MIRA INFORM REPORT

Report Date :

01.03.2011

IDENTIFICATION DETAILS

Name :	KG CHEMICAL CORPORATION

Registered Office :	429-1, Okgil-dong, Sosa-gu, Bucheon-si, Gyeonggi-do, Korea

Country :	South Korea

Financials (as on) :	30.09.2010

Date of Incorporation :	31.12.1954

Com. Reg. No.:	130-81-09693

Legal Form :	Listed Company

Line of Business :	Manufacture of Composite Fertilizers

RATING & COMMENTS

MIRA’s Rating :

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 :	Exists

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)

South Korea

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

Basic

Company Name	KG CHEMICAL CORPORATION (Korean Company Name : “KG케미칼(주)”)
Registered Address	429-1, Okgil-dong, Sosa-gu, Bucheon-si, Gyeonggi-do, Korea
Zip Code	422-080
Tel	+82-2-2680-4114
Fax	+82-2-2680-4328
E-mail	jwkim@kgchem.co.kr;edward@kgchem.co.kr
Website	www.kgchem.co.kr
Trading Address	429-1, Okgil-dong, Sosa-gu, Bucheon-si, Gyeonggi-do, Korea
Tel	+82-2-2680-4114
Fax	+82-2-2680-4328
Other Address-Incheon Factory	108B-4L, Namdong Industrial Complex, 658-1, Gojan-dong, Namdong-gu, Incheon, Korea
Tel	+82-32-819-0147
Fax	+82-32-821-0078
Other Address-Onsan Factory	220, Ijin-ri, Onsan-eup, Ulju-gun, Ulsan, Korea
Tel	+82-52-231-1710
Fax	+82-52-231-1719
Other Address-Jeju Factory	407-14, Geumneung-ri, Hallim-eub, Jeju-si, Jeju-do, Korea
Tel	+82-64-773-2020
Other Address-Seosan Factory	936-9, Hwagok-ri, Daesan-eup, Seosan-si, Chungcheongnam-do, Korea
Type	Export/Import
Industry	Manufacture of Composite Fertilizers
Main Business	Composite Fertilizer, Concrete Admixture
Established (mm/dd/yyyy)	12/31/1954

The Subject owns Bucheon factory(217,860.00㎡), Onsan Factory(194,509.11㎡) and Jeju Factory(10,091.70㎡).

Detailed Products

Activity	Detailed Products (UNSPSC)
Sell	Nitrogen Phosphorous Potassium Mixtures NPK(10171605)
Sell	Organic fertilizers and plant nutrients(10171500)
Sell	Flocculents(47101608)
Sell	Cement accelerators(12162302)
Sell	Concrete and mortars(30111500)
Sell	Chemical fertilizers and plant nutrients(10171600)

CEO’s

Name	Kwak Jae-Sun
Address
Date of Birth	01/15/1959
Title	Chairman & CEO
Sex	Male
Nationality	Korean

Profiles

Capital (KRW)

55,808,245,000

Employees

276

Formation

Listed Company (Korea Stock Exchange : 001390) as of 08/1989

A Company of KG Chemical Group

Bank Details

Korea Development Bank

Corporate Registered No.

124311-0008999

Business Registered No.

130-81-09693

Permit & Licenses

Int’l Trade No.: 438988

Shareholder Position

Name	Shares	%
KWAK JAE-SUN	2,200,547	20.57
KIM YOUNG-RAN	111,430	1.04
KWAK JUNG-HYUN	180,075	1.68
KWAK HYE-EUN	59,376	0.55
KG CORPORATION(124311-0044737)	1,138,865	10.64
KG BATECH CO., LTD.(230111-0114501)	101,680	0.95
TREASURY STOCK	982,983	9.19
SUN HYUN FOUNDATION(12122-0001955)	110,000	1.03
OTHERS	5,815,044	54.35
TOTAL	10,700,000	100.00

Company History

02/17/2011 Decide to acquire KG BATECH CO., LTD.(230111-0114501) as of 03/18/2011

12/2006 Opened first KG directly-run gas station in Naechon

10/2006 Completed compound fertilizer plant of KGO (Tianjin Corporation, China)(annual production of 150,000 tons)

09/2006 Opened first ‘ORFE’, the specialty store for environment-friendly organic Agricultural products

10/2005 Established KG Energy Co., Ltd. (Sihwa: 892,000 tons of steam / 70,900 MW of electric power)

08/2005 Established KGO (Tianjin Corporation, China)

