MIRA INFORM REPORT

Report Date :

18.08.2014

IDENTIFICATION DETAILS

Name :	ZIBO HAIZHENG CHEM CO., LTD.
Registered Office :	No.67 Sangpo Road, Linzi District, Zibo Shandong Province 255400 PR China
Country :	China
Financials (as on) :	31.12.2013
Date of Incorporation :	25.07.2005
Com. Reg. No.:	370300228082403
Legal Form :	Limited Liabilities Company
Line of Business :	Manufacturing and selling tert-butanol, sec-butanol, isobutanol, and n-propanol; selling ethylene, propylene, liquefied petroleum gas, isobutylene, 1,3-butadiene, nitrogen, nitrogen, oxygen [compression], oxygen [liquefaction], carbon dioxide [compression], carbon dioxide [liquefaction], benzene, toluene, ethyl benzene, 1,2-xylene, petroleum naphtha, 2-methyl-2-propanol, 2-butanol, 1-propanol, 2-methyl-1-propanol, n-butanol, 2 propanol, dichloromethane, chloroform, styrene-[suppressed], sodium methoxide, N, N- dimethylformamide, petroleum ether, methyl tert-butyl ether, acetonitrile, aniline, phenol, cyclohexanol, ketones, phthalic anhydride, 3-chloro 1,2-propylene oxide, 1,2-propylene oxide [suppressed], 2-methyl-2-butanol, propionaldehyde, tetrahydrofuran, ethanol, [anhydrous], tert-butylamine, 2-butanone, sulfur, hydrogen peroxide [20% ≤ content ≤60%], hydrogen peroxide, t-butyl [content ≤80%, with hydrogen peroxide, di-t-butyl, and / or A diluent type], sodium hydroxide, sulfuric acid, hydrochloric acid, nitric acid [nitric acid containing ≥70%], and sodium hydroxide solution; selling chemical additives, plastics, rubber & products, hardware, building materials, daily necessities, office supplies, textiles, coal, calcium carbonate, calcium oxide, metal, wood, and auto parts; importing and exporting commodities.
No of Employees :	60

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 :	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 01, 2014

Country Name	Previous Rating (31.03.2014)	Current Rating (01.06.2014)
China	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderate Low Risk	B1
Moderate Risk	B2
Moderate High Risk	C1
High Risk	C2
Very High Risk	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, growth of the private sector, development of stock markets and a modern banking system, 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 considered important to "economic security," explicitly looking to foster globally competitive industries. After keeping its currency tightly linked to the US dollar for years, in July 2005 China 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 and expanded the daily trading band within which the RMB is permitted to fluctuate. 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 2013 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 consumption; (b) facilitating higher-wage job opportunities for the aspiring middle class, including rural migrants and increasing numbers of college graduates; (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. Several factors are converging to slow China's growth, including debt overhang from its credit-fueled stimulus program, industrial overcapacity, inefficient allocation of capital by state-owned banks, and the slow recovery of China's trading partners. The government's 12th Five-Year Plan, adopted in March 2011 and reiterated at the Communist Party's "Third Plenum" meeting in November 2013, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent in the future on fixed investments, exports, and heavy industry. However, China has made only marginal progress toward these rebalancing goals. The new government of President XI Jinping has signaled a greater willingness to undertake reforms that focus on China's long-term economic health, including giving the market a more decisive role in allocating resources.

Source : CIA

COMPANY NAME & ADDRESS

ZIBO HAIZHENG CHEM CO., LTD.

NO. 67 SANGPO ROAD, LINZI DISTRICT, ZIBO

SHANDONG PROVINCE 255400 PR CHINA

TEL: 86 (0) 533-7328778

FAX: 86 (0) 533-7366782

***Note: The (Xichenjia Village, Linzi District, Zibo, Shandong Province) is the registered one, and SC’s complete address should be the heading one.

