The Company has provided loan to its wholly owned subsidiary to carry out business operations. The movement in the loan balance is on account of currency exchange fluctuation.
The Company has not entered with any Scheme(s) of arrangement in terms of sections 230 to 237 of the Companies Act, 2013.
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
18.5 1. The Board of Directors passed a resolution at its meeting held on 25th April, 2024 approving the sub-division of each equity share of face value of Rs. 10 each fully paid up into face value of Rs. 2 each fully paid up. The members in its Extra Ordinary General meeting dated 8th May, 2024 have approved increase in the authorised share capital from Rs. 10 million divided into 5 million equity shares of Rs. 2 each (post split of shares) to Rs. 1,000 million divided into 500 million equity shares of Rs. 2 each. Further, the Board of Directors have also passed a resolution on 25th April, 2024 and approved the issue of bonus equity shares in its meeting which was further approved by shareholder in the meeting held on 21st May, 2024 in the ratio of 200 equity shares of Rs. 2 each for every 1 equity share of Rs. 2 each by capitalisation of such sum standing to the credit of general reserves of the Company.
2. During the year, the Nomination and Remuneration Committee in its meeting held on 18th November, 2024 and 1st December, 2024 had granted 20,951,824 options to the employees of the Company under Employee Stock Option Plan 2024 ("ESOP 2024"). Further, the shareholders of the Company has also approved to increase the authorised share capital from existing Rs. 1,000 million divided into 500 million equity shares Rs. 2 each to Rs. 1,100 million divided into 550 million equity shares of Rs. 2 each ranking pari passu in all respect with the existing equity shares of the Company as per the Memorandum and Articles of Association of the Company.
Nature & Purpose of Reserves
General Reserve: General reserve is created from time to time by transferring profits from retained earnings and can be utilised for purposes such as dividend payout, bonus issue, etc.
Retained Earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserves, dividends or other distributions paid to shareholders. It also includes re-measurement loss/gain on defined benefit plans, net of taxes that will not be reclassified to statement of profit and loss.
Share Premium: Share premium account comprises of premium on issue of shares. It is to be utilised in accordance with the provisions of the the Companies Act, 2013.
Share based payment reserve: The fair value of the equity-settled share based payment transactions with employees is recognised in Statement of profit and loss with corresponding credit to Share based payment reserve.
34. EARNINGS PER SHARE
Basic EPS amount is calculated by dividing the profit/loss for the period attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
35. EMPLOYEE BENEFITS (A) Defined contribution plans
The Company contributes to a defined contribution plan to Employee's Provident Fund which are administered by the Provident Fund authorities and has no further obligation beyond making its contribution which is expensed in the year to which it pertains.
i) The Board of Directors at their meeting held on 25th April, 2024 approved the sub-division of each equity share of face value of Rs. 10 each fully paid up into face value of Rs. 2 each fully paid up.
ii) Further, the Board of Directors have also approved the issue of bonus equity shares in its meeting held on 21st May, 2024 in the ratio of 200 equity shares of Rs. 2 each for every 1 equity share of Rs. 2 each by capitalisation of such sum standing to the credit of free reserves of the Company.
iii) In line with the requirements of Ind AS 33, the basic and diluted earnings per share for the current and previous year presented have been calculated after considering the share split and bonus issue.
37. FINANCIAL INSTRUMENTS RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company is exposed primarily to credit risk and liquidity risk. The management of the Company oversees the management of these risks. The management is supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company's senior management that the Companies financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companies policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.
(i) Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to its bank borrowings obtained with floating interest rates.
The Company is not exposed to the interest rate risk as there are no variable interest bearing borrowings/investments.
(ii) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a different currency from the Company’s functional currency).
Trade receivables:
The Company applies the Ind AS 109 simplified approach for measuring expected credit losses which uses a lifetime expected loss allowance (ECL) for trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
The Company uses past data and experience based on Company’s historical default rates to measure the ECL on trade receivables. Based on evaluation carried out and to the best estimate of management, historical loss sufficiently covers expected loss as well as future contingencies. Adjustment for forward looking factors are not considered significant, hence no adjustment for forward looking factors is made.
(iii) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises principally from the Company’s trade receivables, security deposits, bank balances and other financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.
(iv) Liquidity risk
Liquidity risk is the current and prospective risk arising out of an inability to meet financial commitments as they fall due, through available cash flows or through the sale of assets at fair market value. Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.
The Company’s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. The management monitors the Company’s net liquidity position through forecasts on the basis of expected cash flows.
Balances with banks as well as cash and cash equivalents are considered to have negligible risk or nil risk, as they are maintained with high rated banks as approved by the Board of directors.
