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Diabetes occurs when the pancreas fails to secrete enough insulin, slowly affecting the retina of the human eye. As it progresses, the vision of a patient starts deteriorating, leading to diabetic retinopathy. In this regard, retinal images acquired through fundal camera aid in analyzing the consequences, nature, and status of the effect of diabetes on the eye. The objectives of this study are to (i) detect blood vessel, (ii) identify hemorrhages and (iii) classify different stages of diabetic retinopathy into normal, moderate and non-proliferative diabetic retinopathy (NPDR). The basis of the classification of different stages of diabetic retinopathy is the detection and quantification of blood vessels and hemorrhages present in the retinal image. Retinal vascular is segmented utilising the contrast between the blood vessels and surrounding background. Hemorrhage candidates were detected using density analysis and bounding box techniques. Finally, classification of the different stages of eye disease was done using Random Forests technique based on the area and perimeter of the blood vessels and hemorrhages. Accuracy assessment of the classified output revealed that normal cases were classified with 90% accuracy while moderate and severe NPDR cases were 87.5% accurate.