30th October, 2007

Jaipur, India — October 30, 2007 — Vaibhav Gems Ltd. (India NSE:VAIBHAVGEM), a multi-national company in the jewelry industry, today announced an investment by Nalanda Capital’s India Fund equaling 14.9 percent share of the company in the form of Global Depository receipts and an additional 5% stake through warrants. The total transaction size, if warrants are exercised, will be about US $35 million.

Nalanda Capital Pte. Ltd is a Singapore-based private equity investment firm. The firm’s India fund closed at $400 million in late May 2007. Nalanda Capital Founder and Manager Pulak Prasad will represent the firm on the VGL Board. Prasad was previously managing director in India for the global private equity firm Warburg Pincus.

“We at Vaibhav are very pleased to have Nalanda Capital on our board,” said Sunil Agrawal, Chairman of Vaibhav Gems Ltd. (VGL) “We look forward to their insights and expertise to take Vaibhav to next level.”

VGL has expanded over the past several years to include jewelry shopping channels in the UK, Germany and the US, 19 retail stores in Caribbean and Mexico, its own manufacturing units in India, Thailand and China and a wholesale operation. In 2005, VGL acquired New York-based STS Jewels and its subsidiaries, which have continued to expand products and territories.

“The Team at Nalanda Capital feels that VGL’s business model and recent expansions show promise for long-term growth and a wise investment for its fund as the company is well diversified and vertically integrated,” continued Agrawal.

The team at Nalanda Capital has had a long and successful track record of private equity investing in India. Given the peculiar nature of the Indian private equity industry, the Nalanda team believes that the right long term investing model for India is to apply the private equity discipline in the public markets. The team has successfully applied this discipline in their professional careers before Nalanda.

About Vaibhav Gems Ltd.
Vaibhav Gems Ltd., through its subsidiaries, engages in the manufacture and marketing of gemstones and jewelry primarily in India. VGL is the largest exporter of colored gemstones from India and one of the largest exporters of studded jewelry. VGL is a multi national company having offices across the globe in New York (STS Jewels Inc.),
London (The Jewelry Channel), Germany (Der Schmuckkanal GmbH), Japan (STS Gems Japan Ltd.), China (STS Gems China Ltd.), Hong Kong (STS Gems Ltd.), and Thailand (STS Gems Thai Ltd. and STS Creations Thai Ltd.). VGL can be found online at http://www.vaibhavgems.com.