MIRA INFORM REPORT

Report Date :

15.05.2014

IDENTIFICATION DETAILS

Name :	DAYU CONSERVING WATER (TIANJIN) CO., LTD.
Registered Office :	No. 10 Minwang Road, Jingbin Industrial Park, Wuqing District, Tianjin City, 301712 PR
Country :	China
Financials (as on) :	31.12.2013
Date of Incorporation :	29.06.2010
Com. Reg. No.:	120222000069941
Legal Form :	One-Person Limited Liability Company
Line of Business :	Engaged in water saving material and recycling technology research and development; water saving engineering design, construction, maintenance and installation; construction of water conservancy project; manufacture and sales of drip irrigation pipe (belt), filter, fertilization, irrigation and drainage machinery, plastic pipes and fittings, sprinkler, water pump, plastic film; import and export of goods and technology; water conservancy informatization technology development, transfer, consulting services; installation and sales of automatic control equipment (if needed with permit). Subject product ranges includes drip irrigation, irrigation system, PE Pipe, PVC Pipe, drip fittings & accessories, water treatment filter as well as smart irrigation control system.
No of Employees :	350 (Approximately)

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
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, 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 & address

Dayu Conserving Water (Tianjin) Co., Ltd.

No. 10 minwang road, jingbin industrial park,

wuqing district, tianjin city, 301712 PR CHINA

TEL: 86 (0) 22-59679303/59679308 FAX: 86 (0) 22-59679301

EXECUTIVE SUMMARY

INCORPORATION DATE : june 29, 2010

REGISTRATION NO. : 120222000069941

REGISTERED LEGAL FORM : One-person Limited Liability Company

CHIEF EXECUTIVE : Mr. Wang chong (legal representative)

STAFF STRENGTH : 350

REGISTERED CAPITAL : CNY 55,000,000

BUSINESS LINE : manufacturing, R & D

TURNOVER : CNY 166,050,000 (AS OF DEC. 31, 2013)

EQUITIES : CNY 177,570,000 (AS OF DEC. 31, 2013)

PAYMENT : AVERAGE

MARKET CONDITION : competitive

FINANCIAL CONDITION : fairly STABLE

OPERATIONAL TREND : steady

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.2338 = 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 One-person Limited Liability Company at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license) on June 29, 2010.

Company Status: One-person Limited Liability Company

Single person LLC refers to a limited liability company set up by only one natural person or legal person as the single shareholder of it.

The minimum registered capital of Single person LLC is CNY100,000. The shareholder’s capital contributes, as set out by the articles of associations should be a lump-sum payment in full.

One natural person can only invest in and set up one limited liability company, which is not permitted to invest in and set up a new Single person LLC.

As to any one-person limited liability company, the sole-investor nature of the natural person or legal person shall be indicated in the registration documents of the company and shall be indicated in the business license thereof as well.

The regulation of Single person LLC should be set up by the shareholder

The regulation of Single person LLC has no shareholder meeting.

SC’s registered business scope includes water saving material and recycling technology research and development; water saving engineering design, construction, maintenance and installation; construction of water conservancy project; manufacture and sales of drip irrigation pipe (belt), filter, fertilization, irrigation and drainage machinery, plastic pipes and fittings, sprinkler, water pump, plastic film; import and export of goods and technology; water conservancy informatization technology development, transfer, consulting services; installation and sales of automatic control equipment (if needed with permit).

SC is mainly engaged in manufacturing, sales, R & D of water conservation products.

Mr. Wang Chong is legal representative and chairman of SC at present.

SC is known to have approx. 350 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the industrial zone of Tianjin. Detailed premise information is not available at present.

http://www.dyjs.en.alibaba.com/ The design is professional and the content is well organized. At present it is in English version.

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

No significant changes were found during our checks with the local Administration for Industry and Commerce.

