17th AGM Transcript

Shri Vijay Panwar

Respected Directors and dear Members, a very good afternoon to all of you and welcome to the 17th Annual General Meeting of the Company.

With me present here are Shri Balram Garg, Managing Director. Next to him is Shri Ramesh Kumar Sharma

Executive Director and next to him is Shri Suresh Kumar Jain, Independent Director. To my left, Shri Sanjeev

Bhatia, Chief Financial Officer and myself Vijay Panwar, Company Secretary. We all are attending this meeting from the office of the Company at Delhi.

Now, I would like to introduce the other directors who are attending this meeting through Video Conferencing

/ Other Audio Visual Means from their respective locations.

Shri Krishan Kumar Khurana, Independent Director. He is the Chairman of Stakeholders Relationship

Committee as well as Nomination and Remuneration Committee. He is also attending the meeting on behalf of

Chairman of Audit Committee, Dr. Manohar Lal Singla, who could not attend the meeting due to his personal exigencies. Sir Introduce yourself.

Shri Krishan Kumar Khurana

I Krishan Kumar Khurana, Independent Director and Chairman of

Stakeholders Relationship Committee as well as Nomination and Remuneration Committee is attending this meeting from my office at Nizamuddin East, New Delhi. I am also been attending the meeting on behalf of Dr.

Manohar Lal Singla, Chairman of the Audit Committee, and I welcome to all for this Annual General Meeting on behalf of the Company. Thank you.

Shri Vijay Panwar

Thank you sir. Next is Shri Miyar Ramanath Nayak, Independent Director.

Shri Miyar Ramanath Nayak

I am M R Nayak, attending the meeting from my residence in Bangalore. I welcome all the shareholders for this meeting.

Shri Vijay Panwar

Thank you. Next is Smt. Sannovanda Swathi, Independent Director.

Smt. Sannovanda Machaiah Swathi

Good afternoon to everyone. I am Sannovanda Machaiah

Swathi attending the AGM from my residency from Mysore. A warm welcome to everyone.

Shri Vijay Panwar

In accordance with Article 66 of Articles of Association of the Company, with the consent of the Directors present, Shri Balram Garg will chair the meeting.

In view of the ongoing Covid-19 pandemic, Ministry of Corporate Affairs vide General Circular Number

02/2022 dated May 5, 2022, in continuation to the Circulars issued earlier in this regard, permitted holding of the annual general meeting through video conferencing or other audio visual means up to December 31, 2022, without the physical presence of members at a common venue. Accordingly, in compliance with the provisions of the Companies Act, 2013, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and aforesaid MCA Circulars, the 17th Annual General Meeting of the Company is being held through Video

Conferencing / Other Audio Visual Means and the deemed venue of this AGM is the Registered Office of the company.

In accordance with aforesaid MCA Circulars, facility of joining the AGM through Video Conferencing / Other

Audio Visual Means is made available for 1,000 members on first come first serve basis. However, the participation of members holding 2% or more shares, promoters, institutional investors, directors, key managerial personnel, Chairpersons of Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee and auditors are not restricted on first come first serve basis.

Moderator

Sorry to interrupt you. May I request, all other directors to kindly switch on their cameras, who are

- 1 - not on the dias and joined through different mode. May I request everyone to kindly switch on their cameras.

Thank you. Vijay ji please continue.

Shri Vijay Panwar

Since, this AGM is being held through Video Conferencing / Other Audio Visual Means, hence requirement of appointing proxies is not applicable.

All members who have joined this meeting have been kept by default on mute mode to avoid any disturbances caused by the external noises to ensure smooth conduct of the meeting. Once the question-answer session starts, the Moderator will announce one by one the names of members, who have registered themselves as Speaker.

Speaker member will then be unmuted by the Moderator. It may kindly be noted that the Company reserves the right to restrict the number of speakers and time for each speaker, depending upon the availability of time and to ensure the smooth conduct of the AGM.

