MIRA INFORM REPORT

Report Date :

21.06.2014

IDENTIFICATION DETAILS

Name :	DANFOSS (TIANJIN) LTD.

Registered Office :	No. 5, Fuyuan Road, Wuqing Development Zone Tianjin 301700 Pr China

Country :	China

Financials (as on) :	31.12.2013

Date of Incorporation :	29.09.1995

Com. Reg. No.:	120000400007139

Legal Form :	Wholly Foreign-Owned Enterprise

Line of Business :	Manufacturing and selling valves, industrial control products, automatic control products, transmission gears, compressors and relevant products, heat supplying products, ventilation & refrigeration products, air-conditioners, water control products, systems, modules, and components; technical consulting services, after services; wholesaling business of the above and relevant products; commission agency (excluding auction); importing & exporting business, and relevant business (the above commodities mentioned quota license management and management of special regulations.

No. of Employees	2,700

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

DANFOSS (TIANJIN) LTD.

NO. 5, FUYUAN ROAD, WUQING DEVELOPMENT ZONE

TIANJIN 301700 PR CHINA

TEL: 86 (0) 22-82126400/82197216

FAX: 86 (0) 22-82126407

EXECUTIVE SUMMARY

DATE OF REGISTRATION : SEPTEMBER 29, 1995

REGISTRATION NO. : 120000400007139

LEGAL FORM : WHOLLY FOREIGN-OWNED ENTERPRISE

CHIEF EXECUTIVE : MOGENS TERP PAULSEN (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : USD 42,064,043

STAFF : 2,700

BUSINESS CATEGORY : MANUFACTURING & TRADING

REVENUE : CNY 2,136,652,000 (AS OF DEC. 31, 2013)

EQUITIES : CNY 736,206,000 (AS OF DEC. 31, 2013)

WEBSITE : N/A

E-MAIL : N/A

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : fairly good

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.23 = 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

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.: 120000400007139 on September 29, 1995.

SC’s Organization Code Certificate No.: 60089192-7

SC’s registered capital: USD 42,064,043

SC’s paid-in capital: USD 42,064,043 (CNY 337,193,247)

Registration Change Record:-

Date	Change of Contents	Before the change	After the change
2007-08	Registered Capital	USD 33,064,043	USD 36,064,043
2008-12	Registered Capital	USD 36,064,043	USD 42,064,043
--	Registration No.	009192	120000400007139
	Legal Representative	Jorgen Clausen	Kim Fausing
	Legal Representative	Kim Fausing	Mogens Terp Paulsen

Current Co search indicates SC’s shareholders & chief executives are as follows:-

Name of Shareholder (s)

% of Shareholding

Danfoss International A/S (Denmark)

100

SC’s Chief Executives:-

Position	Name
Legal Representative and Chairman	Mogens Terp Paulsen
General Manager	Xu Dehui
Director	Kim Fausing
	Christian Monrad Overgaard
	Niels Erik Olsen
Supervisor	Jesper Filskov

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

Danfoss International A/S (Denmark) 100

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

Address: Nordborgvej 81 6430

Tel.: +45 86825066

Web: www.danfoss.com

MANAGEMENT

Mogens Terp Paulsen, Legal Representative and Chairman

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

Gender: M

Qualification: University

Working experience (s):

At present, working in SC as legal representative and chairman

Also working in SC’s Wuqing Branch as principal.

Xu Dehui General Manager

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

Gender: F

Qualification: University

Working experience (s):

At present, working in SC as general manager

Director

-----------

Kim Fausing

Christian Monrad Overgaard

Niels Erik Olsen

Supervisor

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

Jesper Filskov

BUSINESS OPERATION

SC’s registered business scope includes R&D, manufacturing and selling valves, industrial control products, automatic control products, transmission gears, compressors and relevant products, heat supplying products, ventilation & refrigeration products, air-conditioners, water control products, systems, modules, and components; technical consulting services, after services; wholesaling business of the above and relevant products; commission agency (excluding auction); importing & exporting business, and relevant business (the above commodities mentioned quota license management and management of special regulations, accordance with relevant state regulations).

