MIRA INFORM REPORT

Report Date :

17.06.2011

IDENTIFICATION DETAILS

Name :	HINI STAR LTD
Registered Office :	Unit 01-02, 10/F., Tower 2, Harbour Centre, 8 Hok Cheung Street, Hunghom, Kowloon
Country :	Hong Kong
Financials (as on) :	31.12.2009
Date of Incorporation :	08.08.2003
Com. Reg. No.:	33862215
Legal Form :	Private Limited Company
Line of Business :	Importer, Exporter and Wholesaler of all kinds of diamonds, gems and 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

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 – March 31^st, 2011

Country Name	Previous Rating (31.12.2010)	Current Rating (31.03.2011)
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

HINI STAR LTD.

Company ADDRESS

Unit 01-02, 10/F., Tower 2, Harbour Centre, 8 Hok Cheung Street, Hunghom, Kowloon, Hong Kong.

PHONE: 2724 4330

FAX: 2721 6516

E-MAIL: hini@karpgroup.com

MANAGEMENT

Managing Director: Mr. Rameshkumar Bhikhabhai Virani

SUMMARY

Incorporated on: 8th August, 2003.

Organization: Private Limited Company.

Capital: Nominal: HK$78,000,000.00

Issued: HK$78,000,000.00

Business Category: Diamond and Gem Trader.

Annual Revenue: US$190,182,476 (Year ended 31-12-2009)

Employees: 8.

Main Dealing Banker: Industrial & Commercial Bank of China (Asia) Ltd., Hong Kong.

Banking Relation: Satisfactory.

Company ADDRESS

Registered Head Office:-

Unit 01-02, 10/F., Tower 2, Harbour Centre, 8 Hok Cheung Street, Hunghom, Kowloon, Hong Kong.

Affiliated Factory in India:-

8/A, Lal Darwaja, Surat-395008, Gujarat, India.

Associated/Affiliated Companies:-

Karp Group of Companies

Hini Star (Bangkok) Ltd., Thailand.

Hini Star (Taiwan) Ltd., Taiwan.

Hini Star Diamonds LLC, UAE.

Karp Diamonds Pvt. Ltd., India.

Karp Impex HK Ltd., Hong Kong.

Karp Impex Ltd., India.

Karp Impex N.V., Belgium.

Karp Infotech, India.

Karp Jewellery Mfg. China Ltd., Hong Kong.

Karp Jewellery Mfg. HK Ltd., Hong Kong.

Karp Jewellery Pvt. Ltd., India.

Karp Jewellery Taiwan Ltd., Hong Kong.

Karp Jewellery Taiwan Ltd., Taiwan.

Karp Manufacturing Co., India.

Karp Suisse (Geneva), Switzerland.

Park Infotech, India.

etc.

BUSINESS REGISTRATION NUMBER

33862215

COMPANY FILE NUMBER

0856743

MANAGEMENT

· Managing Director: Mr. Rameshkumar Bhikhabhai Virani

· General Manager: Mr. Pankajkumar Vitthalbhai Khunt

· Contact Person: Mr. Ramesh Maldar

CAPITAL

Nominal Share Capital: HK$78,000,000.00 (Divided into 78,000,000 shares of HK$1.00 each)

Issued Share Capital: HK$78,000,000.00

SHAREHOLDERS

(As per registry dated 08-08-2010)

Name		No. of shares
Rasila Ramesh VIRANI		65,550,000
Rameshkumar Bhikhabhai VIRANI		11,700,000
Pankajkumar Vitthalbhai KHUNT		450,000
Karp Impex HK Ltd., Hong Kong.		300,000
		–––––––––
	Total:	78,000,000 ========

DIRECTORS

(As per registry dated 08-08-2010)

Name (Nationality)	Address
Rameshkumar Bhikhabhai VIRANI	Unit 01-02, 10/F., Tower 2, Harbour Centre, 8 Hok Cheung Street, Hunghom, Kowloon, Hong Kong.
Rasila Ramesh VIRANI	Unit 01-02, 10/F., Tower 2, Harbour Centre, 8 Hok Cheung Street, Hunghom, Kowloon, Hong Kong.

SECRETARY

(As per registry dated 08-08-2010)

Name	Address	Co. No.
RC Corporate Services Ltd.	Room 2109, 21/F., China Resources Building, 26 Harbour Road, Wanchai, Hong Kong.	0467057

HISTORY

The subject was incorporated on 8th August, 2003 as a private limited liability company under the Hong Kong Companies Ordinance.

The subject moved to the present address in December 2005.

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, gems and jewellery.

Employees: 8.

Commodities Imported: Belgium, India, Israel, USA, etc.

Markets: Europe, Japan, Israel, Thailand, USA, etc.

Annual Revenue: US$196,665,755 (Year ended 31-12-2008)

US$190,182,476 (Year ended 31-12-2009)

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

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

MEMBERSHIP

Hong Kong Jewelry Manufacturers’ Association, Hong Kong.

FINANCIAL INFORMATION

Nominal Share Capital: HK$78,000,000.00 (Divided into 78,000,000 shares of HK$1.00 each)

Issued Share Capital: HK$78,000,000.00

Indebtedness: US$732,043.58 (Total amount outstanding on all mortgages and charges as per last

Annual Return dated 08-08-2010)

Mortgage or Charge: (See attachment)

Net Profit: US$879,615 (Year ended 31-12-2008)

US$900,971 (Year ended 31-12-2009)

Net Worth: US$14,802,594 (As at 31-12-2008)

US$15,703,565 (As at 31-12-2009)

Profit or Loss: Traded at a profitable angle.

Condition: Keeping in an active and steady condition.

Facilities: Making active use of general banking facilities.

Payment: Met trade commitments as contracted.

Commercial Morality: Satisfactory.

Bankers:-

· Industrial & Commercial Bank of China (Asia) Ltd., Hong Kong.

· The Royal Bank of Scotland N.V., Hong Kong Branch.

· The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.

· Standard Chartered Bank (Hong Kong) Ltd., Hong Kong.

Standing: Normal.

GENERAL

Having issued 78 million ordinary shares of HK$1.00 each, Hini Star Ltd. is chiefly owned by Mr. Rasila Ramesh Virani who is holding 84.04% stake of the subject. The subject is a member of the Karp Group which is an Indian group in India trading in jewellery and diamonds. The Group is owned by the Virani family.

The subject is an importer, exporter and wholesaler of fancy cut diamonds, polished diamonds, and round diamonds. Most of the products bear the brand name of “Tri-Star” and “Sky-Star”. Most of its commodities are supplied by Karp Impex Ltd. [Karp Impex] which is an India-based firm. Karp Impex is a main member of the Karp Group.

With well-established offices in worldwide, the subject offers clients with a full spectrum of fancy cut diamonds including taper, baguette, marquise, pear, oval, princess, heart, trillion, round pointer, heart-shape, and brilliant cut diamonds from 0.01 to 10 carats, also “Hearts & Arrows” ideal cut with GIA/HRD/IGI certificate.

The Karp Group has got an affiliated company Karp Impex HK Ltd. which is also located at the operating address of the subject. It is also a holding company of the subject holding 0.38% stake. From 2004 to 2008, Karp Impex HK Ltd. had got the “Best of Show Award of Hong Kong Jewellery Design Competition”.

The Group was formed in the early 60’s in India. Now, the Group is controlled by the third generation of the Virani family.

KARP has been privileged to be a DTC Sightholder since 1993. While such privilege ensures access to reliable and consistent supplies of rough diamonds across a wide range of sizes, it also reflects the kind of responsibilities that KARP accepts. These represent KARP’s commitment to its suppliers, channel partners, eventual consumers and its own social conscience.

KARP is recognized by the Government of India as a “Star Trading House”. Being one of the well respected diamond companies in India and in the world, the Group has received the prestigious awards awarded by the Indian Diamond Council (Gems & Jewellery Export Promotion Council [GJEPC]) and the Government of India for its export achievements.

Mr. Rameshkumar Bhikhabhai Virani who is residing in Hong Kong is one of the key personnel of the Karp Group.

