MIRA INFORM REPORT

Report Date :

14.03.2012

IDENTIFICATION DETAILS

Name :	LIANG'S JEWELRY MAKING LTD.

Registered Office :	Fifth Floor, Block 1, Shuibei Industrial Park, Cuizhu North Road Luohu District, Shenzhen, Guangdong Province 518020 Pr

Country :	China

Financials (as on) :	31.12.2011

Date of Incorporation :	10.12.2003

Com. Reg. No.:	440301102735694

Legal Form :	One-Person Limited Liabilities Company

Line of Business :	Processing and selling gold, platinum and jewelry.

No. of Employees :	557

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

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 – September 30, 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 and address

LIANG'S JEWELRY MAKING LTD.

FIFTH FLOOR, BLOCK 1, SHUIBEI INDUSTRIAL PARK, CUIZHU NORTH ROAD

LUOHU DISTRICT, SHENZHEN, GUANGDONG PROVINCE 518020 PR CHINA

TEL: 86 (0) 755-25506233

FAX: 86 (0) 755-25619055

EXECUTIVE SUMMARY

Date of Registration : december 10, 2003

REGISTRATION NO. : 440301102735694

LEGAL FORM : one-person Limited liabilities company

CHIEF EXECUTIVE : jiang fufang (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : cny 20,000,000

staff : 557

BUSINESS CATEGORY : processing & trading

Revenue : CNY 129,230,000 (AS OF DEC. 31, 2011)

EQUITIES : CNY 20,940,000 (AS OF DEC. 31, 2011)

WEBSITE : www.lj-jewelry.com

E-MAIL : liangsjewelry@163.com

PAYMENT : AVERAGE

MARKET CONDITION : average

FINANCIAL CONDITION : FAIRly stable

OPERATIONAL TREND : ORDINARY

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

***Note: SC’s complete name should be the heading one, while the given name (LJ Jewelry) is the abbreviation.

SC was established as one-person limited liabilities company of PRC with State Administration for Industry & Commerce (SAIC) under registration No.: 440301102735694.

SC’s Organization Code Certificate No.: 75760488-5

SC’s registered capital: CNY 20,000,000

SC’s paid-in capital: CNY 20,000,000

Registration Change Record:

Date	Change of Contents	Before the change	After the change
2007-4-29	Registered Capital	CNY 1,000,000	CNY 10,000,000
2007-4-29	Shareholder (s) (% of Shareholding)	Liang Yingchun 30% Liang Yaosu 70%	Liang Yaosu 7% Liang Yingchun 93%
2007-7-31	Registration No.	4403012129056	440301102735694
2008-3-25	Legal Representative	Liang Yaosu	Liang Suisheng
	Shareholder (s) (% of Shareholding)	Liang Yaosu 7% Liang Yingchun 93%	Liang Yingchun 100%
	Legal Form	Limited Liabilities Company	One-person Limited Liabilities Company
2008-5-21	Shareholder (s) (% of Shareholding)	Liang Yingchun 100%	Chen Zhiyong 30% Liang Yingchun 70%
2008-5-21	Legal Form	One-person Limited Liabilities Company	Limited Liabilities Company
2009-7-7	Shareholder (s) (% of Shareholding)	Chen Zhiyong 30% Liang Yingchun 70%	Liang Yingchun 100%
2009-7-7	Legal Form	Limited Liabilities Company	One-person Limited Liabilities Company
2010-1-28	Legal Representative	Liang Suisheng	Jiang Fufang
2011-2-24	Registered Capital	CNY 10,000,000	CNY 20,000,000

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

Name of Shareholder (s)	% of Shareholding
Liang Yingchun	100

SC’s Chief Executives:-

Position	Name
Legal Representative and Chairman	Jiang Fufang
General Manager	Zhou Zhongxian
Supervisor	He Sufen

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

Liang Yingchun 100

MANAGEMENT

Jiang Fufang , Legal Representative and Chairman

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

Ø Gender: F

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as legal representative and chairman

Zhou Zhongxian , General Manager

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

Ø Gender: M

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as general manager

He Sufen , Supervisor

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

Ø Gender: F

Ø Qualification: University

BUSINESS OPERATION

SC’s registered business scope includes processing gold, platinum and jewelry, industry development (projects need to be reported for authorization), selling jewelry, gold products, and crafts, other domestic commerce, supplying and selling of commodities (excluding the products previlaged, prohibited or franchised).

SC is mainly engaged in processing and selling gold, platinum and jewelry.

SC’s products mainly include:

Diamond ring

Couple ring

Lady Pendant

Etc.

SC sources its materials 100% from domestic market. SC sells 70% of its products in domestic market, and 30% to overseas market, mainly Southeast Asia.

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.

Staff & Office:

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

SC is known to have approx. 557 staff at present.

SC owns an area as its operating office & factory of approx. 10,000 sq. meters at the heading address.

