24th Annual Report 2010-2011

24th ANNUAL REPORT 2010-2011 BOARD OF DIRECTORS : Mr. Kumar C. Bhansali. Chairman & Managing Director Mr. Chandralcant M. Bhansali Director (Resigned w.e.f 22nd June, 2010) Mr. Nirav K. Bhansali Whole- time Director Mt Mayank IL Mehra Whole- time Director Mt Hien H. Shah Whole-time Director (Resigned w.e.f 22nd June, 2010) Mr. Yogesh K. Kaji Director Mr. Zubin N. Batliwalla Director (Resigned w.e.f 23rd September, 2010) Mr. Sumit B. Shah Director (Resigned w.e. I2th November, 2010) Mr. Madhukar G. Patankar Director (Appointment w.e.f 23rd September, 2010) Mt Nishikant S. Jha Director (Appointment w.e.f. I2th November, 2010) AUDITORS : M/s. A. N. Damania & Ca Chartered Accountants (Resigned w.e.f 5th February, 2011) M/s. Apte & Co. Chartered Accountants (Appointment w.e.f 5th February, 2011) BANKERS : State Bank of India Canara Bank State Bank of Indore Industrial Development Bank of India Limited Royal Bank of Scotland Indusind Bank Ltd Union Bank of India
Standard Chartered Bank

Axis Bank
I

NI:7110E heathy given tfrattheTiventy Fiat& Artnint Cserteralideetittg of-the members of CLASS/CDIAMONDSINDIA), LIMITED will be held at Jamnalal Bajaj Seva Trust's Karina* Bt t Bajaj Mann, Ground FlootJainal l aj Mrs. 226, Naimari Point, Mumbai 400 021 onTuesdat, 20"Septenbe42,01 a 11.00aan. to transact the following business:
Mike it

I. To receive, consider and adopt the Auclitedlirefit & Loss Account for the year ended 3 C March, 2011 and the Balance Sheet as; on that date together with the Directors' aid 01451kors'Reports. ' To appoint a Director in place of Mr. Kumar C Bhansali, Who retires byrontionartd has offtied himself for being re-appointed. To appoint a Director in place of Mr. Nirav K. Sheilah, who retires by rotation and has offered himself for being re-appointed. To appoint Mr. Nishikart S. Pia as Director of the Company. He was appointed to fill Casual vacancy due to resignation of Mr. Sumit & Shah. He vacates his office at this Annual General Meeting and being eligllile offers him for reappointment. To appoint Mt Madhukar G. Patankar as Director of the Company. He was appointed to fill Cnosl vacancy due to resignation of Mr. Zubin N. Batliwalla. He vacates his office at this Annual General Meeting and being eligible offers him for reappointment. Appointment of M/s. Apte & Ca as the statutory auditor of the Company for the Year 2011-2012, and to fix their. remuneration. M/s. Apte & Ca has been appointed due to the resignation of M/s A. N. Damania & Ca in the board meeting held one February, 20I I.
NOTES:

I.

A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTTTLEDTO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF ANDTHE PROXY NEED NOT BE A MEMBER. PROXIES IN ORDER TO BE EFFECTIVE, MUST BE RECEIVED AT THE REGISTERED OFFICE OF THE COMPANY AT LEAST 48 HOURS BEFORETHE MEETING. Memben/Proxies should bring the attendance slip duly filled in for attending the meeting.

3.

The Register of Members and Share Transfer Books of the Company will remain dosed from Tuesday 13' September, 2011 to Tuesday 20d4 September, 20I I (Both days inclusive) Securities & Exchange Board of India (SEBI) has made trading in the shares of the Company compulsory Urdematetialized form for all investors with act from 13" March, 200I.'The Equity Shares of the Company have been allotted International Securities Identification Number (ISIN)INE987C01024. Since the Company's shares are in compulsory DEMAT trading, to ensure better service and elimination of risk of holding shares in physical form, we request shareholders holding shares in physical form to dematerialize their shares at the earliest Equity Shares of the Company are listed on the Bombay Stock Exchange Limited (13SE) and on National Stock Exchange of India Limited (NSE).The Company has paid the annual listing fee to the said Exchanges. A brief resume of the directors proposed to be appointed vide item nos. 2 to 5 in the Notice are as follows:

Mr. Kumar C Bhansali is the Managing , Director of the company and under his leadership the Company has reached astronomical heights in the markets. He has sound knowledge and practical experience in handling technical and financial aspects of the Companies.

1111=1=SINIC*111
Mr. Nirav K Bhansali has wide contacts and experience in export trade of the Diamond Industry. He possesses vast knowledge and experience by virtue of his long association with Diamond Industry. Mt Nishikant Jha possesses vast knowledge and experience by virtue of his long experience. He has good communication skills which is helpful to our organization. Mr. Madhukar Patankar is a Chartered Accountant and Company Secretary who has vast and in depth knowledge of the business of the Company. He has more than 24 years of rich experience in the field of Accounting, Statutory Audits, Concurrent Audits, Internal Audits, SOAX Audit under USGAAP, Income Tax matters, Secretarial Matters and Management Consultancy, which is helpful to our organization. As per the provisions of the Companies Act, 1956, facility for making nominations is available to the shareholders in respect of the shares held by them in the prescribed Form No.2B. Shareholders are requested to avail of this facility. Members intending to require information about the accounts are requested to write to the Company at an early date so enable the management to keep the information ready. 10.
as to

Pursuant to Section 205C, the dividend for the year ended 3 I` March, 2004(2003-2004) has been transferred to the Investor Education and Protection Fund. All shareholders who have not yet taken the dividend can request for the same along with the dividend warrant for revalidation of dividend. Section 205C of the Companies Act, 1956, provides that the amount of dividend, which has remained unpaid or unclaimed for a period of seven years from the date of transfer to Unpaid Dividend Account of the Company shall be transferred to the Investor Education and Protection Fund set up by the Government of India and no payments shall be made in respect of any such claims by the Fund. Kindly note, that after such transfer, the members will loose their right to claim such dividend. Members, who have not yet encashed their dividend warrants) for the financial year ended 3Ist March, 2005 (2004-2005) onwards, are requested to make their claims to the Company accordingly, without any delay. Members are requested to consolidate the multiple folios existing in the same names and in identical orders so as to facilitate better and efficient service. Consolidation of folios does not amount to transfer of shares and therefore, no stamp duty or other expenses are payable on the same. Explanatory Statement pursuant to Section I73 of the Companies Act, 1956, is
as

I I.

follows:

ItemNa2 The term of Mr. Kumar C. Bhansali, Director of the Company, expires at this Annual General Meeting Mr. Kumar C. Bhansali has offered himself to be re- appointed. None of the Directors except Mr. Kumar C. Bhansali is deemed to be concerned and interested in the resolution. ItemNo.3 The term of Mr. Nirav K. Bhansali, Director of the Company, expires at this Annual General Meeting Mt Nirav K. Bhansali has offered himself to be re- appointed. None of the Directors except Mr. Nirav k. Bhansali is deemed to be concerned and interested in the resolution. ItemNo.4 Mt Sumit B. Shah, Director of the Company, had resigned and the Board of Directors accepted his resignation in their meeting held on I2th November, 2010. At the same meeting Mr. Nishikant Jha was appointed as the additional director in the place of Mr. Sumit Shah. Mr. Nishikant Jha's term as a director expires at this Annual General Meeting Being eligible he has offered himself to be re-

appointed as Director of Company. None of the Directors except Mr. Nishikant Jha is deemed to be concerned and interested in the resolution. Itan No. 5 Mr. Zubin N. Badiwalla, Director of the Company, had resigned and the Board of Directors accepted his resignation in their meeting held on 23-1 September, 20I0. At the same meeting Mr. Madindcat G. Patanlcar MS appointed as the additional director in the place of Mr. Zubin N. Badiwalla, Mr Madhukar G. Patankar's term as a director expires at this Annual General Meeting Being eligthle he has offered himself to be re-appointed as Director of Company. None of the Director except Mr. Madhukar G. Patahkar is deemed to be concerned and interested in the resolution. ItemNo. 6 Mis A. N. Damania who was appointed as auditor of the Company at the Annual General Meeting on 22- September, 2010, informed the company on 5th February, 2011 that their firm was not a peer reviewed firm, which firms were compulsory for audit of listed company. Casual vacancy caused due to resignation of M/s, A. N. Damania & Co. was filled up by the Board of Direuoss in their meeting held on 5th February, 20I I. The Board had appointed M/s Apte & Co. to hold office till the conclusion of this Annual General Meeting. Accordingly the resolution at point no- 6 is proposed. BY THE ORDER OF THE BOARD

Kumar C. Bhansali Managing Director Registered Office: 1002, Prasad Chambers, Opera House, Mundial 400 004 Data I August, 20I I

%zp
DIRECTOR'S REPORT To The Members, Your Directors have great pleasure in presenting their Twenty Fourth Annual Report with the Audited Statement of Accounts for the financial year ended 3r March 20I I. I. FINANCIAL RESULTS: (Rupees in Lacs) PARTICULARS FOR THE YEAR ENDED 31-Mar-I I FOR THE YEAR ENDED 3I-Mar-I0

I. FINANCIAL RESULTS Sales (Incl. Exch. Difference) Other Income Profit before Interest & Depreciation Less : I) Interest 2) Depreciation Total of Interest and Depredation Misc items (C) Profit before taxation (A-B-C) 50 231 87 182.38 4,30177 3,095.63 427.73 3,5I8.36 65,171.67 408.56 5,360.17 3,047.79 527.69 3,575.48

(26.41) 759.00 158.87 600.13 18,690.95 19,291.08

(15.65) 1,769.04 2729 1,741.75 17,145.08 18,886.83 45.88 150.00 18960.95 18,886.83

Provision for & Deferred Taxation Profit after taxation Bal in P & L Account brought/forward

2. APPROPRIATIONS Proposed Dividend (incl Tax) Transfer to General Reserve Balance carried forward

19,291.08 19,291.08

2. DIVIDEND: Due to the inappropriate market conditions and the financial crisis, your company could barely maintain the level of revenue. The sale for the year 2010-II has dipped down drastically by 23.12%. In order to honor the companies committed contracts to its esteemed customers it had to sell with squeezed margins, leading to the fall in net profit level. Considering of the lower earning of the company in the year the Directors do not recommend any dividend for the year. 5

=IND ONNSE &BSE: The shares of your company are listed on the Bombay Stock Exchange Limited Exchange of India Limited (NSE Cock CLASSIC EQ)

