MIRA INFORM REPORT

Report Date :

07.04.2008

IDENTIFICATION DETAILS

Name :	KOREA PETROLEUM INDUSTRIAL CO., LTD.
Registered Office :	302-79, Ichon 1-dong, Yongsan-gu, 5th Fl., Hanseok Bldg. 140-854, Seoul
Country :	Korea
Financials (as on) :	31.12.2007
Date of Incorporation :	12.11.1964
Com. Reg. No.:	106-81-03639
Legal Form :	Listed Company
Line of Business :	Solvent, Waterproof Sheet, Butyl, Asphalts, Morter Plas, Asphalt Concrete

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Good
Payment Behaviour :	No Complaints
Litigation :	Clear

Basic

Company Name	KOREA PETROLEUM INDUSTRIAL CO., LTD.
Registered Address	302-79, Ichon 1-dong, Yongsan-gu, Seoul, Korea
Building	5th Fl., Hanseok Bldg.
Zip Code	140-854
Tel	+82-2-799-3114
Fax	+82-2-796-7250
E-mail	kival@hansuk.co.kr
Website	www.hansuk.co.kr
Trading Address	5th Fl., Hanseok Bldg., 302-79, Ichon 1-dong, Yongsan-gu, Seoul, Korea
Tel	+82-2-799-3114
Fax	+82-2-796-7250
Other Address-Okcheon Factory	130-6, Dongan-ri, Okcheon-eup, Okcheon-gun, Chungcheongbuk-do, Korea
Tel	+82-43-733-9300~4
Fax	+82-43-733-9305
Other Address-Ulsan Factory	832-23, Yeocheon-dong, Nam-gu, Ulsan, Korea
Tel	+82-52-259-3700
Fax	+82-52-259-3710
Other Address-Busan Sales Office	752-6, Hakjang-dong, Sasang-gu, Busan, Korea
Tel	+82-51-314-1161
Fax	+82-51-314-9907
Other Address-Daegu Office	126-4, Sincheon 3-dong, Dong-gu, Daegu, Korea
Tel	+82-53-741-9091
Fax	+82-53-741-9093
Other Address-Daejeon Office	428-1, Doan-dong, Seo-gu, Daejeon, Korea
Tel	+82-42-825-4491
Fax	+82-42-825-4495
Other Address-Gwangju Office	263-2, Sinan-dong, Buk-gu, Gwangju, Korea
Tel	+82-62-521-3861
Fax	+82-62-521-3863
Other Address-	87-3, Dogok-ri, Yangseong-myeon, Anseong-si, Gyeonggi-do, Korea
Tel	+82-31-671-5101
Fax	+82-31-671-5104
Type	Export/Import
Industry	Petroleum Refineries
Main Business	Solvent, Waterproof Sheet, Butyl, Asphalts, Morter Plas, Asphalt Concrete
Sub Business	Manufacture of Ready-Mix Asphalt Concrete
Established (mm/dd/yyyy)	12/11/1964

The Subject owns the premises of registered HQ address, Ulsan Factory and Okcheon Factory.

Detailed Products

Activity	Detailed Products (UNSPSC)
Sell	Asphalt(30121601)
Sell	Tarpaulins(24141506)
Sell	Moisture repellent(15121801)

CEO’s

Name	Kang Bong-Gu
Date of Birth	12/28/1939
Title	Co-President & CEO
Sex	Male
Nationality	Korean

Profiles

Capital

3,276,000,000 KRW

Employees

124

Formation

Listed Company (Korea Stock Exchange : 004090) as of 06/25/1977

Bank Details

Shinhan Bank-Ichon Dong Branch

Corporate Registered No.

110111-0048490

Business Registered No.

106-81-03639

Permit & Licenses

05/22/1995 ISO 9002

08/03/1995 KS

10/25/1996 KS

04/24/1997 KS

11/06/1997 KS

08/11/1999 KS

Int’l Trade No.: 840026

Shareholder Position

Name	Shares	%
DM Partners Co., Ltd.	181,625	27.72
Kim Moo-Hyun	27,572	4.21
Kang Bong-Gu	73,279	11.18
Kang Seung-Mo	57,495	8.78
Others	315,229	48.11
Total	655,200	100.00

Company History

12/11/1964 Established as Korea Petroleum Industrial Co., Ltd.

09/10/1965 Completed construction of blown asphalt production factory.

08/01/1967 Completed construction of asphalt packing material factory.

09/01/1967 Completed construction of solvent production factory.

03/01/1970 Completed construction of Hangang gas station.

06/20/1970 Completed construction of headquarters building in #302-79, Ichon-dong, Yongsan-gu, Seoul.

