MIRA INFORM REPORT

Report Date :

19.02.2014

IDENTIFICATION DETAILS

Name :	BHAGAVATI GEMS CO., LTD.
Registered Office :	Room No. F, 9^th Floor, Gems Tower, 1249/78 Charoenkrung Road, Suriyawongse, Bangrak, Bangkok 10500
Country :	Thailand
Financials (as on) :	31.12.2012
Date of Incorporation :	2010
Com. Reg. No.:	0105553027933
Legal Form :	Private Limited Company
Line of Business :	Importer, Distributor and Exporter of Diamonds, gemstones and jewelry products
No. of Employees :	2

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, 2013

Country Name	Previous Rating (30.06.2013)	Current Rating (30.09.2013)
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 achieved steady growth due largely to industrial and agriculture exports - mostly electronics, agricultural commodities, automobiles and parts, and processed foods. Thailand is trying to maintain growth by encouraging domestic consumption and public investment to offset weak exports in 2012. Unemployment, at less than 1% of the labor force, stands as one of the lowest levels in the world, which puts upward pressure on wages in some industries. Thailand also attracts nearly 2.5 million migrant workers from neighboring countries. The Thai government is implementing a nation-wide 300 baht ($10) per day minimum wage policy and deploying new tax reforms designed to lower rates on middle-income earners. The Thai economy has weathered internal and external economic shocks in recent years. The global economic crisis severely cut Thailand's exports, with most sectors experiencing double-digit drops. In 2009, the economy contracted 2.3%. However, in 2010, Thailand's economy expanded 7.8%, its fastest pace since 1995, as exports rebounded. In late 2011 growth was interrupted by historic flooding in the industrial areas in Bangkok and its five surrounding provinces, crippling the manufacturing sector. Industry recovered from the second quarter of 2012 onward with GDP growth at 5.5% in 2012. The government has approved flood mitigation projects worth $11.7 billion, which were started in 2012, to prevent similar economic damage, and an additional $75 billion for infrastructure over the next seven years with a plan to start in 2013.

Source : CIA

Company name

BHAGAVATI GEMS CO., LTD.

SUMMARY

BUSINESS ADDRESS : ROOM NO. F, 9^th FLOOR, GEMS TOWER,

1249/78 CHAROENKRUNG ROAD, SURIYAWONGSE,

BANGRAK, BANGKOK 10500, THAILAND

TELEPHONE : [66] 2267-6152

FAX : [66] 2267-6152

E-MAIL ADDRESS : bhagavatigems@yahoo.com

REGISTRATION ADDRESS : SAME AS BUSINESS ADDRESS

ESTABLISHED : 2010

REGISTRATION NO. : 0105553027933

TAX ID NO. : 3033823325

CAPITAL REGISTERED : BHT. 4,000,000

CAPITAL PAID-UP : BHT. 4,000,000

SHAREHOLDER’S PROPORTION : THAI : 51.00%

INDIAN : 49.00%

FISCAL YEAR CLOSING DATE : DECEMBER 31

LEGAL STATUS : PRIVATE LIMITED COMPANY

EXECUTIVE : MR. ALRESHKUMAR CHATURBHAI PATOLIYA, INDIAN

MANAGING DIRECTOR

NO. OF STAFF : 2

LINES OF BUSINESS : DIAMONDS, GEMSTONES AND JEWELRY PRODUCTS

IMPORTER, DISTRIBUTOR AND EXPORTER

CORPORATE PROFILE

OPERATING TREND : STABLE

PRESENT SITUATION : OPERATING NORMALLY

REPUTATION : FAIR WITH NORMAL BUSINESS ENGAGEMENT

MANAGEMENT STANDARD : MANAGEMENT WITH FAIR PERFORMANCE

HISTORY

The subject was established on February 24, 2010 as a private limited company under the registered name BHAGAVATI GEMS CO., LTD. by Thai and Indian groups. Its business objective was declared to the Commercial Registration Department, in order to import, distribute and export various diamonds, precious stones and jewelry products. It currently employs 2 staff.

The subject’s registered address is Room No. F, 9^th Flr., Gems Tower, 1249/78 Charoenkrung Rd., Suriyawongse, Bangrak, Bangkok 10500, and this is the subject’s current operation address.

THE BOARD OF DIRECTOR

Mr. Alreshkumar Chaturbhai Patoliya

AUTHORIZED PERSON

The above director signs on behalf of the subject with company’s affixed.

MANAGEMENT

Mr. Alreshkumar Chaturbhai Patoliya is the Managing Director.

He is Indian nationality with the age of 32 years old.

BUSINESS OPERATIONS

The subject is engaged in international trading business, to import and distribute various kinds of diamonds and gemstones, as well as exporting local diamonds, gemstones and jewelry products.

PURCHASE

The products are purchased from suppliers both domestic and overseas, mainly in India.

SALES

100% of the products is sold locally to wholesalers, manufacturer and end-users.

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 according 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 T/T.

Exports are against T/T.