(RCP Code: 523200) and the National Stock

BUSINESS PROSPECT& The year could not St a revival of business from the US sector, as theft were differences in opinion by the customer there. However, your company now intends to penetrate this market all by itself starting from the snitch, which Mould take couple of years to gear up. Your company is now geared up for the production of the larger type of diamonds, which would yield higher margins and a larger army of products for the customers to suit their require vents: The only constraint of this section of the business is that it involves huge amounts on toughprocurement Oncethe financial position of your company is eased out, this section could add better value to the overall business. In order to optimize the cost of operations your company intends to shift its operations from the Open House area of Mumbai to Barulta The Diamond Bourse in the near future. We also plan to start up a factory in the SurSEZ situated at Sachin, near Surat This factory would be is a position to produce Diamonds as well as jewellery for the newer markets. S. FINANCE: The company has been struggling in materializing its Debtors at a faster pace due to the conflicts between the distribution arms woddwide.The company has laid out policies of trying to gain better credit terms from its creditors leading to a position which could end up in repaying the bank finance to the extent of over Rs.18.83 Crores in Rupee terms. All this has improved the Credit rating of your company which had deteriorated in the earlier year due to the given market conditions. DIRECTORS: The Company has 6 Directors.(Mr. Sumit B. Shah & Mr. Zubin N. Badly/Ala resigned w.e.f it November, 2010 & 2e September, 2010 respectively) of which 3 are Independent Directors. Mr. Kumar C. Bhansali and Mr. Nirav K. Bhansali are liable to retire by rotation and being eligible have offered them for re- appointment. AUDITORS 1441/s Apte & Co. Chartered Accountants were appointed by the Board of Directors in their meeting on e February, 2011 to fill the causal vacancy caused due to resignation of M/s A.N. Damania and Ca who were appointed as auditors at the Annual General held on 22" September, 20110. M/s Apte & Co. having been appointed by the Board of Directors for filling up the casual vacancy vacates their office at this Annual General Meeting.The company has received the certificate from the auditors that their appointment if made, will be within the limits prescribed ruder Section 224(I) of the Companies Act 1956. CORPORATE GOVERNANCE: A separate section on Corporate Governance is included in the Annual Report and the certificate from the company's auditors confirm the compliance of conditions on Corporate Governance as stipubncl in the said dause 49 of the Listing Agreement annexed thereto. FIXED DEPOSIT: The company has not invited or accepted any deposit during the year under review under Section 58-A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975.
10. PERSONNEL:

During the year under review no employee has drawn salary exceeding the limits as stated in Section 217 (2A) of the Companies Act, 1956 read with the Companies (Partied= of Employees) Rules, 1975.

I I. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The information pursuant to Section 217 (I) (e) of the Companies Act, 1956 read with the Companies (Disclosure of
particulars in the Report of the Board of Directors) Rules, 1988 is given below:

CONSERVATION OF ENERGY
As the company is not covered in the list of industries required to furnish information in Form A relating to

conservation of energy, the same is not given. TECHONOLOGY ABSORPTION Research and Development (R & D)
I. Specific areas in which the company carries out R & D: The Company has been successful in manufacturing its own Laser Cutting Machine for the Diamond factory. In the jewellery sector in house design and manufacture of certain consumables are carried out. Benefits derived as a resuk of the above R & D: The Company achieves better productivity and cost reduction. Reduction in Production lead time Reduction in rework and rejection in the manufacturing process Total traceability of each piece during the entire manufacturing process through in house software development Future plan of Action: The company will strive to improvise the manufacturing methodology to effect further cost reduction and

increase productivity.
Expenditure on R & D: ) Capital ) Recurring Total R & D expenditure as a) included in the manufacturing cost percentage of total turnover ) Efforts in brief made towards Technology absorption and innovation: The company keeps abreast of global technical developments, innovations and trends in its line of business and strives to constantly reduce costs and improve the quality of its products. Benefits derived as a result of the above efforts e.g. cost reduction, product development and improvement; import substitution etc. will be reflected in precision manufacturing of high quality products and substantial cost reduction. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) following information may be furnished: The Company has not imported any technology.

c.

7.

C.

FOREIGN EXCHANGE EARNINGS AND OUTGO: Information regarding foreign exchange earnings and outgo is given below: Total Foreign Exchange used Total Foreign Exchange earned : Rs 10689.65471 Lacks : Rs 3019141217 Lacks

12. DIRECTORS RESPONSIBILITY STATEMENT:

The Directors confirm:
ii that they have selected such accounting policies and applied them consistently and made judgments and

estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company for that period; that they have
taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; 7

iii that they have prepared the annual accounts on a going concern basis

CAUTIONARY STATEN/ENT: Statements in this Directors Report and Management Discussion & Analysis describing the Companies objectives projections, estimates, expectations or predictions may be forward-looking statements within the Meaning of appikable Securities laws and regulation:v. Actual resits could differ materially fittnithose expiessed or implied due to risk of uncertainties associated with our expectations with respect to, but not limited to, changes in Government regulations; tax regimes, etimitmic developments within India and the countries in which the Company conducts business, technological changes, exposure to trinket risks, general economic and political conditions in India and which have an impact on our business activities or investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, the performance of the financial markets in India and globally and raw material availability and prices, demand & pricing in the Company's principal markets and other incidental actors. ACKNOVVLEDGEMENT& The Directors wish to convey their appreciation to all the employees of the company for their personal efforts as well as for the excellent contribution made by all employees of the Company through their commitment, competence, co-operation and diligence to duty their collective contribution in such trying times, which enabled the company to meet the challenges set before it. Your Directors would like to express their grateful appreciation for the assistance and cooperation received from the banks during the'Year under review Your Directors also wish to place on record their deep sense of appreciation for the continued support of customers and suppliers of the company. Your Directors thank the shareholders for their confidence in the company. BY THE ORDER OF THE BOARD
Mt.

Kumar C. Bhansali Managing Director

Mr. Nirav K. Blansali Director Mayas* Melua Director

Registered Office: 1002, Prasad Chambers, Opera House, Mumbai 400 004

Dated: I I th August, 201

ANNUAL REPORT 2010-2011

REPORT ON CORPORATE GOVERNANCE

COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE CLASSIC DIAMONDS (INDIA) LIMITED has adopted good corporate governance practices and ensures compliance with all relevant laws and regulations. It has lead to the satisfaction and transparency to the stakeholders. Company's philosophy is concerned with ethics, values, morals and social responsibilities.The Company remains accountable to shareholders and other beneficiaries for their actions.The Company conducts its activities in a manner that is fair and transparent to all stakeholders. BOARD OF DIRECTOR&
imposition and sin of the l

The Board has a required combination of Executive, Independent and Non- Executive directors. The Board is chaired by an Executive Director and total strength of the board was of 6 Directors as on 3r March, 2011, Comprising of 3 Whole time/ Executive Director and 3 Independent Director. , /* Ps:4ElAming; 13 Board Meetings were held at Mumbai during the year under review. The Board Meetings were held on 15th April, 2010; 28th April, 2010; I May, 2010; 28th May, 2010; 23'd June, 2010; I It August, 2010; I4'b August, 2010; 23'd September, 2010; I2`h November, 2010; 7th December, 2010; 5 th February, 2011; IOth February, 2011; I 1 th March, 2011. The maximum gap between two Board Meetings did not exceed the limits prescribed in clause 49 of the Listing Agreement. Derails of the attendance at Board Meeting and Annual General Meeting held on 22nd September, 2010 by the Directors, together with the number of their Directorships and Memberships of the SEBI-designated Board Committees of other companies are as follows; Name of Matins Category of Directors Board Meetings attended during 2010-11 13 Attendance at the A.G.M NO NO No. of other Directorship $ I NIL Membership of Board Committees of other Companies NIL NIL

Mr. Kumar C. Bhansali Mr. Chandrakant M. Bhansali (Resigned w.e.f. 22.6.2010) Mr. Nirav K. Bhansali Mr Mayank Mehta Mr Yogesh K. Kaji Mr Sumit B. Shah (Resigned w.e.f. 12.112010) Mr Zubin N. Batliwalla (Resigned w.e.f. 23.9.2010) Mr. Madhukar Pantankar (Appointed w.e.f. 23.9.2010)

Chairman & Managing Director Executive Director Non-Executive Independent

Whole-time Director Executive Whole-time Director Executive Director Non- Executive Independent Director Non- Executive Independent Director Non- Executive Independent

8 13 6 5

YES YES YES NO

I NIL NIL NIL

NIL NIL NIL NIL

YES

NIL

NIL

Director Non- Executive Independent

NO

NIL

NIL

Mr. Nishilcant Jha (Appointed w.e.f. 12.11.2010) Mr Eliren Fl Shah (Resigned w.e.f. 22.6.2010)

Director Non- Executive Independent Whole- time Director Executive

NO

NIL

NIL

, 5

NO

NIL

NIL

$This excludes Directorslupheld in other Private Limited Companies. C) Shareholding of Non-Executive Directors as on 3IsiMardi. 2011; St. No. L 2. Name of Directors Mr.Chandrakant M. Phansali (Resigned w.e.f. 22.6.2010) Mr. Yogesh K Kaji TOTAL: Shareholdings in the Company 26,81,405 87,920 2749.325

3) a The Board has constituted the following three Committees of Directors: . a) Audit Committee b) Remuneration Committee c). Investor's Grievance Committee a) Auslitralimiasz Role of Audit Committee and its terms of reference include To focus it's attention on subjects relating to accounting standards, internal controls and finsnekl policies. To oversee the Company's financial reporting process and disclosure of its financial information. To review the financial statement before submission to the Board of Directors. To hold discussion with Management regarding the internal control system. To hold prior discussion with external auditors regarding scope and nature of audit before commencement of the audit and also to have post audit discussion on areas of concern. The Audit Committee met four times during the year on It May 2010; 30' July, 2010; 8'November, 2010 & February, 2011. The composition, names of the members, chairperson of the meeting and attendance of the members during the year are as follows: Sr. No I. Names of Members Designation Category of Director Independent Non-Executive. Independent Non-Executive. Independent Non-Executive. Independent Non-Executive. Independent Non-Executive Attendance at Meeting 2 2 I

Mr.Zubin N. Batliwalla Chairman Mr. Sum it Shah Mr.Nishilcant Jha Member Member

4 5.

Mr. Madhukar Fatankar Chairman Mr. Yogesh IC Kaji Member

2
4

genlatletiiiinC480Mbta The Remuneration Committee has been constituted to recommend/review the remuneration package of the Managing/Whole time Directors, based on performance and defined criteria. Mr. Yogesh K Kaji is the Chairman of the Committee.The Committee has been authorized to determine the remuneration package for any Executive Directors as well as remuneration payable to the non-executive Directors from year to year. The Remuneration Committee has met once during the year on 25' March, 2011. The composition of the committee is as follows: 10

1111111111SIME
Sr. No I. Names of Members Mr. Yogesh K. Kaji Mr. Madhukar Patankar Mr. Nishikant Jha Designation Chairman Member Member Category of Director Independent Non-Executive. Independent Non-Executive. Independent Non-Executive The Non- Executive Directors sitting fees for each meeting of the Board or Committee thereof attended by them. Other than Sitting fees, no other remuneration is payable to the Non- executive Directors for the year 2010-2011, Details of Remuneration to the directors for the year ended 3I March, 20I I are as follows: Director Relationship with other Directors Father of Kumar Bhansali Business Relationship Sitting Fees Salary/ Perquisites/ Gratuity Contribution Total To P.F.

