MIRA INFORM REPORT

Report Date :

12.12.2008

IDENTIFICATION DETAILS

Name :	VIETNAM ELECTRICAL EQUIPMENT CORPORATION
Formerly Known As :	VIETNAM ELECTRICAL EQUIPMENT TECHNOLOGY CORPORATION
Registered Office :	No. 41, Hai Ba Trung Street, Hanoi City
Country :	Vietnam
Financials (as on) :	31.12.2007
Year of Establishment :	1991
Com. Reg. No.:	0106000822
Legal Form :	Parent and subsidiaries
Line of Business :	Surveying, Researching, Designing Electrical Equipment and Apparatuses. Trading and Producing Electrical Materials. Import and Export of Electrical Equipment, Technology, Material

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	No Complaints
Litigation :	Clear

SUBJECT IDENTIFICATION & LEGAL FORM
English registered name	VIETNAM ELECTRICAL EQUIPMENT CORPORATION
Vietnamese registered Name	TONG CONG TY THIET BI DIEN
Shortened name	VEC
Brand name	EMIC
Former Vietnamese name	TONG CONG TY THIET BI KY THUAT DIEN
Former English name	VIETNAM ELECTRICAL EQUIPMENT TECHNOLOGY CORPORATION
Type of Business	Parent and subsidiaries
Founded	1991
Re-established decision	42/2006/QD-BCN
Issued on	December 4^th, 2006
Issued by	Ministry of industry
Current business registration	0106000822
Issued on	December 21^st, 2006
Issued by	Planning and investment department of Hanoi city
Former Business Registration	110350
Issuance on	January 20^th, 1996
Issuance by	Ministry of Industry
Registered Capital	500,442,000,000 VND
Tax code	0100100512
Total Employees	5,150 employees in total
ADDRESSES
Head Office and factory:
Transaction Address/ factory	No. 10, Tran Nguyen Han Street, Hanoi City
Registered address	No. 41, Hai Ba Trung Street, Hanoi City
Country	Vietnam
Tel	(84-4) 38257979
Fax	(84-4) 38260735
Email	vechanoi@yahoo.com
Its subsidiaries are
1. Name	CONG TY CO PHAN CHE TAO MAY DIEN VIETNAM-HUNGARI
2. Name	CONG TY CO PHAN THIET BI DIEN
3. Name	CONG TY CO PHAN DAY CAP DIEN VIET NAM
4. Name	CONG TY CO PHAN VAT TU VA XAY DUNG
5. Name	CONG TY TNHH NHA NUOC MOT THANH VIEN CHE TAO DIEN CO HA NOI
6. Name	CONG TY CO PHAN KHI CU DIEN I
7. Name	CONG TY CO PHAN CHE TAO BIEN THE VA VAT LIEU DIEN HA NOI
DIRECTORS
1. NAME	Mr. NGUYEN KIEN THIET
Position	Chairman
Resident	Hanoi city
Nationality	Vietnamese
2. NAME	Mr. LUONG VAN ANH
Position	General director
Resident	Hanoi city
Nationality	Vietnamese
3. NAME	Ms. NGUYEN THI MAO
Position	Chief accountant
Resident	Hanoi city
Nationality	Vietnamese
BUSINESS NATURE AND ACTIVITIES
The subject registers and operates in
* Main activities: + Surveying, researching, designing electrical equipment and apparatuses. + Trading and producing electrical materials. + Import and export of electrical equipment, technology, material. * Main business: + Electrical cables. + Electric transformers. + Electric motors. + Electrical measuring instruments. + Electric apparatuses
IMPORT & EXPORT ACTIVITIES
IMPORT: It imports materials from China and India
EXPORT: The subject’s products are exported to Cambodia and Singapore
BANKERS
1. BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM
Address	No. 191, Ba Trieu Street, Hanoi city
Country	Vietnam
Tel	84-4 222200422
2. VIETINBANK
Address	No. 108, Tran Hung Dao Street, HanoI City
Country	Vietnam
SHAREHOLDER(S)
The subject is a state owned enterprise which operates as parent subsidiary company, which is under management of Ministry of Industry and Trade
NAME	MINISTRY OF INDUSTRY AND TRADE
Address	No. 54, Hai Ba Trung Street, Hanoi city
Tel	84-4 22202222
Website	www.moit.gov.vn

