3decades

MIRA INFORM REPORT

Report No. :	498659
Report Date :	24.03.2018

IDENTIFICATION DETAILS

Name :	DEOSEN BIOCHEMICAL (ORDOS) LIMITED

Registered Office :	West 200 Meters, The Intersection of Jingsan Road and Weiwu Road, Sanshangliang Industrial Park, Dalate, Ordos, Inner Mongolia 014300 PR China

Country :	China

Financials (as on) :	30.06.2017

Date of Incorporation :	09.02.2010

Unified Social Credit Code :	91150600699491826M

Legal Form :	Shares Limited Company

Line of Business :	Manufacturing and Selling of Xanthan Gum; International Trade.

No. of Employees :	630

RATING & COMMENTS

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

MIRA’s Rating :

Credit Rating

Explanation

Rating Comments

Acceptable Risk

Business dealings permissible with moderate risk of default

Status :	Good

Payment Behaviour :	Regular

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

(30.09.2017)

Current Rating

(31.12.2017)

China

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

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. China has implemented reforms in a gradualist fashion, resulting in efficiency gains that have contributed to a more than tenfold increase in GDP since 1978. Reforms began with the phaseout 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 continues to pursue an industrial policy, state support of key sectors, and a restrictive investment regime. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2016 stood as the largest economy in the world, surpassing the US in 2014 for the first time in modern history. China became the world's largest exporter in 2010, and the largest trading nation in 2013. Still, China's per capita income is below the world average.

After keeping its currency tightly linked to the US dollar for years, China in July 2005 moved to an exchange rate system that references a basket of currencies. From mid-2005 to late 2008, the renminbi appreciated more than 20% against the US dollar, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing announced it would allow a resumption of gradual liberalization. From 2013 until early 2015, the renminbi (RMB) appreciated roughly 2% against the dollar, but the exchange rate fell 13% from mid-2015 until end-2016 amid strong capital outflows in part stemming from the August 2015 official devaluation; in 2017 the RMB resumed appreciating against the dollar – roughly 7% from end-of-2016 to end-of-2017. From 2013 to 2017, China had one of the fastest growing economies in the world, averaging slightly more than 7% real growth per year. In 2015, the People’s Bank of China announced it would continue to carefully push for full convertibility of the renminbi, after the currency was accepted as part of the IMF’s special drawing rights basket. However, since late 2015 the Chinese Government has strengthened capital controls and oversight of overseas investments to better manage the exchange rate and maintain financial stability.

The Chinese Government faces numerous economic challenges including: (a) reducing its high domestic savings rate and correspondingly low domestic household consumption; (b) managing its high corporate debt burden to maintain financial stability; (c) controlling off-balance sheet local government debt used to finance infrastructure stimulus; (d) facilitating higher-wage job opportunities for the aspiring middle class, including rural migrants and college graduates, while maintaining competitiveness; (e) dampening speculative investment in the real estate sector without sharply slowing the economy; (f) reducing industrial overcapacity; and (g) raising productivity growth rates through the more efficient allocation of capital and state-support for innovation. Economic development has progressed further in coastal provinces than in the interior, and by 2016 more than 169.3 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of China’s population control policy known as the “one-child policy” - which was relaxed in 2016 to permit all families to have two children - 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 urbanization. The Chinese Government is seeking to add energy production capacity from sources other than coal and oil, focusing on natural gas, nuclear, and clean energy development. In 2016, China ratified the Paris Agreement, a multilateral agreement to combat climate change, and committed to peak its carbon dioxide emissions between 2025 and 2030.

The government's 13th Five-Year Plan, unveiled in March 2016, emphasizes the need to increase innovation and boost domestic consumption to make the economy less dependent on government investment, exports, and heavy industry. However, China has made more progress on subsidizing innovation than rebalancing the economy. Beijing has committed to giving the market a more decisive role in allocating resources, but the Chinese Government’s policies continue to favor state-owned enterprises and emphasize stability. Chinese leaders in 2010 pledged to double China’s GDP by 2020, and the 13th Five Year Plan includes annual economic growth targets of at least 6.5% through 2020 to achieve that goal. 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. Chinese leaders also have undermined some market-oriented reforms by reaffirming the “dominant” role of the state in the economy, a stance that threatens to discourage private initiative and make the economy less efficient over time. The slight acceleration in economic growth in 2017—the first such uptick since 2010—gives Beijing more latitude to pursue its economic reforms, focusing on financial sector deleveraging and its Supply-Side Structural Reform agenda, first announced in late 2015.