Son of Chandrakant Bhansali Mr.Nirav K. Bhansali Son of Kumar Bhansali Mr.Zubin Batliwalla None (Resiged w.e.f 23.92010) Mr.MayanIc Mehta None Mr:Yogesh Kaji Mr.Hiren Shah (Resigned w.e.f. 22.6.2010) Mr.Sumit Shah (Resigned w.e.f 12.11.2010) Mr.Madhukar Patankar (Appointed w.e.f. 23.9.2010) MrNishikant Jha (Appointed w.e.f 12.II .20 I0) None None

Mr.Chandrakant. Bhansali (Resigned w.e.f. 22.6.10) Mr. Kumar C. Bhansali

Promoter

Promoter's Family

24,00,000

24.00,000

Promoter's Family

24,06,500

9,360

24,15,860

None

17,500

17,500

None None None 22,500

11,05,365 99,000

9,360 2,340

11,14,725 22,500 1,01,340

None

None

5,000

5,000

None

None

35,000

35,000

None

None

32,500

32,500

11

c)

innagararieligafigMMittga The Company has constituted an Investor Grievance Committee. The terms of reference of the Committee is to redress Shareholders and Investors complaints, to review all matters connected with the share transfers and to review status of legal cases Solving the investors where the Company has been made a party. The Company's Registrar & Share Transfer Agents, Ws Link Intime India Pvt. Ltd. is fully equipped to carry Out the transfers of shares and redress Investor complaints. The Committee met four times during the year on 5 April, 7010; 7 July, 2010; 8 October, 2010 and 7 January, 201 I. The composition of the Investor's Grievance Committee and attendance of the Committee members at these meetings were as follows: Sr. No I. Names of Members Mr.Kumar C Rheas& Mr. Zubin Batliwala Mr. Maclhultar Patankar Mr. Nirav K. Bhansali No. of Meetings Attended during the year 2010-2011

Designation Chairman Member Member Member

Category Non-Independent Executive. Independent Non-Executive Independent Non-Executive Non-Independent Executive

2 2 4

4.

Details in respect of Compliant., Officer: Sr. No I. Designation of Compliance Officer Mr.Kumar C. Bhansali Chairman & Managing Director (w.e.f. to 1.4.2010 2192010) Mt Namdev Apange (w.e.f. Company Secretary 23.92010 to 31.32011) Name

2.

Details of Investors Complaints and Requests during the Year 2010 2011 are as follows: Sr. No. I. 1 Nature Of Complaint Whether Received SERI DIRECT 4 II 3 I0 5 3 I II 6 No of Complaints Redressed 4 II 3 10 5 3 I II 6 Pending

7. 8. 9. I0. II.

Non-Receipt of Share Certificate Non-Receipt of Dividend Warrant of Non-Receipt Rep/Spl/Con/Dup Certificate Non-Receipt of Demat Credit/ Rana Certificate Non-Receipt of Bonus Certificate Change of Address Bank Details Stop Transfer Issue of Duplicate Certificate Confirmation of Details Transfix/Transmission/ Deletion

NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL

12

ANNUAL RI iPORT 2010_701 1

IS.

21. 21

Issue of Duplicate Dividend Warrant Certificate not existing in Master Data Dematerialization Revalidation & Replacement of Dividend Warrants ECS Detiils Bank Mandate POA Registration Registration of Bank Details Exchange of Certificate Stock split of Equity Shares Others TOTAL

I -

NIL NIL

NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL

5 16 3 89

5 16 3 89

Details of Shares in Physical form lodged for transfer during 2010-2011 are as follows: Sr. No I. Total No. of Transfer Deed Received 14 Dispatched within 30 days of receipt. 14 Dispatched after 30 days of receipt -

Share Transfer; Transfers of shares in physical form are affected and share certificate are dispatched within an average period of 30 days from the date of receipt of request, provided the relevant documents are complete in all respects. With a view to expedite the process of Share transfers, certain officers of the Company have been severally authorized to approve the valid application for transfer, which have been duly processed and scrutinized by the Registrar and Share Transfrr Agent. 4) CIENERALEEEMEEM10; - Annual General Meeting The Location and time of the Annual General Meetings held during the last 3 years are as follows: SPECIAL RESOLUTIONS NIL

AGM 2 I st AGM

DATE 29th September,2008

TIME 3.30 p.m.

VENUE Kamalnayan Bajaj Hall, Nariman point, Mumbai Kamalnayan Bajaj Hall, Nariman point, Mumbai Kamalnayan Bajaj Hall, Nariman point, Mumbai

22' AGM

14th September, 2009

11.30 a.m.

NIL

23" AGM

22' September, 2010

H.00 a.m.

NIL

13

5) Mr' LW NEC

There was no transaction of material nature with the Promoters, Ditawts, Management or their relatives during the financial Year of the Company, which could have potential conflict with the interests of the Company at large. However, the transactions detailed in Note no. 14 of Schedule XV annexed to the Accounts may be considered as related party transactions. The Company does not have a Whistle Blower Policy. All the same, no personnel of the Company have been denied access to the grievance redressal mechanism of the Company. The Company is in Compliance with all the mandatory Provisions of Clause 49 of the Listing Agreement except issuance of public notice under clause II(2) of SAST for conversion of preferential warrants to equity shares, which the company is following regularly with the regulations. 6) MEANSOF COMMUNICATION; The Annual, half Yearly and quarterly results are regularly submitted to the Stock Exchange and published in Newspapers in accordance with dretisting Agreement. ComPanY's quarterly unaudited results for Quarter ended 30' June, 2010; 30' September, 2010 and 3 December, 2010 along with Audited Inuits for the year ended 31 th March, 20I I were published in the Business Standard (English daily newspaper) andTarun Blunt (Vernacular daily newspaper). Management Discussion and Analysis forms part of the Director's Report.
7) (a)

Annual General Meeting (Date, time and

venue)

Financial Calendar Book Closure Date Listing on Stock Exchanges

20 September, 20I I at 11.00 an Jamnalal Bajaj Seva Trust's, Kamalnayan Bajaj Hall, Bajaj Bhavan, Ground Floor, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai 900 021 The Company follows April-March as its financial year. The results for every quartet are declared within 45 days from the end of last quarter. Tuesday 13 September, 2011 to Tuesday 20 September, 2011 (Both days inclusive) Bombay Stock Exchange Limited, Pt Floor, New Trading Ring, Rotunda Building, Dalai Street, Fort, Mumbai 400001. The National Stock Exchange of India Limited Exchange Plaza, Sandra Kuria Complex, Sandra (East), Mumbai 400051

14

ANNUAL REPORT 2010_2011

Registrar & Transfer Agents. Share LINK INTIME INDIA PRIVATE LIMITED C-I3, Pannalal Silk Mills Compound, L B S. Marg, Bhandup (West), Mumbai- 400078. Tel: (022) 25963838 Fax: (022) 25946969 Email: [email protected]. Business Hours: Monday to Friday: 10.00 a.m. to 5.00 p.m. 10.00 am. to 1.00 p.m. Saturdays: Contact Person: Miss Trupti Parab/Ms Sujata

1. G- 28, G& J Complex III, Seepz, Mumbai- 400096. 2.138 & 139, SDF-V, Seepz, Mumbai- 400096. GJ-I2A, SDF VII, Seepz, Mumbai- 400096. Unit No. E 5, Sub Plot 15, Plot No. I I & 12, WICEL, MIDC, Andheri (East), Mumbai- 400093. 5. FP No. 65/A/P/I-B, TPS No.4, Behind Umiya Mata Mandir, A K Road, Surat. for Classic Diamonds (India) Limited Address ) Correspondence 1002, Prasad Chambers, Opera House, Mumbai- 400004 TeL (022) 40361000 Fax: (022) 40361002 Email: compseca,rlawicdiamondsindia.com BSE-523200 Scrip Code NSE- CLASSIC ISIN Number for NSDL INE987C01024 and CDSL. a) Marl= month of 20I0-20I I on StockExchanga Mumb ai: Share prices of the Company for the period 2010-2011 The Stock Exchange, The National Stock Exchange Mumbai of India. Low(Rs) Low(Rs) High(Rs) High(Rs) 19.00 26.80 25.70 20.30 23.90 18.60 23.40 18.75 18.75 21.90 18.25 24.40 19.70 23.40 20.00 23.50 24.00 23.50 20.20 20.05 20.50 23.20 2325 20.15 21.85 19.40 21.90 19.50 15.15 23.20 15.05 23.20 15.30 18.85 15.00 18.85 14.00 19.40 14.55 20.00 15.20 10.70 15.90 10.70 11.30 13.40 11.70 13.45

Plant Locations

Market Price Data

Month April, 2010 May, 2010 June, 20I0 July, 2010 August, 2010 September, 2010 October, 2010 November, 2010 December, 2010 January, 2011 February, 2011 March, 2011

15

(c) Categories of Shareholding as on 3I'Madt,M1i Number of Shares Categories Promoters, Direcoars, Relatives and Companies under the same Management Mutual Funds Banks Private Corporate Bodies Trust Indian Public NRI's Clearing Members Total d) Distribution of Shareholding as on 3r March. 20I It Shareholding of nominal values Rupees I - 5000 5001 - 10000 MOM - 20000 20001 - 30000 30001 - 40000 40001 - 50000 50001 - 100000 100001 - Above Total
(e) ililgtniktiti2nAShEr&

Amount in Rs. 5,08,92,692 L000 31,86,276 31,41,086 I1,000 2,0424,860 3,79,102 4,03,984 7,8440,000

% 64.8810 0.0013 4.0633 4.0044 0.01 26.04 0.48 0.52 100.00

2,54,46,346 500 15,93,138 15,70,543 5,500 1,02,12,430 1,89,551 2,01,992 3,92,20,000

Shareholders Number % of total 12,437 94.3130 413 3.1320 208 1.5770 34 02580 0.1360 18 II 0.0830 02050 27 39 0.2960 13,187 100.0000

Rupees 1,21,38,424 31,50,908 31,33,514 8,50,500 6,36,792 4,71,700 19,51,392 5,61,06,770 7,8440,000

% Of total 15.4750 4.0170 3.9950 1.0840 0.8120 0.6010 2.4880 71.5280 100.0000

The shares of the Company are available for dematerialization and Agreements have been signed with National Securities Depository Ltd. (NSDL) & Central Depository Services (India) Ltd (CDSL). 94.9% of the Company's shares are held in dematerialized mode.Trading in dematerialized form is compulsory for all investors. The Company (through its Registrars and Share Transfer Agents) provides the facility of simultaneous transfer and dematerialization of shares and has confirmed the same to NSDL and CDSL

16

Auditors Certificate on compliance with the conditions of Corporate Governance under (Inc. 49 of the Listing Agreements with the Stock Exchanges.
To the Members of M/s Classic Diamonds (India) Limited We have examined the compliance of the conditions of Corporate Governance by Classic Diamonds (India) Limited, for the year ended 3 March, 2011, as stipulated in Claw 49 of the Listing Agreements of the said Company with the Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to a review of the procedures and implementation thereof, adopted by the Company for ensuring compliance with the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according the explanations given to us and the representations made by the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement We state that no investor grievances are pending for a period exceeding one month against the Company as per the records maintained by the Company which are presented to the Investors Grievance Committee. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. For Apte at Co. Chartered Accountants

JAYANT APTE Parma Membership No: 035494 Place Mumbai Date: August, 2011

17

MANAGEMENT DISCUSSION AND ANLYSIS REPORT OVERALL PERFORMANCE: .

