MIRA INFORM REPORT

Report Date :

18.10.2012

IDENTIFICATION DETAILS

Correct Name :	B.H.C. DIAMONDS [THAI] CO., LTD.

Registered Office :	18^th Floor, Bangkok Gems & Jewelry Tower, 322/40 Surawong Road, Sipraya, Bangrak, Bangkok 10500

Country :	Thailand

Financials (as on) :	31.12.2010

Date of Incorporation :	20.06.1996

Com. Reg. No.:	0105539068202

Legal Form :	Private Limited Company

Line of Business :	Importers, distributor and exporter of cutting diamonds and gemstones

No. of Employees :	07

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate

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)

Thailand

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

Company name

B.H.C. DIAMONDS [THAI] CO., LTD.

SUMMARY

BUSINESS ADDRESS : 18^th FLOOR, BANGKOK GEMS & JEWELRY TOWER,

322/40 SURAWONG ROAD, SIPRAYA, BANGRAK,

BANGKOK 10500, THAILAND

TELEPHONE : [66] 2631-6661-2

FAX : [66] 2631-6663

E-MAIL ADDRESS : bhcdia_thai@hotmail.com

REGISTRATION ADDRESS : SAME AS BUSINESS ADDRESS

ESTABLISHED : 1996

REGISTRATION NO. : 0105539068202 [Former : 1377/2539]

CAPITAL REGISTERED : BHT. 14,000,000

CAPITAL PAID-UP : BHT. 14,000,000

SHAREHOLDER’S PROPORTION : THAI : 51%

INDIAN : 49%

FISCAL YEAR CLOSING DATE : DECEMBER 31

LEGAL STATUS : PRIVATE LIMITED COMPANY

EXECUTIVE : MR. BHAVESHKUMAR PRAKASHKUMAR GANDHI,

AN INDIAN IS THE MANAGING DIRECTOR

NO. OF STAFF : 7

LINES OF BUSINESS : CUTTING DIAMONDS AND GEMSTONES

IMORTER, DISTRIBUTOR AND EXPORTER

CORPORATE PROFILE

OPERATING TREND : STABLE

PRESENT SITUATION : OPERATING NORMALLY

REPUTATION : GOOD WITH NORMAL BUSINESS ENGAGEMENT

MANAGEMENT STANDARD : MANAGEMENT WITH FAIR PERFORMANCE

HISTORY

The subject was established on June 20, 1996 as a private limited company under the name style B.H.C. DIAMONDS [THAI] CO., LTD., by Thai and Indian groups, in order to import raw diamonds for cutting process and sell the finished products to both local and overseas markets. It currently employs 7 staff.

The subject’s registered address was initially located at Suite 513, 5^th Floor, Piyamitr Building, 99 Mahesak Rd., Suriyawongse, Bangrak, Bangkok 10500.

On October 8, 2008, it was relocated to 18^th Floor, Bangkok Gems & Jewelry Tower, 322/40 Surawong Rd., Sipraya, Bangrak, Bangkok 10500, and this is the subject’s current operation address.

THE BOARD OF DIRECTORS

Name	Nationality	Age

Mr. Bhaveshkumar Prakashkumar Gandhi	Indian	37
Mrs. Seema Bhavesh Gandhi	Indian	37

AUTHORIZED PERSON

One of the above directors can sign on behalf of the subject with company’s affixed.

MANAGEMENT

Mr. Bhaveshkumar Prakashkumar Gandhi is the Managing Director.

He is Indian nationality with the age of 37 years old.

BUSINESS OPERATIONS

The subject’s activities are importer of gemstones and raw diamonds for cutting process as well as distributor and exporter of diamonds to overseas countries.

Raw diamonds have been cut by local factories.

IMPORT

90% of raw diamonds and gemstones are imported from India, Russia, South Africa, and Pakistan, the remaining 10% are purchased from local suppliers.

