MIRA INFORM REPORT

Report Date :

05.11.2012

IDENTIFICATION DETAILS

Name :	BLUE STAR DIAMONDS (HK) LTD.
Registered Office :	c/o Asia-Pacific Business Centre, Room 2207-2209, 22/F., Tower Two, Lippo Centre, 89 Queensway, Admiralty
Country :	Hong Kong
Date of Incorporation :	20.10.2011
Com. Reg. No.:	59085045
Legal Form :	Private Limited Company
LINE OF BUSINESS :	TRADER OF ALL KINDS OF DIAMONDS, ROUGH DIAMONDS, ETC
No. of Employees :	3.

RATING & COMMENTS

MIRA’s Rating :

NB

RATING		STATUS	PROPOSED CREDIT LINE
--	NB	New Business	--

Status :	New Company
Payment Behaviour :	Unknown
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, 2012

Country Name	Previous Rating (31.12.2011)	Current Rating (31.03.2012)
Hong Kong	A2	A2

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

HONG KONG - ECONOMIC OVERVIEW

Hong Kong has a free market economy, highly dependent on international trade and finance - the value of goods and services trade, including the sizable share of re-exports, is about four times GDP. Hong Kong's open economy left it exposed to the global economic slowdown that began in 2008. Although increasing integration with China, through trade, tourism, and financial links, helped it to make an initial recovery more quickly than many observers anticipated, it again faces a possible slowdown as exports to the Euro zone and US slump. The Hong Kong government is promoting the Special Administrative Region (SAR) as the site for Chinese renminbi (RMB) internationalization. Hong Kong residents are allowed to establish RMB-denominated savings accounts; RMB-denominated corporate and Chinese government bonds have been issued in Hong Kong; and RMB trade settlement is allowed. The territory far exceeded the RMB conversion quota set by Beijing for trade settlements in 2010 due to the growth of earnings from exports to the mainland. RMB deposits grew to roughly 7.8% of total system deposits in Hong Kong by the end of 2011, an increase of over 59% since the beginning of the year. The government is pursuing efforts to introduce additional use of RMB in Hong Kong financial markets and is seeking to expand the RMB quota. The mainland has long been Hong Kong's largest trading partner, accounting for about half of Hong Kong's exports by value. Hong Kong's natural resources are limited, and food and raw materials must be imported. As a result of China's easing of travel restrictions, the number of mainland tourists to the territory has surged from 4.5 million in 2001 to 28 million in 2011, outnumbering visitors from all other countries combined. Hong Kong has also established itself as the premier stock market for Chinese firms seeking to list abroad. In 2011 mainland Chinese companies constituted about 43% of the firms listed on the Hong Kong Stock Exchange and accounted for about 56% of the Exchange's market capitalization. During the past decade, as Hong Kong's manufacturing industry moved to the mainland, its service industry has grown rapidly. Growth slowed to 5% in 2011. Credit expansion and tight housing supply conditions caused Hong Kong property prices to rise rapidly in 2010 and inflation to rise 5.3% in 2011. Lower and middle income segments of the population are increasingly unable to afford adequate housing. Hong Kong continues to link its currency closely to the US dollar, maintaining an arrangement established in 1983

Source : CIA

COMPANY NAME

BLUE STAR DIAMONDS (HK) LTD.

COMPANY ADDRESS

Room 1406, 14/F., Hang Seng Tsim Sha Tsui Building, 18 Carnarvon Road, Tsimshatsui, Kowloon, Hong Kong.

PHONE: Not available

MANAGEMENT

Managing Director: Mr. Arnav Akshay Mehta

SUMMARY

Incorporated on: 20th October, 2011.

Organization: Private Limited Company.

Capital: Nominal: HK$20,000,000.00

Issued: HK$20,000,000.00

Business Category: Diamond Trader.

Employees: 3.

Main Dealing Banker: The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.

Banking Relation: Satisfactory.

COMPANY ADDRESS

Registered Office:-

c/o Asia-Pacific Business Centre

Room 2207-2209, 22/F., Tower Two, Lippo Centre, 89 Queensway,

Admiralty, Hong Kong.

Operating Office:-

Room 1406, 14/F., Hang Seng Tsim Sha Tsui Building, 18 Carnarvon Road, Tsimshatsui, Kowloon, Hong Kong.

Holding Company

Blue Star Diamonds Private Ltd., India.

Affiliated/Associated Companies

Antwerp Star Diamonds NV, Belgium.

Aurostar Jewellery India Pvt. Ltd., India.

Blue Star Diamonds DMCC, UAE.

