MIRA INFORM REPORT

Report No. :	338080
Report Date :	24.08.2015

IDENTIFICATION DETAILS

Name :	KAULIN MANUFACTURING CO., LTD.
Registered Office :	11^th Fl., No.128, Sec.3, Min Shen E. Rd., Taipei, Taiwan, R.O.C.
Country :	Taiwan
Financials (as on) :	31.12.2014
Date of Incorporation :	05.10.1965
Com. Reg. No.:	29538509
Legal Form :	Joint Stock Company
Line of Business :	Manufacture and Sale of Sewing Machines.
No. of Employees :	About 1,000

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 – December 31, 2014

Country Name	Previous Rating (30.09.2014)	Current Rating (31.12.2014)
Taiwan	A2	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

TAIWAN - ECONOMIC OVERVIEW

Taiwan has a dynamic capitalist economy with gradually decreasing government guidance of investment and foreign trade. Exports, led by electronics, machinery, and petrochemicals have provided the primary impetus for economic development. This heavy dependence on exports exposes the economy to fluctuations in world demand. Taiwan's diplomatic isolation, low birth rate, and rapidly aging population are other major long-term challenges.

Free trade agreements have proliferated in East Asia over the past several years. Following the landmark Economic Cooperation Framework Agreement (ECFA) signed with China in June 2010, Taiwan in July 2013 signed a free trade deal with New Zealand - Taipei’s first-ever with a country with which it does not maintain diplomatic relations - and, in November, inked a trade pact with Singapore. However, follow-on components of the ECFA, including a signed agreement on trade in services and negotiations on trade in goods and dispute resolution, have stalled. In early 2014, the government bowed to public demand and proposed a new law governing the oversight of cross-Strait agreements, before any additional deals with China are implemented; the legislature has yet to vote on such legislation, leaving the future of ECFA up in the air as President MA enters his final full year in office. MA has portrayed ECFA as Taiwan’s key to greater participation in East Asia’s free trade networks.

Taiwan's total fertility rate of just over one child per woman is among the lowest in the world, raising the prospect of future labor shortages, falling domestic demand, and declining tax revenues. Taiwan's population is aging quickly, with the number of people over 65 expected to account for nearly 20% of the island's total population by 2025.

The island runs a trade surplus, largely because of its surplus with China, and its foreign reserves are the world's fifth largest, behind those of China, Japan, Saudi Arabia, and Switzerland. In 2006 China overtook the US to become Taiwan's second-largest source of imports after Japan. China is also the island's number one destination for foreign direct investment. Taiwan since 2009 has gradually loosened rules governing Chinese investment on the island and has also secured greater market access for its investors in the mainland. In August 2012, the Taiwan Central Bank signed a memorandum of understanding (MOU) on cross-Strait currency settlement with its Chinese counterpart. The MOU allows for the direct settlement of Chinese RMB and the New Taiwan dollar across the Strait, which has helped Taiwan develop into a local RMB hub.

Closer economic links with the mainland bring greater opportunities for Taiwan’s economy but also pose new challenges as the island becomes more economically dependent on China at a time when political differences remain unresolved. During 2014, the press paid increasing attention to domestic economic issues, while pushing aside the debates over trade liberalization that were a hallmark of MA’s tenure. The media focused on the divide between Taiwan’s “haves” and “have nots,” providing extensive coverage of public frustration with stagnant wages, skyrocketing housing prices, and the difficulty of finding decent entry-level jobs.

Source : CIA

Contact Points

Company Name:	KAULIN MANUFACTURING CO., LTD.
Supplied Name:	KAULIN MFG CO LTD
Trading Address:	11^th Fl., No.128, Sec.3, Min Shen E. Rd., Taipei, Taiwan, R.O.C.
Supplied Address:	11F, 128 SEC 3 MIN SHEN E. ROAD TAIPEI, TAIWAN
Telephone Number:	+886-2-2713-0232
Fax Number:	+886-2-2713-0501/2713-0318
E-mail:	sirubatw@siruba.com

Notes: The exact name and address are as above.

