M/s. JMR & ASSOCIATES. Chartered AccountantsOff Premises No.701, 7th Floor, Majestic Shopping Centre...

th 27 ANNUAL REPORT2013-2014

M/s. JMR & ASSOCIATES. Chartered Accountants

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ANNUAL REPORT 2013-2014

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NOTICE:

NOTICE IS HEREBY GIVEN THAT THE TWENTY SEVENTH ANNUAL GENERAL MEETING OF THE MEMBERS OF TH CLASSIC DIAMONDS (INDIA) LIMITED (CIN L36900MH1986PLC041541) WILL BE HELD ON 25 SEPTEMBER,

ND2014 AT 3.00 P.M. AT CONSULTAIR INVESTMENT PVT LTD, 20 DOWNTOWN CONFERENCE HALL, 2 FLOOR, S/W

WINGS, CAMBATA BLDG, 42 M.KARVE ROAD, CHURCHGATE, MUMBAI- 400020 TO TRANSACT THE FOLLOWING

BUSINESS:

ORDINARY BUSINESS:

By order of the Board

Kumar C. BhansaliManaging Director

Registered Office:Off Premises No.701, 7th Floor, Majestic Shopping CentrePremises Co-op. Soc. Ltd J.S.S. Rd Mumbai 400004Date: 30th May,2014

NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON HIS / HER BEHALF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. The instrument of proxy, in order to be effective, should be deposited at the Registered Office of the Company, duly completed and signed, not later than 48 hours before the commencement of the meeting. A Proxy Form is annexed to this Report.

Pursuant to provisions of Section 105 of the Companies Act, 2013, a person can act as proxy on behalf of not more than fifty members and holding in aggregate not more than ten percent of the total share capital of the Company. Members holding more than ten percent of the total share capital of the company may appoint single person as proxy who shall not act as proxy for any other person or shareholder. Proxies submitted on behalf of limited companies, societies, etc., must be supported by an appropriate resolution / authority, as applicable.

2. Members/Proxies should bring the attendance slip duly filled in for attending the meeting.

th3. The register of members and the share transfer books of the Company will remain closed from 19 September, 2014 to th25 September, 2014 (both days inclusive).

4. The Members whose names appear in the Register of Members/list of Beneficial Owners as received from Central ndDepository Services (India) Limited (CDSL) and National Securities Depository Limited (NSDL) on 22 August, 2014

are entitled to vote by Ballot Paper attending Annual General Meeting in person(s) on the resolutions set forth in this Notice.

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5. Voting through electronic meansI. In compliance with the provisions of Section 108 of the Companies Act, 2013 read with Rule 20 of

Companies (Management and Administration) Rules, 2014, the Company is pleased to offer e-Voting facility as an alternative mode of voting which will enable the Members to cast their votes electronically. Necessary arrangements have been made by the Company with Central Depository Services (India) Limited (CDSL) to facilitate e-voting. E-voting is optional and members shall have the option to vote either through e-voting or in person at the general meeting.

II. The Members whose names appear in the Register of Members/list of Beneficial Owners as received from Central Depository Services (India) Limited (CDSL) and National Securities Depository Limited (NSDL) on

nd22 August, 2014 are entitled to vote on the resolutions set forth in this Notice. The Voting period will th thcommence on Thrusday, 18 September, 2014 at 9:30 am and will end on Saturday, 20 September, 2014

at 5.30.p.m.III. The instructions for members for voting electronically are as under:-

(A) In case of members receiving e-mail:i) If you are holding shares in Demat form and had logged on to www.evotingindia.com and casted

your vote earlier for EVSN of any Company, then your existing login id and password are to be used.

ii) Log on to the e-voting website www.evotingindia.com. iii) Click on “Shareholders” tab to cast your votes.iv) Now, select the Electronic Voting Sequence Number - “EVSN” along with “COMPANY

NAME” from the drop down menu and click on “SUBMIT”v) Now, fill up the following details in the appropriate boxes:

* Members who have not updated their PAN with the Company/Depository Participant are requested to use the default number: <Default Value> in the PAN field. # Please enter any one of the details in order to login. In case either of the details are not recorded with the depository please enter the value <Default Value> in the DOB column or the <Default Value> in the Dividend Bank details field.

vi) After entering these details appropriately, click on “SUBMIT” tab.vii) Members holding shares in physical form will then reach directly the EVSN selection screen.

However, members holding shares in demat form will now reach 'Password Creation' menu wherein they are required to mandatorily enter their login password in the new password field. The new password has to be minimum eight characters consisting of at least one upper case (A-Z), one lower case (a-z), one numeric value (0-9) and a special character(@ # $ %& *). Kindly note that this password is to be also used by the demat holders for voting for resolutions of any other company on which they are eligible to vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential. Kindly note that this changed password is to be also used by the

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Demat holders for voting for resolutions for the Company or any other Company on which they are eligible to vote, provided that Company opts for e-voting through CDSL platform.

viii) Click on the relevant EVSN on which you choose to vote.ix) On the voting page, you will see Resolution Description and against the same the option “YES/NO” for

voting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution and option NO implies that you dissent to the Resolution.

x) Click on the “Resolutions File Link” if you wish to view the entire Resolutions.xi) After selecting the resolution you have decided to vote on, click on “SUBMIT”. A confirmation box will

be displayed. If you wish to confirm your vote, click on “OK”, else to change your vote, click on “CANCEL” and accordingly modify your vote.

xii) Once you “CONFIRM” your vote on the resolution, you will not be allowed to modify your vote.

