Business Overview

7. BUSINESS OF OUR GROUP 7. BUSINESS OF OUR GROUP 7.1 OVERVIEW We are the leading sugar producer in Malaysia, involved primarily in the production, marketing and sale of refined sugar products, with an annual production capacity of over 1.1 million mt of refined sugar. We conduct our business principally through two operating subsidiaries, MSM and KGFP. In 2010, we produced a total of approximately 945,000 mt of refined sugar products, accounting for approximately 57% of total sugar production in Malaysia. We offer a variety of products and sell to a wide range of customers in Malaysia and in other countries directly and indirectly through traders, wholesalers and distributors. Our customers include major companies in the beverage and confectionery industries, hotels, restaurants, food outlets and household consumers. We operate two sugar refineries, one in Prai, Penang, and another in Chuping, Perlis. Our products range from white refined sugar of various grain sizes to soft brown sugar and are marketed and sold in a variety of packaging options under two brands -“Gula Prai” and “Gula Perlis”. We also sell molasses, a byproduct of the refining process, to distilleries and producers of ethanol, animal feed and yeast, among other products. We are part of the Felda Group, which is affiliated with the Malaysian government and is one of the largest agro-based businesses in Malaysia. FELDA has established 317 schemes throughout Malaysia covering a total of 479,765 ha of plantation land that is cultivated by the settlers in these schemes. In addition, FELDA owns 331,375 ha of land on which it grows various crops, including oil palm and rubber. FELDA has also ~stablished a commercial arm, FGVH, which has investments in over 80 subsidiaries, associated companies and joint ventures engaged in diverse activities in the agro-based industry, including multi-crop plantations, oils and fats, oleochemicals and logistics. In order to better align and consolidate the Felda Group’s sugar businesses, we recently completed the Pre-Listing Restructuring. For more information regarding the Pre-Listing Restructuring, see Section 12.1.2 of this Prospectus. We are the market leader in the Malaysian sugar industry, with a total market share of approximately 57% in 2010 based on production volume. in 2010, our sales in Malaysia accounted for 88.5% of our revenues, while the remainder was derived from sales in other countries. We continue to seek opportunities to establish our products both in Malaysia and in selected overseas markets. As at 31 March 2011, we had total assets of RM1,795.7 million. In 2010, we generated profits after tax of RM232.9 million on net revenue of RM2, 168.6 million.
7.2 COMPETITIVE STRENGTHS We believe our key competitive strengths are as follows: 7.2.1 Leading Position in the Malaysian Sugar Industry We are the leading sugar producer in Malaysia, with an annual production capacity of over 1.1 million mt. The sugar refinery operated by our subsidiary MSM is the largest in Malaysia. In 2010, we produced a total of approximately 945,000 mt of refined sugar, which represents approximately 57% of the refined sugar produced in Malaysia in that year. We are able to leverage on the scale of our operations by for example purchasing and storing raw sugar when market prices are favourable and also being able to optimise the costs of our operations over a greater volume of production. Our operating subsidiaries, MSM and KGFP, have been dedicated to the sugar business for 51 years and 40 years, respectively, and are recognised in the market for providing reliable, high-quality products to our customers. We believe that our established reputation and proven track record in the sugar industry in Malaysia will continue to assist our business and growth in the future.

7. BUSINESS OF OUR GROUP (Cont’d) 7.2.2 Strong Customer Relationships Through Product Quality and Customer Service We have built strong and longstanding relationships, directly and through distributors, with a broad base of approximately 260 customers in Malaysia, which include mainly industrial customers, wholesalers and retailers and some of whom have been our customers for decades. MSM Holdings’ customers include F&N Beverages Manufacturing Sdn Bhd, Permanis Sdn Bhd, Kraft Foods Manufacturing Malaysia Sdn Bhd, Cadbury Confectionery Malaysia Sdn Bhd, Nestle Manufacturing (M) Sdn Bhd, Tesco Stores (Malaysia) Sdn Bhd, Giant GCH Retail (Malaysia) Sdn Bhd, Jaya Jusco Stores Bhd (currently known as Aeon Co (M) Bhd) and Yeo Hiap Seng (Malaysia) Berhad. We have established these relationships by being a dependable supplier of quality products that is flexible and responsive in meeting our customers’ changing needs. We continue to enhance the level of service and product offerings to cater to our customers by, for example, working with them in manufacturing products to their specifications, offering flexible delivery options through our just-in-time delivery capabilities and providing customised packaging sizes. Our customer relationships are closely managed by our experienced team of sales and marketing staff as well as by our senior management. We believe that our reputation as a reliable producer of high-quality products and our well-established base of quality, credit-worthy customers enable us to consistently maintain our leading market position.
7.2.3 Strategic Location of our Production Facilities Our production facilities are strategically located for efficient production and delivery of our products. The MSM Facility is located adjacent to the Prai River near Penang Port and has a dedicated jetty on-site that enables barges to easily and cost-effectively offload raw sugar taken from sea vessels directly into storage for use in our refining process. The KGFP Facility is located adjacent to the Chuping Plantation from which it receives sugar cane for milling, and the milling facility is next to the sugar refinery which processes the raw sugar from the milling facility together with imported raw sugar. The proximity of the MSM Facility to Penang Port also enables us to effectively deliver by sea our products to customers in East Malaysia and overseas markets, either as bagged bulk cargo, from our dedicated on-site jetty or in full containers loaded at our own container loading facility with a loading capacity of 1,000 mt per day.
7.2.4 Effective Logistics Infrastructure Our effective logistics infrastructure, which integrates our storage, packaging and distribution network, aims to ensure timely delivery of the right quality and quantity of products to our customers. Our production facilities in the north, as well as storage and distribution centres in Sungai Buloh and Johor Bahru in the central and southern regions, respectively, ensure efficient distribution of our products throughout Peninsular Malaysia, using rail transport and lorries. Railways connect the MSM Facility and our warehouse facilities in Sungai Buloh and Johor Bahru and enable fast and cost-efficient transport of our products. MSM’s SUbsidiary, Astakonas also operates a dedicated fleet of lorries to transport our products in Peninsular Malaysia. Moreover, our flexible logistics infrastructure allows us to offer our customers a variety of options in receiving our products. We offer our customers the option of bulk delivery from our production facilities and the Sungai Buloh warehouse via road tankers to customers who are able to receive the bulk sugar directly into their silos as well as the option of taking delivery at our production facilities or from the Sungai Buloh and Johor Bahru warehouses. In addition, our Sungai Buloh warehouse has its own packaging facilities, enabling us to offer just-in-time delivery by packaging our products at various times and in various sizes according to our customers’ needs. 7. BUSINESS OF OUR GROUP (Cont’d) We believe that our ability to meet our customers’ needs on a timely basis through our efficient warehousing, packaging and distribution network is a key strength that distinguishes us from our competitors in the Malaysian market.
7.2.5 Modern Integrated Production Facilities The MSM Facility has successfully adopted advanced production systems in its sugar refining process by installing and implementing state-of-the-art equipment and technology that are in line with international standards and benefits from efficiencies realised through automation. For example, MSM has successfully reduced its energy consumption by being, we believe, the first sugar producer in Southeast Asia to operate .a vertical continuous sugar vacuum pan that uses as its heat source recycled vapour from batch pans, which were subsequently upgraded with the triple-effect evaporator. Moreover, through the use of a nano-filtration system that recycles water, the brine solution is recycled and the wastewater load for MSM is significantly reduced, thereby minimising the harmful impact on the environment. KGFP is currently reviewing plans to install additional equipment to modernise its facilities and to increase automation of its production processes in the near future. The KGFP Facility is the only integrated facility in Malaysia with a sugar mill and refinery that processes both sugar cane and raw sugar to produce refined sugar, which provides us with the flexibility to source a portion of our raw sugar supply from sugar cane in addition to imported raw sugar. Our production facilities are also integrated such that we co-generate electricity using the steam produced by our boilers, allowing us to satisfy a part of our electricity needs internally. Furthermore, we are able to configure the equipment and machinery used in our production processes to optimise our output and energy use, which provides us with additional flexibility to reduce costs. We intend to continue to upgrade and modernise our equipment and technology as deemed necessary to maintain or increase our competitiveness.
7.2.6 Diverse Portfolio of Quality Products We develop and offer to our customers a full array of sugar products. We produce refined sugar products of varying types and grades such as fine and coarse granulated white sugar, brown sugar, icing and caster sugar, as well as molasses. Our products are sold in package sizes suited to our customers’ convenience and requirements. In addition to packaging type, we work with customers with stringent product requirements to tailor our products’ features, such as colour, grain size and moisture, to their specifications. Our production and quality assurance teams perform certain testing and research to assist our customers in manufacturing finished sugar products that conform to the specific properties and characteristics they require. For example, MSM has worked with customers to use alternative anti-caking agents in icing sugar and to produce low-moisture soft brown sugar. Furthermore, our products are well-recognised in Malaysia and overseas as reliable high-quality products. We believe that our ability to offer a diverse portfolio of products and our reputation as a manufacturer of quality products help us to maintain a loyal customer base. 7. BUSINESS OF OUR GROUP (Cont’d)
7.2.7 Benefit from Long-term Contracts for Raw Sugar We currently purchase approximately 49% of our imported raw sugar volume pursuant to long-term supply contracts. Since the early 1970s, the Malaysian government has participated, together with Malaysian refined sugar producers, including MSM and KGFP, in negotiations for long-term raw sugar supply contracts with foreign raw sugar suppliers. Such contracts have helped us secure a consistent supply of raw sugar at . fixed prices. The large volume of raw sugar purchased under these contracts and the long-term nature of these contracts, which are usually for a period of three years, allow us to fix in advance a significant portion of our cost of sales, providing us with the visibility to make and implement effective business plans.
7.2.8 Strong Support from the Felda Group We are part of the Felda Group, which is affiliated with the Malaysian government and is one of the largest agro..:based businesses in Malaysia. FELDA has established 317 schemes throughout Malaysia covering a total of 479,765 ha of plantation land that is cultivated by the settlers in these schemes. In addition, FELDA owns 331,375 ha of land on which it grows various crops, including oil palm and rubber. FELDA has also established a commercial arm, FGVH, which has investments in over 80 subsidiaries, associated companies and joint ventures engaged in diverse activities in the agro-based industry, including multi-crop plantations, oils and fats, oleochemicals and logistics. The Felda Group is well-known in Malaysia and has a strong reputation as a valuable contributor to the country’s economic development through the establishment of settlement programs that have successfully advanced Malaysia’S agricultural industry and agro-based businesses. The Felda Group has a presence in many foreign countries, including the United States, Canada, Pakistan, China, Indonesia, Thailand, South Africa, France, Australia and Turkey. We believe that, with the Felda Group as the controlling shareholder, we have the support and commitment of a successful enterprise with a strong brand name in the agro-based industry for us to be a long-term player in the Malaysian sugar industry.
7.2.9 Experienced and Dedicated Management Team Our management team has significant industry knowledge across the entire sugar value chain and has extensive experience in leadership positions in sugar-related companies. In particUlar, Mr. Chua Say Sin, our Chief Executive Officer, Mr. Mohamad Amri Sahari, Mr. Gan Chong Ho and Mr. Ha Charm Mun have over 90 years of combined experience in the sugar industry. The experience of our management team in the sugar industry spans across a wide range of business activities, including the operation of sugar refineries as well as Malaysia’s only sugar cane plantation and sugar cane mill, implementing upgrades and expansions to production facilities, marketing and distributing sugar products in Malaysia and in export markets, hedging against movements in raw sugar prices and foreign currencies and managing various other risks associated with the sugar business. Our management has also adopted advanced production systems in the sugar refining process, such as implementation of state-of-the-art processes to use recycled vapour as a heat source and a filtration system that reduces wastewater. We believe that our management team has been key to our success, and it has the necessary experience and knowledge to continue to successfully manage our business and implement our growth strategies. 7. BUSINESS OF OUR GROUP (Cont’d)
7.2.10 Financial Strength We have a proven record of strong cash generation, which has permitted us to fund most of our capital expenditures through internally generated funds. Our financial discipline has resulted in a strong balance sheet, with only short-term borrowings and a low debt-to-equity ratio of 0.15 as of 31 December 2010, and we have established a track record of consistent payment of dividends. We believe that our financial strength and strong balance sheet provide us with the flexibility to consider and pursue attractive investment opportunities that may become available in the future.
7.3 BUSINESS STRATEGIES AND FUTURE PLANS We plan to implement the following strategies to achieve growth and improve our results: 7.3.1 Achieve Synergies in the Operations of MSM and KGFP After MSM and KGFP were brought into the Felda Group in January 2010, we began to take advantage of the numerous synergies that exist between these companies. We plan to coordinate the purchase of raw sugar for both companies to maximise our leverage in purchase negotiations, and we also expect the two companies to collaborate in their hedging activities for raw sugar and foreign currency. Our management will also review closely the marketing and distribution practices of the two operating companies and aim to apply the best practices from each of the companies to the marketing and distribution efforts of the Group as a whole. MSM and KGFP will also cooperate on the technical aspects of their operations, including on ways to increase the level of automation at the KGFP Facility.
7.3.2 Continue to Reduce Costs and Improve Operating Efficiency We believe that our operating efficiency provides us with a cost advantage compared to other sugar producers in Malaysia. We plan to continue to enhance our cost competitiveness by increasing the level of automation at our production facilities, especially at the KGFP Facility, and by other targeted efforts to cut costs by upgrading the existing boilers at the KGFP Facility. We are also looking to enhance our economies of scale by expanding our total annual production capacity to approximately 1.5 million mt by 2016. As part of this effort, we intend to increase the KGFP Facility’s annual production capacity from 150,000 mt to 200,000 mt by 2015. Furthermore, we are currently reviewing plans to gradually increase production capacity at the MSM Facility as well as making on-going efforts to maximise its daily melt by increasing sales volumes, which would allow us to minimise the downtime for machinery and increase our capacity utilisation rates. In addition, we plan to increase the storage capacity for raw sugar at the MSM Facility from 100,000 mt to 200,000 mt and to expand the storage capacity for refined sugar at MSM’s storage warehouses from 27,000 mt to 37,000 mt. We will also look to reduce freight costs by increasing the use of rail transport in place of lorries. These initiatives are expected to allow us to maintain our low costs and improve our operating efficiency. 7. BUSINESS OF OUR GROUP (Cont’d)
7.3.3 Expand Export Sales Although we give priority to satisfying domestic demand, we have also sought to increase our export sales on an opportunistic basis to increase our sales volume, to earn foreign exchange to help meet part of our foreign currency obligations for raw material purchases, to maximise the use of our production capacity, to lower our average unit cost of production, to reduce our dependence on demand from local customers and to expand our international market presence. We have successfully penetrated attractive niche markets overseas, such as the market in Pakistan for sugar used in pharmaceuticals. We will continue to focus on increasing our competitiveness in existing export markets and further penetrate into our current overseas markets in Asia by securing new traders and distributors and deepening our ties with existing ones, and also by establishing direct relationships with end-customers by meeting them together with the distributors. For markets that currently impose high import duties or involve other import restrictions, we will monitor developments in these markets and attempt to capitalise on opportunities that may arise if there are favourable changes to such import restrictions.
7.3.4 Pursue Strategic Acquisitions or Investments We plan to pursue opportunities to expand our production capacity and diversify to external markets through strategic acquisitions or investments on a selective basis outside Malaysia as such opportunities arise, particularly in Southeast Asia. We will explore such opportunities and endeavour to complete the strategic acquisitions or investments within 2 years from Listing. By producing refined sugar in external markets, we would be able to penetrate those markets more effectively and also target nearby markets that are better served from that location. Any potential acquisition or investment would undergo an extensive evaluation process to determine whether it meets our strategic objectives and benefits our business as a whole.

