MIRA INFORM REPORT

Report Date :

08.04.2011

IDENTIFICATION DETAILS

Name :	ZIBO JIALONG CHEMICAL TECHNOLOGY CO. LTD

Registered Office :	NO. 1, Nanyi Street, Baoshan Road, Zibo Development Zone, Zip Code:255000

Country :	China

Financials (as on) :	31.12.2009

Date of Incorporation :	25.12.2001

Com. Reg. No.:	370303228822251

Legal Form :	Limited Liability Company

Line of Business :	manufacture and sales of chemical raw materials

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate

Payment Behaviour :	Usually 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 – December 31, 2010

Country Name

Previous Rating

(30.09.2010)

Current Rating

(31.12.2010)

China

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Company name & address

ZIBO JIALONG CHEMICAL TECHNOLOGY CO. LTD

NO. 1, Nanyi Street, Baoshan Road, Zibo Development Zone

255000

Tel : 86 533 3983053

Fax 86 533 2671333

Website

Currency in this report is Chinese Yuan unless otherwise stated.

Exchange Rate: 1 USD=6.55Chinese Yuan

"--"in this report indicates "unavailable" due to insufficient information or "no comments"

Note: Subject has stopped production since March, 2011 due to the removal. Now, it is mainly selling its inventories. Subject plans to move to Industrial Park of Zibo Development Zone in 2012.

EXECUTIVE SUMMARY

DATE OF establishment : dec 25^th, 2001

Aic Registration No. : 370303228822251

REGISTERED LEGAL FORM : limited liability company

REGISTERED CAPITAL : 12,000,000.00

main BUSINESS : manufacture and sales of chemical raw materials

TURNOVER : 23,192,000.00 (As of 2009)

net profit : -1,813,000.00 (As of Dec.31th, 2009)

total assets : 30,790,000.00 (As of Dec.31th, 2009)

net worth : 6,550,000.00 (As of Dec.31th, 2009)

employees : 40

import and export

permits : yes

base CREDIT limiit : 0 Chinese Yuan

EXCHANGE RATE : 1 Usd=6.55 CNY (APR 7^th, 2011)

Registered Address: NO. 1, Nanyi Street, Baoshan Road, Zibo Development Zone

Zip Code:255000

Business Address: NO. 1, Nanyi Street, Baoshan Road, Zibo Development Zone

Zip Code:255000

Telephone: 86 533 3983053

Fax: 86 533 2671333

SIC Code (China): 2614, manufacture of organic chemical material

REGISTRATION

Date of Establishment	Dec 25^th, 2001
Registry	Zibo Administration Bureau of Industry and Commerce – High-tech Development Zone Branch
Legal Representative	Cui Qixin
AIC Registration Number	370303228822251
Registered Legal Form	limited liability company
Registered Capital	12,000,000.00
Operating Period	From Dec 25^th, 2001 to ---
Business Scope	Manufacture and sales of PDEB, DVB etc. (license deadline to February 14^th, 2012). Sales of rubber products, plastics, steel products, timbers, home appliances, garments, motorbikes, etc. Import and export of goods ( with licenses for those needed)
Changes in Registration	1. July 27^th, 2004 Subject’s registered address was changed from Sibaoshan Town, Zibo Development Zone to the present address. 2. July 27^th, 2004 Subject’s registered capital was changed from 500,000 Chinese Yuan to the present registered capital.

Limited liabilities co.

This form of business in PR China is defined as a legal person. Its registered capital is contributed jointly by at least two shareholders and no more than fifty. Shareholders bear limited liability to the extent of shareholding, and the co. is liable for its debts only to extent of its total assets. The characteristics of this form of co. are as follows:

Upon the establishment of the co., an investment certificate is issued to the each of shareholders.

The board of directors is comprised of three to thirteen members.

The minimum registered capital for a co. is listed as follows:

-manufacturing co. : RMB 500,000.00

-trading &wholesaling co. : RMB 500,000.00

-retailing co. : RMB 300,000.00

-consultancy & service co. : RMB 100,000.00

Shareholders may take their capital contributions in cash or by means of tangible assets or intangible assets such as industrial property and non-patented technology.

Cash contributed by all shareholders must account for at least 50% of the registered capital while contribution by intangible assets must not exceed 20% of the registered capital.

Existing shareholders have pre-exemption right to purchase shares of the co. offered for sale by the other shareholders and to subscribe for the newly increased registered capital of the co.

REGISTRATION INFO: AVAILABLE

FINANCIAL REPORTS: AVAILABLE

FIELD INVESTIGATION

1. Subject’s income comes mainly from chemical products. Its sales are developed directly to the end users including pharmaceutical and chemical manufacturers. The industry of chemical products is an industry with fierce competition and SC has many competitors in the local place. Despite its long history and large scale, SC’s reputation and influence power still need to be further promoted. Generally speaking, SC’s competitiveness in the local industry is average.

