To,

The Members,

The Directors have pleasure in presenting their 24^th Annual Report on the Audited Statement of Accounts for the Financial Year ended March 31, 2016.

1. FINANCIAL RESULTS

Rs. in Lacs

2. Brief description of the Company’s working during the year/State of Company’s affair

Consolidated:

The consolidate total income increased from Rs. 24377.29 Lacs to Rs. 32542.50 Lacs, increase of 33.50% over the previous financial year. The Consolidated Net Profit after Tax decrease from Rs. 320.61 Lacs to Rs. 272.84 Lacs, a decline of 14.90% over the previous financial year. The detailed analysis of the consolidated results forms part of the Management Discussion & Analysis Report provided separately as part of the Annual Report.

Standalone:

The Standalone total income increase from Rs. 24314.61 Lacs to Rs. 32515.16 Lacs, an increase of 33.73% over the previous financial year. The standalone Profit After Tax decrease from Rs.309.49 Lacs to Rs. 270.70 Lacs, a decline of 12.53 % over the previous financial year.

3. COMPANY’S PERFORMANCE AND FUTURE OUTLOOK

Your Company’s growth journey continued during the year under review. The Company’s Revenue from operation has risen to Rs. 320.99 Crores (current year) from Rs. 239.75 crores ( previous year ) which was increased by 25%. The share of Domestic and Export Sales in the revenue from operations is Rs. 202.84 Crores and Rs. 118.15 Crores respectively.

During the year under review the Company has opened 2 branches in India i.e. Bangalore and Kolkata in order to capture the market and expand its business in India. The Company has taken initiative to utilize its own manufacturing facilities and thereby to reduce the overall cost of production which results in economies of scale in the manufacturing facilities.

CONTINUED CHALLENGES:

The ground realities are far from satisfactory in conduct of operations on sustainable basis, due to prolonged recession in demand side. The shrinking business compelled competitors to extend steep and unworkable discounts to keep the business going in all respects. Due to fluctuation in gold price witnessed in the larger part of financial year 2015-16, the investment demand for gold ornaments didn’t take off. Government regulation like furnishing of PAN card details for purchases above Rs. 2 lakhs, introduction of central excise duty, TCS under Income Tax Act, and mandatory Hallmarking requirement also contributed to the reduction in sales. All these challenges are continuing even in the current financial year 2016-17 as well.

FUTURE PROSPECTS:

Even though there is no perceptible change noticed in the local demand for gold ornaments, the positive movement in the gold price, if sustained, may bring better volume business in the second half of the financial year 2016-17, due to expectation of further increase in gold prices locally. The continuous cost reduction initiatives undertaken by the Management and the effectiveness with which the working capital is managed will go a long way in improving the financial position of the company However, the addition of 2 new branches to our existing branch of our business will ensure better visibility and good volume growth in 2016-17.

4. DIVIDEND AND RESERVES

Your Directors do not recommend any dividend for the financial year ended March 31, 2016 in view to conserve the resources of the Company for any future expansion programmes.

5. SHARE CAPITAL

The Paid-up Equity Share Capital of the Company as on 31^st March, 2016 is Rs. 20,87,68,000/- comprising of 2,08,76,800 shares of Rs. 10/- each. During the year under review, the Company has not issued any equity shares.

6. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mrs. Asha M. Chordia, Director of the Company, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers herself for re-appointment.

During the year, Ms. Khushbu Gupta resigned as the Company Secretary of the Company w.e.f. 16.01.2016. Further, Ms. Prafulla Devaliya was appointed as the Company Secretary of the Company w.e.f. 12.03.2016.

Further, Mr. Sunderlal L. Bothra resigned as Director of the Company w.e.f. 21.12.2015. Further, Mr. Dhruvin B. Shah is appointed as an Additional Director of the Company w.e.f. 28.05.2016.

The Board of Directors re-appointed Mr. Mahendra M. Chordia as the Managing Director of the Company w.e.f. 01.04.2016 for a period of five years upto 31^st March 2021, subject to the approval of the Members of the Company at the forthcoming 24^th Annual General Meeting.

7. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3) (c) & 134(5) of the Companies Act, 2103, the Board of Directors of the Company hereby confirms that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the directors 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;

(c) the directors 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;

(d) the directors have prepared the annual accounts on a going concern basis; and

(e) the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

8. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required pursuant to Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, is enclosed as Annexure I and forms part of this Report.

Further, no employee of the Company is earning more than the limits as prescribed pursuant to Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 in respect of employees of the Company.

Further, the names of top ten employees in terms of remuneration drawn are disclosed in Annexure II and forms part of this Report.

9. NUMBER OF BOARD MEETINGS

A calendar of meetings is prepared and circulated in advance to the Directors. During the year, 8 (Eight) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

10. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The Directors expressed satisfaction with the evaluation process. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

11. INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosure to the Board that they fulfill all the requirements as to qualify for their appointment as Independent Director, under the provisions of Section 149 read with Schedule IV of the Companies Act, 2013 as well the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

12. NOMINATION AND REMUNERATION POLICY

The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors. This policy also lays down criteria for selection and appointment of Board Members. The details of this policy are explained in the Corporate Governance Report.

