Kohinoor Techno Engineers Ltd Management Discussions

Business Overview

We at Kohinoor Techno Engineers Limited dedicate excellence in our prime mission of software development for diamond machineries and now taking initiatives in the business of diamond machineries in diamond industry with updated technology, keeping in mind the need of the industry and global competency.

Thirty to forty years back when small diamond polishing industries flourished in Gujarat most people were using very simple grinding wheels. Most machines were made in India and over a period of time little improvised machines were imported from Russia. We were one of the pioneers in India to design and manufacture semi-automatic machines. The kind of machines and systems we have sold in last 10 to 15 years is way ahead of 1st and 2nd generation machines used 20 to 30 years back. Most Indian competition still sell 3rd generation machines, whereas development and launch of our ‘Smart series - The 4th generation machines with embedded intelligence, will prove to be an inflection point in the history of diamond processing industry. At the moment following companies are considered our competition in Indian and global market:

1. Sarine Technologies Ltd., Israel

2. Sahajanand Laser Technology Ltd., India

3. HRD Antwerp, Belgium

4. DRC Techno, India

5. Bettonville, Belgium

6. Lexus, India

India processes 80 % global demand of small diamonds. This is labor intensive industry. Thirty years back when sophisticated technology was not available and unemployment in Indian Rural areas and other Asian countries was rampant. Millions of rural youths took to cutting and polishing of diamonds in India and elsewhere. In last 20 years prosperity has increased and those who spent their youth grinding star and millie diamonds are attaining retirement age. These people have provided education to their kids who dont want to join this labor oriented industry as more and lucrative economic avenues are available to them. This is creating dearth of skilled labor in industry. Labor cost is increasing by day. New recruits lack skills and competence – which at times result in damage and breakage. There is no option but to employ ‘Smart Machines which can be easily handled by any man of average intelligence with some training. One man can handle more than one machine. This is the obvious solution to the industry facing today and can be the only trend.

80% of small diamonds are processed in India and 80% of this 80% is processed in Surat. Remaining 20% diamonds are proceed in Navsari, Mumbai, Ahmedabad, Bhavnagar, Rajkot and several interior villages in Gujarat. Outside India, China Thailand and some African countries have also started processing diamonds in last 5 to 10 years. However, they still lack skills and infrastructure compared to India. If labor cost may be a concern in China, whereas labor skills are a concern in African continent. Once again automation and smart machines is the only answer to both the issues.

Diamond industry is poised to grow because of acceptance and promotion of CVD and HPHT diamonds easy availability and acceptability as ‘GEM in jewellery industry. Industrial production of ‘near gem or ‘gem quality diamonds will certainly increase the consumption in the middle class globally. With increased demands of processed diamond at one end and lack of skilled man power at the other- smart technologies is the only answer. We are sure that our company is thinking pro-actively in the right direction. Soon there can be recognized demands of smart systems, as soon as any manufacturer offers the products to the market. We are sure our ‘Smart Brut and other products in the pipeline shall enjoy a bright future and so is our company.

Our present business model is very simple:

We have offices and resident sales and service engineers located at all the strategic locations in Gujarat and rest of India. We have been exporting our systems to all over the world where exist a diamond processing unit.

We are also keenly focusing on replacement of old conventional 2nd and 3rd generation machines with our 4th generation smart systems. We are introducing our ‘Smart Systems wherever a new unit is coming. Most big size daimantaires have shown keen interest in our new ‘smart machine and many have placed orders with us for ‘Smart Brut.

• OVERALL REVIEW OF COMPANY

Product Portfolio

A new technology always helps the industry and society in terms of desired quality and quantity of production output.

At Kohinoor we develop smart technological solutions for diamond cutting and polishing industry. These solutions are combination of artificial intelligence & robotics technology. Our technologies provide value added solutions for diamond cutting and polishing industry in particular and promote Gems &Jewellery industry, in general.

