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Directors Report of Winsome Diamonds and Jewellery Ltd.

Mar 31, 2015

Dear Members,

The Directors present the Twenty-Ninth Annual Report together with the Audited Accounts for the year ended 31st March, 2015.

FINANCIAL RESULTS

(Rs in crore)

Particulars For the year 6 Months Ended 31st Period March, 2015 Ended 31st March, 2014

Total Income 6.38 5.35

Profit before Interest and (4.50) 0.01

Depreciation

Less: Finance Charges (Net) 0.30 253.39

Depreciation 7.48 2.95

Profit before Tax (12.28) (256.33)

Provision for Tax — 1.33

Profit after Tax (12.28) (257.66)

Add : Balance in Statement of Profit and Loss

Brought Forward (335.43) (77.76)

Profit Available for Appropriation (347.71) (335.43)

Proposed Dividend Corporate Tax on Proposed Dividend

Short fall of Depreciation as per 0.55 Companies Act

Transfer to General Reserve -

Foreign Exchange/Metal Price - -

Fluctuation

Balance Carried Forward (348.26) (335.43)

Total (348.26) (335.43)

OPERATIONAL REVIEW

The total income of the Company during the current year was ' 638 lacs as against ' 535 lacs in the previous period (6 months). The Company continued to incur loss mainly due to higher depreciation as a result of new Company law provisions and legal expenses incurred

During the preceding two years the Company witnessed unprecedented turn of events. The failure of overseas customers, from the UAE, in making payments for Company's exports resulted in the Company defaulting in meeting its obligations. This had resulted in the Company defaulting in meeting its obligations. The bankers appointed independent audit firms for forensic and investigative audit for which the Company offered explanations.

The Company sent notices to the defaulting overseas customers in October 2013. As no positive actions were received from the defaulting overseas customers the Company initiated legal proceedings before the Conciliation Committee of Sharjah Federal Court, the step preceding to filing of commercial cases before the Sharjah Court in May 2014. The Reports of the Accounting Experts/

Banking Experts appointed by the Sharjah Federal Court of First Instance, First Plenary Commercial Department and the Sharjah Federal Court of First Instance, Second Plenary Commercial Department in various suits filed by the Company against 13 UAE companies that had defaulted in payment of dues amounting to USD 1.2 billion. These reports have been made available on the Company's website i.e. www.winsomeiewellerv.com and the summary of these reports have been made available on the website of the Bombay Stock Exchange i.e. www.bseindia.com.

The Sharjah Federal Court has passed orders in respect of the legal proceedings instituted against the UAE based defaulting customers in the following 2 out of the 13 cases :

Winsome & Al-Subhi - case no(3511/2014)

Winsome & Al-Ihsan- case no(3431/2014)

Orders of the Sharjah Court on the remaining 11 legal cases are awaited.

DIVIDEND

The Board of Directors do not recommend any dividend for the period under consideration due to loss incurred by the Company.

SHARE CAPITAL

The Paid up Equity Capital of the Company as at March 31, 2015 was ' 106.47 crores comprising of 10,66,07,894 shares of ' 10 each. The Company has not issued any shares during the year.

FINANCE

The cash and cash equivalent as at March 31, 2015 stood at ' 16.29 crores. The Company's working capital facilities have been withheld by the consortium due to non-payment of dues of the banks, as its overseas customers failed to make payment towards exports made by the Company during the year 2012-13.

NOTICES FROM BANKS

The Company, which received notice from Standard Chartered Bank, under the SARFAESI Act, has denied all the allegations made therein. Some of the banks, in the consortium, have sent notices to the promoter/ guarantor and also to the companies who have provided corporate guarantees.

The banks had lodged complaints with the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) to carry out investigations against the Company and its management. The management and the directors have fully cooperated with the agencies during their investigations and have submitted all the information available with them.

LEGAL SUIT

The Company has initiated legal proceedings against its defaulting overseas customers in Sharjah Federal Court to recover its outstanding dues. The case is under progress and the experts appointed by the UAE Court have sought explanations from the defaulting overseas customers. The court, in its order, has directed two of the defaulting customers to pay the outstanding amounts to the Company with interest. The decision against the remaining eleven overseas customers is yet to be decided/ confirmed by the Sharjah Court. Your Company is hopeful of an early favourable outcome from the proceedings.

FIXED DEPOSITS

The Company has not accepted any deposit, within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 made thereunder.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not given any loans or guarantees covered under the provision of section 186 of the Companies Act, 2013.

The details of investments made by the Company is given in the notes to financial statements.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has no formal internal control system in place after the devolvement. All the locations have stopped its activities as at March 31, 2015. The Company, however, has in house internal controls for administrative and statutory outgoings commensurate with its size and volume.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has formed a CSR committee. In light of continuing losses in the preceding two years and with no activities the Company has not made any contribution towards the same. The Company is committed to give its due contribution as soon as the situation improves.

CONSERVATION OF ENERGY

The particulars regarding conservation of energy are not applicable to the Company as the Company has stopped all its manufacturing activities.

TECHNOLOGY ABSORPTION

In the absence of any production activity there is no need for any technology absorption.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year under review there was no foreign exchange earnings or outflow.

INDUSTRIAL RELATIONS

There are no activities in any of the units of the Company. However, in Goa Unit of the Company which was in operation till December, 2014, the relations with the workmen were cordial.

DIRECTORS

Mr. Harshad Udani (DIN: 07014853) was appointed as an Additional Director of the Company with effect from 13th January, 2015 under Section 161 of the Companies Act, 2013 and holds office upto the date of ensuing Annual General Meeting.

In compliance with the provisions of section 203 of the Companies Act, 2013, Mr. Harshad Udani was appointed as Whole Time Director of the Company w.e.f 23rd March, 2015 subject to the requisite approvals of shareholders, banks and Central Govt.

Ms. Ami Kothari ( DIN: 07104331) was appointed as an Additional Director of the Company w.e.f 23rd March 2015 fulfilling the requirement for the appointment of a Women Director as per requirements of Companies Act, 2013.

Mr. Jaikumar Kapoor (DIN: 00337011) resigned from the Company due to ill-health w.e.f 02nd January, 2015. The Board wishes to place on record its appreciation of the contribution of Mr. Kapoor during his tenure as director.

Declaration by Independent Director

The Company has received necessary declarations from each independent Director under section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Board Evaluation

The Companies Act, 2013 and Clause 49 of the Listing Agreement mandates that formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors. Schedule IV of the Companies Act, 2013 states that performance evaluation of independent Directors shall be done by the entire Board, excluding the Director being evaluated. A separate meeting of the Independent Directors (Annual ID meeting) was convened which reviewed the performance of the Board (as a whole) and the non-independent Directors without the presence of any member of the management.

Some of the key criteria for the performance evaluation are as follows:

Performance evaluation of Directors :

* Attendance at Board or Committee meetings

* Contribution at the Board and committee meetings

* Guidance/support to management outside Board /committee meetings.

Performance evaluation of Board and Committees:

* Degree of fulfillment of key responsibilities

* Board structure and composition

* Establishment and delineation of responsibilities to committees

* Quality of relationship between Board and Management

* Effectiveness of Board processes, information and functioning.

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, and separate its functions of governance and management. The Board periodically evaluates the need for change in its composition and size.

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration.

The policy of the Company on Director's appointment and remuneration, including criteria for determining qualification, positive attributes, independence of a Director and other matters provided under section 178(3) of the Companies Act, 2013, adopted by the Board is appended to Corporate Governance Report affirming part of the Directors Report. We affirm that the remuneration paid to the Directors is as per the terms laid out in the nomination and remuneration policy of the Company.

Meetings

A calendar of meetings is prepared and circulated in advance to the Directors.

During the year nine Board Meetings (including adjourned meetings) and four Audit Committee Meetings (including adjourned meetings) were convened and held. The details of the same are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors state that -

* in the preparation of the Annual Accounts, the applicable accounting standards have been followed;

* 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 at the end of the financial year and of the loss of the Company for the year under review;

* 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

* the Directors have prepared the Annual Accounts on a going concern basis;

* The directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

* The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively

RELATED PARTY TRANSACTIONS

All related party transactions, if any, that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Management Personnel or other designated persons which may have a potentially conflict with the interest of the Company at large.

SUBSIDIARY COMPANIES

The Company does not have any subsidiary during the year under review.

CODE OF CONDUCT

The Board has approved code of conduct in place which is applicable to all the members of the Board and its employees in the course of day to day operations of the Company.

All the Board Members and Senior Management personnel have confirmed compliance with the Code.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has vigil mechanism / whistle blower policy in place to deal with instances of fraud or mismanagement, if any.