Your company's product profile ranges from Rings, Earrings, Pendants, Bracelets, to Necklaces in the jewellery section which are manufactured with studdings such as the Diamonds that its diamond manufacturing division prodtices and the precious semi precious stones. The company during the year saw a fall in revenues by 23 % mainly due to the US sector which did not pick up due to the difference of opinion with its major customer.There was a requirement of recycling of goods which did not pay off and hence the company had to turn down such offers. Further, the prices of Gold also have risen substantially from die I I00 levels to over I500 $ per Tr. Ox. since 20I0.The Middle east sector aLso faced slow down along with political instability which pulled down the revalues. However, the response that our product in other geographical markets has received could help us in achieving the levels of revenues. The sales of Cut and Polished Diamonds also could not be maintained mainly owing to the difference in opinion with the marketing arms at Belgium on account of rise in prices of Rough Diamonds making it difficult to make decisions on procurement and letting the market to stabilize especially for the core productthat we manufacture. The Diamonds that are manufactured are the round shaped diamonds ranging in sizes from -2 sieve size to as good as +II size (ie.. from half a: cent to fifteen cents a stone). Since. previous year we have been ahk to successfully manufacture the large sized stone which calls for greater skill level and precision in order to yield better result by way of high cottages sand value.These are the certified stones.
PAST HISTORICAL PERFORMANCE:

Net Profit Before Tax in Rs. Cra

29.64

JO 75 20 15

1760

10
5

4.63
2006-07

as
. 2009-10 .
2010-11

. . 2007-08

2008-09 Years

INDUSTRY OUTLOOK The Gems and jewellery sector has a huge market in India and abroad alike.This market encompasses various kinds of jewels including gold, colored gemstones, costume jewelleries, platinum and diamonds. The sector is expected to register a compound annual growth rate (CAGR) of 13 per cent during 2011-2013, according to a report "Indian Gems and Jewellery Market Forecast to 2013," by research firm RNCOS. India possesses world's most competitive gems and jewellery market due to its low cost of production and availability of skilled labor. As per our new research report "Indian Gems and Jewellery Market - Future Prospects to 2011", highly skilled and low cost manpower, along with strong government support in the form of incentives and establishment of SEZs, has been the major driver for the Indian gems and jewellery market. Gems and Jewellery has been one of India's leading foreign exchange earning sectors over the year, it has witnessed a considerable growth in the volume of exports to about US$ 43.14 billion during the year. It thereby comprises 16.67 % to the India's total merchandise exports. The Cut and Polished Diamonds segment registered an export of US$ 28.25 billion whereas the Rough Diamonds docked an export of US$ 1.08 billion and the remaining coming up from export of Jewellery. There has been substantial rise in prices of Diamonds and Gold during this period which has its attributes to the rise as welL The annual demand of Gold reached US$ 150 billion which is an increase of about 38 % over the previous year. Owing to the rise in prices of Gold the end customer prefers to house Silver jewellery instead, as a result of which the demand for Saver has risen manifold times. The price of Silver has risen 78 % from US$ 14.67 in 2009 to US$ 20.19 per ounce in 2010 and to over US$ 37 in Mar 2011. The projected share of industry segments and !thy consumption market trend shows that by 2015 China and India together will emerge as a market equivalent to the US market. The Middle East will surface as another large market, accounting for close to 9 % of the global jewellery sales by 2015. The industry has a potential to grow up to USD 280 billion by 2015 at a CAGR of 63%. (Source GJEPCKPMG report,) EXPANSION:Classic plans to explore more interior markets of the Far East and the Middle East apart from Europe and USA for the jewellery. It intends to set up a stand alone manufacturing unit at Sachin SEZ at Surat to cater to these markets with its newer products. This unit shall manufacture both Diamonds and jewellery as well. Surat is in process of being linked with the rest of the world by starting its Airport operations in the near future.
19

Further, most of the jewellery manufacturers have shifted over to Silverjewellety in-order to match the pricing tequirement of their customers. Classic also has intentions to explore such opportunities. SEGMENTAL REVIEW AND ANALYSIS The detailed financial and Orr:leal performance may be viewed from the hal** that and Anneenee theta in the Annual Reim:at. FINANCIAL REVIEW The details of the financial performance of company are appearing in the ce sheet Profit & Loss Account along with other financial statement Financial Highligra scar under: Your Company could achieve revenue of )U30231.87 Lacs and earned a nett lef R& 600.13 Lai as compared to turnover of Rs. 65,171 k7 Lacs andartnit a net profit Rs 1741.75 ging- represpating a 2.3 % decline in revenue and a sizeable decline of (S% 'in net profit. Earnings before inter** and depredite ITDA) Rs:4303.77 Lacs as compared to Rs. 5360.17 Lacs in preceding financial year, representing a dedine of 20.42 % During the year under review your company could generate lover revenues mainly on account of the change in strategy of customer selection, during the year we could materializing old and non moving stock and make the best of the recovering market conditions. OUTLOOK The overall economic slowdowns in the Europe and Middle East and particularly in the jewellery industry remain a concern for the profitability in the industry in the short term. However, with the cautious approach adopted by the Company which is expected to cushion the adverse impact of declining exports, the Company is via-poised to meet the dynamic challenges faced by the industry in the short as well long term. Your company's low cost of production and innovative design creation gives it the advantage over its competitors.
RISK AND CONCERN

The company continues to follow suitable strategies to positively modify its risks profile by eliminating and significantly reducing key business risks. The process of evaluating the potential risks is closely monitored by senior executives. All identified risks have been classified with respect to their seriousness and probabilities of such risks getting materialized have also been ascertained. In formulating corporate strategies, these risks are duly considered and counter measures are adopted. The increasing price of Gold & Silver, the levy of duty by the US GSP authorities along with increase in prices of Diamonds has made jewellery, from India costlier. Your company has been affected to a great extent. But., nonetheless, we have taken adequate measures to explore other better matkets such as Far East, Middle East and Australia. We are also looking into adding in colored stones with a combination of our Diamonds on the jewellery in order to make pricing lucrative considering the overall look and designing beauty of the product. The revival of company's main market ie. US will take still some time. In this type of market condition Classic has tried to penetrate other markets such as Middle East and Far East. HUMAN RESOURCES DEVELOPMENT The company firmly believes that in house human capital will see the organization through success in today's highly competitive global environment, Classic Diamonds considers its human resources as amongst its most valuable assets. Industrial relations were cordial throughout the yeas.

20

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The company has an internal control system commensurate with its size and nature of the business and meeting with the following objectives: Safeguarding the assets and protecting against loss from unauthorized use or disposition Transactions being properly authorized, accurately recorded and promptly reported, and Proper maintenance of the accounting records. The internal control system and the guidelines for compliance with stated policies of the company for conducting business and communication with the stake holders, customers and other third parties are well documented. In order to achieve higher operational efficiencies, the Company is fully committed to upgrading manufacturing technology, quality control equipments and other operating parameters The procedures, practices and limits with respect to this function were subjected to periodic review by senior management during the year under review. All the factories are ISO certified which call for inbuilt Systems proceeding towards continual improvement.

21

AUDITORS' REPORT TO THE MEMBERS OF CLASSIC DIAMONDS (INDIA)ALEVIITED

I. We have audited the attached Balance Sheet of CLASSIC DIAMONDS (INDIA) LIMITED, Mumbai as at 3r March, 2011, the Profit and Loss Account and the Cash Flow StateMent for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion %these financial statements based on our audit We conducted our audit in accordance with the auditing standards generally accepted in India.Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement An audit includes aamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor's Report)Order, 2003 as amended by Companies (Auditor's Report) (Amendment) Onier, 2004 (together 'the Order) ;slued by the Central Government of India in terms of Sub-settion (4A)of Section 227 of the Companies Act, 1956, and on the basis of the information and explanation given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief; we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure idea id to in paragraph 3 above, we report that We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audiq In our opinion, proper books of account as required by law have been kept by the Company, so far as appears from our examination of those books; The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accoun4 In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable; except regarding provision of Gratuity / Leave encashment not being provided on actuarial basis, therefore we are unable to quantify the effect, if any, on the profits of the company for the year ended 3 I n March 20I I. (Refer Note No. B-7 of Schedule XV). On the basis of written representations received from the Directors, as on 3Ist March, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 3 Ist March, 2011 from being appointed as a director in terms of clause (g) of sub-section (I) of section 274 of the Companies Act, 1956; Subject to our comment in Para 4(d) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: in the case of the Balance Sheet, of the State of Affairs of the Company as at 3Ist March, 20I 1; in the case of Profit and Loss Account, of the Profit of the Company for the year ended on that date; and c) in the case of Cash Flow Statement, of the Cash Flow for the year ended on that date. For Apte & Co. Chartered Accountants Jayant Apte Partner Membership No: 035494

Place: Mumbai Date I August, 2011

 II
ANNEXURE TO THE AUDITORS' REPORT TO THE MEMBERS OF CLASSIC DIAMONDS (INDIA) LIMITED FOR THE YEAR ENDED 3r MARCH, 2011
(Referred to in paragraph 3 of our report of even date) I (a) Fixed Assets records showing full particulars, including quantitative details and situation of fixed assets are being compiled by the company. Fixed assets have not been physically verified by the management during the year. No disposal of substantial part of the fixed assets of the company has taken place during the year. 2 (a) The inventories, other than those lying with outside parties have been physically verified by the management. In our opinion, the frequency of verification is reasonable. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account. According to the information and explanation given to us, the Company has, during the year, neither granted nor taken any loan secured or unsecured to / from companies, firms and other parties covered in the register maintained Under Section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii) (a), (b), (c),(d), (e), (f) and (g) of the order, not applicable. In our opinion, and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls. 5 (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements that need to be entered in the register maintained in section 30I of the Companies Act, 1956 have been so entered. (b) The Company is dealing in the items which requires technical appraisal and expertise in determining prevailing market prices as on the date of transaction and in the absence of required information and records, we are unable to express the opinion in respect of transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, with regards to prices which are reasonable having regard to prevailing market prices at the relevant time. During the year the Company has not accepted any deposits to which provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under would apply. The company did not have any independent internal auditor during the year. We are informed that the company is in the process of appointment an internal auditor. However, according to the information and explanation given to us, the company has an internal audit system, which is commensurate with the size of the company and nature of its business. 8. The Central Government has not prescribed maintenance of cost records under Section 209(IXd) of the Companies Act, 1956 for any of the products of the Company.

9 (a) According to the information and explanations given to us, and verification of records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues, including Provident Fund, Investor Education Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it. According to the information and explanations given to us, there are no undisputed amounts

23

payables in respect of the aforesaid dues as at 3 I st Matth, 20I I.

(b) According to the records of the company and informaticin and explanation given to us, there are no disputed dues pending / payable of IncomeTax, SalesTax,WeakhTax, ServiceTax, Custom Duty, Excise Duty, Cess as on 3 r March 2011. The Company has no accumulated losses and has not incurred cash losses in the current financial year and in the immediately
preceding financialyear. I I. Based on our audit procedures and on the basis of information and explanations given by the Management, we are of the opinion that the Company has not defaulted in repayment of dues to any bank or financial institution. The Company has not issued any debentures.

