Directors Report of Enchante Jewellery Ltd.

Mar 31, 2005

Our Directors are pleased to present the Nineteenth Annual Report together with the Audited Accounts for the year ended 31st March 2005.

FINANCIAL RESULTS (Rs. in Lacs) Year ended Year ended 31.03.2005 31.03.2004

Net Sales (including labour charges) 92.82 58.83

Gross Profit 19.01 13.85

Depreciation 63.01 65.16

Interest 0.20 0.64

Net Profit/(Loss) before prior period adjustments - (97.45)

Net Profit/(Loss) before Impairment loss (89.65) -

Impairment loss (476.57) -

Net Profit/(Loss) (566.22) (97.45)

Net Deficit Carried to Balance Sheet 1226.34 666.12

As a result of loss during the year under review, your Directors are not recommending any dividend.

OPERATIONS

During the year under review, the Company achieved a turnover of Rs. 92.82 Lacs as compared to Rs. 58.83 Lacs during the previous year.

The Companys sales are hampered due to the following factors:

1. Paucity of working capital. The companys operations were severely constrained by the State Bank of Indias failure to disburse the sanctioned working capital during the crucial stage of project implementation in 1995-96. The companys working capital requirements were duly appraised and assessed by SBICAPS. The State Bank of India subsequently conducted an independent appraisal of the project and assessed the working capital requirements of the project. The State Bank of India sanctioned a working capital loan of Rs 525 lacs. The State Bank of India disbursed only Rs 200 lacs of the sanctioned working capital loan. In the absence of adequate working capital, the company struggled to ramp up operations and its plans received a severe setback. The Company has exhausted its working capital and this has had an adverse impact on sales.

2. State Bank of India. The Company has tried its best to resolve the matter with the State Bank of India in order to salvage the project. The Bank led the Company to believe that it would resolve the matter if the Company were to demonstrate its resolve to enter into a settlement by making payments to the Bank. The Company deposited an amount in excess of over Rs 200 lacs with the bank, by depleting its working capital, which was to no avail as the bank did not live upto its representations. After exhausting its resources, in the year 2001-02, the Company roped in a strategic investor for the purposes of settling the matter with the SBI. The SBI negotiated the terms of the settlement with the investor and the Company, and arrived at an agreement on the amount and modalities of the agreed settlement.

Thereafter the SBI spent approximately two years processing the paperwork and after acting on the settlement, backed out of the agreed settlement at the last moment. The Companys operations during the two years that the bank took in processing the paperwork were in limbo. The execution of the agreed settlement would have brought in fresh investment, cleaned up the Companys balance sheet, altered the ownership pattern, affected the management structure, had an impact on the companys future plans, etc. During the period that the Companys operations were in limbo, the Companys working capital continued to bleed to sustain its work force and infrastructure. By the time the SBI reneged on the agreed settlement, the Companys operations had shrunk considerably and the Company did not have the requisite working capital to ramp up operations. Owing to such malafides and glaring acts of commissions, omissions and arbitrariness attributable to SBI, the Company has sustained huge losses. The matter has been referred to legal counsel for advice/opinion as to a suitable course/remedy by the Comoanv.

FUTURE OUTLOOK

The SBI invited the company in 2004 to negeoiate a fresh one time settlement with the Bank. The Company entered into discussion with the Bank without prejudice to its principled stand that a settlement had been entered into in FY 2002/03, the said settlement was acted upon by all parties and the bank is estopped from going back on the agreed settlement and that the company reserves the right to hold the Bank accountable for the consequences of reneging on the agreed settlement. The Company has pointed out the benefits to the different stakeholders if a fresh one time settlement is completed:

1. Benefits to the Bank. Due to the pending issue with the DGFT and the Haryana Sales Tax Department, as brought out in the Techno Economic Viability Study, carried out by an agency appointed by the Bank, the chances of the Bank recovering any amount through litigation appear bleak.The Banks on going litigation with the Company is currently mired in BIFR and will in probability multiply with the company resorting to litigation over every outstanding issue including failure of the Bank to disburse sanctioned working capital, failure to complete an agreed settlement, breach of trust etc. Entering into a fresh one time settlement will bring an end to all litigation.

2. Benefits to the Company. The Companys operations are at a standstill. A fresh one time settlement with the bank would enable the company to raise the much needed working capital and take steps to revive the company. The Company touched a turnover in excess of Rs. 80 Crores and employed over a hundred people in financial year 1997-98-The Company has the potential to reach such heights once again if it is able to resolve the issue of Working Capital.

3. Benefits to the Country.The revival of the company will add impetus to the economy. The Indian economy is on a growth trajectory and India has the potential to emerge as the manufacturing centre for the global economy. The revival of the company will have a positive spin off on employment, the local economy, exports, etc.

4. Benefits to the minority shareholders. Thousands of small retail investors invested their hard earned earnings in the Companys public issue.The failure of the Bank to disburse the sanctioned working capital is singularly responsible for the companys sickness. The Companys sickness has wiped out the small investor. The Companys revival will enable the small investor to recover his capital as well as earn a return on his investment.

The Banks failure to disburse the sanctioned working capital is responsible for the companys sickness. This failure to disburse sanctioned working capital has been noted, documented and commented upon by independent tribunals as well as an agency appointed by BIFR, a quasi-judicial body, in accordance with the due process of law. The absence of a lenders liability law, the deliberate contempt shown by the Bank to the principles of justice and fair play, the refusal by officials of the bank to work in accordance with the letter and sprite of the laws that led to the founding of Public Sector Banks and the Banks refusal to work in accordance with the letter and spirit of laws that were enacted to help revive sick companies leaves the company with very little options vis-a-vis the continuing defaults of the Bank. The company will continue to pursue the Bank to amicably resolve all outstanding matters and will leave no stone unturned in its endeavor to secure the future of the Company.

APPOINTMENT OF AUDITORS

M/s Anuj Kumar Gupta & Co., Chartered Accountants, Auditors of the company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

DIRECTORS

Mr. Shanti Swarup Bhatia and Mr. Uttam Kejriwal, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. Mr. Paramjit Singh, Director of the company has expired. The Board places on record its appreciation of the valuable services rendered by him.

