CMYK CMYK BOOK-POST SU-RAJ DIAMONDS AND JEWELLERY · PDF fileregistered folio number or their...

CMYK CMYK

22ND ANNUAL REPORT2007-2008

SU-RAJ DIAMONDS AND JEWELLERY LIMITED

If undelivered please return to:

Intime Spectrum Registry Limited

Unit : Su-Raj Diamonds and Jewellery LimitedC-13, Pannalal Silk Mills Compound

L.B.S. Road, Bhandup (West), Mumbai 400 078

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ANNUAL REPORT 2007-2008

BOARD OF DIRECTORS Jatin R. Mehta Chairman-cum-Managing Director

K. N. Bhandari Director

G. P. Gupta Director

G. Bharakatia Director

Atul S. Pethe Director

Lakhpatraj Bhansali Director (w.e.f. 30th January, 2008)

Tej Krishen Kaul Director (w.e.f. 9th May, 2008)

Shrilekha V. Parikh Director (w.e.f. 9th May, 2008)

Dharmendra Bhandari Director (upto 25th June, 2008)

CHIEF FINANCIAL OFFICER Jaikumar Kapoor

COMPANY SECRETARY Shivprakash K. Singh

AUDITORS R. C. Reshamwala & Co.Chartered Accountants

BANKERS Standard Chartered BankPunjab National BankExport-Import Bank of IndiaCanara BankState Bank of HyderabadBank of MaharashtraOriental Bank of CommerceUnion Bank of IndiaCentral Bank of IndiaAXIS BankVijaya BankState Bank of India

ADMINISTRATIVE OFFICE Su-Raj House73-C, Cross RoadMIDC, Marol, Andheri (East)Mumbai - 400 093

REGISTERED OFFICE Kesharba Market - 2Gotalawadi, KatargamSurat - 395 004

REGISTRAR & Intime Spectrum Registry LimitedTRANSFER AGENT C-13, Pannalal Silk Mills Compound

L.B.S. Road, Bhandup (West), Mumbai - 400 078

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NOTES:

1) A MEMBER ENTITLED TO ATTEND AND VOTE AT THEMEETING IS ENTITLED TO APPOINT ONE OR MORE PROXIESTO ATTEND AND VOTE ON A POLL ONLY INSTEAD OFHIMSELF AND THE PROXY NEED NOT BE A MEMBER.

2) The instrument appointing a proxy must be deposited with theCompany at its Registered Office not less than 48 hours before thecommencement of the meeting.

3) Explanatory statement with respect to Item Nos. 6 to 8 is annexedand forms part of the Notice.

4) Members/Proxies should bring the Attendance Slip duly filled in forattending the meeting.

5) Pursuant to Section 154 of the Companies Act, 1956, and inaccordance with Clause 15 & 16 of the listing agreement (s), theRegister of Members and Share Transfer Books of the Companywill remain closed from Thursday, 18th September, 2008 to Friday,26th September, 2008 (both days inclusive) to determine theentitlement of shareholders to receive dividend for the year ended31st March, 2008.

6) The Dividend on Equity Shares as recommended by the Board ofDirectors, if any, declared at the meeting, will be payable to thoseshareholders whose names appear in the Register of Members ofCompany as on Wednesday, 17th September, 2008 and in respectof shares held in Electronic form, the dividend will be paid on thebasis of particulars of beneficial ownership furnished by theDepositories as at the end of the business hours on Wednesday,17th September, 2008.

7) Shareholders seeking an information with regard to Accounts arerequested to write to the Company at an early date to enable themanagement to keep the information ready.

8) Shareholders are requested to bring their copy of Annual Report tothe Meeting.

9) The Equity Shares of the Company are compulsorily traded inelectronic form with effect from 28th August, 2000. The shareholderswho have not yet dematerialized their shares are requested todematerialize their shares by opening DP Account with nearestDepository Participant at the earliest to avail the benefits ofdematerialisation.

10) Pursuant to the provisions of Section 205A(5) of the CompaniesAct, 1956, dividends for the financial year ended as on 31st March,2001 and thereafter, which remain unclaimed in the unpaid dividendaccount for a period of seven years from the date of transfer of thesame, will be transferred to the Investor Education and ProtectionFund (IEPF) established by the Central Government, pursuant toSection 205C of the Companies Act, 1956.

Information in respect of such unclaimed dividend when due fortransfer to the said Fund is given below:

Financial Year Ended Date of Declaration Last Date forof Dividend Claiming Dividend

31.3.2001 (1.10.99 - 31.3.01) 29.9.2001 29.9.2008

31.3.2002 (1.4.01 - 31.3.02) 30.9.2002 30.9.2009

31.3.2003 (1.4.02 - 31.3.03) 27.9.2003 27.9.2010

31.3.2004 (1.4.03 - 31.3.04) 31.8.2004 31.8.2011

31.3.2005 (1.4.04 - 31.3.05) 11.8.2005 11.8.2012

31.3.2006 (1.4.05 - 31.3.06) 22.9.2006 22.9.2013

31.3.2007 (1.4.06 - 31.3.07) 30.8.2007 30.8.2014

According to the provisions of the Companies Act shareholders arerequested to note that no claims shall lie against the Company orsaid Fund in respect of any amounts which were unclaimed andunpaid for a period of seven years from the date that they firstbecame due for payment and no payment shall be made in respectof any such claims.

NOTICE

NOTICE is hereby given that the Twenty-second Annual General Meetingof the Members of Su-Raj Diamonds and Jewellery Limited will be heldon Friday, the 26th day of September, 2008 at Mahida Bhawan, Icchanath,Opp. S.V.R. Engineering College, Dumas Road, Surat 395 007 at 11.30a.m. to transact the following business:

AS ORDINARY BUSINESS:

1) To receive, consider and adopt the Audited Balance Sheet as at 31st

March, 2008, the Profit and Loss Account for year ended on thatdate along with the Schedules and the Reports of the Directors andAuditors thereon.

2) To declare dividend on Equity Shares for the financial year ended31st March, 2008.

3) To appoint a Director in place of Mr. K. N. Bhandari who retires byrotation and being eligible, offers himself for re-appointment.

4) To appoint a Director in place of Mr. G. P. Gupta, who retires byrotation and being eligible, offers himself for re-appointment.

5) To re-appoint Auditors who shall hold office from the conclusion ofthis Annual General Meeting until the conclusion of the next AnnualGeneral Meeting and fix their remuneration.

AS SPECIAL BUSINESS:

6) To consider and if thought fit, to pass with or without modification(s),if any, the following resolution as an Ordinary Resolution:

RESOLVED THAT Mr. Lakhpatraj Bhansali who was appointed asan Additional Director by the Board of Directors under the provisionsof Section 260 of the Companies Act, 1956 read with Article 147(1)of the Articles of Association of the Company, and who holds officeupto the date of this Annual General Meeting and in respect ofwhom the Company has received a notice in writing under Section257 of the Companies Act, 1956 from a member signifying hisintention to propose Mr. Lakhpatraj Bhansali as a candidate for theoffice of Director of the Company, be and is hereby appointed as aDirector of the Company liable to retire by rotation.


RESOLVED THAT Gen. Tej Krishen Kaul who was appointed as anAdditional Director by the Board of Directors under the provisions ofSection 260 of the Companies Act, 1956 read with Article 147(1) ofthe Articles of Association of the Company, and who holds officeupto the date of this Annual General Meeting and in respect ofwhom the Company has received a notice in writing under Section257 of the Companies Act, 1956 from a member signifying hisintention to propose Gen. Tej Krishen Kaul as a candidate for theoffice of Director of the Company, be and is hereby appointed as aDirector of the Company liable to retire by rotation.


RESOLVED THAT Mrs. Shrilekha V. Parikh who was appointed asan Additional Director by the Board of Directors under the provisionsof Section 260 of the Companies Act, 1956 read with Article 147(1)of the Articles of Association of the Company, and who holds officeupto the date of this Annual General Meeting and in respect ofwhom the Company has received a notice in writing under Section257 of the Companies Act, 1956 from a member signifying hisintention to propose Mrs. Shrilekha V. Parikh as a candidate for theoffice of Director of the Company, be and is hereby appointed as aDirector of the Company liable to retire by rotation.

By Order of the Board of DirectorsFor Su-Raj Diamonds and Jewellery Limited

Place : Mumbai Shivprakash K. SinghDate : 30th July, 2008 Company Secretary


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11) In order to provide protection against fraudulent encashment of thewarrants, Members holding Share Certificates in physical form arerequested to notify any change in their addresses or bank mandatesimmediately to the Company’s Registrar and Transfer Agent, IntimeSpectrum Registry Limited, Unit: Su-Raj Diamonds and JewelleryLimited, C-13 Pannalal Silk Mills Compound, L.B.S. Road, Bhandup(West), Mumbai 400 078. Phone: (91-22) 2596 3838. Fax: (91-22)2594 6969 / 2596 2691. E-Mail: [email protected], Website:www.intimespectrum.com.

12) Shareholders holding shares in electronic form may kindly note thattheir Bank Account details as furnished by their Depositories to theCompany will be printed on their Dividend Warrants as per theapplicable regulations of the Depositories and the Company will notentertain any direct request from such shareholders for deletion of/change in such Bank details. Further, instructions, if any, alreadygiven by them in respect of shares held in physical form will not beautomatically applicable to shares held in electronic mode.Shareholders who wish to change such Bank Account details aretherefore requested to advise their Depository Participants aboutsuch change, with complete details of Bank Account and not to theCompany.

13) Non-Resident Indian Shareholders are requested to informimmediately to Company’s Registrar and Transfer Agent, IntimeSpectrum Registry Limited :

a) The change in the Residential status on return to India forpermanent settlement.

b) The particulars of the Bank Account maintained in India withcomplete name, branch, account type, account number andaddress of the Bank, if not furnished earlier.

14) Corporate Members intending to send their authorised representativesare requested to send a duly certified copy of the Board Resolutionauthorising their representatives to attend and vote at the AnnualGeneral Meeting.

15) Consequent upon the introduction of Section 109A of the CompaniesAct, 1956, shareholders are entitled to make nomination in respectof shares held by them in physical form. Shareholders desirous ofmaking nominations are requested to send their requests in Form2B (which will be made available on request) to the Company’sRegistrar and Transfer Agent, Intime Spectrum Registry Limited.

16) Shareholders’/Investors’ are requested to make all correspondencesin connection with registration of transfer of shares, non-receipt ofdividend, annual report, change of address, bank mandate, issue ofduplicate, split and consolidated share certificate, dematerialisationof shares, rematerialisation of shares, transmission, transpositionand other grievances etc., by addressing letters directly to theCompany’s Registrar and Transfer Agent, Intime Spectrum RegistryLimited and a copy to the company at Su-Raj House, 73-C, CrossRoad, MIDC, Marol, Andheri (East), Mumbai - 400 093 quoting theirregistered folio number or their client ID number with DP ID numberto enable the Company to resolve the Shareholders’ grievancessmoothly and speedily.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OFTHE COMPANIES ACT, 1956.

Item No. 6

Mr. Lakhpatraj Bhansali was appointed as an Additional Director of theCompany by the Board of Directors at its meeting held on 30th January,2008. Mr. Lakhpatraj Bhansali will hold office as an Additional Directorupto the date of the ensuing Annual General Meeting. The Company hasreceived a notice in writing from a member proposing the candidature ofMr. Lakhpatraj Bhansali for the office of Director of the Company underthe provisions of section 257 of the Companies Act, 1956.

Mr. Lakhpatraj Bhansali is a B.Sc. Graduate. He has been associatedwith Su-Raj Group for over 30 years. Mr. Lakhpatraj Bhansali specialisesin setting up and managing of diamond cutting & polishing units.

In the beneficial interest of the Company your Directors recommend theresolution for approval.

None of the Directors of the Company other than Mr. Lakhpatraj Bhansaliis in any way, concerned or interested in the said resolution.

Item No. 7

Gen. Tej Krishen Kaul was appointed as an Additional Director of theCompany at the Board meeting held on 9th May, 2008. Gen. Tej KrishenKaul is a former Major General of Indian Army.

He is M.Sc. in Defence Studies from Madras University. In addition he isthe holder of Post Graduate Diploma in Business Management from theInstitute of Marketing & Management and M.Phil in Management & MilitaryScience.

Gen. Kaul is Director of OTC Exchange of India and Chairman of TricolorAdvisory Services Private Limited.

He has been awarded several medals, including Param Vishisht SevaMedal and Ati Vishisht Seva Medal by Hon’ble President of India.


None of the Directors of the Company other than Gen. Tej Krishen Kaulis in any way, concerned or interested in the said resolution.

Item No. 8

Mrs. Shrilekha V. Parikh was appointed as an Additional Director of theCompany at the Board meeting held on 9th May, 2008. Mrs. ShrilekhaParikh is an academician with over 35 years of rich teaching experiencein India and abroad.

She is a post-graduate (M.Com) and has a Business Degree withmarketing specialization from Jamnalal Bajaj Institute of ManagementStudies.


None of the Directors of the Company other than Mrs. Shrilekha V.Parikh is in any way, concerned or interested in the said resolution.

By Order of the Board of Directors

For Su-Raj Diamonds and Jewellery Limited

Place : Mumbai Shivprakash K. SinghDate : 30th July, 2008 Company Secretary


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DIRECTORS’ REPORTTo

The Members

The Directors have pleasure in presenting the Twenty-second AnnualReport together with the Audited Accounts for the financial year ended31st March, 2008.

FINANCIAL RESULTS (Rs. in Crore)

Financial FinancialYear Year

Ended Ended31st March, 31st March,

2008 2007

Total Income 2142.20 1572.26

Profit before Interest and Depreciation 77.75 73.67

Less: Finance Charges (Net) 4.41 19.15

Depreciation 5.74 3.30

Profit before Tax 67.60 51.22

Provision for Tax 5.01 3.30

Profit after Tax 62.59 47.92

Add: Balance in Profit and LossAccount Brought Forward 80.80 71.90

Add: Excess/(Short) provision forExpenses/IncomeTax for earlier year 0.04 1.45

Profit Available for Appropriation 143.43 121.27

Proposed Dividend 8.77 7.24

Corporate Tax on Proposed Dividend 1.49 1.23

Transfer to General Reserve 25.00 20.00

Transfer to General Reserve -Foreign Exchange/Metal PriceFluctuation 12.00 12.00

Balance Carried Forward 96.17 80.80

Total 143.43 121.27

DIVIDEND AND APPROPRIATIONS

An amount of Rs. 25 crore has been transferred to General Reserveand Rs. 12 crore to General Reserve – Foreign Exchange/Metal PriceFluctuation.

The Board of Directors have recommended a Dividend of 20%(Rs. 2 per Equity Share) for the year ended 31st March, 2008, subject toapproval of the Shareholders.

OPERATIONS

The total income from operations during the year increased by 36.25%to Rs. 2142.20 crore from Rs.1572.26 crore during the previous year.The Company recorded net profit of Rs. 62.59 crore during the year asagainst Rs. 47.92 crore for the previous year, an increase of 30.61%.

Revenues from Jewellery business grew to Rs. 1517.06 crore ascompared to Rs. 993.52 crore in previous fiscal. Diamond businessgrew to Rs. 623.37 crore against Rs. 576.55 crore in the previous year.

SUBSIDIARIES

As required under the provisions of Section 212 of the Companies Act,1956, a statement of the holding company’s interest in the subsidiarycompanies, namely Su-Raj Diamonds NV, Su-Raj Diamonds andJewellery DMCC, Su-Raj Diamonds & Jewelry USA, Inc and Su-RajDiamond (H.K.) Limited is attached as ‘Annexure’ and forms part of thisreport.

In terms of approval granted by the Central Government under theprovisions of Section 212(8) of the Companies Act, 1956, copies ofBalance Sheet, Profit and Loss Account, Report of the Board of Directorsand the Report of the Auditors of the subsidiary companies have notbeen attached with the Balance Sheet of the Company. The Companywill make available these documents upon request by any investor.

The Annual Accounts of the subsidiaries are also available for inspectionby the investors at the Registered Office of the Company and also atthe respective offices of its subsidiaries. Pursuant to Accounting Standard21, issued by the Institute of Chartered Accountants of India, consolidatedfinancial statements presented by the Company includes the financialinformation of its subsidiaries.

DIRECTORS

Dr. Dharmendra Bhandari resigned from the Board of Directors of theCompany with effect from 25th June, 2008.

Mr. K.N. Bhandari and Mr. G.P. Gupta, Directors, retire by rotation andbeing eligible, offer themselves for re-appointment at the forthcomingAnnual General Meeting.

Mr. Lakhpatraj Bhansali was appointed on 30th January, 2008 as anAdditional Director of the Company and hold office upto the date offorthcoming Annual General Meeting.

Mrs. Shrilekha V. Parikh and Gen. Tej Krishen Kaul were appointed on9th May, 2008 as Additional Directors of the Company and hold officeupto the date of forthcoming Annual General Meeting.

FIXED DEPOSITS

The Company has not accepted any deposit, within the meaning ofSection 58-A of the Companies Act, 1956 read with the Companies(Acceptance of Deposits) Rules, 1975 made thereunder.

COMMUNITY DEVELOPMENT AND SOCIAL WELFARE

In keeping with the Company’s commitment towards communitydevelopment and social welfare the Company is working with Veerayatan,a non-profit, non-governmental organization that strives to uplift andempower humanity through the three jewels of humanitarianisms,education and inner development.

In its world renowned eye hospital and orthopedic center in Bihar, India,Veerayatan provides most of its services free of charge. It has alsoestablished several primary education and vocational training centersthroughout the region of Kutch, India.

The Company is and will continue to participate in the development andgrowth of this organization.

PARTICULARS OF EMPLOYEES

Pursuant to the provisions of Section 217(2A) of the Companies Act,1956 read with the Companies (Particulars of Employees) Rules, 1975,the particulars are given in the statement which forms part of this Report.However, as per the provisions of Section 219(1)(b)(iv) of the CompaniesAct, 1956, the Directors’ Report is being sent to the shareholdersexcluding the aforesaid information. Any shareholder interested inobtaining a copy of the statement may write to the Company’s RegisteredOffice at Surat or to its Administrative Office at Mumbai.


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DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, theDirectors state:

(i) that in the preparation of the Annual Accounts, the applicableaccounting standards have been followed;

(ii) that the Directors have selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financialyear ended 31st March, 2008 and of the profit of the Company forthat financial year;

(iii) that the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud andother irregularities;

(iv) that the Directors have prepared the Annual Accounts on a goingconcern basis.

AUDITORS

M/s. R.C. Reshamwala & Co., Auditors of the Company, hold officeuntil the conclusion of the ensuing Annual General Meeting. TheCompany has received letter from them to the effect that theirappointment, if made, would be within the prescribed limits under Section224(1-B) of the Companies Act, 1956. Your Directors recommend theirre-appointment.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE

Information in accordance with the provisions of Section 217(1)(e) ofthe Companies Act, 1956, read with the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988 regardingconservation of energy, technology absorption and foreign exchangeearnings and outgo is given in the Annexure forming part of this report.

GROUP FOR INTER-SE TRANSFER OF SHARES

As required under Clause 3(e) of Securities and Exchange Board ofIndia (Substantial Acquisition of Shares and Takeovers) Regulations,1997, persons constituting Group (within the meaning as defined in theMonopolies and Restrictive Trade Practices Act, 1969) for the purposeof availing exemption from applicability of the provisions of Regulation10 to 12 of aforesaid SEBI Regulations, are given in the Annexure - Iattached herewith and form part of this report.

INFUSION OF CAPITAL

Preferential Issue of Equity Shares

In order to raise the funds for augmenting the working capital resourcesand to meet the requirements of growth, the Company at its ExtraOrdinary General Meeting held on 2nd February, 2008 approved theissue of 36,20,000 Equity Shares of Rs. 10 each at a price of Rs. 85per Equity Share, including premium, aggregating to Rs. 30.77 crore tothe Promoters Group Companies namely, Su-Raj Diamond IndustriesLimited and J. R. Diamonds Private Limited, under Preferential IssueGuidelines of SEBI. The said Equity Shares have been allotted and are

listed at Bombay Stock Exchange Limited, National Stock Exchange ofIndia Limited and Ahmedabad Stock Exchange Limited. The funds raisedby Preferential Issue of shares have been utilised for working capitalrequirements of the Company.

HUMAN RESOURCES

The Company has taken efforts to develop and maintain an organisationstructure and human resources that keeps pace with changing businessenvironment.

LISTING

The Equity Shares of the Company are listed at Bombay Stock ExchangeLimited, National Stock Exchange of India Limited and Ahmedabad StockExchange Limited. The Company has paid the Annual Listing fee toeach of the above Stock Exchanges.

INTERNAL CONTROL SYSTEM

The Company’s internal control systems governed by well framed policiesand guidelines is supplemented by well-established audit processesthat assists management in identifying issues and associated risks andensure that all assets are safeguarded and protected against any loss.

Internal audit, an independent appraisal function, examines and evaluatesthe adequacy and effectiveness of the internal control systems, appraisesperiodically about activities and audit findings to the Audit Committee,statutory auditors and the management.

