The company’s bank accounts turned out to be Non-Performing Assets from the financial year 2015-16, subsequently one of the member bank of consortium approached National company Law tribunal (“NCLT)National company Law Tribunal (“NCLT”), the case was admitted by NCLT in December 2022, at the first place NCLT appointed Mr. Vishal Bidawatjika as an Insolvency Resolution Professional (“IRP”) and subsequently in April , 2023 has appointed Mr. Sourabh Malpani as Insolvency Resolution Professional (IRP). In this annual report the words Director(s) and Board of Directors shall be construed as Suspended Director(s) and Suspended Board Respectively.

Suspended Board and IRP presents the Thirty Third Annual Report together with the Audited Financial Statements for the financial year ended March 31,2023

Financial Highlights

State of Company’s Affairs

Your Directors wish to inform you that during the current financial year ended March 31,2023, the sales and other income of the Company were Rs. 217.71 lakhs in comparison of Rs. 481.11 Lakhs for the Financial Year ended on March 31,2022. During the Financial Year 2022 - 23 the company incurred Net Loss before tax of Rs. 187.69 Lakhs against Net loss before tax of Rs. 170.86 lakhs in the previous year.

Dividend

Due to losses incurred by the company during the year, the directors do not recommend any dividend.

IPO Fund Utilization

The details of IPO proceeds which have been utilized by the Company are as given under. The Company has utilized major portion of IPO proceeds for expansion as and when the correct opportunity and favorable market conditions were available. However, insignificant portion of the proceeds allocated for the expansion is left

unutilized and the remaining amounts of Rs.76.98 lakhs have been attached / adjusted by government authorities against disputed dues.

Directors and Key Managerial Personnel

The Suspended Board comprises of 6 directors comprising of 2 promoter directors, 1 professional director and 3 independent directors including one woman director. Definition of ‘Independent Director’ is derived from Regulation 16(b) of the SEBI LODR and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors under section 149(7) of the Companies Act 2013 and on evaluation of the relationships disclosed, the Non-Executive Independent Directors - Mr. Bhau Dhure. Mr. Tushar Momaiyah and Mrs. Dhara Atul Shah are considered as Independent Directors, who are not liable to retire by rotation.

In compliance with the requirements of Section 203 of the Companies Act, 2013, Mr. Nandlal Goenka, Chairman, Mr. Navneet Goenka, Vice Chairman & Managing Director and CFO and, Ms. Dimple Jaiswal, Company Secretary & Compliance Officer of the Company continued as Key Managerial Personnel. Mr. Sourabh Malpani is at present IRP of the company.

Directors’ Responsibility Statement

Pursuant to Section 134 of the Companies Act, 2013 (‘the Act’), in relation to the Annual Financial Statements for the Financial Year 2022-2023, your Directors, to the best of their knowledge and ability, confirm that:

a) i n the preparation of the annual accounts for the year ended March 31,2023, the applicable Ind As, which is adopted first time in preparation of financial statements for the year ended March 31, 2023 as per the applicable laws and rules and regulations for the time being in force the read with requirements set out under Schedule III to the Act, have been followed along with proper explanation relating to material departures;

b) t he Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2023 and of the loss of the Company for the year ended on that date;

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

d) the directors have prepared the annual accounts on a “going concern” basis. However, the Statutory Auditors have expresses doubts on the ability of the company to continue as a going concern.

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively, except that the credit given to the overseas buyers in the previous year(s). The present outstanding amount of debtor’s receivable is majorly due to the credit sales made in the previous year(s). Likewise, the payments of statutory dues and bank dues need to be regularized, though the same is the result of the liquidity crunch the company is presently facing mainly due to extending credit to buyers. The company has initiated legal proceedings against the debtors in the respective courts.

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Subsidiary Company and Consolidated Financials

In compliance with Section 129 of the Act, a statement containing requisite details including performance and financial position of each of the subsidiary companies is annexed to this report in Form AOC-1.

As per the requirements of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015, and other rules and regulations as may be applicable from time to time, the audited consolidated financial statements of your company is prepared in accordance with applicable Indian Accounting Standards (Ind AS) are enclosed herewith

Board Evaluation

Evaluation of performance of Independent Directors is not applicable as the Board is suspended.