FINANCIAL DATA
BALANCE SHEET
Unit: 1 VND
Balance sheet date			31/12/2007	31/12/2006
Number of weeks			52	52
ASSETS
A – CURRENT ASSETS			1,900,114,056,399	1,475,661,050,481
I. Cash and cash equivalents			324,968,939,757	206,283,979,947
1.Cash			254,968,939,757	206,283,979,947
2.Cash equivalents			70,000,000,000	0
II. Short-term investments			16,458,000,000	958,000,000
1. Short-term investments			16,458,000,000	958,000,000
2. Provisions for devaluation of short-term investments			0	0
III. Accounts receivable			473,234,626,589	438,820,100,384
1. Receivable from customers			435,037,089,671	404,937,488,148
2. Prepayments to suppliers			39,002,588,571	13,967,006,597
3. Inter-company receivable			158,582,655	360,338,862
4. Receivable according to the progress of construction			0	6,824,090,909
5. Other receivable			11,652,720,691	21,478,346,703
6. Provisions for bad debts			-12,616,354,999	-8,747,170,835
IV. Inventories			1,060,620,833,768	808,050,576,291
1. Inventories			1,063,862,097,317	828,274,362,433
2. Provisions for devaluation of inventories			-3,241,263,549	-20,223,786,142
V. Other Current Assets			24,831,656,285	21,548,393,859
1. Short-term prepaid expenses			1,680,747,960	6,092,242,771
2. VAT to be deducted			12,119,440,512	2,790,788,214
3. Taxes and other accounts receivable from the State			7,480,727,356	5,260,839,033
4. Other current assets			3,550,740,457	7,404,523,841
B. LONG-TERM ASSETS			667,691,610,069	479,073,783,828
I. Long term account receivable			6,157,717,250	0
1. Long term account receivable from customers			6,157,717,250	0
2. Working capital in affiliates			0	0
3. Long-term inter-company receivable			0	0
4. Other long-term receivable			0	0
5. Provisions for bad debts from customers			0	0
II. Fixed assets			386,799,241,290	259,618,310,664
1. Tangible assets			310,114,913,196	218,165,285,128
Historical costs			700,739,251,862	553,645,349,907
Accumulated depreciation			-390,624,338,666	-335,480,064,779
2. Financial leasehold assets			0	0
Historical costs			0	0
Accumulated depreciation			0	0
3. Intangible assets			19,103,759,858	13,481,637,852
Initial costs			23,291,827,280	17,091,912,522
Accumulated amortization			-4,188,067,422	-3,610,274,670
4. Construction-in-progress			57,580,568,236	27,971,387,684
III. Investment property			890,325,601	1,088,175,733
Historical costs			2,374,201,599	2,374,201,599
Accumulated depreciation			-1,483,875,998	-1,286,025,866
IV. Long-term investments			239,921,276,867	207,182,878,869
1. Investments in affiliates			0	0
2. Investments in business concerns and joint ventures			227,218,884,632	195,249,174,377
3. Other long-term investments			13,072,452,129	12,359,932,129
4. Provisions for devaluation of long-term investments			-370,059,894	-426,227,637
VI. Other long-term assets			33,923,049,061	11,184,418,562
1. Long-term prepaid expenses			24,895,082,188	7,939,297,420
2. Deferred income tax assets			12,656,945	3,163,111,142
3. Other long-term assets			9,015,309,928	82,010,000
TOTAL ASSETS			2,567,805,666,468	1,954,734,834,309
LIABILITIES
A- LIABILITIES			1,334,467,703,773	1,237,387,609,269
I. Current liabilities			1,208,746,467,077	1,208,713,092,504
1. Short-term debts and loans			613,028,065,074	694,085,193,412
2. Payable to suppliers			403,558,622,991	279,100,107,990
3. Advances from customers			25,049,269,211	25,329,141,053
4. Taxes and other obligations to the State Budget			27,191,574,578	12,708,268,672
5. Payable to employees			58,953,252,975	59,320,615,343
6. Accrued expenses			27,468,658,333	1,217,213,387
7. Inter-company payable			85,571,414	28,261,633
8. Payable according to the progress of construction contracts			0	0
9. Other payable			48,733,171,447	136,717,225,554
10. Provisions for short-term accounts payable			4,678,281,054	207,065,460
II. Long-Term Liabilities			125,721,236,696	28,674,516,765
1. Long-term accounts payable to suppliers			0	0
2. Long-term inter-company payable			0	0
3. Other long-term payable			103,187,264,728	4,310,993,000
4. Long-term debts and loans			6,363,503,416	18,326,781,488
5. Deferred income tax payable			0	0
6. Provisions for unemployment allowances			6,607,292,420	6,036,742,277
7. Provisions for long-term accounts payable			9,563,176,132	0
B- OWNER'S EQUITY			1,233,337,962,695	717,347,225,040
I. Owner's equity			1,225,707,897,446	699,318,860,235
1. Capital			528,604,134,758	559,468,165,178
2. Share premiums			0	0
3. Other sources of capital			0	0
4. Treasury stocks			0	0
5. Differences on asset revaluation			0	100,846,648
6. Foreign exchange differences			53,680,340,296	53,680,340,296
7. Business promotion fund			11,743,333,744	20,559,811,293
8. Financial reserved fund			7,436,734,529	5,538,383,313
9. Other funds			379,227,042,722	41,598,427,105
10.Retained earnings			244,218,749,522	18,372,886,402
11. Construction investment fund			797,561,875	0
II. Other sources and funds			7,630,065,249	18,028,364,805
1. Bonus and welfare funds			6,609,873,552	18,773,284,439
2. Sources of expenditure			632,421,033	-1,115,356,967
3. Fund to form fixed assets			387,770,664	370,437,333
TOTAL LIABILITIES AND OWNER'S EQUITY			2,567,805,666,468	1,954,734,834,309
PROFIT & LOSS STATEMENT
Description		FY 2007		FY 2006
Revenue		3,384,658,397,981		2,660,171,954,166
Deductions Items		11,784,684,736		5,638,118,128
Net Revenue		3,372,873,713,245		2,654,533,836,038
Costs of goods sold		2,950,208,239,413		2,329,920,225,999
Gross profit		422,665,473,832		324,613,610,039
Financial income		23,494,313,614		9,197,691,594
Financial expenses		86,892,219,215		63,036,116,010
In which: Loan interest expenses		70,425,954,447		63,772,361,263
Selling expenses		128,126,506,897		71,699,860,267
Administrative overheads		127,203,309,716		123,791,606,930
Net operating profit		103,937,751,618		75,283,718,426
Other income		5,857,084,710		3,818,374,810
Other expenses		3,513,730,517		1,460,237,136
Other profit /(loss)		2,343,354,193		2,358,137,674
Total accounting profit before tax		106,281,105,811		77,641,856,100
Current corporate income tax		32,207,435,357		18,758,072,448
Deferred corporate income tax		-10,222,388,030		0
Profit after tax		84,296,058,484		58,883,783,652
FINANCIAL FACTORS
Description		2007		2006
Current liquidity ratio		1.57		1.22
Quick Liquidity ratio		0.69		0.55
Inventory circle		3.16		2.88
Average receive period		51.21		60.34
Utilizing Asset Performance		1.31		1.36
Liability/ Total Asset (%)		51.97		63.30
Liability/ Owner's equity (%)		108.20		172.49
Ebit/ Total asset (%) ROA		6.88		7.23
Ebit/ Owner's equity (%) ROE		14.33		19.71
Ebit/ Total revenue (%) NPM		5.22		5.32
Gross Profit / Total revenue (%) GPM		12.49		12.20
PAYMENT HISTORY AND EXPERIENCES
Trade Morality	Fairly good
Liquidity	Above Average
Payment status	Above average
Financial Situation	Above average
Development trend	Developing
Litigation data	No recorded
Bankruptcy	No recorded
Payment Methods	Through its bank, L.C
Sale Methods	Through its subsidiaries