(B) In case of members receiving the physical copy of Notice of General Meeting [for members whose e-mail IDs are not registered with the company/ depository participant(s) or requesting physical copy]:

i. Initial password is provided as below at the bottom of the Attendance Slip for the AGM.

ii. Please follow all steps from sl. no. (ii) to sl. no. (xii) above, to cast vote.

(C) Institutional shareholders (i.e. other than individuals, HUF, NRI etc.) are required to log on to https://www.evotingindia.co.in and register themselves, link their account which they wish to vote on and then cast their vote. They should upload a scanned copy of the Board Resolution in PDF format in the system for the scrutinizer to verify the vote.

th thIV. The voting period begins at on Thrusday, 18 September, 2014 at 9:30 am and will end on Saturday, 20 September, 2014 at 5:30 p.m. During this period shareholders' of the Company, holding shares either in

ndphysical form or in dematerialized form, as on the cut-off date of 22 August 2014, may cast their vote electronically. The e-voting module shall be disabled by CDSL for voting thereafter. Once the vote on a resolution is cast by the shareholder, the shareholder shall not be allowed to change it subsequently.

(D) In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions (“FAQs”) and e-voting manual available at www.evotingindia.com under help section or write an email to [email protected].

V. The Company has appointed CS Jagdish Patel, Practicing Company Secretary as the Scrutinizer for conducting the e-voting process in fair and transparent manner.

VI. A copy of this notice has been placed on the website of the Company and the website of CDSL.

6. Members desirous of asking any questions at the Annual General Meeting are requested to send in their questions so as to reach the Company at least 10 days before the Annual General Meeting so that the same can be suitably replied.

7. In case of joint holders attending the Meeting, only such joint holder who is higher in the order of names will be entitled to vote.

8. Members are requested to bring their attendance slip along with their copy of Annual Report to the Meeting.

9. Members are requested to intimate change of address, if any, to the company quoting reference to their Registered Folio Number.

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10. At the ensuing Annual General Meeting, Mr. Kumar C. Bhansali (DIN: 00117998) retire by rotation and is being proposed for re-appointment as Director, the details as required under Clause 49 (IV)(v)of the Listing Agreement is given below:

Mr. Kumar C. Bhansali is the Managing Director of the company and has a vast experience in dealing of diamonds and in sales and marketing of the same. He has sound knowledge and practical experience in handling technical and financial aspects of the Companies.

By order of the Board

Kumar C. BhansaliManaging Director

Registered Office:Off Premises No.701, 7th Floor, Majestic Shopping CentrePremises Co-op. Soc. Ltd J.S.S. Rd Mumbai 400004.

Date: 13th August, 2014

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DIRECTOR'S REPORT

ToThe Members,

Your Directors have great pleasure in presenting their Twenty Seventh Annual Report together with the Audited Statement stof Accounts for the financial year ended 31 March, 2014

1. FINANCIAL RESULTS: (Rupees in Lacs)

2. DIVIDEND:In view of loss during the year the management has decided not to declare the dividend

3. LISTING ON NSE & BSE:The shares of your company are listed on the Bombay Stock Exchange Limited (BSE Code: 523200) and the National Stock Exchange of India Limited (NSE Code: CLASSIC EQ)

4. FINANCE:The Company's accounts where they were having limits with the Banks has been declared NPA (Non Performing Assets) by the Bank for non realization of export proceeds. The directors of the Company are trying their best to realize the export proceeds at the earliest

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5. DIRECTORS:The Company has 4 Directors. The following is the list of Directors of the Company:

6. AUDITORS:M/s JMR & Associates Chartered Accountants will continue to hold the office of Auditor as per Section 139 of the Companies Act 2013 from the conclusion of this Annual General Meeting, until the conclusion of Twenty-Eight Annual General Meeting to be held after this meeting, subject to ratification at every Annual General Meeting and to fix their remuneration for the financial year ending 31st March, 2014.

7. 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 stipulated in the said clause 49 of the Listing Agreement annexed thereto.

8. FIXED DEPOSIT:The company has not invited or accepted any deposit during the financial year 2014- 2015 under review under Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

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

The information pursuant to Section 134(3) (m) of the Companies Act, 2013 is given below:

A. CONSERVATION OF ENERGYAs 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.

B. TECHNOLOGY ABSORPTION

Research and Development (R & D)1. 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.

2. Benefits derived as a result of the above R & D:The Company achieves better productivity and cost reduction.Reduction in Production leads timeReduction in rework and rejection in the manufacturing processTotal traceability of each piece during the entire manufacturing process through in house software development

3. Future plan of Action:The company will strive to improvise the manufacturing methodology to effect further cost reduction and increase productivity.