7.4 HISTORY AND MILESTONES MSM was incorporated under the Act on 6 October 1959 as a private limited company under the name Malayan Sugar Manufacturing Company Limited. It was fonned as a joint venture among Kuok Brothers Sdn Bhd (“Kuok Brothers”), Mitsui & Co. and Nissin Sugar Manufacturing Company with the mission to set up a sugar refinery in Malaysia to reduce Malaysia’s dependence on imported refined sugar. KGFP was incorporated under the Act on 26 May 1971 as a private limited company under the nameKilang Gula Felda PerlisSendirian Berhad as part ofthe PerlisSugar Projectthatwasset up in response to the Malaysian government’s desire to diversify Malaysia’s agricultural products and develop its agro-based industries to further develop rural regions of Malaysia. The Perlis Sugar Project originally comprised three entities -FELDA and PPB Group, which owned the sugar cane plantations, along with KGFP, which operated an integrated sugar cane mill and refinery. Until 201 0, PPB Group, which is controlled by Kuok Brothers, had a 100% interest in MSM and a 50% interest in KGFP, and also owned sugar cane plantations. In January 2010, FGVH, a subsidiary of FELDA, acquired PPB Group’s entire sugar business in Malaysia and a 20% stake in Tradewinds (M) Berhad for a total consideration of RM1.5 billion. The sugar business that was acquired consisted of a 100% interest in MSM, 50% interest in KGFP and 5,797 ha of sugar cane plantation land in Chuping, Perlis. The 20% interest in Tradewinds (M) Berhad is currently held by FGVH.

7. BUSINESS OF OUR GROUP (Cont’d) Our Company was incorporated in Malaysia under the Act on 10 March 2011 as a public limited company under the name MSM Malaysia Holdings Berhad. In order to better align and consolidate the Felda Group’s sugar businesses, we recently completed the Pre-Listing Restructuring. For details regarding the Pre-Listing Restructuring, see Section 12.1.2 of this Prospectus. Certain key dates and milestones for our Group include: 1964  MSM Facility commences operations in Prai, Penang  1973  KGFP Facility commences milling and refinery operations in Chuping, Perlis  1976  MSM Facility embarks on automation of production processes  1980  KGFP Facility commences imported raw sugar refining operations  1990  KGFP Facility increases refining capacity to 41,000 mt per year  1992…….  MSM’s warehouse at Sungai Buloh commences operations with rail connection from  MSM Facility in Prai  2002…  MSM’s warehouse at Johor Bahru commences operations with rail connection from  MSM Facility in Prai  2007  MSM Facility increases refining capacity to 800,000 mt per year  2010  Refining capacities increased to 960,000 mt per year at MSM Facility and to 150,000  mt  per year at KGFP Facility  Acquisition by the Felda Group of PPB Group’s interests in MSM and KGFP  2011  Completion of the Pre-Listing Restructuring
(The rest of this page has been intentionally left blank) 7. BUSINESS OF OUR GROUP (Cont’d) 7.5 CORPORATE STRUCTURE We are a holding company and conduct our business mainly through our two operating subsidiaries. We are engaged in the production and sale of refined sugar and related products. In addition to refining sugar, we grow sugar cane in Chuping, Perlis, on a 4,454 ha plantation that we own, as well as on 1,244 ha of adjacent leased land. The plantation supplies sugar cane to the milling facility operated by KGFP for production of raw sugar, which is used by KGFP together with imported raw sugar to produce refined sugar. The chart below presents our corporate structure after giving effect to the Pre-Listing Restructuring: 100% 100%
FGVSFGVH KPF 36% 49% 15 1 % MSM HOLDINGS
100%  I  1  100%  KGFP  100%  \  MSM I  I  100%
MSM PROPERTIESASTAKONAS 7. BUSINESS OF OUR GROUP (Cont’d)

