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Directors Report of Gitanjali Gems Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the Twenty Ninth Annual Report on the business and operations of your Company for the year ended March 31, 2015.

FINANCIAL RESULTS

(Rs in lacs)

Standalone Consolidated

2014-15 2013-14 2014-15 2013-14

Sales & Other Income 720983.03 734308.46 1157959.01 1244555.98

Expenditure 666305.00 694670.98 1047036.68 1163401.76

Finance Cost 52365.17 41418.56 90416.25 73631.46

Depreciation & Ammortisation Expenses 459.11 476.14 4688.68 3827.33

Exceptional Items 0.28 (137.37) (6975.65) (73.47)

Profit before Taxes 1854.03 (2394.59) 8841.75 3621.97

Provision for Current Tax 370.00 - 858.42 769.37

Provision for Deferred Tax (32.38) (129.38) (194.64) (367.10)

Provision for MAT (370.00) - (780.19) (374.60)

Net Profit / (loss) for the year 1886.41 (2265.21) 8958.16 3594.30

COMPANY'S PERFORMANCE

During the year under review, standalone sales and other income stood at Rs. 720983.03 lakhs. After meeting all expenditures, Company made a net profit of Rs. 1886.41 lakhs on standalone basis.

Further during the year under review, consolidated sales and other income stood at Rs. 1157959.01 lakhs. After meeting all expenditures, Company made a net profit of Rs. 8958.16 lakhs on consolidated basis.

BUSINESS REVIEW Gitanjali Gems Ltd. (GGL)

"GGL" was incorporated in 1986 and was primarily engaged in the traditional diamond cutting and polishing business. It also enjoys sight holder status with the Diamond Trading Company. Currently GGL is engaged in sourcing rough diamonds, cutting and polishing diamonds and manufacturing jewellery. The jewellery manufactured is primarily to service the group's international operations.

The diamond cutting and polishing process is labour- intensive and requires a special skill set. The manufacturing facilities are strategically located in Mumbai, Surat and Hyderabad where the diamond industry thrives. Rough diamonds which are procured are sorted or graded on the basis of colour, shape, clarity, cut and weight. In order to ensure optimum yield of polished stones from the rough diamonds, the cutting process is carefully planned. The key steps in the process are Marking, Cleaving, Sawing, Cutting and Polishing. The final stages of the diamond manufacturing process consist of checking for damage, cleaning and the final sorting before marketing to the customer.

Over the years, GGL has incorporated and acquired many companies to integrate vertically through the jewellery value chain and to graduate from diamond and jewellery manufacturing to jewellery branding and retailing. Gitanjali Gems is the strong leg in the entire supply chain and is the strategic arm of the group which ensures a consistent supply of cut and polished diamonds to the branded jewellery manufacturing segment of the business thereby fuelling the company's growth in the branding and retailing space. Spearheaded by a veteran like Mr. Mehul Choksi, who has been a visionary, the company has, over the years, expanded via strategic organic and inorganic endeavors and grown to become one of the largest integrated jewellery players in the world.

Gitanjali Group

Gitanjali Group is one of the largest integrated branded jewellery manufacturer-retailer with an annual turnover of around USD 2 billion. The Group's activities are spread across the entire value chain from rough diamond sourcing, cutting, polishing and distribution, to jewellery manufacturing, branding and retailing in India and abroad. Gitanjali Gems Limited, the flagship Company is the listed entity of the group and it is the ultimate holding company of all the other entities which are engaged in branding and retailing jewellery and lifestyle products. Diamond and Jewellery Manufacturing Gitanjali is a vertically integrated player in the jewellery space. Diamond sourcing and jewellery manufacturing form the first leg of the jewellery value chain for Gitanjali. For over five decades now, Gitanjali has been sourcing rough diamonds and cutting and polishing them at its state of the art manufacturing facilities. This is the traditional business of the group and it is supported by strong back- end of the supply chain which fuels the group's jewellery manufacturing, branding and retailing endeavours. The group houses a team of top notch designers who provide key inputs for manufacturing jewellery in sync with the latest trends prevalent in the market. The group's designing strengths is considered as its key asset. The group has been consolidating its manufacturing facilities across the globe for optimal production. Manufacturing facilities are strategically located in India and Thailand. The group's facility in Thailand is one of the largest in Thailand and manufactures modern jewellery collections. Presence in manufacturing allows the group flexibility in adapting to changing consumer trends and also provides a certain level of immunization against price risks. Gitanjali is looking to further strengthen its manufacturing capabilities to enable it to constantly innovate and address evolving tastes and preferences of cousumer.

India Jewellery Branding and Retailing

The Group has been pioneer in the jewellery retail revolution in India. It owns and distributes some of the major jewellery brands in the country including Gili, Nakshatra, Asmi, D'Damas, Sangini, Nizam and Parineeta to name a few. Gitanjali's vast array of brands was developed primarily to cater to diverse age groups, occasions, price points and geographies.

The group has leveraged upon this inherent brand strength by extending its brands to include lifestyle categories such as apparels under the Gili and Diya brands which have been reasonably successful ventures.

Gitanjali has been an innovator and has been continuously evolving to cater to the changing consumer tastes and preferences. Gitanjali is known for its product, design and channel innovations. In line with this pioneering and innovative culture, Gitanjali has created a range of "affordable jewellery" to resonate with the younger consumers , thereby widening its reach. This range has also been developed to complement the group's growth via the Brick (SIS) and Click (E-Com) Model.

The Group has a very strong retail presence, having explored multiple retail formats over the years and currently it enjois one of the strongest franchisee, distributors and retail network in the country.

Way back in 1994, Gitanjali took the initiative to change the way jewellery was viewed in India, and today its changing the way jewellery is bought in India by exploring innovative selling options such as Online marketplaces, Television selling, Duty free stores at airports, In-flight, Cruise liners, etc.

These innovative channels not only support the affordable jewellery segment which is the company's growth engine going forward, but also, in entirety promote the concept and idea of new-age jewellery shopping.

International Jewellery Branding and Retailing

The Group is present in the top five global diamond jewellery markets - USA, Japan, Middle East, China and India.

USA is the world's largest diamond jewellery market. The company is present in the US through its subsidiary Samuels Jewelers Inc - one of the largest specialty jewellery retailer in the US. Samuels is positioned at engagement and wedding rings with price point ofUS$600. The Group acquired this chain in 2006, to strengthen its foothold in the world's biggest diamond jewellery market. Gitanjali achieved synergies due to in-house sourcing and cost optimization. The integrated business model with strong sourcing, low cost manufacturing capabilities and well established retail presence has been contributing to increasing market share and profitability. The US being the largest diamond jewellery market with superior margins, is one of the most ambitious markets for Gitanjali.

The next focus market for Gitanjali is UAE. The entire region is transforming from a gold heavy market to a studded jewellery market offering immense potential for Gitanjali's brands. Gitanjali started its Middle East retail operations in 2012. Currently there are 4 stores in Dubai and over 52 points of sale through Shop in shops in local malls across the Middle East. Gitanjali's plethora of Indian and Italian brands finds an immediate connect with the tastes and preferences of the Middle East market. Gitanjali is also present and growing in China and Japan. In China the group is present through Shop-in-shops. China is one of the largest and fastest growing diamond jewellery markets in the world. Gitanjali has so far managed to penetrate in shop-in-shops with its Italian diamond jewellery collections and is looking to expand and position itself as a leading Italian brand in this region and be available through multiple channels in the near future.

Japan is the fourth largest diamond jewellery consuming market and provides excellent margins to integrated players. In Japan, the company gained the status of a preferred supplier to the 3rd largest jewellery retail chain - Verite, through a minority stake in the same. The company also acquired a 20% stake in the largest jewellery selling TV channel - Gems TV, (IMACBC) to exploit one of the largest jewellery markets in the world. Large existing proven distribution network in Japan through Gems TV and Verite combined with low cost manufacturing capabilities will enable the next phase of expansion for Gitanjali.

The company also caters to the European Region. It has distribution tie ups with a few jewellery chains in Europe. The company acquired the assets of DIT group in Italy in 2011 which led to the ownership of popular brands like Stefan Hafner, IOSI, Porrati and Valente. The Company leveraged its worldwide marketing and distribution strength to increase the footprint of these brands across its network in India, Russia, Italy, USA and Middle East. The rationale is to create a bouquet of international brands across the rest of the world using the strength of the Italian brands and the distribution / fulfillment strength of the Indian parent.

The Company also distributes its jewellery internationally in other markets like Hong Kong, Thailand. Belgium and Australia. Its customers primarily include jewellery manufacturers, wholesalers and large retailers.

DIVIDEND AND APPROPRIATION

In order to conserve the financial resources of the Company your Directors have not recommended any dividend on equity shares. No appropriations to free reserves are proposed to be made for the year under consideration.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report of the financial condition and result of operations of the Company for the year under review as required under clause 49 of the listing agreement with stock exchanges, is given under separate section forming part of this annual report

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this Report.

SHARE CAPITAL

As on April 1, 2014 the paid up share capital of the Company was Rs. 92,06,54,910/- consisting of 9,20,65,491 equity shares of Rs. 10 each. On June 4, 2014, 60,54,960 equity shares of Rs. 10 each were allotted at a price of Rs. 64.41/- to D.B. Corp Limited (DBCL) pursuant to conversion of fully convertible debenture held by DBCL. Consequent to the conversion, the paid up capital of the Company increased from Rs. 92,06,54,910/- consisting of 9,20,65,491 equity shares of Rs. 10 each to Rs. 98,12,04,510 consisting of 9,81,20,451 equity shares of Rs. 10 each.

Further, during the year under review, the Company has allotted 23,547,194 warrants on preferential basis to persons other than promoters. The said warrants carries an option / entitlement to subscribe to equivalent number of Equity Shares of Rs. 10/- each at a future date, not exceeding 18 (eighteen) months from the date of issue of such warrants at a price of Rs. 72.39/- which includes a premium of Rs. 62.39/- per share.

PUBLIC DEPOSITS

During the year under review, Company has not accepted any deposits from public under chapter V of Companies Act, 2013. No deposits which were due remained unpaid or unclaimed as at the end of the year nor there has been any default in repayment of deposits or payment of interest thereon during the year. Further, there are no deposits which are not in compliance with the requirements of Chapter V of Companies Act, 2013.

Out of the deposit accepted from the public in the previous year 2013-14, as on date Rs.173.36 lacs are outstanding which will mature in current year and next year.

DISCLOSURE PURSUANT TO CLAUSE 5A (I) OF LISTING AGREEMENT

Pursuant to insertion of clause 5A (I) in Listing Agreement as per SEBI notification no. SEBI/CFD/DIL/ LA/1/2009/24/04 dated April 24, 2009 the details in respect of the shares lying in the Gitanjali Gems Limited - Unclaimed Shares Demat Suspense Account till March 31, 2015 is as under:

All the corporate benefits in terms of securities, accruing to on these unclaimed shares shall be credited to such account. Voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES

During the year under review, Jewelsouk Marketplace Limited (formerly known as eGitanjali Limited), erstwhile a wholly owned subsidiary of the Company made a preferential allotment to person other than the Company to augment capital for its expansion. Pursuant to said allotment, Company's stake in eGitanjali Limited came down to 40% and as a result, its status changed from wholly owned subsidiary to an associate company. Further, during the year under review, with a view to rationalize the group structure, holding in some of the subsidiaries e.g. Gitanjali Capital Private Limited, Shubhalavanyaa Jewel Crafts Private Limited, Leading

Singapore Jewels Pte Ltd, and Gitanjali Resources BVBA was sold off and they ceased to part of the group structure.

The Company through its wholly owned subsidiary Gitanjali Infratech Limited incorporated Vidarbha Multi Products SEZ Limited to set up a Special Economic Zone unit for dealing in multi products.

The Policy for determining material subsidiaries as approved may be accessed on the Company's website at http://media.corporate-ir.net/media_files/ IROL/19/196729/Policies_&_Codes/Policy%20for%20 Determining%20Material%20Subsidiary.pdf

A statement containing salient features of the financial statement and related information of the subsidiaries in the prescribed format AOC-1 is provided as Annexure A to the consolidated financial statement and hence not repeated here for the sake of brevity.

SCHEME OF AMALGAMATION

Subsequent to the year under review, at the Meeting of Board of Directors of the Company held on April 21, 2015, the Board has approved the "Scheme of Amalgamation" [Scheme] under Section 391 to 394 of the Companies Act, 1956 and relevant Sections of the Companies Act 2013, to the extent applicable, for amalgamation of Gitanjali Exports Corporation Limited (GECL), a wholly owned subsidiary with the Company, subject to the approval of the Scheme by Stock Exchanges, Shareholders and Creditors of the respective Companies, Hon. Bombay High Court and subject to approval of any other statutory authorities as may be required. Once sanctioned, the Scheme will be effective from the appointed date i.e. April 1, 2014. In terms of circular bearing no. CIR/CFD/DIL/5/2013 dated February 04, 2013 as amended from time to time issued by Securities and Exchange Board of India, the Company is in the process of obtaining an approval of shareholders by way of postal ballot for approving the scheme.

Further, Board of Directors of the respective Companies at their respective meeting held on April 21, 2015, approved the "Scheme of Amalgamation" [Scheme] under Section 391 to 394 of the Companies Act, 1956 and relevant Sections of the Companies Act 2013, to the extent applicable, for Merger of Asmi Jewellery India Limited and Spectrum Jewellery Limited with Nakshatra Brands Limited and Merger of Gitanjali Jewellery Retail Limited and Gitanjali Lifestyle Limited with GILI India Limited, subject to the approval of the Scheme by Hon. Bombay High Court and subject to approval of any other statutory authorities as may be required. Once sanctioned, the Scheme will be effective from the appointed date i.e. April 1, 2014.

NUMBER OF MEETINGS OF THE BOARD

The board met 5 times in financial year 2014-15, the details of which are given in corporate governance report section that forms part of this annual report. The intervening gap between two consecutive board meetings did not exceed 120 days.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declaration from each independent director under section 149(7) of Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(6) of Companies Act, 2013 and clause 49 of listing Agreement.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the board. The Company has put in place a policy on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under section 178(3) of Companies Act, 2013 appended as Annexure 1. The same can also be viewed by visiting following link:

http://media.corporate-ir.net/media_files/ IROL/19/196729/Policies_&_Codes/Nomination%20 and%20Remuneration%20of%20Directors,%20Key%20 Managerial%20Personnel%20and%20Senior%20 Management%20Policy.pdf

FAMILIARISATION PROGRAMMES FOR BOARD MEMBERS

The Board members are provided with necessary documents/brochures, reports and internal policies to enable them to familiarise with the Company's procedures and practices.

Periodic presentations are made at the Board Meetings, on business and performance updates of the Company, global business environment, business strategy and risks involved. The details of such familiarization programmes for Independent Directors are posted on the website of the Company and can be accessed at the following link : http://media.corporate-ir.net/media_files/ IROL/19/196729/Policies_&_Codes/Familiarisation%20 Programme%20for%20Independent%20Directors.pdf

DIRECTORS AND KEY MANAGERIAL PERSONNEL

On the recommendation of nomination and remuneration committee, the board appointed Ms. Nazura Ajaney independent director with effect from August 13, 2014. The shareholders of the Company in the Annual General Meeting held on September 29, 2014 appointed Ms. Nazura Ajaney as independent director to hold office for a term upto September 30, 2018.

Subsequent to year under review, Mr. Swaminathan Sundararajan Mittur resigned from the post of Director of the Company due to pre occupation. The board recorded its appreciation for the contribution made by Mr. Swaminathan Sundararajan Mittur during his tenure as Director.

The Board of Directors at its meeting held on August 14, 2015 appointed Mr. Vinod Juneja to act as an Alternate Director to Mr. Nehal Modi during his absence from the country.

In accordance with Section 152 and other applicable provisions of Companies Act, 2013, Nehal Modi (DIN 02861450), being Non- Executive Director, retires by rotation and being eligible offers himself for re- appointment at the ensuing Annual General Meeting. The Board recommends his re appointment for your approval. Further, in view of resignation of Mr. Kapil Khandelwal as Chief Financial Officer of the Company, the board of directors of the Company at its meeting held on May 30, 2014 appointed Mr. Chandrakant Karkare as Chief Financial Officer (in the category of key managerial personnel) of the Company, in terms of Section 203 of the Companies Act, 2013 read with Companies(Appointment & Remuneration of Managerial Personnel) Rules, 2014.

