MIRA INFORM REPORT

Report Date :

26.03.2014

IDENTIFICATION DETAILS

Name :	CROSROL (SHANGHAI) CO., LTD.

Registered Office :	No. 1258 Yueluo Road, Baoshan District, Shanghai 201908 PR

Country :	China

Financials (as on) :	31.12.2013

Date of Incorporation :	17.11.2000

Com. Reg. No.:	310000400250902

Legal Form :	Wholly Foreign-Owned Enterprise

Line of Business :	Subject is engaged in the developing, designing and manufacturing new textile machinery, textile complete equipment and related parts; selling self-made products

No. of Employees :	118

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate
Payment Behaviour :	Slow
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 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. Debt overhang from its credit-fueled stimulus program in 2008-10, particularly among local governments, and soaring property prices challenge policy makers currently. Their efforts to cool a red-hot property market in 2011 appear to have curbed inflation, but contributed to slower GDP growth in 2012 and 2013. Slow recovery in Europe and other key export markets have also retarded growth. 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 fixed investments and exports in the future. 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

CROSROL (SHANGHAI) CO., LTD.

NO. 1258 YUELUO ROAD, BAOSHAN DISTRICT, SHANGHAI 201908 PR CHINA

TEL: 86 (0) 21-66860777

FAX: 86 (0) 21-36130189

EXECUTIVE SUMMARY

Date of Registration : NOVEMBER 17, 2000

REGISTRATION NO. : 310000400250902

LEGAL FORM : Wholly foreign-owned enterprise

CHIEF EXECUTIVE : LUCY WANG (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : usd 2,700,000

staff : 118

BUSINESS CATEGORY : manufacturing & trading

Revenue : CNY 60,038,000 (AS OF DEC. 31, 2013)

EQUITIES : CNY 454,000 (AS OF DEC. 31, 2013)

WEBSITE : www.crosrolpacific.com

E-MAIL : www.crosrolpacific.com

PAYMENT : AVERAGE

MARKET CONDITION : fair

FINANCIAL CONDITION : FAIR

OPERATIONAL TREND : FAIR

GENERAL REPUTATION : fair

EXCHANGE RATE : CNY 6.20 = 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.: 310000400250902.

SC’s Organization Code Certificate No.: 60742379-8

SC’s Tax No.: 310113607423798

SC’s Customs Registration No.: 3112945165

SC’s registered capital: usd 2,700,000

SC’s paid-in capital: usd 2,700,000

Registration Change Record:-

Date	Change of Contents	Before the change	After the change
2001	Registered Capital	USD 1,200,000	USD 2,700,000
--	Legal Form	Chinese-foreign equity joint venture enterprise	Wholly foreign-owned enterprise
	Legal Representative	Li Peizhong	Lucy Wang
	Company Name	Shanghai Crosrol Pacific Machinery Co., Ltd.	Crosrol (Shanghai) Co., Ltd.
	Shareholder (s) (% of Shareholding)	Pacific Mechatronic (Group) Co., Ltd. 1.78% Shanghai Textile Machinery Complex Plant 46.22% Wang Zhaoyang (UK) 10% Carding Specialists (Canada) Ltd. 42%	Lucy Wang (UK) 100%

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

Name of Shareholder (s)

% of Shareholding

Lucy Wang (UK)

100

SC’s Chief Executives:-

Position	Name
Legal Representative, Chairman, and General Manager	Lucy Wang
Supervisor	Wang Chaoguang

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

Lucy Wang (UK) 100

MANAGEMENT

Lucy Wang, Legal Representative, Chairman and General Manager

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

Nationality: UK

Qualification: University

Working experience (s):

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

Wang Chaoguang, Supervisor

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

Gender: M

Qualification: University

BUSINESS OPERATION

SC’s registered business scope includes developing, designing and manufacturing new textile machinery, textile complete equipment and related parts; selling self-made products (with permits if needed).

SC is mainly engaged in manufacturing and selling textile machinery, textile complete equipment and related parts

Brand: CROSROL

SC’s products mainly include:

Cotton Processing Line

Multi-Blend Cotton Processing Line

Synthetic Processing Line

SC sources its materials 90% from domestic market, and 10% from overseas market, mainly UK, Switzerland, etc. SC sells 45% of its products in domestic market, and 55% to overseas market, mainly Pakistan, Indonesia, Bangladesh, Vietnam, India, etc.

