MIRA INFORM REPORT

Report Date :

23.08.2014

IDENTIFICATION DETAILS

Name :	FEDERAL CORPORATION
Registered Office :	No.369, Chung Hwa Rd., Sec.2, Chungli, Taoyuan,
Country :	Taiwan
Financials (as on) :	31.12.2013
Date of Incorporation :	23.11.1955
Com. Reg. No.:	44721408
Legal Form :	Joint Stock Company
Line of Business :	Trading of tire
No. of Employees	1,000

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 1, 2014

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

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

TAIWAN ECONOMIC OVERVIEW

Taiwan has a dynamic capitalist economy with gradually decreasing government guidance of investment and foreign trade. Exports, led by electronics, machinery, and petrochemicals have provided the primary impetus for economic development. This heavy dependence on exports exposes the economy to fluctuations in world demand. Taiwan's diplomatic isolation, low birth rate, and rapidly aging population are other major long-term challenges. Free trade agreements have proliferated in East Asia over the past several years, and following the landmark Economic Cooperation Framework Agreement (ECFA) signed with China in June 2010, Taiwan in July 2013 signed a free trade deal with New Zealand—Taipei’s first-ever with a country with which it does not maintain diplomatic relations—and in November inked a trade pact with Singapore. Negotiations continue on follow-on components of ECFA regarding trade in goods and a dispute resolution mechanism; a trade in services agreement is under review in the legislature. Taiwan's Total Fertility rate of just over one child per woman is among the lowest in the world, raising the prospect of future labor shortages, falling domestic demand, and declining tax revenues. Taiwan's population is aging quickly, with the number of people over 65 accounting for 11.2% of the island's total population as of 2012. The island runs a large overall trade surplus largely because of its surplus with China, and its foreign reserves are the world's sixth largest, behind China, Japan, Saudi Arabia, Russia, and Switzerland. In 2006 China overtook the US to become Taiwan's second-largest source of imports after Japan. China is also the island's number one destination for foreign direct investment. Taiwan since 2009 has gradually loosened rules governing Chinese investment on the island, and has also secured greater market access for its investors in the mainland. In August 2012, Taiwan Central Bank signed a memorandum of understanding on cross-Strait currency settlement with its Chinese counterpart. The MOU allows for the direct settlement of Chinese RMB and the New Taiwan dollar across the Strait, which could help develop Taiwan into a local RMB hub. Closer economic links with the mainland bring greater opportunities for the Taiwan economy, but also poses new challenges as the island becomes more economically dependent on China while political differences remain unresolved

Source : CIA

Company name and address

Company Name:	FEDERAL CORPORATION
Supplied Name:	FEDERAL CORPORATION, TAIWAN
Trading Address:	No.369, Chung Hwa Rd., Sec.2, Chungli, Taoyuan, Taiwan
Supplied Address:	NO.369, SEC. 2, CHUNGHUA RD., CHUNGLI CITY, T AOYUAN COUNTY 32068,
Telephone Number:	+886-3-452-2156
Fax Number:	+886-3-461-6357

Notes: The exact name and address are as above.

Company Identification Details

Registered Name:	FEDERAL CORPORATION
Registered Address:	No.369, Chung Hwa Rd., Sec.2, Chungli, Taoyuan, Taiwan
Date of Foundation:	1955-11-23
Registration Number:	44721408
Registry:	Department of Commerce, Ministry of Economic Affairs, R.O.C.
Registered Capital:	NTD 5,200,000,000 (USD 172,120,000) (As of 2014.08, 1 NTD = 0.0331 USD)
Paid-up Capital:	NTD 4,571,903,880 (USD 151,330,018)
Legal Representatives:	Shujian Ma
Legal Form:	Joint Stock Company
Principal Activities:	Trading of tire and etc.
Staff:	About 1,000 Employees
Listed at Stock Exchange:	Yes; stock symbol:2102
Date of Last Annual Return:	2014-8-12

History

Subject was incorporated on 1955-11-23 with registered number 44721408 as Joint Stock Company in Taiwan.

