Accounting Policies of Gitanjali Gems Ltd. Company

Mar 31, 2015

1) Basis of Preparation of Financial Statements

The Financial statements of the Company have been prepared on accrual basis under the historical cost Convention, in accordance with generally accepted accounting principles in India (Indian GAAP) to comply with the accounting standards specified in Section 133 of the Companies Act,2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and relevant provisions of the Companies Act,2013.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard or a more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.

2) Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

3) Fixed Assets

(a) Tangible Assets:

Fixed assets are recorded at the cost of acquisition inclusive of freight, duties, taxes and incidental expenses related to acquisition. Expenditure incurred during construction period has been added to the cost of assets. Application software bundled with hardware are capitalized along with such hardware/computers/server.

(b) Leased Assets:

i. Assets taken on finance lease, including taken on hire purchase arrangements, wherein the Company has an option to acquire the asset, are accounted for as fixed assets in accordance with the Accounting Standard 19 on "Leases", (AS 19).

ii. Assets taken on lease under which the lessor effectively retains all the risk and rewards of ownership are classified as operating lease. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with the respective lease agreement.

iii. The cost of improvements to lease properties are capitalized and disclosed appropriately.

4) Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

5) Depreciation / Amortisation

Depreciation on Fixed Assets is provided on WDV method over the useful lives of the assets, as prescribed under Schedule II of the Companies Act, 2013 with effect from 1st April, 2014. The expenditure incurred on improvement to leasehold premises is written off evenly over the period of the lease. Individual Assets costing below Rs. 5000/- each are fully depreciated in the year of acquisition.

6) Investment

i) Long - term investments including investment in Subsidiaries are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

ii) Current investments are carried individually, at lower of cost and fair value.

Cost of investments include acquisition charges such as brokerage, fees and duties.

7) Foreign Currency Transactions

Transactions in foreign currency are recorded at the rate in force on the date of transactions.

Foreign currency assets, except investments and liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the date of the Balance Sheet and resultant gains/losses are charged to the Statement of Profit and Loss.

Premium or discount arising at the inception of forward foreign exchange contracts is amortized as expense or income over the life of the contracts. Any profit or loss arising on cancellation or renewal of such forward contract is recognized as income or expense for the period.

Exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset are recognized in the Statement of Profit and Loss.

8) Revenue Recognition

a) Revenue on sale of products is recognized as and when the products are dispatched to customers or acknowledged by the customers. Sales are stated net of returns and excluding sales tax.

b) Other revenue is recognized only when it is reasonably certain that the ultimate collection will be made.

9) Inventories

Inventories of raw materials, finished goods, rejections, trading goods and stores are valued as under: -

Raw Materiali Lower of cost and net realisable value

Rough Diamond Rejections At net realisable value

Trading Goods Lower of cost and net realisable value

Finished Goods - Polished Diamonds Lower of cost and net realisable value

Work in progress - Jewellery

: Lower of market value and material cost plus proportionate labour and overheads.

Finished Goods - Jewellery

Lower of market value and material cost plus labour and overheads.

Finished Goods - Gold; Lower of cost and market value

Consumable Stores & Tools At cost

10) Employee Benefits

i. Defined Benefit Plan - Leave Salary:

The company has provided for liability towards leave salary based on actuarial valuation. The Company's liability towards leave salary is determined on the basis of year end actuarial valuations applying the Projected Unit Credit Method done by an independent actuary. The actuarial gains or losses determined by the actuary are recognized in the Statement of Profit and Loss as income or expense.

ii. Defined Contribution Plans :

Contributions payable by the Company to the concerned Government authorities in respect of Provident Fund, Family Pension Fund and Employees State Insurance are charged to Statement of Profit & Loss.

iii. Defined Benefit Plan - Gratuity:

The Company's liability towards gratuity is determined on the basis of year end actuarial valuations applying the Projected Unit Credit Method done by an independent actuary. The actuarial gains or losses determined by the actuary are recognized in the Statement of Profit and Loss as income or expense.

11) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying asset are capitalized as part of the cost of asset. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

12) Taxation

The Company is eligible for tax incentives under the Indian Taxation Laws. These incentives presently include an exemption from payment of normal Income Tax for operation in Special Economic Zones. Income from operations in SEZ is subject to MAT. Such MAT is eligible for set off as given hereunder. The management estimates the provisions for current tax after considering such tax benefits.

