MIRA INFORM REPORT

Report Date :

08.11.2014

IDENTIFICATION DETAILS

Name :	R.C. GEMS
Registered Office :	B/603, Charmee Enclave, Shradhanand Service Road, Vile Parle (East), Mumbai – 400057, Maharashtra
Country :	India
Financials (as on) :	31.03.2014 (Provisional)
Year of Establishment :	2000
Capital Investment :	Rs. 67.722 Millions
Legal Form :	Partnership Concern with an Unlimited Liability of the Partners
Line of Business :	Manufacturer, Exporter and Importer of Diamond.
No. of Employees :	350 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

B (31)

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate
Payment Behaviour :	Slow but correct
Litigation :	Clear
Comments :	Subject was erstwhile established as a proprietorship firm in 1985, subsequently was reconstituted as partnership firm in 2000 having moderate track record. The concern possesses a below average financial profile marked by small networth, high total outside liabilities to networth ratio along with high working capital requirements. Management has witnessed better increase in its sales volume over years. Whereas, the rating is also constrained by susceptibility of its profitability margins to volatility in diamond prices and to fluctuations in foreign exchange rates. However, trade relations seems to be fair. Business is active. Payment terms are reported as slow but correct. In view of extensive experience of partners and established relations with customers, the concern can be considered for business dealings with cautions.

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 1, 2014

Country Name	Previous Rating (31.03.2014)	Current Rating (01.06.2014)
India	A1	A1

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

INDIAN ECONOMIC OVERVIEW

N E W S

Verdict Implications : Apex court order may alter coal import dynamics. Traders go slow on talks over coal supply contracts, uncertainty over cancellation of blocks weigh on stocks.

Recent arrest of the Chennai head of the Registrar of Companies, the ministry of corporate affairs arm that ensures that companies file all the information required by the Companies Act is the latest manifestation of a messy fight between a father and his adopted son for the control of Rs 40000 mn business empire. The Central Bureau of Investigation arrested Manumeethi Cholan after he accepted Rs 10 lakhs as bribe from M A M Ramaswamy, a CBI official said.

Central Bureau of Investigation books Electrotherm for cheating Central Bank of Rs 4360 mn.

Infosys maintains revenue guidance. COO Rao says attrition still an area of concern and it would take a few more quarters to bring down levels to 13-15 %.

DHL  to invest Euro 100 mn in India over next 2 years. The firm has chosen India to pilot its e-commerce business model for the Asia-Pacific region.

Blackstone may buy stake in BlueRidge SEZ in line with the fund’s real estate strategy in India.

Kingfisher Airlines Ltd grounded in October 2012 under the weight of heavy debt and accumulated losses, recently approached the Delhi high court for relief in two separate cases. The airline challenged a notice by Punjab & National Bank alleging that It had wilfully defaulted on Rs 7700 mn of loans and sought more time to comply with the requirements under the listing agreements with the Stock Exchanges.

OnMobile likely to sack another 300 employees. The lay-offs follow a spate of senior-level exits over the past two years, starting with of its founder. The overall lay-offs could number around 600 and are driven by the need to cut costs, says a former employee.

EXTERNAL AGENCY RATING

Rating Agency Name	CRISIL
Rating	Long term rating: “BB-”
Rating Explanation	Moderate risk of default regarding timely servicing of financial obligations
Date	22.08.2014

Rating Agency Name	CRISIL
Rating	Short term rating: “A4+”
Rating Explanation	Minimal degree of safety and very high credit risk.
Date	22.08.2014

RBI DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2014.

INFORMATION PARTED BY

Name :	Mr. Sanjay
Designation :	Finance Head
Contact No.:	91-9987255388
Date :	07.11.2014

LOCATIONS

Registered Office :	B/603, Charmee Enclave, Shradhanand Service Road, Vile Parle (East), Mumbai – 400057, Maharashtra, India
Tel. No.:	91-22-40049604
Mobile No.:	91-9987255388 (Mr. Sanjay) 91-9820114625 (Mr. Amit Gadra)
Fax No.:	91-22-40044621
E-Mail :	rc.gems_9604@yahoo.in
Factory :	Shantadevi Road, Navsan Raj Apartment, Near to Surat, Gujarat, India

PARTNERS

Name :	Mr. Amit Gadra
Designation :	Partner
Name :	Mr. Chandubhai Gadra
Designation :	Partner
Name :	Mr. Rhaghavbhia Gadra
Designation :	Partner
Name :	Prabhaben Gadra
Designation :	Partner

KEY EXECUTIVES

Name :	Mr. Sanjay
Designation :	Finance Head

BUSINESS DETAILS

Line of Business :	Manufacturer, Exporter and Importer of Diamond.
Exports :
Products :	Finished Goods
Countries :	· Hongkong · Dubai · Belgium · New York
Imports :
Products :	Diamond
Countries :	Belgium
Terms :
Selling :	Credit (90 Days)
Purchasing :	Credit (90 Days)

GENERAL INFORMATION

Suppliers :	Not Divulged
Customers :	Wholesalers and Retailers
No. of Employees :	350 (Approximately)
Bankers :	Indian Overseas Bank, Fort Branch, Mumbai – 400023, Maharashtra, India
Facilities :	Cash Credit: Rs. 5.000 Millions (From Indian Overseas Bank) Export Bills: Rs. 130.000 Millions (From Indian Overseas Bank)

Banking Relations :	--
Auditors :
Name :	Pillai PKG and Company Chartered Accountants
Address :	Kandivali (West), Mumbai, Maharashtra, India
Mobile No.:	91-9322652170
Sisters Concern :	--

CAPITAL STRUCTURE

As on 31.03.2014 (Provisional)

Capital Investment :
Owned :	Rs. 67.722 Millions
Borrowed :	--
Total :	Rs. 67.722 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

Note: Sole Proprietary and Partnership concerns are exempted from filing their financials with the Government Authorities or Registry.