06/25/1977 The company went public and its stocks listed on the Korea Stock Exchange.

08/01/1980 Completed construction of E.Z. waterproofing membrane factory.

03/07/1984 Registered as a trading company and acquired a license of importer/exporter.

07/31/1987 Completed construction of Pugok depot.

04/01/1989 Commenced production and sales of Blow containers made of synthetic resin.

08/31/1989 Developed Hi-Plas(ECB, HDPE, EVA) waterproofing membrane.

01/01/1990 Commenced wholesaling of basic petrochemical derivatives.

06/05/1990 Signed an agency contract with SK Corp. to sell SK's synthetic

08/01/1990 Established a technical alliance with Safety-Kleen of the U.S. and began to offer parts cleaning services domestically.

06/24/1991 Established subsidiary, Hansuk Petrochemicals Co., Ltd.

08/11/1992 Completed construction of Busan branch office, depot and Garam gas station.

09/18/1992 Completed construction of Okcheon plant.

05/10/1994 Established subsidiary, Hansuk Chemicals Co., Ltd.

12/28/1994 Completed construction of Daejeon office and Doan gas station.

03/01/1995 Became 20 million M² Waterproofing Sheet Membrane manufacture (the greatest achievement in the domestic business circles)

03/28/1995 Entered Nrca(National Roofing Contractors Association)

05/22/1995 Acquired Quality System Certificate of Approval(ISO 9002).

05/29/1995 Established the Hansuk Technology Research Institute.

06/28/1995 Completed construction of Gumdan depot.

08/03/1995 Approved K.S mark on Blown Asphalt and Emulsified Asphalt firstly.

06/24/1996 Completed construction of Inchon plant of Hansuk Petrochemicals Co., Ltd.

12/25/1996 Approved K.S mark on E..Z.-Membrane.

04/24/1997 Approved K.S mark on Waterproofing Asphalt (Asphalt Compound)

11/06/1997 Approved K.S mark on Asphalt Primer(AS-Bond) for moisture-proof and water-proof.

11/06/1997 Approved K.S mark on Asphalt Primer(AS-Bond) for moisture-proof and water-proof.

04/21/1999 Acquired patent on Bitumen Latex Coating Liquid Menbrane. (Aqua Coat)

08/11/1999 Approbed K.S mark on Bitumen Latex Coating Liquid Membrane. (Aqua Coat)

09/30/2001 Completed construction of Ulsan Wax plant.

10/10/2003 Took over Hyowon Ind. Co. as a subsidiary company

12/30/2004 Completed construction of Hansuk Ascon production factory

The Subject Company is a Korea-based company engaged in the provision of petroleum products. The Company produces four main products: asphalt products, which are applied in construction and civil engineering areas; solvents, which are used to dissolve wax, resin and rubber, as well as to resist against corrosion; butyl rubber and wax products, including sealer tapes, rubber pads and seals, and waterproofing membranes, which are used in roofing, electronics, construction, plumbing and refrigeration applications. During the year ended December 31, 2006, the Company had a production capacity of 107,100 kiloliters of solvents and 100,800 tons of asphalt products and its actual output was 87,448, kiloliters of solvents and 58,550 tons of asphalt products. The Company's headquarters are located in Seoul. It operates a domestic factory each in Ulsan and Chungcheongbuk Province.

Management

Job Description	Title	Name	Sex	Nationality	Date of Birth
Co-President & CEO	Mr.	Kang Bong-Gu	Male	Korean	1939.12.28
Co-President & CEO	Mr.	Kang Chul-Gu	Male	Korean	1944.02.20
Sr. Executive Director	Mr.	Kang Shin-Wook	Male	Korean	1949.10.26
Outside Director	Mr.	Lee Song-Gu	Male	Korean	1947.07.26
Auditor	Mr.	Kwon Yong-Shik	Male	Korean	1940.01.24
Auditor	Mr.	Kim Je-Dong	Male	Korean	1938.02.05

Financials Unit: KRW

Year	Sales	Assets	Net income
2007	129,291,172,136	58,136,575,756	2,572,900,467
2006	125,709,586,577	57,251,777,551	1,613,822,494
2005	107,814,722,663	57,725,393,213	1,201,239,356
2004	101,273,136,473	53,205,162,047	1,627,603,478
2003	89,567,460,663	50,660,522,856	1,137,266,259

Financial Description Unit: KRW

Authorized Capital	10,000,000,000
Paid-Up Capital	3,276,000,000
Total Issues Shares	655,200

