MIRA INFORM REPORT

Report No. :	342235
Report Date :	15.09.2015

IDENTIFICATION DETAILS

Name :	KHUSHALI ENTERPRISE CO., LTD.
Registered Office :	4th Floor, Room 401, Sithikorn Building, 208 Mahesak Road, Suriyawongse, Bangrak, Bangkok 10500
Country :	Thailand
Financials (as on) :	31.12.2014
Date of Incorporation :	14.05.2002
Com. Reg. No.:	0105545051430
Legal Form :	Private Limited Company
Line of Business :	Subject is engaged in importing, distributing and re-exporting various kinds of diamonds, gemstones, pearls and jewelry, as well as exporting the local 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 but correct
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 – March 31, 2015

Country Name	Previous Rating (31.12.2014)	Current Rating (31.03.2015)
Thailand	B1	A2

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, and generally pro-investment policies Thailand has historically had a strong economy due in part to competitive industrial and agriculture exports - mostly electronics, agricultural commodities, automobiles and parts, and processed foods. The economy experienced slow growth and declining exports in 2014, in part due to domestic political turmoil and sluggish global demand. With full employment, Thailand attracts an estimated 2-4 million migrant workers from neighboring countries, and faces labor shortages. Following the May 2014 coup d’�tat, tourism decreased 6-7% but is beginning to recover. The household debt to GDP ratio is over 80%. 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 baht has remained stable.

Source : CIA

Company name

KHUSHALI ENTERPRISE CO., LTD.

SUMMARY

BUSINESS ADDRESS : 4^th FLOOR, ROOM 401, SITHIKORN BUILDING,

208 MAHESAK ROAD, SURIYAWONGSE,

BANGRAK, BANGKOK 10500, THAILAND

TELEPHONE : [66] 2635-9337

FAX : [66] 2635-9337, 2635-8768

E-MAIL ADDRESS : prashant@truemail.co.th

REGISTRATION ADDRESS : SAME AS BUSINESS ADDRESS

ESTABLISHED : 2002

REGISTRATION NO. : 0105545051430

TAX ID NO. : 3030553966

CAPITAL REGISTERED : BHT. 6,000,000

CAPITAL PAID-UP : BHT. 6,000,000

SHAREHOLDER’S PROPORTION : THAI : 51.00%

INDIAN : 49.00%

FISCAL YEAR CLOSING DATE : DECEMBER 31

LEGAL STATUS : PRIVATE LIMITED COMPANY

EXECUTIVE : MR. PRASHANT KUMAR NAVINCHANDRA SHAH,

INDIAN

MANAGING DIRECTOR

NO. OF STAFF : 2

LINES OF BUSINESS : DIAMONDS, GEMSTONES, PEARLS AND

JEWELRY

IMPORTER, DISTRIBUTOR AND EXPORTER

CORPORATE PROFILE

OPERATING TREND : STABLE

PRESENT SITUATION : OPERATING NORMALLY

REPUTATION : GOOD WITH NORMAL BUSINESS ENGAGEMENT

MANAGEMENT STANDARD : MANAGEMENT WITH FAIR PERFORMANCE

HISTORY

The subject was established on May 14, 2002 as a private limited company under the registered name KHUSHALI ENTERPRISE CO., LTD., by Thai and Indian groups, with the business objective to import, distribute and export various kinds of diamonds, gemstones, pearls and jewelry products. It currently employs 2 staff.

The subject’s registered address is 4^th Floor, Room 401, Sithikorn Building, 208 Mahesak Road, Suriyawongse, Bangrak, Bangkok 10500, and this is the subject’s current operation address.

THE BOARD OF DIRECTOR

Name	Nationality	Age
Mr. Prashant Kumar Navinchandra Shah	Indian	43

AUTHORIZED PERSON

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

MANAGEMENT

Mr. Prashant Kumar Navinchandra Shah is the Managing Director.

He is Indian nationality with the age of 43 years old.

BUSINESS OPERATIONS

The subject is engaged in importing, distributing and re-exporting various kinds of diamonds, gemstones, pearls and jewelry, as well as exporting the local products.

PURCHASE

Its products are purchased from suppliers both in domestic and overseas in India.

SALES [LOCAL]

Its products are sold locally by wholesale to traders and manufacturers.

EXPORT

Its products are exported and re-exported to Hong Kong, India and Republic of China.

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 prime commercial area.

COMMENT

The subject reported slow sales in 2014. Its business has grown at slow pace due to economy sluggish and slow consumption in local market, as well as expecting a slow sales throughout 2015.