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

Organization Code: 556533240

MAIN SHAREHOLDERS:

Name % of Shareholding

Gansu Dayu Water-Saving Group Co., Ltd. 100

It is a professional supplier of micro-irrigation system in research, manufacture, sales, engineering design, installation and services. In October of 2009, Dayu was honored to be listed as the first professional micro-irrigation equipment producing company in GEM China with the stock name of DYJS, whose stock code is 300021. The market value amounts to more than RMB 3 billion.

Registration No.: 620000000002220

Legal representative: Wang Dong

Legal form: Shares Limited Company

Website: http://www.dyjs.com

Email: dyjszqb@163.com

Legal Representative and Chairman:

Mr. Wang Chong, born in 1971, with junior college education, economist. 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 Gansu Dayu Water-Saving Group Co., Ltd. as vice chairman; in Lanzhou Dayu Water-Saving Co., Ltd. and Dingxi Dayu Water-Saving Co., Ltd. as legal representative, etc.

General Manager:

Guo Yi is currently responsible for the daily management of SC.

Working Experience(s):

At present Working in SC as general manager.

Directors:

Xie Yongsheng

Wang Dong

Supervisor:

Wang Yun

SC is mainly engaged in manufacturing, sales, R & D of water conservation products.

SC’s products mainly include: drip irrigation, irrigation system, PE Pipe, PVC Pipe, drip fittings & accessories, water treatment filter as well as smart irrigation control system.

SC sources its materials 100% from domestic market. SC sells 80% of its products in domestic market, and 20% to overseas market.

The buying terms of SC include Check, T/T 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 declined to release its major suppliers and clients.

Lanzhou Dayu Water-Saving Co., Ltd.

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

Registration No.: 620100000019510

Incorporation Date: 2010-03-29

Legal representative: Wang Chong

Dingxi Dayu Water-Saving Co., Ltd.

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

Registration No.: 621122000000072

Incorporation Date: 2005-12-24

Legal representative: Wang Chong

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.

SC’s accountant refused to release the bank details.

Balance Sheet

Unit: CNY’000

	As of Dec. 31, 2013
Cash & bank	10,380
Inventory	65,020
Accounts receivable	36,480
Advances to suppliers	4,420
Other receivables	19,690
Other current assets	0
	------------------
Current assets	135,990
Fixed assets net value	150,050
Long term investment	400
Projects under construction	30
Deferred tax asset	100
Development expenditure	890
Intangible and other assets	21,400
	------------------
Total assets	308,860
	===========
Short loan	10,000
Accounts payable	11,120
Advances from customers	13,870
Taxes payable	1,020
Other accounts payable	94,880
Payroll payable	370
Interest payable	30
	------------------
Current liabilities	131,290
Long term liabilities	0
	------------------
Total liabilities	131,290
Equities	177,570
	------------------
Total liabilities & equities	308,860
	===========

Income Statement

Unit: CNY’000

	As of Dec. 31, 2013
Turnover	166,050
Cost of goods sold	106,900
Taxes and additional of main operation	1,320
Sales expense	18,750
Management expense	11,730
Finance expense	11,330
Asset impairment loss	980
Non-operating income	30
Non-operating expense	90
Profit before tax	14,980
Less: profit tax	960
Profits	14,020

Important Ratios

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

	As of Dec. 31, 2013
*Current ratio	1.04
*Quick ratio	0.54
*Liabilities to assets	0.43
*Net profit margin (%)	8.44
*Return on total assets (%)	4.54
*Inventory /Turnover ×365	143 days
*Accounts receivable/Turnover ×365	81 days
*Turnover/Total assets	0.54
* Cost of goods sold/Turnover	0.64

PROFITABILITY: AVERAGE

l The turnover of SC appears fairly good in its line.

l SC’s net profit margin is fairly good.

l SC’s return on total assets is average.

l SC’s cost of goods sold is average.

LIQUIDITY: FAIR

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

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

l The inventory of SC appears large.

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

l SC’s short loans are average in 2013.

l SC’s turnover is in a fair level, comparing with the size of its total assets.

LEVERAGE: FAIRLY GOOD

l The debt ratio of SC is low.

l 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 could be a threat to SC’s financial situation.

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 :	DIV
Report Prepared by :	MNL

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.