4. Expenditure on R & D: a. Capital NILb. Recurring NILc. Total R & D expenditure as included in the manufacturing costpercentage of total turnover NIL

5. 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.

6. 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

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cost reduction.

7. 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. FOREIGN EXCHANGE EARNINGS AND OUTGO:Information regarding foreign exchange earnings and outgo is given below:

Total Foreign Exchange used : NIL Total Foreign Exchange earned : NIL

12. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under section 134(3) (c) of the companies act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

• that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

• 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 at the end of the financial year and of the profit and loss 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 this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

• that they have prepared the annual accounts on a going concern basis and• that in case of listed company, had laid down internal function controls to be followed by the company and that

such internal financial controls are adequate and were operating effectively • that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that

such systems were adequate and operating effectively

14. ACKNOWLEDGEMENT:The Directors wish to convey their appreciation to all the employees of the company for their personal efforts as well as

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.

13. CAUTIONARY STATEMENT: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 applicable Securities laws and regulations. Actual results could differ materially from those expressed or implied due to risk of uncertainties associated with our expectations with respect to, but not limited to, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business, technological changes, exposure to market 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 factors.

for the excellent contribution made by all employees of the Company through their commitment, competence, co-operation and diligence to duty

BY THE ORDER OF THE BOARD

Mr. Kumar C. Bhansali Chairman & Managing Director

Mr. Nirav K. Bhansali Whole Time Director

Registered Office:thOff Premises No.701, 7 Floor,

Majestic Shopping Centre Premises Co-op.Soc.ltd. J.S.S. Rd., Mumbai 400 004Dated: 30th May, 2014

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REPORT ON CORPORATE GOVERNANCEPursuant to clause 49 of the Listing Agreement, a report of Corporate Governance is given below:

1) COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE:The essence of Corporate Governance lies in its transparency, its efficiency lies in its ability to protect the stakeholders' interest. Corporate Governance is the application of best management practices, compliance of law and adherence to ethical standards to achieve the Company's objective of enhancing shareholders value and discharging of social responsibility. The Company remains accountable to shareholders and other stakeholders for its actions. The Company conducts its activities in a manner that is fair and transparent to all stakeholders.

2) BOARD OF DIRECTORS:

a) Composition and size of the Board:

The Board has a required combination of Executive, Independent and Non- Executive directors as per the Listing Agreement. The Board is chaired by an Executive Director and total strength of the board was of 4 Directors as on 31st March, 2014, Comprising of 1 Whole time,/ Executive Directors, 1 Managing Director and 2 Independent Directors.

b) Board Meetings:

Four Board Meetings were held at Mumbai during the year under review. The Board Meetings were held on with the maximum gap between two Board Meetings did not exceed the limits prescribed in clause 49 of the Listing Agreement. Details of the attendance at Board Meeting and Annual General Meeting held on 23rd September, 2013 by the Directors, together with the number of their Directorships and Memberships of the SEBI-designated Board Committees of other companies are as follows:

**This excludes Directorship held in other Private Limited Companies.

c) Shareholding of Non-Executive Directors as on 31st March, 2014:

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3) COMMITTEES OF DIRECTORS:

The Board has constituted the following three Committees of Directors:a) Audit Committeeb) Remuneration Committeec) Investor's Grievance Committee

a) Audit Committee:

The Committee noted the following were the terms of reference specified by the Board:

1 To monitor the integrity on subjects relating to accounting standards, internal controls and financial policies.2. To examine the Company's financial reporting process and proper disclosure of its financial information.3. To oversee the financial statement before it is submitted to the Board of Directors.4. To have discussion with Management regarding the effectiveness of the Company's internal control system.5. To hold prior discussion with external auditors regarding scope and nature of audit before commencement of the audit

and also to conduct post audit discussion on areas of concern.

th th thThe Audit Committee met three times during the year on 12 August 2013; 12 November 2013 & 12 February 2014. The composition, names of the members, chairperson of the meeting and attendance of the members during the year are as follows:

Note:The minimum number of members to constitute an Audit committee should be 3 directors with independent directors forming a majority as per section 177 of The Companies Act, 2013. Thus, we conclude that company has duly complied with this provision

b) Remuneration Committee:

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. Nishikant Jha 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 21st March, 2014. The composition of the committee is as follows:

Details of Remuneration to the whole time directors and Non-Executive directors for the year ended 31st March, 2014 are as follows:

The Chairman informed that the Company is doing skeletal trading and the activities has come to a standstill and is not likely to make any profit during the current year .Based on the above he felt that there should be no reviewing of the remuneration of the employees of the company. The sitting fees paid to the independent directors are as under.

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c) Investors Grievance Committee:

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 involving the investors where the Company has been made a party.

The Company's Registrar & Share Transfer Agents, M/s Link-In-time India Pvt. Ltd. is fully equipped to carry out the transfers of shares and redress Investor complaints.

rd th th thThe Committee met four times during the year on 23 May 2013, 9 August 2013, 8 November 2013 & 10 February 2014. The composition of the Investor's Grievance Committee and attendance of the Committee members at these meetings were as follows:

Share Transfer:

Transfers of shares in physical form are effected and share certificates 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.