7.6 PRODUCTS We are the largest producer and supplier of refined sugar in Malaysia. Refined sugar is our principal product line and accounted for 99.2% of our total sales in 2010, and 98.8% of our total sales for the three months ended 31 March 2011. Sugar is a form of edible carbohydrate mainly in the form of sucrose, lactose and fructose, and serves as an important source of energy for the body. In food, sugar typically refers to sucrose, which primarily comes from sugar cane and sugar beet, and is characterised by its sweet taste. In addition to its sweet taste, sugar can serve to improve the texture and colour of baked goods, speed up the fermentation process in baking, act as a bulking agent (for example, in ice cream, jams and preserves) and raise the boiling point and lower the freezing point in certain food recipes. Our main products include various grades of refined sugar for both industrial and retail customers that are packed in an assortment of packing sizes and types tailored to the consumers’ requirements and convenience. We produce different grades of white refined sugar that are classified under the general categories of coarse granulated, fine granulated and caster. In addition to refined white sugar, we produce brown sugar in various grades such as soft and coarse brown. Molasses that we produce as a byproduct of the refining process is sold to industrial customers and accounted for 0.8% of our total sales in 2010, and 1.2% of our total sales for the three months ended 31 March 2011. Our principal products include the following: Production bulk (industrial) Product  Facility  Description  Packaging Sizes  Primary Use  Fine granulated  MSM  Grain size: 0.50 ­ 0.70  5g  sachet,  sugar  Retail,  commercial  white sugar  KGFP  mm  cubes,  1kg,  2kg  food  industry,  food  MSM: Colour: max 20 ICUMSA unit'”  (retail) 25kg, 1,OOOkg,  50kg, 1,400kg,  and beverage manufacturing
Polarization*'”: 99.900 Z KGFP: Colour: max 50 ICUMSA unit Polarization: 99.80 0 Z Coarse granulated MSM Grain size: 0.95 -1.35 5g sachet, sugar Retail, commercial white sugar KGFP mm cubes, 1kg, 2kg food industry, food (retail) and beverageColour: max 50 ICUMSA 25kg, 50kg, manufacturingunit 1,000kg, 1,400kg, MSM: bulk (industrial) Polarization: 99.85 0 Z KGFP: Polarization: 99.80 0 Z
Coarse brown sugar MSM Grain size: min 1.5 mm 500g Retail Colour: 800 -1,500 ICUMSA unit Polarization: 98.5 0 Z 7. BUSINESS OF OUR GROUP (Cont’d)

Production Product Facility Description Soft brown sugar MSM Icing sugar  MSM  Caster sugar  MSM  Super fine white  MSM  sugar  Molasses  MSM  KGFP  Notes:
Polarization: 98.5 0 Z Light brown sugar: Colour: 1,500 -3,000 ICUMSA unit Dark brown sugar: Colour: 3,500 -5,500 ICUMSA unit Grain size: min 95% through 0.15mm aperture mesh*** Polarization: 97.5 0 Z Finer than granulated sugar that is max 15% retained on 0.50 mm aperture mesh Colour: max 35 ICUMSA unit Polarization: 99.85 0 Z Grain size: max 4% retained on 0.425 mm aperture mesh; max 5% retained through 0.125 mm aperture mesh Colour: max 35 ICUMSA unit Polarization: 99.85 0 Z Dark brown, viscous byproduct of refining process MSM: 50% total sugar KGFP: 45% total sugar Packaging Sizes  Primary Use  500g (retail) 25kg and (industrial)  50kg  Retail, commercial food industry
500g (retail) 40kg (industrial)  Retail, commercial food industry for cakes and pastries  500g (retail) 50kg and (industrial)  600kg  Retail, commercial food industry for baking  25kg and 50kg  Food and beverage manufacturing
Bulk Ethanol, animal feed, yeast production
The colour and purity level of refined sugar are measured using standards set out by The International Commission for Unifonn Methods of Sugar Analysis (lCUMSA), known as ICUMSA numbers. A lower ICUMSA number indicates a whiter colour and higher level ofpurity. Polarization is a measurement ofsucrose content in sugar. Aperture mesh refers to a sieve using wire mesh with a specified aperture for sugar crystals to pass through. 7. BUSINESS OF OUR GROUP (Cont’d) Industrial Uses
Sugar is one of the most commonly used ingredients in commercial food and drinks and is used by manufacturers of products such as ice cream, milk, beverages and confectionery. Other industrial users of sugar include distilleries, companies in the canning industry and pharmaceutical companies. Refined sugar for industrial users are supplied based on our customers’ needs in packing sizes ranging from 25 kg to 1,400 kg bags and 17,000 kg bulk load tankers. . Retail and Other Commercial Uses For retail users, our refined white sugar products are available in various qualities ranging from coarse and fine grain to icing and caster sugar, packaged in a variety of sizes such as 1 kg and 2 kg bags, sachet packaging (cup-packs) and sugar cubes. Coarse grain and soft brown sugar is typically packaged in smaller 500 g sizes for retail sale. Our retail products are found in hypermarkets, supermarkets and retail shops in most parts of Malaysia. In addition, we cater to establishments such as restaurants and hotels by providing customised sachet packaging according to customers’ own choice of design. We currently market and sell our products only under our “Gula Prai” and “Gula Perlis” brands. 7.7 PLANTATION AND PRODUCTION FACILITIES We own and operate two sugar refineries, as well as the only sugar cane plantation and sugar cane milling facility in Malaysia. KGFP produces sugar cane in Chuping, Perlis, on a 4,454 ha plantation that it owns, as well as on 1,244 ha of adjacent leased land. KGFP also operates a sugar refinery in Chuping, Perlis. MSM operates a sugar refinery located in Seberang Prai, Penang. Each refining facility has packaging, storage and distribution -capabilities on site. MSM also operates a packaging and distribution warehouse in Sungai Buloh, Selangor, and another distribution warehouse in Johor Bahru, Johor. Both of these facilities are connected to the refinery in Prai by rail. The following table provides information about the location, current capacity, utilisation rate, production and book value of our sugar production facilities: Annual  Refining  Refined  Refined Sugar  Daily Raw  Capacity Utilisation  Daily  Raw to Refined  .Sugar Production  NBVas at  Production Facility  Production Capacity(1)  Sugar Melt Capacity  Rate for 2010(2)  Milling Capacity  Sugar Yield for 2010  Volume for 2010  31 December 2010  (mt)  (mt)  (%)  (mt)  (%)  (mt)  RMOOO  MSM Facility,  960,000  3,000  84.0  N/A  97.0  806,658  147,364  located in Prai,  Penang(3)
KGFP Facility, 150,000 600 92.0 5,500 95.6 138,045 21,401 located in Chupinp, Perlis(4 Notes: (1) For the MSM Facility, calculated based on daily raw sugar mettcapacity of 3,000 mt perday multiplied by 330 days per year multiplied by raw to·refined sugar yield of 97%.
For the KGFP Facility, calculated based on (i) 5,500 mt ofcane milled per day multiplied by 65 days peryear divided by 13 (which is the TCTS (tonne ofcane to tonne of sugar) ratio) plus (ii) daily raw sugar melt capacity of 600 mt per day multiplied by 212 days peryear multiplied by raw to refined sugar yield of 96%.
(2) Calculatedbydividingactualproductionvolume peryearbyannualproductioncapacity.

-111 ­

7. BUSINESS OF OUR GROUP (Cont’d) (3) Consists offaci/ities to store raw sugar, produce refined sugar using the raw sugarrefining process described in Section 7.8, conduct quality control, package and store refined sugar products and load such products for distribution.
(4) Consists offacilities to process sugarcane into raw sugar using the process described in Section 7.8, store raw sugar, produce refined sugar using the raw sugar refining process described in Section 7.8, conduct quality control, package and store refined sugarproducts and load such products for distribution.

The following map highlights the location of our sugar cane plantation, our production facilities and our warehouses: • .]To..?:~··1 ~j f&aifwavT
MSM
MSM operates the MSM Facility, a sugar refinery located in Prai, Penang, on the northwest coast of Peninsular Malaysia. The MSM Facility is the largest sugar refinery in Malaysia and has an annual production capacity of 960,000 mt of refined sugar, representing approximately 86% of our total capacity. In 2008, 2009 and 2010, the MSM Facility produced 684,868 mt, 708,375 mt and 806,658 mt of refined sugar, respectively, representing 82.9%, 83.1 % and 85.4% of our total refined sugar production output, respectively. In 2010, 81.2% of MSM’s refined sugar products by volume were sold in the domestic market, while 14.7% were exported and 4.1 % were sold as “local exports” to domestic industrial customers who use sugar purchased from us to manufacture products for export. The MSM Facility is strategically located near Penang Port and has a dedicated jetty on-site that enables barges to easily and cost-effectively offload raw sugar taken from sea vessels directly into storage for use in our refining process. -112 ­

 

