MIRA INFORM REPORT

 

 

Report Date :

04.03.2013

 

IDENTIFICATION DETAILS

 

Name :

GEMINI  CREATION  CO.,  LTD.

 

 

Registered Office :

23rd Flr., TPI Tower, 26/56 Chan Tat Mai Rd.,  Thungmahamek,  Sathorn,  Bangkok  10120

 

 

Country :

Thailand

 

 

Financials (as on) :

31.12.2011

 

 

Date of Incorporation :

25.05.2004

 

 

Com. Reg. No.:

0105547070563

 

 

Legal Form :

Private  Limited  Company 

 

 

Line of Business :

Manufacturer,  Distributor  and  Exporter of Fine  Gold  and  Silver  Jewelry

 

 

No. of Employees :

70

 

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 :

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 – June 30th, 2012

 

Country Name

Previous Rating

(31.03.2012)

Current Rating

(30.06.2012)

Thailand

B1

B1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

thailand - ECONOMIC OVERVIEW

 

With a well-developed infrastructure, a free-enterprise economy, generally pro-investment policies, and strong export industries, Thailand enjoyed solid growth from 2000 to 2007 - averaging more than 4% per year - as it recovered from the Asian financial crisis of 1997-98. Thai exports - mostly machinery and electronic components, agricultural commodities, and jewelry - continue to drive the economy, accounting for more than half of GDP. The global financial crisis of 2008-09 severely cut Thailand's exports, with most sectors experiencing double-digit drops. In 2009, the economy contracted 2.3%. In 2010, Thailand's economy expanded 7.8%, its fastest pace since 1995, as exports rebounded from their depressed 2009 level. Steady economic growth at just below 4% during the first three quarters of 2011 was interrupted by historic flooding in October and November in the industrial areas north of Bangkok, crippling the manufacturing sector and leading to a revised growth rate of only 0.1% for the year. The industrial sector is poised to recover from the second quarter of 2012 onward, however, and the government anticipates the economy will probably grow between 5.5 and 6.5% for 2012, while private sector forecasts range between 3.8% and 5.7%.

 

Source : CIA

 

 

 

COMPANY NAME

 

GEMINI  CREATION  CO.,  LTD.

 

SUMMARY

 

BUSINESS  ADDRESS                          :           23rd  FLOOR,  TPI  TOWER,  26/56  CHAN  TAT  MAI  ROAD,

THUNGMAHAMEK,  SATHORN, 

BANGKOK  10120,  THAILAND

TELEPHONE                                         :           [66]  2678-6058,  2678-8945

FAX                                                      :           [66]  2678-7419

E-MAIL  ADDRESS                                :           gemini@csloxinfo.com

REGISTRATION  ADDRESS                  :           SAME  AS  BUSINESS  ADDRESS

 

ESTABLISHED                         :           2004

REGISTRATION  NO.                           :           0105547070563

TAX  ID  NO.                                         :           3031384880

CAPITAL REGISTERED                         :           BHT.   55,000,000

CAPITAL PAID-UP                                :           BHT.   55,000,000

SHAREHOLDER’S  PROPORTION         :           INDIAN     :    100%

FISCAL YEAR CLOSING DATE              :           DECEMBER   31            

LEGAL  STATUS                                  :           PRIVATE  LIMITED  COMPANY

EXECUTIVE                                          :           MR. VIJAY  RAWAT,  INDIAN

                                                                        MANAGING  DIRECTOR           

 

NO.  OF  STAFF                                   :           70

LINES  OF  BUSINESS                          :           FINE  GOLD  AND  SILVER  JEWELRY

                                                                        MANUFACTURER,  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  May  25,  2004  as  a  private  limited  company  under  the registered  name GEMINI CREATION CO., LTD.,  by  Indian groups, with  the  business  objective  to  provide  design and  manufacture  various  styles  of  gems  and diamond  jewelry  with  gold  and  silver   to  both   domestic  and  international  markets.  It  currently  employs  approximately   70  staff.  

