Business Overview

V. INFORMATION ON MSW V. INFORMATION ON MSW t. INFORMATION ON MSW lncoqlon.tion MSW was incorporated in Malaysia under the Compmues Act, 196j on 25 March 1971 as a privlHe limited company under the name of Malaysia Steel Works (KL) Sdn Bhd. It was converted into a public limited company 011 18 AlI!,’ust 1997 and assumed tlle name Malaysia Steel Works (KL) Berhad. 011 2 April 2003, it was convened into a priwlle limited company and was subsequenlly re-cQnvcrted into a public limited company on 14 November 200) and :lSSlJIl1ed its presclll name. The principal activities of the Company are the manufncluring of steel bars and steel billets. MSW currently docs not have ally subsidiary or associated company. 1.2 Chang~.s in shllrec<tpit<tl The aUlhorised share capital of MSW is Rl\!fWO,OOO.OOO comprising 200,UOO,000 MSW Shares. TIle issued and paid·up share capilal of MSW is RM54,851,500 comprising 109,703,000 MSW $llarcs. TIle changes ill lhe issued and paid-up share capilal of MSW since ils incorporation are as follows: No. uf urtiinal’J Thtal issut’d Dalf’tlr Pal’ shareJ and paid-up aUt,llJllcnt vatuc allottell Con~idnatiunlTrpe or i’Ssuc share capihl.” 25.3.1971 1.00 3 Subscrihers’ shares 23.6.t972 1.00 t,607.297 Ca~h 1,tlO7,300 23.6.1972 100 392,700 I~~ued :It pur u.~ consideration far the 2,000,000 pUlchmro or land 23.5.1984 1.00 12,000.000 C~h 14.000,000 3.9.1987 1.00 6,500,000 Ilonus i.~sue of appro);imalely 0.46 20,500.000 ordinal)’ ~har~s of RMJ.OO each lor cv<:ry I existing oldil1l:IIY shaH’~ “,I’ RMI,OO each held in MSW from Ihe Cllllit….1i.'<:ltion of the rCl’lIllialiun l;urptus occounl 25.9.1992 1.00 5,500,000 Isslled Ilt pill’ purMJant to tbe a…….lgJlll1~J1l 26.000..000 nfddJt 10 SSCSIl 21.2,1994 1.00 560,000 I~.wed III prenuulll <if RMI.OO <lach 26,560,000 pursuanl to the wll\’crsion Ilfl\dvanccs tv SSCSrl /5.2.19’16 1.00 9,910,000 b:tued all’8r rur~lIalll to the cOl1l’ersion 36,470,000 of 9.910.000 rooecmable <:onvcrtibl” pldelcncc shares· 1.00 2.530,000 I,,”wed lit pur pursuunt (0 the cUllwrsion .w,ooo.ooo of 2.53(3).00 redecll1:1hle convertihle pl’clcrcnce !lhalcs’ 2.6.20IH 1.00 5,26).158 44,26),15lt 2.6.2()()) 1.00 10,588.235 1.~8U<‘d at plemiunl 01′ appmximl’lcly 54,851.39~ RMO,70 ~ …ch pursl1:1nl 10 th~ wrl\’crsion of Jebt to SSCsB 19.9,200.\ 1.00 107 Issued at par pol1illant to the \;VJI\”crsion 54,851.500 or debt I” SSCSIl 13.7.2OO-l 0.50 109.70).000 Sub-di\’is;oo of par value frlllll RMI.OO 54.&51,500 1<) RMO,50 pel ordillll-l)’ sharc v. INFORMATJON ON MSW (CONT’D) Being t/~ ~l”$iQn 0/11,1010,000 n:deenwblt cOIlwf1ible prr/enna :JIlilNS into 11.440.()()O orJinUl’}’ Jimrrs 0/ RAfI 00 eocJl 111 MSW at 0 CCllf\’usion price ofRAlI.QQ. The u/Qresaid ~dt'<m’Qble cmf\·er11ble pref~nm<e .:shares ‘tIfl!Te l.”fllit!d by MSW 011 15 February 1()94. 2. LISTING EXERCISE In conjunction with, and as an ullegral part of lhe IiSling of and quotalioll for the entire enlarged issued and paid-up share capilal of MSW on the MJin Board of Bursa Securities, the Comp3llY undcnook a flolation scheme which was approved by the MlTl on J7 lvlay 2004, 24 May 200.4 and I September 2004, the SC on behalf of FIe on 11 May 2004 and 5 July 2004, and the SC on II May 2004, 29 JUlie 2004 and 26 October 20Q.l, involving the follO\\ing illler-eondiuonal transactions’ (i) Share Split Sub-diVlSIOD of par value for every existing ordinary share in MSW from Rl\i.l.OO to RMO.50, TIIC Share Split W35 compleled on) l July 2004 and upon completion of the Share Split, the issued and p.’lid-up capital share Clplla( of MSW comprises lU9.703,ooo MSW Shares, (ii) Offer (or Sale Following the completion of the Share Split and in conjunction with the flolation of MSW, Ule OfTcrors will WldCftake all Offer for Sale of 17,]()(J,OOO MSW Shares at an offer price of RM1.30 per OffCT Share to the Bumipulera im-estors approved by the MITI and to identified investors by way ofprivale placement. (iii) Puhlic l.ssue In conjunction wiUJ the flotation of MSW. tile Company is implementing a public issuc of 23,297,000 new MSW Shares at an issue price of RM) .30 per Issue Share to tllC Malaysian public, the eligible Directors and employces, customcrs and suppliers of MSW, and identified investors by way of private placement. (i\’) Listing OIond Quotation The tisliltg of and quotation for the entire enlarged issued and paid-up share Clpillli of MSW comprising 133.000,000 MSW Shares will be sought on the Main Board of Bursa Securitics. 3. BUSINESS OVERVIEW 3.1 History llnd Business o( MSW MSW commenced business in 1971 by operating a cross conntry rolling mill in Malaysia producing mild sleel bars \l~th an armuaJ capacity of 30,000 llU. The buSlIless grew to cater faT the gro\\ing housing and construction sector and to keep pace \lith the accelerating industrialisation process of Mala)sia. In 1989, j\.[SW replaced its cross COUlltI)’ roiling mill With :1 modem romng mill wh.ich had a production capacity of 120,000 mt per )’Car. This rotting mill was installed with modem computerised controls. V. INFORMAnON ON MSW (CONT’j) 3.2 From 199G to 1998, the rolling mill was further upgraded to its present capacity of 250,000 lilt per annum. Modern rolling technologies ;Ire used to ensure Ula{ MSW’s production process is efficient and cost competitive. By July 1998, the mill was commissioned to its full capacity of 250,000 ml per alUlUlll. The Directors of MSW focused 011 moving upstream to increase its prodllclion margins and ill rinc with the Directors’ vision, ,I lIew billet plant was buill in Bukit Raja, Sclangor with the capacity to produce up to 350,000 fill of billets l:ler aJUlUlll. The billel planl was constructcd and equipped WiUI modcm equipluem sourced from a leading It:l.1ian manufacturer of steel equipmelll. Thc pL”lnt beg:m operntiolls in May 1998 and was fully commissioned in April 1999. With a combined production floor arC<} of 234,571 sq. ft., MSW is capable of producing up to 250.0(10 mt of steel bars and 35U,OOO lilt of billets per annum. The rolling mill is automated and requires only a few key teciUlical slaff to operate \vhilst the billet plant is fnlly computerised at the primary production process encompassing the two-stage melting, rcfining and additives mixing, and billet casting. The computerised process cOluinuollsly monitors all CSsellti:11 !’llllCtiOllS to optimise the consumption of energy, ndditi\’es and conSUlll;lbfes. The compUler system \\ill lhen monitor tlte performance of the plam and generJte cost iluormation on a “re<ll time” basis. All aspects of tlte production process sllch as tile le\.’el of energy, quantities of additives. production tinting and sequence to caler for different products and production yollllncs are progrJllunable and modulated by the computer system. The principallOC:ltions ofMSW’s operations are as follows: Location and atldr~”” “r(~ctol’Y  Bui'” up ar..a tl<j. ft.  Actual cap;,dl}’ per alUllllll “”  .\.ladIlIUIlI “lIlll1dty per alUIUJII lilt  Clipadt}· ..tili:..,tinII  Rt’lllarlu  Rolling mill:  H~n 161(166. Lot No. PT29C s..k~yen2K Bamlar Pel”lillg J”y.. Disttiet of P”,..ling JaY” Sdiillgor Dan.. EI1SltOl  63.187  168.,200  150.UOO  67%  Ow,”,  Billd plant r”l’ak 1M 2 (Part ofL:lt 13039) MWlL>all P~m!<Olha”n Blikil Raja Sdangor Da1ul Ehsan  1~7,220  215,400  35U,lIOO  62%  Owned  Principal Products