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2014 (Provisional)	31.03.2013
SHAREHOLDERS FUNDS
1] Partners Capital		67.722	56.042
2] Share Application Money		0.000	0.000
3] Profit and Loss		0.000	0.000
4] (Accumulated Losses)		0.000	0.000
NETWORTH		67.722	56.042
LOAN FUNDS
1] Secured Loans		130.349	80.415
2] Unsecured Loans		9.917	4.887
TOTAL BORROWING		140.266	85.302
DEFERRED TAX LIABILITIES		0.000	0.000
TOTAL		207.988	141.344
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		15.445	16.149
Capital work-in-progress		0.000	0.000
INVESTMENT		1.138	1.138
DEFERRED TAX ASSETS		0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	183.371	114.146
	Sundry Debtors	306.694	161.174
	Cash & Bank Balances	6.840	2.134
	Other Current Assets	0.000	0.000
	Loans & Advances	28.126	11.283
Total Current Assets		525.031	288.737
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	326.980	157.987
	Other Current Liabilities	4.941	5.193
	Provisions	1.705	1.500
Total Current Liabilities		333.626	164.680
Net Current Assets		191.405	124.057
MISCELLANEOUS EXPENSES		0.000	0.000
TOTAL		207.988	141.344

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2014 (Provisional)	31.03.2013
	SALES
		Income	784.43	615.879
		Other Income	3.498	2.416
		TOTAL	787.928	618.295
Less	EXPENSES
		Cost of Goods Sold	730.724	566.223
		Sales and Administrative Expenses	21.271	20.349
		Interest	10.521	8.467
		Interest and Remuneration to Partners	11.719	9.743
		TOTAL	763.714	596.315
	PROFIT / (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION		13.693	13.513
Less/ Add	DEPRECIATION/ AMORTISATION		1.858	1.880
	NET PROFIT/ (LOSS)		11.835	11.633

KEY RATIOS

PARTICULARS		31.03.2014 (Provisional)	31.03.2013
Net Profit Margin (PAT/Sales)	(%)	1.51	1.89
Operating Profit Margin (PBDIT/Sales)	(%)	3.09	3.57
Return on Total Assets (PBT/Total Assets}	(%)	2.19	3.82
Return on Investment (ROI) (PBT/Networth)		0.17	0.21
Debt Equity Ratio (Total Debt/Networth)		2.07	1.52
Current Ratio (Current Asset/Current Liability)		1.57	1.75

FINANCIAL ANALYSIS

[all figures are in Rupees Millions]

DEBT EQUITY RATIO

Particular	31.03.2013	31.03.2014 (Provisional)
	(Rs. In Millions)	(Rs. In Millions)
Share Capital	56.042	67.722
Reserves & Surplus	0.000	0.000
Net worth	56.042	67.722
Secured Loans	80.415	130.349
Unsecured Loans	4.887	9.917
Total borrowings	85.302	140.266
Debt/Equity ratio	1.522	2.071

YEAR-ON-YEAR GROWTH

Year on Year Growth	31.03.2013	31.03.2014 (Provisional)
	(Rs. In Millions)	(Rs. In Millions)
Sales	615.879	784.430
		27.368

NET PROFIT MARGIN

Net Profit Margin	31.03.2013	31.03.2014 (Provisional)
	(Rs. In Millions)	(Rs. In Millions)
Sales	615.879	784.430
Profit	11.633	11.835
	1.89%	1.51%

LOCAL AGENCY FURTHER INFORMATION

Sr. No.	Check List by Info Agents	Available in Report (Yes / No)
1]	Year of Establishment	Yes
2]	Locality of the firm	Yes
3]	Constitutions of the firm	Yes
4]	Premises details	No
5]	Type of Business	Yes
6]	Line of Business	Yes
7]	Promoter's background	No
8]	No. of employees	Yes
9]	Name of person contacted	Yes
10]	Designation of contact person	Yes
11]	Turnover of firm for last two years	Yes
12]	Profitability for last two years	Yes
13]	Reasons for variation <> 20%	-----
14]	Estimation for coming financial year	No
15]	Capital in the business	Yes
16]	Details of sister concerns	No
17]	Major suppliers	No
18]	Major customers	No
19]	Payments terms	Yes
20]	Export / Import details (if applicable)	Yes
21]	Market information	-----
22]	Litigations that the firm / promoter involved in	-----
23]	Banking Details	Yes
24]	Banking facility details	Yes
25]	Conduct of the banking account	-----
26]	Buyer visit details	-----
27]	Financials, if provided	Yes
28]	Incorporation details, if applicable	No
29]	Last accounts filed at ROC	No
30]	Major Shareholders, if available	No
31]	Date of Birth of Proprietor/Partner/Director, if available	No
32]	PAN of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	No
34]	External Agency Rating, if available	No

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 and 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.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.52
UK Pound	1	Rs.97.39
Euro	1	Rs.76.16

INFORMATION DETAILS

Information Gathered by :	PRT
Analysis Done by :	SUB
Report Prepared by :	MRI

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	4
PAID-UP CAPITAL	1~10	3
OPERATING SCALE	1~10	4
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	4
--PROFITABILIRY	1~10	3
--LIQUIDITY	1~10	3
--LEVERAGE	1~10	3
--RESERVES	1~10	4
--CREDIT LINES	1~10	3
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	NO
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
DEFAULTER
--RBI	YES/NO	NO
--EPF	YES/NO	NO
TOTAL		31

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%)

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	--

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.