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Blue Star Diamonds is one of the world’s leading polished manufacturers and distributors. Due to its large and modern factories, driven on consistency, efficiency and excellence, Blue Star Diamonds has become first choice supplier of major polished wholesale and jewellery manufacturing houses. Blue Star Diamonds participates in various joint initiatives and retail programs for distributing and marketing diamonds and diamond jewellery in different parts of the world.

Since its foundation Blue Star has been driven by its single-minded commitment to the diamond industry. Blue Star’s mission is to...

...focus on excellence & value addition in all business lines & processes via strong emphasis on relationships with its core suppliers & customers. While striving to achieve this mission, Blue Star does not loose sight of its core values: integrity, loyalty, passion, creativity, commitment and customer orientation.

Social and Corporate Responsibility

1. Best Practices Principle

“…The BPP Assurance Programme has been developed to demonstrate to supply chain partners, consumers and other interested stakeholders that the exploration, extraction, sorting, cutting & polishing of diamonds, and the manufacture and sale of diamond jewellery is undertaken in a professionally, ethically and environmentally friendly and accountable way…”

The programme has been developed and is driven by the Diamond Trading Company (DTC), with an aim to ensure that the activities of the DTC are undertaken in a professional, ethical, environment-friendly and accountable way. This includes the exploration, extraction, sorting, cutting and polishing of diamonds and the manufacture and sale of diamond jewellery by entities that are owned or controlled by the De Beers Group or by Diamond Trading Company (DTC) Sightholders.

Blue Star has put itself firmly behind the Best Practice Principles (BPP) Assurance Programme. It is committed to the ideals, structure and tenets of the programme and has set aside resources and manpower towards its fulfilment. In all areas - business, social and environmental – Blue Star is compliant to the standards set by the BPP program and fully supports it, enforces it and encourages all its business partners to do so too.

As members of the BPP Blue Star urges its business partners to join in the implementation of the Best Practice Principles standards.

2. ISO 9000 Certificate of Compliance

Blue Star's Quality and Management Systems for the manufacture, marketing and export of polished diamonds has been approved and certified by ABS Quality Evaluations based on the ISO 9001:2000 standards.

3. Support to NGO’s, Charity and Noble Causes

Blue Star has, throughout its history, supported and promoted noble and charitable causes. A prime example is Blue Star’s practice of spending a majority of the marketing budget for the promotion of Arisia (its solitaire retail brand in India) on sponsoring NGO’s and charity institutions. The events so far organized by Blue Star include:

Fund-raising and Awareness Creating Event for the Cancer Screening & Research Trust

Series of Arisia Time & Talents Club Musical Evenings – a club making a difference in the lives of the less privileged by providing services in the fields of health, education and social welfare

4. Acceptance and practice of the Kimberley Process

The Kimberley Process is a joint effort undertaken by many governments around the world, the international diamond industry and the civil society to prevent the flow of conflict diamonds. Conflict diamonds are rough diamonds that are used by rebel movements to finance wars against national governments. Kimberley Process Certification is a scheme that imposes extensive requirements on participants to certify that shipments of rough diamonds are conflict free and completely legitimate.

The Blue Star Group has embraced the Kimberley Process and ensures that all diamonds bought, manufactured and sold are conflict free.

Vasantlal Mehta founded the Blue Star Group in Mumbai in 1966. Over the next fifteen years, Mr. Mehta led his three sons, Akshay, Anuj and Ashit, into the business. While Akshay and Anuj focused on the Indian operations, their younger brother Ashit began the firm’s expansion abroad. In 1981, he established the Antwerp hub to provide a steady supply of rough diamonds for the company’s rapidly growing marketing and manufacturing base in India.

Since then, the three brothers have built their Indian and Belgian businesses into a leading global marketing operation for both rough and polished diamonds. In recognition of their achievements, the Blue Star Group was awarded its first DTC sight in Belgium in 1991, and a second DTC sight in India in 1994. Over the last two decades, the Blue Star Group has achieved an annual compound growth rate of over 10% on its total sales.

The Blue Star Group continues to develop its activities for a third generation of the family. In 2001, the group moved downstream into the design, manufacturing and distribution of Jewellery. The same year, it launched its state-of-the-art factory in Surat, India.

In 2002, Akshay’s eldest son, Arjav, joined the business, followed by Arnav, his younger brother in 2004. Other members of the younger generation will follow him in the coming years, to maintain and strengthen the family’s commitment to the industry. 2006 will see the doubling of the Blue Star Group's manufacturing strength by moving into a new ultra modern manufacturing headquarters in Surat, India.

