MIRA INFORM REPORT

Report Date :

21.12.2007

IDENTIFICATION DETAILS

Name :	NEOGEM (INDIA) LIMITED
Registered Office :	G-32, Gems and Jewellery, Complex III, 2^nd Floor, Seepz, Andheri (East), Mumbai-400 096, Maharashtra
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	25.09.1991
Com. Reg. No.:	11-063357
CIN No.: [Company Identification No.]	L36911MH1991PLC063357
TAN No.: [Tax Deduction & Collection Account No.]	MUMN04006C
Legal Form :	A Public Limited Liability Company. Company’s shares are listed on Stock Exchanges.
Line of Business :	Manufacturers and Exporters of Studded Gold Jewellery.

RATING & COMMENTS

MIRA’s Rating :

Ba

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

Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed company having satisfactory track. Directors are reported as experienced and respectable businessmen. Trade relations are reported as fair. Business is active. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office / Factory :	G 32, Gem and Jewellery Complex III, Seepz, Andheri (East), Mumbai – 400 096, Maharashtra, India
Tel. No.:	91-22-30882640 / 41 / 28291636 / 28290578
Fax No.:	91-22-28291123
E-Mail :	neogem@vsnl.net gopal@neogemindia.com
Website :	http://neogemindia.com
Area :	7000 Sq. ft. [Leased]

DIRECTORS

Name :	Mr. Gaurav Mahindra Doshi
Designation :	Chairman and Managing Director
Address :	16/G, Malabar Apartment, Nepean Sea Road, Mumbai – 400036, Maharashtra, India gaurav@neogemindia.com
Date of Birth/Age :	30.12.1976
Date of Appointment :	22.10.1999
Name :	Mr. Ronak Mahindra Doshi
Designation :	Vice Chairman and Whole Time Director
Address :	16/G, Malabar Apartment, Nepean Sea Road, Mumbai – 400036, Maharashtra, India
Date of Birth/Age :	12.11.1974
Date of Appointment :	28.03.1997
Election Commission Identity Card No. :	MT04024049006
Name :	Mr. Vikas Chandubhai Patel
Designation :	Non-Executive and Independent Director
Address :	111, Khushuma Apartments, 29 A, Carmichael Road, Mumbai – 400026, Maharashtra, India
Date of Birth/Age :	30.12.1976
Date of Appointment :	22.03.2002
Name :	Mr. Chrisilda R. Kane
Designation :	Executive Director
Address :	G – 425, Pushpanjali, Vaswani Lane, Near 7 Banglow, Bus Depot, Mumbai – 400061, Maharashtra, India
Date of Birth/Age :	16.11.1968
Date of Appointment :	07.04.2003
Name :	Mr. Jayant Bhikaji Nagarkar
Designation :	Non-Executive and Independent Director
Address :	60, Prime Rose Co-operative Housing Society, Opposite Lido Cinema, Juhu Road, Mumbai 0 400049, Maharashtra, India
Date of Birth/Age :	02.08.1946
Date of Appointment :	25.11.2004
Name :	Mr. Vaitasi Gaurav Doshi
Designation :	Director
Address :	16/G, Malabar Apartment, Nepean Sea Road, Mumbai – 400036, Maharashtra, India
Date of Birth/Age :	30.10.1977
Date of Appointment :	25.11.2003
Name :	Mr. Hemal Shah
Designation :	Non-Executive and Independent Director

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Promoter Group
Indian	2233450	38.48
Public Shareholding
Mutual Fund	24300	0.42
Non Institutions
Bodies Corporate	657000	11.32
Shares Capital <= 100000	1635050	28.16
Shares Capital > 100000	1177400	20.28
NRI Individuals [Non Rep ]	23600	0.41
NRI [Repatriation]	54200	0.93
Total	5805000	100.00

BUSINESS DETAILS

Line of Business :

Manufacturers and Exporters of Studded Gold Jewellery.