PUBLIC DEPOSIT

The Company has not accepted any Fixed Deposits from public during the year under review.

PARTICULARS OF EMPLOYEES

During the year under review, none of the Companys employee was in receipt of remuneration as prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

AUDITORS REPORT

The observations of the Auditors as referred in the Auditors Report are suitably explained in notes to the accounts. With regard to para (vii) of the Auditors Report, your Directors have to state that they have explained the Companys stand vis-a-vis the statement in the section titled.

FUTURE OUTLOOK.

Further, regarding para 9(a) of the annexure to the Auditors Report, on account of financial constraints the company has not been regular depositing its dues. The directors are working to complete the settlement with the bank, which will enable the company to raise resources.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AN OUTGO

A. Conservation of Energy:

The energy conservation is an on going activity in the Company and wherever necessary energy conservation measures have been implemented. The efforts to conserve and optimise the use of energy through improved operational methods and other means will continue,

B. Technology absorption:

(a) Research & Development (R&D) : During the year under review,no R & D activities have been carried out by the Company.

(b) Technology Absorption, Adaptation and Innovation: The Company has not entered into any technical foreign collaboration agreement. The technical know-how received alongwith the imported machinery in 1995 has been fully absorbed.

C. Foreign exchange earnings and outgo:

Foreign exchange earnings (FOB basis) - Nil

Foreign exchange outgo - Nil

DIRECTORS RESPONSIBILITY STATEMENT

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

i. that in the preparation of the annual accounts for the financial year ended 31st March, 2005, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 profit or loss of the Company for the year under review;

iii. that the directors had 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;

iv. that the directors had prepared the accounts for the financial year ended 31st March, 2005 on a going concern basis.

CORPORATE GOVERNANCE

Pursuant to clause 49 to the Listing Agreement the Report on Corporate Governance is given in the annexure to the Directors Report.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the services rendered by the employees of the Company. The Board also gratefully acknowledges the continued support extended by customers and the shareholders of the company.

By order of the Board Place : Gurgaon C.L.Mehra Date : 23rd August, 2005 Chairman

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Mar 31, 2004

To the Members, The Directors are pleased to present the Eighteenth Annual Report together with the Audited Accounts for the year ended 31st March 2004. FINANCIAL RESULTS (Rs. in Lacs) Year ended Year ended 31.03.2004 31.03.2003 Net Sales (including labour charges) 58.83 703.80 Gross Profit 23.85 122.29 Depreciation 65.16 65.64 Interest 0.64 2.35 Net Profit (Loss) before prior period adjustments (97.45) (79.45) Exceptional Item -SBI Loan written back - 624.64 Net Profit/(Loss) (97.45) 545.19 Net Deficit Carried In Balance Sheet 660.12 562.66 As a result of loss during the year under review, your Directors are not recommending any dividend. OPERATIONS During the year under review, the Company achieved a turnover of Rs. 58.83 Lacs as compared to Rs. 703.80 Lass during the previous year. The decline in sales is attributable to the following factors: Paucity of working capital: The company's operations were severely constrained by the State Bank of India's failure to disburse the sanctioned working capital during the crucial stage of project implementation in 1995-96. The company's working capital requirements were duly appraised and assessed by SBICAPS. The State Bank of India subsequently conducted an independent appraisal of the project and assessed the working capital requirements of the project. The State Bank of India sanctioned a working capital loan of Rs 525 lacs. The State Bank of India disbursed only Rs 200 lacs of the sanctioned working capital loan. In the absence of adequate working capital, the company struggled to ramp up operations and its plans received a severe setback. The Company has exhausted its working capital and this has had an adverse impact on sales. 2. State Bank of India: The Company has tried its best to resolve the matter with the State Bank of India in order to salvage the project. The Bank led the Company to believe that it would resolve the matter if the Company were to demonstrate its resolve to enter into a settlement by making payments to the Bank. The Company deposited an amount in excess of over Rs 200 lacs with the bank, by depleting its working capital, which was to no avail as the bank did not live upto its representations. After exhausting its resources, in the year 2001-02, the Company roped in a strategic investor for the purposes of settling the matter with the SBI. The SBI negotiated the terms of the settlement with the investor and the Company, and arrived at an agreement on the amount and modalities of the agreed settlement. Thereafter the SBI spent approximately two years processing the paperwork and after acting on the settlement, backed out of the agreed settlement at the last moment. The Company's operations during the two years that the bank took in processing the paperwork were in limbo. The execution of the agreed settlement would have brought in fresh investment, cleaned up the Company's balance sheet, altered the ownership pattern, affected the management structure, had an impact on the company's future plans,.etc. During the period that the Company's operations were in limbo, the Company's working capital continued to bleed to sustain its work force and infrastructure. By the time the SBI reneged on the agreed settlement, the Company's operations had shrunk considerably and the Company,did not have the requisite working capital to ramp up operations. Owing to such malafides and glaring acts of commissions, omissions and arbitrariness attributable to SBI, the Company has sustained huge losses. The matter has been referred: to legal counsel for advice/opinion as to a suitable course/remedy by the Company. FUTURE OUTLOOK The Techno Economic Viability Study conducted by an agency appointed by the SBI in 2003-2004 has categorically stated that the Company set up the latest facility for manufacture of gold and studded jewellery and also ;hat the Company has been able to establish its brand. The Techno Economic Viability Study has pointed out that the Company's primary handicap is tile paucity of working capital. The Company has attempted to engage the SBI to hold structured meetings to take up the Techno Economic Viability Study and the issue of rehabilitation of the unit. In the event that the Company is able to resolve its working capital hurdle, the Company's future will be extremely bright. The Company will continue to endeavor to pursue the SBi to resolve all pending issues. However. given the Company's bitter experiences, it is not very hopeful the State Bank of India will see reason and adopt a fair and pragmatic approach on account of various reasons. In now appears from the conduct of SBI that the Bank had no intention to actually settle the matter but used the lure of a settlement to bleed the Company so as to cause its collapse and ultimate surrender. The Company believes and has received preliminary legal advice that the Bank is stopped from going back on the agreed settlement after it has inter-alia acted on the agreed settlement by encasing the pay orders. promised the completion of the settlement within 8 weeks and not later than 12 weeks under any circumstances, and gave a counter offer which was accepted by the Company. In the event that the Company is unable to resolve all pending issues with the State Bank of India, the Company will take all steps to hold the Bank accountable for its defaults towards the Company as well as claim damages on this account as per legal advice. APPOINTMENT OF AUDITORS M/s .Anuj Kumar Gupta & Co., Chartered Accountants, Auditors of the company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. DIRECTORS Mr C.L. Mehra and Mr. Paramjit Singh, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. PUBLIC DEPOSIT The Company has not accepted any Fixed Deposits from public during the year under review. PARTICULARS OF EMPLOYEES During the year under review, none of the Company's employee was in receipt of remuneration as prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of -Employees) Rules, 1975. AUDITOR'S REPORT The observations of the Auditors las referred in the Auditors"Report are suitably explained in notes to the accounts. With regard to para (vii) of the Auditor's Report, your Directors have to state that they have explained the Company's stand Vis-a-vis on the settlement in the section titled FUTURE OUT LOOK Further regarding para 9(a) of the Annexure to the Auditors Report, on account of financial constraints the company has not been regular in depositing its dues. The Directors are working to complete the settlement with the bank, which will enable the company to raise resources. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO A. Conservation of Energy: The energy conservation is an on going activity in the Company and wherever necessary .energy conservation measures have been implemented. The efforts to conserve and optimise the use of energy through improved operational methods and other means will continue. B. Technology absorption: a) Research & Development (R&D) : During the year under review. no R 8 D activities have been carried out by the Company. (b) Technology Absorption, Adaptation and Innovation : The Company has not entered into any technical foreign collaboration agreement. The technical know-how received alongwith the imported machinery in 1995 has been fully absorbed. C. Foreign exchange earnings and outgo Foreign exchange earnings (FOB basis) NILForeign exchange outgo NIL DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibilities Statement, it is hereby confirmed: i. that in the preparation of the annual accounts for the financial year ended 31st March, 2004, the applicable accounting standards had been followed along with proper explanation relating to material departures; 2. that the directors had selected such accounting policies and applied there consistently and made judgments and estimates that were 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 profit or loss of the Company for the year under review; iii. that the directors had 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; iv. that the directors had prepared the accounts for the financial year ended 31st March, 2004 on a 'going concern basis. CORPORATE GOVERNANCE Pursuant to clause 49 to the feting Agreement the Report on Corporate Governance is given in the annexure to the Directors Report ACKNOWLEDGEMENT The Directors wish to place on record their appreciation of the services rendered by,the employees of the Company. The Board also gratefully acknowledges the continued support extended by customers and the shareholders of the company. By order of the Board Place: Gurgaon . C.L. Mehra Date : 23rd August, 2004 Chairman

