MIRA INFORM REPORT

Report No. :	491624
Report Date :	10.02.2018

IDENTIFICATION DETAILS

Name :	LCY GRIT CORP
Formerly Known As :	GLOBAL RUBBER CORP
Registered Office :	No.16, Zhonglin Rd., Xiaogang Dist., Kaohsiung City 812, (R.O.C.)
Country :	Taiwan
Financials (as on) :	31.12.2016 (Consolidated)
Date of Incorporation :	10.09.2008
Com. Reg. No.:	29058640
Legal Form :	Joint Stock Company
Line of Business :	Subject is engaged in Manufacturing and sale of styrenic block copolymers
No. of Employees :	Not Available

RATING & COMMENTS

(Mira Inform has adopted New Rating mechanism w.e.f. 23^rd January 2017)

MIRA’s Rating :

A

Credit Rating	Explanation	Rating Comments
A	Acceptable Risk	Business dealings permissible with moderate risk of default

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

Country Name	Previous Rating (30.06.2017)	Current Rating (30.09.2017)
Taiwan	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderately Low Risk	B1
Moderate Risk	B2
Moderately High Risk	C1
High Risk	C2
Very High Risk	D

TAIWAN - ECONOMIC OVERVIEW

Taiwan has a dynamic capitalist economy that is driven largely by industrial manufacturing, and especially exports of electronics, machinery, and petrochemicals. This heavy dependence on exports exposes the economy to fluctuations in global demand. Taiwan's diplomatic isolation, low birth rate, rapidly aging population, and increasing competition from China and other Asia Pacific markets are other major long-term challenges.

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 of that year, 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 uncertain. President TSAI since taking office in May 2016 has promoted greater economic integration with South and Southeast Asia through the New Southbound Policy initiative and has also expressed interest in Taiwan joining the Trans-Pacific Partnership as well as bilateral trade deals with partners such as the US.

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 with many economies, including China and the US, 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 and has also secured greater market access for its investors on 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 renminbi (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 opportunities for Taiwan’s economy but also pose challenges as political differences remain unresolved and China’s economic growth is slowing. Domestic economic issues loomed large in public debate ahead of the January 2016 presidential and legislative elections, including concerns about stagnant wages, high housing prices, youth unemployment, job security, and financial security in retirement.

Source : CIA

company name and address

Company Name:	Lcy Grit Corp.
Former Name:	Global Rubber Corp.
Supplied Name:	LCY GRIT CORP
Trading Address:	3F., No.85, Sec. 4, Bade Rd., Songshan Dist., Taipei City 105, Taiwan
Supplied Address:	3F, NO 83 SEC 4 BADE ROAD TAIPEI ROC
Telephone Number:	+886-2-27631611
Fax Number:	+886-2-27482661

Notes: The exact name and address are as above.

Company Identification Details

Registered Name:	Lcy Grit Corp.
Registered Address:	No.16, Zhonglin Rd., Xiaogang Dist., Kaohsiung City 812, Taiwan (R.O.C.)
Date of Foundation:	2008-9-10
Registration Number:	29058640
Registry:	Economic Development Board of Kaohsiung City Government
Registered Capital:	NTD 3,000,000,000 (USD 102,000,000)
Paid-up Capital:	NTD 500,000 (USD 17,000)
Legal Representatives:	Dingbang Song
Legal Form:	Joint Stock Company
Principal Activities:	Manufacturing and sale of styrenic block copolymers, etc.
Staff:	N/A
Listed at Stock Exchange:	No
Date of Last Annual Return:	2017-11-27

Note: Subject declined to disclose the number of staff and from other source we cannot obtain the related information, either.

History

Subject was incorporated on 2008-9-10 with registered number 29058640 as Joint Stock Company in Taiwan.

Corporate Structure

Factory

Name:	Xiaogang Factory
Address:	No.16, 18 and 20, Zhonglin Rd., Xiaogang Dist., Kaohsiung City 812, Taiwan (R.O.C.)
Date of Foundation:	1995-2-14
Date of Registration:	1996-5-10
Factory Registration Number:	64005174
Factory Manager:	Yonghua Hong
Status:	In Production
Date of Last Annual Return:	2018-1-22
Major Products:	184 Synthetic resin, plastic and rubber 181 basic chemical materials

Parent Company

Name:	Lcy Chemical Corp.
Address:	3F., No.85, Sec. 4, Bade Rd., Songshan Dist., Taipei City 105, Taiwan
Listed at Stock Exchange:	Yes; Stock code: 1704
Telephone Number:	+886-2-27631611
Fax Number:	+886-2-27482661
Principal Activities:	Manufacturing and sale of performance plastics, methanol and solvent, thermoplastic elastomers, drums, etc.

