MIRA INFORM REPORT

Report Date :

24.11.2012

IDENTIFICATION DETAILS

Name :	SHIJIAZHUANG LONZEAL PHARMACEUTICALS CO., LTD.
Registered Office :	NO. 16, West Ring Road, Shenze County, Shijiazhuang, Hebei Province, 052560 PR
Country :	China
Financials (as on) :	31.12.2009
Date of Incorporation :	30.12.2006
Com. Reg. No.:	130128000000119
Legal Form :	Limited Liabilities Co.
Line of Business :	Engaged in researching, developing and producing pharmaceutical intermediates and APIs.
No. of Employees :	260

RATING & COMMENTS

MIRA’s Rating :

B

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

Status :	Moderate
Payment Behaviour :	Unknown
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

SHIJIAZHUANG LONZEAL PHARMACEUTICALS CO., LTD.

NO. 16, WEST RING ROAD, SHENZE COUNTY, SHIJIAZHUANG,

HEBEI PROVINCE, 052560 PR CHINA

TEL: 86 (0) 311-83571299 FAX: 86 (0) 311-83571266

EXECUTIVE SUMMARY

INCORPORATION DATE : DEC. 30, 2006

REGISTRATION NO. : 130128000000119

REGISTERED LEGAL FORM : LIMITED LIABILITIES CO.

CHIEF EXECUTIVE : MR. WANG LIXIN (CHAIRMAN)

STAFF STRENGTH : 260

REGISTERED CAPITAL : CNY 80,000,000

BUSINESS LINE : R&D, MANUFACTURING

TURNOVER : CNY 12,333,000 (AS OF DEC. 31, 2009)

EQUITIES : CNY 7,652,000 (AS OF DEC. 31, 2009)

PAYMENT : AVERAGE

MARKET CONDITION : AVERAGE

FINANCIAL CONDITION : FAIR

OPERATIONAL TREND : FAIRLY STEADY

GENERAL REPUTATION : AVERAGE

EXCHNAGE RATE : CNY 6.23= USD 1

Adopted abbreviations:

ANS - amount not stated

NS - not stated

SC - subject company (the company inquired by you)

NA - not available

M - million

JPY –Japan Yen

SC was registered as a Limited liabilities co. at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license) on Dec. 30, 2006.

Company Status: Limited Liabilities Co.

This form of business in PR China is defined as a legal person. No more than fifty shareholders contribute its registered capital jointly. Shareholders bear limited liability to the extent of shareholding, and the co. is liable for its debts only to extent of its total assets. The characteristics of this form of co. are as follows:

Upon the establishment of the co., an investment certificate is issued to the each of shareholders.

The board of directors is comprised of three to thirteen members.

The minimum registered capital for a co. is CNY 30,000.

Shareholders may take their capital contributions in cash or by means of tangible assets or intangible assets such as industrial property and non-patented technology.

Cash contributed by all shareholders must account for at least 30% of the registered capital.

Existing shareholders have pre-exemption right to purchase shares of the co. offered for sale by the other shareholders and to subscribe for the newly increased registered capital of the co.

SC’s registered business scope includes developing & researching, and selling Lamivudine medicines intermediates; wholesale and retail of chemical products (excluding items forbidden and limited by law, with permit if needed); importing and exporting commodities & technologies (excluding items forbidden and limited by law, with permit if needed).

SC is mainly engaged in researching, developing and producing pharmaceutical intermediates and APIs.

Mr. Wang Lixin has been legal representative and chairman of SC since 2006.

SC is known to have approx. 260 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the industrial zone of Shijiazhuang. Our checks reveal that SC owns the total premise with an area of 100,000 square meters.

http://www.lonzeal.com/ The design is professional and the content is well organized. At present the website is in both Chinese and English versions.

Email: jing@lonzeal.com

Changes of its registered information are as follows:

Date of change	Item	Before the change	After the change
Unknown	Registration No.	1301282000466	The present one

SC’s former registered capital was CNY 15,000,000.

