MIRA INFORM REPORT

Report Date :

27.10.2014

IDENTIFICATION DETAILS

Name :	Kinco Electric (Shenzhen) Ltd.
Registered Office :	Building 1, No. 6 Langshan 1^st Road, North Zone, Hi-Tech Park, Nanshan District, Shenzhen, Guangdong PROVINCE, 518055 Pr
Country :	China
Financials (as on) :	31.12.2013
Date of Incorporation :	29.09.2007
Com. Reg. No.:	440301102904572
Legal Form :	One-Person Limited Liability Company
Line of Business :	Subject is engaged in general operating items: R&D, sales and technical advice of industrial automation electronics, electrical products and related software; import and export business. Licensed business items: manufacture of industrial automation electronics, electrical products and related software.
No of Employees :	270

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 – June 1, 2014

Country Name	Previous Rating (31.03.2014)	Current Rating (01.06.2014)
China	A2	A2

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, 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 & address

Kinco Electric (Shenzhen) Ltd.

Building 1, no. 6 langshan 1^st road, north zone, hi-tech park,

nanshan district, shenzhen, guangdong PROVINCE, 518055 PR CHINA

TEL: 86 (0) 755-86238666*122 FAX: 86 (0) 755-26616372

EXECUTIVE SUMMARY

INCORPORATION DATE : SEP. 29, 2007

REGISTRATION NO. : 440301102904572

REGISTERED LEGAL FORM : One-person Limited Liability Company

CHIEF EXECUTIVE : Mr. Tang dong (legal representative)

STAFF STRENGTH : 270

REGISTERED CAPITAL : CNY 30,000,000

BUSINESS LINE : TRADING and manufacturing

TURNOVER : CNY 192,470,000 (AS OF DEC. 31, 2013)

EQUITIES : CNY 17,500,000 (AS OF DEC. 31, 2013)

PAYMENT : AVERAGE

MARKET CONDITION : competitive

FINANCIAL CONDITION : fairly STABLE

OPERATIONAL TREND : fairly steady

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.1218 = 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 limited liabilities company at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license) on Sep. 29, 2007, and has been under present legal form since 2009.

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 general operating items: R&D, sales and technical advice of industrial automation electronics, electrical products and related software; import and export business. Licensed business items: manufacture of industrial automation electronics, electrical products and related software.

SC is mainly engaged in manufacturing and sales of electric products.

Mr. Tang Dong is legal representative, chairman and general manager of SC at present.

SC is known to have approx. 270 employees at present.

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

http://www.kinco.cn/ (belongs to Shanghai Kinco Automation Co., Ltd.) The design is professional and the content is well organized. At present it is in English and Chinese versions.

Email: sales@kinco.cn

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

Changes of its registered information are as follows:

Date of change	Item	Before the change	After the change
2009-5-15	Shareholders	Shanghai Kinco Electric Co., Ltd. 95% Shenzhen Bujin Technology Co., Ltd. (In Chinese Pinyin) 5%	Present one
	Registered Legal Form	limited liabilities company
2010-5-18	Registered capital	CNY 10,000,000

Note: SC’s shareholder changed its Chinese name from to the present one in 2012.

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

Organization Code: 667071982

MAIN SHAREHOLDERS:

Name % of Shareholding

Shanghai Kinco Automation Co., Ltd. 100

Kinco Automation is one of the leading suppliers of machine automation solutions in China. They focus on the development, production and selling of industrial automation products and total solutions. They help machine builders in Turkey, India, Italy, Germany, etc. to make machines and equipment which are better and more affordable.

Incorporation Date: 2008-12-9

Registration No.: 310115001101665

Legal representative: Tang Dong

Web: http://www.kinco.cn/

Legal Representative, Chairman and General Manager:

Mr. Tang Dong is currently responsible for the overall and daily management of SC.

Working Experience(s):

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

Also working in Shanghai Kinco Automation Co., Ltd. and Kinavo Servo Motor (Changzhou) Ltd. as legal representative.

Director:

Chi Jiawu

Guo Haiquan

Supervisor:

Zhao Youqiang

SC is mainly engaged in manufacturing and sales of electric products.

SC’s products mainly include: HMI, Programmable logic Controller, VFD.

SC sources its materials 95% from domestic market, and 5% from overseas market. SC sells 60% of its products in domestic market, and 40% 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.

Note: SC declined to release its major suppliers and clients.

According to the website:

Kinavo Servo Motor (Changzhou) Ltd.

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

Incorporation Date: 2008-03-21

Registration No.: 320407000099270

Legal representative: Tang Dong

Web: http://www.kinavo.com/

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	5,530
Inventory	33,620
Accounts receivable	9,850
Advances to suppliers	1,060
Other receivables	980
Note receivable	2,800
	------------------
Current assets	53,840
Fixed assets net value	2,500
Long term prepaid expenses	2,100
Intangible and other assets	300
	------------------
Total assets	58,740
	===========
Short loan	0
Accounts payable	31,510
Advances from customers	3,190
Taxes payable	750
Other accounts payable	280
Payroll payable	4,360
Other current liabilities	1,150
	------------------
Current liabilities	41,240
Long term liabilities	0
	------------------
Total liabilities	41,240
Equities	17,500
	------------------
Total liabilities & equities	58,740
	===========

Income Statement

Unit: CNY’000

	As of Dec. 31, 2013
Turnover	192,470
Cost of goods sold	154,110
Taxes and additional of main operation	530
Sales expense	15,410
Management expense	20,730
Finance expense	260
Asset impairment loss	1,980
Investment income	1,840
Non-operating income	840
Non-operating expense	30
Profit before tax	2,100
Less: profit tax	0
Profits	2,100

Important Ratios

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

	As of Dec. 31, 2013
*Current ratio	1.31
*Quick ratio	0.49
*Liabilities to assets	0.70
*Net profit margin (%)	1.09
*Return on total assets (%)	3.58
*Inventory /Turnover ×365	64 days
*Accounts receivable/Turnover ×365	19 days
*Turnover/Total assets	3.28
* Cost of goods sold/Turnover	0.80

PROFITABILITY: AVERAGE

The turnover of SC appears fairly good in its line.

SC’s net profit margin is average.

SC’s return on total assets is average.

SC’s cost of goods sold is average.

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 is maintained in an average level.

SC has no short loans in 2013.

SC’s turnover is in a fairly good 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 could be a threat to SC’s financial condition.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.23
UK Pound	1	Rs.98.67
Euro	1	Rs.77.97

INFORMATION DETAILS

Analysis Done by :	RAS
Report Prepared by :	TPT

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.