Company Identification Details

Registered Name:	Kaulin Manufacturing Co., Ltd.
Registered Address:	11^th Fl., No.128, Sec.3, Min Shen E. Rd., Taipei, Taiwan, R.O.C.
Date of Foundation:	1965-10-5
Registration Number:	29538509
Registry:	Department of Commerce, Ministry of Economic Affairs, R.O.C.
Registered Capital:	NTD 2,000,000,000 (USD 65,000,000) (As of 2015.5, 1 NTD = 0.0325 USD)
Paid-up Capital:	NTD 1,931,510,800 (USD 62,774,101)
Legal Representatives:	Yuwen Lin
Legal Form:	Joint Stock Company
Principal Activities:	Manufacture and sale of sewing machines.
Staff:	About 1,000 Employees
Listed at Stock Exchange:	Yes; Stock Symbol: 1531
Date of Last Annual Return:	2014-7-7

History

Subject was incorporated on 1965-10-5 with registered number 29538509 as Joint Stock Company in Taiwan.

Subject listed on Taiwan Stock Exchange on 2000-9-11.

Shareholders

Major Shareholder

Name	Subscription Shares
Yuwen Lin	12,178,873
Shengzhi Lin	6,837,205
Sumei Chen	61,369
Yuzhen Lin	1,786,803
Xiurong Lin	2,248,319

Subsidiaries & Branches

Factory

Name:	Nankan Factory
Address:	No.42, Sec. 1, Minsheng North Road, Gueishan Township, Taoyuan County, Taiwan R.O.C.
Tel:	+886-3-326-2128-31
Fax:	+886-3-326-2127
Date of Foundation:	1990-2-20
Date of Registration:	1990-8-14
Factory Registration Number:	99625751
Factory Manager:	Yuwen Lin
Status:	In Production
Date of Last Annual Return:	2002-8-14
Major Products:	292 other special-purpose mechanical device

Related Companies

1
Name	America Siruba Latin America Inc.
Address	11380 NW 36^th Terrace, Doral, Fl 33178, U.S.A
Telephone Number:	+1-305-477-4562
Fax Number:	+1-305-477-7524
2
Name	India Siruba Machinery India Private Limited
Address	#268, 1^st Floor, 18^th 'D' Main Road, 6^th Block, Koramangala, Bangalore-560095, Karnataka India
Telephone Number:	+91-080-4155-7057
Fax Number:	+91-080-4155-7056
3
Name	Siruba Investment Pte. Ltd.

Subsidiary

Name	Kaulin Machinery and Electronic Industrial (Ningbo) Co., Ltd.
Address	No.16, Longtan Shan Road., Beilun District, Ningbo City, Zhejiang Province, China
Telephone Number:	+86-574-8611-5888
Fax Number:	+86-574-8611-4666
Date of Registration:	2005-4-5
Registration Number:	330200400017588
Registered Capital:	USD 36,500,000
Legal Representatives:	Wenbin Chen

Personnel Information

Core Management

Directors

1
Name	Yuwen Lin
Position	Board Chairman
2
Name	Shengzhi Lin
Position	Director
3
Name	Yingzhou Chen
Position	Director
4
Name	Jingsong Wang
Position	Director
5
Name	Sumei Chen
Position	Director
6
Name	Yuzhen Lin
Position	Supervisor
7
Name	Paizheng Wang
Position	Supervisor
8
Name	Xiurong Lin
Position	Supervisor
9
Name	Peijia Lin
Position	Manager
Date of Appointment	2013-3-1

Personnel Structure

Total Employees

About 1,000 Employees

Operation Information

Offices & Factories

	Headquarters
Add	11^th Fl., No.128, Sec.3, Min Shen E. Rd., Taipei, Taiwan, R.O.C.

Production Information

Subject is engaged in manufacturing of sewing machines.

Subject has a factory in Taiwan for production.