EVALUATION

Clause 49 of listing agreement mandates that board shall monitor and review board evaluation framework. The Companies Act, 2013 states that formal evaluation needs to be made by the board of its own performance and that of its committees and individual directors. Further Schedule IV of Companies Act, 2013 states that the performance evaluation of independent directors shall be done by entire Board of Directors, excluding director being evaluated. The evaluation of all the directors and the board as a whole was conducted based on the criteria adopted by the board.

The evaluations for the Directors and the Board were done through circulation of questionnaires which assessed the performance of the Board on select parameters related to roles, responsibilities and obligations of the Board and functioning of the Committees including assessing the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The evaluation criterion for the Directors was based on their participation, contribution and offering guidance to and understanding of the areas which are relevant to them in their capacity as members of the Board.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134 (5) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(a) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed and there are no material departures from the same;

(b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2015 and of the profit of the company for the said period;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a going concern basis; and

(e) the Directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively.

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

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements are provided in this Annual Report which have been prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments are given in the notes to the Financial Statements. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188

None of the transactions with any of related parties were in conflict with the Company's interest. The Company's major related party transactions are generally with its subsidiaries. The related party transactions are entered into based on considerations of various business exigencies such as synergy in operations, Company's long-term strategy for investments, optimization of market share, profitability, liquidity ,capital resources of subsidiaries, etc.

During the year under review, the contracts or arrangements with related parties referred to in section 188 of Companies Act, 2013 have been on arms length and in ordinary course of business and they were not material in nature. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2014 are not required to be disclosed as they are not applicable.

The Policy on dealing with related party transactions as approved by the Board may be accessed on the Company's website at http://media.corporate-ir.net/media_files/

IROL/19/196729/Policies_&_Codes/Related%20 Party%20Transactions%20Policy.pdf CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the year under review, the Board of Directors at its meeting held on May 30, 2014 had constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein. The Company pursuant to the recommendation of the CSR Committee had adopted a detailed policy on Corporate Social Responsibility.

Annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure 2 to this Report.

PARTICULARS OF EMPLOYEES

The details in terms of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 3A and the statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is forming part of this report as Annexure 3B AUDIT COMMITTEE:

The Audit Committee of the company consists of the following Directors:

Mr. S. Krishnan - Chairman

Ms. Nazura Ajaney

Mr. Mehul C. Choksi

The board accepted all the recommendations made by the audit committee during the year under review. The details of terms of reference, number of audit committee meetings held during the year under review, attendance, etc are separately given in the section of corporate governance.

VIGIL MECHANISM

In terms of the section 177(9) of companies act, 2013 and rules framed thereunder, the Company has framed a Whistle Blower Policy with vigil mechanism with an objective of encouraging the employees of the Company to raise any concern about Company's operations and working environment, including possible breaches of Company's policies and standards, without fear of adverse managerial action being taken against such employees.

It provides a channel to the employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of any code of conduct or policy in force. The mechanism provides for adequate safeguards against victimization of employees to avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The reported concerns, if found appropriate, would be fully investigated and acted upon.

RISK MANAGEMENT POLICY The Company has adopted a Risk Management Policy duly approved by the Board and also in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure 4 to this Director's Report.

AUDITORS & AUDITORS REPORT

M/s. Ford, Rhodes, Parks & Co., Chartered Accountants, the present Statutory Auditors retire at the ensuing Annual General Meeting and are eligible for re-appointment. The company proposes to re-appoint M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the company from the conclusion of the ensuing Annual General Meeting up to the conclusion of the next Annual General Meeting of the company.

The Audit Committee and the Board recommend the appointment of M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the company.

The Company has received letter from statutory auditors that their re-appointment, if made, would be within prescribed limits under section 141(3)(g) of companies act, 2013 and they are not disqualified for re-appointment. The auditor in their report on standalone financial statements for the year ended March 31, 2015 have stated emphasis of matter. The response of your directors on the same are as follows:

Response to point (a)

Since 2013, the Company is passing through difficult financial conditions due to extraneous factors beyond its control viz, unfavourable regulatory changes and adverse forex movement. Due to liquidity challenges, there remained an overdue of principal amount and liquid reserve was not created. However, management is confident of clearing the outstanding dues shortly and also complying with the requirement of reserve creation. Response to point (b)

Due to liquidity challenges as mentioned above, there have been occasions during FY 2014-15 where there were few overdrawn position in some accounts. However, from time to time, the Company has been clearing the said overdrawn positions and is making best efforts to regularize the status.

Response to point (c)

The Company has been regularly honoring all its debt obligations/ statutory dues with some delays. Multiple extraneous factors as stated earlier, have made significant negative impact on the liquidity status of the Company. The Company however is committed to pay all its outstanding undisputed statutory dues and liabilities and will pay the same gradually.

With regard to points raised in audit report on consolidated financial statements for the year ended March 31, 2015, on emphasis of matter, the directors comments are covered in reply on emphasis of matter to standalone financial statement for year ended March 31, 2015 SECRETARIAL AUDITORS & THEIR REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. Manish Ghia & Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2014-2015. The Secretarial Audit Report has been appended as Annexure 5 to this Report.

The Secretarial Audit Report does not contain any qualification.

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

A. CONSERVATION OF ENERGY

The operations of your company is not energy intensive. However, the Company makes its best efforts for conservation of energy in its factory and office premises.

B. TECHNOLOGY ABSORPTION,ADAPTATIONS & INNOVATION

The Company has not carried out any specific research and development activities. The Company uses indigenous technology for its operations. Accordingly, the information related to technology absorption, adaptation and innovation is reported to be NIL.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO The details of foreign exchange earings and expenditure are as follows.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

INTERNAL CONTROL AND ITS ADEQUACY

The company has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT 2013

Gitanjali's quest for competitive excellence consists of its commitment to lawful and ethical conduct and adherence to its values. Integrity, honesty and respect for people remain some of its core values. The Company is committed to provide a safe & conducive work environment to its employees and has formulated 'Policy for Prevention of Sexual Harassment' to prohibit, prevent or deter any acts of sexual harassment at workplace and to provide the procedure for the redressal of complaints pertaining to sexual harassment, thereby providing a safe and healthy work environment.

During the year under review, no case of sexual harassment was reported.

GENERAL

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

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of sweat equity shares to employees of the Company under any scheme

3. Issue of shares under Employee Stock Option Scheme

4. The Managing Director of the Company is not in receipt of any commission from the Company nor he received any remuneration or commission from any of the subsidiary of the Company.

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

ACKNOWLEDGEMENT

We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by the employees at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation, and support.

We thank the Governments of various countries where we have operations. We also thank the Government of India, Ministry of Commerce & Industry, Ministry of Corporate Affairs, Ministry of Finance, Department of Economic Affairs, Customs & Excise Departments, Income Tax Department, Reserve Bank of India, BSE, NSE, NSDL, CDSL and various bankers, various State Governments and other Government Agencies for their support, and look forward to their continued support in the future.

On behalf of the Board of Directors

Mehul C. Choksi Chairman and Managing Director

Place : Mumbai Date : August 14, 2015


Mar 31, 2014

Dear Members

The Directors are pleased to present the 28th Annual Report on the business and operations of the Company for the year ended March 31, 2014.

FINANCIAL RESULTS

(Rs in lacs) Standalone 2013-14 2012-13

Sales & Other Income 734308.46 1039978.77

Expenditure 694670.98 989147.91

Finance Cost 41418.56 23873.57

Depreciation & Ammortisation Expenses 476.14 487.85

Exceptional Items (137.37) 9.77

profit / (loss) before Taxes (2394.59) 26479.21

Provision for Current Tax - 5188.20

Provision for Deferred Tax (129.38) 74.85

Provision for MAT - (5300.00)

Net profit / (loss) for the year (2265.21) 26516.16

Consolidated 2013-14 2012-13

Sales & Other Income 1244555.98 1642847.75

Expenditure 1163401.76 1530983.24

Finance Cost 73631.46 46131.99

Depreciation & Ammortisation Expenses 3827.33 3665.66

Exceptional Items (73.47) 9.77

profit / (loss) before Taxes 3621.97 62076.64

Provision for Current Tax 769.37 10408.77

Provision for Deferred Tax (367.10) 187.97

Provision for MAT (374.60) (8042.79)

Net profit / (loss) for the year 3594.30 59522.69

COMPANY''S PERFORMANCE

It was one of the toughest years for the Indian economy with the GDP growth falling below 5%. Your Company is no exception and faced a challenging time during the year 2013-14. Customer sentiments were affected by the infation and uncertain economic conditions. During the year under review, Reserve Bank of India initiated measures to contain the Current Account Defcit by imposing restrictions on gold import for domestic consumption. At the same time customs department increased the import duty on gold to 10%. Further, the Indian Rupee weakened considerably during the year.

During the year, financial performance of the Company stood as follows:

> Sales and Other Income as on March 31, 2014 stood at Rs. 734308.46 lakhs as against Rs. 1039978.77 lacs

> Net Loss as on March 31, 2014 is Rs. 2265.21 lacs as against profit of Rs. 26516.16 lakhs of previous year.

It can be seen from the above that in the trying times also, percentage level of gross margins has been maintained. However, finance cost shot up significantly resulting in the loss for the current year.

BUSINESS REVIEW

1. DIAMOND AND JEWELLERY

MANUFACTURING SEGMENT

Gitanjali is a vertically integrated player in the jewellery industry and is engaged in diamond and jewellery manufacturing, jewellery branding and retailing. Its presence across the entire value chain gives it the scale that it enjoys. It is engaged in the entire process from sourcing rough diamonds, cutting and polishing them to manufacturing jewellery. The diamond cutting and polishing process is labour-intensive and requires a special skill set. The Group''s factories are strategically located in surat and Hyderabad where the diamond industry thrives. Rough diamonds which are procured are sorted or graded on the basis of colour, shape, clarity, cut and weight. In order to ensure optimum yield of polished stones from the rough diamonds, the cutting process is carefully planned. The key steps in the process are Marking, Cleaving, Sawing, Cutting and Polishing. The final stages of the diamond manufacturing process consist of checking for damage, cleaning by boiling in various acids and the final sorting before marketing to the customer.

The branded jewellery that Gitanjali manufactures includes diamond studded and other precious stones studded jewellery. The Group has produced branded jewellery in India for over 20 years. During the year Gitanjali upgraded all its diamond and studded jewellery manufacturing facilities based in Hyderabad, Mumbai, Jaipur, China and has also added the Thailand facility - which is one of the largest of its kind. Gitanjali is looking to further strengthen its manufacturing capabilities to enable it to constantly innovate and adapt to changing consumer trends.

2. BRANDED JEWELLERY AND RETAIL SEGMENT

Gitanjali over the years has graduated through the various stages of the value chain to move from the diamond manufacturing business to jewellery manufacturing and retailing to unlock maximum value which accrues through downstream expansion.

Having introduced the frst diamond jewellery brand "Gili" in India in 1994, Gitanjali has pioneered the branded jewellery revolution in the country. It has changed the way jewellery was viewed in India. Ever since then, Gitanjali added a plethora of brands such as Nakshatra, Asmi, Sangini, D''damas to name a few to cater to diverse age groups, occasions, price points and geographies.

Recently Gitanjali made a foray into affordable fne jewellery with its Viola Italia range of jewellery. This vibrant new collection is the company''s endeavour to cater to a wider audience and ensure that need-gaps in the market are addressed.

Gitanjali''s brands enjoy tremendous recall and the group has leveraged upon this by extending its brands to include lifestyle categories such as apparels under the Gili and Diya brands which have been reasonably successful ventures.

The Group has actively pursued not only product and design innovations but also channel innovations. Currently the company distributes its jewellery through around 360 distributors, who cater to more than 3000 retailers. The company also enjoys a significant retail presence through around 239 Own Stores, 305 franchisees and 640 Shop-in-shops. Gitanjali is also strongly exploring newer channels

such as e-commerce and has launched exclusive as well as multi-brand portals and has also created an online market place. The Group''s retail operations are supported by a strong inventory management system.

3. INTERNATIONAL DISTRIBUTION AND RETAIL SEGMENT

The Group is present across in the top five global diamond jewellery markets – USA, Japan, Middle East, China and India.

USA is the largest diamond jewellery market in the world. Gitanjali enjoys a retail presence through over 104 doors of its retail chain Samuels Jewels Inc. The Samuels chain has exclusive designer jewellery collections and a large selection of loose and mounted diamonds under brands such as "Samuels Jewelers", "Schubach Jewelers", "Samuels Diamonds", "Rogers Jewelers" and "Andrews Jewelers" which are primarily targeted at middle and upper middle class consumers in the United States. Samuels'' retail chain is positioned as a wedding jeweller with category focus on bridal collections in the United States. The Group also distributes its jewellery to other local players in the US. The Group''s US business has been witnessing a steady growth of around 10-12% on year on year basis. US being the largest diamond jewellery market with superior margins, is one of the most ambitious markets for Gitanjali.

UAE is another significant market for jewellery in the world. Gitanjali retails its Jewellery from the bouquet of Gitanjali''s Indian brands such as "Nakshatra", "Gili", "Asmi", as well as the collection of Italian brands such as "Stefan Hafner", "Nouvelle Bague", "IO SI", "Porratti" and "Valente". Gitanjali also recently entered into a tie-up with Paris Gallery to retail its jewellery throughout UAE. The Group currently distributes its jewellery through 4 retail stores and over 50 SIS in local jewellers as well as through duty free stores at Dubai airport.

Japan is also one of the largest consumers of diamond jewellery in the world. The Group has a minority stake in a listed Japanese entity – Verite and supplies to over 100 stores of Verite in Japan. The Group also has 20% stake in Gems TV which is a jewellery selling TV channel in Japan. The

Group incorporated Leading Jewels of Japan KK (LJJ) which sources jewellery from Gitanjali Group''s manufacturing facilities in India, China and Thailand and distributes this jewellery to some of the largest customers in Japan. The large team of Jewellery designers from India, China and Thailand supports to customize according to local tastes and requirements of Japan. LJJ also distributes the Group''s Italian brands "Stefen Hafner", Nouvelle Bague", "IO SI", "Porrati" and " Valente" to customers in Japan.

Other International Markets- The Company distributes its jewellery internationally through its subsidiaries in USA, Hong Kong, Thailand, Belgium, Italy and China. These subsidiaries supply within their local markets as well as other global markets such as Australia, Russia, UK and other parts of Europe. Its customers include jewellery manufacturers, wholesalers and large retailers.

DIVIDEND AND APPROPRIATION

As the Company has incurred a loss during the financial year 2013-14, your directors do not recommend any dividend. No appropriations to free reserves are proposed to be made for the year under consideration.

CAPITAL

On December 05, 2012, Company issued 1 (one) Zero Percent Fully Convertible Debenture (FCD) having face value of Rs. 39,00,00,000/- (Rupees Thirty Nine Crores only) on preferential basis to D. B. Corp Limited (DBCL). The said FCD were 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 Securities and Exchange Board of India (Issue of Capital and Disclosure requirements) Regulations, 2009.

Accordingly, on June 4, 2014, 60,54,960 equity shares of Rs. 10 each were allotted at a price of Rs. 64.41/- to DBCL pursuant to conversion of said FCD. Consequent to aforesaid conversion the paid up capital of the Company has increased from Rs. 92,06,54,910/- consisting of 9,20,65,491 equity shares of Rs. 10 each to Rs. 98,12,04,510 consisting of 9,81,20,451 equity shares of Rs. 10 each.

AUDITORS & AUDITORS REPORT

M/s. Ford, Rhodes, Parks & Co., Chartered Accountants, the present Statutory Auditors retire at the ensuing Annual General Meeting and are eligible for re-appointment. The

company proposes to re-appoint M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the company from the conclusion of the ensuing Annual General Meeting up to the conclusion of the next Annual General Meeting of the company.

The Audit Committee and the Board recommend the appointment of M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the company.

The Company has received letter from statutory auditors that their re-appointment, if made, would be within prescribed limits under section 141(3)(g) of companies act, 2013 and they are not disqualified for re-appointment.

The auditor in their report on standalone financial statements for the year ended March 31, 2014 have stated emphasis of matter. The response of your directors on the same are as follows:

Response to point (a)

The Company is passing through diffcult financial conditions due to extraneous factors beyond its control viz, restrictions imposed in revised gold policy, increase in import duty on gold, adverse forex movement and significant weakening of rupee against dollar. The Company is in discussion with LIC for realignment of outstanding debt obligations in respect of non convertible debentures and the management is confdent that the same will be realigned shortly. Once it is realigned, cash deposit will be created as required by circular 4/2013 dated February 11, 2013 issued by ministry of corporate affairs.

