We source our rough diamond requirements from a dedicated group of diamond traders and wholesalers. We have strong relationship with our suppliers and are able to procure good quality rough diamonds at competitive rates. The suppliers are strategically located and have good relationships with the major miners. Over the years, we have diversified our supplier base and reduced our dependence on a few suppliers. Our top 5 suppliers account for 75.26% of our purchases in Fiscal 2009 vis-à-vis 92.98% in Fiscal 2007. We source diamonds from countries like US, Hong Kong, Russia and also source from the local market. Over the years we have reduced supplies from the US market from 62.0% in Fiscal 2007 to 30.5% in Fiscal 2009. Further sourcing from the domestic market has increased from 1.7% in Fiscal 2007 to 36.8% in Fiscal 2009 as we have expanded our jewellery manufacturing operations. We primarily purchase small sized processed diamonds from the local market for our jewellery making operations. The larger sized stones used for jewellery manufacturing are imported in the rough form.

Arrangement with our Subsidiary
As part of our strategy to source raw materials from low cost locations, we plan to increase our sourcing from Russia. Our Subsidiary shall be one of our sources for procuring rough and semi-processed stones. As per IMaCS, Russia is the largest producer of rough diamonds (by volume) and the second largest producer by value in 2007. As per Russian Government policies, only locally incorporated firms are allowed to participate in domestic auctions of rough diamonds. Almost all the domestic production is undertaken by a state owned company, Alrosa. The rates for roughs in these auctions are generally lower than market prices. We have setup a processing facility through our Subsidiary to process the rough diamonds. Despite higher processing costs in Russia, we are able to purchase the raw-material at lower costs through our Subsidiary as compared to purchasing directly from market.