Balance Sheet

Unit : Korean Won	As of 12/31/2007	As of 12/31/2006	As of 12/31/2005
Total Assets	58,136,575,756	57,251,777,551	57,725,393,213
Current Assets	23,295,328,323	23,176,006,951	24,027,387,414
-Quick Assets	19,145,215,503	19,768,244,871	20,312,691,593
-Inventories	4,150,112,820	3,407,762,080	3,714,695,821
Fixed Assets	34,841,247,433	34,075,770,600	33,698,005,799
-Investment	16,382,815,151	15,403,871,365	14,386,676,970
-Tangibles	17,079,462,856	17,344,827,209	17,973,391,869
-Intangibles	120,000,000	135,000,000	-
-Others	1,258,969,426	1,192,072,026	1,337,936,960
Total Liabilities	29,501,387,172	30,861,889,434	32,621,727,590
Current Liabilities	27,433,333,201	28,630,287,531	30,585,132,596
Fixed Liabilities	2,068,053,971	2,231,601,903	2,036,594,994
Capital Stock	3,276,000,000	3,276,000,000	3,276,000,000
Capital Surplus	7,635,534,715	7,635,534,715	7,635,534,715
Profit Surplus	17,723,653,869	15,478,353,402	14,192,130,908
Capital Adjustment	-	-	-
Total Equity	28,635,188,584	26,389,888,117	25,103,665,623
Liab. & Shareholder’s Equity	58,136,575,756	57,251,777,551	57,725,393,213

Current Liabilities	27,433,333,201	28,630,287,531	30,585,132,596
Trade Payables	5,670,403,216	5,432,323,213	6,424,616,069
Short-Term Borrowings	19,713,752,242	20,553,228,122	22,328,487,475
Account Payables	582,170,975	955,774,370	446,212,462
Withholdings	203,509,566	138,480,613	160,610,853
Accrued Expenses	1,041,461,384	791,006,665	875,338,565
Advance Receipts	222,035,818	12,330,042	131,359,687
Accrued Income Tax	-	747,144,506	218,507,485
Fixed Liabilities	2,068,053,971	2,231,601,903	2,036,594,994
Deferred Income Tax Credit	1,685,984,716	1,477,365,853	1,426,347,698
Leasehold Deposit Received	255,784,000	367,800,000	280,715,000
Provision for Severance & Retirement	803,827,750	1,430,958,240	1,326,809,452

Income Statement

Unit : Korean Won	As of 12/31/2007	As of 12/31/2006	As of 12/31/2005
Sales	129,291,172,136	125,709,586,577	107,814,722,663
Cost of Sold Goods	112,397,355,159	110,147,879,240	93,871,691,253
Gross Profit	16,893,816,977	15,561,707,337	13,943,031,410
Selling & Admin. Expenses	13,679,444,186	13,054,247,092	11,599,621,650
Operating Income	3,214,372,791	2,507,460,245	2,343,409,760
Non-Operating Income	2,422,081,663	2,669,117,073	3,929,138,569
Non-Operating expenses	2,241,324,516	3,066,785,645	4,753,245,091
Ordinary Income	3,395,129,938	2,109,791,673	1,519,303,238
Special Income	-	-	-
Income Before Taxes	3,395,129,938	2,109,791,673	1,519,303,238
Income Taxes Expenses	822,229,471	495,969,179	318,063,882
Net Income	2,572,900,467	1,613,822,494	1,201,239,356

Cash Flows

Unit : Korean Won	As of 12/31/2007	As of 12/31/2006	As of 12/31/2005
Cash Flows from Operating	1,641,010,461	3,235,873,220	1,419,235,397
-Net Income	2,572,900,467	1,613,822,494	1,201,239,356
-Exp. without Cash Outflow	2,732,248,493	3,964,980,056	5,444,520,621
-Revenue without Cash Inflows	(-)1,526,220,594	(-)1,668,691,939	(-)3,229,969,221
-Changes in Asset/ & Liability	(-)2,137,917,905	(-)674,237,391	(-)1,996,555,359
Cash Flows from Investing	(-)1,052,713,384	(-)819,075,739	(-)1,494,705,013
-Cash Inflow from Investing	1,173,320,446	2,111,136,565	5,310,158,549
-Cash Outflows for Investing	(-)2,226,033,830	(-)2,930,212,304	(-)6,804,863,562
Cash Flows from Financing	(-)1,279,091,880	(-)2,015,774,353	420,415,449
-Cash Inflows from Financing	14,112,000	203,152,000	868,175,449
-Cash Outflows from Financing	(-)1,293,203,880	(-)2,218,926,353	(-)447,760,000
Increase/Decrease in Cash	(-)690,794,803	401,023,128	344,945,833
Cash at the Beginning of Year	891,134,181	490,111,053	145,165,220
Cash at the End of Year	200,339,378	891,134,181	490,111,053

