MIRA INFORM REPORT

Report No. :	343468
Report Date :	08.10.2015

IDENTIFICATION DETAILS

Name :	LINAN FRIEND LIGHTING APPLIANCE CO., LTD.
Registered Office :	No. 1 Dongkeng Lane, Maling, Gaoqiao, Green Lighting Base Gaohong Industrial Park, Lin'an, Zhejiang Province 311307 Pr
Country :	China
Financials (as on) :	31.12.2014
Date of Incorporation :	13.10.2008
Com. Reg. No.:	330185000026675
Legal Form :	Limited Liability Company
Line of Business :	· Subject assembling and selling electronic energy saving lamps, goods import and export. · Subject engaged in manufacturing and selling electronic energy saving lamps.
No. of Employees :	75

RATING & COMMENTS

MIRA’s Rating :

Ca

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Moderate
Payment Behaviour :	Slow
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. 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 for the first time in modern history. Still, China's per capita income is below the world average.

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 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 also 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 & address

LINAN FRIEND LIGHTING APPLIANCE CO., LTD.

NO. 1 DONGKENG LANE, MALING, GAOQIAO, GREEN LIGHTING BASE GAOHONG INDUSTRIAL PARK, LIN'AN, ZHEJIANG PROVINCE 311307 PR CHINA

TEL: 86 (0) 571-61061878

FAX: 86 (0) 571-61071860

EXECUTIVE SUMMARY

Date of Registration : october 13, 2008

REGISTRATION NO. : 330185000026675

LEGAL FORM : LIMITED LIABILITY COMPANY

CHIEF EXECUTIVE : zhou yongsheng (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : CNY 500,000

staff : 75

BUSINESS CATEGORY : MANUFACTURING & TRADING

Revenue : CNY 23,060,000 (AS OF DEC. 31, 2014)

EQUITIES : CNY -3,770,000 (AS OF DEC. 31, 2014)

WEBSITE : www.hzfrd.com

E-MAIL : zys7455@126.com

PAYMENT : SLOW

MARKET CONDITION : FAIR

FINANCIAL CONDITION : POOR

OPERATIONAL TREND : FAIR

GENERAL REPUTATION : FAIR

EXCHANGE RATE : CNY 6.37= USD 1

Adopted abbreviations (as follows)

SC - Subject Company (the company inquired by you)

N/A – Not available

CNY – China Yuan Ren Min Bi

OPERATIONAL TREND & GENERAL REPUTATION

This section aims at indicating the relative positions of SC in respect of its operational trend & general reputation

Operational Trend:- General Reputation:-

Upward Excellent

Steady Good

Fairly Steady Fairly Good

Ordinary Average

Fair Fair

Stagnant Detrimental

Downward Not known

Not known Not yet be determined

Not yet be determined

LEGAL STATUS & HISTORY

SC was established as a limited liabilities company of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 330185000026675 on October 13, 2008.

SC’s Organization Code Certificate No.: 67987569-7

SC’s Tax No.: 330124679875697

SC’s registered capital: CNY 500,000

SC’s paid-in capital: CNY 500,000

Registration Change Record:-

Date	Change of Contents	Before the change	After the change
2014	Shareholder	Xu Xiangyang	Xi Yunfei

Current Co search indicates SC’s shareholders & chief executives are as follows:-

Name of Shareholder (s)	% of Shareholding
Zhou Yongsheng	90
Xi Yunfei	10

SC’s Chief Executives:-

Position	Name
Legal Representative and Chairman	Zhou Yongsheng
Supervisor	Xi Yunfei

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

Zhou Yongsheng 90

Xi Yunfei 10

MANAGEMENT

Zhou Yongsheng, Legal Representative and Chairman

----------------------------------------------------------------------------------

Gender: M

Nationality: China

Age: 44

ID# 330124197112261219

Qualification: University

Working experience (s):

From 2008 to present, working in SC as legal representative and chairman, also working in Linan Aiwei Package Materials Co., Ltd. as legal representative

Xi Yunfei, Supervisor

----------------------------------------

Gender: M

Nationality: China

BUSINESS OPERATION

SC’s registered business scope includes assembling and selling electronic energy saving lamps, goods import and export.

SC is mainly engaged in manufacturing and selling electronic energy saving lamps.

Brand:

SC’s products mainly include: electronic energy saving lamps, LED lights, outdoor lighting and green lighting products.

SC sources its materials 100% from domestic market, mainly Zhejiang. SC sells 40% of its products in domestic market, and 60% to overseas market, mainly USA, Europe, Mid East, Southeast Asia, etc.

The buying terms of SC include Check, T/T and Credit of 30-60 days. The payment terms of SC include T/T, L/C and Credit of 30-60 days.

Staff & Office:

--------------------------

SC is known to have approx. 75 staff at present.

SC rents an area as its operating office & factory of approx. 15,000 sq. meters at the heading address.

RELATED COMPANY

Lin’an Shuangying Lighting Fixture Co., Ltd.

Lin’an Duoni Lighting Appliance Co., Ltd.