Deferred tax is recognized, subject to prudence, on timing differences, being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized for unabsorbed depreciation and carry forward losses to the extent there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realized.

Minimum Alternate Tax (MAT) credit: MAT is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss and is shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

13) Earnings Per Share

Earnings per share (EPS) is calculated by dividing the net profit or loss for the period attributable to equity shareholders, by the weighted average number of equity shares outstanding during the period.

Dilutive EPS is calculated by dividing the net profit or loss for the period attributable to equity shareholders, by the weighted average number of equity shares considered for deriving the basic EPS and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted at the beginning of the year and not issued at a later date.

14) Segment Reporting

The Company is primarily engaged in the business of Diamond and jewellery comprising of Diamond Studded Jewellery and Plain Gold Jewellery. This represents a primary segment. The company operates in India as well as abroad. The secondary segmental reporting is on the basis of the geographical location of its customers.

15) Cash Flow Statement

Cash flows are reported using indirect methods as set out in Accounting Standard (AS) - "Cash Flow Statement", whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

Cash and cash equivalents :

Cash comprises cash at bank and in hand and demand deposits with banks. Cash equivalents are short term balances that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

16) Provisions for Contingent Liabilities and Contingent Assets

Contingent liabilities are not provided for and are disclosed by way of notes after careful evaluation by the management of the facts and legal aspects of the matters involved. Contingent assets are neither recognized nor disclosed in the financial statements.

---

Mar 31, 2014

1) Basis of Preparation of Financial Statements

The accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act 1956, to the extent applicable read with general circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act 2013, to the extent applicable. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard or a more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.

2) Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

3) Fixed Assets

(a) Tangible Assets:

Fixed assets are recorded at cost of acquisition inclusive of freight, duties, taxes and incidental expenses related to acquisition. Expenditure incurred during construction period has been added to the cost of assets.

(b) Leased Assets:

i. Assets taken on finance lease, including taken on hire purchase arrangements, wherein the Company has an option to acquire the asset, are accounted for as fixed assets in accordance with the Accounting Standard 19 on "Leases", (AS 19).

ii. Assets taken on lease under which the lessor effectively retains all the risk and rewards of ownership are classifed as operating lease. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with the respective lease agreement.

iii. The cost of improvements to lease properties are capitalized and disclosed appropriately.

4) Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

5) Depreciation / Amortisation

Depreciation is charged on the fixed assets under the written down value method in accordance with the provisions of Schedule XIV to the Companies Act, 1956. The expenditure incurred on improvement of assets acquired on lease is written off evenly over the period of the lease.

6) Investment

Long – term investments including investment in Subsidiaries are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

7) Foreign Currency Transactions

Transactions in foreign currency are recorded at the rate in force on the date of transactions.

Foreign currency assets, except investments and liabilities other than for fnancing fixed assets are stated at the rate of exchange prevailing at the date of the Balance Sheet and resultant gains/losses are charged to the Statement of profit and Loss.

Premium or discount arising at the inception of forward foreign exchange contracts is amortized as expense or income over the life of the contracts. Any profit or loss arising on cancellation or renewal of such forward contract is recognized as income or expense for the period.

Exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset are recognized in the Statement of profit and Loss.

8) Revenue Recognition

a) Revenue on sale of products is recognized as and when the products are dispatched to customers or acknowledged by the customers. Sales are stated net of returns and excluding sales tax.

b) Other revenue is recognized only when it is reasonably certain that the ultimate collection will be made.

9) Inventories

Inventories of raw materials, fnished goods, rejections, trading goods and stores are valued as under: -

Raw Material Lower of cost and net realisable value

Rough Diamond Rejections At net realisable value

Trading Goods Lower of cost and net realisable value

Finished Goods–Polished Diamonds Lower of cost and net realisable value

Work in progress – Jewellery Lower of market value and material cost plus proportionate labour and overheads.

Finished Goods – Jewellery Lower of market value and material cost plus labour and overheads.