A whistle blower may report any violation or any instances of fraud or mismanagement to the Chairman of the Audit Committee. The policy ensures that strict confidentiality is maintained whilst dealing with concerns also that no discrimination will be meted out to any person for a genuinely raised concern.

PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code required pre-clearance for dealing the Company's shares and prohibits the purchase or sale of Company's shares by the Directors and designated employees while in possession of unpublished sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for the implementation of the Code.

All Board Directors and designated employees have complied with the Code.

AUDITOR'S REPORT

The qualifications in the Auditors Report (In Italics) are followed by appropriate Board's reply and explanations (in bold) as under:

1. Basis for Qualified Opinion

A. In accordance with Accounting Standard -11 (Standard on The Effects of Changes in Foreign Exchange Rates), the Company is required to report the monetary items using the closing rate. Accordingly the Company is required to value the monetary assets and liabilities viz foreign currency trade receivables, trade payables and foreign currency loanat the foreign exchange rate prevailing as on the date of the balance sheet. The Company has not carried out such valuations as at the year end. Accordingly the exchange loss for the year is overstated thereby resulting inthe total loss for the year being over stated/profit understated by Rs. 214,54,39,618(net). Trade receivables are understated by Rs. 723,73,84,562, trade payables are understated by Rs. 796,76,830as on the balance sheet date and foreign currency loan is understated by Rs.74,67,778(Refer Note No. 7, 8 (A5), 14(b),19(c) and 23(b)).

Export Receivables and Overseas Trade Payables had been restated based on exchange rate as at 31.03.2013. In view of persistent defaults by overseas customers in clearing outstanding dues, the same have been carried forward at the same rate (based on exchange rate as at 31.03.2013) as it is deemed expedient not to take cognizance of depreciation in rupee vis-a-vis US dollar on notional basis when outstanding amounts are expected to be realized over an uncertain period of time. Since the Company does not have any other cashflows to arrange for remittances to overseas trade creditors and expects to defray these liabilities out of realisation of export receivables, the same also have not been restated based on exchange rate as at the date of balance sheet but have been carried forward based on exchange rate as at 31.03.2013. Had it been restated on the basis of exchange rate as at 31.03.2015, the amount payable would have been higher by Rs. 74,67,778/-.

B. The Company has made long term investments in Forever Precious Diamonds and Jewellery Ltd. (Forever) amounting to Rs. 141,17,10,802, thereby resulting in it holding a 49 % stake in the equity of that Company. The said investments continue to be valued at cost. As stated in Note No. 12 A 1 & 2, in the view of the management, provision for diminution in value of investments as per the requirements of Accounting Standard -13 (Accounting for Investments) is not considered necessary and hence not made. We have been provided with the financial statements of Forever for the year ended 31st March 2014. We have observed that there are no significant business operations in Forever. Further the auditors of Forever have qualified the financial statements and termed the Company as a non-going concern. In view of the above the Company should have provided the diminution in value of investments amounting to Rs. 141,17,10,801. Accordingly the loss for the year have been understated and investments overstated by Rs. 141,17,10,801.

Forever Precious Jewellery and Diamonds Limited has also initiated legal action against its defaulting overseas customers and is hopeful of recovering its dues and therefore no diminution in the value of investments is considered. As informed by the management of Forever Precious Jewellery and Diamonds Limited, the Sharjah Federal Court has directed four out of thirteen overseas defaulters to pay to the Company, its outstanding dues with interest. The Company is hopeful of getting a favourable decision in the case of remaining overseas defaulters.

c. Due to the defaults of the Company to the banks, the Company's accounts have been classified as NPAs by the banks. Most of the banks have not charged interest on the Company's borrowings / loans, while some banks have been charging interest at higher rates. The Company was providing for interest at 12.5 % p.a. on all outstanding which was the average rate of rupee export finance. During the year under review no provisions have been made for such interest and provisions made during the year have been reversed at year end. Accordingly Interest for the year is understated resulting in total loss of the Company is understated by Rs. 565,86,78,505.(Refer Note 23 (a)).

The Company has decided, not to provide interest on its outstanding / borrowings including term loan for windmill as all accounts are classified as NPA by the Banks. The Interest charged by some banks during the period under review which is not considered by the Company amounts to Rs.214,68,53,979. The Company used to provide interest in its accounts

* 12.5 % p.a. of the outstanding amounts being the average rate for rupee export finance. Thus interest that should have been charged to Profit and loss for the year under review amount to Rs. 565,86,78,505.

2. Basis for Disclaimer of Opinion

A. In respect of Trade Receivables amounting to Rs. 4,743,24,55,740 the auditors have not received any confirmations of balances even after requesting for the confirmations. The management has obtained confirmation of balances from the respective parties only as on 31st March, 2013 and none thereafter. There have been defaults on the payment obligations by the debtors on the due dates. Various attempts have been made by the management and lenders for recovery, however such attempts have not resulted into any significant collections or getting commitment from the parties regarding schedule of payments which are acceptable to the management / lenders. In view of the above we are unable to comment on the realisability of the debts and any provision to be made for unrealisability in the carrying amounts of these balances and the consequential impact, on the financial statements. (Refer Note 14 and Note 16 to the financial statements)

Against the defaulting overseas customers the Company had initiated proceedings before the Conciliation Committee of Sharjah Federal Court. The Court appointed Accounting and Financial Experts to look into the activities of the defaulting overseas customers. Based on the findings of the Experts the Court has directed two of the thirteen overseas customers to pay the outstanding amounts due to the Company alongwith interest. Decisions against the remaining defaulting overseas customers is expected soon and is likely to be favourable to the Company.

B. As mentioned in Note No 1 regarding preparation of accounts on a Going Concern basis and the reasons stated therein and Note No. 27 of the financial statements detailing the developments that have happened in the last 2 years, the Company's operating results have been materially affected due to various factors including non availability of finance in view of the consortium bankers recalling the financial facilities granted. These events cast significant doubts on the ability of the Company to continue as a going concern since the volumes of business have also drastically dropped in the last 2 years. The appropriateness of the going concern assumption is dependent on the Company's ability to raise adequate finance from alternate means and/or recoveries from overseas debtors to meet its short term and long term obligations as well as to establish consistent business operations.

In absence of any convincing audit evidences, no positive steps taken by the management, non recovery of trade receivables on due date, non-payment of liabilities including statutory dues, financial difficulties faced by the Company due to recalling of bank finance facilities and in view of multiple uncertainties stated above, we are unable to determine the possible effects on the financial statements. We are also unable to conclude on the ability of the Company to carry on as a going concern.

Against the defaulting overseas customers the Company had initiated proceedings before the Conciliation Committee of Sharjah Federal Court. The Court appointed Accounting and Financial Experts to look into the activities of the defaulting overseas customers. Based on the findings of the Experts the Court has directed two of the thirteen overseas customers to pay the outstanding amounts due to the Company alongwith interest. Decisions against the remaining defaulting overseas customers is expected soon and is likely to be favourable to the Company.

3. Disclaimer of Opinion

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph, specifically relating to the multiple uncertainties created due to factors such as non recovery of trade receivables on due dates, non payments of liabilities including statutory dues, financial difficulties faced by the Company due to recalling of bank finance, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial statements.

Against the defaulting overseas customers the Company had initiated proceedings before the Conciliation Committee of Sharjah Federal Court. The Court appointed Accounting and Financial Experts to look into the activities of the defaulting overseas customers. Based on the findings of the Experts the Court has directed two of the thirteen overseas customers to pay the outstanding amounts due to the Company alongwith interest. Decisions against the remaining defaulting overseas customers is expected soon and is likely to be favourable to the Company.

4. Emphasis of Matter

A. As mentioned in note no. 27(ii), the Company has not appointed any Internal Auditors for the year and accordingly no internal audits were carried out for the year.

The Company has not appointed any internal auditor for the year under consideration as all the activities of the Company came to standstill, as the Company did not receive monies against its exports which resulted in the Company defaulting in its payments to the consortium banks. The Company is likely to appoint an internal auditor as soon as the situation improves. The Company, however, has internal control to check its administrative and statutory expenses.

B. As mentioned in note no. 27 (iii), the Company has not done any valuation of stocks of Diamonds which are in the joint custody with the bank. To that extent the increase or decrease in the value of diamond stocks as at year end, as per AS-2 Valuation of Inventories, is not determined.

As per point 2(a) of CARO Report

In June 2013, the banks have placed the stock of diamonds belonging to the Head Office and the Mumbai Branch office of the Company valued at ' 39,35,00,031 in the joint custody. The bank had done a test check valuation as on 30th September, 2013 when officers of the Company were also present, of the said stock which has been then forwarded to the Company. During the period the stocks of Chennai & Cochin SEZ were valued and put in the joint custody of the banks. Confirmation of the stocks lying with the bank has been confirmed by the management on the basis of the letter obtained from the bank as on that date. For the period under consideration, except for the stock lying in joint custody of the banks at HO, Cochin & Chennai where the management has not carried out the physical verification of inventory, physical verification of inventory at other places has been done by the management at regular intervals.