CORPORATE GOVERNANCE

The Company has been in compliance with the conditions of CorporateGovernance as stipulated in Clause 49 of the Listing Agreement withthe Stock Exchanges.

Report on Corporate Governance, Management Discussion and Analysisand Auditor’s Report on compliance with the Corporate Governancerequirements have been included in this Annual Report in separatesections.

ACKNOWLEDGEMENTS

The Directors wish to place on record their gratitude to the Company’sCustomers, Bankers and Shareholders who have helped the Companyin its endeavour. The Board also places on record its appreciation forthe support received from the employees at all the levels. The Directorswould also like to thank the Government and the regulatory authorities& agencies for their co-operation.

On behalf of the Board of Directors

Mumbai Jatin R. Mehta30th July, 2008 Chairman-cum-Managing Director


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ANNEXURE TO THE DIRECTORS’ REPORTParticulars Required under the Companies (Disclosure ofParticulars in the Report of the Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

The particulars regarding conservation of energy are not applicableto the Company as the Diamond Industry is not covered under theschedule prescribed by the said Rules.

B. TECHNOLOGY ABSORPTION

The particulars regarding absorption of technology is given belowas per Form B of the Companies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988.

Research and Development (R & D):

(1) Specific areas in which R&D is carried out by the Company

Cutting and polishing of diamonds and manufacture of jewellery asper international standards are the areas in which general researchand development work pertaining to the manufacturing processare carried out by the Company.

(2) Benefits derived as a result of the above R & D

Improvement in productivity and cost reduction.

(3) Future Plan of Action

Appropriate action plans are being initiated.

(4) Expenditure on R & D:

(a) Capital

(b) Recurring Included in the

(c) Total manufacturing cost.

(d) Total R & D expenditure as apercentage of total turnover

Technology absorption, adaptation and innovation:

(1) Efforts in brief, made towards technology absorption,adaptation and innovation

The Company is monitoring the technological up-gradation takingplace internationally in the field of diamond and jewellerymanufacturing and the same are being reviewed for implementation.

(2) Benefit derived as a result of the above efforts e.g. productimprovement, cost reduction, product development, importsubstitution etc.

1) Product improvement

2) Cost reduction

3) Import substitution in respect of main consumables

(3) In case of Imported Technology (imported during the last 5years reckoned from the beginning of the financial year),following information may be furnished:

(a) Technology Imported

(b) Year of Import

(c) Has technology been fully absorbed Nil

(d) If not fully absorbed, areas wherethis has not taken place, reasonstherefor and future plan of action

}

}

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company’s main line of business is the manufacture and exportof cut and polished diamonds and jewellery.

Total Foreign Exchange Earned Rs. 2,134.54 crore

Total Foreign Exchange Used Rs. 1,757.63 crore

The foreign exchange used includes the remittances made for rawmaterials which are under process and foreign exchange earnedincludes bills to be realised.



Annexure – I

Group for inter-se transfer of shares under clause 3(e) of Securities& Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations, 1997

NAME OF THE COMPANY

Su-Raj Diamond Industries Limited

SJR Commodities and Consultancies Private Limited

Forever Precious Jewellery and Diamonds Limited

Firstrate Diamonds Private Limited

Forever Diamonds Private Limited

Diadem Investment and Finance Private Limited

Kohinoor Diamonds Private Limited

Bombay Diamonds Company Private Limited

J.R. Diamonds Private Limited

Kings Jewel Exports Private Limited


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CORPORATE GOVERNANCE

The Company’s philosophy on Corporate Governance is based onpreserving core values, ethical business conduct, maximisation ofshareholders value and welfare of stakeholders.

The Company on a continuous basis assesses its strengths andweaknesses so as to achieve the best standards of CorporateGovernance while on the path of protecting the long term interest of themembers and the stakeholders.

BOARD OF DIRECTORS

Composition of the Board

As on 31st March, 2008, the Board of Directors comprised of sevenmembers, out of which six are Independent Directors. Mr. Jatin R.Mehta, Executive Director, is the Chairman of the Board.

The Board of Directors meet atleast once in a quarter to approvequarterly/annual financial results. Additional meetings are held as andwhen necessary.

Number of Board Meetings

During the year ended 31st March, 2008, the Board met seven times.The meetings were held on 15th May, 2007, 30th July, 2007, 10th

September, 2007, 30th October, 2007, 5th January, 2008, 30th January,2008 and 15th February, 2008.

Directors’ attendance record

The attendance of the Directors in the Board Meetings held during thefinancial year alongwith the attendance in the Annual General Meetingheld on 30th August, 2007, is as follows:

Name of Director Category Number of Attendence atBoard Meetings the last A.G.M.attended

Jatin R. Mehta Executive 6 YesDirector

Kailash Nath Non-Executive 5 NoBhandari Director &

IndependentDirector

G. Bharakatia Non-Executive 6 YesDirector &IndependentDirector

Dr. Dharmendra Non-Executive 5 NoBhandari Director &

IndependentDirector

Atul S. Pethe Non-Executive 4 NoDirector &IndependentDirector

G. P. Gupta Non-Executive 7 NoDirector &IndependentDirector

Lakhpatraj Bhansali* Non-Executive Nil NADirector &IndependentDirector

* Appointed as Director on 30th January, 2008

Directorships and Committee positions held by the Directors

In accordance with Clause 49 of the Listing Agreement, none of theDirectors is a member in more than ten committees or is acting as achairman of more than five committees across companies in which heis Director. For the purpose of considering the limits of the committees,only the chairmanship and membership of the Audit Committee andShareholders Grievances Committee are considered.

The Directorships and Committee positions held by the Directors invarious other companies are given below:

Name of Director Category Number of Number of Committee positionsDirectorship held in other Companiesin OtherCompanies Chairman Member

Jatin R. Mehta Executive 4 Nil NilDirector

Kailash Nath Non-Executive 7 1 1Bhandari Director &

IndependentDirector

G. Bharakatia Non-Executive 3 Nil NilDirector &IndependentDirector

Dr. Dharmendra Non-Executive 3 1 NilBhandari Director &

IndependentDirector

Atul S. Pethe Non-Executive 1 Nil NilDirector &IndependentDirector

G. P. Gupta Non-Executive 14 5 5Director &IndependentDirector

Lakhpatraj Bhansali Non-Executive 1 Nil NilDirector &IndependentDirector

Information Supplied to the Board

The information placed before the Board includes:

• Annual operating plans, capital budgets and any updates.

• Quarterly results for the Company and business segments.

• Minutes of the meetings of the audit committee and othercommittees of the Board.

• Appointment or removal of Chief Financial Officer and CompanySecretary.

• Materially important show cause, demand, prosecution notices andpenalty notices.

• Fatal or serious accidents, dangerous occurrences, any materialeffluent or pollution problems.

• Any material default in financial obligations to and by the Company,or substantial non-payment for goods sold by the Company.

• Any issue, which involves possible public or product liability claimsof substantial nature, including any judgement or order which, mayhave passed strictures on the conduct of the Company or taken an


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adverse view regarding another enterprise that can have negativeimplications on the Company.

• Details of any joint venture or collaboration agreement.

• Transactions that involve substantial payment towards goodwill,brand equity or intellectual property.

• Significant labour problems and their proposed solutions. Anysignificant development in human resources/industrial relations frontlike signing of wage agreement, implementation of voluntaryretirement scheme, etc.

• Sale of material nature of investments, subsidiaries, assets whichis not in the normal course of business.

• Quarterly details of foreign exchange exposures and the stepstaken by management to limit the risks of adverse exchange ratemovement, if material.

• Non-compliance of any regulatory, statutory nature or listingrequirements and shareholders service such as non-payment ofdividend, delay in share transfer etc.

• Details of investment of surplus funds available with the Company.

• Minutes of the Board Meetings of the subsidiary companies.

• Statement showing significant transactions & arrangements enteredinto by the subsidiary companies.

Remuneration paid to Directors

Details of remuneration paid to Directors for the financial year 2007-08.

(Rs.)

Sr. Name of the Director Board Audit Salary TotalNo. Meeting Committee Perquisites

Sitting Sitting Super-Fees Fees annuation/

Commission/ESOP

1. Mr. Jatin R. Mehta Nil Nil 36,00,000 36,00,000

2. Mr. K. N. Bhandari 45,000 Nil Nil 45,000

3. Mr. G. Bharakatia 55,000 35,000 Nil 90,000

4. Dr. Dharmendra Bhandari 45,000 25,000 Nil 70,000

5. Mr. Atul S. Pethe 35,000 35,000 Nil 70,000

6. Mr. G. P. Gupta 65,000 Nil Nil 65,000

7. Mr. Lakhpatraj Bhansali Nil Nil Nil Nil

Total 39,40,000

Code of Conduct

A code of conduct for all Board members and senior management ofthe Company has been prepared. The code of conduct is available onthe website of the Company www.su-raj.com. All Board members andsenior management personnel have affirmed compliance with the Codeof Conduct. A declaration signed by the Chief Executive Officer (CEO)to this effect is enclosed at the end of this report.

Risk Management

The Company has established risk assessment and minimizationprocedures, which are reviewed by the Board periodically.

COMMITTEES OF THE BOARD

The Company has two committees of the Board, Audit Committee andShareholders/Investors Grievance Committee. The decisions relating tothe constitution of committees, appointment of members and fixing ofterms of service for committee members are taken by the Board ofDirectors. Composition of the said committees, number of meetingsheld and attendance during the financial year is as follows:

a) Audit Committee

As on 31st March, 2008 the Audit Committee comprised of threeindependent Directors, Mr. G. Bharakatia (Chairman), Dr. DharmendraBhandari and Mr. Atul S. Pethe. The Audit Committee met four timesduring the year on 15th May, 2007, 30th July, 2007, 30th October, 2007and 30th January, 2008.The Details of the Audit Committee meeting are given below:

Sr. Name of Members Status No. of MeetingsNo.

Held Attended

1. Mr. G. Bharakatia Chairman 4 4

2. Mr. Atul S. Pethe Member 4 4

3. Dr. Dharmendra Bhandari Member 4 3

The statutory auditors, internal auditors are permanent invitees to theaudit committee. The Company Secretary acts as secretary of thecommittee. Members of the Audit Committee including the Chairman(Mr. G. Bharakatia) have accounting and financial management expertise.The Chairman of the Audit Committee attended the Annual GeneralMeeting (AGM) held on 30th August, 2007 to answer shareholder’squeries.

The Audit Committee of the Company performs the followingfunctions:

• Overseeing the Company’s financial reporting process and thedisclosure of financial information to ensure that the financialstatement is correct, sufficient and credible.

• Recommending to the Board, the appointment and, if required, theremoval of the statutory auditor and the fixation of audit fees.

• Approval of payment to statutory auditors for any other servicesrendered by the statutory auditors.

• Reviewing, with the management, the quarterly and annual financialstatements before submission to the Board.

• Reviewing with the management the annual financial statementsof subsidiary companies.

• Reviewing the adequacy of internal audit functions.

• Reviewing with the management and auditors, the adequacy ofinternal control systems.

• Reviewing with internal auditors any significant findings and followup thereon.

• Reviewing the findings of any internal investigations by the internalauditors into matters where there is suspected fraud or irregularityor a failure of internal control systems of a material nature andreporting the matter to the Board.

• Discussion with statutory auditors before the commencement ofaudit, about the nature and scope of audit as well as post-auditdiscussion to ascertain any area of concern.


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• To look into the reasons for substantial defaults in the payment tothe depositors, debenture holders, shareholders (in case of nonpayment of declared dividends) and creditors, if any.

• Carrying out any other function as is mentioned in the terms ofreference of the Audit Committee.

The Audit Committee reviews:

• Management discussion and analysis of financial condition andresults of operations.

• Statement of significant related party transactions (as defined bythe audit committee), submitted by management.

• Management letters / letters of internal control weaknesses issuedby the statutory auditors.

• Internal audit reports relating to internal control weaknesses.

• The appointment, removal and terms of remuneration of the InternalAuditor.

• The Audit Committee is also presented with the following informationon related party transactions (whenever applicable):

• A statement in summary form of transactions with related partiesin the ordinary course of business.

• Details of material individual transactions with related parties, whichare not in the normal course of business.

• Details of material individual transactions with related parties orothers, which are not on an arm’s length basis along withmanagement’s justification for the same.

• Compliance by the Company of all the Accounting Standards aslaid down by the Institute of Chartered Accountants of India, andadherence thereto, wherever applicable.

b) Shareholder/Investor Grievances Committee

The Shareholder/Investor Grievances Committee comprises of Mr. AtulS. Pethe (Chairman), Mr. Jatin R. Mehta and Mr. G. Bharakatia.

The Shareholder/Investor Grievances Committee looks into redressinginvestor’s grievances like transfer of shares, non-receipt of shares, non-receipt of dividends, non-receipt of annual report, etc.

The power of approving share transfer has been delegated to theRegistrar and Transfer Agent.

Name and designation of the compliance officer: Mr. Shivprakash K.Singh, Company Secretary.

During the year, the Committee met four times, details of which are asunder:

Sr. No. Date Committee No. ofstrength Members present

1 15.05.2007 3 3

2 30.07.2007 3 3

3 30.10.2007 3 3

4 30.01.2008 3 3

Subsidiary Companies

All the subsidiary companies of the Company are managed by theirrespective Board of Directors. The financial statements, in particularinvestments made by unlisted subsidiary companies are reviewed bythe Audit Committee of the Company.

Brief of the Company’s subsidiary companies as on March 31, 2008 areas under:

Sr. No. Name of Subsidiary Country in whichIncorporated

1 Su-Raj Diamonds NV Belgium

2 Su-Raj Diamonds and Jewellery DMCC U.A.E.

3 Su-Raj Diamonds & Jewelry USA, Inc. U.S.A.

4 Su-Raj Diamond (H.K.) Limited Hongkong

MANAGEMENT

Management Discussion and Analysis

Management Discussion and Analysis report forms part of the AnnualReport and has been detailed separately in the report.

Disclosures on materially significant related party transactions

None of the transactions with related parties were in conflict with theinterest of the Company.

Disclosures of transactions with related parties are set out in Schedule11 to Annual Accounts, forming part of the Annual Report.

Details of non-compliance by the Company

No instance of non-compliance by the Company on any matter relatedto capital markets during the last three years has been reported andtherefore no penalties or strictures have been imposed on the Companyby the Stock Exchanges or SEBI or any other statutory authority.

Code for prevention of insider trading practices

The Company has instituted a code of conduct for its management andstaff. The code lays down guidelines, which advises them on proceduresto be followed and disclosures to be made, while dealing with shares ofSu-Raj Diamonds and Jewellery Limited, and cautioning them of theconsequences of violations.

CEO/CFO certification

The CEO and CFO certification of the financial statements and the cashflow statement for the year is enclosed at the end of the report.

SHAREHOLDERS

Re-appointment/Appointment of Directors

According to the Articles of Association of the Company, one-third of itsDirectors retire every year.

Mr. K. N. Bhandari and Mr. G. P. Gupta, Directors, retire by rotationand being eligible, offer themselves for re-appointment at the forthcomingAnnual General Meeting.

The brief particulars of Mr. K. N. Bhandari and Mr. G. P. Gupta aregiven below:

Mr. K. N. BhandariMr. K. N. Bhandari was appointed on the Board with effect from 20th

August, 2002. He was the Chairman cum Managing Director of NewIndia Assurance Company Limited and United India Insurance CompanyLimited. He is having vast experience in General Insurance. He is Non-Executive, Independent Director of the Company. Other Directorshipheld by Mr. K.N. Bhandari as on 31st March, 2008 are as follows:

1. Andhra Cements Limited2. Bank of Rajasthan Limited3. Hindalco Industries Limited4. Agriculture Insurance Company of India Limited5. Saurashtra Cement Limited6. Credence Logistics Limited7. Shristi Infrastructure Development Corporation Limited


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Mr. G. P. Gupta

Mr. G. P. Gupta was appointed as a Director of the Company on 26th

July, 2005. He was the Chairman-cum-Managing Director of IndustrialDevelopment Bank of India and was also the Chairman of Unit Trust ofIndia. He is specialized in the field of General Management, FinancialManagement and Banking. He is Non-Executive Independent Directorof the Company. Other Directorship held by Mr. G. P. Gupta as on 31st

March, 2008 are as follows:

1. The Jammu & Kashmir Bank Limited2. Swaraj Engines Limited3. Birla Sun Life Insurance Company Limited4. Power Trading Corporation of India Limited5. SIDBI Venture Capital Limited6. Aditya Birla Nuvo Limited7. EMKAY Share & Stock Brokers Limited8. NTPC Limited9. Hindustan Aeronautics Limited10. Power Finance Corporation Limited11. Idea Cellular Limited12. Landmark Property Development Company Limited13. AVAM Technologies Private Limited14. S-Infra Limited, Guernsey

Additional Directors

Mr. Lakhpatraj Bhansali, Mrs. Shrilekha V. Parikh and Gen. Tej KrishenKaul, Additional Directors, hold office up to the date of forthcomingAnnual General Meeting and being eligible, offer themselves for re-appointment.

Mr. Lakhpatraj Bhansali

Mr. Lakhpatraj Bhansali was appointed as Additional Director of theCompany on 30th January, 2008.

Mr. Bhansali is a B.Sc. graduate and has over 30 years of experiencein the diamond industry. He is also a Director of Professional DiamondsLimited.

Mrs. Shrilekha V. Parikh

Mrs. Shrilekha V. Parikh was appointed as Additional Director of theCompany on 9th May, 2008. Mrs. Shrilekha Parikh is an academicianwith over 35 years of rich teaching experience in India and abroad.

She is a post-graduate (M.Com) and has a Business Degree withmarketing specialization from Jamnalal Bajaj Institute of ManagementStudies.

Gen. Tej Krishen Kaul

Gen. Tej Krishen Kaul was appointed as Additional Director of theCompany on 9th May, 2008. Gen. Tej Krishen Kaul is a former MajorGeneral of Indian Army.

He is M.Sc. in Defence Studies from Madras University. In addition heis the holder of Post Graduate Diploma in Business Management fromthe Institute of Marketing & Management and M.Phil in Management &Military Science.

Gen. Kaul is Director of OTC Exchange of India and Chairman of TricolorAdvisory Services Private Limited.

He has been awarded several medals, including Param Vishisht SevaMedal and Ati Vishisht Seva Medal by Hon’ble President of India.

Communication with shareholders

Su-Raj Diamonds and Jewellery Limited has its own web-sitewww.su-raj.com and all important information relating to the Company,including results, press releases, etc. are posted on web-site. The resultsof the Company are published in leading newspapers like EconomicTimes and Nav Gujarat Times.

Investor Grievances

The Company has constituted a Shareholders/Investors GrievancesCommittee for redressing shareholders’ complaints, as mentioned earlierin this report. Grievance redressal division/compliance officer’s e-mailID as per clause 47(f) of Listing Agreement, exclusively for the purposeof registering complaints by investors:

[email protected]

Compliance

Certificate from the Auditors of the Company, M/s. R.C. Reshamwala &Company, Chartered Accountants, confirming the compliance with theconditions of corporate governance, as stipulated under Clause 49 ofListing Agreement, is annexed to the Directors Report forming part ofthe Annual Report.

General Body Meetings

Year Location Date Time

2004-2005 11th August, 2005 11.30 a.m.

2005-2006 22nd September,2006 11.30 a.m.

2006-2007 30th August, 2007 11.30 a.m.

2007-2008 2nd February, 2008* 11.30 a.m.

* A Special Resolution under Section 81(1A) of the Companies Act,1956, for Preferential Issue of Equity Shares was passed at the ExtraOrdinary General Meeting held on 2nd February, 2008.

The following resolutions were passed by the Members through postalballot during the financial year 2007-2008:

1. Ordinary Resolution under section 293(1)(a) of the Companies Act,1956 for Creation of Charge.

2. Special Resolution under section 17 of the Companies Act, 1956for alteration of the Objects Clause of the Memorandum ofAssociation.

Result declared on: 30th August, 2007

General Shareholder Information:

Annual General Meeting:

Date, time and venue

26th September, 2008, 11.30 a.m.

Mahida Bhavan, Icchanath, Opp. S.V.R. Engineering College, DumasRoad, Surat 395 007.

Financial Calendar (tentative)

Financial year:

1st April to 31st March

For the financial year 2008-2009 (1st April, 2008 to 31st March, 2009)

• First Quarter : End of July, 2008.

• Second Quarter : End of October, 2008.

• Third Quarter : End of January, 2009.

• Fourth Quarter/Annual : End of June, 2009.

Date of Book Closure : 18th September, 2008 to 26th September, 2008.

Dividend Payment Date : on or after 26th September, 2008.

Mahida BhavanIcchanath Opp.