BANKING

Bangkok Bank Public Co., Ltd.

EMPLOYMENT

The subject currently employs 2 staff.

LOCATION DETAILS

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

LOCATION DETAILS

The premise is rented for administrative office at the heading address, which is the pioneer office building for jewelry trade business. Premise is located in a prime commercial area.

COMMENT

Subject reported slow sales revenue in its first year operation. Sales during 2012- 2013 were increased gradually due to demand of jewelry products in export markets has risen local productions.

FINANCIAL INFORMATION

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

On November 18, 2013, the capital was increased to Bht. 4,000,000 divided into 40,000 shares of Bht. 100 each with fully paid.

THE SHAREHOLDERS LISTED WERE

[as at November 15, 2013]

NAME	HOLDING	%
Mr. Alreshkumar Chaturbhai Patoliya Nationality: Indian Address : 1249/78 Charoenkrung Rd., Suriyawongse, Bangrak, Bangkok	19,600	49.00
Ms. Thidaporn Srimala Nationality: Thai Address : 454 Moo 5, T. Samrong, A. Phrapradaeng, Samutprakarn	7,400	18.50
Ms. Somrudee Panthaisong Nationality: Thai Address : 192 Moo 3, T. Lungtakian, A. Huaytalaeng, Nakornratchasima	7,000	17.50
Mr. Surasak Boonmalert Nationality: Thai Address : 110 Krungthep-Kreetha Rd., Huamark, Bangkapi, Bangkok	6,000	15.00

Total Shareholders : 4

Share Structure [as at November 15, 2013]

Nationality	Shareholders	No. of Share	% Shares
Thai	3	20,400	51.00
Indian	1	19,600	49.00
Total	4	40,000	100.00

NAME OF AUDITOR & CERTIFIED PUBLIC ACCOUNTANT NO.

Mr. Vorasit Srirungkijsawad No. 9950

BALANCE SHEET [BAHT]

The latest financial figures published for December 31, 2012, 2011 & 2010 were :

ASSETS

Current Assets	2012	2011	2010
Cash and Cash Equivalents	263,864.04	30,554.02	658,341.16
Trade Accounts & Other Receivable	27,895,090.15	26,391,200.95	4,019,441.56
Short-term Lending to Related Person	-	-	1,000,000.00
Inventories	16,966,127.48	17,461,275.02	971,997.68
Other Current Assets	4,964.07	1,270.45	39,940.32
Total Current Assets	45,130,042.74	43,884,300.44	6,689,720.72
Fixed Assets	347,545.78	454,447.85	15,818.31
Other Non-current Assets	37,800.00	37,800.00	37,800.00
Total Assets	45,515,388.52	44,376,548.29	6,743,339.03

LIABILITIES & SHAREHOLDERS' EQUITY [BAHT]

Current Liabilities	2012	2011	2010
Trade Accounts & Other Payable	41,285,812.13	41,988,501.87	4,591,230.48
Accrued Income Tax	256,328.77	-	-
Other Current Liabilities	6,471.74	88,015.08	59,504.69
Total Current Liabilities	41,548,612.64	42,076,516.95	4,650,735.17
Total Liabilities	41,548,612.64	42,076,516.95	4,650,735.17
Shareholders' Equity
Share capital : Baht 100 par value authorized, issued & fully paid share capital 20,000 shares	2,000,000.00	2,000,000.00	2,000,000.00
Capital Paid	2,000,000.00	2,000,000.00	2,000,000.00
Retained Earning - Unappropriated	1,966,775.88	300,031.34	92,603.86
Total Shareholders' Equity	3,966,775.88	2,300,031.34	2,092,603.86
Total Liabilities & Shareholders' Equity	45,515,388.52	44,376,548.29	6,743,339.03

PROFIT & LOSS ACCOUNT

Revenue	2012	2011	Feb. 24, 2010 - Dec. 31, 2010
Sales Income	82,105,489.95	52,601,432.40	9,600,678.46
Gain on Exchange Rate	360,026.86	-	-
Other Income	-	-	30,591.30
Total Revenues	82,465,516.81	52,601,432.40	9,631,269.76
Expenses
Cost of Goods Sold	78,509,640.52	49,894,427.46	8,764,011.81
Selling Expenses	11,206.00	15,249.76	406,400.00
Administrative Expenses	1,750,891.08	2,465,858.21	368,254.09
Other Expenses	22,465.45	7,084.94	-
Total Expenses	80,294,203.05	52,382,620.37	9,538,665.90
Profit/[Loss] before Income Tax	2,171,313.76	218,812.03	92,603.86
Income Tax	[504,569.22]	[11,384.55]	-
Net Profit / [Loss]	1,666,744.54	207,427.48	92,603.86