Response to point (b)

The overdue installment of ECB as at of March 31, 2014 was paid in June 2014. The delay was due to liquidity challenges which Company is facing as mentioned in above point.

Response to point (c)

Due to liquidity challenges as mentioned above, there have been occasions during FY 2013-14 where there were few overdrawn position in some accounts. However, from time to time, the Company tried to clear said overdrawn positions as and when it is possible.

Response to point (d)

The management is confdent that Company will be successful in getting the order in its favour in respect of disputed outstanding taxes.

Response to point (e)

The Company has been regularly honoring all its debt obligations/ statutory dues. However, multiple factors as stated earlier, such as restrictions imposed in revised gold policy, increase in import duty on gold, adverse forex movement and significant weakening of rupee against dollar had significant impact on the Company. The Company is committed to pay all its outstanding undisputed statutory dues and will pay the same gradually.

Response to point (f)

The Company is in process of approaching expert in the feld and will act according to the opinion it obtains.

With regard to points raised in audit report on consolidated financial statements for the year ended March 31, 2014, the directors comments on it are covered in reply on emphasis of matter on standalone financial statement for the year ended March 31, 2014.

SUBSIDIARIES

The Ministry of Corporate Affairs, Government of India vide circular no. 2/2011 dated 8th February, 2011 has granted general exemption from attaching the Balance Sheet, profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company, as set out in sub-section (1) of Section 212 of the Companies Act, 1956. Accordingly, the Board of Directors in their Meeting held on May 30, 2014 passed a resolution giving consent for not attaching the Balance Sheet, profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. A statement containing brief financial details of the Company''s subsidiaries for the financial year ended March 31, 2014 is included in the Annual Report.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be available for inspection at the registered office of the Company. The Company shall furnish a copy of details of annual accounts of subsidiaries to any member on demand. We believe that the consolidated accounts present a full and fair picture of the state of affairs and the financial condition and are accepted globally. The Consolidated Financial Statements presented by the Company includes the financial results of its subsidiary companies.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

Your Company continues to do its bit for the society in various felds such as health, education empowerment, etc. Few of the programs that company is undertaking as part of its corporate social responsibility initiative is as under:

SUJYOT : The Company conducts and actively support and participate in programs such as cataract eye camp, blood donation, etc. Under this initiative, Company also runs a medical van in palanpur village in the state of Gujarat.

SAKSHAR : The Company supports educational institutes in the form of material scholarships, food, tuition, etc

SAKSHAM : Its an initiative of Company for empowerment through training and employment of persons with disabilities. The Company has trained many rural disabled youth in diamond and jewellery manufacturing in Hyderabad.

SNEH: It aims to build relationships with organisations and individuals who are active in the feld and execute projects for the upliftment of society by partnering with them.

SRUSHTI: It organises drive for conserving enrgy and water resources, organising tree plantations drive, etc

VIGIL MECHANISM

Subsequent to year under review, in terms of the section 177 of companies act, 2013 and rules framed thereunder, the Company has framed a ''Whistle Blower Policy'' with an objective of encouraging the employees of the Company to raise any concern about Company''s operations and working environment, including possible breaches of Company''s policies and standards, without fear of adverse managerial action being taken against such employees.

It provides a channel to the employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of any code of conduct or policy in force. The mechanism provides for adequate safeguards against victimization of employees to avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The reported concerns, if found appropriate, would be fully investigated and acted upon.

BOOK CLOSURE

As mentioned earlier, the directors are not recommending any dividend for the year under review. However, the members and share transfer books will remain closed from Saturday, September 20, 2014 to Monday, September 29, 2014 (both days inclusive) in terms of clause 16 of listing agreement for the purpose of Annual General Meeting.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE (CSR)

Subsequent to the year under review, the Board of Directors at its meeting held on May 30, 2014 has constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein with Mr. Swaminathan Sundararajan Mittur as its Chairman and Mr. S. Krishnan and Mr. Dhanesh Sheth as its members.

The role and responsibility of CSR Committee shall include the following:

a) Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified;

b) recommend the amount of expenditure to be incurred on the activities to be undertaken by the Company as specified in Schedule VII of Companies Act, 2013.

c) Monitor the implementation of Corporate Social Responsibility Policy of the Company from time to time;

NOMINATION AND REMUNERATION

COMMITTEE

Your Directors, at their meeting held on May 30, 2014 reconstituted remuneration committee as "Nomination and remuneration Committee" in accordance with Section 178 of Companies Act, 2013 read with rules formulated therein with Mr. Swaminathan Sundararajan Mittur as its Chairman and Mr. S. Krishnan and Mr. Dhanesh Sheth as its members.

The role of and responsibility of Nomination and Remuneration Committee is as follows:

a) To identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall carry out evaluation of every director''s performance.

b) To formulate the criteria for determine qualification, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, KMPs and other employees.

c) To formulate criteria for evaluation of Independent Directors and the Board.

STAKEHOLDERS RELATIONSHIP COMMITTEE

In terms of section 178(5) of Companies Act, 2013, your directors have reconstituted Shareholders/Investor''s Grievance Committee as Stakeholders Relationship Committee with Mr. Swaminathan Sundararajan Mittur as its Chairman and Mr. S. Krishnan as other member of the Committee. The role of the Committee is to deal with matters relating to transfer/transmission of shares and monitor redressal of the grievances of the security holders of the Company relating to transfers, non-receipt of Balance Sheet, non-receipt of dividends declared, etc.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the consolidated financial statement pursuant to Clause 32 of the Listing Agreement entered into with Stock Exchange and prepared in accordance with applicable accounting standards prescribed by Institute of Chartered Accountants of India in this regard.

RELATED PARTY TRANSACTIONS

Related party transactions have been disclosed in the notes to accounts.

FIXED DEPOSITS

During the year under review, the Company accepted fixed deposit from the public pursuant to provisions of section 58A, 58AA and other relevant provisions of Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975 made thereunder. The Company accepted total amount of Rs. 2,38,59,000 /- as deposit from public during financial year 2013-14. Till date, company has refunded Rs. 46,00,000/- to deposit holders. As on date, outstanding deposits received from public stood at Rs. 1,92,59,000/- .

TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTIN FUND

In terms of Section 205A and 205C of the Companies Act, 1956, the Company is required to transfer the amount of dividend remaining unclaimed and due for refund for seven years to the Investor Education and Protection

Fund (IEPF) after the period of seven years. Shareholders are requested to ensure that they claim the dividend(s) from the company before transfer to the IEPF.

The cumulative amount transferred to IEPF during the financial year 2013-14 is Rs. 1,27,916/-. Pursuant to the provisions of Investor Education and Protection Fund (Uploading of Information regarding unpaid and unclaimed amounts lying with Companies), Rules 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the company on the website of Ministry of Corporate Affairs.

DIRECTORS

Ms. Nazura Ajaney is appointed as Additional Director on August 13, 2014. Ms. Nazura Ajaney is a Non Executive Independent Director. As per the provisions of Section 161 of companies act 2013, Ms. Nazura Ajaney hold office only up to the date of the forthcoming Annual General Meeting (AGM) of the Company and is eligible for appointment as Director. The Company has received notices under Section, 160 of companies act 2013, in respect of Ms. Nazura Ajaney, from a member of the Company proposing her appointment as a Director of the Company. Resolution seeking approval of the members for the appointment of Ms. Nazura Ajaney as Director of the Company have been incorporated in the Notice of the forthcoming AGM along with brief details about her.

Mr. Sujal Shah retired by rotation on September 30, 2013 and did not offered himself for reappointment. Mr. Sunil Varma, Whole Time Director, tendered his resignation from the board with effect from November 14, 2013. Mr. Sunil Varma has taken a complete charge of the overseas business and affairs of the Company. Further, Mr. Nitin Potdar, Independent Director tendered his resignation from the board as a Director with effect from February 14, 2014. The Board recorded its appreciation for the valuable services rendered by them during their tenure.

Mr. Dhanesh Sheth is retiring by rotation and being eligible have offered himself for reappointment. Your Directors recommend his re-appointment for your approval.

A Brief profle of all the Directors on the Board has been given in Separate Section of the Annual Report.

KEY MANAGERIAL PERSONNEL

In view of resignation of Mr. Kapil Khandelwal as Chief Financial officer of the Company, the board of directors

of the Company at its meeting held on May 30, 2014 appointed Mr. Chandrakant Karkare as Chief Financial officer (in the category of key managerial personnel) of the Company, in terms of Section 203 of the Companies Act, 2013 read with Companies(Appointment & Remuneration of Managerial Personnel) Rules, 2014. Mr. Chandrakant Karkare is MBA in Finance stream with professional experience of over 28 years. He has very rich experience in Financial Operations, Accounts, Administration, Banking & Treasury Operations, and Cash & Forex Management. He also has in depth exposure of heading Corporate Finance and Treasury activities including Fund raising mobilization, cash fow monitoring, credit rating, due diligence.

The Board recorded its appreciation for the valuable service rendered by Mr. Kapil Khandelwal during his tenure as Chief Financial officer of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed.

(i) that in the preparation of the annual accounts, for the financial year ended March 31, 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the loss of the Company for the said period;

(iii) that the Directors have taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) that the Directors have prepared the accounts for the financial year ended March 31, 2014 on a ''going concern'' basis.

The above statements have been reviewed by the Audit Committee at its meeting held on 30 May, 2014.

POLICY FOR PREVENTION OF SEXUAL HARASSMENT

Gitanjali''s quest for competitive excellence consists of its commitment to lawful and ethical conduct and adherence to its values. Integrity, honesty and respec for people remain some of its core values. The Company is committed to provide a safe & conducive work environment to its employees and has formulated ''Policy for Prevention of Sexual Harassment'' to prohibit, preven or deter any acts of sexual harassment at workplace and to provide the procedure for the redressal of complaints pertaining to sexual harassment, thereby providing a safe and healthy work environment.

During the year under review, no case of sexua harassment was reported.

POSTAL BALLOT

The Board of Directors of the Company at its meeting held on August 1, 2014 , interalia, has proposed to seek approval of shareholders of the Company through posta ballot pursuant to section 110 of companies act, 2013 fo the following matters:

1. To raise funds upto Rs. 175 crores by issue o Convertible Warrants to persons other than Promoters by way of preferential allotment in accordance with provisions of Companies Act, 2013 and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements Regulations, 2009 and other applicable statutory provisions.

2. To borrow upto a limit of Rs. 10,000 crores pursuan to provisions of section 180(1)(c) of the Companies Act, 2013.

3. To create charge /hypothecation/mortgage o movable and immovable properties of the Company under Section 180(1)(a) of Companies Act, 2013 upto a limit not exceeding Rs. 10,000 crores.

4. To Make loans(s) and/or give any guarantee (s) provide any security(ies) under section 186 o Companies Act, 2013 upto a limit not exceeding Rs. 7,500 crores.

The process of postal ballot is currently underway and the results of the same will be announced on Tuesday September 9, 2014 at the registered office of the Company

DISCLOSURE PURSUANT TO CLAUSE 5A OF LISTING AGREEMENT

Pursuant to insertion of clause 5A in listing Agreement as per SEBI notifcation no. SEBI/CFD/DIL/ LA/1/2009/24/04 dated April 24, 2009 the details in respect of the shares lying in the Gitanjali Gems Limited – Unclaimed Shares Demat Suspense Account till March 31, 2014 is as under:

SI. Description No. of No. of NO. Cases Shares i) Aggregate number of 24 973 shareholders and the outstanding shares in the suspense account lyingas on April 1, 2013

ii) Number of shareholders who 0 0 approached the Company for transfer of share from suspense account during the year 2013-14

iii) Number of shareholders 0 0 to whom shares were transferred from suspense account during the yea 2013-14

iv) Aggregate number of 24 973 shareholders and the outstanding shares in the suspense account lying as on March 31, 2014

All the corporate benefits in terms of securities, accruing to on these unclaimed shares shall be credited to such account. Voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report of financial condition and results of operations of the Company for the year under review as required under Clause 49 of the Listing Agreement with the Stock Exchanges, is given as a separate statement forming part of this Annual Report.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the

Corporate Governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certifcate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this Report.

EMPLOYEE RELATIONS

Employee relations continued to be cordial during the year. The Company continued its thrust on Human Resource Development. The Board wishes to place on record its sincere appreciation to all the employees of the Company for their sustained efforts and immense contribution to the Company.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company.

ACKNOWLEDGEMENT

We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by the employees at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation, and support.

We thank the Governments of various countries where we have operations. We also thank the Government of India, Ministry of Commerce & Industry, Ministry of Corporate Affairs, Ministry of Finance, Department of Economic Affairs, Customs & Excise Departments, Income Tax Department, Reserve Bank of India, BSE, NSE, NSDL, CDSL and various bankers, various State Governments and other Government Agencies for their support, and look forward to their continued support in the future.

For and On behalf of the Board of Directors

Mehul C. Choksi Chairman & Managing Director

Place : Mumbai Date : August 14, 2014


Mar 31, 2013

Dear Members

The Directors are pleased to present the 27th Annual Report on the business and operations of the Company for the year ended March 31, 2013.

FINANCIAL RESULTS

(Rs in Million)

Standalone Consolidated

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

Sales & Other Income 103,997.87 77,899.96 164,893.08 125,763.96

Expenditure 98,914.78 73,495.87 153,706.64 116,906.98

Finance Cost 2,387.36 1,879.29 4,613.20 3,377.37

Depreciation & Ammortisation Expenses 48.79 34.66 366.57 294.70

Exceptional Items 0.98 97.23 0.98 50.54

Profit before Taxes 2,647.92 2,587.37 6,207.65 5,235.45

Provision for Current Tax 518.82 519.00 1,040.88 920.52

Provision for Deferred Tax 7.49 3.98 18.80 21.19

Provision for MAT (Credit) (530.00) (519.00) (804.28) (601.27)

Net Profit for the year 2,651.61 2,583.39 5,952.26 4,895.01

Profit brought forward from earlier Years 9,671.23 7,920.56 14,445.57 10,387.29

Amount available for Appropriation 12,322.84 10,503.95 20,235.62 15,278.29

Appropriations:

Proposed Dividend (including Dividend Tax) 327.64 317.72 327.64 317.72

Transfer to General Reserve 270.00 265.00 270.00 265.00

Capital Redemption Reserve - - - -

Debenture Redemption Reserve 250.00 250.00 250.00 250.00

Balance Carried to Balance Sheet 11,475.20 9,671.23 19,387.98 14,445.57

(1 Million = 10 Lakhs)

TURNOVERS & PROFITS

Your Directors wish to inform you that despite volatile regulatory environment and inflationery pressure, your Company continues to grow strongly. During the financial year ended March 31, 2013 the sales and other income increased from Rs. 77,899.96 Million to Rs. 103,997.87 Million. The net profit before tax stood at Rs. 2,647.92 Million as against Rs. 2,587.37 Million in the previous year. The net profit after tax stood at Rs. 2,651.61 Million as against Rs. 2,583.39 Million in the previous year.

BUSINESS REVIEW

1. DIAMOND AND JEWELLERY

MANUFACTURING SEGMENT

The company is engaged in the diamond and jewellery manufacturing. It is present in the entire process right from sourcing rough diamonds, cutting and polishing them to manufacturing jewellery. The diamond cutting and polishing process is labour-intensive and requires specialised skills. Rough (uncut and unpolished) diamonds acquired are sorted or graded on the basis of colour, shape, clarity, cut and weight. In order to ensure optimum recovery of polished stones from the rough diamonds, the cutting process is carefully planned. The key steps in the process are Marking, Cleaving, Sawing, Cutting and Polishing. The final stages of the diamond manufacturing process consists of checking for damage, cleaning by boiling in various acids and the final sorting before marketing to the customer.