Finished Goods – Gold Lower of cost and market value

Consumable Stores & Tools At cost

10) Employee benefits

i. Defined benefit Plan – Leave Salary:

The company has provided for liability towards leave salary based on actuarial valuation. The Company''s liability towards leave salary is determined on the basis of year end actuarial valuations applying the Projected Unit Credit Method done by an independent actuary. The actuarial gains or losses determined by the actuary are recognized in the Statement of profit and Loss as income or expense. ii. Defined Contribution Plans :

Contributions payable by the Company to the concerned Government authorities in respect of Provident Fund, Family Pension Fund and Employees State Insurance are charged to Statement of profit & Loss. iii. Defined benefit Plan – Gratuity:

The Company''s liability towards gratuity is determined on the basis of year end actuarial valuations applying the Projected Unit Credit Method done by an independent actuary. The actuarial gains or losses determined by the actuary are recognized in the Statement of profit and Loss as income or expense.

11) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying asset are capitalized as part of the cost of asset. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

12) Taxation

The Company is eligible for tax incentives under the Indian Taxation Laws. These incentives presently include an exemption from payment of normal Income Tax for operation in Special Economic Zones. Income from operations in SEZ is subject to MAT. Such MAT is eligible for set off as given hereunder. The management estimates the provisions for current tax after considering such tax benefits.

Deferred tax is recognized, subject to prudence, on timing differences, being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized for unabsorbed depreciation and carry forward losses to the extent there is virtual certainty that suffcient future taxable income will be available against which deferred tax assets can be realized.

Minimum Alternate Tax (MAT) credit: MAT is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of profit and Loss and is shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

13) Earnings Per Share

Earnings per share (EPS) is calculated by dividing the net profit or loss for the period attributable to equity shareholders, by the weighted average number of equity shares outstanding during the period.

Dilutive EPS is calculated by dividing the net profit or loss for the period attributable to equity shareholders, by the weighted average number of equity shares considered for deriving the basic EPS and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted at the beginning of the year and not issued at a later date.

14) Provisions for Contingent Liabilities and Contingent Assets

Contingent liabilities are not provided for and are disclosed by way of notes after careful evaluation by the management of the facts and legal aspects of the matters involved. Contingent assets are neither recognized nor disclosed in the financial statements.

d. Rights, Preferences and Restriction of Share holders

The company has only one class of Equity shares having par value of Rs. 10/-. The equity share have rights, Preferences and restrictions which are in accordance with the provision of law, in particular the Companies Act 1956.

f. Particulars of shares issued for consideration other than cash, shares bought back and bonus shares in last five years :

i) Company bought back 792,883 Equity shares in Financial year 2009-10; ii) Issue of bonus shares –NIL.

g. There are no shares reserved for issuing under options, contracts / commitments for sale of shares / disinvestments h. Particulars of calls in arrears by directors and officers of the company. – NIL

i. Security convertible into equity shares : During FY 2012-13, the Company has issued 1 (one) Zero percent Fully Convertible Debentures (FCDs) having face value of Rs. 39,00,00,000/- (Rupees Thirty Nine Crore Only) on a preferential basis to D.B Corp Limited. The said FCD will be compulsorily convertible into such number of equity shares with face value of Rs. 10/- each at the end of 18 months from the date of allotment at a price determined as per SEBI (ICDR) Regulations, 2009(i.e. 4th June 2014).

Except this during the year, the company has not issued any security which are to be converted in to equity shares.

---

Mar 31, 2013

A. Basis of Preparation of Financial Statements

The accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act 1956, to the extent applicable. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard or a more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.

b. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c. Fixed Assets

(1) Tangible Assets:

Fixed assets are recorded at cost of acquisition inclusive of freight, duties, taxes and incidental expenses related to acquisition. Expenditure incurred during construction period has been added to the cost of assets.

(2) Leased Assets:

i. Assets taken on finance lease, including taken on hire purchase arrangements, wherein the Company has an option to acquire the asset, are accounted for as fixed assets in accordance with the Accounting Standard 19 on "Leases", (AS 19).

ii. Assets taken on lease under which the lessor effectively retains all the risk and rewards of ownership are classified as operating lease. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with the respective lease agreement.

iii. The cost of improvements to lease properties are capitalized and disclosed appropriately.

