e THE POWER OF DESIRE PC JEWELLER LIMITED | ANNUAL REPORT 2014-15 Caution regarding forward-looking statements This document contains statements about expected future events and financial and operating results of PC Jeweller Limited, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the management’s discussion and analysis of the PC Jeweller Limited Annual Report 2014-15. CONTENTS Corporate overview Corporate identity : 05 Key Operational Metrics : 06 Message from the Managing Director : 08 Our Business Model : 14 Strengths : 17 Corporate Information : 22 Statutory Reports Directors’ Report : 24 Report on Corporate Governance : 48 Management Discussion and Analysis : 62 Standalone Financial Statements Auditors Report : 68 Balance Sheet : 72 Statement of Profit and Loss : 73 Cash Flow Statement : 74 Notes forming part of the Financial Statements : 75 Consolidated Financial Statements Auditors Report : 96 Consolidated Balance Sheet : 100 Consolidated Statement of Profit and Loss : 101 Consolidated Cash Flow Statement : 102 Notes forming part of the Financial Statements : 103 Statement containing salient features of the financial statement of Subsidiaries : 122 GREEN INITIATIVE IN CORPORATE GOVERNANCE The Ministry of Corporate Affairs has taken a ‘Green Initiative in Corporate Governance’ by issuing circulars (vide circular nos. 17/2011 and 18/2011 dated 21st April, 2011 and 29th April, 2011 respectively), and allowing paperless compliances by Companies through electronic mode. Recent amendment to the Listing Agreement with the Stock Exchanges permits companies to send soft copies of the Annual Report to all those shareholders who have registered their e-mail ID’s for the said purpose. Therefore, the Company is sending the Annual report through e-mail to those Members who have registered e-mail ID’s. To further support this initiative Members, whose e-mail ID’s have not been registered so far, are requested to register their e-mail ID’s with their respective Depository Participants, in respect of holdings in demat form and with the Company’s RTA, Karvy Computershare Private Limited, in respect of shares held in physical form. India is the world’s second most populous nation. In this tradition-bound nation, marriage is the highest social institution. Besides, in India, one of the oldest human civilisations, gold has held a fascination for ages. At PC Jeweller, we have created a unique business model addressing the upsides of these multi-century realities. The result is that despite a challenging 2014-15 for the Indian economy, consumer sentiment and gold jewellery buyers, PC Jeweller reported a 19.22% growth in revenues to H634851.64 lac. WE OUTPERFORMED OUR SECTOR BECAUSE WE DID ONE THING COMPETENTLY OVER TIME. WE MONETISED DESIRE. ENDURING FASCINATION. The basic fascination for gold sustains in India because of Gold is considered as a safe haven during emergencies, its wide acceptance as a storehouse of value. which can either be liquidated or pledged to raise a loan. In India, it is widely considered auspicious to India is the world’s largest gold consuming market with buy gold during occasions, the biggest being Akshaya household gold estimated at a massive 20,000 tonnes Tritya. worth a staggering USD 1 trillion (at current prices). MORE MARRIAGES. The average Indian spends one-fifth of the wealth In India, about 50% of gold demand can be attributed accumulated over his/her lifetime on his/her child’s to weddings, which means a massive 400 tonnes of gold wedding, second only to the investment made in a is exchanged at weddings in India each year, making family home. it the single largest component of the Indian wedding market worth around $25 billion a year, or about 60% The Indian wedding market is estimated at US$38 of the total wedding market. billion and at the current growth rate of 25-30% annually, the Indian bridal industry could emerge as The bride’s jewellery at an average high-end wedding the largest wedding market anywhere in the world in India will have pieces which are $10,000-40,000 within two years, surpassing the American wedding each, with an overall budget of about $200,000 spent market, estimated at around US$50 billion annually. on jewellery alone. MORE WEALTH. A record 90 Indians, with a combined net worth indicating the growing presence of new money. of a mind boggling $295 billion, feature in Forbes India is home to the fourth largest billionaire Billionaires List 2015. population in the world with five Indians among the In this list, 28 make their appearance for the first time, 100 richest in the world. 