SU-RAJ DIAMONDS AND JEWELLERY LIMITED Report-06-07.pdf · Meeting of the Members of Su-Raj Diamonds and Jewellery Limited will be held on Thursday, ... quoting their registered folio

21ST ANNUAL REPORT2006-2007

SU-RAJ DIAMONDS AND JEWELLERY LIMITED

ANNUAL REPORT 2006-2007

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

K. N. Bhandari Director

Dr. Dharmendra Bhandari Director

G. P. Gupta Director

G. Bharakatia Director

Atul S. Pethe Director

CHIEF FINANCIAL OFFICER Jaikumar Kapoor

COMPANY SECRETARY Shivprakash K. Singh

AUDITORS M/s. R. C. Reshamwala & Co.Chartered Accountants

BANKERS Standard Chartered Bank

Punjab National Bank

Exim Bank

Canara Bank

State Bank of Hyderabad

Bank of Maharashtra

Oriental Bank of Commerce

Union Bank of India

Central Bank of India

UTI Bank Limited

Vijaya Bank

State Bank of India

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

REGISTERED OFFICE Kesharba Market - 2Gotalawadi, KatargamSurat 395 004

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

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


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SU-RAJ DIAMONDS AND JEWELLERY LIMITEDNOTICENOTICE is hereby given that the Twenty first Annual GeneralMeeting of the Members of Su-Raj Diamonds and JewelleryLimited will be held on Thursday, 30th August, 2007 at MahidaBhawan, Icchanath, Opp. S.V.R. Engineering College, DumasRoad, Surat 395 007 at 11.30 a.m. to transact the followingbusiness:AS ORDINARY BUSINESS:1) To receive, consider and adopt the Audited Balance Sheet

as at 31st March, 2007, the Profit and Loss Account for yearended on that date along with the Schedules and the Reportsof the Directors and Auditors thereon.

2) To declare dividend on Equity Shares for the financial yearended 31st March, 2007.

3) To appoint a Director in place of Mr. G. Bharakatia whoretires by rotation and being eligible, offers himself for re-appointment.

4) To appoint a Director in place of Mr. Atul S. Pethe whoretires by rotation and being eligible, offers himself for re-appointment.

5) To re-appoint Auditors who shall hold office from theconclusion of this Annual General Meeting until theconclusion of the next Annual General Meeting and fix theirremuneration.

AS SPECIAL BUSINESS:6) To consider and if thought fit, to pass with or without

modification(s), if any, the following resolution as an OrdinaryResolution:RESOLVED THAT in modification of the resolution passedby the Company at the Nineteenth Annual General Meetingheld on 11th August, 2005 and pursuant to section 293 (1)(d)of the Companies Act, 1956 and Article 84 of the Articles ofAssociation of the Company and other applicable provisions,if any, of the Companies Act, 1956 consent of the Companybe and is hereby accorded to the Board of Directors of theCompany to borrow any sum or sums of money for thepurpose of the Company at any time or from time to timenotwithstanding that the money or monies to be borrowedtogether with the monies already borrowed by the Company(apart from temporary loans obtained from the Companysbankers in the ordinary course of business) will exceed theaggregate of the paid-up capital of the Company and its freereserves that is to say, reserves not set apart for any specificpurpose, provided however that the total amounts so borrowedby the Board of Directors shall not exceed the aggregate ofthe Companys paid up capital, its free reserves and Rs.2,000crores (Rupees Two Thousand Crores).

7) To consider and if thought fit, to pass with or withoutmodification(s), if any, the following resolution as a SpecialResolution:RESOLVED THAT pursuant to the provisions of section31 of the Companies Act, 1956 and other applicableprovisions, if any, of the Companies Act, 1956, the Articlesof Association of the Company be altered in the followingmanner:Article No.198 (2) of the Articles of Association be deletedand in its place the following new article shall be substituted:The Seal shall not be affixed to any instrument except bythe authority of the Board or a Committee of the Board,previously given and in the presence of atleast one Directorof Company and countersigned by the Secretary or anyother officer specifically authorized in this behalf who shallsign every instrument to which the Seal is affixed.

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

Place : Mumbai Shivprakash K. SinghDate : 15th May, 2007 Company Secretary

NOTES:1) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE

MEETING IS ENTITLED TO APPOINT ONE OR MOREPROXIES TO ATTEND AND VOTE ON A POLL ONLYINSTEAD OF HIMSELF AND THE PROXY NEED NOT BEA MEMBER.

2) The instrument appointing a proxy must be deposited withthe Company at its Registered Office not less than 48 hoursbefore the commencement of the meeting.

3) Explanatory Statement with respect to Item Nos.6 and 7 areannexed and forms part of the Notice.

4) Members/Proxies should bring the Attendance Slip duly filledin for attending the meeting.

5) Pursuant to section 154 of the Companies Act, 1956, and inaccordance with clause 15 and 16 of the listingagreement(s), the Register of Members and Share TransferBooks of the Company will remain closed fromThursday, 23rd August, 2007 to Thursday, 30th August, 2007(both days inclusive) to determine the entitlement ofshareholders to receive dividend for the year ended 31stMarch, 2007.

6) The Dividend on Equity Shares, if declared at the meetingwill be paid on or after 30th August, 2007 to those memberswhose names shall appear on the Companys Register ofMembers on Wednesday, 22nd August, 2007. In respect ofthe Shares held in dematerialized form, the dividend will bepaid on the basis of particulars of beneficial ownershipfurnished by the Depositories as at the end of the businesshours on Wednesday, 22nd August, 2007.

7) Shareholders seeking any information with regard toAccounts are requested to write to the Company at an earlydate to enable the management to keep the informationready.

8) Shareholders are requested to bring their copy of AnnualReport to the Meeting.

9) The Equity Shares of the Company are compulsorily tradedin electronic form with effect from 28th August, 2000. Theshareholders who have not yet dematerialized their sharesare requested to dematerialize their shares by opening DPAccount with nearest Depository Participant at the earliestto avail the benefits of dematerialisation.

10) Pursuant to the provisions of section 205A(5) of theCompanies Act, 1956, dividends for the financial year endedas on 31st March, 2001 and thereafter, which remainunclaimed in the unpaid dividend account for a period ofseven years from the date of transfer of the same,will be transferred to the Investor Education and ProtectionFund (IEPF) established by the Central Government,pursuant to the provisions of section 205C of the CompaniesAct, 1956.

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

Financial Year Date of Declaration Last DateEnded of Dividend for Claiming

Dividend31.3.2001(1.10.99 - 31.3.01) 29.9.2001 29.9.200831.3.2002(1.4.01 - 31.3.02) 30.9.2002 30.9.200931.3.2003(1.4.02 - 31.3.03) 27.9.2003 27.9.201031.3.2004(1.4.03 - 31.3.04) 31.8.2004 31.8.201131.3.2005(1.4.04 - 31.3.05) 11.8.2005 11.8.201231.3.2006(1.4.05 - 31.3.06) 22.9.2006 22.9.2013


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According to the provisions of the Companies Act,shareholders are requested to note that no claims shalllie against the Company or said Fund in respect of anyamounts which were unclaimed and unpaid for a period ofseven years from the date that they first became due forpayment and no payment shall be made in respect of anysuch claims.

11) In order to provide protection against fraudulent encashmentof the warrants, Members holding Share Certificates inphysical form are requested to notify any change, in theiraddresses or bank mandates, immediately to the CompanysRegistrar and Transfer Agent, Intime Spectrum RegistryLimited, Unit: Su-Raj Diamonds & Jewellery Limited, C-13Pannalal Silk Mills Compound, L.B.S. Road, Bhandup (West),Mumbai 400 078. Phone: (91-22) 2596 3838. Fax: (91-22)2594 6969 / 2596 2691. E-Mail: [email protected],Website: www.intimespectrum.com. Shareholders arerequested to make all correspondences in connection withregistration of transfer of shares, non-receipt of dividend,annual report, change of address, bank mandate, issue ofduplicate, split and consolidated share certificate,dematerialisation of shares, rematerialisation of shares,transmission, transposition and other grievances etc., byaddressing letters directly to the Companys Registrar andTransfer Agents, Intime Spectrum Registry Limitedquoting their registered folio numbers or their client ID numberwith DP ID number to enable the company to resolve theShareholders grievances smoothly and speedily.

12) Shareholders holding shares in electronic form may kindlynote that their Bank Account details as furnished by theirDepositories to the Company will be printed on their DividendWarrants as per the applicable regulations of the Depositoriesand the Company will not entertain any direct request fromsuch shareholders for deletion of/change in such Bankdetails. Further, instructions, if any, already given by themin respect of shares held in physical form will not beautomatically applicable to shares held in electronic mode.Shareholders who wish to change such Bank Account detailsare therefore requested to advise their DepositoryParticipants about such change, with complete details ofBank Account.

13) Non-Resident Indian Shareholders are requested to informimmediately to the Companys Registrar and Transfer Agent,Intime Spectrum Registry Limited, Unit: Su-Raj Diamonds& Jewellery Limited, C-13 Pannalal Silk Mills Compound,L.B.S. Road, Bhandup [West), Mumbai 400 078. Phone:(91-22) 2596 3838. Fax: (91-22) 2594 6969 / 2596 2691.E-Mail:[email protected], Website: www.intimespectrum.com

a) The change in the Residential status on return to Indiafor permanent settlement.

b) The particulars of the Bank Account maintained in Indiawith complete name, branch, account type, accountnumber and address of the Bank, if not furnished earlier.

14) Corporate Members intending to send their authorisedrepresentatives are requested to send a duly certified copyof the Board Resolution authorising their representatives toattend and vote at the Annual General Meeting.