The former shareholdings:

Tianjin Hengsheng International Trade Co., Ltd. 20

Tianjin TEDA Tianheng Industry & Trade Co., Ltd. 60

Gu Xiaoyong 20

MAIN SHAREHOLDERS:

Name % of Shareholding

Gu Xiaoyong 5.85

Tianjin Hengsheng International Trade Co., Ltd. 3.75

Zheng Xiao 3.15

Tianjin TEDA Tianheng Industry & Trade Co., Ltd. 11.25

Wang Lixin 76.00

l Legal representative and Chairman:

Mr. Wang Lixin, born in 1968 with university education. He is currently responsible for the overall management of SC.

Working Experience(s):

From 2006 to present Working in SC as legal representative and chairman;

At present Also working in Tianjin TEDA Tianheng Industry & Trade Co., Ltd. as legal representative.

l General manager:

Mr. Gu Xiaoyong, born in 1970. He is currently responsible for the daily management of SC.

Working Experience(s):

At present Working in SC as general manager.

l Supervisors:

Cao Yaling

Zheng Xiao

Ma Lei

l Directors:

Gu Xiaoyong

Lv Zheng

Wang Yabin

SC is mainly engaged in researching, developing and producing pharmaceutical intermediates and APIs.

SC’s products mainly include:

ANTI-VIRUS API: Lamivudine (3TC), Emtricitabine (FTC), Zidovudine (AZT), Nevirapine (NVP), Lopinavir (RTV), Ritonavir (RTV);

ANTI-VIRUS INTERMEDIATES: CME - Lamivudine Intermediate, HME- Emtricitabine/Lamivudine Intermediate, L-MGH - Lamivudine/Emtricitabine Intermediate, FCME - Emtricitabine Intermediate, THP - Lopinavir Intermediate, BDH Succinate Salt - Ritonavir Intermediate BDH Pure - Ritonavir Intermediate, NCT - Ritonavir Intermediate;

RESVERATROL;

Etc.

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

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

Note: SC declined to release its major suppliers and clients.

Branch (according to the above website):

Beijing Business Office

Address: Room 1109, Building 3, Huihuang International, No. 1 Shangdi Tenth Street, Haidian District, Beijing

Tel: 86(0)10-82176280

Fax: 86(0)10-82176289

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 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.

SC’s management declined to release whether it has account in Bank of China.

Financial Summary

Unit: CNY’ 000

	as of Dec. 31, 2008	as of Dec. 31, 2009
Total liabilities	83,388	89,801
Shareholders equities	10,612	7,652
	---------------	---------------
Total assets	94,000	97,453
	==========	==========
Turnover	/	12,333
Profit before tax	-4,427	-2,960
Less: Profit tax	20	0
Net profit	-4,447	-2,960

Note: SC’s staff refused to release the latest financial records and we didn’t find SC’s detailed financial reports for Yr2008 and 2009.

Important Ratios

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

	as of Dec. 31, 2008	as of Dec. 31, 2009
*Liabilities to assets	0.89	0.92
*Net profit margin (%)	/	-24.00
*Return on total assets (%)	-4.73	-3.04
*Turnover/Total assets	/	0.13

PROFITABILITY: FAIR

l The turnover of SC appears average in 2009.

l SC’s net profit margin appears poor in 2009.

l SC’s return on total assets appears fair in 2008 and 2009.

l SC’s turnover is in a fair level in 2009, comparing with the size of its total assets.

LEVERAGE: FAIR

l The debt ratio of SC is high in 2008 and 2009.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fair.

SC is considered medium-sized in its line with a development history of 6 years. Taking into consideration of SC’s development history and operation size we would rate SC as an above average credit risk company.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.55.34
UK Pound	1	Rs.88.29
Euro	1	Rs.71.36

INFORMATION DETAILS

Report Prepared by :

PDT

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.