SALES

The products are sold locally to wholesalers and manufacturers.

EXPORT

The finished products are also exported to Switzerland, Belgium, United Kingdom, France, Italy, Portugal, Denmark, Spain, United States of America, Germany, Netherlands, Sweden, Hong Kong, Japan and the countries in Middle East.

LITIGATION

Bankruptcy and Receivership

There are no litigation on bankruptcy and receivership cases filed against the subject found at Legal Execution Department for the past five years.

Others

There are no legal suits filed against the subject for the past two years.

SUBSIDIARY AND AFFILIATED COMPANY

The subject is not found to have any subsidiary or affiliated company here in Thailand.

CREDIT

Sales are by cash or on the credits term of 30-60 days.

Local bills are paid by cash or on the credits term of 30-60 days.

Imports are by L/C at sight or T/T on negotiated term.

Exports are against T/T.

BUSINESS TRANSACTION

The products are sold by cash and credit, with the maximum credit given at 30-60 days. The subject is not found to have problem on its account receivable.

BANKING

Bangkok Bank Public Co., Ltd.

[Head Office : 333 Silom Rd., Silom, Bangrak, Bangkok 10500]

EMPLOYMENT

The subject employs 7 staff [office and sales staff].

LOCATION DETAILS

The premise is rented for administrative office at the heading address. Premise is located in commercial area.

COMMENT

Even though world consumption of diamonds was slow, subject’s business performance in 2009 was moderate. Slowdown in jewelry industry had seen in world market due to economy sluggish. Subject was also affected from decline consumption, but it was only in a short period. In 2010 consumption of jewelry products, diamond and gemstones have strong rebound and also continued growing throughout the year 2011.

FINANCIAL INFORMATION

The capital was initially registered at Bht. 4,000,000 divided into 40,000 shares of Bht. 100 each.

The capital was increased later as follows:

Bht. 6,000,000 on November 30, 1999

Bht. 14,000,000 on August 11, 2004

The latest registered capital was increased to Bht. 14,000,000 divided into 140,000 shares of Bht. 100 each with fully paid.

THE SHAREHOLDERS LISTED WERE : [as at August 1, 2011]

NAME	HOLDING	%

Ms. Pikul Boonsith Nationality: Thai Address : 73 Moo 2, T. Takfah, A. Takfah, Nakornsawan	71,400	51.00
Mr. Bhaveshkumar Prakashkumar Gandhi Nationality: Indian Address : 322/40 Surawong Rd., Sipraya, Bangrak, Bangkok 10500	38,500	27.50
Mr. Prachan Narendra Shah Nationality: Indian Address : 322/40 Surawong Rd., Sipraya, Bangrak, Bangkok 10500	30,100	21.50

Total Shareholders : 3

Share Structure [as at August 1, 2011]

Nationality	Shareholders	No. of Share	% Shares

Thai	1	71,400	51.00
Foreign - Indian	2	68,600	49.00
Total	3	140,000	100.00

NAME OF AUDITOR & CERTIFIED PUBLIC ACCOUNTANT NO. :

Mr. Surin Ruangpetch No. 3741

BALANCE SHEET [BAHT]

The latest financial figures published for December 31, 2010 & 2009 were:

ASSETS

Current Assets	2010	2009

Cash and Cash Equivalents	3,071,142.91	463,364.95
Trade Account Receivable	83,338,429.79	92,483,955.00
Inventories	162,824,679.05	121,704,322.94
Other Current Assets	975,792.67	975,792.67
Total Current Assets	250,210,044.42	215,627,435.56
Cash at Bank Pledged as a Collateral	11,175,000.00	-
Fixed Assets	8,313.58	10,953.58
Other Assets	24,900.00	24,900.00
Total Assets	261,418,258.00	215,663,289.14

LIABILITIES & SHAREHOLDERS' EQUITY [BAHT]