15) Consequent upon the introduction of section 109A of theCompanies Act, 1956, shareholders are entitled to makenomination in respect of shares held by them in physicalform. Shareholders desirous of making nominations arerequested to send their requests in Form 2B (whichwill be made available on request) to the CompanysRegistrar and Transfer Agent, Intime Spectrum RegistryLimited.

16) All documents referred to in the accompanying Notice areopen for inspection at the Registered Office of the Companyduring the office hours on all working days between 11.00a.m. and 1.00 p.m.

17) Information required under Clause 49 of the ListingAgreement on Directors Re-appointment:Mr. G. BharakatiaMr. G. Bharakatia was appointed as a Director with effectfrom 30th March, 2002. Mr. Bharakatia is a CharteredAccountant with expertise in finance and audits of Banksand Government Companies. He is the Chairman of theAudit Committee of the Board of the Company.Other Directorship held by Mr. Bharakatia as on 31st March,2007 are as follows:1. A.B. Impex Private Limited2. Shri Prempuriji Granimarbo Private Limited3. Mitul India (P) Limited4. Forever Precious Jewellery & Diamonds LimitedMr. Atul S. PetheMr. Atul S. Pethe was appointed on the Board with effectfrom 6th May, 1986 and was also the Managing Director ofthe Company in the past. Mr. Atul S. Pethe is a B.ScGraduate and has more than 32 years experience in Gemand Jewellery Industry with particular expertise in Diamondmanufacturing and related activities.He is a member of the Audit Committee and also theChairman of the Shareholders Grievance Committee of theBoard of the Company.

18) The Company is seeking separately the approval of theShareholders pursuant to the requirements of the provisions ofsection 192A of the Companies Act, 1956 for passing ofresolution through postal ballot in respect of the following items: Creation of Charge under section 293 (1) (a) of the

Companies Act, 1956. Alteration of the Objects Clause under section 17 of

the Companies Act, 1956.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2)OF THE COMPANIES ACT, 1956.Item No.6Under section 293(1)(d) of the Companies Act, 1956, the Boardof Directors of the Company has power to borrow beyond theaggregate limit of its paid-up capital and free reserves only withthe consent of the shareholders in general meeting. At theNineteenth Annual General Meeting held on 11th August, 2005,the Board has been authorized to borrow upto a limit equivalentto the aggregate of the paid-up capital, free reserves andRs. 500 crores, excluding temporary loans obtained from theCompanys bankers in the ordinary course of business. However,with the further increase in business activities additional resourceswill have to be mobilized for which the Board of Directorsrecommend increase in the borrowing limits to a sum of the Paid-up Capital, Free Reserves and Rs.2000 crores.The Directors recommend the Ordinary resolution for your approval.None of the Directors of the Company is, in any way, concernedor interested in the said resolution.Item No.7The existing article No.198.(2) provides that the common sealshall be affixed in the presence of atleast two directors of thecompany and countersigned by company secretary or any otherofficer. For the administrative convenience it is proposed to alterthe said article to enable the affixation of common seal in presenceof atleast one director instead of two directors. The otherprovisions of the said article remain unaltered.The Directors recommend the Special resolution for your approval.None of the Directors of the Company is, in any way, concernedor interested in the said resolution.

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

Place : Mumbai Shivprakash K. SinghDate : 15th May, 2007 Company Secretary

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SU-RAJ DIAMONDS AND JEWELLERY LIMITEDDIRECTORS REPORTThe Members

The Directors have pleasure in presenting the Twenty first AnnualReport together with the Audited Accounts for the financial yearended 31st March, 2007.

FINANCIAL RESULTS (Rs. in Crores)

Financial FinancialYear Year

Ended Ended31st March, 31st March,

2007 2006

Total Income 1572.26 1221.73Profit before Interest andDepreciation 65.79 48.91Less: Interest 11.27 6.30Depreciation 3.30 3.06Profit before tax 51.22 39.55Provision for tax 3.30 2.15Profit after tax 47.92 37.40Add: Balance in Profit and

Loss Account broughtforward 71.90 69.85

Add: Excess/(Short) provision forExpenses/Income

Tax for earlier years 1.45 1.53

Profit available forappropriation 121.27 108.78

Proposed Dividend 7.24 6.03Corporate Tax on Proposed Dividend 1.23 0.85Transfer to General Reserve 20.00 20.00Transfer to General Reserve

Foreign Exchange/Metal Price Fluctuation 12.00 10.00

Balance Carried Forward 80.80 71.90

Total 121.27 108.78

DIVIDEND

The Directors are pleased to recommend a dividend @ 18%(i.e. Rs.1.80 per fully paid share) for the financial year ended31st March, 2007 subject to the approval of members at the AnnualGeneral Meeting. The dividend will absorb Rs.7.24 crores.

RESERVES

It is proposed to transfer Rs.20 crores to General Reserve andRs.12 crores to General Reserve Foreign Exchange/Metal PriceFluctuation.

OPERATIONS

The total income from operations during the year increased by28.7% to Rs.1572.26 crores from Rs.1221.73 crores during theprevious year. The Company recorded net profit of Rs.47.92 crores

during the year as against Rs.37.40 crores for the previous year,an increase of 28.13%.

Revenues from Jewellery business grew 52% to Rs.994 croresas compared to Rs.654 crores in previous fiscal. The Board isconfident of similar growth during the current year also.

SUBSIDIARIES

As required under the provisions of section 212 of the CompaniesAct, 1956, a statement of the holding companys interest in thesubsidiary companies, namely Su-Raj Diamonds NV (formerlyknown as Koradiam NV), Su-Raj Diamonds & Jewellery DMCCand Su-Raj Diamonds & Jewelry USA, Inc, is attached asAnnexure and forms part of this report. In terms of approval grantedby the Central Government under the provisions of section 212(8)of the Companies Act, 1956, copies of Balance Sheet, Profit andLoss Account, Report of the Board of Directors and the Report ofthe Auditors of the subsidiary companies have not been attachedwith the Balance Sheet of the Company. The Company will makeavailable these documents upon request by any investor.

The Annual accounts of the subsidiaries are also available forinspection by the investors at the Registered Office of theCompany and also at the respective offices of its subsidiaries.Pursuant to Accounting Standard AS-21, issued by the Instituteof Chartered Accountants of India, Consolidated Financialstatements presented by the Company includes the financialinformation of its subsidiaries.

DIRECTORS

Mr. G. Bharakatia and Mr. Atul S. Pethe, Directors, retire byrotation and being eligible, offer themselves for re-appointmentat the forthcoming Annual General Meeting.

FIXED DEPOSITS

The Company has not accepted any deposit, within the meaningof Section 58-A of the Companies Act, 1956 read withthe Companies (Acceptance of Deposits) Rules, 1975 madethereunder.

PARTICULARS OF EMPLOYEES

Pursuant to the provisions of section 217(2A) of the CompaniesAct, 1956 read with the Companies (Particulars of Employees)Rules, 1975, the particulars are given in the statement whichforms part of this Report. However, as per provisions of section219(1)(b)(iv) of the Companies Act, 1956, the Directors Reportis being sent to the shareholders excluding the aforesaidinformation. Any shareholder interested in obtaining a copy ofthe statement may write to the Companys Registered Office atSurat or to its Administrative Office at Mumbai.

DIRECTORS RESPONSIBILITY STATEMENT

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

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

(ii) that the Directors have selected such accounting policiesand applied them consistently and made judgments andestimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company at


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the end of the financial year ended 31st March, 2007 and ofthe profit of the Company for that financial year;

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

(iv) that the Directors have prepared the Annual Accounts on agoing concern basis.

AUDITORS

M/s. R.C. Reshamwala & Co., Auditors of the Company, holdoffice until the conclusion of the ensuing Annual General Meeting.The Company has received letter from them to the effect thattheir appointment, if made, would be within the prescribed limitsunder section 224(1-B) of the Companies Act, 1956. YourDirectors recommend their re-appointment.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE

Information in accordance with the provisions of section 217(1)(e)of the Companies Act, 1956, read with the Companies (Disclosureof Particulars in the Report of Board of Directors) Rules, 1988regarding conservation of energy, technology absorption andforeign exchange earnings and outgo is given in the Annexureforming part of this report.

GROUP FOR INTER-SE TRANSFER OF SHARES

As required under Clause 3(e) of Securities and Exchange Boardof India (Substantial Acquisition of Shares and Takeovers)Regulations, 1997, persons constituting Group (within the meaningas defined in the Monopolies and Restrictive Trade PracticesAct, 1969) for the purpose of availing exemption from applicabilityof the provisions of Regulation 10 to 12 of aforesaid SEBIRegulations, are given in the Annexure - I attached herewith andform part of this report.

HUMAN RESOURCES

Steps have been initiated to strengthen Companys HR policiesto meet the increasing requirement of talented resources in viewof Companys growth vision.

LISTING

The Equity Shares of the Company are listed at The StockExchange, Mumbai, National Stock Exchange of India Limited,Mumbai and Ahmedabad Stock Exchange Limited. The Companyhas paid the Annual Listing fee to each of the above StockExchanges.

INTERNAL CONTROL SYSTEM

The Companys internal control systems governed by well framedpolicies and guidelines is supplemented by well-established auditprocesses that assists management in identifying issues andassociated risks and ensure that all assets are safeguarded andprotected against any loss.

Internal audit, an independent appraisal function, examines andevaluates the adequacy and effectiveness of the internal controlsystems, appraises periodically about activities and audit findingsto the Audit Committee, statutory auditors and the management.

CORPORATE GOVERNANCE

A detailed section on Corporate Governance is attached to thisAnnual Report.