MSW produces steel bars including high tensile round and deformed bars as well as billets. The rounds bars atC widely used in light stnlctural constnlctioll whilst lhe deformed bars are prim::uily used in the construction of concrete structures of buildings and infrastructure-related projecls. Tlle products manufactured by MSW ranges from llpstream billets to tlte various sizes of steel bars beillg tIle dowllstre<l1\l product. TYIII: Diamt:ter Range High ren.~ik Ddonncd Gan; 101lUll, 12 nun, 16 nun, 20 mm, 22 rnm. (2 grll.Jcs prcduced: 460 and 510) 25 nun and 32 mm Mild SIt:d Round Bars 10 mm, 12 nun, 16 nun, 20 nun, 22 mm, 25 nun and 32 mm Billets Cross section: 120 mm X120 nun filld (2 grodc:s proJuced: Mild :;led and vlllludium l.lllo~’) 100 111m x 100 mm v. JNFORMATION ON MSW (CONT’D) TIle val)’ing diameter determines the strength of the steel bars and is selected based 011 01(‘ design requjremellts of the civil strudurcs. The prodUCIS with diameler ronging from 10 -20 nun are used for the construction of low rise buildings, low cost nalS and lighl iufraslnJcture works whilst O,e steel bars with diameters r.Ulging from 20 -32 mm are used for Ole construction of high rise buildings, factories, high density flats, heavy inJTaslmcture conslmctioll e.g. bridges and reservoirs. High tensile deformed bars are more suitable for l;ollSlruction as Ihey have ribs throughout the lell,gt.h of Ole steel bars which improves the bonding with Ihe cemenl. Mild steel rouud bars are used in light conslnJc(ion and rel\ovation works as they do nol conlain ribs along its lenhrth_ The products a]so var}’ in lengths which m,ly be customised in 1lccordance with specific orders from customers. Whilst Oil: shmdard lengths are 12 metres, lengths can vmy from 5.5 metres to 12 metres.

3.3 .Manufacturing PI”OCCSS The steel industIy is an extensive and complex induslI)’ wilh ‘-‘:Jrious types of producls as de1ailed ill Section V(5.2) of this ProspeclUs. MSW’s facilities focus on 3 segmenl of the sleel industry under long products which consist of steel bars and billets. (a) Manufacturing of Billeb All overview of the production process of billets in MSW’s billel plam at Buk.it Raja Industrial Area, Klang is illustraled below: I Scr<lp metal ~ I Melting 011 EJectric Arc Fum<tce
Casting lit continuous castillg l1l<lchine
1…. I IlIt billels I
The billet plant has a scmpy:J.rd where all the scrap metal, being the main mw material is stocked and sorted according to different grades. The scrapyard has a storage capacity of approximately tO,OOO mt scrap metal which is equivalent to the requirement for ten days of production. EiOrer Ihe Irydr:l.Ulic claw or the magnet emne is used to carry tile scrap mela] to lhe Scrap Charging Bucket. V. INFORMATION ON MSW (CONT’j)) A Scmp Charging Bucket has :J capacity of 2U·30 tilt and the filling process requires approximately 10 minutes. To improve efficiency. 3 buckelS are llsed cOllcurrent.ly, i.e. whilst I bucket is trdnsponed to the next process, lhe 2 rellloining buckets arc being filled up by the claw or the magnet. TIle Scrap Ch:uging Bucket is Uleu tnlnspoJ1ed “iii an Electric Overhead Trallspon Crane (“EOT Crane”) to the Electric Arc Furmce (“EAr’). The EAF represents the metting process ror the scrap mc1al and the fumace has a melting c<lpacit)’ or SS mt of liquid sleel. This process utilises t.Ile AhCfn<lth’e Current (“AlC”) technology 10 melt the scrap by p,lSSlllg high currenl through 3 electrodes. TIle scrilp is mel1ed by the heat generated by the oscillating electrodes which reaches 1630nC. TIle melting process for 55 mt or steel takes approximutely 45 minutes. To determine the steel grade, other additives such as coke, ferro manganesc, silicone 1ll(H\ganese, ferro silicone, cJlciUln nouride, calcium oxide and oUleIS arc added using computerised coutrols. The EAF lhen releases the molten liquid sleel into the Ladle FUniace which refilles the molten steel to the rcquired quality (Le. the required mewllurgical properties of the product), TIus second heating process requires W minutes at a temperature of (62()~C. The Ladle Fumace is t.I1enimllsported via an Ear Crallc 10 the Ladle Turret, which aCls as a flumel for the refined mollen steel lO be poured into tlle Tundish. TIle ‘”Tundish” is .. vessel which holds Ihe molten liquid steel while the liquid steel is being solidified and eX{rJcted through the moulds. The fLumel releases the molten steel into the Tundish and tlle steel will then flow dowllwnrd to fill lip the mould. To extract the molten sleel and 10 preverll il from solidi(YlIIg in tne [uidst or flowing dowlI. rollers are used 10 pull Ihe solidifying mollen steel downwards. Durillg the casting process, waler is continuousl}’ spraycd to gradually cool the billets. A gas cutting system is used to cnl the billets into lJ1e re{)llired length, TIle molten steel ,Illd billets are sampled by the quality control department to ensure that tlley meet the strict 1tlll11l1Dlcturing slandards. Each billet, weighing I lilt, is thell tmnsferred to a billet cooling machine and is subsequently Irillisferred 011 a daily basis to the rolling mill ill Petaling Jaya. (b) l\bnuraclul”ing ofSteel Bars An overview of the production process of steel bars in MSW’s rolling mill in Petnting Jaya is illustrated ill tile following diagr:.un: BiUelsII

Steel bars packed in Imt bundles V. INFORMATION ON MSW (CONT’D)
The billels are uatlsponed by a crane from the billel yard to the roller table where it is transferred into the reheating furnace. The reheating furnaee heats the billets to l20nce which is the necessary temperuture for the reshaping of the billet. The heated billel is then rolled lhrough various mill stands where the diameter of the tmnsfer bar is reduced gnldllally unlil the final diameter and shape is ::achieved. There are altogether IS mill Slilllds, of which the first 8 stands are classified as the Roughing Mill, the ne:»:! 6 stands arc classified as the Intermediate Mill and the tiMl 4 stands arc c1ussitied as the Finishing Mill. The mill stands are classified into 3 categories based all the motor pmver of thc stand and the speed of the billets moving lllrough the sland. A crop £he:lt is then used to lrim off lhe hCild and tail section of the hilret that has been cooled in the process of rolling and is not suitable for further rolling at the intermediate ;llld finishing mills. The smaller the tinal diameter of the finished product, the more sl,l1lds the billets will need to be rolled through. Upon achieving the desired final diameter, tile steel produced is rolled past ;] tinishing shear which measures the l’rogranuned lengtJl of steel bars and culS lhe steel produced into the rcquired length accordingly. The standard length for most steel bars is 12 mcues. MSW’s rolling mill is one of the few rolling mills in Malaysia cquipped with a Theono QuenChing device. This device allows the rolling mill to produce very high tensile sleel bars using medium grade mild sleel billets. 