For any technical assistance, members can contact KFin Technologies Limited / National Securities Depository

Limited / Central Depository Services (India) Limited at the numbers mentioned in the Notice of the 17th Annual

General Meeting of the Company. Now, I handover the proceedings of the meeting to Shri Balram Garg,

Chairman of the meeting.

Shri Balram Garg

Good afternoon all the board members and dear shareholders. I welcome you all at the 17th

Annual General Meeting of the Company. As the requisite quorum is present, I call the meeting to order.

Statutory and Secretarial Auditors have also joined the meeting. Secretarial Auditor's certificate regarding ESOP and requisite statutory registers are open for inspection during the meeting.

Dear shareholders,

I welcome you all to this 17th annual general meeting of the company. You would have all received and gone through the annual report of the company for the financial year 2021-22. I'm sure that you would have also noticed the theme of our annual report which is ‘Sustenance Through Strong Fundamentals’. This has become especially relevant as the financial year gone by has again remained a difficult for your company. The business which had started recovering after the first wave of Covid-19 pandemic got distributed once again by the second wave. You will all remember that the havoc caused by the second wave which took such a heavy toll of human lives. Obviously, buying of jewellery was the last thing on anybody mind during those days and the business suffered badly.

The Company’s showrooms remained shut for a long period in the first quarter and thereafter also their nominal functioning remain disrupted almost till August end on account of various local disruptions. The company therefore suffered two back to back shocks caused by first and second waves of Covid-19. However, difficult days have passed and the company remains confident of moving on and be on the growth path once again and achieve its past glory soon.

Your company's fundamentals remain intact, in spite of the turbulence of the last two years. These consist of:

 its commitment to purity and quality of jewellery sold;

 its network of around 80 showrooms;

 established brand name;

 designing and manufacturing capabilities;

 well established systems and possess and a strong technical backup;

 all its employees, workers, karigars and other business partners who have remained with it during these difficult time and continue to remain committed to its resurgence.

The jewellery demand has started increasing once again and your company is taking several steps to take an increasing share of the same. Your company is committed to regain its past glory at the earliest and some of the

steps being taken by it are as under

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 Embarking on store expansion once again, you are all aware that your company has not opened any new stores for more than four years but now it has planned for opening at least 50 new stores within next 10 to 12 months. We expect 4 new stores to open during the coming quarter (October to December) only. All of these showrooms will be on franchise model where the company does not have to invest its own capital. The capital and funds required for opening of the new showrooms will be invested by the franchisees. I would like to take a few minutes to explain this model.

You're all aware that consumers are shifting from unorganised to organised sector in all their purchases.

Though this shift is seen to be happening in all segments of consumer purchases, it is very much prominent in jewellery sector, as the share of unorganised sector is very high almost 70%. You are all aware that jewellery is not only a high value purchase, but also a store of value. Therefore, consumers like to purchase jewellery especially heavy jewellery only from a jeweller that they know and trust and it is not only the importance of brand. I'm not sure as to how many of you are aware of the complexities in sourcing of raw materials, designing and manufacturing of jewellery. Jewellery is not a standardised commodity. If a jewellery showrooms contains 10,000 different items, then no two items are common.

Every item is unique and needs to be manufactured individually. I will not go into the details but manufacture of diamond jewellery is even more complex.

Also a showroom is almost like a bank branch. As a bank branch contains currency notes, the inventory of a jewellery store is also equal to cash. Thus running a jewellery store requires very rigorous systems and procedures to prevent any loss. Your company has developed all these capabilities and can easily pass on the same to a new franchisee. Thus your company is being approached by many local jewellers as well as other businesses who want to get into jewellery retail and realise that becoming a franchisee or PC Jeweller is a very smart way of entering this business. Expanding vide the franchisee route is highly beneficial, as it does not involve any additional capital investment by your company but involves higher utilisation of its existing capabilities only. Since your company achieves an increase in both its turnover as well as profitability. It is an excellent way to improve its return on capital employed.