Subject listed on Taiwan stock exchange on 1979-7-16.

Corporate Structure

Factory

Address:	No.369, Chung Hwa Rd., Sec.2, Chungli, Taoyuan, Taiwan
Date of Foundation:	1969-1-1
Date of Registration:	1969-1-1
Factory Registration Number:	99627716
Factory Manager:	Shujian Ma
Status:	In production
Date of Last Annual Return:	2014-8-6
Major Products:	210 Rubber products

Branches

Name	Taipei Branch
Registered Address:	No. 1, Sec. 3, Nanjing E Road, Taipei City, Taiwan
Registration Number	11546963
Date of Registration	1988-6-6
Manager Name	Shaojin Ma
Date of Last Annual Return	--

Related Companies

1
Name	Federal Tire (Jiangxi) Co., Ltd
2
Name	Federex Marketing Corporation

Shareholders

Major Shareholders

Name	Subscription Shares
Shujian Ma	3,477,309
Shaojin Ma
6,477,467
Maxon Corporation	12,298,415
Huanxiang Investment Co., Ltd (Liberal Translation)	15,073,779
Ma Qi Shan Foundation (Liberal Translation)	2,650,869
Taifu Investment Co., Ltd (Liberal Translation)	24,423,682

Shareholder Information:

1
Registered Name:	Maxon Corporation
Registered Address:	6th Fl., No.86, Nan King East Rd., Sec.1, Taipei, Taiwan, R.O.C.
Date of Foundation:	1994-1-13
Registration Number:	84743977
Registry:	Taipei City Government
Registered Capital:	NTD 20,000,000 (USD 662,000) (As of 2014.08, 1 NTD = 0.0331 USD)
Paid-up Capital:	NTD 20,000,000 (USD 662,000)
Legal Representatives:	Shoxiang Ma
Legal Form:	Joint Stock Company
Date of Last Annual Return:	2012-11-6
2
Registered Name:	Huanxiang Investment Co., Ltd (Liberal Translation)
Registered Address:	1F., No.14, Yunong Rd., Shilin Dist., Taipei City, Taiwan (R.O.C.)
Date of Foundation:	1997-9-13
Registration Number:	16092434
Registry:	Taipei City Government
Registered Capital:	NTD 154,952,980 (USD 5,128,944) (As of 2014.08, 1 NTD = 0.0331 USD)
Paid-up Capital:	NTD 154,952,980 (USD 5,128,944)
Legal Representatives:	Shaojin Ma
Legal Form:	Joint Stock Company
Date of Last Annual Return:	2013-8-14
3
Registered Name:	Taifu Investment Co., Ltd (Liberal Translation)
Registered Address:	1F., No.14, Yunong Rd., Shilin Dist., Taipei City, Taiwan (R.O.C.)
Date of Foundation:	1998-2-10
Registration Number:	16437351
Registry:	Taipei City Government
Registered Capital:	NTD 250,000,000 (USD 8,275,000) (As of 2014.08, 1 NTD = 0.0331 USD)
Paid-up Capital:	NTD 220,000,000 (USD 7,282,000)
Legal Representatives:	Wulu Ma
Legal Form:	Joint Stock Company
Date of Last Annual Return:	2014-1-9

Management Information

Core Management

Directors

1
Name		Shujian Ma
Position		Board Chairman/ Manager
Date of Appointment		2002-5-17
2
Name	Shaojin Ma
Position		Director
3
Name	Shukang Ma
Position		Director
4
Name	Qiguang Huang
Position		Director
5
Name	Peijun Ma
Position		Director
6
Name		Shuzhuang Ma
Position		Director
7
Name	Wenzhe Li
Position		Director
8
Name	Suyun Liao
Position		Supervisor
9
Name	Yiyao Sun
Position		Supervisor

Personnel Structure

Total Employees

About 1,000 Employees

Operation Information

Offices & Factories

	Headquarters
Add	No.369, Chung Hwa Rd., Sec.2, Chungli, Taoyuan, Taiwan

Production Information

Subject is engaged in manufacturing of tire and etc.