11le Thenno Quenching device uses controlled WOller jcts 10 “thermodyn:lInic1JIy” change the metallurgic:lI properties of the surface or the steel bar which results in !tigher tensile strength for the finished goods whilst using a lower cost raw ITUlteriaL The twin channel or “ca:n<tllcw” is used 10 increase the operating speed of the cooling bed ill order for the cooling bed to have a higher bar storage Cilpachy. The cold shear allows the bars to be cut into preselected smaller incrementallenglhs. Steel bars are sampled br the qllalily control dcpartment at \’ari01l5 stages of Ihe tolling process to ensure OIC steel bars meet tlle desired manufacturing standards. The steel bars are then tmnsferrcd on to the cooling bed and thereafter gatllcrcd at the bWldling area. Al the bundling area, tlle steel bars llrc weighed and packed illlo bundles of I Int and are lrallsported via a conveyor to the storage \varchouse :md arc ready for delivery to CIlSlomers. JA Production faciliHcli “lid caJlacity/ll’CbnoIOl;J’ usctJ The machinery of both MSW’s rolling mill and billet plant uses modem aJld updated tecimoJogics. The rolling mill uses Scholemann Stands from Germany and Asea Brown Bo\’eri DireCI Current Drives from Switzerland. TIle entire planl is computerised and :llJtOIll<lIed, requiriRg only a slllall number of key lechniC-JI staff 10 operate tlle mill. Thc high leclmology used further improves the phllll’S efficiency and cost effecti”eness. Due to the tecJmology used, MSW is nblc to produce hig.h quality products at a lower cost of production (i.e. ”Thermo Quenching device”). The high level of automation also manages to ensure milumal \,,·ast.age during lite rolling process. v. INFORMATION ON I\1SW (CONT’J») The billet plant uses technologies impol1ed from Danieli S.p.<l of Italy. The billet plant requires minimal supervision and is supported b)’ a few key staff \\.’110 operates Ole machinery begiIUling [rOIll lhe lransportation of scmp to the Scrap Bucket to the melting, refining and casting process. All production and cOllsumpbon datll are fed into tile computer’s data b,mk and the chemical mix and other production processes are optimised by the computer. Equipped with the btest technologies, the billet plant is hence able 10 be highly efficient and COSl competitive. The design of 111e Art: Funl;lce aUou’S MSW to partially substitute very expensive electrical energy with chemical energy with the use of oxygen lances ,md jet bUOiers, The automated <‘llloy additives plaI1\ also ensures exact amount of additive is used and thus avoiding wasttlge, The large radius of continuous casting machilles allows MSW 10 produce high gnlde billets.
3.5 Availability of resources The In<lin r.lW materials used by MSW are scrap metal, nllo}’ additives a.nd lime. The billet plant”s requiremenl for scrap metal can be SOllrced both locally and overseas, Scmp metal is readily avai1<lble in the international lllJrket as a basic commodity and is usually sourced from developed and indusLTialised countries where steel consumption is high. By being a smaller billel producer, MSW is able to source most of its scrap requirement from local suppliers. At presem, tJle Direclors of MSW are of the view thaI lhe supplr of scr::Jp mewl from local suppliers is ndequate for MSW’s production purposes although MSW ocQlsionally purchases imported scr”p should the supply of local SCr.lp metal be insufficient. MSW can sonrce the scr<lp metal from inlem<lIional dealers/trading houses in foreign countries such as Ole United States of America, Japan, Singapore and Ole Philippines. The Direclors of MSW believe that any shonage in scrap metal will increase the price of scr<lp metal and consequently affect (he demand for steel bars. TIle potcntial financial impact on MSW if there is an increase in tJle price of scrap metal and 😉 decrease in tlte demand for sleel b<trs is shown in Sections (lX) 7(i) ;md 7{ii) of this Prospectus respectively. The steel making process. apart frOIll billets which arc manufactured internally, requires consmnables such as graphite electrode, refmctories and lance pipes to produce good qlk1lity steel billets. Al present, most of these COllsumables l’ave to be sourced overseas. MS\V has a long leon relationShip with its suppliers and hns 11 policy of purchasing in bulk to maximise discounlS from tbe foreign suppliers, hence MSW is able to source these consumables at competitive prices.
3.6 Principal m~1I1(et alltl market share MSW’s products are principally sold throughout M<llnysi<l through their dealers a.nd trading houses. MSW’s Iota I lumover amounting to RM242.4 millioll for the finallci’ll year ended 31 December 2003 w::Is derived mainly from the domeslic markel. Based 011 the l<ltest available st<ltistics from MISfF, the Directors of MSW estimate thnt as at 31 December 2002, MSW’s market share is approximately 12% of OIC steel bars mnrkct ill Malaysia. The Directors of MSW Me confident of maintaining the current estimated market share in Ihe future as (he Company jX)Ssesses lhe necessary competitive production cnpacil)” and cost effeCliveness as well ;IS tIS str:llcgic location in Khmg V<llley where major demand of steel is coucentr;ued. V. INFORMATION ON MSW (CONT’D) J.7 Marl;eling and me. hod of llisllibotion MSW has a well-divcrsified and established marketing lletwork through numerous building material dealers and authorised distributors in Peninsular Malaysia. At present, MSW has 68 dealers and trading houses, illcluding RB Trading Sdn Bltd, a subsidiary of R~d Builder (M) Holdings Blld. Hiap Teck Hardware Sdn Bhd, a subsidiilC)’ of HiilP Teck Vetllure Bcrhad, Anshin Sted Indl1Slries Sdn Bid Harrisons Trading (Pcninsular) Sdn Blld, a subsidial)’ of Harrisons HoldillgS (Malaysia) Berh:ld, Yinson Corpomtion Sdn BlId, a subsidiary of Vinson Holdings Berh<ld and TPlllud;] Berh<ld. MS\V’s products are distributed to vnrions customers through a wide and diverse marketing network and as a result, there is no dependence on any single customer. MS\v has an estllblished marketing department which is headed by a Gcneral Manager and a Sales Manager. Thc team is lI”ained to be service orientcd to meet customer needs. \Vilh the repUl1l1ion of prolllpt delivery (especially to the Klang Vall~’ locations) because of its proximity to its ll1ajor customers, MSW requires a sllOner leJd time to fulfill its orders as comp<l1ed 10 its competitors. tn addition, consistent quality and competitive pricing has enabled the marketing learn to secure and lIl<.1intain customer loyalty for the Company,

3.8 COnlllditi\”c advantage MSW has been in the steel manufacturing business for 34 yeMs since its establishment ill 1971 to operale a cross count/)’ rolling mill lind nn electric arc furnace f;’lCility in Malaysia. TIle founders of MSW, the Tai family, have long been established ill Ule steel industry and have also established ;l good long term business relationship with its customers such as Harrison Trading (Peninsular) Sdn Bhd, a subsidiary of Harrisons Holdings (Malaysia) Berhad and Vinson Corporation Sdn Bild,;l subsidiary of Yinson Holdings Berhad, which have had business denlings with MSW for more tll::JJ1 10 years. MSW’s billet plant and rolling mill are strategically located in Bukit Raja and Petaling Jaya, respectively. The strategic location within Ule Klang Valley and the Multimedin Super Corridor where there are extensive development and construclion activities provides the Comp.1n~’ with tlle added advantage of being close to ils end CUSlomers and MSW is lherefore able to fulfill orders wilh tight deadlines. In addition to the ability to provide faster delivcl)’ than its COlllpclitors sillialed outside the Klang Valley, the 5:wings on logistic and handling costs arc subst.mlial and these s~l\’ings can be passed on 10 the customers hence making MSW’s prodncts highly cost competitive. MSW’s products which meets both the Malaysian and British standmds and are of expon quality, have ermbled lhc Company to peuCtrllle