MA level in economics in the University of Bombay. Dr. Dave is a Doctorate (Ph.D.) of Economics and holds a Master’s degree in Economics from the Rensselaer Polytechnic Institute, University of Rochester. He is on the Board of many leading companies such as HDFC Limited, Escort Limited, SBI DFHI Limited, Deccan Cement Ltd. etc.

mr. keki m. mistry

Mr. Keki M. Mistry holds a Bachelor of Commerce degree in Advanced Accountancy and Auditing and is a Fellow Member of the Institute of Chartered Accountants of India. He was actively involved in setting up of several HDFC group companies. He was deputed on consultancy assignments for the Commonwealth Development Corporation (CDC) in Thailand, Mauritius, and Caribbean Islands Jamaica. He has also worked as a consultant for the Mauritius Housing Company and Asian Development Bank.

Mr. Mistry is Vice Chairman & CEO of Housing Development Finance Corporation Limited (HDFC) and Chairman of Gruh Finance Limited. He is also a Director on the Board of various other renowned companies’ viz. Sun Pharmaceutical Industries Limited, HCL Technologies Limited, Torrent Power Ltd., The Great Eastern Shipping Company Ltd, etc.

h.E. festus g. mogae

His Excellency Festus G. Mogae, former President of Republic of Botswana is a noted political and economic analyzer and a great leader. H.E. Mogae studied economics in the Oxford University, United Kingdom and then at the University of Sussex. He returned to Botswana to work as a civil servant before taking up posts

A n n u a l R e p o r t 2 0 1 3 - 1 4 30

with the International Monetary Fund and the Bank of Botswana. He was Vice-President of Botswana from the year 1992 to 1998. He rose to the post of President in the year 1998 and served two full terms of Presidency, the maximum term allowed by the Constitution of Botswana, till the year 2008.

H.E. Mogae was awarded Grand Cross of the Légiond’ honneur by French President Nicolas Sarkozy on 20th March 2008 for his “exemplary leadership” in making Botswana a “Model” of democracy and good governance. He has won the 2008 Ibrahim Prize for Achievement in African Leadership, and will receive US$ 5 million over the period of 10 years and thereafter US$ 200,000 annually for life time. At London’s City Hall on 20th October 2008, former United Nations Secretary-General Kofi Annan stated: “President Mogae’s outstanding leadership has ensured Botswana’s continued stability and prosperity…”

H.E. Mogae currently serves as Special Envoy of the United Nations Secretary-General on Climate Change. In the year 2010, he has also joined the Advisory Board of U.S. Nonprofit Teach AIDS

mr. minoo R. shroff

He is a Fellow of the Institute of Management Accountants (U.K.), Fellow of the Institute of Cost and Works Accountants (ICWA), India and Fellow of the Institute of Directors, London. He has actively participated in Indian Economic and Corporate development.

He has been Corporate Counsellor to leading industrial groups. During his long and varied corporate career, he has been Chairman and Director of several companies. He continues to be on the Board of a few companies.

He was past President of following professional and business bodies:

● Bombay Management Association

● All India Manufacturers’ Organization

● Indo-Japanese Association

The Emperor of Japan conferred on him the award of “THE ORDER OF THE RISING SUN, GOLD RAYS WITH NECK RIBBON” for outstanding contribution in promoting business and friendship with Japan in the year 2000. He is widely traveled and has participated and presented papers at various international conferences.

He is the President of Forum of Free Enterprise, Leslie Sawhny Programme of Training for Democracy and Indo-Iranian Friendship Society. In January 2007 the Ambassador of the Islamic Republic of Iran presented a memento to him in appreciation of his valuable contribution in expanding and strengthening the existing relations between India and Iran.

Mr.SureshN.Talwar

Mr. Suresh N. Talwar is an eminent solicitor and advocate. He retired as a Senior Partner of M/s. Crawford Bayley & Co. w.e.f. 1st April, 2006 and as a partner of M/s Talwar Thakore & Associates w.e.f. 1st April, 2014. He is a legal counsel to numerous Indian companies, multinational corporations and Indian and foreign banks. He is specialized in Corporate Law, Corporate Tax and Foreign Exchange laws. He is on the Board of many leading companies such as Larsen & Toubro Limited, Blue Star Limited, Merck Limited, Biocon Limited, Birla Sun Life Trustee Company Pvt. Limited, Sonata Software Ltd., etc.

mr. s. s. thakur

Mr. S. S. Thakur has held important positions in his long professional career in the field of banking and foreign exchange. He was the Controller of Foreign Exchange of Reserve Bank of India, founder Chairman of HDFC Bank and Senior Advisor to United Nations Development Programme (UNDP).

Mr. Thakur has extensive experience of central banking functions covering, among others, management of foreign exchange, exchange rate and external debt, regulation and monitoring of external trade financing, foreign investment, exchange market etc. He was on the Board of the Bombay Stock Exchange of India Limited (BSE) as a Public Representative Director for 5 years. He was also the Chairman of Central Depository Services (India) Limited till 17th August, 2010.

Mr. Thakur is currently on the Board of several reputed companies such as KEC International Ltd., HDFC Securities Ltd., DSP Black Rock Trustee Co. (Pvt.) Ltd. etc.

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mr. Nihar N. Parikh Mr. Nihar N. Parikh is an Executive Director of the Company. He is a commerce graduate. He joined the

Company on 1st October, 1992 as Vice-President of the Jewellery Division at SEEPZ. He was appointed as Executive Director with effect from 27th April, 1999. He is the driving force behind the jewellery division of the Company. He is an expert in jewellery manufacturing. Under his guidance the Jewellery Division has contributed a great deal to the overall growth of the Company. He travels extensively in quest of latest technology and designs. He has developed excellent business relations abroad.

III. CoMMITTEESoFTHEBoaRD:

In Compliance with both the mandatory and non-mandatory requirements under the Listing Agreement, and the applicable laws, the Board of Directors of your Company constituted the following Committees:

A) Audit Committee, B) Stakeholders Relationship Committee, C) Nomination and Remuneration Committee, D) Corporate Social Responsibility Committee E) Finance Committee. The Chairman of the Board in consultation with the Company Secretary and the Chairman of these Committees determines the frequency of the Committee meetings. The minutes of the meetings of all committees are placed and noted at a subsequent meeting of the Board.

A. Audit committee:

● CompositionoftheauditCommitteeandTermsofReference:

The Audit Committee comprises four members, all of whom are Independent Directors and possess accounting and financial knowledge. The Chairman of the Audit Committee, Mr. S. S. Thakur is having financial management expertise and a long professional career in the field of banking and foreign exchange. Mr. S. S. Thakur, was present at the previous Annual General Meeting held on 7th August, 2013. Composition of the Audit Committee meets the requirements of Section 177 of the Companies Act, 2013 corresponding to Section 292A of the Companies Act, 1956 and rules made there under alongwith the Clause 49 of the Listing Agreement.

The Board has amended the terms of reference of the Audit Committee in line with provisions of Section 177 of the Companies Act, 2013 and as per the guidelines set out in the Listing Agreement with the Stock Exchanges.

The Company has implemented well structured Internal Audit Control Systems to ensure the reliability of financial and operational information and the statutory/ regulatory compliance. Representatives of the Statutory and the Internal Auditors are permanent invitees to the Audit Committee meetings. The Chairman & Managing Director, Group Executive Director, Chief Financial Officer attend the Audit Committee meetings. The Company Secretary acts as the Secretary of the Audit Committee.

● Meetings: The Committee met 4 times during the year on 23rd May 2013, 7th August 2013, 1st November 2013

and 7th February 2014. The time gap between two meetings did not exceed four months. Necessary quorum was present at all the meetings. The attendance of the members at the meetings was as follows:

NameoftheMember Position NumberofmeetingsattendedMr. S. S. Thakur Chairman 4Dr. Surendra A. Dave Member 4Mr. Keki M. Mistry Member 3Mr. Minoo R. Shroff Member 4

B. stakeholders Relationship committee:

● CompositionoftheCommittee:

The Board has changed the nomenclature of Shareholders’/Investors’ Grievance Committee to Stakeholders Relationship Committee as required under Section 178 of the Companies Act, 2013. The Committee will consider and resolve the grievances of security holders of the Company.

The Committee overseas the process of share transfer and monitors redressal of shareholders complaints like non-receipt of annual report, dividend payment, issue of duplicate share certificates, transmission of shares, dematerialization/ rematerialization of shares and other related issues.

The Committee comprises three members, two of whom are Independent Directors and one Executive Director.

A n n u a l R e p o r t 2 0 1 3 - 1 4 32

The existing composition of the Committee is given below:

Name Position category

Dr. B. R. Barwale Chairman Non-Executive Independent Director

Mr. S. S. Thakur Member Non-Executive Independent Director

Mr. Nihar N. Parikh Member Executive Director

● TermsofReference:

a. To review the existing “Investor Redressal System” and suggest measures for improvement.

b. To review the reports received from Registrar and Share Transfer Agent (RTA) on investors’ grievances under clause 47(a) of the Listing agreement and to take necessary redressal action.

c. To suggest improvements in investor relations and to fix responsibilities of the compliance officer.

d. To consider and take on record the certificate received from a Practicing Company Secretary under clause 47(c) of the Listing Agreement.

e. To propose to the Board of Directors, appointment / re-appointment of RTA, including the terms and conditions, professional service charges/fees to be paid to the said agency.

f. To decide the frequency of audit of RTA and to consider the reconciliation of share capital and the Audit Report thereon.

g. To look into and redress security holder/ investors’ grievances and complaints received from the members and such other matters that may be considered necessary in relation to security holder and investors of the Company.

● Meetingandattendanceduringtheyear:

The Stakeholders Relationship Committee met on January 30, 2014 wherein pending legal cases were reviewed and status reports received from the Registrar and Share Transfer Agents were discussed and noted. The Committee also took on record a statement of details of complaints received, cleared and pending.

The Company is registered on SEBI’s investor grievance portal viz. www.scores.gov.in to resolve complaints as may be received from the investors. During the period under review the Company has not received any complaint from the Securities and Exchange Board of India, Registrar of Companies, Stock Exchange(s) or any other authorities.

● preventionofInsiderTrading:

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company’s shares and prohibits the purchase or sale of the Company’s shares while in possession of unpublished price sensitive information or when trading window is closed. Mr. Sanjay M. Abhyankar, Company Secretary is designated as the Compliance Officer for implementation of the said Code.

Pursuant to clause 12 and point 3.2 of SEBI (Prohibition of Insider Trading Regulation), 1992 and under clause 13 of Shrenuj Directors and Designated Employees Code of Conduct for Prevention of Insider Trading, the Company intimates the Stock Exchange(s) about closure of Trading Window. The Company also submits Annual Disclosures received from Directors and Designated Employees of the Company under regulation 13(4) of SEBI (Prohibition of Insider Trading Regulation), 1992.

● DelegationofpowersforapprovalofShareTransfers:

The Board has delegated powers to approve share transfers, transmission, splitting and consolidation of share certificates, demat of shares and issue of duplicate shares, to Mr. Vishal S. Doshi, Group Executive Director and/or Mr. Ashir S. Doshi, Vice President – Company Affairs of the Company to simplify and expedite the share transfer formalities.

33

● DetailsofInvestorComplaints:

Details of the complaints received, cleared and pending during the Financial Year 2013-14 are given below:

Nature of complaints Received cleared PendingNon-receipt of share certificates duly transferred/ demat of shares/issue of duplicate shares etc.

22 22 Nil

Non-receipt of dividend warrants, Annual Report and revalidation of dividend warrants etc.

69 69 Nil

Letter(s) from SEBI Nil Nil NilLetter(s) from Stock Exchanges Nil Nil NilLetter(s) from Registrar of Companies Nil Nil Niltotal 91 91 Nil

Number of complaints received during the year as a percentage of total number of members is 1%.

c. NominationandRemunerationCommittee:

● CompositionoftheNominationandRemunerationCommitteeandattendanceduringtheyear:

The Board at its meeting held on 7th February, 2014 has changed the nomenclature of the Remuneration/Compensation Committee to Nomination and Remuneration Committee as required under Section 178 of the Companies Act, 2013. The Board also inducted Mr. Shreyas K. Doshi, Chairman & Managing Director of the Company as a member of the committee.

The Nomination and Remuneration Committee comprises four Directors, majority of them are Independent Directors. The Company Secretary acts as the secretary to the Committee. During the Financial year 2013-14, three meetings were held on 20th May 2013, 30th January 2014 and 7th March 2014. The composition and attendance of members at the meetings of the Nomination and Remuneration Committee are as follows:

Name Position NumberofmeetingsattendedMr. Minoo R. Shroff Chairman 3Dr. Badrinarayan. R. Barwale Member 2Mr. S. S. Thakur Member 3*Mr. Shreyas K. Doshi Member 1

* Inducted as a member of the Nomination and Remuneration Committee w.e.f. 7th February, 2014.

● TermsofReference:

The Board has amended Nomination and Remuneration Policy on 23rd January, 2014 in line with Section 178 of the Companies Act, 2013 and rules made thereunder and amended clause 49 of the Listing Agreement. The revised Nomination and Remuneration Policy provides following terms of reference:

(i) Criteria for selection of candidates for senior management and members on the Board.

(ii) Criteria for evaluation of performance of every Director and determination of remuneration of the Directors, Key Managerial Personnel and Senior Management Personnel.

(iii) Role and responsibilities of the Nomination and Remuneration Committee.

(iv) To assess the quality, quantity and timeliness of flow of information between the Company’s Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

(v) To review the overall compensation policy, the remuneration structure, service agreement and other employment conditions of the Whole time/ Executive Directors with a view to retain and motivate the best managerial talents.

(vi) To monitor implementation of Employee Stock Option Scheme.

(vii) To decide sitting fees and commission to be paid to the Directors.

(viii) To deal with other matters as the Board may refer to the Committee from time to time.

A n n u a l R e p o r t 2 0 1 3 - 1 4 34

● NominationandRemunerationpolicy:

While determining the remuneration, the Committee takes into consideration the industry trend, remuneration paid by comparable concerns, responsibilities to be shouldered by the executive director, Key Managerial Personnel and Senior Executives of the Company and the Company’s and individual performance.

● RemunerationofWhole-time/ExecutiveDirectors:

The Company pays remuneration to Executive Directors by way of salary, retirement benefits, perquisites, allowances (fixed component) and commission (variable component) based on the recommendation of Nomination and Remuneration Committee and approval of the Board of Directors and shareholders. The commission is calculated with reference to net profits of the Company in the financial year subject to overall ceilings stipulated under Section 197 of the Companies Act, 2013 (corresponding to the Sections 198 and 309 of the Companies Act, 1956).

● RemunerationofNon-ExecutiveDirectors: Non-Executive Directors are paid remuneration by way of commission and sitting fees. Pursuant to

Section 197(5) of the Companies Act, 2013 the Board has revised the sitting fees to be paid to Non-Executive Directors from ` 15,000/- to ` 25,000/- per meeting of the Board and Audit Committee w.e.f. 1st June, 2014 and retained ` 15,000/- per meeting for other committees.

The commission is paid within the monetary limit approved by the shareholders, subject to the limit not exceeding 1% p.a. of the profits of the Company (computed in accordance with Section 197 of the Companies Act, 2013). The commission is being paid on a uniform basis to reinforce the principle of collective responsibility.

Remuneration of Directors for the financial year 2013-14

Name of the Directors

Directors’ Position

salary & perquisites (Rupees)

*commission for fy 12-13

(Rupees)

*sitting fees

(Rupees)

total (Rupees)

Mr. S. K. Doshi Chairman & Managing Director 17,866,666 - N. A. 17,866,666

Dr. B.R. Barwale Independent Director - 350,000 90,000 440,000Dr. S. A. Dave Independent Director - 350,000 120,000 470,000Mr. K. M. Mistry Independent Director - 350,000 90,000 440,000H.E. F. G. Mogae Independent Director 350,000 30,000 380,000Mr. M. R. Shroff Independent Director - 350,000 165,000 515,000Mr. S. N. Talwar Independent Director - 350,000 30,000 380,000Mr. S. S. Thakur Independent Director - 350,000 180,000 530,000Mr. N. N. Parikh Executive Director 10,930,667 - N. A. 10,930,667Mr. V. S. Doshi Group Executive Director 10,101,468 - N.A. 10,101,468total 38,898,801 2,450,000 705,000 42,053,801

* Gross amount before considering TDS and service tax if applicable.

D. CorporateSocialResponsibilityCommitteeandtheCSRpolicy:

As required under Section 135 of the Companies Act, 2013 the Corporate Social Responsibility Committee was constituted on 7th February, 2014 and the Corporate Social Responsibility Policy was approved and adopted by the Board which indicate activities to be undertaken by the Company, recommend the amount of expenditure to be incurred on these activities and to monitor the Corporate Social Responsibility Policy of the Company from time to time.

Dr. Surendra A. Dave is the Chairman of the Committee, Mr. S. S. Thakur, Mr. Shreyas K. Doshi and Mr. Vishal S. Doshi, Directors of the Company are the members of the Committee. The quorum for the Meeting of the Corporate Social Responsibility Committee shall be two members of whom one member shall be an Independent Director.

The CSR policy was placed on the website of the Company viz. www.shrenuj.com and any development/ amendment on this matter will be disclosed on the website for shareholders information.

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E. finance committee:

The Finance Committee consists of four Directors viz. Mr. S. S. Thakur, Dr. Surendra A. Dave, Mr. Shreyas K. Doshi and Mr. Vishal S. Doshi. Mr. S. S. Thakur is the Chairman of the Committee. The Committee has primary responsibility of formulating and recommending the financial policies of the Company to the Board, including the management of the financial affairs of the Company. The Committee shall prepare annual budgets and such other financial estimates as it deems fit. The Committee shall review all capital expenditure of the Company, capital structure, corporate finance activities, treasury and financial risk management, debt and other financings, major strategic investments and acquisitions, dividend policy, etc.

