MIRA INFORM REPORT

Report Date :

16.10.2014

IDENTIFICATION DETAILS

Name :	KENDIAM CO., LTD.
Registered Office :	Suite 16e-2, 11^th Floor, Bangkok Gems & Jewellery Tower, 322/16 Surawong Road, Sipraya, Bangrak, Bangkok 10500
Country :	Thailand
Financials (as on) :	31.12.2013
Date of Incorporation :	06.05.2004
Com. Reg. No.:	0105547062111
Legal Form :	Private Limited Company
Line of Business :	Subject is engaged in importing and distributing various kinds of diamonds and gemstones for jewelry production, as well as exporting of Thai jewelry products.
No of Employees :	2

RATING & COMMENTS

MIRA’s Rating :

B

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

Status :	Moderate
Payment Behaviour :	Slow
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 1, 2014

Country Name	Previous Rating (31.03.2014)	Current Rating (01.06.2014)
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. 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 in 2013 implemented a nation-wide 300 baht ($10) per day minimum wage policy and deployed 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 recession severely cut Thailand's exports, with most sectors experiencing double-digit drops. In late 2011 Thailand's recovery was interrupted by historic flooding in the industrial areas in Bangkok and its five surrounding provinces, crippling the manufacturing sector. The government 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 following seven years. This was expected to lead to an economic upsurge but growth has remained slow, in part due to ongoing political unrest and resulting uncertainties. Spending on infrastructure will require re-approval once a new government is seated.

Source : CIA

Company Name & address

KENDIAM CO., LTD.

SUMMARY

BUSINESS ADDRESS : SUITE 16E-2, 11^th FLOOR, BANGKOK GEMS &

JEWELLERY TOWER, 322/16 SURAWONG ROAD,

SIPRAYA, BANGRAK, BANGKOK 10500, THAILAND

TELEPHONE : [66] 2631-4487, 081 208-3123

FAX : [66] 2631-4487

E-MAIL ADDRESS : sukenrock@yahoo.com

REGISTRATION ADDRESS : SAME AS BUSINESS ADDRESS

ESTABLISHED : 2004

REGISTRATION NO. : 0105547062111

TAX ID NO. : 3031367951

CAPITAL REGISTERED : BHT. 5,000,000

CAPITAL PAID-UP : BHT. 5,000,000

SHAREHOLDER’S PROPORTION : THAI : 51.00%

INDIAN : 49.00%

FISCAL YEAR CLOSING DATE : DECEMBER 31

LEGAL STATUS : PRIVATE LIMITED COMPANY

EXECUTIVE : MR. SUKEN PRAKASH SHAH, INDIAN

MANAGING DIRECTOR

NO. OF STAFF : 2

LINES OF BUSINESS : DIAMONDS AND GEMSTONES

IMPORTER, EXPORTER AND DISTRIBUTOR

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 May 6, 2004 as a private limited company under the registered name KENDIAM CO., LTD., by Thai and Indian groups, with the business objective to import and distribute diamonds, gemstones and export Thai jewelry products. It currently employs 2 staff.

The subject’s registered address is Suite 16E-2, 11^th Flr., Bangkok Gems & Jewellery Tower, 322/16 Surawong Rd., Sipraya, Bangrak, Bangkok 10500, and this is the subject’s current operation address.

THE BOARD OF DIRECTOR

Mr. Suken Prakash Shah

AUTHORIZED PERSON

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

MANAGEMENT

Mr. Suken Prakash Shah is the Managing Director.

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

BUSINESS OPERATIONS

The subject is engaged in importing and distributing various kinds of diamonds and gemstones for jewelry production, as well as exporting of Thai jewelry products.

PURCHASE

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

SALES

Diamonds and gemstones are sold locally by wholesale to manufacturers and end-users.

EXPORT

Thai jewelry products are exported to India, Singapore and Hong Kong.

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 to 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.

COMMENT

The subject is engaged in diamonds and gemstones trading business. It serves mainly to consumer market. It reported moderate business performance in the year 2013, while its business in 2014 had been slowing down in line with shrinking of local consumption.

Subject’s overall business performance is relatively slow from sluggish market.

FINANCIAL INFORMATION

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

On December 1, 2011, the capital was increased to Bht. 5,000,000 divided into 50,000 shares of Bht. 100 each with fully paid.

