tara jewels limited ual report - moneycontrol.com · 2013. 8. 13. · 9.41 8.40 23.04 29.84 124 154...

ANN

REPORT2012

13

UALTARA JEWELS LIMITED

ANNPROPOSITION AT TARA IS DRIVEN BY OUR BUSINESS MODEL.

VALUECO

RPO

RATE R

EVIEW

SMART, SCALABLE, SUSTAINABLE AND TRANSPARENT, IT CREATES A BEAUTIFUL SYNERGY BETWEEN CUSTOMER ASPIRATIONS AND OUR DELIVERY CAPABILITIES.

TARA JEWELS LIMITED 22

AS ONE OF INDIA’S LEADING INTEGRATED JEWELLERY PLAYERS, WE CATER TO DOMESTIC RETAIL CUSTOMERS AND INTERNATIONAL CLIENTS WITH FASHION, BRIDAL AND HANDCRAFTED BESPOKE JEWELLERY.

OFFERING A WIDE PORTFOLIO OF PRODUCTS IN DIAMOND AND GOLD (STUDDED WITH PRECIOUS AND SEMI-PRECIOUS STONES) AND MANY MORE AMONG OTHERS

WE APPRECIATE THE DISCERNING CUSTOMER, WHO CAN BE PASSIONATE ABOUT JEWELLERY AND YET EVER WATCHFUL ABOUT THE RIGHT VALUE AT THE RIGHT PRICE.

FOR OVER 17 YEARS, OUR EXPERIENCE AND EXPERTISE ARE FOCUSED ON MARRYING THE TWO.

ANNUAL REPORT 2012-133

CONTENTS

CONVENTIONAL INDUSTRY. CONTEMPORARY IDEAS.

THE BOARD

LEADERSHIP TEAM

STATUTORY REPORTS

FINANCIAL STATEMENTS

CHAIRMAN’S COMMUNIQUÉ

CONSISTENT AND ROBUST PERFORMANCE

SMALL IS BIG

A STAR IS BORN

DIFFERENT STROKES

DARINGLY DIFFERENT

TRANSPARENCY IS OUR MOST IMPORTANT TRADE SECRET

A HAPPY HARMONY OF TECHNOLOGY AND CRAFTSMANSHIP6

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10

18

12

2224

26

In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take investment decisions. This report and other statements - written and oral – that we periodically make contain forward-looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking statements will be realized, although we believe we have been prudent in assumptions. The achievements of results are subject to risks, uncertainties, and even inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated, or projected. Readers should keep this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

50,000+DESIGNS CATERING TO DIVERSE PREFERENCES

CONTEMEXPERIENCE IN JEWELLERY INDUSTRY

ACROSS THE GLOBE8

OFFICES17+YEARS

CONVENTIONAL INDUSTRY

AT TARA, WE HAVE HELPED ENRICH THE TIME-HONOURED BUSINESS OF JEWELLERY, JEWELLERY-MAKING AND RETAIL WITH OUR CONTEMPORARY IDEAS. THESE HAVE STRENGTHENED OUR BUSINESS PHILOSOPHY IN INDIA AND GLOBALLY. In India, we sell through our retail brand ‘Tara Jewellers’. Internationally, we have collaborated with various large retail chains and well-known designers.

1,550+EMPLOYEE STRENGTH CATERING TO INDIAN AND GLOBAL CUSTOMER DEMANDS


PORARYWITH PROMINENT INTERNATIONAL RETAIL CHAINS

PROMOTED INTERNATIONALLY8+

TIE-UPS6

BRANDS

IDEAS

OUR 35+ DESIGNERS AND 1,000+ CRAFTSMEN HELP DRIVE OUR VALUE PROPOSITION.


PRESENCE IN THE VALUE CHAIN

AWARDS

CONVENTIONAL INDUSTRY. CONTEMPORARY IDEAS.

Majority Indian Exporters

Presence of Tara

Twice awarded Global Supplier of the Year by Walmart in 2005 and 2007

Overall Excellence award, second-highest exporter in the category of studded precious metal jewellery exports in EPZ, by The Gem and Jewellery Export Promotion Council in 2007, 2008 and 2009

Conferred with the status of a ‘Star Trading House’ by the Ministry of Commerce & Industry and have been the highest exporter in gems and jewellery sector for 2009 and 2010

Awarded the ‘Print Campaign of the Year’ by the 8th Retail Jeweller India Awards 2012

Bagged as the ‘Store Design of the Year’ by Economic Times Retail Awards 2013

Polished Diamonds

Job Work

Jewellery

Branded Jewellery

High-end Jewellery

Rough Diamonds


ON THE GLOBAL STAGECaters to retailers across the US, the UK, European Union (12 countries in EU including Austria, Germany and Switzerland), Australia, China, South Africa, UAE and Canada

Headquarters in Mumbai, India Sales and distribution offices Production units Design studios

50RETAIL SHOWROOMS ACROSS 37 INDIAN CITIES•37 operational showrooms*•13 showrooms at launch stage** As on 25th July 2013

90+SHOWROOMS BY 2016-17 TO DRIVE PAN-INDIA PRESENCE

20COUNTRIES CATERED TO ACROSS FIVE CONTINENTS

Phase 1 Stores Phase 2 Stores

UttarakhandPunjab

Delhi

Rajasthan Uttar Pradesh

Chhattisgarh

Gujarat

Goa

Maharashtra

MP

Los AngelesUSA

New York USA

GenevaSwitzerland

MumbaiIndia

Pan YuChina

Hong Kong China

Sydney Australia

Dallas USA


INCOME MIX % REGION-WISE EXPORTS %

USA 46.29CHINA 39.71 (including Hong Kong)

UAE 7.34UK + EUROPE 4.11OTHERS 2.55(Australia, Germany, South Africa, Austria and Belgium)EXPORT 81

DOMESTIC 19

CONSISTENT AND

ROBUST

PERFORMANCE


TOTAL REVENUE ` MNCAGR ↑ 19.66%

10-11 11-12 12-13

EBITDA ` MNCAGR ↑ 25.75%

10-11 11-12 12-13

PAT ` MNCAGR ↑ 33.42%

10-11 11-12 12-13

EARNING PER SHARE (BASIC) `

10-11 11-12 12-13

EARNING PER SHARE(DILUTED)

`

10-11 11-12 12-13

BOOK VALUE PER SHARE `

10-11 11-12 12-13

EBITDA MARGIN % ROCE %

10-11 11-12 12-1310-11 11-12 12-13

11,423972

414

539

737

1,317

1,537

13,991

16,355

23.13

8.51

21 2220

9.41

8.40

23.04

29.84

124

154

20135.73

29.94

35.81


2000 20022001 2003100% integration of operations into SAPImplemented SAP

2011 Co-branded Bridal Programme Cherished Hearts with JC Penney, US

Forayed into the Russia market

Nominated for Regional Retail Chain of the Year

Certified as Nominated Agency as per the Indian Foreign Trade Policy (RE 2008)

M Fabrikant becomes a strategic investor in Tara Jewels

Set up 35,000 square feet state-of-the-art manufacturing facility in SEEPZ, Mumbai

2009 Added two more retail showrooms in India Launched labels - Facets of Love and Candy Hearts with H Samuel, part of the Signet Group, UK

Launched Walmart’s co-branded fashion initiative Heart2Heart

Appointed as a member of SEEPZ Authority Cell governed by the Ministry of Commerce

2010 Added 26 retail showrooms in India

Co-branded Sattva collection with H Samuel, part of the Signet Group, UK

A STARBORNIS


2005 20072006 2008

Established 40,000 square feet manufacturing facility in Panyu, China

Tara’s CMD became the only Indian Director of Jewellers Board of Trade, USA

Highest Export Performance Award (Gems & Jewellery Sector, SEEPZ SEZ) by SEEPZ SEZ

Invention of turntable technology to maximise productivity

Origination of key manufacturing technology for invisible-setting

Launched India retail with three showrooms

Won Highest Export Performance Award (Gems & Jewellery Sector, SEEPZ SEZ) by SEEPZ SEZ

2013 Opened seven new retail showrooms Awarded the Best Store Design of the year at the Economic Times Retail Awards

Acquired the go-forward business of M Fabrikant

2012 Listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE)

Swarovski joins as strategic investor through one of its associates, Crystalon Finanz AG

Awarded the Print Campaign of the Year by the 8th Retail Jeweller India Awards 2012

Co-branded Bridal Programme with Monique Lhuillier

Added 30th showroom at GK1, Delhi

BORNTara Jewels Office, SEEPZ, Mumbai


CHAIRMAN’S COMMUNIQUÉ

For nearly two decades, we have been consistently creating differentiated value for diverse customers in the global jewellery space. We have come a long way and reinforced our footprint across Europe, America, Africa and Asia. Across these locations, customer preferences are not the same and aspirations keep changing with time. But one thing is certain: the passion for jewellery never wanes, and the well-informed, globally integrated customer looks for an appropriate price-value proposition. We have been successful in catering to the evolving aspirations of people and our international credibility is stronger than ever before.

The Indian market dynamics is also interesting to study and derive appropriate lessons from. The middle-income segment of India’s population is an emerging force to reckon with. At Tara, we wanted to enhance our pan-India visibility to cater to this emerging segment of the population. We first focused on developing our retail footprint in West, Central and North India and then subsequently to the rest of the country. Today, despite challenges, we are witnessing steady growth in our performance in India.

The financial year 2012-13 deepened global pessimism,

as economies underperformed in Europe. The US economy, however, is showing vital signs of recovery. Economic growth in India and China were hit, but the rates of growth in these economies are still better than the developed parts of the world. At Tara, we believe India’s long-term growth prospects remain unscathed by short-term economic volatilities and the Indian customer’s love for brands that provide tangible value is bound to grow sustainably. Going forward, we have to leverage this social megatrend.

