MIRA INFORM REPORT

Report Date :

24.09.2012

IDENTIFICATION DETAILS

Name :	SISHUI JINYI PAPER CO., LTD
Registered Office :	Jinzhuang Town, Sishui County, Jining City, Shandong Province, 273201 Pr
Country :	China
Financials (as on) :	31.12.2011
Date of Incorporation :	28.12.1995
Com. Reg. No.:	370800400000765
Legal Form :	Chinese-Foreign Equity Joint Venture Enterprise
Line of Business :	manufacturing and selling CF carbonless copy paper
No. of Employees :	480 employees

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 :	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 – March 31^st, 2012

Country Name	Previous Rating (31.12.2011)	Current Rating (31.03.2012)
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 & address

sishui jinyi paper co., ltd.

JINZHUANG TOWN, SISHUI COUNTY, JINING CITY,

SHANDONG province, 273201 pr china

TEL: 86 (0) 537-4036983/4036823 FAX: 86 (0) 537-4031210

EXECUTIVE SUMMARY

INCORPORATION DATE : dec. 28, 1995

REGISTRATION NO. : 370800400000765

REGISTERED LEGAL FORM : CHINESE-FOREIGN EQUITY JOINT VENTURE ENTERPRISE

CHIEF EXECUTIVE : MR. KONG FAN’GANG (CHAIRMAN)

STAFF STRENGTH : 480

REGISTERED CAPITAL : USD 8,400,000

BUSINESS LINE : MANUFACTURING

TURNOVER : CNY 633,510,000 (AS OF DEC. 31, 2011)

EQUITIES : CNY 110,140,000 (AS OF DEC. 31, 2011)

PAYMENT : AVERAGE

MARKET CONDITION : AVERAGE

FINANCIAL CONDITION : fair

OPERATIONAL TREND : FAIRLY STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.3086 =USD 1

Adopted abbreviations:

ANS - amount not stated

NS - not stated

SC - subject company (the company inquired by you)

NA - not available

CNY - China Yuan Renminbi

SC was registered as a Chinese-foreign equity joint venture enterprise at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license) on Dec. 28, 1995.

Company Status: Chinese-foreign equity joint venture enterprise

This form of business in PR China is defined as a legal person. It is a limited co. jointly invested by one or more foreign companies and one or more PR China controlled companies within the territories of PR China according to a certain proportion of capital investment. The investing parties exercise business management, share profits and bear all risks and liabilities of the co. together. The equity joint venture law requires that foreign party contribute not less than 25% of the registered capital, with no maximum. The investing parties are free to agree on method of profit distribution and liabilities bearing according to the proportion of capital investment. Each investing parties contributes funds, tangible assets, technology & etc. The board of directors excises the high authority. The joint venture usually has a limited duration of 10 to 50 years. Enterprise with large investment, long construction periods, low investment returns, introducing of advanced technology & advanced technology products that have good competition position in international market may extend beyond the 50 years limit.

SC’s registered business scope includes manufacturing and selling CF carbonless copy paper.

SC is mainly engaged in manufacturing and selling CF carbonless copy paper.

Mr. Kong Fan’gang has been legal representative, chairman and general manager of SC since 1995.

SC is known to have approx. 480 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 Sishui county. Our checks reveal that SC owns the total premise about 35,000 square meters.

SC is not known to host website of its own at present.

Changes of its registered information are as follows:

Date of change	Item	Before the change	After the change
2008	Registration No.	000580	370800400000765

MAIN SHAREHOLDERS:

Name % of Shareholding

Shandong Huajin Group Co., Ltd. 71.43

Britain Yida (Asia) Technology Limited 28.57

Shandong Huajin Group Co., Ltd.

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

Shandong Huajin Group Co., Ltd. is a cross-industry, cross-regional national large-scale modern enterprise group mainly engaged in processing, researching and trading paper and paper products. It has 4,200 staffs, 3.3 billion yuan total assets and 6 subsidiaries. It also owns 23 domestic advanced level paper production line, and 9 specialty paper production line. The production its capacity is 850,000 tons. The main products are: high-end industrial paper used; high-end office automation, printing and writing paper; carbonless paper, thermal paper; high-grade coated paperboard, packaging paper five series. Over 120 varieties of products are exported to the sea inside and out.

