MIRA INFORM REPORT

Report Date :

16.01.2014

IDENTIFICATION DETAILS

Name :	HEBEI JIHENG (GROUP) PHARMACEUTICAL CO., LTD.

Registered Office :	No. 368 Jianshe Street, Hengshui, Hebei Province, 053000 PR

Country :	China

Financials (as on) :	30.06.2013

Date of Incorporation :	06.04.1999

Com. Reg. No.:	131100000008139

Legal Form :	One-Person Limited Liabilities Company

Line of Business :	Subject is engaged in manufacturing granule, tablet, pilula, hard capsule, and bulk drugs

No. of Employees :	1,500

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, 2013

Country Name

Previous Rating

(30.06.2013)

Current Rating

(30.09.2013)

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 & address

Hebei Jiheng (Group) Pharmaceutical Co., Ltd.

no. 368 jianshe street, hengshui,

hebei province, 053000 PR CHINA

TEL: 86 (0) 318-2136398 FAX: 86 (0) 318-2182958

EXECUTIVE SUMMARY

INCORPORATION DATE : apR. 6, 1999

REGISTRATION NO. : 131100000008139

REGISTERED LEGAL FORM : ONE-PERSON LIMITED LIABILITIES COMPANY

CHIEF EXECUTIVE : MR. XIAO HUI (CHAIRMAN)

STAFF STRENGTH : 1,500

REGISTERED CAPITAL : CNY 38,000,000

BUSINESS LINE : manufacturing

TURNOVER : CNY 396,780,000 (Jan. 1 to June 30, 2013)

EQUITIES : CNY 291,400,000 (AS OF June 30, 2013)

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : fairly STABLE

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.04 = 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 one-person limited liability company at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license).

Company Status: One-person Limited Liability Company

Single person LLC refers to a limited liability company set up by only one natural person or legal person as the single shareholder of it.

The minimum registered capital of Single person LLC is CNY100,000. The shareholder’s capital contributes, as set out by the articles of associations should be a lump-sum payment in full.

One natural person can only invest in and set up one limited liability company, which is not permitted to invest in and set up a new Single person LLC.

As to any one-person limited liability company, the sole-investor nature of the natural person or legal person shall be indicated in the registration documents of the company and shall be indicated in the business license thereof as well.

The regulation of Single person LLC should be set up by the shareholder

The regulation of Single person LLC has no shareholder meeting.

SC’s registered business scope includes manufacturing granule, tablet, pilula, hard capsule, pulvis, liquor, tincture, bulk drugs, manufacturing food additives; exporting self-made products and technologies; importing mechanical equipments, components, raw materials, accessories, and relative technology needed by SC, excluding commodities and technologies prohibited by state.

SC is mainly engaged in manufacturing granule, tablet, pilula, hard capsule, and bulk drugs.

Mr. Xiao Hui has been the legal representative and chairman of SC since 2013.

SC is known to have approx. 1,500 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 Hengshui. Our checks reveal that SC rents the total premise about 150,000 square meters.

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

E-mail: sales@jihengpharmaceutical.com

Honors:

======

SC was awarded “Excellent Enterprise of Hebei Province”.

SC was awarded “2002 Annual Advanced Enterprise”.

SC was awarded “2002 Annual enterprise credit ratings AAA”.

SC was awarded “Foreign Economic Relations & Trade Advanced Unit of Hebei Province.”

SC obtained Kosher Certificate, ISO Certificate, GMP Certificate

SC also has obtained the ISO9001, ISO14001 certificates. The Folic Acid has certificates of KOSHER, HALAL, FAMI-QS ISO22000.

Changes of its registered information are as follows:

Date of change	Item	Before the change	After the change
2000-03-30	Registered name	Hengshui Jiheng Drug Co., Ltd.	Hengshui Jiheng Pharmacy Co., Ltd.
2001-04-26	Registered capital	CNY 1,580,000	CNY 8,000,000
2001-09-30	Registered capital	CNY 8,000,000	CNY 20,329,700
	Registered legal form	One-person limited liability company	Limited liability company
	Legal representative	Xiao Qiusheng	Han Borui
2002-07-22	Registered capital	CNY 20,329,700	CNY 32,000,000
2003-06-25	Registered capital	CNY 32,000,000	CNY 38,000,000
2004-03-29	Legal representative	Han Borui	Wang Pingsheng
2004-03-29	Registered name	Hengshui Jiheng Pharmacy Co., Ltd.	Hebei Jiheng (Group) Pharmaceutical Co., Ltd.
2008-03-14	Registered legal form	Limited liability company	One-person limited liability company
Unknown	Registered no.	1311001000585	131100000008139
2013	Legal representative	Wang Pingsheng	Xiao