AUDITOR'S REPORT AND SECRETARIAL AUDIT REPORT

As required under section 204 (1) of the Companies Act, 2013 the Company has obtained a secretarial audit report. Certain observations made in the report with regard to late filing of some forms were mainly due to ambiguity and uncertainty of the applicability of the same for the relevant period. However, the Company would ensure in future that all the provisions are complied to the fullest extent.

AUDITORS

The Auditors R C Reshamwala and Co., Chartered Accountants, Mumbai, retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

SECRETARIAL AUDIT

Pursuant to provisions of section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Management Personnel ) Rules , 2014 the Company has appointed S G and Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit report is annexed herewith as "ANNEXURE A".

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "ANNEXURE B".

MEETINGS OF THE BOARD

Nine Board Meetings (including adjourned Board Meetings) were held during the year. For further details please refer report on Corporate Governance on page no. 23 of this annual report.

RISK MANAGEMENT

Though the Company's operations has come to a grinding halt post devolvement of Letter of Credits issued in favour of bullion banks, the probability of any operational risks has come to a naught. However, pursuant to section 134 (3) of the Companies Act, 2013 & Clause 49 of the listing agreement, the Company had constituted business risk management committee. The details of the Committee and its terms of reference are set out in the corporate governance report forming part of the Board's report.

PARTICULARS OF REMUNERATION

The Information required under section 197 of the Companies Act, 2013 and the rules made there-under in respect of the employees of the Company is as under:

(a) the ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year

Nil

(b) the percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary or Manager, if any, in the financial year;

Nil

(c) the percentage increase in the median remuneration of employees in the financial year

Nil

(d) the number of permanent employees on the rolls of Company:

Five

(e) the explanation on the relationship between average increase in remuneration and Company performance;

There are no increase in remuneration during the last 4 years.

(f) comparison of the remuneration of the Key Managerial Personnel against the performance ofthe Company;

Particulars Rs In lacs

Remuneration of Key Managerial Personnel 27.22

(KMP) during the financial year 2014-15

(aggregated)

Revenue from operations 624

Remuneration (as % of revenue) 2.72

Profit before tax (PBT) (12.28)

Remuneration (as % of PBT) -

(g) variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the Company as at the close ofthe current financial year and previous financial year;

Not Applicable

(h) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration.

Not Applicable

(i) Comparison of each remuneration of the Key Managerial Personnel against the performance of the Company

Rs In lacs

Particulars Chief Financial Company officer Secretary

Remuneration 10.22 17

Revenue 624 624

Remuneration (as % 2.72 2.72 revenue)

Profit before tax (PBT) (12.28) (12.28)

Remuneration (as % of N.A N.A PBT)

(j) the key parameters for any variable component of remuneration availed by the directors;

Not Applicable

(k) the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year;

Nil

None of the employees receive remuneration in excess of the limits as prescribed in the information required pursuant to Section 197 read with sub rule (2) of rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company.

PECUNIARY RELATIONSHIP OR TRANSACTIONS OF NON- EXECUTIVE DIRECTORS

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORTS

The Company has been in compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges, save and except those conditions which could not be complied with owing to lack of proper composition of Board of directors.

Report on Corporate Governance, Management Discussion and Analysis and Secretarial Auditor's Certificate on compliance with the Corporate Governance requirements have been included in this Annual Report in separate sections.

ACKNOWLEDGEMENTS

Your Company and Board wish to thank the members of the Company and staff for their continued patience and co-operation.

On behalf of the Board of Directors

Place: Mumbai H. Udani H. Mehta Date: 12/08/2015 Director Director


Mar 31, 2014

Dear Members

The Directors present the Twenty-Eighth Annual Report together with the Audited Accounts for the 6 months accounting period ended 31st March, 2014.

The Company, during the period under review, after the unfortunate and unforeseen events of the past 18 months, has not been able to resurrect itself and is not hopeful of a revival in the near future since revival is dependent on receipt of realization of export bills from defaulting overseas customers. The salient figures of the 6 month ended March 31, 2014 are produced below.

FINANCIAL RESULTS (Rs.in Crore)

Particulars 6 Months 18 Months Period Period Ended 31s1 Ended 30th March, September, 2014 2013

Total Income 4.29 7130.71

Profit before Interest and Depreciation 0.01 (70.90)

Less: Finance Charges (Net) 253.39 345.49

Depreciation 2.95 11.73

Profit before Tax (256.33) (428.12)

Provision for Tax 1.33 (185)

Profit after Tax (257.66) (426.27)

Add : Balance in Statement of Profit and Loss

Brought Forward (77.76) 348.51

Profit Available for Appropriation (335.43) (77.76)

Proposed Dividend - -

Corporate Tax on Proposed - - Dividend

Transfer to General Reserve - -

Transfer to General Reserve -

Foreign Exchange/Metal Price - - Fluctuation

Balance Carried Forward (335.43) (77.76)

Total (335.43) (77.76)

AUDITORS'' REPORT

The qualifications in the Auditors'' Report (in italics)are followed by appropriate reply and explanation (in bold) as under.

The Company having liquidity constraints and to save on costs, decided to conduct the audit internally (Refer Note No. 7 of Annexure to the Auditors'' Report).

The Company has not paid statutory dues amounting to Rs. 12,37,443/- it unfortunately got delayed due to liquidity constraints (Refer Note No. 9A of Annexure to the Auditors'' Report).

Overseas customers have confirmed the balances due from them. As the group of overseas customers have claimed to have suffered heavy losses, they are unable to pay in time and have sought very long period to meet their obligations. As a result of this short term funds have got blocked for long term. (Refer Note No. 17 of Annexure to the Auditors'' Report).

1. Basis for Qualified Opinion

A. In accordance with Accounting Standard - 11 (Standard on The Effects of Changes in Foreign Exchange Rates), the Company is required to value its monetary assets and liabilities viz foreign currency trade receivables and trade payables at the foreign exchange rate prevailing on the date of the balance sheet. The Company has not carried out such valuations. Accordingly the exchange gain for the period is understated, loss for the period is overstated by Rs. 500,48,00,336 (net), trade receivables are understated by Rs. 506,19,59,103 and trade payables are understated by Rs. 5,71,58,767 (Refer Note No. 7 (b), 14(b) and Note 19(c)).

* Export Receivables and Overseas Trade Payables had been restated based on exchange rate as at 31.03.2013. In view of persistent defaults by overseas customers in clearing outstanding dues, the same have been carried forward at the same rate (based on exchange rate as at 31.03.2013) as it is deemed expedient not to take cognizance of depreciation in rupee vis-a-vis US dollar on notional basis when outstanding amounts are expected to be realized over an uncertain period of time. Since the Company does not have any other cashflows to arrange for remittances to overseas trade creditors and expects to defray these liabilities out of realisation of export receivables, the same also have not been restated based on exchange rate as at the date of balance sheet but have been carried forward based on exchange rate as at 31.03.2013. Had it been restated on the basis of exchange rate as at 31.03.2014, the amount payable would have been higher by Rs. 57,158,767/-.

B. The Company has made long term investments in Forever Precious Diamonds and Jewellery Ltd. (Forever) amounting to Rs. 1,411,710,802, thereby resulting in it holding a 49 % stake in the equity of that company. The said investments continue to be valued at cost. As stated in Note No. 12 A 2, in the view of the management, provision for diminution in value of investments as per the requirements of Accounting Standard -13 (Accounting for Investments) is not considered necessary and hence not made. We have been provided with the financial statements of Forever for the period ended September 2013. We have observed that there are no significant business operations in Forever. Further the auditors of Forever have qualified the financial statements and termed the company as a non-going concern. In view of the above the Company should have provided the diminution in value of investments amounting to Rs. 1,411,710,801. Accordingly the loss for the year have been understated and investments overstated by Rs. 1,411,710,801.

* Forever Precious Jewellery and Diamonds Limited is also in the process of initiating legal action against its defaulting overseas cutomers and is hopeful of rcovering its dues and therefore no diminution in the value of investments is considered.

2. Basis for Disclaimer of Opinion.

A. In respect of Trade Receivables amounting to Rs. 4,745,59,96,865 the auditors have not received any confirmations of balances. The management has obtained confirmations of balances from the respective parties only as on 31st March, 2013 and none thereafter. There have been defaults on the payment obligations by the debtors on the due dates. Various attempts have been made by the management and lenders for recovery however such attempts have not resulted into any significant collections or getting commitment from the parties regarding schedule of payments which are acceptable to the management/ lenders. In view of the above we are unable to comment on the realisability of the debts and any provision to be made for unrealisability in the carrying amounts of these balances and the consequential impact, on the financial statements. (Refer Note 14 and Note 16 to the financial statements).