 

The subject’s registered address is 23rd Flr., TPI Tower, 26/56 Chan Tat Mai Rd.,  Thungmahamek,  Sathorn,  Bangkok  10120,  and  this  is  the  subject’s  current  operation  address.  

 

THE  BOARD  OF  DIRECTOR

 

     Name

 

Nationality

Age

 

 

 

 

Mr. Vijay  Rawat

 

Indian

49

Mr. Sunil  Kumer  Haldia

 

Indian

49

 

AUTHORIZED  PERSON

 

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

 

MANAGEMENT

 

Mr. Vijay  Rawat  is  the  Managing  Director.

He  is  Indian  nationality  with  the  age  of  49 years  old.  

 

Mr. Sunil  Kumer  Haldia  is  the  Chief  Finance  Officer.

He  is  Indian  nationality  with  the  age  of  49  years  old.

 

Mr. Arjun  Rawat  is  the  Sales  &  Marketing  Director.

He  is  Indian  nationality.

 

BUSINESS  OPERATIONS

 

The  subject  is  engaged  in   design  and  manufacturing  services   of  gemstone  and  diamond  jewelry  with  fine  gold  and  vintage  silver  under  international  standard  processing.  The  products  include   ring,  earrings, pendant,  bracelet  and   etc.

 

PURCHASE

 

Raw   materials  such  as  gemstones,  semi-precious  stones,  diamonds  and  accessories  are  purchased  from  suppliers  both  domestic  and  overseas,  mainly  in  India,  Africa,  Brazil,  and  Republic  of  China.


 

EXPORT 

 

95%  of  the  products  is  exported  to  U.S.A.,  Hong  Kong,  India,  Japan  and  European  countries,  the  remaining  5%  is  sold  locally.

 

MAJOR  CUSTOMER

 

Gauri  Creation  Inc.       :  U.S.A.

 

SUBSIDIARY  AND  AFFILIATED  COMPANY

 

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

 

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.

 

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.

Exports  are  against  T/T.

 

BANKING

 

Bangkok  Bank  Public  Co.,  Ltd.

 

EMPLOYMENT

 

The  subject  employs  approximately  70  staff.  

 

LOCATION  DETAILS

 

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

 

Factory   is  located  at  Gemopolis  Industrial  Estate,  40/4-5  Soi  31,  Sukhapiban  2  Rd.,  Dokmai,  Pravet,  Bangkok  10250.

 

 

 

 

COMMENT

 

The   jewelry  business  is  vibrant.   The  subject’s   jewelry  products  are   diversified  in  international markets  with  trendy  design  and  prices  attractiveness. An  overall  jewelry  industry  in  domestic market  seems  to  enjoy  growing  since  the  beginning  of  the  year  2012,  while  the  subject’s  business  was  moderate.

 

FINANCIAL  INFORMATION

 

The  capital  was  registered  at  Bht.  2,000,000  divided  into  20,000  shares of  Bht. 100 each  with  fully  paid.

 

The  capital  was  increased  later  as  follows:

 

            Bht.    4,000,000  on      February  21,  2005

            Bht.  10,000,000  on       May  20,  2005

            Bht.  20,000,000  on       August  26,  2005

            Bht.  50,000,000  on       December  11,  2007

            Bht.  55,000,000  on       October  16,  2008

 

The  latest  registered  capital  was  increased  to  Bht.  55  million,  divided  into  55,000  shares  of  Bht. 1,000  each  with  fully  paid.

