MIRA INFORM REPORT

Report Date :

21.11.2012

IDENTIFICATION DETAILS

Name :	TAIHUA HIGH-TECH DYEING & FINISHING (JIAXING) CO., LTD.
Registered Office :	Wangdian Development Zone, Jiaxing, Zhejiang Province 310023 PR
Country :	China
Financials (as on) :	31.12.2011
Date of Incorporation :	19.05.2004
Com. Reg. No.:	330400400003193
Legal Form :	Chinese-Foreign Equity Joint Venture Enterprise
Line of Business :	Manufacturing and Processing High-Grade Fabrics.
No. of Employees :	394

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 Complaint
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 (31.03.2012)	Current Rating (30.06.2012)
China	A2	A2

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

TAIHUA HIGH-TECH DYEING & FINISHING (JIAXING) CO., LTD.

WANGDIAN DEVELOPMENT ZONE, JIAXING

ZHEJIANG PROVINCE 310023 PR CHINA

TEL: 86 (0) 573-83703555

FAX: 86 (0) 573-83253400

EXECUTIVE SUMMARY

Date of Registration : may 19, 2004

REGISTRATION NO. : 330400400003193

LEGAL FORM : Chinese-foreign equity joint venture enterprise

CHIEF EXECUTIVE : shi xiuyou (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : usd 13,690,000

staff : 394

BUSINESS CATEGORY : manufacturing & PROCESSING

Revenue : CNY 325,528,000 (AS OF DEC. 31, 2011)

EQUITIES : CNY 162,934,000 (AS OF DEC. 31, 2011)

WEBSITE : N/A

E-MAIL : N/A

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRly stable

OPERATIONAL TREND : fairly STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.23 = USD 1

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 Chinese-foreign equity joint venture enterprise of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 330400400003193 on May 19, 2004.

SC’s Organization Code Certificate No.: 75119713-1

SC’s Tax No.: 330411751197131

SC’s Customs Registration No.: 3304940797

SC’s registered capital: usd 13,690,000

SC’s paid-in capital: usd 13,690,000

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
Zhejiang Taihua New Materials Co., Ltd.	75
Nesta Corporation Limited (Hong Kong)	25

SC’s Chief Executives:-

Position	Name
Legal Representative and Chairman	Shi Xiuyou
Vice Chairman	Shen Weifeng
General Manager	Wu Jinwei
Supervisor	Shi Huagang

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

Zhejiang Taihua New Materials Co., Ltd. 75

Nesta Corporation Limited (Hong Kong) 25

Zhejiang Taihua New Materials Co., Ltd.

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

Date of Registration: February 21, 2001

Registration No.: 330400400006900

Legal Form: Shares Limited Company

Chief Executive: Shi Qingdao

Registered Capital: CNY 480,000,000

Address: No. 627 Meibei Road, Wangdian Town, Xiuzhou District, Jiaxing, Zhejiang

Web: www.textaihua.com

Nesta Corporation Limited (Hong Kong)

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

Registration No.: 1571390

Legal Form: Private

MANAGEMENT

Shi Xiuyou, Legal Representative and Chairman

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

Ø Gender: M

Ø Passport No.: K512673 (8)

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as legal representative and chairman, also working in Taihua Tezhong Textile (Jiaxing) Co., Ltd. as legal representative

Shen Weifeng, Vice Chairman

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

Ø Gender: M

Ø Age: 44

Ø ID# 330411196801040016

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as vice chairman

Also working in Jiaxing Huachang Textiles Co., Ltd. as legal representative

Wu Jinwei, General Manager

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

Ø Gender: M

Ø Age: 44

Ø Passport No.: H0961291900

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as general manager

Shi Huagang, Supervisor

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

Passport No.: K017057 (7)

BUSINESS OPERATION

SC’s registered business scope includes printing, dyeing and finishing high-grade fabrics.

SC is mainly engaged in manufacturing and processing high-grade fabrics.

SC’s products mainly include: apparel fabrics, etc.

SC sources its materials 100% from domestic market, mainly Zhejiang. SC sells 80% of its products in domestic market, and 20% to overseas market.

The buying terms of SC include Check, 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. 394 staff at present.

SC owns an area as its operating office & factory of approx. 40,000 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

Basic Bank:

Bank of China

AC#: 860028352408091001

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2010	As of Dec. 31, 2011
Cash	75,361	33,531
Notes receivable	5,110	11,859
Accounts receivable	45,479	34,011
Advances to suppliers	28,407	441
Other receivable	23,852	3,628
Inventory	70,637	80,461
Non-current assets within one year	0	0
Other current assets	0	0
	------------------	------------------
Current assets	248,846	163,931
Fixed assets	146,457	155,377
Construction in progress	0	0
Intangible assets	24,145	34,447
Long-term prepaid expenses	0	1,803
Deferred income tax assets	7	68
Other non-current assets	0	0
	------------------	------------------
Total assets	419,455	355,626
	=============	=============
Short-term loans	58,447	86,200
Notes payable	90,000	43,000
Accounts payable	140,394	30,205
Wages payable	1,355	1,809
Taxes payable	9,092	-2,770
Advances from clients	1,729	2,222
Other payable	2,514	1,123
Other current liabilities	92	203
	------------------	------------------
Current liabilities	303,623	161,992
Non-current liabilities	0	30,700
	------------------	------------------
Total liabilities	303,623	192,692
Equities	115,832	162,934
	------------------	------------------
Total liabilities & equities	419,455	355,626
	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2010	As of Dec. 31, 2011
Revenue	351,445	325,528
Cost of sales	291,941	273,602
Taxes and surcharges	743	758
Sales expense	3,097	2,248
Management expense	4,633	7,038
Finance expense	1,549	2,703
Non-business income	185	6,539
Non-business expenditure	397	379
Profit before tax	47,717	47,517
Less: profit tax	3,091	-61
Profits	44,626	47,578

Important Ratios

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

	As of Dec. 31, 2010	As of Dec. 31, 2011
*Current ratio	0.82	1.01
*Quick ratio	0.59	0.52
*Liabilities to assets	0.72	0.54
*Net profit margin (%)	12.70	14.62
*Return on total assets (%)	10.64	13.38
*Inventory / Revenue ×365	74 days	91 days
*Accounts receivable/ Revenue ×365	48 days	39 days
* Revenue/Total assets	0.84	0.92
* Cost of sales / Revenue	0.83	0.84

FINANCIAL COMMENTS

PROFITABILITY: FAIRLY GOOD

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

l SC’s net profit margin is fairy good.

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

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

LIQUIDITY: AVERAGE

l The current ratio of SC is maintained in a normal level in 2011.

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

l The inventory of SC appears fairly large.

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

l The short-term loans of SC appear fairly large in 2011.

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 medium-sized in its line with fairly stable financial conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.54.91
UK Pound	1	Rs.87.38
Euro	1	Rs.70.23

INFORMATION DETAILS

Report Prepared by :

SMN

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.