Other financial assets mainly includes security deposit given, term deposits, loan to related parties, interest accrued on deposits, etc. Based on assessment carried by the Company, entire receivable under this category is classified as "Stage 1". There is no history of loss and credit risk and the amount of provision for expected credit losses on other financial assets is negligible.
(v) Fair value measurement hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1- Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
The fair value of cash and cash equivalents, trade receivables, trade payables, other financial liabilities and other financial assets approximate their carrying amount largely due to short term nature of these instruments. The amortised cost using effective interest rate (EIR) of non-current financial assets consisting of security deposits are not significantly different from the carrying amount.
38. CAPITAL MANAGEMENT
The entity’s objectives when managing capital are to:
• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
• Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by Total 'equity’ (as shown in the statement of financial position). No changes were made in the objectives, policies or processes for managing capital during the reporting periods. There are no Debts taken by the Company. Therefore, Capital structure comprised of only equity as there are no external debts availed by Company.
(a) Mr. Rohit Agarwal (ex-employee) had filed a case against the Company with the Labour Court. An order was passed by Labour Court dated 11th February, 2011 directing the Company to reinstate Mr. Agarwal as an employee and to pay back wages to him to the extent of 25% along with continuity of service with effect from 9th April, 2002. Against the order of Labour court a writ petition was filed before the High court by the Company. By way of Order dated 10th October, 2011, the High Court granted a stay on the Labour Court’s orders on the condition that Company Deposit back the wages in Court. An order dated 27th January, 2012 recorded that Company has deposited Rs. 0.79 million i.e. 100% back wages from 27th February, 2009 to 31st October, 2011, with the Prothonotary and Senior Master of the High Court. The Writ Petition has been listed from time to time and is pending for final hearing.
(b) KS Trade LLC ("Complainant") has filed a complaint dated 21th December, 2017 ("Complaint") against IGI International Gemmological Institute Inc. (IGI USA), International Gemmological Institute DMCC (IGI UAE) along with the Company (collectively, "IGI Entities") and others (together with IGI Entities, "Defendants"), before the Supreme Court of the State of New York. The Complainant has demanded USD 0.75 million and alleged inter alia that the Defendants conspired to misrepresent the true value of diamonds by intentionally over-grading diamonds in IGI Entities’ affiliated laboratories outside of New York, thereby allowing diamond dealers and wholesalers to re-sell diamonds at artificially inflated prices.
It has also been alleged that IGI USA’s grading standards differs substantially from those of other IGI Entities outside New York and it offers to over-grade diamonds in line with Other IGI Entities' grading standard for an illicit fee. The Company have refuted these allegations and the matter is under litigation.
(c) Pursuant to the notice received by the Company from the Ministry of Corporate Affairs (MCA) for non compliances under Companies Act, 2013, the Company has made an application for compunding for the non compliances as per applicable provisions of Companies Act, 2013 and adequate provision has been made in the books in this regard, the matter is currently pending adjudication.
42. SEGMENT REPORTING
The Company’s business activity primarily falls within a single business segment based on the nature of activity involved, which is in line with the business risks attached with the segment having regard to the internal organisation and management structure. The CODM reviews the Company’s performance as a single business segment and not at any other disaggregated level. Hence, no separate financial disclosures provided in respect of its single business segment.
Operations of the Company are managed from India. Accordingly, the following have been identified as operating and reportable segments: (a) "Within India", and (b) "Outside India". In presenting geographic information, segment revenue has been based on the location of the customer and segment assets are based on geographical location of assets.
43. During the year, the Company has completed the acquisition of 100% equity in IGI Netherland B.V. and International Gemmological Institute BV for a consideration of Rs. 7,523.62 million and Rs. 5,934.59 million, respectively, out of which Rs. 13,000.00 million was paid out of the proceeds from IPO.
44. During the year ended 31st December, 2024, the Company has completed its Initial Public Offer ("IPO") of 101,323,893 equity shares of face value of Rs. 2/- each comprising of fresh issue of 35,376,651 equity shares at an issue price of Rs. 417 per equity share aggregating to Rs. 14,750.00 million, except for 52,910 equity shares issued to eligible employees under the "Employee Reservation Portion" of the IPO for which a discount of Rs. 39 per equity share was provided and an offer for sale of 65,947,242 equity shares at an issue price of Rs. 417 per equity share aggregating to Rs. 27,500.00 million. Pursuant to IPO, equity shares of the Company were listed on BSE Limited and National Stock Exchange w.e.f. 20th December, 2024.
