MIRA INFORM REPORT

Preliminary report

Report Date :

16.05.2012

IDENTIFICATION DETAILS

Name :	HUANGSHI DONGBEI ELECTRICAL APPLIANCE CO., LTD.
Registered Office :	No. 5 Wuhuang Road, Tieshan District, Huangshi, Hubei Province, 435006 Pr
Country :	China
Financials (as on) :	31.03.2010
Date of Incorporation :	10.03.1999
Com. Reg. No.:	420000400004635
Legal Form :	Shares Limited Company
Line of Business :	Manufacturing and selling plunger type hermetically sealed compressors
No. of Employees :	2,545

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

Status :	Satisfactory
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 – June 30, 2010

Country Name	Previous Rating (01.04.2010)	Current Rating (30.06.2010)
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 and address

HUANGSHI DONGBEI ELECTRICAL APPLIANCE CO., LTD.

NO. 5 WUHUANG ROAD, TIESHAN DISTRICT, HUANGSHI,

HUBEI PROVINCE, 435006 PR CHINA

TEL: 86 (0) 714-5431873 FAX: 86 (0) 714-5420558

EXECUTIVE SUMMARY

INCORPORATION DATE : MAR. 10, 1999

REGISTRATION NO. : 420000400004635

REGISTERED LEGAL FORM : SHARES LIMITED COMPANY

CHIEF EXECUTIVE : MR. YANG BAICHANG (CHAIRMAN)

STAFF STRENGTH : 2,545

REGISTERED CAPITAL : CNY 235,000,000

BUSINESS LINE : MANUFACTURING

TURNOVER : CNY 1,113,624,000 (CONSOLIDATED, JAN. 1 TO MAR. 31, 2010)

EQUITIES : CNY 706,265,000 (CONSOLIDATED, AS OF MAR. 31, 2010)

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : fairly stable

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : WELL KNOWN

EXCHANGE RATE : CNY 6.80= USD 1 AS OF 2010-8-16

Adopted abbreviations:

ANS - amount not stated

NS - not stated

SC - subject company (the company inquired by you)

NA - not available

CNY - China Yuan Ren Min Bi

SC was registered as a shares limited company at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license) on Mar. 10, 1999.

Company Status: Shares limited co.

This form of business in PR China is defined as a legal person. Its registered capital is divided into shares of equal par value and the co. raises capital by issuing share certificates by promotion or by public offer. Shareholders bear limited liability to the extent of shareholding, and the co. is liable for its debts only to the extent of its total assets. The co has independent property of legal person and enjoys property rights of legal person. The characteristics of the shares limited co. are as follows:

The establishment of the co. requires at least two promoters and no more than 200, half of whom shall be domiciled in China.. Natural person are allowed to serve as promoters.

The minimum registered capital of a co. is CNY 5M. while that of the co. with foreign investment is CNY 5M. The total capital of a co. which propose to apply for publicly listed must be no less than CNY 30M.

The board of directors must consist of five to nineteen directors.

If the co. raises capital by public offer, the promoters must not subscribe less than 35% of the total shares. the promoters’ shares are restricted to transfer- within one year of the offer.

A state-owned enterprise that is restructured into a shares limited co. must comply with the conditions & requirements specified under the law & administrative rule.

SC’s registered business scope includes manufacturing and selling refrigeration compressors and compressor motors; developing, manufacturing and consulting of high-tech products.

SC is mainly engaged in manufacturing and selling plunger type hermetically sealed compressors.

Mr. Yang Baichang has been legal representative and chairman of SC since 2005.

SC is known to have approx. 2,545 employees at present, including 277 technicians, 2,074 workers and 31 sales representatives, etc.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the industrial zone of Huangshi. Our checks reveal that SC owns the total premise about 140,000 square meters.

http://www.donper.com It is the website of SC’s parent company Huangshi Dongbei Mech-Electrical Group Co., Ltd. The design is professional and the content is well organized. At present it is in both Chinese and English versions.

E-mail: stock@donper.com

SC was listed in the Shanghai Stock Exchange in 1999 with stock code of 900956.