It is introduced that subject has a factory in the Mainland of China for production, but we cannot obtain the detail information.

Purchase Information

The registered activities of subject:

Business Code	Details
--	Manufacture, installation and sales of all kinds of sewing machine and components
--	Casting, processing and sales of milling products.
--	Surface treatment, spray painting and baking finishing of all kinds of metal.
--	Manufacture, installation and sales of all kinds of All kinds of transport equipment mechanical parts
--	Casting, processing and sales of sewing machine components
--	Agent and sales business of the products for domestic and overseas customers
--	Import and export trading business of above mentioned products.
ZZ99999	Besides licensed business, all other business items those are not banned or restricted.

It is introduced that the raw materials, components and facilities for production are purchased in Taiwan, Mainland China and Japan.

Sales Information

Subject is engaged in sale of sewing machines, etc.

The major products of the subject include lockstitch machines, picoting chainstitch machines, button holing machines, button sewing machines, bag closers, overlock stitch machines, interlock machines, double chainstitch machines, bar tacking machines, zig-zag machines and feed-off-the-arm machines, etc.

It is introduced that the products are applied in the sewing and processing of bags, apparels, underwear, shoes, leather products and curtains, etc.

Subject’s products are with the brand named “SIRUBA” and “KAULIN”.

The major sales regions of the subject include Taiwan, Mainland China, Indian, Pakistan and Tunisia, etc.

Subject’s major customers are manufacturers of bags, garments and some lather products, etc.

Import and export right:

Import right	Yes
Export right	Yes

Settlements

Purchase

Domestic Purchase

Products	Raw materials and components
Payment Terms	Cash, T/T

Import

Products	Facilities
Payment Terms	T/T

Sales

Domestic Markets

Product	Sewing machines
Selling Terms	Cash, T/T

Export

Product	Sewing machines
Selling Terms	L/C, T/T

Balance Sheet

Unit: NTD/000

Consolidated	2014-12-31	2013-12-31
Assets
Current assets
Cash and cash equivalents
Total cash and cash equivalents	1,078,234	1,165,275
Current financial assets at fair value through profit or loss
Total current financial assets at fair value through profit or loss	0	22,976
Current available-for-sale financial assets
Current available-for-sale financial assets, net	15,004	110,166
Current bond investment without active market
Current bond investment without active market, net	507,037	408,861
Notes receivable, net
Notes receivable, net	97,462	176,919
Accounts receivable, net
Accounts receivable, net	1,043,389	764,667
Current tax assets
Total current tax assets	954	0
Inventories
Total inventories	768,398	1,162,735
Prepayments
Other prepaid expenses	46,025	57,256
Total prepayments	46,025	57,256
Other current assets
Total other current assets	21,463	15,479
Total current assets	3,577,966	3,884,334
Non-current assets
Non-current available-for-sale financial assets
Non-current available-for-sale financial assets, net	96,469	54,741
Property, plant and equipment
Total property, plant and equipment	1,473,652	1,489,415
Investment property, net
Investment property, net	40,225	40,511
Intangible assets
Goodwill	157,885	157,885
Other intangible assets, net
Other intangible assets, net	7,366	8,151
Total intangible assets	165,251	166,036
Deferred tax assets	67,829	65,733
Other non-current assets
Long-term prepaid rents	59,463	57,651
Other non-current assets, others
Total other non-current assets, others	9,732	3,577
Total other non-current assets	69,195	61,228
Total non-current assets	1,912,621	1,877,664
Total assets	5,490,587	5,761,998
Liabilities
Current liabilities
Short-term borrowings
Total short-term borrowings	268,250	447,075
Notes payable
Total notes payable	54,875	62,619
Accounts payable
Total accounts payable	363,206	430,062
Other payables
Total other payables	148,272	120,839
Current tax liabilities	13,543	84,283
Other current liabilities
Long-term liabilities, current portion
Total long-term liabilities, current portion	0	11,922
Other current liabilities, others	26,571	29,910
Total other current liabilities	26,571	41,832
Total current liabilities	874,717	1,186,710
Non-current liabilities
Deferred tax liabilities
Total deferred tax liabilities	316,921	287,730
Other non-current liabilities
Accrued pension liabilities	77,769	72,785
Other non-current liabilities, others	535	535
Total other non-current liabilities	78,304	73,320
Total non-current liabilities	395,225	361,050
Total liabilities	1,269,942	1,547,760
Equity
Equity attributable to owners of parent
Share capital
Ordinary share	1,931,511	1,931,511
Total capital stock	1,931,511	1,931,511
Capital surplus
Total capital surplus	338,901	338,901
Retained earnings
Legal reserve	640,862	612,518
Special reserve	188,788	188,788
Unappropriated retained earnings (accumulated deficit)
Total unappropriated retained earnings (accumulated deficit)	1,090,785	1,113,614
Total retained earnings	1,920,435	1,914,920
Other equity interest
Total other equity interest	189,066	28,906
Treasury shares	159,268	0
Total equity attributable to owners of parent	4,220,645	4,214,238
Non-controlling interests	0	0
Total equity	4,220,645	4,214,238
Number of share capital awaiting retirement	0	0
Equivalent issue shares of advance receipts for ordinary share	0	0
Number of shares in entity held by entity and by its subsidiaries	6,749,000	0