Ihe Association of South East Asian Nations (” ASEAN”) markets with the implementation of AFTA since J;UlIlary 2003 wruch has contributed 10 additional sales for MSW. 3.9 Product di,’crsitJ and qualit)’ MSW is involved in the manufacturing and sales of high tensile deformed bars. mild steel round bars and steel billets, MSW manufactures its own steel billets which are llsed as the raw material for the production or the high tensile deFormed bars and mild steel round bars. As a result of its own in-house steel billet produclion, MSW is able to maintain the quality of the sleel billets and control the delivery lillie of steel billets, tllUS reducing the overall production lead lillie for steel bars. V. INFORMATION ON MSW (CONT’D) TIle managemellt is aware that the quality of the steel billets and bars is imponallt for tIle Company’s products to remain competitive and has taken various Initiatives such as employing visiting consultants from Europe and West Asia for the upgrading of tIle ma.llufaclUring equipment and process and constamly gathering feedback from its customers 10 kccp abreast WitIl tIleir needs. J.IO Qu:lIity control and accredit:Alion As MSW is illvolved in a highly competitive industry, quality is a cmcial determinant of the success of the C0111JXlllY. The Company strives to ensure that all steel bars manufactured are of highest standards. The quality of MSW’ s products is affimlcd by quality assurance procedures infused into each production process, starting with the quality of raw materials to the end product. MSW’s products which arc of e.'(pon quality, complying with the international stand..1rd requirements and arc certified by SIRIM 10 conform to Malaysian Standard. 14Ci (“MS 146”) and British Standard 4449 CBS 4449′} MSW was awarded with the DIN EN ISO 9002 accreditalion from Germanischcr Lyotd Cenificatioll Gmbh on II December 1997 which expired on II December 2003. Subseqltenlly, Gennanischer Lyold Certification Gmbh has renewed the ISO certification under DIN EN ISO 9OOJ:2000 on II May 2004 which will expire on JI M1Y 2007. Stccl bar S<llnples are taken from evcl)’ he-‘ll (Le. every production run) in <1ccordance wilh the quality control procedures implemented to be testcd for the following tests uncler the MS 146 : 1988 and BS 444~ : Il)Y8 specification: (i) Tensile snenboth:
(ii) Beud test of 180 degrees; and

(iii) Rcbend lesl of 45 degrees. All steel b.1rs inspection and testing are carried out ill MSW’s own fully equipped labomtory in the Pelaling Jap plant. All customers of MSW will be issued with a Mill Certificrl1e which contains all relevant inforlllMion of the product for every purchase from MSW in addition to a guarantee lhat conforms to MS 146: 19~8 standard. The Mill Cenif1cate contains thc pertinellt information of thc products such as chemical composition and mechanical properties and Itence gives the customers added assurance all the quality ofthe products. In the billct pl::mVmeltshop, a state-of-the-art spectrometer is used (0 analyse the chemical compositiollS of tile steel (0 ensure thatlhe billets produced meet the quality required by the rolling mill. In addition, Ill:lintenance of the machinery is pcrfomted regularly 10 mininlise any unscheduled ill1emlption in Ihe production process. 3.11 Rc.~arch antlth~,”doplllt~nt MSW re~,’ularly reviews the production process to improve efficiency and quality of productiolJ of the plant The company has set up all intCn18l Engineering Solution Group (“ESO”) for bOlh plants, consisting of persOIU1el front various disciplines who constantly work 011 projects to improve the efficiency of thc plant. The ESG teams monitor the cost of cOllsumables and review a[lemative lIlalcri,lls which have higher dumbility and longer life span. Bya gradual process of various lests. the ESG leams have made signific:mt conuibuuolls through improved efficiencies in producuoll. V. INFORMATION ON MSW (CONT’D) 3.12
Some or the major inlcm11 research and dc\’clopment projects successfully undenaken by the ESG teams in the past are listed below: Objet’t!1I1l ProjCCb DuratIon • To optimise scrilp • lkl’dopment of ~tlwilrc: on blending of various 30 days usage types of scrap \\ttich resull.. in a grL’llIl’f yield and lower 0;:0& of produclion of sled billels.
• To rc::Ju.:.c lhc • lnslall::ition 01 a new lubric<ltiol1 system which 27 days power indir~Uy rl’Uuced po\”llr consumption and the consumptil)n consumption of graphite electrod,,_
• Gas Cleaning • Lnstallatioll of a new system which has reduced 30 (l:lys Plant Filt!,;r Bag the duwntime and is Ie.~s prone 10 litilw’e Purging SYSlo::m (breakdown) resulting III 10\\’I:r Illainlenancc

exrens~. • Optimisation of • Modification 00 the Progr:ll1l Logislil: Control to 20 days Mltterial Handling ensure clogging is minimised and mllchim;ry Syskm (kwntime is reduced thus increasing productivity. At present, some of the current researcJl and dcvelopmenl projects undertaken by the ESG leams: Objective Projech Duration • Ddta Ring • Modification of the inner ring lUld Delta casing
modification cfthe EAF roofw reduce dO\~’ltlme and increase proollctivity.
• To ease • Development of the Continue Castillg Milchinc On going troubleshooting of mould level conlroll~ diagnoslk kit 1dld the mould level procedures 10 t:as.e lrouble shooting when control syslcm problems occur in the m,luld level control syslt:1II. MSW has spent a tolal of RM250,OOO 011 research and developmellt during lbe lasl 3 financial ye:.llS ended 31 December 2003. TIle amounts spenl 011 research <I1ld development represents less Ihm1 1% of tlle arulUa! turnover of the respective financial years. Tratlemarks anti Licences Sleel bars and bIllets arc relatlvelv homogenous products which does not require trademarking. “[lIe Mala}’siall steel iodustry is nonelheless protected by the restrictions of government licensing requirements for the manufacturing of steel products. The capital illlcnsive requirements for the steelllldustry also poses a barrier for new entrants. MSW’s products which aTe of export quality, complying with Ule intcrnutional standard requirements and are ccnified by SlRlM to conform to M<l!:lysian StaIldard 14ti (‘”MS 146·’) and British Standard 444Y (“‘BS 4449″). Each steel bar produced by MSW promotes product recognition through a simple yet unique design which serves as MSW’s identification mark th,ll ~ppears 011 every steel bar. V. INFORMATION ON MSW (CONT’D) MSW el\(ered into a licence agrcement with ils substantial shareholder, SSCSB (‘”Licensor”) on S August lOW for (he use of SSCSB’s trademark in MSW’s corporate logo whereupon the Licensor has l,,’r.Ulted 10 MSW and its fulure subsidiaries and associated companies a non-exclush’e and non-transfemble license to use the Trade Mark No. 98·1114~ in CI:ISS 6 in Malaysia aI a fcc of Rlv(100 per year upon the terms and conditions therein contained. The teml of the agreement shall be for a period of 5 years commencing from 5 Augusl 2004 with an option 10 renew for a fi.lfther teon to be mutually agreed by the parties., unless temtinated by eithcr party by written notice. The agreement provides that, inter alia. MSW shall indenmify the Licensor and its subsidiaries for any claims, losses, liabilities and damages. objection suits or allcg..ltion made by any person for alleged infringement proceedings, costs and expenses upon tmdemark rights owned or controlled b)’ such person due to the use of the trademark.