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Mar 31, 2003

Your Directors are pleased to present the Seventeenth Annual Report together with the Audited Accounts for the year ended 31st March 2003.

FINANCIAL RESULTS (Rs. in Lacs) Year ended Year ended 31.03.2003 31.03.2002

Net Sales (including labour charges) 703.80 1109.05

Gross Profit 122.29 353.16

Depreciation 65.64 65.40

Interest 2.35 64.36

Net Profit/(Loss) before prior period adjustments (79.45) (136.71)

Exceptional Item-SBI Loan written back 624.64 -

Interest on custom duty written back - 170.38

Net Profit/(less) 545.19 33.67

Net Deficit Carried to Balance Sheet 562.66 1107.86

As a result of inadequate profits during the year under review, your Directors are not recommending any dividend.

OPERATIONS

During the year under review, the Company achieved a turnover of Rs. 703.80 lacs as compared to Rs.1109.05 lacs during the previous year.

The primary reasons for the decline in sales is that the State Bank of India has not disbursed the sanctioned Working Capital Limits which has led to immense problems for Company. The continued operations of the company has further depleted working capital.

FUTURE OUTLOOK

Your company is regularly introducing new products and new designs keeping in view the latest trends. The future outlook of the company is extremely bright as the company has been able to negotiate a One Time Settlement with the State Bank of India and is waiting to the settlement to be completed. The Company has taken this step to end litigation so that it can concentrate on growing the Company.

APPOINTMENT OF AUDITORS

M/s T.R. Chadha & Co., Chartered Accountants present auditors of the Company, have informed the company that they are not interested in reappointment.

M/s Anuj Kumar Gupta & Co., Chartered Accountants have informed the company that they are interested to act as auditors of the Company and also confirmed that their appointment, if made, will be within the limits of Section 224(1 B) of the Companies Act, 1956.

DIRECTORS

Mr. Chand Mehra and Mr. R.K. Wadhawan, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. Mr. M.L. Khanna has resigned from the Board of Directors owing to personal reasons. The Board places on record its appreciation of the valuable services rendered by him.

Mr. Vinay Mehras term of appointment as Managing Director of the Company ends on 31st August, 2003. The Board of Directors have approved the reappointment of Mr. Vinay Mehra as Managing Director of the Company for the period of five years w.e.f. 1st September, 2003. Mr. Chand Mehra, Director of the Company is also proposed to appoint as Wholetime Director of the Company for the period of 5 years w.e.f. 1st September, 2003. The resolutions seeking confirmation of their appointment by the member are proposed at the ensuing Annual General Meeting.

PUBLIC DEPOSIT

The Company has not accepted any Fixed Deposits from public during the year under review.

PARTICULARS OF EMPLOYEES

During the year under review, none of the Companys employee was in receipt of remuneration as prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

AUDITORS REPORT

The observation of the Auditors as referred in the Auditors Report are suitably explained in notes to the accounts. With regard to para (vii) of the Auditors Report, your Directors have to state that in response to Companys stand on the settlement, the bank has once again approached their higher authorities for permission to complete the agreed settlement.