STERLING PERFORMANCEAmid a challenging operating environment, we recorded 18% growth in consolidated sales (excluding bullion) from Rs. 13,169 million in 2011-12 to Rs. 15,604 million in 2012-13. Our EBITDA (excluding bullion) grew by 17% from Rs. 1,312 million in 2011-12 to Rs. 1,535 million in 2012-13 and an EBITDA margin (excluding bullion) of 9.8%. Moreover, our net profit increased by 37% from Rs. 539 million in 2011-12 to Rs. 737 million in 2012-13. We witnessed strong momentum, as both our domestic and international businesses registered solid growth on account of higher volumes and operational efficiency.

DEAR FRIENDS,IT GIVES ME IMMENSE PLEASURE TO PRESENT TO YOU THE FIRST ANNUAL REPORT OF TARA JEWELS AFTER OUR IPO AND SUBSEQUENT LISTING ON THE NSE AND BSE. I AM GRATEFUL FOR YOUR HEART-WARMING RESPONSE TO OUR MAIDEN PUBLIC OFFER. THE MARKET CONFIDENCE IN OUR ABILITY HAS ENHANCED OUR RESPONSIBILITY MANIFOLD. WE INTEND TO CONTINUE SEEKING NEW VISTAS OF OPPORTUNITY TO CREATE EXCEPTIONAL VALUE FOR ALL OUR STAKEHOLDERS.

Rajeev ShethChairman and Managing Director


Our international business saw robust growth in order book due to addition of large stock keeping units (SKUs) and expansion across geographies. Our retail business saw volume growth and showroom expansion. During the year, we reduced short-term debt by Rs. 1,115 million through IPO proceeds and internal accruals. Moreover, we launched two new television commercials that enhanced our visibility.

IPOWe raised Rs. 1,795 million through an initial public offer (IPO). The proceeds are proposed to be used to establish retail showrooms and retire loans. The anchor investment portion and the actual IPO were both oversubscribed. Moreover, Crystalon Finanz AG, an affiliate of Swarovski, came in as a pre-IPO investor and Universities Superannuation Scheme Limited (USSL) as a trustee of Universities Superannuation Scheme (the United Kingdom) and D B International Asia Ltd came as an anchor investor.

REGULATORY CHANGEDuring 2012-13, the government’s import duty hike on gold and platinum severely impacted the jewellery players. But we were not affected by this regulatory change as we procure majority of our gold through state-owned firms, such as MMTC Limited and State Trading Corporation. Moreover, over 80% of our revenue is driven by exports, thus offering a natural hedge.

EVOLVING INDUSTRYThe US is the world’s largest market for jewellery followed by China, India and the Middle East. In Europe, the UK and Italy are the largest consumers. These regions account for around 80% of the total global sales. Now the focus for future growth in jewellery industry depends on emerging markets like India, China, Latin America, the Middle East and Southeast Asia. These regions are expected to emerge as the largest consuming markets for both traditional as well as branded jewellery and overtake the US market in gems and jewellery consumption by the next decade.

In India, organised retailers account for a mere 18% of the total jewellery retail market. With consumer preference for hallmark certification and quality

products, organised jewellery retail is bound to grow. Moreover, new-generation jewellery buyers are showing preference for branded jewellery. To capitalise on this trend, we are investing in brand-building exercises, which will lead to higher growth in the branded jewellery segment for us.

LEVEL-NEXT STRATEGYOur priorities for level-next growth comprise the following:

IndiaWe want to expand our retail presence in the suburbs of metro cities and target other town classes with higher concentration of mid-income segment. We are also looking at joint venture opportunities with designer boutiques to foray into the high-end retail jewellery segment. Besides, we also intend to enter into unexplored geographies and manufacture innovative jewellery products.

InternationalLooking at the growing international demand for innovative jewellery products, we plan to enhance our customer base in the existing geographies by targeting departmental stores, discount chain stores, fine jewellers and TV shopping networks. To expand our retail footprint, we want to pursue selective strategic acquisitions and joint venture opportunities globally.

At Tara, we will continue to invest in our capabilities to capture a larger market share. Our experienced management team will embrace global opportunities and focus on capability enhancement to strengthen our visibility. On behalf of the entire leadership team at Tara, I express my gratitude to our shareholders, customers and business associates for their continued trust and support.

Best WishesRajeev ShethChairman and Managing Director

Rs 1,795 MILLIONRAISED THROUGH AN INITIAL PUBLIC OFFER (IPO)

Rs 737 MILLIONNET PROFIT


IN A CHALLENGING GLOBAL LANDSCAPE, TARA HAS TRAVELLED A LONG WAY.FROM BEING AFFORDABLE TO BEING

ADMIRED

THE RETAIL SHOWROOMS ARE OWNED AND OPERATED BY US. THIS MODEL ENABLES US TO ENSURE HIGHER QUALITY CONTROL, ENHANCED CONSUMER SERVICE AND ATTRACTIVE MARGINS. THESE SHOWROOMS OPERATE UNDER THE BRAND NAME ‘TARA JEWELLERS’.

SMALLIS BIG

INDIA’S ORGANISED JEWELLERY RETAIL IS STILL NASCENT, BUT THE OPPORTUNITY FOR GROWTH IS UNLIMITED. WITH YOUNG INDIA’S GROWING PASSION FOR BRANDED JEWELLERY, THE BIG PICTURE IS ONE OF OPTIMISM.


37th Showroom launched at Shoppers Stop, Vashi

The Retail Store

SHOWROOMS ROLLED OUT TILL 31ST MARCH, 2013.

30


This segment is largely untapped by organised jewellery companies. Looking at the evolving Indian consumer and the changing market dynamics from unorganised to the organised, we, at Tara, chose to enhance our pan-India visibility to cater to the emerging segment of the population. We first focused on developing our retail footprint in West, Central and North India and then subsequently move to the rest of the country.

We launched 20 retail showrooms in the first year of our operations, three years ago. Today, that number has surged to 37 showrooms in 25 cities and we are set to launch 13 more showrooms in FY 2013-14. Our India retail strategy is fairly simple. We have already made a presence in urban areas. The showrooms represent our catchment stakes. Going forward, we intend to expand our retail presence in the suburbs of metro cities and target other town classes with higher concentration of mid-income segment.

OUR RETAIL APPROACHUnique store formatWe believe that showcasing excess designs with low differentiation confuses customers and adds significantly to inventory cost. Therefore, we have developed smart retail store formats in consultation with Fitch, international brand and design consultancy. These are unique and small full-service format stores having in-store workshops, browse-wall display that translates into lower inventory carrying costs due to the absence of desk inventory, real time RFID inventory management system, spectroscopic karat meters, lower operating costs and so on. The best practices in international retail have been adopted to this effect.

OUR GROWTH STRATEGY IS DIFFERENT FROM THE CONVENTIONAL APPROACH. WE BELIEVE THAT THE PREFERENCE FOR CERTIFIED AND BRANDED JEWELLERY IS GAINING TRACTION AMONG THE COUNTRY’S BURGEONING MIDDLE-INCOME POPULATION.


ENHANCING CUSTOMER KNOWLEDGE

We have made the purchase process of diamond jewellery transparent, by hiring experienced and trained jewellery consultants to explain the authenticity of the diamonds, providing complete break-up of the jewellery purchase process and introducing buyback and exchange programmes. We believe these measures, coupled with customer education programmes, will boost customer’s confidence, resulting into higher sales.

DESIGNINGWe offer a catalogue of 50,000 designs

FINISHING

CLEANING AND INSPECTION

CAD

FINISHED PRODUCT

DE-INVESTING

SETTING

1 3

6

2

7

4

5

Improving customer experience Our customised delivery model drives higher margins; ‘made to order’ constitutes around 30% of India’s retail business.

MADE-TO-ORDER MODEL


DIFFERENT STROKES


EXQUISITE COLLECTIONS FOR THE INDIAN MARKET


DARINGLY

DIFFERENT

CATERING TO INTERNATIONAL MARKETS

We export diamond-studded jewellery or gems-studded jewellery to large global retailers (Walmart, JC Penney, Signet and Sterling among others). Moreover, we have various collaborative branding efforts including Fine Jewellery from Monique Lhuillier, Enchanted Love, Facets, Cherished Hearts and Heart2Heart. This is a differentiated approach, which reflects our business prudence.

We have collaborated with many of the world’s largest retailers to penetrate into the key international jewellery markets. We aim to capture these markets through various partnerships and co-branding initiatives that ensure increased brand recognition and repeat orders. These collaborations and partnerships have been strongly driven by a proven track record with all major retailers internationally. Our long-term relationships with customers have nurtured as a result of timely delivery of quality products and technical expertise that Tara possesses.

CUSTOMERS ACROSS THE WORLD LOOK FOR TRAILBLAZING INNOVATION THAT STANDS OUT IN THE CROWD. WE STRENGTHEN LONG-TERM RELATIONSHIPS WITH CUSTOMERS, WHICH INCLUDE SEVERAL GLOBAL RETAIL CHAINS, BY STRATEGICALLY ALIGNING OUR OFFERINGS WITH THEIR BUSINESS NEEDS. THIS APPROACH HAS RESULTED IN VARIOUS COLLABORATIVE BRANDING EFFORTS.


We collaborated with renowned bridal designer Monique Lhuillier to bring her sophisticated sense of international style to Blue Nile.

One-of-a-kind engagement rings and wedding bands reflect the elegance and innovative style of Monique Lhuillier.

