AFFLUENCE

DIRECTORS' REPORT

To,

The Members, Neogem India Limited

Your Directors present the Twenty-forth Annual Report of the Company and the Audited Financial Statement for the year ended March 31, 2015.

2.Dividend:

In view to conserve resources, your Directors do not recommend any dividend for the financial year ended 2014-15.

3.Reserves:

The Board does not propose to carry any amounts to reserves.

4.Brief description of the Company's working during the year/ state of Company's affair:

The overall demand for diamond and jewellery has remained subdued during the year under review. The global economic uncertainty has directly and indirectly impacted consumers preference for luxury and lifestyle products. This has resulted in negative growth in some of the key markets. Your Company is therefore exercising caution in marketing by limiting its exposure to specific customers and regions. The Company also uses the services of in-house designers in developing product designs as per emerging market trends.

5.Change in the nature of business, if any: There was no change in nature of business.

6.Material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report:

No material changes have occurred subsequent to the close of the financial year of the Company to which the balance sheet relates and the date of the report.

7.Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future:

There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

8.Details of Subsidiary/ Joint Ventures/ Associate Companies:

The Company did not have any Subsidiary Company/Joint Venture/Associate Company during the year under review.

9.Auditors:

At the Annual General Meeting held on September 30, 2014, M/s. Ashok Bairagra & Associates (Firm's Registration No. 118677W), Chartered Accountants, were appointed as Auditors of the Company for 3 consecutive financial years i.e. till the financial year 2016-17. In 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. Ashok Bairagra & Associates, Chartered Accountants, as the Statutory Auditors of the Company for the financial year 2015-16, is to be placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if their appointment is ratified in ensuing Annual General Meeting, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

10.Extract of the Annual Return:

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the Annual Return in Form MGT - 9 is appended as Annexure 5 of the Board's Report.

11.Conservation of energy, technology absorption and foreign exchange earnings and outgo:

A.Conservation of energy:

i.The steps taken or impact on conservation of energy:

Though our operations are not energy- intensive, efforts have been made to conserve energy by utilizing energy- efficient equipments.

ii.The steps taken by the Company for utilising alternate sources of energy:

The Company is using electricity as the main source of energy and is currently not exploring any alternate source of energy.

iii.The capital investment on energy conservation equipments: Not applicable

Your Company firmly believes that our planet is in dire need of energy resources and conservation is the best policy.

B.Technology absorption:

i.The efforts made towards technology absorption:

Indigenous/Locally available raw materials are utilized to gain maximum advantage.

ii.The benefits derived like product improvement, cost reduction, product development or import substitution: Utilisation of indigenous raw material has led to cost reduction.

iii.In case of imported technology (imported during the last three years reckoned from the beginning of the financial year):

No technology has been imported by the Company.

iv.The expenditure incurred on Research and Development: Nil

C.Foreign exchange Earnings and Outgo:

1.The Company is engaged in activates relating to exports and taking measures for increasing exports, developing new export markets for production and formulating export plans.

12. Directors and Key Managerial Personnel:

A. Changes in Directors and Key Managerial Personnel:

In the 23rd Annual General Meeting of the Company held on 30th September 2014, Mr. Vikas Patel (DIN 00131285) and Mr. Jayant Nagarkar (DIN 00131405) were re-designated as Independent Directors and they have given declaration that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Mr. Ronak Doshi (DIN 00102959), Whole-time Director of the Company was re-designated as the Whole-time Director cum CFO at the Board Meeting held on 30th May 2014. Mr. Gaurav Doshi (DIN 00166703), who is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, seeks reappointment pursuant to the provisions of Section 152 of the Companies Act, 2013. Ms. Renu Kathuria (DIN 01669882), Additional Director, appointed in the Board Meeting held on 2nd September 2015, is proposed to be appointed as an Independent Director of the Company who shall not be liable to retire by rotation, in respect of whom the Company has received notice proposing her candidature under Section 160 of the Companies Act, 2013 along with requisite deposit for a tenure of 5 years. The Board commends her appointment as an Independent Director to the members.