2. Zibo, where SC is located, is in the middle part of Shandong. Its location advantage is obvious and its traffic is very convenient. As a domestic enterprise, SC mainly deals with the manufacture and sales business of chemical products. The local government doesn’t provide any favorable policies.

SHAREHOLDERS AND SHARES

As indicated in the following table:

Shareholder	Capital Subscribed	Percentage
Cui Qixin	6,338,000.00	52.80%
Ji Ying	5,662,000.00	47.20%
Total	12,000,000.00	100%

Shareholder	Way of Investment	Paid-up Percentage
Cui Qixin	Capital	100%
Ji Ying	Capital	100%

Background of major shareholder

Name	Cui Qixin
Gender	Male
ID NO.	370303401001211
Date of Birth	Oct 1^st, 1940

Name	Ji Ying
Gender	Male
ID NO.	370303391005212
Date of Birth	Oct 5^th, 1939

AFFILIATE(S)

After checking with the industry and commerce channels, no affiliates of SC is found.

MANAGEMENT

Name	Cui Qixin
Title	Executive Director
Gender	Male
ID No.	370303401001211
Nationality	China
Date of birth	Nov 29^th, 1952

Name	Pang Jialong
Post	Manager

NUMBER OF EMPLOYEES

Employees: 40

Recent Recruitment：No

BANKERS INFORMATION

Bank Name	China Citic Bank – Zibo Branch
Telephone of the person investigated	86 533 2212199
Comment	The investigated person confirmed subject opened an account in the above bank. He refused to disclose any account information for the reason of keeping secret for the depositor.

OFFICE FACILITIES

Geographic Location: SC is located in NO. 1, Nanyi Street, Baoshan Road, Zibo Development Zone. The environment and traffic condition are OK.

Property Ownership: self - owned

TRADEMARKS & PATENTS

Registration NO.	3160357
Registration Date	Apr 26^th, 2002
Image

MAIN PRODUCTS & SERVICES

Main business

Manufacture and sales of chemical products

Products and services

SC mainly deals with manufacture and sales of chemical products. Its products include diethylbenzene, divinybenzene, alumina powder, alumina supporter, hydrodesulfurization catalyst, hyrorefining catalyst, hyrorefining catalyst, etc. Its products are widely used in the production of many products. At the present time, SC mainly has diethylbenzene and small amount of divinybenzene because its production has been stopped.

SALES INFORMATION

Percentage of domestic sales	80%
Regions	Jiangsu, Zhejiang, Shandong, etc.
Major domestic clients	BLEACHING WRIGHT (CHINA) CO. LTD
Sales Terms:	Prompt payment; on credit
Percentage of international sales	20%
Regions	India
Sales Terms	L/C , T/T
Subject’s products are mainly sold domestically. Its clients are mainly manufacturers of resins, etc. Now, SC cooperates well with some of its clients.
The above information was confirmed by SC’s employee

PURCHASE INFORMATION

Main Commodities Purchased	Ethylene, benzene, etc.
Number of Major Suppliers	More than 2
Major Suppliers	CHINA PETROCHEMICAL QILU JOINT STOCK LIMITED COMPANY
Main Terms of Payment	Prompt payment, on credit
Subject company’s suppliers are mainly domestic suppliers. Its suppliers are mainly in the local place. SC has established stable customer base.
The above information was confirmed by SC’s employee

CREDIT

Name of supplier	CHINA PETROCHEMICAL QILU JOINT STOCK LIMITED COMPANY
Main commodities supplied	Ethylene, benzene, etc.
Post of interviewee	Sales staff
Tel	86 533 7554825
Remarks of interviewee	SC’s employees confirmed that CHINA PETROCHEMICAL QILU JOINT STOCK LIMITED COMPANY etc. is one of its suppliers. We contacted the employee of CHINA PETROCHEMICAL QILU JOINT STOCK LIMITED COMPANY, he couldn’t confirm whether SC is one of its clients since they have many clients and distribution channels.

LITIGATION RECORDS

After checking with China court website, local court website and other major searching websites, no litigation records related to subject in the recent 3 years was found.

FINANCE

Balance Sheet (Unit: 1,000 Chinese Yuan):