S.V.R. EngineeringCollege, Dumas

Road, Surat395 007


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Listing of Equity Shares on Stock Exchanges and Payment ofListing Fees

Bombay Stock Exchange Limited Scrip Code: 507892Phiroze Jeejeebhoy Towers,Dalal Street, Mumbai 400 023

National Stock Exchange of Symbol: SURAJDIAMNIndia Limited Series : EQExchange Plaza, C-1, Block-GBandra-Kurla ComplexBandra (East)Mumbai 400 051

Ahmedabad Stock Exchange Limited Scrip Code : 57910First Floor, Kamdhenu ComplexOpp. Sahajanand CollegePanjarapoleAhmedabad 380 015

The Annual Listing Fees for the financial year 2008-2009 has been paidby the Company to the stock exchanges.

DEMAT SEGMENT ISIN : INE664A01015

Market Price Data :

The price of the Company’s Equity Shares-High, Low during each monthin the last financial year:

MONTH BSE NSE Indices : Sensex(in Rs. per share) (in Rs. per share)

High Low High Low High Low

April, 2007 54.90 47.00 55.00 43.10 14383.72 12425.52

May, 2007 59.00 50.95 57.90 51.00 14576.37 13554.34

June, 2007 64.10 54.10 64.25 52.05 14683.36 13946.99

July, 2007 60.00 53.50 60.20 45.70 15868.85 14638.88

August, 2007 62.00 49.50 59.85 47.15 15542.40 13779.88

September, 2007 61.95 54.75 61.80 54.55 17361.47 15323.05

October, 2007 58.50 50.00 58.00 48.50 20238.16 17144.58

November, 2007 72.10 52.50 72.50 52.00 20204.21 18182.83

December, 2007 106.05 64.35 105.85 64.05 20498.11 18886.40

January, 2008 114.80 60.55 114.90 60.05 21206.77 15332.42

February, 2008 72.80 59.00 73.95 59.00 18895.34 16457.74

March, 2008 64.15 50.00 65.00 50.15 17227.56 14677.24

Registrar and Transfer Agent:


Unit: Su-Raj Diamonds and Jewellery LimitedC-13, Pannalal Silk Mills Compound, L.B.S. RoadBhandup (West), Mumbai - 400 078.Phone : (91-22) 2596 3838.Fax : (91-22) 2594 6969 / 2596 2691.E-Mail : [email protected] : www.intimespectrum.com

Share Transfer System

Shareholders/Investors are requested to send the share transfer relateddocuments directly to the Company’s Registrar & Transfer Agent, IntimeSpectrum Registry Limited whose address is given above.Shareholder’s/Investor’s Grievance Committee is authorized to approvethe registration of transfer of shares in the physical segment. All sharetransfer is completed within statutory time limit from the date of receipt,provided documents meet the stipulated requirement of statutoryprovisions in all respects.

Company’s Registered Office Address:

Su-Raj Diamonds and Jewellery LimitedKesharba Market – 2, Gotalawadi,Katargam, Surat – 395 004Gujarat State, IndiaPhone: 0261-2535055 Fax: 0261-2533435

Investor’s Service Cell:

Su-Raj Diamonds and Jewellery LimitedSu-Raj House, 73-C, Cross Road,MIDC, Marol, Andheri (East),Mumbai 400 093Maharashtra State, IndiaPhone: (022) 28265534/36 Fax: (022) 28265550E-mail: [email protected]

Dematerialisation of Shares and Liquidity

The Equity Shares of the Company are compulsorily traded in electronicform with effect from 28th August, 2000. The shareholders who have notyet dematerialized their shares are requested to dematerialize the sameby opening DP Account with nearest Depository Participants at theearliest to avail the benefits of dematerialisation.

The total number of shares dematerialized as on 31st March, 2008 are3,62,13,254 shares representing 82.60% of Share Capital. The EquityShares of the Company are frequently traded at Bombay Stock Exchangeand National Stock Exchange (BSE & NSE).

Outstanding GDRs/ADRs/Warrants or any Convertible instruments,conversion date and likely impact on equity : Nil

Details of proceeds from Preferential Issue:

During the financial year 2007-2008 an amount of Rs. 30.77 crore hasbeen raised vide Preferential Issue of 36,20,000 Equity Shares ofRs. 10 each at a price of Rs. 85 per share, including premium, to thePromoter group comprising of Su-Raj Diamond Industries Limited andJ.R. Diamonds Private Limited. The proceeds raised through thePreferential Issue of Equity Shares have been utilized for working capitalrequirements, as planned.

Location of Factories:

• 143-D Bommasandra Industrial Area, Hosur Road, Hebbagodi,Bangalore – 560 099.

• Plot No.1 and 1A, Tivim Industrial Estate, Karaswada, Mapusa,Goa - 403 526.

• E-7, Marudhara Industrial Estate, IInd Phase, Basni,Jodhpur - 342 005.

• Kesharba Market-2, Gotalawadi, Katargam, Surat - 395 004.

• Manikanchan Special Economic Zone, Plot No.1, Block-CN,Sector-5, Salt Lake City, Kolkata - 700 091.

• Plot No. 17/SDF, 4th Floor, Cochin Special Economic Zone,Kakkanad, Kochi - 682 037, Kerala.

• Unit No.46, 2nd Floor, SDF-III, MEPZ-SEZ, Tambaram,Chennai - 600 045.


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Distribution of Shareholding as on 31st March, 2008

CATEGORY NO.OF % OFSHARES SHARE

HELD HOLDING

A. Promoter’s Holding

1. PromotersIndian Promoters 2,14,04,698 48.82Foreign Promoters – –

2. Persons acting in Concert – –

Sub Total 2,14,04,698 48.82

B. Non–Promoters Holding

3. Institutional Investora. Mutual Funds and UTI 37,300 0.09b. Banks, Financial 7,44,344 1.70

Institutions (Central/StateGovernment Institutions/Non-Government Institutions)

c. Insurance Companies 400 0.00d. FIIs 45,14,841 10.29

Sub Total 52,96,885 12.08

4. Others

a. Private Corporate Bodies 20,42,145 4.66b. Indian Public 1,44,00,632 32.85c. NRIs/OCBs 6,87,626 1.57d. Any Other (Non-executive 12,272 0.02

Directors and their Relatives)

Sub Total 1,71,42,675 39.10

GRAND TOTAL 4,38,44,258 100.00

Shareholding pattern as on 31st March, 2008

Shareholding of nominal No. of % to Total % tovalue of Rs. Share- Total Shares Total

holders

Up to 5,000 47,302 90.20 71,57,218 16.32

5,001 to 10,000 3,175 6.05 24,47,012 5.58

10,001 to 20,000 1,097 2.09 16,55,264 3.78

20,001 to 30,000 328 0.63 8,25,386 1.88

30,001 to 40,000 130 0.25 4,70,292 1.07

40,001 to 50,000 117 0.22 5,49,145 1.25

50,001 to 1,00,000 163 0.32 11,69,590 2.67

1,00,001 and above 124 0.24 2,95,70,351 67.45

Total 52,436 100.00 4,38,44,258 100.00

CERTIFICATION BY CHIEF EXECUTIVE OFFICER AND CHIEFFINANCIAL OFFICER OF THE COMPANY

(As required by Clause 49 of the Listing Agreement(s) entered intowith the Stock Exchanges)

To

The Shareholders and the Board of Directors

Su-Raj Diamonds and Jewellery Limited

We, Jatin R. Mehta, Chief Executive Officer (CEO) and Jaikumar Kapoor,Chief Financial Officer (CFO) of Su-Raj Diamonds and Jewellery Limited,to the best of our knowledge and belief, certify that:

1) We have reviewed the Balance Sheet and Profit and Loss Accountof the Company for the year ended 31st March, 2008 and all itsschedules and notes on accounts, as well as the Cash FlowStatement.

2) To the best of our knowledge and information:

a) These statements do not contain any materially untruestatement or omit any material fact or contain statements thatmight be misleading;

b) These statements together present a true and fair view of theCompany’s affairs and are in compliance with existingaccounting standards, applicable laws and regulations.

3) We also certify that based on our knowledge and belief there areno transactions entered into by the Company, which are fraudulent,illegal or violative of the Company’s Code of Business Conductand Ethics.

4) The Company’s other certifying officers and we are responsible forestablishing and maintaining internal controls and procedures forthe Company and we have evaluated the effectiveness of theCompany’s internal controls and procedures.

5) The Company’s other certifying officers and we have disclosed,based on our most recent evaluation, wherever applicable, to thecompany’s auditors and through them to the Audit Committee ofthe Company’s Board of Directors:

a) All significant deficiencies in the design or operation of internalcontrols, which we are aware and have taken steps to rectifythese deficiencies;

b) Significant changes in internal control during the year;

c) Any fraud, which we have become aware of and that involvesManagement or other employees who have a significant rolein the Company’s internal control system;

d) Significant changes in accounting policies during the year.

We further declare that all the Board Members and Senior Managementof the Company have affirmed compliance with the Code of BusinessConduct and Ethics for the financial year ended 31st March, 2008.

Jatin R. MehtaChairman cum Managing Director/

Chief Executive Officer

Mumbai Jaikumar Kapoor9th May, 2008 Chief Financial Officer


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Segment wise / Product wise Performance:

Sales of diamonds during the year 2007-2008 was Rs. 623.37 crore,whereas the Sales of Jewellery was Rs. 1517.06 crore, representing29.12% and 70.88% of the total turnover respectively.

Statement of continent-wise sales for year 2007-2008:

Continent Sale (Rs. crores) Percentage

North America 223.43 10.44

Europe 179.95 8.40

Middle East 1245.21 58.18

Asia 491.84 22.98

Total 2140.43 100.00

Financial and Operating Performance:

Income

The income for the year increased by 36.25% to Rs. 2142.20 crore asagainst Rs.1572.26 crore in the previous year.

Details of other Directorships held:

Sr. Name of the Director Directorship Committee CommitteeNo. Membership Chairmanship

1 Mr. Jatin R. Mehta Forever Precious Jewellery & Diamonds Ltd.

Revah Corporation Ltd.

Carbon Accessories Ltd.

Peakok Jewellery Ltd.

2 Mr. K. N. Bhandari Andhra Cements Ltd. Audit Committee

Bank of Rajasthan Ltd.

Hindalco Industries Ltd.

Agriculture Ins. Co. of India Ltd. Audit Committee

Saurashtra Cement Ltd.

Credence Logistics Ltd.

Shristi Infrastructure Development Corporation Ltd.

3 Mr. G. Bharakatia A. B. Impex Pvt. Ltd. (Private Company)

Shri Prempuriji Granimarbo Pvt.Ltd. ”

Mitul India (P) Ltd. ”

4 Dr. Dharmendra Bhandari Bank of Baroda

Harmony for Silvers Foundation (Trust)

J P Morgan Mutual Fund India Pvt. Ltd. (Private Company) Audit Committee

5 Mr. Atul S. Pethe Professional Diamonds Ltd.

6 Mr. G. P. Gupta The Jammu & Kashmir Bank Ltd. Audit Committee

Swaraj Engines Ltd. Audit Committee

Birla Sun Life Insurance Company Ltd. Audit Committee

Power Trading Corporation of India Ltd. Audit Committee

SIDBI Venture Capital Ltd.

Aditya Birla Nuvo Limited Audit Committee

EMKAY Share & Stock Brokers Ltd.

NTPC Limited Audit Committee

Hindustan Aeronautics Ltd. Audit Committee

Power Finance Corporation Ltd. Audit Committee

Idea Cellular Limited Audit Committee

Landmark Property Development Co. Ltd. Audit Committee

AVAM Technologies Private Ltd. (Private Company)

S-Infra Ltd. Guernsey (Foreign Company)

7 Mr. Lakhpatraj Bhansali Professional Diamonds Limited

Management Discussion and AnalysisIndustry Structure and Development:

The Gems and Jewellery Industry has a very important role in theIndian Economy.

The industry witnessed a growth of 22% amounting to a total Export of$20.9 billion (Rs. 84,058 crore) for financial year 2007-2008 as against$17.1 billion in previous year.

The cut and polished diamonds amounted to about 68% of the totalexport which grew to $14.2 billion in financial year 2007-2008 (from$10.9 billion in previous year).

The industry has maintained a steady growth rate. However, due toprice volatility of gold and economic scenario worldwide, the demandfor gold jewellery has witnessed slow-down. The strengthened rupeeagainst the US dollar was another area of concern.

India’s export of gold jewellery has increased in recent years becauseof its intensive efforts towards improved quality and new designs.

Su-Raj Diamonds and Jewellery Limited has reported a 36.33% increasein sales at Rs. 2140.43 crore for the year ended 31st March, 2008. Netprofit rose 30.61% to Rs. 62.59 crore as against Rs. 47.92 crore duringthe previous year.


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Profit

The Operating Profit Before charging Depreciation, Interest and Tax(PBIDT) amounted to Rs. 77.75 crore.

The Profit Before Tax (PBT) for the year under review increased by31.99% from Rs. 51.22 crore in the previous year to Rs. 67.60 crore.The Profit After Tax (PAT) went up by 30.61% to Rs. 62.59 crore fromRs. 47.92 crore in the previous year.

Earning Per Share

The Earning Per Share for the year increased to Rs. 15.41 from Rs.11.95in the previous year.

Dividend

Dividend of 20% (Rs. 2 per share) has been recommended by theBoard for financial year ended 31st March, 2008 (previous year 18%,i.e. Rs.1.80 per share).

Risk, Internal Control System and Adequacy:

Su-Raj Diamonds and Jewellery has a low debt equity ratio and is wellplaced to take care of its borrowings.

CRISIL has rated ‘P1’ for Su-Raj Diamonds and Jewellery’s bankfacilities. CRISIL’s ratings reflect the Company’s healthy business riskprofile and sound operational efficiencies, and its comfortable financialrisk profile.

The risks are suitably covered. The Company has an internal controlsystem in place, which is efficient and commensurate with the size andnature of its business.

Outlook, Opportunities and Threats:

Outlook

The outlook for industry is positive with continued thrust of Governmenton the sector.

Opportunities

The Company’s well established infrastructure and penetration in keymarket enables it to have an upper edge.

Threats

China may emerge as a viable rival in the long run. Threat from polishingin producing countries in Africa to gain further economic benefits fromdiamond producing through jobs creation in a domestic cutting andpolishing industry is emerging.

Slowing down of some of the leading economies due to sub-prime crisismay also have some negative effect.

Human Resources:

Comprehensive on-going training is offered to the employees to increasetheir competence level and job capability. There is a strong focus onteam work and team building. Employee relations continue to be cordial.

Cautionary Statement:

This report contains forward-looking statements based on certainassumptions and expectations of future events. Actual performance,results or achievements may differ from those expressed or implied inany such forward-looking statements. The Company assumes noresponsibility to publicly amend, modify or revise any forward-lookingstatements, on the basis of any subsequent developments, informationor events.



AUDITOR’S CERTIFICATE ON CORPORATEGOVERNANCE

To

The Members ofSu-Raj Diamonds and Jewellery Limited

We have examined the compliance of conditions of CorporateGovernance by SU-RAJ DIAMONDS AND JEWELLERY LIMITED forthe year ended on 31st March, 2008, as stipulated in clause 49 of theListing Agreement of the said Company with stock exchanges.

The compliance of conditions of Corporate Governance is theresponsibility of the management. Our examination was limited toprocedures and implementation thereof, adopted by the Company forensuring the compliance of the conditions of the Corporate Governance.It is neither an audit nor an expression of opinion on the financialstatements of the Company.

In our opinion and to the best of our information and according to theexplanations given to us, we certify that the Company has compliedwith the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreement.

We state that no investor grievances are pending for a period exceedingone month against the Company as per the records maintained by theShareholders/Investors Grievance Committee.

We further state that such compliance is neither an assurance to thefuture viability of the Company nor the efficiency or effectiveness withwhich the management has conducted the affairs of the Company.

FOR R.C. RESHAMWALA & CO.CHARTERED ACCOUNTANTS

RAJNIKANT C. RESHAMWALAMumbai PARTNER30th July, 2008 Membership No. 5502


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AUDITORS REPORT TO THE MEMBERS OFSU-RAJ DIAMONDS AND JEWELLERYLIMITED

We have audited the attached Balance Sheet of SU-RAJ DIAMONDSAND JEWELLERY LIMITED as at 31st March, 2008 and also theannexed Profit and Loss Account and the Cash Flow statement of theCompany for the year ended on that date annexed thereto. Thesefinancial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statementsbased on our audit.

1. We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance whether thefinancial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit providesa reasonable basis for our opinion.

2. As required, by the Companies (Auditors Report) Order, 2003 issuedby the Central Government of India in terms of Section 227(4A) ofthe Companies Act, 1956, we enclose in the annexure, a statementon the matters prescribed in Paragraphs 4 and 5 of the said order.

3. Further, to our comments, in the annexure referred to in paragraph2 above, we report that:

(i) We have obtained all the information and explanations, whichto the best of our knowledge and belief were necessary forthe purposes of our audit;

(ii) In our opinion, proper books of account, as required by lawhave been kept by the company, so far as appears from ourexamination of these books;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flowstatement dealt with by this report are in agreement with thebooks of account;

(iv) In our opinion, the Balance Sheet, Profit and Loss Accountand Cash Flow statement dealt with by this report, complywith the mandatory accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from thedirectors, as on 31st March, 2008, and taken on record by theBoard of Directors, we report that none of the directors isdisqualified as on 31st March, 2008 from being appointed as adirector in terms of clause (g) of sub-section (1) of Section274 of the Companies Act, 1956.

In our opinion and to the best of our information and according tothe explanations given to us, the said accounts read with the Notesthereon, give the information required by the Companies Act, 1956,in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of theCompany as at 31st March, 2008;

(b) In the case of the Profit and Loss Account, of the profit for theyear ended on that date;

and

(c) in the case of the Cash Flow statement, of the cash flows forthe year ended on that date.

For R.C. RESHAMWALA & CO.CHARTERED ACCOUNTANTS

RAJNIKANT C. RESHAMWALAMumbai PARTNER9th May, 2008 Membership No. 5502

ANNEXURE TO THE AUDITORS’ REPORT(Referred to in para 2 of our auditors report of even date on the accountsfor the year ended 31st March, 2008 of SU-RAJ DIAMONDS ANDJEWELLERY LIMITED.

On the basis of such checks as we considered appropriate and in termsof information and explanations given to us, we state that:

1. (a) The Company has maintained proper records, showing fullparticulars including quantitative details and situation of fixedassets.

(b) As explained to us, the fixed assets have been physicallyverified by the management in accordance with a phasedprogramme of verification which in our opinion is reasonableconsidering the size and nature of its business, and no materialdiscrepancies have been noticed on such verification.

(c) Substantial part of fixed assets have not been disposed offduring the year. As such the determination as to whether ithas affected the going concern does not arise.

2. (a) The management, at regular intervals, has done physicalverification of the inventory. In our opinion, the frequency ofthe verification is reasonable.

(b) The procedures of physical verification of inventories followedby the management are reasonable and adequate in relationto the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventory. Thediscrepancies noticed on verification between the physicalstocks and the book records were not material.

3. (a) As per the information and explanations given to us and therecords produced before us for our verification, the Companyhas not granted unsecured loan to companies, firms or otherparties covered in the register maintained under section 301of the Companies Act, 1956.

(b) As the company has not given any loans to parties mentionedin Para 3(a) above, the question of determining whether therate of interest and other terms and conditions of loans givenby the company being prima facie prejudicial to the interest ofthe company does not arise.

(c) Similarly the question of repayment of principal amount andinterest on such loans does not arise.

(d) The company has not taken any loans secured or unsecuredfrom companies, firms or other parties covered in the registermaintained under section 301 of the Companies act, 1956.

(e) As the company has not taken any loans from partiesmentioned in Para 3(d) above, the question of determiningwhether the rate of interest and other terms and conditions ofloans taken by the company being prima facie prejudicial tothe interest of the company does not arise.


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(f) Similarly the question of repayment of principal amount andinterest on such loans does not arise.

4. In our opinion and according to the explanations given to us, thereare adequate internal control systems commensurate with the sizeof the company and the nature of its business with regards topurchases of inventory, fixed assets and sale of goods and services.During the course of the audit we have not observed any continuingfailure to correct major weaknesses in internal control.

5. (a) According to the information and explanations given to us andon the basis of the checks carried out by us, there are nocontracts or arrangements referred to in Section 301 of theAct required to be entered in the register maintained underthat section.

(b) As the company has not entered into any contracts orarrangements with the parties mentioned in Para 5(a) above,the question of determining whether the prices are reasonablehaving regards to prevailing market price does not arise.

6 . The Company has not accepted deposits from the public. As such, thequestion of complying with the directives issued by the Reserve Bankof India and the provisions of Section 58A and 58AA or any otherprovisions of the Act and rules framed thereunder does not arise.

7. In our opinion, the company, which is a listed company, has anadequate Internal Audit System commensurate with its size andnature of its business.

8. In the present case, the Central Government has not prescribedthe maintenance of cost records under section 209(1)(d) of theCompanies Act, 1956. As such, the question of reviewing the booksof account to be maintained by the company pursuant to such anorder does not arise.