The Committee is authorised to approve the borrowings, loans, capital expenditures and guarantees up to such specified amount and upon such conditions as approved by the Board. The Committee is also authorised to open bank accounts and designate those persons authorised to execute cheques, notes, drafts and other orders for payment of money on behalf of the Company.

Iv. SuBSIDIaRyCoMpaNIES:

The Company does not have a material non-listed Indian subsidiary whose turnover or net worth (i.e. paid up capital and free reserves) exceeds 20% of the consolidated turnover or the net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year and hence clause 49E(III)(i) of the Listing Agreement is not applicable to any of the subsidiaries.

Copies of the Minutes of the Board Meetings of the unlisted subsidiary companies are placed before the Board regularly.

A statement containing all significant transactions and arrangements entered into by the unlisted subsidiary companies is also placed before the Board.

v. INFoRMaTIoNoNgENERalBoDyMEETINgS:

● Detailsofannual/Extra-ordinarygeneralMeetings:

The last three Annual General Meetings (AGMs) of the Company were held as under:

financial year Agm No. location Day and Date time

No. of special Resolutions

approved at the Agm

2012-13 31st

Chavan Centre, 4th Floor, Rangaswar, General

Jaganath Bhosale Marg, Mumbai – 400 021

Wednesday, 7th August, 2013 11.00 a.m. 1

2011-12 30th Walchand Hirachand Hall, Lalji Naranji Memorial,

Indian Merchants’ Chamber Building, IMC

Marg, Churchgate, Mumbai – 400 020.

Tuesday, 14th August, 2012 11.00 a.m. --

2010-11 29th Wednesday, 10th August, 2011 11.00 a.m. --

No Extra-ordinary General Meeting was held during the year.

● SpecialresolutionspassedatthelastthreeagM’s:

The Members passed the following special resolution during the last three Annual General Meetings.

sr. No. Date of Agm special Resolution1. 07-08-2013

(31st AGM)Payment of Commission to Non-Executive Directors of the Company under Section 309(7) of the Companies Act, 1956

● passingofResolutionsbypostalBallot:

During the year under review, no postal ballots were used/ invited for voting or passing of any ordinary or special resolutions.

A n n u a l R e p o r t 2 0 1 3 - 1 4 36

vI. DISCloSuRES:

● Disclosureonmateriallysignificantrelatedpartytransactions:

Statements/disclosures of all related party transactions are placed before the Audit Committee, on quarterly basis in terms of Clause 49(IV)(A) and other applicable laws for approval. The said statements are verified by the Internal Auditors before circulating to the Audit Committee. There were no material transactions with related parties or others which were not on arm’s length basis and are entered in its ordinary course of business only. Suitable disclosure as required by the Accounting Standard (AS-18) has been made in the Annual Report.

The Company’s major related party transactions are generally with its subsidiaries and associates. The related party transactions are entered into based on consideration of various business exigencies such as synergy in operations, industry specialization, liquidity and capital resource of subsidiaries and associates.

The Company has received an approval under the proviso to sub Section (1) of Section 297 of the Companies Act, 1956 on 30th March, 2012 for entering into contract with Kiara Jewellery Private Limited, a group company for the period of three years with effect from 1st April, 2012 for an estimated total value of ` 46 Crores.

In view of provisions of Section 188 of the Companies Act, 2013 read with Rule 15 of Companies (Meetings of Board and its Powers) Rules, 2014 and as required under SEBI Circular No. CIR/CFD/POLICY CELL/2/2014 dated April 17, 2014 and as per revised Clause 49 of the Listing Agreement prior approval of the Shareholders is required for certain contracts or arrangement which may cross the limit during the financial year 2014-15 as prescribed under the above regulations. Further as provided in Part B of Clause 49(VII) of the Listing Agreement all prospective material related party transactions requires prior approval of the Shareholders. Considering the transactions between the Company and its few of the Subsidiaries are of material in nature as defined under listing agreement for such contracts or arrangement, members’ approval is sought by way of passing a special resolution in the ensuing Annual General Meeting.

● Compliance: No strictures or penalties have been imposed on the Company by the Stock Exchanges, Securities and

Exchange Board of India or any other statutory authority on any matter related to the Capital Markets during the last three years.

● ManagementDiscussionandanalysis: Management Discussion and Analysis Report is given in a separate section forming a part of the Directors’

Report as Annexure III.

● RiskManagementMechanism: The Board has constituted a Risk Management Committee to inform the Board members about risk

assessment and minimisation procedures and to review and monitor Risk Management policy and plan of the Company and such other related functions and matters as may be deemed fit from time to time. The Board has adopted and approved a revised risk management policy on 23rd May, 2014.

● ChiefExecutiveofficer(CEo)/ChiefFinancialofficer(CFo)Certification: The CEO/MD and the CFO have issued a certificate pursuant to the provisions of Clause 49 of the Listing

Agreement certifying that the financial statements do not contain any untrue statement and these statements represent a true and fair view of the Company’s affairs. The said certificate is annexed and forms part of the Annual Report as Annexure – 2.

● Secretarialaudit: As required under Section 204 of the Companies Act, 2013 the Board has appointed M/s.Hemanshu Kapadia

& Associates, a Company Secretary in Practice to submit a secretarial audit report for the FY 2014-15 and the said report will be annexed to the Board Report of next FY with explanation on any qualification, if any, made by the Company Secretary in Practice.

As stipulated by SEBI, a Secretarial Audit is carried out by an Independent Practicing Company Secretary on quarterly basis to confirm reconciliation of the issued and listed capital, shares held in dematerialised and physical mode and status of the register of members.

● auditor’sCertificateonCorporategovernance: As required by clause 49 of the Listing Agreement, the auditor’s certificate on corporate governance is given

as an annexure to the Directors’ Report.

37

vII.MEaNSoFCoMMuNICaTIoN:

● CommunicationtoShareholders:

The unaudited quarterly/ half yearly results are announced within forty five days of the close of the quarter. The quarterly, half-yearly and annual results of the Company are published in leading newspapers in India which includes, The Economic Times, Free Press Journal (leading national English newspapers), Maharashtra Times and Navshakti, local Marathi newspapers.

The results are also displayed on the Company’s website www.shrenuj.com and also emailed to the Members who have provided their email id to the Company. The Company files the requisite information on www.corpfiling.co.in, a website which has been developed and is maintained by IRIS Business Services (India) Pvt. Ltd. and is the common filing and dissemination portal for all companies listed on the BSE and the NSE. The Company’s corporate website consists of Investors Section which provides comprehensive information to the shareholders. The Annual Report of the Company is dispatched to all the shareholders of the Company and also made available on the Company’s website. The Company also uploads notices, reports and related information as required under listing agreement on portal developed by Stock Exchanges viz. http://listing.bseindia.com, https://www.connect2nse.com/LISTING/ and https://mylisting.mcx-sx.com.

Annexure vvIII.gENERalSHaREHolDERS’INFoRMaTIoN:

1. Date, Time and Venue of Annual General Meeting

Monday, 11th August, 2014 – 11.00 a.m. Walchand Hirachand Hall, Lalji Naranji Memorial, Indian Merchants’ Chamber Building, IMC Marg, Churchgate,Mumbai – 400 020.

2. Financial Year and Financial Calendar (tentative and subject to change)

i ) Financial Year – 1st April – 31st March ii) First Quarter Results – by 14th Aug, 2014 iii) Half Yearly Results – by 14th Nov, 2014 iv) Third Quarter Results – by 14th Feb, 2015 v) Fourth Quarter and year ending Results – by 30th May, 2015 vi) Annual General Meeting – in August, 2015

3. Date of Book Closure Thursday, 17th July, 2014.4. Dividend Payment Date Tuesday, 19th August, 2014 5.

Listing on Stock Exchanges at Bombay Stock Exchange Limited (BSE) (Exchange Code – 523236) National Stock Exchange of India Limited (NSE) (Exchange Code - SHRENUJ) MCX –SX (Applied for Delisting) (Exchange Code - SHRENUJ)

6. Listing fees for 2014-15 The Company has paid the listing fees for the financial year 2014-15 to BSE and NSE.

7. ISIN Number for NSDL & CDSL INE633A01028 The annual custodian fees for the financial year 2014-15 have been paid to National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

8. Corporate Identity Number (CIN) CIN, allotted by the Ministry of Corporate Affairs, Government of India is L99999MH1982PLC026903, and Company Registration Number is 11 – 26903. The Company is registered at Mumbai in the State of Maharashtra, India.

9. Registrar and Transfer Agents Sharepro Services (I) Private Limited 13 AB, Samhita Warehousing Complex, 2nd Floor, Near Sakinaka Telephone Exchange, Off Andheri Kurla Road, Sakinaka, Andheri (E), Mumbai 400 072. Tel. No.022-67720300 Fax No. 022-28591568 Email : shrenuj@shareproservices.com Website : www.shareproservices.com Business Hours : Monday to Friday (10 a.m. to 4.30 p.m.) Contact Person : Ms. Anuradha Bekal

Extension Counter of Sharepro: Sharepro Services (I) Pvt. Ltd. 912, Raheja Center, Free Press Journal Road, Nariman Point, Mumbai – 400 021.

Contact Person: Mr. Joseph Tel. Nos. : 022-66134701 Fax No : 022-22825484

A n n u a l R e p o r t 2 0 1 3 - 1 4 38

10. SToCKMaRKETDaTa:Annexure A enclosed.

11. SHaRETRaNSFERSySTEM:

97.67% of the equity shares of the Company are in electronic form as on 31st March, 2014. The share transfer activities under physical mode are carried out by the Registrar and Transfer Agent (RTA). Shares in physical mode which are lodged for transfer are processed and returned within the stipulated time. Physical shares received for dematerialisation are processed within 21 days from the date of receipt. Objection cases are promptly returned to the Depository Participants (DP’s) under advice to the shareholders.

As required under Clause 47(C) of the Listing Agreement, the certificates on half-yearly basis confirming due compliance of the share transfer formalities and other related matters by the Company from a Practicing Company Secretary have been submitted to Stock Exchanges within stipulated time.

Details of shares transferred in physical /demat form:

Period (from 1st April, 2013 to 31st march, 2014) No. of Requests/ trades No. of shares transferredShares transferred in Physical Form 30 14,185Shares transferred in Demat Form at BSE and NSE 3,71,910 4,39,06,249total 3,71,940 4,39,20,434

liquidity: The Company’s shares are actively traded on BSE and NSE. The average daily number of shares traded and the average daily price per share and average daily value of shares traded on BSE and NSE during the Financial Year 2013-14 are given below:

BsE NsEAverage daily number of shares traded 82,415 92,510Average daily price per share (in `) 101.07 101.54Average daily value of shares traded (` in Lacs) 83.29 93.94Average Shares per Trade (Number of Shares) 97 146

12. ECSMaNDaTE: Members are requested to update their bank account details with their respective depository participants for

shares held in the electronic form or write to the Company’s Registrar and Share Transfer Agent, M/s. Sharepro Services (I) Private Limited for shares held in the physical form.

13. DIstRIBUtIoN of shAREholDINgs AND shAREholDINg PAttERN As oN 31stMaRCH,2014:

Annexure – B is attached.

14. DEMaTERIalIzaTIoNoFSHaRESaNDlIQuIDITy: As on 31st March, 2014 out of total holding of 9,64,53,629 equity shares, 9,42,09,683 equity shares representing

97.67% of the paid up capital of the Company are in dematerialised form and balance 22,43,946 equity shares representing 2.33% are in physical form. (Annexure – c enclosed).

15. NoMINaTIoNFaCIlITy: Pursuant to the provisions of Section 72 of the Companies Act, 2013, Shareholders are entitled to make

nominations in respect of Shares held by them. Shareholders holding shares in physical form and desirous of making nominations are requested to send their requests to the Company’s RTA. Shareholders holding shares in electronic form (demat form) are requested to give the nomination request to their respective Depository Participants directly.

16. oUtstANDINg gDRs/ADRs/ WARRANts oR ANy coNvERtIBlE INstRUmENts, coNvERsIoN DaTEaNDlIKElyIMpaCToNEQuITy:

The Company has not issued any GDRs/ ADRs/ warrants. There were no outstanding convertible warrants as on March 31, 2014.

17. plaNTloCaTIoNS: The Company’s factories are located at Opera House, Tardeo, Sona Udyog (Andheri), MIDC (Andheri), Seepz,

(Andheri - Mumbai), Patna (Bihar) in India and in South Africa & Botswana in Africa.

18. aDDRESSFoRCoRRESpoNDENCE: Shareholders can address their correspondence to the Registered Office of the Company situated at 405,

Dharam Palace, 100-103, N.S. Patkar Marg, Mumbai – 400007, E-mail id – investor@shrenuj.com , Tel. Nos. 022-66373500.

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A n n u a l R e p o r t 2 0 1 3 - 1 4 40

shARE PRIcE / volUmE (BomBAy stock EXchANgE)

Period lowPrice `

high Price `

TotalNumberof shares traded

April, 2013 57.00 94.05 1,141,581 May, 2013 88.60 128.95 3,863,494 June, 2013 101.00 119.00 1,360,630 July, 2013 104.00 115.25 1,338,398 August, 2013 82.10 110.70 1,818,292 September, 2013 98.00 110.50 1,316,543 October, 2013 88.15 104.00 1,032,685 November, 2013 87.00 102.85 1,215,092 December, 2013 90.00 103.50 1,984,218 January, 2014 87.00 107.70 2,028,177 February, 2014 81.10 103.40 1,784,215 March, 2014 90.10 101.00 1,802,850 SubTotal(a) 20,686,175

shARE PRIcE / volUmE (NAtIoNAl stock EXchANgE)

Period lowPrice `

high Price `

TotalNumberof shares traded

April, 2013 57.00 94.40 1,292,773 May, 2013 89.20 128.00 4,844,119 June, 2013 99.00 119.00 1,623,455 July, 2013 104.00 116.65 1,630,680 August, 2013 97.65 111.00 1,906,015 September, 2013 98.10 109.05 1,461,887 October, 2013 89.00 105.00 1,234,720 November, 2013 86.10 103.50 1,241,024 December, 2013 90.05 104.40 2,011,023 January, 2014 87.00 107.70 1,959,977 February, 2014 92.05 102.90 2,322,202 March, 2014 90.30 100.95 1,692,199 SubTotal(B) 23,220,074 totAl volUmE At BsE & NsE (A + B) 43,906,249

ANNEXURE - A

stock mARkEt DAtA foR thE fINANcIAl yEAR 2013-2014

41

ANNEXURE - B

Equity shareholding Pattern as on 31st march, 2014

category No. of shares %Directors, Relatives, Associate Companies 53,606,448 55.58Financial Institutions, Mutual Funds, Nationalised Banks 37,237 0.04Non Resident Individuals, Foreign Financial Institutions, Foreign Banks 21,830,985 22.63Overseas Bodies Corporate 1,682,706 1.74Other Bodies Corporate 9,495,049 9.84Other Individuals 9,801,204 10.16totAl 96,453,629 100.00

DistributionofShareholdingsason31st march, 2014

shareholding of Nominal value in Rupees No. of folios % share Amount

%

Upto 5000 8,882 98.07 10,245,700 5.315,001 to 10,000 57 0.63 853,470 0.4410,001 to 20,000 36 0.40 1,063,250 0.5520,001 to 30,000 22 0.24 1,111,832 0.5830,001 to 40,000 6 0.07 406,678 0.2140,001 to 50,000 6 0.07 533,206 0.2850,001 to 1,00,000 10 0.11 1,346,928 0.70Above 1,00,001 38 0.42 177,346,194 91.93gRAND totAl 9,057 100.00 192,907,258 100.00No. of Shareholders in physical mode 3,219 35.54 4,487,892 2.33No. of Shareholders in electronic mode 5,838 64.46 188,419,366 97.67

Equity Shareholding Pattern as on 31st March, 2014

A n n u a l R e p o r t 2 0 1 3 - 1 4 42

Annexure - 1DEclARAtIoN REgARDINg comPlIANcE By BoARD mEmBERs AND sENIoR mANAgEmENt PERsoNNEl WIth thE comPANy’s coDE of coNDUct

This is to confirm that the Company has adopted a Code of Conduct for its employees including the Managing Director and Executive Directors. In addition, the Company has adopted a Code of Conduct for its Non-Executive Directors. Both these Codes are available on the Company’s website.

I confirm that the Company has, in respect of the financial year ended March 31, 2014, received from the Senior Management Team of the Company and the Members of the Board a declaration of compliance with the Code of Conduct as applicable to them.

For the purpose of this declaration, Senior Management Team means the Chief Financial Officer, employees in the Executive Vice President cadre and the Company Secretary as on March 31, 2014.

Place : Mumbai SHREYAS K. DOSHI Date : May 23, 2014 CHAIRMAN & MANAGING DIRECTOR

Annexure - c

942,09,683

902,98,341 39,11,342

22,43,946

Demat Status as on 31st March, 2014

43

Annexure - 2ChiefExecutiveofficer(CEo)andChiefFinancialofficer(CFo)Certification

We, Shreyas K. Doshi, Chairman & Managing Director and Shridhar J. Sawant, Group Chief Financial Officer of Shrenuj & Company Limited, to the best of our knowledge and belief, certify that:

1. We have reviewed the balance sheet and profit and loss account (standalone and consolidated), and all its schedules and notes to the accounts, as well as the cash flow statements and the directors’ report for the financial year ended 31st March, 2014;

2. Based on our knowledge and information, these statements do not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the statements made;

3. Based on our knowledge and information, the financial statements and other financial information included in this report, present in all material respect, a true and fair view of the company’s affairs, the financial condition, result of operations and cash flows of the Company as of, and for, the period presented in this report, and are in compliance with the existing accounting standards and/or applicable laws and regulations;

4. To the best of our knowledge and belief, no transactions entered into by the Company during the year are fraudulent, illegal or violative of the Company’s code of conduct;

5. We are responsible for establishing and maintaining disclosure controls and procedures and internal controls over financial reporting for the Company, and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Company’s disclosure, control and procedures, and

d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal year that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

6. We have disclosed based on our most recent evaluation, whenever applicable, to the Company’s auditors and the audit committee of the Company’s Board of Directors (and persons performing the equivalent functions):

a) all deficiencies in the design or operations of internal controls, which could adversely affect the Company’s ability to record, process, summarise and report financial data, and have identified for the Company’s auditors, any material weakness in internal control over financial reporting including any corrective actions with regard to deficiencies;

b) significant changes in internal controls during the year covered by this report;

c) all significant changes in accounting policies during the year, if any, and that the same have been disclosed in the notes to the financial statements;

d) instances of significant fraud of which we are aware, that involves management or other employees who have a significant role in the Company’s internal control system;

SHREYAS K. DOSHI SHRIDHAR J. SAWANTCHAIRMAN & MANAGING DIRECTOR GROUP CHIEF FINANCIAL OFFICER

Mumbai, May 23, 2014.