* Against the defaulting overseas customers the company has initiated proceedings before the Conciliation Committee of Sharjah Federal Court, the step preceding to file commercial cases before the Sharjah Court.

B. As mentioned in Note No 1 regarding preparation of accounts on a Going Concern basis and the reasons stated therein and Note No. 27 of the financial statements detailing the developments that have happened in the previous period and the the period under audit, the Company''s operating results have been materially affected due to various factors including non availability of finance in view of the consortium bankers recalling the financial facilities granted. These events cast significant doubts on the ability of the Company to continue as a going concern since the volumes of business have also drastically dropped in the last 6 months. The appropriateness of the going concern assumption is dependent on the Company''s ability to raise adequate finance from alternate means and/or recoveries from overseas debtors to meet its short term and long term obligations as well as to establish consistent business operations. In absence of any convincing audit evidences, no positive steps taken by the management, non recovery of trade receivables on due date, non payment of liabilities including statutory dues, financial difficulties faced by the company due to recalling of bank finance facilities and in view of multiple uncertainties stated above, we are unable to determine the possible effects on the financial statements. We are also unable to conclude on the ability of the company to carry on as a going concern.

* Against the defaulting overseas customers the company has initiated proceedings before the Conciliation Committee of Sharjah Federal Court, the step preceding to file commercial cases before the Sharjah Court.

3. Disclaimer of Opinion

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph, specifically relating to the multiple uncertainties created due to factors such as non recovery of trade receivables on due dates, non payments of liabilities including statutory dues, financial difficulties faced by the Company due to recalling of bank finance, and non availability of books of accounts of Surat branch for our audit, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial statements.

* Against the defaulting overseas customers the company has initiated proceedings before the Conciliation Committee of Sharjah Federal Court, the step preceding to file commercial cases before the Sharjah Court.

4. Emphasis of Matter

Subsequent to the Balance sheet date, the Central Bureau of Investigations (CBI) in April 2014 has seized the books of accounts along with other documents of the Surat Branch of the Company as a part of its investigations against the Company. We have since been provided with the backup data for the period maintained by the Company. In view of the above, since the supporting vouchers and other documents were not available for our verification we were unable to carry out the detailed audit of the branch. The management certified trial balance of the branch has been incorporated in the final financial statements. Accordingly total assets of Rs. 18,58,22,835 , total liabilities of Rs. 18,58,22,835 , total Income of Rs.74,92,392 and total expenses of Rs. 1,42,57,437 of Surat branch have been incorporated in the financial statements on the basis of the unaudited trial balance of the Surat branch.

* The books of Surat Branch were seized by the Central Bureau of Investigation during their search of the premises at Surat. The company has provided the financial statements of the branch to the auditors from the back-up data available. However,the supporting vouchers could not be provided for reasons mentioned above.

As per point 2(a) of CARO Report

In June 2013, the banks have placed the stock of diamonds belonging to the Head Office and the Mumbai Branch office of the Company valued at Rs. 39,35,00,031 in the joint custody. The bank had done a test check valuation as on 30th September, 2013 when officers of the Company were also present, of the said stock which has been then forwarded to the company. During the period the stocks of Chennai & Cochin SEZ were valued and put in the joint custody of the banks. Confirmation of the stocks lying with the bank has been confirmed by the management on the basis of the letter obtained from the bank as on that date. For the period under consideration, except for the stock lying in joint custody of the banks at HO, Cochin & Chennai where the management has not carried out the physical verification of inventory, physical verification of inventory at other places has been done by the management at regular intervals.

DIVIDEND

The Board of Directors do not recommend any dividend for the period under consideration due to loss incurred by the company.

OPERATIONS

The total income of the company during the period (six months) was Rs. 429 lacs as against Rs.713,071 lacs in the previous period (18 months). The company continued to incur loss due to interest levied by the banks on the default due to non-receipt of export realization, towards export bills, from the defaulting overseas customers.

Subsequent to devolvement in the preceding period, the company could not arrange for payment to the consortium towards Standby Letters of Credit issued by consortium banks, and as there being no activities in most of the units of the company during the period under consideration barring its unit in Goa, the company found it difficult to make the ends meet.

NOTICES FROM BANKS

Few bankers have classified the company and its directors as willful defaulters. However, the company has vehemently denied the same and reiterated that they were victim of circumstances beyond their control and are taking all possible steps to recover the same. The company, which had received from Standard Chartered Bank, notice under the SARFAESI Act, has denied all the allegations made therein. Some of the banks have sent notices to the promoter/guarantor and also to the companies who have provided corporate guarantees.

The banks have lodged complaints with the Central Bureau of Investigation to carry out investigations against the company and its management. The agencies visited the premises of the directors and also its branches at Mumbai and Surat. The company has received notice from Economic Offence Wing (EOW) of Mumbai Police and have submitted statement for their observations. The management and the directors (former and present) have fully cooperated with the agencies during their investigations.

LEGAL SUIT

The company sent notices to the defaulting overseas customers in October 2013. As no positive actions were received the company considered filing of legal suit in Mumbai or in the UAE. As the filing of suit in Indian Court may not give any thrust in company''s endeavor to impress upon defaulting overseas customers to make payment, it was decided to file the same in the UAE Court. Accordingly the company has initiated proceedings before the Conciliation Committee of Sharjah Federal Court, the step preceding to filing of commercial cases before the Sharjah Court in May 2014. This definitely is a positive step for the company to ensure its bankers of their intentions to recover and pay their dues.

DIRECTORS

Mr. R. Ravichandran and Mr. Ramesh Parikh have resigned from the position of Director-Operations and Director-Finance with effect from 06.12.2013 and 28.02.2014 respectively. The Board accords its appreciation for their contributions to the business of the Company during their tenure as Whole-Time Director of the Company.

In accordance with the Articles of Association of the Company Mr. Harish Mehta, retire by rotation and being eligible, offer himself for re-appointment at the forthcoming Annual General Meeting.

Mr. Jaikumar Kapoor and Mr. Harimohan Namdev have been appointed on 10th January, 2014 as Additional Directors of the Company and holds office upto the date of forthcoming Annual General Meeting.

APPOINTMENT OF COST ACCOUNTANT

M/s. Gangan & Co., Cost Accountants, Mumbai have been appointed to submit the Compliance Report along with the requisite annexure duly certified by them for the 6 months accounting period ended 31st March, 2014 as required under rule 2 of the Companies (Cost Accounting Record) Rules, 2011 to the Central Government within the time prescribed under above referred rules.

FIXED DEPOSITS

The Company has not accepted any deposit, within the meaning of Section 58-A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 2013 made thereunder.

INFORMATION PURSUANT TO SECTION 217(2A) OF THE COMPANIES ACT, 1956

None of the employees of the Company were in receipt of remuneration in excess of the limits as prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 including Companies (Particulars of Employees) Amendment Rules, 2011 and Companies (Amendment) Act, 1988.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors state that.

* in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

* 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 at the end of the 6 months period ended 31st March, 2014 and of the loss of the Company for that financial year (6 months accounting period).

* 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

* the Directors have prepared the Annual Accounts on a going concern basis.

AUDITORS

M/s. R.C. Reshamwala & Co., Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224(1-B) of the Companies Act, 1956. The Audit Committee and Board of Directors recommend their re- appointment.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

Information in accordance with the provisions of 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 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the Annexure forming part of this report.

INDUSTRIAL RELATIONS

None of the industrial units were functional, during the period under consideration, excepting Goa where the relations were cordial.

LISTING

The Equity Shares of the Company are listed at BSE Limited and National Stock Exchange of India Limited. The Company has paid the Annual Listing fee to BSE Limited. The Board of Directors have unanimously resolved to delist its equity shares listed at NSE voluntarily under regulation 6(a) of SEBI (Delisting of Equity Shares) Regulations, 2009.

INTERNAL CONTROL SYSTEM

The Company''s internal control systems, governed by time proven practices are supplemented by well-established audit process that assists management in identifying issues and associated risks and ensures that all assets are safeguarded and protected against any loss.

Internal audit, an independent appraisal function, examines and evaluates the adequacy and effectiveness of the internal control system, appraises periodically about activities and audit findings to the Audit Committee, statutory auditors and the management.

AUDIT COMMITTEE

During the period under review the Audit Committee was reconstituted after cessation of Mr. Ramesh Parikh as Director- Finance. Mr. Jaikumar Kapoor had been inducted as member of the Audit Committee replacing Mr. Ramesh Parikh. The reconstituted Audit Committee comprise of following Directors.