ACKNOWLEDGEMENTS

The Directors take this opportunity to thank the customers,shareholders, bankers and other stakeholders for their faithreposed in the Company and thank the Government of India,State Governments and regulatory authorities and agencies fortheir assistance and looks forward to their continued support.The Directors place on record their sincere appreciation of thecontribution of all employees which has enabled the growth ofthe Companys business in competitive market conditions.

On behalf of the Board of Directors

Mumbai Jatin R. Mehta15th May, 2007 Chairman-cum-Managing Director

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SU-RAJ DIAMONDS AND JEWELLERY LIMITEDANNEXURE TO THE DIRECTORSREPORTParticulars required under the Companies (Disclosure ofParticulars in the Report of the Board of Directors) Rules,1988.A. CONSERVATION OF ENERGY

The particulars regarding conservation of energy are notapplicable to the Company as the Diamond Industry is notcovered under the schedule prescribed by the said Rules.

B. TECHNOLOGY ABSORPTIONThe particulars regarding absorption of technology is givenbelow as per Form B of the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988.

Research and Development (R & D):(1) Specific areas in which R & D is carried out by the

CompanyCutting and polishing of diamonds and manufacture ofjewellery as per international standards are the areas inwhich general research and development work are carriedout by the Company.

(2) Benefits derived as a result of the above R & DBetter productivity and cost reduction.

(3) Future Plan of ActionAppropriate actions are being planned.

(4) Expenditure on R & D:(a) Capital

(b) Recurring

Included in the(c) Total manufacturing cost.

(d) Total R & D expenditure as a

percentage of total turnover

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

adaptation and innovationThe Company is monitoring the technological up-gradationtaking place internationally in the field of diamond andjewellery manufacturing and the same are being reviewedfor implementation.

(2) Benefit derived as a result of the above efforts e.g.product improvement, cost reduction, productdevelopment, import substitution etc.1) Product improvement

2) Cost reduction

3) Import substitution in respect of main consumables

(3) In case of Imported Technology (imported during thelast 5 years reckoned from the beginning of the financialyear), following information may be furnished:(a) Technology Imported

(b) Year of Import Nil

(c) Has technology been fully absorbed

(d) If not fully absorbed, areas where this hasnot taken place, reasons therefor and futureplan of action

C. FOREIGN EXCHANGE EARNINGS AND OUTGOThe Companys main line of business is the manufactureand export of cut and polished diamonds and diamondstudded gold and platinum jewellery.

Total Foreign Exchange Earned Rs. 1480.28 Crores

Total Foreign Exchange Used Rs. 1230.33 Crores

The foreign exchange used includes the remittances madefor raw materials which are under process and foreignexchange earned includes bills to be realised.



Annexure I

Group for inter-se transfer of shares under clause 3(e) ofSecurities & Exchange Board of India (Substantial Acquisitionof Shares and Takeovers) Regulations, 1997

NAME OF THE COMPANY

Su-Raj Diamond Industries Limited

SJR Commodities and Consultancies Private Limited(formerly known as Su-Raj Diamond Consultancies PrivateLimited)

Forever Precious Jewellery And Diamonds Limited

Firstrate Diamonds Private Limited

Forever Diamonds Private Limited

Diadem Investment and Finance Private Limited

Kohinoor Diamonds Private Limited

Bombay Diamonds Company Private Limited

J. R. Diamonds Private Limited

Kings Jewel Exports Private Limited

}

}


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CORPORATE GOVERNANCEThe Companys philosophy on Corporate Governance is basedon preserving core values, ethical business conduct, maximizationof shareholders value and welfare of stakeholders.

For, Su-Raj, corporate governance is a continuous process thatseeks to provide an enabling environment to achieve theobjectives of maximizing values coupled with accountability andintegrity.

BOARD OF DIRECTORSComposition of the BoardThe Companys Board consists of 6 members, out of which 5 areIndependent Directors. Mr. Jatin R. Mehta, Executive Director isthe Chairman of the Board.

Number of Board MeetingsThe Board of Directors met 4 times during the year on 9th May,2006, 25th July, 2006, 31st October, 2006 and 29th January,2007.

Directors attendance record and Directorship heldNone of the Directors are members of more than ten Board levelcommittees nor are they Chairman of more than five committeesin which they are members.

The following table gives the details of designation, category ofDirectors, number of Board Meetings attended, attendance atlast Annual General Meeting (AGM) and the number of otherDirectorships and Committee Memberships as at March 31, 2007:

Name of the Category of No. of Board Last No. of other Directorship &Director Directorship Meetings during A.G.M. Committee Membership /

the year 2006-07 Chairmanship heldHeld Attended Other Other Other

Director- Committee Committeeship Member- Chairman-

ship shipJatin R. Mehta Executive 4 4 Yes 1 Nil Nil

K. N. Bhandari Non ExecutiveDirector &IndependentDirector 4 3 No 5 1 1

G. Bharakatia Non ExecutiveDirector &IndependentDirector 4 4 Yes 4 Nil Nil

Dr. Dharmendra Non ExecutiveBhandari Director &

IndependentDirector 4 3 No 3 Nil 1

Atul S. Pethe Non ExecutiveDirector &IndependentDirector 4 4 No 1 Nil Nil

G. P. Gupta Non ExecutiveDirector &IndependentDirector 4 3 No 13 5 5

Notes:

1. Independent Director means a Director defined as such under Clause 49 of theListing Agreement.

2. Only two committees of the Board viz. the Audit Committee and ShareholdersGrievance Committee are considered.

Information Supplied to the BoardThe information placed before the Board includes:

Annual operating plans, capital budgets and any updates.

Quarterly results for the Company and business segments.

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

Appointment or removal of Chief Financial Officer andCompany Secretary.

Materially important show cause, demand, prosecution andpenalty notices.

Fatal or serious accidents, dangerous occurrences, anymaterial effluent or pollution problems.

Any material default in financial obligations to and by thecompany, or substantial non-receipt for payment of goodssold by the Company.

Any issue, which involves possible public or product liabilityclaims of substantial nature, including any judgment or orderwhich, may have passed strictures on the conduct of theCompany or taken an adverse view regarding anotherenterprise that can have negative implications on theCompany.

Details of any joint venture or collaboration agreement.

Transactions that involve substantial payment towardsgoodwill, brand equity or intellectual property.

Significant labour problems and their proposed solutions.Any significant development in human resources/industrialrelations front like signing of wage agreement, implementationof voluntary retirement scheme, etc.

Sale of material nature of investments, subsidiaries, assets,which is not in the normal course of business.

Quarterly details of foreign exchange exposures and thesteps taken by management to limit the risks of adverseexchange rate movement, if material.

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

Details of investment of surplus funds available with theCompany.

Minutes of the Board Meetings of the subsidiary companies.

Statement showing significant transactions & arrangementsentered into by the subsidiary companies.

The Board has established procedures to enable the Boardto periodically review compliance reports of all lawsapplicable to the Company, prepared by the Company aswell as steps taken by the Company to rectify instances ofnon-compliances.

Remuneration paid to Directors

Details of remuneration paid to Directors for the year 2006-07.

(Rs.)

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

Sitting Meeting Superannuation/Fees Sitting Commission/

Fees ESOP1. Mr. Jatin R. Mehta Nil Nil 36,00,000 36,00,000

2. Mr. K.N. Bhandari 15,000 Nil Nil 15,000

3. Mr. G. Bharakatia 20,000 20,000 Nil 40,000

4. Dr. Dharmendra Bhandari 15,000 15,000 Nil 30,000

5. Mr. Atul S. Pethe 20,000 20,000 Nil 40,000

6. Mr. G.P. Gupta 15,000 Nil Nil 15,000

Total 37,40,000

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SU-RAJ DIAMONDS AND JEWELLERY LIMITEDCode of ConductA code of conduct for all Board members and senior managementof the Company has been laid. The code of conduct is availableon the website of the Company www.su-raj.com. All Boardmembers and senior management personnel have affirmedcompliance with the Code of Conduct. A declaration signed bythe Chief Executive Officer (CEO) to this effect is enclosed at theend of this report.

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

COMMITTEES OF THE BOARDThe Company has two committees of the Board, Audit Committeeand Shareholders Grievance Committee. The decisions relatingto the constitution of committees, appointment of members andfixing of terms of service for committee members are taken bythe Board of Directors. Composition of the said committees,number of meetings held and attendance during the financialyear are as follows:

a) Audit CommitteeThe Audit Committee comprised of three independent Directors,Mr G. Bharakatia (Chairman), Dr. Dharmendra Bhandari andMr. Atul S. Pethe. The Audit Committee met four times duringthe year on 9th May 2006, 25th July 2006, 31st October 2006and 29th January 2007.

The Details of the Audit Committee meeting are given below:

Name of Members Status No. of meetings

Held Attended

Mr. G. Bharakatia Chairman 4 4

Mr. Atul S. Pethe Member 4 4

Dr. Dharmendra Bhandari Member 4 3

The statutory auditors, internal auditors are permanent inviteesto the audit committee. The Company Secretary acts as secretaryof the committee. Members of the Audit Committee including theChairman (Mr. G. Bharakatia) have accounting and financialmanagement expertise. The Chairman of the Audit Committeeattended the Annual General Meeting (AGM) held on 22ndSeptember, 2006 to answer shareholders queries.

The Audit Committee of the Company performs the followingfunctions: Overseeing the Companys financial reporting process and

the disclosure of financial information to ensure that thefinancial statement is correct, sufficient and credible.

Recommending to the Board, the appointment and, ifrequired, the removal of the statutory auditor and the fixationof audit fees.

Approval of payment to statutory auditors for any otherservices rendered by the statutory auditors.

Reviewing with the management, the quarterly and annualfinancial statements before submission to the Board.

Reviewing with the management the annual financialstatements of subsidiary companies.