(3) Impairment of Fixed Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

d. Depreciation / Amortisation

Depreciation is charged on the fixed assets under the written down value method in accordance with the provisions of Schedule XIV to the Companies Act, 1956. The expenditure incurred on improvement of assets acquired on lease is written off evenly over the period of the lease.

e. Investment

Long - term investments including investment in Subsidiaries are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

f. Foreign Currency Transactions

Transactions in foreign currency are recorded at the rate in force on the date of transactions.

Foreign currency assets, except investments and liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the date of the Balance Sheet and resultant gains/losses are charged to the Statement of Profit and Loss.

Premium or discount arising at the inception of forward foreign exchange contracts is amortized as expense or income over the life of the contracts. Any profit or loss arising on cancellation or renewal of such forward contract is recognized as income or expense for the period.

Exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset are recognized in the Statement of Profit and Loss.

g. Revenue Recognition

1) Revenue on sale of products is recognized as and when the products are dispatched to customers or acknowledged by the customers. Sales are stated net of returns and excluding sales tax.

2) Other revenue is recognized only when it is reasonably certain that the ultimate collection will be made

h. Inventories

Inventories of raw materials, finished goods, rejections, trading goods and stores are valued as under: -

Raw Material Lower of cost and net realisable value

Rough Diamond Rejections At net realisable value

Trading Goods Lower of cost and net realisable value

Finished Goods - Polished Diamonds Lower of cost and net realisable value

Work in progress - Jewellery Lower of market value and material cost plus proportionate labour and overheads.

Finished Goods - Jewellery Lower of market value and material cost plus labour and overheads.

Finished Goods - Gold Lower of cost and market value

Consumable Stores & Tools At cost

i. Employee Benefits

1) Defined Benefit Plan - Leave Salary:

The company has with effect from current year provided for liability towards leave salary based on actuarial valuation. The Company was accounting for leave salary on payment basis as per the policy of the company in the previous year. The Company''s liability towards leave salary is determined on the basis of year end actuarial valuations applying the Projected Unit Credit Method done by an independent actuary. The actuarial gains or losses determined by the actuary are recognized in the Statement of Profit and Loss as income or expense.

2) Defined Contribution Plans :

Contributions payable by the Company to the concerned Government authorities in respect of Provident Fund, Family Pension Fund and Employees State Insurance are charged to Statement of Profit & Loss.

3) Defined Benefit Plan - Gratuity:

The Company''s liability towards gratuity is determined on the basis of year end actuarial valuations applying the Projected Unit Credit Method done by an independent actuary. The actuarial gains or losses determined by the actuary are recognized in the Statement of Profit and Loss as income or expense. j. Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying asset are capitalized as part of the cost of asset. A qualifying asset is one that necessary takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred. k. Taxation

The Company is eligible for tax incentives under the Indian Taxation Laws. These incentives presently includes an exemption from payment of normal Income Tax for operation in Special Economic Zones. Income from operations in SEZ is subject to MAT. Such MAT is eligible for set off as given hereunder. The management estimates the provisions for current tax after considering such tax benefits.

Deferred tax is recognized, subject to prudence, on timing differences, being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized for unabsorbed depreciation and carry forward losses to the extent there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realized.

Minimum Alternate Tax (MAT) credit: MAT is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss and is shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

l. Earnings Per Share

Earnings per share (EPS) is calculated by dividing the net profit or loss for the period attributable to equity shareholders, by the weighted average number of equity shares outstanding during the period.

Dilutive EPS is calculated by dividing the net profit or loss for the period attributable to equity shareholders, by the weighted average number of equity shares considered for deriving the basic EPS and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted at the beginning of the year and not issued at a later date.

m. Provisions for Contingent Liabilities and Contingent Assets

Contingent liabilities are not provided for and are disclosed by way of notes after careful evaluation by the management of the facts and legal aspects of the matters involved. Contingent assets are neither recognized nor disclosed in the financial statements.

---

Mar 31, 2012

1) Basis of Preparation of Financial Statements

The accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act 1956, to the extent applicable. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard or a more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.

2) Presentation and Disclosure of Financial Statements:

For the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of the Balance Sheet. The Company has reclassified previous year figures to confirm to this year's classification.

3) Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

4) Fixed Assets

(a) Tangible Assets:

Fixed assets are recorded at cost of acquisition inclusive of freight, duties, taxes and incidental expenses related to acquisition. Expenditure incurred during construction period has been added to the cost of assets.

(b) Leased Assets:

i. Assets taken on finance lease, including taken on hire purchase arrangements, wherein the Company has an option to acquire the asset, are accounted for as fixed assets in accordance with the Accounting Standard 19 on “Leases”, (AS 19).

ii. Assets taken on lease under which the lessor effectively retains all the risk and rewards of ownership are classified as operating lease. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with the respective lease agreement

iii. The cost of improvements to lease properties are capitalized and disclosed appropriately.

(c) Impairment of Fixed Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

5) Depreciation / Amortisation

Depreciation is charged on the fixed assets under the written down value method in accordance with the provisions of Schedule XIV to the Companies Act, 1956. The expenditure incurred on improvement of assets acquired on lease is written off evenly over the period of the lease.

6) Investment

Long – term investments including investment in Subsidiaries are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

7) Foreign Currency Transactions

Transactions in foreign currency are recorded at the rate in force on the date of transactions.

Foreign currency assets, except investments and liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the date of the Balance Sheet and resultant gains/losses are charged to the Statement of Profit and Loss.

Premium or discount arising at the inception of forward foreign exchange contracts is amortized as expense or income over the life of the contracts. Any profit or loss arising on cancellation or renewal of such forward contract is recognized as income or expense for the period.

Exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset are recognized in the Statement of Profit and Loss.

8) Revenue Recognition

a) Revenue on sale of products is recognized as and when the products are dispatched to customers or acknowledged by the customers. Sales are stated net of returns and excluding sales tax.

b) Other revenue is recognized only when it is reasonably certain that the ultimate collection will be made

9) Inventories

Inventories of raw materials, finished goods, rejections, trading goods and stores are valued as under:

Raw Material Lower of cost and net realisable value

Rough Diamond Rejections At net realisable value

Trading Goods Lower of cost and net realisable value

Finished Goods – Polished Diamonds Lower of cost and net realisable value

Work in progress – Jewellery Lower of market value and material cost plus proportionate labour and overheads.

Finished Goods – Jewellery Lower of market value and material cost plus labour and overheads.

Finished Goods – Gold Lower of cost and market value

Consumable Stores & Tools At cost

10) Employee Benefits

i. Defined Benefit Plan – Leave Salary:

Leave Salary is paid to all employees as per the policy of Company every year.

ii. Defined Contribution Plans :

Contributions payable by the Company to the concerned Government authorities in respect of Provident Fund, Family Pension Fund and Employees State Insurance are charged to Profit & Loss A/c.

iii. Defined Benefit Plan – Gratuity:

The Company's liability towards gratuity is determined on the basis of year end actuarial valuations applying the Projected Unit Credit Method done by an independent actuary. The actuarial gains or losses determined by the actuary are recognized in the Statement of Profit and Loss as income or expense.

11) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying asset are capitalized as part of the cost of asset. A qualifying asset is one that necessary takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

12) Taxation

The Company is eligible for tax incentives under the Indian Taxation Laws. These incentives presently includes an exemption from payment of Income Tax for operation in Special Economic Zones. The management estimates the provisions for current tax after considering such tax benefits.

Deferred tax is recognized, subject to prudence, on timing differences, being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized for unabsorbed depreciation and carry forward losses to the extent there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realized.

Minimum Alternate Tax (MAT) credit: MAT is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss and is shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

13) Earnings Per Share

Earnings per share (EPS) is calculated by dividing the net profit or loss for the period attributable to equity shareholders, by the weighted average number of equity shares outstanding during the period.

Dilutive EPS is calculated by dividing the net profit or loss

for the period attributable to equity shareholders, by the weighted average number of equity shares considered for deriving the basic EPS and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted at the beginning of the year and not issued at a later date.

14) Provisions for Contingent Liabilities and Contingent Assets Contingent liabilities are not provided for and are disclosed by way of notes after careful evaluation by the management of the facts and legal aspects of the matters involved. Contingent assets are neither recognized nor disclosed in the financial statements.

---

Mar 31, 2011

1.1 Accounting Concepts

The accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act 1956, to the extent applicable. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard or a more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.