As part of our continuous improvement program, we are introducing ‘Smart series machines for different operations to cut & polish the diamonds faster but at reduced waste and economically.

Following thirteen ‘Smart series machines are results of our decade long close interaction with hundreds of small and big production houses and the issues these people face. Our Smart series machines are equipped with artificial but intelligent brain.

1) Smart Brut

2) Smart Polish

3) Smart Assort

4) Smart Security

5) Smart Cutting

6) Smart Soft

7) Smart Table

8) Smart Girdle Facet

9) Smart Count

10) Smart Sieves

11) Smart Saw Advisor

12) Smart Blade Sawing

13) Smart Planner & Marker

We would like to give detailed description of all our products, their market potential & market acceptance and why we think that these will be the future of our industry? Currently Gems & Jewellery industry is facing lack of new skilled labor. According to available industry statistical data, around 200,000 diamond cutting and polishing artisans shall retire in next two years& to compensate this scarcity of fully skilled artisans, only artificial intelligence is the solution. Hence, Kohinoor is concentrating with the help of worlds best universities, scientist, technologists& engineers within-house R&D team to deliver best solutions& products which will surely helps local as well as global diamond industry to meet the huge demands of Gems & Jewellery - as annual growth of market is more than 10 percent.

1. Smart Brut

This machine is designed for bruting process in diamond. Its smart and intelligent functionsare inbuilt planning, auto centering & auto angle positioning - as per plan, which previously manipulated manually by operator.Itsauto-stop function not only increases accuracy level but also eliminates need of trained &fully skilled labor. Machine reduces breakage, transfer error & improves quality by its outstanding performance.

• Market Potential

• More than 10 thousand conventional machines using manual process (designed 7 to 10 years back) are currently working in the market. We are sure these can be replaced by the smart intelligent system.

• Market Acceptance

• Reduced labor, cost & freedom from scarcity of labor.

• Low capital investment due to inbuilt planning option.

• Single operator can handle more machines, at a time.

• Maximum optimization of rough as per cut & grade selection of worldwide GIA norms.

• No breakage of rough diamond.

• In-built data storage facility.

• Quick guaranteed returns on the investment made.

• Quality outputs.

• Reduced theft problems.

• Increased yield.

2. Smart Polishing

Polishing is the main operation in diamond, which fully depends on the skill of artisan. All 56 facets along with table mean total 57 facets to be polished in such a symmetrical way to increase the beauty of diamond. Its a main manual process which is still totally depends on manual work. In practice, artisans polish the diamond by frequent inspection of the diamond, at short intervals, while processing on the polishing bench. Our ‘smart polish machine hasim bedded intelligence more than 10 times as compared to unskilled human being and have more efficiency than normal polishers.

Market Potential

More than 100,000 fully skilled artisans are going to retire this year according to government of India statistical data already 50,000 artisans retired from this industry in last two years and new generation is not coming to this industry due to unorganized & un-reputed way of doing job.

Market Acceptance

• More than 2500 ‘Smart polishing machines can be installed in a span of 5 years as per demand forecast of certification institute such as GIA, IGI & EGS etc.

• 24hours slim less working capacity & low labor cost.

• Global demand of same due to its smart & intelligent factor to fulfill the polished diamond demand.

• Quick guaranteed returns on investment.

• Increased life of ‘scaife saves incurring cost to buy it frequently.

3. Smart Assort

Assorting is the process of rough& polish diamond in terms of 4Cs- cut, carat, clarity & color. ‘Smart Assort is fully automated computerized robotic systems which categorize the diamonds onall these parameters with inbuilt capability of weight and optical characteristics measurement& processing techniques. The ‘Smart Assort machine will do assorting of rough and polish diamond. It would help cleaving department do more than 70% of work easily.