3.13 Environmental concerns The main waste product arising from the manufacture of steel bars is referred to as “scales” which can be used for landscaping and for resurfacing of roads. MSW has nOI encountered any problems in disposing ils waste products. MSW cunenlly complies with the Envirorullental Quality Act 1974 alld Enviromuent Quality (Clean Air) Regulalion 1978, and has obtained all tile necessary approvals from the Ncgeri Sciangor/Wilayah Persekuman Department of Envirorunem for all of thc pollution control equipment and facilities installed at its Bukit Raja manuficlUring plaut. 3.)4 Long tcrm contracts MSW docs not have any long-teml contracts with its CuStomers. Save as disclosed ill Section XII(9} of this Prospeclus, MSW does nol hm’e any long·term conlrdcts willl its suppliers. 3. J5 Interruption in the Operations MSW has not experienced any dLsnlptiol1 in business which have had a significant effect 011 its business or opemtions for the past 12 months prior to the date of tllis Prospectus, ,. SUBSIDIARY AND ASSOCIATED COMPANY As at the date of this Prospectus, MSW does not have any subsidiary or associated company. 5. INDUSTRY OVERVIEW 5.1 OVERVIEW OF THE MALAYSIAN ECONOMY TIIC Malaysian economy accelerated its growth momentum in the first half of 200~, after a SlfOng Iake-off in 2003, and is expected to surpass earlier expe<:lations with higher grmnh of 7% for the whole year. Positive signs of a finn economic recovel}’ at the global front, particularly in lhe first six months /IS well as higher commodity prices, reinforced the “fecl-good'” factor thai contributed 10 further improvement in consumer and business sentiments. Growth hilS become more broad based with all sectors registering positive growth Domestic demand, panicularly private consumption, continued to sustain gro\\lll for five consecutive years, while pri,·ate investmenL which picked up in 2003, became more entrenched. resulting in a private sedor-led gro\\lh. v. INFORMATJON ON MSW (CONT’D) The bfOJd-based growth is e\’ident of Ihe effeclive measures implemented by Ihe Malaysian Governmcnt to d~·elop flew sources of gro\\1h to reduce Ihc IUltion’s vulnerability to the exlemal environment. Expanding at 10.5%. the manufacturing sector, which has become more diversified with higher end, value-ndded and new emerging industries a.nd products, remains il nmjor contributor to gro\\’1l1. New gro\.vth nreas in information and commmucation technology, strong expansion in flllaJlcial services and revival in tourism ac:tivities supported .!;;rO\\1ll in the scryic:es sector, cnnbling it to maintain its premier position in lenns of sllare 10 gross domestic product (“GOP”):n 57″/,,>. (Source: economic Repnl” 2(0412005) The Manufacturin~Indust.,,­Gro”‘1h of the mnnufacturing sector ,lccelerated since September 20m, underpinned by double digit and broad-b:lscd grO\…,th in both export clrld domestic-oricnted indusmes. Favourable external environment with continued stJOllg gro\\1h ill China, coupled with the firm recovery in the United States of AmeriC<1 and sustained recovery ill Japan, fuelled !Jle higher demand for manufactured goods, paniculnrly for elocuonk products. Meatl\l,’hjlc, gro\.\1h in dOlllcstic-oricmed industries stren~,’thened 011 the back of the improv~d economic performance. With these posihve developments driving the munufllctLlling sector, its conuibution to GDP gro\.\1Il is expected to increase. Output of COllstruction-related industries expanded slrongly by 20.5% fat lhe firsl six monlns of 2004 (January-JuRe 2003: 7%), driven by favoumble external demand for steel tubes and pipes, Production of fabricated metal products, in particular, rose sharply by 31.2% (January·June 2003: 6%) while iron atld steel increased at a moderate grO\\1h of 7,1% (Janualj’·June 2(Xl3: 8.7%). III cOTltrast, output of non­metallic mineral products, such as concrcte clnd eement recorded a contraction of 5,5% (January-Julle 2003: 11.6%) with the completion of several major public development projects, (Source: Economic Xcpon 2004/2005) TIle COII.~trnction Industry The construction sector recorded a marginal decline of 0,6% during the first half of 2004 largely due LO lower public sector construction. activily, especially ill infmstmcture projects. However, higher residenlial construction activil}’ following stronger gro\,..lh of housing slarts of 36.8% during the second half or 2003 and some on-going infr..JSU1Iclure projects will pro”ide sulTicient support for the sector to record a posilive growth of0,5% in 20U4 (2003: 1.9%..). The completion of several l<lrge infrastructure projects and tile accelerated completion of the Eight Malaysiatl Plan projects, coupled with a lower number of new contracts awarded by the Governmelll have contributed 10 slower activity in civil engineering works. Among the illlhstruClure projects completcd in 2004 arc Ph[lse One of lhe !:;sst Coast Highway, SILK Highw..JY. Penchala Link, New Pantai Expressway and Gulhrie Corridor Expressway. Ongoing projects include the power Sl31ioll in Tanjung Bin, Jollor, Bakun Hydro-Electric power project in Sanlw~lk, Integrated Customs, Immigration aJld QU3filntine Complex and Stom1water Management and Road Tunnelling for flood mitigation and traffic dispersal in Kuala Lumpur. v. INFORMATJON ON MSW (CONT’I)) Acti”il}’ in the residellti<lI sub-sector. 011 the other h,md, is eXpeLled to surge fUJ1her in 2004, following strollg growth in housing starts aJld higher number of housing approvnls in the second half of 2003. Demand for houses remain slrong during the Iirst six months of 2004 with brisk sales registered, particularly for affordable properties in locations with good accessibility and public amenities. The demand was spurred in part by incentives olTered under the economic package introduced by the Malaysiall GovenullelU in May 2003. High-end uoils in primt toe-JUons also rewrdcd good sales, renoctillg changing tastes and quality Iifcstyles, tollowing higher incomes, The sentiment “~JS ;lIsa boosted by low illlcrest mtes and attr.lctive loan packages thm helped raise the affordabilily of hOllses. Housing loan disbursement incre;lsed by 18.5% during t11e first six months of 2U04. In addition, the new interest rate framework, which promotes healthy competition among b<1nks ‘Uld financial instilutions, is expected to benefit house buyers. (Source: Ecol/QmicRcport lOOJI2005) Illctntivl’s The Malaysian Government has offered various incentives tor the manufacturing sector in order to help stimulate dIe growth of the sector. Among them are the tax incentives such as: (i) Pioneer Statu~ A company granted pioneer status enjoys a 5-ycar pl’lrti1l1 exemption from the payment of income laX. It will only have 10 Pi)Y tax on 30% of ilS statuto!)’ income, with exemption period commcncing from its production day. (ii) m\’cstment Tn Allow:lIlce As an altemativc (0 Pioneer 51i11U5, a COlllpall)’ may apply for Investmenl Tax AllO”,<Ince (“ITA”‘). A company granted ITA gets an nllowance of 60% of qualifying c;lpital expellditure (such as factory. plall\: machinery or other equipment used for the llpproved project) incurred within five years fromllle date on \vhich the Iirst qllillifying capital expenditlITC is incurred, Companies can offset Olis “lIo\\’3llce against 70% of thcir starutory income in the year of assessment, An)’ unUlilised allowance Cilll be caITierl fOT\\,;lrd to subsequent years until fully utilised. (iii) Reinvestment Allowance All manufacturing companies thai have been ill operation (or at leasl 12 months :lnd incur qualifying capital cxpcndil11Te 10 expand production cilpacity, modernise and upgrade production f;lcilities. diversify inlo rel;ued products, and :lUlomate ils production facilities can obtain a Rcin”estmelll Allowance CRA”). TIle RA is 60% of qualifying capital expenditure incurred by t.he company, call be offset against 70% of its statutory incomc for the year of ;l5SeSSmcnl. Any unutiHsed allowancc can be carried forward to subsequent years until fully utilised. (Source .-UlDA) V. INFORMAnON ON MSW (CONT’D)