BUSINESS REGISTRATION NUMBER

59085045

COMPANY FILE NUMBER

1673291

MANAGEMENT

Managing Director: Mr. Arnav Akshay Mehta

CAPITAL

Nominal Share Capital: HK$20,000,000.00 (Divided into 20,000,000 shares of HK$1.00 each)

Issued Share Capital: HK$20,000,000.00

SHAREHOLDER

(As per registry dated 19-06-2012)

Name	No. of shares
Blue Star Diamonds Private Ltd. 310/312 Prasad Chambers, Opera House, Mumbai 400-004, India.	20,000,000 ========

DIRECTORS

(As per registry dated 20-10-2011)

Name (Nationality)	Address
Arnav Akshay MEHTA	Kamai Mahal, Flat No. 10, 5/F., Carmichael Road, Mumbai 400 026, India.
Anshul Anuj MEHTA	14th Cliff, B-G Kher Marg, Ridge Road, Malabar Hill, Mumbai-400006, India.

SECRETARY

(As per registry dated 20-10-2011)

Name	Address	Co. No.
Top Establishment Ltd.	Room 2207-2209, 22/F., Tower Two, Lippo Centre, 89 Queensway, Admiralty, Hong Kong.	0409655

HISTORY

The subject was incorporated on 20th October, 2011 as a private limited liability company under the Hong Kong Companies Ordinance.

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

OPERATIONS

Activities: Diamond Trader.

Lines: All kinds of diamonds, rough diamonds, etc.

Employees: 3.

Commodities Imported: India, Belgium, etc.

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

Terms/Sales: As per contracted.

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

FINANCIAL INFORMATION

Nominal Share Capital: HK$20,000,000.00 (Divided into 20,000,000 shares of HK$1.00 each)

Issued Share Capital: HK$20,000,000.00

Alternation of Capital:-

Initially	paid up	HK$ 100,000.00
11-04-2012	paid up	HK$ 3,900,000.00
19-06-2012	paid up	HK$ 16,000,000.00
		––––––––––––––––
Total:	paid up	HK$ 20,000,000.00 ==============

Increases of Nominal Capital:-

From	HK$ 100,000.00	to	HK$ 4,000,000.00	on	11-04-2012
From	HK$4,000,000.00	to	HK$20,000,000.00	on	19-06-2012

Profit or Loss: Too early to offer an opinion.

Condition: Business is under development.

Facilities: Making fairly active use of general banking facilities.

Payment: Met trade commitments as required.

Commercial Morality: Too early to comment

Banker: The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.

Standing: Small.

GENERAL

Having issued 20 million ordinary shares of HK$1.00 each, Blue Star Diamonds (HK) Ltd. is a wholly owned subsidiary of Blue Star Diamonds Private Ltd. [Blue Star] which is an India-based firm.

The directors of the subject are Mr. Arnav Akshay Mehta and Mr. Anshul Anuj Mehta, both of whom are Indian.

The subject is a member of the Blue Star Group.

Vasantlal Mehta founded the Blue Star Group in Mumbai in 1966, and over the next fifteen years, Mr. Mehta brought his three sons, Akshay, Anuj and Ashit, into the business. While Akshay and Anuj developed the Indian operations, their younger brother Ashit undertook the firm’s expansion abroad, establishing, in 1981, an Antwerp hub to provide a steady supply of rough diamonds for the company’s rapidly growing marketing and manufacturing base in India.

Since then, the three brothers have built their Indian and Belgian businesses into a leading global marketing operation for both rough and polished diamonds. In recognition of their achievements, the Blue Star Group was awarded its first DTC sight in Belgium in 1991, under the name Arjav Diamonds, and a second DTC sight in India in 1994. Over the last two decades, the Blue Star Group has achieved an average annual compound growth rate of over 10% on its total sales, and become one of the leading global DTC Sightholders. Additionally it has achieved supply arrangements with other leading mining houses such as BHP and Alrosa. In 2009 the group became the first, and one of the largest contract holders with Alrosa.

The Blue Star Group continues to develop its activities through the third generation of the family. In 2001, the group moved downstream into the design, manufacture and distribution of jewellery. The same year, it launched a state-of-the-art factory in Surat, India.

In 2002, Akshay’s eldest son, Arjav, joined the business, followed by Arnav, his younger brother in 2004, and more recently by Anuj’s eldest son Anshul and Ashit’s son Arpan. Of the younger generation only one more remains to join, to maintain and strengthen the family’s commitment to the industry. 2006 saw the doubling of the Blue Star Group’s manufacturing strength when it moved into a new ultra-modern manufacturing headquarters in Surat, India.

Fully supported by the Blue Star Group, the subject commenced business just in late July 2012.

On the whole, since the history of the subject is short in Hong Kong, consider it good for normal business engagements on L/C basis.

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.53.66
UK Pound	1	Rs.86.36
Euro	1	Rs.69.24

INFORMATION DETAILS

Report Prepared by :

PDT

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%)

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.