Products :

Item Code No.	Product Description
711319.03	Jewellery of Gold set with Diamonds

Export to :

USA, UAE, Hong Kong, Belgium, UK, Israel, Japan, Singapore and Korea

Terms :

Selling :

L/C and Cash

Purchasing :

L/C and Cash

PRODUCTION STATUS

Particulars	Unit	Actual Production
Polished Diamonds	Carats	8395
Studded Jewellery	Grams	537596

GENERAL INFORMATION

Customers :

End Users

No. of Employees :

152 [In Office : 29 and In Factory : 123]

Bankers :

v Punjab National Bank

v Oriental Bank of Commerce

v Bank of India, Seepz Branch, Andheri [East], Mumbai – 400096, Maharashtra, India

Facilities :

Particulars	As on 31.03.2007 Rs. in Millions
Secured Loans:
a) working Capital Loan from Banks (including Gold Loan) (Secured by hypothecation of Stock of Raw Materials and Finished Goods, Export Documentary Bills, Fixed Assets, FD of Rs. 23.500 millions Residential Flat of Two Directors and one Share Holder as well as Personal Guarantee of Two Directors and Three Share holders)	147.327
b) Vehicle Loan (Repayable within one year Rs. 0.218 million)	0.994
	148.321
Unsecured Loans
Inter Company Deposits	5.688
From Director	4.112
Total	9.800

Banking Relations :	Satisfactory
Auditors :
Name :	S. H. Bathiya and Associates Chartered Accountants
Address :	2, Tardeo Air-Conditioned Market, 4^th Floor, Tardeo Road, Mumbai – 400034, Maharashtra, India
Associates / Subsidiaries:	v Kamya Impex Private Limited v Empress Jewelry Private Limited

CAPITAL STRUCTURE

As on 30.09.2006

Authorised Capital :

No. of Shares	Type	Value	Amount
10000000	Equity Shares	Rs. 10/- each	Rs. 100.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
5805000	Equity Shares	Rs. 10/- each	Rs. 58.050 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		58.100	53.700	53.700
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		31.000	21.000	13.600
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		89.100	74.700	67.300
LOAN FUNDS
1] Secured Loans		148.300	141.800	83.400
2] Unsecured Loans		9.800	23.700	11.100
TOTAL BORROWING		158.100	165.500	94.500
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		247.200	240.200	161.800
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		15.200	15.600	16.300
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		0.100	0.100	0.300
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	53.800	54.500	50.300
	Sundry Debtors	618.300	849.200	507.700
	Cash & Bank Balances	36.300	37.600	36.300
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	18.100	12.700	4.000
Total Current Assets		726.500	954.000	598.300
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	479.800	719.900	448.600
	Provisions	14.800	9.600	4.500
Total Current Liabilities		494.600	729.500	453.100
Net Current Assets		231.900	224.500	145.200
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		247.200	240.200	161.800

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		1094.800	1293.400	1058.400
Other Income		8.900	8.100	13.600
Stock Adjustments		1.500	0.000	(7.600)
Total Income		1105.200	1301.500	1064.400
Profit/(Loss) Before Tax		13.700	13.900	11.900
Provision for Taxation		5.100	6.500	4.700
Profit/(Loss) After Tax		8.600	7.400	7.200
Earnings in Foreign Currency :
	Export Earnings	920.620	1179.424	978.151
Total Earnings		920.620	1179.424	978.151
Imports :
	Raw Materials	560.431	422.074	254.109
	Finished Goods	302.304	707.490	493.949
	Capital Goods	0.00	0.00	0.051
	Stores and Spares	6.685	6.436	0.336
Total Imports		869.420	1136.000	748.445
Expenditures :
	Raw Materials	1017.900	1232.700	1008.300
	Excise Duty	0.000	0.000	0.000
	Power and Fuel Cost	2.200	2.000	2.100
	Other Manufacturing Expenses	22.900	14.200	8.400
	Employee Cost	17.200	17.400	16.600
	Selling and Administration Expenses	11.500	10.200	8.900
	Miscellaneous Expenses	5.300	0.400	1.100
	Interest and Financial Charges	12.700	8.800	5.400
	Depreciation	1.800	1.900	1.700
Total Expenditure		1091.500	1287.600	1052.500

