MIRA INFORM REPORT

Report Date :

23.12.2014

IDENTIFICATION DETAILS

Name :	Hubei Hongyuan Pharmaceutical Technology CO., LTD.

Registered Office :	No. 428, Yishui North Road, Fengshan Town, Luotian County, Huanggang City, Hubei Province 438600 Pr

Country :	China

Financials (as on) :	31.12.2013

Date of Incorporation :	21.01.2002

Com. Reg. No.:	421123000005111

Legal Form :	Shares Limited Company

Line of Business :	Manufacturing and selling glyoxylate, glyoxal, lithium hexafluorophosphate; manufacturing and selling API (metronidazole, benzoyl metronidazole, tinidazole, ornidazole, secnidazole and metronidazole disodium phosphate), Lu agent, syrup, tablets, granules, mixture; (validity period as of Dec. 31, 2015); manufacturing and selling health care products Ling Tu Fu Shen Brand Fu Qi Ren capsule (validity period as of Sep. 5, 2016); manufacturing and selling beverages (other drinks) (validity period as of June 19, 2015); manufacturing and selling formaldehyde, formic acid (validity period as of Mar. 29, 2015); manufacturing and selling dimetridazole and pharmaceutical intermediates; selling sucralose; engaged in the coal business accordance with the relevant provisions; importing and exporting goods and technologies (excluding the items prohibited and limited by the state); purchasing and selling agricultural and sideline products (excluding cocoon, tobacco); retailing general merchandise. (with permit if needed)

No of Employees :	500

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 :	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 – September 30, 2014

Country Name

Previous Rating

(30.06.2014)

Current Rating

(30.09.2014)

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, 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

Hubei Hongyuan Pharmaceutical Technology CO., LTD.

no. 428, yishui north road, fengshan town, luotian county,

HUANGGANG CITY, hubei province 438600 PR CHINA

TEL: 86 (0) 713-5072024/13636025632 FAX: 86 (0) 713-5072024

EXECUTIVE SUMMARY

INCORPORATION DATE : jan. 21, 2002

REGISTRATION NO. : 421123000005111

REGISTERED LEGAL FORM : SHARES LIMITED COMPANY

CHIEF EXECUTIVE : MR. YIN GUOPING (CHAIRMAN)

STAFF STRENGTH : 500

REGISTERED CAPITAL : CNY 70,000,000

BUSINESS LINE : MANUFACTURING and trading

TURNOVER : CNY 906,920,000 (AS OF DEC. 31, 2013)

EQUITIES : CNY 160,760,000 (AS OF DEC. 31, 2013)

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRLY STABLE

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : WELL-KNOWN

EXCHANGE RATE : CNY 6.13 =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

Note: SC’s correct English name should be the heading one.

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. 21, 2002 and has been under the present legal form since April of 2014.

Company Status: Shares limited co.

This form of business in PR China is defined as a legal person. Its registered capital is divided into shares of equal par value and the co. raises capital by issuing share certificates by promotion or by public offer. Shareholders bear limited liability to the extent of shareholding, and the co. is liable for its debts only to the extent of its total assets. The co has independent property of legal person and enjoys property rights of legal person. The characteristics of the shares limited co. are as follows:

The establishment of the co. requires at least two promoters and no more than 200, half of whom shall be domiciled in China. Natural person are allowed to serve as promoters.

The minimum registered capital of a co. is CNY 5M. while that of the co. with foreign investment is CNY 5M. The total capital of a co. which propose to apply for publicly listed must be no less than CNY 30M.

The board of directors must consist of five to nineteen directors.

If the co. raises capital by public offer, the promoters must not subscribe less than 35% of the total shares. the promoters’ shares are restricted to transfer- within one year of the offer.

A state-owned enterprise that is restructured into a shares limited co. must comply with the conditions & requirements specified under the law & administrative rule.

