MIRA INFORM REPORT

Report Date :

29.10.2013

IDENTIFICATION DETAILS

Name :	LEE HENG DIAMOND CO. LTD.

Registered Office :	C/o Eunica Co. Ltd. 6/F., Sino Plaza, 256 Gloucester Road, Causeway Bay

Country :	Hong Kong

Date of Incorporation :	08.01.1977

Com. Reg. No.:	05073606

Legal Form :	Private Limited Company

Line of Business :	Importer, Exporter, Wholesaler and Retailer of all kinds diamond and jewellery products, gemsets.

No. of Employees :	12. (Head office only)

RATING & COMMENTS

MIRA’s Rating :

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 – March 31^st, 2013

Country Name

Previous Rating

(31.12.2012)

Current Rating

(31.03.2013)

Hong Kong

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 levies excise duties on only four commodities, namely: hard alcohol, tobacco, hydrocarbon oil, and methyl alcohol. There are no quotas or dumping laws. 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 9.1% of total system deposits in Hong Kong by the end of 2012, an increase of 59% from the previous 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 34.9 million in 2012, 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 2012 mainland Chinese companies constituted about 46.6% of the firms listed on the Hong Kong Stock Exchange and accounted for about 57.4% 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, and less than 2% in 2012. Credit expansion and tight housing supply conditions caused Hong Kong property prices to rise rapidly and inflation to rise 4.1% in 2012. 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 and Address

LEE HENG DIAMOND CO. LTD.

ADDRESS: Room 1201, 12/F., China Building, 29 Queen’s Road Central, Hong Kong.

PHONE: 2526 1167, 2971 2200

FAX: 2868 0170

E-MAIL: lhdgroup@leeheng.com

support@leehengdiamond.com

info@leeheng.com

MANAGEMENT

Managing Director: Mr. Ma Chun Wai, Franklin

SUMMARY

Incorporated on: 8th February, 1977.

Organization: Private Limited Company.

Capital: Nominal:HK$120,000,000.00

Issued: HK$120,000,000.00

Business Category: Jewellery Trader and Retailer.

Employees: 12. (Head office only)

Main Dealing Banker: Hang Seng Bank Ltd., Hong Kong.

Banking Relation: Satisfactory.

ADDRESS

Registered Office:-

c/o Eunica Co. Ltd.

6/F., Sino Plaza, 256 Gloucester Road, Causeway Bay, Hong Kong.

Head Office:-

Room 1201, 12/F., China Building, 29 Queen’s Road Central, Hong Kong.

Holding Company:-

Lee Heng Jewellery Group Of Companies Ltd., Hong Kong. (Same address)

Associated/Affiliated Companies:-

Lee Heng Diamond Group

Ablemaster Jewellery Manufacturing Co. Ltd., Hong Kong.

Dorical Ltd., Hong Kong.

Falconer Jewellers Ltd., Hong Kong.

IAD Jewellery Ltd., Hong Kong.

MaBelle Jewellery Co. Ltd., Hong Kong.

Mabros Gold Co. Ltd., Hong Kong.

Mabros Jewellery Co. Ltd., Hong Kong.

Madia Jewellery International Co. Ltd., Hong Kong.

Profit Famous Ltd., Hong Kong.

Marbros Holdings Ltd., Hong Kong.

etc.

BUSINESS REGISTRATION NUMBER

05073606

COMPANY FILE NUMBER

0051535

MANAGEMENT

Group Chairman: Mr. Ma Charn Yui, Michael

Managing Director: Mr. Ma Chun Wai, Franklin

Contact Persons: Mr. Stephen Lee

Ms. Shirley Lam

CAPITAL

Nominal Share Capital: HK$120,000,000.00 (Divided into 240,000 shares of HK$500.00 each)

Issued Share Capital: HK$120,000,000.00

SHAREHOLDER

(As per registry dated 08-02-2013)

Name

Occupation

No. of shares

Lee Heng Jewellery Group Of Companies Ltd., Hong Kong.

Corporation

240,000

======

DIRECTORS

(As per registry dated 28-02-2013)

Name (Nationality)	Address
MA Yan, Calvin Ronald	House C, 66 Deep Water Bay Road, Hong Kong.
MA Yung Kit	House D, 66 Deep Water Bay Road, Hong Kong.
MA Yung Yi	House C, 66 Deep Water Bay Road, Hong Kong.
CHAN Mee Ngan, Anna	Flat A, 4/F., Block 1, Ruby Court, 55 South Bay Road, Hong Kong.
MA Chun Wai, Franklin	House A, 66 Deep Water Bay Road, Hong Kong.
HO Man Kwong	Flat D, 17/F., Tower B, Hollywood Terrace, 268 Queen’s Road Central, Sheung Wan, Hong Kong.
CHENG Tak Wai, David	Room 2608, 26/F., Tsui Ning House, Tsui Wan Estate, Chai Wan, Hong Kong.
MA Charn Yui, Michael	Flat A, 4/F., Block 1, Ruby Court, 55 South Bay Road, Hong Kong.

SECRETARY

(As per registry dated 08-02-2013)

Name	Address	Co. No.
Eunica Co. Ltd.	6/F., Sino Plaza, 256 Gloucester Road, Causeway Bay, Hong Kong.	0454936

HISTORY

The subject was incorporated on 8th February, 1977 as a private limited liability company under the Hong Kong Companies Ordinance.

The subject moved its registered address to the present location in February 2006.

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

OPERATIONS

Activities: Importer, Exporter, Wholesaler and Retailer.