• Market Potential

Cleaving process is back bone of diamond industry. At the moment more than 40% of manual labor is used in assorting of rough & polish diamond. Due to its fast operation speed ‘Smart Assort gives comfort to manufacturing as well as trading houses to make manufacturing and selling cycle faster.

• Market Acceptance

• Reports of each diamond are stored in data base which helps next level operation smoother.

• Four times more speed compared to manual assorting.

• Low space & low power consumption, which helps to make profit.

• Scope of international market wherever a diamond trading house is located.

• More than 10,000 machines can be installed in couple of years.

• Reduced labor cost.

• Quick guaranteed returns on investment.

4. Smart Security

Diamond is aprecious stone. It needs strong security right from mines to cutting and polishing to use by an end user. ‘Smart security is the robot with artificial intelligence system which stores the bio-medical data of every person who is associated with the diamond manufacturing unit, mines, trading house. Its access control process is too helpful for security purpose. It controls theft and promote safe and smooth environment at work place.

• Market Potential

According to government data 500 big and 4000 small polishing units are running in India. These big and small polishing units support 5000 trading houses& 2000 Jewellery units in India. Every unit need security & access control to protect them from loss.

• Market Acceptance

• Reduced security cost.

• Save time by eliminating paper work.

• Checking and authorization of inward & outward person is automatically handled by robot.

• Artificial intelligence is the future of industrial world.

5. Smart Cutting

Its a laser cutting system used for sawing & bruting of diamond. Only system which can saw and brut any shape of diamond. Its smart function includes saving breakage of diamond while process. Its sophisticated controls offer variable cutting speed and power of laser appropriate to physical parameters and tensions present in diamond which helps diamantaires to reduce loss due to breaking which occur in sawing & bruting process.

Market Potential

Near about 12000 lasers units are being used in diamond industry for bruting & sawing process.

Huge scope of replacement of first generation systems or upgrade same system to achieve desired results.

Nature sourced or artificial labs made rough diamonds are continuously increasing which can increase the demands for laser machines for increased processing in future.

Market Acceptance

Reduced breakage is the main and huge benefit.

Laser is a necessity of industry today and its anti-breakage feature is always welcomed by industry.

6. Smart Soft

Its ERP (Enterprise Resource Planning) software which is used to connect all the systems of ‘Smart Series with the help of local area network connection LAN/WIFI the software which drives the organization from first stage of rough inputs to last stage of polish and selling; a virtual platform which connects all the departments of organization and keep records and manage accounts. This is a monitoring as well as control software which reduces lots of administrative efforts. It is necessary to purchase this software by organization which is responsible to interconnect the entire smart series product along with account and administration department.

Market Potential & Acceptance

As it is compulsory software to drive intelligent factory its selling is directly depends on all the smart products.

Software quantity is directly proportion to numbers of factory where smart series is installed.

7. Smart Table

This is robotic arm used to polish table or window blocking on rough diamond according to plan.

Market Potential & Acceptance

Dearth of labor due to retirement of old hands.

Cost effectiveness.

Single operator can handle multiple arms.

Higher accuracy.

Demand of more than ten thousand arms to fulfill the current production lineup.

8. Smart Girdle Facet

These robotic arms are used for girdle faceting on diamond. The diamond above 30 cent compulsorily requires girdle facet and the average production of bigger diamonds is approximately 15 lacs per day. There is no other company to offer automatic machine for girdle facet.

Market Potential & Acceptance

At least 5000 unit can be sold in couple of years.

Fast production.

Low labor cost.

Increased accuracy level.

Single operator can handle more machines.

9. Smart count

It is used to count rough & polished diamond according to their lot size. It not only saves the data but also transfers the data to other departments.

Market Potential & Acceptance

Market potential is approximate 10000 units in future.

Every unit of diamond polisher & trader can be a buyer of this equipment.

10. Smart Sieves

This system is used to segregate the rough and polished diamond as per its respective sizes. Fast, smooth and noise free process compared to manual work.