SC was ISO9001 certified in 1996, ISO9000: 2000 certified in 2001, and ISO14000 certified in 2003.

In 2004, SC was awarded prize of UNDP/GEF, and the appraisal of the State Environmental Protection Administration of China, which drove the technical progress of the whole compressor industry and improved the integral level of homemade compressors.

SC’s former registration no. was 002678.

MAIN SHAREHOLDERS (As of Dec. 31, 2009):

Name % of Shareholding

Huangshi Dongbei Mech-Electrical Group Co., Ltd. 50.04

Sun Menglin 0.84

Changzhou ZEC Co., Ltd. 0.34

Naito Securities Co., Ltd. 0.23

Shenyin Wanguo Nominees (H.K.) Ltd. 0.22

Zhou Jianbai 0.22

Buy Easy International Co., Limited 0.17

Zhejiang Lisheng Electromechanical Manufacturing Co., Ltd. 0.17

Changshu Tianyin Electromechanical Co., Ltd. 0.17

Shaoxing Xingbei Punching General Co., Ltd. 0.17

Wuhan Xinhua Hardware Co., Ltd. 0.17

Other shareholders: 47.26

Huangshi Dongbei Mech-Electrical Group Co., Ltd.

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

Huangshi Dongbei Mech-Electrical Group Co., Ltd. (Donper Group for short) is a sizable enterprise specialized in R&D, production and sales of refrigerating compressor, commercial-use refrigerating machinery, and solar water heater, etc. In 1994, it formed its group with eight subsidiaries. The main product of the group is refrigeration compressor; simultaneously, it also researches and produces refrigeration equipments such as juice dispenser, ice maker, ice cream machine as well castings, solar energy products and fiber communication component.

The company is also known as Huangshi Donper M & E Group Co., Ltd.

Add: No. 5, Wuhuang Road, Tieshan District, Huangshi City, Hubei Province

Tel: 86-0714-5416688 Fax: 86-0714-5415588

Web: http://www.donper.com

E-Mail: trade@donper.com

Changzhou ZEC Co., Ltd.

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

E-Mail: ZEC@chinaChangzhouZEC.com

Web: http://www.chinachangzhouzec.com/

Shenyin Wanguo Nominees (H.K.) Ltd.

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

CR No.: 0042020

Date of Incorporation: 7-March-1975

Company Status: Private

Active Status: Live

Zhejiang Lisheng Electromechanical Manufacturing Co., Ltd.

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

Registration no.: 330681000066903

Legal representative: Ruan Shufeng

Tel: 0575-87387610

Changshu Tianyin Electromechanical Co., Ltd.

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

Add: No. 8 Yingbin Road, Xingang Town, Changshu, Jiangsu Province

Tel: 86-0512-52691888

Shaoxing Xingbei Punching General Co., Ltd.

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

Legal representative: Bao Wenyao

Wuhan Xinhua Hardware Co., Ltd.

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

Registration no.: 420114000004140

Legal representative: Chen Shuanghe

Tel: 027-69162499

Fax: 027-69161257

l Legal representative and chairman:

Mr. Yang Baichang , senior economist, born in 1955 with Master’s degree. He is currently responsible for the overall management of SC.

Working Experience(s):

From 2005 to present Working in SC as legal representative and chairman

Also working in Huangshi Dongbei Mech-Electrical Group Co., Ltd., as general manager

l General Manager:

Mr. Fang Zeyun , born in 1964. He is currently responsible for the daily management of SC.

Working Experience(s):

Worked in SC as vice general manager, Dongbei Group Research Institute as president and Huangshi Dongbei Refrigeration Co., Ltd. as general manager

From May, 2008 to present Working in SC as general manager

SC is mainly engaged in manufacturing and selling plunger type hermetically sealed compressors.

SC’s products mainly include: reciprocating hermetic refrigerating compressor of 1/14HP ~ 3HP, which are to produce R134a, R600a, R22/R152a, R22, and R404A to match refrigerator, ice box, display case, water machine, car fridge, cold drink machine, and ice cream machine, etc.