Note: The above information is from public files.

Shareholders

Major Shareholders

Name	Subscription Shares
Lcy Chemical Corp.
50,000

Shareholder Information:

Registered Name:	Lcy Chemical Corp.
Registered Address:	No. 3, Zhonglin Rd., Xiaogang Dist., Kaohsiung City 812, Taiwan (R.O.C.)
Date of Foundation:	1965-11-6
Registration Number:	39054405
Registry:	Department of Commerce, Ministry of Economic Affairs, R.O.C.
Registered Capital:	NTD 10,000,000,000
Paid-up Capital:	NTD 8,554,323,680
Legal Representatives:	Zaixing Hong
Legal Form:	Joint Stock Company
Date of Last Annual Return:	2017-12-7

Management Information

Core Management

Directors

1
Name		Dingbang Song
Position		Chairman of the Board
2
Name	Minggong Li
Position		Director
3
Name	Zaixing Hong
Position		Director
4
Name	Shouren Wang
Position		Supervisor

Operation Information

Offices & Factories

	Headquarters
Add	3F., No.85, Sec. 4, Bade Rd., Songshan Dist., Taipei City 105, Taiwan

Production Information

Subject is engaged in manufacturing of styrenic block copolymers, etc.

Subject has a factory in Taiwan for production.

Subject obtained the certification of ISO 10993.

Purchase Information

The registered activities of subject:

Business Code	Details
C801060	Synthetic rubber manufacturing.
C801100	Synthetic resin and plastic manufacturing
F107990	Wholesale of other chemical products
F207990	Other chemicals retailing
F401010	The international trade business
ZZ99999	Besides licensed business, all other business items those are not banned or restricted.

The raw materials for production are purchased both at home and abroad.

Sales Information

Subject is engaged in sale of styrenic block copolymers, etc.

The major products are styrenic block copolymers (SBC), LCY GRIT’s SBS, SIS, and SEBS, etc.

Subject’s products are applied for footwear and rubber goods, toys, outdoor gear, industrial and sporting goods, labeling, etc.

Subject’s sales regions are domestic market and abroad.

Subject’s major customers are manufacturers of footwear and rubber goods, etc.

Import and export right:

Import right	Yes
Export right	Yes

Settlements

Purchase

Domestic Purchase

Products	Raw materials
Payment Terms	T/T, Cash, etc.

Import

Products	Raw materials
Payment Terms	L/C, T/T, etc.

Sales

Domestic Markets

Product	Styrenic block copolymers, etc.
Selling Terms	T/T, Cash, etc.

Export

Product	Styrenic block copolymers, etc.
Selling Terms	L/C, T/T, etc.

Financial Information

Subject has no obligations to disclose its financial statements to the third party according to the relevant policy in Taiwan and the only source from which we can obtain the information is the subject itself.

Subject’s relevant staff declined to disclose its financials citing the grounds of company’s confidentiality; from other sources we could not obtain such information, either.

We obtained the consolidated financial information of subject’s parent company Lcy Chemical Corp. for references:

Balance Sheet

Unit: NTD/000

Consolidated	2016-12-31	2015-12-31
Assets
Current assets
Cash and cash equivalents
Total cash and cash equivalents	11,130,927	7,010,132
Current financial assets at fair value through profit or loss
Total current financial assets at fair value through profit or loss	632,999	628,392
Current available-for-sale financial assets
Current available-for-sale financial assets, net	1,210,021	355,273
Notes receivable, net
Notes receivable, net	955,597	538,359
Notes receivable due from related parties, net
Notes receivable due from related parties, net	19,637	2,785
Accounts receivable, net
Accounts receivable, net	2,719,939	2,234,012
Accounts receivable due from related parties, net
Accounts receivable due from related parties, net	31,578	17,699
Other receivables
Other receivables, net	802,463	314,831
Other receivables due from related parties
Other receivables due from related parties, net	1,254	1,270
Current tax assets
Total current tax assets	4,163	28,635
Inventories
Total inventories	4,746,165	4,913,972
Prepayments
Total prepayments	549,161	523,575
Non-current assets classified as held for sale, net
Non-current assets classified as held for sale, net	455,317	0
Other current assets
Other current financial assets	1,442,520	3,977,654
Other current assets, others	264,251	263,047
Total other current assets	1,706,771	4,240,701
Total current assets	24,965,992	20,809,636
Non-current assets
Non-current available-for-sale financial assets
Non-current available-for-sale financial assets, net	78,985	86,536
Non-current financial assets at cost
Non-current financial assets at cost, net	3,264,055	3,131,767
Investments accounted for using equity method
Investments accounted for using equity method, net	107,715	109,635
Property, plant and equipment
Total property, plant and equipment	11,203,094	12,310,043
Intangible assets
Other intangible assets, net
Other intangible assets, net	59,088	51,723
Total intangible assets	59,088	51,723
Deferred tax assets	249,517	238,428
Other non-current assets
Other non-current financial assets
Total other non-current financial assets	204,641	205,070
Long-term prepaid rents	303,493	338,361
Other non-current assets, others
Total other non-current assets, others	1,045,161	271,171
Total other non-current assets	1,553,295	814,602
Total non-current assets	16,515,749	16,742,734
Total assets	41,481,741	37,552,370
Liabilities and equity
Liabilities
Current liabilities
Short-term borrowings
Total short-term borrowings	2,752,902	1,556,560
Current financial liabilities at fair value through profit or loss
Total current financial liabilities at fair value through profit or loss	53,495	0
Notes payable
Total notes payable	4,713	5,693
Accounts payable
Total accounts payable	2,524,757	1,998,718
Accounts payable to related parties
Total accounts payable to related parties	55,403	16,397
Other payables
Total other payables	1,809,168	1,186,843
Other payables to related parties	18	45
Current tax liabilities	60,896	104,439
Other current liabilities
Advance receipts
Total advance receipts	299,921	172,367
Long-term liabilities, current portion
Total long-term liabilities, current portion	1,297,145	2,074,683
Other current liabilities, others	6,905	1,378
Total other current liabilities	1,603,971	2,248,428
Total current liabilities	8,865,323	7,117,123
Non-current liabilities
Long-term borrowings
Total long-term borrowings	1,412,570	1,343,223
Deferred tax liabilities
Total deferred tax liabilities	4,413,894	4,498,035
Other non-current liabilities
Guarantee deposits received	4,311	1,357
Total other non-current liabilities	4,311	1,357
Total non-current liabilities	5,830,775	5,842,615
Total liabilities	14,696,098	12,959,738
Equity
Equity attributable to owners of parent
Share capital
Ordinary share	8,560,094	8,529,594
Total capital stock	8,560,094	8,529,594
Capital surplus
Total capital surplus	9,236,021	9,171,710
Retained earnings
Legal reserve	2,415,335	2,202,110
Special reserve	1,561,927	1,561,927
Unappropriated retained earnings (accumulated deficit)
Total unappropriated retained earnings (accumulated deficit)	4,607,795	2,132,252
Total retained earnings	8,585,057	5,896,289
Other equity interest
Total other equity interest	305,512	921,736
Treasury shares	0	0
Total equity attributable to owners of parent	26,686,684	24,519,329
Non-controlling interests	98,959	73,303
Total equity	26,785,643	24,592,632
Total liabilities and equity	41,481,741	37,552,370

