MIRA INFORM REPORT

Report Date :

30.12.2014

IDENTIFICATION DETAILS

Name :	KARP IMPEX HK LTD.
Registered Office :	Unit 01-02, 10/F., Tower 2, Harbour Centre, 8 Hok Cheung Street, Hunghom, Kowloon,
Country :	Hong Kong
Date of Incorporation :	19.02.2003
Com. Reg. No.:	33374139
Legal Form :	Private Limited Company
Line of Business :	Importer, Exporter and Wholesaler of all kinds of diamonds and jewellery
No. of Employees :	10

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 – September 30, 2014

Country Name	Previous Rating (30.06.2014)	Current Rating (30.09.2014)
Hong Kong	A1	A1

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 has no tariffs on imported goods, and it levies excise duties on only four commodities, whether imported or produced locally: 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, its continued reliance on foreign trade and investment leaves it vulnerable to renewed global financial market volatility or a slowdown in the global economy. 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 12% of total system deposits in Hong Kong by the end of 2013. 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 total trade 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. Credit expansion and tight housing supply conditions have caused Hong Kong property prices to rise rapidly; consumer prices increased by more than 4% in 2013. 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. In 2013, Hong Kong and China signed new agreements under the Closer Economic Partnership Agreement, adopted in 2003 to forge closer ties between Hong Kong and the mainland. The new measures, effective from January 2014, cover services and trade facilitation, and will improve access to the mainland's service sector for Hong Kong-based companies

Source : CIA

Company name and address

KARP IMPEX HK LTD.

ADDRESS: Unit 01-02, 10/F., Tower 2, Harbour Centre, 8 Hok Cheung Street, Hunghom, Kowloon, Hong Kong.

PHONE: 852-2369 3000, 2724 4330

FAX: 852-2369 8700, 2721 6516

E-MAIL: hini@karpgroup.com

karpjewhk@karpgroup.com

kishorvirani@karpgroup.com

anilvirani@karpgroup.comw

MANAGEMENT

Managing Director: Mr. Anilkumar Bhikhabhai Virani

SUMMARY

Incorporated on: 19th February, 2003.

Organization: Private Limited Company.

Capital: Nominal: HK$10,000,000.00

Issued: HK$5,460,000.00

Business Category: Diamond Trader.

Group Annual Revenue: Rs. 15,000-20,000 million.

Employees: 10. (Including associates)

Main Dealing Banker: Industrial & Commercial Bank of China (Asia) Ltd., Hong Kong.

Banking Relation: Satisfactory.

ADDRESS

Registered Head Office:-

Unit 01-02, 10/F., Tower 2, Harbour Centre, 8 Hok Cheung Street, Hunghom, Kowloon, Hong Kong.

India Factory:-

8/A, Lal Darwaja, Surat-395 008, Gujarat, India.

Holding Company:-

Karp Impex Ltd., India.

Associated/Affiliated Companies:-

Karp Group of Companies

Hini Star (Bangkok) Ltd., Thailand.

Hini Star (Taiwan) Ltd., Taiwan.

Hini Star Diamonds LLC, UAE.

Hini Star Ltd., Hong Kong. (Same address)

Hini Star, Hong Kong. (Same address)

Karp Diamonds Pvt. Ltd., India.

Karp Impex Jewellery Mfg. HK Ltd., Hong Kong. (Same address)

Karp Impex N.V., Belgium.

Karp Infotech, India.

Karp Jewellery Mfg. China Ltd., Hong Kong. (Same address)

Karp Jewellery Pvt. Ltd., India.

Karp Jewellery Taiwan Ltd., Hong Kong.

Karp Jewellery Taiwan Ltd., Taiwan.

Karp Manufacturing Co., India.

Karp Suisse (Geneva), Switzerland.

Park Infotech, India.

etc.

BUSINESS REGISTRATION NUMBER

33374139

COMPANY FILE NUMBER

0833706

MANAGEMENT

Managing Director: Mr. Anilkumar Bhikhabhai Virani

CAPITAL

Nominal Share Capital: HK$10,000,000.00 (Divided into 10,000,000 shares of HK$1.00 each)

Issued Share Capital: HK$5,460,000.00

SHAREHOLDERS: (As per registry dated 19-02-2014)

Name		No. of shares
Karp Impex Ltd. Shanta Bhuvan, 66 Kumudwadi, Bhavnagar-364002 (Gujarat), India.		5,459,999
Anilkumar Bhikhabhai VIRANI		1
		––––––––
	Total:	5,460,000 =======

DIRECTORS: (As per registry dated 19-02-2014)

Name (Nationality)	Address
Anilkumar Bhikhabhai VIRANI	Jal-Mayur Chs., 5/F., 51 Laxmi Vilas, 87 Nepean Sea Road, Mumbai-400006, India.
Kishorkumar Bhikhalal VIRANI	Jal-Mayur Chs., 5/F., 51 Laxmi Vilas, 87 Nepean Sea Road, Mumbai-400006, India.

SECRETARY: (As per registry dated 24-03-2014)

Name	Address	Co. No.
RC Corporate Services Ltd.	Unit 1003, 10/F., Tung Wai Commercial Building, 109-111 Gloucester Road, Wanchai, Hong Kong.	0467057

HISTORY

The subject was incorporated on 19th February, 2003 as a private limited liability company under the Hong Kong Companies Ordinance.

Formerly the subject was located at Room 1505, 15/F., Tung Shun Hing Commercial Centre, 20-22 Granville Road, Tsimshatsui, Kowloon, Hong Kong, moved to the present address in December 2005.

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.

Employees: 10. (Including associates)

Commodities Imported: Belgium, India, Israel, US, etc.

Markets: Europe, Japan, Israel, Thailand, US, etc.