SC sources its materials 80% from domestic market, and 20% from the overseas market, mainly European countries. SC sells 70% of its products in domestic market, and 30% to the overseas market, mainly American and European countries.

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

*Major Clients:

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

Changshu Tianyin Electromechanical Co., Ltd.

*Major Suppliers:

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

Changzhou ZEC Co., Ltd.

Wuhan Xinhua Hardware Co., Ltd.

SC is known to have 5 subsidiaries as below:

Huangshi Haiguanshan Hotel Co., Ltd.

Huangshi Sunshine Opto-Electronic Co., Ltd.

Huangshi Donper M & E Group Solar Energy Co., Ltd.

Wuhu Abaur Mechanical & Electrical Co., Ltd.

Huangshi Donper Casting 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.

SC refused to release any information about its bank.

Consolidated Balance Sheet

Unit: CNY’000

	As of Dec. 31, 2009	As of Mar. 31, 2010
Cash & bank	581,303	678,599
Trading financial assets	503	503
Bills receivable	295,728	285,192
Accounts receivable	476,910	560,063
Advances to suppliers	141,802	143,237
Other receivables	46,324	41,511
Inventory	216,166	190,495
Other current assets	0	0
	------------------	------------------
Current assets	1,758,736	1,899,600
Fixed assets net value	615,558	589,186
Project materials	780	780
Projects under construction	33,349	41,143
Disposal of fixed assets	11	12
Long term investment	55,687	58,687
Investment property	5,941	6,252
Other assets	88,842	88,361
Deferred tax assets	5,445	5,368
	------------------	------------------
Total assets	2,564,349	2,689,389
	=============	=============
Short loans	489,878	544,748
Bills payable	688,606	693,828
Accounts payable	472,497	403,612
Advances from clients	62,160	42,603
Salaries payable	25,916	21,940
Dividend payable	11,788	11,663
Taxes payable	25,804	60,423
Other payable	59,385	60,740
Long term liabilities due within one year	20,000	20,000
Other current liabilities	0	0
	------------------	------------------
Current liabilities	1,856,034	1,859,557
Long term liabilities	6,667	123,567
	------------------	------------------
Total liabilities	1,862,701	1,983,124
Equities	701,648	706,265
	------------------	------------------
Total liabilities & equities	2,564,349	2,689,389
	=============	=============

Consolidated Income Statement

Unit: CNY’000

	As of Dec. 31, 2009	Jan. 1 to Mar. 31, 2010
Turnover	2,846,520	1,113,624
Cost of goods sold	2,411,290	1,005,542
Sales expense	71,223	32,283
Management expense	121,156	41,517
Finance expense	41,424	17,679
Asset impairment loss	31,861	0
Investment income	-4,238	-7,367
Profit before tax	162,677	9,964
Less: profit tax	23,476	3,428
Profits	139,201	6,536

Important Ratios

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

	As of Dec. 31, 2009	As of Mar. 31, 2010
*Current ratio	0.95	1.02
*Quick ratio	0.83	0.92
*Liabilities to assets	0.73	0.74
*Net profit margin (%)	4.89	0.59
*Return on total assets (%)	5.43	0.24
*Inventory /Turnover ×365	28 days	62 days
*Accounts receivable/Turnover ×365	62 days	184 days
*Turnover/Total assets	1.11	0.41
* Cost of goods sold/Turnover	0.85	0.90

PROFITABILITY: FAIRLY GOOD

l The turnover of SC appears good in 2009.

l SC’s net profit margin is average in 2009.

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

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

LIQUIDITY: AVERAGE

l The current ratio of SC is maintained in a fair level in 2009.

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

l The inventory of SC is average in 2009.

l The accounts receivable of SC is average in 2009.

l The short term loan of SC is fairly large.

l SC’s turnover is in an average level in 2009, 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 low.

Overall financial condition of the SC: Fairly Stable.

SC is well-known in its industry with fairly stable financial conditions. The large amount of short loans could be a threat to SC’s financial condition.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.53.84
UK Pound	1	Rs.86.72
Euro	1	Rs.69.17

INFORMATION DETAILS

Report Prepared by :

MNL

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.