American Swiss: Leading Jeweller in South Africa Angus Coote: No. 1 Specialty Retailer in Australia Blue Nile: No. 1 Online Specialty Retailer of Jewellery Christ Uhren und Schmuck: Largest chain of jewellers in Switzerland

Ernest Jones: No. 1 Upper Middle Market Jeweller in the UK

Helzberg: Speciality Retailer of Fine Diamond Jewellery

H Samuels: No. 1 Specialty Jeweller in the UK

For ‘Enchanted Love’ (collection of wedding brands with intricate detailing), we collaborated with Erica Courtney, who is one of the most recognised and successful jewellery designers in the US.

A collaboration with Michael Beaudry, award winning couture designer and jeweller to celebrities.

Exclusively designed by the ‘Master diamond cutter’ using the industry’s most stringent cut, quality and desirability standards.

‘Heart2Heart’ is a collection of stylised heart jewellery with diamonds. It was launched by Walmart in 2009.

One of Walmart’s first branded fashion jewellery collections.

Cherished Hearts is a collection of engagement rings and wedding bands launched in J. C Penney.

Each ring has a heart set with a diamond on the side of the ring.

by Erica Courtney ®

KEY BRAND COLLABORATIONS

TARA HAS ENTERED INTO CO-BRANDING INITIATIVES WITH VARIOUS RETAILERS AND LEADING DESIGNERS GLOBALLY.

GLOBAL RETAIL PARTNERS Jared: No. 1 Off-mall Destination Jeweller in the US JC Penney: One of the biggest Mid-range Department Store in the US

Kay: No. 1 Specialty Jeweller in the US Sterns: Leading Regional Departmental Store in South Africa

Walmart: Largest Departmental Store in the US Zales: No. 2 Specialty Retail jewellery chain in the US


A HAPPY

OF TECHNOLOGY AND CRAFTSMANSHIP

HARMONY

THIS IS THE SECRET OF TARA’S UNMATCHED QUALITY EXCELLENCE, WHICH HAS ENABLED US TO STRENGTHEN OUR GLOBAL FOOTPRINT IN THE RETAIL JEWELLERY SEGMENT.

2,200+kgs of gold consumed annually

930,000+ carats of diamonds used annually


OUR STATE-OF-THE-ART TECHNOLOGIES, ADVANCED PROCESSES, BEST-IN-CLASS EQUIPMENT AND TOP-NOTCH EXPERTISE STRENGTHEN OUR BRAND RECALL AND RESPECT.

TECHNOLOGY MATTERS State-of-the-art equipment for wax injection, laser lithography, microscopic precision setting and casting

Improved wax setting technology Using robotics technology to set stone in studs Accessing advanced plating technology, which allows various types of plating on silver; laser technology for stamping and quality testing purposes; and laser soldering machines for assembly

PATENTED TECHNOLOGY Our patented turntable technology is an indigenously developed manufacturing facility based on precision-oriented jewellery

The Princess Invisible Plate Setting in Wax, provided the much awaited solution to secure the Invisible Set Princess diamonds

The invisible plate setting technique helps to: Achieve the perfect diamond level, irrespective of the relevant cut

Avoid missing diamonds and breakage Save time of setting invisible stones Avoid gold reflection completely

PROCESSES Implemented factory within factory concept to increase productivity and reduce cycle time

Developed indigenously researched turntables for maximum precision

PRODUCT QUALITY Our product finish and stone settings meet the global benchmarks of excellence

Exceed industry standards significantly

TRAINING SCHOOLEstablished a Jewellery Manufacturing and Training School, which has been developed with master jewellers and setters from Germany, Switzerland and Italy.

PEOPLE TRAININGWe impart education to the workers. Besides, we also train them on geometry for one year before they start working on the production floor. The objective is to ensure that they have an excellent understanding of the subject, which will help them deliver the best products.

IT PLATFORMWe implemented SAP across all units to facilitate integration and faster operations.

MANUFACTURING SET-UPSFacilities Annual jewellery

production capacity (Kgs)

Unit built-up area(square feet)

SEEPZ, Mumbai (Unit 1)

1,250 28,696.59

SEEPZ, Mumbai (Unit 2)

250 6,781.26

MIDC unit, Mumbai

300 17,654

Panyu unit, Guanghou, China

400 31,452.15

84,584 SQ. FT. Manufacturing space across four facilities

1,200+Stones set by each diamond setter a day

1.8+Million pieces crafted a year


TRANSPA

TODAY, CUSTOMERS EMBRACE BRANDS THAT STAND FOR TRANSPARENCY AND EVOKE TRUST. AT TARA, WE THINK TRANSPARENCY IS OUR ENDURING STRENGTH AND TRADE SECRET. IT EXTENDS FROM PRODUCTS TO CORPORATE GOVERNANCE.

OUR PRODUCTS ARE NOT ONLY HALLMARKED, BUT CERTIFIED BY QUALIFIED INTERNATIONAL LABORATORIES. OUR CORPORATE PHILOSOPHY ALSO SUPPORTS TRANSPARENT AND SEAMLESS OPERATIONS.


TRANSRENCY

Flexibility and speedThe management’s prompt decision-making abilities enable quick product developments and ensure the right time to market products.

SourcingWe offer guarantees that all diamonds are compliant to Kimberley Process. We support the process fully and ensure that all our diamond suppliers comply with it. Our diamonds are sourced from top-30 multinational vendors and we buy only Good Delivery Gold Bars.

Board of DirectorsTara is governed by an experienced team of Directors having vast experience across varied industries nationally and internationally. This team was instrumental in rolling out retail showrooms in the country.

Transparency The consumers today judge value from a holistic perspective. They look for certified, hallmarked jewellery. Our products are not only hallmarked, but also certified by qualified third-party international laboratories.

IS OUR MOST IMPORTANT TRADE SECRET


1. MR. RAJEEV SHETHPROMOTER, CHAIRMAN AND MANAGING DIRECTORExperience

First-generation entrepreneur with over 31 years of jewellery manufacturing and retail experienceCertified gemologist from Gemological Institute of America, USA and bench jeweller trained in USA and Japan, practiced this art for nine years

JourneyBegan his career by promoting Rose International - a high-end jewellery boutique in 1981, which is now a major player in India and the Middle-East in high–end watches, high-end jewellery and precious stonesSet-up one of India’s first diamond jewellery retail chains, currently known as OrraIntroduced concepts like flexible manufacturing units and turntable technology

AwardsReceived award for the largest exporter for 12 years runningInstrumental in building 14 jewellery factories till date

2. MR. VIKRAM RAIZADAEXECUTIVE DIRECTOR & CEO (RETAIL)Experience

Rich Marketing and Advertising experience spanning over 22 years across the fields of lifestyle, consumer, fashion, jewellery and mediaEducated in Marketing at the University of Southern Queensland, Australia

BOARD

THE

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Involved with jewellery exports and retail in its early days with the then market leader Intergold

Helped MTV India Networks attain and consolidate a leadership position as the Director of Marketing, Communication and Digital

Managed luxury and premium brand launches and marketing as the Head with the Murjani Group

Gained fashion business experience as Head of Fashion with IMG

Managed the Lakme Fashion Week platform

AwardsWon numerous creative and strategy awards for design, communication and marketing

3. MS. NALINI RAJANDIRECTOR - FINANCEResponsibilities

Responsible for planning and control of the finance function

ExperienceApproximately 21 years of experience in the field of finance, of which 14 years have been in the jewellery industry

Education Associate member of the Institute of Chartered Accountants of India

Commerce graduate from Mumbai University

4. MR. SANDRO BRODBECKNON-EXECUTIVE NON-INDEPENDENT DIRECTORExperience

15 years of experience in the premium consumer goods, consulting, energy and natural resources industries

Currently works in Swarovski’s Consumer Goods Business as Vice President jewellery Business Development

Education Masters Degree in Environmental Engineering from the Swiss Federal Institute of Technology in Zürich, Switzerland

Master of Business Administration from the Bocconi School of Management in Milan, Italy

5. MR. FRANCOIS ARPELSNON-EXECUTIVE INDEPENDENT DIRECTORExperience

Managing Director of the Branded Luxury and Consumer Goods practice of international investment Bank Bryan Garnier & Co.

Started career 25 years ago as a shareholder and member of the Executive Committee of Van Cleef & Arpels

Advisor to owners and the executive management of businesses, family offices and institutional investors

6. MS. FERN MALLISNON-EXECUTIVE INDEPENDENT DIRECTORExperience

More than four decades of experience in the Architecture, Design and Fashion

Executive director of Council of Fashion Designers of America from 1991 to 2001 and the Senior Vice President of IMG Fashion from 2001 to 2010

EducationHolds a Degree in Fine Arts from the University of Buffalo

7. MR. RAJIV LOCHAN JAINNON-EXECUTIVE INDEPENDENT DIRECTORExperience

36 years of experience in FMCG, Chemicals & Finance Formerly Managing Director of ICI (India)

EducationMBA from the Whittemore School of Business and Economics Degree in Chemical Engineering IIT (Kharagpur)

8. MR. SHANTI SAROOP KHINDRIANON-EXECUTIVE INDEPENDENT DIRECTORExperience

Close to three decades of experience in the Legal profession.

