**Goenka Diamond and Jewels Limited** is an Indian-based integrated luxury goods enterprise specializing in the cutting and polishing of diamonds and the manufacturing, trading, and retailing of diamond and gold jewellery. Originally established as an exporter of colored stones, the company expanded into the diamond trade in **1994** and diamond-studded jewellery manufacturing in **2003**. The company is currently navigating a critical **Corporate Insolvency Resolution Process (CIRP)** aimed at restructuring its substantial debt and revitalizing its operational infrastructure. --- ### **Core Business Segments & Revenue Recognition** The company operates through two primary business segments identified under **Ind AS 108**: * **Diamond and Gem Segment:** Focuses on the sourcing of rough diamonds and the precision cutting and polishing process. These diamonds are supplied to wholesalers, jewellery manufacturers, traders, and retailers, primarily within the **Indian market**. * **Retail Jewellery Segment:** Involves the design, manufacturing, and sale of gold and diamond-studded jewellery. **Revenue Framework (Ind AS 115):** The company utilizes a **five-step model** for revenue recognition, ensuring income is recorded only upon the **transfer of control** to the customer. | Revenue Component | Description | | :--- | :--- | | **Primary Products** | **Cut and Polished Diamonds**, **Gold Jewellery**, and **Diamond Jewellery**. | | **Measurement Basis** | **Transaction price** adjusted for **volume discounts**, **service level credits**, and **performance bonuses**. | | **Recognition Point** | Point of sale/delivery when **performance obligations** are satisfied (point-in-time). | | **Exclusions** | Figures exclude **taxes collected** and are net of **price concessions**. | --- ### **Operational Infrastructure & Current Status** * **Manufacturing Base:** The company maintains a diamond processing unit in **Surat**, though operations are currently **temporarily closed** due to the ongoing insolvency process. * **Supply Chain:** Historically, success has been tied to the procurement of high-quality rough diamonds at competitive prices. * **Geographic Shift:** While previously active in export markets, recent performance in exports has been weak, with a strategic pivot toward domestic branded jewellery. * **Insolvency Supervision:** As of late **2024**, the company is under the supervision of an **Interim Resolution Professional (IRP)**. The Board of Directors is currently **suspended**. --- ### **Strategic Revitalization & Resolution Plan** A comprehensive Resolution Plan proposed by the **Successful Resolution Applicant (SRA)**, Shri Navneet Goenka, is currently the primary vehicle for the company’s turnaround. **Settlement Terms for Secured Financial Creditors (SFCs):** The RA has proposed a total settlement of **Rs. 35 crore** to discharge liabilities against admitted claims of **Rs. 473.38 crore**. | Payment Phase | Amount | Timeline (from Effective Date) | | :--- | :--- | :--- | | **Upfront Payment** | **Rs. 10 crore** | Within **90 Days** | | **1st Instalment** | **Rs. 10 crore** | Within **270 Days** | | **2nd Instalment** | **Rs. 10 crore** | Within **540 Days** | | **3rd Instalment** | **Rs. 5 crore** | Within **810 Days** | **Means of Finance:** The resolution will be funded through a total infusion of **Rs. 5,071.90 lakhs**: * **Rs. 2,200 lakhs**: Issue of **22,00,00,000 equity shares** at **Rs. 1.00** par value to the RA/nominees. * **Rs. 2,871.90 lakhs**: Infusion via **Equity, Unsecured Interest-Free Debt, or Convertible Debentures**. **Asset Monetization Timeline:** To generate liquidity, specific non-core assets are slated for disposal: * **Nagpur Commercial Asset:** Release of charge within **15 days** of the 1st instalment. * **Mumbai Residential Asset (Mount Unique):** Release of charge within **15 days** of the 2nd instalment. --- ### **Financial Discrepancies & Audit Qualifications** There is a massive disparity between the company’s internal books and the claims admitted during the CIRP process. | Metric | Book Value (Lakhs) | Admitted Claims (Lakhs) | Gap/Unrecorded (Lakhs) | | :--- | :--- | :--- | :--- | | **Secured Financial Debt** | **17,730.38** | **47,338.19** | **31,677.89** | | **Income Tax Dues** | Not Specified | **5,069.00** | Unadjusted in books | | **Trade Payables (>3 yrs)** | **29,772.67** | **29.77** | Subject to CIRP | **Critical Financial Risks:** * **Interest Non-Provisioning:** The company ceased accounting for interest on borrowings on **April 1, 2016**. Unrecorded interest is estimated at **Rs. 209.79 crore** (calculated at **17% p.a.**). * **Foreign Exchange Exposure:** Cumulative unrecognized exchange gains/losses on trade payables amount to **Rs. 15,078.13 lakhs**. * **Receivables Uncertainty:** Overdue trade receivables total **Rs. 76,281.43 lakhs**. Auditors have issued a **Disclaimer of Opinion** regarding their recovery. * **Subsidiary Impairment:** Loans to a subsidiary (**Rs. 1,249.95 lakhs**) have not been impaired despite the subsidiary's **negative net worth**. --- ### **Corporate Structure & Governance** The company’s equity consists of **31,70,00,000 shares** (par value **Rs. 1**). Notably, **4,09,76,250 shares** currently carry **no voting rights** per CLB directions following a promoter dispute. **Key Entities & Management:** * **Direct Subsidiaries:** M.B. Diamonds LLC (Russia), Goenka Diamond & Jewels DMCC (Dubai), Solitaire Diamond Exports. * **Key Personnel:** **Nand Lal Goenka** (Chairman/CEO), **Navneet Goenka** (MD/CFO), **Sanjeev Kumar Jain** (Executive Director). * **Lender Relations:** Debt from **Axis Bank, UCO Bank, Central Bank of India, and Karnataka Bank** has been assigned to **Asset Reconstruction Companies (ARCs)**. --- ### **Legal, Regulatory & Going Concern Risks** The company faces significant headwinds that challenge its status as a **going concern**: * **Regulatory Investigations:** The **Enforcement Directorate (ED)** and **RBI** have issued summons and show-cause notices regarding the non-realization of overseas export bills under **FEMA, 1999**. * **Wilful Defaulter Status:** **Punjab National Bank (PNB)** has initiated **SARFAESI** proceedings, taken possession of mortgaged properties, and issued "wilful defaulter" notices to the company and its directors. * **Statutory Defaults:** Persistent non-regularity in depositing **Provident Fund (PF)**, **TDS**, and **Service Tax**. * **Resolution Contingency:** The NCLAT has stayed liquidation, instructing the RP to maintain the company as a going concern. However, the resolution plan is criticized by some parties as "conditional" due to its reliance on the sale of personal properties by the SRA.