MIRA INFORM REPORT

Report Date :

07.02.2012

IDENTIFICATION DETAILS

Name :	CSPC ZHONGNUO PHARMACEUTICAL (SHIJIAZHUANG) CO., LTD.
Registered Office :	No. 188, Gongnong Road, Shijiazhuang City, Hebei Province 050051 Pr
Country :	China
Financials (as on) :	31.12.2010
Date of Incorporation :	31.07.2002
Com. Reg. No.:	130100400003657
Legal Form :	Wholly Foreign-Owned Enterprise
Line of Business :	manufacturing and selling various active pharmaceutical ingredients
No. of Employees :	2879

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 5,000,000
Status :	Good
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

CSPC Zhongnuo Pharmaceutical (Shijiazhuang) Co., Ltd.

NO. 188, GONGNONG ROAD, SHIJIAZHUANG CITY

HEBEI PROVINCE 050051 PR CHINA

TEL: 86 (0) 311-83805386/83869312

FAX: 86 (0) 311-83805385

EXECUTIVE SUMMARY

Date of Registration : JULY 31, 2002

REGISTRATION NO. : 130100400003657

LEGAL FORM : WHOLLY FOREIGN-OWNED ENTERPRISE

CHIEF EXECUTIVE CAI DONGCHEN (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : CNY 282,810,000

staff : 2,879

BUSINESS CATEGORY : manufacturing

Revenue : CNY 1,950,844,000 (AS OF DEC. 31, 2010)

EQUITIES : CNY 724,747,000 (AS OF DEC. 31, 2010)

WEBSITE : www.znpc.cn

E-MAIL : znbgs@mail.ecspc.com

PAYMENT : AVERAGE

Recommended Credit Limit: UP TO USD 5,000,000

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : stable

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.31 = 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 wholly foreign-owned enterprise of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 130100400003657 on July 31, 2002.

SC’s Organization Code Certificate No.: 74015797-8

SC’s customs registration No.: 1301930780

SC’s Tax No.: 130102740157978

SC’s registered capital: CNY 282,810,000

SC’s paid-in capital: CNY 282,810,000

Registration Change Record:

Date	Change of Contents	Before the change	After the change
--	Registration No.	130100100387	130100400003657
	Registered Capital	CNY 216,000,000	CNY 282,810,000

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

Name of Shareholder (s)	% of Shareholding
China Pharmaceutical Group Limited	100

SC’s Chief Executives:-

Position	Name
Legal Representative and Chairman	Cai Dongchen
General Manager	Xu Baozhi

RECENT DEVELOPMENT

SC has got ISO9001:2004, ISO14001:2000, OHSA, COS certificates, etc.  All its workshops have passed GMP certification in China, and has successfully experienced international GMP inspection and audit from many countries’ FDA, such as Uganda, Malawi, Nigeria, Pakistan, Ghana, Ethiopia… Its products can conform to BP, EP, USP, CP standard, as per clients’ requirements.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

China Pharmaceutical Group Limited 100

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

China Pharmaceutical Group Limited ("China Pharm") (Ticker: 1093) is one of the largest pharmaceutical groups in China. It has been listed on the Main Board of the Hong Kong Stock Exchange since June 1994.

CR No. : 0362244

Registered Legal Form: Listed Company

Active Status: Live

Incorporation Date: Jun. 16, 1992

Address: Room 3206, 32/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong

Tel: 852-28023011

Fax: 852-28024552

Website: www.cpg.hk

Email: info@cpg.hk

MANAGEMENT

Cai Dongchen, Legal Representative and Chairman

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

Ø Gender: M

Ø Age: 59

Ø Qualification: University

Ø Working experience (s):

Educated in Hebei Finance & Economics College

From 1972 to 1984, worked in Hebei Pharmaceutical Plant as technician

Since 1984, worked in Hebei Pharmaceutical Plant as factory manager

From 2002 to present, working in SC as legal representative and chairman

At present, working in China Pharmaceutical Group Ltd. as chairman, and in CSPC as chairman

Xu Baozhi, General Manager

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

Ø Gender: F

Ø Age: 40’s

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as general manager

BUSINESS OPERATION

SC’s registered business scope includes manufacturing power for injection, freeze-dried powder injection, nose drops, eye drops, oral liquid, tablet, hard capsule, granule, Repaglinide, Nitrendipine, Metformin Hydrochride, Ranitidine Hydrochloride, Propafenone Hydrochloride, Benzylpenicillin Sodium, and Penicillin G Procaine, health foods, coffee, surgical dressing, retaining materials; and selling its homegrown products.