Admitted as a Solicitor-England & Wales and Solicitor, Incorporated Law Society, Mumbai

Founded Lexindia- a Law Firm with Global Presence

EducationHolds a graduate Degree in Law, Kent University

9. MR. RAKESH KALRANON-EXECUTIVE INDEPENDENT DIRECTORExperience

31 Years of Experience in the automobile industry Ex-Managing Director of Mahindra Navistar Automotives Limited

EducationGraduate Degree in Mechanical Engineering, BITS Pilani

10. MR. NIKKHIL VAIDYANON-EXECUTIVE INDEPENDENT DIRECTORExperience

25 years of experience in Tax and Compliance Prior industry experience with Bennett Coleman Co & Cable Corporation of India

Education Qualified Chartered Accountant, ICAI Bachelors Degree in Commerce, University of Mumbai


TEAMTHE MANAGEMENT

MS. AARTI SHETH GENERAL MANAGER ResponsibilitiesOversees the strategic alliances with, and new business development for, institutional and retail clients in the United States of America

ExperienceApproximately seven years of experience in jewellery business

EducationMasters Degree in international employment relations and human resource management from London School of Economics and Political Sciences

MR. MATTHEW FORTGANGPRESIDENT - SALES AT FABRIKANT TARA INTERNATIONAL LLC, USAResponsibilitiesResponsible for sales, merchandising and customer relations

ExperienceOver 26 years of experience in jewellery business

EducationBachelor of arts degree from the San Francisco State University

MR. JEFFREY SHLAKMANPRESIDENT - MERCHANDISING AND PRODUCT DEVELOPMENT Responsibilities

Responsible for providing creative direction to design and merchandising team

Direct sales responsibilities

Experience31 years of experience in diamond and jewellery manu-facturing business

EducationDegree in architecture and graduated from The Cooper Union

MR. LEONARD MEYERPRESIDENT - SALES (South Africa, Australia and the United Kingdom Regions)ResponsibilitiesResponsible for sales and marketing in the Australasian, the United Kingdom and South African markets

ExperienceClose to three decades of experience in the field of mail order, direct marketing and jewellery industry, in the fields of manufacturing and retail

EducationHonours degree in economics from the University of Cape Town, South Africa

MR. ALEXANDRE OLIVEVICE PRESIDENT - SALES & BUSINESS DEVELOPMENT(Europe and the Middle East)ResponsibilitiesResponsible for the Business Development of Tara in Europe involving sales, branding, brand launches and acquisitions and partnering with major players

EducationBachelor of Science degrees in International Business and Marketing

ExperienceStrong 14-year track record with a global experience in brand building, reorganising, developing and manag-ing international sales of notorious High-end Watch and Jewellery brands


34 MANAGEMENT DISCUSSION AND ANALYSIS42 DIRECTORS’ REPORT50 CORPORATE GOVERNANCE

STATUREPORTS

TORY

STATUTO

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EPOR

TS


STATUTORY REPORTS

MANAGEMENT DISCUSSION AND ANALYSISECONOMIC SCENARIOGLOBAL ECONOMYThe financial year 2012-13 saw various challenges emanating from the Eurozone crisis, the US fiscal cliff and slowdown in the emerging economies. The economic activities remained subdued with diverging growth trajectories across different economies. However, there have been signs of revival with the economic indicators gaining traction in the US and improving customer sentiments in Eurozone. Emerging economies are also showing resilience. Amid adversities, China witnessed GDP growth of around 7.50% for two consecutive quarters of 2013. With the commitment of the governments of various countries to long-term growth, things are likely to improve going ahead.

Growth Projections (%)

Region 2013 2014

Global 3.10 3.80Advanced economies 1.20 2.10USA 1.70 2.70Eurozone -0.60 0.90Emerging economies 5.00 5.40China 7.80 7.70

(Source: IMF estimates, July 2013 Outlook)

INDIAN ECONOMYIndian economy had its share of domestic problems in addition to the uncertainty from the external environment. The country’s Gross Domestic Product (GDP) showed a modest growth of 5% in 2012-13, in comparison with 6.20% in 2011-12. Escalating inflation, Reserve Bank of India’s (RBI) stern outlook on interest rates and high fiscal deficit played spoilsport. Government has taken several reforms to tackle the deteriorating scenario. Such initiatives include Foreign Direct Investment (FDI) in retail sector, sugar decontrol, petrol and diesel price hikes and others. RBI has also changed its policy with repo rate being reduced thrice and cash reserve ratio once till June, 2013. These measures are likely to revive the economy from the dark shadows of economic slowdown.

SILVER LININGInflation: Monthly wholesale inflation went below 5% in 2013-14 from the high levels of around 8% in the 2012-13.

Fiscal Deficit: Fiscal deficit came down to 4.89% of GDP in 2012-13 from 5.76% of GDP in 2011-12. Going forward, it is estimated to reach 3% of GDP by 2016-17.

GEMS AND JEWELLERY INDUSTRYGLOBAL OVERVIEWAsia Pacific is the world’s largest jewellery market in terms of area globally, with India and China being the leading consumers of gold and jewellery processing and manufacturing hubs. However, the US jewellery market garners maximum revenue with half of its revenue pie being contributed by the diamond jewellery industry. The market size is projected to grow at a Compound


Annual Growth Rate (CAGR) of 5% over coming five years to surpass USD 272 billion by 2018 (Source: the Global Gems and Jewellery Market Forecast & Opportunities, 2018 Report). Rising disposable incomes and changing lifestyles are set to take the global jewellery market growth northwards.

DIAMOND INDUSTRY MARKETThe USThe US, largest diamond market, worth USD 27 billion in 2012, has started recuperating from significant fall witnessed during 2008-09 financial crisis. It accounts for around 40% of the global diamond demand at present (Source: ‘The Global Diamond Industry’ – Bain & Company Report).

ChinaChina is the second largest diamond market globally with revenues of USD 9 billion in 2012. The revenue grew by a CAGR of 10% during the last year owing to fast-expanding Chinese middle class and increasing individual wealth.

DIAMOND DEMAND (%)

THE US 37 33

EUROPE 14 11

JAPAN 10 7

REST OF ASIA 10 12

INDIA 9 12

CHINA 7 13

OTHER 13 12

2011 20202020

2011

(Source: KPMG Quarterly Commodity Insights Bulletin, 2013)

GOLD INDUSTRY MARKETAnnual gold consumption reached new heights in 2012, worth USD 236.4 billion. This is almost 15% higher than the average for previous five years.

REGION-WISE GOLD JEWELLERYCONSUMPTION (%)

INDIA 28.90

GREATER CHINA 28.50

THE MIDDLE EAST 7.70

THE US 5.80

EUROPE (EX-CIS) 2.30

OTHER 26.80

REGION-WISE GOLD JEWELLERYCONSUMPTION (%)

INDIA 31.40

GREATER CHINA 27.80

THE MIDDLE EAST 7.80

THE US 5.80

EUROPE (EX-CIS) 2.50

OTHER 24.70

(Source: ‘Gold Demand Trends Report’ by World Gold Council, 2013)

2012

2011


INDIAN OVERVIEWDriven by an array of cultural, social and demographic aspects, the jewellery industry is one of the fastest growing industries in India. It propels India’s foreign exchange earnings forming about 14% of total exports. The gems and jewellery industry contribution to India’s foreign exchange treasury stands at USD 2,132.82 million in 2012-13, a growth of 154% over the last financial year (Source: Gems and Jewellery Export Promotion Council). The industry provides employment to around 3.40 million workers. The market size is estimated to grow at a CAGR of 12-15% to reach ` 3,000 billion by 2013-14.

INDUSTRY BREAK-UPDiamond Jewellery MarketWith 12% contribution to global diamond consumption, India is the third largest diamond market in the world. Moreover, diamonds have emerged as the second fastest growing

discretionary purchase, growing at a rate of 25% year-on-year in India. Diamond jewellery covers about 12-16% of the country’s total jewellery demand.

Gold Jewellery MarketIndia, with a market size of USD 40 billion, is the largest gold jewellery consumer globally. There is a strong affinity for gold in India as it is considered to be an indispensable part of weddings and festivities. Demand for gold jewellery covers around 80-85% of the total jewellery demand.

The diamond-gold consumption mix is expected to change with the lifestyle trends, certified diamond availability and preference for diamonds in increasing gold price environment.

STATUTORY REPORTS

MANAGEMENT DISCUSSION AND ANALYSIS

2012

CHANGING INDUSTRYJEWELLERY MIX (%)

GOLD JEWELLERY 80-85DIAMOND- 12-16STUDDED JEWELLERYOTHER 3-4

CHANGING INDUSTRYJEWELLERY MIX (%)

GOLD JEWELLERY 70-75DIAMOND- 20-25STUDDED JEWELLERYOTHER 4-6

2014*

(Source: CARE Research, October 2012) *Estimates


PRICE DYNAMICSGold prices went northward and grew at a very high CAGR of 25% from 2007 to 2012. However, there has been correction in gold prices in 2013. Diamond prices also witnessed intermittent volatility between 2007 and 2013 and ultimately reached around the same level during May 2013, as it was in 2007.

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Jan-

03

Jan-

04

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

05

Gold price/gram (`)

GOLD AND DIAMOND PRICE TRENDS

WS1 grade 1 carat polished diamond price (` in Lakhs)

10

8

7

6

5

43

2

1

0

9

May

-07

Aug

-07

Nov

-07

Feb-

08

Feb-

09

Feb-

10

Feb-

11

Feb-

12

Feb-

13

May

-08

May

-09

May

-10

May

-11

May

-12

May

-13

Aug-

08

Aug-

09

Aug-

10

Aug-

11

Aug-

12

Nov

-08

Nov

-09

Nov

-10

Nov

-11

Nov

-12

(Source: JM Financial Report, 2013)

ORGANISED RETAIL PENETRATIONIndia’s gem and jewellery industry is highly fragmented in nature with around 450,000 unorganised players. But, the market dynamics are changing with the increasing share of organised retail to 18% from less than 5% during the past decade. Going forward, the organised players will gain market share from the traditional mom and pop jewellery stores owing to:

Change inconsumerpreferences

Better reachthroughstoreexpansion

New,contemporarydesigns

Economiesof scale

Enhancedconsumerexperience

Certificationof purity(Hallmarking)

Aggressivemarketing

Brand recall

Shift from Unorganised to Organised Retail

PARADIGM SHIFT


DEMAND DRIVERS

Tier-II and Tier-III CitiesAround 60% of the jewellery demand comes from India’s semi-urban and rural markets. With increasing focus of organised retailers to expand into these cities, the jewellery demand is expected to have optimistic future ride.