The completion of the settlement will pave the way for the financial rehabilitation of the company. It will enable the company to raise working capital, which working capital is critical to the success of the company. Further, as mentioned in item no. 17 of the Annexure to the Auditors Report, on account of financial constraints the Company has not been regular in depositing Provident Fund and Employees State Insurance dues. The Directors are working to complete the settlement with bank, which will enable the Company to raise resources.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AN OUTGO

A. Conservation of Energy:

The energy conservation is an on going activity in the Company and wherever necessary energy conservation measures have been implemented. The efforts to conserve and optimise the use of energy through improved operational methods and other means will continue.

B. Technology absorption:

(a) Research & Development (R&D): During the year under review, no R & D activities have been carried out by the Company.

(b) Technology Absorption, Adaptation and Innovation : The Company has not entered into any technical foreign collaboration agreement. The technical know-how received alongwith the imported machinery in 1995 has been fully absorbed.

C. Foreign exchange earnings and outgo:

Foreign exchange earnings (FOB basis) 14.20 Lacs

Foreign exchange outgo 9.75 Lacs

DIRECTORS RESPONSIBILITY STATEMENT

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

i. that in the preparation of the annual accounts for the financial year ended 31st March, 2003, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 profit or loss of the Company for the year under review;

iii. that the directors had 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;

iv. that the directors had prepared the accounts for the financial year ended 31st March, 2003 on a going concern basis.

CORPORATE GOVERNANCE

Pursuant to clause 49 to the Listing Agreement the Report on Corporate Governance is given in the annexure to the Directors Report.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the services rendered by the employees of the Company. The Board also gratefully acknowledges the continued support extended by customers and the shareholders of the company.

By order of the Board Place: Gurgaon C.L. Mehra Date: 23rd August, 2003 Chairman

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Mar 31, 2002

Your Directors are pleased to present the Sixteenth Annual Report together with the Audited Accounts for the year ended 31st March, 2002.

FINANCIAL RESULTS

(Rs. in Lacs) Year ended Year ended 31.03.2002 31.03.2001

Net Sales (including labour charges) 1109.05 760.26

Gross Profit 353.16 307.96

Depreciation 65.40 61.59

Interest 64.36 85.70

Net Profit/(Loss) before prior period adjustments (136.71) (205.53)

Interest on custom duty written back 170.38 -

Net Profit/(Loss) 33.67 (205.53)

Net Deficit Carried to Balance Sheet 1107.86 1141.53

As a result of inadequate profit during the year under review, your Directors are not recommending any dividend.

OPERATIONS

During the year under review, the Company achieved a turnover of Rs. 1109.05 lacs as compared to Rs. 760.26 lacs during the previous year.

The Company has been able to achieve improved performance on account of jewellery exhibitions organised by it at number of places in India. The response at these jewellery exhibitions was excellent. This also gave company widespread publicity about its products.

FUTURE OUTLOOK

Your company is regularly introducing new products and new designs keeping in view the latest trends. The Company participated in two international jewellery fairs i.e. the Basel fair in Switzerland and J.C.K. Las Vegas fair in U.S.A.. The quality and competitive prices of Companys product were highly appreciated at both the fairs. The Company is hopeful of getting export orders.

APPOINTMENT OF AUDITORS

M/s T.R. Chadha & Co., Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

DIRECTORS

Mr. Paramjit Singh and Mr. Shanti Swarup Bhatia, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. Mr. James A.Morse, Mrs. Lata Rani Mehra and Mrs. Aradhana Mehra have resigned from the Board of Directors owing to personal reasons. The Board places on record its appreciation of the valuable services rendered by them. Mr. K.K. Malhotra, Director of the Company expired. The Board places on record its appreciation of the valuable services rendered by him. Mr. Chand Mehra and Mr. R.K. Wadhawan were appointed as Additional Directors in the Company by the Board of Directors and vacate office at the forthcoming Annual General Meeting. The Company has received notices in writing from the members signifying their intention to propose appointment of Mr. Chand Mehra and Mr. R.K. Wadhawan as Directors of the Company.

PUBLIC DEPOSIT

The Company has not accepted any Fixed Deposits from public during the year under review.

PARTICULARS OF EMPLOYEES

During the year under review, none of the Companys employee was in receipt of remuneration as prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985

The State Bank of India, the Operating Agency filed report of Special Audit with Board for Industrial and Financial Reconstruction (BIFR). The Company also filed its comments on the report with BIFR.

SETTLEMENT WITH STATE BANK OF INDIA

The Company is negotiating for One Time Settlement with State Bank of India. The negotiations are continuing with State Bank of India.

LISTING COMPLIANCE

The shares of the Company are listed at the following Stock Exchanges:-

(i) The Delhi Stock Exchange Association Ltd., D.S.E. House, 3/1, Asaf Ali Road, New Delhi - 110002

(ii) The Stock Exchange, Mumbai, Phiroze Jeejeebhoy Towers, Dalai Street, Mumbai - 400001.

(iii) The Jaipur Stock Exchange Ltd., Stock Exchange Building, J.L.N Marg, Malviya Nagar, Jaipur-302017

On account of financial constraints, the Company has not yet paid the listing fees to Delhi and Jaipur Stock Exchanges for the year 2000-2001 and to all the above stock exchanges for the year 2001-2002 and 2002-2003.

AUDITORS REPORT

The observations of Auditors as referred in the Auditors Report are suitably explained in notes to the accounts. With regard to para 4.6.1 of the Auditors Report, your Directors have to state that entire net worth of the company has been eroded due to accumulated losses and the Company has made reference to the Board for Industrial and Financial Reconstruction. The necessary steps are being taken for the revival of the Company. Further, as mentioned in item no. 17 of the Annexure to the Auditors Report, on account of financial constraints the company has not been regular in depositing Provident Fund and Employees State Insurance dues.