2 PC Jeweller Limited MORE OPPORTUNITIES. Despite India being the second most populous nation years compared with 37 for China, making the youth of the world, India’s per capita gold consumption is a population in the 20-35 year age group the highest miniscule 0.7 gm, half of that of the US and one-third in the world at about 400-450 million, at least 100 of the Middle East. million more than the entire population of a continent – Australia. The Indian gems and jewellery market is moving from the unorganised sector to the organised branded With the H7,000-cr Smart City and H21,000 cr NOFN players, widening the opportunity for branded players. networks proposed, India’s broadband speeds and penetration are expected to rise sharply, creating India’s penchant for gold is culturally linked to its a larger digitally engaged consumer base, which is population whose growth rate, at 1.6%, is the highest expected to reach 550 million by 2018. anywhere in the world and is widely expected to surpass China’s population by 2050. In turn, this reality is expected to catalyse the offtake of jewellery beyond its conventional sales channel- By 2022, India’s average age is expected to be 29 towards online offtake. “The Indian gems and jewellery industry developed as an unorganised sector, but the past decade has witnessed the emergence of organised players, with the Government liberalising gold imports into the country. The industry is, however, still fragmented, with local and independent stores constituting roughly 80% of the overall market, in comparison to a much higher proportion of share from organised players (about 50%) in similar markets such as Turkey. However, this skew is increasingly correcting and a large market share is progressively moving to the organised sector in the country. (Source: - AT Kearney–FICCI ‘All that glitters is gold’ report.) MORE GROWTH AT PC JEWELLER. PC Jeweller is among India’s largest organsied sector significant area of 3,13,296 sq ft with presence in 17 jewellers focused on the wedding jewellery market. states of the country. The Company stocks a substantial quantum of gold The Company launches new designs at regular and diamond jewellery, ensuring wider availability and intervals, retaining brand freshness and sustaining catering to a larger budget range. marketplace excitement. The Company has steadily raised its showroom count PC Jeweller is amongst the fastest growing companies from 12 to 50 over the past five years, covering a in India’s jewellery retailing sector. PC JEWELLER: LEVERAGING THE POWER OF DESIRE. Sources: Conde-Nast, World Gold Council, Forbes, Population Foundation of India, Ministry of Commerce and Industry Annual Report 2014-2015 3 PC JEWELLER IS ONE OF THE FASTEST GROWING ORGANISED INDIAN JEWELLERY ENTERPRISES. THE COMPANY REPORTED A REVENUE AND NET PROFIT COMPOUNDED ANNUAL GROWTH RATE OF 27.7% AND 17.8% RESPECTIVELY, OVER THE PAST THREE YEARS. 4 PC Jeweller Limited Who we are The Company has four manufacturing units The brand PC Jeweller took birth on April 13, with a covered area of more than 80,000 sq 2005, when our Company got incorporated ft. The Company produces nearly 65% of in New Delhi under the Companies Act, its jewellery in-house. The balance is out 1956, as amended (“Companies Act”) as a sourced to skilled artisans all over the country private limited company under the name ‘P for getting region specific jewellery. This dual Chand Jewellers Private Limited’ with the sourcing not only enables the Company to Registrar of Companies, National Capital control quality and costs on the one hand but Territory of Delhi and Haryana (“RoC”). also provides flexibility on the other to cater Our Company was converted into a public to demand spikes coinciding with occasions/ limited company, pursuant to a resolution seasons. passed by our shareholders on July 5, 2011, following which our name was changed to Online presence ‘PC Jeweller Limited’, and a fresh certificate In an exciting forward-looking development, of incorporation was issued by the RoC on PC Jeweller launched its online portal, August 2, 2011. The Company got listed on www.wearyourshine.com, that offers BSE Limited and National Stock Exchange customers access to the jewellery portfolio of India Limited in December 2012. PC round-the-clock. It also enables the Company Jeweller is one of India’s leading players in to capture a completely new consumer the Indian gems and jewellery industry. segment comprising the youth and working women, who are net-savvy and look to What we do jewellery as everyday use products. At PC Jeweller, we are engaged in the business of jewellery manufacturing, retail and export.