Subject has a factory in Taiwan for production.

Subject obtained the certification of

Purchase Information

The registered activities of subject:

Business Code	Details
C804010	Manufacturing of tyre.
C804020	Manufacturing of industrial rubber products.
C804990	Manufacturing of other rubber products.
F114030	Wholesales of related components and parts of automobile and locomotive.
F114050	Wholesales of tyre.
F214030	Retails of related components and parts of automobile and locomotive.
F214050	Retails of tyre.
F401010	International trading business.
ZZ99999	Besides licensed business, all other business items those are not banned or restricted.

It is introduced that subject purchases its raw materials and etc both at home and abroad.

It is introduced that subject imports some technologies from Bridgestone Corporation and Sumitomo Rubber Industries (Dunlop Tires) in Japan.

Sales Information

Subject is engaged in sale of tire and etc.

The major products are Motorsports Tire, Ultra High Performance Series tires, High Performance tire, PCR, Light Truck Tire, SUV Truck Tire, l Winter Tire and so on.

Subject’s sales regions include Asia, Europe, America, Australia, Africa and etc.

Subject’s major customers are manufacturers, repairers of automobile, distributors of automobile’s components and parts.

It is introduced that subject has about 100 sales points covering all over the world.

Import and export right:

Import right	Yes
Export right	Yes

Settlements

Purchase

Domestic Purchase

Products	Raw materials and etc
Payment Terms	Cash, T/T and etc

Import

Products	Raw materials and etc
Payment Terms	T/T, L/C and etc

Sales

Domestic Markets

Product	Tire and etc.
Selling Terms	Cash, T/T and etc

Export

Product	Tire and etc.
Selling Terms	T/T, L/C and etc

Balance Sheet

Unit: NTD/000

	2013-12-31	2012-12-31
Assets
Current assets
Cash and cash equivalents
Total cash and cash equivalents	1,804,159	1,493,696
Current financial assets at fair value through profit or loss
Total current financial assets at fair value through profit or loss	349,101	302,220
Notes receivable, net
Notes receivable, net	567,393	278,918
Accounts receivable, net
Accounts receivable, net	1,580,847	1,570,950
Other receivables
Other receivables, net	6,625	4,098
Inventories
Total inventories	1,289,540	1,380,538
Prepayments
Total prepayments	49,666	54,632
Other current assets
Total other current assets	131,461	71,208
Total current assets	5,778,792	5,156,260
Non-current assets
Non-current financial assets at cost
Non-current financial assets at cost, net	18,845	18,845
Investments accounted for using equity method
Investments accounted for using equity method, net	10,004	20,057
Property, plant and equipment
Total property, plant and equipment	7,137,413	7,238,893
Intangible assets
Total intangible assets	40,664	0
Deferred tax assets	39,121	40,884
Other non-current assets
Guarantee deposits paid	4,792	6,156
Other non-current assets, others
Total other non-current assets, others	110,325	68,718
Total other non-current assets	115,117	74,874
Total non-current assets	7,361,164	7,393,553
Total assets	13,139,956	12,549,813
Total assets (USD)	434,932,544	415,398,810
Liabilities
Current liabilities
Short-term borrowings
Total short-term borrowings	624,915	829,746
Current financial liabilities at fair value through profit or loss
Total current financial liabilities at fair value through profit or loss	257	0
Notes payable
Total notes payable	0	2
Accounts payable
Total accounts payable	673,876	691,097
Other payables
Total other payables	239,971	191,736
Current tax liabilities	67,134	80,781
Other current liabilities
Long-term liabilities, current portion
Total long-term liabilities, current portion	96,000	0
Other current liabilities, others	60,222	71,719
Total other current liabilities	156,222	71,719