Source : CIA

COMPANY NAME AND ADDRESS

COMPANY NAME	Deosen Biochemical (Ordos) Limited
CURRENT ADDRESS/ REGISTERED ADDRESS	West 200 Meters, The Intersection of Jingsan Road and Weiwu Road, Sanshangliang Industrial Park, Dalate, Ordos, Inner Mongolia 014300 PR China
TEL. NO.	86 (0) 477-5189082/5189760
FAX NO.	86 (0) 477-5189760

***Note: SC's current address should be the heading one, and the given address (Sanshangliang Industrial Park, Dalate, Ordos, Inner Mongolia) was the former one.

The given telephone numbers (0086 533 7220837-7220838) belong to SC's parent company-Zibo Disen Bio-Tech Co., Ltd.

EXECUTIVE SUMMARY

Date of Registration : february 9, 2010

Unified social credit code : 91150600699491826M

LEGAL FORM : SHARES LIMITED COMPANY

CHIEF EXECUTIVE : Lian Junhong (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : CNY 560,000,000

staff : 630

BUSINESS CATEGORY : MANUFACTURING & TRADING

REVENUE : CNY 218,932,000 (Consolidated, Jan. 1, 2017 to Jun. 30, 2017)

EQUITIES : CNY 709,347,000 (Consolidated, As of Jun. 30, 2017)

WEBSITE : N/A

E-MAIL : N/A

PAYMENT : REGULAR

MARKET CONDITION : average

FINANCIAL CONDITION : fairly stable

OPERATIONAL TREND : fairly STEADY

GENERAL REPUTATION : average

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 shares limited company of PRC with State Administration of Industry & Commerce (SAIC) under Unified Social Credit Code: 91150600699491826M.

SC’s Import and Export Enterprise Code: 1500699491826

SC’s registered capital: cny 560,000,000

Registration Change Record:-

Date	Change of Contents	Before the change	After the change
2015-4-27	Legal Form	One-Person Limited Liability Company	Limited Liabilities Company
2015-8-12	Legal Form	Limited Liabilities Company	Shares Limited Company
2016-10-17	Legal Representative	Zhang Tao	Lian Junhong
2017-2-9	Registered Capital	cny 500,000,000	cny 560,000,000
2017-2-9	Registered Address	Sanshangliang Industrial Park, Dalate, Ordos, Inner Mongolia	West 200 Meters, The Intersection of Jingsan Road and Weiwu Road, Sanshangliang Industrial Park, Dalate, Ordos, Inner Mongolia

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

Name of Shareholder (s) (As of June 30, 2017)	% of Shareholding
Zibo Disen Bio-tech Co., Ltd.	62.50
Shanghai Dingliang Zeyu Investment Center (Limited Partnership)	13.30
Shanghai Yining Investment Development Center (Limited Partnership)	6.70
Anhui Gaoxin Tonghua Venture Capital Fund (Limited Partnership)	5.89
Zibo Yuanhe Venture Investment (Limited Partnership)	2.68
Sheng Xiulin	2.20
Shen Guoqiang	0.01
Shanghai Jiuhan Investment Management Partnership Enterprise (Limited Partnership)	1.89
Everbright Securities Co., Ltd.	1.19
Xie Jian	0.75
Other Shareholders	2.89

SC’s Chief Executives:-

Position	Name
Legal Representative, General Manager and Director	Lian Junhong
Chairman and Director	Zhai Li
Deputy General Manager	Zhai Hantao
Deputy General Manager	Hu Xinqiong

RECENT DEVELOPMENT

SC was listed on the new three board stock market, and the stock code is 834628.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

(As of June 30, 2017)

Zibo Disen Bio-Tech Co., Ltd. 62.50

Shanghai Dingliang Zeyu Investment Center (Limited Partnership) 13.30

Shanghai Yining Investment Development Center (Limited Partnership) 6.70

Anhui Gaoxin Tonghua Venture Capital Fund (Limited Partnership) 5.89

Zibo Yuanhe Venture Investment (Limited Partnership) 2.68

Sheng Xiulin 2.20

Shen Guoqiang 0.01

Shanghai Jiuhan Investment Management Partnership Enterprise

(Limited Partnership) 1.89

Everbright Securities Co., Ltd. 1.19

Xie Jian 0.75

Other Shareholders 2.89

Zibo Disen Bio-Tech Co., Ltd.

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

Unified Social Credit Code: 913703007774097454

Date of Registration: July 13, 2005

Registered Capital: CNY 180,000,000

Legal Representative: Zhai Li

MANAGEMENT

Lian Junhong, Legal Representative, General Manager and Director

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

Ø Gender: M

Ø Nationality: China

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as legal representative, general manager and director

Zhai Li, Chairman and Director

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

Ø Gender: M

Ø Nationality: China

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as chairman and director

Also working in Zibo Disen Bio-Tech Co., Ltd. as legal representative

Deputy General Manager

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

Zhai Hantao

Hu Xinqiong

BUSINESS OPERATION

SC’s registered business scope includes manufacturing and selling xanthan gum; international trade.

