MIRA INFORM REPORT

Report Date :

24.12.2012

IDENTIFICATION DETAILS

Name :	MCC PAPER GROUP CO., LTD.

Registered Office :	Mcc Tower, No. 28, Shuguangxili, Chaoyang District Beijing 100028 Pr

Country :	China

Financials (as on) :	31.12.2011

Date of Incorporation :	18.02.1998

Com. Reg. No.:	640000000003125

Legal Form :	One-Person Limited Liability Company

Line of Business :	Subject engaged in management of its subsidiaries, international trade.

No. of Employees :	150

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 :	Slow but correct
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^th, 2012

Country Name

Previous Rating

(31.03.2011)

Current Rating

(30.06.2012)

China

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

CHINA - ECONOMIC OVERVIEW

Since the late 1970s China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the world's largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, creation of a diversified banking system, development of stock markets, rapid growth of the private sector, and opening to foreign trade and investment. China has implemented reforms in a gradualist fashion. In recent years, China has renewed its support for state-owned enterprises in sectors it considers important to "economic security," explicitly looking to foster globally competitive national champions. After keeping its currency tightly linked to the US dollar for years, in July 2005 China revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of the renminbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2010 stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar values of China's agricultural and industrial output each exceed those of the US; China is second to the US in the value of services it produces. Still, per capita income is below the world average. The Chinese government faces numerous economic challenges, including: (a) reducing its high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and by 2011 more than 250 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of population control policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and economic development. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development. In 2010-11, China faced high inflation resulting largely from its credit-fueled stimulus program. Some tightening measures appear to have controlled inflation, but GDP growth consequently slowed to near 9% for 2011. An economic slowdown in Europe is expected to further drag Chinese growth in 2012. Debt overhang from the stimulus program, particularly among local governments, and a property price bubble challenge policy makers currently. The government's 12th Five-Year Plan, adopted in March 2011, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent on exports in the future. However, China has made only marginal progress toward these rebalancing goals.

Source : CIA

Company name and address

MCC PAPER GROUP CO., LTD.

MCC TOWER, NO. 28, SHUGUANGXILI, CHAOYANG DISTRICT

BEIJING 100028 PR CHINA

TEL: 86 (0) 10-59868574/59868621

FAX: 86 (0) 10-59868578/59868622

EXECUTIVE SUMMARY

Date of Registration : february 18, 1998

REGISTRATION NO. : 640000000003125

LEGAL FORM : One-person Limited Liability Company

CHIEF EXECUTIVE : Zhao zhishun (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : cny 1,672,310,000

staff : 150

BUSINESS CATEGORY : management and trade

Revenue : CNY 12,746,657,000 (CONSOLIDATED, AS OF DEC. 31, 2011)

EQUITIES : CNY 2,440,879,000 (CONSOLIDATED, AS OF DEC. 31, 2011)

WEBSITE : www.mccpapergroup.com

E-MAIL : N/A

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : fairly stable

OPERATIONAL TREND : fairly STEADY

GENERAL REPUTATION : FAIRLY GOOD

EXCHANGE RATE : CNY 6.23 = USD 1

Adopted abbreviations (as follows)

SC - Subject Company (the company inquired by you)

N/A – Not available

CNY – China Yuan Ren Min Bi

OPERATIONAL TREND & GENERAL REPUTATION

This section aims at indicating the relative positions of SC in respect of its operational trend & general reputation

Operational Trend:- General Reputation:-

Upward Excellent

Steady Good

Fairly Steady Fairly Good

Ordinary Average

Fair Fair

Stagnant Detrimental

Downward Not known

Not known Not yet be determined

Not yet be determined

LEGAL STATUS & HISTORY

SC was established as a one-person limited liability company of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 640000000003125 on February 18, 1998.

SC’s Organization Code Certificate No.: 22834747-3

SC’s registered capital: cny 1,672,310,000

SC’s paid-in capital: cny 1,672,310,000

Registration Change Record:-

No significant changes of SC have been noted in SAIC since its incorporation.

Current Co search indicates SC’s shareholders & chief executives are as follows:-

Name of Shareholder (s)	% of Shareholding
China Metallurgical Group Corporation	100

SC’s Chief Executives:-

Position	Name
Legal Representative, Chairman, and General Manager	Zhao Zhishun
Deputy General Manager	Xu Shiqing

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

China Metallurgical Group Corporation 100

------------------------------------

Date of Registration: December 18, 1982

Registration No.: 100000000000942

Legal Form: Sole State-Owned Enterprise

Chief Executive: Guo Wenqing

Registered Capital: CNY 8,459,570,000

Address: No. 28 Shuguangxili, Chaoyang District, Beijing

Tel: 86 010-59869999

Fax: 86 010-59869988

Web: www.mcc.com.cn

MANAGEMENT

Zhao Zhishun , Legal Representative, Chairman and General Manager

-------------------------------------------------------------------------------------------------------

Ø Gender: M

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as legal representative, chairman and general manager

Xu Shiqing , Deputy General Manager

-------------------------------------------------------------

Ø Gender: M

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as deputy general manager

BUSINESS OPERATION

SC’s registered business scope includes wholesale of toluene, hydrochloric acid, flammable solids, spontaneous combustion and flammable substances, compressed gases and liquefied gases, flammable liquids. Manufacturing and selling all kinds of machine-made paper and paperboard, coated paper, packaging paper, selling non-ferrous metal mineral products, chemical minerals, metallic minerals, barite, talc, graphite, fluorite, magnesite, refractory bauxite, wollastonite, kaolin, bentonite, diatomite, gypsum, perlite, serpentine asbestos, diamond, calcium oxide; manufacturing and selling chemical products; pulpwood planting; manufacturing and selling raw bamboo, reed and straw, reed pulp, bamboo pulp, wood pulp; decoration of building construction, machinery and equipment installation, real estate development and project contracting, industrial engineering; international trade; investment and management of the project.

