MIRA INFORM REPORT

Report Date :

06.02.2013

IDENTIFICATION DETAILS

Name :	CSPC ZHONGRUN PHARMACEUTICAL (INNER MONGOLIA) CO., LTD.
Registered Office :	Tuodian Industrial Zone, Tuoketuo County, Hohhot, Inner Mongolia, 010206 Pr
Country :	China
Financials (as on) :	30.09.2012
Date of Incorporation :	17.10.2003
Com. Reg. No.:	150100400000023
Legal Form :	Wholly Foreign Owned Enterprise
Line of Business :	Manufacturing and selling pharmaceutical products
No. of Employees :	1,500

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^th, 2012

Country Name	Previous Rating (31.03.2011)	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

CSPC ZHONGRUN PHARMACEUTICAL (INNER MONGOLIA) CO., LTD.

TUODIAN INDUSTRIAL ZONE, TUOKETUO COUNTY, HOHHOT,

INNER MONGOLIA, 010206 PR CHINA

TEL: 86 (0) 471-8660666/8661099

FAX: 86 (0) 471-8660964

EXECUTIVE SUMMARY

INCORPORATION DATE : OCT. 17, 2003

REGISTRATION NO. : 150100400000023

REGISTERED LEGAL FORM : WHOLLY FOREIGN OWNED ENTERPRISE

CHIEF EXECUTIVE : MR. LIU ZHENTAO (CHAIRMAN)

STAFF STRENGTH : 1,500

REGISTERED CAPITAL : HKD 271,647,200

BUSINESS LINE : MANUFACTURING AND TRADING

TURNOVER : CNY 826,530,000 (JAN. 1 TO SEP. 30, 2012)

EQUITIES : CNY 547,360,000 (AS OF SEP. 30, 2012)

PAYMENT : average

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : fairly stable

OPERATIONAL TREND : fairly STEADY

GENERAL REPUTATION : WELL-KNOWN

EXCHANGE 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

CNY - China Yuan Ren Min Bi

SC was registered as a wholly foreign owned enterprise at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license) on Oct. 17, 2003.

Company Status: Wholly foreign-owned enterprise

This form of business in PR China is defined as a legal person. It is a limited co. established within the territories of PR China with capital provided totally by the foreign investors. More than one foreign investor may jointly invest in a wholly foreign-owned enterprise. The investing party/parties solely exercise management, reap profit and bear risks and liabilities by themselves. This form of companies usually have a limited duration is extendible upon approval of Examination and Approval Authorities.

SC’s registered business scope includes manufacturing and selling 6 - aminopenicillanic acid, amoxicillin, ampicillin, 7 - amino-3 the - off acetoxy Cephalosporanic acid, deacetyl-7-ACA, 7 - aminocephalosporanic acid; industrial wastewater treatment; manufacturing and selling organic fertilizer, blended fertilizer and related products; manufacturing and selling fine chemical products.

SC is mainly engaged in manufacturing and selling pharmaceutical products.

Mr. Liu Zhentao is the legal representative and chairman of SC at present.

SC is known to have approx. 1,500 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 Tuoketuo County. Our checks reveal that SC owns the total premise about 139,000 square meters.

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

Changes of SC’s registered information:

Date	Item	Before changed	After changed
Unknown	Registered no.	000404	Present one
	Legal rep.	Ji Jianming	Present one
	Registered capital	HKD 258,000,000	Present amount

MAIN SHAREHOLDERS:

Name % of Shareholding

China Pharmaceutical Group Limited (Hong Kong) 100

China Pharmaceutical Group Limited ("China Pharm") (Ticker: 1093) is one of the largest pharmaceutical group in China. It has been listed on the Main Board of the Hong Kong Stock Exchange since June 1994.

Its bulk drug products include vitamin C, penicillin G and 7-ACA. In terms of production capacity, China Pharm is one of the largest manufactures in the world for all of its bulk drug products. It is also a major manufacturer of antibiotic finished drugs in China. Its finished drug operation has over 200 penicillin and cephalosporin products and owns a strong distribution network in China.