7. BUSINESS OF OUR GROUP (Cont’d) Natural gas used for the boilers at the MSM Facility is provided through a dedicated pipeline from Gas Malaysia Sdn Bhd pursuant to a long-term contract at prices in accordance with applicable tariff rates. Diesel fuel is supplied by Shell Malaysia Trading Sdn Bhd pursuant to a supply contract. We generate approximately 40% of the electricity needed for the MSM Facility through an on-site cogeneration facility that uses steam produced by the boilers to generate up to 21,000 MWh per year, while our remaining power requirements and backup power are supplied by Tenaga Nasional Berhad (UTNB”). Water supply for the MSM Facility is provided by the local water authority based on the applicable tariff rates. Railway tracks located within the MSM Facility connect to our warehouses located in Sungai Buloh, Selangor, and Johor Bahru, Johor, allowing our products to be delivered in a cost-efficient manner to customers in the central and southern regions of Peninsular Malaysia. Products are also delivered from the MSM Facility and MSM’s warehouses to our customers by lorries and other modes of transportation operated by MSM’s subsidiary, Astakonas. MSM also offers the option of bulk delivery from the Sungai Buloh facility via road tankers to customers who are able to receive the bulk sl1gar directly into their silos. A number of our customers also take delivery of our products by arranging their own transportation to take delivery from our warehouses located in Prai, Sungai Buloh and Johor Bahru. In addition, MSM’s Sungai Buroh warehouse has its own packaging facilities, enabling us to package our products at various times and in various sizes according to our customers’ needs. With this efficient warehousing, packaging and distribution network, we are able to offer just-in-time delivery and respond promptly to our customers’ orders or sudden changes to their orders. For East Malaysia and overseas exports other than Singapore, our products are sent from our dedicated on-site jetty through Penang Port as bagged bulk cargo. Alternatively, we can load our products in full container loads at MSM’s loading facility, which has a 1,000 mt per day loading capacity, and send the containers to Penang Port. KGFP KGFP operates the KGFP Facility, an integrated sugar mill and refinery located in Chuping, Perlis in the northwestern part of Peninsular Malaysia. In addition, KGFP grows sugar cane in Chuping, Perlis on the Chuping Plantation. The sugar mill has a sugar cane crushing capacity of 5,500 mt per day. The KGFP Facility has an annual production capacity of 150,000 mt of refined sugar, representing approximately 14% of our total capacity. In 2008, 2009 and 2010, the KGFP Facility produced 140,791 mt, 143,993 mt and 138,045 mt of refined sugar, respectively, representing 17.1 %, 16.9% and 14.6% of our total refined sugar production output, respectively. Currently, all of KGFP’s refined sugar products are sold in the domestic market, and it expects to continue focusing on supplying the domestic market. KGFP is currently planning to expand the sugar refining capacity of the KGFP Facility from 150,000 mt per year to 200,000 mt per year by 2015 through the installation of additional equipment, such as centrifuges, and increasing automation of its production processes. We expect to fund such expansion primarily with part of the proceeds from the Public Issue. For more information regarding our capital expenditure plans, see Section 8.3.4 of this Prospectus. Approximately 10% to 15% of the raw sugar used at the KGFP Facility to produce refined sugar is derived from sugar cane harvested at the Chuping Plantation. The remainder of the raw sugar used at the KGFP Facility is imported. For details of our raw materials, see Section 7.11 of this Prospectus. The KGFP Facility has warehouse facilities on site, as well as a bulk cargo terminal at Prai, Penang, from which its products are transported throughout Malaysia via road and sea. A number of our customers also take delivery of our products directly from our warehouse located in the KGFP Facility and from our bulk cargo terminal via bulk tankers. -113 ­7. BUSINESS OF OUR GROUP (Cont’d) The boilers at the KGFP Facility currently use biomass fuel, including bagasse, which is a fibrous matter that remains after sugar cane is crushed, as well as woodchips and logwood, which are supplied by local suppliers. We are currently reviewing a project to switch the energy source for the boilers from biomass fuel to natural gas by 2014, which, if successfully completed, we expect will lower our fuel and maintenance costs at the KGFP Facility. For more information regarding our capital expenditure plans, see Section 8.3.4 of this Prospectus. An on-site cogeneration facility using steam from boilers generates up to 41,700 MWh of electricity per year, which is sufficient to meet the needs of the KGFP Facility. Backup power is supplied by a diesel generator and from the national grid by TNB. Water for the KGFP Facility is supplied from an underground tube well powered by electricity supplied from the national grid by TNB, and we pay royalties to the local government for use of the water. Maintenance Both the MSM Facility and the KGFP Facility are shut down periodically for scheduled maintenance and occasionally for unscheduled corrective maintenance and repair. We regularly monitor the performance and condition of our equipment in our production facilities, including the boilers, turbine generators, vacuum pans, centrifuges and other critical machinery. Maintenance on our facilities is performed by trained personnel to ensure long-term reliability of key equipment and the production processes as a whole. On average, refining facilities at both the MSM Facility and the KGFP Facility operate at various production capacities for 24 hours a day, 330 to 340 days a year. Milling operations at the KGFP Facility only run seasonally to process the sugar cane harvest from December through April and are not operational for the remainder of the year. During the periods of operation, our milling facilities are shut down weekly for scheduled maintenance to optimise performance. These comprehensive maintenance efforts contribute to reduction of our long-term costs and improvement of our asset utilisation, thereby helping to increase the overall reliability and maintain the production efficiency of these facilities. 7.8 SUGAR PRODUCTION PROCESSES The primary raw material used in our refined sugar production process is raw sugar from sugar cane. Sugar cane is processed into raw sugar by raw cane mills promptly after harvest. Cane sugar refineries like those we operate purify raw sugar to produce refined sugar. Operating results of cane sugar refineries are driven primarily by the spread between raw sugar and refined sugar prices and by the conversion and other costs of the refining process. For details on raw materials and suppliers, see Section 7.11 of this Prospectus. Cane Process The annual sugar cane harvesting period in Malaysia typically begins in December and ends in April. Several varieties of sugar cane were initially imported from Africa, Taiwan, Australia, Brazil and the United States but sugar canes that are currently planted in the Chuping Plantation are hybrid varieties. Once planted, sugar cane is harvested each year for several consecutive years. With each subsequent harvest, sucrose yields decrease, and the current optimum economic cycle at the Chuping Plantation is five consecutive harvests. However, the harvests must be carefully managed in order to continue to attain sucrose yields similar to the newly-planted crop.

7. BUSINESS OF OUR GROUP (Cont’d) Before sugar cane is harvested, the field is set on fire, which removes dry leaves and destroys insects and other pests without harming the sugar cane stalks or the roots. After the sugar cane is harvested by mechanical harvesters and by manual cutting, it is transported to our mill for inspection and weighing. The proximity of our milling facilities at the KGFP Facility to the Chuping Plantation land on which we cultivate sugar cane reduces our transportation costs and enables us to process the sugar cane within up to 24 hours of harvesting, thereby maximising sucrose recovery as sucrose concentration in sugar cane starts to decrease upon harvesting. The milling facilities at the KGFP Facility process sugar cane into raw sugar promptly after harvest. This process consists of several steps. • The extraction or purifying process separates the natural sugar stored in the cane stalk from the rest of the sugar cane plant, and it involves grinding the cane and pressing it to extract the juice through a series of mills, known as “crushing” or “milling”.
• The sugar juice resulting from milling is pumped away for processing into raw sugar and the residual fibrous material, called “bagasse”, is recycled as fuel for the boiler furnaces at the KGFP Facility.
• Impurities in the extracted sugar juice are removed in a process called “clarification” whereby lime is added to the sugar juice and then heated. Lime neutralises acids and precipitates impurities, which settle out in large specially designed vessels called clarifiers.
• Clear sugar JUice from the clarifiers is concentrated through a process called “evaporation” by boiling it under vacuum in evaporator vessels, resulting in concentrated juice called “syrup”.
• The syrup is further concentrated by boiling in a vacuum pan and is seeded with fine sugar crystals in a process called “crystallisation” whereby the crystals are grown to the required size by adding more syrup while boiling continues.
• The mixture of grown sugar crystals and syrup that is formed, called “massecuite”, is placed into centrifuge machines which separate the crystals from the syrup and then dried and cooled to produce raw sugar.

Molasses is a viscous byproduct of this sugar cane process after a certain amount of sugar is extracted to produce raw sugar. Molasses has a sucrose content of approximately 45% to 55% and is typically sold to producers of ethanol, animal feed and yeast, among other products.
7. BUSINESS OF OUR GROUP (Cont’d) The following diagram illustrates how the sugar cane is processed into raw sugar for use at the KGFP Facility. SUGARCANE ..
Milling Clarification Evaporation Crystallisation
FINAL +­Centrifuging
MOLASSES .. RAW SUGAR All, the raw sugar produced from the sugar cane harvested at the Chuping Plantation is used at the KGFP Facility. In 2008, 2009 and 2010, we crushed 370,602 mt, 282,150 mt and 202,899 mt of sugar cane, respectively, as the land area for sugar cane cultivation has been reduced as a result of a shift to higher value crops, such as oil palm and rubber. We will review from time to time in the future whether the amount of land devoted to sugar cane cultivation should be changed. Currently, the milling facility at the KGFP Facility has a crushing capacity of 5,500 mt per day. Raw Sugar Refining Process Each of the MSM Facility and the KGFP Facility refines raw sugar to produce refined sugar, along with molasses as a byproduct of the refining process. The refining process consists of several steps. • Raw sugar crystals are initially mixed with raw syrup to soften them and remove impurities from the crystals’ outer coating. The crystals are then separated from the syrup and washed with hot water in a centrifuge in a process called “affination”.
• The washed sugar is dissolved to form “melted liquor”. The melted liquor is then pumped to the carbonator, together with lime (calcium hydroxide) and carbon dioxide, for a process called “carbonation”, which forms a carbonated precipitate that traps most of the impurities in the liquor.
• The carbonated precipitate, together with the impurities, is removed by pressure filtering to produce “clear liquor”.
• Further colour removal is completed through either of two methods depending on the production facility, ultimately leading to the production of “decoloured liquor”.

o At the MSM Facility, colour removal is achieved by pumping the clear liquor through towers containing ion exchange resins that absorb the colour producing components. -116 ­7. BUSINESS OF OUR GROUP (Cont’d) o At the KGFP Facility, colour removal is achieved by a “sulphitation” process that uses sulfur dioxide reaction and filtration that absorb colour producing components. • Solid impurities are removed from the decoloured liquor through a final filtration process to yield “fine liquor”.
• At the MSM Facility, an additional step is undertaken to concentrate the fine liquor by having its excess water content evaporated before it undergoes crystallisation.
• The fine liquor is subsequently boiled in vessels called vacuum pans to form crystals. Fine sugar crystals are used as seed and are grown to the required size by adding more liquor.
• The mixture of grown sugar crystals and syrup that is formed, called “massecuite”, is placed into centrifuge machines which separate the crystals from the syrup.
• The refined sugar crystals are then dried, cooled, sieved and screened into various grain-sized prod,ucts and stored in silos to be transferred to warehouses or packaged into various grades for delivery to customers.