FINANCIAL INFORMATION

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

The capital was increased later as follows:

Bht. 4,000,000 on February 1, 2006

Bht. 6,000,000 on August 27, 2013

The latest registered capital was increased to Bht. 6,000,000 divided into 60,000 shares of Bht. 100 each with fully paid.

THE SHAREHOLDERS LISTED WERE

[as at April 30, 2015]

NAME	HOLDING	%
Mr. Prashant Kumar Navinchandra Shah Nationality: Indian Address : 208 Mahesak Road, Suriyawongse, Bangrak, Bangkok	29,400	49.00
Ms. Thongbai Baloon Nationality: Thai Address : 46/180 Moo 4, T. Omyai, A. Sampran, Nakornpathom	10,200	17.00
Ms. Anong Phothong Nationality: Thai Address : 25 Moo 1, T. Nongplalai, A. Nongprue, Kanchanaburi	10,200	17.00
Mr. Boonmee Thongsa-ard Nationality: Thai Address : 208 Mahesak Road, Suriyawongse, Bangrak, Bangkok	10,200	17.00

Total Shareholders : 4

Share Structure [as at April 30, 2015]

Nationality	Shareholders	No. of Share	% Shares
Thai	3	30,600	51.00
Foreign - Indian	1	29,400	49.00
Total	4	60,000	100.00

NAME OF AUDITOR & CERTIFIED PUBLIC ACCOUNTANT NO.

Mr. Chumpol Jarasrojanakul No. 5223

BALANCE SHEET [BAHT]

The latest financial figures published as at December 31, 2014, 2013 & 2012 were:

ASSETS

Current Assets	2014	2013	2012
Cash and Cash Equivalents	389,301.16	1,527,153.56	1,016,713.23
Trade Accounts & Other Receivable	6,871,038.82	10,399,564.72	9,211,817.31
Inventories	1,390,393.20	1,592,337.41	1,722,399.51
Total Current Assets	8,650,733.18	13,519,055.69	11,950,930.05
Equipments	6,320.33	22,320.33	38,866.68
Total Assets	8,657,053.51	13,541,376.02	11,989,796.73

LIABILITIES & SHAREHOLDERS’ EQUITY [BAHT]

Current Liabilities	2014	2013	2012
Trade Accounts & Other Payable	-	2,146,465.27	2,004,978.39
Accrued Income Tax	33,049.83	64,972.41	25,758.55
Other Current Liabilities	41,454.86	36,133.51	33,252.75
Total Current Liabilities	74,504.69	2,247,571.19	2,063,989.69
Loan from Director	2,392,792.30	4,342,792.30	5,342,792.30
Total Liabilities	2,467,296.99	6,590,363.49	7,406,781.99
Shareholders' Equity
Share capital : Baht 100 par value authorized and issued share capital 60,000 shares in 2014 & 2013, 40,000 shares in 2012	6,000,000.00	6,000,000.00	4,000,000.00
Capital Paid	6,000,000.00	6,000,000.00	4,000,000.00
Retained Earning - Unappropriated	189,756.52	951,012.53	583,014.74
Total Shareholders' Equity	6,189,756.52	6,951,012.53	4,583,014.74
Total Liabilities & Shareholders' Equity	8,657,053.51	13,541,376.02	11,989,796.73

PROFIT & LOSS ACCOUNT

Revenue	2014	2013	2012
Sales Income	11,893,559.48	13,755,313.57	6,195,212.33
Gain on Exchange Rate	43,171.60	822,389.65	-
Other Income	176,132.63	78,086.35	25,259.45
Total Revenues	12,112,863.71	14,655,789.57	6,220,471.78
Expenses
Cost of Goods Sold	9,054,659.39	11,498,351.40	4,268,290.30
Selling and Administrative Expenses	3,746,410.50	2,689,217.97	1,932,117.25
Loss on Exchange Rate	-	-	238,637.89
Total Expenses	12,801,069.89	14,187,569.37	6,439,045.44
Profit / [Loss] before Income Tax	[688,206.18]	468,220.20	[218,573.66]
Income Tax	[73,049.83]	[100,222.41]	[52,758.55]
Net Profit / [Loss]	[761,256.01]	367,997.79	[271,332.21]