9. (a) According to the records of the company, undisputed statutorydues including provident fund, investor education andprotection fund, employees state insurance dues, income-tax,sales tax, wealth tax, service tax, customs duty, excise duty,cess and other material statutory dues applicable, havegenerally been regularly deposited with the appropriateauthorities though there has been a slight delay in a fewcases. No undisputed amounts are outstanding for more thansix months at the end of the accounting year.

(b) According to the information and explanations given to us andthe records of the Company as examined by us, there are nodisputed dues of service tax, customs duty, excise duty wealthtax and cess, which have not been deposited. The details ofDisputed dues as outstanding on account of Income tax andSales tax are as enumerated below:

Name of the Nature of the Amount Period to which Forum whereStatute Dues (Rs.) the Amount dispute is

relates pending

Income Tax Act Income Tax 89,69,693 A. Y. 2002-03 CIT(Appeals)

Income Tax Act Income Tax 25,51,894 A. Y. 2005-06 CIT(Appeals)

Less:- Refund Dues 4,66,014

Net Liability 1,10,55,573

10. The company has no accumulated losses and the company hasnot incurred cash losses during the financial year covered by ouraudit and in the immediately preceding financial year.

11. In our opinion and according to the information and explanationsgiven to us, the company has not defaulted on repayments of duesto banks and financial institutions. There are no debentures issuedby the company and as such the question of default in payment todebenture holders does not arise.

12. As informed to us, the company has not granted any loans andadvances on the basis of security by way of pledge of any shares,debentures and other securities. Therefore, the provisions of clause4(xii) of the Companies (Auditor’s Report) Order, 2003 are notapplicable to the company.

13. In our opinion, the company is not a chit fund or a nidhi mutualbenefit fund/society. Therefore, the provisions of clause 4(xiii) ofthe Companies (Auditor’s Report) Order, 2003 are not applicableto the company.

14. In our opinion and according to the explanations given to us, thecompany is not dealing in or trading in shares, securities, debenturesand other investments. The company has only invested / appliedin shares of subsidiaries / group companies for which proper recordshave been maintained. The said investments are held / will be heldby the company in its own name.

15. As informed to us, the company has given guarantees for creditfacilities taken by its subsidiaries from banks. The terms andconditions of the guarantees are not prima-facie prejudicial to theinterests of the company.

16. On the basis of the review of the utilization of funds pertaining toterm loans on overall basis and related information as madeavailable to us by the company, prima facie the term loans takenby the company were applied for the purpose for which they hadbeen raised.

17. According to the information and explanations given to us and onoverall examination of the Balance Sheet and Cash Flow Statementof the company, prima facie no funds raised on short-term basishave been used for long-term investments.

18. The company has made preferential allotment of shares to itsPromoters Group. However the said allotment of shares is notmade to companies covered under the register maintained underSection 301 of the Act. Thus the question of determination of pricingbeing prejudicial to the interest of the company does not arise.

19. The company has not issued any debentures. Therefore, theprovisions of clause 4(xix) of the Companies (Auditor’s Report)Order 2003 are not applicable to the company.

20. During the year under review, apart from amounts received oncalls in arrears, the company has not raised any monies by way ofpublic issues. Hence the question of verification of end use ofmonies raised in public issue as per the provision of clause 4(xx)of the Companies (Auditor’s Report) Order 2003 does not arise.

21. On the basis of our examinations and according to the informationand explanations given to us, no fraud/s on or by the company hasbeen noticed or reported during the course of the audit.

For R.C. RESHAMWALA & CO.CHARTERED ACCOUNTANTS

RAJNIKANT C. RESHAMWALAMumbai PARTNER9th May, 2008 Membership No. 5502


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BALANCE SHEET AS AT 31st MARCH, 2008Current Year Previous Year

Schedules Rupees Rupees Rupees

I. SOURCES OF FUNDS :

1. Shareholders’ Funds :

a) Share Capital 1 437,015,350 400,031,815

b) Reserves and Surplus 2 6,029,263,758 5,227,358,181

6,466,279,108 5,627,389,996

2. Loan Funds : 3

Secured Loans 2,841,538,917 2,270,583,842

3. Deferred Tax Liability (Net) 36,680,672 27,821,476

TOTAL 9,344,498,697 7,925,795,314

II. APPLICATION OF FUNDS :

1. Fixed Assets :

a) Gross Block 4 860,405,796 649,137,107

Less : Depreciation 300,165,253 242,899,110

Net Block 560,240,543 406,237,997

b) Capital Work-in-Progress 316,526,642 322,236,014

876,767,185 728,474,011

2. Investments 5 1,019,991,476 743,932,927

3. Current Assets, Loans and Advances : 6

a) Inventories 1,864,061,161 1,774,200,368

b) Sundry Debtors 14,045,159,617 11,421,693,667

c) Cash and Bank Balances 1,189,423,374 1,071,444,507

d) Loans and Advances 255,751,296 171,304,344

17,354,395,448 14,438,642,886

Less : Current Liabilities and Provisions : 7

a) Current Liabilities 9,711,814,234 7,849,545,843

b) Provisions 194,841,178 135,708,667

9,906,655,412 7,985,254,510

Net Current Assets 7,447,740,036 6,453,388,376

TOTAL 9,344,498,697 7,925,795,314

NOTES ON ACCOUNTS 11

As per our attached report of even date For and on behalf of the Board

For R. C. RESHAMWALA & CO. Jatin R. Mehta Chairman-cum-Managing DirectorChartered Accountants

Rajnikant C. Reshamwala G. BharakatiaPartnerMembership No. 5502 Atul S. Pethe

G. P. Gupta DirectorsShivprakash K. Singh

Mumbai, 9th May, 2008 Company Secretary Lakhpatraj Bhansali}


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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2008

Current Year Previous YearSchedules Rupees Rupees Rupees

I. INCOMESales 21,404,311,965 15,700,657,984Other Income 8 17,710,726 21,902,593

21,422,022,691 15,722,560,577II. EXPENDITURE

Material Cost 9 20,183,605,919 14,775,090,577Manufacturing and other expenses 10 460,874,926 210,751,305

20,644,480,845 14,985,841,882III. PROFIT

Profit before Interest and Depreciation 777,541,846 736,718,695Finance Charges (Net) 44,131,996 191,505,799Depreciation 57,418,257 33,041,966

101,550,253 224,547,765

Profit Before Tax 675,991,593 512,170,930Provision for Taxa) Current Tax 40,000,000 27,200,000b) Fringe Benefit Tax 1,250,000 800,000c) Deferred Tax 8,859,196 4,954,200

50,109,196 32,954,200

Profit After Tax 625,882,397 479,216,730

Balance brought forward from Previous Year 808,048,538 719,026,817

1,433,930,935 1,198,243,547Add :

Excess/(Short) Provision for Expenses/Income of earlier years (Net) (51,812) 1,902,512

Excess/(Short) Provision for Tax (Net) 456,166 12,611,146

Profit available for appropriation TOTAL 1,434,335,289 1,212,757,205

IV. APPROPRIATIONS

Proposed Dividend 87,688,516 72,403,664Tax on Dividend 14,902,662 12,305,003Transfer to General Reserve 250,000,000 200,000,000Transfer to General Reserve-Foreign Exchange/

Metal Price Fluctuation 120,000,000 120,000,000Balance carried to Balance Sheet 961,744,111 808,048,538

TOTAL 1,434,335,289 1,212,757,205

Earnings per share (Basic & Diluted) 15.41 11.95






Mumbai, 9th May, 2008 Company Secretary Lakhpatraj Bhansali

}


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SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2008

Current Year Current Year Previous YearRupees Rupees Rupees

SCHEDULE 1 : SHARE CAPITAL

Authorised

70,000,000 Equity Shares of Rs. 10/- each (Previous Year : 70,000,000 700,000,000 700,000,000Equity Shares of Rs. 10/- each)

Issued and Subscribed

43,844,258 Equity Shares of Rs. 10/- each (Previous Year : 40,224,258 438,442,580 402,242,580Equity Shares of Rs. 10/- each)

Paid-up

43,844,258 Equity Shares of Rs. 10/- each (Previous Year : 40,224,258Equity Shares of Rs. 10/- each) fully paid up 438,442,580 402,242,580Less: Calls Unpaid - Other than Directors 1,427,230 2,210,765

TOTAL 437,015,350 400,031,815

Note :1) Of the above paid-up Capital, Rs. 104,806,450 represents capitalisation of General Reserve

by issue of 10,480,645 Equity Shares of Rs. 10 each fully paid up as Bonus Shares.2) Of the above paid-up capital, Rs. 36,200,000 represents issue of 3,620,000 Equity Shares

of Rs. 10 each fully paid up as Preferential allotment, during the year.

SCHEDULE 2 : RESERVES AND SURPLUSCapital ReserveAs per last Balance Sheet 50,341,338 50,341,338Share Premium AccountPremium Receivable 1,988,014,830 1,716,514,830

Less : Allotment Money in Arrears 4,154,552 7,494,407Less : Call Money in Arrears 1,839,659 5,209,808

1,982,020,619 1,703,810,615General Reserve

As per last Balance Sheet 2,410,157,690 2,210,157,690Add : Amount transferred from Profit and Loss Account 250,000,000 200,000,000

2,660,157,690 2,410,157,690General Reserve-Foreign Exchange/Metal Price Fluctuation

As per last Balance Sheet 255,000,000 135,000,000Add : Amount transferred from Profit and Loss Account 120,000,000 120,000,000

375,000,000 255,000,000Surplus in Profit and Loss Account 961,744,111 808,048,538

TOTAL 6,029,263,758 5,227,358,181

SCHEDULE 3 : LOAN FUNDSSecured Loans(i) Short Term Loans from Banks

Secured by hypothecation of stock-in-trade, book debts (bothpresent and future), personal guarantee of a Director andmortgage by way of Title Deeds of the immovable propertiescomprising of land and other structures, fixed machinery andplant, fixtures and fittings erected or installed thereon situatedat Bangalore, Jodhpur, Mumbai and Valsad; and collateralsecurity of land & building offered by Bombay Diamonds CompanyPvt. Ltd., Kohinoor Diamonds Pvt. Ltd. and land & building andplant & machinery of Forever Diamonds Pvt. Ltd. 2,841,239,378 2,270,082,650The Company also has non-fund credit facilitity of Rs.1017.50 Crores(Previous year Rs. 787.50 Crores) with the Consortium of Bankers,secured against above assets and fixed deposits.

(ii) Received From Banks - Buyers Credit Facilities 5,196,948,539 1,805,435,089Less : Fixed Deposits with Banks Rs. 5,355,416,244Pledged for use against payment of Buyers Credit Facilities 5,196,948,539 1,805,435,089

– –(iii) Term Loans from Banks/Financial Institution 299,539 501,192

(Secured by hypothecation of Vehicle)

TOTAL 2,841,538,917 2,270,583,842


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SCHEDULE 4 : FIXED ASSETS

GROSS BLOCK DEPRECIATION NET BLOCK

Description of Assets As At 1st Additions Sales As At 31st As At 1st Sales Provided Upto 31st As At 31st As At 31stApril during the during the March, April during the during the March, March, March2007 year year 2008 2007 year year 2008 2008 2007

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Leasehold Land 7,232,169 – – 7,232,169 39,553 – 2,318 41,871 7,190,298 7,192,616Factory Premises 104,001,342 53,479,594 – 157,480,936 36,133,361 – 8,720,539 44,853,900 112,627,036 67,867,981Office Premises 147,931,028 – – 147,931,028 17,477,492 – 6,522,677 24,000,169 123,930,859 130,453,536Plant & Machinery 287,956,638 99,048,317 – 387,004,955 142,788,629 – 25,779,635 168,568,264 218,436,691 145,168,009Furniture & Fixture 22,643,005 19,296,194 5,662 41,933,537 9,389,643 3,333 4,489,270 13,875,580 28,057,957 13,253,362Electrical Installation 31,056,259 10,456,238 – 41,512,497 14,196,658 – 3,171,440 17,368,098 24,144,399 16,859,601Equipments 15,043,723 6,145,105 3,700 21,185,128 4,893,212 814 1,793,938 6,686,336 14,498,792 10,150,511Air-conditioners 10,044,360 7,672,272 – 17,716,632 4,475,413 – 1,185,581 5,660,994 12,055,638 5,568,947Computers 14,651,127 10,984,912 36,645 25,599,394 10,008,415 36,484 3,980,989 13,952,920 11,646,474 4,642,712Vehicles 7,669,164 295,320 – 7,964,484 3,407,689 – 1,126,709 4,534,398 3,430,086 4,261,475Moulds & Dies 908,292 4,310,802 374,058 4,845,036 89,045 111,483 645,161 622,723 4,222,313 819,247

649,137,107 211,688,754 420,065 860,405,796 242,899,110 152,114 57,418,257 300,165,253 560,240,543 406,237,997

Previous Year 527,367,204 138,087,942 16,318,039 649,137,107 222,692,822 12,835,678 33,041,966 242,899,110 406,237,997

NOTE :The value of the capital work in progress capitalised during the year is as under :

PARTICULARS CURRENT YEAR PREVIOUS YEARRUPEES RUPEES

Factory Premises 27,609,903 14,130,732Plant & Machinery 7,165,326 5,025,018Electrical Installation 4,444,129 939,032Furniture & Fixture 8,462,325 897,690Air-Conditioner 4,017,289 568,690Equipment 795,149 –

52,494,121 21,561,162

Current Year Previous YearRupees Rupees Rupees

SCHEDULE 5 : INVESTMENTS : (AT COST) - UNQUOTEDUNQUOTED (AT COST) :Long TermIn Government Securities

2 (Previous Year : 2) Indira Vikas Patra of Rs. 500 each 1,000 1,000 National Savings Certificates 5,000 5,000

6,000 6,000In Shares (Trade Investments)Subsidiary Company

30,088 (Previous Year : 30,088) Equity Shares of EURO 248 eachof Su-Raj Diamonds N.V., fully paid-up 378,530,800 378,530,800

30 (Previous Year : 30) Equity Shares of US$ 100,000 eachof Su-Raj Diamonds & Jewelry USA Inc., fully paid-up 134,105,250 134,105,250

200 (Previous Year : 200) Equity Shares of AED 1000 eachof Su-Raj Diamonds and Jewellery DMCC, fully paid-up 2,525,935 2,525,935

23,400,000 (Previous Year : NIL) Equity Shares of 1 HK $ eachof Su-Raj Diamond (H.K.) Ltd., fully paid-up 119,985,000 –

635,146,985 515,161,985Others2,000,000 (Previous Year : 2,000,000) Equity Shares of 20,000,000 20,000,000

Rs. 10 each of Su-Raj Diamond Dealers Limited,fully paid-up

11,650,000 (Previous Year : 6,750,000) Equity Shares of Rs. 10 each ofForever Precious Jewellery & Diamonds Ltd., fully paid-up 332,570,042 207,130,042

2,444 (Previous Year : 2,444) Equity Shares of Thai Baht 400 eachof SJR Jewelry Co. Ltd, fully paid-up 1,389,900 1,389,900

2,434,700 (Previous Year : 24,500) Equity Shares of Rs. 10 eachof Revah Corporation Ltd., fully paid-up 24,347,000 245,000

17,500 (Previous year : NIL) Equity Shares of Rs. 100 eachof Peakok Jewellery Ltd., fully paid-up 5,012,750 –

576,250 (Previous year : NIL) Equity Shares of Rs. 10 eachof Carbon Accessories Ltd., fully paid-up 1,444,299 –

7,449.03 (Previous year : NIL) Units of Rs. 10 each ofPrinciple Mutual Fund of Punjab National Bank 74,500 –

384,838,491 228,764,942

TOTAL 1,019,991,476 743,932,927


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SCHEDULE 6 : CURRENT ASSETS, LOANS AND ADVANCES

A. Current Assets

Inventories

(As certified by a Director)

I. Stores and Spare Parts (At Cost) 9,313,935 10,313,529

II. Stock-in-Trade

(i) Raw Materials

(Valued “At Cost” or “Net Realisable Value” whichever is lower)

Diamonds 509,375,516 736,309,241

Gold and Alloy 474,160,255 551,857,158

Precious, Semi-precious and Other Stones 15,992,316 12,251,706

Others 5,826,375 2,630,476

1,005,354,462 1,303,048,581

(ii) Semi Finished Goods

(Valued “At Cost” or “Net Realisable Value” whichever is lower) – 1,561,002

(iii) Finished Goods


Diamonds, Plain and Studded Jewellery 849,392,764 459,277,256

1,854,747,226 1,763,886,839

1,864,061,161 1,774,200,368

B. Sundry Debtors

(Unsecured, considered good)

Debts outstanding for a period exceeding six months 1,430,174,118 1,443,091,579

Other Debts 12,614,985,499 9,978,602,088

14,045,159,617 11,421,693,667

C. Cash and Bank Balances

Cash on hand 627,567 1,155,872

Balance with Scheduled Banks :

In Current Account (including cheques on hand Rs. 2,205,881; 293,766,862 297,102,477

Previous Year Rs. NIL)

In Fixed Deposit Accounts :

Fixed Deposits with Banks 6,091,977,484 2,578,621,247

Less : Pledged with Bank against Buyers Credit Facilities

availed for payment of Buyers Credit Facilities 5,196,948,539 1,805,435,089

895,028,945 773,186,158

1,189,423,374 1,071,444,507

TOTAL ‘A’ 17,098,644,152 14,267,338,542

D. Loans and Advances


Advances recoverable in cash or in kind or for value to be received 157,765,930 114,572,999

Advance payment of Income-tax 97,985,366 56,731,345

TOTAL ‘B’ 255,751,296 171,304,344

TOTAL ‘A’ + ‘B’ 17,354,395,448 14,438,642,886




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SCHEDULE 7 : CURRENT LIABILITIES AND PROVISIONS

A. Current Liabilities

a) Sundry Creditors 9,695,946,202 7,837,024,558

b) Bank Overdraft 1,680,283 –

c) Unclaimed Dividend 12,268,963 10,914,402

d) Other Liabilities 1,918,786 1,606,883

9,711,814,234 7,849,545,843

B. Provisions

a) Taxation 92,250,000 51,000,000

b) Proposed Dividend 87,688,516 72,403,664

c) Tax on Dividend 14,902,662 12,305,003

194,841,178 135,708,667

TOTAL 9,906,655,412 7,985,254,510

SCHEDULE 8 : OTHER INCOME

Interest Received 7,326,500 8,923,452

(Tax deducted at source Rs. 1,382,993; Previous Year Rs. 336,384)

Labour Charges Received 8,870,993 8,883,522

(Tax deducted at source Rs. 197,427; Previous Year Rs. 199,345)

Profit on Sale of Assets (Net) 217,548 159,182

Dividend Received 4,228 –

Rent Received 658,500 830,000

Miscellaneous Receipts

From Others 632,957 3,106,437

TOTAL 17,710,726 21,902,593


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SCHEDULE 9 : MATERIAL COST

Raw Materials ConsumedOpening Stock 1,303,048,582 1,173,123,658Add : Purchases 20,270,508,376 14,825,705,781

21,573,556,958 15,998,829,439Less : Closing Stock 1,005,354,462 1,303,048,582

20,568,202,496 14,695,780,857(Increase)/Decrease in Semi-Finished Goods

Opening Stock of Semi-Finished Goods 1,561,002 1,561,002Add : Purchase – 4,351,554

1,561,002 5,912,556Less : Closing Stock of Semi-Finished Goods – 1,561,002

1,561,002 4,351,554

(Increase)/Decrease in Finished Goods

Opening Stock of Finished Goods 459,277,255 534,235,421Add : Purchases 3,957,930 –

463,235,185 534,235,421Less : Closing Stock of Finished Goods 849,392,764 459,277,255

(Accretion)/Decretion in stock (386,157,579) 74,958,166

TOTAL 20,183,605,919 14,775,090,577

SCHEDULE 10 : MANUFACTURING AND OTHER EXPENSES

Salaries, Wages and Bonus 40,689,499 19,391,651Contribution to Provident and other Funds 2,354,496 1,260,359Workmen and Staff Welfare Expenses 3,879,251 1,632,934

46,923,246 22,284,944Directors’ Remuneration 3,900,000 3,740,000Labour Charges 258,885,690 98,783,369Assortment and Valuation Charges 3,623,553 2,058,757Packing Materials Consumed 181,528 96,301Stores and Spare Parts Consumed 26,358,363 7,660,400Electricity Charges 13,067,785 6,863,055Freight and Forwarding 10,046,009 8,024,998Postage, Telephone, Telex and Fax Charges 4,885,391 3,660,251Advertisement and Sales Promotion Expenses 4,166,977 2,715,762Rent, Rates, Taxes and Duties

(Including Rs. NIL; Previous Year Rs. 500,000 towards Stamp Duty) 4,507,378 4,329,811Travelling Expenses 14,483,524 9,855,966Printing and Stationery 2,576,941 1,239,915Licence, Registration and Other Fees 4,065,774 959,057Repairs and Maintenance of :

Buildings 1,877,495 1,748,147Plant and Machinery 3,775,260 518,789Others 5,914,664 2,300,344

11,567,419 4,567,280Insurance Charges (Including Rs. 4,999,838; Previous Year Rs. 5,243,480

for ECGC Premium reimbursed to banks) 11,793,505 10,777,380Legal and Professional Charges 16,757,309 7,123,420Miscellaneous Expenses 13,872,047 11,761,092Loss on sale of Investment – 255,550Donations 9,212,487 2,086,001Preliminary Expenses Written Off – 1,907,996

TOTAL 460,874,926 210,751,305


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SCHEDULE 11:

NOTES FORMING PART OF THE ACCOUNTS FOR THE YEARENDED 31ST MARCH, 2008.

