MIRA INFORM REPORT

Report No. :	332999
Report Date :	24.07.2015

IDENTIFICATION DETAILS

Name :	MICHELL (SUZHOU) WOOL CO., LTD.
Registered Office :	Shuangzhu Road, Linhu Avenue, Fenhu Economic Development Zone, Wujiang, Suzhou City, Jiangsu Province, 215214 Pr
Country :	China
Financials (as on) :	31.12.2014
Date of Incorporation :	28.06.2006
Com. Reg. No.:	320584400000379
Legal Form :	Wholly Foreign-Owned Enterprise
Line of Business :	Manufacture and Sales of all kinds of Wools and Wool Products.
No. of Employees :	110

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, 2015

Country Name	Previous Rating (31.12.2014)	Current Rating (31.03.2015)
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. In 2014 the People’s Bank of China (PBOC) doubled 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 2014 stood as the largest economy in the world, surpassing the US that year... 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 2014 more than 274 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. In 2014 China agreed to begin limiting carbon dioxide emissions by 2030. China implemented several economic reforms in 2014, including passing legislation to allow local governments to issue bonds, opening several state-owned enterprises to further private investment, loosening the one-child policy, passing harsher pollution fines, and cutting administrative red tape.

Source : CIA

Company Name and address

MICHELL (SUZHOU) WOOL CO., LTD.

SHUANGZHU ROAD, LINHU AVENUE, FENHU ECONOMIC DEVELOPMENT ZONE,

WUJIANG, SUZHOU CITY, JIANGSU PROVINCE, 215214 PR CHINA

TEL: 86 (0) 512-63228900 FAX: 86 (0) 512-63228200

EXECUTIVE SUMMARY

INCORPORATION DATE : JUNE 28, 2006

REGISTRATION NO. : 320584400000379

REGISTERED LEGAL FORM : WHOLLY FOREIGN-OWNED ENTERPRISE

CHIEF EXECUTIVE : MR. DAVID RONALD MICHELL (LEGAL REPRESENTATIVE)

STAFF STRENGTH : 110

REGISTERED CAPITAL : USD 10,000,000

BUSINESS LINE : MANUFACTURING & TRADING

TURNOVER : CNY 167,220,000 (AS OF DEC. 31, 2014)

EQUITIES : CNY 58,020,000 (AS OF DEC. 31, 2014)

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRLY STABLE

OPERATIONAL TREND : FAIRLY STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.2093 = 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 Ren min bi

SC was registered as a Wholly Foreign-Owned Enterprise at local Administration for industry & commerce (AIC - the official body of issuing and renewing business license) on June 28, 2006.

Company Status: Wholly foreign-owned enterprise

This form of business in PR China is defined as a legal person. It is a limited co. established within the territories of PR China with capital provided totally by the foreign investors. More than one foreign investor may jointly invest in a wholly foreign-owned enterprise. The investing party/parties solely exercise management, reap profit and bear risks and liabilities by themselves. This form of companies usually have a limited duration is extendible upon approval of Examination and Approval Authorities.

SC’s registered business scope includes processing of animal products (research and development and processing of wool), sales of company produced products; construction and operation of sewage treatment facilities; wholesale and import & export business of the similar commodities with the company products (does not involve the state-run trade management products, involving quota or license management of goods, according to the state's relevant regulations apply for)

SC is mainly engaged in manufacture and sales of all kinds of wools and wool products.

Mr. David Ronald Michell is legal representative and chairman of SC at present.

SC is known to have approx. 110 employees at present.

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

http://www.michellwool.com It belongs to Michell Wool. The design is professional and the content is well organized. At present it is in English version.

Email: wang.zhimin@michell.com.au

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

Organization Code: 788361871

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

MAIN SHAREHOLDERS:

Name % of Shareholding

Michell (HK) Limited 100

Registration No.: 1046839

Incorporation Date: 2006-5-22

Legal form: Private Company Limited by shares

l Legal Representative and Chairman:

Mr. David Ronald Michell, Australian, he is currently responsible for the overall management of SC.

Working Experience(s):

At present Working in SC as legal representative and chairman.

l Vice chairman:

Mr. Peter John Michell, Australian, he is currently responsible for the daily management of SC.

Working Experience(s):

At present Working in SC as vice chairman.

l General Manager:

Mr. Naijier James Morocutti (Literal Translation), Australian, he is currently responsible for the daily management of SC.

Working Experience(s):

At present Working in SC as general manager.

l Director:

Ivan Mark Jacques (Australian)

l Supervisor:

Richard Hugh Kimber (Australian)

SC is mainly engaged in manufacture and sales of all kinds of wools and wool products.

SC’s products mainly include:

Carbonised wool

Scoured wool

Felt wool

Specialty wool tops

Machine washable wool

Etc.

SC sources its materials 30% from domestic market, and 70% of its products from overseas market. SC sells 40% of its products in domestic market, and 60% 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’s management declined to release its main clients and suppliers.

Hong Kong Fur Factory Limited

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

Registration No.: 0023926

Incorporation Date: 1971-5-21

Legal form: Private Company Limited by shares

Tel: (852) 2742 2011

Fax: (852) 2786 1900

Website: http://www.hongkongfur.com

Michell Wool Pty Ltd. (Australia)

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

Tel: + 61 8 8209 4400

Address: 1506 Main North Road, Salisbury South, South Australia, Australia 5106

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 declined to release its banking details

Balance Sheet

Unit: CNY’000

	As of Dec. 31, 2014
Cash & bank	2,300
Inventory	24,970
Accounts receivable	15,260
Advances to suppliers	2,970
Other receivables	60
Prepaid expenses	610
	------------------
Current assets	46,170
Fixed assets net value	38,400
Projects under construction	250
Intangible assets and other current assets	15,180
	------------------
Total assets	100,000
	=============
Short loans	22,040
Accounts payable	10,050
Advances from customers	2,170
Taxes payable	520
Other Accounts payable	5,370
Other current liabilities	1,830
	-----------------
Current liabilities	41,980
Long term liabilities	0
	-----------------
Total liabilities	41,980
Shareholders equities	58,020
	-----------------
Total liabilities & equities	100,000
	=============

Income Statement

Unit: CNY’000

	As of Dec. 31, 2014
Turnover	167,220
Cost of goods sold	155,430
Taxes and additional of main operation	480
Sales expense	2,950
Management expense	5,970
Finance expense	2,010
Non-operating income	370
Profit before tax	750
Less: profit tax	0
Profits	750

Important Ratios

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

	As of Dec. 31, 2014
*Current ratio	1.10
*Quick ratio	0.51
*Liabilities to assets	0.42
*Net profit margin (%)	0.45
*Return on total assets (%)	0.75
*Inventory /Turnover ×365	55 days
*Accounts receivable/Turnover ×365	33 days
*Turnover/Total assets	1.67
* Cost of goods sold/Turnover	0.93

PROFITABILITY: AVERAGE

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

l SC’s net profit margin is average.

l SC’s return on total assets is average.

l SC’s cost of goods sold is average in 2014.

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 SC’s inventory appears fairly large in 2014.

l SC’s accounts receivable appears average in 2014.

l SC’s short-term loan is fairly large in 2014.

l SC’s turnover is in an average 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 and short-term loan could be a threat to SC’s financial conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.63.71
UK Pound	1	Rs.99.57
Euro	1	Rs.69.63

INFORMATION DETAILS

Analysis Done by :	KAS
Report Prepared by :	NIT

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.