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Details of Shares in Physical form lodged for transfer during 2013-2014 are as follows:

M/s Link-In-time India Private Limited is well equipped to carry out the share transfer in physical form. They maintain the share transfer register and make entries for changes in the same.

4) GENERAL BODY MEETINGS:

- Annual General Meeting The Location and time of the Annual General Meetings held during the last 3 years are as follows:

5) DISCLOSURES:

There was no transaction of material nature with the Promoters, Directors, 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. 41 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 11(2) of SAST for conversion of preferential warrants to equity shares, which the company is following regularly with the regulations.

6) MEANS OF COMMUNICATION:

The half yearly and quarterly results are regularly submitted to the Stock Exchange and published in Newspapers in accordance with the Listing Agreement.

Company's quarterly unaudited results for Quarter ended 30th June, 2013; 30th September, 2013 and 31st December, 2013 along with Audited results for the year ended 31st March, 2014 were published in the Business Standard (English daily newspaper) and Maha Nayak (Vernacular daily newspaper).

Management Discussion and Analysis forms part of the Director's Report.

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7) (a) General Shareholder Information:

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(e) Dematerialization of Shares:

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). 95.13% 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.

Auditors Certificate on compliance with the conditions of Corporate Governance under Clause 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 31March 2014, as stipulated under clause 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.

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In our opinion and to the best of our information and according to the explanations given to us and the representations made by the directors and the management, we report that the Company has not complied with the conditions of corporate governance as stipulated in the above mentioned listing agreement.

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 JMR & Associates,Chartered Accountant

(CA. Nikesh Jain)PartnerMembership No. 114003Place: Mumbai

thDate: 30 May, 2014

Management Discussion and Analysis report

Indian Gems and Jewellery (G&J) industry is one of the major exporting industries with a firm presence in cut & polished (C&P) diamond exports, handling world's 90% of diamond cutting and polishing business. Of late, India's gold Jewellery exports have witnessed a spectacular rise as Jewelers are pushing the Jewellery into high margin overseas markets. On the domestic front, India is one of the major consumers of gold cornering around 30% of world's total gold consumption. Though demand for diamond Jewellery in India is quite low as compared to overall Jewellery demand, the same is picking with rising urbanization, younger population, rising popularity of diamond due to marketing efforts by the players etc.

The Gem & Jewellery industry in FY2012 has suffered on two counts: subdued demand for C&P diamonds led to decline in prices whereas prices of rough diamond did not fall to that extent, leading to margin erosion for exporters and in the domestic markets, more than 30% rise in gold price in rupee terms coupled with lower GDP growth and higher inflation led to muted gold consumption. Organized players in the G&J space are witnessing a good growth due to thriving retail growth and more innovative products. Though the contribution of organized players is small, it is expected to pick up rapidly going forward.

Management expects that exports will grow at a moderate pace over next couple of Years due to a drop in Cut & Polished exports on account of drastic reduction in re-export of Cut & Polished diamonds and subdued global demand for Cut & Polished diamonds. Gold Jewellery exports are expected to continue its growth in the higher trajectory. Domestic demand is expected to remain intact with a substantially higher growth expected for the organized players in Gem & Jewellery space.

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INDEPENDENT AUDITORS' DISCLAIMER OF OPINION REPORT

TO THE MEMBERS OF

CLASSIC DIAMONDS (INDIA) LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of CLASSIC DIAMONDS (INDIA) LIMITED (“the Company”),

stwhich comprise the Balance Sheet as at 31 March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial StatementsThe Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India.

However, because of the matters described in the Basis for Disclaimer of Opinion paragraph below, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion1. We could not observe the counting of physical inventories in the absence of information available and restriction

placed by the Management Accordingly, we were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 31st March, 2013 and 31st March, 2014 which are stated in the Balance Sheet at Rs.44,11,593and Rs.44,11,593 respectively.

2. In addition, we were unable to confirm or verify by alternative means balance of accounts receivableRs.2,957,822,918 and balance of accounts payable Rs.244,505,890 and corresponding translation

stgain or loss, if any on theses balance is not recorded for the year ended 31 March, 2014 and same matters was reported in previous year.

3. We are also unable to confirm the bank balance (including working capital facility and overdraft) and interest payable thereon since the accounts are freezed by the consortium of banks and by income tax authorities and as a result facility has been ceased to be operational and same matter was reported in previous year,.

4. The Company has been unable to renegotiate its borrowings from its bankers and also incurred loss in current year and previous year. Without such financial support there is substantial doubt that it will be able to continue as a going concern. Consequently, adjustments may be required to the recorded asset amounts and classification of liabilities. The financial statements (and notes thereto) do not disclose this fact.

As a result of these matters, we were unable to determine whether any adjustments might have been found necessary in respect of recorded or unrecorded inventories, bank balance (including overdraft facilities) and interest payable thereon and accounts receivable/payable and the elements making up the Statement of Profit and Loss and the Cash Flow Statement.