	2007-12-31	2008-12-31	2009-12-31
Current assets
Money capital		3,323	1,244
Short-term investment
Notes receivable		1,636	3,859
Net ball of Account Receivable		6,525	3,342
Payment in advance		773	1,125
Subsidy Receivable
Other Account Receivable		602	52
Inventory		3,321	3,699
Other current assets
Export rebates receivable
Total current Assets	-	16,180	13,321
Long-term investment
Long-term investment
Original value of fixed assets		12,442	12,464
Accumulated depreciation		5,580	6,800
Net fixed assets	0	6,862	5664
Fixed assets depreciation reserve
Net Value of Fixed Assets	0	6,862	5,664
Fixed assets in liquidation
Projects being constructed		1,517	1,526
Fixed assets losses in suspense
Total fixed assets	0	8,379	7,190
Intangible assets and deferred assets
Intangible assets		10,763	10,279
Deferred assets
Total intangible and deferred assets	-	10,763	10,279
Other long-term assets
Other long-term assets
Total assets	38,220	35,322	30,790
Current liabilities
Short-term loans
Notes payable
Account payable		-224	-409
Deposit received
Other accounts payable		24,539	21,433
Wages payable		0	67
Welfare payable
Tax unpaid		-154	35
Unpaid profit
Accrued expenses		0	400
L/T debt due in 1 year
Other current liabilities		13	12
Total current liabilities	0	24,174	21,538
L/T liabilities
L/T loans
Bonds payable
L/T account payable		2,702	2,702
Total L/T liabilities	0	2,702	2,702
Deferred tax
Deferred tax
Total liabilities	28,290	26,876	24,240
Owner’s interest
Paid-up capital	12,000	12,000	12,000
Contributed surplus
Surplus reserves
Unconfirmed investment loss
Undistributed profits		-3,554	-5,450
Minority interest
Total owner’s interest	20,660	8,446	6,550
Liabilities and owner’s interest	48,950	35,322	30,790

Income Statement (Unit: 1,000):

	2007	2008	2009
Main business income	48,950	40,195	23,192
Main business cost		37,338	21,969
Tax and associate charge		156	57
Main business profit		2,701	1,166
Other business profit		2	3
Operation expenses		2,011	1,192
- management expenses		2,099	1,670
Financial expenses		196	122
Operation profit		-1,603	-1,815
Investment profit
Subsidy income		107	0
Non business income		1	3
- non business expenses		17	1
Prior year income adjustment
Total profit		-800	-1,512
- income tax		0	0
Minority stock holder’s interest
Net profit		-800	-1,512

Important Ratios:

	2007	2008	2009
Return on net assets (%)	-3.87	-17.90	-27.68
Return on total assets (%)	-2.09	-4.28	-5.89
Net profit margin (%)	-1.63	-3.76	-7.82
Turnover of total assets	1.28	1.14	0.75
Turnover of current assets	-	2.48	1.74
Turnover of accounts receivable	-	6.16	6.94
Inventory turnover	-	11.24	5.94
Asset liability ratio (%)	74.02	76.09	78.73
Current ratio	-	0.67	0.62
Quick ratio	-	0.53	0.45

Major Financial Information (Unit: 1,000)

	2007	2008	2009
Main business income	48,950	40,195	23,192
Total profit	-800	-1,512	-1,813
Net profit	-800	-1,512	-1,813
Total assets	38,220	35,322	30,790
Total liabilities	28,290	26,876	24,240
Total owner’s interest	20,660	8,446	6,550
Source from	government	government	government
Whether audited or not	Yes	Yes	Yes

Analysis of Financial Indicators

We mainly analyze Subject’s indicators in 2009. All of SC’s profitability indicators are negative which indicates that SC’s profitability is poor. SC’s turnover of total assets and turnover of current assets indicate that its capital operation ability is poor. SC’s turnover of account receivable is average which indicates that its debt recovery speed is average. SC’s asset liability ratio which is about 80% indicates that its long-term solvency is poor. In addition, SC’s current ratio and quick ration which are both below one show that its short-term solvency is poor.

INDUSTRY PROFILE

Industry

SIC Code (China): 2614 manufacture of organic chemical material

Description: manufacture of organic intermediate, HC and halogen derivative, alcohol, phenol and the derivative, ether, ketone, amides, organic phosphate, organic compound, salt etc.

Status Quo & Trend

From January to March 2010, the export value of chemicals of China reached 77.14 billion Chinese Yuan, increasing 29.6% y/y. Export of specific chemical products increased by more than 30%. In H2 2010, the chemical industry was recovered completely. Organic chemical is a branch of basic chemical material industry. In Dec.2009, there were 2570 organic chemical manufacturers in China, and the output of the whole year was 536,794,655 Chinese Yuan, increasing 5.19% y/y.

GENERAL COMMENTS

Subject company which was established in December, 2001 was a limited liability company. SC mainly deals with manufacture and sales of chemical raw materials. With a long history but an average business scale, its fame in the industry still needs to be promoted.

SC’s existing financial data show that its main business income in 2009 decreased a lot compared with that of 2008. That indicates that SC’s business development shrinked a lot in 2009. Since SC’s cost control ability is poor, its net profit ratio is low. SC has many other accounts receivable in recent years which indicates that it has close business relationship with its related companies. SC’s asset liability ratios in recent 3 years were high which indicates that its long-term solvency is poor and it has strong debt paying pressure.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.22
UK Pound	1	Rs.71.97
Euro	1	Rs.63.23

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

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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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.