MIRA INFORM REPORT

Report Date :

08.08.2014

IDENTIFICATION DETAILS

Name :	NET JAPAN CO LTD

Registered Office :	KDX Bldg, 5-24-16 Ueno Taitoku Tokyo 110-0005

Country :	Japan

Financials (as on) :	31.12.2013

Date of Incorporation :	March 2012

Com. Reg. No.:	0104-01-09839

Legal Form :	Limited Company

Line of Business :	Import, wholesale, retail of diamond, precious metals, jewelry

No of Employees :	270

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 :	Good

Payment Behaviour :	Regular

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 01, 2014

Country Name

Previous Rating

(31.03.2014)

Current Rating

(01.06.2014)

Japan

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderate Low Risk	B1
Moderate Risk	B2
Moderate High Risk	C1
High Risk	C2
Very High Risk	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 small agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. While self-sufficient in rice production, Japan imports about 60% of its food on a caloric basis. 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. Modest economic growth continued after 2000, but the economy has fallen into recession three times since 2008. A sharp downturn in business investment and global demand for Japan's exports in late 2008 pushed Japan 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 and the ensuing tsunami in March disrupted manufacturing. The economy has largely recovered in the two years since the disaster, but reconstruction in the Tohoku region has been uneven. Prime Minister Shinzo ABE has declared the economy his government's top priority; he has overturned his predecessor's plan to permanently close nuclear power plants and is pursuing an economic revitalization agenda of fiscal stimulus, monetary easing, and structural reform. Japan joined the Trans Pacific Partnership negotiations in 2013, a pact that would open Japan's economy to increased foreign competition and create new export opportunities for Japanese businesses. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2013 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 2012. The new government will continue a longstanding debate on restructuring the economy and reining in Japan's huge government debt, which is exceeding 230% of GDP. To help raise government revenue and reduce public debt, Japan decided in 2013 to gradually increase the consumption tax to a total of 10% by the year 2015. Japan is making progress on ending deflation due to a weaker yen and higher energy costs, but reliance on exports to drive growth and an aging, shrinking population pose other major long-term challenges for the economy.

Source : CIA

COMPANY NAME:

NET JAPAN CO LTD

REGD NAME:

KK Net Japan

MAIN OFFICE:

KDX Bldg, 5-24-16 Ueno Taitoku Tokyo 110-0005 JAPAN

Tel: 03-3832-6511 Fax: 03-3832-6510

URL: Error! Hyperlink reference not valid.net-japan.co.jp

E-Mail address: net@net-japan.co.jp

ACTIVITIES:

Import, wholesale, retail of diamond, precious metals, jewelry

BRANCHES:

Tokyo (2), Osaka, Nagoya, Sapporo, Sendai, Kofu, Kanazawa, Yokohama, Hiroshima, Matsuyama, Fukuoka

SHOPS:

At the caption address (duty-free)

OVERSEAS:

China, Hong Kong

OFFICERS:

TOSHIYUKI YOSHIZAWA, PRES

Takashi Endo, v pres Kazunori Ushiro, s/mgn dir

Hideo Yasui, dir Shuji Irie, dir

Yen Amount: In million Yen, unless otherwise stated

SUMMARY:

FINANCES FAIR A/SALES Yen 180,714 M

PAYMENTSREGULAR CAPITAL Yen 6,000 M

TREND UP WORTH Yen 11,386 M

STARTED 2012 EMPLOYES 270

COMMENT:

TRADING FIRM SPECIALIZING IN JEWELRY, DIAMOND, OTHER.

FINANCIAL SITUATION CONSIDERED FAIR AND GOOD FOR ORDINARY BUSINESS ENGAGEMENTS.

HIGHLIGHTS:

The subject company was established originally in 1995 by Toshiyuki Yoshizawa, on his account, and was incorporated in 2012. In Apr 2014 the firm became a wholly owned subsidiary of Orix Corp (See REGISTRATION). This is a trading firm for import, wholesale and retail of jewelry, diamond, precious stones, other. Operates a duty-free shop at the caption address. Goods are imported from Belgium, India, Hong Kong, China, other. Clients include department stores, jewelry shops, other, nationwide

FINANCIAL INFORMATION:

The sales volume for Dec/2013 fiscal term amounted to Yen 180,714 million, a 468% up from Yen 23,854 million for 9 months in the previous term (growth rates are adjusted on a 12-month basis). Client networks expanded. The recurring profit was posted at Yen 2,268 million and the net profit at Yen 1,400 million, respectively, compared with Yen 315 million recurring loss and Yen 270 million net profit, respectively, a year ago.

For the current term ending Dec 2014 the recurring profit is projected at Yen 3,000 million and the net profit at Yen 2,000 million, respectively, on a 30% rise in turnover, to Yen 235,000 million. Sales may rise further under Orix Corporation.

The financial situation is considered FAIR and good for ORDINARY business engagements.

REGISTRATION:

Date Registered: Mar 2012

Regd No.: 0104-01-09839 (Tokyo-Taitoku)

Legal Status: Limited Company (Kabushiki Kaisha)

Authorized: 480,000 shares

Issued: 120,000 shares

Sum: Yen 6,000 million

Major shareholders (%): Orix Corporation* (100)

*.. Orix Corporation, largest general leasing company in Japan, Tokyo, founded 1964, capital Yen 219,546 million, sales Yen 1,341,651 million, operating profit Yen 200,978 million, recurring profit Yen 283,726 million, total assets Yen 9,069,392 million, net worth Yen 1,918,740 million, employees 25,977, pres Makoto Inoue

Nothing detrimental is known as to the commercial morality of executives.

OPERATION:

Activities: Imports, wholesales and retails loose diamond, precious metals (ingot/scrap), including recycled goods (--95%), jewelry (mainly vintage high-grade jewelry), other (--5%).

Precious Metals: Gold, platinum, palladium, silver, other

Clients: [Mfrs, wholesalers] Tokyu Department Store, Keio Department Store, Takashimaya, Hankyu Hanshin Department Store,

No. of accounts: 500

Domestic areas of activities: Nationwide

Suppliers: [Mfrs, wholesalers] Mitsubishi Material, Fishland Co, IR Japan, other

Imports from Belgium, India, China, Hong Kong, other

Payment record: Regular

Location: Business area in Tokyo. Office premises at the caption address are leased and maintained satisfactory.

Bank References:

Mizuho Bank (Ueno)

SMBC (Ueno)

Relations: Satisfactory

FINANCES (In Million Yen)

Terms Ending:	31/12/2014	31/12/2013	31/12/2012
Annual Sales	235,000	180,714	23,854
Recur. Profit	3,000	2,268	-315
Net Profit	2,000	1,400	270
Total Assets		23,134	22,361
Current Assets		15,578	12,642
Current Liabs		4,983	12,807
Net Worth		11,386	9,528
Capital, Paid-Up		6,000	5,716
Div.P.Share(¥)		0.00	0.00
*<Analytical Data>*	(%)	(%)	(%)
S.Growth Rate	30.04	468.15	..
Current Ratio	..	312.62	98.71
N.Worth Ratio	..	49.22	42.61
R.Profit/Sales	1.28	1.26	-1.32
N.Profit/Sales	0.85	0.77	1.13
Return On Equity	..	12.30	2.83

Notes: The 31/12/2013 fiscal term is the initial accounting term from the inception. Growth rates are adjusted on a 12-month basis.

Forecast (or estimated) figures for the 31/12/2014 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.

- 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. 61.41
UK Pound	1	Rs. 103.42
Euro	1	Rs. 82.16

INFORMATION DETAILS

Analysis Done by :	DIV

Report Prepared by :	DPT

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.