13. DETAILS OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

As at March 31, 2016, your Company had following Subsidiary Company (ies), however, there was no Joint Venture or Associate Company (ies):

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of financial statements of subsidiary company (ies) in Form No. AOC-1 is attached separately as an Annexure III to this report.

14. RECONSTITUTION OF THE NOMINATION AND REMUNERATION COMMITTEE OF THE BOARD:

Due to changes in the composition of the Board of Directors, the constitution of the nomination and remuneration committee stands reconstituted as under:

(i) * Resigned w.e.f. 21.12.2015

(ii) ** Appointed w.e.f. 28.05.2016.

15. STATUTORY AUDITORS' AND AUDITORS' REPORT

At the Annual General Meeting held on September 22^nd 2014, M/s. Suresh Anchaliya & Co., Chartered Accountants were appointed as Statutory Auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held for the financial year ended 2019. In the terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the Auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Suresh Anchaliya & Co., Chartered Accountants, as Statutory Auditors of the Company, is placed for ratification of the Shareholders. In this regard, the Company has received a Certificate from the Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

Auditors' Report:

The Board has duly reviewed the statutory Auditors’ Report on the Accounts. The observations and comments appearing in the Auditors’ Report are self-explanatory and do not call for any further explanations/comments/clarification by the Board.

16. SECRETARIAL AUDIT

In terms of Section 204 of the Act and Rules made there under, M/s. Deep Shukla & Associates, Practicing Company Secretaries, have been appointed Secretarial Auditors of the Company. The Secretarial Audit Report is enclosed as Annexure IV to this report.

Explanation under Section 134(3)(f)(ii) of the Companies Act, 2013:

1. The transfer of unpaid / unclaimed dividend to the Investor Education and Protection Fund was pending due to technical and procedural difficulties faced by the Company.

2. The composition of NRC fell short due to sudden exit of an Independent Director; however corrective steps were taken by the Company in this regard.

3. Due to some technical reasons, the website of the Company faced some difficulties in proper functioning; however the said issues were sorted out and the website is working effectively

4. The Company has faced technical difficulties in filing e-forms on MCA portal and hence the same were pending. However the pending forms were subsequently filed by the company

17. INTERNAL AUDIT & CONTROLS

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board and to the Managing Director.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal Control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observation and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

Further, M/s. Hiran & Associates, Chartered Accountants issued their Internal Audit Report for the financial year ended 31^st March, 2016.

18. EMPLOYEES’ STOCK OPTION PLAN

The Company has not provided stock options to any employee of the Company.

19. VIGIL MECHANISM

In pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.swarnsarita.com. The employees of the Company are made aware of the said policy at the time of joining the Company.

20. RISK MANAGEMENT POLICY

The Company has laid down the procedure to inform the Board about the risk assessment and minimization procedures. These procedures are reviewed by the Board annually to ensure that there is timely identification and assessment of risks, measures to mitigate them, and mechanisms for their proper and timely monitoring and reporting.

21. EXTRACT OF ANNUAL RETURN:

The details forming part of the Extract of the Annual Return in Form MGT-9, as required under Section 92 of the Companies Act, 2013 is included in this Report as Annexure Vand forms part of this Report.

22. DEPOSITS

The Company has not accepted nor renewed any fixed deposits during the FY 2015-2016.

23. LOANS, INVESTMENTS & GUARANTEES

Particulars of loan given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the notes to the standalone financial statement. (Please refer to Note Nos. 9, 11 & 15 to the standalone financial statement).

24. RELATED PARTY TRANSACTIONS

Details of material transactions with Related Parties on an arm’s length basis with respect to transaction covered under Section 188(1) of the Act in the prescribed Form No. AOC-2 is annexed with this Report and marked as Annexure VI.

Further, details of Related Party Transaction as required under to be disclosed by Accounting Standard - 18 on “Related Party Disclosures” specified under Section 133 of the Act read with rule 7 of the Companies (Accounts) Rules, 2014, are given in the Notes to the Financial Statements.

25. CORPORATE GOVERNANCE CERTIFICATE

A Report on Corporate Governance along with a certificate from the Auditors of the Company regarding the compliance of conditions of corporate governance as stipulated under SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015 and forms a part of this Annual Report.

26. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report, which gives a detailed state of affairs of the Company’s operations forms a part of this Annual Report.

27. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

(A) Conservation of energy-

Even though its operations are not energy-intensive and manually executed, significant measures are taken to reduce energy consumption by using energy-efficient equipment. The Company regularly reviews power consumption patterns across all locations and implement requisite improvements/changes in the process in order to optimize energy/ power consumption and thereby achieve cost savings. Energy costs comprise a very small part of the Company’s total cost of operations. However, as a part of the Company’s conservation of energy programme, the management has appealed to all the employees / workers to conserve energy.