Market Potential & Acceptance

All diamond factoriesand trade housesrequire same for their daily sheaving process.

More than 10000 units can be sold in next 5 years.

11. Smart Saw Advisor

This system gives 3D cutting option in laser sawing process, which helps minimum weight loss in sawing. This software advises laser operator to position the start point of sawing.

Market Potential & Acceptance

2500 polishing units can buy this product.

Reduces weight loss by 1%

Eliminates human error.

Quick returns, within 3 months, against investment.

Measures angle of cutting and pre defines weight loss which is not possible to judge by a human.

12. Smart Blade Sawing

Its a portable blade sawing machine which gives automatic feed to cut the diamond with the help of blade it is faster than manual machine.

Market Potential & Acceptance

Worldwide 15000 machine running already.

Small footprint; no need of heavy foundation.

More than 4000 machines can be installed in couple of years.

13. Smart Planner & Marker

This system gives planning of rough diamond by optimizing the best plan and auto inclusion, plotting and tension (feather) plotting. A unique combination which gives best yield option as per international gemological institute such as GIA, IGI, AGS , EGL etc. after marking on the surface of rough diamond with the help of laser.

Market Potential & Acceptance

Minimum 100 machines can be installed in a year.

Less expensive as compared to imported machine.

Additional feature of tension detection & feather plotting promotes the sales.

INDUSTRY SCENARIO

Worldwide diamond demand is continuously increasing. To fulfill this increased demand, now science & technology is successfully used in preparing ‘Lab diamond (Manmade synthetic diamond with natural physical characteristic) which also require increased quantity of machinery & equipment to cut and polish these diamonds. This is good news to the Indian diamond cutting and polishing machinery industry. The industry has current turnover of 1 lac crore and plays major role in earning export revenue for Indian government.

OPPORTUNIES AND THREATS

An Initiative that Transformed the Industry

Kohinoor, the leading company in diamond machinery manufacturing industry-developing enduring relationship with customers by providing quality products and service since 25 years.

Machine is suitable for making Table or Block the rough diamond according to laser marking.

Easy to learn & operate.

Guarantee a quick return on your investment.

Suitable for table blocking for every cut.

Reduced production cost as one operator can operate two mills.

Its outstanding double System of sensing and micron setting which gives highest ccuracy level ever seen before.

16 grain selection operating System which gives smooth luster finishing on table.

Its solid rigid design gives you long lasting performance.

User friendly break selection option.

Available best path selection facility.

Our Clientele

With consistent quality products and services, we have achieved total customer satisfaction resulting in worldwide customer base. We have been able to achieve long standing association with our clients by offering them maximum benefits through our superior quality of services and products.

We have a wide network of distributors and offices, which are always there to assist our clients in meeting all of their requirements with utmost precision and within time. Our teams of technically sound sales persons ensure prompt delivery of goods and provide friendly assistance with round the clock services to our valued customers.

Quality Assurance

Committed to deliver an up to date technology through continuous innovation and research

Equipped with required infrastructure and utility

Advance lab fully equipped for monitoring of test results and monitoring of produced machines in plant

Equipped with required all testing / measuring / trial equipments for demonstration and measurement

Skilled expert of diamond industry with mechanical technocrats with advance software technology made, research easier and quicker 3-D modeling of design and components are prepared for design validation prior to match required standard of accuracy and strength.

After sale support team is linked with R&D team for timely update of product performance and analysis of complain route cause to make product error / trouble free

Customer has liberty to suggest their view / experience to make product more reliable and efficient.

CURRENT SCENARIO

The Competitive Edge

Kohinoor Techno Engineers Limited stands tall in its arena owing to a number of factors. Few of these are:

Strong Human Resource consisting of best talent from field of Laser, computer software-hardware, electronics and mechanical and management

Value for money products.

