This invention relates to a novel herbal formulation for the prevention and management of type-2 diabetes mellitus and vascular complications associated with diabetes comprising, preparing of hydromethanolic extract of at least one plant selected form Salacia roxburghii, Salacia oblonga, Garcinia Indica and Lagerstroemia parviflora at 70°-80° C., maintaining ph of the solution between 7-10, separating the active compounds by using TLC, HPLC, HPTLC, subjecting the active compounds to the step of molecular characterization.