Favourable DemographicsIndia has almost 65% of its population under the age of 35 years, with more than half of total population under the age of 25. It is expected that India is poised to emerge as the world’s youngest country by 2020, with 64% of its population under the working age group (15-59 years) category. This set of population not only purchases jewellery for traditional purposes, but also as investments. Moreover, the young population indulges in discretionary purchases, such as that of jewellery. Therefore, the composition is expected to contribute to the jewellery industry’s growth.

Rising Disposable IncomeIndia’s per capita income is projected to reach ` 68,747 in 2012-13 from ` 61,564 in 2011-12, a growth of 11.40%. This is likely to augment the jewellery demand.

Increasing Women WorkforceGone are the days when women were confined to their homes. More and more women have started working in India. This has empowered them to make purchases of their own choice. Jewellery being their undying love, they will purchase more of it.

High Unmarried PopulationAlmost 49% of India’s population is still unmarried. With jewellery being an integral part of Indian marriages, the country’s the jewellery demand is bound to escalate, ultimately contributing to the growth of the jewellery industry.

Marriage Composition

MARRIED VS UNMARRIED ININDIA (%)

MARRIED 48

UNMARRIED 49OTHERS 3

(Source: JM Financial Report, 2013)

Changing Customer PreferenceCustomers are fashion conscious these days. They are shifting towards branded jewellery with the quality assurance and array of innovative and contemporary designs being offered by them. This is also likely to spur the jewellery demand.

GOVERNMENT POLICIES Government allowed up to 51% Foreign Direct Investment

(FDI) in multi-brand retailing with prior Government approval and 100% in single brand retailing.

Import duty on gold has been raised from 6% to 8% and customs duty has been hiked from 4% to 6% from January, 2013.

The Government also reduced the basic custom duty from 10% to 2% on pre-forms of precious and semi-precious stones (other than diamonds).

The country is facing a problem of widening CAD (Current Account Deficit), the reasons for which were directly attributed to gold imports. In May, 2013, the deficit stood at it’s highest-ever levels. RBI’s suggestions on regulatory changes were largely looked at bringing about a change in the economics of the jewellery industry.

As per the Reserve Bank of India’s new directives (July, 2013), at least one-fifth of the gold imported into the country has to be exported by all nominated banks/agencies. About 20% of the imported gold will be kept in custom-bonded warehouse. Any fresh imports can only be made post 75% of such custom warehoused gold has been exported.

In India, gold consumption stood at 864.20 tonnes in 2012. However, India’s gold average annual exports stood around 70 tonnes, implying that imports can be made to the extent of 280 tonnes. This will lead to substantial gold demand-supply imbalance.

This new development is, thus, blessing in disguise for Indian exporters. India, being the largest consumer of gold, will provide significant opportunity to the exporters, as new directives are likely to increase exporter’s potential to import gold for domestic consumption.

With these directives, other restrictions on gold imports on consignment basis, letter of credit and others also stand withdrawn.

Where Tara StandsTara Jewels Limited (Tara) exported around 952 kgs of gold from India during 2012-13. This provides an opportunity for the Company to import significant quantity of gold (around 4760 kgs) into the country. Moreover, being a nominated agency, the

STATUTORY REPORTS



Company is empowered to import gold directly. Owing to these facts, the Company can cater to the country’s gold demand and also procure gold loans at better terms from the banks.

OUTLOOKRobust customer demand, increasing per capita income and rising women workforce are likely to play a major role in driving India’s gems and jewellery industry forward in the years to come. Besides, favourable demographics, evolving customer preferences and an organised retail sector are also expected to help the growth of the industry. With the introduction of RBI’s new import policy 20:80 principle to curb gold imports, Indian gold exporters are likely to benefit. Despite adverse economic conditions overall, the industry is expected to witness a CAGR of 16.26% between 2012 and 2017, riding on the above-mentioned factors.

COMPANY OVERVIEWTara Jewels Limited is an integrated player in the jewellery industry with presence across designing, manufacturing and jewellery retailing, both in India and globally.

OUR USPsOne of India’s Largest Studded Jewellery ExporterThe Company has been one of the largest studded jewellery exporters from India since a long time. It has international presence across countries including Australia, China, Canada, European Union, the UK and the US. Income from exports contributes around 81.21% of our total revenue.

2012-13

COUNTRY-WISE CONTRIBUTION[2012-13] (%)

USA 46.29

CHINA 39.71(INCLUDING HONG KONG)

UAE 7.34

UK + EUROPE 4.11

OTHER 2.55

Access to Advanced TechnologyThe Company has fully automated jewellery casting plant. Its state-of-the-art technologies, such as Laser Lithography, Microscopic Precision Setting, Machine-made bands, Invisible

Settings (patented), Machined Engraving help the Company give jewellery a perfect finish. Jewellery designing is done with computer-aided design (CAD)/computer-aided manufacturing (CAM) technology.

Strong Customer RelationshipsThe Company maintains long-term relationships with its key customers by strategically aligning its offerings with their business requirements. Its marquee clientele includes Walmart, Kay, Zales, Ernest Jones, H Samuels, Blue Nile, American Swiss, Angus Coote and many more.

Integrated Player with Domain KnowledgeThe Company is a jewellery integrated player with deep and relevant domain knowledge. With decades-rich experience in jewellery industry, we have gained tremendous expertise in diamond-cutting and polishing, job-work, sub-contracting, manufacturing, designing, distribution and others.

Vast Marketing and Distribution NetworkThe Company has over 12,000 touch points through international retailers globally, ensuring high customer base. The marketing team maintains customer relationships across the world. Tara reaches its customers through national chains, television, internet, departmental stores, hypermarkets, small chain jewellers, independent and catalogue jewellers.

Experienced Management TeamThe Company’s qualified and experienced management team helped it to reach its current position. It boasts of a mixture of people from diverse backgrounds, having adequate experience in the jewellery industry.


NetworthThe Company’s networth increased from ` 2,773 million, as on March 31, 2012 to ` 4,929 million, as on March 31, 2013.

ReservesThe Company’s reserves increased from ` 2,593 million as on March 31, 2012 to ` 4,683 million, as on March 31, 2013. It comprised share premium reserve, general reserve and profit & loss account. Free reserves constituted around 86.57% of the total reserves.

External FundsThe Company’s Book Debts as, on March 31, 2012, stood at ` 3,239 million, as compared to ` 3,194 million a year later, registering a decrease of 1.37%.

Net BlockThe Company’s net block decreased from ` 810 million, as on March 31, 2012 to ` 803 million, as on March 31, 2013.

Debt-EquityThe Company’s Debt Equity ratio stood at 0.40:1 (excluding working capital).

Short-term DebtGross short-term debt reduced by ` 1,115 million, ` 500 million of which was funded from the IPO proceeds and another ` 615 million through internal accruals. The short-term debt stands at ` 4,895 million, as on March 31, 2013.

Inventories TurnoverThe Company’s Inventories Turnover decreased from 158 days in 2011-12 to 140 days in 2012-13. The lowering of the days can be attributed to better inventory management.

RISK MANAGEMENTCOMPETITION RISKRisk of entry of new players leading to high competition

Mitigating FactorsTo mitigate the risk arising out of competition, Tara follows extremely differentiated retail business model. It understands the needs of the customers and has launched an extensive range of products for them to choose from. Moreover, Tara is known for its talented team comprising 35 designers that include several computer-aided designers and more than a thousand craftsmen.

FINANCIAL HIGHLIGHTS(` in million)

Particulars 2012-13 2011-12

Total Income 16,355 13,991Earnings before interest, tax, depreciation and amortisation [EBITDA]

1,537 1,317

Interest 491 471Depreciation and amortisation

139 142

Profit before tax [PBT] 957 724Profit after tax [PAT] 737 539Basic Earnings per share [EPS] (`)

35.81 29.94

Diluted Earnings per share [EPS] (`)

35.73 29.84

Net worth 4,929 2,773Short-term borrowings 3,242 3,320Long-term borrowings 63 69Inventory 6509 5890Debtors 2902 3164Net working capital 4050 2023Gross block 1566 1443Cash & Bank Balances 1124 223EBIDTA Margins (%) 9.40 9.41

Total IncomeThe Company’s total revenue has increased by 16.90% from ` 13,991 million in 2011-12 to ̀ 16,355 million in 2012-13. Stores expansion and launch of exquisite new collections contributed to topline growth. The Company was able to maintain the strong growth momentum driven by higher volumes and better operational efficiency.

EBITDAThe Company witnessed a 16.70% growth in EBITDA from ` 1,317 million in 2011-12 to ` 1,537 million in 2012-13. The increase in margin can be attributed to lower employee, administrative and selling and distribution costs.

PATThe Company witnessed a strong performance in profit after tax during the year under review. It increased from ̀ 539 million in 2011-12 to ` 737million in 2012-13, up 36.73%.

STATUTORY REPORTS



QUALITY RISKRisk of inconsistent quality affecting our brand image

Mitigating FactorsThe Company carries out a 300% quality check i.e. three times more than what the industry requires. Furthermore, Tara gets all its products certified through qualified international laboratories. The Company buys only good delivery gold bars and fully supports the Kimberley process for certified diamonds.

RAW MATERIAL RISKRisk of unavailability and cost of raw materials could affect operational performance

Mitigating FactorsThe Company has ‘Nominated Agency’ designation helping us to import gold directly from international suppliers at a competitive rate with better terms. Tara procures gold on a lease structure.

GEOGRAPHICAL CONCENTRATION RISKExposure to the small geographical regions could affect revenue avenues

Mitigating FactorsTo mitigate the risk arising out of a concentration in one particular region, the Company’s products are sold through more than 12,000 stores worldwide. It has opened 37 stores in India which are spread across 19 cities.

