MIRA INFORM REPORT

Report Date :

14.05.2014

IDENTIFICATION DETAILS

Name :	KINGDECOR (ZHEJIANG) CO., LTD.
Registered Office :	No. 20, Tianhu South Road, Qujiang District, Quzhou, Zhejiang Province, 324022 PR
Country :	China
Financials (as on) :	31.12.2012
Date of Incorporation :	26.11.2004
Com. Reg. No.:	330800400000802
Legal Form :	Chinese-Foreign Equity Joint Venture Enterprise
Line of Business :	Subject is engaged in manufacturing and selling decorative base paper
No. of Employees :	325

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 – 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

KINGDECOR (ZHEJIANG) CO., Ltd.

NO. 20, TIANHU SOUTH ROAD, QUJIANG DISTRICT,

QUZHOU, ZHEJIANG PROVINCE, 324022 PR CHINA

TEL: 86 (0) 570-8507888-8663

FAX: 86 (0) 570-8768669

EXECUTIVE SUMMARY

INCORPORATION DATE : NOV. 26, 2004

REGISTRATION NO. : 330800400000802

REGISTERED LEGAL FORM : CHINESE-FOREIGN EQUITY JOINT VENTURE ENTERPRISE

CHIEF EXECUTIVE : MR. ZHU YI (CHAIRMAN)

STAFF STRENGTH : 325

REGISTERED CAPITAL : USD 32,600,000

BUSINESS LINE : MANUFACTURING and trading

TURNOVER : CNY 1,152,240,000 (AS OF DEC. 31, 2012)

EQUITIES : CNY 434,730,000 (AS OF DEC. 31, 2012)

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : fairly stable

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.0766 = 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 Chinese-foreign equity joint venture enterprise at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license) on Nov. 26, 2004.

Company Status: Chinese-foreign equity joint venture enterprise

This form of business in PR China is defined as a legal person. It is a limited co. jointly invested by one or more foreign companies and one or more PR China controlled companies within the territories of PR China according to a certain proportion of capital investment. The investing parties exercise business management, share profits and bear all risks and liabilities of the co. together. The equity joint venture law requires that foreign party contribute not less than 25% of the registered capital, with no maximum. The investing parties are free to agree on method of profit distribution and liabilities bearing according to the proportion of capital investment. Each investing parties contributes funds, tangible assets, technology & etc. The board of directors excises the high authority. The joint venture usually has a limited duration of 10 to 50 years. Enterprise with large investment, long construction periods, low investment returns, introducing of advanced technology & advanced technology products that have good competition position in international market may extend beyond the 50 years limit.

SC’s registered business scope includes manufacturing and selling decorative base paper.

SC is mainly engaged in manufacturing and selling decorative base paper.

Mr. Zhu Yi is the legal representative and chairman of SC at present.

SC is known to have approx. 325 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office and factory in Quzhou. SC’s management declined to release the detailed information of the premise.

The (Tongjing Road 158, Quzhou Zhejiang - 324 022) was the previous address of SC’s factory.

http://www.kingdecor.cn The design is professional and the content is well organized. At present it is in Chinese and English versions.

Email: jin.wang@kingdecor.cn

Changes of its registered information are as follows:

Date of change	Item	Before the change	After the change
2011	Registered capital	USD 24,311,912	Present amount

Certificates:

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

MAIN SHAREHOLDERS:

Name % of Shareholding

Zhejiang Xianhe Special Paper Co., Ltd. 50

Schattdecor AG (Germany) 50

Schattdecor

Zhejiang Xianhe Special Paper Co., Ltd.

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

Zhejiang Xianhe Special Paper Co., Ltd. is the largest special paper producer in China, the company was established in 1997. Located in Shenjia Economic Development Zone of Quzhou city, Zhejiang province of China, has a registered capital of 150million RMB and fixed assets of 1000million RMB, occupied area of 1000 acres lands and 1500 employees. The company owns 17 lines of paper machine and 8 branch plants, primarily produce decorate base paper, tobacco industry base paper, printing industry base paper, food (medical) wrapping base paper and insulation paper, with annual production capacity of 150 thousand tons and sales values of 1.5billion RMB .