 Your company has developed strong designing and manufacturing capabilities and is regularly creating new collections and new designs. During the last financial year only it has launched eight collections namely Anant, The Fluttering Beauty, Men's Collection, Animal Collection, Wedding Collection,

Watch Accessories, Diamond Mangalsutra and Rakhi Collection. Here I would especially like to speak about the manufacture of a totally new category of diamond jewellery which is silver base instead of gold based. This is a very affordable range of jewellery which is aimed at consumers who currently purchase artificial jewellery. We have already done a soft launch of the same and it has been very well accepted.

 Jewellery is of many types. Wedding jewellery is heavy and relatively more expensive. It still constitutes the single most important segment of jewellery market. However, jewellery has now become also a lifestyle item and the customers are asking for different types of jewellery for different occasions like party or get together, office wear, festivals etc. Your company is changing the inventory composition of all its showrooms so that range of variety available there can cater to all the age groups, price points and occasions.

 Your company is revamping and beautifying all its showrooms. It has changed the branding and logo to present a new refreshing look to its customers.

 Increasing advertising and also participating in various wedding exhibitions.

In the end, I would like to express my thanks towards our shareholders as well as our employees and my Board colleagues for their commitment towards the company through its testing time. I'm also thankful to all our customers, business partners, as well as bankers for their continuous support.

Now, I request the Company Secretary to kindly continue with the proceedings of the meeting. Thank you.

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Shri Vijay Panwar

In compliance with the requirements of the Companies Act, 2013, Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the company had provided to its members the facility to exercise their right to vote by electronic means in respect of the business to be transacted at this AGM. The company has engaged the services of KFin Technologies Limited, as the agency, for participation of members in the 17th AGM through video conferencing / other audio visual means, facility for remote e-voting and e-voting at the AGM.

Remote e-voting commenced at 9 a.m. (IST) on September 27, 2022 and ended at 5 p.m. (IST) on September

29, 2022. The company has also provided e-voting facility at this AGM and members, who have not already casted their votes by remote e-voting and joined this meeting, may cast their votes through e-voting by clicking on the Instapoll icon and following the instructions to vote on the resolutions. The voting rights of members are in proportion to their share in the paid-up equity share capital of the company as on the cut-off date, i.e.

September 23, 2022.

Shri Randhir Singh Sharma, Practising Company Secretary, has been appointed as the Scrutinizer to scrutinise remote e-voting and e-voting at this AGM in a fair and transparent manner. Dispatch of Annual Report 2021-

22 comprising of 17th Annual General Meeting Notice, Directors Report, Statutory Auditor's Reports and

Financial Statements, etc. to members of the company was completed through email on September 6, 2022.

Since the Notice of the 17th AGM is already circulated to members, hence, the Notice convening the meeting is taken as read. Statutory as well as Secretarial Auditor's Reports are also taken as read except for the qualifications, reservations, adverse remarks or disclaimer or observations in their reports and the Board's explanations or comments on them.

Now, I am reading out the qualification, reservation or adverse remark or disclaimer in statutory auditor's report, as well as the board's explanation or comments on them.

I) Para 3 of independent auditors’ report on page number 53 of annual report 2021-22 regarding providing discounts of Rs. 513.65 crore to export customers during the financial year ended March 31 2019, which had been adjusted against the revenues for the said year:

The board's explanation or comments on the same as provided in the director’s report is that the company had filed repudiate applications will AD category-1 banks for seeking approval of the aforesaid discount as per master circular on exports of goods and services (Master Circular Number

14/2014-15) issued by Reserve Bank of India. Subsequently, the company has obtained approvals from authorised dealer banks for reduction in receivables corresponding to discounts amounting to Rs. 323.07 crore and approval for the balance amount is under process. The discount extended was in accordance with the aforesaid master circular and the management does not expect any material penalty to be levied, and therefore no provision for the same has been recognised in the financials.