The branded jewellery that the company manufactures includes diamond studded and other precious metal jewellery. There are currently over 200,000 active SKUs. The company has produced branded jewellery in India for approximately 20 years. It started as an outsourcing partner for leading international jewellery brands and then transitioned to cater to its own brandedjewellery distribution and retailing. The majority of the branded jewellery that is produced in-house is used in the company''s own distribution and retailing network. The company makes use of sophisticated jewellery manufacturing facilities in India that incorporate CAD (Computer Aided Designing) and CAM (Computer Aided Manufacturing) technology, that is overseen by a highly skilled design team. The multiple manufacturing locations mitigate risks associated with a single site manufacturing facility. In addition, the company is situated in strategic locations to take advantage of the supply of skilled labourers that may be specific to a region. Our manufacturing facilities are also located at logistical hubs for efficient supply chain management beginning with raw material sourcing and ending with easier access to consumers.

2. BRANDED JEWELLERY AND RETAIL SEGMENT

The company believes that it has been a pioneer in the branded jewellery segment and is amongst the first few companies to launch its own outlets to sell branded jewellery in India. The "Gili" brand of jewellery, introduced in 1994, was among the first branded jewellery lines introduced in India. The company''s brands and sub-brands are aimed at different customer profiles, various markets and price segments and enjoy significant brand equity and market share.

The company''s distribution channels include exclusive distributors for jewellery products, direct sales to large department stores and direct sales to end customers through retail operations. The company sells diamond and other jewellery products in India through its nationwide sales and distribution network that consisted of 360 distributors, 259 Company-owned stores, 391 stores set up through franchisee arrangements and 643 shop-in-shops located in department stores. The company is also strongly exploring newer channels of distribution such as e-commerce and e-franchising to capitalize on the trend of consumer preferences changing in favour of modern retail formats and new buying methods. The company''s retail operations are carried out through it various subsidaries and are supported by a strong inventory management system.

3. INTERNATIONAL DISTRIBUTION AND RETAIL SEGMENT

The company has also established a significant retail and distribution presence in the United States, the Middle East and certain regions in Asia through it overseas subsidiaries.

In the United States, the company operates a retail network of 104 stores through its subsidiary Samuels Jewelers, Inc. which was acquired in 2006. The Samuels chain has exclusive designer jewellery collections and a large selection of loose and mounted diamonds under brands such as "Samuels Jewelers", "Schubach Jewelers", "Samuels Diamonds", "Rogers Jewelers" and "Andrews Jewelers" which are primarily targeted at middle and upper middle class consumers in the United States. Headquartered in Austin, Texas, Samuels'' retail chain is positioned as a wedding jeweller with category focus on bridal collections in the United States.

In the Middle East, the company operates four stores in Dubai and also sells to approximately 50 prominent retailers. The company targets the Indian diaspora who are familiar with its brands.

The company has incorporated a subsidiary in Singapore, Leading Singapore Jewels Pte. Limited in order to expand its Asian retail presence. In 2012, the company opened its first retail store in Singapore.

The Company is also present in Japanese market through it strategic stakeholding in IMACBC and Verite Co. Limited. Aston Luxury Group Limited, a Hong Kong based wholly owned subsidiary of the Company, owns 20% stake in IMACBC and 15.03% stake in Verite Co. Limited

The company has also increased its global presence in Italy through brand acquisitions and increased access to distribution networks on account of strategic acquisitions and investments, in Italy.

The company, through its subsidiary Alfred Terry, in the United Kingdom has gained access to a strong distribution network in the UK and rest of Europe.

The company also acquired Crown Aim Limited, a Hong Kong based company that has strong distribution network to Hong Kong, China, Japan, the US, Middle East and Europe.

DIVIDEND

Your Directors recommended a dividend of Rs 3/- per equity share for the year ended March 31, 2013. The payment of dividend is subject to the approval of shareholders at the ensuing Annual General Meeting.

TRANSFER TO RESERVES

The Company proposes to transfer Rs. 270.00 Million to the general reserve out of the total amount of Rs. 12,322.84 Million available for appropriations as on March 31, 2013.

SUBSIDIARIES

The Company has the following Subsidiaries/ Step down Subsidiaries as on date:

1. eGitanjali Limited

2. Gitanjali Exports Corporation Limited

3. Gitanjali Brands Limited

4. Gitanjali Infratech Limited

5. Hyderabad Gems SEZ Limited

6. Gitanjali Lifestyle Limited

7. N & J Finstocks Private Limited

8. Nashik Multi Services SEZ Limited

9. Gitanjali Jewellery Retail Limited

10. Decent Securities & Finance Private Limited

11. Decent Investment & Finance Private Limited*

12. Eureka Finstocks Private limited

13. MMTC Gitanjali Limited

14. Samuels Jewelers Inc.

15. Gitanjali USA, Inc.

16. Gitanjali Ventures DMCC

17. Aston Luxury Group Limited

*Acquired during the year

STEP DOWN SUBSIDIARIES

1. Maya Retail Limited (Subsidiary of Gitanjali Lifestyle Limited)

2. MobileNxt Teleservices Private Limited(Subsidiary of Gitanjali Lifestyle Limited)

3. Ivida Technologies Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

4. Gitanjali Realtors Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

5. Coronet Gems Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

6. Damas Gems-N-Jewels (I) Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

7. Gitanjali Capital Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

8. Gili India Limited (Subsidiary of Gitanjali Brands Limited)

9. Nakshatra Brands Limited (Subsidiary of Gitanjali Brands Limited)

10. D''Damas Jewellery (India) Private Limited (Subsidiary of Gitanjali Brands Limited)

11. Shubhalavanya Jewel Crafts Private Limited (Subsidiary of Gitanjali Brands Limited)

12. Asmi Jewellery India Limited (Subsidiary of Gitanjali Brands Limited)

13. Spectrum Jewellery Limited (Subsidiary of Gitanjali Brands Limited)

14. Tri-Star Worldwide LLC (Subsidiary of Gitanjali USA, Inc.)

15. GGL Diamonds LLC (Subsidiary of Gitanjali USA, Inc.)

16. Diamlink Inc. USA (Subsidiary of Gitanjali USA, Inc.)

17. Diamlink Jewelery Inc. (Subsidiary of Diamlink Inc. USA)

18. Jewelry Marketing Company, LLC (Subsidiary of Diamlink Jewelery Inc.)

19. LJOW Holdings, LLC (Subsidiary of Diamlink Jewelery Inc.)

20. Gitanjali Resources (Subsidiary of Aston Luxury Group Limited)

21. Leading Italian Jewels SRL (Subsidiary of Aston Luxury Group Limited)

22. Crown Aim Limited (Subsidiary of Aston Luxury Group Limited)

23. Aston Diamond Resources SA Proprietary Limited (Subsidiary of Aston Luxury Group Limited)

24. Abbeycrest (Thailand) Limited (Subsidiary of Aston Luxury Group Limited)

25. Leading Jewels of Japan KK (Subsidiary of Aston Luxury Group Limited)

26. Leading Italian Jewels (Singapore) Pte. Limited (Subsidiary of Aston Luxury Group Limited)

27. Alfred Terry Limited (Subsidiary of Aston Luxury Group Limited)

28. BLU SRL (Subsidiary of Crown Aim Limited)

A statement containing brief financial details of subsidiaries is included in the annual report.

SUBSIDIARIES

The Ministry of Corporate Affairs, Government of India vide circular no. 2/2011 dated 8th February, 2011 has granted general exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of subsidiary companies with the Balance Sheet of the Company, as set out in sub-section (1) of Section 212 of the Companies Act, 1956. Accordingly, the Board of Directors in their Meeting held on May 28, 2013, passed a resolution giving consent for not attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. A statement containing brief financial details of the Company''s subsidiaries for the financial year ended March 31, 2013 is included in the Annual Report.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be available for inspection as above at office of the Company situated at A-1, 7th Floor, Laxmi Towers, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. The Company shall furnish a copy of details of annual accounts of subsidiaries to any member on demand. We believe that the consolidated accounts present a full and fair picture of the state of affairs and the financial condition and are accepted globally. The Consolidated Financial Statements presented by the Company includes the financial results of its subsidiary companies.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the consolidated financial statement pursuant to Clause 32 of the Listing Agreement entered into with Stock Exchange and prepared in accordance with applicable accounting standards prescribed by Institute of Chartered Accountants of India in this regard. The Auditors report on consolidated financial statement does not contain any qualification.

RELATED PARTY TRANSACTIONS:

Related party transactions have been disclosed in the notes to accounts.

FIXED DEPOSITS:

During the financial year 2012-13, your Company has neither invited nor accepted any fixed deposits from the public within the meaning of Section 58A of the Companies Act, 1956.

In the year 2013-14 the Company has started accepting Fixed Deposits from the public pursuant to the provisions of Section 58A and 58AA and other relevant provisions of the Companies Act, 1956 read with the Companies (Acceptance of Deposit) Rules, 1975 made thereunder. Fixed Deposit received from public as on date stood at Rs. 2.19 crores.

DIRECTORS:

In accordance with the Articles of Association, Mr. Sujal A. Shah and Mr. Nitin Potdar, Directors of the Company are retiring at the ensuing Annual General Meeting. Mr. Nitin Potdar, being eligible, offers himself for re-appointment. Mr. Sujal Shah expressed his desire to retire at ensuing Annual General Meeting due to pre- occupation.

AUDITORS & AUDITORS REPORT:

M/s. Ford, Rhodes, Parks & Co., Chartered Accountants, the present Statutory Auditors retire at the ensuing Annual General Meeting and are eligible for re-appointment u/s 224 (1B) of the Companies Act, 1956. The company proposes to re-appoint M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the company from the conclusion of the ensuing Annual General Meeting up to the conclusion of the next Annual General Meeting of the company.

The Audit Committee and the Board recommended appointment of M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the company.

In respect of the observations made by Auditors in their report, your Directors wish to state that the respective notes to the Accounts are self explanatory and therefore do not call for any further comments.

COST AUDITOR:

As per the Order F. No. 52/26/CAB-2010 dated November 06, 2012 issued by Ministry of Corporate Affairs, Cost Audit Branch, the Company is required to get its cost accounting record audited, in respect of each of its financial year commencing on or after 1 st day of January, 2013, by a cost auditor. M/s. Ajekar Shivaraya Kini, Cost Accountants have been appointed as the Cost Auditors for the Company by the Board of Directors in their meeting held on May 28, 2013 to conduct the cost audit for the Financial Year 2013-2014.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2 A A) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the annual accounts, for the financial year ended March 31, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the profit of the Company for the said period;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) that the Directors have prepared the accounts for the financial year ended March 31, 2013 on a ''going concern'' basis.

The above statements have been reviewed by the Audit Committee at its meeting held on May 28, 2013.

SIGNIFICANT DEVELOPMENTS DURING THE YEAR

a) During the year, Aston Luxury Group Limited, a Hong Kong based wholly owned subsidiary of the Company has acquired 15.03% stake in Verite Co. Limited in Japan. Verite Co. Limited is a listed entity on the Tokyo Stock Exchange and operates a network of 101 jewellery retail stores in Japan.

b) During the year, Board of Directors of the Company in its meeting held on November 09, 2012 gave in-principle approval to merge Gitanjali Infratech Limited, wholly owned subsidiary of the Company, into Gitanjali Gems Limited

c) During the year, the Company has acquired jewellery brands, Nirvana and Viola through Spectrum Jewellery Limited, a step-down subsidiary of the Company.

d) During the year, the Company has allotted 1(One) Zero Percent Fully Convertible Debenture (FCD) to D. B. Corp Limited having face value of Rs. 39,00,00,000/- on preferential basis as per SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2009.

e) During the year, the Company allotted 943,396 equity shares of Rs. 10/- each upon conversion of 943,396 warrants issued in previous year to Bennett Coleman and Company Limited (BCCL) on Preferential basis at the price of Rs. 424/- per warrant. Consequently, paid up capital of the Company increased from Rs. 911,220,950/- consisting of 91,122,095 equity shares of Rs.10/- each to Rs. 920,654,910/- consisting of 92,065,491 equity shares of Rs. 10/- each.

f) In terms of Section 205C of the Companies Act, 1956, the application money received by companies for allotment of any securities and due for refund and lying unpaid or unclaimed for a period of seven years from the date they became due for payment, shall be transferred by the companies to the Investor Education and Production Fund (IEPF) established by the Central Government.

During the financial year 2012-13, the Company has transferred the unclaimed share application money amounting to Rs. 22,56,935 (Rupees twenty two lacs fifty six thousand nine hundred thirty five only) received during the Initial Public Offer of the Company to Investor Education and Production Fund (IEPF).

RECENT DEVELOPMENT

a) M/s. Gems London Co. Limited in which the company was holding strategic stake to the extent of 30% through it Hong Kong based wholly owned subsidary Aston Luxury Group Limited was merged with Tokyo based Imacbc Co. Limited with effect from April 01, 2013. This merger with IMACBC, a jewellery manufacturing Company was a strategic move with a view to avail synergies of an integrated business model.

DISCLOSURE PURSUANT TO CLAUSE 5A OF LISTING AGREEMENT

Pursuant to insertion of clause 5A in listing agreement as per SEBI notification no. SEBI/CFD/DIL/ LA/1/2009/24/04 dated April 24, 2009 the details in respect of the shares lying in the Gitanjali Gems Limited - Unclaimed Shares Suspense Account till March 31, 2013 is as under:

SI. Description No. of No. of No. Cases Shares

i) Aggregate number of shareholders and the outstanding shares in the suspense account lying as on April 01, 2012 25 1008

ii) Number of shareholders who approached the Company for transfer of share from suspense account during the year 2012-13 1 35

iii) Number of shareholders to whom shares were transferred from suspense account during the year 2012-13 1 35

iv) Aggregate number of shareholders and the outstanding shares in the suspense account lying as on March 31, 2013 24 973

All the corporate benefits in terms of securities, accruing to on these unclaimed shares shall be credited to such account. Voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report of financial condition and results of operations of the Company for the year under review as required under Clause 49 of the Listing Agreement with the Stock Exchanges, is given as a separate statement forming part of this Annual Report.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this Report.

EMPLOYEE RELATIONS

Employee relations continued to be cordial during the year. The Company continued its thrust on Human Resource Development. The Board wishes to place on record its sincere appreciation to all the employees of the Company for their sustained efforts and immense contribution to the high level of performance and growth of the business during the year.

PARTICULARS OF EMPLOYEES

The Board of Directors wishes to express its appreciation to all employees for their outstanding contribution in the operations of the Company during the year.

During the year under review there were no employees drawing remuneration covered under the Sub-Section (2A) of Section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended. Hence no particulars in this regard are furnished in the report.

INFORMATION UNDER SECTION 217(1)(e) OF COMPANIES ACT, 1956 READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES 1988:

A. CONSERVATION OF ENERGY

The Disclosure of particulars with respect to conservation of energy pursuant to Section 217 (1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable to the Company. However, the Company makes its best efforts for conservation of energy.

B. TECHNOLOGY ABSORPTION, ADAPTATIONS & INNOVATION

The Company has not carried out any specific research and development activities. The Company uses indigenous technology for its operations. Accordingly, the information related to technology absorption, adaptation and innovation is reported to be NIL.

ACKNOWLEDGEMENT

We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by the employees at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation, and support.

We thank the Governments of various countries where we have operations. We also thank the Government of India, Ministry of Commerce & Industry, Ministry of Corporate Affairs, Ministry of Finance, Department of Economic affairs, Customs & Excise Departments, Income Tax Department, Reserve Bank of India, BSE, NSE, NSDL, CDSL and our bankers, various State Governments and other Government Agencies for their support, and look forward to their continued support in the future.

On behalf of the Board of Directors

Mehul C. Choksi

Chairman & Managing Director

Place : Mumbai

Date : August 14, 2013


Mar 31, 2012

Dear Members,

The Directors are pleased to present the 26th Annual Report on the business and operations of the Company for the year ended March 31, 2012.