A n n u a l R e p o r t 2 0 1 3 - 1 4 44

Independent Auditors’ ReportTo the Members ofShRenuj & Co. LImIted

We have audited the accompanying financial statements of Shrenuj & Co. Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

mAnAgement’S ReSponSIbILIty foR the fInAnCIAL StAtementS

The Company’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AudItoRS’ ReSponSIbILIty

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

opInIon

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b In the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

c In the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

RepoRt on otheR LegAL And ReguLAtoRy RequIRementS

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

a We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.

45

c The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

e On the basis of the written representations received from the directors as on March 31, 2014, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of Section 274(1)(g) of the Act.

For Rajendra & Co.Chartered AccountantsRegistration No. 108355W

Akshay R. ShahPartnerMembership No.: 103316

Place: MumbaiDate: 23rd May, 2014.

AnneXuRe to AudItoR’S RepoRtReferred to in Paragraph 1 under the heading of “Report on other Legal and Regulatory Requirements” of our report of even date

1. In respect of its fixed assets:

a The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b As explained to us all the fixed assets have been physically verified by the Management at the end of the accounting year, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c In our opinion, the Company has not disposed of substantial part of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories:

a As explained to us, inventories have been physically verified by the management at regular intervals during the year, except for inventories lying with third parties in respect whereof the company has obtained necessary confirmations.

b In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventory as compared to the book records.

A n n u a l R e p o r t 2 0 1 3 - 1 4 46

3. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a The Company has given loans to six wholly owned subsidiary Companies during the year aggregating to Rs. 246.28 million, the maximum amount of loans outstanding at any time during the year was Rs. 1,768.66 million and the year-end balance in respect of the said loans outstanding is Rs 1,692.20 million.

b In our opinion and according to the information and explanation given to us, having regard to the long term involvement of the Company with its wholly-owned subsidiaries, the rate of interest wherever applicable, and other terms and condition of the said loans, are not prima facie prejudicial to the interest of the Company.

c The principal amounts are repayable over a period of seven to ten years while interest wherever applicable is payable annually.

d In respect of the said loans and interest thereon wherever applicable, there are no overdue amounts.

e The Company has taken loans from Six parties as listed in register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1,062.62 million and year-end balance in respect of the said loans is Rs. 1,046.57 million.

f In our opinion and according to information and explanations given to us, the rate of Interest, wherever applicable, and the other terms and conditions of the said loans are not prima facie pre judicial to the interest of the Company.

g In respect of the loans taken by the Company, payment of Interest and principal amounts, are regular wherever applicable.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal controls.

5. In respect of transactions covered under Section 301 of the Companies Act, 1956, in our opinion and according to the information and explanations given to us:

a The transactions made in pursuance of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

b In respect of transactions for purchase and sale of goods in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, pricing essentially involves technical appraisal. However, we have been informed by the management, that these transactions have been effected at the prevailing market rates in the given conditions.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No orders in respect of said deposits have been passed by the Company Law Board, National Company Law Tribunal, Reserve Bank of India, Courts of any other Tribunals.

7. In our opinion, the internal audit system of the Company is commensurate with the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. In respect of statutory dues:

a According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-Tax, Sales-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues, as may be applicable, have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2014 for a period of more than six months from the date of becoming payable.

AnneXuRe to AudItoR’S RepoRt (Contd.)

47

b The disputed statutory dues aggregating to Rs. 126.43 million that have not been deposited on account of matters pending before appropriate authorities are as under:

Sr.no.

name of the statute

nature of the dues forum where dispute is pending

period to which amount relates

Amount (`. million)

1. Income Tax Act, 1961

Income-Tax Commissioner of Income-Tax (Appeals)

FY 2000-01FY 2001-02FY 2002-03FY 2005-06

0.215.370.922.35

Appellate Tribunal FY 1989-90FY 1999-00FY 2007-08FY 2008-09

0.390.35

40.4076.44

2. The Bombay Sales Tax Act

Sales Tax Commissioner (Appeals) FY 1994-95 0.34

TOTAL: 126.43

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred any cash loss during the financial year covered by our audit or in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, or banks. The Company has not raised any money by issue of debentures.

12. In our opinion and according to the information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/ society. Therefore, clause 4(xiii) of the Companies (Auditor’s Report) Order 2003 is not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures or other investments. The investments made by the Company are held in its own name except to the extent of the exemption under Section 49 of the Companies Act, 1956.

15. The Company has given guarantees for loans taken by its subsidiary and associate companies from banks. According to the information and explanations given to us by the management, and having regard to the long term involvement of the Company with its subsidiaries and associates, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interests of the Company.

16. In our opinion, the term loans outstanding at the beginning of the year as well as those raised during the year have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investments during the year.

18. The Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. The Company has not raised any monies by issue of debentures.

20. The Company has not raised any monies by making a public issue during the year.

21. In our opinion and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

For Rajendra & Co.Chartered Accountants(Firm Registration No. 108355W)

Akshay R. ShahPartnerMembership No.: 103316

MumbaiDated: 23rd May, 2014

A n n u a l R e p o r t 2 0 1 3 - 1 4 48

bALAnCe Sheet AS At 31st mARCh, 2014 (` in million)

particulars notes 31st mARCh, 2014 31st March, 2013 I. equIty And LIAbILItIeS

Shareholder’s fundsShare Capital 1 192.91 192.91 Reserves and Surplus 2 6,766.71 6,501.28

6,959.62 6,694.19 non-Current LiabilitiesLong-Term Borrowings 3 2,197.95 2,011.67 Deferred Tax Liabilities (Net) 4 96.86 91.86 Other Long Term Liabilities 5 2.39 1.29 Long Term Provisions 6 68.60 31.66

2,365.80 2,136.48 Current LiabilitiesShort-Term Borrowings 7 13,155.43 12,389.56 Trade Payables 8 13,691.51 11,122.89 Other Current Liabilities 9 597.53 372.82 Short-Term Provisions 10 211.82 179.63

27,656.29 24,064.90 total equity and Liabilities 36,981.71 32,895.57

II. ASSetSnon-Current Assetsfixed Assets 11 Tangible Assets 2,495.68 2,510.02 Intangible Assets 9.87 15.72 Capital Work in Progress 2.57 13.57

2,508.12 2,539.31 Non-Current Investments 12 1,163.09 1,163.09 Long TermLoans and Advances 13 1,708.33 1,632.10

5,379.54 5,334.50 Current AssetsCurrent Investments 14 0.03 0.15 Inventories 15 16,429.36 13,771.53 Trade Receivables 16 13,997.12 12,516.58 Cash and Cash Equivalents 17 600.53 758.46 Short-Term Loans and Advances 18 575.13 514.35

31,602.17 27,561.07 total Assets 36,981.71 32,895.57

Significant Accounting PoliciesNotes to financial statements 1 to 36

As per our Report of even date Shreyas K. doshi dr. b. R. barwale Chairman & Managing Director dr. Surendra A. dave

Keki m. mistryFor RAjendRA & Co., Shridhar j. Sawant S. S. thakurChartered Accountants Group Chief Financial Officer minoo R. Shroff

Vishal S. doshiDirectors

Akshay R. Shah Sanjay m. AbhyankarPartner Chief Compliance Officer &MUMBAI, 23rd May, 2014 Company Secretary MUMBAI, 23rd May, 2014

49

StAtement of pRofIt & LoSS foR the yeAR ended 31st mARCh, 2014 (` in million)

particulars Note 2013-14 2012-13

InCome

Revenue from Operations 19 25,265.82 22,392.98

Other Income 20 10.82 8.62

total Revenue 25,276.64 22,401.60

eXpenSeS

Cost of materials consumed 21 16,706.84 13,864.88

Purchase of Stock in trade 22 9,050.94 8,013.35

Changes in inventories of Finished Goods, Work in Progress and Stock in Trade

23 (3,351.48) (2,286.46)

Employee Benefits Expense 24 408.60 378.06

Finance Costs 25 954.03 1,005.19

Depreciation/ Amortisation Expense 26 66.72 63.01

Other Expenses 27 947.88 966.09

total expenses 24,783.53 22,004.12

pRofIt befoRe tAXAtIon 493.11 397.48

Less: Provision for Taxation - Current 137.50 85.00

Provision for Deferred Taxation 5.00 7.50

Excess provision for Tax of earlier year (0.78) -

pRofIt AfteR tAXAtIon 351.39 304.98

Earnings per equity share of face value of ` 2 each. 28

- Basic 3.64 3.97

- Diluted 3.64 3.97

Significant Accounting Policies

Notes to Financial Statements 1 to 36

As per our Report of even date Shreyas K. doshi dr. b. R. barwale Chairman & Managing Director dr. Surendra A. dave

Keki m. mistryFor RAjendRA & Co., Shridhar j. Sawant S. S. thakurChartered Accountants Group Chief Financial Officer minoo R. Shroff

Vishal S. doshiDirectors

Akshay R. Shah Sanjay m. AbhyankarPartner Chief Compliance Officer &MUMBAI, 23rd May, 2014 Company Secretary MUMBAI, 23rd May, 2014

A n n u a l R e p o r t 2 0 1 3 - 1 4 50

CASh fLoW StAtement AnneXed to the bALAnCe Sheet foR the yeAR ended 31st mARCh, 2014

(` in million)

financial year Financial Year

2013-2014 2012-2013

(A) Cash flows from operating activities:

Net Profit before tax and after extraordinary items

493.11 397.48

Adjustments for:

Depreciation 66.72 63.01

Provision for leave encashment/Gratuity 16.63 16.59

(Profit)/ loss on sale of fixed assets 8.49 11.23

Dividend received - (0.04)

Provision for doubtful debts - 8.48

Finance cost (net) 1007.54 1,012.65

Interest income (53.51) (7.46)

Profit on sale of investment 0.12 (0.29)

Deferred employee compensation - 1.01

Effects of exchange rate change 221.25 179.23

1,267.24 1,284.41

Operating Profit before working capital changes

1,760.35 1,681.89

Adjustments for:

Trade and other receivables (1,451.76) (2,406.90)

Inventories (2,657.83) (2,563.90)

Trade payables 2,764.19 1,739.53

Cash generated from operations 414.95 (1,549.38)

Direct taxes paid (128.14) (125.82)

net Cash flow from operating activities 286.81 (1,675.20)

(b) Cash flows from investing activities:

Purchase of fixed assets (69.73) (124.12)

Sale of fixed assets 8.27 0.57

Sale of investments - 1.19

Dividend received - 0.04

Interest income 53.51 23.77

Movement of loans 76.22 (1,042.10)

net Cash used in investing activities 68.27 (1,140.65)

51

CASh fLoW StAtement AnneXed to the bALAnCe Sheet foR the yeAR ended 31st mARCh, 2014

(` in million)

financial year Financial Year

2013-2014 2012-2013

(C) Cash flows from financing activities:

Proceeds from Issue of share capital including share premium

- 1,052.32

Increase in long term borrowings 74.98 1,086.87

Increase in short term borrowings 421.44 1,772.77

Interest paid (945.88) (996.75)

Dividends paid (57.76) (49.71)

Tax on dividend (9.84) (8.08)

Effects of exchange rate change 4.05 (1.39)

Net Cash used in financing activities (513.01) 2,856.04

Net increase in cash and cash equivalents (A+B+C)

(157.93) 40.19

Opening balance of cash and cash equivalent 758.46 718.27

Closing balance of cash and cash equivalent 600.53 758.46

Note:

The Cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 (AS-3) on Cash flow statement issued by the Companies (Accounting Standards) Rules, 2006.

As per our Report of even date Shreyas K. doshi dr. b. R. barwale Chairman & Managing Director dr. Surendra A. dave

Keki m. mistryFor RAjendRA & Co., Shridhar j. Sawant S. S. thakurChartered Accountants Group Chief Financial Officer minoo R. Shroff

Vishal S. doshiDirectors

Akshay R. Shah Sanjay m. AbhyankarPartner Chief Compliance Officer &MUMBAI, 23rd May, 2014 Company Secretary MUMBAI, 23rd May, 2014

A n n u a l R e p o r t 2 0 1 3 - 1 4 52

SIgnIfICAnt ACCountIng poLICIeS foR the yeAR ended 31St mARCh 2014 A. Basis of preparation of financial statements The financial statements have been prepared and presented on an accrual basis under the historical cost

convention except for certain fixed assets which are revalued in accordance with the provisions of the Companies Act, 1956 and the accounting principles generally accepted in India and comply with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006’ by Central Government, to the extent applicable.

Accounting Policies not specifically referred to otherwise are consistent with and in consonance with generally accepted accounting principles.

b. use of estimates The preparation of the financial statements in conformity with generally accepted accounting principles (GAAP)

in India requires management to make estimates and assumptions that affect the reported amount of assets, liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to the accounting estimates is recognised prospectively in current and future periods.

C. fixed assets and depreciation Fixed assets are stated at acquisition/construction cost net of recoverable taxes and includes amounts added

on revaluation less accumulated depreciation and impairment loss if any. Cost of construction include cost attributable to bring the asset to its intended use, and includes related borrowing costs and adjustment arising from exchange rate variation attributable to fixed assets are capitalised.

Depreciation on fixed assets (other than Leasehold Land) has been provided on straight-line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Cost of leasehold land is amortised over the life of the lease period and on amounts added on revaluation, depreciation is provided as aforesaid on residual life of the assets as certified by valuers. Assets costing individually `. 5,000 or less are depreciated fully in the year of purchase.

d. Intangible Assets and Amortisation Intangible assets are stated at cost of acquisition less accumulated amortisation. These assets are amortised

over a period of five years on a straight line basis.

e. Impairment of assets The Company assesses at each balance sheet date whether there is any indication that an asset may be

impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

f. Investments Long term investments are stated at cost, less any other than, temporary diminution in value. Current investments are carried at lower of cost or market/ fair value determined on an individual investment

basis. Profit or loss on sale of investments is determined on the basis of weighted average carrying amount of

investments disposed off.

g. foreign currency transactions Foreign currency transactions are recorded using the exchange rates prevailing on the date of the transaction.

Exchange differences arising on foreign exchange transactions settled during the year are generally recognised in the profit and loss account of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the exchange rate on that date; the resultant exchange differences are recognized in the profit and loss account.

In respect of Forward Exchange Contracts (excluding cash flow hedges), the differences between the contract rate and spot rate on the date of the contract is charged to Profit and Loss Account over the period of contract

53

and the difference between the year end rate and spot rate on the date of contract is also recognised in Profit and Loss Account.

The exchange difference arising on translations and realised gains and losses on foreign currency transactions are generally recognised in Profit and Loss Account, except in case they relate to non current monetary assets and liabilities in which case they are credited/debited to Foreign currency monetary item translation difference account.

Non-monetary foreign currency items are carried at cost.

h. derivative instruments and hedge accounting The Company enters into derivative financial instruments (option contracts and forward contracts) to hedge

foreign currency risk of firm commitments and highly probable forecast transactions. In respect of Derivative financial instruments entered to hedge foreign currency risk of highly probable forecast

transactions that qualify as Cash flow hedges, the gains or losses are reflected in the Hedging Reserve Account in the Balance Sheet and are subsequently recognised in the Profit and Loss Account of the period in which the hedged transaction materialises as per principles of hedge accounting enunciated in Accounting Standard (AS) – 30, “Financial Instruments: Recognition and Measurement”. In respect of other derivative financial instruments, which are hedges, the gains or losses are accounted for in Profit and Loss Account.

I. Inventories Raw materials Raw materials are valued at cost or net realizable value whichever is lower. Cost of Raw Materials – for Jewellery

division is computed using the First in First out (FIFO) method, – for diamond division, specific items of cost are allocated and assigned to inventory wherever practicable and in other cases, the weighted average method is used to compute cost.

Stock in process Stock in process is considered as part of stock of raw materials and is not valued separately. Finished goods For Jewellery division are valued at estimated cost or net realizable value, whichever is lower. For Diamond

division, polished diamonds are valued at technical estimate of cost or net realizable value, whichever is lower. Cost includes cost of materials consumed and related conversion costs which are technically evaluated by the management, in view of the nature of the variation in the value of individual diamonds, existence of multiple grades and the differentials in conversion costs. The company has therefore complied with AS2 – “Valuation of Inventories” issued by the Institute of Chartered Accountants of India to the extent practicable.

Stores, spares parts and loose tools are valued at cost.

j. Revenue Recognition Revenue is recognised only when it can be reliably measured and it is reasonable to expect ultimate collection.

Turnover includes sale of goods and services and gain / loss on corresponding hedge contract. Dividend income is recognised when right to receive is established. Interest income is recognized on time proportionate basis.

K. Employee’s retirement benefits Shorttermemployeebenefits All employee benefits payable wholly within twelve months of rendering the service are classified as short-term

employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the year.

Postemploymentbenefits DefinedContributionPlans The Company’s provident fund scheme is a defined contribution plan. The Company’s contribution paid/payable under the schemes is recognised as expense in the Profit and Loss

account during the period in which the employee renders the related service. The Company makes specified monthly contributions towards employee provident fund.

DefinedBenefitPlans The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect of

the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees will earn in

A n n u a l R e p o r t 2 0 1 3 - 1 4 54

return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation by an independent actuary at each balance sheet date using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, are based on the market yields on Government securities as at the balance sheet date.