(B) Technology absorption-

(i) the efforts made towards technology absorption;

The Company values innovation and applies it to every facet of its business. This drives development of distinctive new products, ever improving quality standards and more efficient processes.

The Company has augmented its revenues and per unit price realization by deploying innovative marketing strategies and offering exciting new products. The depth of designing capabilities was the core to our success over the years.

The Company uses the service of in-house designers as well as those of freelancers in developing product designs as per the emerging market trends. The Company uses innovation in design as well as in technology to develop new products.

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution;

As a result of the above, the following benefits have been achieved:

a. Better efficiency in operations,

b. Reduced dependence on external sources for technology for developing new products and upgrading existing products,

c. Expansion of product range and cost reduction,

d. Greater precision,

e. Retention of existing customers and expansion of customer base,

f. Lower inventory stocks resulting in low carrying costs,

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-The Company has not imported any technology during the year under review.

(a) the details of technology imported;

(b) the year of import;

(c) whether the technology been fully absorbed;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and

(iv) the expenditure incurred on Research and Development.

The Company has not expended any expenditure towards Research and Development during the year under review.

RESEARCH AND DEVELOPMENT (R&D):

R & D is focused on the development of new products both for export and domestic markets. Due emphasis is placed on improving quality standards with enhanced customer satisfaction. this was primarily achieved through process improvements, control on systems, reduction of waste and energy conservation. Effective use of tools and small group activities with the technological support resulted in controlling the variations in processes, maximizing the productivity and minimizing the cost of production.

1. Specific areas in which R & D carried out by the Company:

i) Material evaluation/Characterization of raw materials and rough diamonds.

ii) Planning, cutting and polishing of diamonds and manufacturing of jewellery.

iii) In-house development of advance software for preventing human errors.

iv) Designing of jewellery and development of new cuts in diamonds.

v) Waxing, wax setting, casting, filling and polishing of jewellery

vi) Capability development for in- house processes, designs and strategic applications of material for product improvement. Efforts continued in the direction of fine tuning of the jewellery manufacturing and the changes in designs. These resulted in improvements in product performance.

2. Benefits derived as a result of R & D activity:

The R & D activities helped to add new quality products and to achieve greater customer acceptance in the retail market. These activities also enabled the Company to reduce waste, increase productivity, achieve higher “customer satisfaction” and derive following benefits:

a. Increase product range coupled with technology up gradations and cost reduction;

b. Introduction of new products with a focus on achieving global acceptance and in conformity to Indian and International standards;

c. Improved quality in diamond and jewellery manufacturing;

d. Increased customer base and additional business volumes;

e. Reduction in reworks and elimination of manufacturing rejections in jewellery;

f. Improved finish and lustre of diamonds;

g. Boosting the capabilities, to offer custom-made jewellery and fetching orders in stiff international competition.

FOREIGN EXCHANGE:

The Company has transaction in foreign currencies are normally recorded at the average exchange rate prevailing during the period of transaction.

FOREIGN CURRENCY TRANSACTIONS:

Rs. in Lacs

28. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

During the year, the Company has to transfer a sum of Rs.2,50,854/- and Rs. 4,52,110/- to Investor Education & Protection Fund, the amount which was due and payable and remained unclaimed and unpaid for a period of seven years, for the F.Y 2007-2008 as provided under the Companies Act, 2013. The said fund Transferred to Investor Education and Protection Fund Account on 7^th July, 2016 and 28^th July, 2016 respectively

29. CORPORATE SOCIAL RESPONSIBILITY

The Company does not meet the criteria of Section 135 of Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 so there is no requirement to constitute Corporate Social Responsibility Committee.

30. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

In order to prevent sexual harassment of women at work place a new act The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified on 9^th December, 2013. Under the said Act every company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee.

Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy During the year Company has not received any complaint of Sexual Harassment.

31. GENERAL

During the year under review, no revision was made in the financial statement of the Company.

During the year ended 31^st March, 2016, there were no cases filed /reported pursuant to the Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company confirms that it has paid the Annual Listing Fees for the year 2016-2017 to BSE where the Company’s Shares are listed.

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations.

The Securities and Exchange Board of India (SEBI) on 2^nd September 2015 issued SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforceability The said regulations were effective from 1^st December 2015. Accordingly, all the listed entities were required to enter into the Listing Agreement within six months from 1^st December 2015. The Company has entered into Listing Agreement with BSE Limited in compliance of the said new Regulations.

32. HUMAN RESOURCES

Your Company treats its “human resources” as one of its most important assets.

Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement.

33. ACKNOWLEDGEMENT

The Directors would like to thank all shareholders, customers, bankers, suppliers and everybody else with whose help, co-operation and hard work the Company is able to achieve the results. The Directors would also like to place on record their appreciation of the dedicated efforts put in by the employees of the Company.

For Swarnsarita Gems Limited

Mahendra M. Chordia

Managing Director

DIN:00175686

Sunil Jain

Executive Director

DIN: 00175748

Place: Mumbai

Date: 20^th August, 2016