Registered number: 0362244

Incorporated date: Jun. 16, 1992

Legal form: listed Company

Status: Live

Tel: 00852-28023011

Web: Http://www.cpg.hk

E-mail: info@cpg.hk

l Legal representative and Chairman:

Mr. Liu Zhentao , born in 1966 with university education. He is currently responsible for the overall management of SC.

Working Experience(s):

At present working in SC as legal reprehensive and chairman;

Also working in CSPC Inner Mongolia Zhongkang Sugar Industrial Co., Ltd., CSPC Inner Mongolia Xinhui Pharmaceutical Co., Ltd., etc. as legal representative

SC is mainly engaged in manufacturing and selling pharmaceutical products.

SC’s products mainly include: 6-Aminopenicillanic acid, amoxicillin, Ampicillin, etc.

SC sources its materials 90% from domestic market, and 10% from the overseas market, mainly European countries. SC sells 70% of its products in domestic market, and 30% to the overseas market, mainly Southeast Asia 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 Check, T/T, L/C and Credit of 30-60 days.

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

SC is known to invest in the following companies:

CSPC Inner Mongolia Zhongkang Sugar Industrial Co., Ltd.

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

Legal representative: Liu Zhentao

Registration No.: 150107000000029

Incorporation date: Apr. 19, 2004

CSPC Inner Mongolia Xinhui Pharmaceutical Co., Ltd.

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

Legal representative: Liu Zhentao

Registration No.: 150107000005161

Incorporation date: Oct. 10, 2009

Ultimate parent company:

CSPC Pharmaceutical Group Limited

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

CSPC Pharmaceutical Group Limited (CSPC Pharma) is the first one of the oversized pharmaceutical enterprises that were founded by strong union in pharmaceutical industry and a backbone enterprise group of Hebei Province.

Currently CSPC has approx. 20,000 staff members and possesses Zhongrun, Weisheng, Zhongnuo, Zhongrun Neimeng, NBP, etc., more than 10 wholly-owned or holding subsidiaries. Among them, the one that was established in Hong Kong – China Pharmaceutical Group Co., Ltd (China Pharma.) is the No. 1 in China’s pharmaceutical industry that went to the abroad market. It is the biggest pharmaceutical company on Hong Kong market at present and is also one of the Constituent Stocks of Hong Kong Heng Seng Red Chips index.

Legal representative: Cai Dongchen

Registration No.: 130100400009068

Registered capital: 221,360,000

Incorporation date: Mar. 31, 1998

Add: No. 276 West Zhongshan Road, Shijiazhuang Hebei Province

Tel: 0311-87037015

Fax: 0311-87039608

E-mail: cspc@mail.ecspc.com

Web: http://www.e-cspc.com/

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.

Industrial & Commercial Bank of China Hohhot Tuoketuo County Electronic Factory Office

AC#：0602121209000000486

Relationship: Normal

Financial Summary

Unit: CNY’000

	as of Dec. 31, 2011	as of Sep. 30, 2012
Total Liabilities	1,128,830	1,160,240
Shareholders equities	548,100	547,360
Total Assets	1,676,930	1,707,600
	as of Dec. 31, 2011	Jan. 1 to Sep. 30, 2012
Turnover	1,462,060	826,530
Profit before tax	47,570	-630
Less: profit tax	0	0
Net profit	47,570	-630

Note: we did not find SC’s detailed financial reports. The above SC’s financial data came from the information on SC in the public financial report of SC’s ultimate parent company CSPC Pharmaceutical Group Limited.

Important Ratios

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

	as of Dec. 31, 2011	as of Sep. 30, 2012
*Liabilities to assets	0.67	0.68
*Net profit margin (%)	3.25	-0.08
*Return on total assets (%)	2.84	-0.04
*Turnover/Total assets	0.87	0.48

PROFITABILITY: FAIR

l The turnover of SC appears good in its line.

l SC’s net profit margin is average in 2011 but fair in the first three quarters of 2012.

l SC’s return on total assets is average in 2011 but fair in the first three quarters of 2012.

l SC’s turnover is in a fair 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 fairly low.

Overall financial condition of the SC: Fairly stable.

SC is considered large-sized in its line with fairly stable financial conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.53.29
UK Pound	1	Rs.83.96
Euro	1	Rs.71.88

INFORMATION DETAILS

Report Prepared by :

PRL

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.