AUDIT COMMITTEE

The Company has constituted Audit Committee as per the requirements of Section 292A of the Companies Act, 1956. The Audit Committee .consists of Mr. C.L. Mehra, Mr. Paramjit Singh, Mr. Shanti Swarup Bhatia and Mr. R.K. Wadhawan. Mr. Paramjit Singh is -the chairman of the Committee.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

A. Conservation of Energy :

The energy conservation is an on going activity in the Company and wherever necessary energy conservation measures have been implemented. The efforts to conserve and optimise the use of energy through improved operational methods and other means will continue,

B. Technology absorption :

(a) Research & Development (R&D) : During the year under review, no R & D activities have been carried out by the Company.

(b) Technology Absorption , Adaptation and Innovation : The Company has not entered into any technical foreign collaboration agreement. The technical know-how received alongwith the imported machinery in 1995 has been fully absorbed.

C. Foreign exchange earnings and outgo :

Foreign exchange earnings Rs. Nil

Foreign exchange outgo Rs. 13.58 Lacs

DIRECTORS RESPONSIBILITY STATEMENT

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

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2002 the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 profit or loss of the Company for the year under review;

(iii) that the directors had 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;

(iv) that the directors had prepared the accounts for the financial year ended 31st March, 2002 on a going concern basis.

ACKNOWLEDGMENT

Your Directors wish to place on record their appreciation of the services rendered by the employees of the Company. The Board also gratefully acknowledges the continued support extended by customers and the shareholders of the company.

For and on behalf of the Board

Place : Gurgaon C. L. Mehra Date : 31.07.2002 Chairman

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Mar 31, 2001

Your Directors are pleased to present the Fifteenth Annual Report together with the Audited Accounts forthe year ended 31st March, 2001.

FINANCIAL RESULTS

(Rs. in Lacs) Year ended Year ended 31.03.2001 31.03.2000

Net Sales (including labour charges) 760.26 372.24

Gross Profit 307.96 114.63

Depreciation 61.59 54.40

Interest 85.70 62.52

Net Loss 205.53 485.36

Net Deficit Carried to Balance Sheet 1141.53 936.00

As a result of loss during the year under review, your Directors are not recommending any dividend.

OPERATIONS

During the year under review, the Company achieved a turnover of Rs. 760.26 lacs as compared to Rs. 372.24 lacs during the previous year.

The Company has been able to achieve improved performance on account of jewellery exhibitions organised by it at number of places in India. The response atthese jewellery exhibitionswas excellent. This also gavecompany widespread publicity about it products.

FUTURE OUTLOOK

Your company is regularly introducing new products and new designs keeping in view the latest trends. The Company also intends to organise jewellery exhibitions all over India.

APPOINTMENT OF AUDITORS

M/s T.R. Chadha & Co., Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

DIRECTORS

Mr. C.L. Mehra, Mr. Uttam Kejriwal and Mr. James A. Morse, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. Mr. A. R. Kohli and Mr. Chand Mehra resigned from the Board of Directors owing to personal reasons. The Board places on record its appreciation of the valuable services rendered by them.

Mr. Shanti Swarup Bhatia, Mrs. Lata Rani Mehra and Mrs. Aradhana Mehra were appointed as Additional Directors in the Company by the Board of Directors and vacate office at the forthcoming Annual General Meeting. The Company has received notices in writing from the members signifying their intention to propose appointment of Mr. Shanti Swarup Bhatia, Mrs. Lata Rani Mehra and Mrs. Aradhana Mehra as Directors of the Company.

PUBLIC DEPOSIT

The Company has not accepted any Fixed Deposits from public during the year under review.

PARTICULARS OF EMPLOYEES

During the year under review, none of the Company's employee was in receipt of remuneration as prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985

The Company had made a reference to the Board for Industrial and Financial Reconstruction (BIFR) in terms of proviso to Section 15(1) of the Sick Industrial Companies (Special Provisions) Act,1985. The hearing of the case was held on 22nd February, 2001 wherein the bench appointed State Bank of India (SBI) as Operating Agency to enquire and make a report to the BIFR on its own or through a reputed firm of Chartered Accountants with respect to matters specified in the order. The SBI has appointed M/s Thakur Vaidyanath Aiyar & Co. to conduct Special Audit and the report is awaited.

COMPROMISE PROPOSAL WITH STATE BANK OF INDIA

Debt Recovery Tribunal (DRT) in its order dated 22.06.1999 had directed the Company to pay the entire dues of State Bank of India (SBI) in 35 equal quarterly instalments alongwith simple interest @ 9% per annum. However, SBI had filed an appeal in Debt Recovery Appellate Tribunal (DRAT) against the aforesaid order of DRT. In the hearing held on 11.01.2001, the Company assured DRAT that it wants to have an amicable settlement with SBI. As a result, a structured meeting was held between the Company and SB! on 05.02.2001 at which compromise proposal was formulated. The compromise proposal approved by the Board of Directors of the Company stipulates payment of entire dues of SBI in 4 years alongwith simple interest @ 12% p.a. apart from other terms. However, the same is yet to be approved by appropriate authority of SBI.

LISTING COMPLIANCE The shares of the Company are listed at the following Stock Exchanges :

(i) The Delhi Stock Exchange Association Ltd., D.S.E. House, 3/1, AsafAli Road, New Delhi - 110002.

(ii) The Stock Exchange, Mumbai, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400001.

(iii) The Jaipur Stock Exchange Ltd., Stock Exchange Building, J.L.N Marg, Malviya Nagar, Jaipur-302017.

On account of financial constraints, the Company has not yet paid the listing fees to Delhi and Jaipur Stock Exchanges for the year 2000-2001 and to all the above stock exchanges for the year 2001-2002. The same will be paid shortly.