SC is known to have a subsidiary at present,

Linan Aiwei Package Materials Co., Ltd.

---------------------------------------

Date of Registration: June 11, 2009

Legal Form: Limited Liability Company

Chief Executive: Zhou Yongsheng

Registered Capital: CNY 250,000

According to SC’s website

Henan Office

Add.: No. 49-50 North Building, North Yard of Wankelai, Zhengzhou

Tel.: 0371-68765758

Fax: 0371-86137607

Shaanxi Office

Add.: No. 88 Beichen Avenue, Weiyang District, Xi’an西安市未央区北辰大道88号

Tel.: 029-86471358

Jilin Office

Add.: Building 22, Taoyuan Chunhui Residential Area, Dongtian Street, Nanguan District, Changchun

Tel.: 0431-81885152

PAYMENT

Overall payment appraisal: ( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet be 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.

BANKING

Basic Bank:

Bank of Hangzhou Linan Sub-branch

AC#: 86918100156302

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2011	As of Dec. 31, 2012	As of Dec. 31, 2013	As of Dec. 31, 2014
Cash	16,955	29,522	7,500	5,590
Notes receivable	0	0	0	0
Accounts receivable	17,635	18,957	21,760	24,040
Advances to suppliers	0	0	0	0
Other receivable	-9	-1	-30	530
Inventory	3,303	4,479	3,450	7,470
Non-current assets within one year	0	0	0	0
Other current assets	0	0	0	30
	------------------	------------------	------------------	------------------
Current assets	37,884	52,957	32,680	37,660
Long-term investment	150	150	150	150
Fixed assets	1,550	1,305	2,170	2,410
Construction in progress	0	0	0	0
Intangible assets	0	0	0	0
Long-term prepaid expenses	0	0	0	0
Deferred income tax assets	0	0	0	0
Other non-current assets	0	0	0	590
	------------------	------------------	------------------	------------------
Total assets	39,584	54,412	35,000	40,810
	=============	=============	=============	=============
Short-term loans	969	5,176	6,990	8,150
Notes payable	16,689	23,639	9,230	6,560
Accounts payable	21,884	26,301	18,050	18,230
Wages payable	0	0	0	0
Taxes payable	-1,265	-1,534	-1,120	0
Advances from clients	0	0	0	0
Other payable	111	145	2,100	11,620
Other current liabilities	0	0	0	20
	------------------	------------------	------------------	------------------
Current liabilities	38,388	53,727	35,250	44,580
Non-current liabilities	0	0	0	0
	------------------	------------------	------------------	------------------
Total liabilities	38,388	53,727	35,250	44,580
Equities	1,196	685	-250	-3,770
	------------------	------------------	------------------	------------------
Total liabilities & equities	39,584	54,412	35,000	40,810
	=============	=============	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2011	As of Dec. 31, 2012	As of Dec. 31, 2013	As of Dec. 31, 2014
Revenue	57,997	32,425	28,180	23,060
Cost of sales	52,887	25,778	22,300	22,140
Sales expense	1,593	1,855	1,950	2,160
Management expense	3,212	5,126	3,730	1,780
Finance expense	49	131	1,130	490
Non-business income	22	31	0	0
Non-business expenditure	58	34	70	60
Profit before tax	219	-466	-930	-3,570
Less: profit tax	53	0	0	0
Profits	166	-466	-930	-3,570

Important Ratios

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

	As of Dec. 31, 2011	As of Dec. 31, 2012	As of Dec. 31, 2013	As of Dec. 31, 2014
*Current ratio	0.99	0.99	0.93	0.84
*Quick ratio	0.90	0.90	0.83	0.68
*Liabilities to assets	0.97	0.99	1.01	1.09
*Net profit margin (%)	0.29	-1.44	-3.30	-15.48
*Return on total assets (%)	0.42	-0.86	-2.66	-8.75
*Inventory / Revenue ×365	21 days	51 days	45 days	119 days
*Accounts receivable / Revenue ×365	111 days	214 days	282 days	381 days
*Revenue / Total assets	1.47	0.60	0.81	0.57
*Cost of sales / Revenue	0.91	0.80	0.79	0.96

FINANCIAL COMMENTS

PROFITABILITY: FAIR

The revenue of SC appears average in its line.

SC’s net profit margin is fair.

SC’s return on total assets is fair.

SC’s cost of sales is average, comparing with its revenue.

LIQUIDITY: FAIR

The current ratio of SC is maintained in a fair level.

SC’s quick ratio is maintained in a normal level.

The inventory of SC is maintained in an average level.

The accounts receivable of SC appears large.

SC’s short-term loans are in an average level.

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

LEVERAGE: POOR

The debt ratio of SC is high.

The risk for SC to go bankrupt is fairly high.

Overall financial condition of the SC: Poor.

CONCLUSIONS

SC is considered small-sized in its line with poor financial conditions. The large amount of accounts receivable may be a threat to SC’s financial condition.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.65.25
UK Pound	1	Rs.99.53
Euro	1	Rs.73.47

INFORMATION DETAILS

Analysis Done by :	KAS
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.