 

THE  SHAREHOLDERS  LISTED  WERE  :  [as  at  April  30,  2012]

 

       NAME

HOLDING

%

 

 

 

Mr. Vijay  Rawat

Nationality:  Indian

Address     :  16A,  16/F.,  Supakarn  Condo, 

                     Charoennakorn  Rd.,  Banglampulang, 

                     Klongsan,  Bangkok

16,500

30.00

Mr. Arjun  Rawat

Nationality:  Indian

Address     :  16A,  16/F.,  Supakarn  Condo, 

                     Charoennakorn  Rd.,  Banglampulang, 

                     Klongsan,  Bangkok 

13,200

24.00

Mrs. Niti  Rawat

Nationality:  Indian

Address     :  16A,  16/F.,  Supakarn  Condo, 

                     Charoennakorn  Rd.,  Banglampulang, 

                     Klongsan,  Bangkok

11,550

21.00

Mrs. Sharita  Haldia

Nationality:  Indian

Address     :  423/5  Rama  3  Rd.,  Chongnonsi, 

                     Yannawa,  Bangkok 

11,550

21.00

Mr. Sunil  Kumer  Haldia

Nationality:  Indian

Address     :  423/5  Rama  3  Rd.,  Chongnonsi, 

                     Yannawa,  Bangkok 

  2,200

4.00

 

Total  Shareholders  :   5

 

Share  Structure  [as  at  April  30,  2012]

 

Nationality

Shareholders

No. of  Share

% Shares

 

 

 

 

Thai

-

-

-

Foreign  -  Indian

5

55,000

100.00

 

Total

 

5

 

55,000

 

100.00

 

NAME  OF  AUDITOR  &  CERTIFIED  PUBLIC  ACCOUNTANT  NO. :

 

Mr. Wattana  Treekantha  No.  2399

 

BALANCE SHEET [BAHT]

 

The  latest  financial  figures  published  for  December  31,  2011,  2010  &  2009  were:

           

ASSETS

                                                                                                

Current Assets

2011

2010

2009

 

 

 

 

Cash  and Cash Equivalent

4,915,030.08

2,556,098.71

5,914,759.14

Short-term Investment

5,014,922.04

3,000,000.00

-

Trade  Accounts  Receivable

185,036,870.11

153,906,287.16

130,393,951.43

Short-term Lending  to  Person  or 

   Related  Company

 

-

 

-

 

2,750,000.00

Other  Receivable

5,252,095.00

5,252,095.00

-

Inventories

11,990,071.08

7,324,398.70

61,470,000.87

Other  Current  Assets       

2,329,227.65

876,857.67

1,410,943.02

 

 

 

 

Total  Current  Assets                

214,538,215.96

172,915,737.24

201,939,654.46

 

 

 

 

Investment  in Related  Company

2,987,820.00

2,987,820.00

-

Fixed Assets          

9,297,603.40

9,244,899.41

10,364,631.41

Other  Non-current  Assets                      

423,805.54

423,805.54

1,273,309.54

 

Total  Assets                 

 

227,247,444.90

 

185,572,262.19

 

213,577,595.41


 

LIABILITIES & SHAREHOLDERS’ EQUITY [BAHT]

 

 

Current Liabilities

2011

2010

2009

 

 

 

 

Bank  Overdraft & Short-term Loan from

  Financial  Institution

 

46,846,869.53

 

39,852,619.99

 

41,802,777.59

Trade  Accounts  Payable

117,889,651.26

87,365,956.37

114,327,233.49

Current  Portion  of Long-term Liabilities

187,500.00

-

-

Accrued Income Tax

1,174,848.47

268,275.10

105,642.55

Other  Current  Liabilities             

239,467.92

363,295.76

220,384.34

 

 

 

 

Total Current Liabilities

166,338,337.18

127,850,147.22

156,456,037.97

 

Long-term Liabilities

 

390,625.00

 

-

 

-

 

Total  Liabilities            

 

166,728,962.18

 

127,850,147.22

 

156,456,037.97

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 Share  capital : Baht  1,000  par  value 

  authorized,  issued  and  fully 

  paid  share  capital  55,000  shares

 

 

55,000,000.00

 

 

55,000,000.00

 

 

55,000,000.00

 

 

 

 

Capital  Paid                      

55,000,000.00

55,000,000.00

55,000,000.00

Retained  Earning  Unappropriated

5,518,482.72

2,722,114.97

2,121,557.44

 

Total Shareholders' Equity

 

60,518,482.72

 

57,722,114.97

 

57,121,557.44

 

Total  Liabilities  &  Shareholders' 

