MIRA INFORM REPORT

Report No. :	322555
Report Date :	18.05.2015

IDENTIFICATION DETAILS

Name :	SHIRI GEMS LTD
Registered Office :	Bian Okachimachi Bldg 306 3-17-9 Taito Taitoku, Tokyo110-0016
Country :	Japan
Date of Incorporation :	March 1999
Legal Form :	Limited Company
Line of Business :	Import, wholesale of polished diamonds, jewely products
No. of Employees :	4

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 :	Unknown
Litigation :	Clear

NOTES:

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ECGC Country Risk Classification List – December 31, 2014

Country Name	Previous Rating (30.09.2014)	Current Rating (31.12.2014)
Japan	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	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. Since the complete shutdown of Japan’s nuclear reactors after the earthquake and tsunami disaster in 2011, Japan's industrial sector has become 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 four 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. A sales tax increase caused the economy to contract during the 2nd and 3rd quarters of 2014. The economy has largely recovered in the three years since the disaster, but reconstruction in the Tohoku region has been uneven due to labor shortages. 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 2014 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 government will continue a longstanding debate on restructuring the economy and reining in Japan's huge government debt, which amounts to more than 240% 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 2015, although the government in 2014 decided to postpone the final phase of the increase until 2017 to give the economy time to recover from the 2014 increase. 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 & address

ENGLISH COMPANY NAME	SHIRI GEMS LTD
Japanese company name	YK Shri Gems
Registered Office
1. Street Number and District	Bian Okachimachi Bldg 306 3-17-9 Taito Taitoku
2. City and Perefecture	Tokyo
3. ZIP Code	110-0016
4. Country	JAPAN
TEL	03-3839-5991
FAX	03-3839-5992
URL	N/A
Email Address	N/A
Activities (Services & Products)	Import, wholesale of polished diamonds, jewely products
SUMMARY OF REPORT
Annual Sales (MM YEN)	unavailable
Capital Amount (MM YEN)	50
Net Worth (MM YEN)	unavailable
FINANCES	unavailable
TREND	unavailable
EMPLOYEES	4
OTHER INFORMATION FOLLOWS:
Year Started	1999
Year Registered	Mar. 1999
Major Shareholders
1	Shrikant Shah
Number of Shareholders	1
Authorized Shares (MM)	Unavailable
Issued Shares (MM)	Unavailable
Executives
PRESIDENT	SHRIKANT SHAH
Chairman
Vice President
Senior Mgn Director
Mgn Director
Director
Director
Director
Main Banks
1	Asahi Shinkin Bank (H/O)
2	MUFG (Ueno)
Relations	Satisfactory
Clients
1	Jewelyr wholesalers
2	Jewelry stores
3	Others
4
5
Suppliers
1	Imports from India exclusively
Branches
1	None
Factories
1	None
2
3
Overseas
1	None
2
3
HIGHLIGHT and COMMENT	The subject company was established by Shrikant Shah, Indian resident businessman, in order to make most of his experience in the subject line of business, utilizing his business networks in India. This is a trading firm specializing in import and wholesale of polished, precut diamonds and diamond jewelry, from India exclusively. Diamonds are partially subcontracted mfg to local jewelry processors into jewelry products. Clients are local jewelry processors, jewelry stores, other. Partially retails them, too.
FINANCIAL information	No Financial data is available.

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.63.58
UK Pound	1	Rs.100.30
Euro	1	Rs.72.38

INFORMATION DETAILS

Analysis Done by :	KAR
Report Prepared by :	SDA

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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