Remuneration Policy

The current policy is an appropriate mix of executive and independent directors to maintain the independence of the Board. The Nomination & Remuneration Committee framed a policy for selection and appointment of Directors including determining qualifications and independence of a Director, Key Managerial Personnel, Senior Management Personnel and their remuneration as part of its charter and other matters provided under Section 178(3) of the Companies Act, 2013. No remuneration has been paid to the Directors after appointment of first IRP by the NCLT as board stands suspended.

The salient features of the Remuneration Policy are stated in the Corporate Governance Report. Deposits and Unclaimed Dividend

During the year under review, your company has not accepted any public deposit under Chapter V of the Companies Act, 2013.

During the year under review, pursuant to section 124 of the Companies Act, 2013 and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules 2016 (the “Rules”) framed there under,

Number of Meetings of the Board

The Board met Six times in financial year 2022-2023, on May 26, 2022, August 08, 2022, November 11, 2022, February 04, 2023, February 14, 2023 and February 18, 2023. The maximum interval between any two meetings did not exceed 120 days.

Details of Committees of the Board

The Company has following Committees of the Board:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Relationship Committee

1. Audit Committee

The Present Audit Committee comprises namely Mr. Bhau Dhure, Mr. Navneet Goenka, Mrs. Dhara Shah and Mr. Tushar Momaiyah.

Mr. Bhau Dhure - Chairman

Mr. Navneet Goenka - Member. Mrs. Dhara Shah - Member.

Mr. Tushar Momaiyah - Member

All the recommendations made by the committee were accepted by the Board

2. Nomination and Remuneration Committee

The Present Nomination and Remuneration Committee comprises namely Mrs. Dhara Shah, Mr. Bhau Dhure and Mr. Tushar Momaiyah.

Mr. Tushar Momaiyah - Chairman

Mrs. Dhara Shah - Member

Mr. Bhau Dhure - Member

All the recommendations made by the committee were accepted by the Board.

3. Stakeholders Relationship Committee

The Present Stakeholders Relationship Committee comprises namely Mr. Bhau Dhure, Mr. Navneet Goenka and Mrs. Dhara Shah.

Mr. Bhau Dhure - Chairman

Mr. Tushar Momaiyah - Member

Mrs. Dhara Shah - Member

All the recommendations made by the committee were accepted by the Board.

The details of the meetings held and attendance of the members of the above committees of the Board are provided in the Corporate Governance report.

Statutory Auditors

M/s. Ummed Jain & Co., (Firm Regn. No. 119250W) Chartered Accountant, Mumbai Statutory Auditors of the Company, was re-appointed as statutory auditor of the company, to hold office from the conclusion of Annual General Meeting held for the Financial Year ended march 31,2022 to the conclusion of the Annual General Meeting for the Financial Year ended march 31,2027.

Auditors’ Report

In respect of the observations made by Auditors in their report, your Directors wish to state that the replies in that respect have been given in the Directors Report in a separate section.

Secretarial Auditor

The Board has appointed Mr. Vishal N. Manseta, Practicing Company Secretary, to conduct Secretarial Audit for the financial year 2022-2023. The Secretarial Audit Report for the financial year ended March 31,2023 is annexed to this Report.

Secretarial Audit Report

In respect of the observations made by Secretarial Auditor in his report, your Directors wish to state that the replies in that respect have been given in the Directors Report in a separate section.

Contracts and Arrangements with Related Parties

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm’s length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material. Accordingly, the particulars of the transactions as prescribed in Form AOC-2 of the rules prescribed under Chapter IX relating to Accounts of Companies under Companies Act, 2013 are not required to be disclosed as they are not applicable.

Members are requested to refer Note 35 and 42 to the Standalone financial statements which sets out related party disclosures.

As per Regulation 23 of the SEBI LODR, the Board has adopted a ‘Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions’ which may be accessed on the Company’s website i.e. www.goenkadiamonds.com

Extract of Annual Return

The extract of Annual Return in Form MGT-9 as required under Section 92(3) of the Act read with Companies (Management & Administration) Rules, 2014 is annexed to this report as on March 31,2023.

Sexual Harassment

The Company is committed to provide a safe and conducive work environment to its employees and has detailed procedure for the redressal of complaints pertaining to sexual harassment. Your Directors further state that during the year under review, there were no cases filed pursuant to the sexual harassment at workplace.