FINANCIAL ANALYSIS

ITEM	UNIT	2014	2013	2012
LIQUIDITY RATIO
CURRENT RATIO	TIMES	116.11	6.01	5.79
QUICK RATIO	TIMES	97.45	5.31	4.96
ACTIVITY RATIO
FIXED ASSETS TURNOVER	TIMES	1,881.79	616.27	159.40
TOTAL ASSETS TURNOVER	TIMES	1.37	1.02	0.52
INVENTORY CONVERSION PERIOD	DAYS	56.05	50.55	147.29
INVENTORY TURNOVER	TIMES	6.51	7.22	2.48
RECEIVABLES CONVERSION PERIOD	DAYS	210.86	275.95	542.73
RECEIVABLES TURNOVER	TIMES	1.73	1.32	0.67
PAYABLES CONVERSION PERIOD	DAYS	-	68.14	171.45
CASH CONVERSION CYCLE	DAYS	266.91	258.36	518.56
PROFITABILITY RATIO
COST OF GOODS SOLD	%	76.13	83.59	68.90
SELLING & ADMINISTRATION	%	31.50	19.55	31.19
INTEREST	%	-	-	-
GROSS PROFIT MARGIN	%	25.71	22.95	31.51
NET PROFIT MARGIN BEFORE EX. ITEM	%	(5.79)	3.40	(3.53)
NET PROFIT MARGIN	%	(6.40)	2.68	(4.38)
RETURN ON EQUITY	%	(12.30)	5.29	(5.92)
RETURN ON ASSET	%	(8.79)	2.72	(2.26)
EARNING PER SHARE	BAHT	(12.69)	6.13	(6.78)
LEVERAGE RATIO
DEBT RATIO	TIMES	0.29	0.49	0.62
DEBT TO EQUITY RATIO	TIMES	0.40	0.95	1.62
TIME INTEREST EARNED	TIMES	-	-	-
ANNUAL GROWTH
SALES GROWTH	%	(13.53)	122.03
OPERATING PROFIT	%	(246.98)	(314.22)
NET PROFIT	%	(306.86)	235.63
FIXED ASSETS	%	(71.68)	(42.57)
TOTAL ASSETS	%	(36.07)	12.94

ANNUAL GROWTH : RISKY

An annual sales growth is -13.53%. Turnover has decreased from THB 13,755,313.57 in 2013 to THB 11,893,559.48 in 2014. While net profit has decreased from THB 367,997.79 in 2013 to THB -761,256.01 in 2014. And total assets has decreased from THB 13,541,376.02 in 2013 to THB 8,657,053.51 in 2014.

PROFITABILITY : ACCEPTABLE

PROFITABILITY RATIO

Gross Profit Margin	25.71	Impressive	Industrial Average	16.41
Net Profit Margin	(6.40)	Deteriorated	Industrial Average	1.41
Return on Assets	(8.79)	Deteriorated	Industrial Average	3.02
Return on Equity	(12.30)	Deteriorated	Industrial Average	8.20

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 25.71%. 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 -6.4%. 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 -8.79%.

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 -12.3%.

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

Return on Assets Uptrend

Return on Equity Uptrend

LIQUIDITY : SATISFACTORY

LIQUIDITY RATIO

Current Ratio	116.11	Impressive	Industrial Average	1.66
Quick Ratio	97.45
Cash Conversion Cycle	266.91

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 116.11 times in 2014, increase from 6.01 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 higher, indicated that company was an efficient operator in a dominant position within its industry.

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 97.45 times in 2014, increase from 5.31 times, although excluding inventory so the company still have good short-term financial strength.

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 267 days.

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

Current Ratio Uptrend

LEVERAGE : EXCELLENT

LEVERAGE RATIO

Debt Ratio	0.29	Impressive	Industrial Average	0.60
Debt to Equity Ratio	0.40	Impressive	Industrial Average	1.49
Times Interest Earned	-		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 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 0.29 less than 0.5, most of the company's assets are financed through equity.

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

Debt Ratio Downtrend

Times Interest Earned Stable

ACTIVITY : SATISFACTORY

ACTIVITY RATIO

Fixed Assets Turnover	1,881.79	Impressive	Industrial Average	-
Total Assets Turnover	1.37	Acceptable	Industrial Average	2.14
Inventory Conversion Period	56.05
Inventory Turnover	6.51	Impressive	Industrial Average	3.44
Receivables Conversion Period	210.86
Receivables Turnover	1.73	Deteriorated	Industrial Average	4.11
Payables Conversion Period	-

The company's Account Receivable Ratio is calculated as 1.73 and 1.32 in 2014 and 2013 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 2014 increased from 2013. 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 increased from 51 days at the end of 2013 to 56 days at the end of 2014. This represents a negative trend. And Inventory turnover has decreased from 7.22 times in year 2013 to 6.51 times in year 2014.

The company's Total Asset Turnover is calculated as 1.37 times and 1.02 times in 2014 and 2013 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 8th Century B.C.  India, in fact, remained undisputed leader till 18th 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 30th 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.66.10
UK Pound	1	Rs.100.89
Euro	1	Rs.73.96

INFORMATION DETAILS

Analysis Done by :	TRI
Report Prepared by :	TRU

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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