Total current liabilities	1,762,375	1,865,081
Non-current liabilities
Long-term borrowings
Total long-term borrowings	1,168,514	1,264,514
Deferred tax liabilities
Total deferred tax liabilities	639,489	600,148
Other non-current liabilities
Total other non-current liabilities	294,024	302,181
Total non-current liabilities	2,102,027	2,166,843
Total liabilities	3,864,402	4,031,924
Equity
Equity attributable to owners of parent
Share capital
Ordinary share	4,233,244	4,031,661
Total capital stock	4,233,244	4,031,661
Capital surplus
Capital surplus, additional paid-in capital
Total capital surplus, additional paid-in capital	163,337	63,977
Capital surplus, treasury share transactions	0	98,035
Capital surplus, donated assets received
Total capital surplus, donated assets received	0	151
Total capital surplus	163,337	162,163
Retained earnings
Legal reserve	572,287	530,361
Special reserve	1,907,768	1,907,768
Unappropriated retained earnings (accumulated deficit)
Total unappropriated retained earnings (accumulated deficit)	2,518,527	2,155,574
Total retained earnings	4,998,582	4,593,703
Other equity interest
Exchange differences on translation of foreign financial statements
Total exchange differences on translation of foreign financial statements	63,426	-86,603
Total other equity interest	63,426	-86,603
Treasury shares	183,035	183,035
Total equity attributable to owners of parent	9,275,554	8,517,889
Non-controlling interests	0	0
Total equity	9,275,554	8,517,889
Total equity (USD)	307,020,837	281,942,126
Equivalent issue shares of advance receipts for ordinary share	0	0
Number of shares in entity held by entity and by its subsidiaries	12,302,402	11,716,574

(As of 2014.08, 1 NTD = 0.0331 USD)

Profit and Loss Account

Unit: NTD/000

	2013	2012
Operating revenue
Total operating revenue	8,288,301	9,423,678
Total operating revenue (USD)	274,342,763	311,923,742
Operating costs
Total operating costs	6,490,116	7,820,276
Gross profit (loss) from operations	1,798,185	1,603,402
Gross profit (loss) from operations	1,798,185	1,603,402
Operating expenses
Selling expenses
Total selling expenses	795,595	783,174
Administrative expenses
Total administrative expenses	214,699	220,566
Total operating expenses	1,010,294	1,003,740
Net operating income (loss)	787,891	599,662
Non-operating income and expenses
Other income
Total other income	58,909	33,497
Other gains and losses
Other gains and losses, net	15,873	-4,668
Finance costs
Finance costs, net	48,757	62,594
Share of profit (loss) of associates and joint ventures accounted for using equity method
Share of profit (loss) of associates and joint ventures accounted for using equity method, net	60	100
Total non-operating income and expenses	26,085	-33,665
Profit (loss) from continuing operations before tax	813,976	565,997
Tax expense (income)
Total tax expense (income)	175,801	136,123
Profit (loss) from continuing operations	638,175	429,874
Profit (loss)	638,175	429,874
Profit (loss) (USD)	21,123,593	14,228,829
Other comprehensive income
Exchange differences on translation	150,029	-86,603
Actuarial gains (losses) on defined benefit plans	8,604	-1,395
Other comprehensive income, net	158,633	-87,998
Total comprehensive income	796,808	341,876
Profit (loss), attributable to:
Profit (loss), attributable to owners of parent	638,175	429,779
Profit (loss), attributable to non-controlling interests	0	95
Comprehensive income attributable to:
Comprehensive income, attributable to owners of parent	796,808	341,781
Comprehensive income, attributable to non-controlling interests	0	95
Basic earnings per share
Basic earnings (loss) per share from continuing operations	1.55	1.06
Total basic earnings per share	1.55	1.06
Diluted earnings per share
Diluted earnings (loss) per share from continuing operations	1.55	1.05
Total diluted earnings per share	1.55	1.05