   Equity

 

 

227,247,444.90

 

 

185,572,262.19

 

 

213,577,595.41

 


 

PROFIT  &  LOSS  ACCOUNT

 

Revenue

2011

2010

2009

 

 

 

 

Sales  Income                                        

187,421,115.27

197,757,204.73

206,508,833.42

Other  Income                 

2,374,195.76

459,715.16

168,255.54

 

Total  Revenues           

 

189,795,311.03

 

198,216,919.89

 

206,677,088.96

 

Expenses

 

 

 

 

 

 

 

Cost  of  Progress                       

174,076,568.38

175,857,658.20

190,989,673.62

Selling Expenses

2,316,417.95

1,548,098.73

769,588.18

Administrative  Expenses

6,749,897.28

10,557,939.73

8,632,230.41

Other Expenses

-

5,844,284.50

2,545,430.98

 

Total Expenses             

 

183,142,883.61

 

193,807,981.16

 

202,936,923.19

 

 

 

 

Profit / [Loss]  before  Financial  Cost  & 

  Income  Tax

 

6,652,427.42

 

4,408,938.73

 

3,740,165.77

Financial Cost

[2,630,211.20]

[3,540,106.10]

[3,123,168.60]

 

Profit / [Loss]  before  Income  Tax

 

4,022,216.22

 

868,832.63

 

616,997.17

Income  Tax

[1,225,848.47]

[268,275.10]

[206,142.55]

 

 

 

 

Net  Profit / [Loss]

2,796,367.75

600,557.53

410,854.62

 

 


 

 

FINANCIAL  ANALYSIS

 

ITEM

UNIT

2011

2010

2009

 

 

 

 

 

LIQUIDITY RATIO

 

 

 

 

CURRENT RATIO

TIMES

1.29

1.35

1.29

QUICK RATIO

TIMES

1.20

1.29

0.89

 

 

 

 

 

ACTIVITY RATIO

 

 

 

 

FIXED ASSETS TURNOVER

TIMES

20.16

21.39

19.92

TOTAL ASSETS TURNOVER

TIMES

0.82

1.07

0.97

INVENTORY CONVERSION PERIOD

DAYS

25.14

15.20

117.48

INVENTORY TURNOVER

TIMES

14.52

24.01

3.11

RECEIVABLES CONVERSION PERIOD

DAYS

360.36

284.06

230.47

RECEIVABLES TURNOVER

TIMES

1.01

1.28

1.58

PAYABLES CONVERSION PERIOD

DAYS

247.19

181.33

218.49

CASH CONVERSION CYCLE

DAYS

138.31

117.93

129.45

 

 

 

 

 

PROFITABILITY RATIO

 

 

 

 

COST OF GOODS SOLD

%

92.88

88.93

92.48

SELLING & ADMINISTRATION

%

4.84

6.12

4.55

INTEREST

%

1.40

1.79

1.51

GROSS PROFIT MARGIN

%

8.39

11.31

7.60

NET PROFIT MARGIN BEFORE EX. ITEM

%

3.55

2.23

1.81

NET PROFIT MARGIN

%

1.49

0.30

0.20

RETURN ON EQUITY

%

4.62

1.04

0.72

RETURN ON ASSET

%

1.23

0.32

0.19

EARNING PER SHARE

BAHT

50.84

10.92

7.47

 

 

 

 

 

LEVERAGE RATIO

 

 

 

 

DEBT RATIO

TIMES

0.73

0.69

0.73

DEBT TO EQUITY RATIO

TIMES

2.76

2.21

2.74

TIME INTEREST EARNED

TIMES

2.53

1.25

1.20

 

 

 

 

 

ANNUAL GROWTH

 

 

 

 

SALES GROWTH

%

(5.23)

(4.24)

 

OPERATING PROFIT

%

50.89

17.88

 

NET PROFIT

%

365.63

46.17

 

FIXED ASSETS

%

0.57

(10.80)

 

TOTAL ASSETS

%

22.46

(13.11)

 

 


 

 

ANNUAL GROWTH : IMPRESSIVE

 

An annual sales growth is -5.23%. Turnover has decreased from THB 197,757,204.73 in 2010 to THB 187,421,115.27 in 2011. While net profit has increased from THB 600,557.53 in 2010 to THB 2,796,367.75 in 2011. And total assets has increased from THB 185,572,262.19 in 2010 to THB 227,247,444.90 in 2011.                   