Disclaimer of OpinionBecause of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph above, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the aforesaid financial statements.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2003 (“the Order”) issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

ON FINANCIAL STATEMENTS

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2. As required by Section 227(3) of the Act, we report that:(a) As described in the Basis for Disclaimer of Opinion paragraph above, we were unable to obtain all the

information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph above, we are unable to state whether proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books

(c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account except for fixed assets register and other matter as referred in Basis for Disclaimer of Opinion

(d) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph above, we are unable to state whether the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) We are unable to comment on compliance of Section 274(1)(g) of the Act since none of the directors has submitted written representations with regards to being appointed as a director in terms of Section 274(1)(g) of the Act and consequently the same not been taken on record by the Board of Directors.

For JMR & AssociatesChartered Accountants

Firm Reg. No. 106912W

(CA. Nikesh Jain)Partner

Membership No: 114003

Annexure to Independent Auditors' ReportReferred to in paragraph under the heading of “Report on Other Legal and Regulatory Requirements” of our Report of even date

i. In respect of its fixed assets:a) The company has not maintained proper records showing full particulars including quantitative details and

situation of its fixed assets.b) As explained to us, the fixed assets have not been physically verified by the management during the year. Hence,

we are unable to comment on discrepancies between book record and physical assets.c) In the absence of fixed assets register and physical verification report of fixed assets we are unable to comment on

disposal of fixed assets

ii. In respect of its inventories:a) As explained to us, the inventories other than those lying with outside parties were physically verified during the

year by the management at reasonable intervals. However, records of such physical verification were not made available to us for verification.

b) In our opinion and according to the information and explanations given to us, we are unable to comment on the procedures of physical verification in the absence of appropriate audit evidence.

c) In our opinion and on the basis of our examination of the records, in the absence of appropriate audit evidence, we are unable to comment on discrepancy on physical verification of stocks by the management if any.

iii.d) According to information and explanations given to us, the Company has not granted any loans, secured or

unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. As the Company has not granted any loans, the clause 4(iii)(b), 4(iii)(c) and 4(iii)(d) of the Order are not applicable.

e) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, to / from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 except for interest free loan from the Director and relative of director. The maximum amount involved during the year was ` 2,49,409 and ` 89,313 respectively and year-end balance is `7,494 and Nil respectively.

Place: MumbaiDate : 30th May, 2014

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f) In our opinion and according to information and explanations given to us, in respect of such interest free unsecured loans taken by the Company, the other terms and conditions are prima facie, not prejudicial to the interest of the Company.

g) In respect of such loans taken by the Company, the principal amounts were repayable on demand.

iv. In our opinion, and according to the information and explanations given to us, there is an inadequate internal control system commensurate with the size of the Company and there are no sale of goods and services during the year. There are no purchases of inventory and fixed assets during the year.

v. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the

Register maintained under the said Section have been so entered.

b) Where each of such transaction is in excess of Rs. 5 lakh in respect of any party, having regard to the explanation that some of the items sold during the year where the suitable alternative sources are not readily available for obtaining comparable quotations. Hence, we are unable to comment on transactions have been made at prices which are prima facie reasonable having regard to prevailing market prices at the relevant time.

vi. According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year. In respect of unclaimed deposits, the Company has complied with the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956.

vii. According to the information and explanations given to us the Company does not have internal audit system.

viii. The Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 for trading activities. Accordingly, this para is not applicable to the Company.

ix. According to the information and explanations given to us in respect of statutory dues:

a) The Company has not deposited undisputed statutory dues, including Provident Fund, Investor Education & Protection Fund, and Employees' State Insurance, Income-tax, Sales-tax, Wealth-tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with appropriate authorities.

b) There are undisputed amounts payable in respect of certain statutory dues for a period of more than six months from the date they became payable as given below:

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c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited as on 31March 2014 on account of disputes are given below:

xi. Accumulated losses of the Company at the end of the financial year are more than hundred percent of its net worth. The Company has incurred cash losses during the current financial year and in the immediately preceding financial year.

xii. In our opinion and according to the information and explanations given to us, the company has defaulted in repayment of dues to banks amounting to Rs.3,00,64,46,069/- in respect of loans repayable on demand. Also, the Company has failed to repay the overdraft balance in Current Accounts with the banks amounting to Rs.13,83,08,413/-.The Company has not defaulted in repayment of dues to financial institution. The Company has not issued any debentures and hence, clause (xi) so far as it related to debenture holders does not apply in the case of the Company.

xiii. In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiv. In our opinion, and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statue applicable to chit fund and nidhi / mutual benefit fund / societies. Accordingly, clause 4 (xiii) of the Order is not applicable to the Company.

xv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures or other investments. Accordingly, the provisions of paragraph 4 (xiv) of the Order are not applicable to the Company.

xvi. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given corporate guarantees to banks or financial institutions on behalf of associated concerns are prejudicial to the interests of the Company.

xvii. In our opinion and according to the information and explanations given to us, the Company has not raised any term loan during the current period consequently the para of the order is not applicable.

xviii. In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we are unable report on utilisation of short term fund for long term purpose as referred in basis of disclaimer of opinion since we do not have appropriate audit evidence for classification and recoverability of certain amounts.

xix. The Company has not made any preferential allotment of shares to parties or companies covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year.

xx. The Company has not issued any debentures. Accordingly, clause (xix) of paragraph 4 of the Order is not applicable in the case of the Company.

xxi. The Company has not raised any money by public issue during the year.xxii. To the best of our knowledge and according to the information and explanations given to us, no fraud by the

Company and no material fraud on the Company has been noticed or reported during the year.

