MIRA INFORM REPORT

Report Date :

24.01.2011

IDENTIFICATION DETAILS

Correct Name :	MATRIX LABORATORIES (XIAMEN) LTD.

Registered Office :	No. 6, Yangtai Road, Xinyang Industrial Park, Haicang District, Xiamen City, Fujian Province 361022 Pr

Country :	China

Financials (as on) :	31.12.2009

Date of Incorporation :	06.09.2002

Com. Reg. No.:	350200400010131

Legal Form :	Chinese Foreign Equity Joint Venture Enterprise

Line of Business :	manufacturing troche and bulk drugs

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 :	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 – June 30, 2010

Country Name

Previous Rating

(01.04.2010)

Current Rating

(30.06.2010)

China

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

Company name & address

Matrix Laboratories (Xiamen) Ltd.

NO. 6, YANGTAI ROAD, XINYANG INDUSTRIAL PARK, HAICANG DISTRICT

XIAMEN CITY, FUJIAN PROVINCE 361022 PR CHINA

TEL: 86 (0) 592-6515618 FAX: 86 (0) 592-6511588

EXECUTIVE SUMMARY

INCORPORATION DATE : september 6, 2002

REGISTRATION NO. : 350200400010131

REGISTERED LEGAL FORM : CHINESE FOREIGN EQUITY JOINT VENTURE ENTERPRISE

CHIEF EXECUTIVE : Mr. SANDIP CHOUDHURY (chairman)

STAFF STRENGTH : 400

REGISTERED CAPITAL : cny 103,116,658

BUSINESS LINE : manufacturing

TURNOVER : cny 248,485,000 (AS OF DEC. 31, 2009)

EQUITIES : CNY -12,982,000 (AS OF DEC. 31, 2009)

PAYMENT : average

RECOMM. CREDIT RANGE : C.O.D.

MARKET CONDITION : AVERAGE

FINANCIAL CONDITION : fair

OPERATIONAL TREND : FAIRLY steady

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.59 = 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 Ren Min Bi

Note: SC’s current name should be the heading one, while the given name-Xiamen Mchem Laboratories Ltd. was the former one.

SC was registered as a Chinese-foreign equity joint venture enterprise at local Administration for Industry & Commerce (AIC-The official body of issuing and renewing business license) on September 6, 2002.

Company Status: Chinese-foreign equity joint venture enterprise

This form of business in PR China is defined as a legal person. It is a limited co. jointly invested by one or more foreign companies and one or more PR China controlled companies within the territories of PR China according to a certain proportion of capital investment. The investing parties exercise business management, share profits and bear all risks and liabilities of the co. together. The equity joint venture law requires that foreign party contribute not less than 25% of the registered capital, with no maximum. The investing parties are free to agree on method of profit distribution and liabilities bearing according to the proportion of capital investment. Each investing parties contributes funds, tangible assets, technology & etc. The board of directors excises the high authority. The joint venture usually has a limited duration of 10 to 50 years. Enterprise with large investment, long construction periods, low investment returns, introducing of advanced technology & advanced technology products that have good competition position in international market may extend beyond the 50 years limit.

SC’s registered business scope includes manufacturing troche (including CEPs), capsule, granular formulation, oral liquid, bulk drug (such as, Nevirapine, indinavir sulfate, Didanosine, lamivudine, stavudine, citalopram hydrobromate, zidovudine, ritonavir, Fluconazole, metformin hydrochloride, loratadine, Micardis(telmisartan), sulfamethoxazole (SMZ), chlorphenamine maleate, secnidazole, zaleplon, bisacodyl, Mannityl Nicotinate, Inositol Nicotinate, Norcantharidin, mefenamic acid, Monoclofenamic Acid, carbamazepine, and cefixime) and related assorted services.

SC is mainly engaged in manufacturing troche and bulk drugs.

Mr. Sandip Choudhury has been legal representative and chairman of SC since 2010.

SC is known to have approx. 400 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the industrial zone of Xiamen. Our checks reveal that SC owns the total premise about 57,000 square meters.

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

Changes of its registered information are as follows:

Date of change	Item	Before the change	After the change
2008-01	Legal Representative	C.S.Muralidharan	Prasad Nimmagadda
2008-01	Shareholders	Xiamen Erqing Collectivity Enterprise Cooperative Association 7% Xiamen Mchem Pharma (Group) Ltd. 51.33% Gao Jingdong 16.67% Matrix Laboratories (Singapore) Pte. Ltd. 25%	Xiamen Erqing Collectivity Enterprise Cooperative Association 7% Xiamen Mchem Pharma (Group) Ltd. 68% Matrix Laboratories (Singapore) Pte. Ltd. 25%
2009-03	Company Name	Xiamen Mchem Laboratories Ltd.	Matrix Laboratories (Xiamen) Ltd.
2009-03	Shareholders	Xiamen Erqing Collectivity Enterprise Cooperative Association 7% Xiamen Mchem Pharma (Group) Ltd. 68% Matrix Laboratories (Singapore) Pte. Ltd. 25%	Xiamen Erqing Collectivity Enterprise Cooperative Association 7% Matrix Pharma Group (Xiamen) Limited 68% Matrix Laboratories (Singapore) Pte. Ltd. 25%
2010-01	Registered Capital	CNY 60,000,000	CNY 103,116,658
2010-01	Shareholders	Xiamen Erqing Collectivity Enterprise Cooperative Association 7% Matrix Pharma Group (Xiamen) Limited 68% Matrix Laboratories (Singapore) Pte. Ltd. 25%	Present ones
2010-06	Legal Representative	Prasad Nimmagadda	Sandip Choudhury
Unknown	Registration Number	06969	350200400010131