The term of Mr. Gaurav Doshi as the Managing Director and Mr. Ronak Doshi as the Whole-time Director of the Company expired on 31st March 2015. The Board of Directors in their meeting based on the recommendation of Nomination and Remuneration Committee held on 13th February 2015, re-appointed them for a term of 5 years subject to approval of the members in the ensuing Annual General Meeting.

The Company has received declarations u/s 149(7) of the Act from all the Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed both under the Act and Clause 49 of Listing Agreement with Stock Exchanges. The Company has also received Disclosure of Interest by Directors as per the provisions of Section 184 of Companies Act, 2013. B. Board Evaluation:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, of individual Directors as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees. The Board approved the evaluation results as collated by the Nomination and Remuneration Committee. Directors:

i.Independent Directors:

In accordance with the criteria suggested by the Nomination and Remuneration Committee, the performance of each independent director was evaluated by the entire Board of Directors (in the absence of the director getting evaluated) on various parameters like engagement, leadership, analysis, decision making, communication, governance, interest of stakeholders, etc. The Board was of the unanimous view that every Independent Director was a reputed professional and brought his rich experience to the deliberations of the Board. The Board also appreciated the contribution made by all Independent Directors in guiding the management to achieving higher growth and continuance of each independent director on the Board will be in the interest of the Company.

ii.Non-Independent Directors:

The performance of all the non-independent directors was evaluated by the Independent Directors at their separate meeting. Further, their performance was also evaluated by the Board of Directors. The various criteria considered for the purpose of evaluation included leadership, engagement, transparency, analysis, decision making, functional knowledge, governance, stakeholders etc. The Board was of the unanimous view that all the non-independent directors were providing good business and people leadership.

iii. Declaration by an Independent Director(s) and re-appointment, if any:

All the Independent Directors have provided the declaration of Independence, as required pursuant to Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in sub-section (6).

iv. Familiarization Programme to Independent Directors:

Though it is not mandatory for the Company to provide any formal familiarization programme, however the Company provides suitable familiarization programme to Independent Directors so as to associate themselves with the nature of the industry in which the company operates and business model of the company in addition to regular presentation on technical operations, marketing and exports and financial statements. In addition to the above, Directors are periodically advised about the changes effected in the Corporate Law, Listing Agreement with regard to their roles, rights and responsibilities as Directors of the company. 13. Details of Committees of the Board:

Currently the Board has 4 Committees: the Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee and Share Transfer Committee. The Composition of various committees and compliances, as per the applicable provisions of the Companies Act, 2013 and the Rules thereunder and Listing Agreement, are as follows: A. i. Audit Committee:

The Board has constituted an Audit Committee comprising of Mr. Vikas Patel (DIN-00131285), Independent Director as the Chairman of the Committee, and Mr. Jayant Nagarkar (DIN-00131405), Independent Director and Mr. Gaurav Doshi (DIN-00166703), Managing Director as the members of the Committee. The recommendations of the Audit Committee is always welcomed and accepted by the Board and all the major steps impacting the financials of the Company are undertaken only after the consultation of the Audit Committee. A. ii. Details of establishment of vigil mechanism for directors and employees:

The Company has established vigil mechanism pursuant to Section 177(9) of the Companies Act, 2013 for Directors and Employees to report their concerns and has also taken steps to safeguard any person using this mechanism from victimization and in appropriate and exceptional cases, there is direct access to approach Mr. Vikas Patel (DIN 00131285), Chairperson of the Audit Committee.

B. Nomination and Remuneration Committee:

The Board has constituted Nomination and Remuneration Committee under Section 178 of the Companies Act, 2013. Mr. Vikas Patel (DIN 00131285), Independent Director is the Chairman of the said Committee and Mr. Jayant Nagarkar (DIN 00131405) and Ms. Renu Kathuria (DIN 01669882), Independent Directors are the members of the Committee. The Committee has framed a policy to determine the qualification and attributes for appointment and basis of determination of remuneration of all the Directors, Key Managerial Personnel and other employees. A copy of the policy is annexed as Annexure 6.

C.Stakeholder's Relationship Committee:

The Stakeholder's Relationship Committee comprises of Mr. Vikas Patel (DIN 00131285), Independent Director as the Chairman of the said Committee and Mr. Jayant Nagarkar (DIN 00131405), Independent Director as the member of the Committee. The role of the Committee is to consider and resolve securities holders' complaint. The meetings of the Committee are held once in a quarter and the complaints are responded within the time frame provided.