INTERPRETATION ON THE SCORES

Vietnam Electrical Equipment Corporation has been formally operating as legal form of parent –subsidiaries company since January 1^st, 2007 with total more than 5,150 employees, in which about 960 employees work for the head office of corporation and the rest work for its subsidiaries.

Formerly, the subject was found in year of 1991 and formally got established decision No. 1120/QD-TCCB on October 27^th, 1995 granted by Minister of Heavy Industry and business registration No. 110350 issued on January 20^th, 1996 granted by Ministry of industry.

Its original registered capital of 308,000 million VND and its current registered capital is 500,442 billion VND.

The subject is now facing with hard competition from interior and exterior competitors, decreasing in tax of same kinds of subject’s product in market, fluctuation in exchange rate, increasing in materials price. These difficulties have been causing bad effect to its operation, putting pressure on its products price, decreasing the competitive capability.

Its expected in year of 2008, its production value will account for 3,585 billion VND, revenue will account for 3,837 billion VND, expected profit about 100 billion VND, export revenue will about 10 million USD.

It also re-arrange its subsidiaries as planning, fastening progress of projects in putting invested projects into exploiting and using for business operation.

The subject is now preparing plans to step up production and consume products, focusing on products which has large market share, finding solutions for bad consuming products, innovating management capability, decreasing product price to improve competitive capability, etc.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.48.71
UK Pound	1	Rs.72.85
Euro	1	Rs.64.70

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