(As of 2014.08, 1 NTD = 0.0331 USD)

Cash Flows

Unit: NTD/000

	2013	2012
Cash flows from (used in) operating activities, indirect method
Profit (loss) from continuing operations before tax	813,976	565,997
Profit (loss) before tax	813,976	565,997
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense	451,006	489,130
Amortization expense	95,028	103,927
Provision (reversal of provision) for bad debt expense	-10,365	16,395
Net loss (gain) on financial assets or liabilities at fair value through profit or loss	6,590	-12,256
Interest expense	48,757	62,594
Interest income	-17,204	-14,850
Share of loss (profit) of associates and joint ventures accounted for using equity method	-60	-100
Loss (gain) on disposal of property, plan and equipment	996	2,281
Reversal of impairment loss on non-financial assets	-384	-9,311
Other adjustments to reconcile profit (loss)	10,000	20,000
Total adjustments to reconcile profit (loss)	584,364	657,810
Changes in operating assets and liabilities
Changes in operating assets
Decrease (increase) in financial assets held for trading	-53,214	-186,921
Decrease (increase) in accounts receivable	-240,848	416,759
Decrease (increase) in other receivable	-721	6,920
Decrease (increase) in inventories	129,494	619,532
Decrease (increase) in prepayments	5,108	17,981
Total changes in operating assets	-160,181	874,271
Changes in operating liabilities
Increase (decrease) in accounts payable	-36,272	-317,171
Increase (decrease) in other payable	47,276	-51,998
Increase (decrease) in other current liabilities	-11,497	-14,361
Increase (decrease) in accrued pension liabilities	2,365	3,293
Total changes in operating liabilities	1,872	-380,237
Total changes in operating assets and liabilities	-158,309	494,034
Total adjustments	426,055	1,151,844
Cash inflow (outflow) generated from operations	1,240,031	1,717,841
Interest received	15,398	14,919
Interest paid	-47,798	-68,560
Income taxes refund (paid)	-148,364	-62,706
Net cash flows from (used in) operating activities	1,059,267	1,601,494
Cash flows from (used in) investing activities
Proceeds from disposal of subsidiaries	0	-55,553
Acquisition of property, plant and equipment	-376,905	-1,624,129
Proceeds from disposal of property, plant and equipment	795	2,067
Increase in refundable deposits	1,509	11,973
Acquisition of intangible assets	-679	0
Increase in other financial assets	-60,253	-54,557
Increase in other non-current assets	-42,980	-39,062
Net cash flows from (used in) investing activities	-478,513	-1,759,261
Cash flows from (used in) financing activities
Increase in short-term loans	-228,842	-992,809
Proceeds from long-term debt	0	1,264,514
Decrease in guarantee deposits received	-1,497	451
Cash dividends paid	-40,317	-18,929
Net cash flows from (used in) financing activities	-270,656	253,227
Effect of exchange rate changes on cash and cash equivalents	365	-18,908
Net increase (decrease) in cash and cash equivalents	310,463	76,552
Cash and cash equivalents at beginning of period	1,493,696	1,417,144
Cash and cash equivalents at end of period	1,804,159	1,493,696
Cash and cash equivalents reported in the statement of financial position	1,804,159	1,493,696

Bankers

Subject declined to disclose its bank details; from other source we could not obtain the relevant information, either.

Public Record

Mortgage

No chattel mortgage record of subject has been found within the recent 3 months.

Lawsuit

Up to date of reporting, no existing or latent litigation of the subject has been found.

Special Note

Interview Details

Department

Sales Department

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.60.43
UK Pound	1	Rs.100.23
Euro	1	Rs.80.35

INFORMATION DETAILS

Analysis Done by :	DIV
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%)

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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.