MIRA INFORM REPORT

Report Date :

18.09.2013

IDENTIFICATION DETAILS

Name :	EATON FLUID POWER (SHANGHAI) CO., LTD.
Registered Office :	No. 388 Aidu Road, Waigaoqiao Free Trade Zone, Pudong New District, Shanghai City, 200131 Pr China.
Country :	China
Financials (as on) :	31.12.2009
Date of Incorporation :	21.01.1998
Com. Reg. No.:	310115400051068
Legal Form :	Wholly Foreign Owned Enterprise
Line of Business :	Subject engaged in manufacturing and selling fluid pressure transmission systems.
No. of Employees :	358

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 – March 31^st, 2013

Country Name	Previous Rating (31.12.2012)	Current Rating (31.03.2013)
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 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 & ADDRESS

EATON FLUID POWER (SHANGHAI) CO., LTD.

NO. 388 AIDU ROAD, WAIGAOQIAO FREE TRADE ZONE, PUDONG NEW DISTRICT,

SHANGHAI CITY, 200131 PR CHINA.

TEL: 86 (0) 21-38503532

FAX: 86 (0) 21-50460767

EXECUTIVE SUMMARY

INCORPORATION DATE : JAN. 21, 1998

REGISTRATION NO. : 310115400051068

REGISTERED LEGAL FORM : WHOLLY FOREIGN OWNED ENTERPRISE

CHIEF EXECUTIVE : MR. SHYAM PONNAPPA KAMBEYANDA (CHAIRMAN)

STAFF STRENGTH : 358

REGISTERED CAPITAL : USD 2,100,000

BUSINESS LINE : MANUFACTURING

TURNOVER : CNY 800,980,000 (AS OF DEC. 31, 2009)

EQUITIES : CNY 145,470,000 (AS OF DEC. 31, 2009)

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRLY STABLE (AS OF DEC. 31, 2009)

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.12 = 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 Jan. 21, 1998.

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 investors 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 designing, developing installing, manufacturing, processing and selling high quality fluid pressure systems, transmission gears, hydraulic pumps, motors and other hydraulic components; wholesaling, importing and exporting business; providing trade and technical advices, training and after-sale services; international trade, entrepot trade and trade agent in the zone; warehousing and display of goods (with permits if needed).

SC is mainly engaged in manufacturing and selling fluid pressure transmission systems.

Mr. Shyam Ponnappa Kambeyanda is legal representative and chairman of SC at present.

SC is known to have approx. 358 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the free trade zone of Shanghai. Our checks reveal that SC rents the total premise about 3,581 square meters.

http://www.eaton.com It is the website of Eaton Corporation. The design is professional and the content is well organized. At present it is in English version.

SC’s former registration no. was 311923, and its former legal representative was Nelda Janine.

MAIN SHAREHOLDERS:

Name % of Shareholding

Eaton (China) Investments Co., Ltd. 100

Eaton (China) Investments Co., Ltd was established in 1997, since then its presence has grown in the region through acquisitions, joint ventures and wholly owned subsidiaries.

Nowadays, it has 20 manufacturing facilities, 26 sales offices and more than 5,000 employees in China.

Add: 11/F Hong Kong New World Building No. 300 Huaihai Mid. Road, Shanghai

Tel: 86 21-63879988

l Legal representative and chairman:

Mr. Shyam Ponnappa Kambeyanda (American), in his 40’s with university education. He is currently responsible for the overall management of SC.

Working Experience(s):

At present Working in SC as chairman and legal representative.

SC is mainly engaged in manufacturing and selling fluid pressure transmission systems.

SC’s products mainly include: fluid pressure transmission systems and its parts.

SC’s main brands are “VICKERS” (pumps and valves) and “Char-Lynn” (motors and redirectors).

SC sources its materials 100% from domestic market. SC sells 60% of its products in domestic market, and 40% to the overseas market, mainly to USA.

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.

SC is known to have an office in Dalian.

Room 1806 Pingan Building, No. 24 Renmin Road, Zhongshan District, Dalian

Tel: 86 0411-82539886

Fax: 86 0411-82539885

Email: walterwang@eaton.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 refused to release any information of its suppliers and the trade reference was not available.

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 and Commercial Bank of China Free Trade Zone Sub-branch

AC#：1001192309016230293

Relationship: Normal.

Balance Sheet

Unit: CNY’000

	as of Dec. 31, 2009
Cash & bank	29,280
Bills receivable	38,260
Accounts receivable	110,390
Other receivables	1,980
Advances to suppliers	7,800
Inventory	166,830
Prepaid expenses	-80
Other current assets	0
	------------------
Current assets	354,460
Fixed assets net value	22,000
Projects under construction	100
Long term investment	0
Other assets	6,850
	------------------
Total assets	383,410
	=============
Short loans	0
Bills payable	0
Accounts payable	133,840
Advances from clients	50,990
Accrued payable	18,140
Tax payable	5,510
Other payable	0
Surcharge payable	0
Other current liabilities	29,460
	------------------
Current liabilities	237,940
Long term liabilities	0
	------------------
Total liabilities	237,940
Equities	145,470
	------------------
Total liabilities & equities	383,410
	=============

Income Statement

Unit: CNY’000

	as of Dec. 31, 2009
Turnover	800,980
Cost of goods sold	565,480
Sales expense	50,430
Management expense	31,310
Finance expense	-1,030
Income from other operations	560
Subsidy income	8,940
Non-operating income	380
Non-operating expense	16,340
Profit before tax	148,340
Less: profit tax	31,870
Profits	116,470

Note: SC’s management declined to release the latest financial information.

Important Ratios

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

	as of Dec. 31, 2009
*Current ratio	1.49
*Quick ratio	0.79
*Liabilities to assets	0.62
*Net profit margin (%)	14.54
*Return on total assets (%)	30.38
*Inventory /Turnover ×365	77 days
*Accounts receivable/Turnover ×365	51 days
*Turnover/Total assets	2.09
* Cost of goods sold/Turnover	0.71

PROFITABILITY: FAIRLY GOOD

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

l SC’s net profit margin is fairly good.

l SC’s return on total assets is good.

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

LIQUIDITY: FAIR

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

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 appears average.

l SC has no short-term loan in 2009.

l SC’s turnover 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.

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

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.63.37
UK Pound	1	Rs.100.85
Euro	1	Rs.84.59

INFORMATION DETAILS

Report Prepared by :

NLM

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.