The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities, The Company is not carrying the chit fund business; hence, the provisions of any special statute applicable to chit fund are not applicable. The Company is not dealing in or trading in shares, securities, debentures or other investments. In our opinion, terms and conditions on which the Company has given corporate guarantees to banks on behalf of Associated concerns, are not prima facie prejudicial to the interest of the Company. On the basis of the review of the utilization of funds pertaining to term loans on overall basis and Mated information as made available to us by the Company, prima fade, the term loans taken by the Company were applied for the purpose for which they had been raised. According to Cash flow statements and other records examined by w and on the basis of the information and explanation given to us, on overall basis we report that funds raised on short term basis have not been used for long term investments by the company. The Company has made preferential allotment of shares to parties or companies covered in the Register maintained under section 301 of the Companies Act, 1956. However, the price at which shares have been issued is not prejudicial to the interest of the company. During the year, the Company has not issued any debentures. During the year, the Company has not raised money by public issue(s). Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Apte & Co. Chartered Accountants Jayant Apte Partner

Membership No: 035494

?Luc Mumbai Date: I Ph August, 2011

UMI L
I

CLASSIC

NSHEET ST CH 1

Sch. Jules

Rupees

CURRENT YEAR Rupees

PREVIOUS YEAR Rupees

MigatiQUMM 1 5,....holdn's Pugh Share Capital a)

b) Reserves and Surplus I II 78,440,003 2,365.197,999 2,443,637999 2 78,440,000 2505.185269 2,381625,269

kaillthiligle Secured Lams Defend Tax Liablity (Net)

III

3,038,131,930 5481,769,929

3,226,470,400 5,610,095669

QLaFilkg/5 II MPDG5n P I EizstAillsi Gross Block Les: Depreciation

777,930.493 409,033299 368897,194 13,195.527 382.092,721 V (1,436,969) 1,350,441 VI 1.321,192,849 4.287,568,554 176.336,679 22.895,660 5,807,993,742 VII 693,958505 14271,499 708.230,004 5.099,763,738 5,481,769,929

c)

Capital work in Progress

771,321,402 376,998,034 3' 323,368 31,636,373 425,959,741 22,399.627 171,701

2 3 4

Investments Deferred Tax Asset (Net)

CaltiOSAusiadamuoil AdniAte
Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less

3,071,132,543 3,302807,833 170,623,967 48,475.498 6593.039,941

fdaklaisigilkilLS

&SSE
Lab:blies Provisions

1,420,999,073 10,476,168 1,431,475241 5.161,564600 5,610,095469

Net Current Assets

Significant Accounting Policies and Noes on Accounts As pa our report of even date For APTE ft CO. Chatted Accountants

XV

For and on behalf of the Board

KUMAR C BHANSALI Managing Director

JAYANT APTE Partner

NIRAV K. EHANSALI Whole Time Director

MAYANR R. MEHTA
Whole Time Director Mamba Dated: 1 Ith August, 2011 Mumbai 1 1th August, 2011

25

attailaSIZOMANCal IMEITASNOCISACCOMIZMILIantmuziow gsr MARCF12011

&he day. I 24CO248 Saks Other hos Irma/ / (Deaner) in &Mt li SSA Goods ICKPIINDITURE Ittrosialt Oat Purebeet of Traded Grob Pommes toted Prone= foe Empkrier Msarisaterios end Other Wears Hosea Cost Dynamics V1/1 IX X CURRENT YEAR. Ler 5,023.186409 17459.340 (1,60940.5641 1.403405384 II XI X4 XIII XIV 1.621069.373 1,164.0832150 102497,791 67,529314 3242310346 42,272a 3,328483.937 74721.347 15487355 (1374740) 44012.732 1,869.094.365 Rums MUNI= MR. Rape 6417,164858 117.784351 550.767.061 7,145,714,269 2,604.961.060 ' 3.744697.990 145182.984 85,309.187 335,790491 52,764862 7.0061110.474 174903.795 5,072.672 (2343.943) 174175.066 1,714408343

III Pet Before Tarim Lae : Muria Incase Da Deferred Tax Friar /Imele Tar IV Profit Abet Talks Buena brought forra from adier yews Profit swarlirle fee gpariatiS0 V APPROPRIATIONS Proposed Divided Tex on Prepared Dividend Mode to Geed Ranee &ince calcied to Bane Sheet

1429307.597

1.8884413409

1929.10,597 1,929.107497

3.922.000 664544 15.000.000 1469494.865 1488683,409

Famits242819(442 . Boric fRefa Note 16 of Schalult XV] C.,. Acceasing Policies and Notes on Arrows As pa our report of cream For APIS & CO. Chemed &acumen

133 XV Fated co behalf ofdre Board

4.44

KUMAR C. IHANSALI Mertegies Director

;AVANT APIS
Paton

NIRAV K. MW' Alt 'Whole Time Director

MAYAN[ R. MENU Whole Tine Detract

Marebei Dual t 11th Pergest3011

Monilai
Data :11th

Aurst,2011

CLASSIC DIAMONDS (INDIA) LIMITED Cash(low Statement for the year ended 3Ist March. 2011
Particulars Caahflow from operating activities Net Profit before tax ADJUSTMENTS: Share of (Profit)/Loss from partnership Firm Rent income Interest income Exchange fluctuation Profit/Loss on sale of assets Depreciation Sundry Balance w/off (Net) Interest Expenses Provision for Doubtful Debts 31st March,20II 7472/ 7.43 (0.18) (100.84) (720.09) 26.4/ 422.73 (2.62) 3,095.63 . 2,728.46 Operating Profit before working capital changes CHANGES IN WORKING CAPITAL Trade and other receivables Inventories Trade payables Cash used in operation Direct taxes (A) Net cash used in operating activities Cash flow from investing activities Rent income Purchase/ Sale of Investments Purchase / sale of fixed assets Sale of fixed assets Investment in partnership Cash flow from financing activities Increase in Capital Interest income Borrowings Loam & advances Interest (net) Payment of dividend NET CASH / CASH EQUIVALENT (A+B+C) Cash & cash Equivalent at beginning Cash & cash Equivalent at the end As per our report of even date For APTE & CO. Chartered Accountants JAYANT APTE Partner 3,475.67 (9,847.61) 17,499.40 (7,042.00) . (1,012.19) (2,732.57) 5,780.80 (26.99) (0./8) (110.38) (2,512.61) (I5.65) 527.69 (0.25) 3,056.67 918.30 2,687.34 31st March,2010 1,769.04

609.79 4,085.46 76.63 4,162.09

2,036.04 4,723.38 (83.89) 4,639.49

0.18 238.37 118.32 (1,883.38) (255.80) (2,320.06) (45.89)

356.86 356.86

0.18 (86.35) 4.61 (132.68)

(214.24) (214.24)

97.50 (1,339.98) (2,784.78) (123)

(4,505.13) (4,50513) 13.82 13.82

(4,028.49) (4,028.49) 396.76 396.76

1,602.62 1,616.43

1,205.86 1,602.62 _

For and on behalf of the Board KUMAR C. BHANSALI Managing Director NIRAV K. BHANSALI Whole- time Director MAYANK R. MEHTA Whole- time Director

Place Mumbai Date I / th August,20/1

Place Mumhai Dart I Ith August,20Il

27

CLASSIC DIAMONDS (INDIA) LIMITED 11LQRMIu3atcaitilisi6act,aligrusAilusniaggidat

RUIUS .
EMERLILEul SiABELCAINIAL

CURRENT YEAR RUPEES

PREVIOUS YEAR RUPEES

Authorised : 75,000,000 (75,000,000)Equity Shares of Rs. 2/- each Issued. Subscribed and paid up : 39220,000 ( 39,220,000)Equity Shares of Rs. 2/- each Of the Above Shares 24,70,000 Equity Shares of Rs. 2 each allotted as fully paid up to the shareholders of erstwhile Pinvi Diamonds Pvt. Ltd., pursuant to the Scheme of Amalgamation. 1,000,000 Equity Shares of Rs. 2 each allotted as fully paid
up to the holders of optionally convenable warrants.

150.000,000 78,440,000

150,000,000 78,440,000

750000 Equity Shares of Rs. 2 each allotted as fully paid up to the holden of optionally converulle warrants. 17,50,000 (17,50,000) Equity Shares are allotted by way of bonus shares
MEDLLIELII

78,440.000

78,440,000

EZZLIMAISD2a2=

Share Premium As per last Balance Sheet Add : Preferential Shares allowed
General Reserve

84,660,002 84,660,002 351,430,400 351,430,400 1,929,107,597 2,365,197,999

76.410,002 8,250,000 84,660,002 336,430,400 15,000,000 351,430.400 1,869,094,867 2,305,185,269

As per last Balance Sheet Add : Transfer From Profit and Loss Account Profit & Loss Account

aCtigaillaati SECURED IDAM

Banks Term Loan (Secured by equitable mortgage of the immovable properties of the company and of its associate concerns and personal guarantee by some of the Directors and corporate guarantee of the company and its associate concerns) (Inclusive of Accrued int Rs.431,453/- Previous Year Rs.989274/-) (Due within I year Rs.57,791,791/ - Previous Year 93,600000) Working Capital Loan (Secured by hypothecation of Stock-in-trade, Book debts (both present and future) and equitable mortgage of the immovable properties of the company and of its associate contain and personal guarantee by some of the Directors and corporate guarantee of the company and its associate concerns)
E

57,791,791

148,530,216

2,979,649,803

3,077,681,584

Car Loan (Secured against hypothecation of Motor Cars) (Due within I year principal Rs303,370/- & interest Rs. 53,882/Previous Year Ra258,600/- & interest Rs.13,048/-)

690,336

258,600

111S9111
552:ZIAILTaY

INVESTMENT Capital Balance in Partnership Firm Trade Long Term (At Cost) Unquoted 490,000 (490,000) Equity Shares of Aarohi Diamonds Ltd (Company Under the same Management) of IHK $ each fully paid up c) Non Trade Long Term (At Cost) Unquoted 2,000,000 ( 2,000,000) Units of Its 10 each of SBI Blue Chip-Mutual Fund. (NAV as on 31.03.11 Rs 29,120,000) (Previous Year Its 28,200,000)

(24,291,219)

(454,623)

2,854,250

2,854,250

20,000,000

20,000,000

(1,436,969)

22,399,627

saint :
A

CUBSLIW
aagarrAgias
a), Inventoties (As taken. valued and certified by the lAsogiag Director)
Stores and Spares Raw Materials Finished Goods b) 1,403,219 640,797,508 678,992,122 1,321,192,849 2,796,762 752,403,095 2,315,932,686 3,071,132,543

VI

Sundry Debtors (Unsecured, considered good unless stated otherwise)

Debts outstanding for the period exceeding six months : (includes receivable Lour Rup Diamonds Rs.233,769) Good Doubtful Less : Provision for Doubtful Debts Other Debts, Considered Good

3,158,378,943 483,796 3,158,862,739 483,796 3,158,378,943 1,129,189,611 4,287.568,554

1,402,626,109 483,796 1,403,109,905 483,796 1,402,626,109 1,900,181,724 3,302,807,833

29

c)

QVALIBiallitailant4 Cash on Hand Balances with Schedukl Banks In Current Accounts In Fixed Deposit (Pledged with Bank) In Margin Money In Exchange Earners Foreign Account Cu (US $ NIL (P.Y US$ NIL)) Unclaimed Dividend Bank Accounts Balances with Banks in Current Accounts
ABN Amro Bank (maz.amr.o/s Rs35,740,495/-)

8,002,457 1,540293 158,353,801 7,280.059

1,303,357 3,820,198 159,684689 4,256000

1,159,673

1,244.821

300,751 395 12,151

Previous Year max.amt o/s Ra31,741,436/-) ABN Miro Bank (max.amt.o/s Rs.13,297,056/-) Previous Year max.amt o/s Rs.16,154,191/-) Total (A)