FINANCIAL RESULTS: (Rs. in Millions)

Standalone Consolidated 2011-12 2010-11 2011-12 2010-11

Sales & Other Income 78,530.12 51,303.47 126,463.83 94,809.63

Expenditure 73,495.87 47,938.72 116,906.98 88,376.11

Finance Cost 2,509.45 1,043.98 4,077.24 2,217.70

Depreciation & Ammortisation Expenses 34.66 33.56 294.70 563.72

Exceptional Items 97.23 2.44 50.54 180.67

Profit before Taxes 2,587.37 2,289.65 5,235.45 3,832.77

Provision for Current Tax 519.00 45.00 920.52 404.13

Provision for Deferred Tax 3.98 (1.38) 21.19 (137.01)

Provision for MAT (Credit) (519.00) -- (601.27) --

Net Profit for the Year 2,583.39 2,246.03 4895.01 3,565.65

Profit brought forward from earlier Years 7,920.56 6,450.45 10,387.29 7,601.60

Amount available for Appropriation 10,503.95 8,696.48 15,278.29 11,166.53

Appropriations:

Proposed Dividend (including Dividend Tax) 317.72 295.92 317.72 295.92

Transfer to General Reserve 265.00 230.00 265.00 230.00

Capital Redemption Reserve - - - 3.33

Debenture Redemption Reserve 250.00 250.00 250.00 250.00

Balance Carried to Balance Sheet 9,671.23 7,920.56 14,445.57 10,387.29

(1 Million=10 Lakhs)

TURNOVERS & PROFITS

Your Directors wish to inform you that during the financial year ended March 31, 2012 the sales and other income increased from Rs. 51303.47 Million to Rs. 78530.12 Million. The net profit before tax stood at Rs. 2587.37 million as against Rs. 2289.65 million in the previous year. The net profit after tax stood at Rs. 2583.39 million as against Rs. 2246.03 million in the previous year.

BUSINESS REVIEW

1. DIAMOND AND JEWELLERY MANUFACTURING

SEGMENT

The Company is engaged in an end-to-end diamond processing chain which begins with Marking, Cleaving, Sawing, Cutting and finally, Polishing. Gitanjali procures rough diamonds from various major reputed diamond suppliers across the globe. These rough diamonds are processed and polished in modern diamond manufacturing facilities. The Company is making conscientious efforts in addressing the large market opportunities that exist in the Diamond Segment both in India and abroad. Converting diamonds into jewellery is a lucrative proposition and the company also has state of the art jewellery manufacturing facilities catering to domestic as well as International requirements.

2. BRANDED JEWELLERY AND RETAIL SEGMENT

The branded jewellery segment of the company is an India focused segment, which sells jewellery through over 4,000 points of sales across the country. Gitanjali owns 8 out of the top 10 brands in the country. The Group's “Gili” brand of jewellery, introduced in 1994, was among one of the first jewellery brand introduced in India. The Group's brands and sub-brands are aimed at different customer profiles, various markets and price segments and enjoy significant brand equity and market share. Gitanjali's brand portfolio includes leading jewellery brands like GILI, Nakshatra, Asmi, Sangini, D'damas, Maya Gold, etc. The other important brands under various sections including jewellery, fashion accessories, watches and silver ware are Vivaaha, Glitterati, Diya, Stefen Hafner, Shuddhi, Nizam, Lucera, Revv, Rivaaz, Giantti, World of Solitaire, Me Solitaire, World of Silver, Bezel, Morellato etc.

Asmi, Gili, Nakashtra and D'Damas have become leading brands today in the jewellery segment in India. Gitanjali has also launched new brands such as Amore and GDivas in India as part of its constant endeavour to extend its product range thereby, rapidly filling gaps and addressing an ever-growing demand for branded jewellery in India.

Consumer preferences have changed and lifestyles have improved in India. Retailing in India has also undergone a transformation. This has filtered through to the jewellery business creating opportunities for modern retail formats and chains. Gitanjali has been the pioneer in the branded jewellery segment and is amongst the first few companies to launch its own outlets to sell branded jewellery in India. Gitanjali is present across most modern retail formats such as shop-in- shops in large departmental stores and both, multi-brand outlets and exclusive brand outlets under owned and franchised stores. Gitanjali has extended its retail presence across outlets through an increase in the number of doors in order to take advantage of these opportunities. Gitanjali has a retail footprint of 1.7 mn sq. ft. It is focused strategically on expanding through the franchisee channel. This has allowed it an access to markets in smaller Indian towns and cities rapidly.

3. INTERNATIONAL DISTRIBUTION AND RETAIL SEGMENT

Besides operations in India, Gitanjali has a strong presence in leading jewellery markets of the world. It has the retail chain of

Samuels in USA with 110 stores. In the Middle East, it has four stores in Dubai and over 50 distribution points through leading retail chains of GCC countries.

In China, Gitanjali has distribution through a chain of 40 stores and a manufacturing facility for local as well as international supply. In Japan, it has a significant stake in Gems London Company Ltd which owns Gems TV, one of the leading Jewellery selling TV Channels of the world as well as a strong distribution network supplying to other leading retail chains of Japan. In the design capital of the world, Italy, Gitanjali owns leading brands such as Stefan Hafner, Io Si, Nouvelle Bague, Porrati and Valente. The Italian brands and designs are available to penetrate markets such as Russia, Saudi Arabia, China and the Far-east. Through its recent acquisition, Gitanjali also has a well established distribution chain in UK supplying its jewellery to leading retail chains in UK and in the rest of Europe.

DIVIDEND

Your Directors recommended a dividend of Rs 3/- per equity share for the year ended March 31, 2012. The payment of dividend is subject to the approval of shareholders at the ensuing Annual General Meeting.

TRANSFER TO RESERVES

The Company proposes to transfer Rs. 265.00 million to the general reserve out of the total amount of Rs. 10503.95 million available for appropriations as on March 31, 2012.

CAPITAL

The Company issued 943396 warrants convertible into equal number of Equity Shares on Preferential Basis at a price of Rs. 424/- per Warrant to Bennett Coleman and Company Limited (BCCL). Pursuant to notice received from BCCL for conversion of Warrants Company allotted 943396 equity shares of Rs. 10 each on 4th August, 2012. Consequent to aforesaid conversion the paid up capital of the Company has increased from Rs. 911,220,950/- consisting of 91122095 equity shares of Rs. 10 each to Rs. 920,654,910/- consisting of 92065491 equity shares of Rs. 10/- each.

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

The Company had raised USD 110 Million by way of issuance of FCCBs as per Offering Circular dated November 26, 2006 for utilization of funds towards overseas acquisition and infrastructure activities and development of Special Economic Zone (SEZ). Till the date of maturity, FCCBs worth USD 69.74 Million were converted into 12748162 Equity shares of Rs. 10 each of the Company at applicable conversion rates. On November 25, 2011 balance amount of outstanding FCCBs of Rs. 40.26 million were redeemed at a premium of 42.052%.

GLOBAL DEPOSITORY RECEIPTS (GDRs)

The Company had a balance of USD 0.066 million from its GDR Proceeds as on 1st April, 2011. During the year ended March 31, 2012 the Company has not utilized any GDR proceeds. Further, during the year under review the Company has earned an interest of USD 0.006 million on the said deposit. As on March 31, 2012 the balance net proceeds of GDR of USD 0.072 million were kept as deposits with overseas banks pending utilization.

EXTERNAL COMMERCIAL BORROWING (ECB)

During the year under review the Company has raised funds through ECB routes from Banks aggregating to USD 107.19 million.

Out of the above ECB proceeds USD 57.19 million was utilized for redemption of outstanding FCCBs and USD 50 Million was utilized towards CAPEX in SEZ unit in Hyderabad and investment in overseas subsidiaries.

DELISTING OF GLOBAL DEPOSITORY RECEIPTS (GDRS) FROM LONDON STOCK EXCHANGE AND FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs) FROM SINGAPORE STOCK EXCHANGE

As 1% Foreign Currency Convertible Bonds (FCCBs) of the Company listed on Singapore Stock Exchange have matured and been redeemed and also the entire Global Depositary Receipts listed on London Stock Exchange has been converted into Equity Shares of the Company, both securities have been delisted/cancelled from the respective Stock Exchanges.

SUBSIDIARIES

The Company has the following Subsidiaries/ Step down Subsidiaries as on date:

1. Gitanjali Limited

2. Gitanjali Exports Corporation Limited

3. Gitanjali Brands Limited

4. Gitanjali Infratech Limited

5. Hyderabad Gems SEZ Limited

6. Gitanjali Lifestyle Limited

7. Nashik Multi Services SEZ Limited

8. Gitanjali Jewellery Retail Limited

9. Samuels Jewelers Inc.

10. Gitanjali USA, Inc.

11. Gitanjali Ventures DMCC

12. Decent Securities & Finance Private Limited

13. Eureka Finstocks Private Limited

14. MMTC Gitanjali Private Limited

15. Gitanjali Capital Pvt Ltd.

16. Aston Luxury Group Limited

17. N&J Finstocks Private Limited

STEP DOWN SUBSIDIARIES

1. Tri-Star Worldwide LLC (Subsidiary of Gitanjali USA, Inc.)

2. Maya Retail Limited (Subsidiary of Gitanjali Lifestyle Limited)

3. MobileNxt Teleservices Pvt. Ltd (Subsidiary of Gitanjali Lifestyle Limited)

4. Diamlink Inc. USA (Subsidiary of Gitanjali USA, .Inc)

5. Diamlink Jewelery Inc. (Subsidiary of Diamlink Inc. USA)

6. Jewelry Marketing Comp, LLC (Subsidiary of Diamlink Jewelery Inc)

7. LJOW Holdings, LLC (Subsidiary of Diamlink Jewelery Inc)

8. Gili India Limited (Subsidiary of Gitanjali Brands Limited)

9. Brightest Circle Jewellery Limited (Subsidiary of Gitanjali Brands Limited)

10. D'Damas Jewellery (India) Private Limited (Subsidiary of Gitanjali Brands Limited)

11. Shubhalavanya Jewel Crafts Private Limited (Subsidiary of Gitanjali Brands Limited)

12. Asmi Jewellery India Limited (Subsidiary of Gitanjali Brands Limited)

13. Spectrum Jewellery Limited (Subsidiary of Gitanjali Brands Limited)

14. Gitanjali Resources BVBA (Subsidiary of Aston Luxury Group Ltd)

15. GGL Diamonds LLC (Subsidiary of Gitanjali USA)

*16. Leading Jewels of Japan KK (Subsidiary of Aston Luxury Group Ltd)

*17. Leading Singapore Jewels Pte Ltd (Subsidiary of Aston Luxury Group Ltd)

18. Leading Italian Jewels SRL (Subsidiary of Aston LuxuryGroup Ltd)

*19. Alfred Terry Limited (Subsidiary of Aston Luxury Group Ltd) (Formerly known as Alfred Terry Holding Limited)

*20. Terry Alfred Limited (Subsidiary of Alfred Terry Limited) (Formerly known as Alfred Terry Limited)

21. BLU Srl (Subsidiary of Leading Italia Jewels Srl)

*22. Crown Aim limited (Subsidiary of Aston Luxury Group Ltd)

*23. Forever Prime Inc (Subsidiary of Aston Luxury Group Ltd)

*24. Aston Luxury Retails Ltd (Subsidiary of Forever Prime Inc)

*Acquired/Incorporated during the year

Notes:

a. West Bengal SEZ Limited, Kolkata Axis Mall Limited, Raigad Gems SEZ Limited, Gitanjali Retail Ventures Limited, Cria Jewellery Private Limited and Mohar Jewels Limited were struck off from the register of Companies of ROC, Mumbai under Fast Track Exit mode for defunct companies under section 560 of the Companies Act,1956.

b. Modali Gems Private Limited have made an application under Fast Track Exit mode for defunct companies under section 560 of the Companies Act, 1956 to ROC, Mumbai. The same is under process of Strike off.

c. A statement containing brief financial details of subsidiaries is included in the annual report.

SUBSIDIARIES

The Ministry of Corporate Affairs, Government of India vide circular no. 2/2011 dated 8th February, 2011 has granted general exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company, as set out in sub-section (1) of Section 212 of the Companies Act, 1956. Accordingly, the Board of Directors in their Meeting held on 21st May, 2012, passed a resolution giving consent for not attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. A statement containing brief financial details of the Company's subsidiaries for the financial year ended March 31, 2012 is included in the Annual Report.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be available for inspection as above at office of the Company situated at Bldg. No. 2/101, Jogani Complex, Behind Amar – Brass, Manipada Road, Kalina, Santacruz (E), Mumbai – 400 098. The Company shall furnish a copy of details of annual accounts of subsidiaries to any member on demand. We believe that the consolidated accounts present a full and fair picture of the state of affairs and the financial condition and are accepted globally. The Consolidated Financial Statements presented by the Company includes the financial results of its subsidiary companies.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the consolidated financial statement pursuant to Clause 32 of the Listing Agreement entered into with Stock Exchange and prepared in accordance with applicable accounting standards prescribed by Institute of Chartered Accountants of India in this regard. The Auditors report does not contain any qualification.

RELATED PARTY TRANSACTIONS

Related party transactions have been disclosed in the notes to accounts.

FIXED DEPOSITS AND LOANS & ADVANCES

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public within the meaning of Section 58A of the Companies Act, 1956.

DIRECTORS

Mr. M. S. Sundararajan and Mr. Sunil Varma have been appointed as Additional Directors on March 21, 2012 and May 21, 2012 respectively. Mr. M. S. Sundararajan is an Independent Director and Mr. Sunil Varma is an Executive Director. As per the provisions of Section 260 of the Act, both the Directors hold office only up to the date of the forthcoming Annual General Meeting (AGM) of the Company and are eligible for appointment as Directors. The Company has received notices under Section 257 of the Act, in respect of the above persons, from a member of the Company proposing their appointment as a Director of the Company. Resolutions seeking approval of the members for the appointment of Mr. M. S. Sundararajan and

Mr. Sunil Varma as Directors of the Company have been incorporated in the Notice of the forthcoming AGM along with brief details about them.

Mr. Sunil Varma is appointed as Whole Time Director of the Company w.e.f. May 21, 2012 upto May 20, 2017 and will not be liable to retire by rotation.

The term of appointment of Mr. Mehul C. Choksi as Managing Director came to an end on 31st July, 2012 and he was reappointed for a further period of 5 years with effect from 1st August, 2012 to till 31st July, 2017 in Board of Directors Meeting held on 21st May, 2012. He will not be liable to retire by rotation.

Mr. Nehal Modi and Mr. S. Krishnan, Directors, are retiring by rotation and being eligible have offered themselves for re- appointment. Your Directors recommend their re-appointment for your approval.

A Brief profile of all the Directors on the Board has been given in Separate Section of the Annual Report.

REGISTERED OFFICE ADDRESS

The registered office of the Company has been shifted from 801/802, Prasad Chambers, Opera House, Mumbai – 400 004 to A-1, 7th Floor, Laxmi Tower, Bandra – Kurla Complex, Bandra (E), Mumbai – 400 051. The same was approved by the Board of Directors in their meeting held on 11th August, 2012.

AUDITORS & AUDITORS REPORT:

M/s. Ford, Rhodes, Parks & Co., Chartered Accountants, the present Statutory Auditors retire at the ensuing Annual General Meeting and are eligible for re-appointment u/s 224 (1B) of the Companies Act, 1956. The company proposes to re-appoint M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the company from the conclusion of the ensuing Annual General Meeting up to the conclusion of the next Annual General Meeting of the company.

The Audit Committee and the Board recommend the appointment of M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the company.

In respect of the observations made by Auditors in their report, your Directors wish to state that the respective notes to the Accounts are self explanatory and therefore do not call for any further comments.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the annual accounts, for the financial year ended March 31, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of the profit of the Company for the said period;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) that the Directors have prepared the accounts for the financial year ended March 31, 2012 on a ‘going concern' basis.

The above statements have been reviewed by the Audit Committee at its meeting held on 21st May, 2012.

SIGNIFICANT DEVELOPMENTS DURING THE YEAR

(a) As a part of the restructuring exercise of the Company as being advised by KPMG inorder to consolidate and realign the Branded Jewellery business, the Company has transferred its entire stake of following Subsidiaries to Gitanjali Brands Limited another Subsidiary of the Company:

1. Gili India Limited

2. Brightest Circle Jewellery Limited

3. D'Damas Jewellery (India) Private Limited

4. Asmi Jewellery India Limited

5. Spectrum Jewellery Limited

6. Shubalavnyaa Jewel Crafts Private Limited

(b) During the year, the Company through its Hong Kong based wholly owned subsidiary Aston Luxury Group Limited has incorporated a wholly owned subsidiary (WOS) In the name of "Leading Singapore Jewels Pte. Ltd" in Singapore with a view to expand it's business in Singapore and the Far Eastern regions.

(c) During the year, as a part of an ongoing exercise of re- aligning and restructuring of the International business of the Company, the Company has transferred it's stake In 'Leading Italian Jewels S.R.L.' to 'Aston Luxury Group Limited', a Hong Kong based wholly owned subsidiary of the Company. Further Giantti Italia S.r.l, a Milan based subsidiary of the Company has merged with Leading Italian Jewels S.r.l.

