MIRA INFORM REPORT

Report Date :

14.06.2014

IDENTIFICATION DETAILS

Name :	Zhejiang Huahai Pharmaceutical co., ltd.

Registered Office :	Xunqiao Economic Development Zone, Linhai, Zhejiang Province, 317024 PR

Country :	China

Financials (as on) :	31.12.2013

Date of Incorporation :	28.02.2001

Com. Reg. No.:	330000000027652

Legal Form :	Shares Limited Company

Line of Business :	Manufacturing drug general operating items: manufacturing pharmaceutical intermediates; import and export business

No. of Employees	3,855

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 – March 31, 2014

Country Name

Previous Rating

(31.12.2013)

Current Rating

(31.03.2014)

China

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderate Low Risk	B1
Moderate Risk	B2
Moderate 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

Zhejiang Huahai Pharmaceutical co., ltd.

XUNQIAO ECONOMIC DEVELOPMENT ZONE, LINHAI,

ZHEJIANG province, 317024 PR CHINA

TEL: 86 (0) 576-85991096

FAX: 86 (0) 576-85016010

EXECUTIVE SUMMARY

INCORPORATION DATE : FEB. 28, 2001

REGISTRATION NO. : 330000000027652

REGISTERED LEGAL FORM : shares limited company

CHIEF EXECUTIVE : MR. CHEN BAOHUA (legal representative)

STAFF STRENGTH : 3,855 (including its main subsidiaries)

REGISTERED CAPITAL : CNY 785,302,000

BUSINESS LINE : manufacturing and trading

TURNOVER : CNY 2,296,408,000 (CONSOLIDATED, as of dec. 31, 2013)

EQUITIES : CNY 3,019,286,000 (CONSOLIDATED, as of dec. 31, 2013)

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRLY STABLE

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : average

EXCHANGE RATE : CNY 6.2503= 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 Ren Min Bi

SC was registered as a shares limited company at Zhejiang Provincial Administration for Industry & Commerce (AIC-The official body of issuing and renewing business license) on Feb. 28, 2001.

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 characteristics of the shares limited co. are as follows:

The establishment of the co. requires at least five promoters and at least three of them must be PR- China controlled legal persons. Natural person can not be allowed to serve as promoters.

The minimum registered capital of a co. is CNY 10M. while that of the co. with foreign investment is CNY 30M. The total capital of a co. which propose to apply for publicly listed must not less than CNY 50M.

The board of directors must consist of an odd number 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 three years of the offer. Directors can not transfer the shares they hold in the co. during their terms of office.

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 drug (range see the People's Republic of China Pharmaceutical Production License, valid until December 2, 2015); general operating items: manufacturing pharmaceutical intermediates; import and export business (excluding those limited, prohibited and permitted by the state ).

SC is mainly engaged in manufacturing and selling pharmaceutical preparations, API (Active Pharmaceutical Ingredient) and pharmaceutical intermediates.

Mr. Chen Baohua is the legal representative and general manager of SC at present.

SC is known to have approx. 3,855 employees (including its main subsidiaries), including 2,067 workers, 97 sales staff, 932 technical staff and 42 financial staff, etc.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the economic development zone of Linhai. Our checks reveal that SC covers an area of 1,200,000 square meters

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

E-mail: 600521@huahaipharm.com

SC is a listed company in Shanghai Stock Exchange Market with the code 600521.

SC is entitled as National Key Hi-tech Enterprise, National Pilot Enterprise of Innovation, and China’s top 500 private enterprises, and possesses a “State Certified Enterprise Technology Center”.

· awarded with the honor of “National-recognized enterprise technology center”

· awarded with the honor of “Special contribution to 5.12 Wen chuan earthquake relief efforts”

·award with the honor of “National Demonstration Project for Advanced Technology Industrialization”

· awarded with the honor of “National Environment Friendly Enterprise”

· awarded with the honor of “Five Star Enterprise of Environmental Protection” by Zhejiang Province

· awarded with the honor of “Key Hi-Tech Enterprise of China”

Etc.