LDAISSINEUMISCES alattssaulagoidaulags0
Advances recoverable in cash or in kind or for value to be ru.ived Loans to Employees Deposal:, Accurecl Interest on Deposit Taxation (Net of Provisions) Total (B) Total (A + B) 14,603,122 223,500 5,828,075 2,240,962 19,893,087 308,000 9,185,602 4,668,817 14,419,992

v)

WEEIZILEaleli 51108allilABILMMAND23412315213S
A CIIRRENT 1 Tan MRS Sundry Creditors (Other than SST) Overdrawn Balance in Current Account with Scheduled Bank Due to Directors Unclaimed Dividend Advance Recd from Customers Other Liabilities Total (A) B PROVISIONS i) Taxation (Net of Taxes Paid) Proposed Dividend Tax on Proposed Dividend
Gratnigi

589,500009 14,693,422 30,196,985 1,160,005 3,323,684 55,084,400 693,958,505

1,361,766529 10,362,402 21,055,595 1,245,119 117000 26,452,428 1,420,999,073

8,191,831 3,922,000 666,544 5,887,624 10.476,168 1,431,475,241

6,079,668 Total (B) Total (A + B) 14,271,499 708,230,004

30

CLASSIC DIAMONDS (INDIA) LIMITED CLASSIC DIAMONDS (INDIA) LIMITED SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 3IST MARCH20I I SCHEDULE: IV FIXED ASSETS
Sr Desaiption of Assets No Mn 01.042010 GROSS BLOCK Deductions Additions doting the 74u I 2 3 4 5 6 7 8 9 Land (Freehold) Building Plant & Machinery Weighing Machines Furniture & Fixtures Electrical Installanons Office Equipments Air - Conditioners Wilda 33904275 379,386.691 124,849.467 5,483,457 129,319,906 28,823,388 18,980,173 13,191,801 20,648,731 16,733513 771,321,402 767231,064 18,160,924.W 95,000 121.527 103248 0 217.314 148,474 1,520,115 712.623.95 21,079,226 7,796,635 2000,000 118,527 1,809,709 146.925 100,425 327,258 9,959,920 7,371.45 14,470,135 3,706,297 33,904.275 397,547,615 124944,467 5,486,457 127,613,445 28.676,463 19,097.062 13013,017 12208.926 17,438,766 777,930,493 771221,402 151211,814 70,848,683 3,684,844 84.945,823 15.542.861 10,892,314 8,153,281 16.629.180 15.089235 376,998035 325,909,820 21,963,738 7.410,412 246,361 7,828.566 1,800.564 1205,433 682,227 238.997 896,367 42,272,663 52,768,862 9086.897 10,237,398 1,680,649 , 1,150,501 173,175,552 77,108.594 3,931205 92,774.389 17,343,425 12,097.747 8,835.508 7,781279 15,985,602 409,033299 376,998,034 , 33,904,275 224,372,063 45,835,873 1,555,252 34,839057 11,333,038 6,999,316 4,177.510 4,427.647 1.453.164 368,897.194 394,323.368 33,904275 228,174,877 54.000,784 1,798,613 44,374,083 13280,527 8087,859 5038,5213 4,019,551 1,644,278 394,322,367 441,321,244 Mat 1.032011 M at 01.042010 DEPRECIATION Dedtscnons For the Pm Mat 31032011 NET BLOCK Mat M at 31.032011 31.032010

I0 Computer Out.= yeat's Total Praia.. Yean Total

SCHEDULES FORMING PART OF THE PROFIT AND LOSS FOR THE YEAR ENDED 3IST MARCH. 2011
CI.IRRENT YEAR RUPEES RUPEES 5LaipiaLL_VIE SALES Sales Exchange Rate Difference on Exports SCHEDULEUX QThalig2Mg Interest Income (Gross) (MS Ra9,39 .864/-; Previous Year Rs.18,07,462/-) Rent Profit / (Loss) on Sale of Assets ERD on Others Re-Assortment Charged Real Share of Profit in 'Rap Diamonds (Net of Tax) Gain / (Loss) on Forward Contract / Options ERD on Term Loan Sundry Balance W/back (Net) Miscellaneous Income PREVIOUS YEAR RUPEES

. 5,104,783,238 (81,596,729) 5,023,186,509

7,032,502,445 (515,335.587) 6,517.166.858

10,084,259 18,000 (2,641,497) 3,330 (742,559) 8,709,662 874,499 10 753,636 17,059,340

11,037,834 18,000 (1,564.550) (54,307) 218,507 2,699,138 77,594,633 26,599,684 48,122 1,183,288 117,780,351

ligglEARinEEMEnQEMagi4PCaNg Closing Stock Opening Stock IMLIULLXI MATERIALS COST Opening Snack Add : Purchases Exchange Rate Difference on Imports Less : Sale of Rejection Diamonds (Including Exchange Rate Difference) Closing Stock

678,992,122 2,315,932,686 (L636.940564)

2,315,932,686 1,765,165,625 550767,061

752,403.095 1,528,582,667 (18218,881) 1,510.363,786 2,262,766,881

1.030,363,576 2,631093,164 (304,092,584) 3,357,364,155 752,403095 752,403095 2,604,961,060

640,797,508 640,797,508 1,621,969,373

SCHEDULE na PAYMENTS TO AND PROVISION FOR EMPLOYEES Salaries, Wages and Bonus Payments to Directors Gravity Contribution to Provident and Other Funds Workmen and Staff Welfare Expenses

90,962,230 6,053.560 2,053,628 2,451,788 976,585 102,497.791

174,095.184
5,105,128

1294.558 3.331,351 1,456,763 185,282,984

NLAI 1:1 R)1 ?, I 2010-2011

MANUFACTURING AND OTHER EXPENSES Commission and Brokerage Stores and Spares Consumed Power and Fuel Rent Repairs and Maintenance to : Building Plant and Machinery Others Insurance Charges (IncL ECGC Premium) Rates and Taxes Labour Charges Packing Materials Charges Assortment and Valuation Charges Freight and Forwarding Postage, Telegram, Telex and Telephone Expenses Travelling and Conveyance Printing and Stationery Licences, Registration and Other Fees Sales Promotion Expenses Advertisement Auditors Remuneration Legal and Professional Charges Motor Car Expenses Miscellaneous Expenses Donation Sundry balances written off (Net) Cash Transaction Tax Gain / (Loss) on Forward Contract / Options ERD on Term Loan

34,647 6,464,633 9,405,375 6,786,014 745277 716,339 2,161,472 3,623,088 6,206,394 499,907 11,380,139 65,651 4,309 3,782,109 2,662,108 3,898,185 652,890 325,412 606,135 63,040 551,500 6,323,814 428,753 39,688 (262,276) -

196,890 8,017,236 11,695202 9,342,963 1,421,673 698,807 2,389,384 5,970,897 482,324 9,554,709 131,382 25,286 6,314,384 3,657,648 3,557,959 1,001,663 213,893 586,171 149,472 137,875 13,940219 573,436 4,668,753 557,852 23,110 -

63,541,517 SCHEDULE : XIV FINANCE COST Bank Charges Interest to Banks Interest on Term Loan Interest to others

85,309,187

16,668,186 300,859,727 8,703,134 326231,046

30,123,267 283,564,844 22,102,279 335,790,391

33

SCHEDULE FO MIN P RT OF
SCHEDULE XV

ACCOUNT' FOR

AR ENDED 1ST MARCI-I 2011

SIGNIFICANT ACCOUNTING POLICIES & NOTE ON ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES I. GENERAL I. I The Accounts have been prepared on historical cost basis ignoring changes, if any, in the purchasing power of money. 1.2 All revenues and expenses are accounted on accrual basis except to the extent stated otherwise. Insurance claims and refund from governments are accounted for on realization basis. FIXED ASSETS AND DEPRECIATION: 2.1 Fixed assets are stated at cost of acquisition and include other direct/indirect and incidental expenses incurred to put them into use, but excludes Cenvat availed on such assets. 2.2 Depreciation on fixed assets has been provided on Written Down Value basis at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. 2.3 Depreciation is provided on pro-rata basis with reference to the date of addition / installation / deletion except in case of assets costing Rs 5,000/- or less, which are depreciated at I00% in the year of acquisition. INVENTORIES: 3.1 Due to the short period of processing and / or manufacturing, difficulty in identifying the stages of process and the insignificant impact on valuation, goods in process, including polished diamonds, are classified as raw materials for the purpose of classification and valuation. 3.2 VALUATION: RAW MATERIALS: Diamonds (including in process) are valued at cost on specific identification basis. Other items of raw material are valued at cost on FIFO basis. FINISHED GOODS: Polished diamonds are valued at estimated cost or estimated net realizable value whichever is lower In view of the nature of variation in the values of individual diamonds and the differential in their processing costs, it is not practicable to compute the cost of polished diamonds using either FIFO orWeighted average cost. In view of the numerous grades, it is not practicable to use specific costs.The method of valuation is therefore in compliance with "AS-2" issued by the Institute of Chartered Accountants of India to the extent practicable. Jewellery is valued at lower of cost on weighted average basis or net realized value. ROUGH REJECTION: Rough Rejection Diamonds are valued at estimated realizable value. STORES AND SPARES: Stores and Spares are valued at cost

4.

SUNDRY DEBTORS AND RECEIVABLES Sundry debtors, loans and advances are stated at the value if realised in the ordinary course of business. Irrecoverable amounts, if any are accounted and / or provided for as per management's judgement or only upon final settlement of accounts with the parties.

S.

INVESTMENT: LongTerm Investments are carried at cost after deducting provision, in cases where the fall in market value has been considered of permanent nature. Current Investments are stated at lower of cost and fair value. FOREIGN CURRENCY TRANSACTIONS: 6.1 Transactions in foreign currency are accounted at the exchange rate prevailing on the date the transactions have taken place. 6.2 Gain or loss upon settlement of transaction during the year is recognized in Profit and Loss account except in respect of foreign exchange liabilities in relation to fixed assets where such gains or losses are adjusted in carrying amount of respective fixed assets. 6.3 Assets and Liabilities denominated in foreign currency are restated at the year-end rates. Gains or losses arising as a result of above are recognized in Profit and Loss account except in respect of foreign exchange liabilities in relation to fixed assets where such gains or losses are adjusted in carrying amount of respective fixed assets. 6.4 In respect of foreign exchange transactions covered by forward exchange / options contracts: The difference between the contract rate and the exchange rate at d4ate of the transaction is recognized as income or expense over the life of the contract, except in respect of liabilities incurred for acquiring fixed assets where such difference is adjusted in carrying amount of respective fixed assets. The difference between the exchange rate at date of the transaction and year-end exchange rate is recognized as income or expense in Profit and Loss account, except in respect of liabilities incurred for acquiring fixed assets where such difference is adjusted in carrying amount of respective fixed assets. Gains or losses on cancellation or renewal of contacts are recognized as income or expenses, except in respect of fixed assets where such gains or losses are adjusted in carrying amount of the respective fixed assets.

5.1

5.2 6.

7.

RETIREMENT BENEFITS: 7.1 Liability for gratuity on retirement is accounted based on the assumption that such benefits are payable to all eligible employees at the end of the accounting year. 7.2 Liability for leave encashment to staff and workers for the year is paid / provided in the year of accrual.

