MIRA INFORM REPORT

Report Date :

15.12.2011

IDENTIFICATION DETAILS

Name :	SHRENUJ JEWELRY (FAR EAST) LTD.
Registered Office :	5/F., Kaiseng Commercial Centre, 4-6 Hankow Road, Tsimshatsui, Kowloon
Country :	Hong Kong
Date of Incorporation :	13.05.2006
Com. Reg. No.:	36752328
Legal Form :	Private Limited Company
Line of Business :	Importer, Exporter and Wholesaler of all kinds of diamonds and jewellery products, etc
No. of Employees :	50. (Including affiliates)

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 :	No Complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – September 30^th, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
Hong Kong	a2	a2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Company name

SHRENUJ JEWELRY (FAR EAST) LTD.

Company ADDRESS

5/F., Kaiseng Commercial Centre, 4-6 Hankow Road, Tsimshatsui, Kowloon, Hong Kong.

PHONE: 2766 3800, 2368 5589

FAX: 2766 3893, 2368 9116

E-MAIL: shrenujjos@shrenuj.com

MANAGEMENT

Managing Director: Mr. Nihar Nitin Parikh

SUMMARY

Incorporated on: 13th May, 2006.

Organization: Private Limited Company.

Capital: Nominal: HK$1,000,000.00

Issued: HK$936,000.00

Business Category: Diamond Trader.

Turnover:- (Year ended 31-03-2011)

Rs 519,963,436 (Subject)

Rs 245,651.52 million (Group)

Employees: 50. (Including affiliates)

Main Dealing Banker: Bank of India, Hong Kong Branch.

Banking Relation: Satisfactory.

Company ADDRESS

Registered Head Office:-

5/F., Kaiseng Commercial Centre, 4-6 Hankow Road, Tsimshatsui, Kowloon, Hong Kong.

Holding Company:-

Shrenuj (Mauritius) Pvt. Ltd., Republic of Mauritius.

Ultimate Holding Company:-

Shrenuj & Co. Ltd., India.

Affiliated Companies:-

Shrenuj Group of Companies

· Alija International Pty. Ltd., Australia.

· Arisia Jewellery Pvt. Ltd., India.

· Astral Holdings Inc., USA.

· Astral Jewels LLC, USA.

· Astral USA Inc., USA.

· Bernie’s International LLC, USA.

· Copem & Shrenuj, Italy.

· Daily Jewellery Ltd., Hong Kong. [Trading as Joeliesse] (Same address)

· Ever Gold (HK) Ltd., Hong Kong. (Same address)

· Facet (Hong Kong) Ltd., Hong Kong. (Same address)

· Global Marine Diamond Corporation, USA.

· Inala Metals & Minerals Pvt. Ltd., India.

· Inter-Gems (H.K.) Ltd., Hong Kong. (Same address)

· Ithemba Diamonds (Pty) Ltd., South Africa.

· Jomard SAS, France.

· K.K. Doshi & Co., India.

· Kiara Jewellery (H.K.) Ltd., Hong Kong. (Same address)

· Kiara Jewellery Pvt. Ltd., India.

· Lume Germany GmbH, Germany.

· Lume Group AG, Switzerland.

· Prest Impex Private Ltd., India.

· SHL Gems & Jewellery Ltd., India.

· Shrenuj (Shanghai) Diamonds Pvt. Ltd., China.

· Shrenuj Australia Pty. Ltd., Australia.

· Shrenuj Botswana Pty. Ltd., Botswana.

· Shrenuj Diajewels Ltd., India.

· Shrenuj DMCC, UAE.

· Shrenuj Gems & Jewellery Ltd., India.

· Shrenuj GmbH, Germany.

· Shrenuj Japan Corporation, Japan.

· Shrenuj Lifestyle Ltd., India.

· Shrenuj N.V., Belgium.

· Shrenuj Overseas Ltd., India.

· Shrenuj South Africa (Pty) Ltd., South Africa.

· Shrenuj USA LLC, USA.

· Simon Golub & Sons Inc., USA.

· SWA Trading Ltd., Israel.

· Trapz LLC, USA.

· Uxolo Diamond Cutting Works (Pty) Ltd., South Africa.

etc.