QUARTERLY RESULTS

PARTICULARS	30.09.2007 (2^nd Quarter)	30.06.2007 (1^ST Quarter )
Sales Turnover	146.700	171.000
Other Income	1.200	0.000
Total Income	147.900	171.000
Total Expenditure	139.600	167.500
Operating Profit	8.300	3.500
Interest	3.000	2.000
Gross Profit	5.300	1.500
Depreciation	0.500	0.500
Tax	1.700	0.300
Reported PAT	3.100	0.700

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio		1.98	1.83	0.92
Long Term Debt-Equity Ratio		0.13	0.11	0.06
Current Ratio		1.10	1.09	1.08
Turnover Ratio
Fixed Assets		35.66	43.40	37.40
Inventory		20.22	24.68	17.25
Debtors		1.49	1.91	1.76
Interest Cover Ratio		2.08	2.58	3.20
Operating Profit Margin	(%)	2.58	1.90	1.80
Profit Before Interest And Tax Margin	(%)	2.41	1.76	1.63
Cash Profit Margin	(%)	0.95	0.72	0.84
Adjusted Net Profit Margin	(%)	0.79	0.57	0.68
Return On Capital Employed	(%)	10.83	11.29	14.16
Return On Net Worth	(%)	10.50	10.42	11.30

LOCAL AGENCY FURTHER INFORMATION

History:

Subject was incorporated as 21^st Sep.1991, as a Public Limited Company. They obtained a certificate of commencement of business on 9^th Dec. 1991. Subject manufactures plain gold and studded gold jewellery at SEEPZ (SEZ), Mumbai after receiving a letter of intent in Feb. 1991. On 1^st April 1993, they launched a public issue of Rs.53.000 Millions at par and listed itself on Bombay Stock Exchange. This issue financed the unit of jewellery manufacture at SEEPZ, Mumbai.

Fixed Assets

v Goodwill

v Land

v Factory Shed

v Staff Quarters

v Plant and Machinery

v Electricals Fittings

v Interiors Works

v Utilities

v Furniture and Fixtures

v Factory Equipments

v Office Equipments

v Air Conditioner

v Computers

v Motor Bike

v Motor Car

Review of Operations:

During the year under review, the results of the Company are satisfactory. The sales and other receipts for the year are Rs. 1103.630 Millions as compared to Rs. 1301.477 Millions. The reduction in the sales was mainly due to the cautious credit polity adopted and the weakening of the dollar against the rupee. The profit after tax of the current year stood at Rs. 8.572 Millions as compared to Rs. 7.426 Millions of last year. The company has an extensive distribution and marketing network across the world and has been able to export studded gold Jewellery products to USA, Australia, Canada, Israel and various other countries across the globe inspite of facing cut – throat competition.

CEO/CFO Certification

The Chairman and Managing Director, being the CEO of the Company, and the CFO of the company, had submitted a Certificate to the Board regarding the Financial Statements and other maters as required under Clause 49 [V] of the Listing Agreement.

MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT: 

Industry Structure and Development and Outlook

As India makes rapid progress in the retail arena, the Jewellery market is undergoing a gradual metamorphosis from a storehouse of value to a fashion accessory bazaar, Plain gold has bow given way to diamonds, platinum and coloured gemstones.

The two major segments of the sector in India are gold jewellery and diamonds. Gold jewellery forms around 80 per cent of the Indian jewellery market, with the balance comprising fabricates studded jewellery that includes diamond as well as gemstone studded jewellery.

The total export of gems and jewellery in 2006-07 as US$ 17.12 billion, up from US$ 16.71 billion and US$ 15.68 billion in the previous two years. Destination wise the major market for Indian gems and jewellery in terms of importance are USA, UAE, Hong Kong, Belgium, UK, Israel, Japan, Singapore and Korea. The USA accounts for 31 % of the total exports from India in this sector.

Subject has a well – equipped manufacturing facility with technically advanced machines to carry out productions efficiently. Company’s skilled workforce is trained to deliver high quality products of international standards.

Opportunities & Threats, Risks and Concerns

SWOT Analysis of Indian Gems and Jewellery Industry

Strengths:

· About one millions craftsmen are associated with this industry. Their skills can be utilized for designing and making modern Jewellery.