Reviewing the adequacy of internal audit functions. Reviewing with the management and auditors, the adequacy

of internal control systems. Reviewing with internal auditors any significant findings and

follow up thereon.

Reviewing the findings of any internal investigations by theinternal auditors into matters where there is suspected fraudor irregularity or a failure of internal control systems of amaterial nature and reporting the matter to the Board.

Discussion with statutory auditors before the commencementof audit, about the nature and scope of audit as well aspost-audit discussion to ascertain any area of concern.

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

Carrying out any other function as is mentioned in the termsof reference of the Audit Committee.The Audit Committee reviews:

Management discussion and analysis of financial conditionand results of operations.

Statement of significant related party transactions (as definedby the audit committee), submitted by management.

Management letters / letters of internal control weaknessesissued by the statutory auditors.

Internal audit reports relating to internal control weaknesses. The appointment, removal and terms of remuneration of the

Internal Auditor. The Audit Committee is also presented with the following

information on related party transactions (wheneverapplicable):

A statement in summary form of transactions with relatedparties in the ordinary course of business.

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

Details of material individual transactions with related partiesor others, which are not on an arms length basis along withmanagements justification for the same.

b) Shareholders Grievances CommitteeThe Shareholders Grievances committee comprises of Mr. AtulS. Pethe (Chairman), Mr. Jatin R. Mehta and Mr. G. Bharakatia.

The committee looks into redressing investors grievances liketransfer of shares, non-receipt of shares, non-receipt of dividends,non-receipt of annual report, etc.

The power of approving share transfer has been delegated to theCompany Secretary.

Name and designation of the compliance officer:

Mr. Shivprakash K. Singh, Company Secretary.

Presently, the Company has approximately 58,000 shareholders.During the financial year 2006-2007 Company received 262complaints from shareholders and all the complaints have beenredressed. There were no complaints pending as on 31st March,2007.

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

Sr. No. Date Committee No. ofstrength members present

1 09.05.2006 3 3

2 25.07.2006 3 3

3 31.10.2006 3 3

4 29.01.2007 3 3


10

Subsidiary CompaniesAll the subsidiary companies of the Company are managed bytheir respective Board of Directors. The financial statements, inparticular investments made by unlisted subsidiary companiesare reviewed by the Audit Committee of the Company.Brief of the Companys subsidiaries as on March 31, 2007 areas under:

Sl. Name of Subsidiary Country inNo. which

Incorporated1 Su-Raj Diamonds NV Belgium

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

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

MANAGEMENTManagement Discussion and AnalysisManagement Discussion and Analysis report forms part of theAnnual Report and has been detailed separately in the report.Disclosures on materially significant related partytransactionsNone of the transactions with related parties were in conflict withthe interest of the Company.Disclosures of transactions with related parties are set out inSchedule 12 to Annual Accounts, forming part of the Annual Report.Details of non-compliance by the CompanyNo instance of non-compliance by the Company on any matterrelated to capital markets during the last three years has beenreported and therefore no penalties or strictures have beenimposed on the Company by the Stock Exchanges or SEBI orany other statutory authority.Code for prevention of insider trading practicesThe Company has instituted a code of conduct for its managementand staff. The code lays down guidelines, which advises them onprocedures to be followed and disclosures to be made, whiledealing with shares of Su-Raj Diamonds & Jewellery Limited,and cautioning them of the consequences of violations.CEO/CFO certificationThe CEO and CFO certification of the financial statements and thecash flow statement for the year is enclosed at the end of the report.SHAREHOLDERSRe-appointment/Appointment of DirectorsAccording to the Articles of Association of the Company, one-thirdof its Directors retire every year at the Annual General Meeting.Mr. G. Bharakatia and Mr. Atul S. Pethe would retire this year atforthcoming Annual General Meeting.Mr. G. Bharakatia and Mr. Atul S. Pethe, Directors have offeredthemselves for re-appointment. Their brief CV is given below:Mr. G. BharakatiaMr. G. Bharakatia was appointed as a Director with effect from30th March, 2002. Mr. Bharakatia is a Chartered Accountant withexpertise in finance and audits of Banks and GovernmentCompanies. He is the Chairman of the Audit Committee of theBoard of the Company.Other Directorship held by Mr. Bharakatia as on 31st March,2007 are as follows:1. A.B. Impex Private Limited2. Shri Prempurji Granimarbo Private Limited3. Mitul India (P) Limited4. Forever Precious Jewellery & Diamonds Limited

Mr. Atul S. PetheMr. Atul S. Pethe was appointed on the Board with effect from6th May, 1986 and was also the Managing Director of theCompany in the past. Mr. Atul S. Pethe is a B.Sc Graduate andhas more than 32 years experience in Gem and Jewellery Industrywith particular expertise in Diamond manufacturing and relatedactivities.

He is a member of the Audit Committee and also the Chairman of theShareholders Grievance Committee of the Board of the Company.

Mr. Atul S. Pethe is also on Board of Professional DiamondsLimited.

Communication with shareholdersSu-Raj Diamonds and Jewellery Limited has its own web-sitewww.su-raj.com and all important information relating to theCompany, including results, press releases, etc. are posted onweb-site. The results of the Company are published in leadingnewspapers like Economic Times, Nav Gujarat Times.

Investor GrievancesThe Company has constituted a Shareholders GrievancesCommittee for redressing shareholders complaints, as mentionedearlier in this report. Grievance redressal division/compliance officerse-mail ID as per clause 47(f) of Listing Agreement, exclusively forthe purpose of registering complaints by investors is as under :

[email protected]

ComplianceCertificate from the Auditors of the Company, M/s. R.C.Reshamwala & Company, Chartered Accountants, confirming thecompliance with the conditions of corporate governance, asstipulated under Clause 49 of Listing Agreement, is annexed tothe Directors Report forming part of the Annual Report.

General Body Meetings

Year Location Date Time

2003-2004 Mahida Bhavan 31st August, 2004 11.30 a.m.Icchanath

2004-2005 Opp. S.V.R. 11th August, 2005 11.30 a.m.Engineering College,Dumas Road

2005-2006 Surat 395 007 22nd September, 2006 11.30 a.m.

There were no resolutions passed by the Members through postalballot during last three years.General Shareholder Information :Annual General Meeting :Date, time and venue

30th August, 2007, 11.30 a.m.

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

Financial Calendar (tentative)Financial year :1st April to 31st March

For the financial year 2007-2008 (1st April, 2007 to 31st March, 2008) First Quarter : End of July, 2007 Second Quarter : End of October, 2007 Third Quarter : End of January, 2008 Fourth Quarter/Annual : End of June, 2008

Date of Book Closure : 23rd August, 2007 to 30th August, 2007Dividend Payment Date : on or after 30th August, 2007

11

SU-RAJ DIAMONDS AND JEWELLERY LIMITEDListing of Equity Shares on Stock Exchanges and Paymentof Listing Fees

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

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

National Stock Exchange of IndiaLimited Symbol:SURAJDIAMNExchange Plaza, C-1, Block-G Series : EQBandra-Kurla ComplexBandra (East)Mumbai 400 051

The Annual Listing Fees for the financial year 2007-2008 hasbeen paid by the Company to the stock exchanges.

DEMAT SEGMENT ISIN : INE664A01015

Market Price Data :

The price of the Companys Equity Shares-High, Low during eachmonth in the last financial year:

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

High Low High Low High Low

April, 2006 67.65 58.10 67.65 57.55 12102.00 11008.43

May, 2006 74.30 47.00 74.30 49.40 12671.11 9826.91

June, 2006 57.80 39.00 57.70 39.50 10626.84 8799.01

July, 2006 50.80 42.50 51.25 42.20 10940.45 9875.35

August, 2006 60.40 46.40 60.70 46.20 11794.43 10645.99

September, 2006 62.25 54.00 62.35 53.30 12485.17 11444.18

October, 2006 60.50 51.30 59.05 50.55 13075.85 12178.83

November, 2006 53.60 46.80 53.45 46.00 13799.08 12937.30

December, 2006 55.80 44.60 53.90 36.90 14035.30 12801.65

January, 2007 59.00 51.75 57.90 50.55 14325.92 13303.22

February, 2007 67.00 40.95 65.00 43.10 14723.88 12800.91

March, 2007 56.95 46.25 56.50 47.00 13386.95 12316.10

Registrar and Transfer Agent :Intime Spectrum Registry LimitedUnit: Su-Raj Diamonds & Jewellery Limited,C-13, Pannalal Silk Mills Compound, L.B.S. Road,Bhandup (West), Mumbai 400 078.Phone : (91-22) 2596 3838.Fax : (91-22) 2594 6969 / 2596 2691.E-Mail: [email protected],Website: www.intimespectrum.com.

Share Transfer System

Shareholders are requested to send the share transfer relateddocuments directly to our Registrar & Transfer Agent, IntimeSpectrum Registry Limited whose address is given above.Shareholders Grievances Committee is authorized to approvethe registration of transfer of shares in the physical segment. Allshare transfer is completed within statutory time limit from thedate of receipt, provided documents meet the stipulatedrequirement of statutory provisions in all respects.

Registered Office:Su-Raj Diamonds & Jewellery LimitedKesharba Market 2, GotalawadiKatargam, Surat 395 004Gujarat State, IndiaPhone: 0261-2535055 Fax: 0261-2533435

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

Dematerlisation of Shares and Liquidity

The Equity Shares of the Company are compulsorily traded inelectronic form with effect from 28th August, 2000. Theshareholders who have not yet dematerialized their shares arerequested to dematerialize the same by opening DP Accountwith nearest Depository Participants at the earliest to avail thebenefits of dematerialisation.

The total number of shares dematerialized as on 31st March,2007 are 3,19,82,140 shares representing 79.51% of ShareCapital. The Equity Shares of the Company are frequently tradedat Mumbai and National Stock Exchange (BSE & NSE).