AUDITOR'S REPORT

With regard to para B(e)(a) of the Auditors' Report, your Directors have to state that entire net worth of the company has been eroded due to accumulated losses and the Company has made reference to the Board for Industrial and Financial Reconstruction. The necessary steps are being taken for the revival of the Company. As regards para B(e)(b) of the Auditors' Report, your Directors have to state that no provision has been made for premium payable for procurement of Special Import Licence (SIL) to be surrendered to DGFT, as amount is not ascertainable. Further, as mentioned in item no. 18 of the Annexure to the Auditors' Report, on account of financial constraints the company has not been regular in depositing Provident Fund and Employees State Insurance dues.

AUDIT COMMITTEE

The Company has constituted Audit Committee as per the requirements of Section 292A of the Companies Act, 1956. The Audit Committee consists of Mr.C.L.Mehra, Mr.Vinay Mehra,Mr.K.K.Malhotra, Mr.Paramjit Singh and Mr. Shanti Swarup Bhatia. Mr. C.L. Mehra is the chairman of the Committee.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AN OUTGO

A. Conservation of Energy :

The energy conservation is an on going activity in the Company and wherever necessary energy conservation measures have been implemented. The efforts to conserve and optimise the use of energy through improved operational methods and other means will continue.

B. Technology absorption :

(a) Reserve & Development (R&D) : During the year under review no R & D activities have been carried out by the Company.

(b) Technology Absorption, Adaptation and Innovation : The Company has not entered into any technical foreign collaboration agreement. The technical know-how received alongwith the imported machinery in 1995 has been fully absorbed.

C. Foreign exchange earnings and outgo :

Foreign exchange earnings (FOB basis) Rs. 11.58 Lacs Foreign exchange outgo Rs. 63.63 Lacs

DIRECTORS' RESPONSIBILITY STATEMENT

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

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2001 the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 profit or loss of the Company for the year under review;

(iii) that the directors had 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;

(iv) that the directors had prepared the accounts for the financial year ended 31st March, 2001 on a going concern basis.

DEMATERIALISATION OF SHARES

During the year under review, company's equity shares came under compulsory dematerialisation, and the same have been activated in demat form on both the Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). The Company has appointed M/s Mas Services Private Ltd., New Delhi as its Registrar & Share Transfer Agent for the limited purpose of establishing electronic connectivity of the Company and its interface with NSDL and CDSL with respect to dematerialised shares.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the services rendered by the employees of the Company. The Board also gratefully acknowledges the continued support extended by customers and the shareholders of the company.

For and on behalf of the Board

Place : Gurgaon, C.. L. Mehra Date : 30.07.2001. Chairman

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Mar 31, 2000

The Directors are pleased to present the Fourteenth Annual Report together with the Audited Accounts for the year ended 31st March, 2000.

FINANCIAL RESULTS

(Rs. in Lacs)

Year ended Year ended 31/3/2000 31/3/1999

Net Sales (including labour charges) 372.24 671.26

Gross Profit 114.63 50.79

Depreciation 54.40 52.00

Interest 62.52 102.21

Net Loss 485.36 267.11

Net Deficit Carried to Balance Sheet 936.00 450.64

As a result of loss during the year under review, the Directors are not recommending any dividend.

OPERATIONS

During the year under review, the Company achieved a turnover of Rs. 372.24 lacs as compared to Rs. 671.26 lacs during the previous year.

The lack of working capital and the failure of our Banker, the State Bank of India, to meet its obligations has held to the immense problems for the company. The Company has been able to establish its brand and achieve ISO 9001 Quality Certification. The Directors are pleased to inform you that the company is the only Jewellery Brand in India to be awarded an ISO 9001 Certification.

FUTURE OUTLOOK

The company is regularly introducing new products and new designs keeping in view the latest trends. The Company is trying to create awareness for its products through advertising so that it can develop a brand equity.

APPOINTMENT OF AUDITORS

M/s T. R. Chadha & Co., Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

DIRECTORS

Mr. M. L. Khanna and Mr. K. K. Malhotra, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. Mr. James A. Morse resigned as Technical Director of the Company. However, he continues as a Director on the Board of the Company.

The Board of Directors has approved the appointment of Mr. A. R. Kohli as Wholetime Director designated as Executive Chairman of the Company for a period of one year w.e.f. 1st July, 2000. The resolution seeking confirmation of his appointment by the members is proposed at the ensuring Annual General Meeting.

PUBLIC DEPOSITS

The Company has not accepted any Fixed Deposits from public during the year under review.

PARTICULARS OF EMPLOYEES

During the year under review, none of the Company's employee was in receipt of remuneration as prescribed under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) rules, 1975.

SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985

The accumulated losses of the Company as at 31st March, 2000 have exceeded the entire net worth of the Company and the company has become a Sick Industrial Company within the meaning of Section 3 (1) (o) of the sick Industrial Companies (Special Provisions) Act,1985 (in short `SICA'). The Company has made a reference to the Board for Industrial and Financial Reconstruction in terms of proviso to Section 15 (1) of SICA.

LISTING COMPLIANCE

The shares of the Company are listed at the following Stock Exchanges :

(i) The Delhi Stock Exchange Association Ltd., D.S.E. House, 31/1, Asaf Road, New Delhi - 110002.

(ii) The Stock Exchange, Mumbai, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400001.

(iii) The Jaipur Stock Exchange Ltd., Stock Exchange Buildings, J.L.N. Marg, Malviya Nagar, Jaipur - 302017.

On account of financial constraints, the company has not yet paid the listing fees to above stock exchanges for the year 2000-2001. The same will be paid shortly.

AUDITORS' REPORT

With regard to para 2 (e) (a) of the Auditors' Report, the Directors have to state that entire net worth of the company has been eroded due to accumulated losses and the Company has made reference to the Board for Industrial and Financial Reconstruction. The necessary steps are being taken for the revival of the Company. As regards para 2(e) (b) of the Auditors' Report, the Directors have to state that no provision has been made for premium payable for procurement of Special Import Licence (SIL) to be surrendered to DGFT, as amount is not ascertainable. Further, as mentioned in item no. 18 of the Annexure to the Auditors' Report, on account of financial constraints the company has not been regular in depositing Provident Fund and Employees State Insurance dues.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

A. Conservation of Energy :

The energy conservation is an on going activity in the Company and wherever necessary energy conservation measures have been implemented. The efforts to conserve and optimise the use of energy through improved operational methods and other means will continue.