Commitment for quality in products and operations

A large base of satisfied customers across the globe

Dedicated efforts towards technical excellence through continuous innovation

Customer centric product development approach

Well articulated market sensing mechanism

A market share of around 80% of the supply of laser machines

Advanced R&D and manufacturing infrastructure

Highly dynamic & well equipped Marketing & Service team

Driven by the purpose of client business excellence

Future Expansion & Projection

Fully automated / robotic machineries

In order to improve our competitive advantage, reduce production costs, improve product quality, Machinery Automation & Robotics (MAR) are experts in providing robotic and automation solutions. We offer a complete service, from design and manufacture and project set up and management through to implementation and on-going 24 hour support to our end users.

Laser machineries launching

The Promoters felt that the time came for application of Laser technology for diamond cutting and the need for developing laser-cutting methods, which aimed at enabling high productivity and minimum loss of a diamond weight. Over the course of time in the coming years, your company is interested to invest heavily in developing its own laser systems, which would satisfy the developing needs and expectation of its clients.

Industrial Plot

The promoters of the Company are planning to take on lease industrial plot for constructing a separate works for the Companys business.

In house research and development

The Promoters of the Company themselves are technocrat with wide network and expertise in the business of the Company and hence the Company has its in-house research and development system which finally leads not only cost cutting steps for the Company but also give benefit of new research to the business of the Company.

Internal Control Systems and their adequacy

The Company is committed to maintaining an effective system of internal control for facilitating accurate, reliable and speedy compilation of financial information, safeguarding the assets and interests of the Company and ensuring compliance with all laws and regulations. The Company has an internal control department to monitor, review and update internal controls on an ongoing basis. The Company has put in place a well defined organization structure, authority levels and internal guidelines for conducting business transactions. The Company appointed independent internal auditors, who would monitor and review all transactions independently to get higher level of efficiency and would report directly to the Audit Committee, which consists of entirely independent directors, on quarterly basis. The Internal Auditors conducts audit all key business areas as per the pre-drawn audit plan. All significant audit observations and follow up actions are reported to the Audit Committee along Internal Audit reports and managements responses/replies. The minutes of Audit Committee would be reviewed by the Board for its suggestions/recommendations to further improve the internal control systems. The Audit Committee periodically reviews audit plans, observations and recommendations of the internal auditors as well as external auditors with reference to significant risk areas and adequacy of internal controls.

Human Resources / Industrial Relations

The Company believes that its people are a key differentiator, especially in knowledge driven, competitive and global business environment. Adapting work culture to suit the dynamic balancing of people requirements and employee needs is an ongoing process. Fundamental HR processes which enable higher performance orientation, speed, skill and competency development, talent management and human asset refreshable are corner stones for the success of any organization.

Caution Statement

Investors are cautioned that this discussion contains statements that involve risks and uncertainties. Words like anticipate, believe, estimate, intend, will, expect and other similar expressions are intended to identify such forward looking statements. The Company assumes no responsibility to amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. Besides, the Company cannot guarantee that these assumptions and expectations are accurate or will be realized and actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements.

Business in Diamond Trading & Processing:

Diamond trading & manufacturing business is spreads across the global. The first wave of gem-quality manufactured diamond hit the market late in 2003. Man-made diamonds is nothing new and the technology has been available since the mid-19th century. As lucrative profit seen in diamond trading, Company did diamond trading & establish processing / manufacturing of diamonds also in near short spam of time

Market and New products:

Research groups are actively engaged in developing new products. Furthermore, diversification may have a perceived new market opportunity and it can also reduce the risk especially in financial crisis. Your Board also foresee prospects in textile products due to changing government Rules and world market scenario.

	For & on behalf of the Board of Director of the Company
	Sd/-	Sd/-	Sd/-
	Kiritbhai Bhatt	Rajiv Bhatt	Sanjivbhai Bhatt
Date: 30/05/2015	Managing Director	Director	Director
Place: Surat	(DIN: 01632285)	(DIN: 01632211)	(DIN: 01689640)