Molasses is also a byproduct of this refining process after a certain amount of sugar is extracted to produce our refined sugar products. The following diagram illustrates how raw sugar is processed into refined sugar products. RAW SUGAR … Raw syrup
Affination•Melting .. Carbonation … Filtration … Ion Exchange (MSM) I Sulphitation (KGFP) Decolourisation … Evaporation (MSM)  Crop remelt  ~  L,  White Sugar Crystallisation … Centrifuging … Drying & Cooling … REFINED SUGAR  ~ Recovery House r: Crystallisation … Centrifuging’ … FINAL MOLASSES  1—-‘

 

7. BUSINESS OF OUR GROUP (Cont’d) 7.9 BUSINESS INTERRUPTIONS There has not been any material interruption to our business activities during the past 12 months.
7.10 QUALITY CONTROL Product quality is extremely important to us, and we place great emphasis on quality control of all our products. We are committed to manufacturing safe, hygienic and high-quality refined sugar products that meet our customers’ needs. We have achieved a number of major certifications for our products and manufacturing processes including “Buatan Malaysia” certification for our white refined sugars for general and industrial use and “Halal” certifications. Moreover, each of our production facilities has its own quality control department. The quality control departments at both the MSIVI Facility and the KGFP Facility consistently monitor the quality of sugar cane (in the case of KGFP), raw sugar, intermediate products and finished products for pH, ash, colour, moisture and purity, among other factors, to ensure integrity of our manufacturing processes and to certify that the finished products meet our high standards. As a result of decreased sugar cane cultivation at the Chuping Plantation from 2008 to 2010, the number of our employees in the quality control department at KGFP that monitor the quality of sugar cane also decreased during that period. For customers that require products meeting defined parameters and specifications, such as those for colour or grain size, our quality control process also ensures that we consistently provide products that satisfy these conditions. The quality management system and food safety management system employed by each of our production facilities are certified to the appropriate ISO standards, such as ISO 9001 and ISO 22000. Our quality and food safety management systems in place at each of our production facilities undergo both annual internal and external audits to ensure compliance to established procedures and measure effectiveness of control systems. External audits of our quality and food safety management systems are conducted annually and certified by SIRIM QAS International Sdn Bhd (“SIRIM”), the Malaysian national standards development and inspection agency for international certification bodies.
7.11 RAW MATERIALS The main raw material for our operations is raw sugar, which is processed in our refineries to produce our sugar products. We use raw sugar produced from sugar canes that are processed in milling facilities promptly after harvest. Most of the raw sugar we require is imported while the rest is supplied from the sugar canes we harvest at the Chuping Plantation. Cost of raw sugar constituted 70.5%, 85.3% and 80.2% of our total cost of sales for 2008, 2009 and 2010, respectively, and 86.8% for the three months ended 31 March 2011. Sugarcane Sllgar cane harvested at the Chuping Plantation is milled at the KGFP Facility to produce raw sugar for use in the refining operations at the KGFP Facility. Sugar cane yield is an important productivity measure for our harvesting operations. We believe that by choosing new sugar cane varieties, our agricultural yields may continue to increase. In 2010, our average sugar extraction yield was 76.33 kg of total sugar recovered (“TSR”) per tonne of sugar cane and our agricultural yield was 50.14 mt of sugar cane per ha, compared to our average sugar extraction yield of 82.78 kg of TSR per tonne of sugar cane and 51.28 mt of sugar cane per ha in 2009, and 76.51 kg of TSR per tonne of sugar cane and 55.36 mt of sugar cane per ha in 2008. During a favourable harvest season with bumper crops and optimal sugar content, we believe that average sugar extraction yield could be approximately 90 kg of TSR per tonne of sugar cane and agricultural yield could be approximately 59 mt of sugar cane per ha.

7. BUSINESS OF OUR GROUP (Cont’d) In 2010, we milled 202,899 mt of sugar cane to produce approximately 16,218 mt of raw sugar equivalent, accounting for approximately 11 % of the raw sugar supply used at the KGFP Facility. The remaining 89% of the raw sugar used at the KGFP Facility was imported, while all of the raw sugar that is used in the MSM Facility was imported. Raw Sugar Raw sugar is an intermediate product in cane sugar production that is used at our refineries for final processing to produce our sugar products. Raw sugar is a tan, coarse granulated product that is approximately 97% sucrose and obtained through the milling process that involves evaporation of clarified sugar cane juice. It may typically be stored for long periods and transported over long distances without, we believe, affecting its quality. In 2010, approximately 0.99 million mt of the raw sugar we used, accounting for approximately 97% of our total raw sugar used, was imported sugar produced mainly in Australia and Brazil. We also purchase raw sugar from Thailand and other countries on an opportunistic basis. Since the early 1970s, the Malaysian government represented by MITI has participated, together with Malaysian refined sugar producers, including MSM and KGFP, in negotiations for long-term raw sugar supply contracts with foreign raw sugar suppliers. Pursuant to these negotiations, MITI and all the refined sugar producers in Malaysia, including MSM and KGFP, collectively enter into supply contracts with foreign raw sugar suppliers typically covering a three-year period, and such contracts have helped us secure a consistent supply of raw sugar at prices that are usually lower than those available otherwise on the international spot market. These long-term supply contracts typically have had pricing terms that take into account the then-prevailing global market prices at the time of the contract and have been renegotiated and renewed for three-year terms generally on a continuous basis prior to their scheduled expiry. We currently purchase approximately 49% of our imported raw sugar volume pursuant to such long-term supply contracts that were entered into in the early part of 2009 and are scheduled to expire at the end of 2011. The remaining 51 % of the imported raw sugar is purchased in the international market at prevailing market prices, which are volatile. For additional information regarding risks related to imported raw sugar, see Section 5.1.2 of this Prospectus. Suppliers We expect to purchase a substantial portion of our raw sugar requirements from foreign sources in the foreseeable future. Our primary suppliers of raw sugar are Queensland Sugar Limited, Cargill International SA (“Cargill”), Noble Resources Pte Ltd, Sucres et Denrees SA and Eagle Trading Limited (currently known as Sucden Hong Kong Pty Ltd). The folloWing table provides information about our raw sugar suppliers in 2008,2009 and 2010, and for the three months ended 31 March 2011 (including their country of incorporation) and the percentage of total raw sugar purchases accounted for by each supplier: Three Months Year Ended 31 December Ended 31 March Supplier 2008 2009 2010 2011 Cargill International SA (Switzerland)  6%  34%  36%  Eagle Trading Limited (currently  known as Sucden Hong Kong pty  ltd.) (Hong Kong)  .  6%  4%  21%  Mulgrave Central Mill Co. ltd  (Australia)  .  13%  7%  Noble Resources Pte ltd  (Singapore)  .  13%  5%