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

Details of Public Funding Obtained in the last three years :Nil

Location of Factories :

1. 143-D Bomasandra Industrial Area, Hosur Road, Hebbagodi,Bangalore - 562 158.

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

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

4. Unit No.39-40, Plot No.261, Surat Special Economic Zone,Road No.3, GIDC, Sachin, Surat - 394 230.

5. Kesharbha Market-2, Gotalawadi, Katargam, Surat - 395004.

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

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

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


12

Distribution of Shareholding as on 31st March, 2007

CATEGORY NO.OF % OFSHARES SHARE

HELD HOLDING

A. Promoters Holding

1. PromotersIndian Promoters * 1,77,84,698 44.21Foreign Promoters

2. Persons acting in Concert Nil Nil

Sub Total 1,77,84,698 44.21

B. NonPromoters Holding

3. Institutional Investora. Mutual Funds and UTI 37,600 0.09b. Banks, Financial 11,27,859 2.81

Institutions, InsuranceCompanies (Central/StateGovernment Institutions/Non-GovernmentInstitutions)

c. FIIs 17,38,169 4.32

Sub Total 29,03,628 7.22

4. Others

a. Private Corporate Bodies 19,68,650 4.90b. Indian Public 1,67,58,470 41.66c. NRIs/OCBs 8,02,812 2.00d. Any Other (Other

Directors 6,000 0.01and their Relatives) **

Sub Total 1,95,35,932 48.57

GRAND TOTAL 4,02,24,258 100.00

* 10,260 Equity Shares of NRIs included in Promoters Holdings.** Holding of Non-Executive Independent Directors & theirRelatives.

Shareholding pattern as on 31st March, 2007

Shares To No. of % to Total % ToFrom Shareholders Total Shares Total

1 5,000 51,821 89.76 80,60,971 20.04

5,001 10,000 3,676 6.37 28,39,616 7.06

10,001 20,000 1,275 2.21 19,14,648 4.76

20,001 30,000 358 0.62 8,94,083 2.22

30,001 40,000 150 0.26 5,36,154 1.33

40,001 50,000 122 0.21 5,70,415 1.42

50,001 1,00,000 185 0.32 13,32,821 3.31

1,00,001 AND ABOVE 146 0.25 2,40,75,550 59.86

Total 57,733 100.00 4,02,24,258 100.00

CERTIFICATION BY CHIEF EXECUTIVE OFFICER ANDCHIEF FINANCIAL OFFICER OF THE COMPANY

(As required by Clause 49 of the Listing Agreement(s) enteredinto with the Stock Exchanges)

ToThe Shareholders and the Board of Directors

Su-Raj Diamonds And Jewellery Limited

We, Jatin R. Mehta, Chairman-cum-Managing Director/ChiefExecutive Officer and Jaikumar Kapoor, Chief Financial Officerof Su-Raj Diamonds & Jewellery Limited, to the best of ourknowledge and belief, certify that:

1) We have reviewed the Balance Sheet and Profit and LossAccount of the Company for the year ended 31st March,2007 and all its schedule and notes on accounts, as well asthe Cash Flow Statement.

2) To the best of our knowledge and information:

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

b) These statements together present a true and fair viewof the Companys affairs and are in compliance withexisting accounting standards, applicable laws andregulations.

3) We also certify, that based on our knowledge and beliefthere are no transactions entered into by the Company,which are fraudulent, illegal or violative of the CompanysCode of Business Conduct and Ethics.

4) The Companys other certifying officers and we areresponsible for establishing and maintaining internal controlsand procedures for the Company, and we have evaluatedthe effectiveness of the Companys internal controls andprocedures.

5) The Companys other certifying officers and we havedisclosed, based on our most recent evaluation, whereverapplicable, to the Companys auditors and through them tothe Audit Committee of the Companys Board of Directors:

a) All significant deficiencies in the design or operation ofinternal controls, which we are aware and have takensteps to rectify these deficiencies;

b) Significant changes in internal control during the year;

c) Any fraud, which we have become aware of and thatinvolves Management or other employees who have asignificant role in the Companys internal control system;

d) Significant changes in accounting policies during theyear.

We further declare that all the Board Members and SeniorManagement personnel of the Company have affirmed compliancewith the Code of Business Conduct and Ethics for the financialyear ended 31st March, 2007.

Jatin R. Mehta Jaikumar KapoorChairman-cum-Managing Director/ Chief FinancialChief Executive Officer Officer

Mumbai, 15th May, 2007

13

SU-RAJ DIAMONDS AND JEWELLERY LIMITEDDetails of other Directorships held:

Sr. Name of the Director Directorship Committee Committee

No. Membership Chairmanship

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

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

The Bank of Rajasthan Limited

Hindalco Industries Limited

Agriculture Ins. Co. of India Limited Audit Committee

Saurashtra Cement Limited

3 Mr. G. Bharakatia A. B. Impex Pvt. Limited

Shri Prempuriji Granimarbo Pvt. Limited

Mitul India (P) Limited

Forever Precious Jewellery & Diamonds Limited

4 Dr. Dharmendra Bhandari Bank of Baroda Audit Committee &

Management Committee

Harmony for Silvers Foundation

J P Morgan Mutual Fund India Pvt. Limited

5 Mr. Atul S. Pethe Professional Diamonds Limited

6 Mr. Gian Prakash Gupta The Jammu & Kashmir Bank Limited Audit Committee

Swaraj Engines Limited Audit Committee

M. P. Power Generation Company Limited

Birla Sun Life Insurance Company Limited Audit Committee

Power Trading Corporation of India Limited Audit Committee

SIDBI Venture Capital Limited

Aditya Birla Nuvo Limited Audit Committee

EMKAY Share & Stock Brokers Limited

NTPC Limited Audit Committee

Hindustan Aeronautics Limited Audit Committee

Shree Digvijay Cement Corporation Limited Audit Committee

Power Finance Corporation Limited Audit Committee

Idea Cellular Limited Audit Committee


14

Managements Discussion and AnalysisIndustry Structure and Development:

The Gem and Jewellery industry is ranked as one of the fastestgrowing sectors and is also a leading industry for foreign exchangeearnings. The Gem and Jewellery sector recorded an increase of2.74% in exports at US $17.1 billion in year 2006-07 as comparedto US $ 16.6 billion in previous fiscal.

While USA accounts for 31% of industrys gem and jewelleryexports, other markets like Japan and CIS nations includingAfrican countries are being explored by the industry.

There is a huge demand for Indian traditional jewellery as well ascontemporary designs. The growth in industry is lead by jewellery,especially from SEZ/EPZ.

Recently Government has made import of polished diamondsduty free which will result in growth of Gem and Jewellery Industry.This step of Indian Government will pave way for India becominga global trading hub for diamonds.

Su-Raj Diamonds and Jewellery Limited has reported a 28%increase in sales at Rs.1570.06 crore for the year ended 31stMarch, 2007. Net profit rose 28% to Rs.47.92 crores as againstRs.37.40 crores during the previous year.

Segment wise / Product wise Performance:

Sales of diamonds during the year 2006-2007 was Rs.576.55Crores, whereas the Sales of Jewellery was Rs.993.51 Crores,representing 36.72% and 63.28% of the total turnover respectively.

Statement of continent-wise sales for year 2006-2007:

Continent Sale (Rs.crores) Percentage

North America 278.85 17.76

Europe 112.61 7.18

Middle East 965.03 61.46

Asia 213.57 13.60

TOTAL 1570.06 100

Financial and Operating Performance:

The total income of the Company for the year 200607 increased28.70% to Rs.1572.26 Crores. The operating profit (PBDIT) forthe year was Rs.65.79 Crores compared to Rs.48.91 Crores inthe previous year. Net Profit of the Company stood at Rs.47.92Crores as compared to Rs.37.40 Crores for the previous year.Earning per Share (EPS) was Rs.11.95 as against Rs.9.33 forthe previous year. A dividend of 18% has been proposed, subjectto the approval of the shareholders. The Corresponding dividendpayout will be Rs.7.24 Crores in addition to tax of Rs.1.23 Crorespayable by the Company as tax on distribution of dividend.

Risk, Internal Control System and Adequacy:

The foreign exchange transactions of the Company are suitablycovered. The Company has adequate internal control procedurecommensurate with its size and nature of the business. Theinternal control system is supplemented by extensive internalaudits, regular reviews by management and well-documentedpolicies and guidelines to ensure reliability of financial and allother records to prepare financial statements. The Companycontinuously upgrades these systems in line with best accountingpractices. The Company has established risk management policywhich is periodically reviewed.

Outlook, Opportunities and Threats:

Outlook

The outlook for Gem and Jewellery industry is positive withcontinued thrust of Government on the sector.

Opportunities

With well established set up, the Company is in a position tofurther consolidate its market share.

Threats

Low cost produce from China may be a threat. Secondly, theneck-deep in competition in a luxury market crowded with newand existing products is another cause of concern.

Human Resources:

Human resource is one of the key assets that the Company hasnurtured and encouraged for active participation in its growth.The Company has well defined appraisal system in place forrecognition of talented and deserving employees, which includesline and staff function personnel. The industrial relations remainedcordial during the year.

Cautionary Statement:

This report contains forward-looking statements based on certainassumptions and expectations of future events. Actualperformance, results or achievements may differ from thoseexpressed or implied in any such forward - looking statements.The Company assumes no responsibility to publicly amend, modifyor revise any forward looking statements, on the basis of anysubsequent developments, information or events.