II) Para II (B) of Annexure-A to independent auditors’ report on page number 58 of annual report 2021-

22 regarding variances in quarterly returns or statements filed by the company with the banks with the

books of accounts

The board's explanation or comment on the same as provided in the director’s report is that the variance in the value of inventory for the quarter ended June 2021 was on account of a clerical error. For the remaining quarters the variances are less than 0.15% and have arisen only due to minor corrections during finalisation of the financial results. Similarly, the variances in the values of sundry receivables is less than 1% for the first three quarters. The variance for the last quarter is on account of foreign exchange restatement and ECL provisions at the end of the financial year.

III) Para III (C), (D) and (E) of Annexure-A to independent auditors’ report on page number 58-59 of annual report 2021-22 regarding loans / advances granted by the company:

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The board's explanation or comment on the same as provided in the director’s report is that the company has granted loans for business purposes to its two subsidiaries as they do not enjoy any credit facility from any bank or financial institution. There is no increase in the quantum of these loans during the year. The staff advances have been extended to permanent employees of the company in the normal course for their personnel requirements.

IV) Para V of Annexure-A to independent auditors’ report on page number 59 of annual report 2021-22 regarding balance in deposit repayment reserve account is short by Rs. 1.39 crore as at March 31, 2022:

The board's explanation or comments on the same as provided in the director’s report is that the company had set aside adequate fixed deposit for the purpose.

V) Para (VII) (A) of Annexure-A to independent auditors’ report on page number 59 of annual report 2021-

22 regarding arrears of undisputed statutory dues outstanding for more than six months at the year end:

The board's explanation or comments on the same as provided in the director's report is that the company will do the needful to make the payment in due course.

VI) Para IX (A) of Annexure-A to independent auditors’ report on page number 59-60 of annual report

2021-22 regarding default in repayment of loans (including interest) to its bankers:

The board’s explanation or comment on the same as provided in the director’s report is that the company's accounts with its lenders turned NPA as on June 30, 2021 on account of decline in the business and subsequent liquidity constraints. The company has since approached its lenders with its resolution proposal under the appropriate RBI guidelines and the same is under their active consideration.

VII) Para XVII of Annexure-A to independent auditors’ report on page number 61 of annual report 2021-22

regarding cash losses incurred

The board’s explanation or comment on the same as provided in the director’s report is that the cash losses are the result of decline in that turnover and business operations during the year.

VIII) Para XIX of Annexure-A to independent auditors’ report on page number 61 of annual report 2021-22 regarding payment of overdue portion of company's borrowing accounts:

The board’s explanation or comment on the same as provided in the director’s report is that the company has already submitted its resolution plan detailing its plans towards settlement of overdues and the plan is under active consideration of the company's lenders.

IX) Para XX (B) of Annexure-A to independent auditors report on page number 61 of annual report 2021-

22 regarding unspent CSR amount pursuant to ongoing project has not been transferred to special

account

The board's explanation or comment on the same as provided in the director’s report is that the company's liquidity position had become very constrained after March 2020 on account of lockdowns and disruptions in business due to spread of Covid 19 pandemic. During FY 2020-21, a cheque for Rs.

6.50 was issued by the company towards CSR expenditure to an implementing agency as approved by

Corporate Social Responsibility Committee and the board, which however, could not get cleared subsequently due to liquidity constraints. Thereafter, the company's accounts with its lenders turned

NPA as on June 30, 2021 and its banking transactions got highly restricted. Therefore, the CSR expenditure for FY 2020-21 and 2021 22 remains unspent. Further the company submitted a request to its lead bank State Bank of India for opening a special current account under the nomenclature of

“Unspent Corporate Social Responsibility Account” in March 2022, on which no action was taken by the bank. However, the company's resolution process is under active consideration with its lenders and

- 5 - it is confident of meeting the necessary compliances as per the law post implementation of the resolution process.