Actuarial gains and losses are recognized immediately in the Profit and Loss Account. OtherLongtermemploymentbenefits The Company’s liabilities towards Compensated Absences to employees are determined on the basis of

valuations, as at balance sheet date, carried out by an independent actuary using Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognized immediately in the Profit and Loss Account.

L. Leases Lease payments under an operating lease are recognised in the profit and loss account on a straight line basis,

over the lease term.

m. taxation Income tax expense comprises of current tax (i.e. amount of tax for the year determined in accordance with

the income tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year).

The deferred tax charge or credits and the corresponding deferred tax liabilities or assets are recognised using the tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is virtually/reasonably (as the case may be) certain to be realised.

n. borrowing cost Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part

of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

o. provisions and contingent liabilities and contingent assets The Company creates a provision when there is present obligation as a result of a past event that probably

requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may or may not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements.

p. earnings per share (‘epS’) Basic EPS is computed using the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti-dilutive.

q. employee stock option based compensation The Company calculates the compensation cost based on the intrinsic value method wherein the excess of

value of underlying equity shares as of the date of the grant of options over the exercise price of such options is recognised and amortised over the vesting period on a straight line basis. The Company follows SEBI guidelines for accounting of employee stock options.

55

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

1. ShARe CApItAL

Authorised 225,000,000 (225,000,000) Equity Shares of ` 2/- each 450.00 450.00

Issued, Subscribed and Paid-up 96,453,629 (96,453,629) Equity Shares of ` 2/- each fully paid-up 192.91 192.91

192.91 192.91 Notes:

1 a) Of the above Equity shares: i) 14,122,325 shares were issued pursuant to the scheme of amalgamation without payment being

received in cash. ii) 6,692,070 shares were issued pursuant to the exercise of option by the holders of Foreign

Currency Convertible Bonds.

b) details of shareholders holding more than 5% shares in the Company.31st march 2014 31st March, 2013

particulars no. of shares

% holding in the class

No. of shares

% holding in the class

Equity shares of ` 2/- each fully paid Shreyas K. Doshi 13,349,300 13.84% 13,349,300 13.84% Vishal S. Doshi 7,491,009 7.77% 7,491,009 7.77% Suman K. Doshi 7,552,125 7.83% 7,552,125 7.83% Shrenuj Investments & Finance Pvt. Ltd. 14,815,251 15.36% 14,815,251 15.36% HSBC Private Bank (Suisse) SA 5,088,870 5.28% 5,088,870 5.28% India Max Investment Fund Ltd. 6,140,735 6.37% 6,140,735 6.37%

c) The reconciliation of the number of share outstanding is set out below:

particulars 31st march, 2014 31st March, 2013no. of shares No. of shares

Equity shares at the beginning of the year 96,453,629 76,409,595 Add: Shares issued on exercise of Employee Stock Options - 182,713 Add: Shares issued on preferential basis to FII’s - 15,449,557 Add: Shares Issued on conversion of Unsecured Loans

from promoters - 4,411,764

96,453,629 96,453,629

A n n u a l R e p o r t 2 0 1 3 - 1 4 56

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

2. ReSeRVeS And SuRpLuSCapital ReserveBalance as per last financial statements 20.33 20.33 Revaluation Reserve [Refer note 2(a)]Balance as per last financial statements 1,307.23 1,323.44 Less: Transferred to the statement of Profit and Loss Account (18.59) (16.21)

1,288.64 1,307.23 AmalgamationReserve [Refer note 2(a)]Balance as per last financial statements 550.03 557.31 Less: Transferred to the statement of Profit and Loss Account (7.28) (7.28)

542.75 550.03 Securities premium ReserveBalance as per last financial statements 2,191.69 878.46 Add: Received during the year - 1,315.33 Less:Share Issue Expenses - (2.10)

2,191.69 2,191.69 Share option outstanding AccountBalance as per last financial statements - 2.78 Less: Exercised /Lapsed during the year - (2.78)

- - general ReserveBalance as per last financial statements 1,132.00 1,100.00 Add: Transfer from Profit and Loss Account 36.00 32.00

1,168.00 1,132.00

hedging Reserve [Refer note 2(b)] - 8.95

foreign Currency monetary Item translation difference Account 16.57 -

Surplus as per Profit andLoss AccountBalance as per last financial statements 1,291.05 1,085.78 Add: Profit / (Loss) for the year 351.39 304.98 Less: AppropriationsDividends proposed to be distributed to equity shareholders (` 0.60 per share) (P.Y ` 0.60 per share)

(57.87) (57.87)

Tax on dividend (9.84) (9.84)Transferred to General reserve (36.00) (32.00)

1,538.73 1,291.05 gRAnd totAL 6,766.71 6,501.28 Note:a) The Company had revalued / fair valued its Land and Buildings situated at Mumbai and consequently, there

is an additional charge for depreciation of ` 25.87 (` 23.49 million) for the year ended 31st March 2014 and an amount of ̀ 18.59 million (` 16.21 million for previous year) and ̀ 7.28 million (` 7.28 million for previous year) has been withdrawn from Revaluation Reserve and Amalgamation Reserve respectively as per the scheme sanctioned by the Hon’ble High Court of Judicature at Bombay vide order dated 1st October 2010. This has no impact on the profit for the year.

b) The Company has continued to adopt the principles of AS – 30, “Financial Instruments: Recognition & Measurement” in respect of hedge accounting. Accordingly, in respect of derivative financial instruments which are entered into to hedge foreign currency risks of firm commitments or highly probable forecast transactions and which are effective cash flow hedges, the net notional gain on these instruments outstanding as at 31st March 2014, amounting to ` Nil (P.Y notional gain ` 8.95 million) is reflected in the Hedging Reserve account.

57

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

non - Current Current Non - Current Current3 LONG TERM BORROWINGS :

Secured LoansFrom BankTerm Loan from Banks [Refer note 3(a)& 3(c)]

1,153.08 51.07 1,087.29 3.80

From OthersTerm Loan from a company [Refer note 3(b)]

- 0.86 0.86 0.93

Unsecured LoansFrom Directors 241.17 - 251.52 - Inter Corporate Deposits 770.20 - 672.00 - (from Companies under same management)Loans & Advances from Share Holders 33.50 - - -

2,197.95 51.93 2,011.67 4.73 Note:a) Term Loan from Banks includes:

(i) ̀ 1,198.40 million (P.Y. 1,086.00 million ) secured by way of first charge on immovable property of one of the director, situated at NCPA Nariman point , Mumbai and residual charge over the current assets of the Company. The loan is collaterally secured by pledge of Company’s shares held by the promoters and these are further guaranteed by some of the directors in their personal capacity. It carries interest @ Libor + 4.80% and is repayable over a period of 6 years.

(ii) ` 5.75 million (P.Y. ` 5.09 million) is secured by hypothecation of specific vehicles.b) Term loan from a company was secured by hypothecation of a specific vehicles.

c) Maturity of Term loan from bank is as under:Repaymentfor the year 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20RepaymentAmount (` In million) 51.07 68.03 126.33 269.64 419.44 269.64

d) Unsecured loans from Directors , Companies and Shareholders are payable over a period of 7 to 10 years. Loan from Directors carry interest of 8% , Inter Corporate Deposits carry interest ranging from 8% to 15.25% and Loans from Shareholders is interest free.

31st march, 2014 31st March, 2013(` in million) (` in million)

4 defeRRed tAX LIAbILItIeS (net)AssetsProvision for unencashed leave/ gratuity 17.60 14.50 Amalgamation expenses 0.07 0.17

17.67 14.67 LiabilityDepreciation 114.53 106.53

96.86 91.86

31st march, 2014 31st March, 2013(` in million) (` in million)

5 otheR Long teRm LIAbILItIeSOthers- Security Deposit 2.39 1.29

2.39 1.29

A n n u a l R e p o r t 2 0 1 3 - 1 4 58

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

6 Long teRm pRoVISIonSProvision for employee benefits 68.60 31.66

68.60 31.66 7 SHORT TERM BORROWINGS :

Secured Loansfrom bank Working Capital Loan from Banks [Refer note (7a)] 13,123.60 12,254.25 Short term loan from banks [Refer note (7b)] 13.13 13.01

13,136.73 12,267.26 unsecured Loans

from Related partiesShareholders 1.70 18.00 Inter Corporate Deposits - 80.80

1.70 98.80 from othersFixed Deposits 17.00 23.50

17.00 23.50 13,155.43 12,389.56

Note:a) Working Capital loans from banks are secured as under:

(i) Primarily by hypothecation of stock in trade and book debts.(ii) Collaterally by machinery, office equipment and furnitures & fixtures present and future, and mortgage

of premises situated at Mumbai.(iii) Further collaterally by pledge of fixed deposits and guarantee by some of the Directors in their Personal

capacity.b) Short term loan from banks are secured against Company’s Fixed Deposits.

31st march, 2014 31st March, 2013(` in million) (` in million)

8 tRAde pAyAbLeSTrade Payables (Refer note 8a) 13,691.51 11,122.89

13,691.51 11,122.89 Note:a) On the basis of information and records available with the Company, there are no outstanding dues as at

31st March 2014 to the Micro and small enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006.

31st march, 2014 31st March, 2013(` in million) (` in million)

9 otheR CuRRent LIAbILItIeSCurrent maturities of long term debt (Secured):

Term Loan from Banks [Refer note 3(a)] 51.07 3.80Term Loan from a company [Refer note 3(b)] 0.86 0.93

Duties & Taxes payable 56.90 33.89 Unclaimed Dividend* 2.91 2.80Deposits - 0.86 Interest accrued but not due 15.60 5.87 Interest accrued and due 103.35 51.42 Temporary Overdraft 12.10 40.06 Creditors for capital expenditure 10.09 11.13 Other Payables # 344.65 222.06 597.53 372.82

* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.# Other Payables includes creditors for revenue expenditure, Advance from Customer, Statutory liabilities etc.

59

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

10 ShoRt teRm pRoVISIonSTaxation 137.50 85.00 Provision for employee benefits 6.61 26.92 Proposed dividend 57.87 57.87 Tax on proposed dividend 9.84 9.84

211.82 179.63

11 fIXed ASSet (` in million)Sr. no

particulars gross block depreciation/ Amortisation net blockAs at

01.04.2013Additions deductions As at

31.03.2014As at

01.04.2013for the year

deductions As at 31.03.2014

As at 31.03.2014

As at 31.03.2013

I tangible Assetsown AssetsFreehold Land 675.46 - - 675.46 - - - - 675.46 675.46 Leasehold Land 72.03 - - 72.03 2.19 - - 2.19 69.84 69.84 Building* 1,395.94 21.34 - 1,417.28 148.57 38.76 - 187.33 1,229.95 1,247.37 Leasehold improvements 3.56 - - 3.56 3.39 - - 3.39 0.17 0.18 Plant and Equipment 331.25 37.15 1.00 367.40 110.75 16.87 0.18 127.44 239.96 220.50 Electrical Installations 93.47 3.76 4.76 92.47 32.82 4.19 1.90 35.11 57.36 60.65 Office Equipment 180.19 5.64 2.17 183.66 87.35 9.87 0.91 96.31 87.35 92.84 Furnitures & Fixtures 213.85 4.51 4.55 213.81 96.71 11.60 2.55 105.76 108.05 117.14 Vehicles 42.59 6.96 4.11 45.44 19.05 3.84 2.79 20.10 25.34 23.54 Yacht 4.44 - - 4.44 1.93 0.31 - 2.24 2.20 2.51 totAL ( A ) 3,012.78 79.36 16.59 3,075.55 502.76 85.44 8.33 579.87 2,495.68 2,510.03

II Intangible AssetsComputer Software 52.65 1.30 - 53.95 39.00 5.53 - 44.53 9.42 13.65 Trademarks 6.49 - - 6.49 6.17 - - 6.17 0.32 0.32 Technical Knowhow 8.11 - - 8.11 6.36 1.62 - 7.98 0.13 1.75 totAL ( b ) 67.25 1.30 - 68.55 51.53 7.15 - 58.68 9.87 15.72

III Capital Work-in-progressBuilding Under Construction - - - - - - - 2.57 13.57 totAL ( C ) - - - - - - - - 2.57 13.57 total [ A + b + C ] (Current year) 3,080.03 80.66 16.59 3,144.10 554.30 92.59 8.33 638.55 2,508.12 2,539.31 (Previous Year) 2,581.52 520.38 21.87 3,080.03 477.86 86.50 10.07 554.29 2,539.31 - Note:

a) Building includes ` 9.98 million being the cost of shares in Co-operative Housing Society/Company.b) Gross Block & CWIP includes ` 1,351.11 million added on revaluation of Land, Building and Office Premises as at 1st April, 2010 based on reports issued

by independent valuer. Refer note 2(a).

31st march, 2014 31st March, 2013(` in million) (` in million)

12 non-CuRRent InVeStmentStrade InvestmentsIn Wholly owned Subsidiary Companies - unquoted5,000 (5,000)Equity Shares of Shrenuj Overseas Ltd. of ̀ 100/- each fully paid up

0.50 0.50

50,000 (50,000) Equity Shares of Shrenuj Lifestyle Ltd. of ` 10/- each fully paid up

0.50 0.50

100 (100) Equity Shares of US $ 0.01 each of Astral USA Inc. fully paid up and additional paid-in capital

179.68 179.68

3,837,708 (3,837,708) Equity Shares of Shrenuj Mauritius Pvt. Ltd. of MRS 100 each fully paid up

542.40 542.40

11,210 (11,210) Equity Shares of Shrenuj DMCC of AED 1000 each fully paid up

136.24 136.24

A n n u a l R e p o r t 2 0 1 3 - 1 4 60

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

12 non-CuRRent InVeStmentS200 (200) Equity Shares of Shrenuj Japan Corporation of YEN 10000 each fully paid up

4.76 4.76

100 (100) Equity Shares of Astral Holdings, Inc. of US $ 1 each fully paid up & additional paid-in capital

250.40 250.40

In Subsidiary Companies - unquoted3,750,000 (3,750,000) Equity Shares of Daily Jewellery Ltd. of HK$ 1.00 each fully paid up

17.01 17.01

In Associate companies - unquoted2,810,000 (2,810,000) Equity Shares of Kiara Jewellery Pvt. Ltd. of ` 10/- each fully paid up

28.10 28.10

350,000 (350,000) Equity Shares of Arisia Jewellery Pvt. Ltd. of ` 10/- each fully paid up

3.50 3.50

1,163.09 1,163.09 Aggregate of Unquoted Investments - At Book Value 1,163.09 1,163.09

13 Long teRm LoAnS And AdVAnCeSunsecured Advances Capital Advances 2.59 6.26 Security Deposits 11.17 10.37 Loans & Advances to Related Parties [Refer note 13(a)] 1,692.21 1,613.11 Other Loans & Advances 2.36 2.36

1,708.33 1,632.10 a) Loans and Advances to Wholly Owned Subsidiary Companies: 1) Shrenuj Japan Corporation 11.21 10.15 2) Astral USA Inc 3.73 3.38 3) Astral Holding Inc 457.08 414.21 4) Shrenuj Lifestyle Limited 33.78 110.23 5) Shrenuj (Mauritius) Pvt Limited 886.81 803.64 6) Shrenuj DMCC 299.60 271.50 b) Loans and Advances shown above, fall under the category of Long Term Loans and Advances repayable

over a period of 5 to 7 years. c) Loans and Advances from parties (1) to (4) are interest free. Loan to Shrenuj Mauritius Pvt. Ltd. to the

extent of ` 287.62 million and Loan to Shrenuj DMCC is interest bearing. d) Investment by the Loanee in subsidiary companies

2013-14 no. of Shares outstanding

Investment by Shrenuj mauritius (pvt.) Ltd. in subsidiaries during the year

Shrenuj NV 37,675 Shrenuj Far East Ltd. 501,000 Shrenuj Jewellery Far East Ltd. 936,000 Shrenuj Botswana(Proprietory) Ltd. 4,146,786 Shrenuj South Africa (Proprietory) Ltd. 100 Shrenuj GMBH 250 Lume Group 11,000 Daily Jewellery 1,250,000 Investment by Astral holding Inc. in subsidiaries Simon Golub & Sons 10,686 Investment by Astral uSA in Subsidiaries Shrenuj USA LLC 1,035,000 Bernie’s International LLC 60,000 Astral Jewels LLC 230,000

61

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

14 CuRRent InVeStmentSother Investments- unquoted 2,500 (2,500) Equity Shares of Saraswat Co-Operative Bank

Ltd. of ` 10/- each fully paid up 0.03 0.03

- (165) Equity Shares of Global Trendz Retail (P) Ltd. - 0.12 0.03 0.15

15 InVentoRIeS(As valued, verified and certified by the Management) Raw materials 3,913.66 4,608.09 Stock in Trade 673.87 724.78 Finished goods 11,832.42 8,430.03 Stores, Spares etc. 9.41 8.63

16,429.36 13,771.53

16 tRAde ReCeIVAbLeSunsecuredOutstanding for over six months Considered Good 2,345.71 1,879.32 Considered Doubtful 8.48 8.48

2,354.19 1,887.80 Less : Provision for doubtful debts 8.48 8.48

2,345.71 1,879.32 Other Debtors Considered Good 11,651.41 10,637.26

13,997.12 12,516.58

17 CASh And bAnK bALAnCeS Cash on hand 0.97 1.28 balance with Scheduled banks Current Accounts * 107.30 372.52 Fixed Deposits ** 90.66 95.63 Bank Deposits with more than 12 months maturity 0.86 72.87 Margin Deposit Accounts 400.74 216.16

600.53 758.46 (* Includes unclaimed dividend ` 2.91 million (P.Y ` 2.80 million)(** Includes ` 43.91 million (P.Y ` 20.00 million) pledged with

Banks as Security)

18 ShoRt teRm LoAnS And AdVAnCeSunsecured Advances Advance Tax (net of provisions) 134.33 91.19 Sales Tax/ Service Tax Refundable 75.05 61.30 Prepaid Expenses 5.16 18.81 Advance to Suppliers 340.65 287.45 Others* 19.94 55.60

575.13 514.35

* Includes primarily Interest on loans, Loans & Advance to employees, receivable on cancellation of Forward Exchange Contracts etc.