Material Changes and Commitments, affecting the financial position of the Company

During the current financial year the hon’ble NCLT has appointed IRP in December 2022, the company is going through IBC Process. The board of directors of the company stands suspended since the order is passed to appoint IRP. The operations of the company are under supervision of the IRP, presently Mr. Sourabh Malpani is the IRP of the company, looking after entire CIRP process as well as monitoring the operations of the company. Entire Board stands suspended as per the applicable provisions.

None of the suspended directors has any power whatsoever in relation to decision making in context of the company. All the decisions are with prior permission of the IRP.

There have been no material changes and commitments, affecting the financial position of the Company which occurred between the end of the financial year to which the financial statements relate and the date of this report. Lead Bank Punjab National Bank, on behalf of all consortium banks, had issued fresh notice u/s 13(2) of the SARFAESI Act (after withdrawing its earlier notice) on October 22, 2018 for an amount of Rs. 216.62 crores owed by company to the consortium banks (excluding dues of one bank) and Asset Reconstruction Company up to March 31, 2018 and subsequently issued possession notices for company's properties and thereafter for sale of secured assets of the company which was stayed by DRT-1, Mumbai vide its order dated December 30, 2019. Further, Punjab & Sind Bank (one of the consortium bank) has issued separate notice u/s 13(2) of the SARFAESI Act on January 07, 2020 for recovery of an amount of Rs. 77.26 Crores (including interest upto December 31, 2019) within 60 days of the receipt of notice, which as per the management is already covered under the above stay order by DRT. Further, Mumbai DRT has also issued summons dated June 3, 2019 on application made by Punjab & Sind Bank (one of the consortium bank) under section 19(4) of The Recovery of Debts due to Banks and Financial Institution Act, 1993 for recovery of an amount of Rs. 56.92 crores owed by company to the bank, against which company has filed appeal. The Corporation Bank (one of the consortium bank) has filed petition with National Company Law Tribunal under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating corporate insolvency resolution process which are still pending for hearing. Further on appilcation by the Corporation Bank, DRT- Mumbai has also issued summons dated September 16, 2020 under The Recovery of Debts due to Banks and Financial Institution Act, 1993 for recovery of Rs.30.41 crs, the proceeding for which is still pending. Four lender banks up to the reporting date have already transferred and assigned its outstanding dues against company to an Asset Reconstruction Company. In previous year State Bank of India has accepted the One Time Settlement (OTS) proposal submitted by the Company and the company during the period has paid full amount as per settlement terms. However, OTS proposal submitted to other banks has been rejected by the banks and they have requested to improve the OTS proposal. However, the directors will intimate the members of the company and the regulators from time to time as per the regulations as may be applicable from time to time.

Details of significant and material orders passed by the regulators/ courts/ tribunals impacting the going concern status and the Company’s operations in future

The Hon’ble NCLT has passed order admitting the company’s case into CIRP process. The first IRP was appointed in December 2022, subsequently IRP was changed in April 2023. At present Mr. Sourabh Malpani is IRP of the Company, as on date of this report there is no material outcome with regards to the insolvency process.

Corporate Social Responsibility

The provisions related to Corporate Social Responsibility as mentioned in the Act are not applicable to the company. Risk Management Policy

The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company’s management systems, organizational structures, processes, standards, code of conduct and behaviors govern how the company conducts the business and manages associated risks. At present the company is going through CIRP.

Internal Financial Controls

The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively, except that the credit given to the overseas buyers in the previous year(s). The present outstanding amount of debtor’s receivable is majorly due to the credit sales made in the previous year(s). Likewise, the payments of statutory dues and bank dues need to be regularized, though the same is the result of the liquidity crunch the company is presently facing mainly due to extending credit to buyers. The company has initiated legal proceedings against the debtors in the respective courts. The board has monitored till November 2022, subsequently board was suspended and company is under control of IRP till date of this report.

Share Capital

The paid up equity share capital of the Company as on March 31, 2023 was Rs. 31,70,00,000/- During the year under review, the Company has not issued shares with differential voting rights and sweat equity shares.

Vigil Mechanism

The Company has established Vigil Mechanism and adopted Whistle blower policy for its directors and employees to report concern about unethical behavior, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy. The mechanism provides adequate safeguards against victimization of persons who use such mechanism. Protected disclosures can be made by a whistle blower through an e-mail or dedicated telephone line or a letter to the senior executives or to the Chairman of the Audit Committee. During year under review, no personnel were denied access to the Audit Committee.