B. Technology Absorption :

(a) Research & Development (R & D) : During the year under review, no R & D activities have been carried out by the Company.

(b) Technology Absorption, Adaptation and Innovation : The Company has not entered into any technical foreign collaboration agreement. The technical know-how received alongwith the Imported machinery in 1995 has been fully absorbed.

C. Foreign exchange earnings and outgo :

Foreign exchange earnings : NIL

Foreign exchange outgo : Rs. 116.23 lacs.

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Mar 31, 1999

The Directors are pleased to present the Thirteenth Annual Report together with the Audited Accounts for the year ended 31st March, 1999.

FINANCIAL RESULTS (Rs. in Lacs) Year ended Year ended 31/3/1999 31/3/1998

Net Sales (including labour charges) 671.26 8562.96

Gross Profit 50.79 437.71

Depreciation 52.00 50.65

Interest 102.21 131.83

Net Profit/(Loss) (267.11) 88.42

Net Deficit carried to Balance Sheet 450.64 183.53

As a result of loss during the year under review, the Directors are not recommending any dividend.

OPERATIONS

During the year under review, the Company achieved a turnover of Rs. 671.26 lacs as compared to Rs. 8,562.96 lacs during the previous year.

The primary reason for the decline in sales and the net loss is that our bankers, the State Bank of India, filed a case against the company in the Debt Recovery Tribunal (D.R.T.) and the D.R.T. granted an injunction, which virtually brought our operations to a halt. In light of the fact that the non-disbursal of sanctioned Working Capital Limits was a major cause of the company's difficulties, we approached the D.R.T. for a compromise. Now that chapter is behind us, we have once again started our marketing activities and are positive of recovering the lost ground in the near future.

FUTURE OUTLOOK

The Company is concentrating on building up its brand. The Company will continue to introduce new designs keeping in view the latest trends. The Company is trying to create a niche for its products through advertising so that the brand `enchante' becomes a household name.

APPOINTMENT OF AUDITORS

M/s. T.R. Chadha & Co., Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for reappointment.

DIRECTORS

Mr. A.R. Kohli and Mr. Paramjit Singh, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment.

Mr. Chand Mehra's term of appointment as Wholetime Director of the Company ends on 30th September, 1999. The Board of Directors has approved the reappointment of Mr. Chand Mehra as Wholetime Director of the Company for the period of five years w.e.f. 1st October, 1999. The resolution seeking confirmation of his reappointment by the members is proposed at the ensuing Annual General Meeting.

PUBLIC DEPOSITS

The Company has not accepted any Fixed Deposits from public during the year under review.

PARTICULARS OF EMPLOYEES

During the year under review, none of the Company's employee was in receipt of remuneration as prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985

Since the accumulated losses of the Company as at 31st March, 1999 resulted in erosion of more than 50% of the Peak Net Worth of the Company, the Company has to submit a report to the Board for Industrial & Financial Reconstruction under Section 23(1)(a)(i) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company is arranging a separate General Body Meeting for considering such erosion.

LISTING COMPLIANCE

The shares of the Company are listed at the following Stock Exchanges :

(i) The Delhi Stock Exchange Association Ltd., West Plaza, I.G. Stadium, Indraprastha Estate, New Delhi- 110002.

(ii) The Stock Exchange, Mumbai, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001.

(iii) The Jaipur Stock Exchange Ltd., Stock Exchange Building, J.L.N. Marg, Malviya Nagar, Jaipur-302017.

On account of financial constraints the Company has not yet paid the listing fees to above stock exchanges for the year 1999-2000. The same will be paid shortly.

The Company has taken necessary steps to ensure Y2K compliance for all its computer systems.

AUDITORS' REPORT

As mentioned in item no. 18 of the Annexure to the Auditors' Report, on account of financial constraints the Company has not been regular in depositing provident fund dues.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

A. Conservation of Energy :

The energy conservation is an ongoing activity in the Company & wherever necessary energy conservation measures have been implemented. The efforts to conserve & optimise the use of energy through improved operational methods & other means will continue.

B. Technology Absorption :

(a) Research & Development (R & D) : During the year under review no R & D activities have been carried out by the Company.

(b) Technology Absorption, Adaptation and Innovation : The Company has not entered into any technical foreign collaboration agreement. The technical know-how received alongwith the Imported machinery in 1995 has been fully absorbed.

C. Foreign exchange earnings and outgo :

Foreign exchange earnings NIL

Foreign exchange outgo Rs. 132.82 lacs

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Mar 31, 1998

The Directors are pleased to present the Twelfth Annual Report together with the Audited Accounts for the year ended 31st March, 1998.

FINANCIAL RESULTS (Rs. in Lacs)

Year ended Year ended 31/3/1998 31/3/1997

Net Sales (including labour charges) 8562.96 459.54 Gross Profit 437.71 59.16 Depreciation 50.65 49.94 Depreciation written back -- 44.80 Interest 131.83 109.68 Net Profit/(Loss) 88.42 (202.03) Net Deficit carried to Balance Sheet 183.53 271.95

As the profits of the Company for the year under review are inadequate, the Directors are not recommending any dividend.

OPERATIONS

During the year under review the Company achieved turnover of Rs. 8,562.96 lacs as compared to Rs. 459.54 lacs during the previous year and a net profit of Rs. 88.42 lacs as compared to a net loss of Rs. 202.03 lacs during the previous year.

The Company has been able to achieve improved performance on account of the increasing awareness about branded enchante Jewellery through extensive marketing. The Directors are pleased to inform you that the company has introduced branded Diamond Jewellery & Bangles in the market and established its casting unit. The falling gold prices have also contributed to spurring demand for gold jewellery. The liberalisation of Gold import by Government has helped in removing hurdles in procuring gold.

FUTURE OUTLOOK

The Company is regularly increasing its product range so that it can cater to all the requirements of its customers and to all the segments of the market. With this objective in view it is intended to launch gold coins in near future. The Company is also exploring various avenues for establishing its brand in the international market.