RELATED COMPANY

SC is not known to have any subsidiary at present.

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 local SAIC.

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2011
Cash	3,130
Accounts receivable	6,490
Advances to suppliers	640
Other receivable	380
Inventory	44,040
Non-current assets within one year	0
Other current assets	0
	------------------
Current assets	54,680
Fixed assets	2,370
Construction in progress	0
Intangible assets	0
Deferred income tax assets	0
Other non-current assets	15,590
	------------------
Total assets	72,640
	=============
Short-term loans	19,720
Notes payable	0
Accounts payable	5,880
Wages payable	0
Advances from clients	15,890
Other payable	9,170
Other current liabilities	1,040
	------------------
Current liabilities	51,700
Non-current liabilities	0
	------------------
Total liabilities	51,700
Equities	20,940
	------------------
Total liabilities & equities	72,640
	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2011
Revenue	129,230
Cost of sales	124,030
Sales expense	110
Management expense	3,400
Finance expense	420
Profit before tax	1,110
Less: profit tax	290
Profits	820

Important Ratios

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

	As of Dec. 31, 2011
*Current ratio	1.06
*Quick ratio	0.21
*Liabilities to assets	0.71
*Net profit margin (%)	0.63
*Return on total assets (%)	1.13
*Inventory / Revenue ×365	125 days
*Accounts receivable/ Revenue ×365	19 days
* Revenue/Total assets	1.78
* Cost of sales / Revenue	0.96

FINANCIAL COMMENTS

PROFITABILITY: AVERAGE

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

l SC’s net profit margin is average.

l SC’s return on total assets is average.

l SC’s cost of sales is fairly 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 poor level.

l The inventory of SC appears large.

l The accounts receivable of SC appears average.

l The short-term loans of SC appear fairly large.

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.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fairly Stable.

CONCLUSIONS

SC is considered small-sized in its line with fairly stable financial conditions. The large amount of inventory may be a threat to SC’s financial condition. A credit line up to USD 80,000 would appear to be within SC’s capacities.

DIAMOND INDUSTRY – INDIA

- From time immemorial, India is well known in the world as the birthplace for diamonds. It is difficult to trace the origin of diamonds but history says that in the remote past, diamonds were mined only in India. Diamond production in India can be traced back to almost 8^th Century B.C. India, in fact, remained undisputed leader till 18^th Century when Brazilian fields were discovered in 1725 followed by emergence of S. Africa, Russia and Australia.

- The achievement of the Indian diamond industry was possible only due to combination of the manufacturing skills of the Indian workforce and the untiring and unflagging efforts of the Indian diamantaires, supported by progressive Government policies.

- The area of study of family owned diamond businesses derives its importance from the huge conglomerate of family run organizations which operate in the diamond industry since many generations.

- Some of the basic traits of family run business enterprises include spirit of entrepreneurship, mutual trust lowers transaction costs, small, nimble and quick to react, information as a source of advantage and philanthropy.

- Family owned diamond businesses need to improve on many fronts including higher standard of corporate governance, long-term performance – focused strategies, modern management and technology.

- The diamond jewellery industry in India today may be more than Rs 60000 mil and is rated amongst the fastest growing in the world. Indi ranks third in the world in domestic diamond consumption.

- Utmost caution is to be exercised while dealing with some medium and large diamond traders which are usually engaged in fictitious import – export, inter-company transactions, financially assisted by banks. In the process, several public sector banks lost several hundred million rupees. They mostly diverted borrowed money for diamond business into real estate and capital markets.

- Excerpts from Times of India dated 30^th October 2010 is as under –

DIAMOND SAGA – DIRTY DOZEN STUCK WITH 2K CR DEBT

This could be the biggest credibility crisis the Indian diamond industry has ever faced. Fifteen banks run the risk of losing Rs 2000 crore lent to a dozen diamond firms in Surat. Until about two months ago, they had not repaid these dues. Bankers believe many diamantaires borrowed money during the economic downturn two years ago and diverted funds to businesses like real estate and capital markets. Many of themselves made money from these businesses but their diamond companies have gone sick and declared insolvency.

- Most of the money borrowed from the banks in the name of their diamond business has been diverted in real estate and the share market. The banks are not in a position to seize their properties because in many cases, these were purchased in the name of their relatives and friends.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.49.84
UK Pound	1	Rs.77.97
Euro	1	Rs.65.61

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.

MIRA INFORM REPORT

Company name and address

EXECUTIVE SUMMARY

OPERATIONAL TREND & GENERAL REPUTATION

LEGAL STATUS & HISTORY

RECENT DEVELOPMENT

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

MANAGEMENT

BUSINESS OPERATION

RELATED COMPANY

PAYMENT

BANKING

FINANCIALS

FINANCIAL COMMENTS

CONCLUSIONS

Unit