MAIN SHAREHOLDERS:

Name % of Shareholding

Xiamen Erqing Collectivity Enterprise Cooperative Association 4.07

Matrix Pharma Group (Xiamen) Limited 39.57

Matrix Laboratories (Singapore) Pte. Ltd. 56.36

Xiamen Erqing Collectivity Enterprise Cooperative Association:

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

Address: No. 86-1, Hubin South Road, Xiamen, Fujian Province

Tel: 86 0592-2219281

Matrix Pharma Group (Xiamen) Limited:

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

Incorporation Date: July 24, 1997

Registration No.: 350200400010123

Registered Legal Form: Wholly Foreign-Owned Enterprise

Legal Representative: Mr. Sandip Choudhury

Registered Capital: CNY 94,000,000

Address: No.6, Yangtai Road, Xinyang Industrial Park, Haicang, Xiamen, Fujian Province

Tel: 86 (0) 592-2218988/2235020

Fax: 86 (0) 592-2218615

l Legal Representative and Chairman:

Mr. Sandip Choudhury, Indian, born in 1961, passport no.: F5549900, He is currently responsible for the overall management of SC.

Working Experience(s):

From 2010 to present Working in SC as legal representative and chairman;

Also working in Matrix Pharma Group (Xiamen) Limited as legal representative.

l Directors:

Hari Babu Bodepudi (Passport No.: H3899690)

Susanto Banerjee (Passport No.: H3168376)

Srinivasan Seshan (Passport No.: G7828154)

Fang Jianbing (ID# 350204197011205035)

l Supervisor:

Vasireddi Uma Maheswar Rao (passport no.: Z1865935)

SC is mainly engaged in manufacturing troche and bulk drugs.

SC’s products mainly include: capsule, granule, and oral liquid, etc.

SC sources its materials 80% from domestic market, mainly Jiangsu province, and 20% from overseas market; SC sells its products 10% to overseas market, mainly U.S, Italy, Spain, South Africa, Argentina, and Japan, and 90% in domestic market, mainly Beijing and Fujian province.

The buying terms of SC include 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.

*Major Supplier:

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

Changshu Medical & Chemical Equipment Factory

*Major Customer:

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

Beijing Taiyang Pharmaceutical Industry Co., Ltd.

SC is said to invest in other companies, but the detail is not available.

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.

China CITIC Bank

AC# N/A

Relationship: Normal.

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2009	As of Dec. 31, 2008
Cash & bank	2,627	2,842
Inventory	36,882	25,730
Bills receivable	3,122	2,188
Accounts receivable	34,237	38,238
Advances to suppliers	1,636	2,098
Other receivables	7,166	9,981
To be apportioned expense	0	0
Other current assets	336	836
	------------------	------------------
Current assets	86,006	81,913
Fixed assets net value	129,522	85,239
Projects under construction	1,857	39,698
Long term investment	8,441	8,441
Other assets	8,636	11,497
	------------------	------------------
Total assets	234,462	226,788
	=============	=============
Short loans	149,851	117,542
Bills payable	0	0
Accounts payable	39,187	53,007
Advances from clients	3,927	27,772
Taxes payable	21	21
Payroll payable	2,331	1,688
Interest payable	467	7,359
Other payable	49,916	53,964
Withdraw the expenses in advance	0	0
Other current liabilities	0	0
	------------------	------------------
Current liabilities	245,700	261,353
Non-current liabilities	1,744	39,455
	------------------	------------------
Total liabilities	247,444	300,808
Equities	-12,982	-74,020
	------------------	------------------
Total liabilities & equities	234,462	226,788
	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2009	As of Dec. 31, 2008
Turnover	248,485	139,778
Cost of goods sold	201,841	137,498
Sales expense	5,459	5,272
Management expense	6,954	9,876
Finance expense	14,978	13,364
Profit before tax	17,920	-26,811
Less: profit tax	0	0
Profits	17,920	-26,811

Important Ratios

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

	As of Dec. 31, 2009	As of Dec. 31, 2008
*Current ratio	0.35	0.31
*Quick ratio	0.20	0.21
*Liabilities to assets	1.06	1.33
*Net profit margin (%)	7.21	-19.18
*Return on total assets (%)	7.64	-11.82
*Inventory /Turnover ×365	55 days	68 days
*Accounts receivable/Turnover ×365	51 days	100 days
*Turnover/Total assets	1.06	0.62
* Cost of goods sold/Turnover	0.81	0.98

PROFITABILITY: FAIRLY GOOD

l The turnover of SC appears fairly good in 2008, and it increased greatly in 2009.

l SC’s net profit margin appears poor in 2008, and fairly good in 2009.

l SC’s return on total assets is fair in 2008, and fairly good in 2009.

l SC’s cost of goods sold is average, comparing with its turnover in 2009.

LIQUIDITY: POOR

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

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

l The inventory of SC appears fairly large.

l The accounts receivable of SC appears fairly large.

l The short-term loan of SC appears large.

l SC’s turnover is in an average level, comparing with the size of its total assets in 2009.

LEVERAGE: POOR

l The debt ratio of SC is too high in both years.

l The risk for SC to go bankrupt is above average.

Overall financial condition of the SC: Fair.

SC is considered medium-sized in its line with fair financial conditions. The large amount of short-term loan could be a threat to SC’s financial condition. The given credit amount would appear to be beyond SC’s capacities, great caution is required in providing credit to SC and C.O.D. is recommended.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.45.70
UK Pound	1	Rs.72.78
Euro	1	Rs.61.65

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%)

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.

Company name & address

EXECUTIVE SUMMARY

Adopted abbreviations

Name % of Shareholding

Unit