1. Mr. Harish Mehta, Chairman

2. Mr. Satya Prakash Tanwar, Member

3. Mr. Jaikumar Kapoor, Member

CORPORATE GOVERNANCE

The Company has been in compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges, save and except those conditions which could not be complied with owing to lack of proper composition of Board of directors.

Report on Corporate Governance, Management Discussion and Analysis and Auditor''s Report on compliance with the Corporate Governance requirements have been included in this Annual Report in separate sections.

ACKNOWLEDGEMENTS

The Board of Directors wishes to thank Government of India, bankers, customers, suppliers, shareholders, other business associates and employees of the Company for the continued co-operation and unstinted support extended to the Company.

On behalf of the Board of Directors

Place : Mumbai Jaikumar Kapoor Harish Mehta Date : 30th May, 2014 Director Director


Sep 30, 2013

The Directors present the Twenty-Seventh Annual Report together with the Audited Accounts for the 18 months period ended 30th September, 2013.

The Company, during the period under review, witnessed unprecedented crisis culminating in complete suspension of its revenue generating operations, the details whereof along with corrective steps initiated by the Company and present status are briefy enumerated as under -

Background

1.01 The Company, incorporated in 1985, had been engaged in manufacture and exports of cut and polished diamonds and plain and studded gold jewellery and also in imports and local sales of bullion as one of the Nominated Agencies.

Credit Facilities from Consortium of Banks

2.01 The company had been sanctioned, by the Consortium of 14 banks, Fund Based (Export Packing Credit and Post Shipment Credit) and Non Fund Based (StandBy Letters of Credit and Bank Guarantee) credit limits of Rs.375 crores and Rs.3470 crores respectively and had also been extended in principle approval for 20% thereof as ad-hoc (stand-by) limits to take care of peak / seasonal requirement as also to take care of additional need owing to increase in price of gold and depreciation of rupee vis-à-vis dollar. As at 31.03.2013, the company had availed of additional ad-hoc FB and NFB limit of Rs.45 crores and Rs.490 crores respectively. The Fund Based limits were sanctioned for diamond division whereas Non Fund Based limits were sanctioned for procurement of gold for Jewellery division. Part of Non Fund Based (SBLC) limits were allowed to be used as Fund Based limits by 3 of the 14 consortium banks.

Invocations of SBLCs

3.01 Till March 2013, the company was, inter-alia, engaged in manufacture and export of gold jewellery. For the purpose, it had been procuring gold, usually on loan basis and on unfxed price basis as per industry practice, from overseas bullion banks as also from nominated agencies / banks in India against StandBy Letters of Credit (SBLCs) of Consortium of Banks which had sanctioned credit facilities to the company.

3.02 As per the extant Foreign Trade Policy, maximum tenor for which gold loans can be availed has been 270 days and accordingly, the member banks of the consortium usually established SBLCs for 270 days. The tenor of gold loan was adequate to take care of manufacturing cycle and trade credit of 180 days that the company usually extended to its overseas customers.

3.03 The company had executed gold loan agreement with the bullion banks from whom it regularly procured gold. These agreements contained a standard enabling provision for recalling of all outstanding gold loans by the bullion banks in the event of (even single) default by the company in discharging its obligations as per the terms of the agreements.

3.04 Owing to delay in receipt of inward remittances from overseas customers against export bills, the company could not arrange for payments which were due in March 2013 to the bullion banks. In view of these events of default, the bullion banks initially invoked SBLCs which had fallen due, but, later, as defaults persisted, invoked all SBLCs, during April 2013, including even those in respect of which gold loans were not due.

3.05 Of the aggregate outstanding SBLCs of Rs.3580.68 crores as at 31.03.2013, SBLCs of Rs.3485.18 crores (excluding SBLCs of Rs.95.50 crores established in favour of State Bank of India) had been invoked by April-end 2013, although SBLCs worth Rs.958.08 crores only were falling due till 30.04.2013 whereas SBLCs of Rs.2527.10 crores had been invoked ahead of the due dates of respective gold loans.

3.06 State Bank of India had invoked SBLCs of Rs.95.50 crores as and when gold loans got matured.

3.07 All invoked SBLCs of Rs.3580.68 crores have been paid by the Consortium banks. As a result of invocation and devolvement of SBLCs, the liabilities had got crystallized in rupee terms and the accounts were overdrawn. With no gold lines from bullion banks and no fresh SBLCs from the consortium banks, the operations had been signifcantly impacted. Further, as defaults of overseas customers persisted, the company could not repay Export Packing Credit and Post Shipment Advances that it had availed for diamond division. As such, the company had been constrained to suspend its manufacturing operations.

3.08 The company did approach the Honorable Bombay High Court for an Order restraining the Consortium banks from making remittances against invocations of those SBLCs where Gold Loans had not fallen due. However, the Standard Bank PLC, one of the bullion banks (banks from whom the company usually procured gold), obtained an Order from the UK Court that as the jurisdiction as per the Gold Loan Agreement for any legal action is a Court in London, it will be deemed as Contempt of that Court if the company persisted with its application in the Bombay High Court. The company, accordingly, could not pursue its application for a Stay Order.

Overseas Customers

4.01 The company''s dealings with overseas customers, till February 2013, have been generally satisfactory and there were no commercial disputes of any sort. Although there were intermittent delays in receipt of moneys towards export bills occasionally in the past, there used to be regular fow of inward remittances and the company did not have any major problem in realization of its export bills.

4.02 The company''s exports of diamonds as well as jewellery had been mainly to wholesalers and on clean credit basis.

4.03 Due to negative reports in Diamond Intelligence Brief and other trade and industry journals about the Group (especially, about the company''s subsidiaries in USA and Belgium), its exports to USA and Europe almost dried up since May 2012 resulting in concentration of exports to UAE market.

4.04 The crisis emerged when inward remittances against export bills from a Group of 13 customers in UAE, represented by Mr. Haytham Obidah as director / shareholder / owner or as introducer, were abruptly suspended since March 2013. The company had been dealing with the group of customers headed by Mr. Haytham for over 5 years.

4.05 Total amount due from these 13 customers in UAE is approx. USD 875 million (equivalent to about Rs.4760 crores). As the amounts at stake were very large and as the same were not backed by any tangible security / incoming LCs, the company''s recovery efforts in the beginning have been very measured. Immediately after invocations and devolvement of SBLCs, the company''s Whole-time Director (Operations) went to Dubai and met Mr. Haytham on 21.03.2013. This was followed by another visit along with Offcial of Standard Chartered Bank, the Lead Bank of the Consortium, on 18.04.2013.

4.06 The promoter and guarantor, Mr. Jatin Mehta and Whole-time Director (Operations) along with senior offcials of the Core Group of the Consortium of banks (comprising Punjab National Bank, Central Bank of India, Canara Bank, Standard Chartered Bank and Union Bank of India) visited Dubai and met Mr. Haytham on 23.05.2013. During the visit by the offcials of the Core group of the Consortium, Mr. Haytham had reportedly stated that delay in remittances was attributable to liquidity constraints (owing to fnancial loss incurred in foreign exchange and commodity trading by 3 of those customers) which are sought to be mitigated in due course and that the entire dues shall be paid in full in phased manner with the timeframe extending up to FY 2025-26.

4.07 Despite regular follow-up for payments through telephonic talks, e-mails and correspondence, the company, during six month period ended 30.09.2013, received only USD 1,268,118 from those 13 UAE customers as probably they have not been able to mitigate their liquidity constraints fully. The company, therefore, served legal notices, in October 2013, on all the 13 UAE customers as also on Mr. Haytham, through its Advocates and has sought opinion of a reputed legal frm in Dubai as to what legal options are available for recovery of outstanding dues and proposes to initiate legal action in Dubai and / or in India, in case customers do not demonstrate urgency in sending remittances of larger sums.

Forensic Audits

5.01 Bankers had appointed M/S. Ernst & Young (EY) for forensic audit and M/S. Kroll Advisory Solutions (KROLL) for investigative audit. The report of EY did not contain any adverse remarks and with regard to certain audit observations, the company had offered satisfactory explanations. While the banks considered company''s explanations as satisfactory in respect of most of the audit observations of ''KROLL'', in case of a few observations, they desired further clarifcations from Mr. Jatin Mehta. The company, however, is informed by the bankers that they have not received any clarifcations from Mr. Mehta in this regard.