FOREIGN EXCHANGE RISKRisk of currency volatility affecting the Company’s profitability

Mitigating FactorsSince Tara caters to a huge export market, the Company’s export earnings act as natural hedge against currency fluctuations. In addition to this, the Company has also entered into several forward contracts to mitigate the risks.

HUMAN CAPITALThe Company recognises its employees to be an integral part of its success story. At Tara, we help employees nurture ambitions and progress through learning and skill development. The Company has in-house training and development programmes to upgrade knowledge and skills of its employees. Our performance-rewarding culture keeps our employees motivated. The ultimate aim is to build a work environment wherein every employee achieves optimum potential and eventually turns into leaders, accelerating our progress. The Company employs around 1,561 employees, as on March 31, 2013, with an attrition rate below industry standards.

INTERNAL CONTROLThe Company has adequate internal control systems commensurate with size and nature of its business. The system supervises the internal business processes across departments to ensure operational efficiency, compliance with internal policies, applicable laws and regulations, optimum resource and asset utilisation, and accurate reporting of financial transactions. All transactions are properly authorised, recorded and reported to the management. The Company is following all the Accounting Standards for properly maintaining the books of accounts and reporting of financial statements. The internal audit department functions along with external auditors to review various areas of Company’s operations.

CAUTIONARY STATEMENTStatements made in this Annual Report describing the Company’s objectives, projections, estimates, expectations may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ from those express or implied. Important factors that could make a difference to the Company’s operations include conditions affecting demand supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the government regulations, tax laws, other statutes and other incidental factors.


STATUTORY REPORTS

DIRECTORS’ REPORT

To The Members, TARA JEWELS LIMITED

The Directors present the Twelfth Annual Report of the Tara Jewels Limited (“TJL/ Tara Jewels / the Company”) for the year ended 31st March, 2013.

FINANCIAL RESULTSThe performance of the Company for the Financial Year (“FY”) 2012-13 is summarised below:

(` in Crore)

Particulars Standalone Consolidated

FY 2012-13 FY 2011-12 FY 2012-13 FY 2011-12

Total Income 1,388.07 1,281.47 1,640.38 1,401.06Less: Expenditure 1,289.63 1,200.73 1,530.83 1,314.46Profit Before Tax and Depreciation 98.44 80.74 109.55 86.60Less: Depreciation 12.99 13.30 13.90 14.23Profit Before Tax 85.45 67.44 95.65 72.37Less: Tax 19.21 16.72 21.98 18.48Net Profit After Tax 66.24 50.72 73.67 53.89

CONSOLIDATED FINANCIAL STATEMENTSThe Consolidated Financial Statements of the Company prepared as per Accounting Standard AS-21 and Accounting Standard AS-23, consolidating the Company’s accounts with its subsidiaries have also been included as part of this Annual Report.

DIVIDENDWith a view of conserving the profits of the Company for future expansion of the business, the Directors do not recommend dividend on the Equity Share Capital of the Company for the Financial Year ended 31st March, 2013.

OVERVIEWFinancial Year 2012-13 has been good for your Company. The Company achieved a turnover of 1,383.60 Crore for the Financial Year 2012-13 as against ` 1,279.90 Crore for the Financial Year 2011-12 representing an increase of 8.10%. Net Profit After Tax was ` 66.24 Crore for the Financial Year 2012-13 against

` 50.72 Crore for the Financial Year 2011-12 registering an increase of 30.61%.

Income from Exports for the Financial Year 2012-13 was ` 1,076 Crore against ` 1,014 Crore for the Financial Year 2011-12 representing an increase of 6.12% and Income from Retail business for the the Financial Year 2012-13 was ` 231.16 Crore against ` 183.48 Crore for the Financial Year 2011-12 representing an increase of 25.98%.

The Nominated Agency status of the Company has been renewed for the year 2013-14. By virtue of this, the Company is able to import precious metals directly from foreign suppliers.

IPO OF THE COMPANY :The Initial Public Offer (IPO) of the Company opened for subscription on 21st November, 2012 and closed on 23rd November, 2012. It was first in about five months and paved the way for the IPOs of other companies subsequently. The Price Band was fixed at ̀ 225/- – ̀ 230/-. It got subscribed 1.98 times, wherein the Qualified Institutional Buyers (QIBs) Category was subscribed 1.49 times, Non Institutional Investors Category


was subscribed 3.1 times and the Retail Individual Investors (RIIs) Category was subscribed 2.05 times. The Cut-Off price was determined as ` 230/- per share. 9,829 applicants were allotted shares in the IPO.

The Company was listed with the BSE Limited (The Bombay Stock Exchange) and the National Stock Exchange of India Limited (NSE) on 6th December, 2012.

Crystalon Finanz AG, an affiliate of Swarovski, came in as a pre-IPO investor. Universities Superannuation Scheme Limited (USSL) as trustee of Universities Superannuation Scheme (United Kingdom) and D B International Asia Limited came in as anchor investors.

The objects for which the money was raised through the IPO included setting up of additional 20 showrooms and repayment of debt of ` 50 Crore. Out of the 20 showrooms, 7 (Jaipur, Jodhpur, Udaipur, Jallandhar, Ludhiana Bhatinda and Shoppers Stop - Vashi) are already up and running, while the debt of ` 50 Crore has been repaid. Remaining locations have been identified and are at various stages of completion and commencement.

AWARDS AND RECOGNITIONS:During the current year, your Company won the Print Campaign of the Year 2012 award at the 8th Annual Gemfields Rio Tinto Retail Jeweller India Awards 2012.

‘Tara Jewellers’ also won the prestigious award for The Best Store Design of the year - Single Brand category at the Economic Times Retail Awards 2013.

SHARE CAPITALDuring the year under review, the Authorised Share Capital of the Company of ` 300,000,000/- did not undergo any change. The Paid-up Share Capital increased from ` 180,000,000/- (comprising of 18,000,000 equity shares of ` 10 each) to ` 245,774,820/- (comprising of 24,577,482 equity shares of ` 10 each) as a result of allotment of 1,800,000 equity shares to Crystalon under Pre-IPO offer, 4,760,869 equity shares under IPO offer and 16,613 equity shares pursuant to exercise of ESOPs.

SUBSIDIARIESThe Subsidiaries and step down subsidiaries of the Company as on 31st March, 2013 are as follows:

Tara (Hong Kong) Limited

Tara Jewels Holdings Inc.

Fabrikant-Tara International, LLC.

Tara China Jewelry Limited

Tara Jewels Honduras, Sociedad de Responsabilidad Limitada

The Board of Directors, in their meeting held on 16th May, 2013, has approved the closure of Tara Jewels Honduras, Sociedad de Responsabilidad Limitada.

This Company was set up to tap the potential of Central American market for jewellery and if required, to set up a manufacturing facility there.

Based on the analysis of the past two years, the potential in those markets did not merit setting up of a manufacturing facility there. Consequently, the office there could also be done away with which would result in cost saving for the Company. Hence, the decision to close the Company was taken.

The Statement pursuant to Section 212 of the Companies Act, 1956, pertaining to holding in subsidiary companies is attached. The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with Accounting Standard AS21 form part of the Annual Report. Upon written request from the member, the Company Secretary will make these documents available. These documents will be available for inspection at the Company’s Registered Office, between 11.00 a.m. to 1.00 p.m. on all working days, except Saturdays, till the date of the Annual General Meeting.

DIRECTORSMr. Rakesh Kalra and Mr. Rajiv Lochan Jain, Directors of the Company are liable to retire by rotation at the ensuing Annual General Meeting (“AGM”) and being eligible, offer themselves for re-appointment. Further, Mr. Sandro Brodbeck and Mr. Francois Arpels, who were appointed as Additional Directors, hold office up to the date of the ensuing Annual General


Meeting. Your Company has received notices in writing from members proposing their candidature for the office of Directors of the Company, liable to retire by rotation, under the provisions of Section 257 of the Companies Act, 1956. Your Directors recommend their respective re-appointment/appointment as Directors of the Company liable to retire by rotation.

During the year Ms. Aarti Sheth and Ms. Alpana Deo resigned as Directors of the Company. Your Board place on record their appreciation for their contribution for the business of the Company during their tenure as the Directors of the Company.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Act, your Directors hereby confirm:

a. that in the preparation of the annual accounts for the Financial Year 2012-13, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. they 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 at the end of the Financial Year 2012-13 and of the profit of the Company for that year;

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

d. they have prepared the Annual Accounts for the FY 2012-13 on a going concern basis.

RELATED PARTY TRANSACTIONSA statement of related party transactions pursuant to Accounting Standard 18 forms a part of the Annual Report.

AUDITORSM/s. C.B. Chhajed & Co., Chartered Accountants, who are the Statutory Auditors of the Company are liable to retire at the conclusion of ensuing Annual General Meeting and are eligible for re-appointment. The Board of Directors at their Meeting held on 25th July, 2013, on the recommendation of the Audit Committee, proposed to re-appoint M/s. C.B. Chhajed & Co. as the Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of

the next Annual General Meeting of the Company. The Auditors have signified their willingness to accept the appointment, if made, and further confirmed their eligibility under Section 224(1B) of the Act.

AUDITORS’ REPORTWith respect to the observation of the Auditors under Sr. No. 9(b) of the Annexure to the Auditors’ Report, the management is optimistic that the outcome of the disputed matters will be in Company’s favour.

PARTICULARS OF EMPLOYEESParticulars of Employees for the year 2012-13, pursuant to Section 217(2A) of the Act, read with Companies (Particulars of Employees) Amendment Rules, 2011 is provided in Annexure 1, forming a part of the Directors’ Report.

HUMAN RESOURCESAs on 31st March, 2013 the Company had 1561 employees on its roles. The Company highly values its human resources and is continuously updating the knowledge and skills of its employees through trainings and other programmes. The Company is also recruiting talented employees based on the requirements of the Company.