Corporate Governance

As per SEBI LODR, a separate section on corporate governance practice which is followed by your Company, together with a certificate from Mr. Vishal N. Manseta, Practicing Company Secretary is given in this annual report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The prescribed particulars of employees required under section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached and form part of this report.

Green Initiatives

Electronic copies of the Annual Report 2022-23 and Notice of the 33^rd Annual General Meeting are sent to all members whose email addresses are registered with the Company/Depository Participant(s). For members who have not registered their email addresses are requested to register their email ids with their DPs in order to cooperate with the company in implementation of green initiative; and help to protect the environment.

STATUTORY AUDITORS REMARKS AND MANAGEMENTS REPLIES THEREUPON

a) Auditors observation: We do not express an opinion on the accompanying standalone Ind AS financial statements of the Company. Because of the significance of the matter described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on this standalone Ind AS Financial Statements

Management Reply: The management has provided the major audit evidence to excepting the at certain occasions the account confirmation of overseas debtors and creditors and few bank confirmations owing to the frozen bank accounts and bank accounts converted in NPA. The Company has approached consortium bankers and ARC for settlement of loan dues and assumes that Company will have adequate cash flow from export realisation to defray its entire debt obligation and payment to creditors in phased manner The promoters of the Company are also ready to infuse funds in the company and to raise fund from alternate means to meet short term and long term obligations of the Company.

b) Auditors observation : We draw attention to Note No. 38 and 45 of the financial statement regarding commencement of Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Act, 2016 and appointment of Interim Resolution Professional (IRP) to carry function as mentioned under the Code. Consequently, the powers of Board stand suspended and are exercised by the IRP in line with the provisions of the Code. Subsequent to issue of public announcement by IRP, the claims submitted by the financial and operational creditors have been collated by the IRP and no accounting adjustment has been carried out for any excess, short or non-receipt of claims from operational and financial creditors

Management Reply: Management noted the same.

c) Auditors observation: We draw attention to Note No. 17(B)(2) and 17(B)(3) of financial statement regarding default in repayment of loans and interest to banks (including ARC) owing to which the banks have classified the account as NPA and recalled its loans and has initiated various legal actions for recovery of its dues including legal action initiated under SARFESI Act, The Recovery of Debts due to Banks and Financial Institution Act, 1993. The outstanding loans, credit balances and interest due to banks (including ARC) amounting to Rs. 17710.38 lacs and adhoc / repayment of loan amount to an asset reconstruction company (ARC) of Rs. 1405.61 lacs for which no confirmation/statements have been provided to us are subject to reconciliation and subsequent adjustments

Management Reply: Factual description of status of legal cases. Since, the banks are not allowing any operation and no statements/ confirmations are being issued by the banks. However, the Management to the best of its knowledge and belief has recorded all the transactions.The Company has received letters from ARC and Banks for assignment of debts of UCO Bank, Karnataka Bank, AXIS Bank and Central Bank of India in favour of ARC. The company has made payment of Rs. 1405.61 to ARC to adjust loans of above four banks debts assigned to ARC

d) Auditors observation : Refer Note No. 9(a) and (b) of financial statement regarding non-provision of the expected credit loss/ impairment relating to overdue Trade Receivables of Rs. 69775.76 Lacs as per the requirement of Ind- AS 109 “Financial Instruments". In view of defaults in payment obligations by the Trade Receivables on due date, non-recoveries from Trade Receivables, non-receipt of confirmations/ reconciliation from Trade receivables, initiation of legal action/ suits against Trade Receivables by the company, notices/ summon to the Company from Enforcement Directorate, Reserve Bank of India, Development Commissioner of Surat SEZ and in absence of clear forward looking information regarding outcome of pending legal actions initiated and time frame and quantum of realisability of these Trade receivables, we are unable to determine the amount of expected credit loss/ impairment based on provision matrix as per the requirements of Ind-AS 109 “Financial Instruments" and its consequential impact, on the financial results.