· Availability of abundance of cheap and skilled labour in India

· Presence of excellent marketing network spread across the world

· Supportive government industrial / EXIM policy

Weakness:

• Small firms lacking technological / export information expertise
• Low productivity compared to labour in China, Thailand and Sri Lanka
• As the major raw materials requirements need to be imported, companies normally stock huge quantities of inventory resulting high inventory carrying costs.

Opportunities:

· New markets in Europe and Latin America

· Growing demand in South Asian and Far East courtiers

· Industries moving form a phase of consolidation

Threats:

· China, Sri Lanka and Thailand’s entry in small diamond segment

· Infrastructure bottlenecks, absence of latest technology

· Increase in the price of gold

· Rupee value appreciating resulting in a decrease in the profitability

Performance

The company’s products are recognized in the international Market and the Company has been landmark in producing a high quality premium range of jewellery for the International Market. This has enabled the company to export its products in a competitive global market like Australia, Canada, Israel, USA etc. which contributes a major part of the total Export turnover.

Operations:

The company could achieve a sales turnover of Rs. 1094.760 millions and other receipts of Rs. 8.870 Millions aggregating Rs. 1103.630 Millions inspite of a drop in exchange rate of US dollar. The profit after tax of the current year stood at Rs. 8.572 Millions as compared to Rs. 7.426 Millions of last year.

Contingent Liabilities:

Claims against the Company not acknowledged as debts: Rs. Nil

Guarantee issued by Bank for Trading Division (SEEPZ) Rs. 0.500 million

Bankers Charges Report as per Registry

This form is for	Modification of charge
Charge identification number of the charge to be modified	80031359
Corporate identity number of the company	L36911MH1991PLC063357
Name of the company	NEOGEM INDIA LIMITED
Address of the registered office or of the principal place of business in India of the company	G 32, Gem and Jewellery Complex III, Seepz, Andheri (East), Mumbai – 400 096, Maharashtra
Type of charge	Immovable Property Any Interest in Immovable Property Book Debts Movable Property [not Being pledge]
Particular of charge holder	Punjab National Bank Off Shore Banking Units, SEEPZ, Andheri [East] Mumbai – 400096, Maharashtra, India equanimus@gmail.com
Nature of description of the instrument creating or modifying the charge	Second supplemental joint deed of hypothecation Second supplemental working capital consortium agreement.
Date of instrument Creating the charge	02.08.2007
Amount secured by the charge	Rs. 180.000 Millions
Brief particulars of the principal terms an conditions and extent and operation of the charge	Terms of repayment Unless otherwise agreed to by banks or any one or more of them, borrowers shall repay the said facilities to each of the said banks for with on demand of all such amounts as may be standing at the foot of the said accounts together with interest, compound interest, additional interest, liquidated damages, costs, charges, expenses and other moneys thereon at the rate or rates as applicable thereto. Extent operation of the charge Pari passu first charge on the borrower’s current assets, consumable stock and spares, bills receivables and book dents and immovable and movable plant and machinery stores and spares relating to the plant and machinery and all other movables both present and future. First Pari passu first charge on the borrower’s immovable and movable properties both present and future except immovable property / fixed block assets financed to be financed exclusively out term loan of Punjab National Bank
Short particulars of the property charged	Current assets, stock of raw materials, semi finished and finished goods, consumables stores and spares, bills receivable and book debts and immovable and movable plant and machinery, stores and spares relating to the plant and machinery and all other movables both present and future except immovable property / fixed block financed / to be financed exclusively out of term loan of Punjab National Bank
Date of latest modification prior to the present modification	03.01.2006
Particulars of the present modification	Total credit facility increased to Rs. 160.000 Millions for year 2006-07 and to Rs. 180.000 Millions for year 2007-08 Immovable property / fixed block financed / to be financed exclusively out of term loan of Punjab National Bank has been excluded from property charged.

CMT REPORT (Corruption, Money Laundering & Terrorism]

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

1] INFORMATION ON DESIGNATED PARTY

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.

2] Court Declaration :

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.

3] Asset Declaration :

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

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

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.

8] Affiliation with Government :

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.

9] Compensation Package :

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.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

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.

CONTRAVENTION

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.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.39.57
UK Pound	1	Rs.78.93
Euro	1	Rs.56.85

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--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		53

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:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

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.	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
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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