MIRA INFORM REPORT

Report Date :

22.12.2011

IDENTIFICATION DETAILS

Name :	SAINT GOBAIN ZIRPRO (HANDAN) CO., LTD.
Registered Office :	No. 8 Century Street, Economic Development Zone, Handan, Hebei Province, 056107 Pr
Country :	China
Financials (as on) :	31.12.2010
Date of Incorporation :	24.08.2005
Com. Reg. No.:	130400400003264
Legal Form :	Wholly Foreign-Owned Enterprise
Line of Business :	manufacturing and selling a variety of zirconium products and their derivatives.
No. of Employees :	120 persons

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

Maximum Credit Limit :	usd 500,000
Status :	Satisfactory
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

SAINT GOBAIN ZIRPRO (HANDAN) CO., LTD.

NO. 8 CENTURY STREET, ECONOMIC DEVELOPMENT ZONE, HANDAN,

HEBEI PROVINCE, 056107 PR CHINA

TEL: 86 (0) 310-8066001/8066028 FAX: 86 (0) 310-8066022

EXECUTIVE SUMMARY

INCORPORATION DATE : AUGUST 24, 2005

REGISTRATION NO. : 130400400003264

REGISTERED LEGAL FORM : Wholly foreign-owned enterprise

CHIEF EXECUTIVE : MR. PATRICK MILLOT (CHAIRMAN)

STAFF STRENGTH : 120

REGISTERED CAPITAL : CNY 89,000,000

BUSINESS LINE : MANUFACTURING

TURNOVER : CNY 131,480,000 (AS OF DEC. 31, 2010)

EQUITIES : CNY 80,640,000 (AS OF DEC. 31, 2010)

PAYMENT : AVERAGE

RECOMM. CREDIT RANGE : UP TO usd 500,000 (periodical review)

MARKET CONDITION : competitive

FINANCIAL CONDITION : FAIRLY stable

OPERATIONAL TREND : FAIRLY STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.34 = USD 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 August 24, 2005.

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 registered business scope includes manufacturing a variety of ceramic products and grinding media, zirconia, zirconium sulfate and its derivatives, and selling self-made products; related import and export business (excluding the goods and technology prohibited or limited by the country, with permit if needed); wholesaling and retailing similar goods to the above products and commission agency (excluding auction).

SC is mainly engaged in manufacturing and selling a variety of zirconium products and their derivatives.

Mr. Patrick Millot is the legal representative and chairman of SC at present.

SC is known to have approx. 120 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the economic development zone of Handan. Our checks reveal that SC owns the total premise, but the gross area is unspecified.

http://www.zirpro.com.cn/ The design is professional and the content is well organized. At present it is in Chinese version.

Email: shannon.li@saint-gobain.com

No significant events or changes were found during our checks with local AIC.

MAIN SHAREHOLDERS:

Name % of Shareholding

(France) Saint-Gobain Performance Plastics Corporation 100

Tel: (33) 254 230 456

Fax: (33) 254 230 456

Web: http://www.plastics.saint-gobain.com/

l Legal representative and Chairman:

Mr. Patrick Millot is currently responsible for the overall management of SC.

Working Experience(s):

At present Working in SC as legal representative and chairman

SC is mainly engaged in manufacturing and selling a variety of zirconium products and their derivatives.

SC’s products mainly include: zirconia (CZ), yttria-stabilized zirconium hydroxide (ZHY), zirconium carbonate (ZBC), zirconium Sulphate (AZST), stabilized zirconia, grinding (zirconia) beads, etc.

SC sources its materials and products 95% from domestic market, and 5% from overseas market. SC sells 20% of its products in domestic market, and 80% to overseas market, mainly Southeast Asia and Europe

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

Note: SC’s management declined to release its major suppliers and clients.

· Saint-Gobain Proppants (Guanghan) Co., Ltd.

· Saint-Gobain Advanced Ceramics (Shanghai) Co., Ltd.

· Saint-Gobain Performance Plastics (Shanghai) Co. Ltd.

· Saint-Gobain Performance Plastics Trading (Shanghai) Co., Ltd.

Etc.

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.

Citibank (China) Co., Ltd. Shanghai Branch

AC# N/A

Relationship: Normal.

Balance Sheet

Unit: CNY’000	as of Dec. 31, 2009	as of Dec. 31, 2010
Cash & bank	140	1,720
Inventory	18,700	31,840
Accounts receivable	32,580	33,800
Advances to suppliers	390	1,220
Notes receivable	0	110
Other Accounts receivable	160	1,170
To be apportioned expense	0	0
Other current assets	370	230
	------------------	------------------
Current assets	52,340	70,090
Fixed assets net value	58,990	63,720
Projects under construction	820	1,280
Long term investment	0	0
Intangible assets	7,190	10
Other assets	10	0
	------------------	------------------
Total assets	119,350	135,100
	=============	=============
Short loans	28,450	27,090
Accounts payable	11,650	19,140
Other Accounts payable	1,720	850
Advances from clients	340	540
Salaries and welfare payable	240	380
Taxes payable	-790	-1,550
Other current liabilities	5,140	8,010
	------------------	------------------
Current liabilities	46,750	54,460
Long term liabilities	0	0
	------------------	------------------
Total liabilities	46,750	54,460
Equities	72,600	80,640
	------------------	------------------
Total liabilities & equities	119,350	135,100
	=============	=============

Income Statement

Unit: CNY’000	as of Dec. 31, 2010
Turnover	131,480
Cost of goods sold	99,400
Sales expense	7,670
Management expense	9,740
Finance expense	1,740
Subsidy income	100
Non-operating income	170
Non-operating expenses	6,470
Profit before tax	8,460
Less: profit tax	420
Profits	8,040

Important Ratios

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

	as of Dec. 31, 2009	as of Dec. 31, 2010
*Current ratio	1.12	1.29
*Quick ratio	0.72	0.70
*Liabilities to assets	0.39	0.40
*Net profit margin (%)	/	6.11
*Return on total assets (%)	/	5.95
*Inventory /Turnover ×365	/	88 days
*Accounts receivable/Turnover ×365	/	94 days
*Turnover/Total assets	/	0.97
* Cost of goods sold/Turnover	/	0.76

PROFITABILITY: FAIRLY GOOD

l The turnover of SC appears fairly good in its line in 2010.

l SC’s net profit margin is fairly good in 2010.

l SC’s return on total assets is fairly good in 2010.

l SC’s cost of goods sold is average in 2010, comparing with its turnover.

LIQUIDITY: FAIR

l The current ratio of SC is maintained in a normal level in both years.

l SC’s quick ratio is maintained in a fair level in both years.

l The inventory of SC appears average in 2009 but fairly large in 2010.

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

l The short-term loan appears fairly large in both years.

l SC’s turnover is in an average level in 2010, comparing with the size of its total assets.

LEVERAGE: AVERAGE

l The debt ratio of SC is low in both years.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fairly Stable.

SC is considered medium-sized in its line with fairly stable financial conditions. The large amount of inventory and accounts receivable could be a threat to SC’s financial conditions. A credit line up to USD 500,000 would appear to be within SC’s capacities upon a periodical review basis.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.52.67
UK Pound	1	Rs.82.53
Euro	1	Rs.69.13

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.