A n n u a l R e p o r t 2 0 1 3 - 1 4 62

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

19 ReVenue fRom opeRAtIonSSale of Products 25,255.88 22,387.27 Income from Service charges ( Net) 9.94 5.71

25,265.82 22,392.98 (a) details of product Sold

finished goods sold Diamond Division 10,810.52 9,284.10 Jewellery Division 5,138.76 5,264.31 traded goods sold Diamond Division 8,244.22 6,722.11 Jewellery Division 1,062.38 1,116.75

(b) Earning in Foreign Exchange: F.O.B. Value of goods exported 19,663.88 15,978.07

20 otheR InComeInterest from others 0.51 - Dividend Income on Current Investments - 0.04 Profit on sale of Investments - 0.29 Other non operating income 10.31 8.29

10.82 8.62

21 CoSt of RAW mAteRIALS ConSumedRaw Material Stock at commencement 4,608.09 4,331.46 Add : Purchases 16,348.98 14,434.11

20,957.07 18,765.57 Less : Sale of raw materials 336.57 292.60 Stock at close 3,913.66 4,608.09

4,250.23 4,900.69 16,706.84 13,864.88

(a) details of Rm Consumed Diamond Division 12,392.30 9,338.33 Jewellery Division 4,314.54 4,526.55

(b) Value of imported and indigenous Consumption:2013-2014 2012-2013

% (` in million) % (` in Million)

Raw Materials: Directly Imported 64.93 10,847.10 46.58 6,457.98 Indigenously obtained 35.07 5,859.74 53.42 7,406.90

100.00 16,706.84 100.00 13,864.88

31st march, 2014 31st March, 2013(` in million) (` in million)

22 puRChASe of fInIShed goodS 9,050.94 8,013.35 (a) Details of Purchases

Diamond 8,282.94 6,907.55 Jewellery 768.00 1,105.80

(b) Value of Imports on C.I.F. Basis: Raw Materials / Purchases 18,400.44 15,525.28 Capital Goods 27.33 12.27 Stores and Spare parts 8.84 7.70

63

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

23 VARIAtIon In StoCK of fInIShed goodSStock at commencement of finished goods / stock-in-trade 9,154.81 6,868.35 Less: Stock at close 12,506.29 9,154.81

(3,351.48) (2,286.46)

24 empLoyee benefIt eXpenSeSSalaries, Wages, Allowances & Other Benefits 294.65 267.02 Directors Remuneration 45.95 40.70 Contribution to PF & Other Funds 44.41 46.21 Staff Welfare expenses 23.59 23.12 Employee Stock Option Scheme - 1.01

408.60 378.06

(a) The Disclosure of employee benefit as defined in the accounting standard are given below: Defined Contribution Plan:

The Company makes Provident Fund and Superannuation Fund contributions as defined contributions retirement benefit plans for qualifying employees. The Company’s provident fund is under the management of the statutory authorities. The Company has recognised ` 22.06 million (` 20.42 million) for Provident Fund and ` 1.18 million (` 2.69 million ) for Superannuation contributions in Profit and Loss account. The Contributions payable to this plans by the Company are at rates specified in the rules of the scheme.Defined Benefit Plan:The employees Gratuity Fund scheme managed by a trust is a funded defined benefit plan. The present value of obligation is determined based on the actuarial valuation using Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

gratuity (funded) Leave encashment (funded)2013-2014 2012-2013 2011-2012 2013-2014 2012-2013 2011-2012

a. Reconciliation of opening and closing balances of Defined Benefit Obligation:Liability at the beginning of the year 25.62 21.22 14.91 31.65 23.43 23.96 Current service cost 4.28 1.70 1.34 4.61 1.72 3.27 Interest cost 2.05 2.34 1.19 2.61 2.05 1.98 Actuarial (Gain) / Loss 17.66 2.10 7.05 (4.08) 11.31 (0.87)Benefit paid (4.78) (1.74) (3.27) (4.61) (6.86) (4.89)Liability at the end of the year 44.83 25.62 21.22 30.18 31.65 23.43

b. Reconciliation of opening and closing balances of Fair Value of Planned Assets:Fair Value of planned assets at the beginning of the year

15.29 10.33 12.19 3.40 3.12 2.87

Expected return on planned asset 1.29 1.34 1.41 0.29 0.26 0.23 Employers’ contribution 1.88 5.36 - 4.61 - - Actuarial gain / (loss) (0.30) - - 0.01 0.02 0.02 Benefit paid (4.78) (1.74) (3.27) (4.61) - - Fair Value of planned assets at the end of the year

13.38 15.29 10.33 3.70 3.40 3.12

Actual return on planned assets 1.00 1.34 1.41 0.29 0.26 0.23 c. Amount recognised in the balance Sheet

Liability at the end of the year 44.83 25.62 21.22 30.18 31.65 23.43 Fair Value of planned assets at the end of the year

13.38 15.29 15.67 3.70 3.40 3.12

Amount recognised in the Balance Sheet

31.45 10.33 5.55 26.48 28.25 20.31

A n n u a l R e p o r t 2 0 1 3 - 1 4 64

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

gratuity (funded) Leave encashment (funded)2013-2014 2012-2013 2011-2012 2013-2014 2012-2013 2011-2012

d. Expenses recognised in the Profit & Loss account:Current service cost 4.28 2.34 1.34 4.61 1.72 3.27 Interest cost 2.05 1.70 1.19 2.61 2.05 1.98 Expected return on planned asset (1.29) (1.34) (1.41) (0.29) (0.26) (0.23)Actuarial (Gain) / Loss 17.96 2.10 7.05 (4.09) 11.30 (0.90)

Net expense recognised in Profit & Loss account

23.00 4.80 8.17 2.84 14.79 4.12

e. Investment details:% % % % % %

invested invested invested invested invested invested Insurance Policies 100.00 100.00 100.00 100.00 100.00 100.00

f. Actuarial assumptions:Mortality Table

LIC LIC LIC IALM IALM IALM 1994-96 1994-96 1994-96 (94-96) (94-96) (94-96)

Discount rate per annum 9.10 8.00 8.00 9.10 8.25 8.30 Expected rate of return on planned assets

8.70 8.00 8.00 8.70 8.25 8.30

Salary escalation (per annum) 7.00 8.00 4.00 7.00 8.00 8.00 The above information is certified by an Actuary. The estimates of rate of escalation in salary considered in Actuarial valuation are based on the sector specific industry standards.

31st march, 2014 31st March, 2013(` in million) (` in million)

25 fInAnCe CoStInterest ExpenseOn Term loan 65.00 7.63 To Banks 693.43 773.81 To Others 191.32 209.66

949.75 991.10 Other Borrowing Cost 57.79 45.32

1,007.54 1,036.42 Less : Interest received from Banks [Refer note 25(a)] 24.56 23.77 Less : Interest received from Others 28.95 7.46

954.03 1,005.19 Note:

a) Tax Deducted at Source on Interest received 1.13 1.31

26 depReCIAtIon And AmoRtISAtIon eXpenSeSDepreciation of tangible assets 85.44 78.92 Amortisation of intangible assets 7.15 7.58

92.59 86.50 Less: Transfer from Revaluation Reserve 18.59 16.21 Less: Transfer from Amalgamation Reserve 7.28 7.28

66.72 63.01

65

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

27 OTHER ExPENSES:Manufacturing Expenses:Stores and spares consumed 34.46 36.74 Power and fuel 36.63 36.88 Subcontracting charges / Processing expenses 392.02 383.68 Rent 4.92 6.54 Rates and taxes 7.81 4.95 Machinery repairs 3.85 1.32 Other manufacturing expenses 25.05 31.42

504.74 501.53 Selling and distribution expensesFreight and forwarding charges 31.28 23.25 Sales promotion Expenses 13.31 22.22 Advertisement Expenses 2.75 1.59 Brokerage & Commission 20.47 13.44 Other Selling and Distribution expenses 88.32 74.95

156.13 135.45 miscellaneous expensesInsurance 25.81 24.95 Other repairs 25.59 26.26 Legal and professional charges 23.24 67.58 Sundry expenses 72.79 83.35 Remuneration to Auditors [Refer note 27(d)] 1.83 1.46 Donations 1.63 0.03 Bank Charges 127.51 105.04 Provision for Doubtful debt - 8.48 Loss on sale / discarded of Assets 8.61 11.23 Prior period items - 0.73

287.01 329.11 947.88 966.09

(a) Value of imported and indigenous Consumption:2013-2014 2012-2013

% (` in million) % (` in Million) Stores and Spares parts: Directly Imported 22.46 7.74 19.52 7.17 Indigenously obtained 77.54 26.72 80.48 29.57

100.00 34.46 100.00 36.74

31st march, 2014 31st March, 2013(` in million) (` in million)

(b) expenditure in foreign Currency Foreign Travelling 5.00 9.15 Marketing Expenses 24.85 27.96 Export Commission 17.74 21.01 Legal & Professional Charges 3.11 1.41 Interest 102.02 92.15 Others 25.41 43.48

A n n u a l R e p o r t 2 0 1 3 - 1 4 66

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

(c) earning in foreign Currency Interest on Loan 28.95 7.47 Other Income 6.84 -

(d) Remuneration to Auditors As auditor: - Audit Fees 0.90 0.79 - Tax Audit Fees 0.24 0.24 In other capacity: - Taxation Matters 0.40 0.16 - Certification Fees 0.29 0.27

1.83 1.46 Cost Audit fees 0.03 -

28 eARnIngS peR ShARe i) Profit after Tax available for Equity shareholders 351.39 304.98 ii) Weighted average number of equity shares

For Basic 96,453,629 76,784,752 For Diluted 96,453,629 76,784,752

iii) Earnings Per Share of ` 2 each Basic 3.64 3.97 Diluted 3.64 3.97

29 RemIttAnCe In foReIgn CuRRenCy on ACCount of DIVIDEND:i) Year to which dividend relates 2012-2013 2011-2012ii) Number of non-resident shareholders whom remittance was

made32 30

iii) Number of Equity Shares on which remittance was made 1,709,535 1,705,810 of ` 2 each of ` 2 each

iv) Net amount remitted (` in million) 1.03 1.11

30. deRIVAtIVe InStRumentS

The company, in accordance with its risk management policies and procedures, enters into derivative instruments (option contracts & forward contracts) to manage its exposure to foreign exchange rates. The counter party is generally a bank.

The Company has following outstanding derivative instruments designated as cash flow hedge as on 31st March, 2014:

year number of Contracts

notional amount of forward Contracts

fair Value gain / (Loss)

maturity period

Current Year Nil Nil Nil -Previous Year 14 USD 18.05 million ` 8.95 Million Upto 1 yrs

In addition to the above, the Company has outstanding derivative instruments aggregating to ` 1,235.85 Million (` 3,183.61 Million) whose fair value showed a net loss of ` 66.38 Million (P.Y. loss of ` 7.21 Million) and which is accounted for in the Profit and Loss Account.

As of balance sheet date, the Company has foreign currency exposures that are not hedged by a derivative instrument or otherwise amounting to ` 12,868 million (P.Y. ` 8,748.49 million) representing receivables and ` 25,468.64 million (previous year ` 20,932.79 million) representing payables.

67

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

Commodity hedging

The Company enters into Gold Futures and Options contracts to hedge its commodity related risk. The net outstanding position at the end of the year is Nil (P.Y. NIL). The MTM gain / (loss) of Nil (P.Y. NIL) has been accounted for in the Profit and Loss Account.

31 The Ministry of Corporate Affairs, Government of India vide its General Circular No. 2 and 3 dated 8th Februrary, 2011 and 21st February, 2011 respectively has granted a general exemption from compliance with Section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been attached to the Consolidated Financial Statements.

32 Previous year’s figures have been reclassified / regrouped wherever necessary.

33 Segment Information for the year ended 31st March, 2014 As per Accounting Standard 21 on Consolidated Financial Statements and Accounting Standard 23 on

Accounting for Investment in Associates in Consolidated Financial Statements issued by Institute of Chartered Accountants of India, the Company has presented Consolidated Financial Statements, including subsidiaries and associates. Accordingly segment information as required under Accounting Standard 17 on Segment reporting is included under the Notes to Consolidated financial statements.

31st march, 2014 31st March, 2013(` in million) (` in million)

34 a) Exchange Fluctuations on monetary items (Net) Credited/(Debited) to Profit and Loss Account

(1,016.94) (717.21)

b) Income/(Expenses) relating to previous year credited/debited to respective account

(3.04) (0.73)

35 Contingent Liabilities and Capital commitments not provided for in respect of:

a) Guarantees given by the Company on behalf of Subsidiaries and Associates in respect of Advances granted by Banks

16,523.76 14,295.20

b) Disputed Income Tax Liabilities not provided for 185.31 98.80 c) Disputed Sales Tax Liabilities not provided for 0.38 0.38 d) Bank Guarantee executed in favor of Third Party 5.10 - e) Bond executed for import of Capital goods 24.79 23.59 f) Letter of Credit against import of goods 1,361.98 1,576.76 g) Estimated amount of contracts remaining to be executed on

capital account - 3.35

h) Letter of Credit discounted 28.95 -

36 RELATED PARTy TRANSACTIONS:As per the Directors1) Parties where control exists:

1 Shrenuj Lifestyle Limited Wholly owned subsidiary2 Shrenuj Overseas Ltd Wholly owned subsidiary3 Shrenuj DMCC Wholly owned subsidiary4 Shrenuj Japan Corporation Wholly owned subsidiary5 Shrenuj (Mauritius) Pvt. Ltd. Wholly owned subsidiary6 Shrenuj Jewellery (Far East) Ltd. Wholly owned subsidiary7 Shrenuj Botswana (Pty.) Ltd Wholly owned subsidiary8 Shrenuj South Africa (Pty) Ltd. Wholly owned subsidiary9 Shrenuj N.V. Wholly owned subsidiary

A n n u a l R e p o r t 2 0 1 3 - 1 4 68

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

10 Shrenuj GmbH Wholly owned subsidiary11 Shrenuj Australia Pty. Ltd. Wholly owned subsidiary12 Lume Group AG Wholly owned subsidiary13 Astral USA, INC. Wholly owned subsidiary14 Shrenuj USA, LLC Wholly owned subsidiary15 Astral Jewels LLC Wholly owned subsidiary16 Astral Holding INC Wholly owned subsidiary17 Alija International Pty Ltd Wholly owned subsidiary18 Global Marine Diamonds Company Wholly owned subsidiary19 Simon Golub & Sons INC Wholly owned subsidiary20 Daily Jewellery Ltd.Hong Kong Wholly owned subsidiary21 Intergems H.K. Ltd. Wholly owned subsidiary22 Shrenuj Shanghai Diamonds Pvt. Ltd. Wholly owned subsidiary23 Bernies International, LLC Subsidiary24 Ithemba Diamonds (Pty) Ltd Subsidiary25 Uxolo Diamond Cutting Works (Pty) Limited Subsidiary

2) Associates :1 Kiara Jewellery Pvt. Ltd.2 Arisia Jewellery Pvt. Ltd.3 Jomard SAS4 SWA Trading Ltd.5 Copem & Shrenuj6 Trapz, LLC7 SHL Gems & Jewellery Ltd.8 K. K. Doshi & Co. 9 Shrenuj Investments & Finance Pvt. Ltd.10 Prest Impex Pvt Ltd.

3) Key Management Personnel and their relatives:1 Shri Shreyas K. Doshi Chairman & Managing Director2 Shri Nihar N. Parikh Executive Director3 Shri Vishal S. Doshi Group Executive Director4 Mrs. Anjali P. Mehta Relative

The Following transactions were carried out with the related parties in the ordinary course of business:(i) Details relating to parties referred to in items 1 and 2 above:

Wholly owned subsidiary Associates2013-14 2012-13 2013-14 2012-13

(` in million)

(`.in Million) (` in million)

(` in Million)

1) Interest received 32.55 6.31 - - 2) Other Services Received 31.73 23.66 6.04 - 3) Other Services Rendered 5.35 18.34 1.59 5.55 4) Purchase of Raw Materials / Finished goods 10,451.51 8,720.19 254.17 74.01 5) Interest Paid - - 96.58 97.95 6) Sale of Raw Materials / Finished goods 10,591.90 7,517.44 69.46 162.13 7) Purchase of Fixed Assets 0.65 - - - 8) Sale of Fixed Assets 0.50 0.86 - - 9) Guarantees outstanding 16,344.01 14,099.00 179.76 162.90 10) Outstanding Receivable 6,912.67 4,706.46 8.99 21.35 11) Goods sent on consignment 430.77 34.62 - - 12) Outstanding Payable 6,814.17 5,876.36 15.18 13.94

69

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

disclosure in respect of above.1. Interest Received includes Received from Shrenuj DMCC ` 16.81 Mn.(` 1.59 Mn.), Shenuj Mauritius Pvt. Ltd.

` 15.74 Mn.(` 4.72 Mn.).2. Other Services Received includes Received from Shrenuj Botswana Pty Ltd. `.20.06 Mn.(` Nil), Simon Golub

& Sons ` 1.33 Mn.(` 18.80 Mn.), Shrenuj USA,LLC ` 0.98 Mn.(` 4.84 Mn.),Uxolo Diamond Cutting Works Pvt. Ltd. ` 5.15 Mn. (` Nil), Kiara Jewellery Pvt. Ltd. ` 6.04 Mn.(` Nil).

3. Other Services Rendered includes paid to Shrenuj Jewellery (Far East Ltd.) ` Nil( ` 3.55 Mn.), Shrenuj GMBH ` 0.6 Mn. (` Nil),Shrenuj Botswana Pty. Ltd. ` 4.39 Mn. (` 12.93 Mn.), Kiara Jewellery Pvt. Ltd. ` 0.39 Mn. (` 5.55 Mn), Prest Impex Pvt. Ltd. ` 1.20 Mn.(` Nil).