SC is mainly engaged in manufacturing and selling every kind of valves, compressors and related products.

Brand: DANFOSS

SC’s products mainly include: control valves, water valves, compressors, etc.

SC sources its materials 40% from domestic market, mainly Tianjin, and 60% from overseas market, mainly Denmark, France and Hong Kong; SC sells its products 30% in domestic market, mainly Tianjin, and 70% to overseas market, mainly Denmark, Singapore, and France.

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 Customers:

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

Danfoss Scroll Technologies

Danfoss Industries S.A. De C.V.

Staff & Office:

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

SC is known to have approx. 2,700 staff at present.

SC owns an area as its operating office & factory of approx. 150,000 sq. meters at the heading address.

RELATED COMPANY

Danfoss Industries Limited (Hong Kong)

Etc.

SC is known to have following branches and offices at present,

Danfoss (Tianjin) Ltd. Beijing Office

Danfoss (Tianjin) Ltd. Tianjin Office

Danfoss (Tianjin) Ltd. Wuqing Branch

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 SAIC.

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2012	As of Dec. 31, 2013
Cash	141,596	1,268
Notes receivable	0	0
Accounts receivable	400,302	442,165
Advances to suppliers	8,499	747
Other receivable	164,125	58,928
Inventory	110,725	100,831
Non-current assets within one year	0	0
Other current assets	1,260	11,065
	------------------	------------------
Current assets	826,507	615,004
Fixed assets	532,224	475,118
Construction in progress	14,861	34,558
Intangible assets	11,152	10,553
Long-term prepaid expenses	0	0
Deferred income tax assets	30,533	33,810
Other non-current assets	42,543	40,571
	------------------	------------------
Total assets	1,457,820	1,209,614
	=============	=============
Short-term loans	317,321	55,942
Notes payable	0	0
Accounts payable	362,893	353,343
Wages payable	26,132	37,363
Taxes payable	11,185	5,184
Advances from clients	0	0
Other payable	14,558	19,396
Other current liabilities	0	0
	------------------	------------------
Current liabilities	732,089	471,228
Non-current liabilities	119,508	2,180
	------------------	------------------
Total liabilities	851,597	473,408
Equities	606,223	736,206
	------------------	------------------
Total liabilities & equities	1,457,820	1,209,614
	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2012	As of Dec. 31, 2013
Revenue	1,969,460	2,136,652
Cost of sales	1,434,381	1,430,811
Taxes and surcharges	13,477	13,867
Sales expense	49,461	45,767
Management expense	360,034	467,831
Finance expense	8,076	21,164
Non-business income	6,937	5,284
Non-business expenditure	6,042	3,483
Profit before tax	99,293	156,315
Less: profit tax	21,174	25,019
Profits	78,119	131,296

Important Ratios

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

	As of Dec. 31, 2012	As of Dec. 31, 2013
*Current ratio	1.13	1.31
*Quick ratio	0.98	1.09
*Liabilities to assets	0.58	0.39
*Net profit margin (%)	3.97	6.14
*Return on total assets (%)	5.36	10.85
*Inventory / Revenue ×365	21 days	18 days
*Accounts receivable/ Revenue ×365	75 days	76 days
*Revenue/Total assets	1.35	1.77
*Cost of sales / Revenue	0.73	0.67

FINANCIAL COMMENTS

PROFITABILITY: FAIRLY GOOD

The revenue 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 cost of sales is average, comparing with its revenue.

LIQUIDITY: AVERAGE

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

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

The inventory of SC is maintained in an average level.

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

SC’s short-term loans are in an average level.

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

LEVERAGE: FAIRLY GOOD

The debt ratio of SC is low.

The risk for SC to go bankrupt is low.

Overall financial condition of the SC: Fairly Good.

CONCLUSIONS

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

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.60.28
UK Pound	1	Rs.102.77
Euro	1	Rs.82.12

INFORMATION DETAILS

Analysis Done by :	KAR

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.