Corporate Debt Restructuring

6.01 The company had submitted its Financial Restructuring Plan to the Corporate Debt Restructuring (CDR) Cell. The Flash Report was fled on 17.06.2013. Although the Empowered Group of CDR had initially expressed certain reservations for admission of Flash Report (at its Meeting held on 24.06.2013), it reconsidered the company''s proposal at its subsequent meeting held on 25.07.2013 where although the requisite mandate (support for admission of fash report) from the banks were in place, a view emerged that certain issues were needed to be addressed and execution of legally enforceable Tripartite Agreement between the company, the overseas customers and banks was one of the issues that needed to be addressed. However, UAE customers expressed reservations for execution of Tripartite Agreements as suggested by banks / CDR Cell. The other issues that needed to be addressed were (a) bringing promoters contribution upfront in consonance with RBI guidelines for CDR (b) re-induction of Mr. Jatin Mehta, the promoter an d guarantor, on the Board of the Company and (c) explanation by Mr. Jatin Mehta for certain observations contained in the forensic audit reports. As Mr. Jatin Mehta''s response on the above was not as per the expectations of the banks, the company''s Flash Report has been withdrawn by them.

Inventory

7.01 Entire inventory of diamonds and pearls (excluding inventory lying in the company''s units located in the SEZs) has been placed in the lockers in PNB and is in the joint custody with PNB since 18.06.2013. The banks arranged for valuation of inventory by Customs approved valuers on 30.09.2013 and as per their report, the total value of inventory was Rs.39.35 crores as against its cost, as per records of the Company, at Rs. 147.24 Crores. Since the valuation was carried out on the basis of examination of only part of the inventory selected on random basis, the company has requested PNB to arrange for valuation of entire inventory. Nonetheless, the value of inventory has been considered on a conservative basis, while drawing accounts for the 18 month period ended 30.09.2013, so as to take cognizance of depletion in the value of inventory of diamonds.

Board of Directors

8.01 Mr. Jatin Mehta relinquished Managing Directorship of the company to join as President of Su-Raj Diamonds And Jewellery DMCC (UAE), one of the Wholly Owned Subsidiaries of the company, with effect from 19.04.2011, as it was felt at that time that owing to evolving business scenario and resultant opportunities vis-à-vis infrastructure and business profle of the company and its subsidiaries, that was the appropriate time for further growth of business globally and that for the purpose, Mr. Mehta would be required to engage himself comprehensively with overseas operations which would entail extensive travel away from India for execution of business plan. While Mr. Mehta continued as director and Non-Executive Chairman, Mr. Lakhpat Raj Bhansali, with over 35 years of experience in the industry, was appointed as Whole-time Director.

8.02 As part of further consolidation process and restructuring necessitated owing to substantial expansion of capacities by M/S. Su-Raj Diamond Industries Ltd. (SDIL), a group company, Mr. Lakhpat Raj Bhansali resigned from the Board with effect from 09.05.2012 as he was appointed as Whole-time Director of SDIL. Mr. R Ravichandran and Mr. Ramesh I Parikh, employees of the Company, were inducted on the Board and appointed as Whole-time Directors (Operations) and (Finance) respectively.

8.03 Mr. Gian Prakash Gupta and Mr. Kailash Nath Bhandari resigned from the Board with effect from 08.05.2012 and 24.08.2012 respectively. Mrs. Shrilekha V. Parikh, who was liable to retire by rotation, did not offer herself for reappointment at the previous AGM held on 29.09.2012.

8.04 Mr. Jatin Mehta submitted his resignation as Chairman and Director with effect from 09.11.2012 following his decision to reduce Board Commitments owing to unavoidable circumstances. The Board, while respecting his decision, suggested to Mr. Mehta that he could endeavor to keep sharing critical inputs which are vital for it to discharge its functions effectively to which Mr. Mehta agreed. Mr. Madan Khurjekar was, accordingly, appointed as Chairman.

8.05 After invocations and devolvement of SBLCs, all the independent and non-executive directors on the Board, Mr. Rathnakar Hegde, Mr. Shard Bhagwat, Mrs. Urvashi Saxena, Mr. Dilip Tikle and Mr. Madan Khurjekar, resigned during the period 30.03.2013 to 10.06.2013. Accordingly, the company''s Board, with effect from 10.06.2013, comprised only 2 Whole-time directors and did not have suffcient number of directors as required by the Companies Act, 1956.

8.06 Mr. Satya Prakash Tanwar, Nominee of PNB and Mr. Harish Mehta have been inducted on the Board with effect from 27.09.2013 and 16.10.2013 respectively.

8.07 Mr. Jaikumar Kapoor and Mr. Harimohan Namdev have been inducted on the Board with effect from 10.01.2014.

8.08 Mr. Ramesh Parikh, Director-Finance, resigned from the Board with effect from 28.02.2014.

Overseas Subsidiaries

9.01 During the period under review, the company disinvested its entire shareholding in its wholly owned subsidiaries in USA, Belgium, Hong Kong & UAE.

Associate Company

10.01 During the period under review, the company invested in additional equity share capital of an associate company, Forever Precious Jewellery & Diamonds Ltd. (FPJDL), wherein the company, consequent upon fresh investment, is holding 49% of its equity. FPJDL has been confronted with similar crisis as faced by the company for the same reasons as aggregate sum of approx. USD 375 million are outstanding from the same group of 13 UAE customers with invocations and devolvement of SBLCs of Rs.1800 crores. Mr. Jatin Mehta has given up directorship of FPJDL in August 2012.

Accounts

11.01 The Company had earlier anticipated that its Debt Restructuring Plan will get implemented under CDR mechanism by September 2013 and accordingly, had extended its fnancial year by 6 months. As such, the accounts have been prepared for 18 month period commencing 01.04.2012 and ending on 30.09.2013 for which it has received requisite approval from the Registrar of Companies, Ahmedabad, Ministry of Corporate Affairs, Government of India.

11.02 Since the company''s Board comprised only 2 Whole-time Directors during 10.06.2013 to 16.10.2013, its operating results for Q5 (Quarter ended 30.06.2013),of the 18 month period ending 30.09.2013, which were published, in August 2013, for the beneft of the shareholders and for ensuring compliance with statutory provisions, were, at that time, not reviewed by the Audit Committee (which did not exit) and therefore were not considered by the Board and were not subjected to limited review by the auditors. The same were reviewed by the Audit Committee and considered by the Board at their meetings held on 27.11.2013.

Present Status

12.01 The company and its directors, including directors who were on the Board when devolvement occurred, have been issued, by Punjab National Bank, Notices wherein it is stated that if entire defaulted amount is not paid within specifed time frame, then they will be classifed as ''Willful defaulter''.

12.02 The company and its directors, including directors who were on the Board when devolvement occurred, have been issued, by Vijaya Bank, Notice under the SARFAESIA 2002 as part of recovery proceedings.

12.03 Bank of Maharashtra and IDBI Bank Ltd. have issued Notice to the company recalling entire outstanding amount.

12.04 We understand that the company''s account has been classifed as Non Performing Asset by all the consortium banks.

12.05 As no signifcant amounts were realized from the overseas customers after second week of March 2013, CRISIL, the Credit Rating Agency, had downgraded rating from A1 to A3 in third week of April 2013 and to A4 in fourth week of April 2013 and further to D in frst week of May 2013.

12.06 We understand that banks are seriously contemplating action against Company, Mr. Jatin Mehta and present directors (other than Nominee director) for suspected fraud and diversion of funds. The Board takes this opportunity to assure members that the company and directors have acted bona fde, in good faith and have discharged their duties honestly and sincerely, to the best of their abilities and that if they have been found wanting, it is only because of their inexperience to deal with the complexities and enormity of the crisis. The company and the Board are confdent of surpassing the scrutiny of any investigating agencies and confrm that they shall be extending full co-operation in this regard.

12.07 The Board does not have any representation of the Promoter Group. The Whole-time Directors do not have any fnancial stake and are professional directors and have only contractual relationship with the company as employees.

12.08 The Promoter & Guarantor (and former Chairman and Managing Director), Mr. Jatin Mehta, has contented, in e-mails to one of the whole-time directors of the company as also in communications to Punjab National Bank that he was not involved in day-to-day management of the company since April 2011. The Board respectfully disagrees with his contentions. Though Mr. Jatin Mehta is not formally on the Board of the company, he had been and is involved in its affairs and all key decisions are subject to his informal concurrence.

12.09 The Board, fnding itself wanting with regard to competence, experience and resources vis-à-vis the extent, magnitude and gravity of the crisis that the company is in, has requested Mr. Jatin Mehta to immediately extend his consent for being re-inducted on the Board of the Company not only in deference to the suggestions of the Banks but also owing to compelling circumstances and to take note of the fact that he would need to urgently lend active support in terms of required resources and information / clarifcation / explanations to the bankers so as to clear misunderstanding or doubts which seem to have arisen owing to allegations implied in the bank''s communications based on certain forensic / investigative audit reports which will help raise comfort level of the Banks and of the company personnel and also in terms of his commitment and active involvement for resolving all outstanding issues and formulation of defnitive and credible plan of action for restructuring of company''s operations and its debt obligations and most importantly, to take further steps for the recovery of dues from the defaulting overseas customers in UAE considering that he (Mr. Jatin Mehta) had been interacting with Mr. Haytham and had business relations with him for a number of years. It was also conveyed to Mr. Mehta that the Board feels that left to itself, it will not, in the absence of his direct and active involvement, be in a position to discharge its functions effectively and therefore, it shall be of paramount importance for him to join the Board without any further loss of time in the larger interest of the company. The Board has also accorded its consent for the Company Secretary approaching, in the absence of direct and active involvement of Mr. Jatin Mehta as requested for, Shareholders and / or Company Law Board for taking such steps as they may deem appropriate in the given circumstances.

