MIRA INFORM REPORT

Report Date :

01.12.2011

IDENTIFICATION DETAILS

Name :	EMAG MACHINE TOOLS (TAICANG) CO., LTD.
Registered Office :	Building 3, Cangneng European & American Technology Park, No. 8 North Loujiang Rd., Taicang, Suzhou, Jiangsu Province, 215400 Pr
Country :	China
Financials (as on) :	31.12.2010
Date of Incorporation :	08.11.2004
Com. Reg. No.:	320585400007447
Legal Form :	Wholly Foreign-Owned Enterprise
Line of Business :	Manufacturing and Selling Machine Tools
No. of Employees :	100 Persons

RATING & COMMENTS

MIRA’s Rating :

B

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

Maximum Credit Limit :	EUR 40,000
Status :	Moderate
Payment Behaviour :	No Complaints
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 – September 30^th, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
China	a2	a2

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

Company name & address

EMAG MACHINE TOOLS (TAICANG) CO., LTD.

BUILDING 3, CANGNENG EUROPEAN & AMERICAN TECHNOLOGY PARK, NO. 8 NORTH LOUJIANG RD., TAICANG, SUZHOU, JIANGSU PROVINCE, 215400 PR CHINA

TEL: 86 (0) 512-53574098 FAX: 86 (0) 512-53574096

EXECUTIVE SUMMARY

INCORPORATION DATE : NOVEMBER 08, 2004

REGISTRATION NO. : 320585400007447

REGISTERED LEGAL FORM : Wholly foreign-owned enterprise

CHIEF EXECUTIVE : MR. Christoph Hoene (legal REPRESENTATIVE)

STAFF STRENGTH : 100

REGISTERED CAPITAL : USD 1,300,000

BUSINESS LINE : manufacture

TURNOVER : CNY 42,733,000 (AS OF DEC. 31, 2010)

EQUITIES : CNY 7,241,000 (AS OF DEC. 31, 2010)

PAYMENT : AVERAGE

RECOMM. CREDIT RANGE : UP TO EUR 40,000 (periodical review)

MARKET CONDITION : average

FINANCIAL CONDITION : Fairly STABLE

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 8.5584 = EUR 1

Adopted abbreviations

ANS - amount not stated

NS - not stated

SC - subject company (the company inquired by you)

NA - not available

CNY - China Yuan Renminbi

SC was registered as a wholly foreign owned enterprise at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license) on Nov. 8, 2004.

Company Status: Wholly foreign-owned enterprise

This form of business in PR China is defined as a legal person. It is a limited co. established within the territories of PR China with capital provided totally by the foreign investors. More than one foreign investor may jointly invest in a wholly foreign-owned enterprise. The investing party/parties solely exercise management, reap profit and bear risks and liabilities by themselves. This form of companies usually have a limited duration is extendible upon approval of Examination and Approval Authorities.

SC’s general business projects includes: design and produce of high performance joint machine tools with more than three axis (rotating and grinding machines), sales of self-made products, and providing corresponding technical consultation and service; wholesale and international trade of the same kind of goods (does not involve in the state-run trade management products; with permit if needed).

SC is mainly engaged in manufacturing and selling machine tools.

Mr. Christoph Hoene has been chairman of SC since 2004.

SC is known to have approx. 100 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office in the industrial zone of Taicang. Our checks reveal that SC rents the total premise about 2,600 square meters.

SC is not known to host web site of its own at present.

Email: info@emag-china.com

Changes of SC’s registered information:

Date	Item	Before changed	After changed
Jun., 2010	Shareholder	EMAG Machine Tools GmbH (Germany)	Present one

Tax number: 320585768259327

MAIN SHAREHOLDERS:

Name % of Shareholding

EMAG Holding GmbH (Germany) 100

The EMAG Group products cover the entire spectrum of machining processes in the metal working industry. Whether chucked, shaft-type or cubic components − the companies under the EMAG umbrella offer the best manufacturing solution for every customer. With its variety of technology centers EMAG has become an important partner in the realization of complete process streams for the manufacture of transmission, engine and chassis components.

Business no.: HRB 100867

Add.: Austrasse 24 73084 Salach Germany

Tel.: +49 / 7162 / 17-0

Fax: +49 / 7162 / 17-199

E-mail: communications@emag.com

Web: http://www.emag.com

l Chairman and General Manager:

Mr. Christoph Hoene, ID#: D509110234, with university education. He is currently responsible for the overall management of SC.