7. BUSINESS OF OUR GROUP (Cont’d) Three Months Year Ended 31 December Ended 31 March Supplier (Cont’d) 2008 2009 2010 2011 Queensland Sugar Limited (Australia)……………………….. 11% 34% 21% 32%
Sucre et Denrees SA (France) 30% 21% 11% Kerry Foodstuffs Co. Limited (Hong Kong)……………………. 53% 9% 32% Total ……………………………… 100% 100% 100% 100%
The composition of our raw sugar suppliers changed significantly from 2008 to 2009 as new long-term raw sugar supply contracts were entered into in the early part of 2009 with additional suppliers. For raw sugar purchased on the open market, the raw sugar suppliers varied depending on the price and other terms offered by the suppliers. Energy, Utilities and Other Materials Sugar refining is an energy intensive process. The MSM Facility uses natural gas and, the KGFP Facility uses biomass fuel for the boilers needed in the production process. The MSM Facility also uses diesel fuel primarily for transporting and handling refined sugar within our facilities as well as for backup electricity generators. Our total energy usage in 2010 consisted of 2.133 million mmbtu of natural gas, 615,340 litres of diesel fuel and 266,572 mt of biomass fuel. In addition, electricity and water are required for operating our refineries and are supplied by local utilities or, in certain cases, generated on our own facilities for internal consumption. For additional information on our plantation and production facilities, see Section 7.7 of this Prospectus. Certain other materials, such as lime (calcium hydroxide), resin and boiler water treatment chemicals, are required for the operation of our production facilities and are critical in our production processes. We typically purchase these and other products and services from local suppliers. We also employ local contractors for the maintenance and repair of equipment in the MSM Facility and the KGFP Facility. 7.12 SALES AND MARKETING We market our sugar products to retailers, distributors and industrial food manufacturers directly through our sales force and indirectly through wholesalers and traders. Our primary business strategy is to capitalise on our well-known brands and expand brand penetration through on-going emphasis on product quality to meet customers’ expectations and to leverage our effective distribution and delivery network to more easily reach customers throughout Malaysia. Our sales and marketing efforts are led by our marketing committee comprised of representatives from both MSM and KGFP. The committee expects to actively explore opportunities to achieve synergies in marketing and distribution efforts across the two operating companies to increase competitiveness and minimise distribution costs. Our sales and marketing team is based in our headquarters in Kuala Lumpur and services the majority of our biggest customers. 7. BUSINESS OF OUR GROUP (Cont’d) Sales to Distributors/Retailers We sell a variety of sugar products, including coarse and fine granulated white sugar and brown sugar, to wholesale distributors who in turn sell those products to retail outlets, manufacturers, restaurants and institutional food service establishments in a variety of packaging sizes including sugar cubes, 5 g sachets and 1 kg, 2 kg, 15 kg, 25 kg, 30 kg and 50 kg bags. Retail packages are marketed under the trade names “Gula Prai” and “Gula Perlis”. Our products reach all regions in Peninsular Malaysia and East Malaysia. We sold 496,063 mt, 517,957 mt and 542,676 mt of refined sugar products to distributorslretailers in Malaysia in 2008, 2009 and 2010, respectively, and we sold 135,640 mt of refined sugar products to such customers in the three months ended 31 March 2011. Sales volume of refined sugar products to distributorslretailers in Malaysia accounted for 67.3%, 66.1 % and 65.7% of our total refined sugar sales volume in 2008, 2009 and 2010, respectively, and 67.8% of our total refined sugar sales volume for the three months ended 31 March 2011. Sales to Industrial Customers We produce and sell refined sugar products to industrial customers, principally food manufacturers, in bulk or packaged form ranging from 50 kg to 1,400 kg. Food manufacturers purchase sugar for use in the preparation of ice cream, dairy products, beverages, confectionery and various other food products. We also sell molasses to producers of ethanol, animal feed and yeast. Historically, we have made the majority of our sales to industrial customers under fixed price, forward sales contracts with terms of up to one year. We sold 241,351 mt, 265,475 mt and 283,383 mt of refined sugar products to industrial customers in Malaysia in 2008, 2009 and 2010, respectively, and we sold 64,534 mt of refined sugar products to such customers in the three months ended 31 March 2011. Sales volume of .refined sugar products to industrial customers in Malaysia accounted for 32.7%, 33.9% and 34.3% of our total refined sugar sales volume in 2008, 2009 and 2010, respectively, and 32.2% of our total refined sugar sales volume for the three months ended 31 March 2011. Principal Markets and Customers We market and sell our products primarily in Malaysia. We also export our products typically when there is an excess in supply after domestic demand has been met. Our major markets outside of Malaysia include Australia, New Zealand, Pakistan, the Philippines, Singapore, Vietnam and Indonesia. Our export sales (excluding “local exports” discussed below) typically account for approximately 5% to 15% of our total sales, depending on the level of domestic and global sugar demand. Sales in Malaysia include products sold as “local exports” to domestic industrial customers who use sugar purchased from us to manufacture products for export. Local exports of refined sugar accounted for 2.0%, 2.3% and 3.6% of our total sales in 2008, 2009 and 2010, respectively, and 1.8% of our total sales for the three months ended 31 March 2011. In 2008, 2009 and 2010, domestic sales, including local exports, of refined sugar accounted for 88.0%, 93.2% and 87.7%, respectively, of our total sales, and sales of refined sugar to other countries accounted for 11.0%, 6.2% and 11.6%, respectively, of our total sales. For the three months ended 31 March 2011, sales of refined sugar in Malaysia accounted for 95.8% of our total sales, and sales of refined sugar to other countries accounted for 3.1 % of our total sales. 7. BUSINESS OF OUR GROUP (Cont’d) We are the largest producer of refined sugar products in Malaysia, and have a well-established and loyal customer base of approximately 260 customers in Malaysia, some of whom have been with us for decades, comprising principally retailers, traders, wholesalers and industrial food manufacturers such as beverage and condensed milk manufacturers. MSM Holdings’ customers include F&N Beverages Manufacturing Sdn Bhd, Permanis Sdn Bhd, Kraft Foods Manufacturing Malaysia Sdn Bhd, Cadbury Confectionery Malaysia Sdn Bhd, Nestle Manufacturing (M) Sdn Bhd, Tesco Stores (Malaysia) Sdn Bhd, Giant GCH Retail (Malaysia) Sdn Bhd, Jaya Jusco Stores Bhd (currently known as Aeon Co (M) Bhd) and Yeo Hiap Seng (Malaysia) Berhad. Our export sales are made primarily through traders like Cargill and Sucden Hong Kong Pty Ltd. We believe that our partnerships with our customers are one of the most critical aspects of our business that complements our various strengths as they have allowed us to grow and maintain our market share domestically and penetrate international markets. No single customer has contributed 10% or more of our total revenue in 2008, 2009 or 2010, or for the three months ended 31 March 2011. Customer relationship management is key to our sales efforts, especially in the Malaysian market. We continue to enhance the level of service and product offerings to cater towards our customers’ needs, such as manufacturing products to custom specifications and providing customised packaging sizes. In order to facilitate distribution of our products, we have warehouses located in key regions of Malaysia from which we deliver our products throughout Malaysia by rail and road. The proximity of our production facilities and warehouses to key customers allows us to minimise transportation costs, increase efficiency and enhance reliability of product delivery to customers. Sales Information The following tables set forth sales amounts, sales as a percentage of total sales and volume for our products for the periods indicated: Year Ended 31 December 2008  2009  2010  (RM  %  mt  (RM  %  mt  (RM  %  mt  million)  million)  million)  Refined Sugar  Products  Domestidf) ….•…  993.0  86.1%  721,161  1,493.9  90.9%  762,823  1,823.3  84.1%  792,723  Local export(2)….  23.3  2.0%  16,253  37.4  2.3%  20,610  77.4  3.6%  33,336  Export…………….  127.4  11.0%  90,613  102.2  6.2%  56,745  250.6  11.5%  118,785  Other  Molasses………..  10.5  0.9%  36,890  10.1  0.6%  30,024  17.3  0.8%  33,915
. Total …..••••….•……. 1,154.2 100% 864,917 1,643.6 100% 870,202 2,168.6 100% 978,759
7. BUSINESS OF OUR GROUP (Cont’d) Three Months Ended 31 March 2010 2011 (RM million) 0/0 mt (RM million) 0/0 mt Refined Sugar Products
DomesticC3) 444.5 89.3% 187,327 473.0 94.0% 196,866 Local export(2) 15.7 3.1% 6,732 8.9 1.8% 3,308 Export 29.7 6.0% 11,958 15.4 3.1% 5,589 Other Molasses 7.9 1.6% 16,090 5.8 1.2% 10,438 Total 497.8 100% 222,107 503.1 100% 216,201 “Notes: (1) Revenue includes subsidy amounts of RM439.5 million for the year ended 31 December 2009 and RM479.9 million for the year ended 31 December 2010.
(2) “Local exports’ are sales made to domestic industrial customers who use sugar purchased from us to manufacture products for export.
(3) Revenueincludessubsidyamounts ofRM145.2millionforthethreemonthsended 31 March 2010 and RM54.2 million for the three months ended 31 March 2011.

A substantial portion of our sales were made in the domestic market, accounting for 84.1 % of our total sales in 2010 and 94.0% of our total sales in the three months ended 31 March 2011. Domestic sales primarily comprise coarse grain and fine grain white sugar, with our other refined sugar products, such as cater sugar and brown sugar, comprising the remainder of our domestic sales. Export and local export sales comprise entirely of coarse grain and fine grain white sugar products. We currently sell molasses only in the domestic market.

7.13 GOVERNING LAWS AND REGULATIONS Regulation of the Sugar Industry in Malaysia As in many countries, the sugar industry in Malaysia is regulated by the government. Pursuant to the Price Controls Act 1946, the government has historically set price ceilings for refined white sugar products, taking into account various factors. In recent years, there has been a sharp increase in the price of raw sugar in the international markets. For example, the average price of raw sugar was 27.03 cents per pound in 2010 compared to 13.84 cents per pound in 2008, based on the Sugar No. 11 futures contract traded on the New York Board of Trade. For additional information about international raw sugar prices, see “Section 1.4 -Industry Risks and Challenges” of Section 6 of this Prospectus. Following such increases in raw sugar prices, the Malaysian government introduced a sugar price subsidy in 2009 so that the increase in the price of raw sugar would not be fully passed on to consumers of refined sugar products in Malaysia. Our financial performance, like the financial performance of other refined sugar producers in Malaysia, thus depends to a large extent on the government’s policies with respect to the sugar industry, such as the level of price ceilings and sugar SUbsidy, which are beyond our control. In addition, the import of refined sugar into Malaysia is restricted by the government, with such imports only being allowed for industrial consumers with approved permits issued by the Malaysian government. At present we are not aware of any permits for the import of refined sugar having been approved and issued by the government.