8.

SALES: Sales are inclusive of freight and insurance, if any.

35

9. BORROWING COST: Borrowing costs directly attributable to the acquisition or construction of qualifying assets, as defined in AS 16 on "Borrowing Cost" are capitalized as cost of the assets, up to the date the asset input to use. Other borrowing costs are charged to the Profit and Loss Account in the year in which they are incurred. IMPAIRMENT OF ASSETS: An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. Where there is an indication that an assets is impaired, the recoverable amount, if any, is estimated and impairment loss is recognized to the extent of carrying amount exceed recoverable amount. I. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSET& Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements. 12. TAXATION: 12.1 Provision for current Income -Tax is made on the basis of the estimated Taxable Income for the current accordance with the provisions of the Income Tax Act, 1961. Deferred Tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the current rate of tax, to the extent that the tinting differences are expected to crystallize. Deferred Tax Assets are recognized for all deductible timing differences and carried forward to the extent there is reasonable certainty that sufficient future taxable profit will be available agiinst which such deferred tax assets can be realized.

12.2

B. NOTES ON ACCOUNTS

I. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF

31/03/2011
Rapes
Property Tax 496,020

31/03/2010
Rapala
(429,884)

Onataateat given to bank and *then:

Sr No. NAME OF IHE BANK

31/03/2011 Rupees
223,200,000 27,000,000 13,000,000 -

31/03/2010 Impala
(225,550,000) (27,000,000) (13,000,000) (50,000,000)

I ma BANK 2 BANK OF INDIA 3 PUNJAB NATIONAL BANK 4 ABN AMRO BANK

36

Secured by counter gurantee of directors, lien on FDR Rs. I 58,353,801 /-.(Previous Year I59,686,689/-) 2. IN THE OPINION OF THE DIRECTORS: The current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business. The provisions for all known liabilities are adequate and not in excess of the amounts reasonably necessary. 3. PAYMENTS TO AUDITOR&

31/03/2011 31/03/2010 Rupees Rupees

Audit Fees Tax Audit Fees c) Certification Fees Grand Total 330,000 55,000 165,000 550,000 (82,725) (16,545) (38,605) (137,875)

4. PAYMENTS TO DIRECTORS: 3 1/03 /2011 31/03/2010 Rupees Rupees

Salaries, Bonus and Allowances Perquisites Contribution to Provident and Other Funds Sitting Fees e) Gratuity 5,920,000 21,060 112,500 90,865 6,144,425 (5,586,548) (573,436) (28,080) (110,000) (-856) (6,297,208)

5. Managerial Remuneration: Calculation of Net Profit U/s 198 read with section 309(5) of the Companies Act, 1956 : 31/03/2011

Rupees
Net Profit before tax

31/03/2010 Rupees
(17,69,03,795) (61 87,208) NIL (0_1) (18,30,91,003) NIL (18,30,91,003) (18,309,100) (61,87,208)

Add: (I) Managerial Remuneration

Loss on Sale of Fixed Assets (If loss is more than original cost) Provision for Doubtful Debts
Las: (I) Profit/(Loss) on Sale of Fixed Assets

74,721,347 60,31,925 NIL NIL 80,753,272 NIL 80,753,272 80,75,327 60,31,925

(Any profit above original cost) Profit as per Section 198 of the Companies Act, 1956 NM of the above (See section 309 of the Companies Act, 1956) Managerial Remuneration Paid

Prior period expenses of Rs. 1,74,949/- and income of Rs. 40,034/- [Previous year Prior period Expense of Rs. 245,232/and income of Rs. 896,954/-] are debited / credited to Miscellaneous Expenses / Miscellaneous Income. The company has made provision amounting to Rs. 60,79,668/- for gratuity and Rs. 4, I4,456/- towards leave encashment payable to its employees as at 3r March 2011. However the said sum is not actuarially valued as required by AS-IS.

37

8. a) Details of foreign currency exposures that are hedged by option/forward instruments or otherwise: (Rupees in Lacs) (Rupees in Lacs) Palandan Debtors Creditors Tenn Loan Amiga Gatency USD 2,800,000 (USD 2,615,000) NIL (USD 0) NIL (USD 0) Equivalent Indian Cunany Ots) 1,249.36 (1,179.10) NIL (0) NIL (0)

Hedging the risk. Hedging the risk. the 44104g

Interest Liability

Details of foreign currency exposures that are un-hedged by option/forward instruments or otherwise: (Rupees in Lacs) Panieubn
Debtors

Crurmty
USD ($)

Foreign Cuttency 143,357,189.29 (105,423,0/3.31) 2,211.41

(2,404.41) 60,753,859.32 (60,137,630.73) 48,86,124.88

Equivalent Indian Canrency (Rs)

63,965.98

(47,535.24)
0.99 (1.08) 27,I20.52 (27,128.09) 2,181.17 (5,11629)

Other Assets
Creditors

USD ($)
USD ($) USD ($)

Banks

(11,341,35461) 9. PARTICULARS OF INVESTMENT IN PARTNERSHIP FIRM (AUDITED) Name of the Firm Total Capital of the Firm : M/s. Rup Diamonds : Rs. 67,074,764/- (64,389,946/-)

Name of the Partners and share of each partner is as follows: Name I. Ratio (%)Profit sharing Kumar C. Bhansali Nirav K. Bhansali Classic Diamonds (India) Limited
(a)

10% 10% 80% I00 %

JO.

The supplier's invoices or other documents furnished by them do not give any ostensible information about their status and in particular, whether a small scale industrial undertaking (SSI UNITS). Accordingly, it is not possible to disclose any authentic information about dues to SSI units. In the absence of any intimation received from vendors regarding the status of their registration under "Micro, Small and Medium Enterprises Development Act, 2006", the company is unable to comply with the disclosures required to be made under the said Act.

(b)

36

 411
I I. The balance due to / from the parties are subject to confirmation. 12. DEFERREDTAX ASSET/LIABILITIES (NET): Major components of deferred tax assets and liabilities arising on account of timing differences as on 31' March, 2011 are mentioned below:
Past:Scam M at 31/03/2011 (Rupees) Deferred Deferred Tax Liabilities Tax Assets
2,056,807 2,019,514 150,938 116,261 127,621 3,120,700

M at 31/03/2010 (Rupees) Deferred Defeated Tar Liabilities Tax Assets

1,951,337 2,001,204 38,531 246,237 164,442 145,088 4,375,138

Depreciation Provision for Gratuity Provision for Bonus Adjudication Expenses Provision for Doubtful Debts Leave Salary

Total Deferred tax Asset / (Lialslity)(Islet)

4,471,141 1,350,941

3,120,700

4,546,839 17 ,701

4,375,138

I3.

Debtors includes debts due from Company under the same management, details of these outstanding are as follows: the 31/03/2011 Rupees 31/03/2010 Rupees (974,198,557) Nil _1

Name of Company Aarohi Ltd. Aarohi LLC

Diamonds Diamonds

724,189,044 69,383,100

14. RELATED PARTY DISCLOSURES: Disclosures as required by the Accounting Standard 18 "Related Party Disclosures" are given below: A. List of Related Parties ( As Per Managaement) Associates M/s. Rup Diamonds, M/s. Classic Gems, M/s. Pithy Diamonds, Comfort Investment Pvt. Ltd., M/s. Lazer Mac, Classic Jewellery Limited, Aarohi Diamonds Limited HK, Aarohi Diamonds Private Limited, Diamax Investment and Finance Private Limited, Artnaan Diamonds Private Limited, Classic Gems and Jewels Pvt Ltd., Rupen Diamonds Pvt. Ltd., Aarohi Diamonds LLC. Key Management Personnel and Relatives Mr. Kumar C. Bhansali, Mr. Mayank R. Mehta, Mr. Nirav K. Bhansali, Mr. Hiren Shah, Mr. Chandrakant M. Bhansali.

39

B. Transactions with related Parties:

Nature of Transactions

Associates 31/03/2011 31/03/3010

Rupees 1,548,264,880 180.640,287 135,000 18,000 -742559 Rupees (2 380 254 155) 11 233,498.852) (135,000) (18,0001 (2.699,138)

Rey manapement Personnel A Relatives

31/03/2011
Rupees 6.144,425 -

31/03/2010
Rupees (5.692.407) -

Sales Purchases Rent Paid Rent Received Managerial Remuneration Share of Profit/(Loss) in M Partnership Firm (Net of Tax) Outstanding Balance As on 31st March, 2011 : Due to Company Payable by Company Investment in - Associate/Partnership Firm IS.

793.572.144 -21438989

(1.140.373.439) (2.399,827)

29,953.4854 -

(20.884.594) -

GMENTALINFO RMATIONS
A) Primary

The Company's operations predominantly relate to export of Diamonds and Gold studdecllewellery. Based on the guiding principle given in the Accounting Standard 17 "Segment Reporting" issued by the Institute of Chartered Accountants of India, the Company's primary segments are Diamonds and Gold studdedleveellery. The above business segments have been identified considering: The nature of the products The related risks and returns iii) The internal financial reporting system. B) Accounting policies The accounting principles consistently used in preparation of financial statements are also consistently applied to record income and expenditure in individual segments.These are set out in the note on significant accounting policies. Inter division transfers are made at the cost. Interest expenses and interest income are reported as unallocated expense / income. Accordingly assets and liabilities relating to interest income and expenses are reported as in unallocated assets and liabilities respectively.

40

Se. NIA

Pad=

Dimeeds Gomm Yaw

Daces Panes Vat

Jeweils, Camas Y at

Jenillay Preams Vat

Elininatinal Care Vert

asatiata Pavia Vat

Tad Gwent Yale

Tend Plans Yoe

A.

Ravens Enema sala (Including cabanaa rate differeem) Inc segment =la Total lemma Ranks Sepiental results 5,325456,032 5,680.189 5.331.334221 7,074.225,230 4405219 7,078,830,449 309,357,679 1.466.073.332 1,446073332 64,398.754 1,580.948.685 7,518948685 (1,768.542.855) (5,680189) (5.680.189) (4138,004058) (4,605,219) (4605,219) 5.023,186,509 5024186409 377566,004 309562,861 9314999 285,438 2,926,935 41,701 74,721,347 14,708415 _ a 60E2.732 6517.166.857 6517,164657 466363,620 304,779.346 10,904,803 -1,564,550 2,850,169 176,903.795 4728.729 174,175.066 _

313.167250

166,005,941 -

&UZI=

Interest Paid Imam Received Profit on Sate of Asses Lae on Sale of Anal Uneliocated income Opeming profit berme no Inman as including defend tax & eadiet year tax Asian Profit afta tax

Other !aromatic= Scream assets Undlmated assets Total ma Sepnenclialdlitia Unabated liaddirdes Toad liabilities Capital employed Capital expenditures Depreciation Non Cash expenditure other thaadepenxian/ ammisarion

6.814817500 -

6,760,254.644 -

1,617,592,457 -

1,690,392,473 -

8,434409.957 3,183,154 8,43323,111 2,972,466,189 3,069.488.920 5.991,955,110 2443.638001 20.936,685 42372,663

8,450,647,117 201,744245 8454394361 3015.406,434 3353359,658 6164766092 2,383,625269 7339,536 52,768.862

949,624552

1253.0/5,742 -

1.972.841,637 -

1.764390,692 -

5.865.192,948 /9.693420 36,346520

5,507238,902 6.778236 45,721,596

(355249,180) 1243265 5.924143

(71.998220) 561,300 7,047366 -

Segmental assets and liabilities does not include inter segment assets and liabilities.