15


AUDITORS REPORT TO THE MEMBERSOF SU-RAJ DIAMONDS AND JEWELLERYLIMITEDWe have audited the attached Balance Sheet of SU-RAJDIAMONDS AND JEWELLERY LIMITED as at 31st March, 2007and also the annexed Profit and Loss Account and the CashFlow Statement of the Company for the year ended on that dateannexed thereto. These financial statements are the responsibilityof the Companys management. Our responsibility is to expressan opinion on these financial statements based on our audit.

1. We conducted our audit in accordance with auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance whether the financial statements arefree of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includesassessing the accounting principles used and significantestimates made by management, as well as evaluating theoverall financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.

2. As required, by the Companies (Auditors Report) Order,2003 issued by the Central Government of India in terms ofsection 227(4A) of the Companies Act, 1956, we enclose inthe annexure, a statement on the matters prescribed inParagraphs 4 and 5 of the said order.

3. Further, to our comments, in the annexure referred to inparagraph 2 above, we report that:

(i) We have obtained all the information and explanations,which to the best of our knowledge and belief werenecessary for the purposes of our audit;

(ii) In our opinion, proper books of account, as required bylaw have been kept by the Company, so far as appearsfrom our examination of these books;

(iii) The Balance Sheet, Profit and Loss Account and CashFlow Statement dealt with by this report are inagreement with the books of account;

(iv) In our opinion, the Balance Sheet, Profit and LossAccount and Cash Flow statement dealt with by thisreport comply with the accounting standards referredto in sub-section (3C) of section 211 of the CompaniesAct, 1956;

(v) On the basis of written representations received fromthe directors, as on 31st March, 2007, and taken onrecord by the Board of Directors, we report that noneof the directors is disqualified as on 31st March, 2007from being appointed as a director in terms of clause(g) of sub-section (1) of section 274 of the CompaniesAct, 1956.

4. In our opinion and to the best of our information andaccording to the explanations given to us, the said accounts,read with the Notes thereon, give the information requiredby the Companies Act, 1956, in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India:

(a) in the case of the Balance Sheet, of the State of Affairsof the Company as at 31st March, 2007;

(b) In the case of the Profit and Loss Account, of the Profitfor the year ended on that date;

and

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

For R.C. RESHAMWALA & CO.CHARTERED ACCOUNTANTS

Membership No. 5502 RAJNIKANT C. RESHAMWALAMumbai, 15th May, 2007 PARTNER

AUDITORS CERTIFICATE ONCORPORATE GOVERNANCE

ToThe Members ofSu-Raj Diamonds and Jewellery Limited

We have examined the compliance of conditions of CorporateGovernance by SU-RAJ DIAMONDS AND JEWELLERYLIMITED, for the year ended on 31st March, 2007, as stipulatedin clause 49 of the Listing Agreement of the said Company withstock exchanges.

The compliance of conditions of Corporate Governance is theresponsibility of the management. Our examination was limitedto procedures and implementation thereof, adopted by theCompany for ensuring the compliance of the conditions of theCorporate Governance. It is neither an audit nor an expression ofopinion on the financial statements of the Company.

In our opinion and to the best of our information and according tothe explanations given to us, we certify that the Company hascomplied with the conditions of Corporate Governance asstipulated in the above mentioned Listing Agreement.

We state that no investor grievances are pending for a periodexceeding one month against the Company as per the recordsmaintained by the Shareholders Grievance Committee.

We further state that such compliance is neither an assurance tothe future viability of the Company nor the efficiency oreffectiveness with which the management has conducted theaffairs of the Company.




16

ANNEXURES TO THE AUDITORSREPORT(Referred to in para 2 of our report of even date on the accountsfor the year ended 31st March, 2007 of SU-RAJ DIAMONDSAND JEWELLERY LIMITED.

On the basis of such checks as we considered appropriate andin terms of information and explanations given to us, we statethat:

1. (a) The Company has maintained proper records, showingfull particulars including quantitative details and situationof fixed assets.

(b) As explained to us, the fixed assets have beenphysically verified by the management in accordancewith a phased programme of verification which in ouropinion is reasonable considering the size and natureof its business, and no material discrepancies havebeen noticed on such verification.

(c) Substantial part of fixed assets have not been disposedoff during the year. As such the determination as towhether it has affected the going concern does notarise.

2. (a) The management, at regular intervals, has donephysical verification of the inventory. In our opinion, thefrequency of the verification is reasonable.

(b) The procedures of physical verification of inventoriesfollowed by the management are reasonable andadequate in relation to the size of the Company andthe nature of its business.

(c) The Company is maintaining proper records ofinventory. The discrepancies noticed on verificationbetween the physical stocks and the book records werenot material.

3. (a) As per the information and explanations given to usand the records produced before us for our verification,the Company has not granted unsecured loan tocompanies, firms or other parties covered in the registermaintained under section 301 of the Companies Act,1956.

(b) As the Company has not given any loans to partiesmentioned in Para 3(a) above, the question ofdetermining whether the rate of interest and other termsand conditions of loans taken by the Company beingprima facie prejudicial to the interest of the Companydoes not arise.

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

(d) The Company has not taken any loans secured orunsecured from companies, firms or other partiescovered in the register maintained under section 301 ofthe Companies act, 1956.

(e) As the Company has not taken any loans from partiesmentioned in Para 3(d) above, the question of

determining whether the rate of interest and other termsand conditions of loans taken by the Company beingprima facie prejudicial to the interest of the Companydoes not arise.

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

4. In our opinion and according to the explanations given tous, there are adequate internal control systemscommensurate with the size of the Company and the natureof its business with regards to purchases of inventory, fixedassets and sale of goods and services. During the course ofthe audit we have not observed any continuing failure tocorrect major weaknesses in internal control.

5. (a) According to the information and explanations given tous and on the basis of the checks carried out by us,there are no contracts or arrangements referred to insection 301 of the Act required to be entered in theregister maintained under that section.

(b) As the Company has not entered into any contracts orarrangements with the parties mentioned in Para 5(a)above, the question of determining whether the pricesare reasonable having regards to prevailing market pricedoes not arise.

6 . The Company has not accepted deposits from the public.As such, the question of complying with the directives issuedby the Reserve Bank of India and the provisions of Section58A and 58AA or any other provisions of the Act and rulesframed thereunder does not arise.

7. In our opinion, the Company, which is a listed Company,has an adequate Internal Audit System commensurate withits size and nature of its business.

8. In the present case, the Central Government has notprescribed the maintenance of cost records under section209(1)(d) of the Companies Act, 1956. As such, the questionof reviewing the books of account to be maintained by theCompany pursuant to such an order does not arise.

9. (a) According to the records of the Company, undisputedstatutory dues including provident fund, investoreducation and protection fund, employees stateinsurance, income-tax, sales tax, wealth tax, servicetax, customs duty, excise duty, cess and other materialstatutory dues applicable, have generally been regularlydeposited with the appropriate authorities though therehas been a slight delay in a few cases. No undisputedamounts are outstanding for more than six months atthe end of the accounting year.

(b) According to the information and explanations given tous and the records of the Company as examined byus, there are no disputed dues of service tax, customsduty, excise duty, wealth tax and cess, which have notbeen deposited. The details of Disputed dues asoutstanding on account of Income tax and Sales taxare as enumerated below:

17


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

relates pending

Income Tax Act Income Tax 25,51,894 A. Y. 2005-06 Assessing officer

Less: Refund Dues 12,93,762

Net Liability 12,58,132

Sales Tax Sales Tax 3,36,657 F. Y. 1992-93 MST (Tribunal)

Sales Tax Sales Tax 59,642 F. Y. 1993-94 MST (Tribunal)



Total ST Liability 6,43,351 MST (Tribunal)

Total Liability 19,01,483

10. The Company has no accumulated losses and the Companyhas not incurred cash losses during the financial year coveredby our audit and in the immediately preceding financial year.

11. In our opinion and according to the information andexplanations given to us, the Company has not defaulted onrepayments of dues to banks and financial institutions. Thereare no debentures issued by the Company and as such thequestion of default in payment to debenture holders doesnot arise.

12. As informed to us, the Company has not granted any loansand advances on the basis of security by way of pledge ofany shares, debentures and other securities. Therefore, theprovisions of clause 4(xii) of the Companies (AuditorsReport) Order, 2003 are not applicable to the Company.

13. In our opinion, the Company is not a chit fund or a nidhimutual benefit fund/society. Therefore, the provisions ofclause 4(xiii) of the Companies (Auditors Report) Order,2003 are not applicable to the Company.

14. In our opinion and according to the explanations given tous, the Company is not dealing in or trading in shares,securities, debentures and other investments. The Companyhas only invested / applied in shares of subsidiaries / groupcompanies for which proper records have been maintained.The said investments are held / will be held by the Companyin its own name.

15. As informed to us, the Company had not given anyguarantees for any loans taken by others from banks orfinancial institutions. Therefore, the provisions of clause 4(xv)of the Companies (Auditors Report) Order 2003 are notapplicable to the Company.

16. On the basis of the review of the utilization of funds pertainingto term loans on overall basis and related information asmade available to us by the Company, prima facie the termloans taken by the Company were applied for the purposefor which they had been raised.

17. According to the information and explanations given to usand on overall examination of the Balance Sheet and CashFlow of the Company, prima facie no funds raised on short-term basis have been used for long-term investments.

18. The Company has not made any fresh allotment of shares.Therefore, the provisions of clause 4(xviii) of the Companies(Auditors Report) Order 2003 are not applicable to theCompany.

19. The Company has not issued any debentures. Therefore,the provisions of clause 4(xix) of the Companies (AuditorsReport) Order 2003 are not applicable to the Company.

20. During the year under review, apart from amounts receivedon calls in arrears, the Company has not raised any moniesby way of public issues. Hence the question of verificationof end use of monies raised in public issue as per theprovision of clause 4(xx) of the Companies (Auditors Report)Order 2003 does not arise.