5.2 THE STEEL INDUSTRY The steel industry forms the foundalion of an advanced and indUStrialised economy. Most, if not all of the coulllries which I\.:we emerged as industri’llised economies over the last four decndes have regarded lhe development of their steel industry as a priority. lliis is because sleel is the essential raw lIlaterial used illihe manufacturing seclor, machinery and engineering industries, transportation equipment (aulomotive, rdil””,J)’ and shipping) as well as tbe major illgredient for infrdslJUC1ure projects. Hence, the steel-making capacities are often viewed as a ll;Jtional interest to add value to natural resources, ensure re:Jdy supply for tbe development of the manufacturing and constmction sectors. substitute for imporl, save 011 foreign exchmlge and to gCllerJte further linkages with the rest of the economy. The table beJow shows the structure of the Malaysian steel industry in 2002, by product and nlllllber orcslablislunents. ,\’lruc1url! offhl! Sled Industry in MulllY.~ifl, 2002 NumlH:rof Rated Sub-Sector Product Type estllblbhnlCh~ upacit)· (OOtI hll)
Prim:,1)’ Products Scrnp subsliruldl: Direct Reduce…! lrrm (DRI) 1,200 Hot Briqudkd Iron (HEI) 720 Crude steel (~emi-11nishcd): Bil1et~ 6 4,400 Blooms I 750 Slabs I ·2,500 RollingIFinished Products Long produ~ts: Rolled Prodw:t~ 51 5,1XXl Light Sections 5 200 Mediwn 10 Heavy Sections 1 700 Flat products: HOl·Rolled Coils I 2,000 Cold-RolI~ Coils 2 680 Pllll~ I “200 Secondary Products Wire Mesh 40 5(J(J . Longs Galvuniscd Wire 6 250 Hard Dra\\11 Wire 40 120 Bolts and Nuts 15 150 Nails 14 84 Wdding EkclIodes 10 40 High Cttrhlll1 4 154 Shamng Bars 7 (i0 Olhers 6 120 Secondary Products S\.Ccl lind Cement-Lined Pipes 31 2,300 -Flfll” Pii>C Fining.<; 4 NA Tinpllde 1 250 Galvanising 4 lOO Colour Coating 8 260 Roll·Fonners 45 500 Sleel Sa~’ice Centres 40 1,50il
v. INFORMATION ON MSW (CONT’D) l”clusiVtJ “fcclfK’C!ly from AfeKmlcc{ Sdn iJhd IQ IlIvke hoi-rolled (;QII1. ‘ncluslve ifcQf’OCJI)’fromJlkong D”‘Ii!ll~ Scln Bhd and l.lOn [‘ID,e Mill SOn 8M. Overall, Ole steel industry ill Malaysia is centred all the country’s constmctiOll and m.~lnllf;~cturing needs. Steel production is no longer dominated by long products such ;)s bars and wire-rods as the importance of f1<11s and steel sections has increased in recent years with the rapid development of the country and economic prosperity of its population. The major producers of bars ;lnd wire rods in the coulltry are Perw:lja Steel Sdn 8hd, A!nsteel Mills Sdn Shd, Somhem Steel 8hd, Malayawala BlId, Antara Steel Sdn 8M and MSW. These arc also the major producers for billets. (&)l(f’C/:: !vIlSIFReport 2003)

 

5.3 GROWTH OF THE STEEL INDUSTRY Malaysia’s aggregate steel consumption trend for 1992 to 2002 is illustrated below: ..oo =•..•.•.•.•…•.•.•.,7JiK………….••••..
..oo 700J ~:l-‘, -………..
600J
,i5XO •• 4(XXl•3m “‘” HOO o ‘932 ‘993 1994 100) 1936 1997 1998
2001_~L –“1==…..==’=’=””==,–..-==='”=3;’–_ In the decade preceding the 1997·1998 financial en SIS, steel comumptioll grew steadily from 15 million mt in 1986103.3 million Int ill 1990. and 8.1 million mt in 1996. ConslUllption peaked in 1997 at 8.3 million Ill! despite signs of an ecollomic slowdown. In 1998, sleet consumption declined sharply as the crisis rooted itself in the real sector of the economy. Consumption nose-dived by <Ill unpreccdenled 45% to 4.6 million lilt in I’;198, before picking up a strong 33% in 1999 to G.1 million lilt. In 2000, aggregate sleel consumption recorded 6.9 million mt, wi til long products accounting for 44% of lota1 consumption and flat products nmkillg up the remaining 56%. III 21)(ll, steel consumption grew 5% to 7.2 million mt before moderating to 7.0 million mt in 2002, a slight decline of 2%. Long products accounted for 51 % oftata! aggregate steel consumption in 2002, up from 43% in 200 1. The l;;onsumplion of IOllg products stood at 3.6 million Int in 2002, lip 15% frOIll the previous year. Bars and wire rods made up Ihe bulk of the consumptioll for rongs in 2002, ;11 51 % and 33% respectively. Sections accounted for 13% of 11111011g products consumed. The consumption of flat products. on ule other hand, stood at 3.4 million Ill( in 2002, down l5% from the previous year. Among the tn:ljor categories of flat consumed during lhe year were hot-rolled sheets <Uld strips (49%), cold-rolled sheets and coils (20%) and plates (7%).
Y. INFORMATlON ON MSW (CONT’D) The ratio of OrtiS 10 longs consumed is generally higher for most of the years. LOllgs outstripped Oms only during the 1995-1997 period. A possible explanation for tltis trend is tlun construction activity was at its peak in lhc mid-1990s_ TIle consllllclion seelor grew at all aver.lgc aMual mle of 13% from 19!,lJ-1997. fuelled by a buoyant real esl:lte market as well as major infrastructure and building projccts, Such projects resulted in Ihe extensivc use of rolled long products, such as bars, wire rods and sections. 111 2002, the ratio was about even with longs accounling for 51% of tOUlI consumption. The manufacturing sector, on lhe olher hand, is a nl:~or consumer of finished flat products. Like the construclion sector, ule manufacturing sector also grew at an average annual mle of 13% between 1′;193-1997. This high growth r,lIe was a key faclOr Olat conlribllled to Ole increase in consumption of flat products, prior to the economic crisis in 1997-199R. With the manufacturing sector growing strongly in 1999 alld 200U, and the eonstmction sector remaining relatively Oat, the consumption of flats outstripped longs again in the last two years. In 20tH, however, the manufacturing sector llndenvent a contraction of 6.2%. Although value-added e:-:p<Hlded 4.4%, in 2002, the consumption of n”t products moderated as a result. (Source: ,WSWReport 2003j S.:t OUTLOOK OF STEEL INDUSTRY Tile outlook for 2005 will generally remain favourable although global growth is expected to moderate Oil account of high oil prices, inflationuI)’ pressures, interest rJte hikes and a prothlble slowdown in China’s economy. The emergencc of tbese risks, that became uJlparellt in the second half of 2004 and are expecled to continue illlo 2005, wilt have a larger impacl on grm”‘1h lIext )’C<tr. Global economic growth is projected 10 moderate to 4.4% in 2005 from 4,6% in 2004. Tlle saonger m:lcroeconomic fundamClllals and resilience, backed by sturdy domestic dem,Old and bro:ld-bascd growth, will however, continue to suppon Malaysia’s GOP grO\\1h, forecast a16% in 20U5. Olltput growth in 2005 is expected to be broad based with the manufacturing and services seclors remaining the