Now, I am reading out the qualification, observation or other remarks in secretarial auditor's report as well as the board's explanations or comments on them:

I) Regarding the composition of the Board did not have sufficient number of directors liable to retire by rotation as mentioned in secretarial audit report on page number 17 of annual report 2021-22:

The board’s explanation or comment on the same as provided in the director’s report is that the company will do the needful to ensure necessary compliance in due course.

II) Regarding unspent CSR amounts for financial year 2020-21 and 2021-22 pursuant to ongoing project(s) are not transferred to special account as mentioned in Secretarial audit report on page number 17 of annual report 2021-22:

The explanation for the same is the same as provided in the statutory auditor's qualification section.

III) Regarding balance in deposit repayment reserve account is short by Rs. 1.39 crore as March 31, 2022 as mentioned in secretarial audit report on page number 17 of annual report 2021-22:

The board's explanation or comment on the same as provided in the director’s report is the same as been mentioned in the statutory auditor section.

IV) Regarding gap between two consecutive meetings of risk management committee exceeding 180 days as mentioned in Secretarial audit report on page number 17 of annual report 2021-22:

The board's explanation or comment on the same as provided in the director's report is that due to the start of the third wave of COVID-19 in Delhi during second half of December 2021, which disrupted the normal business operations, the second meeting of risk management committee got delayed. The company is now more careful and vigilant and endeavour to ensure that this lapse do not occur again.

Now, we come to the notice items:

Item No. 1: To receive, consider and adopt the audited standalone financial statements of the company for the financial year ended March 31, 2022, the reports of the board of directors and statutory auditors thereon and the audited consolidated financial statements of the company for the financial year ended March 31 2022 and the report on statutory auditors there on.

Item No. 2: To appoint a director in place of Shri Ramesh Kumar Sharma (DIN: 01980542), who retires by rotation and being eligible, offers himself for re-appointment.

Item No. 3: Reappointment of Smt. Sannovanda Machaiah Swathi (DIN: 06952954) as an independent director.

Now, I hand over the proceedings back to the Chairman.

Shri Balram Garg

Members who have not already casted their votes by remote e-voting and joined this meeting may now please cast their votes through e-voting. Members who have registered as speakers are now invited for expressing their view and raise questions, if any, on the notice items.

We would like to request speaker members to kindly limit their speech or queries to two minutes so that opportunity can be provided to maximum number of speakers. Moderator please remind the speaker if he or she exceed permitted time limit. To avoid repetition, response to all the queries will be provided at the end. Now, I request the moderator to announce the name of speaker members one by one.

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Moderator announced the names of speaker members one by one. Shri Dileep Kumar Jain, Shri Pradeep Sood,

Shri Lokesh Gupta, Shri Ashok Kumar Jain, Shri Chetan Chadha, Shri Narender Singh Chauhan, Shri Manjit

Singh, Shri Mahender Pal Bhutani, Shri Gagan Kumar, Shri Rakesh Kumar, Shri Vimal Jain spoke at the meeting. They expressed their views, raised queries / sought clarifications about the Company’s business operations, expansion plan, new launches, impact of covid etc.

Shri Balram Garg & Shri Sanjeev Bhatia: Responded to the queries / clarifications of the speaker members.

Shri Vijay Panwar

Members may note that the voting on KFin Technologies Limited platform will continue to be available for 15 minutes after conclusion of this meeting. Results of voting will be announced within 48 hours from the conclusion of this Annual General Meeting and will be placed on the company's website as well as KFin Technologies Limited's website and shall also be submitted with BSE limited and National Stock

Exchange of India Limited, where the company shares are listed. Now, I once again hand over the proceedings to the chairman for his concluding remarks.

Shri Balram Garg

Thank you all for attending the meeting and I hereby declare the proceeding of the meeting as closed. Thank you very much. And see you all see you next year. Till then stay healthy and stay safe. Thank you. Thank you.

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