THE SHAREHOLDERS LISTED WERE : [as at April 30, 2014]

NAME	HOLDING	%
Mr. Suken Prakash Shah Nationality: Indian Address : 62/3 Surawong Rd., Suriyawongse, Bangrak, Bangkok	10,000	20.00
Mr. Prakash Kakaltus Shah Nationality: Indian Address : 62/3 Surawong Rd., Suriyawongse, Bangrak, Bangkok	7,250	14.50
Mr. Keyur Prakash Shah Nationality: Indian Address : 62/3 Surawong Rd., Suriyawongse, Bangrak, Bangkok	7,250	14.50
Mr. Chatree Phu-eiam Nationality: Thai Address : 46 Moo 12, Yothaka, Bangnampriew, Chachoengsao	6,375	12.75
Mr. Prasert Boonmalert Nationality: Thai Address : 30/1 Moo 12, Yothaka, Bangnampriew, Chachoengsao	6,375	12.75
Mr. Tan Saipan Nationality: Thai Address : 63 Moo 11, Huamuang, Song, Phrae	6,375	12.75
Ms. Aoonruan Chanthuk Nationality: Thai Address : 7 Moo 5, Inburi, Singburi	6,375	12.75

Total Shareholders : 7

Share Structure [as at April 30, 2014]

Nationality	Shareholders	No. of Share	% Shares
Thai	4	25,500	51.00
Foreign - Indian	3	24,500	49.00
Total	7	50,000	100.00

NAME OF AUDITOR & CERTIFIED PUBLIC ACCOUNTANT NO. :

Mrs. Wasana Tanmongkol No. 1888

BALANCE SHEET [BAHT]

The latest financial figures published for December 31, 2013, 2012 & 2011 were:

ASSETS

Current Assets	2013	2012	2011
Cash and Cash Equivalent	374,904.34	1,004,548.66	1,349,093.66
Trade Accounts Receivable	6,609,435.23	4,448,396.87	1,847,138.95
Inventories	19,137,654.64	18,295,628.93	12,236,596.77
Other Current Assets	-	-	939.02
Total Current Assets	26,121,994.21	23,748,574.46	15,433,768.40
Fixed Assets	53,441.36	66,801.71	2,869.23
Total Assets	26,175,435.57	23,815,376.17	15,436,637.63

LIABILITIES & SHAREHOLDERS’ EQUITY [BAHT]

Current Liabilities	2013	2012	2011
Trade Accounts Payable	19,110,305.49	16,752,562.31	8,847,838.43
Loan from Directors	990,000.00	330,000.00	780,000.00
Other Current Liabilities	50,513.82	156,538.69	78,323.63
Total Current Liabilities	20,150,819.31	17,239,101.00	9,706,162.06
Total Liabilities	20,150,819.31	17,239,101.00	9,706,162.06
Shareholders’ Equity
Share capital : Baht 100 par value authorized, issued and fully paid share capital 50,000 shares	5,000,000.00	5,000,000.00	5,000,000.00
Capital Paid	5,000,000.00	5,000,000.00	5,000,000.00
Retained Earning - Unappropriated	1,024,616.26	1,576,275.17	730,475.57
Total Shareholders' Equity	6,024,616.26	6,576,275.17	5,730,475.57
Total Liabilities & Shareholders' Equity	26,175,435.57	23,815,376.17	15,436,637.63

PROFIT & LOSS ACCOUNT

Revenue	2013	2012	2011
Sales Income	34,449,928.18	29,613,115.28	16,771,618.36
Other Income	-	332,036.18	-
Total Revenues	34,449,928.18	29,945,151.46	16,771,618.36
Expenses
Cost of Goods Sold	32,465,359.96	27,644,747.85	15,087,388.67
Selling Expenses	135,678.55	278,650.00	111,412.00
Administrative Expenses	1,142,988.87	1,040,942.69	885,164.01
Other Expenses	1,199,597.98	-	144,090.05
Total Expenses	34,943,625.36	28,964,340.54	16,228,054.73
Profit / [Loss] before Financial Cost & Income Tax	[493,697.18]	980,810.92	543,563.63
Financial Cost	[11,888.91]	[8,099.26]	[10,978.14]
Profit / [Loss] before Income Tax	[505,586.09]	972,711.66	532,585.49
Income Tax	[46,072.82]	[126,912.06]	[64,172.23]
Net Profit / [Loss]	[551,658.91]	845,799.60	468,413.26