Current Liabilities	2010	2009

Bank Overdraft	-	45,540,825.96
Trade Account Payable	152,912,488.77	114,130,542.35
Other Current Liabilities	2,406,690.13	167,001.36
Total Current Liabilities	155,319,178.90	159,838,369.67
Loan Payable - Financial Institution	74,765,035.36	49,089,380.44
Total Liabilities	230,084,214.26	187,759,428.05

Shareholders' Equity

Share capital : Baht 100 value authorized, issued and fully paid share capital 140,000 shares	14,000,000.00	14,000,000.00
Capital Paid	14,000,000.00	14,000,000.00
Retained Earning - Unappropriated	17,334,043.74	13,903,861.09
Total Shareholders' Equity	31,334,043.74	27,903,861.09
Total Liabilities & Shareholders' Equity	261,418,258.00	215,663,289.14

PROFIT & LOSS ACCOUNT

Revenue	2010	2009

Sales Income	301,624,790.82	218,483,823.66
Gain on Exchange Rate	7,878,754.48	4,131,971.61
Total Revenues	309,503,545.30	222,615,795.27
Expenses

Cost of Goods Sold	292,498,568.04	208,864,474.17
Selling & Administrative Expenses	9,536,825.66	7,673,961.40
Total Expenses	302,035,393.70	216,538,435.57
Profit / [Loss] before Financial Cost & Income Tax	7,468,151.60	6,077,359.70
Financial Cost	[2,503,450.42]	[3,500,874.84]
Profit / [Loss] before Income Tax	4,964,701.18	2,576,484.86
Income Tax	[1,534,518.53]	[809,779.40]
Net Profit / [Loss]	3,430,182.65	1,766,705.46

FINANCIAL ANALYSIS

ITEM	UNIT	2010	2009

LIQUIDITY RATIO
CURRENT RATIO	TIMES	1.61	1.35
QUICK RATIO	TIMES	0.56	0.58

ACTIVITY RATIO
FIXED ASSETS TURNOVER	TIMES	36,280.98	19,946.34
TOTAL ASSETS TURNOVER	TIMES	1.15	1.01
INVENTORY CONVERSION PERIOD	DAYS	203.18	212.68
INVENTORY TURNOVER	TIMES	1.80	1.72
RECEIVABLES CONVERSION PERIOD	DAYS	100.85	154.50
RECEIVABLES TURNOVER	TIMES	3.62	2.36
PAYABLES CONVERSION PERIOD	DAYS	190.81	199.45
CASH CONVERSION CYCLE	DAYS	113.22	167.74

PROFITABILITY RATIO
COST OF GOODS SOLD	%	96.97	95.60
SELLING & ADMINISTRATION	%	3.16	3.51
INTEREST	%	0.83	1.60
GROSS PROFIT MARGIN	%	5.64	6.29
NET PROFIT MARGIN BEFORE EX. ITEM	%	2.48	2.78
NET PROFIT MARGIN	%	1.14	0.81
RETURN ON EQUITY	%	10.95	6.33
RETURN ON ASSET	%	1.31	0.82
EARNING PER SHARE	BAHT	24.50	12.62

LEVERAGE RATIO
DEBT RATIO	TIMES	0.88	0.87
DEBT TO EQUITY RATIO	TIMES	7.34	6.73
TIME INTEREST EARNED	TIMES	2.98	1.74

ANNUAL GROWTH
SALES GROWTH	%	38.05
OPERATING PROFIT	%	22.88
NET PROFIT	%	94.16
FIXED ASSETS	%	(24.10)
TOTAL ASSETS	%	21.22

PROFITABILITY RATIO

Gross Profit Margin	5.64	Deteriorated	Industrial Average	29.20
Net Profit Margin	1.14	Impressive	Industrial Average	(51.65)
Return on Assets	1.31	Impressive	Industrial Average	(13.01)
Return on Equity	10.95	Impressive	Industrial Average	(3.83)

Gross Profit Margin used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. The company's figure is 5.64%. When compared with the industry average, the ratio of the company was lower. This indicated that company was originated from the problems with control over its costs.

