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History of Suashish Diamonds Ltd.

Suashish Diamonds Limited [SDLs] has been promoted by Mr.Rameshkumar S. Goenka. The Comp. was incorporated on 5th October, 1988 as a public limited Comp. in the State of Maharashtra & obtained the Certificate of Commencement of Business on 12th October, 1988 from the Registrar of Companies, Maharashtra at Bombay.

The registered office of Comp. was situated at 309, Panchratna, 3rd Floor, M. P. Marg, Opera House, Bombay - 400 004 which was shifted to 347, Panchratna, 3rd Floor, M. P. Marg, Opera House, Bombay - 400 004 with effect from 15th November, 1993. The Comp. has a manufacturing unit - Laser kerfing and sawing division at Unit No. 102, 220 Keytu Industrial Estate, Kondivita Village Road, Andheri [Easts], Bombay - 400 059. The Company main activities are import of rough diamonds, cutting and polishing the same & export of cut & polished diamonds. The contractors working exclusively for SDL have factories at Ahmedabad & Bombay. The clientele base of Comp. is spread across USA, Japan, Europe, Far East & Israel. SDL is a privileged sightholder of Diamond Trading Company, London [DTCs] whereby it enjoys uninterrupted supply of raw materials at competitive rates.

SDL has been granted 'STAR TRADING HOUSE' status under the Export Import Policy of Government of India vide letter No. 1N/58/94-95/EP.III/796 dated 04/08/94 which is valid for a period of three years from 01/04/94 to 31/03/97. Over the last three years the Comp. has reported a compounded annual growth rate of 79.94% for sales & 128.5% for net profit.

The Comp. has received the following awards:

---------------------------------------------------------------- YearAwardsAwarding Agency ---------------------------------------------------------------- 1993-943rd Largest exporter ofThe Gem and Jewellery cut & polished diamondsExport Promotion in the categoryCouncil. of 'DTC Sightholder'.

1992-933rd largest exporter ofThe Gem and jewellery cut & polished dia-Export Promotion -monds in the categoryCouncil. of 'DTC Sightholder'.

1991-924th Largest exporter ofThe Gem and jewellery cut & polished dia-Export Promotion -monds in the categoryCouncil. of 'DTC Sightholder'.

1991-92Trophy for meritoriousGovernment of India, performance in theMinistry of Commerce. field of Export.

1990-91Certificate of Merit forGovernment of India, outstanding ExportMinistry of Commerce. performance[National Export award for outstanding performances] ----------------------------------------------------------------

The Comp. has not faced any labour problems/defaults/litigations that have resulted in closure or suspension of business activities in the past.

INDIAN GEMS AND JEWELLERY INDUSTRY SCENARIO

India has a glorious historical past in diamonds & has revived the past tradition in the sixties when she entered the fray as a manufacturer exporter of cut & polished diamonds, & later on jewellery as well. After spending initial years in establishing the industry in a defined global market place, India established herself among the top manufacturer & exporter of cut & polished diamonds. The main reason among others for her excellent growth is attributed to India skills in converting small diamonds which had so far been discarded as uncuttable into gems. Further India advantage is its cheap labour, which gives a comparative price advantage.

Today the gems & jewellery industry is India second largest foreign exchange earner.

Net Foreign Exchange earnings of Gem and Jewellery ---------------------------------------------------------------- YearNet Earning i.e. excess of exports over imports ------------------------------------- [Rs. in Crores][In US $ millions] ---------------------------------------------------------------- 1984-85353.40302.10 1985-86369.80292.96 1986-87607.40468.18 1987-88557.20428.58 1988-89 1261.10865.78 1989-90 1078.90648.01 1990-91 1420.60791.78 1991-92 1838.90762.86 1992-93 2045.80863.65 1993-94 4131.14 1345.74 ---------------------------------------------------------------- [Source : The GJEPCs]

During the year ended March 1994, Indian exports soared to US $ 4139.26 million - 27% higher than the previous year 1992-93 despite the fact that the world has witnessed a recession in the diamond industry during the same period. The average price realisation was US $ 260 per carat. During the same period i.e. 1993-94 import of rough diamonds increased by 16% over the previous year to US $ 2793.52 million.