Place: MumbaiDate: 30th May, 2014

For JMR & AssociatesChartered Accountants

Firm Reg. No. 106912W

(CA. Nikesh Jain)Partner

Membership No: 114003

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Place : MumbaiDate : 30th May, 2014

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22



CLASSIC DIAMONDS (INDIA) LIMITED

SIGNIFICANT ACCOUNTING POLICIES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014.

CORPORATE INFORMATION

1 DESCRIPTION OF THE GROUPClassic Diamonds (India) Limited is a leading exporter of cut and polished diamonds and jewellery. The p r inc ipa l operations of the company is located in India.

2 SIGNIFICANT ACCOUNTING POLICIESA Basis of Preparation of Financial Statements

The accounts have been prepared on the accrual basis of accounting, under historical cost convention and in accordance with the generally accepted accounting principles, Companies Accounting Standards notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and the provisions of Companies Act, 1956, except where otherwise stated.

B Use of EstimatesThe preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.

C Fixed AssetsFixed Assets are carried on at cost of acquisition less accumulated depreciation. Cost includes other direct/indirect and incidental expenses incurred upto the date the asset is ready for its intended use but excludes Cenvat availed on such assets. Depreciation has been provided on written down value method of depreciation at the rates prescribed under Schedule XIV to the Companies Act, 1956.

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 100% in the year of acquisition.

D Impairment of AssetsAn asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

E Foreign Currency TransactionsTransactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction. Any income or expense on accountof exchange difference either on settlement is recognised in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets. Monetary items denominated in foreign currencies at the year end are not restated at year end rates.

In respect of foreign exchange transactions covered by forward exchange / options contracts, the difference between the contract rate and the exchange rate at date 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. Gains or losses on cancellation or renewal of contracts 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.

F Inventories Due to the short period of processing and / or manufacturing, difficulty in identifying the stages of process and theinsignificant impact on valuation, goods in process, including polished diamonds, are classified as raw materials for the purpose of classification and valuation.

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ValuationRaw Materials:Rough diamonds are valued at the lower of cost and net realizable value. The cost is determined on specific identification basis by adding purchase price, commission on purchase and clearing charges and by reducing the s a l e value of raw materials sold. 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. cost is based on technical estimate by the management to avoid distortion in valuation. 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 or Weighted average cost. In view of the numerous grades, it is not practicable to use specific costs. The basis of computing cost used on consistent basis though in line with generally accepted industry practice, is a deviation from the method prescribed by Accounting Standard (AS) – 2 ‘Valuation of Inventories’.

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 & Spares:Stores and Spares are valued at the lower of cost or net realizable value. Cost is determined on FIFO basis.

The impact on loss for the year, reserves and surplus and inventories as at 31 March 2014, if any, due to the above deviations is not ascertainable.

G Revenue RecognisitionThe Company recognizes revenue on the sale of products, inclusive of freight and insurance, if any, when the products are delivered to the dealer / customer or when delivered to the carrier for export sales, which is when risks and rewards of ownership pass to the dealer / customer. Interest income is accounted on accrual basis.

Dividend income is accounted for when the right to receive is established. Insurance claims and refund from governments are accounted on realization basis.

H Employee BenefitsShort-term employee benefits are recognised as an expense in the Profit and Loss Account of the year in which the related service is rendered. Increamental gratuity liability calculated on the basis of 15 days last drawn salary for each completed year of service is recognised as an expense in the Profit and Loss Account. Liability for leave encashment to staff and workers for the year is paid / provided in the year of accrual.

I InvestmentsLong Term Investments are c arried 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. Net asset value of units declared by mutual funds is considered as market value for non-exchange traded Mutual Funds.

J Provision for TaxationTax expense comprises of current and deferred tax. Current income taxes are measured at the amount expected to be paid to the tax authorities in accordance with the requirements of domestic laws of the respective countries.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably/virtually certain that sufficient future taxable income will be available against which such deferred tax assets can be realized.

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K Borrowing CostsBorrowing 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 is put to use. Other borrowing costs are charged to the Profit and Loss Account in the year in which they are incurred.

L Earnings per shareThe basic earnings per share (“EPS”) is computed by dividing the net profit after tax for the year available for the equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit/(loss) after tax for the year available for equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

M ImpairmentAt each balance sheet date, the Group determines whether a provision should be made for impairment loss on fixed assets (including intangible assets), by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard (AS) - 28 ‘Impairment of Assets’. Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made. At the balance sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the assets is reflected at the recoverable amount subject to a minimum of depreciated historical cost.