BUSINESS REGISTRATION NUMBER

36752328

COMPANY FILE NUMBER

1044799

MANAGEMENT

Managing Director: Mr. Nihar Nitin Parikh

CAPITAL

Nominal Share Capital: HK$1,000,000.00 (Divided into 1,000,000 shares of HK$1.00 each)

Issued Share Capital: HK$936,000.00

SHAREHOLDER

(As per registry dated 13-05-2011)

Name	No. of shares
Shrenuj (Mauritius) Pvt. Ltd. St. James Court, Suite 308, St. Denis Street, Port Louis, Republic of Mauritius.	936,000 ======

DIRECTORS

(As per registry dated 13-05-2011)

Name (Nationality)	Address
Nihar Nitin PARIKH	D-33, Tahnee Heights, Petit Hall, 66 Nepean Sea Road, Mumbai-6, India.
Vishal Shreyas DOSHI	405 Dharam Palace 100-103, N.S. Patkar Marg, Mumbai-400 007, India.

SECRETARY

(As per registry dated 13-05-2011)

Name	Address
Dipan Jagdish PATEL	5/F., Kaiseng Commercial Centre, 4-6 Hankow Road, Tsimshatsui, Kowloon, Hong Kong.

HISTORY

The subject was incorporated on 13th May, 2006 as a private limited liability company under the Hong Kong Companies Ordinance.

Originally the subject was registered under the name of Shrenuj (Jewelry Outsourcing) Ltd., name changed to the present style on 12th October, 2007.

Apart from these, neither material change nor amendment has been ever traced and noted.

OPERATIONS

Activities: Importer, Exporter and Wholesaler.

Lines: All kinds of diamonds and jewellery products, etc.

Employees: 50. (Including affiliates)

Commodities Imported: India, Europe, etc.

Markets: Hong Kong, other Asian countries, Europe, etc.

Turnover:-

Period	Subject	Group
Year ended 31-03-2009	-	Rs 146,010.03 million
Year ended 31-03-2010	Rs 52,725,139	Rs 188,995.87 million
Year ended 31-03-2011	Rs 519,963,436	Rs 245,651.52 million
6 months ended 30-09-2010 – Unaudited	-	Rs 106,896.91 million
6 months ended 30-09-2011 – Unaudited	-	Rs 144,335.23 million

Terms/Sales: L/C, T/T, etc.

Terms/Buying: L/C, T/T, D/P, etc.

FINANCIAL INFORMATION

Nominal Share Capital: HK$1,000,000.00 (Divided into 1,000,000 shares of HK$1.00 each)

Issued Share Capital: HK$936,000.00

Mortgage or Charge:-

Date of Letter of Set-off and Appropriation: 31-05-2011

Amount: Advances and other banking facilities

Property: Deal No.: 170639
Date: 31-05-2011
Amount: US$350,000.00
Due Date: 31-05-2012

Mortgagee: Bank of India, Hong Kong Branch.

Net Profit:-

Period	Subject	Group
Year ended 31-03-2009	-	Rs 2,369.38 million
Year ended 31-03-2010	Rs 507,816	Rs 5,077.49 million
Year ended 31-03-2011	Rs 11,804,684	Rs 5,684.47 million
6 months ended 30-09-2010 – Unaudited	-	Rs 2,851.33 million
6 months ended 30-09-2011 – Unaudited	-	Rs 3,847.80 million

Profit or Loss: Making a small profit every year.

Condition: Keeping in a satisfactory manner.

Facilities: Making very active use of general banking facilities.

Payment: Met trade commitments as contracted.

Commercial Morality: Satisfactory.

Banker: Bank of India, Hong Kong Branch.

Standing: Normal.

GENERAL

Shrenuj Jewelry (Far East) Ltd. is a wholly-owned subsidiary of Shrenuj (Mauritius) Pvt. Ltd. [SMPL] which was registered in the Republic of Mauritius. The ultimate holding company of the subject Shrenuj & Co. Ltd. [Shrenuj] is an India-based firm. The directors of the subject are in India.

The subject shares the same operating address with Facet (Hong Kong) Ltd. [Facet] which is also a Hong Kong-registered firm. The subject and Facet are diamond traders.

The subject is trading in the products of its ultimate parent Shrenuj. Shrenuj is a listed firm with shares actively traded on Bombay Stock Exchange [BSE] and National Stock Exchange [NSE].