SC’s registered business scope includes manufacturing and selling glyoxylate, glyoxal, lithium hexafluorophosphate; manufacturing and selling API (metronidazole, benzoyl metronidazole, tinidazole, ornidazole, secnidazole and metronidazole disodium phosphate), Lu agent, syrup, tablets, granules, mixture; (validity period as of Dec. 31, 2015); manufacturing and selling health care products Ling Tu Fu Shen Brand Fu Qi Ren capsule (validity period as of Sep. 5, 2016); manufacturing and selling beverages (other drinks) (validity period as of June 19, 2015); manufacturing and selling formaldehyde, formic acid (validity period as of Mar. 29, 2015); manufacturing and selling dimetridazole and pharmaceutical intermediates; selling sucralose; engaged in the coal business accordance with the relevant provisions; importing and exporting goods and technologies (excluding the items prohibited and limited by the state); purchasing and selling agricultural and sideline products (excluding cocoon, tobacco); retailing general merchandise. (with permit if needed)

SC is mainly engaged in manufacturing and selling active pharmaceutical ingredients and intermediates.

Mr. Yin Guoping has been the legal representative, chairman and general manager since 2002.

SC is known to have approx. 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 Luotian County. Our checks reveal that SC rents the total premise about 18,000 square meters.

Note: SC has another factory: No. 8 Fengshan Road, Industrial & Economic Development Zone, Luotian County, Huanggang City, Hubei

http://www.hbhypharm.com/ The design is professional and the content is well organized. At present it is in both Chinese and English versions.

E-mail: sales@hbhypharm.com

SC has passed ISO9001:2000 and GMP.

Changes of its registered information:

Date of change	Item	Before the change	After the change
2002-5-29	Registered capital	CNY 500,000	CNY 3,148,000
2007-7-3	Registered capital	CNY 3,148,000	CNY 20,000,000
2008-3-19	Registration number	4211231002149	Present one
2008-8-4	Company name	Luotian Hongyuan Biochemical Co., Ltd.	Hubei Hongyuan Pharmaceutical Co., Ltd.
Unknown	Shareholdings	Yin Guoping 32.10% Liao Liping 11.76% Fang Ligao 5.96% Other individuals 50.18%	Yin Guoping 32.1% Liao Liping 11.91% Fang Ligao 5.96% Xiao Jiahuai 5.96% Duan Xiaoliu 5.96% Lei Gaoliang 5.96% Gong Bingtao 5.96% Liu Zhanliang 5.96% Li Xiaoxiong 5.95% Xu Shuangxi 5.95% He Jianping 4.76% Deng Zhihua 3.57%
	Shareholders	Yin Guoping 32.1% Liao Liping 11.91% Fang Ligao 5.96% Xiao Jiahuai 5.96% Duan Xiaoliu 5.96% Lei Gaoliang 5.96% Gong Bingtao 5.96% Liu Zhanliang 5.96% Li Xiaoxiong 5.95% Xu Shuangxi 5.95% He Jianping 4.76% Deng Zhihua 3.57%	Gong Chen 2% Lei Gaoliang 3% Liao Shengru 0.5% Xu Shuangxi 3% Deng Zhihua 3% Cheng Siyuan 1% Ding Zhihua 1% Duan Xiaoliu 3% Liao Zhongzhu 0.5% He Jianping 1% Li Xiaoxiong 2% Liu Zhanliang 3% Xiao Jiahuai 2.5% Yan Xiaohui 63% Liao Liping 10% Xiao Yaodong 1% Li Guoxin 0.5%
	Registered capital	CNY 20,000,000	Present amount
	Shareholders and shareholding	Gong Chen 2% Lei Gaoliang 3% Liao Shengru 0.5% Xu Shuangxi 3% Deng Zhihua 3% Cheng Siyuan 1% Ding Zhihua 1% Duan Xiaoliu 3% Liao Zhongzhu 0.5% He Jianping 1% Li Xiaoxiong 2% Liu Zhanliang 3% Xiao Jiahuai 2.5% Yan Xiaohui 63% Liao Liping 10% Xiao Yaodong 1% Li Guoxin 0.5%	Present ones
2014-4-8	Company name	Hubei Hongyuan Pharmaceutical Co., Ltd.	Present one
2014-4-8	Legal form	Limited liabilities co.	Present one