A. Significant Accounting Policies :

1. Basis of Accounting and Preparation of Financial Statements:

(a) All income and expenditure items are accounted on accrualbasis.

(b) Financial statements are based on historical costs. Thesecosts are not adjusted to reflect the impact of the changingvalue in the purchasing power of money.

2. Fixed Assets :

(a) All fixed assets are valued at cost less depreciation.

(b) Exchange differences relating to the acquisition of fixed assetsare taken to the Profit and Loss account.

3. Depreciation :

(a) Depreciation is provided as per the “Written Down Value”method at rates provided by Schedule XIV to the CompaniesAct, 1956. Leasehold Land is amortised over the period oflease.

(b) Depreciation on additions and on sale/disposal of fixed assetsis computed pro-rata on day-to-day basis from the date ofpurchase and up to the date of sale.

(c) Depreciation on new unit is taken from the date ofcommissioning of the unit.

(d) Depreciation is also considered on those assets (idle assets)which were not used for whole or part of the year. Howeverfor units shut down, no depreciation is charged.

4. Work in Progress :

(a) The cost of fixed assets, acquisition/construction, installationsof which are not completed are included under Capital Work-in-Progress and the same are apportioned/transferred torespective fixed assets on installation/completion of the asset/project.

(b) Expenses incurred to set up business premises/factorypremises forming part of capital work-in-progress arecapitalized under the head Factory Premises.

(c) Similarly, goods which are under production and cannot betermed as finished goods are treated as work in progress.

5. Investments :

(a) Long term Investments are stated at Cost of acquisition.Provision for diminution in the value of long term investmentsis made if such diminution is considered other than temporaryin nature.

(b) Application monies for investment in shares are classified asan advance till the allotment of shares is completed.

6. Inventories :

The Company has complied with AS-2 “Valuation of Inventories’’issued by the Institute of Chartered Accountants of India, to theextent practicable keeping in mind the peculiar nature of theindustry.

(a) Raw Materials (Rough Diamonds, Precious Stones, Gold,Silver, Alloys, Platinum, Pearls) are valued “At Cost” (i.e. costof acquisition as on that date) or “Net Realisable Value”,whichever is lower.

(b) Closing stock of other Raw Materials is valued “At Cost” or“Net Realisable Value” whichever is lower (Cost meansaverage cost with the proportionate value of freight and clearingcharges added to closing stock.)

(c) Stock on hand as on the last date which is under processingand not yet converted to finished goods is considered to be apart of stock of raw materials and hence is valued as rawmaterials as in (a) above.

(d) Finished Goods of Polished Diamonds are valued “At Cost” or“Net Realisable Value”, whichever is lower. Cost includes costof raw materials on weighted average cost basis, labour costand proportionately allocated other costs related to convertingthem into finished goods which are technically evaluated keepingin view the wide variety and grades of diamonds.

(e) Finished Goods of Jewellery are valued “At Cost” or “NetRealisable Value”, whichever is lower. Cost includes cost ofraw materials, labour cost and proportionately allocated othercosts related to converting them into finished goods.

(f) Goods procured for trading (Studded and Plain Jewellery andDiamonds) are valued “At Cost” or “Net Realisable Value”,whichever is lower.

(g) Stores and Spares are valued “At Cost”.

7. Foreign Exchange Transactions :

(a) Transactions in foreign currency are accounted at theexchange rate/average rate prevailing on the date oftransaction. Exchange fluctuations between the transactiondate and the settlement date in respect of revenue transactionsare recognized in Profit and Loss Account.

(b) All export proceeds/import payables not realised at the yearend are restated at the rate prevailing at the year end. Theexchange difference arising therefrom has been recognisedas income/expenses in the current year’s Profit and LossAccount.

(c) Monetary Assets and Liabilities denominated in ForeignCurrency are translated at year end exchange rates and theProfit/Loss so determined are recognised in the Profit andLoss Account for the year.

(d) (i) As per the Provisions of the AS - 11 of the ICAI, theprofit/loss on cancellation or renewal of derivativeinstruments such as forward contract and option contractundertaken to hedge exchange fluctuation/price risks arerecognised as income/expenses in the Profit and LossAccount for the year.

(ii) Option contract open at the year end are recognized atyear end rate and the Mark to Market difference taken torevenue account.

(iii) Premium or discount at the inception of forward exchangecontract is amortized as expenses or income over thelife of contract.

8. Preliminary Expenses :

Preliminary Expenses are treated as Deferred Revenue Expenditureand the same are written off in ten equal installments.

9. Employees Retirement Benefits :

(a) Defined Contribution Plans:

The Company has Defined Contribution Plan for postemployment benefit in the form of provident fund for eligibleemployees which is administered by Regional Provident FundCommissioner. Provident fund is classified as DefinedContribution Plan as the Company has no further obligationbeyond making the contributions. The Company’s contributions

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2008


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CMYK

to Defined Contribution Plans are charged to the Profit andLoss Account as and when incurred.

(b) Defined Benefit Plan:

The Company has Defined Benefit Plan for post employmentbenefit in the form of Gratuity for eligible employees which isadministered through a Group Gratuity Policy with LifeInsurance Corporation of India (LIC). The liability for the aboveDefined Benefit Plan is provided on the basis of an actuarialvaluation as carried out by LIC. The actuarial method usedfor measuring the liability is the Projected Unit Credit Method.

(c) Termination benefits are recognized as an expense as andwhen incurred.

(d) The Company has made provision for leave encashment duesas on the last date of the year.

10. Taxation :

(a) Provisions for taxation is made after considering various relief’sadmissible under the provisions of the Income Tax Act.

(b) Disputed amounts of tax are considered in contingent liabilities.

(c) The Company has implemented ‘Accounting Standard 22’-“Accounting of Taxes on Income”, issued by the Institute ofChartered Accountants of India, which is mandatory in nature.The Company has recognized Deferred Taxes which resultfrom the timing difference between the Book Profits and TaxProfits that originate in one period and are capable of reversalin one or more subsequent periods.

11. Borrowing Cost :

Borrowing Costs that are attributable to the acquisition/constructionof fixed assets are capitalized as part of the cost of the respectiveassets. Other borrowing costs are recognized as expenses in theyear in which they are incurred.

B. Notes forming part of the accounts :

1. Contingent Liabilities not provided for in respect of:

Rupees Rupees

(a) Disputed Income Tax Liability 11,055,573 (1,901,483)

(b) Estimated amounts ofcontracts remaining to beexecuted on Capital Account 106,811,527 (29,991,295)

(c) EPCG Benefits(Customs Duties payable if export obligations not met) 117,252,673 (30,673,761)

(d) Guarantees given to thebanks for foreignsubsidiaries 400,000,000 (Nil)

Total 635,119,773 (62,566,539)

Name of the Nature of dues Amount (Rs.) Period to which Forum whereStatute the amount dispute is

relates pending

Income Tax Act Income Tax 8,969,693 A Y 2002-03 C I T (Appeals)

Income Tax 2,551,894 A Y 2005-06 C I T (Appeals)

Total 11,521,587

Less: Refund Dues 466,014

Net Liability 11,055,573

2. In the opinion of the Directors:

(a) The Current Assets, Loans and Advances are approximatelyof the value stated, if realised in the ordinary course ofbusiness.

(b) The provision for Depreciation and for all known liabilities areadequate and not in excess of the amounts reasonablynecessary.

3. Legal and Professional charges include payment to StatutoryAuditors:

Rupees Rupees

(a) Audit Fees 500,000 400,000

(b) Tax Audit Fees 70,000 70,000

(c) As advisor or in any other capacityin respect of certification charges 147,500 145,500

(d) Reimbursement of expenses andService Tax 147,031 88,619

Total 864,531 704,119

4. The Finance charges includes bank charges of Rs. 88,175,165(Rs.78,765,225) Bank interest paid Rs. 282,714,362(Rs.200,307,404) and Bank interest received on Fixed depositsRs. 326,757,531 (Rs. 87,566,830).

5. Letters have been addressed to Sundry Debtors and SundryCreditors for confirmation. Confirmations have been received fromsome of the parties.

6. The Accounting Standard – AS 15 (revised 2005) on EmployeeBenefits issued by the Institute of Chartered Accountants of Indiahas been adopted by the Company.

a) Defined Contribution Plan:

The Company has recognized Rs.2,039,769 towardscontribution made to Employees Provident & Family PensionFund.

b) Defined Benefit Plan:

(1) Assumption

Sr. Particulars As on31st March, 2008

(a) Discount Rate 8.00%

(b) Salary Escalation 4.00%

(2) Changes in the Present Value of Obligation


(a) Present Value of obligationas at April 1, 2007 1,220,810

(b) Interest Cost 91,561

(c) Past Service Cost Nil

(d) Current Service Cost 269,883

(e) Curtailment Cost/(Credit) Nil

(f) Settlement Cost/(Credit) Nil

(g) Benefits Paid 153,129

(h) Actuarial (Gain)/Losson obligation 14,924

(i) Present Value of obligationas at March 31, 2008 1,444,049


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(3) Changes in the Fair Value of Plan Assets


(a) Present Value of Plan Assetsas at April 1, 2007 459,887

(b) Expected Return on Plan Assets 38,067(c) Actuarial Gain/Loss Nil(d) Employer’s Contributions 777,390(e) Employee’s Contributions Nil(f) Benefits Paid 153,129(g) Actuarial Gain/(Loss) on Plan Assets Nil(h) Fair Value of Plan Assets

as at March 31, 2008 1,122,215

(4) Fair Value of Plan Assets


(a) Fair Value of Plan Assetsas at April 1, 2007 459,887

(b) Actual Return on Plan Assets 38,067(c) Contributions 777,390(d) Benefits Paid 153,129(e) Fair Value of Plan Assets

as at March 31,2008 1,122,215

(f) Funded status (321,834)

(5) Actuarial Gain/Loss recognized


(a) Actuarial Gain/(Loss) for theyear-obligation (14,924)

(b) Actuarial (Gain)/Loss for theyear-plan assets NIL

(c) Total (Gain)/Loss for the year 14,924

(d) Actuarial (Gain)/Lossrecognized in the year 14,924

(6) The amounts to be recognized in the Balance Sheet andStatement of Profit And Loss


(a) Present value of obligationsas at March 31, 2008 1,444,049

(b) Fair value of plant assets as atMarch 31, 2008 1,122,215

(c) Funded status (321,834)(d) Net Assets/(Liability) recognized

in Balance Sheet 321,834

(7) Expenses recognized in Statement of Profit and Loss


(a) Current Service cost 269,883(b) Interest Cost 91,561(c) Expected Return on Plan Assets 38,067(d) Net Actuarial (Gain)/Loss

recognized in the year 14,924(e) Expenses recognized in

Statement of Profit and Loss 338,301

This being the first year of implementation of AS-15(Revised) previousyear figures have not been given.

The estimate of future salary increases considered in actuarial valua-tion takes into account inflation, seniority, promotion and other relevantfactors. This being the first year of implementation of AS-15 (Revised)previous year figures have not been given.

7. The Company has taken gold on loan from various banks. Thesaid gold has been processed and sales of Jewellery made. Thevalue of purchase and sale is taken on the basis of the provisionalsale certificate of the bank. The final value of purchase and sale isrecorded on the date of repayment of the loan or on final priceconfirmation of gold loan on the basis of forward contract bookedwith the difference of sale and purchase amount being recorded torespective accounts. The closing stock of Raw Materials-Goldincludes Gold valued at Rs. 374,656,079 (Rs.377,830,302) takenon loan from Banks under the EXIM-Gold Loan Scheme.

8. During the year a net gain on account of Foreign ExchangeFluctuation / Derivative transactions amounting to Rs. 7,545,892(Gain of Rs. 110,141,913) has been recognised in the Profit andLoss Account along with underlying transaction.

9. During the year, the Company has adjusted the dividends payableagainst the amounts due from shareholders who have not paidtheir call monies in respect of shares subscribed by them. Theamount of dividend adjusted against the Share Premium Accountis Rs.792,757 (Rs. 666,420).

10. There are no amounts of unclaimed dividend due and outstandingto be credited to Investor Education and Protection Fund.

11. During the year under review the Company has entered intotransactions in relation to derivative instruments. The following isthe list of transactions outstanding on the Balance Sheet date asdisclosed by the company:

i. Transactions for forward contracts for hedging foreignexchange exposure in relation to receivable and payablenumbering to 26 (18) amounting to Rs. 686.20 crores(Rs.299.40 crores.)

ii. Transactions for option contracts for hedging foreign exchangeexposure in relation to receivable and payable numbering to 1(58) amounting to Rs. 22 crores (Rs. 165.42) crores.

iii. The reclassification of values on the year end and markingthem to market has been recognized on the above transaction.The loss on the same amounts to Rs. 5.01 crores. (Figure ofprevious year is not given as this is the first year)

12. During the year under review the Company has entered intoCommodity trading in Futures for precious metals to hedge the risksof price fluctuations in precious metal (raw materials). The initialmargin on such derivative transactions has been paid in cash. Anygain/loss on such transactions made during the year has beencharged to Profit and Loss Account along with the underlyingtransaction. The values of transaction numbering to Nil (8) amountingto Rs. Nil (Rs. 5.26 crores) are open on Balance Sheet date.

13. The Engineering Division at Jodhpur which had been manufacturingScaives and Press pots for the Diamond Industry has closed itsoperations. The Board at its meeting had decided to dispose offthe assets of the division. The Company in this division has duringthe year incurred a loss of Rs. 25.34 lacs including impairment ofstock, stores and spares items (Rs. 3.18 lacs). The carrying valueof the total assets to be disposed off at Jodhpur is Rs.131.20 lacs(Rs.157.64 lacs) and the liabilities to be settled is Rs. NIL (Rs. Nil)at the Balance Sheet date.


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CMYK

SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH, 2008

(i) Information about Primary Business Segment: (Rs.in Lacs)

Diamond Jewellery Un-allocated Total

REVENUESales 62,337 151,706 177 214,220

(57,655) (99,351) (219) (157,225)RESULT 1,691 5,510 Nil 7,201Segment Result (2,710) (4,328) (Nil) (7,038)Finance Charges (Net) 441 441

(1,916) (1,916)Profit before Tax 6,760

(5,121)Provision for TaxCurrent 400

(272)Fringe Benefit Tax 12

(8)Deferred 89

(50)Profit after Tax 6,259

(4,792)OTHER INFORMATIONSegment Assets 70,346 116,406 10,200 196,952

(62,926) (88,743) (7,439) (159,108)Segment Liabilities 8,928 94,580 103,508

(6,685) (72,323) (79,008)Share Capital & Reserves 64,663

(56,274)Deferred Taxation 367

(278)Non-cash expenses NilOther than depreciation (Nil)

(ii) Information about Secondary Business Segment:

Statement of continent-wise sale : (Rs. In Lacs)

Amount (Rs.)

North America 22,343

(27,885)

Europe 17,995

(11,262)

Middle East 124,521

(96,503)

Asia (Including Japan and Fiji) 49,184

(21,357)

Total 214,043

(157,007)

14. As per the provisions of Accounting Standard 17- “Segment Reporting” issued by the Institute of Chartered Accountants of India, the details ofthe Primary and Secondary Segment are given below:


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CMYK

15. As per provisions of Accounting Standard 18 - “Related Party Transactions” issued by the Institute of Chartered Accountants of India, thedetails of Related Party Transaction based on disclosure certificate issued by the Directors, is enclosed here below :

List of Related Parties : Particulars

Subsidiaries Su-Raj Diamonds N.V., Su-Raj Diamonds & Jewelry USA, Inc., Su-RajDiamonds & Jewellery DMCC, Su-Raj Diamond (H.K.) Limited

Associates Forever Precious Jewellery & Diamonds Limited, Su-Raj Diamond DealersLimited, SJR Jewelry Co. Limited, Revah Corporation Limited.

Key Management Personnel Jatin R. Mehta

Enterprise in which key management personnel Su-Raj Diamond Traders Private Limited, J.R. Diamonds Private Limited, SJRand their relatives have significant influence Commodities & Consultancies Private Limited, Diadem Investment and Finance

Private Limited, Bombay Diamonds Company Private Limited, FirstrateDiamonds Private Limited, Forever Diamonds Private Limited, Euro Auto PrivateLimited, Precious Jewels Exports Private Limited, Collection Diamond ExportsPrivate Limited, Hira Exports Private Limited, Kings Jewel Exports PrivateLimited, Kohinoor Diamonds Private Limited.

Relative of key management personnel Jatin R. Mehta (HUF), Ms. Sonia J. Mehta

A. Transaction for the year ended 31.3.2008

Subsidiaries Associates Enterprise in which Key management TOTALkey management personnel &

personnel and their their relatives Relatives have

significant influence

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

1. Purchases 361,366,969 212,326 415,954 Nil 361,995,249

(362,163,867) (309,747) (Nil) (Nil) (362,473,614)

2. Sales 579,986,835 73,476 1,888,902 Nil 581,949,213

(433,635,455) (4.709) (Nil) (Nil) (433,640,164)

3. Sales of Fixed Assets Nil Nil 2,000 Nil 2,000

(Nil) (617,126) (977,543) (Nil) (1,594,669)

4. Labour Charges Paid Nil 2,061,613 25,178,895 Nil 27,240,508

(Nil) (7,731,644) (3,895,034) (Nil) (11,626,678)

5. Labour Charges Received Nil 1,590,150 Nil Nil 1,590,150

(Nil) (Nil) (Nil) (Nil) (Nil)

6. Loan/Advances Given 2,250,600 21,400,000 1,000,000 Nil 24,650,600

(Nil) (23,615,000) (Nil) (Nil) (23,615,000)

7. Interest Received Nil 226,850 Nil Nil 226,850

(Nil) (1,092,316) (Nil) (Nil) (1,092,316)

8. Loan Received Nil Nil Nil Nil Nil

(Nil) (Nil) (22,075,424) (Nil) (22,075,424)

9. Guarantee Given 400,000,000 Nil Nil Nil 400,000,000

(Nil) (Nil) (Nil) (Nil) (Nil)

10. Equity Contribution 119,985,000 149,542,000 Nil Nil 269,527,000

(136,888,650) (89,090,558) (Nil) (Nil) (225,979,208)

11. Remuneration (Nil) (Nil) (Nil) 3,600,000 3,600,000

(Nil) (Nil) (Nil) (3,600,000) (3,600,000)

B. Outstanding as on 31.3.2008

1. Debtors 123,575,489 1,058,505 7,172,091 Nil 131,806,085

(187,720,986) (42,263,788) (891,403) (Nil) (230,876,177)

2. Creditors 156,441,376 7,173,906 Nil Nil 163,615,282

(116,299,028) (6,969,366) (718,893) (Nil) (123,987,287)


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CMYK

16. The Company has various operating leases for factory premises and office facilities that are renewable on a periodic basis and can beterminated at the option of either party. Rental expenses for operational leases recognized in the Profit and Loss Account for the year areRs. 2,730,569 (Rs. 1,978,832).

Minimum future lease rentals payable are:

Rupees Rupees

(a) Payable within one year 3,335,359 (1,146,497)

(b) Payable within one year andfive years 9,182,646 (4,272,660)

(c) Payable after five years Nil (Nil)

Minimum future lease rentals receivable in respect of assets given on operating lease in the form of Plant & Machinery after 1/10/2002 andBuilding after 1/8/2001 are :

Rupees Rupees

(a) Receivable within one year 488,000 (200,000)

(b) Receivable between one year andfive years 684,000 (1,084,000)

(c) Receivable after five years Nil (Nil)

17. During the year, the Company has issued 3,620,000 Equity Shares of Rs.10 each at a price of Rs. 85 per share, including premium of Rs.75per share, on preferential basis to Promoter Group. The pricing of the said issue was in accordance with SEBI guidelines.

18. Earnings per share :

Profit computation for both Basic and Diluted earnings per share of Rs.10 each.

Rupees Rupees

Net Profit as per Profit and Loss

Account available to shareholders 625,882,397 (479,216,730)

Weighted average number of Equity Shares 40,605,397 (40,113,720)

40,081,535 Equity Shares fully paid of Rs.10 each 40,081,535

142,723 Equity Shares partly paid-upof Rs. 5 each = Rs. 713,615 Hence Equivalent fully paid-upEquity Shares of Rs. 10 each 71,362

3,620,000 Equity Shares fully paid of Rs. 10 eachissued on 15.2.2008 i.e. for 1½ months 452,500

Total No. of Equity Shares 40,605,397

Earnings per Share (Basic and Diluted) 15.41 (11.95)

19. The Company has implemented ‘Accounting Standard 22’ - “Accounting of Taxes on Income”, issued by the Institute of Chartered Accountantsof India, which is mandatory in nature. The Company has recognized Deferred Taxes which result from the timing difference between the BookProfits and Tax Profits that originate in one period and are capable of reversal in one or more subsequent periods.