4. Purchases includes Purchase from Shrenuj N.V. ` 3251.76 Mn.(` 4198.37), Shrenuj DMCC ` 3339.91 Mn. (` 1880.63 Mn.), Shrenuj Botswana Pty Ltd. ` 2211.25 Mn. (` 1618.52), Kiara Jewellery Pvt Ltd. ` 22.42 Mn. (` 69.28 Mn.), K.K. Doshi & Co. ` 231.75 Mn.(` Nil).

5. Interest paid includes paid to Shrenuj Investment & Finance Pvt. Ltd. ̀ 77.69 Mn.(` 79.11 Mn.), Prest Impex Pvt. Ltd. ` 18.89 Mn.(` 18.83 Mn.)

6. Sales includes Sale to Shrenuj USA LLC ` 1151.55 Mn. (` 1103.94 Mn), Shrenuj DMCC ` 3764.46 Mn. (` 2046.40 Mn.), Shrenuj N.V. ̀ 3441.53 Mn. (` 2281 Mn.) , Shrenuj Far East Ltd (Intergems H.K. Ltd) ̀ 992.91 Mn. (` 1047.75 Mn.), Kiara Jewellery Pvt Ltd ` 69.46 Mn. (` 102.28 Mn).

7. Purchase of Fixed Assets includes Purchase from Simon Golub & Sons ` 0.65 Mn.(` Nil).8. Sale of Fixed Assets includes Sale to Shrenuj Botswana Pty Ltd ` 0.50 Mn. (` 0.86 Mn.).9. Guarantee includes Shrenuj N.V ` 5500.66 Mn(` 4984.75 Mn), Shrenuj DMCC ` 4272.30 Mn.(` 3192.80 Mn.),

Shrenuj Far East Ltd (Intergems H K Ltd) ` 1653.79 Mn.(` 1498.70 Mn.), Kiara Jewellery Pvt Ltd ` 179.76 Mn. (` 162.90 Mn.), Simon Golub & Sons ` 1659.78 Mn.(` 1504.10 Mn.).

10. Outstanding Receivable includes Shrenuj USA LLC ` 865.93 Mn. (` 729.68 Mn), Shrenuj NV ` 1781.51 Mn. (` 1129.27 Mn.), Shrenuj DMCC ` 2507.13 Mn.(` 1292.65 Mn.),Copem & Shrenuj `13.32 Mn.(` Nil), SWA Trading Co Ltd ` 3.35 Mn. (` 3.82 Mn), Kiara Jewellery Pvt Ltd ` 5.64 Mn (` 4.21 Mn.).

11. Goods sent on Consignment includes Shrenuj N.V.` 50.63 Mn.(` Nil),Shrenuj DMCC ̀ 110.92 Mn.(` 34.62 Mn.), Shrenuj Far East Ltd. (Intergems H K Ltd) ` 76.99 Mn. (` Nil), Shrenuj Lifestyle Ltd ` 188.41 Mn.(` Nil).

12. Outstanding Payable includes Payable to Shrenuj N V ̀ .1985.83 Mn.(` 2691.80 Mn.), Shrenuj DMCC ̀ 2017.48 Mn. (` 1592.26 Mn), Shrenuj Botswana Pty Ltd ` 1544.91 Mn.(` 843.86 Mn.), Kiara Trading Ltd ` 8.51 Mn. (` 9.47 Mn.), SWA Trading Ltd ` 3.35 Mn.(` 3.04 Mn.), SHL Gems Limited ` 1.33 Mn. (` 1.43 Mn.).

(`. In Million)13) Inter Corporate deposits given opening

balance

given during

the year

Repaid during

the year

Closing balance

Shrenuj Japan Corporation 10.15 3.69 2.63 11.21 (9.51) (2.63) (1.99) (10.15)

Astral USA Inc 3.38 0.35 - 3.73 (3.17) (0.21) - (3.38)

Astral Holding Inc 414.21 123.03 80.16 457.08 (388.05) (80.16) (54.00) (414.21)

Shrenuj Lifestyle Limited 110.23 7.94 84.40 33.77 (89.23) (26.50) (5.50) (110.23)

Shrenuj (Mauritius) Pvt. Ltd. 803.64 83.17 - 886.81 - (805.12) (1.48) (803.64)

Shrenuj DMCC 271.50 28.10 - 299.60 - (272.00) (0.50) (271.50)

A n n u a l R e p o r t 2 0 1 3 - 1 4 70

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

(` In Million)14) i) unsecured Loans received opening

balance

Received during

the year

Repaid during

the year

Closing balance

Shrenuj Inv. & Finance Pvt. Ltd. 522.50 16.70 - 539.20 (509.30) (185.86) (172.66) (522.50)

Kirtilal K. Doshi 4.10 14.00 - 18.10 (2.10) (2.00) - (4.10)

Vishal S. Doshi 97.45 4.40 - 101.85 (248.45) (3.40) (154.40) (97.45)

Anuj K. Doshi 0.70 - - 0.70 (0.70) - - (0.70)

Suman K. Doshi 10.90 4.50 - 15.40 (6.00) (4.90) - (10.90)

Shreyas K. Doshi 155.37 86.00 102.05 139.32 (255.77) (20.30) (120.70) (155.37)

Geeta S Doshi 1.00 - - 1.00 (1.00) (1.50) (1.50) (1.00)

Prest Impex Pvt Ltd 230.30 0.70 - 231.00 (220.30) (10.00) - (230.30)

(ii) details relating to persons referred to in item 3 above (` In Million)2013-14 2012-13

1. Remuneration to Directors 45.95 40.70 (Details in Corporate governance report) 2. Interest payable to Director 19.52 37.34 3. Interest paid to relative (Mrs. Anjali P. Mehta) 0.16 0.02 4. Rent paid to Nihar N. Parikh 1.20 1.09

As per our Report of even date Shreyas K. doshi dr. b. R. barwale Chairman & Managing Director dr. Surendra A. dave

Keki m. mistryFor RAjendRA & Co., Shridhar j. Sawant S. S. thakurChartered Accountants Group Chief Financial Officer minoo R. Shroff

Vishal S. doshiDirectors

Akshay R. Shah Sanjay m. AbhyankarPartner Chief Compliance Officer &MUMBAI, 23rd May, 2014 Company Secretary MUMBAI, 23rd May, 2014

71

A n n u a l R e p o r t 2 0 1 3 - 1 4 72

Independent Auditors’ Reportto,the board of directors of Shrenuj & Co. Limited

RepoRt on ConSoLIdAted fInAnCIAL StAtementS

We have audited the accompanying consolidated financial statements of Shrenuj & Co. Limited (“the Company”), it’s subsidiaries and jointly controlled entities (collectively referred to as “the Group”) which comprise the Consolidated Balance Sheet as at March 31, 2014, the Consolidated Statement of Profit and Loss and Consolidated Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

mAnAgement’S ReSponSIbILIty foR the ConSoLIdAted fInAnCIAL StAtementS

The Management is responsible for the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AudItoRS’ ReSponSIbILIty

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

opInIon

In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of other auditors on the financial statements/ consolidated financial statements of the subsidiaries and associates as noted below, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

a In the case of the Consolidated Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b In the case of the Consolidated Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

c In the case of the Consolidated Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

otheR mAtteRS

We did not audit the financial statements / consolidated financial statements of Fifteen subsidiaries, whose financial statements / consolidated financial statements reflect total assets of Rs 30,982.96 Million as at 31st March 2014, total revenues of Rs.44,714.01 million and net cash flows amounting to Rs. 239.11 million for the year ended on that date and financial statement of two associates in which the share of profit of the Group is Rs. 0.41 million. These financial statements / consolidated financial statements have been audited by other auditors whose reports have been furnished to us and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries/associates, is based solely on the reports of other auditors.

73

We have relied upon the unaudited financial statements / information as provided by the Management in respect of Ten subsidiary companies, whose financial statements / consolidated financial statements reflect total assets of Rs.8,676.51 million as at 31st March, 2014, total revenues of Rs.5,772.12 million and net cash flows amounting to Rs 19.55 million for the year then ended and the unaudited financial statement of Three associates in which the share of profit of the Group is Rs.0.58 million and our opinion in so far as it relates to the amounts included in respect of these subsidiaries/associates, is based solely on such unaudited financial statement / information.

Our opinion is not qualified in respect of other matters.

For Rajendra & Co.Chartered AccountantsRegistration No. 108355W

Akshay R. ShahPartnerMembership No.: 103316

Place: MumbaiDate: 23rd May, 2014

A n n u a l R e p o r t 2 0 1 3 - 1 4 74

(` in million)particulars note 31st march, 2014 31st March, 2013equIty And LIAbILItIeSShareholder’s fundsShare Capital 1 192.91 192.91Reserves and Surplus 2 9,246.84 9,439.75 8,142.47 8,335.38minority Interests 3 (4.73) 15.12non-Current LiabilitiesLong-Term Borrowings 4 4,537.56 5,522.52Deferred Tax Liabilities (Net) 5 45.45 47.06Other Long Term Liabilities 6 2.39 17.46Long Term Provisions 7 90.45 4,675.85 51.42 5,638.46Current LiabilitiesShort-Term Borrowings 8 25,901.04 22,239.89Trade Payables 9 9,350.40 6,738.93Other Current Liabilities 10 989.09 916.13Short-Term Provisions 11 264.66 36,505.19 241.88 30,136.82total equity and Liabilities 50,616.06 44,125.78ASSetSnon-Current Assetsfixed Assets 12Tangible Assets 3,083.89 3,045.75Intangible Assets 333.24 260.92Capital Work in Progress 28.99 36.69

3,446.12 3,343.36Non-Current Investments 13 202.54 203.84Long Term Loans and Advances 14 125.26 3,773.92 303.45 3,850.65Current AssetsCurrent Investments 15 0.03 0.15Inventories 16 22,792.98 19,818.53Trade Receivables 17 21,320.45 17,819.22Cash and Cash equivalents 18 1,533.82 1,468.23Short-Term Loans and Advances 19 1,194.86 1,167.05Other Current Assets 20 - 46,842.14 1.95 40,275.13total Assets 50,616.06 44,125.78Notes to Financial Statements 1 to 44

ConSoLIdAted bALAnCe Sheet AS At 31st mARCh, 2014

As per our Report of even date Shreyas K. doshi dr. b. R. barwale Chairman & Managing Director dr. Surendra A. dave

Keki m. mistryFor RAjendRA & Co., Shridhar j. Sawant S. S. thakurChartered Accountants Group Chief Financial Officer minoo R. Shroff

Vishal S. doshiDirectors

Akshay R. Shah Sanjay m. AbhyankarPartner Chief Compliance Officer &MUMBAI, 23rd May, 2014 Company Secretary MUMBAI, 23rd May, 2014

75

ConSoLIdAted StAtement of pRofIt And LoSS foR the yeAR ended 31st mARCh, 2014

(` in million)

particulars note 2013-14 2012-13

InCome

Revenue from Operations 21 46,431.80 38,621.47

Other Income 22 225.64 158.53

total Revenue 46,657.44 38,780.00

eXpenSeS

Cost of materials consumed 23 18,523.49 17,283.67

Purchase of Stock in trade 24 26,698.45 18,635.50

Variation in inventory of Finished goods & Stock in trade 25 (4,753.06) (2,881.94)

Employee Benefit Expense 26 1,201.11 1,181.15

Finance Cost 27 1,557.28 1,557.41

Depreciation/ Amortisation 28 121.00 112.32

Other Expenses 29 2,251.86 1,967.70

total expense 45,600.13 37,855.81

pRofIt befoRe tAXAtIon 1,057.31 924.20

Less: Provision for Taxation - Current 157.16 92.24

: Provision for Tax in respect of earlier year 1.25 93.01

: Provision for Deferred Taxation 2.64 (12.45)

pRofIt AfteR tAXAtIon 896.26 751.40

Share of Profit/ (Loss) in Associate 0.93 5.67

Share of (Profit)/ Loss transferred to Minority (0.07) (23.31)

897.12 733.76

Earnings per equity share of face value of ` 2 each.

- Basic 9.30 9.56

- Diluted 9.30 9.56

Notes to Financial Statements 1 to 44

As per our Report of even date Shreyas K. doshi dr. b. R. barwale Chairman & Managing Director dr. Surendra A. dave

Keki m. mistryFor RAjendRA & Co., Shridhar j. Sawant S. S. thakurChartered Accountants Group Chief Financial Officer minoo R. Shroff

Vishal S. doshiDirectors

Akshay R. Shah Sanjay m. AbhyankarPartner Chief Compliance Officer &MUMBAI, 23rd May, 2014 Company Secretary MUMBAI, 23rd May, 2014

A n n u a l R e p o r t 2 0 1 3 - 1 4 76

(` in million)financial year Financial Year

2013-2014 2012-2013

(A) Cash flows from operating activities:

Net Profit before tax and after extraordinary items

1,057.31 924.20

Adjustments for:

Depreciation 121.00 112.32

Provision for Leave Encashment 27.29 (9.25)

(Profit)/Loss on sale of Assets 14.44 13.98

Profit on Sale of Investment - (0.29)

Dividend Received - (0.04)

Deferred employee compensation - 1.01

Provision for doubtful debts 11.42 13.74

Interest Expenses (Net) 1,557.28 1,536.67

Deffered gain on lease transaction - (6.24)

Effect of exchange rate change 269.68 396.39

2,001.11 2,058.29

Operating Profit before working capital changes

3,058.42 2,982.49

Adjustments for:

Trade and other receivables (3,331.32) (6,885.53)

Inventories (2,974.45) (3,338.56)

Trade payables 2,682.59 1,460.31

Cash generated from operations (564.76) (5,781.29)

Direct taxes paid (168.87) (172.04)

net Cash flow from operating activities (733.63) (5,953.33)

(b) Cash flows from investing activities:

Purchase of fixed assets (173.35) (249.14)

Sale of fixed assets 23.89 17.80

Sale of investments 2.37 1.19

Dividend received - 0.04

Interest income 48.79 32.35

Movement of loans 28.35 (0.02)

net Cash used in investing activities (69.95) (197.78)

ConSoLIdAted CASh fLoW of ShRenuj & CompAny LImIted AndItS SubSIdIARy CompAnIeS foR the yeAR ended 31st mARCh 2014

77

ConSoLIdAted CASh fLoW of ShRenuj & CompAny LImIted AndItS SubSIdIARy CompAnIeS foR the yeAR ended 31st mARCh 2014

(` in million)financial year Financial Year

2013-2014 2012-2013

(C) Cash flows from financing activities:

Proceeds from share capital including share premium

- 1,052.32

Capital contributed by Minority (adjusted

for their share of Loss) (19.85) (74.94)

Increase in long term borrowings (1,192.86) 2,366.91

Increase in short term borrowings 3,661.15 4,161.56

Interest paid (1,511.67) (1,545.27)

Dividends paid (57.76) (49.71)

Tax on dividend (9.84) (8.08)

Effects of exchange rate change - (1.39)

Net Cash used in financing activities 869.17 5,901.40

Net increase in cash and cash equivalents (A+B+C)

65.59 (249.72)

Opening balance of cash and cash equivalent

1,468.23 1,717.95

Closing balance of cash and cash equivalent

1,533.82 1,468.23

Note:

The Cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 (AS-3) on Cash flow statement issued by the Companies (Accounting Standards) Rules, 2006.

As per our Report of even date Shreyas K. doshi dr. b. R. barwale Chairman & Managing Director dr. Surendra A. dave

Keki m. mistryFor RAjendRA & Co., Shridhar j. Sawant S. S. thakurChartered Accountants Group Chief Financial Officer minoo R. Shroff

Vishal S. doshiDirectors

Akshay R. Shah Sanjay m. AbhyankarPartner Chief Compliance Officer &MUMBAI, 23rd May, 2014 Company Secretary MUMBAI, 23rd May, 2014

A n n u a l R e p o r t 2 0 1 3 - 1 4 78

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013

(` in million) (` in million)

1. Share Capital

Authorised

225,000,000 (225,000,000) Equity Shares of `. 2/- each 450.00 450.00

Issued, Subscribed and paid-up

96,453,629 (96,453,629) Equity Shares of `. 2/- each fully paid-up 192.91 192.91

192.91 192.91

Notes:

a) Of the above Equity shares:

i) 14,122,325 shares were issued pursuant to the scheme of amalgamation without payment being received in cash.

ii) 6,692,070 shares were issued pursuant to the exercise of option by the holders of Foreign Currency Convertible Bonds.

b) details of shareholders holding more than 5% shares in the Company.