Net Profit Margin is the indicator of the company's efficiency in that net profit takes into consideration all expenses of the company. A low profit margin indicates a low margin of safety, higher risk that a decline in sales will erase profits and result in a net loss. Net Profit Margin ratio is 1.14%, higher figure when compared with those of its average competitors in the same industry, indicated that business was an efficient operator in a dominant position within its industry.

Return on Assets measures how efficiently profits are being generated from the assets employed in the business when compared with the ratios of firms in a similar business. A low ratio in comparison with industry averages indicates an inefficient use of business assets. Return on Assets ratio is 1.31%, higher figure when compared with those of its average competitors in the same industry, indicated that business was an efficient profit in a dominant position within its industry.

Return on Equity indicates how profitable a company is by comparing its net income to its average shareholders' equity, ROE measures how much the shareholders earned for their investment in the company. Return on Equity ratio is 10.95%, higher figure when compared with those of its average competitors in the same industry, indicated that business was an efficient profit in a dominant position within its industry.

Trend of the average competitors in the same industry for last 5 years

Return on Assets Downtrend

Return on Equity Downtrend

LIQUIDITY RATIO

Current Ratio	1.61	Deteriorated	Industrial Average	83.84
Quick Ratio	0.56
Cash Conversion Cycle	113.22

The Current Ratio is to ascertain whether a company's short-term assets are readily available to pay off its short-term liabilities. The company's figure is 1.61 times in 2010, increase from 1.35 times, then it is generally considered to have good short-term financial strength. When compared with the industry average, the ratio of the company was lower.

The Quick Ratio is a liquidity indicator that further refines the current ratio by measuring the amount of the most liquid current assets there are to cover current liabilities. The company's figure is 0.56 times in 2010, decrease from 0.58 times, then the company has not enough current assets that presumably can be quickly converted to cash for pay financial obligations.

The Cash Conversion Cycle measures the number of days a company's cash is tied up in the production and sales process of its operations and the benefit from payment terms from its creditors. It meant the company could survive when no cash inflow was received from sale for 114 days.

Trend of the average competitors in the same industry for last 5 years

Current Ratio Uptrend

LEVERAGE RATIO

Debt Ratio	0.88	Impressive	Industrial Average	1.91
Debt to Equity Ratio	7.34	Risky	Industrial Average	1.49
Times Interest Earned	2.98	Deteriorated	Industrial Average	343.72

Debt to Equity Ratio a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. A lower the percentage means that the company is using less leverage and has a stronger equity position.

Times Interest Earned measuring a company's ability to meet its debt obligations. Ratio is 2.99 higher than 1, so the company can pay interest expenses on outstanding debt.

Debt Ratio shows the proportion of a company's assets which are financed through debt. The company's figure is 0.88 greater than 0.5, most of the company's assets are financed through debt.

Trend of the average competitors in the same industry for last 5 years

Debt Ratio Uptrend

Times Interest Earned Uptrend

ACTIVITY RATIO

Fixed Assets Turnover	36,280.98	Deteriorated	Industrial Average	167,038.45
Total Assets Turnover	1.15	Satisfactory	Industrial Average	1.18
Inventory Conversion Period	203.18
Inventory Turnover	1.80	Deteriorated	Industrial Average	4.27
Receivables Conversion Period	100.85
Receivables Turnover	3.62	Deteriorated	Industrial Average	34.28
Payables Conversion Period	190.81

Trend of the average competitors in the same industry for last 5 years

Fixed Assets Turnover Uptrend

Total Assets Turnover Downtrend

Inventory Turnover Uptrend

Receivables Turnover Uptrend

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.52.75
UK Pound	1	Rs.85.08
Euro	1	Rs.69.04

INFORMATION DETAILS

Report Prepared by :

MNL

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