(d) During the year, Aston Luxury Group Limited , a wholly owned subsidiary of the Company has acquired entire stake in Crown Aim Limited. It is a Hong Kong based company engaged in the business of distribution of Jewellery to china, Japan, USA, middle east and Europe.

In Addition, Crown Aim has a Jewellery manufacturing unit in China and plans to setup retailing of Jewellery in China. With the above acquisition company has acquired control over its subsidiaries which are engaged in the business of distribution of Jewellery in UK.

(e) During the year, Aston Luxury Group Limited , a wholly owned subsidiary of the Company has acquired entire stake in

Leading Jewels of Japan KK with a view to expand its business in Japan and the adjoining region.

The main activity of Leading Jewels of Japan KK is Production, sales, purchase, import, and export of diamonds, precious stones, jewels and jewellery.

RECENT DEVELOPMENTS

(a) The Company issued 943396 warrants convertible into equal number of Equity Shares on Preferential Basis at a price of Rs. 424/- per Warrant to Bennett Coleman and Company Limited (BCCL). Pursuant to notice received from BCCL for conversion of Warrants Company allotted 943396 equity shares of Rs. 10 each on 4th August, 2012.

(b) The Board of Directors of the Company at their meeting held on 11th August, 2012 decided to issue 1 (one) Zero Percent Fully Convertible Debenture (FCD) having face value of Rs. 39,00,00,000/- (Rupees Thirty Nine Crores only) on preferential basis in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended from time to time to D. B. Corp Limited which is subject to approval of shareholders in ensuing Annual General Meeting.

All the corporate benefits in terms of securities, accruing to on these unclaimed shares shall be credited to such account. Voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report of financial condition and results of operations of the Company for the year under review as required under Clause 49 of the Listing Agreement with the Stock Exchanges, is given as a separate statement forming part of this Annual Report.

OUTLOOK FOR 2012-13

Currently, India is the world's leading diamond cutting and polishing country and also the largest consumer of polished diamonds after the US and Japan. Urbanization and a rapidly expanding middle class have helped trigger Indian consumerism especially in the gems and jewellery sector.

Overall the year 2012-13 will be a year where Gitanjali plans to increase the number of owned stores and franchisees in India and overseas. All the Company's stores will be on revenue sharing models whereby the rentals and the capital expenditure will be borne by the developer/owner. The Company will have a variable outflow of revenue share against its investment in capex and monthly rentals. Besides, the company's core focus is to expand through the franchising route and to open some flagship stores and attract franchisees.

The growth potential of the Indian business and profit unlocking from the brands converting into retail chains have a huge upside in the valuation of the company. The existing shareholders will also benefit from the business restructuring undertaken by the company under the advice of KPMG, as the exercise has significant value unlocking potential for the shareholders.

The company would continuously strive to gain by capitalizing on the business model and the Indian demand for diamond jewellery and share the resultant benefits with its stakeholders.

AWARDS AND RECOGNITIONS

9 The Company has won the Blue Dart Global CSR Award for

‘Best Corporate Social Responsibility Practice Overall' at a glittering ceremony on 18th February 2012. The Hon'ble Union Minister of Corporate Affairs, Dr. M. Veerappa Moily presented the global CSR award.

0 The Company has won 'Category Leader - Luxury eRetailer of the Year' and 'Special Award - Most Innovative eRetailer of the Year' Awards at recently held Indian eRetail awards, 2012.

These awards recognised the efforts of the Company in the creation of path breaking trends and unprecedented innovations in the online retail industry.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Gitanjali Gems Limited spread its wings in the social sector under its CSR umbrella “ SAMBHAV”.

The company continues to do its bit for the society in the field of health, education and empowerment through its programs SUJYOT,SAKSHAR AND SAKSHAM.

The new addition to its CSR initiative is SUJYOT a medical van that runs in rural areas of Palanpur in Gujarat in collaboration with the Wockhardt foundation. More than 6000 people have been benefitted from the same.

The company maintains a stern focus on its empowerment initiative Saksham where the strength of the specially disabled employees (PWD) has gradually increased from 118 in 2009 to 245 in 2012.Efforts were put in to design and conceptualize the Training Manual / handbook for Inclusion of Specially disabled.

The CSR department also conducted various awareness seminars and first aid training along with social activities like blood donation camps, visit to the schools for underprivileged by its employees.

The detailed CSR initiatives undertaken by the Company is also available on the Company's website www.gitanjaligroup.com.

INDUSTRIAL RELATIONS

Employee relations continued to be cordial during the year. The Company continued its thrust on Human Resource Development. The Board wishes to place on record its sincere appreciation to all the employees of the Company for their sustained efforts and immense contribution to the high level of performance and growth of the business during the year.

PARTICULARS OF EMPLOYEES

The Board of Directors wishes to express its appreciation to all employees for their outstanding contribution to the operations of the Company during the year.

During the year under review there were no employees drawing remuneration covered under the Sub-Section (2A) of Section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended. Hence no particulars in this regard are furnished in the report.

INFORMATION UNDER SECTION 217(1)(e) OF COMPANIES ACT, 1956 READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES 1988:

A. CONSERVATION OF ENERGY

The Disclosure of particulars with respect to conservation of energy pursuant to Section 217 (1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable to the Company. However, the Company makes its best efforts for conservation of energy.

B. TECHNOLOGY ABSORPTION, ADAPTATIONS & INNOVATION

The Company has not carried out any specific research and development activities. The Company uses indigenous technology for its operations. Accordingly, the information related to technology absorption, adaptation and innovation is reported to be NIL.

ACKNOWLEDGEMENT

We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by the employees at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation, and support.

We thank the Governments of various countries where we have operations. We also thank the Government of India, Ministry of Commerce & Industry, Ministry of Corporate Affairs, Ministry of Finance, Department of Economic affairs, Customs & Excise Departments, Income Tax Department, Reserve Bank of India, BSE, NSE, NSDL, CDSL and various bankers, various State Governments and other Government Agencies for their support, and look forward to their continued support in the future.

On behalf of the Board of Directors

Place : Mumbai Mehul C. Choksi

Date : August 11, 2012 Chairman & Managing Director


Mar 31, 2011

The members of

Gitanjali Gems Limited

The Directors are pleased to present the 25th Annual Report on the business and operations of the Company for the year ended 31st March, 2011.

FINANCIAL RESULTS

(Rs. in millions)

Standalone Consolidated

2010-11 2009-10 2010-11 2009-10

Sales & Other Income 51,232.7 33,552.52 94,723.96 65,302.17

Expenditure 47,906.04 31,008.41 88,420.94 60,885.06

Interest 1,003.44 1,011.14 2,087.20 1,724.31

Depreciation 33.56 39.41 563.72 445.41

Exceptional Items - - 180.67 -

Profit Before Taxes 2,289.65 1,493.56 3,832.77 2,247.39

Provision for Income Tax 45.00 69.50 404.13 244.20

Earlier Years (Excess)/ Short Provision - 2.20 - -

Provision for Deferred Tax (1.38) 0.95 (137.01) (12.30)

Provision for Fringe Benefit Tax - - - (0.00)

Net Profit for the Year 2,246.03 1,420.91 3,565.65 2,015.49

Profit brought forward from earlier Years 6,450.46 5,604.65 7,601.60 6,197.38

Amount available for Appropriation 8,696.49 7,025.56 11,166.53 8,176.71

Appropriations:

Proposed Dividend (including Dividend Tax) 295.91 197.18 295.91 197.18

Transfer to General Reserve 230.00 120.00 230.00 120.00

Capital Redemption Reserve - 7.93 3.33 7.93

Debenture Redemption Reserve 250.00 250.00 250.00 250.00

Balance Carried to Balance Sheet 7,920.57 6,450.45 10,387.29 7,601.60

TURNOVERS & PROFITS

The Directors wish to inform you that during the financial year ended 31st March, 2011 the sales and other income increased from Rs. 33552.52 millions to Rs. 51232.7 millions. The net profit before tax stood at Rs. 2289.65 millions as against Rs. 1493.56 millions in the previous year. The net profit after tax stood at Rs. 2246.03 millions as against Rs. 1420.91 millions in the previous year.

BUSINESS REVIEW

1. DIAMOND AND JEWELLERY MANUFACTURING SEGMENT

The Company engages in an end-to-end diamond processing chain which begins with Marking, Cleaving, Sawing, Cutting and finally, Polishing. It procures rough diamonds from various major reputed diamond suppliers across the globe. Tese rough diamonds are processed and polished in the modern diamond processing units.

The Company is making conscientious efforts in addressing the large market opportunities that exist in the Diamond Segment both in India and abroad. Exports of Gems and Jewellery are also on the upswing. Large opportunities exist in exports by converting diamond into Jewellery before exports.

The Company also has state of art manufacturing facilities of Jewellery catering to its domestic as well as International distribution.

2. BRANDED JEWELLERY SEGMENT

Branded Jewellery Segment is India Focused Segment of the group, which caters to over 3600 points of sales across the country. Gitanjali owns 8 out of top 10 brands in the country. Asmi, Gili, Nakashtra, and D'Damas have become most dominating brand today in the jewellery segment in India. All these brands are housed in separate legal entities with their manufacturing strength offers India's largest jewellery distribution and retail model under this segment.

Multi-brands retail outlets are also under this segment to develop company owned and franchise formats for the group. This segment holds Gitanjali's lifestyle business of accessories and watches.

Gitanjali has been the pioneer in the branded jewellery segment and is amongst the first few companies to launch its own outlets to sell branded jewellery in India. The Group's "Gili" brand of jewellery, introduced in 1994, was among the first branded jewellery introduced in India. The Group's brands and sub-brands are aimed at different customer profiles, various markets and price segments and enjoy significant brand equity and market share.

Gitanjali's brand portfolio includes leading jewellery brands like GILI, Nakshatra, Asmi, Sangini, D'damas etc. The other important brands under various sections including jewellery, fashion accessories,

watches and silver ware are Collection G, Gold Expressions, Vivaaha, Glitterati, Maya Gold, Diya, Stefen Hafner, Shuddhi, Lucera, Hoop, Bella, Revv, Rivaaz, Giantti, World of Solitaire, Me Solitaire, World of Silver, Bezel, Morellato etc.

3. INTERNATIONAL DISTRIBUTION AND RETAIL SEGMENT.

Gitanjali forayed into the US market by acquiring Samuels and Rogers, a retail chain in USA. Gitanjali now has 111 stores in USA. International segment also caters to retail and distribution in Middle East, China and Japan and other jewellery consumption countries.

Recent acquisition of DIT Group's assets in Italy aims to target Italian designs of jewellery for Russian and Saudi Arbian Markets while Indian designs have penetrated in Asian Sub-continent.

International segment will compliment company's vision to become worlds largest jewellery player with integrated model.

DIVIDEND

Your Directors recommended a dividend of Rs. 3.00 per equity share for the year ended 31st March, 2011 at their meeting held on 27th May, 2011. Subsequently on 3rd August, 2011, the Company issued 611795 Equity Shares of Rs. 10 each upon conversion of FCCBs worth USD 3 millions. The said shares ranks pari passu with the existing shares and are entitled to get all benefits of existing shares. The payment of dividend is subject to the approval of shareholders at the ensuing Annual General Meeting.

TRANSFER TO RESERVES

The Company proposes to transfer Rs. 230 millions to the general reserve out of the total amount of Rs. 8696.49 millions available for appropriations as on 31st March, 2011.

AUTHORISED SHARE CAPITAL

During the year under review, the Authorised Share Capital of the Company was increased from Rs. 120,00,00,000/- (Rupees One Hundred and Twenty crores) divided into 12,00,00,000 (Twelve crores) equity shares of Rs. 10 (Rupees Ten Only) each to Rs. 150,00,00,000/- (Rupees One Hundred and Fifty crores Only) divided into 15,00,00,000 (Fifteen crores) equity shares of Rs. 10 (Rupees Ten only) each. The Authorised Share Capital has been increased in order to facilitate raising funds through issuance of new securities.

PAID UP SHARE CAPITAL

On 8th January, 2011 the Company issued 601598 Equity shares of Rs. 10 each upon conversion of FCCBs worth USD 2.95 millions. Further on 3rd August, 2011 Company issued 611795 Equity shares of Rs. 10 each upon conversion of FCCBs worth USD 3 millions.

Consequently, paid up capital of the Company increased from Rs. 84,27,00,000 consisting of 8,42,70,000 Equity shares of Rs. 10 each at the begining of the year to Rs. 85,48,33,930 consisting of 8,54,83,393 Equity shares of Rs. 10 each as on date.

FUND UTILISATION:

1. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB)

As on 1st April, 2010 the Company had a balance of USD 2 millions from the net proceeds of FCCBs in deposits pending utilisation. During the year, the Company has utilised entire FCCB proceeds and as on 31st March, 2011 the Company has NIL balance of FCCBs proceeds.

2. GLOBAL DEPOSITORY RECEIPTS (GDRS)

The Company had a balance of USD 2.215 millions from its GDR Proceeds as on 1st April, 2010. After utilisation of funds towards the objects for which it was raised as on 31st March, 2011 the balance net proceeds of GDR of USD 0.066 millions was kept as deposits with overseas banks pending utilisation.

SUBSIDIARIES

The Company had the following Subsidiaries/ Step down Subsidiaries at the beginning of the year:

1. Mehul Impex Limited

2. Gitanjali Exports Corporation Limited

3. Shubalavanyaa Jewel Crafts Private Limited

4. Gili India Limited

5. Gitanjali Brands Limited (formerly known as Fantasy Jewellery Private Limited )

6. Brightest Circle Jewellery Limited (formerly known as Brightest Circle Jewellery Private Limited)

7. D'Damas Jewellery (India) Private Limited

8. Asmi Jewellery India Limited (formerly known as Asmi Jewellery India Private Limited)

9. Gitanjali Lifestyle Limited

10. CRIA Jewellery Private Limited

11. Gitanjali Infratech Limited

12. *Aurangabad SEZ Limited

13. *Nanded SEZ Limited

14. *Nagpur Multi-Product Services SEZ Limited

15. Hyderabad Gems SEZ Limited

16. Raigad Gems SEZ Limited

17. Nashik Multi Services SEZ Limited

18. Gitanjali Jewellery Retail Private Limited

19. Mohar Jewels Limited

20. Samuels Jewelers Inc.

21. Gitanjali USA, Inc.

22. Gitanjali Ventures DMCC

23. Gitanjali Retail Ventures Limited

24. Modali Gems Private Limited

25. Decent Securities & Finance Private Limited

26. Eureka Finstock Private Limited

27. West Bengal SEZ Limited

28. *Gitanjali Holdings Limited

29. MMTC Gitanjali Private Limited

30. Spectrum Jewellery Limited (formerly known as Spectrum Jewellery Private Limited)

31. Gitanjali Capital Private Limited (formerly known as Bezel India Private Limited)

STEP DOWN SUBSIDIARIES

1. Tri-Star Worldwide LLC (Subsidiary of Gitanjali USA, Inc.)

2. **Lucera Retail Venture Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

3. **Trinity Expositions Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

4. **Hoop Retail Ventures Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

5. Kolkata Axis Mall Limited (Subsidiary of Gitanjali Infratech Limited)

6. Maya Retail Limited (formerly known as Salasar Retail Limited - Subsidiary of Gitanjali Lifestyle Limited)

7. MobileNXT Teleservices Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

8. ***Alliance Jewelleries Private Limited (Subsidiary of Brightest Circle Jewellery Limited)

9. Diamlink Inc. USA (Subsidiary of Gitanjali USA, .Inc)

10. Diamlink Jewelery Inc. (Subsidiary of Diamlink Inc. USA )

11. Jewelry Marketing Comp, LLC (Subsidiary of Diamlink Jewelery Inc )

12. LJOW Holdings, LLC (Subsidiary of Diamlink Jewelery Inc)

The following subsidiaries/step-down subsidiaries were wholly / partly acquired or incorporated during the year:

1. N&J Finstocks Private Limited

2. Gitanjali Resources

3. Giantii Italia SRL

4. ***Pink Jewellery Private Limited (subsidiary of Brightest Circle Jewellery Limited)

Notes:

* Aurangabad SEZ Limited, Nanded SEZ Limited and Nagpur Multi-Product Services SEZ Limited were struck off under Easy Exit Scheme, 2011. Further Gitanjali Holdings Ltd, U.A.E. has been deregistered as there were no operations in it.

