MIRA INFORM REPORT

Report Date :

14.06.2014

IDENTIFICATION DETAILS

Name :	JSM (SHENZHEN) ENTERPRISES CO., LTD.
Registered Office :	Rm. 1306, Bldg. a, Zhongshen Garden, Caitian Road South, Futian District, Shenzhen, Guangdong Province, 518026 PR
Country :	China
Financials (as on) :	31.12.2013
Date of Incorporation :	20.04.2001
Com. Reg. No.:	440301105251262
Legal Form :	Limited Liabilities Company
Line of Business :	Subject is engaged in trading pharmaceutical & chemical products. Products mainly include: pharmaceutical raw materials, agrochemicals, intermediates, natural botanical extract
No. of Employees :	14

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 :	Slow but correct
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 – March 31, 2014

Country Name	Previous Rating (31.12.2013)	Current Rating (31.03.2014)
China	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderately Low Risk	B1
Moderate Risk	B2
Moderately 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 and address

JSM (SHENZHEN) ENTERPRISES Co., Ltd.

rm. 1306, bldg. a, zhongshen garden, caitian road south,

FUTIAN DISTRICT, SHENZHEN, GUANGDONG PROVINCE, 518026 PR CHINA

TEL: 86 (0) 755-82995391

FAX: 86 (0) 755-82995863

EXECUTIVE SUMMARY

INCORPORATION DATE : april 20, 2001

REGISTRATION NO. : 440301105251262

REGISTERED LEGAL FORM : LIMITED LIABILITIES COMPANY

CHIEF EXECUTIVE : MR. xiao zuoming (CHAIRMAN)

STAFF STRENGTH : 14

REGISTERED CAPITAL : CNY 20,000,000

BUSINESS LINE : TRADING

TURNOVER : CNY 68,550,000 (AS OF DEC. 31, 2013)

EQUITIES : CNY 13,360,000 (AS OF DEC. 31, 2013)

PAYMENT : AVERAGE

MARKET CONDITION : average

FINANCIAL CONDITION : fairly STABLE

OPERATIONAL TREND : fairly STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.22 = 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 limited liabilities company at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license) on April 20, 2001.

Company Status: Limited liabilities co.

This form of business in PR China is defined as a legal person. No more than fifty shareholders contribute its registered capital jointly. Shareholders bear limited liability to the extent of shareholding, and the co. is liable for its debts only to extent of its total assets. The characteristics of this form of co. are as follows:

Upon the establishment of the co., an investment certificate is issued to the each of shareholders.

The board of directors is comprised of three to thirteen members.

The minimum registered capital for a co. is CNY 30,000.

Shareholders may take their capital contributions in cash or by means of tangible assets or intangible assets such as industrial property and non-patented technology.

Cash contributed by all shareholders must account for at least 30% of the registered capital.

Existing shareholders have pre-exemption right to purchase shares of the co. offered for sale by the other shareholders and to subscribe for the newly increased registered capital of the co.

SC’s registered business scope includes domestic commerce; supplying and selling of commodities; industry development; import & export business. Owned property leasing.

SC is mainly engaged in trading pharmaceutical & chemical products.

Mr. Xiao Zuoming has been chairman, legal representative and general manager of SC since 2001.

SC is known to have approx. 14 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office in the commercial zone of Shenzhen. Our checks reveal that SC owns the total premise about 450 square meters.

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

E-mail: info@jsmec.net

xzm@jsmec.net

SC’s quality system meets the international standards of ISO 9001:2000.

Changes of its registered information are as follows:

Date of change	Item	Before the change	After the change
2011-3-14	Registration No.	4403011064114	Present one
	Registered Capital	CNY 12,000,000	Present amount

Subject passed the annual inspection of 2012 with Administration for Industry & Commerce.

Organization Code: 728543681

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

MAIN SHAREHOLDERS:

Name `% of Shareholding

Xiao Zuoming 65

Zhang Qijun 35

Legal Representative, Chairman and General Manager:

Mr. Xiao Zuoming, born in 1963. He is currently responsible for the overall and daily management of SC.

Working Experience(s):

From 2001 to present Working in SC as legal representative, chairman and general manager.

Vice-general manager:

Mr. Zhang Qijun, born in 1966, with university education. He is currently responsible for the daily management of SC.

Working Experience(s):

From 2001 to present Working in SC as vice-general manager.

*Officials:

=======

Name Title

Liu Xin Supervisor

Liu Qing Director

Zhang Qijun Director

SC is mainly engaged in trading pharmaceutical & chemical products.

SC’s products mainly include: pharmaceutical raw materials, agrochemicals, intermediates, natural botanical extract, and so on.