Management Comments on Auditor''s observations

- The independent internal auditor agreed to carry the audit for latter half of the year in the month of April, 2013 and was to submit report subsequently. The company was having liquidity constraints and to save on costs, decided to conduct the audit internally. The same will be carried out with retrospective effect. (Refer Note No. 7 of Annexure to the Auditors'' Report).

- The Company has not paid service Tax amounting to Rs. 3,44,786. The same shall be paid before March 2014. It unfortunately got delayed due to liquidity constraints and delays in expected refunds from the Service Tax Dept. and Income Tax Dept of much larger sums. (Refer Note No. 9A of Annexure to the Auditors'' Report).

- We have written to Standard Chartered Bank, Mumbai to kindly request their counter parts in the UAE to release the guarantee or issue a no dues letter as, we understand, all their dues have since been settled. (Refer Note No. 15 of Annexure to the Auditors'' Report).

- Overseas customers have confrmed the balances due from them. As the group of overseas customers have claimed to have suffered heavy losses, they are unable to pay in time and have sought very long period to meet their obligations. As a result of this short term funds have got blocked for long term. (Refer Note No. 17 of Annexure to the Auditors'' Report).

1. Basis for Qualifed Opinion

In accordance with Accounting Standard - 11 (Standard on The Effects of Changes in Foreign Exchange Rates), the Company is required to value its monetary assets and liabilities viz foreign currency trade receivables and trade payables at the foreign exchange rate prevailing on the date of the balance sheet. The Company has not carried out such valuations. Accordingly the exchange gain for the period is understated, loss for the period is overstated by Rs. 636,04,74,798 (net), trade receivables are understated by Rs. 643,26,50,421 and trade payables are understated by Rs. 7,21,75,623 (Refer Note No. 8 (b), 16(b) and Note 22(c)).

- Export receivables had been restated based on exchange rate as at 31.03.2013. In view of persistent defaults by overseas customers in clearing outstanding dues, the same have been carried forward at the same rate (based on exchange rate as at 31.03.2013) while drawing up accounts for the quarter ended 30.06.2013 and also while drawing up accounts for the period under review as it is deemed expedient not to take cognizance of depreciation in rupee vis-à-vis US dollar on notional basis when outstanding amounts are likely to be realized over uncertain period of time. Had it been restated on the basis of exchange rate as at 30.09.2013, the export receivables would have been higher by Rs. 643,26,50,421/-, Trade payables would have been higher by Rs.7,21,75,623/-and proft would have been higher by or loss would have been lower by Rs. 636,04,74,798 (net).

2. Basis for Disclaimer of Opinion

A. In respect of Trade Receivables amounting to Rs. 4,759,24,33,182, the auditors have not received any confrmations of balances. The management has obtained confrmations of balances from the respective parties. There have been defaults on the payment obligations by the debtors on the due date. Various attempts have been made by the management and lenders for recovery however such attempts have not resulted into any signifcant collections or getting commitment from the parties regarding schedule of payments which are acceptable to the management / lenders, In view of the above we are unable to comment on the realisability of the debts and any provision to be made for unreliability in the carrying amounts of these balances and the consequential impact, on the fnancial statements. (Refer Note 16 and 19 to the fnancial statements)

- Overseas customers have confrmed the balances due from them in their debt confrmation letter. As the group of overseas customers have claimed to have suffered heavy losses, they are unable to pay in time and have sought very long period to meet their obligations which is not acceptable to the company and the banks. Accordingly legal action at Dubai is being contemplated.

B. The Company has made long term investments in Forever Precious Jewellery and Diamonds Ltd.(Forever) amounting to Rs. 1,411,710,802, thereby resulting in it holding a 49 % stake in the equity of that company. The said investments continue to be valued at cost. As stated in Note No. 14 B, in the view of the management, provision for diminution in value of investments as per the requirements of Accounting Standard -13 (Accounting for Investments) is not considered necessary and hence not made. In the absence of availability of audited fnancial statements of ''Forever'', we are unable to comment on the carrying costs of such investments and the provision for diminution in their value as on 30th September 2013. We are unable to comment on the impact on the fnancial statements of provision for diminution in value of investments.

- The Company is of the opinion that with the goodwill, reputation, brand image and retail network of over 125 outlets across the country that FPJDL had developed has potential to re-establish its fnancial viability in the long term once it is able to mitigate current crisis through initiatives from Promoter-Guarantor or other strategic investor and therefore, it will probably be little premature to consider depletion in the value of investment at present and accordingly, the same have been carried at cost without considering any provision in this regard.

C. As mentioned in Note No 1 regarding preparation of accounts on a Going Concern basis and the reasons stated therein and Note No. 31 of the fnancial statements detailing the developments that have happened during the period under audit, the Company''s operating results have been materially affected due to various factors including non availability of fnance in view of the consortium bankers recalling the fnancial facilities granted. These events cast signifcant doubts on the ability of the Company to continue as a going concern since the volumes of business have also drastically dropped in the last 6 months. The appropriateness of the going concern assumption is dependent on the Company''s ability to raise adequate fnance from alternate means and/or recoveries from overseas debtors to meet its short term and long term obligations as well as to establish consistent business operations. In absence of any convincing audit evidences, no positive steps taken by the management, non recovery of trade receivables on due date, non payment of liabilities including statutory dues, fnancial diffculties faced by the company due to recalling of bank fnance facilities and in view of multiple uncertainities stated above, we are unable to determine the possible effects on the fnancial statements. We are also unable to conclude on the ability of the company to carry on as a going concern.

The Company''s presumptions and assumptions are as under :

- The promoter-guarantor, Mr. Jatin Mehta, is professionally expected eventually to lend tangible support by joining the Board, bringing funds for resumption of operations, arranging for funds to initiate legal actions against defaulting customers and with his active involvement and commitment in any exercise of revival / restructuring of the company''s business.

- Investigations / substantive proceedings / audits that might be carried out overseas either through expert to be appointed through Court in Dubai or by any other agencies will endorse / substantiate claims of overseas customers about genuineness of (a) transactions so far as they relate to exports by the company and (b) loss incurred in commodity and currency transactions.

- The defaulting UAE customers will eventually pay off their entire dues over a reasonable span of time.

Disclaimer of Opinion

Because of the signifcance of the matters described in the Basis for Disclaimer of Opinion paragraph, specifcally relating to the multiple uncertainties created due to factors such as non recovery of trade receivables on due dates, non payments of liabilities including statutory dues, fnancial diffculties faced by the Company due to recalling of bank fnance we have not been able to obtain suffcient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the fnancial statements.

The Company''s presumptions and assumptions are as under :

- The promoter-guarantor, Mr. Jatin Mehta, is professionally expected eventually to lend tangible support by joining the Board, bringing funds for resumption of operations, arranging for funds to initiate legal actions against defaulting customers and with his active involvement and commitment in any exercise of revival / restructuring of the company''s business.

- Investigations / substantive proceedings / audits that might be carried out overseas either through expert to be appointed through Court in Dubai or by any other agencies will endorse / substantiate claims of overseas customers about genuineness of (a) transactions so far as they relate to exports by the company and (b) loss incurred in commodity and currency transactions.

- The defaulting UAE customers will eventually pay off their entire dues over a reasonable span of time.

4. Emphasis of Matter

In accordance with Accounting Standard – 9 (Revenue Recognition), In terms of the EXIM policy for Gold Loans and as per the consistent practice followed by the Company in the past, it is required to raise revised invoices on its customers on account of the fnal settlement of its liability of gold loan. As stated in Note No. 16(c), in view of the uncertainty involved of ultimate realization of such amounts, the company has not raised the revised invoices amounting to Rs. 119,35,00,046. (Refer Note No. 16 c and Note 22 c).

- The company was importing gold on loan basis and on unfxed price basis and likewise, the exports of jewellery were also on unfxed price basis as per FTP / EXIM policy. Accordingly, both the export invoices and the invoices for imports of gold used to be revised upon fnal settlement of liability in respect of gold loan. Considering facts and circumstances of the case, when export receivables are overdue and are expected to be realised over a long period, revised invoices have not been raised in view of uncertainty about realisation of additional revenue. If the invoices were to be revised, the export receivables would have been higher by Rs.119,35,00,046/- based on exchange rate as at 30.09.2013.

