MIRA INFORM REPORT

Report Date :

10.01.2012

IDENTIFICATION DETAILS

Correct Name :	LIAONING HONGFENG PRINTING & DYEING CO., LTD.

Registered Office :	No. 15, Section 6, Jiefang Road, Linghe District, Jinzhou, Liaoning Province 121000 Pr

Country :	China

Financials (as on) :	31.12.2010

Date of Incorporation :	07.07.2000

Com. Reg. No.:	210700004033526

Legal Form :	One-Person Limited Liability Company

Line of Business :	processing and selling different sorts of printing and dyeing cloth

No. of Employees :	500

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Poor
Payment Behaviour :	Slow
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

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

Company name & address

LIAONING HONGFENG PRINTING & DYEING CO., LTD.

NO. 15, SECTION 6, JIEFANG ROAD, LINGHE DISTRICT

JINZHOU, LIAONING PROVINCE 121000 PR CHINA

TEL: 86 (0) 416-3567778

FAX: 86 (0) 416-3567770

EXECUTIVE SUMMARY

Date of Registration : july 7, 2000

REGISTRATION NO. : 210700004033526

LEGAL FORM : One-person Limited Liability Company

CHIEF EXECUTIVE : wu yang (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : CNY 30,000,000

staff : 500

BUSINESS CATEGORY : manufacturing

Revenue : CNY 293,670,000 (AS OF DEC. 31, 2010)

EQUITIES : CNY -30,560,000 (AS OF DEC. 31, 2010)

WEBSITE : N/A

E-MAIL : N/A

PAYMENT : AVERAGE

Recommended Credit Limit: c.o.d.

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : poor

OPERATIONAL TREND : DOWNWARD

GENERAL REPUTATION : FAIR

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

***Note: SC’s correct name should be the above stated one, instead of the given name – Hongfeng Printing & Dyeing Mill Liaoning.

SC was established as a limited liabilities company of PRC on July 7, 2000. However, SC changed to present legal form, and was registered as one-person limited liabilities company of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 210700004033526 in 2011.

SC’s Organization Code Certificate No.: 71968688-3

SC’s registered capital: CNY 30,000,000

SC’s paid-in capital: CNY 30,000,000

Registration Change Record:

Date	Change of Contents	Before the change	After the change
2010	Registered Capital	CNY 20,000,000	CNY 30,000,000
2010	Company Name	Hongfeng Printing And Dyeing Mill Co., Ltd.	Liaoning Hongfeng Printing & Dyeing Co., Ltd.
2011	Legal Form	Limited liabilities company	One-Person Limited Liabilities Company

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

Name of Shareholder (s)

% of Shareholding

Liaoning Hongfeng Industry Development Co., Ltd.

100

SC’s Chief Executives:-

Position	Name
Legal Representative, Chairman, and General Manager	Wu Yang

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

Liaoning Hongfeng Industry Development Co., Ltd. 100

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

Date of Registration: July 14, 2004

Registration No.: 210700004042037

Legal Form: Limited Liability Company

Chief Executive: Wu Yang

Registered Capital: CNY 30,000,000

MANAGEMENT

Wu Yang, Legal Representative, Chairman and General Manager

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

Ø Gender: M

Ø Age: 47

Ø ID# 210202196506235916

Ø Qualification: University

Ø Working experience (s):

From 2000 to present, working in SC as legal representative, chairman and general manager

Also working in Liaoning Hongfeng Industry Development Co., Ltd., Dalian Hongfeng Holdings Co., Ltd., Hongfeng (Dalian F.T.Z) International Trade Co., Ltd., Jinzhou Hongfeng Real Estate Development Co., Ltd. and Dalian Anming Hongfeng Printing & Dyeing Co., Ltd. as legal representative and chairman

BUSINESS OPERATION

SC’s registered business scope includes exporting self-made products and technologies; importing raw materials, machinery, instruments, and relevant technology for its production and research, excluding the imported goods controlled and forbidden by the state; processing with imported materials, processing with imported samples, assembling with imported parts, and compensation trade in agreement; selling textile raw materials, dyeing chemicals and garments.

SC is mainly engaged in processing and selling different sorts of printing and dyeing cloth.

SC’s products mainly include: dyeing chemicals, dyeing cloth and garments with cotton, polyester, viscose, etc.

SC sources its materials 60% from domestic market, and 40% from overseas market, mainly Europe. SC sells 10% of its products in domestic market, and 90% to overseas market, mainly Eastern Europe.