21. On the basis of our examinations and according to theinformation and explanations given to us, no fraud/s on orby the Company has been noticed or reported during thecourse of the audit.




18

BALANCE SHEET AS AT 31st MARCH, 2007Current Year Previous Year

Schedules Rupees Rupees Rupees

I. SOURCES OF FUNDS :1. Shareholders Funds :

a) Share Capital 1 400,031,815 399,984,845b) Reserves & Surplus 2 5,227,358,181 4,817,412,669

5,627,389,996 5,217,397,5142. Loan Funds : 3

Secured Loans 2,270,183,801 2,079,965,626

3. Deferred Tax Liability (Net) 27,821,476 22,867,276

TOTAL 7,925,395,273 7,320,230,416

II. APPLICATION OF FUNDS :1. Fixed Assets :

a) Gross Block 4 649,137,107 527,367,204Less : Depreciation 242,899,110 222,692,822

Net Block 406,237,997 304,674,382b) Capital Work-in-Progress 322,236,014 281,973,325

728,474,011 586,647,7072. Investments 5 743,932,927 519,555,0403. Current Assets, Loans And Advances 6

a) Inventories 1,774,200,368 1,715,335,552b) Sundry Debtors 11,421,693,667 7,806,189,055c) Cash and Bank Balances 1,071,444,507 1,062,257,009d) Loans and Advances 171,304,344 149,118,773

14,438,642,886 10,732,900,389Less : Current Liabilities And Provisions : 7a) Current Liabilities 7,849,945,884 4,409,910,213b) Provisions 135,708,667 110,870,503

7,985,654,551 4,520,780,716Net Current Assets 6,452,988,335 6,212,119,673

4. Miscellaneous Expenditure : 8(To the extent not written off or adjusted) 1,907,996

TOTAL 7,925,395,273 7,320,230,416

NOTES ON ACCOUNTS 12

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

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

Rajnikant C. Reshamwala K. N. BhandariPartnerMembership No. 5502 Dharmendra Bhandari

G. Bharakatia Directors

Shivprakash K. SinghAtul S. Pethe

Mumbai, 15th May, 2007 Company Secretary G. P. Gupta

}

19

SU-RAJ DIAMONDS AND JEWELLERY LIMITEDPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2007

Current Year Previous YearSchedules Rupees Rupees Rupees

I. INCOMESales 15,700,657,984 12,198,950,902Other Income 9 21,902,593 18,313,026

15,722,560,577 12,217,263,928II. EXPENDITURE

Material Cost 10 14,775,090,577 11,453,581,064Manufacturing and other expenses 11 289,516,530 274,563,941

15,064,607,107 11,728,145,005III. PROFIT

Profit before Interest and Depreciation 657,953,470 489,118,923Interest (Net) 112,740,574 62,989,538Depreciation 33,041,966 30,585,253

145,782,540 93,574,791

Profit Before Tax 512,170,930 395,544,132Provision for Taxa) Current 27,200,000 22,300,000b) Fringe Benefit Tax 800,000 700,000c) Deferred Tax 4,954,200 (1,489,857)

32,954,200 21,510,143

Profit After Tax 479,216,730 374,033,989Balance brought forward from Previous Year 719,026,817 698,521,328

1,198,243,547 1,072,555,317Add :Excess/(Short) Provision for Expenses/

Income of earlier years (Net) 1,902,512 3,706,836Excess/(Short) Provision for Tax (Net) 12,611,146 11,563,229

Profit available for appropriation Total 1,212,757,205 1,087,825,382

IV. APPROPRIATIONSProposed Dividend 72,403,664 60,336,387Tax on Dividend 12,305,003 8,462,178Transfer to General Reserve 200,000,000 200,000,000Transfer to General Reserve - Foreign Exchange/

Metal Price Fluctuation 120,000,000 100,000,000Balance carried to Balance Sheet 808,048,538 719,026,817

Total 1,212,757,205 1,087,825,382

Earnings per share (Basic & Diluted) 11.95 9.33NOTES ON ACCOUNTS 12

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

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

Rajnikant C. Reshamwala K. N. BhandariPartnerMembership No. 5502 Dharmendra Bhandari

G. Bharakatia Directors

Shivprakash K. SinghAtul S. Pethe

Mumbai, 15th May, 2007 Company Secretary G. P. Gupta

}


20

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2007

Current Year Current Year Previous YearRupees Rupees Rupees

SCHEDULE 1 : SHARE CAPITALAuthorised7,00,00,000 Equity Shares of Rs. 10 each (Previous Year : 7,00,00,000 700,000,000 700,000,000

Equity Shares of Rs. 10 each)Issued and Subscribed4,02,24,258 Equity Shares of Rs. 10 each (Previous Year : 4,02,24,258 402,242,580 402,242,580

Equity Shares of Rs. 10 each)Paid-up4,02,24,258 Equity Shares of Rs. 10 each (Previous Year : 4,02,24,258

Equity Shares of Rs. 10 each) 402,242,580 402,242,580Less: Calls Unpaid - Other than Directors 2,210,765 2,257,735

TOTAL 400,031,815 399,984,845Note :Of the above paid-up Capital, Rs. 10,48,06,450 represents capitalisation of General Reserveby issue of 1,04,80,645 Equity Shares of Rs. 10 each fully paid up as Bonus Shares.

SCHEDULE 2 : RESERVES AND SURPLUSCapital ReserveAs per last Balance Sheet 50,341,338 50,341,338Share Premium AccountPremium Receivable 1,716,514,830 1,716,514,830Less : Allotment Money in Arrears 7,494,407 7,600,134Less : Call Money in Arrears 5,209,808 6,027,872

1,703,810,615 1,702,886,824General Reserve

As per last Balance Sheet 2,210,157,690 2,010,157,690Add : Amount transferred from Profit and Loss Account 200,000,000 200,000,000

2,410,157,690 2,210,157,690General Reserve - Foreign Exchange/Metal Price Fluctuation

As per last Balance Sheet 135,000,000 35,000,000Add : Amount transferred from Profit and Loss Account 120,000,000 100,000,000

255,000,000 135,000,000Surplus in Profit and Loss Account 808,048,538 719,026,817

TOTAL 5,227,358,181 4,817,412,669SCHEDULE 3 : LOAN FUNDSSecured Loans(i) Short Term Loans from Banks

Secured by hypothecation of stock-in-trade, book debts (bothpresent and future), personal guarantee of a Director andmortgage by way of Title Deeds of the immovable propertiescomprising of land and other structures, fixed machinery andplant, fixtures and fittings erected or installed thereon situatedat Bangalore, Jodhpur, Mumbai and Valsad; and CollateralSecurity of Land & Building offered by Bombay Diamond CompanyPvt. Ltd., Kohinoor Diamonds Pvt. Ltd. and Land & Buildingand Plant & Machinery of Forever Diamonds Pvt. Ltd. 2,270,082,650 2,079,294,180The Company also has non-fund credit facilitity of Rs. 787.50 crores(Previous year 487.05 crores) with the Consortium of Bankers,secured against above Assets and Fixed Deposits.

(ii) Received From Banks - Buyers Credit facilities 1,805,435,089 474,011,989Less : Fixed Deposits with Banks Rs. 193,35,96,504Pledged for use against payment of buyerscredit facilities 1,805,435,089 474,011,989

(iii) Term Loans from Banks/Financial Institution 101,151 671,446

(Secured by hypothecation of Vehicle)

TOTAL 2,270,183,801 2,079,965,626

21

SU-RAJ DIAMONDS AND JEWELLERY LIMITEDSCHEDULE 4 : FIXED ASSETS

GROSS BLOCK (At Cost) DEPRECIATION NET BLOCK

Description of Asset As At 1st Additions Sales As At 31st As At 1st Sales Provided As At 31st As At 31st As At 31stApril during the during the March, April during the during the March, March, March2006 year year 2007 2006 year year 2007 2007 2006

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

1. Leasehold Land 7,232,169 7,232,169 37,236 2,317 39,553 7,192,616 7,194,9332. Factory Premises 75,275,980 28,725,362 104,001,342 31,688,762 4,444,599 36,133,361 67,867,981 43,587,2183. Office Premises 147,931,028 147,931,028 10,611,518 6,865,975 17,477,493 130,453,535 137,319,5104. Plant and Machinery 229,309,121 72,465,277 13,439,640 288,334,758 139,345,099 10,398,186 13,972,579 142,919,492 145,415,266 89,964,0225. Furniture and Fixtures 13,278,271 9,607,979 243,246 22,643,004 7,981,182 200,887 1,609,345 9,389,640 13,253,364 5,297,0896. Electrical Installations 19,696,285 11,401,887 41,913 31,056,259 13,006,614 33,936 1,222,040 14,194,718 16,861,541 6,689,6717. Equipement 9,839,957 6,537,631 1,296,822 15,080,766 4,788,737 1,016,724 1,128,248 4,900,261 10,180,505 5,051,2208. Air-conditioners 6,379,863 3,249,335 9,629,198 3,872,714 466,727 4,339,441 5,289,757 2,507,1499. Computers 13,171,052 2,474,423 994,348 14,651,127 8,786,892 960,710 2,182,233 10,008,415 4,642,712 4,384,16010. Vehicles 5,253,478 2,717,756 302,070 7,669,164 2,574,068 225,235 1,058,857 3,407,690 4,261,474 2,679,41011. Moulds and Dies 908,292 908,292 89,045 89,045 819,247

CURRENT YEARS TOTAL 527,367,204 138,087,942 16,318,039 649,137,107 222,692,822 12,835,678 33,041,966 242,899,110 406,237,997 304,674,382

