MIRA INFORM REPORT

Report Date :

06.11.2007

IDENTIFICATION DETAILS

Name :	ASIAN STAR COMPANY LIMITED
Registered Office :	114 – C, Mittal Court, Nariman Point, Mumbai – 400021, Maharashtra
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	02.03.1995
Com. Reg. No.:	11-86017
CIN No.: [Company Identification No.]	U36910MH2003PLC086017
TAN No.: [Tax Deduction & Collection Account No.]	MUMM22677E
PAN No.: [Permanent Account No.]	AAACA4856B
Legal Form :	Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturers and Exporters of Cut & Polished Diamonds.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 11600760
Status :	Good
Payment Behaviour :	Usually correct
Litigation :	Clear
Comments :	Subject is one of the largest diamond traders and manufacturers. It is a DTC Slight-holder. Trade relations are fair. Financial position is good. Payments are usually correct and as per commitments. The company is doing well. It can be considered good for any normal business dealings at usual trade terms and conditions. It can be regarded as a promising business partner in a medium to long – run.

LOCATIONS

Registered Office :	114 – C, Mittal Court, Jamnadas Bajaj Road, Nariman Point, Mumbai – 400021, Maharashtra, India
Tel. No.:	91-22-22821886 / 22824257
Fax No.:	91-22-22043747
Email:	secretarial@asianstarco.com astar@vsnl.com
Website :	http://www.asianstarco.com
Manufacturing Plant :	Cut and polished Diamonds 8-1269/70/71, Rangildas Mehta Street, Opposite, Terapanthi Bhavan, Gopipura, Kaji Maidan, Surat, Gujarat – 395 001 Diamond Studded Jewellery Plot No.5, F -11/12, WICEL, opposite SEEPZ, MIDC (Marol) Central Road, Andheri (East), Mumbai – 400 093, Maharashtra Wind Energy Sangli , Maharashtra

DIRECTORS

Name :	Mr. Dinesh T. Shah
Designation :	Chairman [Resigned as Managing Director w.e.f. 27.04.2004]
Date of Birth/Age :	16.01.1940
Qualification :	B.Sc
Date of Appointment :	02.03.1995
Name :	Mr. Arvind T. Shah
Designation :	Managing Director cum Chief Executive Officer [w.e.f. 01.07.2004]
Name :	Mr. Dharmesh D. Shah
Designation :	Joint Managing Director cum Chief Executive Officer [w.e.f. 01.07.2004]
Name :	Mr. Vipul P. Shah
Designation :	Director
Date of Birth/Age :	23.09.1967
Qualification :	B.Com
Date of Appointment :	02.03.1995
Directorship in other companies:	· Asian Star Diamonds · International Private Limited · Carbon Accessories Limited
Name :	Mr. Rajendra J. Shah
Designation :	Director
Name :	Mr. Bhupendra K. Shroff
Designation :	Director
Name :	Mr. K. Mohanram Pai
Designation :	Director
Name :	Mr. Apurva R. Shah
Designation :	Director
Name :	Mr. Atul B. Munim
Designation :	Director
Name :	Mr. Priyanshu A. Shah
Designation :	Executive Director
Date of Birth/Age :	14.05.1981
Qualification :	B.Com, A Certified Gemologist from G I A , New York
Date of Appointment :	08.10.2004
Directorship in other companies:	Carbon Accessories Limited
Name :	Mr. Hasmukh B. Gandhi
Designation :	Director [Appointed as Additional Director on 20.10.2003]

KEY EXECUTIVES

Name :	Mr. Uday Sheth
Designation :	General Manager
Name :	Mr. H Shah
Designation :	General Manager – Manufacturing
Name :	Mr. Kalpesh Rana
Designation :	Export Manager
Name :	Ms. Anuradha A. Banerjee
Designation :	Company Secretary
Date of Appointment :	01.06.2004

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares
Asian Paints (I) Limited	10000
Bombay Rayon Fashions Limited	30000
Canara Bank Limited	1370
Corporation Bank	797
Development Credit Bank Limited	50000
Idea Cellular	6086
I – Flex	55600
Indian Bank	69800
Jaiprakash Hydro Power Limited	100000
Power Finance Corporation Limited	4899
Tech Mahindra Limited	3424

BUSINESS DETAILS

Line of Business :	Manufacturers and Exporters of Cut & Polished Diamonds.
Exports :
Countries :	U.S.A., Belgium, Japan, United Kingdom, Iceland, Western Europe and Asia – Pacific

GENERAL INFORMATION

No. of Employees :	2000
Bankers :	· Bank of India · Corporation Bank · Central Bank of India · State Bank of Hyderabad · Bank of Baroda · Bank of Maharashtra · State Bank of Patiala · Development Credit Bank Limited · Canara Bank · IndusInd Bank Limited · ING Vysya Bank Limited · Andhra Bank · State Bank of Indore · State Bank of Travancore · Syndicate Bank

Banking Relations :	Satisfactory
Auditors :	V. A. Parikh & Associates Chartered Accountants,
Associates:	· Asian Star Company Limited, USA · Intergems Inc. · Carbon Accessories Limited · Shah Enterprises · Shah Manufacturers · Jewel Art · Mr. Arvind T Shah · Dinesh T Shah · Mr. Dharmesh D Shah · Vipul P Shah · Mr. Priyanshu A Shah · Mrs. Nirmala D Shah · Mrs. Shweta D Shah · Mrs. Rasila A Shah · Mr. Vipul P Shah (HUF)
Subsidiaries :	· Asian Star Company Limited, New York, U.S.A. · Intergem Inc., Los Angeles, U.S.A.