N Provisions, Contingent Liabilities and Contingent AssetsThe Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made . Contingent Assets are neither recognized nor disclosed in the financial statements.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014

3 SHARE CAPITAL

a) Details of reconciliation of the number of shares outstanding at the beginning and at the end of the reporting year:

b) Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.2 per share. Each holder of equity shares is entitled to one vote per share. Due to the losses incurred by the company, the Board of Directors have not proposed any dividend in Current Year.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c) Details of shares in the company held by each shareholder holding more than 5 percent:

d) Details of Shares issued by the company in last 5 years for consideration other than CashNo Shares have been issued for consideration other than cash by the company in last 5 Financial Years

4. RESERVES AND SURPLUS

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5. OTHER LONG TERM LIABILITIES

6. SHORT TERM BORROWINGS

Working capital loans - from banksWorking capital loans from banks are secured by hypothecation of entire current assets (first pari passu) of the Company, equitable mortgage by deposit of title deeds of Land and factory building at Mumbai and surat and office premises of the Company at various locations in mumbai and office premises of two firms in which directors have significant influence, corporate guarantee of two firms in which directors have significant influence, personal guarantee of directors and lien on fixed deposits.

7. TRADE PAYABLES

* The company does not possess information about the micro, small and medium enterpirses, as defined in the Micro, Small and Medium Enterprises Act, 2006 and hence no disclosure have been made for the same. The balances are subject to confirmation.

8. OTHER CURRENT LIABILITIES

* Amount does not include any amount which is required to be credited to the Investor Education and Protection Fund.

Unclaimed share application moneyUnclaimed share application money outstanding in the books Rs. 13,007/- have not been transferred to Investor education and protection fund for period exceeding 7 years from the date it became due for refund.

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Car loan - from financial institution

Car loan taken from financial institution is secured against hypothecation of Motor Car EMI Rs.29,771/- due on every 10th of the month, Number of Installments-2, Rate of Interest :9.63%

9. SHORT-TERM PROVISIONS

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11. NON CURRENT INVESMENTS (At cost)

12. LONG TERM LOANS AND ADVANCES

13. OTHER NON-CURRENT ASSETS

14. INVENTORIES

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15. TRADE RECEIVABLES

16. CASH AND BANK BALANCES

17. SHORT-TERM LOANS AND ADVANCES

18. OTHER CURRENT ASSETS

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19. REVENUE FROM OPERATIONS

20. OTHER INCOME

21. COST OF MATERIALS

22. CHANGES IN INVENTORIES OF FINISHED GOODS AND WORK-IN-PROGRESS

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23. EMPLOYEE BENEFITS EXPENSE

24. FINANCE COSTS

* Interest expenses are recorded based on contractual rates, however, due to default on the part of the company to repay the loans, the banks accounts of the company has been freezed. As a result, actual interest charged by the respective banks may vary from the contractual rates.

25. OTHER EXPENSES

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27. The Company’s production facilities at unit no. 138/139, SDF-V SEEPZ Andheri (E) has been locked out due to labour problems. The Company has suspended its operations from the said locations from 21st November 2011 and has not been functional yet. The company has effected an Out of Court settlement with the labour unions and has paid all the dues to the employees as per agreed terms between the labour union and the Company. Application has been submitted to the industrial court for withdrawal of appeals by the labour union on the basis of consensus agreed between the parties.

28. The Company's Factory at Surat has been shut down completely w.e.f November 2011.

29. The consortium of bankers which had granted various working capital and export facilities have withdrawn these facilities and have called upon the Company to repay their outstanding. Further, the Company has informed that the Company is in the process of negotiation with the banks. The banks are covered by way of mortgagee of various properties / assets of the Company.

30. The year end monetary asset and liabilities which are in foreign currency have not been restated at closing exchange rate which is in non-compliance with the requirements of Accounting Standard (AS) 11 - "The Effects of Changes in Foreign Exchange Rates’.

31. During the year, as required by the Accounting Standard (AS) – 28 “Impairment of Assets”, the Company has reviewed potential generation of economic benefits from fixed assets and concluded that entire plant and machinery. furniture & fixtures, office equipments, weighting machine, air conditioner and electrical installations (which were not in continuous use) aggregating to its written down value of Rs.30,701,096 as on 31 March 2014 are currently not foreseen to generate adequate economic returns over their useful lives. Consequently, these assets have been fully written off.

32. In the opinion of the management all assets, other than fixed assets and non current investments, have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet. The provision for depreciation and for all known liabilities is adequate and not in excess of the amount reasonably stated.

Balances of certain debtors, creditors and advances are subject to confirmation / reconciliation’s if any. The management does not expect any material difference affecting the financial statements on such reconciliation / adjustments.

33. Prior peroid (Income) / expense :

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34. The Company has not made any provision for gratuity and towards leave encashment or Bonus as payable to its employees since the company has shut majority of its operations and has laid off all the employees as at 31st March 2013. Hence, the guidelines mentioned in AS-15 "Employee Benefits" are not applicable.

35. The Company has not hedged the foreign currency exposures. The details of foreign currency exposures that are un-hedged by option/forward instruments or otherwise:

36. 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.

37. Disclosure regarding investment in Associates as required under Clause 32 of Listing Agreement has been given in Note No 11.