Products, Technologies, Services Description

Main Products & Services

-Construction Materials

Waterproofing Liquid Membrane

Waterproofing Sheet Membrane

Asphalt

Sealant

- Petrochemicals

Plastic Resin

Plastic Molding Products

WAX

-Chemical

Solvent

Monomer

Inorganic & Others

Brand Name: Hansol, Morter Plas

Annual production Capacity

(Unit: KL, Ton, Roll)

Item	2007	2006	2005
Solvent	107,100	107,100	63,000
Asphalt	100,800	100,800	100,800
Morter Plas	492,000	492,000	492,000

Trade Partners

Suppliers	SK ENERGY CO., LTD.(110111-3710385) SK NETWORKS CO., LTD.(130111-0005199)
Competitors	DONGNAM HOSUNG DAE HEUNG KUKDONG PETRO SUNGMOON Asphalt: The Subject accounts for 60.8% domestic market share. Solvent: The Subject accounts for 19.8% domestic market shares. Morter Plas : The Subject accounts for 21.0% domestic market shares.

Related Parties (Subsidiaries, Joint-Venture & Affiliates)

Affiliates	MINETECH KOREA PETROLEUM (49.0% held by the subject company)
Subsidiary	HANSUK PETROCHEMICAL CO., LTD(110111-0785860) (100.0% held by the subject company) HANSUK CHEMICALS CO., LTD.(110111-1035983) (100.0% held by the subject company) SEONAM INDUSTRIAL CO., LTD. (100.0% held by the subject company) HYOWON INDUSTRIAL CO., LTD. (100.0% held by the subject company) KYUNGIN TANK TERMINAL CO., LTD. (50.0% held by the subject company) HONG KONG INTERNATIONAL CAPITAL LIMITED (100.0% held by the subject company)
Cooperative Enterprise	AL-OSAIS

Sales by Region (Activity & Markets)

Sales/ Unit :Mil KRW	2007	2006	2005
Export	4,640	4,298	2,748
Domestic	124,651	121,411	105,066
Total	129,291	125,709	107,814

The Subject deals with the companies in China, Hong Kong, Singapore, Malaysia and Thailand.

Court Action

No.

News Clipping

2007 a year of records for markets

JoongangIlbo & Joins.com:12/28/2007

If this year’s domestic stock market can be summed up with the word “growth,” Daehan Fire and Marine Insurance best represents the market.

According to the Korea Exchange, shares of the nonlife insurer, listed on the Kospi, grew by 955.6 percent from 1,800 won ($1.9) at the end of last year to 19,000 won as of yesterday.

Adeka Fine Chemical Korea posted the second-biggest growth on the Kospi, at 657.6 percent, followed by Samho Development at 609.2 percent, Korea Petro Industrial at 595.5 percent, DC Chemical at 430.7 percent and STX Corporation at 395.3 percent.

The dramatic growth came in a year when the Kospi index enjoyed an unprecedented rally.

After breaking the 1,500 point mark for the first time on April 9, the index kept setting records.

It passed 1,600 points on May 11, 1,700 points on May 31, 1,800 points on June 18, 1,900 on July 12 and 2,000 points on July 25.

The 2,000 point mark came two years and five months after the Kospi broke 1,000.

During the year, the Kospi set record highs 51 times before reaching 2,064.85 points on Oct. 31.

It closed at 1,908.62 points yesterday.

Samsung Electronics managed to keep its title as the single largest company in Korea in terms of market value with 84 trillion won of market cap as of yesterday.

But it is being chased by Posco and Hyundai Heavy Industries.

Posco, the third-biggest firm last year, rose to the second spot with 50.7 trillion won.

Hyundai Heavy Industries increased its market cap to 34.2 trillion won, jumping from the 15th spot at the end of last year to the current third.

Total market capitalization at both the main exchange and the secondary Kosdaq also set a record this year.

It surpassed 1 quadrillion won for the first time on July 4. Yesterday, it was 1,056 trillion won ― 957 trillion won for the Kospi and 99 trillion won for the Kosdaq.

On the Kosdaq alone, the number of companies reached a record high, surpassing 1,000 on Oct. 1.

There are currently 1,001 companies on the tech-heavy market.

NHN, the Kosdaq bellwether, more than doubled its market cap from 5.3 trillion won at the end of last year to 11.1 trillion won yesterday.

LG Telecom and Hanarotelecom kept their place at second and third on the Kosdaq, respectively, with 2.9 trillion won and 2.6 trillion won in market value.

By Moon Gwang-lip Staff Reporter [joe@joongang.co.kr]

- Copyrights ⓒ JoongangIlbo & Joins.com, All rights reserved. -

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	Unfavourable & favourable factors carry similar weight in credit consideration. 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
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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%)

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