India Imports & Exports of Gems and Jewellery

---------------------------------------------------------------- YearValue of ExportsValue of Imports

[Rs. in[US $[Rs. ins][US $ Crores]millions]Crores]millions] ---------------------------------------------------------------- 1989-905479.38N.A.4400.50N.A. 1990-915360.24N.A.3939.57N.A. 1991-927233.732934.345394.752171.48 1992-939503.503272.367457.672408.71 1993-94 12942.904139.268811.772793.52 ---------------------------------------------------------------- [Source : The GJEPCs]

The composition of Gem and Jewellery Industry items of volume of export in 1993-94 is as follows:

---------------------------------------------------------------- ItemUS$Volume In Million[Rs. in lacss] ---------------------------------------------------------------- Diamonds3,649.0311,40,988.63 Gold Jewellery 367.35 1,14,868.82 Non Gold Jewellery 7.43 2,328.56 Coloured Gemstones99.61 31,152.99 Pearls 4.60 1,437.80 Costume Fashion Jewellery 5.81 1,817.45 Synthetic Stones 0.45137.56 Sale to Foreign Tourist 4.98 1,558.46 -------------------- TOTAL4,139.2612,94,290.27 ------------------------------------------------------------ [Source : The GJEPCs]

As the Comp. is proposing to deal in the proposed projects with diamonds segment of Gem and Jewellery Industry the focus is concentrated on the same only.

DIAMONDS

Diamonds, the best known & most popular gemstones, are composed of single element, carbon. Diamond crystals have such a strong cohesion that it attains a degree of hardness unequalled in the mineral kingdom.

The value of cut diamonds is determined by an internationally practised extremely rigid system of evaluation based on four c - colour, carat, cut & clarity.

By virtue of availability of cheap highly skilled labour, India has enjoyed a considerable competitive advantage in the processing of smaller & lower value diamonds. This competitive advantage permitted the Indian diamond processing industry to consolidate its position as demand during the period of recession in the international markets shifted towards smaller diamonds.

GROWTH

The export of cut & polished diamonds & the growth rate during last 10 years are given in the following table

---------------------------------------------------------------- Year Export ofGrowth over DiamondsPrevious Year [Rs. in Croress] ---------------------------------------------------------------- 1984-851172.08 - 1985-861344.25+ 14.7 % 1986-871959.73+ 45.8 % 1987-882439.74+ 24.5 % 1988-894238.18+ 73.7 % 1989-904971.93+ 17.3 % 1990-914738.71- 4.7 % 1991-926162.64+ 30.0 % 1992-938316.15+ 34.9 % 1993-94 11409.89+ 37.2 % ----------------------------------------------------------------

The Compounded Annual Growth Rate [CAGRs] of Indian industry export of cut & polished diamonds over last 9 years i.e. from 1985-86 to 1993-94 works out to 28.77% p.a. & in the last 3 years i.e. from 1991-92 to 1993-94 it was 34.03% p.a.

DESTINATION OF EXPORTS

90% of India exports of cut & polished diamonds are accounted for by five major centres viz., USA, Hong Kong, Belgium, Japan and Thailand.

During 1993-94 the growth in India exports in terms of value of exports to the following consuming centres has been above 15 % over the previous financial year:

---------------------------------------------------------------- Consuming CentreGrowth over Previous Year ---------------------------------------------------------------- Hong Kong73% U. S. A.30% Belgium25% Japan19% ---------------------------------------------------------------- [Source : SOLITAIRE [May-June 1994 issues]]

FUTURE

The market for cut & polished diamonds of various sizes is estimated at about US $ 8 billion. The Indian exports Acc. for approximately 70% in terms of quantity i.e. number of pieces & approximately 45% in terms of value. [Source : SOLITAIRE [May-June 1994 issues]]

The performance in the last year has been particularly encouraging & spurred by a recovery in the US & European markets, exports have risen by 37.2% in Rupee terms. This trend is expected to continue in the near future, auguring well for diamond processing industry.

Further, with the Asian countries registering a higher rate of growth in income, the Hong Kong & Japanese markets are likely to witness a higher rate of growth. This would provide additional fuel to the Indian diamond [cut and polisheds] industry to rise to greater heights.