Changes of its registered information are as follows:

Date of change	Item	Before the change	After the change
Unknown	Registered no.	3300001007639	Present one
2012	Registered capital	CNY 538,607,000	CNY 547,448,000
2013	Registered capital	CNY 547,448,000	CNY 775,486,000
2013	Chairman	Chen Baohua	Present one
Unknown	Registered capital	CNY 775,486,000	Present amount

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

Organization Code: 147968817

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

MAIN SHAREHOLDERS: (As of Mar. 31, 2014)

Name % of Shareholding

Chen Baohua 26.64

Zhou Minghua 19.77

Weng Zhenyu 1.39

China Everbright Bank Co., Ltd. - Everbright Pramerica

Quantified Core Securities Investment Fund 1.21

PICC Property And Casualty Co., Ltd. - Tradition –

General Insurance Products - 008C-CT001 Shanghai 1.02

Bank of China Limited - E Fund Health Care Industry

Stock Securities Investment Fund 0.95

Industrial and Commercial Bank of China Limited-

Huitianfu Health Care Stock Securities Investment Fund 0.84

China Merchants Bank Co., Ltd. - Everbright

Pramerica Advantage Allocation Stock Securities Investment Fund 0.84

Su Chunlian 0.65

Industrial and Commercial Bank of China- Huitianfu

Growth Focus Stock Securities Investment Fund 0.62

Other Shareholders 46.07

Chairman:

Mr. Tong Jianxin born in 1952 with university education. He is currently responsible for the overall management of SC.

Working Experience(s):

Ever worked in Zhejiang Pharmaceutical Administration Comprehensive Economic Department as commissioner;

From 2013 to present Working in SC as chairman

Legal representative and General manager:

Mr. Chen Baohua born in 1962, senior engineer, with university education. He is currently responsible for the daily management of SC.

Working Experience(s):

Ever worked in SC as chairman;

At present Working in SC as legal representative and general manager;

Also working in Zhejiang Huahai Medical Sale Co., Ltd., Zhejiang Huahai Import & Export Co., Ltd., Linhai Huahai Pharmaceutical Equipment Co., Ltd., Shanghai Aobo Bio-pharmaceutical Tech. Co., Ltd., Shanghai Shuanghua Biological Medicine Technology Development Co., Ltd. etc. as legal representative

Vice Chairman:

Mr. Du Jun born in 1956, with master’s degree. He is currently responsible for the daily management of SC.

Working Experience(s):

At present Working in SC as vice chairman;

Also working in Zhejiang Meiyang International Engineering Design Co., Ltd. as legal representative and chairman, working in Huahai (USA) International Inc. as general manager

Vice General Managers:

Zhu Yonghua

Chen Qimao

Li Bo

Etc.

Directors:

Zhao Bowen

Yu Mingde

Su Yan

Etc.

Supervisors:

Wang Hugen

Jiang Wei

Gan Zhihe

SC is mainly engaged in manufacturing and selling pharmaceutical preparations, API (Active Pharmaceutical Ingredient) and pharmaceutical intermediates.

SC’s products mainly include: Irbesartan and Hydrochlorothiazide Tablets, Paroxetine Hydrochloride Tablets, Irbesartan Tablets, etc.

SC sources its materials 50% from domestic market, and 50% from overseas market. SC sells 20% of its products in domestic market, and 80% to overseas 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.

*Major Clients:

===========

Par Pharmaceutical Inc.

Merck Sharp & Dohme Asia Pacific Services Pte Ltd

Balkanpharma Dupnitza AD

Chemo AG Vienna Lugano Branch

L.C.M Trading S.P.A

*Major suppliers:

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

Merck Sharp & Dohme Asia Pacific Services Pte Ltd

Jinxi Sipurui Pharmaceutical Co., Ltd. (In Chinese Pinyin)

Zhejiang Apeloa Medical Technology Co., Ltd.

Yancheng Donggang Pharmaceutical Development Co., Ltd.

Wujiang Yongxiang Ethanol Manufacturing Co., Ltd. (Literal translation)

SC is known to have the following subsidiaries at present, as follows:

Huahai (USA) International Inc.

Linhai Huanan Chemical Co., Ltd.

……………………………………