As a result the Deferred Tax Liability for the year aggregating to Rs.8,859,195 (Rs.4,954,200) has been recognized in the Profit and Lossaccount, the details of which are as under:

Particulars Balance carried Arising during Balance carriedas at 31.3.2007 the year as at 31.3.2008

(Rs.) (Rs.) (Rs.)

Deferred Tax Liabilities :

Depreciation (27,821,477) (8,859,195) (36,680,672)

Net (27,821,477) (8,859,195) (36,680,672)

20. The Company has taken into consideration the Provisions of Accounting Standard 28 – Impairment of Assets. The Company does not have anyassets, which would require impairment and provisions other than the fixed assets at Jodhpur Engineering Division (Refer to note No. 13). Thecompany has during the year considered impairment on stocks at Jodhpur Engineering Division of Rs.1,845,093, stores and spares at JodhpurEngineering Division of Rs. 681,796 and stores and spares at Jodhpur Sawing Division of Rs.3,912,266 which being obsolete have been writtenoff in full.


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CMYK

21. The Company has implemented the Provisions of Accounting Standard 29 – Provisions, Contingent Liabilities and Contingent Assets. TheCompany has recognised contingent liabilities as given in B(1) above and as such no provision is required to be made. The Company does nothave any contingent Assets which requires provision.

22. Payment to Directors: Rupees Rupees

Salaries 3,600,000 (3,600,000)Meeting Fees 300,000 (140,000)

Total 3,900,000 (3,740,000)

23. Computation of Net Profit as per section 349 read with section 309(5) and section 198 of the Companies Act, 1956 for calculation of theremuneration of Managing Director and Whole Time Director.

Rupees Rupees

Profit before tax as per Profit and Loss Account 675,991,592 (512,170,930)

Add: Managerial Remuneration 3,600,000 (3,740,000)

Loss on sale of fixed assets 3,859 (–)

Loss on sale of investments – (255,550)

Less: Profit on sale of fixed assets 221,407 (159,182)

Profit for Director’s Commission 679,374,044 (516,007,298)

Calculation of Commission @1% of the net profit 6,793,740 (5,160,073)

As per schedule XIII to the Companies Act, 1956

Restricted to N.A. (N.A.)

24. Additional information required under Para 4-D of Part-II of Schedule VI to the Companies Act, 1956 as certified by a Director is as follows

Rupees Rupeesa) Value of Imports on CIF basis

Raw Materials 17,528,239,685 (12,254,151,048)

Stores and Spares 11,531,407 (7,191,589)

Capital Goods 36,518,901 (41,994,062)

17,576,289,993 (12,303,336,699)

b) Expenditure in foreign currency on account of

Travelling Expenses 93,697 (1,018,705)

Membership & Subscription 381,319 (340,150)

475,016 (1,358,855)

c) i) Break-up of the value of Raw Materials Consumed : Rupees Percentage

Imported 16,488,733,460 80(12,106,889,327) (82)

Indigenous 4,081,030,038 20(2,593,243,084) (18)

20,569,763,498 100(14,700,132,411) (100)

ii) Break-up of Stores and Spares Consumed :

Imported 8,985,390 34(4,227,296) (55)

Indigenous 17,372,973 66(3,433,104) (45)

26,358,363 100(7,660,400) (100)

d) Remittance of dividend in foreign currency :No. of Non-Resident Shareholders 294 17No. of shares held by them 211,844 24,000Dividend Year 2006-2007 2005-2006Dividend Amount Rs. 381,319 Rs. 36,000


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CMYK

e) Earning in Foreign Exchange : Rupees Rupeesi) Export of Goods on F.O.B. basis 21,345,378,266 (14,802,784,739)ii) Recovery of Freight and Insurance 8,709,743 (6,502,973)

21,354,088,009 (14,809,287,712)

25. Additional information pursuant to the provisions of Paragraph 3 and 4 of Part II of Schedule VI to the Companies Act, 1956 (as certified by aDirector and accepted by Auditors) :

a) Licensed and Installed capacity and Production Information in respect of goods manufactured (i.e, fully processed polished diamonds,studded jewellery and press pots)

Diamond Division Jewellery Division Engineering Division

i) Licensed Capacity : Not Applicable Not Applicable Not Applicableii) Installed Capacity : Not Applicable Not Applicable 4,600,000 pcs (Pots)

2,500 Pcs. (Scaives)iii) Actual Production : 1,050,792.01 cts. 14,664,380.44gms. Nil pcs (Pots)

(1,444,648.82 cts.) (10,529,260.19 gms) (Nil) pcs(Pots)Nil pcs. (Scaives)

(Nil) pcs. (Scaives)

b) 1. Manufacturing Goods :

DESCRIPTION OPENING STOCK SALES CLOSING STOCK

Unit Quantity Value Quantity Value Quantity ValueRupees Rupees Rupees

FINISHED GOODSFully ProcessedPolished Diamonds Cts. 40,273.92 450,494,351 1,033,163.00 6,223,825,018 57,903.00 793,128,909

(47,354.94) (528,568,178) (1,519,037.48) (5,589,834,221) (40,274.92) (450,494,351)Gold and Platinum JewelleryPlain, Studded with Diamond andOther Stones Gms. 8,993.00 8,782,905 14,603,753.00 15,167,650,730 72,447.00 56,263,855

(3,598.80) (5,667,243) (10,523,947.00) (10,088,959,792) (8,993.00) (8,782,905)

Grand Total 459,277,256 21,391,475,748 849,392,764(534,235,421) (15,678,794,013) (459,277,256)

c) Raw Material Consumed :I DIAMOND DIVISION : Quantity Value

(Cts.) (Rupees)

Rough Diamonds (including Rejection Diamonds) 517,955.00 1,642,266,153(121,096.42) (276,574,804)

Polished Diamonds 904,817.00 4,663,298,091(1,484,948.67) (5,021,779,433)

Precious, Semi-Precious and Other Stones 649,067.00 6,577,369(259,357.10) (4,012,923)

Total - I 6,312,141,613(5,302,367,160)

II JEWELLERY DIVISION : Quantity ValueDescription (Gms.) (Rupees)

Gold 14,006,356 14,239,948,193(10,025,405) (9,390,726,694)

Silver 487,621 8,263,633(279,445) (3,562,538)

Alloy 565,591 7,564,024(490,749) (3,378,415)

Platinum 1 942(56) (97,604)

Total - II 14,255,776,792(9,397,765,251)


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CMYK

III ENGINEERING DIVISION :DescriptionAllumnium Pully (Nos.) 14.00 1,295

( – ) ( – )C.S. Blanks (Nos.) 12.00 48,192

( – ) ( – )Diamond Powder (Cts.) 13,324.00 9,529

( – ) ( – )Others 225,075

( – )

Total - III 284,091( – )

GRAND TOTAL (I+II+III) 20,568,202,496(14,700,132,411)

Note : The Consumption shown above has been arrived at on the basis of Opening Stock plus Purchases minus Closing Stock including wastage thereon,if any, Profit/Loss if any, on sale of Raw Materials gets adjusted in the Consumption.

26. Capital Work-in-Progress comprises of :

Rupees Rupees

Plant and Machinery 523,256 (7,165,326)

Factory/Office Building 306,544,618 (296,399,703)

Electrical Installation 8,220,923 (5,008,522)

Furniture and Fixture 408,249 (8,462,325)

Equipment 477,159 (1,182,849)

Air Conditioner – (4,017,289)

Moulds and Dies 352,437 –

Total 316,526,642 (322,236,014)

27. As per the information available with the Company, total outstanding due to Micro & Small enterprises as required to be disclosed under theMicro, Small and Medium Enterprises Development Act, 2006 at the end of the year is Rs. Nil (Nil).

28. Figures in brackets in notes 1 to 27 pertain to previous year.

29. Previous Year’s figures have been re-arranged and re-grouped wherever necessary.





Mumbai, 9th May, 2008 Company Secretary Lakhpatraj Bhansali}


32

CMYK

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before Tax 6,760 5,122

Adjustments for :

Depreciation 574 330

Finance Charges (Net) 441 1,127

Excess/short provision for Expenses/Income for earlier year 4 145

(Profit)/Loss on Sale of Assets (Net) and Investment (2) 1

Preliminary Expenses written off – 19

Operating Profit before working capital changes 7,777 6,744

Adjustments for :

Trade and Other Receivables (26,667) (36,270)

Inventories (899) (589)

Trade Payable 18,606 34,367

(1,183) 4,252

Taxes paid (413) (280)

Cash generated from operating activities (1,596) 3,972

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (2,060) (1,783)

Sale of Fixed Assets 6 37

Purchase of Investments (2,761) (2,247)

Interest Received 3,268 876

Net cash from investing activities (1,547) (3,117)

C. CASH FLOW FROM FINANCE ACTIVITIES

Proceeds from Share Premium 2,782 10

Proceeds from Short Term borrowings 5,710 1,902

Proceeds from Share Capital 370 1

Bank Interest and Charges (3,709) (2,003)

Dividend Paid with Tax (847) (674)

Net cash from financing activities 4,306 (764)

Net increase/(decrease) in cash and cash equivalent (A+B+C) 1,163 91

Cash and Cash equivalent as at 1st April, 2007 (Opening Balance) 10,714 10,623

Cash and Cash equivalent as at 31st March, 2008 (Closing Balance) 11,877 10,714

CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2008(Rs. in Lacs)

Current Year Previous Year



Rajnikant C. Reshamwala G. BharakatiaPartnerMembership No. 5502 Jaikumar Kapoor Atul S. Pethe

Chief Financial OfficerG. P. Gupta Directors

Shivprakash K. SinghMumbai, 9th May, 2008 Company Secretary Lakhpatraj Bhansali

}


33

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INFORMATION PURSUANT TO PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I Registration Details

Registration No. 15915 State Code 4

Balance Sheet Date 31/03/2008

II Capital Raised during the year (Amount in Rs. Thousands)

Public Issue NIL Right Issue NIL

Bonus Issue NIL Private Placement 36,200

III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities 19,251,154 Total Assets 19,251,154

Sources of Funds

Paid up Capital 437,015 Reserves and Surplus 6,029,264

Secured Loans 2,841,539 Deferred Tax Liability 36,681

Unsecured Loans NIL

Application of Funds

Net Fixed Assets 876,767 Investments 1,019,991

Net Current Assets 7,447,740 Misc. Expenditure NIL

Accumulated Losses NIL

IV Performance of Company (Amount in Rs. Thousands)

Turnover 21,422,023 Total Expenditure 20,746,031

Profit Before Tax 675,992 Profit after Tax 625,882

Earnings per shares in Rs. 15.41 Dividend Rate (%) 20

V Generic Name of Three Principal Products/Services of Company (as per monetary terms)

a) Item Code No. (ITC Code) 710239.01

Product Description DIAMONDS

b) Item Code No. (ITC Code) 711319.03

Product Description STUDDED JEWELLERY

c) Item Code No. (ITC Code) 711319.01

Product Description PLAIN JEWELLERY

For and on behalf of the Board

Jatin R. Mehta Chairman-cum-Managing Director

G. Bharakatia

Atul S. Pethe



}


34

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STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TOCOMPANY’S INTEREST IN THE SUBSIDIARY COMPANIES

1 Name of the Subsidiary SU-RAJ DIAMONDS N. V. SU-RAJ DIAMONDS SU-RAJ DIAMONDS SU-RAJ DIAMOND& JEWELRY USA, INC. & JEWELLERY DMCC (H.K.) LTD.

2 Financial Period of the subsidiaryended on 31st March, 2008 31st March, 2008 31st March, 2008 31st December, 2007

3 Date from which it becamea subsidiary 1st April, 2003 3rd July, 2006 20th June, 2006 4th August, 2006

4 Shares of the Subsidiary heldby the Company on theabove date

a) Number and face value 30,088 Shares 30 Shares 200 Shares 100,000 sharesEuro 248 each US $ 100000 each AED 1000 each HK$ 1 each

b) Extent of Holding 92% 100% 100% 100%

5 Net aggregate amount of Profits/(Loss) of the subsidiary for theabove financial period of thesubsidiary so far as they concernmembers of the Company

a) dealt with in the accountsof the Company for yearended 31st March, 2008 Nil Nil Nil Nil

b) not dealt with in the accountsof the Company for the yearended 31st March, 2008 Euro 30,948.79 US $ 111,326 AED 120,684 HK $ 393,819

6 Net aggregating amount of Profits/(Losses) for the previous financialyears of the subsidiary, since itbecame a subsidiary so far as theyconcern members of the Company

a) dealt with in the accounts of theCompany for the year ended31st March, 2008 Nil Nil Nil Nil

b) not dealt with in the accountsof the Company for the yearended 31st March, 2008 Euro 191,212.96 US $ 32, 292 AED (37,635) Nil

For and on behalf of the Board

Jatin R. Mehta Chairman-cum-Managing Director

G. Bharakatia

Atul S. Pethe



}


35

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Auditor’s Report on the Consolidated Financial StatementsThe Board of Directors

Su-Raj Diamonds and Jewellery Limited

We have audited the attached consolidated balance sheet of Su-Raj Diamonds Group as at 31st March, 2008, and also the consolidated profit andloss account and the consolidated cash flow statement for the year ended on that date annexed thereto. These financial statements are theresponsibility of the Su-Raj Diamonds Group’s management and have been prepared by the management on the basis of separate financialstatements and other financial information regarding its subsidiaries and associates. Our responsibility is to express an opinion on these financialstatements based on our audit.

We have conducted our audit in accordance with the auditing standards generally accepted in India. These standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

We did not audit the financial statements of the subsidiaries, viz; Su-Raj Diamonds NV (100%), Su-Raj Diamonds and Jewelry USA, Inc. (100%),Su-Raj Diamond (H.K.) Ltd. (100%) and Su-Raj Diamonds and Jewellery DMCC (100%) subsidiaries for the year 1st April, 2007 to 31st March, 2008and of the associate companies viz Forever Precious Jewellery and Diamonds Limited, Su-Raj Diamond Dealers Limited, SJR Jewelry CompanyLimited and Revah Corporation Limited. The financial statements and other financial information of the subsidiaries have been audited or reviewedfor the full year except in the case of Su-Raj Diamond (H.K.) Ltd. where the audited statement are for 31st December, 2007 and unaudited statementof accounts for the three months ended 31st March, 2008 and the same are considered for consolidation. In the case of the associate companies ouropinion is based on the audited financial statements of the above companies duly incorporated in the financial statements.

We report that the consolidated financial statements have been prepared by Su-Raj Diamonds Group’s management in accordance with therequirements of Accounting Standards (AS) 21-Consolidated Financial Statements, and Accounting Standard (AS) 23-Accounting for Investments inAssociates in Consolidated Financial Statements issued by the Institute of Chartered Accountants of India.

Based on our audit of Su-Raj Diamonds and Jewellery Ltd. and on consideration of the audited / reviewed or unaudited but management certifiedfinancial statements and on the basis of other financial information of the subsidiaries and associates, and to the best of our information andaccording to the explanations given to us, we are of the opinion that the attached consolidated financial statements give a true and fair view inconformity with the accounting principles generally accepted in India:

(a) in the case of the Consolidated Balance Sheet, of the state of affairs of Su-Raj Diamonds Group as at 31st March, 2008;

(b) in the case of the Consolidated Profit and Loss Account, of the profit for the year ended on that date; and

(c) in the case of the Consolidated Cash Flow Statement, of the cash flows for the year ended on that date.

For R.C. Reshamwala & Co.Chartered Accountants

Rajnikant C. ReshamwalaPartner

Mumbai : 9th May, 2008 Membership No. 5502

ANNEXURE TO AUDITOR’S REPORTSTATEMENT OF HOLDING IN SUBSIDIARIES AND ASSOCIATE COMPANIES

NAME OF THE COMPANY COUNTRY OF INCORPORATION % OF HOLDING

SUBSIDIARIES

Su-Raj Diamonds N.V. Belgium 100*

Su-Raj Diamonds and Jewelry USA, Inc. USA 100

Su-Raj Diamonds and Jewellery DMCC UAE 100

Su-Raj Diamond (H.K.) Ltd. Hongkong 100

ASSOCIATES

Su-Raj Diamond Dealers Limited India 40

Forever Precious Jewellery and Diamonds Limited India 49

SJR Jewelry Company Limited Thailand 49

Revah Corporation Limited India 49

* 8% through Su-Raj Diamond (H.K.) Ltd.


36

CMYK

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2008Current Year Current Year Previous Year


I. SOURCES OF FUNDS :

1. Shareholders’ Funds :

a) Share Capital 1 437,015,350 400,031,815

b) Reserves and Surplus 2 6,218,512,899 5,343,586,661

6,655,528,249 5,743,618,476

2. Loan Funds : 3

a) Secured Loans 3,049,776,555 2,467,257,311

b) Unsecured Loans 41,372,172 30,401,368

3,091,148,727 2,497,658,679

3. Deferred Tax Liability (Net) 36,680,672 27,821,476

TOTAL 9,783,357,648 8,269,098,631

II. APPLICATION OF FUNDS :

1. Fixed Assets :

a) Gross Block 4 898,280,700 661,218,259

Less : Depreciation 308,965,503 249,514,861

Net Block 589,315,197 411,703,398b) Capital Work-in-Progress 316,526,642 322,236,014

905,841,839 733,939,412

2. Investments 5 477,196,842 271,812,571

3. Current Assets, Loans and Advances : 6

a) Inventories 2,508,259,914 2,126,194,903

b) Sundry Debtors 14,908,242,950 11,958,257,610

c) Cash and Bank Balances 1,222,708,942 1,108,600,223

d) Loans and Advances 297,882,872 198,503,214

18,937,094,678 15,391,555,950

Less : Current Liabilities and Provisions : 7

a) Current Liabilities 10,341,278,194 7,991,789,194

b) Provisions 195,497,517 136,420,108

10,536,775,711 8,128,209,302Net Current Assets 8,400,318,967 7,263,346,648

TOTAL 9,783,357,648 8,269,098,631





G. P. GuptaDirectors


}


37

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CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008Current Year Current Year Previous Year


I. INCOMESales 22,811,759,973 16,342,109,432Other Income 8 21,822,421 26,465,726

22,833,582,394 16,368,575,158II. EXPENDITURE

Material Cost 9 21,474,011,917 15,359,026,850Manufacturing and other expenses 10 527,531,006 236,022,423

22,001,542,923 15,595,049,273III. PROFIT

Profit before Interest and Depreciation 832,039,471 773,525,885Finance Charges 88,797,103 212,676,030Depreciation 58,999,506 34,255,626

147,796,610 246,931,656

Profit Before Tax 684,242,861 526,594,229Provision for Taxa) Current 41,690,368 36,729,664b) Fringe Benefit Tax 1,250,000 800,000c) Deferred Tax 8,859,196 4,954,200

51,799,564 42,483,864

Profit After Tax 632,443,297 484,110,365Share of Profit of Associates (Net) 49,272,184 42,592,682

681,715,481 526,703,047Balance brought forward from Previous Year 850,983,448 719,098,690

1,532,698,929 1,245,801,737Add :Excess/(Short) Provision for Expenses/

Income of earlier years (Net) (51,812) 1,902,512Excess/(Short) Provision for Tax (Net) 456,166 12,611,146Loss on Merger (4,426,792) –

Profit available for appropriation Total 1,528,676,491 1,260,315,395

IV. APPROPRIATIONSProposed Dividend 87,688,516 72,403,664Tax on Dividend 14,902,662 12,305,003Transfer to General Reserve 250,000,000 204,623,280Transfer to Exchange Fluctuation Reserve 120,000,000 120,000,000Balance carried to Balance Sheet 1,056,085,313 850,983,448

Total 1,528,676,491 1,260,315,395

Earnings per share (Basic & Diluted) 15.58 13.17







}


38

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SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2008

Current Year Current Year Previous YearRupees Rupees Rupees

SCHEDULE 1 : SHARE CAPITALAuthorised70,000,000 Equity Shares of Rs. 10/- each (Previous Year : 70,000,000 700,000,000 700,000,000

Equity Shares of Rs. 10/- each)Issued and Subscribed43,844,258 Equity Shares of Rs. 10/- each (Previous Year : 40,224,258 438,442,580 402,242,580

Equity Shares of Rs. 10/- each)Paid-up43,844,258 Equity Shares of Rs. 10/- each (Previous Year : 40,224,258

Equity Shares of Rs. 10/- each) 438,442,580 402,242,580Less: Calls Unpaid - Other than Directors 1,427,230 2,210,765

TOTAL 437,015,350 400,031,815

Note :1) Of the above paid-up Capital, Rs. 104,806,450 represents capitalisation of General Reserve

by issue of 10,480,645 Equity Shares of Rs. 10 each fully paid-up as Bonus Shares.2) Of the above paid-up capital Rs. 36,200,000 represents issue of 3,620,000 Equity Shares

of Rs. 10/- each fully paid-up as Preferential allotment, during the year.