Registration No.: 370000228031741

Address: No. 818, Jinzhuang Town, Sishui County, Jining, Shandong Province

Tel: 86-537-4036979

Web: http://www.huajinpaper.com

E-mail: huajinlbz@126.com

Legal Representative, Chairman and General Manager:

Mr. Kong Fan’gang, in his 50’s, with university education. He is currently responsible for the overall management of SC.

Working Experience(s):

From 1995 to present Working in SC as legal representative, chairman and general manager.

SC is mainly engaged in manufacturing and selling CF carbonless copy paper.

SC’s products mainly include: CF carbonless copy paper.

SC’s brands: “Jinyi 金益” “Jinxin 金鑫” “Jindong 金东”.

SC sources its materials 20% from domestic market, mainly Shandong, and 80% from overseas market, mainly America, France, and Switzerland. SC sells 40% in domestic market, mainly Shandong, and 60% to overseas market, mainly Southeast Asia.

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

*Major Supplier:

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

CENTIAL NATIONAL-GOTTESM INC.

*Major Customer:

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

ANISE PAPER AS

According to the website: http://www.huajinpaper.com

Qingdao Dongli Paper Co., Ltd.

Incorporation Date: 1996-3-27

Registration No.: 370200400044787

Registered Legal Form: Chinese-Foreign Equity Joint Venture Enterprise

Chief Executive: Wang Xinli

Registered Capital: USD 735,000

Jilin Huajin Paper Co., Ltd.

Etc.

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.

China Construction Bank Jining Sishui Sub-branch

AC#37001687108050001809

Relationship: Normal.

Balance Sheet

Unit: CNY’000

	as of Dec. 31, 2010	as of Dec. 31, 2011
Cash & bank	130,470	125,040
Trading financial assets	640	1,100
Inventory	464,960	576,680
Accounts receivable	35,170	58,810
Advances to suppliers	52,930	85,490
Other receivables	293,060	269,120
Other current assets	0	0
	------------------	------------------
Current assets	977,230	1,116,240
Long-term investments	0	0
Fixed assets net value	99,560	86,010
Projects under construction	1,560	3,910
Intangible assets	0	0
Other assets	0	0
	------------------	------------------
Total assets	1,078,350	1,206,160
	=============	=============
Short loans	137,160	279,120
Notes payable	50,000	90,000
Accounts payable	127,750	63,780
Advances from customers	19,720	37,820
Accrued Payroll	0	0
Welfare Payable	0	0
Taxes payable	-21,560	-41,130
Other accounts payable	504,190	526,430
Other current liabilities	0	0
	-----------------	-----------------
Current liabilities	817,260	956,020
Long term liabilities	140,000	140,000
	------------------	------------------
Total liabilities	957,260	1,096,020
Shareholders equities	121,090	110,140
	------------------	------------------
Total liabilities & equities	1,078,350	1,206,160
	=============	=============

Income Statement

Unit: CNY’000

	as of Dec. 31, 2010	as of Dec. 31, 2011
Turnover	631,890	633,510
Cost of goods sold	573,410	554,890
Taxes and additional of main operation	0	60
Sales expense	16,450	17,850
Management expense	3,800	860
Finance expense	44,100	70,620
The profits on the changes in fair value	0	-150
Non-operating income	10	20
Non-operating expense	70	40
Profit before tax	-5,930	-10,940
Less: profit tax	0	0
Net profit	-5,930	-10,940

Important Ratios

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

	As of Dec. 31, 2010	As of Dec. 31, 2011
*Current ratio	1.20	1.17
*Quick ratio	0.63	0.56
*Liabilities to assets	0.89	0.91
*Net profit margin (%)	-0.94	-1.73
*Return on total assets (%)	-0.55	-0.91
*Inventory /Turnover ×365	269 days	333 days
*Accounts receivable/Turnover ×365	21 days	34 days
*Turnover/Total assets	0.59	0.53
* Cost of goods sold/Turnover	0.91	0.88

PROFITABILITY: FAIR

l The turnover of SC appears fairly good in its line in both years.

l SC’s net profit margin is fair in both years.

l SC’s return on total assets is fair in both years.

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

LIQUIDITY: FAIR

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

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

l The inventory of SC appears large in both years.

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

l The short-term loan of SC is maintained in a large level in both years.

l SC’s turnover is in a fair level in both years, 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 average.

Overall financial condition of the SC: Fair.

SC is considered medium-sized in its line with fair financial conditions. The large amount of inventory and short loans could be a threat to SC’s financial condition.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.53.91
UK Pound	1	Rs.87.60
Euro	1	Rs.70.01

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.