Management Reply: It was deemed prudent not to take cognizance of unrealised exchange difference on notional basis due to uncertainties with regard to expected time frame for realisation of Trade Receivables and loans & advances to subsidiaries. Consequently, the payment to creditors is also dependent on recovery

from these Trade receivables and loans & advances to subsidiaries. The company shall account for the actual exchange difference at the time of realization of these trade receivables, Loans and advances and at the time of payment to trade payables.

e) Auditors observation :Trade payables and other payables amounting to Rs. 29717.66 lacs are outstanding since long for which neither any confirmation have been provided nor are we aware of any legal action initiated by the vendors against the Company. In absence of current status and relevant details, we are unable to comment on the payment obligation in this regard and its consequential impact on the financial statements.

Management Reply: The company has filed legal suits in Mumbai High Court against majority of debtors and is in process of filing legal suits against other major debtors for recovery of dues. Due to delay in realization of debtors, there is a delay in payment to creditors. However, the Management to the best of its knowledge and belief has recorded all the transactions.

f) Auditors observation: ReferNote No. 17(B)(2) regarding default in repayment of loans taken from the banks and non-provision of interest on such loans and consequently based on the calculation done by the management total interest amounting to Rs. 20979.19 Lacs determined at estimated rates, have not been provided for in the books of accounts including interest amounting to Rs. 2730.80 Lacs for year ended on March 31, 2023. Accordingly, finance cost for the year ended on March 31, 2023 is understated by Rs. 2730.80 lacs

Management Reply: The Management is taking all possible steps to revive the business operations and has approached consortium bankers for one-time settlement (OTS) of entire loan dues and assumes that Company will have adequate cash flow from export realization to defray its entire debt obligation in phased manner. Further, four lender banks have transferred and assigned its outstanding dues against company to an Asset Reconstruction Company and State Bank of India accepted the One Time Settlement (OTS) proposal submitted by the Company and Company has paid full OTS amounts to State Bank of India. However, OTS proposals submitted by the company to other banks are still under consideration. The Board have decided not to provide Interest on working capital borrowings availed by the Company. However, the Management to the best of its knowledge and belief has recorded all the transactions.

g) Auditors observation: Refer Note No. 9(b), 18(b) and 5(a) of the financial statement wherein, the company has not translated following monetary items denominated in foreign currency as at year ended closing rate and has been carried forward at the rate as at 31st March 2015, 31st March 2016, and / or 31st March 2017, which is not in accordance with Ind-AS -21 ‘The Effect of changes in Foreign Exchange Rates" and accounting policy followed by the Company

1) Trade receivable amounting to Rs. 69,703.18 lacs

2) Trade payables and other payable amounting to Rs. 29717.66 lacs

3) Loans to subsidiary (including accrued interest) amounting to Rs. 2062.30 lacs

The company has not provided for cumulative exchange gain (net) on the above items amounting to Rs. 12793.91 lacs including exchange gain of Rs. 4361.32 lacs pertaining to the year ended on March 31, 2023 respectively. Accordingly, exchange gain is understated by Rs. 4361.32 for the year ended March 31, 2023

Management Reply: There have been defaults on payment obligations by the trade receivables on due date and recoveries from these trade receivables are not significant, due to certain unfavourable developments in earlier years and economic slowdown especially in diamond sector. No confirmation have been received by these trade receivables. The Company is taking all possible efforts to recover old trade receivables and had initiated legal action wherever considered necessary. However, looking at the past record regarding recovery from Trade receivables, the management is of the opinion that looking to the uncertainty regarding time frame and quantum of realisation from these trade receivables, amount of expected credit loss required to be recognised cannot be estimated and therefore no provision for expected credit loss is required to be made against these trade receivables. Contrary to Ind AS 21, trade receivables denominated in foreign currency amounting to Rs. 69,703.18 lakhs have not been restated based on exchange rate as at the end of the year.

These trade receivables have been carried forward based on exchange rate as at the end of March 31,2015 and/ or March 31,2016, as it is deemed prudent not to take cognizance of unrealised exchange difference on notional basis due to uncertainties with regard to expected time frame for realisation of trade receivables. The company shall account for the actual exchange difference at the time of realization of these trade receivables.

h) Auditors observation : The Company has made provision for expected credited loss of Rs. 812.35 Lacs against the interest receivable on loan from a subsidiary and has recognized loss of Rs. 49.00 lacs on current investment designated through FVTPL. No deferred tax assets thereon amounting to Rs. 216.79 lacs have been recognized which is not in accordance with Ind AS-12 “Income Taxes. Had the exchange difference as stated in para (f) above and deferred tax thereon and interest on loans as stated in para (e) above been provided, the loss before tax for the year would have been decreased by Rs. 1630.52 Lacs respectively. Consequently, the overstatement and understatement of assets and liabilities are as under:-