D.Share Transfer Committee:

The Share Transfer Committee comprises of Mr. Vikas Patel (DIN 00131285), Independent Director as the Chairman of the said Committee and Mr. Jayant Nagarkar (DIN 00131405), Independent Director as the member of the Committee. The role of the Committee is to consider, approve/ratify transfer of securities. The meetings of the Committee are held once in a quarter and to see to it that the transfers are executed within the time frame provided. 14. Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors have appointed M/s Hemanshu Kapadia & Associates, Company Secretaries in Practice to carry out the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as Annexure 7. The management's replies to the observations of the Secretarial Auditors are as under:

1.The Company has not appointed a Whole-time Company Secretary as required pursuant to Section 203 of the Companies Act, 2013              The Company is searching for a suitable candidate and shall appoint the Whole-time Company Secretary on finding right candidate.

2.The Nomination and Remuneration Committee is not in conformity with the Companies Act, 2013 as according to Section 178 of the Companies Act, 2013, the Committee shall comprise of three or more Non-Executive Directors, while Company has only 2 Non-Executive Directors          During the financial year, the Company was short of one Independent Director, however in this ensuing Annual General Meeting the Company has appointed Ms. Renu Kathuria as an Independent Director who is also a member of Company's Nomination and Remuneration Committee, thus complying with the said requirement.

3.The Company has not appointed Woman Director as required under Section 149 of the Companies Act, 2013 During the financial year, the Company had not appointed a Woman Director, however the same has been appointed in the Board meeting held on 2nd September 2015.

4.The Company has not appointed Internal Auditor as required under Section 138 of the Companies Act, 2013   Though the Company has not formally appointed Internal Auditor, in accordance with the size of the Company, the Company has proper internal control system and procedure in place.

5.The Company has not published notice convening Board Meeting for approval of quarterly financial results for the financial year 2014-15 in English and Marathi newspapers as required under Clause 41(III)(a) of the Listing Agreement    The Management has noted the Auditor's observations and has started complying with the same from September 2015.

15. Number of meetings of the Board of Directors:

The Board of Directors met Six (6) times during the Financial Year. The intervening gap between any two meetings was not more than 120 days as prescribed by the Companies Act, 2013. Details of dates of Board meeting are as under:

16.Particulars of loans, guarantees or investments under section 186:

During the year under review, the Company has not provided any loans, made investments, gave guarantees or subscribed/purchased securities under Section 186 of the Companies Act, 2013.

17.Particulars of contracts or arrangements with related parties:

The Company, during the year, has not entered into any transaction, as specified under section 188(1) of the Companies Act, 2014, with related parties which are not on arms' length basis or are on arms' length basis and material in nature. Accordingly, the disclosure of Related Party Transactions to be provided under section 134(3)(h) of the Companies Act, 2013, in Form AOC - 2 is not applicable.

18.Directors' Responsibility Statement:

As stipulated under clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors subscribe to the Directors Responsibility Statement and state that:

a)In preparation of the annual accounts, the applicable accounting standards had been followed and there are no material departures from them;

b)the Directors had 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 had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d)the Directors had prepared the annual accounts on a going concern basis;

e)the Directors had laid down internal financial controls to be followed by the Company & that such internal financial controls are adequate and were operating effectively; and

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

19.Managerial Remuneration:

A.Details of the remuneration of each director to the median remuneration of the employees of the Company and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure 8.

B.The Company doesn't have any employee falling within the preview of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 hence, no such details to be provided.

20.Management Discussion And Analysis:

The Management Discussion and Analysis Report for the financial year under review as stipulated under the Listing Agreement entered with the Stock Exchange is annexed as a part of this Annual Report as Annexure 4.

21.Report on Corporate Governance:

At Neogem, it is imperative that our company affairs are managed in a fair and transparent manner. This is vital to gain and retain the trust of our stakeholders.

As per the Clause 49 of the Listing Agreement with the Stock Exchange a separate section on Report on corporate governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance is annexed as a part of the Annual Report as Annexure 1.