SC is mainly engaged in manufacturing and selling xanthan gum.

SC’s products mainly include: xanthan gum.

SC sources its materials 100% from domestic market, mainly Inner Mongolia. SC sells 65% of its products in domestic market, and 35% to overseas market.

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

*Major Customers:

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

Zibo Disen Bio-Tech Co., Ltd.

SCHLUMBERGER

Baker Hughes

MI L.L.C.

Al Shoumoukh Group of Companies

*Major Suppliers:

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

Inner Mongolia Rongcheng Corn Development

Inner Mongolia Jinhe Starch Co., Ltd.

Nei Meng Gu Yu Wang Biological Science Technology Co., Ltd.

Yantai Jiaji Commercial & Trade Co., Ltd.

Staff & Office:

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

SC is known to have approx. 630 staff at present.

SC owns an area as its operating office and factory, but the detailed information is unknown.

RELATED COMPANY

SC is known to have the following subsidiaries at present,

Inner Mongolia Tianshi Alkene Application Materials Co., Ltd.

Erdos Zhongxuan Jintai Coal Co., Ltd.

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 records and our debt collection record concerning SC.

Trade payment experience: SC’s suppliers declined to make any comments.

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:

Agricultural Bank of China Dalad Banner Sub-branch

AC#: 05385101040009939

FINANCIALS

Consolidated Balance Sheet

Unit: CNY’000	As of Dec. 31, 2016	As of Jun. 30, 2017
Cash	7,344	3,200
Notes receivable	0	0
Accounts receivable	54,826	75,762
Advances to suppliers	4,628	7,748
Interest receivable	0	0
Other receivable	2,532	1,100
Inventory	84,228	70,803
Other current assets	0	0
	------------------	------------------
Current assets	153,558	158,613
Long-term investment	0	43,000
Fixed assets	934,041	896,567
Construction in progress	5,482	6,172
Project materials	509	506
Intangible assets	86,114	85,170
Long-term prepaid expenses	0	0
Deferred income tax assets	4,529	4,019
Other non-current assets	20,967	16,277
	------------------	------------------
Total assets	1,205,200	1,210,324
	=============	=============
Short-term loans	200,000	250,000
Notes payable	0	0
Accounts payable	124,357	122,412
Advances from clients	60,569	6,421
Payroll payable	8,566	12,575
Tax payable	1,911	2,721
Interest payable	377	474
Other payable	2,629	30,792
Non-current liabilities due within one year	51,516	52,678
Other current liabilities	0	0
	------------------	------------------
Current liabilities	449,925	478,073
Non-current liabilities	50,594	22,904
	------------------	------------------
Total liabilities	500,519	500,977
Equities	704,681	709,347
	------------------	------------------
Total liabilities & equities	1,205,200	1,210,324
	=============	=============

Consolidated Income Statement

Unit: CNY’000	As of Dec. 31, 2016	Jan. 1, 2017 to Jun. 30, 2017
Revenue	429,877	218,932
Cost of sales	374,677	173,323
Taxes and surcharges	4,586	6,390
Sales expense	25,166	10,120
Management expense	39,407	17,147
Finance expense	21,170	8,224
Non-operating income	9,442	38
Non-operating expense	104	0
Profit before tax	-29,043	5,176
Less: profit tax	755	510
Profits	-29,798	4,666

Important Ratios

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

	As of Dec. 31, 2016	As of Jun. 30, 2017
*Current ratio	0.34	0.33
*Quick ratio	0.15	0.18
*Liabilities to assets	0.42	0.41
*Net profit margin (%)	-6.93	2.13
*Return on total assets (%)	-2.47	0.39
*Inventory / Revenue ×365/180	72 days	59 days
*Accounts receivable / Revenue ×365/180	47 days	63 days
*Revenue / Total assets	0.36	0.18
*Cost of sales / Revenue	0.87	0.79

FINANCIAL COMMENTS

PROFITABILITY: AVERAGE

l The revenue 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 sales is average, comparing with its revenue.

LIQUIDITY: FAIR

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

l SC’s quick ratio is maintained in a fair level.

l The inventory of SC is maintained in an average level.

l The accounts receivable of SC is maintained in an average level.

l The short-term loans of SC appear large.

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

LEVERAGE: AVERAGE

l The debt ratio of SC is average.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fairly Stable.

CONCLUSIONS

SC is considered large-sized in its line with fairly stable financial conditions. The large amount of short-term loans may be a threat to SC’s financial condition.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	INR 65.13
UK Pound	1	INR 91.96
Euro	1	INR 80.34
CNY	1	INR 10.30

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

INFORMATION DETAILS

Analysis Done by :	VIV

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.