1. Trade Receivables Rs. 19707.68 lacs (Understatement)

2. Trade Payables Rs. 7407.54 lacs (Understatement)

3. Non-Current financial assets Rs. 336.77 lacs (Understatement)

4. Current Financial Assets Rs. 158.46 lacs (Understatement)

5. Borrowings 20979.19 lacs (Understatement)

7. Current financial liabilities Rs. 1.46 lacs (Understatement)

8. Deferred Tax Liability Rs. 197.66 lacs (Understatement)

9. Other Equity Rs. 8382.93 (Overstatement)

Due to uncertainties with respect to settlement of bank dues and interest, adjustments of trade receivables and payables and its consequential impact on taxation thereof, we are unable to ascertain the tax impact and liability, on the financial results.

Management Reply: The Management is taking all possible steps to revive the business operations and has approached consortium bankers for one-time settlement (OTS) of entire loan dues and assumes that Company will have adequate cash flow from export realization to defray its entire debt obligation in phased manner. Further, four lender banks have transferred and assigned its outstanding dues against company to an Asset Reconstruction Company and State Bank of India accepted the One Time Settlement (OTS) proposal submitted by the Company and Company has paid full OTS amounts to State Bank of India. However, OTS proposals submitted by the company to other banks are still under consideration. The Board have decided not to provide Interest on working capital borrowings availed by the Company. However, the Management to the best of its knowledge and belief has recorded all the transactions.

i) Auditors observation : Refer Note No. 5(b) and 41 (c) of the financial statement, no provision for the expected credit loss/ impairment on loan to a subsidiary amounting to Rs. 1249.95 Lacs has been recognized as per the requirement of Ind- AS 109 “Financial Instruments". The net worth of above subsidiary is negative and based on reasonable and supportable information regarding the current financial status and business condition of the subsidiary, there has been significant increase in credit risk and there could be delay/default in recovery of this amount. Considering the above, we are unable to comment on the amount of expected credit loss/ impairment and its consequential impact, on the financial

Management Reply: With regard to loan due from subsidiary of Rs. 1249.95 lacs, the same is in the nature of long-term loan for set up of business of the subsidiary and is part of net investment in the subsidiary. The operation of the subsidiary shall soon be revived and these loans will be recovered in near future

j) Auditors observation : The Inventory has been taken on the basis of physical verification carried out by the management (including inventory lying with franchisees on approval basis) as at the year end and its valuation is based on determination of estimated net realizable value and specific identification which involves technical

judgment of management. In the absence of any valuation by an independent expert, we have relied upon by the physical verification and valuation of the Inventory as certified and determined by the management

Management Reply: Management has physically verified the inventory as at year end and has properly valued the inventory based on determination of estimated net realizable value and specific identification.

k) Auditors observation : Balances with Banks amounting to Rs. 1.55 lacs (debit balances), Other non-current deposits amounting to Rs. 13.23 lacs, other current assets (balance with government authorities) amounting to Rs. 32.48 lacs, Other Current Assets and Liabilities are subject to confirmations and consequential adjustment thereof.

Management Reply: The management is of the opinion that all the transactions have been recorded on the books properly. Efforts are being made regularly for obtaining confirmations statements .

l) Auditors observation : The company has made provision for Impairment of Residential flat/office building at Jaipur having gross block of Rs. 19.72 lacs (WDV of Rs. 5.34 lacs), for which the company neither has possession of such assets nor have any title deeds.

Management Reply: In absence of title deeds of buildings (including building as mentioned above) having total Gross value of Rs. 19.72 lakhs and WDV of Rs. 5.34 lakhs as on March 31,2023 have been impaired and the impairment loss of Rs. 5.34 lakhs is included in depreciation charged during the year.