38. Related party disclosures in respect of (AS) -18 “Related Party Disclosure”

I. Related party relationship

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ii. List of transactions with related parties

Note:Previous years figures have been re-stated as per the list of related party as disclosed in Management Representation Letter

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39. Segmental information:The Company has only one business segments viz. gems and jewellery, which is being considered as the primary segment.

Segmental information with respect to the secondary segment, i.e. ‘geographical segments’ is given below:

Notes:

i. Secondary segments identified are as per the requirements of Accounting Standard (AS) -17 “Segment Reporting” taking into account the organization structure as well as the differing risks and returns.

ii. The segment revenue and segment assets include the revenue and assets, respectively, which are identifiable with each segment and amounts allocated to the segments on a reasonable basis.

iii. Figures in the brackets pertain to the previous year.

40. Earnings/(Loss) per share

41. Deferred TaxThe major components of deferred tax assets and liabilities, arising on account of timing differences are as below:

Since there is no virtual / reasonable certainty of taxable income in future against which deferred tax assets can be realised, the Company has not recognized deferred tax assets (net) during the current year and has also derecognized deferred tax assets (net) Rs. 141,668,218 in the previous year which was recognised upto 31 March 2012.

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42. Information regarding Exports / Imports and other matters

43. Share of Loss from Investment in partnership firm - M/s. Rup Diamonds includes un-apportioned loss of Rs.1,86,131/- in previous year relating to earlier year.

44. Auditors Remunaration

45. Previous year's figuresPrevious year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

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CLASSIC DIAMONDS (INDIA) LIMITEDRegistered Office: 1002, Prasad Chambers, Opera House, Mumbai 400 004.

[FORM 2B]

(See Rules 50)

N O M I N A T I O N F O R M

[To be filled in by individual(s) applying singly or jointly]

I/We ______________________________________________________________ the

holder(s)________________________ _______________of shares bearing number(s)

________________________ Folio No./DPID No. ______________________ Clint ID

_______________ No. _________________ of CLASSIC DIAMONDS (INDIA) LIMITED wish to make

a nomination and do 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(es) 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: _________________________________________________

_____________________________________ Signature of Guardian: ______________________

(**To be deleted if not applicable)

1) First Holder 2) Second Holder

Signature : ___________________________ Signature : _____________________

Name : ___________________________ Name : ____________________

3) Third Holder

Signature : ____________________________

Name : ____________________________

Place:

Date:

Name, Address and Signature of two witnesses:

Name and Address Signature with date

1.

2.

Please see Instruction on reverse of this page

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INSTRUCTIONS

1. 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 firm, Karta 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.

2. 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.

3. The nominee shall not be a trust, society, body corporate, partnership firm of Karta of Hindu Undivided Family.

4. Nomination stands rescinded upon transfer of the shares.

5. 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-13, Pannalal Silk Mills Compound,L.B.S. Marg, Bhandup (West),Mumbai – 400078

Tel: (022) 2596 38 38

Fax: (022) 2594 69 69

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I/We hereby record my/our presence at the Annual General Meeting of the Company held on

th25 day, September, 2014 at 3.00 p.m. at Consultair Investment P v t L t d , 2 0 D o w n t o w n

NDConference Hall, 2 Floor,S/W W i n g s , C a m b a t a B l d g , 4 2 M.Karve Road,Churchgate ,Mumbai- 400020

Registered Office: Premises NO.701,Seventh Floor, Majestic Shopping Center Premises,

Co-operative Society Ltd,144 J.S.S Road, Girgaum, Mumbai - 400004.

Registered Office: Premises NO.701,Seventh Floor, Majestic Shopping Center Premises,

Co-operative Society Ltd,144 J.S.S Road, Girgaum, Mumbai - 400004.

2014

2014

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FORMB

Format of covering letter of the annual audit report to be filed with the stock exchanges

1 Name of the Com an .• CLASSIC DIAMONDS (INDIA) LIMITED 2. Annual Financial Statement for 31 MARCH 2014

the ear ended 1-3_._-+-T~L..t?ofAudit Qualification

4. Frequency of Qualification 5. Draw attention to the relevant

notes in the annual financial statements and management response to the qualification III

the Directors' Report:

QUALIFIED 2012-13 & 201=-3-=2-'-'01=-:4'--______-1

Refer Page no. 16 of the Annual report lays

down the various disclaimers of the Statutory

Auditors and since the statutory Auditors

were appointed after 31st March 2013, due to

resignation of auditors,the management has

accepted his disclaimers in totality. MIs. JMR

& Associates, Chartered Accountants who

was appointed on 1ih June, 2013 at the EGM

to fill the Vacancy caused by the resignation

of MIs. Apte and Company completed the

Audit for the year ended 31st March, 2013

and as such was not able to verify the stock

and other balances as on 31st March 2013 &

31st MarchJ 2014 which he has qualified in his

report.

6. Additional comments from the Refer Page no. 16 and 17 of the Audit Report Board I Audit Committee Chair; layout the various issues as pointed out the

rinei al 7, To be signed by

Managing Director

Kumar C Bhansali Chairman and Managing Director

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