The Comp. is presently engaged in the activity of export of cut & polished diamonds & processing of rough diamonds. The Comp. has firm arrangements with contractors having manufacturing facilities who work exclusively for Company. While some of polishing is done by workshops in Bombay, most of cutting & polishing of Company goods are done by units in Ahemadabad in Gujarat. Recently, the Comp. has set-up a Laser processing unit from July, 1993 which is not only used for in house processing but also for rendering services to outsiders on job work basis.

Over the last three years from 1991-92 to 1993-94, sales have increased from Rs. 43.14 crores to Rs. 251.33 crores & net profit [PATs] from Rs. 1.93 crores to Rs. 23.02 crores which implies a Compounded Annual Growth Rate [CAGRs] of 79.94% for sales & 128.5% for net profit.

SDL has developed itself into one of largest net foreign exchange earners in the diamond industry within a short span of time as shown below:

[Rs. in lacss] ----------------------------------------------------------------

Foreign exchange RevenueGrowth YearIncomingOutgoingCapitalNetover Outgoing[Outgoing/ Previous Incomings] Year % ---------------------------------------------------------------- 1993-9425,313.1111,607.47180.7413,524.90303.6 1992-9319,625.6716,274.95- 3,350.72 54.6 1991-9211,765.69 9,598.28- 2,167.41 97.4 l990-91 4,308.01 3,209.79 - 1,098.22 1266.5 l989-90559.69479.32- 80.37177.8 1988-89 28.93-- 28.93 - ----------------------------------------------------------------

Revenue income is E.O.B. value of exports which is inclusive of unrealised export proceeds made during the relevant year while the outgoing of foreign exchange is taken on actual remittance or cash basis.

PRESENT BUSINESS

At present, the Comp. buys 'Roughs' mainly from DTC & contracts out for cutting & polishing. The entire cut & polished diamonds are then exported to clients all over the world & in particular, to Hong Kong, U.S.A., Japan & Belgium. During the year 1993-94, the laser processing unit of Comp. commenced its operations.

Suashish Diamdeal [Indias] Limited [SDILs]

Suashish Diamdeal [Indias] limited is a 100% subsidiary Comp. of Suashish Diamonds Limited. It was incorporated as a public limited Comp. on 18th September, 1992 & has become a 100% subsidiary Comp. of Suashish Diamonds limited with effect from 24th May, 1993. The Comp. has commenced business operations in 1994-95. During the first 5 months ended August '94, the Comp. has made export of diamonds for Rs. 75.6 lacs apart from local sales of imported gold for Rs. 363.5 lacs. The Comp. has been issued a bulk licence under the Exim Policy of US$18,759,588.

The financial highlights of subsidiary Comp. are as follows:

The main objects of subsidiary Comp. to be purused are

1. To act as importers, exporters, manufacturers, processors, wholesalers, distributors, retailers, dealers & indenting agents of diamonds, synthetic stones, gems and jewellery precious & semi-precious stones.

2. To carry on, conduct, manage & administer the business of refining, boiling, processing, assorting, cleaning, classifying, clifting, blocking, polishing, preparing, chiselling, kerfing, cleaving, sawing, drilling, bruting through laser or other process cut or uncut coarse & or polished gems, diamonds including industrial diamonds.

bs] Suashish Jewellery Exports Limited [SJELs]

SJEL was incorporated on 28th October, 1992 to act as importers, exporters, manufacturers, wholesalers, distributors, retailers, dealers & indenting agents of jewellery, studded gold jewellery plain gold jewellery gems, diamonds, synthetic stones, precious & semi- precious stones. SJEL has become a subsidiary of SDL from 24th October, 1994. SJEL is setting up a jewellery manufacturing unit at Santacruz Electronics Export Processing Zone. The Comp. has not commenced commercial production till 31st August, 1994.

cs]Suashish Diamonds [Hong Kongs] limited - Proposed subsidiary

The above Comp. has been incorporated on 23rd June, 1994 at Hong Kong & the proposed investment by SDL in the shares of above Comp. is yet to be made.

There is no holding Comp. of Suashish Diamonds Ltd.