growth drivers. The rmulIlfacturing sector is enviSilged to e.xp,md strongly, propelled by strengthened domeslic demand and SUSlained performance of the e:..temal seclor. Ch’crall produclion is cxpected to grow more than 10%, while exportS;)1 11.3%,. The construction sector is forecast to increase by 1.8% (2OU4: 0.5%), eonlributed partly by the civil-engineering sub-seclor, following the implementation of new and on-going infrastructure projects such as the Phase Two of the Easl C<»\Sl Highway and T<u~ung Bin Power Station ill Johor. TIle housing sub-seelor is also envisaged (0 remain robust, underpinned by higher incomes, low intcrest mtes and easy access to loans. (Source: Economic Report 200.112005) As the products from (he steel indusll)’ playa key role in supporting the cOllslmction, illrrnstmcture and manuf<lcturing sectors and hence, any growth in tlle steel induslry will ~ closely linked to the growth of the aforesaid seetocs_ V. INFORMATION ON MSW (CONl”D) 1n view of the positive outlook on the consUlIction, infrastructure and mUIluf:lcturillg sectors, the steel consumption is forecast to expand, spurred by thc implememation of infrastructure developmcntal projects and Osc,,11 measures. Gro\”1h of the steel industl) for the next five years (2003 -2(07) is expected to be around 5% 10 15% annually as depicted by the ch<lrt below. AienllJ’ see! Or5uTJ:tion Fon!caslliU Year ‘2!X11 ‘_ffi_7__””’ ‘!El__Nute: The above chUl1 is based 011 rhe u-‘lsllnrpfioll tllal fhe steel c()n~’lImptioll will grow by 5% ond 8% in 200] (lmi 2004 re’~lJ<!ctiw~V. It will/hell grow at 10% anllllallyfivm 2005 tv 2007. (Source: MISIF Report 2003) 6, MAJOR cus’rOPtfERS The details of the major customers of MSW cOlltributing to 10% or more of MSW’s tllmover <lnd tJle lOp 10 CUSlomers for the 9 months financial period fuded 30 September 2004 are set Ollt below: % Yt’;Irs

C..nfributi,,” I.. letlglh ..rbusfneu I’roducl.!i Jlurt:h~;s.’d ~IS\Y’$ Illnlf>\’er relatioJ1!lhlp
CM~ Sled Bhd  Billets  13,3  Da~woo Internati.mul Corpllralion  Billel~  9.4  Metal On~ A~ilO PIc LId  Billet”  ,-‘  M.K. Chaw £nkrpl’isc Sdtl 8M  Slee! burs  ‘.2  II  An,;hin Sted I”dllstn”” Sdn 8M  Hillets  4.5  12  QU:il1lum Coni.ortium Sdn Bhd  Sleel bar.~  4.4  2  Sy~rikut Yu<;:ng ~’~1I Marketing Sdn tlbd Hiap Hin Chan Trading Co Sdn BhJ  Steel bar,; Sled bars  3 1 ] .•  7 10  Excelnor IndLl~try &In llbJ  Slee! burs  2.’  2  Aflh”:I\1 S)’n”rgy Sdn Bhd  Billel.!i  2.3
v. INFORMATION ON MSW (CONT’D) 7. MAJOR SUPPLIERS The details of the m~ljor suppliers ofMSW comribUling 10 10% or more of MSW’s purchases and the top 10 suppliers for Ihe 9 monlhs financial period ended 30 September 2004 :Ire sel out below: PmtluctslScn1ccs C”lltrihulioli I… Length uf buslnus Major Suppliers supplied I\fS\\”~ pun’hases relationship % Years ebyc-Hup Hcn~ -“‘dn Bhd Scrop Metnl 37.9 Sa Kemuning Sdn Bhd Scrnp Melal 14′ , Soon Selig Co (Selang<.lr) Sdn Bhd Scrap MClal II,S , Tenag’-J Na~iollal H<::rhad El<:ctridty 7.2 8 Milsubi.~hi Corporation Gwphhc Electrode 2′ 6 ,elk”. Buml Limc 2.8 ChhliUisgftll1 Eleclricily Co,uptln)’ Silicon MnnsanilSol 1.8 2 Limiled China Mew.ls {/;. MineJnJ~ Corp_ Ltd Ferro Alloy, Silicon 15 M..nl!\lIJll:se MOX Gases Scin Ohd lndUSlrial Ga~ 1.2
(jomn:rly known as 1010X (jM”.f B”r/llldj Finc’SSCo Corp0l31ion Pic LId Silicon Mans-uneNl 1.I 6 MSW h:Js !lot cncountered any problems in sourcing for raw matcrials or services and is not depelldent Oil any particular supplier for its raw m:lIerbls. To date, MSW is able to secure a steady supply of raw materials for ils operations from various suppliers. 8, FUTURE PLANS, STRATEGI.E$ AND PROSPECTS MSW il11cnds 10 focus 011 the production and marketing of high quality export grade billets, steel bars and sections amI will continue 10 improve its cfficiency and production capacity, The tillling of implementing the expansion will depend on the pace of lhe economic recove!)’ and the demand or tile construction industry for stccl. MSW intends to widen (he range of billels il produces to increase ilS expor1S 10 neighbouring ASEAN couutries. This includes Ole sale of high gmde ~nd higher margin billets and steel bars to neigllbouring countries such 35 Philippines, Singapore and Victnam. In its preparation to fully utilise the produclion capacity of its billet plant of 350,000 illt per annum, M$\V intellds to constmct a section mill plant in the IIcar lenn which uses billelS for its raw materials. The section mill plallt will produce various grades of channels mKl .mgles and is expecled to open up new markets for M$W in tile m:mufaclnring seclor. V. INFORMATION ON MSW (CONT’D) 9.  LANDED PROPERTIES  Details of landed properties ofMSW are as follows:  Owner! Llcation  EXisting use  Approximate age of building yearsffenure  Date of certificate of fitness  Land areal built-up area sq. ft.  Net book value as at 30 September 2004 RMOOO  Encumhram:es  MSW HSD 161066, Lot No. PT29C Seksyen 28 Bandar Petaling Jaya District ofPetaling Jaya Se1angor Darul Ehsan  Office, lactor)’ and warehouse  22 years! LCllsehold for 99 years expiring on 15.04.2067  3.08.1982  130,897 sq. 11./ 63,187 sq. ft.  4,921  (i)  First legal charge in favour of RHB Salmra Merchant Bankers Berhad (“RHB Sakura”) as the trustee for Hong Leong Bank Berhad CHong Leong”), RIm Bank &rhad CRHB Bank”) and Standard Chartered Bank .Malaysia Berhad being thc financier in respect orthe 1st syndicated loan granted to MSW~  (ii)  Second legal charge in favour of RIm Sakura as the t1llqtee t{lr Hong Leong being the financier of the 2nd syndicated loan granted to MSW;  (iii) Third legal charge in iavour of RHB Sakura as the truste~ for Hong Leong being the financi~r of the 3rd syndicated loan granted to MSW;  (iv) Fourth and Ilfth legal charges in favour of Atrin Bank Berhad (“Aflln Bank”) in respect of banking facilities granted to MSW; and  (v)  Si>.ih legal charge in favour of United Overseas Bank (Malaysia) Berhad in respect of banking facilities granted to MSW.  MSW TapakLot 2 (Part of Lot 1303’J) Kawasan Perusahaan RulLit Raja Mukim Kapar District of Klang Sc1angor Dam! Ehsan  omce, factory and warehouse  4 vears! (J)L~asehold  (1)_  1,566,067 sq. ft.! 187)20 sq 11  47,521  Assignment of interests in the land in favour of EON Bank Bcrhad as the trustee of RHB Bank, Aflin Bank and Bank Islam Malaysia Berhad in respect of the club deal facilities granled to MSW.  MSW GRN 33304 Lot 3780 Mukim of Pasir Panjang District of Fort Dickson  Enngalo\v  20 years! Fredlold  12.01.1985  5,403 sq. ftI 1,334 sq. ft.  145  – Negni Scmbilan Daml Khusus
-49 ­v. INFORMATION ON MSW (CONT’D) “\”It<!!l: (I) Tht’ crrti!ic«/e offinn:ss fnr nccUporiOll (‘CF’~ for this property has IIut bt!.!n bsu.:J alld all applicatiollfor CF WO,f made ‘RI 14 JUlie 2004 to the Klallg ,l,fullicipol Cmlflt:il (“Councit”) fljlrr the lerms (J1Il1 r()>Jd,tiolis ofthl’ (‘mmci/’.f /erler dllted 5 Sepl/!mher /997Iu1\’e bun fully <.'(lmplied ‘With. III adt!illiltl. MSW /111.’> s”bmlltm the layout planfnr a amMen (/lid II “(IJ bl/III ,. builditrg p/<II7 for a SION Iltr U June 2(JiN to fhe Coulu:iI for approval, …hid, is pt’lldirrg as 01 Iht! dalt! of lliis PIVSp.!ctI/S, III this I’i’..~ct, the [)I/’l:ct()rs ofMSW umlerlake 10 comply Milh fUr/her cOlldiliOIlS, 1/ Oil)’, laiddm.” by t},« relnmu authorities /() facilitate the ;$:>lUlIIce oflhe CF.
