MIRA INFORM REPORT

Report Date :

31.10.2013

IDENTIFICATION DETAILS

Name :	KAMA-SCHACHTER JEWELRY HONG KONG LTD.
Registered Office :	Unit 1903, 19/F., Tern Plaza, 5 Cameron Road, Tsimshatsui, Kowloon,
Country :	Hong Kong
Date of Incorporation :	22.04.2010
Com. Reg. No.:	52141280
Legal Form :	Private Limited Company.
Line of Business :	Importer, Exporter and Wholesaler of all kinds of diamonds and jewellery products
No. of Employees :	04

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 :	Slow but correct
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)
Hongkong	A2	A2

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

HONGKONG - 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

KAMA-SCHACHTER JEWELRY HONG KONG LTD.

ADDRESS: Unit 1903, 19/F., Tern Plaza, 5 Cameron Road, Tsimshatsui, Kowloon, Hong Kong.

PHONE: 852-2110 3370, 2110 3378

FAX: 852-2110 0059

E-MAIL: olga.kamaschachter@gmail.com

MANAGEMENT

Managing Director: Mr. Colin Pankaj Shah

SUMMARY

Incorporated on: 22nd April, 2010.

Organization: Private Limited Company.

Capital: Nominal:HK$5,000,000.00

Issued: HK$5,000,000.00

Business Category: Jewellery Trader.

Employees: 4.

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

Banking Relation: Satisfactory

ADDRESS

Registered Head Office:-

Unit 1903, 19/F., Tern Plaza, 5 Cameron Road, Tsimshatsui, Kowloon, Hong Kong.

Holding Company:-

Kama-Schachter Jewelry Private Ltd., India.

Associated Companies:-

Kama Schachter Jewellery Retail Pvt. Ltd., India.

Kama Schachter Jewelry Japan Co. Ltd., Japan.

Kama Schachter Jewelry Shanghai Ltd., China.

Kama-Schachter Jewelry Inc., USA.

Affiliated Company:-

Leo Schachter Diamonds LLC, USA.

BUSINESS REGISTRATION NUMBER

52141280

COMPANY FILE NUMBER

1447589

MANAGEMENT

Managing Director: Mr. Colin Pankaj Shah

Contact Person: Ms. Ajita D’Souza

CAPITAL

Nominal Share Capital: HK$5,000,000.00 (Divided into 5,000,000 shares of HK$1.00 each)

Issued Share Capital: HK$5,000,000.00

SHAREHOLDER: (As per registry dated 22-04-2013)

Name	No. of shares
Kama-Schachter Jewelry Private Ltd. Unit 110, 1/F., The Capital, Opp, ICICI Bank, Bandra-Kurla Complex, Bandra (East) Mumbai-400051, India.	5,000,000 =======

DIRECTOR: (As per registry dated 22-04-2013)

Name (Nationality)	Address
Colin Pankaj SHAH	211-212, Kalpataru Horizon, S. K. Ahire Marg, Worli, Mumbai-400018, India.

SECRETARY: (As per registry dated 22-04-2013)

Name	Address	Co. No.
Blick Management Consultants Ltd.	Unit 501, 5/F., Mirror Tower, 61 Mody Road, Tsimshatsui East, Kowloon, Hong Kong.	0130506

HISTORY

The subject was incorporated on 22nd April, 2010 as a private limited liability company under the Hong Kong Companies Ordinance.

Formerly the subject’s address was located at Unit 1203, 12/F., Lippo Sun Plaza, 28 Canton Road, Tsimshatsui, Kowloon, Hong Kong, moved to the present address in recent months.

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

OPERATIONS

Activities: Importer, Exporter and Wholesaler.

Lines: All kinds of diamonds and jewellery products

Employees: 4.

Commodities Imported: India, other Asian countries, Europe, US, etc.

Markets: Hong Kong, other Asian countries, Europe, Middle East, US, etc.

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

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

FINANCIAL INFORMATION

Nominal Share Capital: HK$5,000,000.00 (Divided into 5,000,000 shares of HK$1.00 each)

Issued Share Capital: HK$5,000,000.00

Profit or Loss: Made a small profit in 2011 & 2012.

Condition: Business is improving.

Facilities: Making rather active use of general banking facilities.

Payment: Met trade commitments as required.

Commercial Morality: Satisfactory.

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

Standing: Small.

GENERAL

Having issued 5,000,000 ordinary shares of HK$1.00 each, Kama-Schachter Jewelry Hong Kong Ltd. is a wholly-owned subsidiary of Kama-Schachter Jewelry Private Ltd. [Kama-Schachter], an India-based firm. The only director of the subject Mr. Colin Pankaj Shah is an Indian.

Kama-Schachter is a diamond jewellery manufacturer and trader. The subject is trading in those products supplied by Kama-Schachter. Kama-Schachter’s headquarters are in Mumbai, with branches in Chennai and Delhi, and sales offices in New York, Toronto, Tokyo and Frankfurt. Kama-Schachter’s three factories in Mumbai, India are using state-of-the-art technology to produce the diamond jewellery for leading retailers all over the world.

Leo Schachter Diamonds LLC [LSD], a US-based firm, is one of the business partners of Kama-Schachter.

Kama Schachter is one of Asia’s largest manufacturers and exporters of diamonds and diamond jewellery. Since its inception in 1996 with 40 employees producing 1,000-1,500 pieces per month in its first year of operation, Kama Schachter has expanded to two factories, with 1,000 workers and professionals, producing 30,000 pieces of jewellery every month.

Now, Kama-Schachter has set up three large factories and a diamond sourcing office, employing 1,000 in India. It is able to introduce 200 new styles every month

.

Kama Schachter’s diamond sourcing office is located in Mumbai’s diamond centre. Its partnership with LSD, one of the world’s largest DTC Sightholders, allows it direct access to a vast range of loose diamonds of every category.

Apart from the subject, Kama Schachter has set up offices in Mumbai, Delhi, Chennai, New York, Tokyo, Guangzhou, Shanghai, etc.

The business of the subject keeps on improving. According to the subject, it is trading in the following commodities:-

Rose Gold Ring, Diamond Necklace, Diamond Bangle, Ladies’ Ring, Stone Ring, White Gold Necklace, etc.

In order to penetrate the international market further, the subject has taken part in fairs and exhibitions held in Hong Kong. For instance, it took part in “HKTDC Hong Kong International Jewellery Show 2013” which had been held in Hong Kong Convention and Exhibition Centre, Wanchai, Hong Kong during the period of 5th to 9th March, 2013.

It is going to take part in “HKTDC Hong Kong International Jewellery Show 2014” which will be held in the same Convention and Exhibition Centre, Wanchai, Hong Kong during the period of 5th to 9th March, 2014.

The contact person of the subject Ms. Ajita D’Souza is also an Indian.

The history of the subject in Hong Kong is over three years.

On the whole, consider it good for normal business engagements in small credit amounts for the time being.

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.61.49
UK Pound	1	Rs.98.71
Euro	1	Rs.84.49

INFORMATION DETAILS

Report Prepared by :

NIS

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.