SC is mainly engaged in management of its subsidiaries, international trade.

SC’s products mainly include:

FDA grade one-side coated cardboard

Ivory board paper

High-strength corrugated medium base

Cast coated base paper

Bulky offset printing paper

Snow-white offset printing paper

Offset Printing Paper

Fine writing paper

High grade multi-purpose office paper

Etc.

SC sources its materials 80% from domestic market, and 20% from overseas market. SC sells 30% of its products in domestic market, and 70% to overseas market, mainly U.S.A., Europe, Mid East, Southeast Asia, etc.

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.

*Major Customers:

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

Canfor Pulp Limited

General Office Industries Inc.

Staff & Office:

--------------------------

SC is known to have approx. 150 staff at present.

SC owns an area as its operating office, but the detailed information is unknown.

RELATED COMPANY

SC is known to have following subsidiaries at present,

n Mcc Meili Paper Industry Co., Ltd.

n Mcc Paper Yinhe Co., Ltd.

n Mcc Laishan Paper Industry Co., Ltd.

n Mcc Qianyang Plasm Paper Co., Ltd.

n Mcc Meili Forestry Development Co., Ltd.

n Mcc Meili Inner Mongolia Plasm Paper Co., Ltd.

n Mcc Meili Plasm Paper Co., Ltd.

n Mcc Paper Chengdu Sales Co., Ltd.

n Mcc Guoxin Trade Co., Ltd.

n Mcc Paper Trade (Shanghai) Co., Ltd.

n Mcc Ningxia Industry Co., Ltd.

n Mcc Meili Paper Group Ensuring Environment Protection Co., Ltd.

n Ningxia Meili Technology Printing And Packaging Co., Ltd.

n Ningxia Meili Paper Group Waste Material Recycling Co., Ltd.

PAYMENT

Overall payment appraisal:

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet be 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.

BANKING

The bank information of SC is not filed in SAIC.

FINANCIALS

Consolidated Balance Sheet

Unit: CNY’000	As of Dec. 31, 2010	As of Dec. 31, 2011
Cash	659,391	1,796,901
Notes receivable	215,888	713,742
Accounts receivable	992,756	1,071,781
Advances to suppliers	1,141,592	769,006
Other receivable	517,201	228,091
Inventory	4,591,467	3,570,576
Non-current assets within one year	0	0
Other current assets	82,061	67,419
	------------------	------------------
Current assets	8,200,356	8,217,516
Fixed assets	7,677,012	7,620,496
Construction in progress	752,312	458,961
Intangible assets	1,380,280	4,716,020
Long-term prepaid expenses	406,975	409,940
Deferred income tax assets	39,589	81,590
Other non-current assets	208,604	-213,121
	------------------	------------------
Total assets	18,665,128	21,291,402
	=============	=============
Short-term loans	4,943,203	7,165,264
Notes payable	533,946	1,580,823
Accounts payable	1,436,742	2,323,198
Wages payable	61,953	140,947
Taxes payable	173,888	183,507
Advances from clients	200,366	259,358
Other payable	1,230,998	1,085,016
Other current liabilities	794,591	1,038,973
	------------------	------------------
Current liabilities	9,375,687	13,777,086
Non-current liabilities	5,578,486	5,073,437
	------------------	------------------
Total liabilities	14,954,173	18,850,523
Equities	3,710,955	2,440,879
	------------------	------------------
Total liabilities & equities	18,665,128	21,291,402
	=============	=============

Consolidated Income Statement

Unit: CNY’000	As of Dec. 31, 2010	As of Dec. 31, 2011
Revenue	7,969,168	12,746,657
Cost of sales	6,600,963	10,255,122
Taxes and surcharges	22,492	23,270
Sales expense	319,626	354,967
Management expense	219,232	303,756
Finance expense	552,568	885,513
Asset impairment loss	2,087	817,303
Investment income	161	361
Non-business income	54,567	124,413
Non-business expenditure	78,729	4,525
Profit before tax	76,413	-1,254,395
Less: profit tax	35,173	15,681
Profits	41,240	-1,270,076

Important Ratios

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

	As of Dec. 31, 2010	As of Dec. 31, 2011
*Current ratio	0.87	0.60
*Quick ratio	0.38	0.34
*Liabilities to assets	0.80	0.89
*Net profit margin (%)	0.52	-9.96
*Return on total assets (%)	0.22	-5.97
*Inventory / Revenue ×365	211 days	103 days
*Accounts receivable/ Revenue ×365	46 days	31 days
* Revenue/Total assets	0.43	0.60
* Cost of sales / Revenue	0.83	0.80

FINANCIAL COMMENTS

PROFITABILITY: AVERAGE

l The revenue of SC appears fairly good, and it was rising in 2011.

l SC’s net profit margin is average in 2010 and fair in 2011.

l SC’s return on total assets is average in 2010 and fair in 2011.

l SC’s cost of sales is average, comparing with its revenue.

LIQUIDITY: FAIR

l The current ratio of SC is maintained in a fair level.

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

l The inventory of SC appears large.

l The accounts receivable of SC is maintained in an average level.

l The short-term loans of SC appear large.

l SC’s revenue is in a fair level, 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 low.

Overall financial condition of the SC: Fairly Stable.

CONCLUSIONS

SC is considered large-sized in its line with fairly stable financial conditions. The large amount of inventory and short-term loans may be a threat to SC’s financial condition.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.55.08
UK Pound	1	Rs.89.53
Euro	1	Rs.72.77

INFORMATION DETAILS

Report Prepared by :

PRL

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.