The followings are the financial highlights of the subject for the FY 2010/11:-

	Year ended 31-03-2011 (Unit: Rs)
Turnover	519,963,436
Cost of sales	(503,678,905)
Gross profit	16,284,531
Other revenue	2,221,481
Administrative expenses	(4,299,841)
Profit before taxation	14,206,171
Taxation	(2,401,487)
Net profit for the year	11,804,684

Shrenuj is one of the largest diamond and jewellery manufacturing companies in India having an international presence in 15 countries with a geographically diversified customer base, favourable economies of scale, ability to source roughs from strategic partners, growing retail presence and market linked production mix. Its activities are carried out in accordance with good corporate practices.

Shrenuj’s policies and practices are not only consistent with the statutory requirement but also underline its commitment to operate in the best interest of the stakeholders. It will continue to focus its resources, strengths and strategies to achieve its vision of becoming a global company, while upholding the core values of transparency, integrity, honesty and accountability.

The world diamond market has recovered well from the bottoms of 2008/09. The recovery has been prompt and sustained and we expect the trend to continue over the coming years. The US market cannot remain on the margin for long, given its resilience in the past. Shrenuj also expects the Euro zone to emerge out of the current crisis within the next twelve months. The markets in China and India continue to perform well while the smaller markets of Australia and South East Asia hold promise for the future.

For the year ended 31st March, 2011, the turnover of the Group amounted to Rs 245,651.52 million (2010: Rs 188,995.87 million). Group net profit after taxation and minority interest for the year was Rs 5,684.47 million (2010: Rs 5,077.49 million).

For the six months ended 30th September, 2011, the turnover of the Group amounted to Rs 144,335.23 million (same period of 2010: Rs 106,896.91 million). Group net profit after taxation and minority interests for the period was Rs 3,847.80 million (same period of 2010: Rs 2,851.33 million).

For the year ended 31st March, 2011, the sales turnover of the subject amounted to Rs 520.0 million, grew substantially as compared with Rs 52.7 million in previous year. Its net profit also grew substantially.

The subject has had an associated company in Hong Kong known as Inter‑Gems (H.K.) Ltd. This firm is 85%-owned by SMPL.

The subject is fully supported by the Shrenuj Group.

On the whole, consider the subject good for normal business engagements.

DIAMOND INDUSTRY – INDIA

- From time immemorial, India is well known in the world as the birthplace for diamonds.  It is difficult to trace the origin of diamonds but history says that in the remote past, diamonds were mined only in India. Diamond production in India can be traced back to almost 8^th Century B.C.  India, in fact, remained undisputed leader till 18^th Century when Brazilian fields were discovered in 1725 followed by emergence of S. Africa, Russia and Australia.

- The achievement of the Indian diamond industry was possible only due to combination of the manufacturing skills of the Indian workforce and the untiring and unflagging efforts of the Indian diamantaires, supported by progressive Government policies.

- The area of study of family owned diamond businesses derives its importance from the huge conglomerate of family run organizations which operate in the diamond industry since many generations.

- Some of the basic traits of family run business enterprises include spirit of entrepreneurship, mutual trust lowers transaction costs, small, nimble and quick to react, information as a source of advantage and philanthropy.

- Family owned diamond businesses need to improve on many fronts including higher standard of corporate governance, long-term performance – focused strategies, modern management and technology.

- The diamond jewellery industry in India today may be more than Rs 60000 mil and is rated amongst the fastest growing  in the world. Indi ranks third in the world in domestic diamond consumption.

- Utmost caution is to be exercised while dealing with some medium and large diamond traders which are usually engaged in fictitious import – export, inter-company transactions, financially assisted by banks. In the process, several public sector banks lost several hundred million rupees. They mostly diverted borrowed money for diamond business into real estate and capital markets.

- Excerpts from Times of India dated 30^th October 2010 is as under –

DIAMOND SAGA – DIRTY DOZEN STUCK WITH 2K CR DEBT

This could be the biggest credibility crisis the Indian diamond industry has ever faced. Fifteen banks run the risk of losing Rs 2000 crore lent to a dozen diamond firms in Surat. Until about two months ago, they had not repaid  these dues. Bankers believe many diamantaires borrowed money during the economic downturn two years ago and diverted funds to businesses like real estate and capital markets. Many of themselves made money from these businesses but their diamond companies have gone sick and declared insolvency.

- Most of the money borrowed from the banks in the name of their diamond business has been diverted in real estate and the share market. The banks are not in a position to seize their properties because in many cases, these were purchased in the name of their relatives and friends.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.53.58
UK Pound	1	Rs.82.97
Euro	1	Rs.69.89

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	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
----	NB	New Business	----

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%)

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