** Hoop Retail Ventures Private Limited, Trinity Expositions Private Limited and Lucera Retail Venture Private Limited, step down subsidiaries were amalgamated with Gitanjali Lifestyle Limited, wholly owned subsidiary as per Bombay High Court Order dated May 06, 2011.

*** Pink Jewellery Private Limited and Alliance Jewelleries Private Limited, stepdown Subsidiaries were amalgamated with Brightest Circle Jewellery Limited, wholly owned Subsidiary as per Bombay High Court Order dated April 15, 2011.

A statement containing brief financial details of subsidiaries is included in the annual report.

As required under listing Agreements with the Stock Exchanges, a consolidated financial statement of the Company and all it's subsidiaries is attached. The consolidated financial statement has been prepared in accordance with accounting standard 21, 23 and 27 issued by Institute of Chartered Accountants of India and show the financial resources, assets, liabilities, income, profits and other details of the Company, its subsidiaries and Joint ventures.

PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT, 1956

The Ministry of Corporate Affairs, Government of India vide circular no. 2/2011 dated 8th February, 2011 has granted general exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company as set out in sub-section (1) of Section 212 of the Companies Act, 1956. Accordingly, the Board of Directors in their Meeting held on 27th May, 2011 passed a resolution giving consent for not attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. A statement containing brief financial details of the Company's subsidiaries for the financial year ended 31st March, 2011 is included in the Annual Report.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be available for inspection at the Corporate Office of the Company. The Company shall furnish a copy of details of annual accounts of subsidiaries to any member on demand. We believe that the consolidated accounts present a full and fair picture of the state of affairs and the financial condition and are accepted globally.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the consolidated financial statement which is prepared in accordance with applicable accounting standards prescribed by Institute of Chartered Accountants of India in this regard. The Auditors report does not contain any qualification.

RELATED PARTY TRANSACTIONS:

Related party transactions have been disclosed in the notes to accounts.

FIXED DEPOSITS AND LOANS & ADVANCES:

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public within the meaning of Section 58A of the Companies Act, 1956.

DIRECTORS:

In accordance with the Articles of Association, Mr. Dhanesh Sheth, Director retires by rotation and being eligible, offers himself for re-appointment. Your Directors recommend his re-appointment for your approval.

Brief resume of all the Directors on the Board has been given in the Annual Report in "Corporate Governance Report" section.

GROUP:

Pursuant to intimation from the Promoters, the names of the Promoters and entities comprising the 'group' are disclosed in the Annual Report for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

AUDITORS & AUDITORS REPORT:

M/s. Ford, Rhodes, Parks & Co., Chartered Accountants, the present Statutory Auditors retire at the ensuing Annual General Meeting and are eligible for re-appointment u/s 224 (1B) of the Companies Act, 1956. Te Company proposes to re-appoint M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting up to the conclusion of the next Annual General Meeting of the Company.

The Audit Committee and the Board recommend the appointment of M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the Company.

In respect of the observations made by Auditors in their report, your Directors wish to state that the respective notes to the Accounts are self explanatory and therefore do not call for any further comments.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the annual accounts, for the financial year ended 31st March, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the profit of the Company for the said period;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2011 on a 'going concern' basis.

The above statements have been reviewed by the Audit Committee at its meeting held on 27th May, 2011.

SIGNIFICANT DEVELOPMENTS DURING THE YEAR

(a) During the year, the Company has acquired 100% Shares of N&J Finstocks Private Limited (N&J), By way of this acquisition, N&J has become a wholly owned subsidiary of the Company.

(b) During the year, the Company has acquired 100% stake in 'Giantti Italia S.R.L.', a Company based in Milan, Italy. By virtue of this acquisition 'Giantti Italia S.R.L.' has become a direct subsidiary of the Company. The said acquisition will be useful for growth of the branded jewellery business overseas and gain the designing and branding concepts expertise from Italy.

(c) During the year with a view to rationalise the group structure, the Company has acquired entire stake in "Pink Jewellery Private Limited" (PJPL) through Brightest Circle Jewellery Limited, a wholly owned subsidiary of the Company.

(d) During the year, the Company has incorporated a wholly owned subsidiary (WOS) In the name of "Gitanjali Resources" in Belgium with a view to explore and expand its businesses in Europe. The main object of this WOS is to focus on the business of the Company in European Region and conduct core diamond and jewellery business in that continent.

RECENT DEVELOPMENTS

(a) The Company has incorporated a wholly owned subsidiary in the name of Leading Italian Jewels SRL (LIJ) in Italy with the view to expand its business in Italy and adjoining region. The main activity of LIJ is trading in precious stones, diamonds jewellery, pearls etc.

(b) The Company has sold its entire 51% stake in Shubalavanyaa Jewel Crafts Private Limited, a Subsidiary of the Company to Gitanjali Brands Limited, a wholly owned Subsidiary of the Company. Consequent to the said transfer Shubalavanyaa Jewel Crafts Private Limited has become a Subsidiary of Gitanjali Brands Limited.

(c) The Company has acquired assets of DIT Group S.p.A (DIT) Italy alongwith the trust constituted as operating vehicle i.e 'BLU S.r.l' a Company governed by Italian law with headquarters in Milan. DIT engages in Jewellery manufacturing and sale business.

(d) The Company decided to explore the potential merger of subsidiaries, demerger and other forms of restructuring, or acquisition, or spin-off with the ultimate object of enhancing and unlocking shareholder value. Accordingly, Pink Jewellery Private Limited and Alliance Jewelleries Private Limited, stepdown Subsidiaries were amalgamated with Brightest Circle Jewellery Limited, wholly owned Subsidiary as per Honorable Bombay High Court Order dated April 15,2011. Further, Hoop Retail Ventures Private Limited, Trinity Expositions Private Limited and Lucera Retail Venture Private Limited, step down subsidiaries were amalgamated with Gitanjali Lifestyle Limited, wholly owned subsidiary as per Honorable Bombay High Court Order dated May 06, 2011

(e) The Company has incorporated wholly owned subsidiary in the name of Aston Luxury Group Ltd. in Hong Kong.

(f) The Company has incorporated GGL Diamond LLC in United States of America through its wholly owned subsidiary Gitanjali USA Inc.

DISCLOSURE PURSUANT TO CLAUSE 5A OF LISTING AGREEMENT

Pursuant to insertion of clause 5A in listing Agreement as per SEBI notification no. SEBI/CFD/DIL/LA/1/2009/24/04 dated 24th April, 2009 the details in respect of the shares lying in the Gitanjali Gems Limited – Unclaimed Shares Demat Suspense Account till 31st March, 2011 is as under.

Sl. No Description No. of Cases No. of Shares Remarks

i) Aggregate number of shareholders and the outstanding shares in the 27 1078 suspense account lying as on 1st April, 2010.

ii) Number of shareholders who approached the Company for transfer of shares 1 35 from suspense account during the year 2010-2011

iii) Number of shareholders to whom shares were transferred from suspense 1 35 account during the year 2010-2011

iv) Aggregate number of shareholders and the outstanding shares in the 26 1043 suspense account lying as on 31st March, 2011

All the corporate benefits in terms of securities, accruing to on these unclaimed shares shall be credited to such account. Voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report of financial condition and results of operations of the Company for the year under review as required under Clause 49 of the Listing Agreement with the Stock Exchanges, is given as a separate statement forming part of this Annual Report.

OUTLOOK FOR 2011-12

The Jewellery business will continue its growth path through various nitiatives, including launching of new collections, setting up large format stores, increasing share of studded jewellery and achieving design leadership.

Overall, the year 2011-12 will be a year where the Company would drive for strong and profitable growth in all its Indian consumer businesses, retain focus on elimination of wasteful costs, and skillfully navigate the nternational businesses which will continue to pose challenges due to sluggish demand in some of the geographies.

AWARDS AND RECOGNITION

- The Company has been awarded the Outstanding CSR in the Gems & Jewellery sector at the first CSR TLC held on 19th February, 2011, from the hands of Shri Salman Khurshid, Honorable Union Cabinet Minister for Water Resources, and for Minority Affairs. The Company has received this prestigious award as recognition for its efforts in the field of community health and welfare.

- The Company has been awarded the 5th INDY's award for Excellence in Corporate Social Responsibility Practice. The award recognised the Company for systematically planning and carrying out socia activities within the organisation. The jury was extremely impressed with the involvement of the employees and the array of activities being carried out like blood donation camp, eye check up camp, first aid training, cleanliness drive etc.

- It was a proud moment for the Company as 'Saksham' one of the projects under the Company's CSR initiative 'Sambhav', was acknowledged and awarded the prestigious NCPEDP- Shell Helen Keller Award, 2010 under Category C meant for Companies/ Organisations/Institutions who through their policies and practices demonstrate their belief in equal rights and gainful employment for people with disabilities. The award, was given at a simple ceremony at India International Centre Auditorium, Max Mueller Marg on 2nd December, 2010 on the eve of World Disability Day. Hon'ble Home Minister and chief guest for the evening, Shri P. Chidambaram presented the award to the Company. The Saksham initiative of the Company is focused on empowerment of People with Disabilities (PWD's) through a six month training programme and creating conditions for their rehabilitation and integration into society. Nearly 250 such people are employed at the Company's factory located at Rajiv Gems Park at Hyderabad and the Company plans to significantly increase this number in the coming year.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements as set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has devoted time, attention and resources to long cherished dream that the Company have held - that of giving back to the society at large. The Company's CSR initiative under the name Sambhav has brought together the different social programs that the Company has been associated with over the years. Tese are programs in the fields of education, health, providing employment to PWDs. The Company will be integrating all of them and in own different initiatives like Saksham, Saakshar, Sujyot and Sneh. The focus will be both on strengthening the existing programs as well as developing new ones too. The Company is now aiming to take this CSR initiative to new heights and are in the process of channelising all the strengths and efforts to form a strong CSR team within the Company to encourage and promote a wide range of social welfare activities internally or in partnering with other NGOs and government bodies. The detailed Corporate Sustainability Report is also available on the Company's website www.gitanjaligroup.com

INDUSTRIAL RELATIONS

Employee relations continued to be cordial during the year. The Company continued its thrust on Human Resource Development. The Board wishes to place on record its sincere appreciation to all the employees in the Company for their sustained efforts and immense contribution to the high level of performance and growth of the business during the year.

PARTICULARS OF EMPLOYEES

The Board of Directors wishes to express its appreciation to all employees for their outstanding contribution to the operations of the Company during the year.

During the year under review there were no employees drawing remuneration covered under the Sub-Section (2A) of Section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended. Hence no particulars in this regard are furnished in the report.

INFORMATION UNDER SECTION 217(1)(e)OF COMPANIES ACT, 1956 READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES 1988:

A. CONSERVATION OF ENERGY

The Disclosure of particulars with respect to conservation of energy pursuant to Section 217 (1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable to the Company. However, the Company makes its best efforts for conservation of energy

B. TECHNOLOGY ABSORPTION, ADAPTATIONS & INNOVATION

The Company has not carried out any specific research and development activities. The Company uses indigenous technology for its operations. Accordingly, the information related to technology absorption, adaptation and innovation is reported to be NIL.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(Rs. in millions)

2011 2010

Foreign Exchange Earnings:

FOB Value 30,298.04 19,449.31

Foreign Exchange Outgo:

Value of Imports on CIF basis 17,694.60 14,854.93

Expenditure in Foreign Exchange 47.16 31.72

ACKNOWLEDGEMENT

We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by the employees at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation, and support.

We thank the Governments of various countries where we have operations. We also thank the Government of India, Ministry of Commerce & Industry, Ministry of Corporate Affairs, Ministry of Finance, Department of Economic affairs, Customs & Excise Departments, Income Tax Department, Reserve Bank of India, Stock Exchanges, NSDL, CDSL, various bankers, State Governments and other Government Agencies for their support, and look forward to their continued support in the future.

On behalf of the Board of Directors

Mehul C. Choksi

Place: Mumbai Chairman & Managing Director

Date: 12th August, 2011


Mar 31, 2010

The Directors are pleased to present the 24th Annual Report on the business and operations of the Company for the year ended March 31, 2010.

(Rs. in Millions)

FINANCIAL RESULTS

Standalone Consolidated

2009-10 2008-09 2009-10 2008-09

Sales & Other Income 33,552.52 26,940.64 65,302.17 50,911.12

Expenditure 31,008.41 25,136.69 60,885.06 48,012.19

Interest 1,011.14 453.39 1,724.31 978.40

Depreciation 39.41 43.36 445.41 335.96 Proft before Taxes 1,493.56 1,307.20 2,247.39 1,584.57

Provision for Income Tax 69.50 35.00 244.20 129.61

Earlier Years (Excess)/ Short Provision 2.20 - - -

Provision for Deferred Tax 0.95 2.50 (12.30) (108.77)

Provision for Fringe Beneft Tax - 2.01 (0.00) 10.94

Net Proft for the Year 1,420.91 1,267.69 2,015.49 1,552.79

Proft brought forward from earlier Years 5,604.65 4,624.10 6,197.38 4,970.46

Amount available for Appropriation 7,025.56 5,891.79 8,176.71 6,484.51

Appropriations

Proposed Dividend (including Dividend Tax) 197.18 179.14 197.18 179.14

Transfer to General Reserve 120.00 108.00 120.00 108.00

Capital Redemption Reserve 7.93 - 7.93 -

Debenture Redemption Reserve 250.00 - 250.00 -

Balance Carried to Balance Sheet 6,450.45 5,604.65 7,601.60 6,197.38

(1 Million=10 Lakhs)

Turnovers & Profts

The Directors wish to inform you that during the fnancial year ended March 31, 2010 the sales and other income increased from 26,940.64 Million to Rs. 33,552.52 Million. The net proft before tax stood at Rs. 1,493.56 million as against Rs. 1,307.20 million in the previous year. The net proft after tax stood at Rs. 1,420.91 million as against Rs. 1267.69 million in the previous year.

Business Review

1. Diamond Segment

Gitanjali procures rough diamonds from various major reputed diamond suppliers across the globe. These rough diamonds are processed and polished in the modern diamond processing units located at Surat – Gujrat, Dhaisar – Mumbai and Rajiv Gems Park – Hyderabad. Gitanjalis diamond sales accounted for Rs. 20,972 million in 2009-10 recording a growth of Rough diamonds are being processed and polished in the modern diamond processing units located at Surat – Gujrat, Dhaisar – Mumbai and Rajiv Gems Park – Hyderabad.

29%. Gitanjali exports diamond jewellery as well. Diamond export countries include the U.S., Hong Kong, Japan, China, Middle East and Thailand.

Gitanjalis end-to-end diamond processing chain activities include Marking, Cleaving, Sawing, Cutting and fnally polishing. The Companys quality sourcing facilities helps the company to establish competitive prices, and enjoy a consistent market demand.

2. Jewellery Segment

Gitanjali manufactures gold jewellery and diamond studded jewellery in its various state of the art facilities. The manufacturing activities are supported by a strong product development and design function. The manufacturing process includes designing, model and mould making, waxing and wax setting, casting, sprue binding, flling, polishing, metal setting and rodium polish. The Export processing unit is located at SEEPZ - Andheri, Mumbai with more than 500 workers. The other domestic manufacturing units are also located at Goregaon & Andheri - Mumbai, Surat – Gujarat, Rajiv Gems Park - Hyderabad and Manikanchan SEZ - Kolkata.

The revenue from the jewellery segment accounted for 38% of the total revenue in 2009-10. The jewellery segment grew by 18% in 2009-10 to Rs. 12,578 million. Gitanjalis growth can be attributed to branding, promotion, and expansion of its retail network.

3. Branding and Retail Expansion

Gitanjali has several jewellery brands under its umbrella which offer designs for all ages, all occasions, and all customer segments. Gitanjalis brand portfolio includes Gili, Nakshatra, Asmi, Sangini, Ddamas etc. The other important brands under various sections including jewellery, fashion accessories, watches and silverware are Vivaaha, Glitterati, Maya Gold, Diya, Stefen Hafner, Lucera, Hoop, Bella, Revv, Rivaaz, Giantti, World of Solitaire, Me Solitaire, World of Silver, Bezel, Morellato etc.

Gitanjali forayed into the US market by acquiring Samuels and Rogers, USA. Gitanjali now has 126 stores in USA. In India, Gitanjali has a 60% share in the branded jewellery segment of the total mall space. During FY 2009-10, Gitanjalis retail space in India increased by 33% to around 1,000,000 sq. ft. The number of company operated stores increased to 185 in 2009-10; and the number of franchisee stores increased to 215 in 2009-10.