Legal representative: Wang Minliang

Registration no.: 330803000012452

Incorporation date: Dec. 19, 2001

Website: http://www.xianhepaper.com/

E-mail: zjxianhe@alibaba.com.cn

Add: No. 81 Tongjiang Road, Shenjia Economic Development Zone, Qujiang District, Quzhou, Zhejiang Province

Tel: +86- 570-2933109

Fax: +86- 570-2931631

Schattdecor AG (Germany)

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

Schattdecor AG is legally represented by its Management Board made up of Reiner Schulz (CEO), Roland Auer, Roland Heeger, Kurt Mack and Harald Purainer).

Commercial register no.: 13582

VAT ID no.: DE 813198185

Website: http://www.schattdecor.de/en/

Add: Walter-Schatt-Allee 1-3, DE-83101 Thansau, Germany
Tel.: +49 8031 - 275 0
Fax: +49 8031 - 275 125
E-Mail: info@schattdecor.de

Legal representative and chairman:

Mr. Zhu Yi, Chinese-German, #6005263354, born in 1962, he is currently responsible for the overall management of SC.

Working Experience(s):

At present Working in SC as legal representative and chairman;

Also working in Schattdecor (Shanghai) Co., Ltd. as legal representative

General Manager:

Mr. Wang Minliang is currently responsible for the daily management of SC.

Working Experience(s):

At present Working in SC as general manager;

Also working in Zhejiang Xianhe Special Paper Co., Ltd. as legal representative.

SC is mainly engaged in manufacturing and selling decorative base paper.

SC’s products mainly include: high-grade printing paper, plain paper

SC sources its materials 20% from domestic market and 80% from the overseas markets, mainly South America. SC sells 80% of its products in domestic market and 20% to the overseas markets, mainly Southeast Asia.

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 main clients and suppliers.

Schattdecor (Shanghai) Co., Ltd.

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

Incorporation date: 2001-5-15

Registration no.: 310000400264600

Registered capital: EUR 15,800,000

Legal representative: Zhu Yi

Legal form: Wholly foreign-owned enterprise

Add: No. 1189 Kangqiao East Road, Shanghai

Tel.: +86 21-38117777

Fax: +86 21-58138787

E-Mail: info@schattdecor.cn

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.

Industrial & Commercial Bank of China Zhejiang Provincial Branch

AC#: N/A

Relationship: Normal.

Balance Sheet

Unit: CNY’000

	as of Dec. 31, 2012
Cash & bank	134,270
Notes receivable	77,810
Inventory	303,160
Accounts receivable	250,820
Advances to suppliers	48,180
Other receivables	1,100
Other current assets	430
	------------------
Current assets	815,770
Long-term investments	0
Fixed assets net value	292,630
Projects under construction	0
Intangible assets	15,830
Other assets	0
	------------------
Total assets	1,124,230
	=============
Short loans	373,510
Accounts payable	110,660
Advances from customers	10,310
Employee pay payable	8,460
Taxes payable	11,130
Other accounts payable	108,190
Non-current liabilities due within one year	35,000
Other current liabilities	7,240
	-----------------
Current liabilities	664,500
Long term liabilities	25,000
	------------------
Total liabilities	689,500
Shareholders equities	434,730
	------------------
Total liabilities & equities	1,124,230
	=============

Income Statement

Unit: CNY’000

	as of Dec. 31, 2012
Turnover	1,152,240
Cost of goods sold	1,013,000
Taxes and additional of main operation	1,760
Income from other operation	10
Sales expense	47,680
Management expense	13,390
Finance expense	29,280
Non-operating income	950
Non-operating expense	10
Profit before tax	48,080
Less: profit tax	12,080
Net profit	36,000

Important Ratios

	as of Dec. 31, 2012
*Current ratio	1.23
*Quick ratio	0.77
*Liabilities to assets	0.61
*Net profit margin (%)	3.12
*Return on total assets (%)	3.20
*Inventory /Turnover ×365	97 days
*Accounts receivable/Turnover ×365	80 days
*Turnover/Total assets	1.02
* Cost of goods sold/Turnover	0.88

PROFITABILITY: AVERAGE

· The turnover of SC appears good.

· SC’s net profit margin is average.

· SC’s return on total assets is average.

· SC’s cost of goods sold is average, comparing with its turnover.

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 fairly large.

· The accounts receivable of SC appears average.

· The short-term loan of SC appears fairly large in 2012.

· SC’s turnover is in an average level, 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 medium-sized in its line with fairly stable financial conditions. The large amount of inventory and short loans could be a threat to SC’s financial condition.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.59.88
UK Pound	1	Rs.100.98
Euro	1	Rs.82.40

INFORMATION DETAILS

Analysis Done by :	KAR
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.