1.2 Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and iabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

1.3 Revenue Recognition

a) Revenue on sale of products is recognised as and when the products are dispatched to customers or acknowledged by the customers. Sales are stated net of returns and excluding sales tax.

b) Revenue is recognised only when it is reasonably certain that the ultimate collection will be made

1.4 Fixed Assets

Fixed assets are recorded at cost of acquisition inclusive of freight, duties, taxes and incidental expenses related to acquisition. Expenditure incurred during construction period has been added to the cost of assets.

1.5 Leased Assets

a) Assets taken on finance lease, including taken on hire purchase arrangements, wherein the Company has an option to acquire the asset, are accounted for as fixed assets in accordance with the Accounting Standard 19 on "Leases", (AS 19).

b) Assets taken on lease under which the lessor effectively retains all the risk and rewards of ownership are classified as operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the respective lease agreement.

c) The cost of improvements to lease properties are capitalised and disclosed appropriately.

1.6 Impairment of Fixed Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount

1.7 Depreciation

Depreciation is charged on the fixed assets under the written down value method in accordance with the provisions of Schedule XIV to the Companies Act, 1956. The expenditure incurred on improvement of assets acquired on lease is written off evenly over the balance period of the lease.

1.8 Investment

Long - term investments including investment in Subsidiaries are stated at cost. Provision for diminution in the value of long-term nvestments is made only if such a decline is other than temporary in the opinion of the management.

1.9 Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying asset are capitalised as part of the cost of asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

1.10 Foreign Currency Transactions

Transactions in foreign currency are recorded at the rate in force on the date of transactions.

Foreign currency assets, except investments and liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the date of balance sheet and resultant gains/losses are charged to the profit and loss account.

Premium or discount arising at the inception of forward foreign exchange contracts is amortised as expense or income over the life of the contracts. Any profit or loss arising on cancellation or renewal of such forward contract is recognised as income or expense for the period.

Exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset are recognised in the Profit and Loss account.

1.11 Inventories

Inventories of raw materials, finished goods, rejections, trading goods and stores are valued as under: -

Raw Material Lower of cost and net realisable value

Rough Diamond Rejections At net realisable value

Trading Goods Lower of cost and net realisable value

Finished Goods – Polished Diamonds Lower of cost and net realisable value

Work in progress – Jewellery Lower of market value and material cost plus proportionate labour and overheads.

Finished Goods – Jewellery Lower of market value and material cost plus labour and overheads.

Finished Goods – Gold Lower of cost and market value

Consumable Stores & Tools At cost

1.12 Taxation

The Company is eligible for tax incentives under the Indian Taxation Laws. Tese incentives presently includes an exemption from payment of Income Tax for operation in Special Economic Zones. The management estimates the provisions for current tax after considering such tax benefits.

Deferred tax is recognised, subject to prudence, on timing differences, being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognised for unabsorbed depreciation and carry forward losses to the extent there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realised.

1.13 Employee Benefits

i. Leave Salary is paid to all employees as per the policy of Company every year.

ii. Defined Contribution Plans :

Contributions payable by the Company to the concerned Government authorities in respect of Provident Fund, Family Pension Fund and Employees State Insurance are charged to Profit & Loss A/c.

iii. Defined Benefit Plan :

The Company's liability towards gratuity is determined on the basis of year end actuarial valuations applying the Projected Unit Credit Method done by an independent actuary. The actuarial gains or losses determined by the actuary are recognised in the Profit and Loss Account as income or expense.

1.14 Earning Per Share

Earning per share (EPS) is calculated by dividing the net profit or loss for the period attributable to equity shareholders, by the weighted average number of equity shares outstanding during the period.

Dilutive EPS is calculated by dividing the net profit or loss for the period attributable to equity shareholders, by the weighted average number of equity shares considered for deriving the basic EPS and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted at the beginning of the year and not issued at a later date.

1.15 Provisions for Contingent Liabilities and Contingent Assets

Contingent liabilities are not provided for and are disclosed by way of notes after careful evaluation by the management of the facts and legal aspects of the matters involved. Contingent assets are neither recognised nor disclosed in the financial statements.