Working Experience(s):

From 2004 to present Working in SC as chairman and general manager.

l Directors:

Markus Hessbrueggen ID#: C8CKYHL7X

Zhou Feibao ID#: 310108196103074034

l Supervisor:

Thomas Kampmann ID#: C9KRCL607

SC is mainly engaged in manufacturing and selling machine tools.

SC’s products mainly include: numerical control machine tools.

SC sources its materials 90% from domestic market, and 10% from the overseas market, mainly European countries. SC sells 45% of its products in domestic market, and 55% to the overseas market, mainly Southeast Asia and European countries.

The buying terms of SC include Check, T/T, L/C and Credit of 30-60 days. The payment terms of SC include T/T, L/C and Credit of 30-60 days.

SC is not known to have any subsidiary at present.

Overall payment appraisal:

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

Trade payment experience: SC did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

Delinquent payment record: None in our database.

Debt collection record: No overdue amount owed by SC was placed to us for collection within the last 6 years.

SC’s management declined to release its bank details.

Balance Sheet

Unit: CNY’000

	as of Dec. 31, 2010	as of Dec. 31, 2009
Cash & bank	880	2,798
Inventory	23,449	5,993
Accounts receivable	19,803	22,153
Other Accounts receivable	642	517
Advance to suppliers	688	196
Other current assets	39	21
	------------------	------------------
Current assets	45,501	31,678
Fixed assets net value	9,243	6,000
Long term investment	0	0
Other assets	16	16
	------------------	------------------
Total assets	54,760	37,694
	=============	=============
Short loans	0	0
Accounts payable	20,438	31,061
Advances from customers	23,346	113
Accrued payroll	2,600	1,120
Other Accounts payable	345	1,224
Tax payable	-492	469
Other current liabilities	1,282	624
	------------------	------------------
Current liabilities	47,519	34,611
Long term liabilities	0	0
Other liabilities	0	0
	------------------	------------------
Total liabilities	47,519	34,611
Equities	7,241	3,083
	------------------	------------------
Total liabilities & equities	54,760	37,694
	=============	=============

Income Statement

Unit: CNY’000

	as of Dec. 31, 2010	as of Dec. 31, 2009
Turnover	42,733	34,399
Cost of goods sold	21,202	15,748
Taxes and additional of main operation	7	21
Sales expense	5,939	2,767
Management expense	13,139	14,103
Finance expense	-1,918	707
Non-operating income	12	80
Non-operating expense	25	65
Profit before tax	4,351	1,068
Less: profit tax	193	0
Profits	4,158	1,068

Important Ratios

=============

	as of Dec. 31, 2010	As of Dec. 31, 2009
*Current ratio	0.96	0.92
*Quick ratio	0.46	0.74
*Liabilities to assets	0.87	0.92
*Net profit margin (%)	9.73	3.10
*Return on total assets (%)	7.59	2.83
*Inventory /Turnover ×365	201 days	64 days
*Accounts receivable/Turnover ×365	167 days	236 days
*Turnover/Total assets	0.78	0.91
* Cost of goods sold/Turnover	0.50	0.46

PROFITABILITY: AVERAGE

l The turnover of SC appears average in its line, and it was rising in 2010.

l SC’s net profit margin is average in 2009, and it appears fairly good in 2010.

l SC’s return on total assets is average in 2009, and it appears fairly good in 2010.

l SC’s cost of goods sold is low in both years.

LIQUIDITY: FAIR

l The current ratio of SC appears fair in both years.

l SC’s quick ratio appears fair in both years.

l The inventory of SC appears average in 2009, and it appears large in 2010.

l The accounts receivable of SC appears fairly large in both years.

l SC has no short-term loan in both years.

l SC’s turnover is in a fair level, comparing with the size of its total assets.

LEVERAGE: FAIR

l The debt ratio appears high in both years.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fairly Stable.

SC is considered small-sized in its line with fairly stable financial conditions. The large amount of inventory & account receivable could be a threat to SC’s financial condition. A credit line up to EUR 40,000 appears acceptable upon a periodical review basis.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.52.17
UK Pound	1	Rs.81.29
Euro	1	Rs.69.47

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%)

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

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