FINANCIAL ANALYSIS

ITEM	UNIT	2013	2012	2011
LIQUIDITY RATIO
CURRENT RATIO	TIMES	1.30	1.38	1.59
QUICK RATIO	TIMES	0.35	0.32	0.33
ACTIVITY RATIO
FIXED ASSETS TURNOVER	TIMES	644.63	443.30	5,845.34
TOTAL ASSETS TURNOVER	TIMES	1.32	1.24	1.09
INVENTORY CONVERSION PERIOD	DAYS	215.16	241.56	296.03
INVENTORY TURNOVER	TIMES	1.70	1.51	1.23
RECEIVABLES CONVERSION PERIOD	DAYS	70.03	54.83	40.20
RECEIVABLES TURNOVER	TIMES	5.21	6.66	9.08
PAYABLES CONVERSION PERIOD	DAYS	214.85	221.19	214.05
CASH CONVERSION CYCLE	DAYS	70.34	75.20	122.18
PROFITABILITY RATIO
COST OF GOODS SOLD	%	94.24	93.35	89.96
SELLING & ADMINISTRATION	%	3.71	4.46	5.94
INTEREST	%	0.03	0.03	0.07
GROSS PROFIT MARGIN	%	5.76	7.77	10.04
NET PROFIT MARGIN BEFORE EX. ITEM	%	(1.43)	3.31	3.24
NET PROFIT MARGIN	%	(1.60)	2.86	2.79
RETURN ON EQUITY	%	(9.16)	12.86	8.17
RETURN ON ASSET	%	(2.11)	3.55	3.03
EARNING PER SHARE	BAHT	(11.03)	16.92	9.37
LEVERAGE RATIO
DEBT RATIO	TIMES	0.77	0.72	0.63
DEBT TO EQUITY RATIO	TIMES	3.34	2.62	1.69
TIME INTEREST EARNED	TIMES	(41.53)	121.10	49.51
ANNUAL GROWTH
SALES GROWTH	%	16.33	76.57
OPERATING PROFIT	%	(150.34)	80.44
NET PROFIT	%	(165.22)	80.57
FIXED ASSETS	%	(20.00)	2,228.21
TOTAL ASSETS	%	9.91	54.28

ANNUAL GROWTH : ACCEPTABLE

An annual sales growth is 16.33%. Turnover has increased from THB 29,613,115.28 in 2012 to THB 34,449,928.18 in 2013. While net profit has decreased from THB 845,799.60 in 2012 to THB -551,658.91 in 2013. And total assets has increased from THB 23,815,376.17 in 2012 to THB 26,175,435.57 in 2013.

PROFITABILITY : ACCEPTABLE

PROFITABILITY RATIO

Gross Profit Margin	5.76	Impressive	Industrial Average	3.01
Net Profit Margin	(1.60)	Deteriorated	Industrial Average	0.58
Return on Assets	(2.11)	Deteriorated	Industrial Average	3.55
Return on Equity	(9.16)	Deteriorated	Industrial Average	14.14

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. Gross Profit Margin is 5.76%. 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 -1.6%. When compared with the industry average, the ratio of the company was lower.

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. When compared with the industry average, it was lower, the company's figure is -2.11%.

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. When compared with the industry average, it was lower, the company's figure is -9.16%.

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	1.30	Satisfactory	Industrial Average	1.60
Quick Ratio	0.35
Cash Conversion Cycle	70.34

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 1.3 times in 2013, decrease from 1.38 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 0.35 times in 2013, increase from 0.32 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 71 days.

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

Current Ratio Uptrend

LEVERAGE : RISKY

LEVERAGE RATIO

Debt Ratio	0.77	Acceptable	Industrial Average	0.73
Debt to Equity Ratio	3.34	Risky	Industrial Average	2.73
Times Interest Earned	(41.53)	Risky	Industrial Average	-

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 higher the percentage means that the company is using less equity and has stronger leverage position.

Times Interest Earned measuring a company's ability to meet its debt obligations. Ratio is -41.53 lower than 1, so the company is not generating enough cash from EBIT to meet its interest obligations.

Debt Ratio shows the proportion of a company's assets which are financed through debt. The company's figure is 0.77 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 Downtrend

Times Interest Earned Stable

ACTIVITY : ACCEPTABLE

ACTIVITY RATIO

Fixed Assets Turnover	644.63	Impressive	Industrial Average	-
Total Assets Turnover	1.32	Deteriorated	Industrial Average	6.16
Inventory Conversion Period	215.16
Inventory Turnover	1.70	Deteriorated	Industrial Average	12.03
Receivables Conversion Period	70.03
Receivables Turnover	5.21	Acceptable	Industrial Average	8.23
Payables Conversion Period	214.85

The company's Account Receivable Ratio is calculated as 5.21 and 6.66 in 2013 and 2012 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 2013 decreased from 2012. This would suggest the company had deteriorated 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 242 days at the end of 2012 to 215 days at the end of 2013. This represents a positive trend. And Inventory turnover has increased from 1.51 times in year 2012 to 1.7 times in year 2013.

The company's Total Asset Turnover is calculated as 1.32 times and 1.24 times in 2013 and 2012 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 Stable

Total Assets Turnover Downtrend

Inventory Turnover Downtrend

Receivables Turnover Downtrend

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.61.11
UK Pound	1	Rs.98.15
Euro	1	Rs.77.68

INFORMATION DETAILS

Analysis Done by :	KAR
Report Prepared by :	TPT

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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