MIRA INFORM REPORT

Report Date :

17.01.2014

IDENTIFICATION DETAILS

Name :	OMNOVA (NINGBO) CO., LTD.
Registered Office :	No. 308 Jiangbin Road, Beilun District, Ningbo, Zhejiang Province 315803 Pr
Country :	China
Financials (as on) :	31.12.2012
Date of Incorporation :	02.07.2003
Com. Reg. No.:	330200400037047
Legal Form :	Wholly Foreign-Owned Enterprise
Line of Business :	Engaged in developing and manufacturing of auxiliaries and other new products.
No. of Employees :	228

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 – September 30, 2013

Country Name	Previous Rating (30.06.2013)	Current Rating (30.09.2013)
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

OMNOVA (NINGBO) CO., LTD.

NO. 308 jiangbin road, beilun district

NINGBO, ZHEJIANG PROVINCE 315803 PR CHINA

TEL: 86 (0) 574-86183719/86183707

FAX: 86 (0) 574-86226673

EXECUTIVE SUMMARY

Date of Registration : july 2, 2003

REGISTRATION NO. : 330200400037047

LEGAL FORM : WHOLLY FOREIGN-OWNED ENTERPRISE

CHIEF EXECUTIVE : KEVIN M.MCMULLEN (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : usd 5,000,000

staff : 228

BUSINESS CATEGORY : manufacturing & TRADING

Sale : CNY 178,936,000 (AS OF DEC. 31, 2012)

EQUITIES : CNY 111,827,000 (AS OF DEC. 31, 2012)

WEBSITE : N/A

E-MAIL : N/A

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRly GOOD

OPERATIONAL TREND : fairly STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.05 = 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

LEGAL STATUS & HISTORY

SC was established as a wholly foreign-owned enterprise of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 330200400037047 on July 2, 2003.

SC’s Organization Code Certificate No.: 75037191-9

SC’s Tax No.: 330206750371919

SC’s Customs Registration No.: 3302240244

SC’s registered capital: usd 5,000,000

SC’s paid-in capital: usd 5,000,000

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
OMNOVA Holding Ltd. (Mauritius)	100

SC’s Chief Executives:-

Position	Name
Legal Representative, Chairman, and General Manager	Kevin M.Mcmullen
Director	James C. Lemay
	Michael E. Hicks
Supervisor	John Sze Chung Wei

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

OMNOVA Holding Ltd. (Mauritius) 100

MANAGEMENT

Kevin M.Mcmullen, Legal Representative, Chairman and General Manager

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

Ø Gender: M

Ø Passport No.: 017688315

Ø Nationality: U.S.A.

Ø Qualification: University

Ø Working experience (s):

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

James C. Lemay, Director

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

Ø Gender: M

Ø Passport No.: 112914759

Ø Nationality: U.S.A.

Ø Qualification: University

Michael E. Hicks, Director

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

Ø Gender: M

Ø Passport No.: 027561538

Ø Nationality: U.S.A.

Ø Qualification: University

John Sze Chung Wei, Supervisor

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

Ø Gender: M

Ø Passport No.: 421434867

Ø Nationality: U.S.A.

Ø Qualification: University

BUSINESS OPERATION

SC’s registered business scope includes developing and manufacturing auxiliaries and other new products.

SC is mainly engaged in manufacturing and selling auxiliaries.

SC’s products mainly include: auxiliaries.

SC sources its materials 75% from domestic market, and 25% from overseas market, mainly France, Japan, India, and Germany. SC sells 16% of its products in domestic market, and 84% to overseas market, mainly U.S.A. and France.

The import & export status of SC in 2012 is as follows,

Country	Amount of Exports (USD)	Amount of Imports (USD)
Japan	--	2,193,800
India	--	6,329,200
France	20,128,200	211,700
Germany	--	53,200
U.S.A.	3,677,800	--
	-----------------	-----------------
Total	23,806,000	8787900

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

*Major Customer*

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

Akron Dispersions

Staff & Office:

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

SC is known to have approx. 228 staff at present.