SC sources its materials 99% from domestic market, and 1% from overseas market, mainly Europe. SC sells 20% of its products in domestic market, and 80% to overseas market, mainly Europe and 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 Check, T/T, L/C and Credit of 30-60 days.

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

According to SC’s website,

Hualong Enterprises Ltd. (Hong Kong)

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

CR No.: 0358670

Date of Incorporation: 1992-5-26

Company Status: Private Company Limited by Shares

Address: Unit A 12/F., Wan Hen Comm. Centre, 381-383 Hennessy Road, Wanchai, Hong Kong

Telephone: 00852-62948389

Fax: 00852-23330847

E-mail: xzm@jsmec.net

JSM India Office

=========

Address: F202, Panorama Mansion, Renuka Enclave, Rajbhavan Road, Somajiguda, Hyderabad, 500082, India.

Tel.: 040-66669396, 0091-9618062088, 0091-9951831196

Fax: 040-66669396

E-mail zl@jsmec.net, lana.zou@gmail.com

Subsidiary:

JSM (Jiangxi) Enterprise Co., Ltd.

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

Registration No.: 360100219408878

Incorporation Date: 2004-12-9

Chairman: Xu Jinfa

Address: B2-1, Nanyang Garden, Beijing East-Road, Nanchang, Jiangxi, China

Telephone: 0086-791-8336288

Fax: 0086-791-8327101

E-mail: df@jsmec.net

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.

China Merchants Bank Shenzhen Branch Huanggang Sub-branch

AC#: 81528267911000

Relationship: Normal.

Balance Sheet

Unit: CNY’000

	As of Dec. 31, 2013	As of Dec. 31, 2012
Cash & bank	5,140	6,320
Notes receivable	90	1,180
Inventory	0	700
Accounts receivable	10,120	12,240
Advances to suppliers	560	30
Other accounts receivable	4,690	2,390
Other current assets	0	0
	------------------	-----------------
Current assets	20,600	22,860
Fixed assets net value	3,340	3,610
Project under construction	0	0
Long term investment	2,500	2,500
Long-term prepaid expenses	0	0
Project materials	0	0
Intangible and other assets	130	180
	------------------	------------------
Total assets	26,570	29,150
	=============	=============
Short loans	0	0
Notes payable	0	1,310
Accounts payable	7,360	11,240
Advances from clients	4,630	1,540
Accrued payroll	170	150
Welfare payable	0	0
Taxes payable	0	-60
Surcharge payable	0	0
Other accounts payable	1,050	940
Other current liabilities	0	0
Interest payable	0	0
	------------------	------------------
Current liabilities	13,210	15,120
Long-term liabilities	0	0
	------------------	------------------
Total liabilities	13,210	15,120
Equities	13,360	14,030
	------------------	------------------
Total liabilities & equities	26,570	29,150
	=============	=============

Income Statement

Unit: CNY’000

	As of Dec. 31, 2013
Turnover	68,550
Cost of goods sold	67,120
Sales expense	1,260
Management expense	1,260
Finance expense	-100
Non-operating income	330
Non-operating expense	0
Profit before tax	-660
Less: profit tax	0
Profits	-660

Important Ratios

	As of Dec. 31, 2013	As of Dec. 31, 2012
*Current ratio	1.56	1.51
*Quick ratio	1.56	1.47
*Liabilities to assets	0.50	0.52
*Net profit margin (%)	-0.96	/
*Return on total assets (%)	-2.48	/
*Inventory /Turnover ×365	/	/
*Accounts receivable/Turnover ×365	54 days	/
*Turnover/Total assets	2.58	/
* Cost of goods sold/Turnover	0.98	/

PROFITABILITY: FAIR

· The turnover of SC appears average in 2013.

· SC’s net profit margin is fair in 2013.

· SC’s return on total assets is fair in 2013.

· SC’s cost of goods sold is high in 2013, comparing with its turnover.

LIQUIDITY: AVERAGE

· The current ratio of SC is maintained in a normal level.

· SC’s quick ratio is maintained in a normal level.

· The inventory of SC appears average in 2012 and SC has no inventory in 2013.

· The accounts receivable of SC is fairly large in both years.

· SC has no short-term loan in both years.

· SC’s turnover is in an average level in 2013, 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 average.

Overall financial condition of the SC: Fairly Stable.

SC is considered small-sized in its line with fairly stable financial conditions. The large amount of accounts receivable could be a threat to SC’s financial conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.59.48
UK Pound	1	Rs.100.93
Euro	1	Rs.80.71

INFORMATION DETAILS

Analysis Done by :	DIV
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.