(2) nN! I,tfr~ t/t)oC’1’I1;:1I1 /.If lille 10 the laud llrIS yet to he iMued. Pursuonl 10 the Sale ami ?urdtw;~ .”greerlk’1II (“SPA’J d;IIL’d 20 Man’h 19911 entered inlo belween Ihe Sdangor Stall’ DI’W’lopmefil C()rp’JT/I/;OIl (‘SSlX: ”) and Tahan Sted Corpornlion Sdn Blld (‘TSC “) and Ihr-SPA dated 16 April 1991 enlem into between MSW and TSC. il is further slated Ihal, ….hell Issued Ihe dOcumen/ of/ltlt Kill be-a Qualified Tirle wllh a lease/wid period of 99 years alld shall cunlai/, such eJ.1)1’l!.”$ or til/plied condiliol/s aud re.w·!ctio/l.l’ III mlerest Ihal the relel’ant authorlly may ill II.~ di.,creIiOIl Impf).\e Inc/udifly, the restriction that Ihe land alienaled shall nol be trall.ljerred, charg”d, leased or wid ….i/holll lI,e wrillen consenl of Ihe n.’levanl Siale Authorily. I’r1Jdillg tI,e Issuance ,md /he !ran.o;Jer o//he: Illud SS[X: I1S tn/.,’Iee has ria ils leI/a dall’d 6 Augusl 1998 <ldmowledg,’d thCll (he limd IlllS been ClSslglled to EON RankB.:rhad byMSWvia a DeedofA.uignment dated 30 .I,’ovem/Jer 1994 and 1m.;’ ‘1O I)h)((‘IIOI/ 10 Ihe ass/gll/nenl .TulJject 10 the COl/sent ofIhe State AUlh(lrity wlwlI the individual do(.’wtWIl/ ofti/le Is regl.~le,.ed. 5~~DC has co/dinned via a leiter dated -I JWilf 2001 tha! MSW is Ihe bellltjiclol olmer ofthe 101ld.

Save as disclosed in the notes above, there are no restrictions ill illterest for the above properties and 1I0ne or Ule existing use or the land in the nbove properties is in breach of the land-use conditions and/or pcnnissible I:md use, IU. OTH[R INFORMAnON As al the date of this Prospecttls, there are no olher approvals. major licences and pcmnts obl.:1ined by MSW except for UK: details or such approvals, licences and permits, the conditions imposed and the slatus or compliance 3S disclosed below: Dill .. Itr b.sU;oIl~..1 Typo! ofbminusl Stlolu~ nr Alllh”rilif”s Erplr,’ lrannCliVfj :lJlpro\’tll Main ~o”,liti”‘llI imJlos~d •· …Illpliu,,~~ 26.12.197\!;  Mallu(aclu/;ng  li<Xncc  CQnditions ofth” li”””ll”’ ~mongst oth~rs  !\’/A  for Il)Und h.rs.  ~ngks  are:  and »~~Iion~  (i) 1hc cl!lire ~hares of MSW .,ball be  ””et  h~ld by I..falay.ian.• with ~t kallt  ~(WO to ho l~servcd for Bumiputera  and /lfSW must eon,ult \-ITT!  hefore the allotment of the resaved  Sh:lN~,  (ii) /vISW shall ‘” lar ~’p”_.sible  Mel  a(l(loinl M”l..y.ian owned  comp;t.nic.• IQ dislribute iu prOlkl~1s  lOr the d”,ne”ie malket.  MSW shall also appoim  Tobcmct  Bumipulcm di:rtribul….s 10 lIislribulll III 1″”‘1 )0% of its sales in  lhe tlo”le…i” IT\.~lkel. The selection  lind nppointm..m or lh~ UllmipUler.t  diYlribl.llon shall l~ mad.o: ;n  c(lllwltatioll with MIT!.  AIllI”lillhncll1 (If nOt\-Mala~ian  To be met  comp;ln;h :I» dl<lr;hu[QI’s shalt he  nll’lde U\er OO1l;n;n& prioc app1″ovai  f/o,n MITt,  (iii) 111c /lIITI ~haU bc inf<)fmed ofHny  To I”, met  “pl’0intmenl nnd ,h’llge~ to the  Bo,1rd nfDirecton,
V. INFORMATION ON MSW (CONl”D) T,.·pl” uf  Oittt-of  busincs.”ll  issuance!  t,….mu.t:tiun  Stahl” of  Autnoriiie.’i  f..:Xl’iry  appro\’ed  IVluil1 conditions imposE’d  c:.ontpliancc  MITI  22.7.1991;  Manufaduring  lic~l)ce  COnditions orthe licelwe amongst others  ~.iA  for steel wire rods  Me:  (i)  The cntiN shares or MSW shall he  ·~’fct  hdd  by Malaysian…  wilh  iLl  1;;:;\.<;.1  30%1 10 he reserved for l:)umipukra  and  MS\V  must  consult  Min  hefon~ 1111:: allotment of the reservl.”:d  .”hares  (ii)  Any shares of U,e company hdd by  Met  non-~.fala.ysian dtizen shall not be  sold without first ohtaining written  approval from MITI.  (iii)  MSW  shall  as  rar  a..  possible  lvlet  appoint  t..lall\j’sian  uWm:d  companies to di.’Jlributc its produds  tor the domestic market.  MS W  shall  RI~o  awoint  To be m~t  Bumiplltera  distributors  to  di_’>tribute 1\1 Ica:)t 30% (Jf ils sales in  the dom~s:tic market. The selection  and appointment of the Bumiputem  distributor~  sh… 11  be  made  in  consultation with MITI.  Appointment  of  nOfl-Ml\lay~ian  To ht.” rllet  compames  a~  di~lributors shall  be  made after ohl<lining prior approv,\1  from MITl.  (iv)  The MITl shall be int'<lnn-=d of any  To be met  arl’ointm~nt  anJ  l.:hunges  to  the  Uoard of Dir<:ctors.  (v)  MSW i!> pemlitte.d 10 inslall “rolling  Met  mill” to prOt:lu!.;<: “sled wire rods”  of whi~h  its  produr.:;tion  capaCity  shall  not  ex..::eed  250,000  rot  per  year_  MSW  is  also  I’ermitt~d  to  produce “steel bill..::ts” of whi(;h ils  c;~pacity shall  not  exceed 400,000  tnt pu year lor it” own  usage and  export onl’j.  MIT!  8.7.1993;  Change-I( in  the Cttuity  (i)  AI le,lSl 60% of the entire shares of  \-lct  l\’iA  ~ondiliom:  of  the  MSW shall  be  held hy Ma[ay~ian  manufacturing licence  incl\lding 30% 10  be  reserved  tor  Bumiputera; and  (ii)  l\·fSW must elq)ort at least 40% of  “”To h~ met  il.. production within 2 yeC\r.i from  the dale ofthc approv,l! letter,
SIRIM  20.112003;  Licellce  to  u~e  the  Nil  Not  17.9.2005  CC’ltificll.lion  M.uk  of  applicahle  SIRtM  011 Hot  Rolled  DeJormed  Steel  Bar~  for  the  Reil1ror~ement  of Concrete  Notes:
MSW ha.\’ obtained the appro\”al ji’om Mi1’1 via irs feller dated 8 .lu.ly /993 10 inCreuse the foreIgn .l’h(m:.holding,~lip to .;{PAi o.fthe entire .thare capital (Jj~lylSW. .. On 16 December 2fJ04, MSW made an applicalirm to the MIT] to ,teekjor an extension of rimc up to 3J December ]OOj [0 comply with the said condition,

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