SC owns an area as its operating office & factory of approx. 30,000 sq. meters at the heading address.

RELATED COMPANY

· Omnova Solutions Inc.

Omnova (Shanghai) Co., Ltd.

Omnova Performance Chemicals Trading (Shanghai) Co., Ltd.

Omnova Solutions Performance Chemicals Singapore Pte. Ltd.

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, 2010	As of Dec. 31, 2011	As of Dec. 31, 2012
Cash	20,509	10,311	26,881
Short-term investment	0	10,006	15,010
Notes receivable	0	0	0
Accounts receivable	35,581	18,723	32,794
Advances to suppliers	0	0	0
Other receivable	388	141	47
Inventory	8,712	18,275	16,171
Deferred expenses	2	38	66
Other current assets	0	0	0
	------------------	------------------	------------------
Current assets	65,192	57,494	90,969
Fixed assets	50,980	47,015	42,046
Construction in progress	566	917	336
Intangible assets	149	103	61
Long-term prepaid expenses	0	0	0
Deferred income tax assets	86	179	282
Other non-current assets	0	0	0
	------------------	------------------	------------------
Total assets	116,973	105,708	133,694
	=============	=============	=============
Short-term loans	0	0	0
Notes payable	0	0	0
Accounts payable	14,472	4,623	16,723
Wages payable	899	587	1,103
Welfares payable	59	87	89
Taxes payable	1,758	92	3,062
Advances from clients	0	0	0
Other payable	323	293	679
Accrued expenses	223	249	211
Other current liabilities	10,775	0	0
	------------------	------------------	------------------
Current liabilities	28,509	5,931	21,867
Non-current liabilities	0	0	0
	------------------	------------------	------------------
Total liabilities	28,509	5,931	21,867
Equities	88,464	99,777	111,827
	------------------	------------------	------------------
Total liabilities & equities	116,973	105,708	133,694
	=============	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2010	As of Dec. 31, 2011	As of Dec. 31, 2012
Sale	191,897	158,756	178,936
Cost of sales	172,985	134,999	155,651
Taxes and surcharges	0	0	0
Sales expense	1,458	1,271	1,190
Management expense	1,457	7,072	6,406
Finance expense	2,165	1,345	258
Profit before tax	14,561	13,533	16,363
Less: profit tax	3,462	2,219	4,314
Profits	11,099	11,314	12,049

Important Ratios

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

	As of Dec. 31, 2010	As of Dec. 31, 2011	As of Dec. 31, 2012
*Current ratio	2.29	9.69	4.16
*Quick ratio	1.98	6.61	3.42
*Liabilities to assets	0.24	0.06	0.16
*Net profit margin (%)	5.78	7.13	6.73
*Return on total assets (%)	9.49	10.70	9.01
*Inventory / Sale ×365	17 days	43 days	33 days
*Accounts receivable / Sale ×365	68 days	44 days	67 days
*Sale / Total assets	1.64	1.50	1.34
*Cost of sales / Sale	0.90	0.85	0.87

FINANCIAL COMMENTS

PROFITABILITY: AVERAGE

l The sale of SC appears fairly good in three years.

l SC’s net profit margin is fairly good.

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

l SC’s cost of sales is average, comparing with its sale.

LIQUIDITY: FAIRLY GOOD

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

l SC’s quick ratio is maintained in a fairly good level.

l The inventory of SC is maintained in an average level.

l The accounts receivable of SC is maintained in an average level.

l SC has no short-term loans.

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

LEVERAGE: AVERAGE

l The debt ratio of SC is low.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fairly Good.

CONCLUSIONS

SC is considered medium-sized in its line with fairly good financial conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.53
UK Pound	1	Rs.100.73
Euro	1	Rs.83.84

INFORMATION DETAILS

Report Prepared by :

MNL

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.