31st march, 2014 31st March, 2013

particularsno. of

shares% holding

in the class

No. of shares % holding in the class

Equity shares of `. 2/- each fully paid

Shreyas K. Doshi 13,349,300 13.84% 13,349,300 13.84%

Vishal S Doshi 7,491,009 7.77% 7,491,009 7.77%

Suman K Doshi 7,552,125 7.83% 7,552,125 7.83%

Shrenuj Investments & Finance Pvt. Ltd. 14,815,251 15.36% 14,815,251 15.36%

HSBC Private Bank (Suisse) SA 5,088,870 5.28% 5,088,870 5.28%

India Max Investment Fund Ltd. 6,140,735 6.37% 6,140,735 6.37%

c) The reconciliation of the number of share outstanding is set out below:

particulars 31st march, 2014

31st March, 2013

no. of shares

No. of shares

Equity shares at the beginning of the year 96,453,629 76,409,595

Add: Shares issued on exercise of Employee Stock Options - 182,713

Add: Shares issued on preferential basis to FII’s - 15,449,557

Add: Shares Issued on conversion of Unsecured Loans from promoters - 4,411,764

96,453,629 96,453,629

79

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 20132. Reserves and Surplus (` in million) (` in million)

Capital ReserveBalance as per last financial statements 20.33 20.33Revaluation Reserve [Refer note 2(a)]Balance as per last financial statements 1,307.23 1,323.44Less: Transferred to the statement of Profit and Loss Account (18.59) (16.21)

1,288.64 1,307.23Amalgamation Reserve [Refer note 2(a)]Balance as per last financial statements 550.03 557.31Less: Transferred to the statement of Profit and Loss Account (7.28) (7.28)

542.75 550.03Securities premium ReserveBalance as per last financial statements 2,191.69 878.46Add: Received during the year - 1,315.33Less:Share Issue Expenses - (2.10)

2,191.69 2,191.69Share option outstanding AccountBalance as per last financial statements - 2.78Less: Exercised/Lapsed during the year - (2.78)

- -general ReserveBalance as per last financial statements 1,135.51 1,102.49Add: Transfer from Profit and Loss Account 41.48 33.02

1,176.99 1,135.51

hedging Reserve [Refer note 2(b)] - 8.95

foreign exchange monetary Item difference Account 16.56 -

exchange fluctuation Reserve 573.51 270.12

Surplus as per profit and loss accountBalance as per last financial statements 2,658.61 2,025.58Less: Adjusted on Liquidation of Subsidaries/Transfer of interest to Minority (10.17) -

Add: Profit for the year 897.12 733.76Less: AppropriationsDividends proposed to be distributed to equity shareholders (` 0.60 per share) (P.Y ` 0.60 per share)

(57.87) (57.87)

Tax on dividend (9.84) (9.84)Transferred to General reserve (41.48) (33.02)

3,436.37 2,658.61gRAnd totAL 9,246.84 8,142.47Notes:2a) The Company had revalued / fair valued its Land and Buildings situated at Mumbai and consequently, there

is an additional charge for depreciation of ` 25.87 (` 23.49 million) for the year ended 31st March, 2014 and an amount of ̀ 18.59 million (` 16.21 million for previous year) and ̀ 7.28 million (` 7.28 million for previous year) has been withdrawn from Revaluation Reserve and Amalgamation Reserve respectively as per the scheme sanctioned by the Hon’ble High Court of Judicature at Bombay vide order dated 1st October 2010. This has no impact on the profit for the year.

2b) The Company has continued to adopt the principles of AS – 30, “Financial Instruments: Recognition & Measurement” in respect of hedge accounting. Accordingly, in respect of derivative financial instruments which are entered into to hedge foreign currency risks of firm commitments or highly probable forecast transactions and which are effective cash flow hedges, the net notional gain on these instruments outstanding as at 31st March, 2014, amounting to ` Nil million (P.Y. notional gain ` 8.95 million) is reflected in the Hedging Reserve account.

A n n u a l R e p o r t 2 0 1 3 - 1 4 80

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014

(` in million)

31st March, 2013

(` in million)3 mInoRIty InteReSt

Minority Interest (4.73) 15.12 (4.73) 15.12

31st march,2014 31st March,2013

(` in million) (` in million)non - Current Current Non - Current Current

4 LONG TERM BORROWINGS :Secured Loansfrom bankTerm Loan from Banks [Refer note 4(a)] 1,271.07 173.91 2,466.02 271.34from othersTerm Loan from a company [Refer note 4(b)] - 0.86 0.86 0.93unsecured Loans

- From Directors [Refer note 4(c)] 241.17 - 251.52 -

- Inter Corporate Deposits [Refer note 4(c)](from Companies under same management)

770.20 - 672.00 -

- From Shareholders [Refer note 4 (d)] 33.50 - - -

- From Others [Refer note 4(d)] 2,221.62 - 2,132.12 - 4,537.56 174.77 5,522.52 272.27

Notes:

a) Term Loan from Banks includes:

(i) ̀ 1198.40 million (P.Y. ` 1086 million) secured by way of first charge on immovable property of one of the director, situated at NCPA Nariman point , Mumbai and residual charge over the current assets of the Company.The loan is collaterally secured by pledge of Company’s shares held by the promoters and these are further guaranteed by some of the directors in their personal capacity.It carries interest @ Libor + 4.80% and is repayable over a period of 7 years.

(ii) ̀ 240.83 million (P.Y. ` 400.57 million) availed by overseas subsidiaries from their respective bankers and are secured against assets situated in their respective countries. These are further guaranteed by corporate guarantees issued by the holding company and some of the Directors in their personal capacity.

(iii) ` 5.75 million (P.Y. ` 5.09 million) is secured by hypothecation of specific vehicles.

(iv) ̀ Nil (P.Y. ` 1245.70 million) Working capital term loan availed by overseas Subsidiaries from their respective bankers are secured against mortgage of properties situated in their respective countries.

b) Term loan from a company is secured by hypothecation of a specific vehicles.

c) Unsecured loans from Directors and Intercorporate Deposits from Companies are payable over a period of 7 to 10 years and carries interest from 8% to 16.25%.

d) Unsecured loans from Shareholders and Others availed by overseas subsidiary companies are payable over a period of 3 to 5 years and same are interest free.

81

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

5 deferred tax Liabilities (net)AssetsDisallowance/Unabsorbed Losses under Income Tax Act 76.91 66.96

76.91 66.96LiabilityDepreciation 122.36 114.02

45.45 47.06

6 other Long term LiabilitiesDeposits 2.39 1.29Others (Refer Note 38 (b)] - 16.17

2.39 17.46

7 Long term provisionsProvision for employee benefits 90.45 51.42

90.45 51.42

8 SHORT TERM BORROWINGS :Secured LoansFrom BankWorking Capital Loan from Banks [Refer note 8(a)] 25,315.25 22,086.15Short term loan from banks [Refer note 8(b)] 103.01 13.01

25,418.26 22,099.16unsecured Loansfrom Related partiesFrom Shareholders 1.70 18.00Inter Corporate Deposits 122.19 99.22

123.89 117.22from othersFixed Deposits 17.00 23.51Others 341.89 -

358.89 23.51

25,901.04 22,239.89

a) Working Capital loans from banks to the extent of ` 13,123.60 million (P.Y. ` 12,254.25 Mn.) are secured as under:

(i) Primarily by hypothecation of stock in trade and book debts.

(ii) Collaterally by machinery present and future, and mortgage of premises situated at Mumbai.

(iii) collaterally by pledge of fixed deposits and guarantee by some of the Directors in their Personal capacity.

(iv) ̀ 12,191.65 million (P.Y. ` 9,831.90 million) Working capital facilities availed by overseas Subsidiaries from their respective bankers are secured against mortgage of properties situated in their respective countries.

b) Term Loan from banks are secured against Fixed Deposits and Immovable property of the subsidiary company

A n n u a l R e p o r t 2 0 1 3 - 1 4 82

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march,2014 (` in million)

31st March,2013 (` in million)

9 trade payables

Trade Payables 9,350.40 6,738.93

9,350.40 6,738.93

10 other Current Liabilities

Current maturities of long term debt (Secured):

Term Loan from Banks [Refer note 4(a)] 173.91 271.34

Term Loan from a company [Refer note 4(c)] 0.86 0.93

Duties & Taxes payable 78.47 38.96

Unpaid Dividend* 2.91 2.80

Deposits 0.27 10.07

Short Term finance lease obligations 4.21 -

Interest accrued but not due 21.93 8.03

Interest accrued & due 123.15 55.90

Temporary Overdraft 100.50 40.06

Creditors for capital expenditure 10.09 11.13

Other Payables ** 472.79 476.91

989.09 916.13

* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

** Other payables mainly includes Statutory dues, Liability for expenses, Income received in advance, Liability for MTM Losses etc.

11 Short term provisions

Taxation 164.80 127.35

Provision for employee benefits 23.19 34.93

Proposed dividend 57.87 57.87

Tax on proposed dividend 9.84 9.84

Others 8.96 11.89

264.66 241.88

83

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

12. fixed Asset(` in Million)

Sr. No. Particulars

Gross Block Depreciation/ Amortisation Net Block

As at 01.04.2013

Additions Deductions/Adjustments

As at 31.03.2014

As at 01.04.2013

For the year

Deductions/Adjustments

As at 31.03.2014

As at 31.03.2014

As at 31.03.2013

A. Tangible Assets :

Freehold Land 700.80 2.58 - 703.38 - - - - 703.38 700.80

Leasehold Land 72.08 - - 72.08 2.19 - - 2.19 69.89 69.89

Buildings* 1,740.25 55.77 46.11 1,749.91 187.57 53.49 33.72 207.34 1,542.57 1,552.68

Leasehold Improvements 58.26 9.34 - 67.60 43.45 0.90 - 44.35 23.25 14.80

Plant & Machinery 439.05 60.96 4.75 495.26 134.02 23.46 1.67 155.81 339.45 305.03

Electrical Installations 93.76 3.79 4.76 92.79 32.86 4.24 1.89 35.21 57.58 60.90

Office Equipments 382.94 48.33 29.15 402.12 225.85 27.09 12.93 240.01 162.11 157.09

Furniture & Fixtures 285.61 14.63 4.81 295.43 151.72 15.18 2.80 164.10 131.33 133.90

Vehicles 86.80 15.27 4.57 97.50 38.65 9.01 2.29 45.37 52.13 48.14

Yacht 4.45 - - 4.45 1.94 0.31 - 2.25 2.20 2.51

total (A) 3,864.00 210.67 94.15 3,980.52 818.25 133.68 55.30 896.63 3,083.89 3,045.75

b. Intangible Assets :

Computer Software 69.36 3.59 - 72.95 44.98 10.13 0.26 54.85 18.10 24.37

Trade Mark 181.07 31.42 - 212.49 6.48 0.97 0.26 7.19 205.30 174.59

Technical Knowhow 8.11 - - 8.11 6.35 1.62 - 7.97 0.14 1.76

Goodwill 60.19 49.98 - 110.17 - 0.47 - 0.47 109.70 60.20

total (b) 318.73 84.99 - 403.72 57.81 13.19 0.52 70.48 333.24 260.92

C. Capital Work in progress

Work in progress at cost

and advance Payments 28.99 36.69

against capital expenditure

total (C) 28.99 36.69

totAL (A+b+C) 4,182.73 295.66 94.15 4,384.23 876.06 146.87 55.82 967.11 3,446.12 3,343.36

Previous Year 3,593.10 640.79 51.16 4,182.73 739.00 135.81 (1.25) 876.06 3,343.36 -

Notes:

Gross Block & CWIP includes ` 1,351.11 Million added on revaluation of Land, Building and Office Premises as at 1st April, 2010 based on reports issued by independent valuer. Adjustment includes ` 220.57 Million being added on account of fair valuation of amalgamating Companies

* Building includes ` 3,250/- being the cost of shares in Co-operative Housing Society.

31st march, 2014 31st March, 2013(` in million) (` in million)

13 non-Current Investmentstrade InvestmentsIn Associate companies - unquoted2,810,000 (2,810,000) Equity Shares of Kiara Jewellery Pvt. Ltd. of ` 10/- each fully paid up

88.34 72.75

2,500 (2,500) Equity Shares of Jomard SAS fully paid up 104.70 119.68100 (100) Equity Shares of Copem & Shrenuj fully paid up 4.30 3.96100 (100) Equity Shares of SWA Trading Ltd. fully paid up 6.86 6.86100 (100) Equity Shares of Trapz LLC fully paid up - -350,000 (350,000) Equity Shares of Arisia Jewellery Pvt. Ltd. of ` 10/- each fully paid up 0.88 0.88

205.08 204.13Less : Share of Loss in Trapz LLC 3.08 3.08

202.00 201.05Other Investments: Unquoted150,757 (150,757) Intercontinental jewellery Manufacturing Public Co. Ltd, Thailand

0.51 0.51

Others 0.03 2.28 0.54 2.79

total 202.54 203.84Aggregate of Unquoted Investments - At Book Value 202.54 203.84

A n n u a l R e p o r t 2 0 1 3 - 1 4 84

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

14 Long term Loans and Advances

Secured Advances / deposits

unsecured Advances

Capital Advances 2.59 6.26

Security Deposits 26.81 20.03

Loans and Advances to Associates 3.91 32.28

Other Loans and Advances 91.95 244.88

125.26 303.45

15 Current Investments

other Investments

others - unquoted

2,500 (2,500) Equity Shares of Saraswat Co-Operative Bank Ltd. of ` 10/- each fully paid up

0.03 0.03

(165) Equity Shares of Global Trendz Retail (P) Ltd. - 0.12

0.03 0.15

16 Inventories

(As valued, verified and certified by the Management)

Raw materials 4,116.57 5,896.16

Stock in Trade 6,759.89 5,173.64

Finished goods 11,906.68 8,739.88

Stores, Spares etc. 9.84 8.85

22,792.98 19,818.53

17 trade Receivables

Outstanding for over six months

Considered Good 2,250.66 1,886.61

Considered Doubtful 35.45 22.06

2,286.11 1,908.67

Less : Provision for doubtful debts 35.45 22.06

2,250.66 1,886.61

Other Debtors

Considered Good 19,069.79 15,932.61

21,320.45 17,819.22

85

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

31st march, 2014 31st March, 2013(` in million) (` in million)

18 Cash and bank balances

Cash on hand 10.18 5.85

balance with Scheduled banks

Current Accounts* 434.70 657.56

Fixed Deposits** 406.92 396.27

Bank Deposits with more than 12 months maturity 137.97 73.58

Margin Deposit Accounts 544.05 334.98

1,533.82 1,468.23

(* Includes unclaimed dividend ` 2.91 million (P.Y ` 2.80 million)

(** Includes ` 13.13 million (P.Y ` 47.00 million pledged with

Banks as Security)

19 Short term loans and advances

A. unsecured Advances

Advance Taxes ( Net of Provision) 149.46 101.56

Sales Tax/ Service Tax Refundable 142.30 146.57

Interest Receivable - 1.47

Deposits 3.05 5.28

Prepaid Expenses 124.50 76.06

Advance to Suppliers 432.43 274.21

Others * 343.12 561.89

1,194.86 1,167.05

*(Includes Loan to employees, other advances, other recceivables, Advance for expenses and services)

20 other current assets

Preliminary expenses to the extent not written off - 1.95

- 1.95

21 Revenue from operation

Sale of Products 46,172.46 38,359.25

Service charges 9.73 5.46

Other Operating Revenues 249.61 256.77

46,431.80 38,621.47

A n n u a l R e p o r t 2 0 1 3 - 1 4 86

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

2013-14 2012-13(` in million) (` in million)

22 other IncomeConsultancy fees 13.10 -Dividend Income - 0.04Interest Income 13.25 20.74Profit on sale of assets 1.89 2.91Profit on sale of Investments - 0.29Other non-operating Income 197.40 134.55

225.64 158.53

23 Cost of Raw materials ConsumedRaw Material Stock at commencement 5,896.16 5,440.41Add: Purchases 18,088.24 18,307.50

23,984.40 23,747.91

Less: Sale of raw materials 1,344.34 568.08 Stock at close 4,116.57 5,896.16

5,460.91 6,464.24 18,523.49 17,283.67

24 Purchase of finished goods 26,698.45 18,635.50

25 Variation in stock of finished goodsStock at commencement 13,913.52 11,031.57Less: Stock at close 18,666.58 13,913.52

(4,753.06) (2,881.94)

26 Employee Benefit ExpensesSalaries, Wages, Allowances & Other Benefits 965.62 959.29Directors Remuneration (Refer note 44) 45.95 40.70Contribution to PF & Other Funds 95.79 95.40Staff Welfare expenses 93.75 84.75Employee Stock Option Scheme - 1.01

1,201.11 1,181.1527 finance Cost

Interest ExpenseOn Term loan 70.52 21.12To Banks 1,255.69 1,252.51To Others 204.22 210.23

1,530.43 1,483.86Other Borrowing Cost 62.38 100.08Less : Interest received 35.53 26.53

1,557.28 1,557.41

28 depreciation and Amortisation expensesDepreciation of tangible assets 134.13 125.68Amortisation of intangible assets 12.74 10.13

146.87 135.81Less: Transfer from Revaluation Reserve 18.59 16.21Less: Transfer from Amalgamation Reserve 7.28 7.28

121.00 112.32

87

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

2013-14 (` in million)

2012-13 (` in million)

29 Other Expenses:

Manufacturing Expenses:

Stores and spares consumed 42.57 41.99

Power and fuel 40.81 38.52

Subcontracting charges / Processing expenses 414.43 413.38

Rent 33.55 37.50

Rates and taxes 9.49 6.40

Building repairs 4.13 1.17

Machinery repairs 2.14 4.35

Other manufacturing expenses 182.45 97.07

729.57 640.38

Selling and distribution expenses

Marketing / Advisory Expenses 53.41 8.32

Freight and forwarding charges 118.47 76.39

Sales promotion Expenses 34.17 38.42

Advertisement Expenses 132.56 105.92

Brokerage & Commission 161.52 127.05

Other Selling and Distribution expenses 180.27 116.82

680.40 472.92

miscellaneous expenses

Insurance 59.83 53.23

Other repairs 70.64 37.75

Legal and professional charges 78.71 130.60

Sundry expenses 358.33 350.83

Remuneration to Auditors 5.02 5.00

Donations 2.66 1.05

Bank Charges 237.81 217.49

Loss on sale / discarded Assets 16.33 16.89

Provision for doubtful debts 11.42 13.74

Prior period expenses 1.13 27.84

841.89 854.41

2,251.86 1,967.70

A n n u a l R e p o r t 2 0 1 3 - 1 4 88

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

noteS foRmIng pARtS of the ACCountS

30 StAtement of ACCountIng poLICIeS

a. basis of Accounting

The financial statements are prepared under the historical cost convention and comply with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

b. principles of consolidation

The consolidation financial statement relate to Shrenuj & Company Limited (SCL) (“the Company) and its Subsidiary/Associates Companies. The consolidated financial statements have been prepared on the following basis: -

● The financial statements of the Company and its Subsidiary Companies have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions in accordance with the Accounting Standard AS-21 “Consolidated financial Statements”.

● In respect of Foreign subsidiaries consolidation is done based on Audited / Unaudited financial statements prepared according to the IFRS / Generally Accepted Accounting Principles (GAAP) in their respective countries of origin and no re-statement is done for the same based on Indian GAAP. Subject to the above, the consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances to the extent practicable.

● The excess/deficit of cost to the Company of its investment in the Subsidiary Companies is recognised in the financial statements as Goodwill / Capital Reserve.