POSTAL BALLOTDuring the year under review the Company obtained the approval of the members of the Company vide Postal Ballot for the implementation of new Employee Stock Option Plan (ESOP Scheme 2013) and also for the alteration of the Objects the Issue as mentioned in the Prospectus of the Company dated 26th November, 2012.

STATUTORY REPORTS

DIRECTORS’ REPORT

The Company primarily exports to Australia, China, Canada, European Union, South Africa, UAE, UK and USA. The Company is exploring new opportunities for developemnt of export markets in New Zealand and additional countries in the European Union.


ESOP SCHEMEESOP SCHEME 2010With a view of motivating, rewarding and retaining talent in the Company, the Directors at their meeting held on 2nd September, 2010 approved and adopted the Employee Stock Option Scheme 2010 (“ESOP 2010”). The ESOP 2010, has been divided into Grant A and Grant B. The Company has granted a total of 509,025 options convertible into 509,025 equity shares which represents 2.83% of the then paid-up capital of the Company. Further, options granted under this scheme shall not exceed 5 % of the Equity Share Capital of the Company at any point of time. Out of the total number of options granted, 422,571 options convertible into 442,571 Equity shares are granted under Grant A and 66,454 options convertible into 66,454 Equity shares are granted under Grant B.

As on 31st March, 2013, 16,613 options have been converted into 16,613 equity shares pursuant to exercise of options by four employees of the Company.

The disclosures pursuant to Clause 12 of the SEBI (Employee Stock Option Schemes and Employee Stock Purchase Schemes) Guidelines, 1999 are provided in Annexure 2, forming a part of the Directors’ Report.

ESOP SCHEME 2013Your Company has implemented an ESOP Scheme 2013, pursuant to the approval of the members of the Company vide Postal Ballot, for granting options to the employees of the Company who are deemed to be valuable to the Company and who have the potential to take the Company to newer heights. The Company has constituted a Compensation Committee of the Board of Directors of the Company to administer the ESOP Scheme, 2013.

DEPOSITSThe Company has not accepted any deposit from the public during the year within the meaning of the provisions of Section 58A of the Companies Act, 1956 and The Companies (Acceptance of Deposits) Rules, 1975, as amended.

CORPORATE GOVERNANCEYour Company’s Equity Shares got listed on 6th December, 2012 both on BSE Limited (BSE) & National Stock Exchange of India Limited (NSE). A detailed report on the Corporate Governance in compliance with Clause 49 of the Listing Agreement forms as a part of the Annual Report. A Certificate from a Practising

Company Secretary on the compliance with Corporate Governance requirements by your Company is attached to the Report on Corporate Governance.

MANAGEMENT DISCUSSION AND ANALYSISManagement Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges on corporate governance, is presented in a separate section of this Annual Report.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars FY 2012-13(` in Crore)

FY 2011-12(` in Crore)

Foreign Exchange Earnings

1,076.36 1,014.20

Outgo 478.03 381.34

The Company primarily exports to Australia, China, Canada, European Union, South Africa, UAE, UK and USA. The Company is exploring new opportunities for developemnt of export markets in New Zealand and additional countries in the European Union.

CONSERVATION OF ENERGY, TECHNOLOGICAL ADOPTIONS, AND INNOVATIONSIn view of the nature of the activities carried out by the Company, Rules 2A and 2B of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to conservation of energy and technology absorption, to the Company are not applicable.

COST AUDITORSPursuant to Section 233B of the Companies Act, 1956, M/s. Ketki D. Visariya & Company (Firm Registration No. 00362), Cost Accountants (Membership No. 20457) have been appointed as the Cost Auditors to issue the Cost Audit Report under the Companies (Cost Audit Report) Rules, 2011 for the Financial Year ended 31st March, 2014.

ACKNOWLEDGEMENTThe Directors would like to thank the customers, vendors, bankers and employees for their continued support, co-operation and contribution to the growth of the Company during the year.


The Directors would also like to thank the Shareholders, The Reserve Bank of India, Ministry of Corporate Affairs, the Customs and Excise Departments, Ministry of Commerce and Industry, Income Tax Department and various other government organisations and Banks for their support and confidence in the Management.

For and on behalf of the Board of DirectorsTARA JEWELS LIMITED

Rajeev ShethChairman and Managing Director

Date: July 25, 2013Place: Mumbai

ANNEXURE 1

Sr. No.

Name Designation Qualification Age Experi-ence (Years)

Date Of Ap-pointment

Gross Remuneration ( )̀

Previous Employment

% Of Share-holding in the Company (More Than 2%)

1 Mr. Rajeev Sheth Chairman and Managing Director

B.Com from Mumbai University and Diploma in Gemology from Gemological Institute of America

54 32 16th April, 2001

` 20,966,530/- InterGold India Limited

58.93

2 Mr. Vikram Raizada

Executive Director – Marketing, Retail and Business Development

B.A(Economics) from University of Mumbai and Degree in Business (Marketing) from University of Southern Queensland, Australia

47 22 January 1, 2010

` 9,039,720/- IMG Fashion, India

Negligible

Notes:

1. The Remuneration paid includes basic salary, allowances, taxable value of perquisites etc.

2. The nature of employment is contractual in nature.

STATUTORY REPORTS

DIRECTORS’ REPORT


ANNEXURE 21. EMPLOYEE STOCK OPTION PLAN – ESOP 2010Your Company instituted the ESOP 2010, which was approved by the Board vide its resolution dated 2nd September, 2010. Under the ESOP 2010, employee stock options exercisable into such number of Equity Shares being not more than 5% of paid-up Equity Share capital of the Company at any point in time be issued to eligible employees and Directors of the Company or its Subsidiaries. Under ESOP 2010, two grants have been made, Grant A and Grant B.The Company has granted a total of 509,025 options convertible into 509, 025 Equity Shares of ` 10/- each of the Company. Out of the total number of options granted, 442,571 options convertible into 442,571 Equity Shares had been granted under Grant A and 66,454 options convertible into 66,454 Equity Shares under Grant B. The following table sets forth the particulars of the options granted under the ESOP 2010:

Particulars Details

Options granted Grant A: 442,571 (Surrendered)Grant B: 66,454Total: 509,025

Date of grant 2nd September, 2010Total number of equity shares arising as a result of full exercise of options already granted

509,025

Pricing Formula Intrinsic value method.Exercise price of options Grant A: ` 333

Grant B: ` 20Total options vested Grant A: 66,386 (Out of the 2nd vesting, only Part A options have vested while the vesting of Part

B performance based options is carried forward to the next year. For further details, refer to the vesting schedule below)Grant B: 66,454

Options exercised Grant A: NilGrant B: 16,613

Options forfeited/ lapsed/ cancelled 442,571Variations in terms of options The Exercise Period for options granted under Grant Bhas been extended till 2nd September, 2013Money realised by exercise of options (in `) ` 332,260Options outstanding (in force) 49,841

Employee wise details of options granted toi) Directors and Senior managerial

personnel/Key Managerial Employees

Name of employee No. of outstanding options under Grant

A (Surrendered)

No. of outstanding options under Grant

B

Total

Mr. Vikram Raizada 44,958 Nil 44,958Ms. Nalini Rajan 44,958 31,949 76,907Mr. Ravindran M.P 13,488 4,793 18,281Mr. Pravin Patil 8,992 3,195 12,187Mr. Jeffrey Shlakman 24,817 Nil 24,817Mr. Leonard Meyer 20,681 Nil 20,681Ms. Elisabeth McGuire

20,681 Nil 20,681

Mr. Stuart Marcus 16,545 Nil 16,545Mr. Tateos Tateossian 8,992 2,237 11,229Mr. Chander Gurnani 8,992 4,792 13,784Ms.Sunayana Vora 5,395 3,195 8,590Mr. Vishal Adhyapak 7,193 3,195 10,388Mr. Shibu Parakkat 5,395 2,236 7,631Mr. Vinodkumar Deshmukh

3,597 2,236 5,833

Ms. Jenny Lee 8,272 Nil 8,272


Employee wise details of options granted toii) Any other employee who

received a grant in any one year of options amounting to 5% or more of the options granted during the year

Name of employee Total no. of options granted % of options granted

Ms. Nalini Rajan 76,907 15.11Mr. Vikram Raizada 44,958 8.83

iii) Identified employees who are granted options, during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

Name of employee

–

No. of options granted

–

% of issued Equity Share capital

–

Impact on fully diluted EPS on a pre-issue basis (as per AS 20)

For FY 2011- 2012, the impact on fully diluted EPS is Re. 0.10 and for FY 2012-2013, the impact on fully diluted EPS is Re.0.07.

Difference between employee compensation cost using the intrinsic value method and the employee compensation cost that shall have been recognised if the Company has used fair value of options and impact of this difference on profits and EPS of the Company.

Options have been granted in FY 2010-2011. Employee compensation cost is calculated using intrinsic value method.

Had the Company followed fair value method for accounting the stock options, compensation cost would have been higher by ` 12.30 million for FY 2011-2012. Consequently profit after tax for FY 2011-2012 would have been lower by ` 12.30 million and the basic EPS of the Company would have been lower by ` 0.68 per Equity Share and the diluted EPS would have been lower by ` 0.67 per Equity Share.

Had the Company followed fair value method for accounting the stock options, compensation cost would have been higher by ` 8.60 million for FY 2012-2013. Consequently profit after tax for FY 2012-2013 would have been lower by ̀ 8.60 million and accordingly EPS would get diluted to the extent of stock options granted. The incremental fair value per option (pre and post modification of the terms) of options granted under Grant B is negligible and hence not recognised.

Weighted average exercise price either equals or exceeds or is less than the market value of the shares.

Weighted average exercise price of Options granted last year whose:Exercise price equals market price on the date of grant

` 333.00 per option

Exercise price is greater than market price on the date of grant

N.A.