7. BUSINESS OF OUR GROUP (Cont’d) The prices of coarse and fine granulated refined white sugar in the domestic market historically have been controlled by the Malaysian government pursuant to the Price Control Act 1946. The following table sets forth the maximum prices of refined white sugar products for the domestic market that were in effect during the periods indicated: Peninsular Malaysia East Malaysia .Coarse Granulated Refined White Sugar  Fine Granulated Refined White Sugar  Coarse Granulated Refined White Sugar  Fine Granulated Refined White Sugar  (RM p er kg)  Factory to Wholesaler  1 January 2008 to 31 December 2008  .  1.34  1.42 1.44  1.52  1 January 2009 to 31 December 2009  .  1.34  1.42  1.44  1.52  1 January 2010 to 15 July 2010  .  1.54  1.62  1.64  1.72  16 July 2010 to 3 December 2010  .  1.74  1.82  1.84  1.92  4 December 2010 to 9 May 2011  .  1.94  2.02  2.04  2.12  10 May 2011 to present  .  2.14  2.22  2.24  2.32
Wholesaler to Retailer 1 January 2008 to 31 December 2008 . 1.40 1.48 1.50 1.58 1 January 2009 to 31 December 2009 . 1.40 1.48 1.50 1.58 1 January 2010 to 15 July 2010 . 1.60 1.68 1.70 1.78 16 July 2010 to 3 December 2010 . 1.82 1.90 1.92 2.00 4 December 2010 to 9 May 2011 . 2.02 2.10 2.12 2.20 10 May 2011 to present . 2.22 2.30 2.32 2.40 Retailer to Customer 1 January 2008 to 31 December 2008 . 1.45 1.55 1.55 1.65 1 January 2009 to 31 December 2009 . 1.45 1.55 1.55 1.65 1 January 2010 to 15 July 2010 . 1.65 1.75 1.75 1.85 16 July 2010 to 3 December 2010 . 1.90 2.00 2.00 2.10 4 December 2010 to 9 May 2011 . 2.10 2.20 2.20 2.30 10 May 2011 to present .. 2.30 2.40 2.40 2.50 7. BUSINESS OF OUR GROUP (Cont’d) Domestic sales of othersugar products we sell, such as caster, brown sugar and molasses, are not subject to these retail price ceilings and are made at prevailing market prices. Domestic sales to certain major industrial customers in the beverage and dairy industries are also not subject to these price ceilings, and the Malaysian government has allowed the domestic sugar producers to charge a higher price to these industrial customers. Similarly, sugar that is exported or sold domestically as “local exports” is not subject to these price ceilings and is sold at prevailing market prices. The Malaysian government introduced the sugar subsidy in 2009 in response to a sharp increase in global raw sugar prices in recent years. The table below sets forth the subsidy amounts that were in effect during the periods indicated since the subsidy was introduced: Period  RM per kg  1 January 2009 to 31 December 2009  .  0.60  1 January 2010 to 31 May 2010  .  0.80  1 June 2010 to 15 July 2010  .  0.70  16 July 2010 to 3 December 201 0  .  0.49  4 December 2010 to 31 December 2010  .  0.29  1 January 2011 to 9 May 2011  .  0.40  10 May 2011 to present…  .  0.20
Each domestic refined sugar producer, including MSM and KGFP, provides to the government data on the volume of sugar it has sold at the controlled price on a monthly basis, and the government pays the subsidy to the sugar producers, subject to a monthly limit. The subsidy amount, together with the price ceiling, is determined annually based on a number of factors, including projected domestic demand, raw sugar prices and each domestic sugar producer’s proven sales volume, and is subject to review and adjustment by the Malaysian government during the year as it deems appropriate. Starting in 2010, the government has gradually adjusted the level of sugar subsidy and the sugar price ceiling, with the sugar subsidy amount generally being decreased and the price ceiling being increased. Because a substantial portion of our revenue is derived from sales of refined. sugar products that are price controlled, if the global raw sugar prices remains high or . increases further and the Malaysian government decreases or eliminates its sugar subsidy without. increasing or eliminating the refined sugar price ceilings, our profit margin, financial condition and results of operations would be materially andadversely affected. For information regarding the risks related to the regulation of the sugar industry see Section 5.1.1 of this Prospectus. Price Control and Anti-Profiteering Act 2011 The Price Control and Anti-Profiteering Act 2011 (the “PCAPA”) replaced the Price Control Act 1946 (“PCA”) and came into force on 1 April 2011. The PCAPA provides for the control of prices of goods Whereby the MDTCC may, among others things, determine the maximum, minimum or fixed prices for the manufacturing, producing, wholesaling or retailing of goods. In addition, the Price Advisory Council shall advise the Minister of MDTCC on issues relating to profiteering and the Minister of MDTCC shall prescribe the mechanism to determine whether profit is unreasonably high. The Price Controller is empowered to investigate and enforce the provisions of the PCAPA including any person making unreasonably high profits by selling, supplying or offering to sell or supply goods.
7. BUSINESS OF OUR GROUP (Cont’d) Control of Supplies Act 1961 The Control of Supplies Act 1961 (the “CSA”) is enforced by the MDTCC and it provides for the control and rationing of supplies in Malaysia. Under the CSA, sugar is both a controlled article and a schedule article. As sugar is a schedule article, both dealing in sugar in the wholesale or retail markets and manufacturing of sugar, including sugar refining, requires a license. In addition, sale of sugar by any person (either wholesale or retail) at any premise requires a license. Specifically, a separate license is required for each and every such place of business of such persons. Offenses under the CSA include the sale of any controlled article without a license, the sale by any person of any controlled article in excess of the quantity which may be lawfully acquired by the purchaser, the concealment and destruction of any controlled article in order to withhold the article from the market and false denial of being in possession of, or refusal to sell, a controlled article. Industrial Co-ordination Act 1975 Industrial Co-ordination Act 1975 requires a license for any manufacturing activity in Malaysia. A license is required for the manufacture of specified products at each separate manufacturing site and is typically issued in accordance with national economic and social objectives in order to promote the orderly development of manufacturing activities in Malaysia. The licenses are issued by MITI and are subject to certain conditions. They do not normally require renewal but are revocable in the event that an imposed condition is not complied with, the license holder is no longer carrying out the manufacturing activity or a false statement has been made in the application for the license. The licenses are non-transferable except with the prior approval of MIT!. Occupational Safety and Health Act 1994 We are sUbject to the Occupational Safety and Health Act 1994 (“OSHA”), under which we have a general duty to our employees to provide and maintain our production facilities and systems that are, to the extent practicable, safe and without risks to health. We also have an obligation to provide our employees with information, instruction, training and supervision to ensure, to the extent practicable, their safety and health, and to provide a safe working environment without risks to their health and welfare. Our duty extends to non-employees as well in order to ensure the safety and health of persons who may be affected by our operations. Because we employ more than 500 employees, we are obliged under OSHA to employ a safety and health officer who is tasked with ensuring the due observance of our statutory obligations as regarding workplace health and safety as well as the promotion of safe work conduct. We have also set up a health and safety committee that promotes and develops measures to ensure our employees’ safety and health and monitors the effectiveness of those safety measures. Environmental Quality Act 1974 Environmental Quality Act 1974 prohibits activities causing air pollution, noise pollution, soil pollution or inland water pollution without obtaining a license. Accordingly, discharge of oil into Malaysian waters, discharge of wastes into Malaysian waters and open burning of fields are prohibited without obtaining the necessary licenses or permits. Malaysian Department of Environment (“DOE”) and the local environmental authority are responsible for implementing and monitoring Malaysia’s environmental regulations and policies. 7. BUSINESS OF OUR GROUP (Cont’d)
7.14 COMPETITION We compete primarily with other domestic sugar producers in Malaysia and foreign sugar producers in overseas markets. In the domestic market for refined sugar products that are price-controlled, we compete primarily on the basis of product offerings, product quality, the ability to meet timely delivery requirements and overall customer service. In markets that are not subject to price control, we also compete on the basis of price, and refined sugar product prices in such markets are determined largely by external market factors including global supply and demand balances and raw material costs that to some extent are beyond our control. The import of refined sugar into Malaysia is restricted by the government, with such imports only being allowed for industrial consumers with approved permits issued by the Malaysian government. At present we are not aware of any permits for the import of refined sugar having been approved and issued by the government, thus our primary competitors in the domestic market are the operators of the other sugar refineries in Malaysia, namely CSR and GPT, which are controlled by Tradewinds (M) Berhad. In export markets, our main competitors include local sugar producers in those markets, such as SIS ’88 Pte Ltd in Singapore, as well as global sugar companies such as ED & F Man Holdings Limited, Wilmar International Limited and Mitr Phol Sugar Group.
7.15 HEALTH, SAFETY AND ENVIRONMENTAL MATTERS We have comprehensive health, safety and environmental management policies and systems covering environmental protection and conservation, people safety, food safety, health and asset protection. Environmental Compliance Our operations are governed by various Malaysian federal, state and local environmental regulations and these regulations impose effluent and emission limitations, and requirements regarding management of water resources, air resources, toxic substances, solid waste and emergency planning. Our environmental compliance policy covers a range of these areas and we are committed to the protection of the local ecology. Environmental protection is one of the important criteria we use when selecting new technologies and equipment. We implement these policies partly through use of energy-efficient equipment and pollution monitoring in our production facilities as well as through emphasis on control procedures and pollution management as an integral part of the training on operating and maintenance procedures. For example, MSM has successfully reduced its energy consumption by being the first sugar producer in Southeast Asia to operate a vertical continuous sugar vacuum pan that uses recycled vapour from batch pans as its heat source. Moreover, through the use of a nano-filtration system that recycles water, the brine solution is recycled and the wastewater load for MSM is significantly reduced, thereby minimising the harmful impact on the environment. Malaysian law requires those companies, including manufacturers, whose business activities are expected to have a potentially significant impact on the environment, to prepare environmental impact assessments, environmental monitoring plans and environmental management plans (together, an “environmental impact assessment report”) in connection with certain operations that are considered likely to have an impact on the environment. An environmental impact assessment report must be submitted to a commission consisting of representatives of various federal and local government agencies and non-governmental organisations before the construction of a facility. Once the commission approves the environmental impact assessment report, which sets out various compliance standards and other obligations, amendments to the environmental impact assessment report must be provided to a similar commission in connection with the commencement of the subject company’s operations. For our existing facilities, all appropriate environmental requirements were completed.
7. BUSINESS OF OUR GROUP (Cont’d) Our environmental management policy requires full compliance with all local, state and federal laws and regulations concerning environmental protection and related matters, including those that govern the use, storage, transportation and disposal of toxic and hazardous materials. Our operations are monitored by several governmental entities, including the DOE, which is responsible for enforcing pollution control regulations and policies in Malaysia. We maintain compliance with environmental regulations promulgated by local and national governing bodies, including the DOE. The results of inspections and other compliance requirements are typically within the required specifications. We report the compliance related data on a regular basis to the local regulatory offices. . . We believe that our operations are in compliance in all material respects with applicable environmental laws and regulations currently in effect in Malaysia. We have received permission from the relevant authorities for the sugar cane burning activity at the Chuping Plantation. We are not aware of any environmental violations or incidents that have led to claims or any environmental proceedings or investigations to which we are, or to which we expect to become, a party. . Health and Safety The health and safety of our employees and our customers are of critical importance to us, and we are required to comply with a range of health, safety and food safety laws and regulations that are designed to protect workers, customers and consumers of our products. In order to comply with these regulations, we have developed specific operating and maintenance procedures and are required to maintain records and report data on a timely basis. We review our health, safety and food safety standards on an ongoing basis and our operations are subject to inspections by government authorities throughout the year. Our ongoing training programs apply to all phases of our production processes to ensure safe and hygienic conditions for our production facilities. All levels of our operations are included in a monthly safety awareness meeting. We also conduct walk-through inspections to verify safety conditions and employee activities. Refined sugar products are combustible under certain conditions. We therefore conduct inspections of our production facilities regularly in order to prevent fires, explosions or other disastrous accidents. Our production facilities have their own internal firefighting teams as well as medical clinics that are capable of providing first-aid services if the need arises. We maintain compliance with health, safety and food safety regulations promulgated by local and national governing bodies. The results of inspections and other compliance requirements are typically within the required specifications. We report the compliance related data on a regular basis to the local regUlatory offices. Additionally, we have a management system for health, safety and environment that enables us to effectively manage the minimum environment management standard that we have established that is in line with international best practices. 7.16 INSURANCE Our operations are subject to numerous operating risks, including fire, floods, machinery breakdown, product liability, employer’s liability and cargo damage. These risks and hazards could result in damage to or destruction of our inventory of raw materials and finished prOducts, production facilities and machinery, personal injury, environmental damage and business interruption. To protect ourselves against such risks, MSM and KGFP carry insurance against property damage and consequent business interruption through “all risks” and other policies that are in force until 31 December 2011 and are renewed annually. 7. BUSINESS OF OUR GROUP (Cont’d) MSM’s “all risks” coverage has a maximum indemnification limit of RM755.8 million per year for losses (Le., physical loss or damage combined with business interruption following physical loss or damage), and this limit may be reinstated when assets damaged or affected by an incident are replaced. KGFP’s fire and named perils policy has a maximum indemnification limit of RM199.1 million per year for physical loss or material damage and its business interruption and consequential loss policy has a maximum indemnification limit of RM38.0 million per 13 months. KGFP’s “all risks” policy covers certain equipment and inland transit-related losses and has a combined maximum indemnification limit of RMO.7 million per year. Our “all risks” and other insurance coverage are subject to standard industry exclusions, namely terrorism, war and certain other events. In addition to these policies, we maintain other insurance policies for specified risks, including marine transport, public liability, personal accident and motor vehicle insurance and other types of coverage that are not included in our “all risks” policies. We do not anticipate having any difficulties in renewing any of our insurance policies and believe our insurance coverage is in accordance with industry standards in Malaysia.