FINANCIAL ANALYSIS

ITEM	UNIT	2012	2011	2010
LIQUIDITY RATIO
CURRENT RATIO	TIMES	1.09	1.04	1.44
QUICK RATIO	TIMES	0.68	0.63	1.22
ACTIVITY RATIO
FIXED ASSETS TURNOVER	TIMES	236.24	115.75	606.93
TOTAL ASSETS TURNOVER	TIMES	1.80	1.19	1.42
INVENTORY CONVERSION PERIOD	DAYS	78.88	127.74	40.48
INVENTORY TURNOVER	TIMES	4.63	2.86	9.02
RECEIVABLES CONVERSION PERIOD	DAYS	124.01	183.13	152.81
RECEIVABLES TURNOVER	TIMES	2.94	1.99	2.39
PAYABLES CONVERSION PERIOD	DAYS	191.94	307.16	191.21
CASH CONVERSION CYCLE	DAYS	10.94	3.70	2.08
PROFITABILITY RATIO
COST OF GOODS SOLD	%	95.62	94.85	91.29
SELLING & ADMINISTRATION	%	2.15	4.72	8.07
INTEREST	%	-	-	-
GROSS PROFIT MARGIN	%	4.82	5.15	9.03
NET PROFIT MARGIN BEFORE EX. ITEM	%	2.64	0.42	0.96
NET PROFIT MARGIN	%	2.03	0.39	0.96
RETURN ON EQUITY	%	42.02	9.02	4.43
RETURN ON ASSET	%	3.66	0.47	1.37
EARNING PER SHARE	BAHT	83.34	10.37	4.63
LEVERAGE RATIO
DEBT RATIO	TIMES	0.91	0.95	0.69
DEBT TO EQUITY RATIO	TIMES	10.47	18.29	2.22
TIME INTEREST EARNED	TIMES	-	-	-
ANNUAL GROWTH
SALES GROWTH	%	56.09	447.89
OPERATING PROFIT	%	892.32	136.29
NET PROFIT	%	703.53	123.99
FIXED ASSETS	%	(23.52)	2,772.92
TOTAL ASSETS	%	2.57	558.08

ANNUAL GROWTH : IMPRESSIVE

An annual sales growth is 56.09%. Turnover has increased from THB 52,601,432.40 in 2011 to THB 82,105,489.95 in 2012. While net profit has increased from THB 207,427.48 in 2011 to THB 1,666,744.54 in 2012. And total assets has increased from THB 44,376,548.29 in 2011 to THB 45,515,388.52 in 2012.

PROFITABILITY : EXCELLENT

PROFITABILITY RATIO

Gross Profit Margin	4.82	Impressive	Industrial Average	1.88
Net Profit Margin	2.03	Impressive	Industrial Average	0.04
Return on Assets	3.66	Impressive	Industrial Average	0.43
Return on Equity	42.02	Impressive	Industrial Average	1.93

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 4.82%. When compared with the industry average, the ratio of the company was higher, indicated that company was more profitable than the same industry.

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 2.03%, 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 3.66%, 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.

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 42.02%, 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 Uptrend

Return on Equity Uptrend

LIQUIDITY : ACCEPTABLE

LIQUIDITY RATIO

Current Ratio	1.09	Acceptable	Industrial Average	1.72
Quick Ratio	0.68
Cash Conversion Cycle	10.94

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 1.09 times in 2012, increased from 1.04 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 0.68 times in 2012, increased from 0.63 times, then the company has not enough current assets that presumably can be quickly converted to cash for pay financial obligations.

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 11 days.

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

Current Ratio Downtrend

LEVERAGE : RISKY

LEVERAGE RATIO

Debt Ratio	0.91	Acceptable	Industrial Average	0.76
Debt to Equity Ratio	10.47	Risky	Industrial Average	3.41
Times Interest Earned	-		Industrial Average	0.28

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.

Debt Ratio shows the proportion of a company's assets which are financed through debt. The company's figure is 0.91 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 Uptrend

Times Interest Earned Downtrend

ACTIVITY : ACCEPTABLE

ACTIVITY RATIO

Fixed Assets Turnover	236.24	Impressive	Industrial Average	2.53
Total Assets Turnover	1.80	Deteriorated	Industrial Average	14.17
Inventory Conversion Period	78.88
Inventory Turnover	4.63	Deteriorated	Industrial Average	43.91
Receivables Conversion Period	124.01
Receivables Turnover	2.94	Deteriorated	Industrial Average	18.17
Payables Conversion Period	191.94

The company's Account Receivable Ratio is calculated as 2.94 and 1.99 in 2012 and 2011 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 2012 increased from 2011. This would suggest the company had good performance 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 decreased from 128 days at the end of 2011 to 79 days at the end of 2012. This represents a positive trend. And Inventory turnover has increased from 2.86 times in year 2011 to 4.63 times in year 2012.

The company's Total Asset Turnover is calculated as 1.8 times and 1.19 times in 2012 and 2011 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 Uptrend

Inventory Turnover Uptrend

Receivables Turnover Uptrend

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.62.12
UK Pound	1	Rs.103.93
Euro	1	Rs.85.17

INFORMATION DETAILS

Report Prepared by :

NNA

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.