Group Annual Revenue: Rs. 15,000-20,000 million.

Terms/Sales: As per contracted.

Terms/Buying: Various terms.

FINANCIAL INFORMATION

Nominal Share Capital: HK$10,000,000.00 (Divided into 10,000,000 shares of HK$1.00 each)

Issued Share Capital: HK$5,460,000.00

Profit or Loss: Profitable operation is recorded.

Condition: Business remains active.

Facilities: Making active use of general banking facilities.

Payment: Met trade commitments on time.

Commercial Morality: Satisfactory.

Bankers:-

Industrial & Commercial Bank of China (Asia) Ltd., Hong Kong.

The Royal Bank of Scotland N.V., Hong Kong Branch.

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

Standing: Very Good.

GENERAL

Having issued 5,460,000 ordinary shares of HK$1.00 each, Karp Impex HK Ltd. is a wholly-owned subsidiary of Karp Impex Ltd. [Karp Impex] which is an India-based firm. The subject is controlled by Mr. Anilkumar Bhikhabhai Virani who is holding a very minor stake of the subject. A B Virani is an India passport holder and does not have the right to reside in Hong Kong permanently.

The subject is a member of the Karp Group which is an Indian Group in India trading in jewellery and diamonds. It is an importer, exporter and wholesaler of fancy cut diamonds and round diamonds. It also trades in ladies’ necklace, diamond jewellery and ladies’ ring.

The subject has had an associated company Karp Jewellery Mfg. HK Ltd. [Karp JM] located at the same address. This company is also a member of the Karp Group and managed by the same family.

The manufacturing unit of the Karp Group is located in Panyu, Guangzhou City, Guangdong Province, China which comprises of expertise including designers, gemmologists, plating chemists, metallurgists and craftsmen. The Panyu factory has been equipped with ultra-modern production facilities including rapid prototyping technology. It also has been equipped with computerized moulding machines, advanced automatic assembling and laser machines, model workshop, computer aided design software, rapid prototyping equipment, etc. The factory is able to develop its own new products.

With well-established offices in worldwide, the subject offers customers with the full spectrum of fancy cut diamonds including taper, baguette, marquise, pear, oval, princess, heart, trillion, round pointer, and brilliant cut diamonds from 0.01 to 10 carat, also “Hearts & Arrows” ideal cut with GIA / HRD / IGI certificate.

The Group has a designing team which has been bestowed with prominent awards every year from 2004 to 2012. In 2012, KARP introduced the two haute couture collections - “FengHuang” and “Grandeur” featuring stunning pieces set with natural white and fancy coloured diamonds. After the celebrated success of these collections, in 2012 KARP unveiled the “Autour Du Monde” collection.

The subject has got an associated company Hini Star Ltd. [Hini Star] located at the subject’s operating address. Hini Star has been named the No. 1 diamond importer in Southeast Asia by the Gem and Jewellery Export Promotion Council of India since 1996.

The Karp Group is owned by the Maldar family and was formed in the early 60’s in India. Now, the Group is controlled by the third generation of the family.

Hini Star is administered by Mr. Rameshkumar Bhikhabhai Virani who is one of the key members of the Karp Group.

Karp Impex is recognized by the Government of India as a “Star Trading House”.

The presence of Karp Impex in international luxury market as an exclusive supplier of patented cut and polished diamonds to “Mont Blanc” for their writing instruments and women accessories. Karp Impex derives about 80% of its revenues from manufacturing and processing of cut and polished diamonds, while balance sales arise out of trading of cut and polished diamonds and rough diamonds. The company’s sales are predominantly export oriented. It exports about 80% of its products. Its markets are the United Kingdom, the United States, India, China, the United Arab Emirates, other European countries, Russia, etc.

In India, the Karp Group has about 8,000 workers while some of its workers are the third generation employees.

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

It is taking part the following exhibitions and shows:

USA

JCK Las Vegas Show (May)

Europe

Vicenzaoro Winter, Italy (Jan)

Baselworld, Switzerland (Mar)

Europe Jewellery & Gem Fair, Germany (Apr)

Vicenzaoro Spring, Italy (May)

Vicenzaoro Fall, Italy (Sep)

Hong Kong

HK Int’l Jewellery Show (Mar)

HK Int’l Diamond, Gem & Pearl Show (Mar)

HK Jewellery & Gem Fair (Jun)

HK Jewellery & Gem Fair (Sep)

HK Int’l Jewelry Manufacturers’ Show (Nov)

The Middle East

MidEast Watch & Jewellery, Sharjah (Apr)

MidEast Watch & Jewellery, Sharjah (Oct)

Jewellery Arabia, Bahrain (Nov)

Karp Impex was established on 30th November, 1983 as a partnership. In FY 2013, its total income was Rs. 17,221.041 million. The principal shareholders of Karp Impex are Anilkumar Bhikhabhai Virani and Kishorkumar Bhikhalal Virani. Being directors of the subject, each of them is holding 45.4% interests of Karp Impex.

The subject is fully supported by the Karp Group. History is over eleven years and nine months.

On the whole, consider the subject good for normal business engagements.

REMARK

Property information of affiliate:-

Property Location: Workshop Unit No. 01 & 02 on 10/F., Harbour Centre Tower 2,
8 Hok Cheung Street, Kowloon, Hong Kong.

Owner: Hini Star Ltd.

Date of Purchase: n.a.

Purchased Price: n.a.

Incumbrances:-

Date of Mortgage	Amount Consideration	Mortgagee	Nature
01-09-2005	-	The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.	Mortgage to secure general banking facilities
07-09-2007	-	- ditto -	Deed of variation and further charge 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.63.65
UK Pound	1	Rs.99.14
Euro	1	Rs.77.60

INFORMATION DETAILS

Analysis Done by :	KAR
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%)

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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.