APPOINTMENT OF AUDITORS

M/s. T.R. Chadha & Co., Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

DIRECTORS

Mr. C.L. Mehra and Mr. Uttam Kejriwal, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment.

Mr. Vinay Mehra's term of appointment as Managing Director of the Company ends on 31st August, 1998. The Board of Directors have approved the reappointment of Mr. Vinay Mehra as Managing Director of the Company for the period of five years w.e.f. 1st September, 1998. The resolution seeking confirmation of his reappointment by the members is proposed at the ensuing Annual General Meeting.

PUBLIC DEPOSITS

The Company has not accepted any Fixed Deposits from public during the year under review.

PARTICULARS OF EMPLOYEES

Information of employees under Section 217(2A) of the Companies Act, 1956 is being annexed as per Annexure `A'.

PROJECTIONS VS. PERFORMANCE

The projected net sales and net profit as per the prospectus for the year 1997-98 are Rs. 14,794.09 lacs and Rs. 754.09 lacs respectively as against the actual net sales of Rs. 8,562.96 lacs and net profit of Rs. 88.42 lacs. The reasons for variations are as under:

(i) The Company had launched branded `enchante' gold chains in May, 1996. The Company is increasing its product range & has introduced branded Diamond Jewellery. The Branded jewellery being a new concept in India will take time to establish itself.

(ii) The existing value addition norms of 10% have prevented the Company to export as other countries are exporting at much lower value addition. However, the Government has revised value addition norms to 3% in Export- Import policy announced in April, 1998. The Company is confident of improving its Export performance in future.

(iii) There is absence of hallmarking facilities in the country which enables unscrupulous manufacturers to undercut us by selling 18/20 carat chains as 22 carat chains. The Company has petitioned the Government to set up hallmarking facilities in the country. The Company is also exploring possibilities of tying up with Research Laboratories for the hallmarking of gold jewellery.

(iv) The restrictions on import of gold were acting as serious impediment in the growth of the Company. The Government has recently announced changes in the Gold import policy and the Company is gearing up to take the benefit of the same.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

As required under Section 217(1) (e) of the Companies Act, 1956 and Rules made therein, the particulars relating to energy conservation, technology absorption and foreign exchange earnings and outgo are given in Annexure `B' which is attached hereto and forms part of the Directors' Report.

ANNEXURE `A' TO DIRECTORS' REPORT

ANNEXURE 'B' TO DIRECTORS' REPORT

Information in accordance with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

The energy conservation is an on going activity in the Company & wherever necessary energy conservation measures have been implemented. The efforts to conserve & optimise the use of energy through improved operational methods & other means will continue.

B. TECHNOLOGY ABSORPTION

(a) Research & Development (R & D)

During the year under review no R & D activities have been carried out by the Company.

(b) Technology Absorption, Adaptation and Innovation

The Company has not entered into any technical foreign collaboration agreement. The technical know-how received alongwith the Imported machinery in 1995 has been fully absorbed.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange Earnings (FOB basis) Rs. 21.77 lacs Foreign Exchange Outgo Rs. 230.94 lacs

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Mar 31, 1997

Information will not available in annual report 1997-98.

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Mar 31, 1996

The Directors are pleased to present the Tenth Annual Report together with the audited accounts for the year ended 31st March, 1996.

As a result of loss during the year, your Directors are not recommending any dividend.

2. OPERATIONS

During the year under review the company achieved turnover of Rs. 222.43 lacs as compared to Rs. 59.66 lacs during the previous year.

Your Directors are pleased to inform you that company has introduced branded chains in the market under the brand name 'ENCHANTE'. The company is establishing all India Dealership network for marketing of its 'ENCHANTE' range of products.

3. FUTURE OUTLOOK

The 'ENCHANTE' chains of the Company have been very well received in the market due to its superior quality & fine designs. Your Directors are confident that the company is poised for substantial growth in the times to come.

4. PUBLIC ISSUE

The Company came out with a public issue of 19,58,000 Equity Shares of Rs. 10/- each aggregating Rs. 195.80 lacs. The Issue was oversubscribed by 8.6 times. The funds mobilised have been utilised for the purpose they were raised.

5. APPOINTMENT OF AUDITORS

M/s T.R. Chadha & Co., Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

6. DIRECTORS

Mr. C.L. Mehra, Director of the Company retires by rotation at the forthcoming Annual General Meeting and being eligible offers himself for reappointment. Dr. K.P. Jain & Mr. B.R. Gujral have resigned from the Board owing to personal reasons. The Board places on record its appreciation of the valuable services rendered by them.

Mr. Deepak Kapoor and Mr. Uttam Kejriwal were appointed as Additional Directors in the company by the Board and vacate office at the forthcoming Annual General Meeting. The company has received notices in writing from the members signifying their intention to propose appointment of Mr. Deepak Kapoor and Mr. Uttam Kejriwal as Directors of the Company.

7. PUBLIC DEPOSITS

The company has not accepted any Fixed Deposits from public during the year under review.

8. PARTICULARS OF EMPLOYEES

Information of employees under Section 217(2A) of the Companies Act, 1956 is being Annexed as per Annexure 'A'.

9. PROJECTIONS VS PERFORMANCE

The projected net sales and net profit as per the prospectus for the year 1995-96 are Rs. 6959.63 lacs and Rs. 163.05 lacs respectively as against the actual net sales of Rs. 222.43 lacs and net loss of Rs. 70.98 lacs. The reasons for variations are as under:

i) There was a delay of three months in commencement of quality production.

ii) For achieving the desired international quality production, the introduction of branded product in the market as scheduled and development of dealers network had to be delayed.

iii) Delay in shipment of Machinery from November, 1994 to July, 1995.

10. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 217(1)(e) of the Companies Act, 1956 and Rules made therein, the particulars relating to energy conservation, technology absorption and foreign exchange earnings and outgo are given in Annexure 'B' which is attached hereto and forms part of the Directors' Report.