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
15000000	Equity shares	Rs.10/- each	Rs. 150.000 millions
50000000	Redeemable Cumulative preference Shares	Rs. 10/- each	Rs. 500.000 millions
		Total	Rs.650.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
10671200	Equity shares	Rs.10/- each	Rs.106.712 millions
25200000	3% Redeemable Cumulative Preference shares	Rs. 10/- each	Rs. 252.000 millions
		Total	Rs.358.712 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		358.712	358.712	106.700
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		2541.478	2298.969	2046.600
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		2900.190	2657.681	2153.300
LOAN FUNDS
1] Secured Loans		5551.468	5997.851	6010.100
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		5551.468	5997.851	6010.100
DEFERRED TAX LIABILITIES		68.426	47.757	0.000
TOTAL		8520.084	8703.289	8163.400
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		490.565	508.602	289.200
Capital work-in-progress		46.877	0.000	0.000
INVESTMENT		66.224	56.339	166.400
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	2515.253	2756.252	3049.700
	Sundry Debtors	4916.289	4771.987	4257.900
	Cash & Bank Balances	688.034	869.669	534.600
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	683.416	545.784	506.300
Total Current Assets		8802.992	8943.692	8348.500
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	350.760	392.425	348.200
	Provisions	535.814	412.919	292.900
Total Current Liabilities		886.574	805.344	641.100
Net Current Assets		7916.418	8138.348	7707.400
MISCELLANEOUS EXPENSES		0.000	0.000	0.400
TOTAL		8520.084	8703.289	8163.400

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		11636.103	12066.688	11069.100
Other Income		29.179	13.707	0.000
Total Income		11665.282	12080.395	11069.100
Profit/(Loss) Before Tax		412.414	422.203	345.000
Provision for Taxation		136.910	144.074	124.400
Profit/(Loss) After Tax		275.504	278.129	220.600
Expenditures :
	Material Cost	9870.070	10467.083
	Manufacturing and Other expenses	874.234	817.010
	Purchase of polished Diamonds / Jewellery	146.742	71.743	10724.100
	Interest	337.389	284.645
	Depreciation	24.433	17.194
	Preliminary Expenses Written Off	0.000	42.600
Total Expenditure		11252.868	11700.275	10724.100

QUARTERLY RESULTS

Year	30.09.2007	30.06.2007
Type	2 Quarter	1 Quarter
Sales Turnover	3220.000	3222.700
Other Income	3.400	0.000
Total Income	3223.400	3222.700
Total Expenditure	2983.400	3014.500
Operating Profit	240.000	208.200
Interest	73.200	83.700
Gross Profit	166.800	124.500
Depreciation	6.900	6.200
Tax	49.200	39.400
Reported PAT	110.700	76.900

KEY RATIOS

Year	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	2.08	2.50	2.59
Long Term Debt-Equity Ratio	0.04	0.02	0.00
Current Ratio	1.35	1.29	1.29
TURNOVER RATIOS
Fixed Assets	20.61	27.13	39.01
Inventory	4.41	4.16	4.24
Debtors	2.40	2.67	2.58
Interest Cover Ratio	2.06	2.29	2.95
Operating Profit Margin(%)	7.11	6.35	5.04
Profit Before Interest And Tax Margin(%)	6.90	6.21	4.92
Cash Profit Margin(%)	2.58	2.45	2.20
Adjusted Net Profit Margin(%)	2.37	2.30	2.08
Return On Capital Employed(%)	9.38	8.91	7.09
Return On Net Worth(%)	10.60	12.20	10.73

LOCAL AGENCY FURTHER INFORMATION

DIRECTOR REPORTS:

Performance and Prospects

During the F.Y. 2006-07, the company has registered turnover of Rs.11636.100 millions against the corresponding turnover of Rs. 12066.700 millions during the FY 2005-06. Inspite of fall in the sales, the company has been able to maintain its profitability. This year was a year of consolidation for the Gem and Jewellery industry; cut and polished diamonds in particular. Total cut and polished diamond exports from India witnessed a decline of 7.83% in F.Y.06-07. The industry is confident of overcoming this difficult phase and is poised for scaling new highs in the years to come.

Wind Energy

The company has long term contractual agreement with Maharashtra State Electricity Distribution Company Limited for sale of power generated by Wind Mills. During the year 2006-07, the company has generated 33, 99,337 Kwh. Resulting in the sales of Rs. 11.909 millions.

Subsidiary Companies

As required under Section 212 of the Companies Act, 1956, the Audited Statements of Accounts of overseas subsidiary companies:

Asian Star Company Limited, New York (U.S.A.) and Intergem Inc., Los Angeles (U.S.A.) and the Auditors Report thereon for the year ended March 31, 2007 are annexed.

FIXED ASSETS:

· Goodwill

· Land

· Office premises

· Factory Premises

· Plant and machinery

· Vehicles

· Furniture and Fixtures

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 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.32.29
UK Pound	1	Rs.81.91
Euro	1	Rs.56.96

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--RESERVES	1~10	7
--CREDIT LINES	1~10	7
--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	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		63

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/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
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