DIVIDEND AND APPROPRIATIONS

The Company is facing acute fnancial crisis and therefore, your Board have not recommended any dividend for the 18 months period ended 30th September, 2013.

OPERATIONS

Total income from Operations, during the 18 month period, increased to Rs.7130.71 crores from Rs.5546.67 crores during FY 2011-12. Proft before Interest and Depreciation during 12 month period ended 31.03.2013 were Rs. (62.36) crores vis-à-vis Rs.211.79 crores for FY 2011-12. However, due to virtual closure of revenue generating activities during six month period ended 30.09.2013, the Proft before Interest and Depreciation for 18 month period were Rs.(70.90) crores.

DIRECTORS

None of the Directors of the Company are liable to retire by rotation during the ensuing Annual General Meeting.

APPOINTMENT OF COST ACCOUNTANT

M/s. Gangan & Co., Cost Accountants, Mumbai have been appointed to submit the Compliance Report along with the requisite annexure duly certifed by them for the 18 months period ended 30th September, 2013 as required under rule 2 of the Companies (Cost Accounting Record) Rules, 2011 to the Central Government within the time prescribed under above referred rules.

FIXED DEPOSITS

The Company has not accepted any deposit, within the meaning of Section 58-A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 2013 made thereunder.

COMMUNITY DEVELOPMENT AND SOCIAL WELFARE

The Company contributed for social welfare that strives to uplift and empower humanity.

INFORMATION PURSUANT TO SECTION 217(2A) OF THE COMPANIES ACT, 1956

None of the employees of the Company were in receipt of remuneration in excess of the limits as prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 including Companies (Particulars of Employees) Amendment Rules, 2011 and Companies (Amendment) Act, 1988.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors state that -

- in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

- 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 at the end of the 18 months period ended 30th September, 2013 and of the proft of the Company for that fnancial year;

- 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

- the Directors have prepared the Annual Accounts on a going concern basis.

In view of the foregoing, the Board perceives the following as impediments so far as going concern status of the company and the accompanying fnancial statements as refecting the true and fair view of the statement of affairs and the loss and the cash-fows of the company

- The promoter-guarantor has not responded to the Board''s communication with regard to (a) rejoining Board (b) formulating credible action plan for revival of the company''s operations.

- The promoter-guarantor has not indicated as to how one proposes to provide for / reimburse the expenses for initiating legal action in Dubai against the defaulting customers.

The promoter-guarantor is wrongfully attempting to distance himself from the KYC / due diligence / trade references / selection of customers who have been defaulting, which, however, were always his decisions and prerogatives.

The promoter-guarantor has not been updating the company about steps, if any, that he has been taking for recovery of dues.

The promoter-guarantor has not indicated timeframe for bringing funds for recommencing company''s revenue generating / manufacturing activities.

As claimed by the banks, the promoter-guarantor and the overseas customers have failed to provide satisfactory explanations in respect of certain observations contained in the report of investigative auditors appointed by the banks.

The concerned employees are not available for ascertaining reasons for wide variation in the valuation of stock of diamonds held in joint custody with PNB.

Defaulting UAE customers have not been honoring assurances held out to the representatives of the core group of consortium of banks in Dubai on 23.05.2013 with regard to timeframe for clearance of overdue amounts.

Inward remittances of less than USD 2.5 million during last 11 months (01.04.2013 to 28.02.2014) are miniscule vis-à-vis outstanding dues as also compared to amounts agreed to be remitted during the FY 2013-14.

The overseas customers have not responded to Legal Notices served on them by the Company''s advocates in October 2013.

The Board / management is precariously placed and is not in a position to provide the much needed comfort that the auditors need for expressing positive opinion.

The present crisis, its nature and extent, call for initiation and implementation of strong mitigating factors, however, the board / management, does not have experience and resources to deal with the same and is at the mercy of Mr. Haytham and is dependent on active involvement and commitment of Mr. Mehta.

The company is incurring cash loss and is fnding it diffcult to discharge its statutory obligations in time.

8 out of 14 member banks of the Consortium have issued Notices recalling advances whereas 5 banks have issued Notices for Willful Default and a few of them have stated that the company''s replies to their notices were not convincing.

However, the Board feels that it can still take a pragmatic view and consider the status of the company as ''going concern'' and the accompanying fnancial statements as refecting the true and fair view of the statement of affairs and the loss and the cash-fows of the company on the presumptions and assumptions that -

The promoter-guarantor, Mr. Jatin Mehta, will eventually lend tangible support by joining the Board, bringing funds for resumption of operations, arranging for funds to initiate legal actions against defaulting customers and with his active involvement and commitment in any exercise of revival / restructuring of the company''s business.

Investigations / substantive proceedings / audits that might be carried out overseas either through expert to be appointed through Court in Dubai or by any other agencies will endorse / substantiate claims of overseas customers about genuineness of (a) transactions so far as they relate to exports by the company and (b) loss incurred in commodity and currency transactions.

The defaulting UAE customers will eventually pay off their entire dues over a reasonable span of time.

While the Board does concede that the above presumptions and assumptions are based entirely on its professional expectations and are not backed by visible intent and demonstrable actions on part of overseas customers and Mr. Mehta, it is of the opinion that in the larger interest of all stakeholders, it has but one option to take risk of relying on above optimistic presumptions and assumptions for the present.

Accordingly, the fnancial statements comprising Balance Sheet, Statement of Proft and Loss & Cash-fow Statement are, accordingly, to be construed only as fnancial / monetary abstracts of the books of accounts wherein entries have been recorded in respect of transactions on the basis of relevant documents. The Board, it may be appreciated, is not in a position to hold out any assurance for action / inaction of Mr. Mehta and the defaulting overseas customers and its impact on realisability of overdue export receivables and going concern status.

AUDITORS

M/s. R.C. Reshamwala & Co., Auditors of the Company, hold offce until the conclusion of the ensuing Annual General Meeting. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224(1-B) of the Companies Act, 1956. The Audit Committee and Board of Directors recommend their re-appointment.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

Information in accordance with the provisions of 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 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the Annexure forming part of this report.

INDUSTRIAL RELATIONS

Industrial relations at all levels during the year were satisfactory. The Board wishes to place on record its sincere appreciation of the efforts put in by all the Company''s employees in achievement of results.

LISTING

The Equity Shares of the Company are listed at BSE Limited and National Stock Exchange of India Limited. The Company has paid the Annual Listing fee to each of the above Stock Exchanges.

INTERNAL CONTROL SYSTEM

The Company''s internal control systems, governed by time proven practices are supplemented by well-established audit process that assists management in identifying issues and associated risks and ensures that all assets are safeguarded and protected against any loss.

Internal audit, an independent appraisal function, examines and evaluates the adequacy and effectiveness of the internal control system, appraises periodically about activities and audit fndings to the Audit Committee, statutory auditors and the management.

BOARD COMMITTEES

During the 18 months period ended 30th September, 2013, subsequent to resignations of all Independent Directors during 30.03.2013 to 10.06.2013, Audit Committee and Shareholders'' Grievance Committee were not in place with effect from 11.06.2013. These Committees were reconstituted on 16.10.2013 consequent upon appointment of independent directors.

a) Audit Committee

As aforesaid, there was no Audit Committee of Directors as on 30th September, 2013. However the Audit Committee was reconstituted, after the Balance Sheet date w.e.f 16.10.2013, comprising of the following Directors:

1. Mr. Harish Mehta, Chairman

2. Mr. Satya Prakash Tanwar, Member

3. Mr. Ramesh I. Parikh, Member

b) Shareholder/Investor Grievances Committee

As aforesaid, there was no Shareholders'' Grievance Committee of Directors as on 30th September, 2013. However the Shareholders'' Grievance Committee was reconstituted, after the Balance Sheet date w.e.f 16.10.2013, comprising of the following Directors:

1. Mr. Harish Mehta, Chairman

2. Mr. Satya Prakash Tanwar, Member

CORPORATE GOVERNANCE

The Company has been in compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges, save and except those conditions which could not be complied with owing to lack of proper composition of Board of directors.

Report on Corporate Governance, Management Discussion and Analysis and Auditor''s Report on compliance with the Corporate Governance requirements have been included in this Annual Report in separate sections.

ACKNOWLEDGEMENTS

The Board of Directors wishes to thank Government of India, bankers, customers, suppliers, shareholders, other business associates and employees of the Company for the continued co-operation and unstinted support extended to the Company.

On behalf of the Board of Directors

Jaikumar Kapoor Harish R. Mehta

Director Director

Mumbai

Date: 5th March, 2014

 
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