● In case of foreign subsidiary being non-integral foreign operations, revenue items are consolidated at the average rate prevailing during the period. All Assets and Liabilities are converted at rates prevailing at the end of the year. Any exchange difference arising on consolidation is recognized as exchange fluctuation reserve in the Balance Sheet.

● Minority interest’s share of net profit for the year is identified and adjusted against the income of the group in order to arrive at the net income attributable to shareholder of the company.

● Minority interest’s share of net assets of consolidated subsidiary is identified and presented in the consolidated Balance Sheet separate from liabilities and equity of the Company’s shareholders.

● Investment in Associates have been accounted under the Equity method of accounting as per AS-23 “Accounting for Investment in Associates in Consolidated Financial Statement”.

c. Other Significant Accounting Policies

These are set out in the notes to accounts under “Statement of Accounting Policies” of the Financial Statements of the Company, and subsidiary companies.

31 THE SUBSIDIARy COMPANIES CONSIDERED IN THE CONSOLIDATED FINANCIAL STATEMENTS ARE:

name of the Company Country of origin

% equity Share Capital held as at 31.03.2014

parent Company

Daily Jewellery Ltd. Hong Kong 100% SCLShrenuj (Mauritius) Pvt. Ltd. Mauritius 100% SCLAstral USA, Inc (ASTRAL) USA 100% SCLShrenuj USA LLC (SUSA) USA 100% ASTRALBernie’s International LLC (Bernie) USA 60% ASTRALAstral Jewels LLC (AJL) USA 100% ASTRAL

89

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

name of the Company Country of origin

% equity Share Capital held as at 31.03.2014

parent Company

Shrenuj Japan Corporation (SJC) Japan 100% SCL

Shrenuj DMCC (SDMCC) UAE 100% SCL

Shrenuj Jewellery Far East Ltd. (JOS) Hong Kong 100% SMPLShrenuj Fareast Ltd.(Formerly known as Inter Gems (HK) Ltd.) Hong Kong 100% SMPL

Shrenuj GmbH (SGMBH) Germany 100% SMPL

Lume Group AG (LUMEAG) Switzerland 100% SMPLShrenuj Australia Pty. Ltd. (SAPL) upto 24th November, 2013 Australia 100% SMPL

Shrenuj N.V. (SNV) Belgium 100% SMPL

Shrenuj Lifestyle Ltd (SLL) India 100% SCL

Shrenuj Overseas Limited (SOL) India 100% SCL

Shrenuj Botswana Pty Ltd (SBPL) Botswana 100% SMPL

Shrenuj South Africa Pty Ltd (SSAP) South Africa 100% SMPLAlija International Pty. Ltd. (ALIJA) upto 11th December, 2013 Australia 100% SMPL

Ithemba Diamonds (Pty) Ltd. (IDPL) South Africa 74% SSAP

Uxolo Diamond Cutting Works (Pty) Ltd. (UDCL) South Africa 74% SSAP

Astral Holding INC (AHL) USA 100% SCL

Simon Golub & Sons Inc. (SGS) USA 100% AHL

Global Marine Diamond Corporation (GMDC) USA 100% DMCC

Shrenuj Shanghai Ltd. China 100% Shrenuj Fareast Ltd.

32 the SIgnIfICAnt ASSoCIAte CompAnIeS ConSIdeRed In the ConSoLIdAted fInAnCIAL STATEMENT ARE:

name of the Company Country of origin

% equity Share Capital held as at 31.03.2014

Investee Company

Kiara Jewellery Pvt. Ltd. (KIARA) India 50% SCL

Arisia Jewellery Pvt. Ltd. (ARISIA) India 50% SCL

Trapz LLC (TRAPZ) USA 33.34% ASTRAL

Jomard SAS France 50% SMPL

SWA Trading Ltd. Israel 33.34% SMPL

Copem & Shrenuj Italy 50% SMPL

33 (i) As in the previous year, the Company has continued to adopt the principles of AS – 30, “Financial Instruments: Recognition & Measurement” in respect of hedge accounting. Accordingly, in respect of derivative financial instruments which are entered into to hedge foreign currency risks of firm commitments or highly probable forecast transactions and which are effective cash flow hedges, the net notional gain on these instruments outstanding as at 31st March, 2014, amounting to ̀ Nil (previous year notional loss ̀ 8.95 Million) is reflected in the Hedging Reserve account.

A n n u a l R e p o r t 2 0 1 3 - 1 4 90

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

(ii) The company, in accordance with its risk management policies and procedures, enters into derivative instruments (option contracts & forward contracts) to manage its exposure to foreign exchange rates. The counter party is generally a bank.

The Company has following outstanding derivative instruments as on 31st March, 2014:

Year Number of Contracts

Notional amount of Forward contracts

Fair Value Gain / (Loss)

Maturity period

Current Year Nil Nil Nil -

Previous Year 14 USD 18.05 million ` 8.95 Million Upto 1 yr

In addition to the above cash flow hedges, the Company has outstanding derivative instruments aggregating to ` 1,235.85 Million (` 3,183.61 Million) whose fair value showed a net loss of ` 66.38 Million (P.Y. loss of ` 7.21 Million) and which is accounted for in the Profit and Loss Account.

As of balance sheet date, the Company has foreign currency exposures that are not hedged by a derivative instrument or otherwise amounting to ` 12,868 million (P.Y. ` 8,748.49 million) representing receivables and ` 25,468.64 million (previous year ` 20,932.79 million) representing payables.

Commodity hedging The Company enters into Gold Futures and Options contracts to hedge its commodity related risk. The net

outstanding position at the end of the year is Nil (P.Y. NIL). The MTM gain / (loss) of Nil (P.Y. NIL) has been accounted for in the Profit and Loss Account.

34 The audited / unaudited financial statements of subsidiaries incorporated outside India are prepared according to International Financial Reporting Standards or Reporting Standard in their country of residence and for the purpose of consolidation, restatement of the said financial statements to Indian GAAP has not been done.

35 For the purpose of consolidation, Astral USA Inc, Astral Jewels, Shrenuj USA, Astral Holding, GMDC, Lume Group AG, Bernie’s International LLC,Simon Golub & Sons and Shrenuj Mauritius Pvt Ltd un-audited financial statements adopted by the respective Board have been considered.

36 The Consolidated Financial statements have been prepared in accordance with Accounting Standard AS-21 “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India.

37 Commitments under Operating Leases:

As a Lessee:

The Notes to financial statement of Shrenuj Far East. Ltd state that at the end of the reporting period, the Company as a lessee had a total future minimum lease payment payable under non-cancellable operating lease as set out below:

31st march, 2014 31st March, 2013(` in million) (` in million)

Land & Buildings 1.80 6.22- Within 1 year - 0.07- In the 2nd to 5th year inclusive 1.80 6.29

As a Lessor:

The Notes to financial statement of Shrenuj Far East Ltd state that at the end of the reporting period, the Company as a lessor had a total future minimum lease payment receivable under non-cancellable operating lease as set out below:

31st march, 2014 31st March, 2013(` in million) (` in million)

Land & Buildings 2.52 2.67- Within 1 year - 0.76- In the 2nd to 5th year inclusive 2.52 3.43

91

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

38 The Notes to the Management Certified Consolidated Financial Statement of SGS for the year ended 31st March, 2014 states that:

a. Goodwill represents the excess cost of acquiring the assets of C & A Diamonds International, LLC, over the fair value of net assets acquired at the date of acquisition. The Company evaluates goodwill annually to determine potential impairment by examining the carrying amount of the assets to determine if the carrying amount is recoverable and by comparing the carrying amount to the assets fair market value. Management determined that no impairment charge was required for the year ended March 31, 2014 and March 31, 2013.

b. During 2005, the Company entered into a sale-leaseback arrangement relating to its operating facility. The Company was a 25% general partner in the partnership which sold the facility in 2005. Following the sale, the Company leased back the property under a ten year operating lease. The Company accounted for the arrangement under the full accrual method. Accordingly, the deferred gain of $1,147,921 (` 68.78 Million) (P.Y. ` 62.33 million) is being amortized and recognized over the term of the lease. During the current year the lease agreement was terminated. A gain in the amount of $ 253,484 (` 14.48 Million) (P.Y. $118,750) (` 6.24 million) is reported under other income in the Statements of Operations for the fiscal years ended March 31, 2014 and 2013 respectively.

31st march, 2014 31st March, 2013

(` in million) (` in million)

39 Exchange Fluctuations on monetary items (Net) Credited/(Debited) to Profit and Loss Account

(1,016.94) (717.21)

40 Contingent Liabilities not provided for in respect of:

a) Guarantees given by the Company on behalf of Associates in respect of Advances granted by Banks

179.76 162.90

b) Disputed Income Tax Liabilities not provided for 185.31 98.80

c) Disputed Sales Tax Liabilities not provided for 0.38 0.38

d) Bank Guarantee executed in favor of Third Party 5.10 33.30

e) Bond executed for import of Capital goods 24.79 23.59

f) Letter of Credit against import of goods 1361.98 1576.76

g) Estimated amount of contracts remaining to be executed on capital account

- 3.35

h) Letter of credit discounted 102.02 -

41 Earnings Per Share

i) Profit after Tax available for Equity shareholders 897.12 733.76

ii) Weighted average number of equity shares

For Basic 96,453,629 76,784,752

For Diluted 96,453,629 76,784,752

iii) Earnings Per Share of ` 2 each

Basic 9.30 9.56

Diluted 9.30 9.56

A n n u a l R e p o r t 2 0 1 3 - 1 4 92

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

42 Previous year’s figures have been re-grouped and/or rearranged wherever necessary.

43 Segment InfoRmAtIon foR the yeAR ended 31St mARCh, 2014(i) Information about Primary Business Segments (Rupees in Million)

diamond jewellery unallocated elimination totalRevenueExternal 38965.83 9210.70 - 1744.73 46431.80

(30794.23) (8378.43) - (551.18) (38621.47)ResultSegment result 2048.53 566.06 - - 2614.59

(2012.81) (468.81) - - (2481.62)Unallocated income/(expenditure) (net)

- - -

- - - Interest expenses 1252.72 340.09 - - 1,592.81

(1239.27) (344.67) - - (1,583.94)Interest income 24.90 10.63 - - 35.53

(14.05) (12.47) - - (26.52)Profit before taxation 820.71 236.60 0.00 - 1,057.31

(787.59) (136.61) 0.00 - (924.20)Provision for taxation – Current tax and Fringe Benefit Tax

157.16 - - - - (92.24)

-- Deferred tax 2.64 - - - - 12.45

Profit after taxation 897.51 (844.41)

Tax in respect of previous year 1.25 93.01

Minority interest 0.07 (23.31)

Share in profits of Associates 0.93 (5.67)

Profit for the year 897.12 (733.76)

Other InformationSegment assets 39349.48 11117.12 - 50466.60

(33894.47) (10129.74) 0.00 - (44024.21)Segment liabilities 33042.30 7744.86 159.09 - 40946.25

(28222.27) (7221.75) (133.41) - (35577.43)Share Capital and Reserves 9439.75 - 9439.75

- - (8335.36) - (8335.36)Minority interest (4.73) - (4.73)

- - (15.12) - (15.12)Provision for taxation less payments

14.71 - 14.71 - - (25.79) - (25.79)

93

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

diamond jewellery unallocated elimination totalUnclaimed dividend and proposed dividend incl. Tax on Dividend

70.62 - 70.62 - - (70.51) - (70.51)

Total of Segment Liabilities 33042.30 7744.86 9679.44 - 50466.60 (28,222.27) (7,221.75) (8,580.19) - (44,024.21)

Capital expenditure (including Work in Progress)

2.57 26.42 - 28.99 (11.70) (24.99) - (36.69)

Depreciation (net) 75.38 45.62 - 121.00 (67.93) (44.39) - - (112.32)

Non-cash expenses other than depreciation

- - -

(1.95) - (1.95)

(ii) Information about Secondary Business Segments (` In Million)

Revenue by geographical market Within India outside India

elimination total

External 5607.45 40824.35 - 46431.80(6399.38) (32222.09) - (38621.47)

Carrying amount of segment assets 2544.83 18775.62 - 21320.45(3234.32) (14584.90) - (17819.22)

(iii) (i) The Company is organised into two main business segments, namely: Diamonds – representing Trading ,Cutting and Polishing of Diamonds Jewellery - representing Diamond studded Gold/Platinum jewellery Segments have been identified and reported taking into account the nature of products the differing

risks and returns, the organisation structure, and the internal financial reporting systems.(ii) Segment Revenue in each of the above domestic business segments primarily includes sales,

processing charges in the respective segments.(iii) The Segment Revenue in the geographical segments considered for disclosure are as follows: (a) Revenue Local includes sales & services to customers located within India. (b) Revenue Exports includes sales to customers located outside India.(iv) Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each

of the segments and amounts allocable on a reasonable basis

44 RELATED PARTy TRANSACTIONS:As per the Directors1) Associates :

Kiara Jewellery Pvt. Ltd.Arisia Jewellery Pvt. Ltd.Jomard SASSWA Trading Ltd.Copem & ShrenujTrapz, LLCSHL Gems & Jewellery Ltd.K. K. Doshi & Co. Shrenuj Investments & Finance Pvt. Ltd.Prest Impex Pvt. Ltd.

A n n u a l R e p o r t 2 0 1 3 - 1 4 94

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

2) Key Management Personnel and their relatives:Shri Shreyas K. Doshi Chairman and Managing DirectorShri Nihar N. Parikh Executive DirectorShri Vishal S. Doshi Group Executive DirectorMrs. Anjali P. Mehta Relative

The Following transactions were carried out with related parties in the ordinary course of business:

(i) Details relating to parties referred to in items 1 and 2 above:

31st march, 2014(` in million)

31st March, 2013(` in million)

1) Purchase of Raw Materials / Finished goods 254.17 124.63

2) Sale of Raw Materials / Finished goods 290.28 384.59

3) Other Services Received 6.04 5.55

4) Other Services Paid 0.39 -

5) Interest Paid 96.58 97.94

6) Outstanding Receivable 22.54 49.36

7) Outstanding Payable 13.19 13.94

8) Guarantees outstanding 179.76 162.90

Disclosure in respect of above:1 Purchases includes Purchase from Kiara Jewellery Ltd ` 22.42 Mn.(` 69.28Mn.), Copem & Shrenuj ` Nil

(` 50.62 Mn.) K K Doshi & Co. ` 231.75 Mn. (` Nil)2 Sales includes Sale to Copem & Shrenuj `.220.82 Mn.(` 235.75 Mn.), K K Doshi & Co. ` Nil (` 42.30 Mn.)

Kiara Jewellery Pvt Ltd ` 69.46 Mn. (` 102.28 Mn.).3 Other Services Received includes Received from Kiara Jewellery Pvt Ltd ` 6.04 Mn.(` 5.55 Mn).4 Other Services Paid includes paid to Kiara Jewellery Pvt Ltd ` 0.39 Mn.(` Nil).5 Interest Paid includes Paid to Shrenuj Investment & Finance Pvt. Ltd. ` 77.69 Mn.(` 79.11 Mn.), Prest

Impex Pvt Ltd. ` 18.89 Mn. (` 18.83 Mn.).6 Outstanding Receivable includes Copem & Shrenuj ` Nil (`.26.09 Mn.),Swa Trading Co Ltd `.3.35 Mn.

(` 6.78 Mn.), Kiara Jewellery Pvt Ltd ` 5.64 Mn.(` 4.21), K K Doshi & Co. ` 13.55 Mn. (` 12.28 Mn).7 Outstanding Payable includes Payable to Kiara Trading Ltd ` 8.51 Mn. (` 9.47 Mn), SWA Trading Ltd

` 3.35 Mn. (` 3.04 Mn.), SHL Gems Limited ` 1.33 Mn. (` 1.43 Mn).8 Guarantee includes given to Kiara Jewellery Pvt Ltd ` 179.76 Mn. (` 162.90 Mn).

(` in million)opening balance

given during the year

Repaid during the year

Closing balance

9 Inter Corporate deposits givenCopem & Shrenuj 3.64 0.27 - 3.91

(3.64) - - (3.64)SWA Trading Ltd. 28.62 2.85 - 31.47

(28.62) - - (28.62)

95

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

(` in million)opening balance

Received during the year

Repaid during the year

Closing balance

10 unsecured Loans received

i) Shrenuj Inv. & Finance Pvt. Ltd. 522.50 16.70 - 539.20 (509.30) (185.86) (172.66) (522.50)

Kirtilal K. Doshi 4.10 14.00 - 18.10 (2.10) (2.00) - (4.10)

Vishal S. Doshi 97.45 4.40 - 101.85 (248.45) (3.40) (154.40) (97.45)

Anuj K. Doshi 0.70 - - 0.70 (0.70) - - (0.70)

Suman K. Doshi 10.90 4.50 - 15.40 (6.00) (4.90) - (10.90)

Shreyas K. Doshi 155.37 86.00 102.05 139.32 (255.77) (20.30) (120.70) (155.37)

Geeta S Doshi 1.00 - - 1.00 (1.00) (1.50) (1.50) (1.00)

Prest Impex Pvt Ltd 230.30 0.70 - 231.00 (220.30) (10.00) - (230.30)

ii) Details relating to persons referred to in item 2 above(` In Million)

2013-2014 2012-20131 Remuneration to Directors 45.95 40.70

(Details in Corporate governance report)2 Interest payable to Director 19.52 37.343 Interest paid to relative (Mrs. Anjali P. Mehta) 0.16 0.024 Rent paid to Nihar N.Parikh 1.20 1.09

As per our Report of even date Shreyas K. doshi dr. b. R. barwale Chairman & Managing Director dr. Surendra A. dave

Keki m. mistryFor RAjendRA & Co., Shridhar j. Sawant S. S. thakurChartered Accountants Group Chief Financial Officer minoo R. Shroff

Vishal S. doshiDirectors

Akshay R. Shah Sanjay m. AbhyankarPartner Chief Compliance Officer &MUMBAI, 23rd May, 2014 Company Secretary MUMBAI, 23rd May, 2014

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