08/2005 Established KG Vatech Co., Ltd. Specializing in bio-chemicals (Ulsan, annual production of 115 tons)

06/2005 Produced concrete compound (Inchon, annual production of 30,000 tons)

10/2004 Newly established high-tech ceramic bead plant (Ulsan, annual production of 300 tons)

09/2004 Newly established organic solid fertilizer plant (Bucheon, annual production of 60,000 tons)

09/2004 Established the automation facilities in liquid fertilizer plant (Bucheon, annual production of 10,000 tons)

02/2004 Completed OEM fertilizer plant (B.B.) (Seowan, annual production of 50,000 tons)

10/2003 Completed Corporate Closing Procedure after paying 96,400,000,000

09/2003 Changed the corporate name to KG Chemical Corporation, inaugurated Chairman Kwak Jae-sun

08/2003 Changed the company name to KG Chemical Corporation.

07/2003 Changed Corporate Closing Procedure by the Court

02/2001 Newly established organic solid fertilizer plant (Ulsan, annual production of 30,000 tons)

09/1999 Started the Corporate Closing Procedure by the Court

08/1998 Enlarged PNS factory to increase production.(Onsan 60,000ton/year)

04/1998 Separated of water treatment, Liquid&Soluble Fertilizer department.

06/1997 Concluded technical introduction agreement for exclude Dioxin with Marker in Germany.

06/1997 Completed construction of BB fertilizer plant.(Jaeju 50,000ton/year)

03/1997 Completed construction of BB fertilizer plant.(Onsan 40,000ton/year)

01/1997 Sparated processing company of production department.

06/1996 Enlarged PNS factory to increase production.(Onsan 50,000ton/year)

04/1994 Completed construction of PACS plant.(Onsan 15,000ton/year)

05/1993 Completed construction of PNS plant.(Onsan 8,500ton/year)

05/1992 Completed construction of Kyunggi Bulk Terminal in Onsan.(Berthing capacity:30,000DWT)

01/1991 Began production of Clean-Magnesium Hydroxide. (Buchon, Onsan: 45,000ton/year)

09/1990 Completed construction of compaction plant. (Onsan: SOP 10,000ton/year, BB fertilizer 20,000ton/year)

08/1989 Opened the enterprise to the public.

03/1988 Enlarged SOP plan. (Onsan 67,000ton/year) (Total capacity: 90,000ton/year)

01/1986 Began production of MAG-SUL.(Buchon 25,000ton/year)

02/1985 Completed construction of compound fertilizer plant. (Onsan 90,000ton/year)

11/1982 Began production of SOP.(Onsan 22,500ton/year)

02/1977 Began production of compound fertilizer.(Buchon 105,000ton/year)

12/1973 Concluded collaboration contract with Mitsubishi Corporation & Ildong FC.

06/1966 Began production of FMP.(Buchon 50,000ton/year)

09/1958 Began production of Limeston powder fertilizer.

12/1955 Began production of Calcium Hydroxide.

12/1954 Founded Company

Management

Job Description	Title	Name	Sex	Nationality	Inauguration Date
Chairman & CEO	Mr.	Kwak Jae-Sun	Korean	1959.01.15	-
President & CEO	Mr.	Byun Yong-Kwan	Korean	1952.03.16	-
Director	Mr.	Jang Ji-Hwui	Korean	1964.08.30	Inha University
Outside Director	Mr.	Kang Hwa-Joong	Korean	1948.06.10	-
Auditor	Mr.	Park Chan-Kyun	Korean	1953.01.12	-

Financials

Year / Unit : KRW	Sales	Assets	Net Income
09/2010	208,607,148,193	379,553,291,366	5,114,858,851
2009	266,805,076,655	348,960,618,395	8,492,774,504
2008	303,233,116,234	340,586,810,851	5,903,054,600
2007	243,302,739,676	195,197,832,741	(-)3,695,607,229
2006	226,640,136,977	198,510,487,718	11,300,162,414
2005	227,202,444,066	179,934,912,795	9,639,921,857
2004	196,530,577,957	151,956,611,146	6,463,251,114
2003	140,013,369,392	131,518,710,018	18,794,913,014

Financial Description

Authorized Capital(KRW)	75,000,000,000
Paid-Up Capital(KRW)	55,808,245,000
Total Issues Shares	10,700,000