22.Corporate Social Responsibility (CSR):

In line with the new provisions of the Companies Act, 2013 and the rules framed there under with respect to the Corporate Social Responsibility (CSR), your company is not governed by the provisions of Section 135 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014. So, the Company is not required to formulate a policy on CSR and also has not constituted a CSR Committee.

23.Risk Assessment and Management:

Your Company has a well defined Risk Management System in place, as a part of its good Corporate Governance practices. Your Company has assigned the ownership of key risks to various Risk Owners and has made the concerned departments and officials responsible for mitigation plans and review of these risks from time to time. All the risks are identified at various departmental levels and suitable mitigation measures are thereafter adopted. These are subjected to a quarterly review by the Board.

24.Internal Financial Control System and their Adequacy:

Adequate internal controls, systems, and checks are in place, commensurate with the size of the Company and the nature of its business. The management exercises financial control on the operations through a well-defined budget monitoring process and other standard operating procedures. In addition to the above, the Audit Committee and the Board specifically review the Internal Control and Financial Reporting process prevalent in the Company. On a periodical basis, the Board also engages the services of professional experts in the said field in order to ensure that the financial controls and systems are in place. At the end of a period, the CFO gives a declaration in the appropriate format to certify that the financial statements prepared are accurate and complete in all aspects and that there are no significant issues that can impair the financial performance of the Company.

25.Share Capital:

Allotment of Equity Shares pursuant to Conversion of Fully Convertible Equity Warrants issued on Preferential basis:

Based on the approval of the members taken in the 22nd Annual General Meeting, the Company has made preferential allotment of Fully Convertible Equity Share Warrants to the promoter group of the Company, as per the provision of section 81(1A) of the Companies Act, 1956 and as per the Listing Agreement entered in to by the Company with the Stock Exchanges where the shares of the Company are listed and in accordance with Regulations prescribed by the Securities and Exchange Board of India ("SEBI"). Based on the share application money received, the Company had made a preferential allotment of 10,60,000 Fully Convertible Equity Share Warrants carrying an entitlement to subscribe to an equivalent number of Equity Shares of Rs.10/- each at an exercise price of Rs. 18/- (Rs.10 each at premium of Rs. 8/- each) to the promoter group of the Company.

The Board of Directors' of the Company at their meeting held on 31st March 2015, had passed a resolution for conversion of the said shares warrants and accordingly the Board had allotted 2,92,000 Equity Shares of Rs.10/-each pursuant to conversion of 2,92,000 Fully Convertible Equity Warrants out of total outstanding 10,60,000 Fully Convertible Equity Warrants issued to promoter group vide special resolution passed at the Annual General Meeting held on 30th September 2013, which shall rank pari-passu with the existing equity shares of the Company to the promoter group whose names are mentioned below along with the number of shares allotted to each of them:

26.Disclosure under the Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013:

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral. No complaints pertaining to sexual harassment were received during the F. Y. 2014-15.

27.Other Disclosures / Reporting:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a)Details relating to deposits covered under Chapter V of the Act.

b)Issue of equity shares with differential rights as to dividend, voting or otherwise.

c)Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

d)The Company does not have any Subsidiaries and/or Joint Venture and/or Associate Company.

e)Details of payment of remuneration or commission to Managing Director or Joint Managing Director of the Company from any of its subsidiaries as the Company does not have any Subsidiaries/Joint Venture/Associate Company.

f)Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3)(c) of the Companies Act, 2013).

28.Acknowledgements:

The Board of Directors expresses their deep gratitude for the co-operation and support extended to the Company by its customers, suppliers, Bankers and various Government agencies. Your Directors also place on record the commitment and involvement of the employees at all levels and look forward to their continuous co-operation.

By Order of the Board of Directors

Gaurav Doshi

Chairman & Managing Director

DIN-00166703 G-32, Gems & Jewellery Complex III, Seepz (SEZ), Andheri (E), Mumbai-400 096

Registered Office:

G-32, Gems & Jewellery Complex III, Seepz (SEZ), Andheri (E), Mumbai-400 096 CIN: L36911MH1991PLC063357

Place : Mumbai

Date: 2nd September 2015