The family’s values extend throughout the Blue Star Group. All Blue Star Group’s employees are considered to be members of one big family, sharing bonds of mutual trust, support, responsibility and respect. The family is united in its dedication to the excellence of the products, and the superior standards of service that the group provides to all business partners. The Blue Star Group’s success is rooted in the business ethics of this ‘Hindu Undivided Family’ – fully devoted to the diamond industry.

A reliable supply of rough diamonds has always been a core strength of the Blue Star Group. Besides access to direct sources of rough as a sightholder of the DTC, Blue Star also purchases from a range of other primary source suppliers. This assured source of quality rough translates into consistent, tailored supplies for its customers. Blue Star can in this regard also rely on the wide variety of 'quality' rough assortments, offered by Arjav Diamonds NV a long standing business relationship and one of the major rough distributors on the Antwerp market.

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

Name :	BLUE STAR

Registered Office :	312-A / 302, Prasad Chambers Opera House, Mumbai – 400004, Maharashtra, India

Country :	India

Financials (as on) :	31.03.2006

Date of Incorporation :	1978

TAN No.: [Tax Deduction & Collection Account No.]	MUMB00396E

PAN No.: [Permanent Account No.]	AAAFB1196N

Legal Form :	Partnership concern with an unlimited liability of the partners.

Line of Business :	Manufacturers, Exporters and Importers of Rough and Polished Diamonds

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 1750000

Status :	Satisfactory

Payment Behaviour :	Usually correct

Litigation :	Clear

Comments :	Subject is a well established concern having satisfactory track. Trade relations are fair. Market reputation is favourable. Payments are correct and as per commitments. The concern can be considered good for normal business dealings at usual trade terms and conditions.

Registered Office :	312-A / 302, Prasad Chambers Opera House, Mumbai – 400004, Maharashtra, India
Tel. No.:	91-22-40404444 / 56563333
Fax No.:	91-22-23630202
E-Mail :	arnav@bluestardiamonds.com
Website :	http://www.bluestardiamonds.com
Area :	Medium Sized
Location :	Owned

Factory 1 :	3-A Sarvodya Society, Vaishali Road – Varachha, Surat 395 006 - India
Tel. No.:	91-261-255 4567
Fax No.:	91-261-256 3962
E-Mail :	bsfactory@bluestardiamonds.com

Sales and Marketing :	301/310/311/312 Prasad Chambers, Opera House, Mumbai 400 004 – India
Tel. No.:	91 22 4040 4444
Fax No.:	91 22 2363 0202
E-Mail :	info@bluestardiamonds.com

Name :	Mr. Akshay V. Mehta
Designation :	Partner

Name :	Mr. Anuj V. Mehta
Designation :	Partner

Name :	Mr. Arnav V. Mehta
Designation :	Partner

Name :	Mr. Anshul V. Mehta
Designation :	Partner

Name :	Mrs. Kokila V. Mehta
Designation :	Partner

Name :	Mrs. Smita A. Mehta
Designation :	Partner

Name :	Mrs. Reena A. Mehta
Designation :	Partner

Name :	Master Achal A. Mehta
Designation :	Partner

MIRA INFORM REPORT

Unit

Line of Business :	Manufacturers, Exporters and Importers of Rough and Polished Diamonds

Products :	Rough and Polished Diamonds

Exports to :	Polished Diamonds to Japan, Israel and USA

Imports from :	Rough Diamonds from Belgium and UK

Customers :	Wholesalers

No. of Employees :	In office : 40 ; In factory : 2000 Total : 2040

Bankers :	v State Bank of India, Diamond Branch, Girgaum v ABN Amro Bank N. V. v Corporation Bank, Overseas Branch, Nariman Point, Mumbai - 400021

Facilities :	Cash Credit


Banking Relations :	Satisfactory

Auditors :	J. J. Shah and Company Chartered Accountants Pydnoonie, Mumbai

Associates/Subsidiaries :	v Besar Diamonds Private Limited v Mihir Gems v Mark Diamonds v Auro Sons v Auro Star Jewellery India Private Limited

Capital Investment :
Owned :	Rs. 450.000 millions
Borrowed :	--
Total :	Rs. 450.000 millions

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 45.92
UK Pound	1	Rs. 84.76
Euro	1	Rs. 57.95

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	5
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		45

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended