MIRA INFORM REPORT

Report Date :

04.05.2012

IDENTIFICATION DETAILS

Name :	H SHERUL AND COMPANY
Registered Office :	205, The Jewel, (Roxy), M P Marg, Opera House, Mumbai – 400004, Maharashtra
Country :	India
Financials (as on) :	31.03.2012
Date of Incorporation :	19.10.2001
IEC No.:	0301048282
PAN No.: [Permanent Account No.]	AACFH2878K
Legal Form :	Partnership Concern with an Unlimited Liability of the Partners.
Line of Business :	Manufacturer of Diamond
No. of Employees :	250 (Approximately) ( In Office + In Factory)

RATING & COMMENTS

MIRA’s Rating :

Ba (48)

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

Maximum Credit Limit:	USD 680000
Status :	Satisfactory
Payment Behaviour :	Usually correct
Litigation :	Clear
Comments :	Subject is an established partnership concern having satisfactory track. Trade relations are reported as fair. Business is active. Payments are reported to be usually correct and as per commitments. The concern can be considered normal for business dealings at usual trade terms and conditions.

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, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
India	A1	A1

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

INFORMATION PARTED BY

Name :	Mr. Praful
Designation :	Accounts Manager
Contact No.:	91-22-23696292
Date :	03.05.2012

LOCATIONS

Registered Office :	205, The Jewel, (Roxy), M P Marg, Opera House, Mumbai – 400004, Maharashtra, India
Tel. No.:	91-22-23696292/ 93/ 23669401/ 02
Mobile No.:	91-9820084007 / 9820065035 (Mr. Ramesh Lukhi)
Fax No.:	91-22-66151511/ 23669403
E-Mail :	hsherul@yahoo.co.in blukhi@ymail.com rrlukhi@yahoo.co.in
Location :	Owned
Factory :	201, 2^nd Floor, Lukhi Niwas, C. T. S. No. 1595, Opposite Virant Tower, S V Road, Dahisar (East), Mumbai – 400068, Maharashtra, India
Location :	Owned

PARTNERS

Name :	Mr. Ramesh Lukhi
Designation :	Partner
Address :	1* 007 – C, Upvan Tower, Upper Govind Nagar, Malad (East), Mumbai – 400097, Maharashtra, India
Qualification :	Under Graduate
PAN No.:	AAJPL4835F
Name :	Mr. Bhupatbhai R. Lukhi
Designation :	Partner
Qualification :	Under Graduate
PAN No.:	ABAPL2381C

KEY EXECUTIVES

Name :	Mr. Praful
Designation :	Accounts Manager

BUSINESS DETAILS

Line of Business :

Manufacturer of Diamond

Products :

Products Description	Item Code No.
Diamond Cutting, Polish	36912
ING and Processing	96811

Exports :

Products :

· Diamond

Countries :

· Belgium

· Hong Kong

· USA

· Israel

· Thailand

Imports :

Products :

Raw Materials

Countries :

· Belgium

· Israel

Terms :

Selling :

Cash and Credit

Purchasing :

Cash and Credit

GENERAL INFORMATION

Customers :

Wholesalers and Retailers

· Blue Diamond Company

· Bright Impex

· Dhan Max

· Fantasy Diamonds FZC

· Gehna Jewellery Trading LLC

· Heera Blue

· Hassan Gems LLC

· H K Gems and Diamonds

· Hong Kong Stone company

· Lukhi Diam BVBA

· Lenti and Villasco

· Moti Diamond Company

· Malay Impex

· Niru Diamonds Israel (1987) Limited

· New Deal NY Inc.

· Riddhi Gems LLC

· Raj Impex

· S K and Company

· Signature Impex Company Limited

· Top Deal NY Inc.

· V. Diamond

· Zenith Trading (H.K.)

Suppliers :

· Rosy Blue (India) Private Limited

· Arjav Diamonds (India) Private Limited

· Anmal Gems BVBA

· Choron Diamonds N. V.

· Jayvidiam (Israel) Limited

· Lukhi Diamond BVBA

· Rosy Blue Sales Limited

· SRB Diamonds

No. of Employees :

250 (Approximately) ( In Office + In Factory)

Bankers :

· The Saraswat Co-operative Bank

Marine Lines, Mumbai, Maharashtra, India

· Axis Bank

Kalanagar, Bandra East, Mumbai, Maharashtra, India

· Oriental Bank of Commerce

· Union Bank of India

Facilities :

Cash Credit Limit Rs.25.000 Millions From The Saraswat co-operative Bank

Working Capital – Rs.100.000 Millions From Axis Bank

Secured Loans	31.03.2011 (Rs. In Millions)
From Banks
Axis Bank (PSC)	64.800
Axis Bank (PC)	32.590
Oriental Bank of Commerce (PSC)	38.970
Oriental Bank of Commerce (PC)	34.967
Central Bank (PSFC $ 772356.52	34.439
Central Bank (EBD $ 1444130.66)	64.394
Total	270.160
Unsecured Loans	31.03.2011 (Rs. In Millions)
Bhikhabhai J. Savani	0.520
Dharam Impex	5.404
Ghanshyam V. Mangukiya	1.751
Maniprabha Impex	18.621
Nish Gems	15.126
Nainesh M. Savani	8.468
Natubhai N. Virani	1.542
Pushpaben R. Lukhi	0.714
Total	52.146

Banking Relations :	--
Auditors :
Name :	S. C. Chirania and Company Chartered Accountants
Address :	306, Prashant Chambers, 75/78, Bhandari Street, Masjid (West), Mumbai – 400003, Maharashtra, India
Tel. No.:	91-22-3445308/ 3430295
Name :	Bhavesh P. Sanghavi Chartered Accountant
Address :	F – 1, Rasdhara Society, 1^st Floor, 385, S. V. P. Road, Prarthna Samaj, Mumbai – 400004, Maharashtra, India
Tel No.:	91-22-23872687

CAPITAL STRUCTURE

PARTNERS CAPITAL ACCOUNTS

(RS. IN MILLIONS)

Name of the Partners	%	Fixed Capital	Opening Balance	Share of Profit	Salary	Net Additions	Closing Balance	Total Capital
Mr. Bhupatbhai R. Lukhi	50	0.010	65.291	5.066	0.500	2.222	78.954	78.964
Mr. Rameshbhai R. Lukhi	50	0.010	62.553	5.066	0.200	19.422	90.994	91.004
Total	100	0.020	127.844	10.132	0.700	21.644	169.948	169.968

------------------------------------------------------------------------------------------------------------------------------

FINANCIAL DATA

[all figures are in Rupees Millions]

Particulars		31.03.2012
Sales Turnover (Approximately)		1260.000
	(Due to Good quality Modern Machinery and Manufacturing Unit)

Expected Sales (2012.2013) : Rs.1500.000 Millions

The above information has been parted by Mr. Praful.

Note : Sole Proprietory and Partnership concerns are exempted from filing their financials with the Government Authorities or Registry Records.

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2011	31.03.2010	31.03.2009
SHAREHOLDERS FUNDS
1] Partners Capital		169.968	127.864	92.382
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		0.000	0.000	0.000
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		169.968	127.864	92.382
LOAN FUNDS
1] Secured Loans		270.160		184.344
2] Unsecured Loans		52.146		25.749
TOTAL BORROWING		322.306	320.999	210.093
DEFERRED TAX LIABILITIES		0.300	0.355	0.021
TOTAL		492.574	449.218	302.496
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		59.860	60.242	64.859
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		0.000	0.000	0.025
DEFERRED TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	172.249	163.259	154.863
	Sundry Debtors	526.139	474.413	231.605
	Cash & Bank Balances	12.100	2.821	6.066
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	3.973	13.168	10.623
Total Current Assets		714.461	653.661	403.157
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	284.797	256.649
	Other Current Liabilities	0.516	0.328	160.432
	Provisions	0.120	9.555	7.127
Total Current Liabilities		285.433	266.532	167.559
Net Current Assets		429.028	387.129	235.598
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
Prepaid Expenses		3.686	1.847	2.014
TOTAL		492.574	449.218	302.496

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	1091.760	884.747	618.566
		Other Income	2.711	1.765	0.533
		TOTAL	1094.471	886.512	619.099
Less	EXPENSES
		Cost of Goods Sold	1029.047	830.404
		Interest	18.653	18.857
		Sales and Administrative Expenses	15.792	13.777
		Salary and Interest to partners	10.329	4.500
		Profit on sale of Air Conditioner	(0.027)	0.000
		TOTAL	1073.794	867.538	604.267
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION		20.677	18.974	14.832
Less/ Add	DEPRECIATION/ AMORTISATION		6.115	6.409	7.664
	PROFIT BEFORE TAX		14.562	12.565	7.168
Less	TAX		4.430	4.355	2.496
	PROFIT AFTER TAX		10.132	8.210	4.672

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	0.93	0.93	0.75
Net Profit Margin (PBT/Sales)	(%)	1.33	1.42	1.16
Return on Total Assets (PBT/Total Assets}	(%)	1.88	1.76	1.53
Return on Investment (ROI) (PBT/Networth)		0.09	0.10	0.08
Debt Equity Ratio (Total Liability/Networth)		3.58	4.59	4.09
Current Ratio (Current Asset/Current Liability)		2.50	2.45	2.41

LOCAL AGENCY FURTHER INFORMATION

Check List by Info Agents	Available in Report (Yes / No)
1) Year of Establishment	Yes
2) Locality of the firm	Yes
3) Constitutions of the firm	Yes
4) Premises details	No
5) Type of Business	Yes
6) Line of Business•	Yes
7) Promoter’s background	Yes
8) No. of employees	Yes
9) Name of person contacted	Yes
10) Designation of contact person	Yes
11) Turnover of firm for last four years	Yes
12) Profitability for last three years	Yes
13) Reasons for variation <> 20%	--
14) Estimation for coming financial year	Yes
15) Capital in the business	Yes
16) Details of sister concerns	No
17) Major suppliers	Yes
18) Major customers	Yes
19) Payments terms	Yes
20) Export / Import details (if applicable)	Yes
21) Market information	--
22) Litigations that the firm / promoter	--
23) Banking Details	Yes
24) Banking facility details	Yes
25) Conduct of the banking account	--
26) Buyer visit details	--
27) Financials, if provided	Yes
28) Incorporation details, if applicable	No
29) Last accounts filed at ROC	No
30) Major Shareholders, if available	No

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 60000.000 millions and is rated amongst the fastest growing  in the world. India 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 20000.000 Millions 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.

FIXED ASSETS:

· Plant and Machinery

· Building

· Furniture and Fixtures

· Computers

· Safe

· Printer

· Camera System

· Refrigerator

· Television

· Air conditioner

· Mobile Phones

· Motor Car

· Telephone Systems

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.53.24
UK Pound	1	Rs.86.14
Euro	1	Rs.69.98

INFORMATION DETAILS

Information Gathered by :	PJA
Report Prepared by :	BSN

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	6
--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	NO
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		48

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	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	-

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

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.