Profit and Loss Account

Unit: NTD/000

Consolidated	2016	2015
Operating revenue
Net sales revenue
Net sales revenue	39,853,417	35,730,850
Rental revenue
Total rental revenue	226,767	234,197
Total operating revenue	40,080,184	35,965,047
Operating costs
Cost of sales
Total cost of sales	33,028,695	30,771,516
Cost of rental sales
Total cost of rental sales	100,886	98,898
Total operating costs	33,129,581	30,870,414
Gross profit (loss) from operations	6,950,603	5,094,633
Gross profit (loss) from operations	6,950,603	5,094,633
Operating expenses
Selling expenses
Total selling expenses	1,728,509	1,487,625
Administrative expenses
Total administrative expenses	751,097	697,683
Research and development expenses
Total research and development expenses	346,603	194,803
Total operating expenses	2,826,209	2,380,111
Net operating income (loss)	4,124,394	2,714,522
Non-operating income and expenses
Other income
Total other income	695,251	1,534,899
Other gains and losses
Other gains and losses, net	-81,206	6,698,669
Finance costs
Finance costs, net	91,814	687,552
Share of profit (loss) of associates and joint ventures accounted for using equity method
Share of profit (loss) of associates and joint ventures accounted for using equity method, net	0	-5,898
Total non-operating income and expenses	522,231	7,540,118
Profit (loss) from continuing operations before tax	4,646,625	10,254,640
Tax expense (income)
Total tax expense (income)	652,765	490,157
Profit (loss) from continuing operations	3,993,860	9,764,483
Profit (loss)	3,993,860	9,764,483
Other comprehensive income
Components of other comprehensive income that will be reclassified to profit or loss
Exchange differences on translation	-671,547	390,853
Unrealised gains (losses) on valuation of available-for-sale financial assets	-1,036	-11,041
Income tax related to components of other comprehensive income that will be reclassified to profit or loss	-114,162	66,447
Components of other comprehensive income that will be reclassified to profit or loss	-558,421	313,365
Other comprehensive income, net	-558,421	313,365
Total comprehensive income	3,435,439	10,077,848
Profit (loss), attributable to:
Profit (loss), attributable to owners of parent	3,968,207	9,974,414
Profit (loss), attributable to non-controlling interests	25,653	-209,931
Comprehensive income attributable to:
Comprehensive income, attributable to owners of parent	3,409,783	10,287,777
Comprehensive income, attributable to non-controlling interests	25,656	-209,929
Basic earnings per share
Total basic earnings per share	4.65	11.69
Diluted earnings per share
Total diluted earnings per share	4.64	11.28

