TO THE MEMBERS OF FLAWLESS DIAMOND (INDIA) LIMITED.
 
 The Directors hereby present their 23rd Annual Report on the business
 and operations of the Company and the Financial Accounts for the year
 ended 31st March, 2012.
 
 Particulars                                      (Rs. in Thousands)
 
                                         Year ended       Year ended
                                         31.03.2012       31.03.2011
 
 Total Income                             755908.32       3356671.75
 
 Profit/(Loss) Before Depreciation 
 & Taxes                                   (1930.03)       (15269.82)
 
 Less: Depreciation                         3558.12          4388.87
 
 Profit/(Loss) Before Tax                  (5488.15)       (19658.69)
 
 Less: Provision for Current Tax                  0                0
 
 Less: Provision for Deferred
 Taxation                                  (8970.87)         (328.77)
 
 Less: Earlier Tax                                0           205.01
 
 Profit/(Loss) After Tax for 
 the year                                   3482.72        (19534.93)
 
 Add: Balance in Reserves & Surplus       617918.66        637453.59
 
 Less: Appropriations                             0                0
 
 Closing Balance                          621401.38        617918.66
 
 BUSINESS OPERATION
 
 During the year the company has suffered a loss of Rs. 54.88 lakh
 before tax against loss of Rs. 196.58 lakh for previous year. The loss
 is due to global slowdown and lower economic growth resulting to non
 realization of exports proceeds from the overseas parties. The company
 is very hopeful that it will recover from the slowdown and achieve its
 past glory in near future.
 
 DIVIDEND
 
 In view of Loss during the year, the Board of Directors has decided to
 not to declare the dividend.
 
 RESEARCH AND DEVELOPMENT
 
 Research and Development is a vital area of the Company''s focus and has
 been a key factor in maintaining the company''s growth.  Leveraging on
 its strong research and development department, your Company is
 constantly developing new and latest designs of jewellery and lifestyle
 products. Your Company keeps abreast with the latest trends in the
 market and its users, which will be useful in coming years.
 
 CONTRIBUTION OF EXPORT IN TOTAL REVENUE
 
 The total contribution of exports in the Company is 69.84% of total
 revenue of the company. During the year, export turnover was Rs.
 4033.97 Lakhs.
 
 CORPORATE GOVERNANCE
 
 Your Company is committed to maintain the highest standards of
 Corporate Governance. Your Directors adhere to the stipulations set out
 in the Listing Agreement with the Stock Exchange and have implemented
 all the prescribed requirements. A separate report on Corporate
 Governance is enclosed as a part of this Annual Report of the Company.
 A certificate from Auditors of the Company regarding compliance of
 Corporate Governance as stipulated under clause 49 of the Listing
 Agreement is annexed to the report on Corporate Governance.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956, with respect to Directors'' Responsibility Statement, It is
 hereby confirmed that:
 
 (i) In the preparation of the annual accounts, for the Financial Year
 ended 31st March, 2012, the applicable accounting standards had been
 followed;
 
 (ii) The Directors have selected such accounting policies and applied
 them consistently and made judgements 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 Loss of the
 Company for the year ended 31st March, 2012;
 
 (iii) The Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956, for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 iv) The Directors have prepared the annual accounts of the Company for
 the Financial Year ended 31st March, 2012 on ''going concern'' basis.
 However the company''s secured creditor ''ICICI Bank'' has filed winding
 up petition u/s 439 of the Companies Act, 1956 in the Bombay High
 Court, which may affect the ''going concern'' status.
 
 DIRECTORS
 
 Pursuant to Article 164 of the Article of Association of the Company
 Shri Deepak K. Parekh and Shri Ashok Chheda, Directors of the
 Company, retire by rotation at the forthcoming Annual General Meeting
 and being eligible, offer themselves for re-appointment.  During the
 year Shri Gautam Banerjee Director of the Company resigned on
 12.12.2011. The Board appreciates his association and contribution to
 the Company during his tenure as Director of the company.
 