SCHEDULE 2 : RESERVES AND SURPLUSCapital ReserveAs per last Balance Sheet 73,589,530 76,892,715Less: Goodwill on consolidation 9,155,671 3,303,185

64,433,859 73,589,530Share Premium AccountPremium Receivable 1,988,014,830 1,716,514,830Less : Allotment Money in Arrears 4,154,552 7,494,407Less : Call Money in Arrears 1,839,659 5,209,808

1,982,020,619 1,703,810,615General ReserveAs per last Balance Sheet 2,419,489,690 2,214,844,490Add : During Merger 1,019,308 –Add : Amount transferred from Profit and Loss Account 250,000,000 204,623,280

2,670,508,998 2,419,467,770General Reserve - Foreign Exchange FluctuationAs per last Balance Sheet 255,000,000 135,000,000Add : Amount transferred from Profit and Loss Account 120,000,000 120,000,000

375,000,000 255,000,000Foreign Currency Translation ReserveAs per last Balance Sheet 40,735,298 4,753,960Add : Exchange Difference 29,728,812 35,981,338

70,464,110 40,735,298Surplus in Profit and Loss Account 1,056,085,313 850,983,448

TOTAL 6,218,512,899 5,343,586,661

SCHEDULE 3 : LOAN FUNDS(i) Secured Loans

Short Term Loans from Banks 3,021,477,016 2,467,156,160Secured by hypothecation of stock-in-trade, book debts (both present andfuture), personal guarantee of a Director and mortgage by way of Title Deeds ofthe immovable properties comprising of land and other structure, fixed machinery andplant, fixtures and fittings erected or installed thereon situated at Bangalore, Jodhpur andValsad; and Collateral Security of Land & Building offered by Bombay Diamond CompanyPvt. Ltd., Kohinoor Diamonds Pvt. Ltd. and Plant & Machinery of Forever Diamonds Pvt. Ltd.The Company also has non-fund credit facilitity of Rs. 1,017.50(Previous year Rs.787.50) Crores with the Consortium of Bankers, secured againstabove Assets and Fixed Deposits.

(ii) Received from Banks - Buyers Credit facilities 5,196,948,539 1,805,435,089Less: Fixed Deposits with Banks Rs.5,355,416,244pledged for use against payment of buyers credit facilities 5,196,948,539 1,805,435,089

– –(iii) Term Loans from Banks/Financial Institution 28,299,539 101,151

(Secured by hypothecation of Vehicle)

TOTAL 3,049,776,555 2,467,257,311

(iv) Unsecured LoansShort Term Loans from Banks 2,206,610 –Long Term Loans 39,165,562 30,401,368

41,372,172 30,401,368


39

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Current year Current year Previous YearRupees Rupees Rupees

SCHEDULE 5 : INVESTMENTS : (AT COST) - UNQUOTEDLong TermIn Government Securities

2 (Previous Year : 2) Indira Vikas Patra of Rs. 500 each 1,000 1,000National Savings Certificates 5,000 5,000

6,000 6,000Other Companies2,000,000 (Previous Year 2,000,000) Equity Shares of Rs. 10 each of 19,996,293 20,000,000

Su-Raj Diamond Dealers Limited, fully Paid-upAdd: Share of Profit/(Loss) (1,456) (3,707)

19,994,837 19,996,29311,650,000 (Previous Year : 6,750,000) Equity Shares of Rs.10 each of 375,252,210

Forever Precious Jewellery & Diamonds Private Limited(Capital Reserve on acquisitions Rs.5,197,543)Add: Share of Profit/(Loss) 53,405,192 428,657,402 249,812,210

2,444 (Pevious Year : 2,444) Equity Shares of Baht 400 each 1,304,121of SJR Jewelry Co. Ltd., fully paid-up(Capital Reserve on acquisitions Rs.216,780)Add: Share of Profit/(Loss) 1,970,032 3,274,153 1,304,121.00

2,434,700 (Previous Year : 24,500) Equity Shares of Rs.10 each 24,347,000of Revah Corporation Ltd., fully paid-upAdd: Share of Profit/(Loss) (6,101,584) 18,245,416 245,000.00

501,275 (Previous Year : Nil) Equity Shares of Rs.100 eachof Peakok Jewellery Ltd., fully paid-up 5,012,750

576,250 (Previous Year : Nil) Equity Shares of Rs.10 each 1,444,300of Carbon Accessories Ltd., fully paid-up

7,449.03 (Previous Year : Nil) Equity Shares of Rs.10 each 74,500of Principal Mutual Fund of Punjab National Bank

10 (Previous Year : 10) Equity Shares of Su-Raj Euro Jewel 392,487 361,4601 (Previous Year : 1) Equity Share of Antwerpse Diamontkring 94,997 87,487

477,190,842 271,806,571

TOTAL 477,196,842 271,812,571

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2008SCHEDULE 4 : FIXED ASSETS

GROSS BLOCK DEPRECIATION NET BLOCK

Description Of Assets Addition Adjustment Sales Sale Adjustment ProvidedAs At During During During As At As At During During During Upto As At As At

01/04/2007 The Year The Year The Year 31/03/2008 01/04/2007 The Year The Year The Year 31/03/2008 31/03/2008 31/03/2007

1 Leasehold Land 7,232,169 – – – 7,232,169 39,553 – – 2,318 41,871 7,190,298 7,192,6162 Factory/Office Premises 259,063,034 78,592,935 – – 337,655,969 58,648,596 – – 16,170,071 74,818,667 262,837,302 200,414,4383 Plant & Machinery 288,334,760 99,048,317 – – 387,383,077 142,919,492 – – 25,779,635 168,699,127 218,683,950 145,415,2684 Furniture & Fixture 24,511,132 19,296,194 – 5,662 43,801,664 9,664,382 3,333 – 4,740,516 14,401,565 29,400,099 14,846,7505 Electrical Installations 32,168,783 10,456,238 – – 42,625,021 14,745,085 – – 3,255,102 18,000,187 24,624,834 17,423,6986 Equipments 40,823,309 25,050,849 – 40,345 65,833,813 19,517,290 37,298 – 7,279,976 26,759,968 39,073,845 21,306,0197 Vehicles 7,669,164 295,320 – – 7,964,484 3,407,690 – – 1,126,709 4,534,399 3,430,085 4,261,4748 Moulds And Dies 908,292 4,310,802 – 374,057 4,845,037 89,045 111,483 – 645,160 622,722 4,222,315 819,247

Difference In F.E.C. 507,616 – 431,849 – 939,465 483,727 – 603,271 – 1,086,998 (147,533) 23,889

Current Year’s Total 661,218,259 237,050,655 431,849 420,064 898,280,700 249,514,862 152,114 603,271 58,999,487 308,965,503 589,315,197 411,703,398

Previous Year’s Total 535,437,082 141,659,244 654,819 16,532,886 661,218,259 227,894,392 13,048,558 413,401 34,255,626 249,514,861 411,703,398

Note :The value of the capital work in progress capitalised during the year as under :

PARTICULARS CURRENT YEAR PREVIOUS YEARRUPEES RUPEES

1) Factory Premises 27,609,903 14,130,7322) Plant & Machinery 7,165,326 5,025,0183) Electrical Installation 4,444,129 939,0324) Furniture and Fixtures 8,462,325 897,6905) Air Conditioner 4,017,289 568,6906) Equipment 795,149 –

52,494,121 21,561,162


40

CMYK

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2008


SCHEDULE 6 : CURRENT ASSETS, LOANS AND ADVANCES

a) Inventories

(As certified by a Director)

I. Stores and Spare Parts (At Cost) 9,313,935 10,313,529

II. Stock-in-Trade

(i) Raw Materials


Diamonds 509,375,516 736,309,241

Gold and Alloy 474,160,255 551,857,158

Precious, Semi-precious and Other Stones 15,992,316 12,251,706

Others 125,848,735 171,413,395

1,125,376,822 1,471,831,500

(ii) Semi Finished Goods – 1,561,002


(iii) Finished Goods

(Valued “At Cost” or “Net Realisable Value” whichever is lower)Diamonds and Studded Jewellery 1,373,569,157 642,488,872

2,498,945,979 2,115,881,374

2,508,259,914 2,126,194,903

b) Sundry Debtors


Debts outstanding for a period exceeding six months 1,373,926,676 1,443,356,011

Other Debts 13,534,316,274 10,514,901,599

14,908,242,950 11,958,257,610

c) Cash and Bank Balances

Cash on hand 12,336,648 7,989,784

Balance with Scheduled Banks :In Current Account (including cheques on hand Rs. 2,205,881, 315,343,349 327,424,281

Previous Year Rs. NIL)

In Fixed Deposit Accounts

Fixed Deposit with Banks 6,091,977,484 2,578,621,247

Less : Pledged with Bank against buyers credit facilitiesavailed for payment of buyers credit facilities 5,196,948,539 1,805,435,089

895,028,945 773,186,1581,222,708,942 1,108,600,223

TOTAL ‘A’ 18,639,211,806 15,193,052,736

d) Loans & Advances


Advances recoverable in cash or in kind or for value to be received 159,482,435 114,727,525

Loan to Companies 39,942,035 26,610,507

Prepaid Expenses 473,036 433,837

Advance payment of Income-tax 97,985,366 56,731,345

TOTAL ‘B’ 297,882,872 198,503,214

TOTAL ‘A’ + ‘B’ 18,937,094,678 15,391,555,950


41

CMYK



SCHEDULE 7 : CURRENT LIABILITIES AND PROVISIONS

A. Current Liabilities

a) Sundry Creditors 10,314,266,105 7,965,530,146

b) Unclaimed Dividend 12,268,963 10,914,402

c) Other Liabilities 14,743,126 15,344,646

10,341,278,194 7,991,789,194

B. Provisions

a) Taxation 92,692,280 51,711,441

b) Provision for Gratuity 147,561 –

c) Proposed Dividend 87,688,516 72,403,664

d) Other 66,498 –

e) Tax on Dividend 14,902,662 12,305,003

195,497,517 136,420,108

TOTAL 10,536,775,711 8,128,209,302

SCHEDULE 8 : OTHER INCOME

Interest Received 11,438,195 8,923,452(Tax deducted at source Rs. 1,382,993; Previous Year Rs.336,384)

Labour Charges Received 8,870,993 8,883,522(Tax deducted at source Rs. 197,427; Previous Year Rs. 199,345)

Profit on Sale of Assets (Net) 217,548 159,182

Dividend Received 4,228 –

Rent Received 658,500 830,000

Miscellaneous Receipts 632,957 7,669,570

TOTAL 21,822,421 26,465,726


42

CMYK



SCHEDULE 9 : MATERIAL COSTRaw Materials ConsumedOpening Stock 1,303,048,582 1,173,123,658Add : Purchases 19,877,650,383 15,409,392,860

21,180,698,965 16,582,516,518Less : Closing Stock 1,005,354,462 1,303,048,582

20,175,344,503 15,279,467,936(Increase)/Decrease in Semi-Finished GoodsOpening Stock of Semi-Finished Goods 1,561,002 1,561,002Add : Purchases – 4,351,554

1,561,002 5,912,556Closing Stock of Semi-Finished Goods – 1,561,002

1,561,002 4,351,554(Increase)/Decrease in Finished GoodsOpening Stock of Finished Goods 642,488,871 703,257,523Add : Purchases 2,148,209,058 14,438,708

2,790,697,929 717,696,231Closing Stock of Finished Goods 1,493,591,517 642,488,871

(Accretion)/Decretion in stock 1,297,106,412 75,207,360

21,474,011,917 15,359,026,850

SCHEDULE 10 : MANUFACTURING AND OTHER EXPENSESSalaries, Wages and Bonus 51,630,848 29,074,355Contribution to Provident and other Funds 2,705,186 1,260,359Workmen and Staff Welfare Expenses 3,889,717 1,632,934

58,225,752 31,967,648Directors’ Remuneration 11,506,244 5,173,217Labour Charges 258,934,439 98,783,369Assortment and Valuation Charges 3,623,553 2,058,757Packing Materials Consumed 181,528 96,301Stores and Spare Parts Consumed 26,358,363 7,660,400Power and Fuel 13,101,665 6,878,144Freight and Forwarding 14,396,088 9,649,748Postage Telegram & Telex and Fax Charges 6,972,136 4,268,896Advertisement and Sales Promotion Expenses 5,937,793 2,735,989Rent Rates, Taxes and Duties 12,478,083 8,015,237

(Including Rs. NIL; (Previous Year Rs.500,000) towards Stamp Duty)Travelling Expenses 17,493,495 10,269,129Printing and Stationery 2,638,974 1,357,110Licence, Registration and Other Fees 4,288,645 959,057Repairs and Maintenance of :

Buildings 1,877,495 1,748,147Plant and Machinery 3,775,260 518,789Others 6,366,437 2,424,675

12,019,192 4,691,611Insurance Charges (Including Rs.4,999,838 (Previous Year Rs. 5,243,480)

for ECGC Premium reimbursed to banks) 13,847,524 13,210,565Legal and Professional Charges 19,813,412 9,051,648Miscellaneous Expenses 20,115,257 14,946,050Loss on FEF 16,352,041 –Loss on sale of Investment – 255,550Donations 9,212,487 2,086,001Preliminary Expenses Written Off 34,333 1,907,996

527,531,006 236,022,423


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SCHEDULE 11:

NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS FORTHE YEAR ENDED 31st MARCH, 2008.

A. Significant Accounting Policies:

1. Basis of Accounting and Preparation of Financial Statements:

(a) The consolidated financial statements have been prepared inaccordance with generally accepted accounting principles andcomplying with the Accounting Standard (AS-21) –Consolidated Financial Statements issued by the Institute ofChartered Accountants of India.

(b) All income and expenditure items are accounted on accrualbasis.

(c) Financial statements are based on historical costs. Thesecosts are not adjusted to reflect the impact of the changingvalue in the purchasing power of money.

2. Principles of Consolidation:

(a) The consolidated financial statements comprise the financialstatement of Su-Raj Diamonds & Jewellery Limited, (‘TheCompany’) and it’s subsidiaries being foreign companies, Su-Raj Diamonds N.V., Su-Raj Diamonds & Jewelry USA Inc.,Su-Raj Diamonds & Jewellery DMCC, Su-Raj Diamond (H.K.)Limited, and it’s Associates in India namely Su-Raj DiamondDealers Ltd., Forever Precious Jewellery & Diamonds Limited,Revah Corporation Limited and in foreign being SJR JewelryCompany Limited.

(b) The financial statements have been consolidated on a line-by-line basis by adding together the book values of like itemsof assets, liabilities, income and expenses, after eliminatingintra-group balances and the unrealized profits/losses on intra-group transactions, if any.

(c) The accounts of the foreign subsidiaries have been preparedin compliance with the local laws applicable.

(d) The consolidated financial statements are prepared by adoptinguniform accounting policies for like transactions and otherevents in similar circumstances and are presented to the extentpossible in the same manner as that followed by the companyin its separate financial statements.

(e) Investment in associate companies is accounted as perAccounting Standard (AS)23 “Accounting for Investments inAssociates in Consolidated Financial Statements” issued bythe Institute of the Chartered Accountants of India.

(f) The excess/shortage of the share of equity in the subsidiariesover its cost of investments are recognized as Capital Reserve/Goodwill and adjusted under the head Reserves and Surplus.

3. REPORTING DATES OF SUBSIDIARIES FOR CONSOLIDATION.

For the purpose of preparing these statements the financials of theparent and its subsidiaries Su-Raj Diamonds N.V., Su-Raj Diamonds& Jewelry USA Inc., Su-Raj Diamonds & Jewellery DMCC, Su-RajDiamond (H.K.) Limited for the period ended 31.03.2008 isconsidered.

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2008

4. Fixed Assets:

(a) All fixed assets are valued at cost less depreciation.

(b) Exchange differences relating to the acquisition of fixed assetsare adjusted in the cost of the assets.

5. Depreciation:Indian Company

(a) Depreciation is provided as per the “Written Down Value”method at rates provided by Schedule XIV to the CompaniesAct, 1956. Leasehold Land is amortised over the period oflease.

(b) Depreciation on additions and on sale/disposal of fixed assetsis computed pro-rata on day-to-day basis from the date ofpurchase or up to the date of sale.

(c) Depreciation on new unit is taken from the date ofcommissioning of the unit.

(d) Depreciation is also considered on those assets (idle assets)which were not used for whole or part of the year. However,for shut down units, no depreciation is charged.

Foreign Company

Depreciation has been provided on the basis of the method andrates prevailing as per the local laws.

6. Work in Progress:

(a) The cost of fixed assets, acquisition/construction, installationsof which are not completed are included under Capital Work-in-Progress and the same are apportioned/transferred torespective fixed assets on installation/completion of the asset/project.

(b) Expenses incurred during the year to set up of businesspremises/factory premises forming part of capital work-in-progress are capitalised under the head Factory Premises.

(c) Similarly, goods, which are under production and cannot betermed as finished goods are treated as work in progress.

7. Investments :

(a) Long term Investments are stated at Cost of acquisition.Provision for diminution in the value of long term investmentsis made if such diminution is considered other than temporaryin nature.

(b) Application monies for investment in shares are classified asan advance till the allotment of shares is completed.

8. Inventories :

The Company has complied with AS-2 Valuation of Inventoriesissued by the Institute of Chartered Accounts of India, to the extentpracticable keeping in mind the peculiar nature of the industry.

(a) Raw Materials (Rough Diamonds, Precious stones, Gold,Silver, Alloys, Platinum, Pearls) are valued “At Cost” (i.e. costof acquisition as on that date) or “Net Realisable Value”,whichever is lower.


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(b) Closing stock of other Raw Materials is valued “At Cost” or“Net Realisable Value” which ever is lower (Cost meansaverage cost with the proportionate value of freight andClearing charges added to closing stock.)

(c) Stock on hand as on the last date which is under processingand not yet converted to finished goods is considered to be apart of Stock of Raw Materials and hence is valued as RawMaterials as in (a) above.

(d) Finished Goods of Polished Diamonds are valued “At Cost orNet Realisable Value”, whichever is lower. Cost includes costof raw materials on weighted average cost basis, labour costand proportionately allocated other costs related to convertingthem into finished goods which are technically evaluatedkeeping in view the wide variety and grades of diamonds.

(e) Finished Goods of Jewellery are valued “At Cost or NetRealisable Value”, whichever is lower. Cost includes cost ofraw materials, labour cost and proportionately allocated othercosts related to converting them into finished goods.

(f) Goods procured for trading (Studded and Plain Jewellery andDiamonds) are valued “At Cost” or “Net Realisable Value”,whichever is lower.

(g) Stores and Spares are valued “At Cost”.

9. Foreign Exchange Transactions:

(a) Transactions in foreign currency are accounted at theexchange rate / average rate prevailing on the date oftransaction. Exchange fluctuations between the transactiondate and the settlement date in respect of revenue transactionsare recognized in Profit and Loss Account.

(b) All export proceeds / import payables not realised at the year-end are restated at the rate prevailing at the year end. Theexchange difference arising therefrom has been recognisedas income/ expenses in the current years Profit and LossAccount.

(c) Monetary Assets and Liabilities denominated in ForeignCurrency, are translated at year end exchange rates and theProfit/Loss so determined are recognized in the Profit andLoss Account for the year.

(d) (i) As per the Provisions of the AS -11 of the ICAI, theprofit/loss on cancellation or renewal of derivativeinstruments such as forward contract and option contractundertaken to hedge exchange fluctuation/price risks arerecognised as income/expense in the Profit and LossAccount for the year.

(ii) Option contract open at the year end are recognized atyear end rate and the Mark to Market difference taken torevenue account.

(iii) Premium or discount at the inception of forward exchangecontract is amortized as expenses or income over thelife of contract.

10. Preliminary Expenses :

Preliminary Expenses are treated as Deferred Revenue Expenditureand the same are written off in ten equal installments.

11. Employees Retirement Benefits :

Indian Company

(a) Defined Contribution Plan:

The Company has Defined Contribution Plan for postemployment benefit in the form of provident fund for eligibleemployees which is administered by regional provident fundcommissioner. Provident fund is classified as DefinedContribution Plan as the Company has no further obligationbeyond making the contributions. The Company’s contributionsto Defined Contribution Plans are charged to the Profit andLoss Account as and when incurred.

(b) Defined Benefit Plan:

The Company has Defined Benefit Plan for post employmentbenefit in the form of Gratuity for eligible employees whichare administered through a Group Gratuity Policy with LifeInsurance Corporation of India (LIC). The liability for the aboveDefined Benefit Plan is provided on the basis of an actuarialvaluation as carried out by LIC. The actuarial method usedfor measuring the liability is the Projected Unit Credit Method.

(c) Termination benefits are recognized as an expense as andwhen incurred.

(d) The Company has made provision for leave encashment duesas on the last date of the year.