\eXECUTIVE sUMMARY

Date of Registration : july 25, 2005

REGISTRATION NO. : 370300228082403

LEGAL FORM : Limited liabilities company

CHIEF EXECUTIVE : lu kai (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : cny 10,000,000

staff : 60

BUSINESS CATEGORY : manufacturing & trading

Revenue : CNY 58,185,000 (AS OF DEC. 31, 2013)

EQUITIES : CNY 8,580,000 (AS OF DEC. 31, 2013)

WEBSITE : www.haizhengchem.com

E-MAIL : sales@haizhengchem.com

PAYMENT : AVERAGE

MARKET CONDITION : AVERAGE

FINANCIAL CONDITION : FAIR

OPERATIONAL TREND : ORDINARY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.15 = USD 1

Adopted abbreviations (as follows)

SC - Subject Company (the company inquired by you)

N/A – Not available

CNY – China Yuan Ren Min Bi

OPERATIONAL TREND & GENERAL REPUTATION:

This section aims at indicating the relative positions of SC in respect of its operational trend & general reputation

Operational Trend:- General Reputation:-

Upward Excellent

Steady Good

Fairly Steady Fairly Good

Ordinary Average

Fair Fair

Stagnant Detrimental

Downward Not known

Not known Not yet be determined

Not yet be determined

LEGAL STATUS & HISTORY

SC was established as a limited liabilities company of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 370300228082403 on July 25, 2005.

SC’s Organization Code Certificate No.: 77744922-9

SC’s Tax No.: 370305777449229

SC’s registered capital: cny 10,000,000

SC’s paid-in capital: cny 10,000,000

Registration Change Record:-

No significant changes of SC have been noted in SAIC since its incorporation.

Current Co search indicates SC’s shareholders & chief executives are as follows:-

Name of Shareholder (s)	% of Shareholding
Huang Youping	30
Lu Kai	30
Zhou Bing	40

SC’s Chief Executives:-

Position	Name
Legal Representative, Chairman and General Manager	Lu Kai
Director	Zhou Bing
Supervisor	Huang Youping

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

Huang Youping

30

Lu Kai

30

Zhou Bing

40

MANAGEMENT

Lu Kai, Legal Representative, Chairman and General Manager

------------------------------------------------------------------------------------------

Ø Gender: M

Ø Working experience (s):

At present, working in SC as legal representative, chairman and general manager

Zhou Bing, Director

-----------------------------------

Ø Gender: M

Huang Youping, Supervisor

-----------------------------------------------

Ø Gender: M

BUSINESS OPERATION

SC’s registered business scope includes manufacturing and selling tert-butanol, sec-butanol, isobutanol, and n-propanol; selling ethylene, propylene, liquefied petroleum gas, isobutylene, 1,3-butadiene, nitrogen, nitrogen, oxygen [compression], oxygen [liquefaction], carbon dioxide [compression], carbon dioxide [liquefaction], benzene, toluene, ethyl benzene, 1,2-xylene, petroleum naphtha, 2-methyl-2-propanol, 2-butanol, 1-propanol, 2-methyl-1-propanol, n-butanol, 2 propanol, dichloromethane, chloroform, styrene-[suppressed], sodium methoxide, N, N- dimethylformamide, petroleum ether, methyl tert-butyl ether, acetonitrile, aniline, phenol, cyclohexanol, ketones, phthalic anhydride, 3-chloro 1,2-propylene oxide, 1,2-propylene oxide [suppressed], 2-methyl-2-butanol, propionaldehyde, tetrahydrofuran, ethanol, [anhydrous], tert-butylamine, 2-butanone, sulfur, hydrogen peroxide [20% ≤ content ≤60%], hydrogen peroxide, t-butyl [content ≤80%, with hydrogen peroxide, di-t-butyl, and / or A diluent type], sodium hydroxide, sulfuric acid, hydrochloric acid, nitric acid [nitric acid containing ≥70%], and sodium hydroxide solution; selling chemical additives, plastics, rubber & products, hardware, building materials, daily necessities, office supplies, textiles, coal, calcium carbonate, calcium oxide, metal, wood, and auto parts; importing and exporting commodities.