Balance Sheet

Unit : Korean Won	01/01/2010~09/30/2010	As of 12/31/2009	As of 12/31/2008
Total Assets	379,553,291,366	348,960,618,395	340,586,810,851
Current Assets	158,943,809,857	165,217,977,915	155,518,032,044
-Quick Assets	104,121,131,895	102,362,808,215	80,799,036,554
-Inventories	54,822,677,962	62,855,169,700	74,718,995,490
Fixed Assets	220,609,481,509	183,742,640,480	185,068,778,807
-Investment	77,974,247,572	40,370,235,095	41,407,106,652
-Tangibles	137,643,465,340	138,478,213,424	142,134,232,058
-Intangibles	2,055,363,023	2,504,021,218	328,028,400
-Others	2,936,405,574	2,390,170,743	1,199,411,697
Total Liabilities	196,050,245,976	162,934,760,647	156,031,012,771
Current Liabilities	146,081,319,901	137,889,283,271	127,898,767,518
Fixed Liabilities	49,968,926,075	25,045,477,376	28,132,245,253
Capital Stock	55,808,245,000	55,808,245,000	55,808,245,000
Capital Surplus	4,893,007,452	4,892,922,494	4,890,768,079
Profit Surplus	42,376,081,845	39,807,345,698	33,508,312,594
Capital Adjustment	80,425,711,093	85,517,344,556	90,348,472,407
Total Equity	183,503,045,390	186,025,857,748	184,555,798,080
Liab. & Shareholder’s Equity	379,553,291,366	348,960,618,395	340,586,810,851

Current Liabilities	146,081,319,901	137,889,283,271	127,898,767,518
Trade Payables	15,625,906,565	14,949,489,015	20,885,210,290
Short-Term Borrowings	93,200,000,000	90,204,500,000	65,204,500,000
Short-Term Borrowings-Foreign Currency	17,711,283,400	16,968,828,502	9,727,239,154
Account Payables	7,943,285,676	10,532,217,763	12,734,270,254
Advance Receipts	800,491,510	670,875,320	879,671,996
Withholdings	8,252,008,108	214,959,466	104,759,707
Accrued Expenses	371,871,218	308,603,208	355,228,736
Accrued Income Tax	465,556,296	1,356,232,287	1,782,953,889
Current Portion of Long-Term Debts	1,270,660,749	2,151,321,331	15,512,978,903
Guarantee Deposit Withhold	333,100,000	425,100,000	490,000,000
Other Current Liabilities	107,156,379	107,156,379	221,954,589
Fixed Liabilities	49,968,926,075	25,045,477,376	28,132,245,253
Long-Term Borrowings	25,000,000,000	556,727,139	2,916,556,479
Provision for Severance & Retirement	4,891,006,315	4,995,663,503	4,400,310,813
Deferred Income Tax Credit	24,387,025,504	24,320,378,642	25,084,748,168

Income Statement

Unit : Korean Won	01/01/2010~09/30/2010	As of 12/31/2009	As of 12/31/2008
Sales	208,607,148,193	266,805,076,655	303,233,116,234
Cost of Sold Goods	174,880,464,195	219,304,186,568	235,095,509,870
Gross Profit	33,726,683,998	47,500,890,087	68,137,606,364
Selling & Admin. Expenses	21,786,732,833	32,081,482,437	36,763,421,376
Operating Income	11,939,951,165	15,419,407,650	31,374,184,988
Non-Operating Income	6,343,759,173	13,121,022,731	14,226,380,632
Non-Operating Expenses	11,699,034,293	16,867,559,111	36,983,967,430
Ordinary Income	6,584,676,045	11,672,871,270	8,616,598,190
Special Income	-	-	-
Income Before Taxes	6,584,676,045	11,672,871,270	8,616,598,190
Income Taxes Expenses	1,469,817,194	3,180,096,766	2,713,543,590
Net Income	5,114,858,851	8,492,774,504	5,903,054,600

Cash Flows

Unit : Korean Won	01/01/2010~09/30/2010	As of 12/31/2009	As of 12/31/2008
Cash Flows from Operating	6,876,465,575	24,329,072,012	6,637,183,703
-Net Income	5,114,858,851	8,492,774,504	5,903,054,600
-Exp. without Cash Outflow	8,092,265,648	15,655,176,321	19,847,695,843
-Revenue without Cash Inflows	-3,341,430,978	-4,544,314,288	-8,337,540,287
-Changes in Asset/ & Liability	-2,989,227,946	4,725,435,475	-10,776,026,453
Cash Flows from Investing	-28,222,789,296	-33,940,261,035	-16,755,754,395
-Cash Inflow from Investing	20,070,659,926	23,081,266,387	5,101,267,678
-Cash Outflows for Investing	-48,293,449,222	-57,021,527,422	-21,857,022,073
Cash Flows from Financing	20,327,280,189	12,978,981,174	6,528,217,785
-Cash Inflows from Financing	93,397,190,815	111,060,045,988	121,549,820,309
-Cash Outflows from Financing	-73,069,910,626	-98,081,064,814	-115,021,602,524
Increase/Decrease in Cash	-1,019,043,532	3,367,792,151	-3,590,352,907
Cash at the Beginning of Year	5,349,960,349	1,982,168,198	5,572,521,105
Cash at the End of Year	4,330,916,817	5,349,960,349	1,982,168,198

