MIRA INFORM REPORT

Report Date :

22.09.2012

IDENTIFICATION DETAILS

Name :	VITHAL TRADING COMPANY, YK
Registered Office :	1-4-30 Naka-Ogawara Kofu Yamanashi-Pref 400-0855
Country :	Japan
Financials (as on) :	31.08.2011
Date of Incorporation :	August 2002
Com. Reg. No.:	(Yamanashi-Kofu) 006135
Legal Form :	Private Limited Company
Line of Business :	Import, wholesale of polished diamonds, diamond set jewelry, other, from India
No. of Employees :	05

RATING & COMMENTS

MIRA’s Rating :

B

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

Status :	Moderate
Payment Behaviour :	Regular
Litigation :	----

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)
Japan	a1	a1

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

JAPAN - ECONOMIC OVERVIEW

In the years following World War II, government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped Japan develop a technologically advanced economy. Two notable characteristics of the post-war economy were the close interlocking structures of manufacturers, suppliers, and distributors, known as keiretsu, and the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features are now eroding under the dual pressures of global competition and domestic demographic change. Japan's industrial sector is heavily dependent on imported raw materials and fuels. A tiny agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Usually self-sufficient in rice, Japan imports about 60% of its food on a caloric basis. Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the global catch. For three decades, overall real economic growth had been spectacular - a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the after effects of inefficient investment and an asset price bubble in the late 1980s that required a protracted period of time for firms to reduce excess debt, capital, and labor. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2011 stood as the fourth-largest economy in the world after second-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2011. A sharp downturn in business investment and global demand for Japan's exports in late 2008 pushed Japan further into recession. Government stimulus spending helped the economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive 9.0 magnitude earthquake in March disrupted manufacturing. Electricity supplies remain tight because Japan has temporarily shut down almost all of its nuclear power plants after the Fukushima Daiichi nuclear reactors were crippled by the earthquake and resulting tsunami. Estimates of the direct costs of the damage - rebuilding homes, factories, and infrastructure - range from $235 billion to $310 billion, and GDP declined almost 0.5% in 2011. Prime Minister Yoshihiko NODA has proposed opening the agricultural and services sectors to greater foreign competition and boosting exports through membership in the US-led Trans-Pacific Partnership trade talks and by pursuing free-trade agreements with the EU and others, but debate continues on restructuring the economy and reining in Japan's huge government debt, which exceeds 200% of GDP. Persistent deflation, reliance on exports to drive growth, and an aging and shrinking population are other major long-term challenges for the economy.

Source : CIA

Company name

VITHAL TRADING COMPANY, YK

REGD NAME

YK Vithal Trading

MAIN OFFICE

1-4-30 Naka-Ogawara Kofu Yamanashi-Pref 400-0855 JAPAN

Tel: 055-242-7801 Fax: 055-242-7802

Former Address

Space Bros, 1273-3 Showacho Shimizu Arai Nakakomagun Yamanashi-Pref,

URL: N/A

ACTIVITIES

Import, wholesale of polished diamonds, diamond set jewelry, other, from India

BRANCHES

Nil

FACTORIES

(subcontracted)

OFFICER(S)

CHETAN BAHI KUMAR, PRES

Yen Amount: In million Yen, unless otherwise stated

SUMMARY

FINANCES R/WEAK A/SALES Yen 570 M

PAYMENTS REGULAR CAPITAL Yen 9 M

TREND SLOW WORTH Yen 64 M

STARTED 2002 EMPLOYES 5

COMMENT

IMPORTER AND WHOLESALER SPECIALIZING IN DIAMONDS & JEWELRY, FROM INDIA.

FINANCIAL SITUATION CONSIDERED RATHER WEAK BUT SHOULD BE GOOD FOR MODERATE BUDINESS ENGAGEMENTS

HIGHLIGHTS

The subject company was established by Chetan Bahi Kumar, an Indian businessman residing in Japan over 8 years, speaking fluent Japanese, in order to make most of his experience in the subject line of business. This is a trading firm for import and wholesale of polished diamonds and jewelry products. Diamonds are partially subcontracted mfg into products by local jewelry processors. The operations cover widely in the greater-Tokyo area.

FINANCIAL INFORMATION

The owner declined to disclose financials and we have managed to obtain the figures from outside sources.

The sales volume for Aug/2011 fiscal term amounted to Yen 570 million, a 2% up from Yen 560 million in the previous period. Sales were affected by the North Japan Earthquake that hit the northern part of Japan in March 2011. Consumer spending was sluggish for arts, jewelry, watches, and other big-ticket items. Originally sales were projected to reach Yen 580 million, up 4% from the previous year. The net profit was posted at Yen 2 million, compared with Yen 3 million a year ago.

For the current term ending Aug 2012 the net profit is projected at Yen 3 million, on a 3% rise in turnover, to Yen 580 million.

The financial situation is considered RATHER WEAK but should be good for MODERATE business engagements.

REGISTRATION

Date Registered: Aug 2002

Regd No.: (Yamanashi-Kofu) 006135

Legal Status: Private Limited Company (Yugen Kaisha)

Regd Capital: Yen 9 million

Major shareholders (%): Chetan Bahi Kumar (100).

Nothing detrimental is known as to his commercial morality.

OPERATION

Activities: Imports and wholesales polished diamonds, other precious stones, diamond set jewelry, other jewelry products, from India (--100%).

Diamonds and other precious stones are partially subcontracted mfg to local jewelry processors.

Clients: [Jewelry processors, jewelry stores, consumers] Ishitomo Co, other

No. of accounts: 100

Domestic areas of activities: Centered in Yamanashi-Pref, extending into Tokyo.

Suppliers: [Mfrs] Imports solely from India

Payment record: Regular

Location: Business area in Yamanashi City. Office premises at the caption address are leased and maintained satisfactorily.

Bank References:

· Resona Bank (Kofu)

· Yamanashi Chuo Bank (H/O)

Relations: Satisfactory

FINANCES

(In Million Yen)

Terms Ending:		31/08/2012	31/08/2011	31/08/2010	31/08/2009
Annual Sales		580	570	560	800
Recur. Profit
Net Profit		3	2	3	8
Total Assets			N/A	N/A	N/A
Net Worth			64	62	59
Capital, Paid-Up			9	9	9
Div.P.Share(¥)			0.00	0.00	0.00
<Analytical Data>		(%)	(%)	(%)	(%)
S.Growth Rate		1.75	1.79	-30.00	0.00
Current Ratio			..	..	..
N.Worth Ratio			..	..	..
N.Profit/Sales		0.52	0.35	0.54	1.00

Notes: Financials for the 31/08/2011 fiscal term have not yet been disclosed and we have compiled this statement from the data collected from outside sources.

Forecast (or estimated) figures for the 31/08/2012 fiscal term

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.53.90
UK Pound	1	Rs.87.60
Euro	1	Rs.70.00

INFORMATION DETAILS

Report Prepared by :

NLM

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.