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

MAIN SHAREHOLDER:

Name % of Shareholding

Hebei Jiheng Group Co., Ltd. 100

Hebei Jiheng Group Co., Ltd. mainly specialize in producing more than 30 kinds of chemical products, including ammonium persulphate, sodium persulfate, potassium persulphate, dichloro, trichloro, cyanuric acid, ammonium bicarbonate, phos rock fertilizer in bulk, aniline, vitriol, compound fertilizer, dimethylaniline, and more than ten kinds of chemical raw materials, including benzalagen, aminopyrine, antipyrin, paracetamol

Registration No.: 131100000013908

Registered capital: CNY 133,600,000

Legal representative: Xiao Qiusheng

Incorporation date: 1998-9-8

Website: http://www.jihenggroup.com/

Tel: 0318-2123752

Fax: 0318-2127915

Legal representative and chairman:

Mr. Xiao Hui, born in 1973 with postgraduate education. He is currently responsible for the overall management of SC.

Working Experience(s):

From 2013 to present Working in SC as legal representative and chairman

Also working in Hebei Jiheng Baikang Chemical Industry Co., Ltd. (Literal Translation) as legal representative

General Manager:

Mr. Li Guosheng, born in 1968 with junior college education. He is currently responsible for the daily management of SC.

Working Experience(s):

From 1999 to present Working in SC as general manager

SC is mainly engaged in manufacturing granule, tablet, pilula, hard capsule, and bulk drugs.

SC’s products mainly include: Active Pharmaceutical Ingredients, finished formulations, Chinese Herbal medicines, pharmaceutical intermediates

SC sources its materials 90% from domestic market, mainly Hebei, and 10% from overseas market. SC sells 80% of its products in domestic market, and 20% to overseas market, mainly Southeast Asian market.

The buying terms of SC include Check, T/T, L/C and Credit of 30-60 days. The payment terms of SC include T/T, L/C and Credit of 30-60 days.

Note: SC refused to release its major clients and suppliers.

SC is said to have subsidiaries, but the detail is unspecified.

Related companies:

Hebei Jiheng Baikang Chemical Industry Co., Ltd. (Literal Translation)

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

Registered no.: 130924000001763

Legal representative: Xiao Hui

Registered capital: CNY 40,000,000

Date of incorporation: 2009-7-24

Hebei Jiheng Chemical Co., Ltd.

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

Registered no.: 130000000019648

Legal representative: Xiao Qiusheng

Registered capital: CNY 190,000,000

Date of incorporation: 2001-7-31

Hebei Jiheng (Group) Shenzhou Chemical Co., Ltd.

Hebei Jiheng Group Co., Ltd. Bluesky Branch

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.

Agricultural Bank of China Hengshui Branch

AC#：401001040000195

Relationship: Normal.

Financial Information

Unit: CNY’000

	as of Dec. 31, 2012	as of June 30, 2013
Total liabilities	382,280	423,950
Shareholders equities	264,110	291,400
Total Assets	646,390	715,350

	as of Dec. 31, 2012	Jan. 1 to June 30, 2013
Turnover	731,880	396,780
Net profit	43,020	25,770

Note: SC’s management declined to release its detailed financial information.

Important Ratios

	as of Dec. 31, 2012	as of June 30, 2013
*Liabilities to assets	0.59	0.59
*Net profit margin (%)	5.88	6.49
*Return on total assets (%)	6.66	3.60
*Turnover/Total assets	1.13	0.55

PROFITABILITY: AVERAGE

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

· SC’s net profit margin is fairly good.

· SC’s return on total assets is fairly good.

SC’s turnover is in an average level in 2012, 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 low.

Overall financial condition of the SC: Fairly Stable.

SC is considered large-sized in its line with fairly stable financial conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.59
UK Pound	1	Rs.101.09
Euro	1	Rs.83.99

INFORMATION DETAILS

Report Prepared by :

NNA

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.