m) Auditors observation : The Company’s operating results have been materially affected due to various factors including non-realization of unconfirmed Trade receivables, defaults in repayment of loans and interest to banks, non-availability of finance due to recall of loans by banks in consortium, legal actions/ insolvency proceedings initiated by banks against company for recovery of its dues, notices/ summon to company/ director(s) from Enforcement Directorate, Reserve Bank of India, Development Commissioner of Surat SEZ and from other regulatory authorities, commencement of CIRP proceedings as stated in Note No. 1, Debt Recovery Tribunals and other courts for recovery of banks dues and possession/attachment/sale of company’s properties, assignment and transfer of dues in favor of an asset reconstruction company (ARC), pending income tax demands and consequent attachment of bank accounts by Income tax department, reliance on occasional sales for meeting out expenses, overall substantial decrease in volume of business and sales, non-payment of statutory dues and taxes, overdue unconfirmed trade payable, non-realization of loan and interest thereon from a subsidiary etc. We are also unable to determine the impact of actions and forthcoming actions that may be taken by various legal and statutory authorities due to various factors mentioned herein above. These events cause significant doubts on the ability of the company to continue as a going concern. The appropriateness of the going concern assumption is dependent on the company’s ability to raise adequate finance from alternative means, settlement of its due from banks and ARC, outcome of CIRP process and recoveries from overseas Trade Receivables to meet its short term and long term obligations as well as to establish consistent business operation. The above situation indicates that material uncertainty exist that cast significant doubt on company’s ability to continue as a going concern.

Because of the significance of the matters described above in the “Basis of Disclaimer of Opinion" section of our report, absence of sufficient appropriate audit evidences and Material uncertainty related to Going Concern paragraph above, it is not possible to form an opinion on the financial statements due to the potential interaction of the multiple uncertainties and their possible cumulative effect on the financial statements. Accordingly, we do not express an opinion on the financial

Management Reply: The management is of the view that due to certain unfavourable developments and slugglish market in earlier periods, the recovery from trade receivables are slow and there is a mismatch in the cash flow resulting in default in payment to creditors, payment of statutory dues and repayment of dues to banks owing to which banks have classified the account as NPA and recalled their loans. The management is hopeful that these trade receivables shall be recovered as the company has initiated legal action by way of sending legal notices and filing court cases. The company has filed legal suits in Mumbai High Court against majority of debtors and is in process of filing legal suits against other major debtors. Further, the management

is taking all possible steps to revive the business operations and has approached consortium bankers for one-time settlement of entire loan dues and assumes that Company will have adequate cash flow from export realisation to defray its entire debt obligation and payment to creditors in phased manner. At the same time, management is hopeful that it will be able to raise adequate finance from internal accruals and alternate means to meet its short term and long-term obligations. Hence, the accounts of the Company are prepared on going concern basis.

n) Regarding auditors’ observations at point no. (a) to (d), point no. as reported by them under section 143(3), management replies may be found in the above paragraphs.

o) Regarding observation made by Auditors at point No. vii (a) and (b) of the Annexure “A" to Auditors Report:

Management reply: The company is committed to pay all its outstanding undisputed statutory dues. Regarding the disputed outstanding taxes, the appeal is pending before ITAT Mumbai and regarding PVAT, Company is confident that it will be able to get favorable orders from the concerned appellate authorities.

p) Regarding observation made by the Auditors in the point no (a) of Annexure “B" to Auditors Report, whereby they have pointed out internal control weakness relating to ascertainment of customers’ credit worthiness etc., which has resulted in huge old outstanding dues from customers

Management Reply: Though the company has taken all due care at the time of sale of goods to customers, it strongly feels that the internal financial control system in this regard needs to be improvised. The management is of the view that due to certain unfavourable developments and slugglish market in earlier periods, the recovery from trade receivables is slow. The management is hopeful that these trade receivables shall be recovered as the company has initiated legal action by way of sending legal notices and filing court cases.

q) Regarding observation made by the Auditors in the point no (b) Annexure “B" to Auditors Report, whereby they have pointed out irregularities in payment of statutory dues / taxes and interest and loan repayment to banks

Management Reply: Due to slow recovery from trade receivables, there is a temporary deficit in the cash flow resulting in default in payment of statutory dues / taxes; and repayment of dues to banks. The Company is taking all possible efforts to recover old trade receivables and revive its business operations. Nonetheless, the management is committed to pay all statutory dues/ taxes. Regarding repayment of dues to banks, the company has approached bankers with proposal of One Time Settlement.