 DEPOSITS
 
 Your Company has not invited or accepted any fixed deposits from the
 public during the year under review.
 
 AUDITORS
 
 M/s. Suresh Anchaliya & Co., Chartered Accountants, the retiring
 Auditors of the Company who holds Office in accordance with the
 provisions of the Companies Act, 1956 up to the conclusion of the
 forthcoming Annual General Meeting and being eligible offer themselves
 for re-appointment.
 
 The Company has received letter from the Auditors to the effect that
 their re-appointment, if made, would be within the prescribed limit
 under Section 224 (IB) of the Companies Act, 1956 and that they are not
 disqualified for such re-appointment within the meaning of Section 226
 of the said Act.
 
 AUDITORS REPORT
 
 There is no adverse comment or qualification in the Auditors Report.
 
 MATERIAL CHANGES
 
 a.  The Company''s account with the banks has been declared NPA (Non
 Performing Assets) by the banks for non realization of export proceeds
 and non-payment of loans and interest. The banks have moved the matter
 before Debt Recovery Tribunal and initiated recovery proceeding under
 SARFAESI Act, 2002 for recovery of their dues. The Directors of the
 company are trying their best to realize the export proceeds at the
 earliest and pay off the bank dues.
 
 b.  During the year the company has closed its operation at Dehradun
 Unit. There is no manufacturing activities carried out during the year
 under review.
 
 c.  The secured creditor ''ICICI Bank'' has moved winding up petition u/s
 439 of the Companies Act, 1956 before the Bombay High Court for
 dissolution of the company and the matter is pending before the
 Honorable High Court.
 
 INSURANCE
 
 The Company''s assets and goods are fully insured.
 
 MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT
 
 A detailed review of the progress of the project and the future outlook
 of the Company and its business as stipulated under clause 49 of the
 Listing Agreement with the Stock Exchange is presented in a separate
 section forming part of the Annual Report.
 
 PARTICULARS OF EMPLOYEES
 
 The overall industrial and employee relations remained healthy. There
 are no such employees pursuant to Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975,
 as amended by the Companies Amendment Act, 1988. Hence, no particulars
 are required to be appended to this report in this regard.
 
 DEMATERIALISATION OF SHARES
 
 77.75% Shares of total equity capital is held in dematerialised form
 with NSDL and 16.93% Shares of total equity capital is held in
 dematerialised form with CDSL as on 31.03.2012.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
 EARNINGS & OUTGO
 
 The information pursuant to Section 217(i)(e) of the Companies Act,
 1956, read with the Companies (Disclosure of Particulars in the Report
 of Board of Directors) Rules, 1988, is given as under.
 
 A Conservation of Energy: As the Company is not covered in the list of
 industries required to furnish information in form ''A'' in relation to
 conservation of energy, the same is not given.
 
 B.  Technology Absorption, Research and Development (R&D): The
 Company''s manufacturing unit is closed hence no information is
 required.
 
 C.  Foreign Exchange Earning & Outgo: The total exports for the year
 2011-12 amounts to Rs. 4033.96 lakhs
 
 Total Foreign Exchange used & earned :     Rs. (In Lakhs)
 
 Total Foreign Exchange used :                     778.87
 
 Total Foreign Exchange earned :                   460.96
 
 ACKNOWLEDGEMENT
 
 The Directors wish to place on record their appreciation for the
 consistent assistance and co-operation received from the Central and
 State Government Authorities, Company''s Bankers, Outgoing Director,
 Vendors, Members and dedicated Employees for the confidence in the
 Company and its management through the periods of prosperity and
 adversity.
 
                                  On behalf of the Board of Directors
 
                                                        KAMAL U. JAIN
                                                             Chairman
 
 Registered Office:
 
 136, Panchratna, 
 Opera House, 
 Mumbai - 4 00 004.
 
 Place : Mumbai 
 Date : 28/08/2012