Foreign Company

Employees’ retirement benefits are provided by the foreign companyin accordance with the applicable local laws.

12. Taxation:

Indian Company

(a) Provisions for taxation is made after considering various reliefsadmissible under the provisions of the Income tax Act.

(b) Disputed amounts of tax are considered in contingent liabilities.

(c) The Company has implemented ‘Accounting Standard 22’ -“Accounting of Taxes on Income”, issued by the Institute ofChartered Accountants of India, which is mandatory in nature.The Company has recognized Deferred Taxes which resultfrom the timing difference between the Book Profits and TaxProfits that originate in one period and are capable of reversalin one or more subsequent periods.

Foreign Company

Provision for taxation and other tax expenses are recognized bythe foreign company in accordance with the applicable local laws.

13. Borrowing Cost:

Borrowing Costs that are attributable to the acquisition/constructionof fixed assets are capitalized as part of the cost of the respectiveassets. Other borrowing costs are recognized as expenses in theyear in which they are incurred.


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B. Notes forming part of the accounts:

1. Contingent Liabilities not provided for in respect of:

Rupees Rupees

(a) Disputed Income Tax Liability 11,055,573 (1,901,483)

(b) Estimated amounts of contractsremaining to be executed onCapital Account 106,811,527 (29,991,295)

(c) EPCG Benefits (CustomsDuties payable if exportobligations not met) 117,252,673 (30,673,761)

Total 235,119,773 (62,566,539)

2. In the opinion of the Directors:

(a) The Current Assets, Loans and Advances are approximatelyof the value stated, if realized in the ordinary course ofbusiness.

(b) The provision for Depreciation and for all known liabilities areadequate and not in excess of the amounts reasonablynecessary.

3. Legal and Professional charges include payment to StatutoryAuditors:

Rupees Rupees

(a) Audit Fees 500,000 400,000

(b) Tax Audit Fees 70,000 70,000

(c) As advisor or in any othercapacity in respect ofcertification charges 147,500 145,500

(d) Reimbursement of expenses &Service Tax. 147,031 88,619

(e) Foreign Company Audit Fees 798,208 685,065

Total 1,662,739 1,389,184

4. The Financial charges includes bank charges of Rs.88,175,165(Rs.78,765,225) Bank interest paid Rs.282,714,362(Rs.200,307,404) and Bank interest received on Fixed depositsRs. 326,757,531 (Rs.87,566,830).

5. Letters have been addressed to Sundry Debtors and SundryCreditors for confirmation. Confirmations have been received fromsome parties.

6. The Accounting Standard – AS 15 (revised 2005) on EmployeeBenefits issued by the Institute of Chartered Accountants of Indiahas been adopted by the Company.

a) Defined Contribution Plan:

The Company has recognized Rs.2,039,769 towardscontribution made to Employees Provident & family pensionFund.

b) Defined Benefit Plan:

(1) Assumption


(a) Discount Rate 8.00%

(b) Salary Escalation 4.00%

(2) Changes in the Present Value of Obligation


(a) Present Value of obligationas at April 1, 2007 1,220,810


(c) Past Service Cost Nil

(d) Current Service Cost 269,883

(e) Curtailment Cost/(Credit) Nil

(f) Settlement Cost/(Credit) Nil

(g) Benefits Paid 153,129

(h) Actuarial (Gain)/Losson obligation 14,924

(i) Present Value of obligationas at March 31, 2008 1,444,049

(3) Changes in the Fair Value of Plan Assets


(a) Present Value of Plan Assetsas at April 1,2007 459,887

(b) Expected Return on Plan Assets 38,067

(c) Actuarial Gain / Loss Nil

(d) Employer’s Contributions 777,390

(e) Employee’s Contributions Nil

(f) Benefits Paid 153,129

(g) Actuarial Gain /(Loss) on Plan Assets Nil

(h) Fair Value of Plan Assetsas at March 31, 2008 1,122,215

(4) Fair Value of Plan Assets


(a) Fair Value of Plan Assetsas at April 1, 2007 459,887

(b) Actual Return on Plan Assets 38,067

(c) Contributions 777,390

(d) Benefits Paid 153,129

(e) Fair Value of Plan Assetsas at March 31, 2008 1,122,215

(f) Funded status (321,834)


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(5) Actuarial Gain/Loss recognized


(a) Actuarial Gain/(Loss) for theyear-obligation (14,924)

(b) Actuarial (Gain)/Loss for theyear-plan assets NIL

(c) Total (Gain)/Loss for the year 14,924

(d) Actuarial (Gain)/Lossrecognized in the year 14,924

(6) The amounts to be recognized in the Balance Sheet andStatement of Profit and Loss


(a) Present value of obligationsas at March 31, 2008 1,444,049

(b) Fair value of plant assets as atMarch 31, 2008 1,122,215

(c) Funded status (321,834)

(d) Net Assets/(Liability) recognizedin Balance Sheet 321,834

(7) Expenses recognized in statement of Profit and Loss


(a) Current Service cost 269,883


(c) Expected Return on Plan Assets 38,067

(d) Net Actuarial (Gain)/Lossrecognized in the year 14,924

(e) Expenses recognized instatement of Profit and Loss 338,301

The estimate of future salary increases considered in actuarial valua-tion takes into account inflation, seniority, promotion and other relevantfactors. This being the first year of implementation of AS-15 (Revised),hence previous year figures have not been given.

7. The Company has taken gold on loan from various banks.The said gold has been processed and sales of Jewellery made.The value of purchase and sale is taken on the basis of theprovisional sale certificate of the bank. The final value of purchaseand sale is recorded on the date of repayment of the loan or onfinal price confirmation of gold loan on the basis of forward contractbooked with the difference of sale and purchase amount beingrecorded to respective accounts.

8. During the year a net gain on account of Foreign ExchangeFluctuation / derivative transactions amounting to Rs.7,645,892(Gain of Rs. 110,141,913) has been recognised in the Profit andLoss Account along with underlying transactions.

9. During the year, the Company has adjusted the dividends payableagainst the amounts due from shareholders who have not paidtheir call monies in respect of shares subscribed by them. Theamount of dividend adjusted against the Share Premium Accountis Rs.792,757 (Rs. 666,420).

10. There are no amounts of unclaimed dividend due and outstandingto be credited to Investor Education and Protection Fund.

11. During the year under review the Company has entered intotransactions in relation to derivative instruments. The following isthe list of transactions outstanding on the Balance Sheet date asdisclosed by the company:

i. Transactions for forward contracts for hedging foreignexchange exposure in relation to receivable and payablenumbering to 26 (18) amounting to Rs. 686.20 crores(Rs.299.40 crores).

ii. Transactions for option contracts for hedging foreign exchangeexposure in relation to receivable and payable numbering to 1(58) amounting to Rs. 22 crores (Rs. 165.42 crores).

iii. The reclassification of values on the year end and markingthem to market has been recognized on the above transaction.The loss on the same amounts to Rs. 5.01 crores (Figure ofprevious year is not given as this is the first year).

12. During the year under review the company has entered intoCommodity trading in Futures for precious metals to hedge therisks of price fluctuations in precious metal (raw materials). Theinitial margin on such derivative transactions has been paid incash. Any gain/loss on such transactions made during the yearhas been charged to Profit and Loss Account along with theunderlying transaction. The values of transaction numbering to Nil(8) amounting to Rs. Nil (Rs. 5.26 crores) are open on BalanceSheet date.

13. The Engineering Division at Jodhpur which had been manufacturingScaives and Press pots for the Diamond Industry has closed itsoperations. The Board at its meeting had decided to dispose offthe assets of the division. The Company in this division has duringthe year incurred a loss of Rs. 25.34 lacs including impairment ofstock, stores and spares items (Rs. 3.18 lacs). The carrying valueof the total assets to be disposed off at Jodhpur is Rs.131.20 lacs(Rs.157.64 lacs) and the liabilities to be settled is Rs. NIL (Rs. Nil)at the Balance Sheet date.


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14. As per the provisions of Accounting Standard 17- “Segment Reporting“ issued by the Institute of Chartered Accountants of India, the details ofthe Primary and Secondary Segment are given below :

SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH, 2008

(i) Information about Primary Business Segment: (Rs.in Lacs)

Diamond Jewellery Un-allocated Total

REVENUE

Sales 75,926 152,191 218 228,335(63,851) (99,351) (219) (163,421)

RESULTSegment Result 2,175 5,517 Nil 7,692

(3,065) (4,328) (Nil) (7,393)

Bank Interest/Charges 850 850(2,127) (2,127)

Profit before Tax 6,842(5,266)

Provision for Tax

Current 417 (367)

Fringe Benefit Tax 12(8)

Deferred 89(50)

Profit after Tax 6,324(4,841)

OTHER INFORMATION

Segment Assets 80,070 118,359 4772 203,201(72,577) (88,743) (2,756) (164,076)

Segment Liabilities 32,224 73,144 105,368(9,005) (72,323) (81,328)

Share Capital and Reserves 66,555(57,436)

Deferred Taxation 367(278)

Non-cash expenses Other than Depreciation Nil(Nil)

(ii) Information about Secondary Business Segment:

Statement of continent wise sale : (Rs. In Lacs)

Amount ( Rs.)

North America 24,460(27,677)

Europe 25,669(17,884)

Middle East 125,006(96,503)

Asia (Including Japan and Fiji) 52,983(21,357)

Total 228,118(163,421)


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15. As per provisions of Accounting Standard 18 - “Related Party Transactions” issued by the Institute of Chartered Accountants of India, thedetails of Related Party Transaction based on disclosure certificate issued by the Directors, is enclosed here below :

List of Related Parties : Particulars

Associates Forever Precious Jewellery & Diamonds Ltd, Su-Raj Diamond Dealers Limited,SJR Jewelry Co. Ltd, Revah Corporation Ltd

Key Management Personnel Jatin R. Mehta

Enterprise in which key management personnel Su-Raj Diamond Traders Pvt. Ltd., J. R. Diamonds Pvt. Ltd., SJR Commoditiesand their relatives have significant influence & Consultancies Pvt. Ltd., Diadem Investment and Finance Pvt. Ltd., Bombay

Diamonds Company Pvt. Ltd., Firstrate Diamonds Pvt. Ltd., Forever DiamondsPvt. Ltd., Euro Auto Pvt. Ltd., Precious Jewels Exports Pvt. Ltd., CollectionDiamond Exports Pvt. Ltd., Hira Exports Pvt. Ltd., Kings Jewel Exports Pvt.Ltd., Kohinoor Diamonds Pvt. Ltd.

Relative of key management personnel Jatin R. Mehta (HUF), Ms. Sonia J. Mehta

A. Transaction for the year ended 31.03.2008

Associates Enterprise in which Key management TOTALkey management personnel

personnel and relatives have

significant influence

(Rs.) (Rs.) (Rs.) (Rs.)

1. Purchases 212,326 415,954 Nil 628,280(309,747) (Nil) (Nil) (309,747)

2. Sales 73,476 1,888,902 1,962,378(4.709) (Nil) (Nil) (4,709)

3. Sales of Fixed Assets Nil 2,000 Nil 2,000(617,126) (977,543) (Nil) (1,594,669)

4. Labour Charges Paid 2,061,613 25,178,895 Nil 27,240,508(7,731,644) (3,895,034) (Nil) (11,626,678)

5. Labour Charges Received 1,590,150 Nil Nil 1,590,150(Nil) (Nil) (Nil) (Nil)

6. Loans/Advances Given 21,400,000 1,000,000 Nil 22,400,000(23,615,000) (Nil) (Nil) (23,615,000)

7. Interest Received 226,850 Nil Nil 226,850(1,092,316) (Nil) (Nil) (1,092,316)

8. Loan Received Nil Nil Nil Nil(Nil) (22,075,424) (Nil) (22,075,424)

9. Guarantee Given Nil Nil Nil Nil(Nil) (Nil) (Nil) (Nil)

10. Equity contribution 149,542,000 Nil Nil 149,542,000(89,090,558) (Nil) (Nil) (89,090,558)

11. Remuneration (Nil) (Nil) 3,600,000 3,600,000(Nil) (Nil) (3,600,000) (3,600,000)

B. Outstanding as on 31.03.2008

1. Debtors 1,058,505 7,172,091 Nil 8,230,596(42,263,788) (891,403) (Nil) (43,155,191)

2. Creditors 7,173,906 Nil Nil 7,173,906(6,969,366) (718,893) (Nil) (7,688,259)


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16. The Company has various operating leases for factory premises and office facilities that are renewable on a periodic basis and can beterminated at the option of either party. Rental expenses for operational leases recognized in the Profit and Loss Account for the year areRs. 2,730,569 (Rs. 1,978,832).

Minimum future lease rentals payable are:

Rupees Rupees

(a) Payable within one year 3,335,359 (1,146,497)

(b) Payable within one year and five years. 9,182,646 (4,272,660)

(c) Payable after five years. Nil Nil

Minimum future lease rentals receivable in respect of assets given on operating lease in the form of Plant & Machinery after 1/10/2002 andBuilding after 1/8/2001 are :

Rupees Rupees

(a) Receivable within one year 488,000 (200,000)

(b) Receivable between one year and five years 684,000 (1,084,000)

(c) Receivable after five years Nil (Nil)

17. Capital Work-in-Progress comprises of :Rupees Rupees

Plant and Machinery 523,256 (7,165,326)

Factory/Office Building 306,544,618 (296,399,703)

Electrical Installation 8,220,923 (5,008,522)

Furniture and Fixture 408,249 (8,462,325)

Equipment 477,159 (1,182,849)

Air Conditioner – (4,017,289)

Moulds and Dies 352,437 –

Total 316,526,642 (322,236,014)

18. Earnings per share:

Profit computation for both Basic and Diluted earnings per share of Rs.10 each.

Rupees Rupees

Net Profit as per Profit and Loss Account available to shareholders 632,443,297 (484,110,365)

Weighted average number of Equity Shares 40,605,397 (40,113,720)

40,081,535 Equity Shares fully paid of Rs.10 each 40,081,535

142,723 Equity Shares partly paid up of Rs. 5 each = Rs. 713,615Hence fully paid up Equity Shares of Rs. 10 each 71,362

3,620,000 Equity Shares fully paid of Rs. 10 each issued on15.2.2008 i.e. for 1 ½ months 452,500

Total No. of Equity Shares 40,605,397

Earnings per Share (Basic and Diluted) 15.58 (12.06)


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19. The Company has implemented ‘Accounting Standard 22’ - “Accounting of Taxes on Income”, issued by the Institute of Chartered Accountantsof India, which is mandatory in nature. The Company has recognized Deferred Taxes which result from the timing difference between the BookProfits and Tax Profits that originate in one period and are capable of reversal in one or more subsequent periods.

As a result the deferred tax Liability for the year aggregating to Rs.8,859,195 has been recognized in the Profit and Loss account, the detailsof which are as under.

Particulars Balance carried Arising during Balance carriedas at 31.3.2007 the year as at 31.3.2008

(Rs.) (Rs.) (Rs.)

Deferred Tax Liabilities :

Depreciation (27,821,477) (8,859,195) (36,680,672)

Nett (27,821,477) (8,859,195) (36,680,672)

20. The Company has taken into consideration the Provisions of Accounting Standard 28 – Impairment of Assets. The Company does not have anyassets, which would require impairment and provisions other than the fixed assets at Jodhpur Engineering Division (Refer to note No. 13). Thecompany has during the year considered impairment on stocks at Jodhpur Engineering Division of Rs.1,845,093/-, stores and spares atJodhpur Engineering Division of Rs. 681,796/- and stores and spares at Jodhpur Sawing Division of Rs.3,912,266/- which being obsolete havebeen written off in full.

21. The Company has implemented the Provisions of Accounting Standard 29 – Provisions, Contingent Liabilities and Contingent Assets. TheCompany has recognized contingent liabilities as given in B(1) above and as such no provision is required to be made. The Company does nothave any contingent Assets which requires provision.

22. As per the information available with the Company, total outstanding due to Small Scale Industrial units at the end of the year is Rs. Nil (Nil)

23. Figures in brackets in notes 1 to 22 pertain to previous year.

24. Previous Year’s figures have been re-arranged and re-grouped wherever necessary.






}


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A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit before Tax 6,842 5,266Adjustments for :Depreciation 590 342Interest (Net) 887 1,336Excess/short provision for Expenses/Income for earlier year – 145(Profit)/Loss on Sale of Assets (Net) and Investment (2) (3)Preliminary Expenses written off – 19Proportionate share of profit of Associate Companies 493 426Loss on merger – –

Operating Profit before working capital changes 8,810 7,531Adjustments for :Trade and Other Receivables (30,081) (40,738)Inventories (3,821) (2,419)Trade Payable 23,676 38,880

(1,416) 3,254Taxes paid (432) (425)

Cash generated from operating activities (1,848) 2,829

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (2,316) (1,786)Sale of Fixed Assets 6 –Purchase of Investments (2,054) (1,304)Interest Received 3,268 876

Net cash from investing activities (1,096) (2,214)

C. CASH FLOW FROM FINANCE ACTIVITIESProceeds from Share Premium 2,782 9(Repayment)/Proceeds from Short Term Borrowings 5,935 2,265Proceeds from Parent Company Reserve 370 327Interest Paid (4,155) (2,212)Dividend Paid (724) (589)Tax on Proposed Dividend (123) (85)

Net cash from financing activities 4,085 (285)

Net increase/(decrease) in cash and cash equivalent (A+B+C) 1,141 330Cash and Cash equivalent as at 1st April, 2007 (Opening Balance) 11,086 10,756Cash and Cash equivalent as at 31st March, 2008 (Closing Balance) 12,227 11,086

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2008(Rs. in Lacs)

Current Year Previous Year



Rajnikant C. Reshamwala G. BharakatiaPartnerMembership No. 5502 Jaikumar Kapoor Atul S. Pethe

Chief Financial OfficerG. P. Gupta

Directors


}


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DETAILS OF SUBSIDIARY COMPANIES (AMOUNT IN RS.)

Name of Subsidary Su-Raj Diamonds N. V. Su-Raj Diamonds Su-Raj Diamonds & Su-Raj Diamond& Jewelry USA, Inc. Jewellery DMCC (H.K.) Ltd.

1. Capital 501,901,519 120,000,000 2,184,600 120,603,600

2. Reserve & Surplus 18,986,199 4,453,040 907,142 2,518,258

3. Total Assets(Fixed Assets + Current Assets) 890,440,758 253,043,560 195,254,976 553,707,241

4. Total Liabilities(Debts + Current Liabilities) 370,040,526 128,590,520 192,163,234 470,786,582

5. Investments 487,484 – – 40,201,200

6. Total Income 1,170,435,180 420,524,790 48,454,382 675,864,126

7. Profit Before Tax 1,919,663 4,872,830 539,472 2,331,638

8. Provision for Tax – 1,690,368 – –

9. Profit After Tax 1,919,663 3,182,462 539,472 2,331,638


53

CMYK

SU-RAJ DIAMONDS AND JEWELLERY LIMITEDRegistered Office: Kesharba Market-2, Gotalawadi, Katargam, Surat 395 004

ATTENDANCE SLIP

Please complete this Attendance Slip and hand it over at the entrance of the Meeting Hall.

Shares Held_________________________________

Regd.Folio No._______________________ DP ID No._____________________ Client ID No.____________________

(Name in BLOCK letters)____________________________________________________________________________

I hereby record my presence at the 22nd ANNUAL GENERAL MEETING of the Company held at Mahida Bhawan,Icchanath, Opp. S.V.R. Engineering College, Dumas Road, Surat 395 007 on Friday, the 26th September, 2008 at11.30 a.m.

_______________________Member’s/Proxy’s Signature

NOTE:Members/Proxy holder are requested to bring their copy of the annual Report with them at the Meeting.

-------------------------------------------------------------------------CUT HERE----------------------------------------------------------------------

SU-RAJ DIAMONDS AND JEWELLERY LIMITEDRegistered Office: Kesharba Market-2, Gotalawadi, Katargam, Surat 395 004

PROXY FORM

Shares Held_________________________________

Regd.Folio No._______________________ DP ID No._____________________ Client ID No.____________________

(Name in BLOCK letters)____________________________________________________________________________

I/We__________________________________ of _____________________________being a Member/Members of the

above-named Company, hereby appoint________________________________________________________________

of__________________________________________ in the district of _____________________________________ or

failing him ________________________________ of ____________________ in the district of______________________

as my/our proxy to vote for me/us and on my/our behalf at the 22nd ANNUAL GENERAL MEETING of the Company to

be held on Friday, the 26th September, 2008 at 11.30 a.m. or at any adjournment thereof.

Signed this _________ day of ___________ 2008.

AffixOne Rupee

RevenueStamp

Note: The Proxy to be effective should be deposited at the Registered Office of the Company not less than 48 hoursbefore the commencement of the meeting.

CMYK CMYK

22ND ANNUAL REPORT2007-2008


If undelivered please return to:


Unit : Su-Raj Diamonds and Jewellery LimitedC-13, Pannalal Silk Mills Compound

L.B.S. Road, Bhandup (West), Mumbai 400 078

BOOK-POST

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