In order to penetrate the international market further, the subject has taken part in fairs and exhibitions held in Hong Kong and other foreign large cities such as Las Vegas of the United States, Basel of Switzerland, Hyderabad of India, Macau, Shenzhen of China, etc. For instance, it is going to take part in the Hong Kong Jewellery & Gem Fair which will be held between 4th to 8th March, 2011 in Hong Kong. Besides, it is also going to take part in the BaselWorld 2011 The World Watch & Jewellery Show which will be held between 24th to 31st March, 2011 in Basel.

Over the past years, the subject has taken part in the following exhibitions and fairs:-

United States

· JCK Las Vegas Show

Europe

· BaselWorld, Switzerland

Hong Kong

· Hong Kong International Jewellery Show

· Hong Kong Jewellery & Gem Fair

· Hong Kong Jewellery & Gem Fair

· Hong Kong International Jewelry Manufacturers’ Exhibition

Mainland China

· Jewelry Shanghai

· Beijing International Jewellery Fair

· Shenzhen International Jewellery Fair

· China International Jewellery Fair, Beijing

The annual sales turnover of the subject is very significant.

Sharing the same operating office with Karp Impex HK Ltd., the subject is fully supported by the Karp Group and the Virani family.

The subject has had the following three main affiliated companies:-

Hini Star (Bangkok) Ltd., Thailand

Hini Star (Taiwan) Ltd., Taiwan

Hini Star Diamonds LLC, Dubai, UAE

Over the past years, the subject has got the following GJEPC awards:-

1996-97	GJEPC Award — Highest Importers of Diamonds from India to South East Asia, Hong Kong
1997-98	GJEPC Award — Highest Importers of Diamonds from India to South East Asia, Hong Kong
1998-99	GJEPC Award — Highest Importers of Diamonds from India to South East Asia, Hong Kong
1999-00	GJEPC Award — Highest Importers of Diamonds from India to South East Asia, Hong Kong
2000-01	GJEPC Award — Highest Importers of Diamonds from India to South East Asia, Hong Kong
2001-02	GJEPC Award — Highest Importers of Diamonds from India to South East Asia, Hong Kong

Karp Impex, an affiliate of the subject, is in Surat, Gujarat of India. It is accommodating 2,500 craftsmen and is the No. 1 premiere diamond polishing factory in the world equipped with state-of-the-art technology. It is one of KARP’s versatile diamond cutting centres which has got advanced diamond cutting and polishing technology. It is supplying the subject with its products.

Another main firm of the Group Karp Diamonds Pvt. Ltd. which is in Jasdan, Gujarat, India, is spread across 88 acres with the manufacturing premises housed in 31,000 sq.ft. The residential part of the factory township for the employees consists of row houses in tree-lines streets, with landscaped gardens, in a pollution free environment. The township is complete with park, canteen, medical facilities, playground and a shopping centre.

At present, the Group employs over 8,000 personnel at its state-of-the-art diamond cutting and polishing factories. The factories are well equipped with cutting edge diamond processing technology such as VibFree console; Hi‑Gain, 5-axes laser technology, Auto-Pol console and Russian Pacor technology for the production of both fancy and brilliant cut diamonds as well as personalised cuts.

From more than 47 years of diamond cutting and distribution experience KARP has developed in-house ERP & CRM software to manage the complexities of the diamond trade. From the point of allocation, through every stage, until the final sale, each step is well managed and controlled by a loyal and responsible management team.

The contact person of the subject Mr. Ramesh Maldar is also an Indian.

For the year ended 31st December, 2009, the revenues of the subject amounted to US$190.2 million, decreased by 3.3% as compared with US$196.7 million in FY 2008; profit after tax was US$900,971, grew by 2.4% as compared with US$879,615 in FY 2008. Over the past two years, the revenues of the subject were significant but its profit margins were rather low. The low profit margins were attributable to the high cost of sales. As at end of December 2009, the subject’s retained profits amounted to US$15.7 million as compared with the retained profits of US$14.8 million. In 2009, the subject’s accounts receivable were much better than that of FY 2008. The overall financial position of the subject is satisfactory as its retained profit has been increasing.

The history of the subject in Hong Kong is over seven years and five months.

On the whole, in view of the background and parentage of the subject, consider it good for normal business engagements.

REMARKS:

Court Cases: None per our.

Property information of the company:-

Property Location: Workshop Unit No. 01 & 02 on 10/F., Harbour Centre Tower 2,
8 Hok Cheung Street, Kowloon, Hong Kong.

Owner: Hini Star Ltd.

Date of Purchase: n.a.

Purchased Price: n.a.

Incumbrances:-

Date of Mortgage	Amount Consideration	Mortgagee	Nature
01-09-2005	-	The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.	Mortgage to secure general banking facilities
07-09-2007	-	- ditto -	Deed of variation and further charge to secure general banking facilities

STATEMENT OF COMPREHENSIVE INCOME

(Year ended 31st December, 2009)

	2009	2008
	(US$)	(US$)
REVENUE	190,182,476	196,665,755
Cost of sales	(186,529,820)	(192,899,716)
Gross profit	3,652,656	3,766,039
Other income	381,895	140,588
Gain on disposal of available-for-sale financial assets	-	1,187,144
Administrative and other operating expenses	(2,103,947)	(2,438,030)
Operating profit	1,930,604	2,655,741
Finance costs	(881,633)	(1,071,135)
Impairment loss on available-for-sale financial assets	-	(642,674)
Profit before tax	1,048,971	941,932
Income tax	(148,000)	(62,317)
PROFIT FOR THE YEAR	900,971	879,615
Other comprehensive income	-	-
TOTAL COMPREHENSIVE INCOME	900,971	879,615

BALANCE SHEET

(As at 31st December, 2009)

	2009	2008
	(US$)	(US$)
NON-CURRENT ASSETS
Property, plant and equipment	2,650,558	2,773,390
Available-for-sale financial assets	1,775,797	1,775,797
	4,426,355	4,549,187
CURRENT ASSETS
Inventories	52,793,405	53,131,087
Accounts receivable	50,441,660	30,442,651
Amounts due from directors	-	13,680,000
Trade deposits paid	7,659,773	5,498,987
Deposits and prepayments	148,243	192,554
Other receivables	60,452	69,241
Tax recoverable	-	91,248
Cash and bank balances	783,976	741,097
	111,887,509	103,846,865
CURRENT LIABILITIES
Accounts payable	68,744,289	53,889,572
Trust receipt loans	28,882,511	28,091,933
Trade advance received	1,904,835	10,477,304
Current portion of mortgage loan, secured	116,915	143,907
Accruals and other payable	205,923	174,753
Provision for taxation	56,752	-
	99,911,225	92,777,469
NET CURRENT ASSETS	11,976,284	11,069,396
NON-CURRENT LIABILITIES
Mortgage loan, secured	699,074	815,989
	15,703,565	14,802,594
EQUITY
Share capital	10,025,707	10,025,707
Investment revaluation reserve	-	-
Retained profits	5,677,858	4,776,887
	15,703,565	14,802,594

MORTGAGE OR CHARGE

Date	Particulars	Amount
01-09-2005	Instrument: Mortgage Property: 103/5,767th parts or shares of and in The Remaining Portion of Kowloon Marine Lot No. 113 (Workshop Unit No. 01 & 02 on 10/F. of Harbour Centre Tower 2, 8 Hok Cheung Street, Hunghom, Kowloon, Hong Kong.) Mortgagee: The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.	To secure the Secured Indebtedness
07-09-2007	Instrument: Deed of Variation and Further Charge Property: 103/5,767th parts or shares of and in The Remaining Portion of Kowloon Marine Lot No. 113 (Workshop Unit No. 01 & 02 on 10/F. of Harbour Centre Tower 2, 8 Hok Cheung Street, Hunghom, Kowloon, Hong Kong.) Mortgagee: The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.	To secure all moneys in respect of general banking facilities
26-04-2010	Instrument: Security Agreement over Bank Account (Own Obligations) Property: By way of a first fixed charge to the Bank all of the Chargor’s rights in respect of any amount standing to the credit of the Account and the debt represented by it Mortgagee: Standard Chartered Bank, Hong Kong Branch. [Business transferred to Standard Chartered Bank (Hong Kong) Ltd.]	To secure for the payment and satisfaction of all present and future obligations and liabilities

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.90
UK Pound	1	Rs.72.54
Euro	1	Rs.63.39

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

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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