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.

Staff & Office:

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

SC is known to have approx. 118 staff at present.

SC rents an area as its operating office & factory of approx. 4,000 sq. meters at the heading address.

RELATED COMPANY

SC is not known to have any subsidiary at present.

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

Basic Bank:

Industrial & Commercial Bank of China Shanghai Yuepu Sub-branch

AC#: 1001708209001700743

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2010	As of Dec. 31, 2011	As of Dec. 31, 2012	As of Dec. 31, 2013
Cash	23,187	11,521	10,268	11,201
Notes receivable	0	1,250	0	0
Accounts receivable	9,865	5,951	7,701	6,852
Advances to suppliers	1,113	348	576	700
Other receivable	476	6,498	5,981	6,025
Inventory	18,860	20,239	15,704	16,106
Non-current assets within one year	0	0	0	0
Other current assets	0	142	109	110
	------------------	------------------	------------------	------------------
Current assets	53,501	45,949	40,339	40,994
Fixed assets	2,324	1,475	1,180	1,488
Construction in progress	0	0	0	0
Intangible assets	666	196	0	0
Long-term prepaid expenses	31	0	0	0
Deferred income tax assets	0	0	0	0
Other non-current assets	0	0	0	0
	------------------	------------------	------------------	------------------
Total assets	56,522	47,620	41,519	42,482
	=============	=============	=============	=============
Short-term loans	0	0	0	0
Notes payable	0	0	0	0
Accounts payable	26,837	31,651	32,581	33,023
Wages payable	0	0	0	0
Taxes payable	696	1,023	-973	-800
Advances from clients	11,799	6,794	3,527	2,989
Other payable	1,984	801	1,312	6,816
Other current liabilities	0	0	0	0
	------------------	------------------	------------------	------------------
Current liabilities	41,316	40,269	36,447	42,028
Non-current liabilities	0	0	0	0
	------------------	------------------	------------------	------------------
Total liabilities	41,316	40,269	36,447	42,028
Equities	15,206	7,351	5,072	454
	------------------	------------------	------------------	------------------
Total liabilities & equities	56,522	47,620	41,519	42,482
	=============	=============	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2010	As of Dec. 31, 2011	As of Dec. 31, 2012	As of Dec. 31, 2013
Revenue	86,132	81,733	67,141	60,038
Cost of sales	71,884	70,597	52,576	46,568
Sales expense	7,664	10,312	7,975	6,325
Management expense	9,670	8,823	8,024	7,081
Finance expense	49	507	167	55
Profit before tax	-3,135	-7,855	-1,779	-4,636
Less: profit tax	0	0	0	0
Profits	-3,135	-7,855	-1,779	-4,636

Important Ratios

	As of Dec. 31, 2010	As of Dec. 31, 2011	As of Dec. 31, 2012	As of Dec. 31, 2013
*Current ratio	1.29	1.14	1.11	0.98
*Quick ratio	0.84	0.64	0.68	0.59
*Liabilities to assets	0.73	0.85	0.88	0.99
*Net profit margin (%)	-3.64	-9.61	-2.65	-7.72
*Return on total assets (%)	-5.55	-16.50	-4.28	-10.91
*Inventory / Revenue ×365	80 days	91 days	86 days	98 days
*Accounts receivable/ Revenue ×365	42 days	27 days	42 days	42 days
*Revenue / Total assets	1.52	1.72	1.62	1.41
*Cost of sales / Revenue	0.83	0.86	0.78	0.78

FINANCIAL COMMENTS

PROFITABILITY: FAIR

· The revenue of SC appears average in its line.

· SC’s net profit margin is fair in four years.

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

· SC’s cost of sales is average, comparing with its revenue.

LIQUIDITY: FAIR

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

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

· The inventory of SC appears large.

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

· SC has no short-term loans in four years.

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

LEVERAGE: FAIR

· The debt ratio of SC is fairly high.

· The risk for SC to go bankrupt is above average.

Overall financial condition of the SC: Fair.

CONCLUSIONS

SC is considered medium-sized in its line with fair financial conditions. The large amount of inventory may be a threat to SC’s financial condition.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.60.49
UK Pound	1	Rs.99.77
Euro	1	Rs.83.67

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.