Organization code: 73519634X

Honors:

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

MAIN SHAREHOLDERS:

Name Investment amount % of Shareholding

Yan Xiaohui CNY 24,275,000 34.68

Yin Guoping CNY 15,275,000 21.82

Xu Shuangxi CNY 6,300,000 9

Liao Liping CNY 6,000,000 8.57

Hubei Hongyuan Charitable Foundation (in Chinese Pinyin) CNY 2,700,000 3.86

Lei Gaoliang CNY 1,800,000 2.57

Duan Xiaoliu CNY 1,800,000 2.57

Liu Zhanliang CNY 1,800,000 2.57

Xiao Jiahuai CNY 1,500,000 2.14

Li Xiaoxiong CNY 1,200,000 1.71

Deng Zhihua CNY 1,200,000 1.71

Gong Chen CNY 1,200,000 1.71

Cheng Siyuan CNY 600,000 0.86

Ding Zhihua CNY 600,000 0.86

He Jianping CNY 600,000 0.86

Xiao Yaodong CNY 600,000 0.86

Liao Shengru CNY 550,000 0.79

Other 9 individuals CNY 2,000,000 2.86

Legal representative, Chairman and General Manager:

Mr. Yin Guoping, born in 1960, with university education. He is currently responsible for the overall management of SC.

Working Experience(s):

From 2002 to present Working in SC as legal representative, chairman and general manager

Vice Chairman:

Mr. Yan Xiaohui is currently responsible for the daily management of SC.

Working Experience(s):

At present Working in SC as vice chairman

Directors:

Xu Shuangxi

Duan Xiaoliu

Liu Zhanliang

Supervisors:

Gong Shuipeng

Lei Gaoliang

Wang Lintao

Li Guoxin

SC is mainly engaged in manufacturing and selling active pharmaceutical ingredients and intermediates.

SC’s products mainly include: Metronidazole, 2-Methyl-5-Nitroimidazole, 2-Methylimidazole, Dimetridazole, Imidazole, 4-Nitroimidazole, and Metronidazole Benzoate.

SC sources its materials 100% from domestic market, mainly Hubei province. SC sells 50% to overseas market, mainly European and American countries, and 50% in domestic market, mainly Hubei and Jiangsu province.

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.

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

According SC’s website:

Wuhan International Business Department

Tel: +86-27-59422698

Fax: +86-27-59422633

E-mail: sales@hbhypharm.com

Add: 15G, Building B, Zhongjian Square, No. 2-6, Zhongnan Road, Wuchang District, Wuhan City, Hubei Province, China

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.

Bank of China Luotian Sub-branch

AC#：N/A

Relationship: Normal.

Financial Summary

Unit: CNY’000

	As of Dec. 31, 2013
Total assets	725,820
Total liabilities	565,060
Equities	160,760
Turnover	906,920
Cost of goods sold	771,530
Profits	28,610

Note: SC refused to release its detailed financial information.

Important Ratios

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

	As of Dec. 31, 2013
*Liabilities to assets	0.78
*Net profit margin (%)	3.15
*Return on total assets (%)	3.94
*Turnover/Total assets	1.25
* Cost of goods sold/Turnover	0.85

PROFITABILITY: AVERAGE

The turnover of SC appears fairly good 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 average, comparing with its turnover.

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

LEVERAGE: AVERAGE

The debt ratio of SC is fairly high.

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. Taking into consideration of SC’s general performance, reputation as well as market conditions we would rate SC as an average credit risk company.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.63.18
UK Pound	1	Rs.98.85
Euro	1	Rs.77.42

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%)

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.