Gitanjali has an aggressive domestic retail expansion plan for the several brands it owns through multiple channels in place. Gitanjalis products are sold in super stores and department stores, reputed jewellery retailers, owned retail stores which are managed by group, franchised stores, dedicated jewellery marts

and chain stores supported by international certifcations of scientifcally tested purity and authenticity. Gitanjali placed its jewellery brands in retail stores at the time when the overall shopping environment went in for a change, with global brands entering India. Gitanjali has offered high visibility to all its brands through promotions which roped in well known personalities. With these multi – tiered mobilization of formats, Gitanjali is well placed to realize its vision of global leadership.

4. Lifestyle

Gitanjalis foray into the lifestyle segment was as a result of rising disposable incomes and per capita consumptions. There has been continuous change in the trends and in the mindsets of people. People have become ready for innovative jewellery, watches and other accessories. Gitanjali, as part of its lifestyle business provides luxury products like watches, silverware, perfumes, luxury artefacts, apparels, leather goods, writing instruments, silver and other fashion jewellery and accessories. Gitanjali has embarked upon diverse alliances with global players to bring unique and tailor made designs on to the domestic market.

The lifestyle wing ventured in to the area of media and entertainment and has taken up production, marketing and advertisements of flms, television serials, software and other entertainment related programs via media like T.V., Radio, Newspaper, Outdoor Hoardings and other available advertising media. It has also taken up promotional activities via Music Launch, press conference, City Visits of Artists, Mass scale events etc.

5. Special Economic Zone at Hyderabad

GiGtanjalis Rajiv Gems Park at Hyderabad SEZ, has developed fve modern state of art manufacturing facilities for commercial production and a training center. The said facilities are up and running and are employing nearly 1500 workers. The unit provides extensive tax benefts and holidays including the 10 year income tax holiday and 5 year income tax breaks for all frms within the SEZ. World During the year company bought back and extinguished 7,92,883 equity shares and subsequently the outstanding equity share capital of the Company was reduced to Rs. 84,27,00,000 comprising of 8,42,70,000 equity shares of Rs. 10 each.

class in house facilities are being provided for all leading diamond/Jewellery manufacturers.

Dividend

Your Directors recommended a dividend of Rs 2.00 per equity share for the year ended March 31, 2010. The payment of dividend is subject to the approval of shareholders at the ensuing Annual General Meeting.

Transfer to Reserves

The Company proposes to transfer Rs. 120 million to the general reserve out of the total amount of Rs. 7,025.56 million available for appropriations as on March 31, 2010.

Buy-Back of Equity Shares

Subsequent to the approval of the board in their meeting held on December 19, 2008 and after necessary approvals from Securities and Exchange Board of India (SEBI), the Company commenced buyback of its equity shares from the open market through stock exchange mechanism on August 19, 2009. The buyback of equity shares of the Company was closed on December 18, 2009 and till that date Company bought back and extinguished 7,92,883 equity shares of Rs.10/- each at an average rate of Rs. 115.95 /- per equity share through Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). Subsequent to extinguishment, outstanding equity share capital of the Company is Rs. 84,27,00,000 comprising of 8,42,70,000 equity shares of Rs. 10 each.

Share Capital

At present, the Company has only one class of share i.e. equity share of the face value of Rs. 10/- each. During the year company bought back and extinguished 7,92,883 equity shares and subsequently the outstanding equity share capital of the Company was reduced from Rs. 85,06,28,830 comprising of 8,50,62,883 equity shares of Rs. 10 each to Rs. 84,27,00,000 comprising of 8,42,70,000 equity shares of Rs. 10 each.

Debentures

On 22nd June, 2009 the company issued 1,250, 12% secured redeemable Non-Convertible Debentures (NCDs) of Rs. 10,00,000/- each at par on private placement basis to Life Insurance Corporation of India. The said NCDs are listed on the debt segment of Bombay Stock Exchange Limited.

Fund Utilisation

1. Foreign Currency Convertible Bonds (FCCB)

As on 31st March, 2009 the company had a balance of USD 2 million from the net proceeds of FCCBs in deposits pending utilisation. During the year, the Company has not utilized FCCB proceeds and as on March 31, 2010 the entire USD 2 million were kept in deposits pending utilisation.

2. Global Depository Receipts (GDRs)

The Company had a balance of USD 21.335 million from its GDR Proceeds as on 1st April, 2009. During the year ended March 31, 2010 the Company utilized USD 19.12 million towards investment in subsidiaries, general corporate purposes and working capital requirement. As on March 31, 2010 the balance net proceeds of GDR of USD 2.215 million was kept as deposits with overseas banks pending utilization.

Subsidiaries

The Company had the following Thirty Six (36) Subsidiaries/ Step down Subsidiaries at the beginning of the year.

1. Mehul Impex Limited

2. Gitanjali Exports Corporation Limited

3. Shubalavnya Jewel Crafts Private Limited

4. Gili India Limited

5. Fantasy Jewellery Private Limited (formerly known as Fantasy Diamond Cuts Pvt. Ltd )

6. Brightest Circle Jewellery Private Limited

7. DDamas Jewellery (India) Private Limited

8. Asmi Jewellery India Private Limited (formerly known as Desire Lifestyle Private Limited)

9. Gitanjali Lifestyle Limited

10. CRIA Jewellery Private Limited

11. Gitanjali Infratech Limited

12. Hyderabad Gems SEZ Limited

13. Raigad Gems SEZ Limited

14. Aurangabad SEZ Limited

15. Nanded SEZ Limited

16. Nagpur Multi-Product SEZ Limited

17. Nashik Multi Services SEZ Limited

18. Gitanjali Jewellery Retail Private Limited (formerly known as Modali Jewels Private Limited)

19. Mohar Jewels Limited

20. * Ivida Technologies Private Limited

21. Samuels Jewelers Inc.

22. Gitanjali USA, Inc.

23. Rogers Ltd., Inc.

24. Gitanjali Ventures DMCC

25. Gitanjali Retail Ventures Limited

26. Modali Gems Private Limited

27. Decent Securities & Finance Private Limited

28. Eureka Finstocks Private Limited

29. West Bengal SEZ Limited

30. Gitanjali Holdings Limited

31. MMTC Gitanjali Private Limited

Step Down Subsidiaries

1. Tri-Star Worlwide LLC (Subsidiary of Gitanjali USA, Inc.)

2. Lucera Retail Venture Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

3. Trinity Expositions Private Limited (formerly known as Trinity Watch Company Private Limited - Subsidiary of Gitanjali Lifestyle Limited)

4. Hoop Retail Ventures Private Limited (Subsidiary of Gitanjali Lifestyle Limited)

5. Kolkata Axis Mall Limited (Subsidiary of Gitanjali Infratech Limited)

The following Nine subsidiaries/step-down subsidiaries were acquired wholly / partly during the year:

1. Spectrum Jewellery Pvt. Ltd

2. Bezel India Pvt. Ltd (Formerly known as Morellato India Private Limited)

3. Salasar Retail Limited (subsidiary of Gitanjali Lifestyle Limited)

4. MobileNxt Teleservices Pvt. Ltd. (subsidiary of Gitanjali Lifestyle Limited)

5. Alliance Jewelleries Pvt. Ltd (Subsidiary of Brightest Circle Jewellery Pvt. Ltd)

6. Diamlink Inc. USA (Subsidiary of Gitanjali USA, .Inc)

7. Diamlink Jewelery Inc. (Subsidiary of Diamlink Inc. USA)

8. Jewelry Marketing Comp, LLC (Subsidiary of Diamlink Jewelery Inc)

9. LJOW Holdings, LLC (Subsidiary of Diamlink Jewelery Inc)

* During the year, with an intention to focus over core area of business, the Company sold its entire stake in Ivida Technologies Private Limited

There has been no material change in the nature of business of subsidiaries. A statement containing brief fnancial details of subsidiaries is included in the annual report.

As required under listing Agreements with the Stock Exchanges, a consolidated fnancial statement of the company and all its subsidiaries is attached. The consolidated fnancial statement has been prepared in accordance with accounting standard 21, 23 and 27 issued by Institute of Chartered Accountants of India and show the fnancial resources, assets, liabilities, income, profts and other details of the Company, its subsidiaries and Joint ventures.

Particulars Under Section 212 of the

Companies Act

Ministry of Corporate Affairs, Government of India has granted approval that the requirement to attach various documents in respect of subsidiary companies, as set out in sub-section (1) of Section 212 of the Companies Act, 1956, shall not apply to the Company. Accordingly, the Balance Sheet, Proft and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. Financial information of the subsidiary companies, as required by the said approval, is disclosed in the Annual Report. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. We believe that the consolidated accounts present a full and fair picture of the state of affairs and the fnancial condition and are accepted globally.

Further, as required, the brief fnancial data of the subsidiaries has been furnished under the head “Statement pursuant to section 212(8) of the Companies Act, 1956, related to Subsidiary Companies” forming part of the Annual Report.

Related Party Transactions

Related party transactions have been disclosed in the notes to accounts.

Fixed Deposits

During the year under review, your Company has neither invited nor accepted any fxed deposits from the public within the meaning of Section 58A

On the basis of export performance, the Company has been recognised as a ‘Star Trading House and further designated as ‘Nominated Agency for the purpose of direct import of gold, silver and other precious metals.

of the Companies Act, 1956.

Directors

In accordance with section 260 of the Companies act, 1956 Mr. Nehal Modi and Mr. Nitin Potdar were appointed as Additional Directors of the Company on October 29, 2009 and January 30, 2010 respectively who hold offce upto the date of ensuing Annual General Meeting.

Mr. G.K. Nair, Executive Director has tendered his resignation from the board as a Director with effect from November 13, 2009 while Mr. Suresh Chukkapalli and Mr. Prakash Shah, Independent Directors tendered their resignation with effect from October 29, 2009 and January 25, 2010 respectively. The Board recorded its appreciation for the valuable services rendered by them during their tenure.

In accordance with the Articles of Association, Mr. Sujal Shah, Director retires by rotation and being eligible, offers himself for re-appointment. Your Directors recommend his re-appointment for your approval.

Brief resume of all the Directors on the Board has been given in the Annual Report in “Corporate Governance Report” section.

Auditors & Auditors Report

M/s. Ford, Rhodes, Parks & Co., Chartered Accountants, the present Statutory Auditors retire at the ensuing Annual General Meeting and are eligible for re-appointment u/s 224 (1B) of the Companies Act, 1956. The company proposes to re- appoint M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the company from the conclusion of the ensuing Annual General Meeting up to the conclusion of the next Annual General Meeting of the company.

The Audit Committee and the Board recommend the appointment of M/s. Ford, Rhodes, Parks & Co., Chartered Accountants as Statutory Auditors of the company.

In respect of the observations made by Auditors in their report, your Directors wish to state that the respective notes to the Accounts are self explanatory and therefore do not call for any further comments.

Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confrmed:

(i) that in the preparation of the annual accounts, for the fnancial year ended March 31, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the proft of the Company for the said period;

(iii) that the Directors have taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) that the Directors have prepared the accounts for the fnancial year ended March 31, 2010 on a ‘going concern basis.

The above statements have been reviewed by the Audit Committee at its meeting held on May 29, 2010.

Signifcant Developments during the Year

(a) The Companys wholly owned subsidiary, Gitanjali Lifestyle Limited entered into Joint Venture Agreement with Damas LLC on August 14, 2009 to form a joint venture Company with the primary objective of carrying on the business of single brand retail trading of all kinds jewellery and accessories. To pursue the objectives of MOU, Damas Gems - N - Jewels (I) Private Limited was incorporated on September 7, 2009.

(b) On the basis of export performance, the Company has been recognised as a ‘Star Trading House by Ministry of Commerce and Industry (said ministry), Government of India. Further Company has been designated as ‘Nominated Agency by the said ministry for the purpose of direct import of gold, silver and other precious metals vide its certifcate dated October 1, 2009.

(c) During the year, the Company acquired “Alliance Jewelleries Pvt. Ltd” (“Alliance”) through its wholly owned subsidiary Brightest Circle Jewellery Pvt. Ltd. Alliance is engaged in the business of manufacturing of gold and diamond studded jewellery etc.

(d) During the year the Company undertook a major brand valuation excercise for its four prominent jewellery brands viz. Gili, Nakshatra, Ddamas and Asmi. Brand Finance, renowned UK based frm in marketing and brand valuation was commissioned to evaluate these brands. The total worth of these four brands were valued to be Rs. 1500 crores.

(e) The Company has acquired additional Shares of ‘Spectrum Jewellery Private Limited (Spectrum), earlier a Joint Venture Company. By way of this acquisition, the Company has become majority stake owner in Spectrum, which is owner of brand ‘Sangini.

(f) The Companys wholly owned subsidiary, Gitanjali Lifestyle Limited has acquired 76% stake in Salasar Retail Limited, a company engaged in the business of retailing, selling, trading and distributing all kinds of cloth, cotton, synthetics, silk yard, readymade garments etc.

(g) During the year, the Company has acquired 100% Shares of Bezel India Private Limited (Bezel), (formerly known as Morellato India Pvt. Ltd), earlier a Joint Venture Company. By way of this acquisition, Bezel has become a wholly owned subsidiary of the Company.

Disclosure Pursuant to Clause 5A of Listing

Agreement

Pursuant to insertion of clause 5A in listing Agreement as per SEBI notifcation no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009 the details in respect of the shares lying in the Gitanjali Gems Limited – Unclaimed Shares Demat Suspense Account till March 31, 2010 is as under.

Description No. of Cases No. of Shares

Aggregate number of shareholders and the outstanding shares in the suspense 33 1317 account lying as on April 1, 2009

Number of shareholders who approached the Company for transfer of shares from 6 239 suspense account during the year 2009- 2010

Number of shareholders to whom shares were transferred from suspense account 6 239 during the year 2009 – 2010

Aggregate number of shareholders and the outstanding shares in the suspense 27 1078 account lying as on March 31, 2010

All the corporate benefts in terms of securities, accruing to on these unclaimed shares shall be credited to such account. Voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

Management Discussion and Analysis

Report

The Management Discussion and Analysis Report of fnancial condition and results of operations of the Company for the year under review as required under Clause 49 of the Listing Agreement with the Stock Exchanges, is given as a separate statement forming part of this Annual Report.

Corporate Governance

A Report on Corporate Governance for the fnancial year 2009-10 along with the Auditors Certifcate on its compliance is provided in the corporate governance report section of this Annual Report.

Industrial Relations

Employee relations continued to be cordial during the year. The Company continued its thrust on Human Resource Development. The Board wishes to place on record its sincere appreciation to all the employees in the Company for their sustained efforts and immense contribution to the high level of performance and growth of the business during the year.

Particulars of Employees

In terms of provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in the Annexure to the Directors Report. However, having regard to the provisions of Section 219 (1) (b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary of the Company.

The Company became majority stake owner in Spectrum Jewellery Pvt. Ltd., the owner of brand ‘Sangini.

Information Under Section 217(1)(e) Of Companies Act, 1956 Read With Companies (Disclosure of particulars in the report of the Board of Directors) Rules 1988:

A. Conservation of Energy

The Disclosure of particulars with respect to conservation of energy pursuant to Section 217 (1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable to the Company. However, the Company makes its best efforts for conservation of energy.

B. Technology Absorption, Adaptations & Innovation

The Company has not carried out any specifc research and development activities. The Company uses indigenous technology for its operations. Accordingly, the information related to technology absorption, adaptation and innovation is reported to be NIL.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

Current Year Previous Year

A. Foreign Exchange Earnings: (Rs. in Millions) (Rs. in Millions)

FOB Value 19,449.31 14,170.31

B. Foreign Exchange Outgo:

Value of Imports on CIF basis 14,854.93 11,156.88

Expenditure in Foreign Exchange 31.72 18.72

Acknowledgement

We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by the employees at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation, and support.

We thank the Governments of various countries where we have operations. We also thank the Government of India, Ministry of Commerce & Industry, Ministry of Corporate Affairs, Ministry of Finance, Department of Economic affairs, Customs & Excise Departments, Income Tax Department, Reserve Bank of India, various bankers, various State Governments and other Government Agencies for their support, and look forward to their continued support in the future.

On behalf of the Board of Directors

Place : Mumbai Mehul C. Choksi

Date : August 7, 2010 Chairman & Managing Director

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