Exercise price is less than market price on the date of grant

` 20.00 per option

Weighted average fair values of options whose exercise price equals or is less than the market value of the stock.

Weighted average fair value of options granted last year whose:Exercise price equals market price on the date of grant

` 80.97 per option

Exercise price is greater than market price on the date of grant

N.A.

Exercise price is less than market price on the date of grant

` 314.22 per option

STATUTORY REPORTS

DIRECTORS’ REPORT


Description of the method and significant assumptions used during the year to estimate the fair values of options, including weighted-average information, namely, risk-free interest rate, expected life, expected volatility, expected dividends and the price of the underlying share in market at the time of grant of the option

The fair value of the options has been calculated using the Black Scholes Options Pricing Model and the significant assumptions used for the two grants are as follows:

Grant A (Surrendered)Risk Free Interest Rate 7.22%Expected Life 4 yearsExpected Volatility Since ourCompany was unlisted at the

time of grant, volatility has been taken as zero

Dividend Yield Since our Company has not paid any dividends in the past, the dividend yield is taken as nil.

Exercise Price ` 333.00Price of the underlying share in market at the time of the option grant.

` 333.00

Fair Value per option ` 80.97

Grant BRisk Free Interest Rate 6.50%Expected Life 1 yearExpected Volatility Since ourCompany was unlisted at the

time of grant, volatility has been taken as zero

Dividend Yield Since ourCompany has not paid any dividends in the past, the dividend yield is taken as nil.

Exercise Price `20.00Price of the underlying share in market at the time of the option grant.

` 333.00

Fair Value per option ` 314.22


STATUTORY REPORTS

CORPORATE GOVERNANCE REPORTA. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCEYour Company’s Corporate Governance system is based on certain key principles, including fairness and integrity, transparency and disclosure, accountability, equal treatment to all the shareholders and social responsibility. Corporate Governance extends beyond corporate laws. Its fundamental objective is not merely to fulfil legal requirements, but also the institution of and adherence to systems and procedures, ensuring the commitment of the Board of Directors in managing the Company’s affairs in a transparent manner to maximise the long-term value of the shareholders at large.

Your Company has adopted an appropriate Corporate Governance framework to ensure timely and accurate disclosure of all material matters, including financial position, performance, ownership and governance.

Your Company’s policies and practices relating to the Corporate Governance are discussed in the following sections:

B. BOARD OF DIRECTORS(I) BOARD MEMBERSHIP CRITERIAThe members of the Board of Directors of your Company are expected to possess the required expertise, skill and experience to effectively manage and direct your Company to attain its organisational goals. They are expected to be persons with vision, leadership qualities, proven competence and integrity, and with a strategic bent of mind.

Each member of the Board of Directors of your Company is expected to ensure that his/her personal interest does not run in conflict with your Company’s interests. Moreover, each member is expected to use his/her professional judgement to maintain both the substance and appearance of independence and objectivity.

(II) COMPOSITION OF THE BOARDThe Board of Directors of your Company has an optimum combination of Executive and Non-executive Directors to have a balanced Board Structure. The Board has ten Directors, and except the Chairman & Managing Director and Two Whole-Time Directors, all other Seven Directors are Non-executive. Out of the Seven Non-executive Directors, Six are Independent Directors. The Chairman of the Board of Directors of your Company is a Non-independent Director.

The composition of the Board of Directors of your Company, along with the other Directorships held by each of the Directors is brought out in the following tables:


Name of Director Position Relationship with other Directors

No. of other Director-ships#

No. of Other Board Committee(s) of which

he / she is a Member*

No. of Other Board Committee(s) of which

he / she is a Chairman*

Mr. Rajeev Sheth Chairman & Managing Director

None NIL NIL NIL

Mr. Vikram Raizada Executive Director & CEO (Retail)

None NIL NIL NIL

Ms. Nalini Rajan Director - Finance None NIL NIL NILMs. Fern Mallis Non-executive

& Independent Director

None NIL NIL NIL

Mr. Nikkhil Vaidya Non-executive & Independent Director

None NIL NIL NIL

Mr. Rajiv Lochan Jain Non-executive & Independent Director

None 1 2 NIL

Mr. Rakesh Kalra Non-executive & Independent Director

None 1 1 NIL

Mr. Shanti Saroop Khindria

Non-executive & Independent Director

None NIL NIL NIL

Mr. Sandro Brodbeck $ Non-executive & Non-Independent Director

None NIL NIL NIL

Mr. Francois Arpels ^ Non-executive & Independent Director

None NIL NIL NIL

# Includes directorships of only Indian Public companies* This includes memberships of only Audit Committee and Shareholders/Investors’ Grievances Committee$ Appointed as an Additional Director w.e.f. 11th February, 2013^ Appointed as an Additional Director w.e.f. 16th May, 2013


(III) BOARD MEETINGS / ANNUAL GENERAL MEETINGDuring the year 2012-13, the Board of Directors of your Company met 15 times on 15th June, 2012, 4th July, 2012, 1st August, 2012, 24th August, 2012, 7th September, 2012, 12th September, 2012, 9th October, 2012, 2nd November, 2012, 8th November, 2012 (2 meetings held), 20th November, 2012, 24th November, 2012 , 26th November, 2012 , 1st December, 2012 and 11th February, 2013. The previous Annual General Meeting was held on 20th July, 2012.

Details regarding the attendance of Directors at the Board Meetings and the Annual General Meeting held during 2012-13 are presented in the following table:

Director No. of Board Meetings Attended

Whether Last AGM Attended (Yes/No)

Mr. Rajeev Sheth 15 YesMr. Vikram Raizada 15 YesMs. Nalini Rajan 15 YesMs. Fern Mallis 1 NoMr. Nikkhil Vaidya 4 YesMr. Rajiv Lochan Jain 2 NoMr. Rakesh Kalra 4 NoMr. Shanti Saroop Khindria 1 NoMr. Sandro Brodbeck* NA NAMr. Francois Arpels^ NA NAMs. Alpana Deo $ 0 NoMs. Aarti Sheth @ 2 Yes

* Appointed as an Additional Director w.e.f. 11th February, 2013^ Appointed as an Additional Director w.e.f. 16th May, 2013$ resigned as Director w.e.f. 31 January, 2013@ resigned as Director w.e.f. 01 August, 2012

(IV) MEMBERSHIP TERM AND RETIREMENT POLICYAccording to your Company’s Articles of Association, at every Annual General Meeting, one-third of the Directors for the time being are liable to retire by rotation or, if their number is not three or a multiple of three, then the number nearest to one-third, shall retire from office.

The Directors to retire by rotation at every Annual General Meeting shall be those who have been longest in office since their last appointment. However, as between persons who became Director on the same day and those who are to retire shall (unless they otherwise agree among themselves) be determined by lot. A retiring Director shall be eligible for re-appointment.

(V) CODE OF CONDUCTYour Company’s Board of Directors has prescribed a Code of Conduct for all Board Members and the Company’s Senior Management. The Code of Conduct is available on your Company’s website, www.tarajewels.in.

All the Board Members and the Senior Management personnel of your Company have affirmed their compliance with the Code of Conduct for the year ended 31st March, 2013. A declaration to this effect signed by the Managing Director is given below:

This is to certify that, in line with the requirement of Clause 49 of the Listing Agreement, all the Directors of the Board and Senior Management Personnel have solemnly affirmed that to the best of their knowledge and belief, they have complied with the provisions of the Code of Conduct during the financial year 2012-13.

Rajeev Sheth Chairman & Managing Director

(VI) CODE OF CONDUCT FOR PROHIBITION OF INSIDER TRADINGIn accordance with the SEBI (Prohibition of Insider Trading) Regulations, 1992, the Board has approved and adopted a code of conduct governing all the Directors, senior management and other employees of the Company. Mr. Amol Raje, Company Secretary, has been appointed as the Compliance Officer in respect of compliance of the code.

C. BOARD COMMITTEESIn compliance with both the mandatory and non-mandatory requirements under Clause 49 of the Listing Agreement and the applicable laws, your Company’s Board of Directors constituted the following Committees:

(i) Audit Committee

(ii) Remuneration Committee

(iii) Shareholders’/Investors’ Grievance Committee

(iv) Finance Committee

(v) Allotment Committee

(vi) Compensation Committee

(vii) Management & Administration Committee

(I) AUDIT COMMITTEEThe Audit Committee of the Board of Directors of your Company consists of the following Members:

Mr. Nikkhil Vaidya, Chairman (Non-executive Independent Director)

STATUTORY REPORTS

CORPORATE GOVERNANCE REPORT


Mr. Rakesh Kalra (Non-executive Independent Director)

Ms. Nalini Rajan (Executive Director)

Mr. Amol Raje, Company Secretary acts as the Secretary of the Committee.

The composition, role, terms of reference as well as powers of the Audit Committee are in accordance with the provisions of Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956.

The brief terms of reference of the Audit Committee are as follows:

Inter alia, include overseeing of the Company’s financial reporting process, reviewing the financial statements with the Management, recommending appointment / reappointment of auditors, fixation of audit fees, reviewing the adequacy of internal audit function, holding periodic discussions with auditors about their scope and adequacy of internal control systems, discussing on any significant findings made by Internal Auditor’s and following it up with action. The Committee also reviews information prescribed under Clause 49(II)(E) of the Listing Agreement.

The detailed terms of reference of Audit Committee are available on your Company’s website, www.tarajewels.co.in.

The Company’s Audit Committee met 3 times during 2012-13 on 15th June, 2012, 9th October, 2012 and 11th February, 2013.

The following table presents the details of attendance at the Audit Committee meetings held during 2012-13

Members No. of Meetings Attended

Mr. Nikkhil Vaidya 3Mr. Rake

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