Lines: All kinds diamond and jewellery products, gemsets.

Brand Name: MaBelle, Madia, Mabros, Falconer.

Employees: 12. (Head office only)

Commodities Imported: India, Thailand, Europe, etc.

Markets: Asia countries, Europe, Middle East, US, etc.

Terms/Sales: L/C, T/T, etc.

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

FINANCIAL INFORMATION

Nominal Share Capital: HK$120,000,000.00 (Divided into 240,000 shares of HK$500.00 each)

Issued Share Capital: HK$120,000,000.00

Profit or Loss: Making a small profit every year.

Condition: Keeping in an active condition.

Facilities: Making rather active use of general banking facilities.

Payment: Met trade commitments as contracted.

Commercial Morality: Satisfactory.

Banker: Hang Seng Bank Ltd., Hong Kong.

Standing: Very Good.

GENERAL

Having issued 240,000 ordinary shares of HK$500.00 each, Lee Heng Diamond Co. Ltd. is a wholly owned subsidiary of Lee Heng Jewellery Group Of Companies Ltd. which is a Hong Kong-based firm located at the operating office of the subject. The operating address of the Group is located at Room 1201, 12/F., China Building, 29 Queen’s Road Central, Hong Kong.

Incorporated in Hong Kong in 1977, the subject is the origin and key member of the Lee Heng Diamond Group which consists of over twelve different diamond and jewellery companies — from handling polished diamond, manufacturing jewellery, to wholesaling, retailing and distributing diamonds and jewellery products.

The subject is one of the core members of the Group. According to the subject, its predecessor started operation in 1949. The subject is trading in the following products:-

Diamond gold jewellery (such as diamond ring, diamond pendant, ladies’ diamond pendant, branded diamond ring, etc.);

Diamond jewellery set;

Loose diamond;

Certified diamond;

Diamond platinum jewellery;

Gemset gold jewellery — 18 karat;

Gemset jewellery; &

Gold chain, etc.

Commodities and raw materials are imported from Italy, France, other European countries, some Asian countries such as India, etc. Prime markets are Hong Kong, China, other Asian countries, Europe, the Middle East, etc. Overall business is rather active.

In Hong Kong, the subject has had four affiliated retailers and one in China. Names of the retailers are Mabros, Falconer Jewellers, Madia, MaBelle and MaBelle (China). MaBelle was created by the Group in 1993, however, the MaBelle shop was established in Shanghai, China in 2001. Now, there are over 40 MaBelle Jewelry Shops in China.

In Hong Kong, the Group is operating about 50 MaBelle Jewelry Shops.

The subject and its associates Mabros Gold, IAD Jewellery are wholesalers. The manufacturers of the Group are “Ablemaster Jewellery Manufacturing Co. Ltd.” and “Profit Famous”.

The Group has ten retail shops in Hong Kong. Mabros Jewellery Co. Ltd. is one of the retailing shops of the Group which is retailing “Marbos” brand jewellery products. The Group also markets its products via the following two websites: “Mabelle.com” and “Dorical”.

In 2007, the Group launched its first online shop -- MBLife.com through establishing Dorical Ltd.

Three of the subject’s directors Ma Yung Yi, Michael Ma Charn Yui and Ma Yung Kit are also directors of Ablemaster Jewellery, a Hong Kong-registered firm incorporated on 17th March, 1992.

In order to penetrate the international market further, the subject has taken part in fairs and exhibitions held in Hong Kong and other foreign large cities.

For instance, it is going to take part in “HKTDC Hong Kong International Jewellery Show 2014” which will be held in Hong Kong Convention and Exhibition Centre, Wanchai, Hong Kong during the period of 5th to 9th March, 2014. Its booth No. is 3CON-010.

As the history of the subject in Hong Kong is over thirty-six years, on the whole, consider it good for normal business engagements.

REMARK

Property information of affiliate:-

Property Location: Workshop Unit 10, 11, 12 & 13 on 2/F. of Block A,
Focal Industrial Centre, 21 Man Lok Street, Kowloon, Hong Kong.

Owner: Ablemaster Jewellery Manufacturing Co. Ltd.

Date of Purchase: N.a.

Purchased Price: N.a.

Incumbrances:-

Date of Mortgage	Amount Consideration	Mortgagee	Nature
01-12-1992	-	Dah Sing Bank Ltd., Hong Kong.	Mortgage to secure general banking facilities

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.

- 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 –

- Gem & Jewellery Export Promotion Council in its statistical data has shown the export of polished diamonds to have increase by 28 % in February 2013. Compared to $ 1.4 bn worth of polished diamond export in February, 2012, India exported $ 1.84 billion worth of polished diamonds in February 2013. A senior executive of GJEPC said, “Export of cut and polished diamonds started falling month-wise after the imposition of 2 % of import duty on the polished diamonds. But February, 2013 has given a new ray of hope to the industry as the export of polished diamonds has actually increased by 28 %. It means the industry is on the track of recovery and round tripping of diamonds has stopped completely.” Demand has started coming from the US, the UK, Japan and China. India’s polished diamond export is expected to cross $ 21 bn in 2013-14.

- The banking sector has started exercising restraint while following prudent risk management norms when lending money to gems and jewellery sector. This follows the implementation of Basel III accord – a global voluntary regulatory standard on bank capital adequacy, stress testing and market liquidity.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.50
UK Pound	1	Rs.99.49
Euro	1	Rs.84.88

INFORMATION DETAILS

Report Prepared by :

SDA

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.