Profit and Loss Account

Unit: NTD/000

Consolidated	2014	2013
Operating revenue
Net sales revenue
Net sales revenue	2,777,856	3,019,440
Total operating revenue	2,777,856	3,019,440
Operating costs
Cost of sales
Total cost of sales	2,297,730	2,338,718
Total operating costs	2,297,730	2,338,718
Gross profit (loss) from operations	480,126	680,722
Gross profit (loss) from operations	480,126	680,722
Operating expenses
Selling expenses
Total selling expenses	169,183	154,404
Administrative expenses
Total administrative expenses	152,160	206,799
Research and development expenses
Total research and development expenses	57,830	46,297
Total operating expenses	379,173	407,500
Net operating income (loss)	100,953	273,222
Non-operating income and expenses
Other income
Other income, others	43,469	46,875
Total other income	43,469	46,875
Other gains and losses
Other gains and losses, net	75,946	84,329
Finance costs
Finance costs, net	8,009	5,752
Total non-operating income and expenses	111,406	125,452
Profit (loss) from continuing operations before tax	212,359	398,674
Tax expense (income)
Total tax expense (income)	10,309	109,254
Profit (loss) from continuing operations	202,050	289,420
Profit (loss)	202,050	289,420
Other comprehensive income
Exchange differences on translation	144,206	142,491
Unrealized gains (losses) on valuation of available-for-sale financial assets	41,566	19,469
Actuarial gains (losses) on defined benefit plans	-4,077	391
Other comprehensive income	-24,919	-24,992
Other comprehensive income, net	156,776	137,359
Total comprehensive income	358,826	426,779
Profit (loss), attributable to:
Profit (loss), attributable to owners of parent	202,050	283,438
Profit (loss), attributable to non-controlling interests	0	5,982
Comprehensive income attributable to:
Comprehensive income, attributable to owners of parent	358,826	405,304
Comprehensive income, attributable to non-controlling interests	0	21,475
Basic earnings per share
Total basic earnings per share	1.05	1.47
Diluted earnings per share
Total diluted earnings per share	1.05	1.46