PREVIOUS YEARS TOTAL 498,959,209 39,578,981 11,170,986 527,367,204 202,165,666 10,058,097 30,585,253 222,692,822 304,674,382

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

PARTICULARS CURRENT YEAR PREVIOUS YEARRUPEES RUPEES

1) Factory Premises 14,130,732 2,672,3282) Plant & Machinery 5,025,018 4,365,4873) Electrical Installation 939,032 689,3704) Furniture and Fixture 897,690 232,2895) Air Conditioner 568,690

21,561,162 7,959,474

Current Year Previous YearRupees Rupees Rupees

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

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

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

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

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

2,000 (Previous Year : NIL) Equity Shares of AED 1000 eachof Su-Raj Diamonds & Jewellery DMCC, Fully paid up 2,525,935

515,161,985 378,530,800Other Companies20,00,000 (Previous Year : 20,00,000) Equity Shares of 20,000,000 20,000,000

Rs. 10 each of Su-Raj Diamond Dealers Limited, Fully Paid-upNil (Previous Year : 20,000) Equity Shares of

Rs. 10 each of Su-Raj Jewellery (India) Limited, Fully Paid-up 200,000Nil (Previous Year : 6,900) Equity Shares of Rs. 10 each

of Su-Raj UK Industries Limited, Fully paid-up 69,0006,750,000 (Previous Year : 36,23,659) Equity Shares of Rs. 10 each of

Forever Precious Jewellery & Diamonds Limited 207,130,042 120,749,2402,444 (Previous Year : NIL) Equity Shares of Thai Baht 400 each

of SJR Jewelry Co., Limited fully paid up 1,389,900 24,500 (Previous Year : NIL) Equity Shares of Rs. 10 each

of Revah Corporation Limited, fully paid-up 245,000

228,764,942 141,018,240TOTAL 743,932,927 519,555,040


22



SCHEDULE 6 : CURRENT ASSETS, LOANS AND ADVANCES

A. Current AssetsInventories

(As certified by a Director)I. Stores and Spare Parts (At Cost) 10,313,529 6,415,471II. Stock-in-Trade

(i) Raw Materials(Valued At Cost or Net Realisable Valuewhichever is lower)Diamonds 736,309,241 698,494,271Gold and Alloy 551,857,158 464,414,235Precious, Semi-precious and Other Stones 12,251,706 8,785,515Others 2,630,476 1,429,637

1,303,048,581 1,173,123,658(ii) Semi Finished Goods 1,561,002 1,561,002

(Valued At Cost or Net Realisable Valuewhichever is lower)

(iii) Finished Goods(Valued At Cost or Net Realisable Valuewhichever is lower)

Diamonds and Studded Jewellery 459,277,256 534,235,421

1,763,886,839 1,708,920,081

1,774,200,368 1,715,335,552B. Sundry Debtors

(Unsecured, considered good)Debts outstanding for a period exceeding six months 1,443,091,579 406,879,969Other Debts 9,978,602,088 7,399,309,086

11,421,693,667 7,806,189,055C. Cash and Bank Balances

Cash on hand 1,155,872 339,816Balance with Scheduled Banks :In Current Account (including cheques on hand Rs. NIL; 297,102,477 124,759,234

Previous Year Rs. 4,61,00,000)In Fixed Deposit AccountsFixed Deposits with Banks 2,578,621,247 1,411,169,948Less : Pledged with Bank against buyers credit facilities

availed for payment of buyers credit facilities 1,805,435,089 474,011,989

773,186,158 937,157,9591,071,444,507 1,062,257,009

TOTAL A 14,267,338,542 10,583,781,616D. Loans and Advances

(Unsecured, considered good)Advances recoverable in cash or in kind or for value to be received 114,572,999 105,901,262Advance payment of Income-tax 56,731,345 43,217,511

TOTAL B 171,304,344 149,118,773

TOTAL A + B 14,438,642,886 10,732,900,389

23

SU-RAJ DIAMONDS AND JEWELLERY LIMITEDSCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2007


SCHEDULE 7 : CURRENT LIABILITIES AND PROVISIONS

A. Current Liabilities

a) Sundry Creditors 7,837,424,599 4,397,823,071

b) Due to Directors 307,050

c) Unclaimed Dividend 10,914,402 9,515,971

d) Other Liabilities 1,606,883 2,264,121

7,849,945,884 4,409,910,213B. Provisions

a) Taxation 51,000,000 40,300,000

b) Provision for Gratuity 1,771,938

c) Proposed Dividend 72,403,664 60,336,387

d) Tax on Dividend 12,305,003 8,462,178135,708,667 110,870,503

TOTAL 7,985,654,551 4,520,780,716

SCHEDULE 8 : MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)

a) Preliminary Expenses 574,119

b) Commission and Brokerage on subscription of shares 1,333,877

TOTAL 1,907,996

SCHEDULE 9 : OTHER INCOME

Interest Received 8,923,452 8,205,098(Tax deducted at source Rs. 3,36,384; Previous Year Rs.43,539)

Labour Charges Received 8,883,522 4,436,120(Tax deducted at source Rs. 1,99,345;Previous Year Rs. 99,537)

Profit on Sale of Assets (Net) 159,182

Dividend Received 14,500

Rent Received 830,000 512,000

Miscellaneous Receipts

Premium on Sale of Licence 4,932,385

From Others 3,106,437 212,923

TOTAL 21,902,593 18,313,026


24

SCHEDULE 10 : MATERIAL COSTRaw Materials ConsumedOpening Stock 1,173,123,658 550,196,442Add : Purchases 14,825,705,781 11,690,590,307

15,998,829,439 12,240,786,749Less : Closing Stock 1,303,048,582 1,173,123,658

14,695,780,857 11,067,663,091(Increase)/Decrease in Semi-Finished GoodsOpening Stock of Semi-Finished Goods 1,561,002 1,561,002Add : Purchase 4,351,554

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

4,351,554 Goods Traded InOpening Stock 4,405,394Add : Purchases 2,660,772

7,066,166Less : Closing Stock

7,066,166(Increase)/Decrease in Finished GoodsOpening Stock of Finished Goods 534,235,421 913,087,228Closing Stock of Finished Goods 459,277,255 534,235,421(Accretion)/Decretion in stock 74,958,166 378,851,807

TOTAL 14,775,090,577 11,453,581,064

SCHEDULE 11 : MANUFACTURING AND OTHER EXPENSESSalaries, Wages and Bonus 19,391,651 10,519,064Contribution to Provident and other Funds 1,260,359 750,685Workmen and Staff Welfare Expenses 1,632,934 1,013,776

22,284,944 12,283,525Directors Remuneration 3,740,000 1,475,000Labour Charges 98,783,369 97,869,017Assortment and Valuation Charges 2,058,757 1,892,857Packing Materials Consumed 96,301 86,588Stores and Spare Parts Consumed 7,660,400 9,097,958Electricity Charges 6,863,055 4,743,246Freight and Forwarding 8,024,998 6,406,868Postage, Telephone, Telex and Fax Charges 3,660,251 3,413,360Advertisement and Sales Promotion Expenses 2,715,762 3,952,610Rent, Rates, Taxes and Duties(Including Rs. 5,00,000; Previous YearRs. 88,758 towards Stamp Duty) 4,329,811 3,688,690Travelling Expenses 9,855,966 6,317,637Printing and Stationery 1,239,915 984,688Licence, Registration and Other Fees 959,057 518,163Repairs and Maintenance of :

Buildings 1,748,147 256,530Plant and Machinery 518,789 360,482Others 2,300,344 2,184,903

4,567,280 2,801,915Insurance Charges (Including Rs.52,43,480;

Previous Year Rs. 53,32,130 for ECGC Premiumreimbursed to banks) 10,777,380 12,615,666

Legal and Professional Charges 7,123,420 6,325,530Bank Charges 78,765,225 88,089,524Miscellaneous Expenses 11,761,092 6,456,423Loss on sale of Investments 255,550 Loss on sale of Fixed Assets 673,698Donations 2,086,001 1,055,000Preliminary Expenses Written Off 1,907,996 3,815,978

TOTAL 289,516,530 274,563,941



25


SCHEDULE 12 :

NOTES FORMING PART OF THE ACCOUNTS FOR THE YEARENDED 31ST MARCH, 2007

A. Significant Accounting Policies :1. Basis of Accounting and Preparation of financial

Statements:(a) All income and expenditure items are accounted on

accrual basis.(b) Financial statements are based on historical costs.

These costs are not adjusted to reflect the impact ofthe changing value in the purchasing power of money.

2. Fixed Assets :(a) All fixed assets are valued at cost less depreciation.(b) Exchange differences relating to the acquisition of fixed

assets are adjusted in the cost of the assets.3. Depreciation :

(a) Depreciation is provided as per the Written downValue method at rates provided by Schedule XIV tothe Companies Act, 1956. Leasehold Land is amortisedover the period of lease.

(b) Depreciation on additions and on sale/disposal of fixedassets is computed pro-rata on day-to-day basis fromthe date of purchase or up to the date of sale.

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

(d) Depreciation is also considered on those assets (idleassets) which were not used for whole or part of theyear. However for units shut down, no depreciation ischarged.

4. Work in Progress :(a) The cost of fixed assets, acquisition/construction,

installations of which are not completed are includedunder Capital Work-in-Progress and the same areapportioned/transferred to respective fixed assets oninstallation/completion of the asset/project.

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

(c) Similarly, goods, which are under production and cannotbe termed as finished goods are treated as work inprogress.

5. Investments :(a) Long term Investments are stated at Cost of acquisition.

Provision for diminution in the value of long terminvestments is made if such diminution is consideredother than temporary in nature.

(b) Application monies for investment in shares areclassified as an advance till the allotment of shares iscompleted.

6. Inventories :The Company

Documents

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