C)

SgsgainSgmat As the company operates significantly in export of the above-mentioned products, there is no secondary segment on the basis of geographical location or assets based locations.

I& EARNINGS PER SHARE OiP) Earnings Per Share (EPS) is eakulatzd in accordance with Acomating St:Sao:120 (AS-20) a under:

31/03/2011
Net profit available for equity shareholders (Numerator used for adculatIon) Weiebted Average No. of Equity Shares Basic (Denominator used for calculation) c) Nominal Value of Equity Shares (Rs.) d)reang.RMARar, Basic 60,012.732

Res

31/02/2010 imps
(174,175,066)

39.220.000 2 1.53

(39.220,000) (2) (4.44)

17

Value of Import on CIF basis Raw Materials Packing materials Traded goods Stores & spares Capital goods

Rupees 985,923,435 161,109,036 1,648,276

Rupees (1,870,995,273) (1,152,109,158) (1271,442) (2,797,446) (2,450,843) (4,009)

Expenditure in foreign currency on account of : 2,770,071 Travelling expenses Membership & subscription

Breakup of the value of raw materials consumed (including inter unit transfer) : Rupees Rupees (2,426,245,450) (92.98) 91.47 1,483,538,001 Imported (7.02) (183,320,829) 8.53 138,431,371 Indigenous (2,609,566280) (I00.00) 100.00 1,621,969,373 11) Breakup of the value of stores and spare part consumed : Rupees Rupees (1,856,224) (23.15) 27.44 1,773,688 Imported (6,161,012) (76.85) 72.56 4,690,945 Indigenous (8,017,235) (100.00) 100.00 6,464,633 Rupees Rupees Earning in foreign exchange (6,706,602,159) 4,746261,954 FOB Value of Exports e) Licensed and installed capacity and production : (As Certified by die Management) JEWELLERY DIVISION DIAMOND PARTICULARS DIAMOND JEWELLERY DIVISION I I2,500 Cts. 105,000 Pieces ' 666,000 as I) Licensed Capacity 450,000 Gins (666,000) (I05,000) Pieces (112,500) Cts. (450,000) Gnu I00,000 Cu. " 850,000 Gins 204,000 cts Installed Capacity (100,000) Cts. " (850,000) Gins (204,000) Cts. - 327,184.52 Gins 29,817.07 cts Actual Production Cts. ( ) (372,297.34) Gins (69,456.13) as Licensed and Installed capacity of diamond division is only in respect of EOU Unit of Surat Division. " On Triple Shift Basis Additional Information required under Para.3,4C and 4D of Part II of Schedule VI to the Companies Act,1956, (As certified by the Managing Director, and relied upon by the Auditors) to the extend applicable, is as follows:

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E) I

RAW MATERIALS CONSUMED: QUANTITY DIAMOND DIVISION Rough Diamonds * JEWELLERY DIVISION Gold (Gins.) Polished Diamonds (Cts) Precious & Semi Precious stones (Cis.) Platinum (Gins.) Alloy (Gans.) Silver (Gins.) Mountings (Gins.) Rough Diamonds ( Cts) Gold Findings (Gms.) Silver Finding 121,664.84 (586,601.08) 71 398.11 (128,154.15) 42,657.18 (34,618.11) 19,117.02 (4,677.8D 359.02 (319.46) 145,437.82 (176,183.51) 36,806.95 (32.645.62) 57,830.32 (89,413.32) 1036 1,990.76 (8,812.49) 4,577.63 (542.14) VALUE IN RUPEES 339,203,401 (1,272,141,503) 113,099,495 (194,656,613)
1,062,340,248

II

(983,773,025) 3,997,093 (1,527,886) 644,602 (560,069) 1,605,230 (1,350,129) 1,044,380 (681,317) 103,173,342 (145,521,807) 7,366 2,242,093 (9,322,657) 292,311 (31,273) 1,627,649,561 (2,609,566279) 5,680,189 (4,605,219)
1,621,969.372 (2,604,961,060)

Less Inter Division Transfer Total consumption

NoteThe consumption shown above has been arrived at on the basis of opening stock plus purchases (Inclusive of ERD) minus closing stock and Sales of rejections, if any. *Rough Diamonds Consumption includes sale of rough diamond.

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g) Information in respect of opening stock, purchase & Manufacturing sales and dosing sto-'' of finished goods. (As certified by Management)
DeaiPlke Quantity Opening Stock Vane litres Fully processed Polished diamonds SCarts) Gold Jewellery Studded with Diamonds (Gene) Total Includes Exchange Rate Difference Includes Traded Goods et net of Transfer to Jewellery Division 140,904.35 (98,147.12) 2263.661610 (1,711,750367) 371,460.09 (616.599 72) Putthese et Mandel:wing
(Natter Vain

Quantity

Sales

Value Rupees

OPantitf

Repeat 1,168,083.850E0 (3.744497,990.00) 482619.03 (573,842.49)

3.508,933.446 (4.845.865.852)

29,745.41 (140,904.35)

16,844.62 (17.46120)_

52,270076 (53,415258) 2,315.932686 (1.765,165,625)

327,190.13 (369.05135) 1268,083,850 (3,744497.990)

336,721.62 (369,667.93)

1,466.073,332 (1.721,961,097) 4.975.006,778 (6567,826,949)

7,313.13 (16,844.62)

Figures in Bracket are in respect of previous year. Previous years figures have been rearranged and regrouped wherever considered necessary to make them comparable with the current year's figures. Signatures to Schedule I to XV
As per our report of even date For APTE & CO. Chartered Accountants KUMAR C. BHANSAL1 Managing Director

JAYANT APTE Partner

NIRAV K. BHANSAII Whole Time Director

MAYANK FL MEHTA Whole Time Director Mumbai Dated: lids August, 2011 Mumbai 11th August, 2011

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BALANCE SHEET ABSTRACT AND COMPANY GENERAL BUSINESS PROFILE L REGISTRATION DETAILS

Reiner* It.
Balance Sheet Date

415411

State Code 03

II Year 1 2011 1

IL CAPITAL RAISED DURING THe YEAR (AMOUNT IN ts...000) Public Issue Bonus Issue NIL 1
NIL 1

Right Issue
Private Placement

"NIL L NIL

ILL POSMON OF MOB/LISATON AND DEPLOYMENT OF FUNDS (AMOUNT IN Rs. '000) Total Liabilities Source of Funds Paid up Capital Reserves and Surplus Secured Loans Deffered Tax Liabilities (Net) 784401 23651981 30381321 54817701 Total Assets Application of Funds Na Fixed Assets Investments Na Current Assets Defined Tax Assets (Net) 3820931 -14371 50997641
13501

54817701

01

PERFORMANCE OF THE COMPANY (AMOUNT N P.S. '000) Turnover Profit Before Tax 50231871 747211 1.53 1 Total Expenditure Profit After Tax Dividend Rare % 33285841 600/31

Earnings Per Share in Rs.

GENERIC NAMES OF THREE PRINCIPAL PRODUCTS / SERVICES OF COMPANY (AS PER MONETARY TERMS) Item Code No. (1TC Code) Item Code No. (ITC Code) hem Code Na (ITC Code) 1 1 1 710231 - 01 711319 - 02 1 1 Product Description Rodin& DesaiptMn Product Description Cur & Polished Diamonds Studded Gold Imam Rough Diamonds

710239 - 00 1

For and on behalf of the Board

KUMAR C. BFIANSALI Managing Director NIRAV K. Dittman Whole Time Director Mumbai Date : lhh August, 2011 MAYANK R. MEHTA Whole Time Director

48

,11.74.:111
CLASSIC DIAMONDS (INDIA) LIMITED
Registered Office: 1002, Prasad Chambers, Opera House, Mumbai 400 004. [FORM 2B] (See Rules 50) NOMINATION FORM [To be filled in by individual(s) applying singly or jointly] the holder(s) I/We Clint ID Folio No./DPID No. of shares bearing niunber(s) of CLASSIC DIAMONDS (INDIA) LIMITED wish to make a nomination and do No. hereby nominate the following person(s) in whom all rights of transfer and/or amount payable in respect of shares shall vest in the event of my/our death. Name(s), Address (a) and Signature(s) of nominee(s) Name Address Date of Birth* Telephone No. Signature (*To be furnished in case the nominee is a minor) **the nominee is a minor whose guardian is: Name and Address of the Guardian: of Guardian: ("To be deleted if not applicable) I) First Holder Signature : Name : 3) Third Holder Signature : Name : Place: Date: Name, Address and Signature of two witnesses: Name and Address Signature with date 2) Second Holder Signature Name

I.
2. Please see Instruction on reverse of this page

47

INSTRUCTIONS I. The Nomination can be made only by the individuals holding shares on their own behalf, singly or jointly. Non-individuals, including society, trust, body corporate, partnership final, Lida of Hindu Undivided Family and holder of power of attorney cannot nominate. If the shares are held jointly, all joint holders should sign the nomination form. Space is provided as a specimen, if there are more joint holders more sheets can be added for signature of holders of shares and witness. A minor can be nominated by a holder of shares and in that event the name and address of the guardian shall be given by the holder. The nominee shall not be a trust, society, body corporate, partnership firm of Karta of Hindu Undivided Family. Nomination stands rescinded upon transfer of the shares. Transfer of shares in favour of a nominee and repayment of amount of deposit to nominee shall be valid discharge by the company against the legal heir. 6. The Nomination Form should be submitted to the Company's Registrar and Transfer Agents at the following address: LINK INTIME INDIA PRIVATE LIMITED, C-I3, Pannalal Silk Mills Compound, L.B.S. Mug, Bhandup (West), Mumbai 400078 Tel: (022) 2596 38 38 Fax (022) 2594 69 69

er

CLASSIC DIAMONDS (INDIA) LIMITED

Registered Office: 1002, Prasad Chambers, Opera House, Mumbai 400 004.

ATTENDENCE CARD
To be handed over at the entrance of the Meeting Hall Name of the attending Member
(in Block Letters)

Membership Folio Number or DP-ID & Client ID

I/We hereby record my/our presence at the Annual General Meeting of the Company held on Tuesday, 20th September, 2011 at II.00 A.M. at Jamnalal Bajaj Seva Trust's Kamalnayan Bajaj Hall, Bajaj Bhavan, Ground Floor, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai 400 021

Name of the Proxy (IN BLOCK LETTERS) (To be filled in if the proxy attends instead of the
Members)

Number of Equity Shares held

Member's/Proxy's Signature (To be signed at the time of handling over this slip)

5PC

CLASSIC DIAMONDS (INDIA) LIMITED

Registered Office 1002, Prasad Chambers, Opera House, Mumbai 400 004.
PROXY FORM

being Member /Members of CLASSIC I/We as my/our of DIAMONDS (INDIA) LIMITED hereby appoint proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the company to be held on 2011 and at any adjournment thereof Signed this Folio/Client ID No. day of ,20I1 No. of shares Held

I Rupee Revenue Stamp

Note: The proxy Form duly Completed and Stamped must be lodged with the Company not less then 48 before the time for holding the aforesaid meeting.

49