MIRA INFORM REPORT

Report Date :

31.10.2013

IDENTIFICATION DETAILS

Name :	lanxi zhijiang home textile Co., Ltd.

Registered Office :	Houlu Village, Lanjiang Street, Lanxi, Zhejiang Province, 321100 PR

Country :	China

Financials (as on) :	31.12.2012

Date of Incorporation :	30.01.2002

Com. Reg. No.:	330781000020788

Legal Form :	Limited Liabilities Company

Line of Business :	Manufacturing and selling cotton products

No. of Employees :	100

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	Slow but correct
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, 2013

Country Name

Previous Rating

(31.12.2012)

Current Rating

(31.03.2013)

China

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 2012 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 under 8% for 2012. An economic slowdown in Europe contributed to China's, and is expected to further drag Chinese growth in 2013. 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

lanxi zhijiang home textile Co., Ltd.

houlu village, lanjiang street,

lanxi, zhejiang PROVINCE, 321100 PR CHINA

TEL: 86 (0) 579-88781268/89015583

FAX: 86 (0) 579-88781799

EXECUTIVE SUMMARY

INCORPORATION DATE : jan. 30, 2002

REGISTRATION NO. : 330781000020788

REGISTERED LEGAL FORM : LIMITED LIABILITIES COMPANY

CHIEF EXECUTIVE : MR. lu ruxiang (CHAIRMAN)

STAFF STRENGTH : 100

REGISTERED CAPITAL : CNY 20,000,000

BUSINESS LINE : MANUFACTURING

TURNOVER : CNY 69,870,000 (UNaudited, AS OF DEC. 31, 2012)

EQUITIES : CNY 20,210,000 (UNaudited, AS OF DEC. 31, 2012)

PAYMENT : AVERAGE

MARKET CONDITION : AVERAGE

FINANCIAL CONDITION : fairly stable

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.08 = 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 limited liabilities co. at local Administration for industry & commerce (AIC - the official body of issuing and renewing business license) on Jan. 30, 2002.

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 manufacturing and selling cotton products; exporting its products and technologies; importing mechanical equipment, parts, raw materials and technology needed for its production, excluding the goods forbidden by the government.

SC is mainly engaged in manufacturing and selling cotton products.

Mr. Lu Ruxiang is legal representative and chairman of SC at present.

SC is known to have approx. 100 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 Lanxi. The detailed information of the premise is unspecified.

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

No significant events or changes were found during our checks with the local Administration for Industry and Commerce.

For the past two years there is no record of litigation.

MAIN SHAREHOLDERS:

Name % of Shareholding

Lu Ruxiang 52

Xu Na 48

Legal representative and Chairman:

Mr. Lu Ruxiang is currently responsible for the overall management of SC.

Working Experience(s):

At present Working in SC as legal representative and chairman

SC is mainly engaged in manufacturing and selling cotton products.

SC’s products mainly include: towel, bath towel, kerchief, dinner cloth, etc.

SC sources its materials 90% from domestic market, and 10% from overseas market. SC sells 70% of its products in domestic market, and 30% to overseas market.

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 customer and supplier details.

SC is not known to have any subsidiary at present.

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 its bank details.

Balance Sheet (as of Dec. 31, 2012)

Unit: CNY’000

Cash & bank	19,120
Notes receivable	3,800
Inventory	5,790
Accounts receivable	-1,680
Advances to suppliers	15,250
Other receivables	1,420
Other current assets	0
	------------------
Current assets	43,700
Fixed assets net value	31,460
Projects under construction	0
Long term investment	210
Intangible assets	4,380
Other assets	580
	------------------
Total assets	80,330
	=============
Short loans	31,500
Notes payable	41,710
Accounts payable	-9,460
Other payable	160
Taxes payable	-2,360
Advances from clients	0
Other current liabilities	60
	------------------
Current liabilities	61,610
Long term liabilities	-1,490
	------------------
Total liabilities	60,120
Equities	20,210
	------------------
Total liabilities & equities	80,330
	=============

Income Statement (as of Dec. 31, 2012)

Unit: CNY’000

Turnover	69,870
Cost of goods sold	66,890
Add: Income from other operations	490
Sales expense	680
Management expense	1,280
Finance expense	1,290
Non-operating income	340
Non-operating expense	-520
Profit before tax	29
Less: profit tax	21
Profits	8

Note: The above financial have not been audited.

Important Ratios

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

	as of Dec. 31, 2012
*Current ratio	0.71
*Quick ratio	0.62
*Liabilities to assets	0.75
*Net profit margin (%)	0.01
*Return on total assets (%)	0.01
*Inventory /Turnover ×365	31 days
*Accounts receivable/Turnover ×365	/
*Turnover/Total assets	0.87
* Cost of goods sold/Turnover	0.96

PROFITABILITY: AVERAGE

The turnover of SC appears average in its line.

SC’s net profit margin is average.

SC’s return on total assets is average.

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

LIQUIDITY: FAIR

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

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

The inventory of SC is maintained in an average level.

SC’s short-term loan appears large in 2012.

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

LEVERAGE: AVERAGE

The debt ratio of SC is average.

The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fairly stable.

SC is considered medium-sized in its line with fairly stable financial conditions. The large amount of short loans could be a threat to SC’s financial condition. A credit line appears to be within SC’s capacities upon a periodical review basis.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.49
UK Pound	1	Rs.98.71
Euro	1	Rs.84.49

INFORMATION DETAILS

Report Prepared by :

NIS

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.