                       

PROFITABILITY : IMPRESSIVE

 


 

PROFITABILITY RATIO

 

Gross Profit Margin

8.39

Acceptable

Industrial Average

15.83

Net Profit Margin

1.49

Impressive

Industrial Average

0.22

Return on Assets

1.23

Impressive

Industrial Average

0.24

Return on Equity

4.62

Impressive

Industrial Average

0.39

 

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 8.39%. When compared with the industry average, the ratio of the company was lower,  this indicated that company may have 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. The company's figure is 1.49%, 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 1.23%, higher figure when compared with those of its average competitors in the same industry, indicated that business was an efficient profits 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 4.62%, 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 : ACCEPTABLE

 

 

LIQUIDITY RATIO

 

Current Ratio

1.29

Satisfactory

Industrial Average

1.69

Quick Ratio

1.20

 

 

 

Cash Conversion Cycle

138.31

 

 

 

 

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 1.29 times in 2011, decreased 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 1.2 times in 2011, decreased from 1.29 times, although excluding inventory so the company still have good short-term financial strength.

 

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 139 days.

 

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

Current Ratio                 Uptrend


 

LEVERAGE : ACCEPTABLE

 


 

LEVERAGE RATIO

 

Debt Ratio

0.73

Acceptable

Industrial Average

0.56

Debt to Equity Ratio

2.76

Risky

Industrial Average

1.31

Times Interest Earned

2.53

Impressive

Industrial Average

0.96

 

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 2.53 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 0.73 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                                 Downtrend

Times Interest Earned                Downtrend

 

ACTIVITY : SATISFACTORY

 


 

ACTIVITY RATIO

 

Fixed Assets Turnover

20.16

Impressive

Industrial Average

4.89

Total Assets Turnover

0.82

Acceptable

Industrial Average

1.36

Inventory Conversion Period

25.14

 

 

 

Inventory Turnover

14.52

Impressive

Industrial Average

2.04

Receivables Conversion Period

360.36

 

 

 

Receivables Turnover

1.01

Deteriorated

Industrial Average

3.46

Payables Conversion Period

247.19

 

 

 

 

The company's Account Receivable Ratio is calculated as 1.01 and 1.28 in 2011 and 2010 respectively. This ratio measures the efficiency of the company in managing its trade debtors to generate revenue. A lower ratio may indicate over extension and collection problems. Conversely, a higher ratio may indicate an overtly stringent policy. In this case, the company's A/R ratio in 2011 decreased from 2010. This would suggest the company had deteriorated in the management of its debt collections.

 

Inventory Turnover in Days Ratio indicates the liquidity of inventory. It estimates the number of days that it will take to sell the current inventory. Inventory is particularly sensitive to change in business activities. The inventory turnover in days has increased from 15 days at the end of 2010 to 25 days at the end of 2011. This represents a negative trend. And Inventory turnover has decreased from 24.01 times in year 2010 to 14.52 times in year 2011.

 

The company's Total Asset Turnover is calculated as 0.82 times and 1.07 times in 2011 and 2010 respectively. This ratio is determined by dividing total assets into total sales turnover. The ratio measures the activity of the assets and the ability of the firm to generate sales through the use of the assets.

 

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

Fixed Assets Turnover                Downtrend

Total Assets Turnover                 Downtrend

Inventory Turnover                      Downtrend

Receivables Turnover                  Downtrend

 

 

 


 

 

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 8th Century B.C.  India, in fact, remained undisputed leader till 18th 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 30th 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.54.48

UK Pound

1

Rs.82.71

Euro

1

Rs.71.27

 

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

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NB

New Business

 

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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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