---

Mar 31, 2010

1.1 Accounting Concepts

The accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act 1956, to the extent applicable. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard or a more appropriate presentation of the fnancial statements requires a change in the accounting policy hitherto in use.

1.2 Use of estimates

The preparation of fnancial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the fnancial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

1.3 Revenue Recognition

a) Revenue on sale of products is recognised as and when the products are dispatched to customers & acknowledged by the customers. Sales are stated net of returns and excluding sales tax.

b) Revenue is recognised only when it is reasonably certain that the ultimate collection will be made

1.4 Fixed Assets

Fixed assets are recorded at cost of acquisition inclusive of freight, duties, taxes and incidental expenses related to acquisition. Expenditure incurred during construction period has been added to the cost of assets.

1.5 Leased Assets

a) Assets taken on fnance lease, including taken on hire purchase arrangements, wherein the Company has an option to acquire the asset, are accounted for as fxed assets in accordance with the Accounting Standard 19 on “Leases”, (AS 19) issued by the Institute of Chartered Accountants of India.

b) Assets taken on lease under which the lessor effectively retains all the risk and rewards of ownership are classifed as operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the respective lease agreement.

c) The cost of improvements to lease properties are capitalised and disclosed appropriately.

1.6 Impairment of Fixed Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Proft and Loss account in the year in which an asset is identifed as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount

1.7 Depreciation

Depreciation is charged on the fxed assets under the written down value method in accordance with the provisions of Schedule XIV to the Companies Act, 1956. The expenditure incurred on improvement of assets acquired on lease is written off evenly over the balance period of the lease.

1.8 Investment

Long – term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

1.9 Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying asset are capitalised as part of the cost of asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

1.10 Foreign Currency Transactions

Transactions in foreign currency are recorded at the rate in force on the date of transactions.

Foreign currency assets, except investments and liabilities other than for fnancing fxed assets are stated at the rate of exchange prevailing at the date of balance sheet and resultant gains/losses are charged to the proft and loss account.

Premium or discount arising at the inception of forward foreign exchange contracts is amortised as expense or income over the life of the contracts. Any proft or loss arising on cancellation or renewal of such forward contract is recognised as income or expense for the period.

Exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fxed asset are recognised in the Proft and Loss account.

1.11 Inventories

Inventories of raw materials, fnished goods, rejections, trading goods and stores are valued as under: -

Raw Material Lower of cost and net realisable value

Rough Diamond Rejections At net realisable value

Trading Goods Lower of cost and net realisable value

Finished Goods - Polished Diamonds Lower of cost and net realisable value

Work in progress - Jewellery Lower of market value and material cost plus proportionate labour and overheads. Finished Goods - Jewellery Lower of market value and material cost plus labour and overheads.

Finished Goods - Gold Lower of cost and market value

Consumable Stores & Tools At cost

1.12 Taxation

Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961.

Deferred tax is recognised, subject to prudence, on timing differences, being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognised for unabsorbed depreciation and carry forward losses to the extent there is virtual certainty that suffcient future taxable income will be available against which deferred tax assets can be realised.

1.13 Employee Benefts

a) Leave Salary is paid to all employees as per the policy of Company every year.

b) Defned Contribution Plans :

Contributions payable by the Company to the concerned Government authorities in respect of Provident Fund, Family Pension Fund and Employees State Insurance are charged to Proft & Loss A/c.

c) Defned Beneft Plan :

The Company’s liability towards gratuity is determined on the basis of year end actuarial valuations applying the Projected Unit Credit Method done by an independent actuary. The actuarial gains or losses determined by the actuary are recognised in the Proft and Loss Account as income or expense.

1.14 Earning Per Share

Earning per share (EPS) is calculated by dividing the net proft or loss for the period attributable to equity shareholders, by the weighted average number of equity shares outstanding during the period.

Dilutive EPS is calculated by dividing the net proft or loss for the period attributable to equity shareholders, by the weighted average number of equity shares considered for deriving the basic EPS and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted at the beginning of the year and not issued at a later date.

1.15 Provisions for Contingent Liabilities and Contingent Assets

Contingent liabilities are not provided for and are disclosed by way of notes after careful evaluation by the management of the facts and legal aspects of the matters involved. Contingent assets are neither recognised nor disclosed in the fnancial statements.