SC is mainly engaged in manufacturing and selling various active pharmaceutical ingredients.

SC’s products mainly include: power for injection, tablet, hard capsule, granule, and eye drop.

SC sources its materials 100% from domestic market, mainly Hebei province. SC sells 95% of its products in domestic markets, mainly Guangdong and Hebei province, and 5% to overseas market, mainly Hong Kong.

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

*Major Customer:

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

Guangzhou Pharmaceuticals Corp.

Staff & Office:

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

SC is known to have approx. 2,879 staff at present.

SC owns an area as its operating office & factory of approx. 113,229 sq. meters at the heading address.

RELATED COMPANY

CSPC Zhongnuo Pharmaceutical (Taizhou) Co., Ltd.

Etc.

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

Basic Bank:

Industrial and Commercial Bank of China Jianhua Sub-branch

AC#: 04020224093000309202

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2009	As of Dec. 31, 2010
Cash	153,731	225,843
Notes receivable	268,389	267,028
Accounts receivable	230,838	303,958
Advances to suppliers	20,388	13,428
Other receivable	415,848	258,141
Inventory	254,657	286,233
Non-current assets within one year	0	0
Other current assets	0	0
	------------------	------------------
Current assets	1,343,851	1,354,631
Fixed assets	172,704	170,559
Construction in progress	10,473	492
Intangible assets	78,243	95,105
Long-term investment	140,000	242,800
Long-term prepaid expenses	14,408	15,235
Deferred income tax assets	0	0
Other non-current assets	0	0
	------------------	------------------
Total assets	1,759,679	1,878,822
	=============	=============
Short-term loans	0	0
Notes payable	110,000	90,000
Accounts payable	374,029	364,839
Wages payable	6,770	9,249
Taxes payable	6,202	3,187
Advances from clients	35,134	19,827
Other payable	534,708	596,184
Other current liabilities	0	0
	------------------	------------------
Current liabilities	1,066,843	1,083,286
Non-current liabilities	250	70,789
	------------------	------------------
Total liabilities	1,067,093	1,154,075
Equities	692,586	724,747
	------------------	------------------
Total liabilities & equities	1,759,679	1,878,822
	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2009	As of Dec. 31, 2010
Revenue	1,865,774	1,950,844
Cost of sales	1,370,657	1,489,073
Taxes and surcharges	0	64
Sales expense	293,219	299,105
Management expense	101,705	92,063
Finance expense	3,512	4,287
Income from investment	-800	0
Non-operating income	2,450	3,543
Non-operating expense	944	5,153
Profit before tax	96,103	64,640
Less: profit tax	6,563	9,480
Profits	89,540	55,160

Important Ratios

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

	As of Dec. 31, 2009	As of Dec. 31, 2010
*Current ratio	1.26	1.25
*Quick ratio	1.02	0.99
*Liabilities to assets	0.61	0.61
*Net profit margin (%)	4.80	2.83
*Return on total assets (%)	5.09	2.94
*Inventory / Revenue ×365	50 days	54 days
*Accounts receivable/ Revenue ×365	46 days	57 days
* Revenue/Total assets	1.06	1.04
* Cost of sales / Revenue	0.73	0.76

FINANCIAL COMMENTS

PROFITABILITY: AVERAGE

l The revenue of SC appears good in its line in both years.

l SC’s net profit margin is fairly good in 2009 and average in 2010.

l SC’s return on total assets is fairly good in 2009 and average in 2010.

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

LIQUIDITY: AVERAGE

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

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

l The inventory of SC is maintained in an average level.

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

l SC has no short-term loans in both years.

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

LEVERAGE: AVERAGE

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

l The risk for SC to go bankrupt is low.

Overall financial condition of the SC: Stable.

CONCLUSIONS

SC is considered large-sized in its line with stable financial conditions. Taking into consideration of SC’s general performance, reputation as well as market conditions, a credit line up to USD 5,000,000 would appear to be within SC’s capacities.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.48.68
UK Pound	1	Rs.76.75
Euro	1	Rs.63.57

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.