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 Customer:

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

Shandong D&Y Textile & Garment Group Co., Ltd.

*Major Supplier:

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

Shaanxi Modern Textiles Co., Ltd.

Staff & Office:

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

SC is known to have approx. 500 staff at present.

SC owns an area as its operating office & factory of approx. 70,000 sq. meters at the heading address.

RELATED COMPANY

n Dalian Hongfeng Holdings Co., Ltd.

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

Date of Registration: September 8, 2006

Registration No.: 210231000020462

Legal Form: Limited Liability Company

Chief Executive: Wu Yang

Registered Capital: CNY 52,770,000

n Hongfeng (Dalian F.T.Z) International Trade Co., Ltd.

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

Date of Registration: May 18, 1999

Registration No.: 210200400016385

Chief Executive: Wu Yang

Registered Capital: CNY 11,800,000

n Dalian Anming Hongfeng Printing & Dyeing Co., Ltd.

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

Date of Registration: June 2, 2008

Registration No.: 210281400001771

Chief Executive: Wu Yang

Registered Capital: CNY 20,000,000

n Jinzhou Hongfeng Real Estate Development Co., Ltd.

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

Date of Registration: April 28, 2007

Registration No.: 210700004030239

Legal Form: Limited Liability Company

Chief Executive: Wu Yang

Registered Capital: CNY 28,800,000

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’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.

BANKING

Basic Bank:

Bank of Jinzhou

AC#: 402003197501018

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2009	As of Dec. 31, 2010
Cash	51,000	81,190
Accounts receivable	92,040	109,300
Advances to suppliers	97,990	73,330
Other receivable	70,750	126,260
Inventory	54,010	83,960
Non-current assets within one year	0	0
Other current assets	20	20
	------------------	------------------
Current assets	365,810	474,060
Fixed assets	71,730	77,250
Construction in progress	0	0
Long-term prepaid expenses	0	0
Deferred income tax assets	0	0
Other non-current assets	47,990	58,280
	------------------	------------------
Total assets	485,530	609,590
	=============	=============
Short-term loans	88,490	108,570
Notes payable	137,930	197,620
Accounts payable	44,300	51,100
Wages payable	0	0
Advances from clients	19,970	34,610
Other payable	41,210	66,240
Other current liabilities	-3,740	-5,420
	------------------	------------------
Current liabilities	328,160	452,720
Long term liabilities	115,000	115,000
Other liabilities	64,990	72,430
	------------------	------------------
Total liabilities	508,150	640,150
Equities	-22,620	-30,560
	------------------	------------------
Total liabilities & equities	485,530	609,590
	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2010
Revenue	293,670
Cost of sales	276,440
Sales expense	3,240
Management expense	15,940
Finance expense	14,330
Profit before tax	-8,380
Less: profit tax	0
Profits	-8,380

Important Ratios

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

	As of Dec. 31, 2009	As of Dec. 31, 2010
*Current ratio	1.11	1.05
*Quick ratio	0.95	0.86
*Liabilities to assets	1.05	1.05
*Net profit margin (%)	--	-2.85
*Return on total assets (%)	--	-1.37
*Inventory / Revenue ×365	--	105 days
*Accounts receivable/ Revenue ×365	--	136 days
* Revenue/Total assets	--	0.48
* Cost of sales / Revenue	--	0.94

FINANCIAL COMMENTS

PROFITABILITY: FAIR

l The revenue of SC appears fairly good in its line.

l SC’s net profit margin is fair.

l SC’s return on total assets is fair.

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

LIQUIDITY: FAIR

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

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

l The inventory of SC appears large.

l The accounts receivable of SC appears large.

l The short-term loan of SC appears large.

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

LEVERAGE: FAIR

l The debt ratio of SC is high.

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

Overall financial condition of the SC: Poor.

CONCLUSIONS

SC is considered medium-sized in its line with poor financial conditions. The large amount of inventory, accounts receivable and short-term loan may be a threat to SC’s financial condition. 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.52.73
UK Pound	1	Rs.81.34
Euro	1	Rs.67.01

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.

Company name & address

EXECUTIVE SUMMARY

Adopted abbreviations

OPERATIONAL TREND & GENERAL REPUTATION

LEGAL STATUS & HISTORY

RECENT DEVELOPMENT

SHAREHOLDER CHART & BACKGROUND

MANAGEMENT

BUSINESS OPERATION

RELATED COMPANY

PAYMENT

BANKING

FINANCIALS

FINANCIAL COMMENTS

CONCLUSIONS

Unit