MIRA INFORM REPORT

Report Date :

19.05.2011

IDENTIFICATION DETAILS

Name :	HANGZHOU XIASA HENGSHENG (SUNSHINE) CHEMICAL CO., LTD
Registered Office :	No. 325 13^th Avenue, Hangzhou T/E Development Zone, Hangzhou, Zhejiang Province, 310018 Pr
Country :	China
Financials (as on) :	31.12.2010
Date of Incorporation :	13.12.1995
Com. Reg. No.:	330100400001631
Legal Form :	Wholly Foreign-Owned Enterprise
Line of Business :	Developing, Manufacturing and Selling Dyestuff Intermediates.

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 :	USD 400,000
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 – December 31, 2010

Country Name	Previous Rating (30.09.2010)	Current Rating (31.12.2010)
China	a2	a2

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

Bottom of Form

Company name & address

HANGZHOU XIASA HENGSHENG (SUNSHINE) CHEMICAL CO., LTD.

NO. 325 13^TH AVENUE, HANGZHOU T/E DEVELOPMENT ZONE, HANGZHOU,

ZHEJIANG PROVINCE, 310018 PR CHINA

TEL: 86 (0) 571-86920288 FAX: 86 (0) 571-86923523

EXECUTIVE SUMMARY

INCORPORATION DATE : DEC. 13, 1995

REGISTRATION NO. : 330100400001631

REGISTERED LEGAL FORM : WHOLLY FOREIGN-OWNED ENTERPRISE

CHIEF EXECUTIVE : MR. ZHANG XIAOJIANG (CHAIRMAN)

STAFF STRENGTH : 60

REGISTERED CAPITAL : USD 6,818,386

BUSINESS LINE : DEVELOPMENT & MANUFACTURING

TURNOVER : CNY 256,530,000 (AS OF DEC. 31, 2010)

EQUITIES : CNY 83,770,000 (AS OF DEC. 31, 2010)

PAYMENT : AVERAGE

RECOMM. CREDIT RANGE : UP TO USD 400,000

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRLY STABLE

OPERATIONAL TREND : FAIRLY STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.51 = 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 Dec. 13, 1995.

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 and selling dyestuff chemical intermediates.

SC is mainly engaged in developing, manufacturing and selling dyestuff intermediates.

Mr. Zhang Xiaojiang has been legal representative and chairman of SC since 1995.

SC is known to have approx. 60 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the T/E development zone of Hangzhou. Our checks reveal that SC owns the total premise, but SC’s accountant refused to release the gross area of the premise.

http://www.sunshinechemicals.com/ The design is professional and the content is well organized. At present it is both in Chinese and English versions.

E-Mail: sales_zhang@hsdye.com

Changes of its registered information are as follows:

Date of change	Item	Before the change	After the change
Unknown	Shareholders	Zhang Xiaojiang (Swedish) 96.98%; Zhou Yusong (Swedish) 3.02%	Present ones

MAIN SHAREHOLDERS:

Name % of Shareholding

Zhang Xiaojiang (Swedish) 82.82

Zhou Yusong (Swedish) 10.10

Zhou Yuting (Swedish) 2.36

Zhou Yuwei (Swedish 2.36

Zhou Yujie (Swedish) 2.36

l Legal representative and chairman:

Mr. Zhang Xiaojiang, Swedish, in his 60’s with university education. He is currently responsible for the overall management of SC.

Working Experience(s):

From 1995 to present Working in SC as chairman and legal representative

Also working in Hengsheng Chemical (Qidong) Co., Ltd. as legal representative

l General manager:

Mr. Zhou Yusong, Swedish, in his 30’s with university education. He is currently responsible for the daily management of SC.

Working Experience(s):

At present Working in SC as general manager

SC is mainly engaged in developing, manufacturing and selling dyestuff intermediates.

SC’s products mainly include: acid dyestuff, auxiliaries for textile dyeing and printing, dyestuffs intermediates, etc.

SC sources its materials 90% from domestic market and 10% from the overseas market. SC sells 30% of its products to overseas market and 70% in domestic market.

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

*Major Supplier*

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

Byerex Ltd. (Korea)

*Major Customer*

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

Hangzhou Planet Chemical Co., Ltd.

SC is known to invest in the following companies:

Hengsheng Chemical (Qidong) Co., Ltd.

Danyang Liansheng Chemical Co., Ltd.

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’s suppliers declined to make any comments.

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.

Hangzhou United Bank Xiasha Sub-branch

AC# 201000007212802

Relationship: Normal.

Balance Sheet

Unit: CNY’000

	as of Dec. 31, 2009	as of Dec. 31, 2010
Cash & bank	104,530	60,510
Short-term investments	1,770	1,390
Bills receivable	6,290	6,110
Accounts receivable	44,790	66,010
Inventory	19,290	14,920
Other receivables	84,550	51,510
Dividends receivable	5,100	6,560
Advances to suppliers	340	32,170
Prepaid expenses	0	20
Other current assets	20,020	20,000
	------------------	------------------
Current assets	286,680	259,200
Fixed assets net value	6,720	4,080
Projects under construction	320	9,310
Long term investment	63,020	60,800
Intangible assets	7,720	7,340
Other assets	0	10
	------------------	------------------
Total assets	364,460	340,740
	=============	=============
Short loans	131,340	114,000
Bills payable	83,200	85,500
Accounts payable	12,840	8,020
Advances from clients	1,950	4,360
Welfare payable	0	0
Accrued payroll	0	0
Tax payable	1,610	2,720
Other payable	980	1,430
Surcharge payable	230	200
Other current liabilities	90	210
	------------------	------------------
Current liabilities	232,240	216,440
Long term liabilities	41,370	40,530
	------------------	------------------
Total liabilities	273,610	256,970
Equities	90,850	83,770
	------------------	------------------
Total liabilities & equities	364,460	340,740
	=============	=============

Income Statement

Unit: CNY’000

	as of Dec. 31, 2010
Turnover	256,530
Cost of goods sold	232,570
Taxes and additional of main operation	160
Sales expense	2,410
Management expense	24,570
Finance expense	7,100
Income from other operations	2,670
Investment income	-130
Profit before tax	-6,480
Less: profit tax	600
Profits	-7,080

Important Ratios

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

	as of Dec. 31, 2009	as of Dec. 31, 2010
*Current ratio	1.23	1.20
*Quick ratio	1.15	1.13
*Liabilities to assets	0.75	0.75
*Net profit margin (%)	/	-2.76
*Return on total assets (%)	/	-2.08
*Inventory /Turnover ×365	/	21 days
*Accounts receivable/Turnover ×365	/	94 days
*Turnover/Total assets	/	0.75
* Cost of goods sold/Turnover	/	0.91

PROFITABILITY: FAIR

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

l SC’s net profit margin is fair in 2010.

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

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

LIQUIDITY: AVERAGE

l The current ratio of SC is maintained in a normal level in both 2 years.

l SC’s quick ratio is maintained in a normal level in both 2 years.

l The inventory of SC appears average in both 2 years.

l The accounts receivable of SC appears average in both 2 years.

l SC’s short-term loan is large in both 2 years.

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

LEVERAGE: AVERAGE

l The debt ratio of SC is fairly high.

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 short-term loan could be a threat to SC’s financial condition. The given credit amount would appear to be within SC’s capacities, and a credit line up to USD 400,000 is recommended.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.45.08
UK Pound	1	Rs.73.45
Euro	1	Rs.64.30

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.