Cash Flows

Unit: NTD/000

Consolidated	2014	2013
Cash flows from (used in) operating activities, indirect method
Profit (loss) from continuing operations before tax	212,359	398,674
Profit (loss) before tax	212,359	398,674
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense	161,845	168,200
Amortization expense	3,723	2,577
Provision (reversal of provision) for bad debt expense	-36,885	2,557
Net loss (gain) on financial assets or liabilities at fair value through profit or loss	336	-12,968
Interest expense	8,009	5,752
Interest income	-32,558	-34,852
Loss (gain) on disposal of property, plan and equipment	-166	-847
Loss (gain) on disposal of investments	-1,373	-4,323
Impairment loss on non-financial assets	4,466	5,333
Reversal of impairment loss on non-financial assets	0	-16,412
Unrealized foreign exchange loss (gain)	-19,038	2,038
Other adjustments to reconcile profit (loss)	2,372	-8,699
Total adjustments to reconcile profit (loss)	90,731	108,356
Changes in operating assets and liabilities
Changes in operating assets
Decrease (increase) in financial assets held for trading	22,640	0
Decrease (increase) in notes receivable	83,479	-95,179
Decrease (increase) in accounts receivable	-196,344	-87,682
Decrease (increase) in inventories	431,363	-40,773
Decrease (increase) in prepayments	11,315	-16,173
Decrease (increase) in other current assets	13,950	-17,561
Total changes in operating assets	366,403	-257,368
Changes in operating liabilities
Increase (decrease) in notes payable	-7,744	655
Increase (decrease) in accounts payable	-85,632	192,355
Increase (decrease) in other payable	27,266	-11,690
Increase (decrease) in other current liabilities	-3,339	10,585
Total changes in operating liabilities	-69,449	191,905
Total changes in operating assets and liabilities	296,954	-65,463
Total adjustments	387,685	42,893
Cash inflow (outflow) generated from operations	600,044	441,567
Interest received	31,417	34,214
Interest paid	-8,543	-5,515
Income taxes refund (paid)	-81,998	-115,198
Net cash flows from (used in) operating activities	540,920	355,068
Cash flows from (used in) investing activities
Acquisition of available-for-sale financial assets	-267,121	-759,598
Proceeds from disposal of available-for-sale financial assets	363,494	814,800
Acquisition of bond investments without active market	-405,904	-385,760
Proceeds from disposal of bond investments without active market	307,728	0
Proceeds from disposal of subsidiaries	0	-723
Acquisition of property, plant and equipment	-97,214	-412,509
Proceeds from disposal of property, plant and equipment	220	5,991
Increase in refundable deposits	-6,012	0
Decrease in refundable deposits	0	865
Acquisition of intangible assets	-2,754	-5,081
Increase in prepayments for business facilities	-1,980	-1,225
Net cash flows from (used in) investing activities	-109,543	-743,240
Cash flows from (used in) financing activities
Increase in short-term loans	261,350	444,650
Decrease in short-term loans	-454,575	-298,050
Repayments of long-term debt	-12,067	-65,046
Cash dividends paid	-193,151	-231,781
Proceeds from issuing shares	0	-69,702
Capital reduction payments to shareholders	0	-143,073
Payments to acquire treasury shares	-159,268	0
Acquisition of ownership interests in subsidiaries	0	-488,234
Net cash flows from (used in) financing activities	-557,711	-851,236
Effect of exchange rate changes on cash and cash equivalents	39,293	62,583
Net increase (decrease) in cash and cash equivalents	-87,041	-1,176,825
Cash and cash equivalents at beginning of period	1,165,275	2,342,100
Cash and cash equivalents at end of period	1,078,234	1,165,275
Cash and cash equivalents reported in the statement of financial position	1,078,234	1,165,275

Note: Subject didn’t submit its individual financial information; we obtained its consolidated financials as above for reference.

The above financial figures are based on the IFRSs Accounting System.

Bankers

Name	Mega International Commercial Bank Co., Ltd.,

Public Record

Mortgage

No chattel mortgage record of subject has been found within the recent 3 months.

Lawsuit

Up to date of report, no existing or latent litigation of the subject has been found.

Interview Details

Name	Ms. Liu
Department	Sales Department

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.65.83
UK Pound	1	Rs.103.39
Euro	1	Rs.74.27

INFORMATION DETAILS

Analysis Done by :	KAR
Report Prepared by :	ASH

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%)

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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.