SC is mainly engaged in manufacturing and selling chemical products.

SC’s products mainly include:

TBA tert-butyl alcohol

SBA, Sc-butyl alcohol

N-propyl alcohol

Isobutanol

Butanol

SC sources its products 100% from domestic market. SC sells 100% of its products to overseas market, mainly India, etc.

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.

*Major Client*

------------------

Sanjay Chemicals (India) Pvt. Ltd.

Staff & Office:

--------------------------

SC is known to have approx. 60 staff at present.

SC rents an area as its operating office and factory, but the detailed information is unknown.

RELATED COMPANY

SC is not known to have any subsidiary at present.

PAYMENT

Overall payment appraisal:

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet be 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.

BANKING

The bank information of SC is not filed in local SAIC.

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2012	As of Dec. 31, 2013
Cash	9,644	8,122
Notes receivable	6,838	2,083
Accounts receivable	3,799	4,178
Advances to suppliers	8,892	1,177
Other receivable	39	434
Inventory	2,000	10,185
Prepaid expenses	0	0
Other current assets	0	0
	------------------	------------------
Current assets	31,212	26,179
Fixed assets	5,587	5,456
Construction in progress	0	0
Intangible assets	22	12
Long-term prepaid expenses	0	0
Deferred income tax assets	0	0
Other non-current assets	0	0
	------------------	------------------
Total assets	36,821	31,647
	=============	=============
Short-term loans	9,000	9,500
Notes payable	10,000	10,000
Accounts payable	493	2,418
Wages payable	0	0
Taxes payable	-216	-690
Advances from clients	6,182	3,001
Other payable	2,091	-1,158
Accrued expenses	0	0
Other current liabilities	12	-4
	------------------	------------------
Current liabilities	27,562	23,067
Non-current liabilities	0	0
	------------------	------------------
Total liabilities	27,562	23,067
Equities	9,259	8,580
	------------------	------------------
Total liabilities & equities	36,821	31,647
	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2012	As of Dec. 31, 2013
Revenue	62,130	58,185
Cost of sales	57,967	54,317
Taxes and surcharges	122	16
Sales expense	3,153	2,768
Management expense	935	882
Finance expense	769	724
Subsidy income	0	20
Non-operating income	0	1
Non-operating expense	3	11
Profit before tax	172	-666
Less: profit tax	55	28
Profits	117	-694

Important Ratios

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

	As of Dec. 31, 2012	As of Dec. 31, 2013
*Current ratio	1.13	1.13
*Quick ratio	1.06	0.69
*Liabilities to assets	0.75	0.73
*Net profit margin (%)	0.19	-1.19
*Return on total assets (%)	0.32	-2.19
*Inventory / Revenue ×365	12 days	64 days
*Accounts receivable / Revenue ×365	23 days	27 days
*Revenue / Total assets	1.69	1.84
*Cost of sales / Revenue	0.93	0.93

FINANCIAL COMMENTS

PROFITABILITY: FAIR

l The revenue of SC appears average in its line in both years.

l SC’s net profit margin is average in 2012, fair in 2013.

l SC’s return on total assets is average in 2012, fair in 2013.

l SC’s cost of sales is fairly high, comparing with its revenue.

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 fairly good level in 2012, fair in 2013.

l The inventory of SC appears large in 2013.

l The accounts receivable of SC appears average.

l The short-term loans of SC appear large in both years.

l SC’s revenue is in an average level, comparing with the size of its total assets.

LEVERAGE: FAIR

l The debt ratio of SC is average.

l The risk for SC to go bankrupt is above average.

Overall financial condition of the SC: Fair.

CONCLUSIONS

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

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.06
UK Pound	1	Rs.101.84
Euro	1	Rs.81.56

INFORMATION DETAILS

Analysis Done by :	SUB
Report Prepared by :	SMN

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.