The Company has received an amount of Rs. 14,097.40 million (net of IPO expenses of Rs. 652.60 million) from proceeds out of fresh issue of equity shares. The IPO expenses incurred of Rs. 521.20 million (including deferred taxes) has been adjusted against securities premium.
46. CORPORATE SOCIAL RESPONSIBILITY
As per Section 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. A CSR committee has been formed by the Company as per the Act. The funds are utilised through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.
48. ADDITIONAL REGULATORY INFORMATION REQUIRED BY SCHEDULE III
i) Details of benami property held
No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made there under.
ii) Borrowing secured against current assets
No such borrowings have been availed by the Company during the year.
iii) Wilful defaulter
Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
iv) Relationship with struck off companies
The Company has no transactions with companies struck off under Companies Act, 2013 or Companies Act, 1956.
v) Registration of charges or satisfaction with Registrar of Companies
There are no charges or satisfaction which are yet to be registered with Registrar of Companies.
vi) Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under the Companies Act, 2013.
vii) Compliance with approved scheme(s) of arrangements
The Company has not entered into any scheme of arrangement which has an accounting impact in the current year.
viii) Undisclosed Income
The Company has not surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961, that have not been recorded in the books of account.
ix) Details of crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the reported year.
x) Valuation of PP&E, intangible asset and investment property
The Company has not revalued its property, plant and equipment or Investment Properties (including right-of-use assets) or intangible assets.
xi) Utilisation of borrowed funds and share premium
The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
b provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b provide any guarantee, security or the like on behalf of the ultimate beneficiaries
49 CONVERSION OF THE COMPANY FROM PRIVATE LIMITED TO PUBLIC LIMITED
Pursuant to resolution passed by the Members in the Extra odinary General Meeting dated 19th June 2024 and as approved by Registrar of the Company w.e.f. 10th July 2024, the Company has been converted from Private Limited Company into a Public Limited Company including adoption of new Memorandum of Association and new Articles of Association as applicable to Public Company in place of existing Memorandum of Association and Articles of Association of the Company.
50 CODE OF SOCIAL SECURITY, 2020
The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come in to effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period when the Code becomes effective
51 The Accounts of the Company have been prepared on "going concern basis". The Board of Directors are of the Opinion that the Current Assets, Loans and Advances have realisation value of an amount equivalent to their stated carrying values
52 The Company has not entered into any agreements for loans or advances to the directors, promoters, KMP’s and related parties where either loans and advances repayable on demand or without specifying any terms of period of payment
53.1 AUDIT TRAIL COMPLIANCE
The Company has used an accounting software for maintaining its books of account from 1st January, 2024 to 31st October, 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, there were no instance of audit trail feature being tampered with.
Further, the Company migrated to a new accounting software from 1st November, 2024 for which used for maintaining its books of account, which and was managed and maintained by a third-party service provider. In the absence of sufficient and appropriate audit evidence, due to non availability of SOC report, the management was unable to determine whether the database of the software to log any direct changes has a feature of recording audit trail (edit log) facility and whether the same has been enabled and operated for the period from 1st November, 2024 to 31st Decemeber, 2024 for all relevant transaction recorded or whether there is is any instance of audit trail feature being tampered with.
The Company has used an accounting software for maintaining transactions for revenue which has a feature of recording the audit trail (edit log) facility, except that audit trail feature was not enabled throughout the year for certain relevant transactions recorded in the accounting software at the application level. Further, the audit trail feature was not enabled at the database level within the accounting software to log any direct changes.
Further, to the extent enabled, the audit trail feature has been operated for the relevant transactions recorded in the accounting software and there were no instance of the audit trail feature being tampered with. Additionally, the audit trail feature of previous year has been preserved by the Company as per the statutory requirements for record retention to the extent it was enabled and recorded in previous year.
53.2 MAINTENANCE OF BOOKS OF ACCOUNT ON SERVER IN INDIA
As per the MCA notification dated 5th August, 2022, the Central Government has notified the Companies (Accounts) Fourth Amendment Rules, 2022. As per the amended rules, the Companies are required to maintain back-up of the books of account and other relevant books and papers in electronic mode that should be accessible in India at all times. Also, the Companies are required to maintain such back-up of accounts on servers which are physically located in India, on a daily basis. The books of account along with other relevant records and papers of the Company are currently maintained in electronic mode. These are readily accessible in India at all times and a back-up is maintained on a daily basis on servers located in India.
54 EVENTS SUBSEQUENT TO BALANCE SHEET DATE
The Board of Directors of the Company in its meeting held on 22nd February, 2025 had declared the interim dividend of Rs. 2.44 per equity share of face value of Rs. 2/- each for the year ended 31st December, 2024. The record date for the purpose of said interim dividend is 28th February, 2025.
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