SECRETARIAL AUDITORS REMARKS AND MANAGEMENTS REPLIES THEREUPON

1) Auditors Observation on legal action taken by the banks

Management Reply: the management has taken requisite steps with regards to legal action initiated by the banks

2) Auditors Observation on assignment and transfer of dues of three bank in favor of an asset reconstruction company (ARC)

Management Reply : The banks have classified the account as NPA and recalled their loans. And as consequence two banks dues were assigned and transfer to an asset reconstruction company (ARC)

3) Auditors Observation made on delay in payment of statutory dues:

Management Reply: The management is of the view that due to certain unfavourable developments and slugglish market in earlier periods, the recovery from trade receivables are slow and there is a mismatch in the cash flow resulting in default in payment of statutory dues.

4) Auditors Observation made on long outstanding Trade Receivables and non realization of overseas debtors for more than 180 days:

Management Reply: The Company has already filed legal suits against the major overseas buyers in respective courts. Legal suits against other overseas buyers are in the process of being filed for the recovery of Export Outstanding.

5) Auditors observation relating to default in repayment of principal and interest to bankers, declaration of company’s account as NPA; and recall of loans:

Management Reply: Due to slow recovery from trade receivables, there is a temporary deficit in the cash flow resulting in default in repayment of dues to banks owing to which the bankers have classified the account as NPA and recalled their loans. The Company is taking all possible efforts to recover old trade receivables and has also initiated legal action where ever considered necessary. The Company is taking steps to revive its business operations and has approached consortium bankers with proposal of One Time Settlement (OTS) and also management is in discussion with ARC.

6) Auditors observation regarding legal actions/ insolvency proceedings initiated by banks against company for recovery of its dues, notices/ summon from Enforcement Directorate, Reserve Bank of India, Development Commissioner of Surat SEZ and from other regulatory authorities, pending proceeding with National Company Law Tribunal, Debt Recovery Tribunals and other courts for recovery of banks dues

Management Reply: Due to default in repayment of dues to banks owing to which the bankers have classified the account as NPA and recalled their loans. the matter is pending with the legal authorities and with regards to NCLT matter is pending before NCLT, Jaipur and regarding notice from development commissioner of Surat SEZ, matter is pending for hearing.

7) Auditors observation regarding order passed by the hon’ble NCLT commencing CIRP and appointment of IRP

Management Reply : the management has made consistent efforts to get accounts settled under onetime settlement process to which couple of banks disagreed and the matter was admitted by Hon’ble NCLT.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo Conservation of Energy:

The Company is engaged in manufacturing of gems and jewellery and as such its operations do not account for substantial energy consumption. However, the Company is taking all possible measures to conserve energy, in its endeavor towards conservation of energy. Your Company ensure optimal use of energy, avoid wastages and conserve energy as far as possible. Several environment friendly measures were adopted by the Company such as minimising air-conditioning usage, Shutting off all the lights when not in use.

Sustainability Report

The company is involved in cutting and polishing of diamonds, color stones, precious and semi-precious stones. This is related to fashion and astronomic industry and does not involve generation of any kind of pollution and hence the environment sustainability is not applicable to the company.

Technology Absorption, Adoption and Innovation

The Company continuously monitors and keep track of technological upgradation in the field of Jewellery manufacturing and the same are reviewed and considered for implementation. Your Company continued its focus on quality up-gradation and product enhancements. The company uses indigenous technology for its operations.

Research and Development

The nature of the business of the company is categorically end user business of large size diamonds and high end jewellery wherein research and development expense are more in the nature of designing rather than development of new technology.

Foreign Exchange Earnings and Outgo

The information regarding foreign exchange earnings and outgo is contained in note no. 31 (v) of notes on Financial Statements.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of sweat equity shares to employees of the company under any scheme.

2. Issue of shares under Employee Stock Option Scheme.

3. Re-appointment of an independent director for second term of five years.

4. Neither the Managing Director nor the Whole-time Directors of the Company received any remuneration or commission from any of its subsidiaries.

5. There were no companies which have become or ceased to be Subsidiaries, Joint Ventures or associate companies during the year.

6. There was no change in nature of business.

7. There were no loans, guarantees or investments given / made by the Company under Section 186 of the Act. Acknowledgement

Your Directors place on record their gratitude to Central Government, State Governments, Financial Institutions and Company’s Bankers for assistance, co-operation and encouragement they extended to the Company. The Directors are also grateful to the valued customers, esteemed shareholders, dedicated employees and public at large for their patronage and confidence reposed in the company.