Cash Flows

Unit: NTD/000

Consolidated	2016	2015
Cash flows from (used in) operating activities, indirect method
Profit (loss) from continuing operations before tax	4,646,625	10,254,640
Profit (loss) before tax	4,646,625	10,254,640
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense	1,245,307	1,393,100
Amortization expense	21,236	19,458
Provision (reversal of provision) for bad debt expense	507	-2,311
Net loss (gain) on financial assets or liabilities at fair value through profit or loss	-8,419	-12,201
Interest expense	91,814	687,552
Interest income	-81,304	-84,229
Dividend income	-537,684	-1,391,001
Share-based payments	37,011	-205,985
Share of loss (profit) of associates and joint ventures accounted for using equity method	0	5,898
Loss (gain) on disposal of property, plan and equipment	7,689	9,799
Property, plan and equipment transferred to expenses	0	3,123
Loss (gain) on disposal of intangible assets	0	-700
Loss (gain) on disposal of other assets	0	-8,423,183
Loss (gain) on disposal of non-current assets classified as held for sale	0	-150,630
Loss (gain) on disposal of investments	-1,108	-8,449
Loss (gain) on disposal of investments accounted for using equity method	0	-29,947
Impairment loss on financial assets	0	1,534,016
Impairment loss on non-financial assets	0	157,561
Reversal of impairment loss on non-financial assets	-19	-44,745
Unrealized foreign exchange loss (gain)	2,931	-67,782
Loss (gain) on bond redemption	0	-3,598
Other adjustments to reconcile profit (loss)	-13,351	-2,133
Total adjustments to reconcile profit (loss)	764,610	-6,616,387
Changes in operating assets and liabilities
Changes in operating assets
Decrease (increase) in financial assets held for trading	9,613	19,120
Decrease (increase) in notes receivable	-478,999	322,033
Decrease (increase) in notes receivable due from related parties	-16,852	14,423
Decrease (increase) in accounts receivable	-543,348	-177,870
Decrease (increase) in accounts receivable due from related parties	-13,879	-1,656
Decrease (increase) in other receivable	-63,693	-47,236
Decrease (increase) in other receivable due from related parties	16	-351
Decrease (increase) in inventories	75,580	1,221,385
Decrease (increase) in prepayments	-188,015	-179,270
Decrease (increase) in other current assets	-5,441	1,846
Decrease (increase) in other financial assets	2,181,401	-1,169,872
Total changes in operating assets	956,383	2,552
Changes in operating liabilities
Increase (decrease) in financial liabilities held for trading	-47,793	-331
Increase (decrease) in notes payable	-980	3,469
Increase (decrease) in accounts payable	570,407	261,418
Increase (decrease) in accounts payable to related parties	38,948	-10,090
Increase (decrease) in other payable	489,031	488,266
Increase (decrease) in other payable to related parties	-27	28
Increase (decrease) in receipts in advance	156,163	87,016
Increase (decrease) in other current liabilities	5,527	-4,632
Total changes in operating liabilities	1,211,276	825,144
Total changes in operating assets and liabilities	2,167,659	827,696
Total adjustments	2,932,269	-5,788,691
Cash inflow (outflow) generated from operations	7,578,894	4,465,949
Interest paid	-89,686	-128,315
Income taxes refund (paid)	-648,501	-90,839
Net cash flows from (used in) operating activities	6,840,707	4,246,795
Cash flows from (used in) investing activities
Proceeds from disposal of financial assets at fair value through profit or loss, designated as upon initial recognition	75,570	4,439
Acquisition of available-for-sale financial assets	-2,947,658	-2,122,837
Proceeds from disposal of available-for-sale financial assets	1,673,423	2,044,694
Proceeds from capital reduction of available-for-sale financial assets	4,684	16,801
Acquisition of financial assets at cost	-292,531	-143,214
Proceeds from disposal of financial assets at cost	578	5,661
Proceeds from capital reduction of financial assets at cost	109,265	154,254
Increase in prepayments for investments	-600	0
Proceeds from disposal of subsidiaries	0	-138,609
Proceeds from disposal of non-current assets classified as held for sale	0	906,477
Acquisition of property, plant and equipment	-1,306,767	-773,007
Proceeds from disposal of property, plant and equipment	2,721	10,335
Increase in refundable deposits	-31,830	0
Decrease in refundable deposits	0	8,156
Acquisition of intangible assets	-5,168	-7,212
Proceeds from disposal of intangible assets	0	700
Increase in other financial assets	0	-940,252
Decrease in other financial assets	281,280	0
Interest received	82,103	80,660
Dividends received	537,684	1,391,001
Net cash flows from (used in) investing activities	-1,817,246	498,047
Cash flows from (used in) financing activities
Increase in short-term loans	1,229,396	100,622
Repayments of bonds	0	-2,025,781
Proceeds from long-term debt	1,378,294	543,480
Repayments of long-term debt	-2,074,683	-2,286,321
Increase in guarantee deposits received	2,954	0
Decrease in guarantee deposits received	0	-839
Decrease in lease payable	0	-198,920
Cash dividends paid	-1,279,439	0
Net cash flows from (used in) financing activities	-743,478	-3,867,759
Effect of exchange rate changes on cash and cash equivalents	-159,188	371,704
Net increase (decrease) in cash and cash equivalents	4,120,795	1,248,787
Cash and cash equivalents at beginning of period	7,010,132	5,761,345
Cash and cash equivalents at end of period	11,130,927	7,010,132
Cash and cash equivalents reported in the statement of financial position	11,130,927	7,010,132

Note: The Company 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

Subject declined to disclose its bank details; from other source we could not obtain the relevant information, either.

Public Record

Mortgage

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

Lawsuit

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

Special Note

Interview Details

Name	Mr. Chen
Department	Sales Department

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	INR 64.37
UK Pound	1	INR 89.71
Euro	1	INR 78.89
TWD	1	INR 2.19

Note: Above are approximate rates obtained from sources believed to be correct

INFORMATION DETAILS

Analysis Done by :	DIV
Report Prepared by :	NIT

RATING EXPLANATIONS

Credit Rating	Explanation	Rating Comments
A++	Minimum Risk	Business dealings permissible with minimum risk of default
A+	Low Risk	Business dealings permissible with low risk of default
A	Acceptable Risk	Business dealings permissible with moderate risk of default
B	Medium Risk	Business dealings permissible on a regular monitoring basis
C	Medium High Risk	Business dealings permissible preferably on secured basis
D	High Risk	Business dealing not recommended or on secured terms only
NB	New Business	No recommendation can be done due to business in infancy stage
NT	No Trace	No recommendation can be done as the business is not traceable

NB is stated where there is insufficient information to facilitate rating. However, it is not to be considered as unfavourable.

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 are as follows:

· Financial condition covering various ratios

· Company background and operations size

· Promoters / Management background

· Payment record

· Litigation against the subject

· Industry scenario / competitor analysis

· Supplier / Customer / Banker review (wherever available)

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.