Products, Technologies, Services Description

Main Products & Services

Bio-Agr

Compound fertilizer

Bulk blending fertilizer(made-to-order)

Fertigation & Soilless culture fertilizer

Slow-release fertilizer

Phosphate fertilizer

Potassium fertilizer

Construction Materials

POWERCON is a PNS(polynaphthalene sulfonate) type superplasticizer which has made it possible to make high-performance concrete. By using POWERCON in making concrete, the properties of fresh concrete(workability) and hardened concrete(compressive strength and durability) improve..

Environmental

Started to supply Mg(OH)2 in 1991, which is most economical Flue Gas Desulfurization, Poly Aluminium Silicate Sulfate(PASS) in 1992, and more updated Poly Aluminium Chloride Silicate(PACS) in 1993.

Over 44 % of the doestic market share in this coagulant field at present. and 45% of the market share in the Mg(OH)2 field.

Detailed Products Spec.

The Subject has been producing and supplying the compounded fertilizer which is exclusively used for fruit trees and vegetables.

Since 1996, The Subject, as a company in the fertilizer industry with the market share by 40%, has also made a contribution to boost the farmer’s income and keep remaining fertile soil by developing and supplying the customized, environment-friendly B.B. that is suitable

for soil and the crops and eventually enables environmental farming and precise fertilization.

Plant	Description	Capacity
Bucheon	Compound Fertilizer	120,000ton
	Bulk Blending	50,000ton
	Slow Release Fertilizer	25,000ton
Onsan	Compound Fertilizer	120,000ton
	Bulk Blending	50,000ton
	Compaction	30,000ton
	SOP	90,000ton
	MAG-SUL	7,500ton
	Organic Pellet	40,000ton
Jaeju	Bulk Blending	50,000ton

After completing POWERCON plant in 1993, The Subject has been keeping the largest production capacity over 90 thousand ton per year in the world.

Trade Partners & Competitors

Suppliers

CAPRO CORPORATION(110111-0111825)

POSCO(174611-0000741)

OCI COMPANY LTD.(174611-0000981)

SK ENERGY CO., LTD.(110111-3710385)

Customers

NONGHYUP

GYUNGBUK APPLE ASSOCIATION

DONGBU HANNONG CHEMICAL

POONGNONG

CHOBI CO.,LTD

NAMHAE CHEMICAL CORPORATION

Sales Channel

Nonghyup: The Subject sells its products to Nonghup’s local branches through Nonghyup.

Factory=> Local Nonghyup Branches=>Farmers

Factory=>Customers

Export: Sells through int’l trading companies by local L/C.

Payment Condition:

Nonghyup: Cash within 91 days

Others: Normally cash within 3 Months to 6 Months

Competitors

NAMHAE CHEMICAL

DONGBU HANNONG CHEMICAL

POONGNONG

CHOBI

The Subject’s fertilizer is ranked as 2nd player next to NAMHAE CHEMICAL in terms of domestic market share.

JMC

The Subject’s CTC is ranked the 1st player in terms of domestic market share.

The domestic market share of the Subject’s POWERCON is about 60%.

Related Parties (Subsidiaries, Joint-Venture & Affiliates)

Affiliates-Domestic

JEIL BUNSEOK CO., LTD.,(124311-0041535)

(33.00% held by the subject company)

KG L&B CO., LTD.(181211-0009289)

(99.95% held by the subject company)

KG ENGINEERING CO., LTD.

(98.00% held by the subject company)

KC CORPORATION(124311-0044737)

SEIL ENGINEERING & CONSTRUCTION CO.,LTD. (110111-0393069)

KG BATECH CO., LTD.(230111-0114501)

(19.67% held by the subject company)

KG ENERGY CO., LTD.(135011-0075404)

(69.95% held by the subject company)

KG JEJU CO., LTD.(220111-0058016)

(100.0% held by the subject company)

KG YELLOWCAP CO., LTD.(110111-2092205)

Subsidiary

KG DYWELL INC.