7.17 EMPLOYEES As of 31 March 2011, we employed a total of 1,068 permanent staff and 104 contract staff. Permanent employees generally include management, sales and marketing, operations and productions staff, while we typically employ contract workers for packing and warehouse work. In addition, as of 31 March 2011, we employed approximately 550 foreign workers, mainly from Thailand, who engage in seasonal harvesting of the sugar cane crop at the Chuping Plantation. As of 31 December 2008,2009 and 2010, our subsidiaries that are owned by MSM Holdings through the Pre-Listing Restructuring had a total of 1,127,1,074 and 1,072 permanent staff, respectively, and 93, 99 and 117 contract staff, respectively. The following table sets forth the number of employees for each of our operating subsidiaries as at 31 December 2008, 2009 and 2010 and as at 31 March 2011. As at 31 December As at 31 March Subsidiary MSM ~ . KGFP . Total . 2008 406 814 1,120 2009 414 759 1,173 2010 405 784 1,189 2011  407 765 1,172  As of 31 March 2011, our permanent staff and contract staff were employed in the following
locations: Prai Chuping Kuala Lumpur Sungai Buloh Johor Bahru Employee Type (MSM & KGFP) (KGFP) (MSM) (MSM) (MSM) Permanent staff………. 315672 22 48 2 Contract staff …………. 1282 8 20 Total …………………….. 327754 30 50 2 7. BUSINESS OF OUR GROUP (Cont’d) The following table sets forth the number of employees by job function as of the dates indicated. Job Function Management . Engineering . Marketing, Accounts, Administration, Purchasing and EMH .
Production and packing . Quality assurance . Logistics and inventory . Plantation . Total . As at 31 December  As at 31 March  2008  2009  2010  2011  100  109  101  102  274  257  260  250  256  265  276  270  339  337  363  359  122  84  68  74  29  30  29  29  100  91  92  88  1,220  1,173  1,189  1,172
As of 31 March 2011,458 employees, or approximately 39% of our employees, were unionised. They are represented by in-house unions at each of MSM and KGFP: Malayan Sugar Manufacturing Company Employees’ Union and Kesatuan Pekerja Kilang Gula Felda Perlis Sendirian Berhad, respectively. MSM signed a three-year collective bargaining agreement with its union in June 2009, while KGFP signed a collective bargaining agreement with its union in August 2009 which expires at the end of 2011. We believe we have a good relationship with our employees, demonstrated by the historically low turnover rate among employees, and we have not experienced any strikes or material disruptions due to labour disputes. As at the Latest Practicable Date, nothing has come to our attention that leads us to believe we are not in compliance with the relevant labour laws in any material respect. Pursuant to the requirements under Malaysian law, we contribute amounts into the Employee Provident Fund, a mandatory employee retirement fund that is administered by a board appointed by the government of Malaysia. For the current and preceding years, we have no legal obligation to pay further contributions. We do not maintain any other retirement, pension or severance plans or have any unfunded pension liabilities, nor do we owe any amounts to any present or former employees not in the ordinary course of business operations. We believe that our employees are key assets that playa pivotal role toward our continuous growth and we recognise the importance of retaining quality employees. It is our policy to encourage the development and training of our employees for the improvement of overall skill sets for the enhancement of productivity. We believe that professional development is an on-going process and encourage our employees to improve their skills and knowledge through hands-on training and field experience. Each of our production facilities provides technical training programs for our employees that allow them to gain technical knowledge and skills to effectively operate various parts of our production processes. By having employees trained in multiple aspects of our operations, we are able to effectively use our existing workforce to operate various parts of our production facilities without necessarily increasing the number of workers. For example, because milling operations at the KGFP Facility are seasonal, when milling operations cease for the year, workers who were involved in the milling process are sUbsequently deployed to other parts of the facility to work on refining operations that continue throughout the year. In addition, the Human Resource Department and Education Division of the Felda Group provide a structured approach for the training and development of Felda Group’s employees by aiming to link the capabilities required to implement our business strategies to individual training needs to ensure that the employees have the requisite skills and knowledge.

7. BUSINESS OF OUR GROUP (Cont’d) The following table provides details of the recent training programs attended by our employees: Skills Name of Programme Job Grade Year Leadership Team development and Production, packaging, 2009 leadership for supervisors logistics Safety and health Fork-lift handling safety Logistics and warehouse, 2009,2010 maintenance Quality CCP-2 & CCP-3 procedure Packaging supervisors 2010 and work instruction and operators Technical Libra 1 Budpack weigher Instruments technicians 2010 controller operation and and packing operators maintenance Quality 5S Internal auditor Executives and foremen 2010 Quality Pest control Executives and foremen 2010 Quality Personal hygiene All levels 2010 Management tool Performance management All levels 2010 system Information technology Exact System -material Executives and foremen 2010 requisition In addition to these internal training programs, we provide our employees opportunities to participate in externally conducted training programs such as those relating to various aspects of our business operations, laws and regulations governing employment practice, computer software skills and knowledge, work safety and fire-fighting, tax regulations and warehousing and inventory control best practices. 7.18 RESEARCH AND DEVELOPMENT As sugar is a basic commodity item, our product types and range have generally remained constant over the years and we do not actively engage in research and development activities. However, as part of our customer support service, our production and quality assurance teams may from time to time perform certain testing and research to assist our customers in manufacturing finished sugar products that conform to the specific properties and characteristics they require. For example, MSM has worked with customers to use alternative anti-caking agents in icing sugar and to produce low-moisture soft brown sugar. In addition, we continuously review ways to enhance our sugar refining process and have developed innovative improvements to our production process. For example, MSM has successfUlly reduced its energy consumption by being, we believe, the first sugar producer in Southeast Asia to operate a vertical continuous sugar vacuum pan that uses as its heat source recycled vapour from batch pans, which were subsequently upgraded with the triple-effect evaporator. Moreover, through the use of a nano-filtration system that recycles water, the brine solution is recycled and the wastewater load for MSM is significantly reduced, thereby minimising the harmful impact on the environment. We intend to continue to develop upgrades and modernisations to our equipment and technology as deemed necessary to maintain or increase our competitiveness. 7. BUSINESS OF OUR GROUP (Cont’d) 7.19 CERTIFICATIONS AND RECOGNITIONS We have been recognised as one of the leading producers of quality refined sugar products in Malaysia. Our recent certifications and recognitions include: (The rest of this page has been intentionally left blank) 7. BUSINESS OF OUR GROUP (Cont’d)

 

7.20 TECHNOLOGY AND INTELLECTUAL PROPERTY Technology Sugar cane milling and sugar refining processes generally do not require proprietary technologies that need to be licensed from vendors. Accordingly, we do not depend on any technology licenses to operate our milling and refinery businesses. The core milling and refining processes and related equipment utilised in our production facilities, such as boilers, filters, carbonators, vacuum pans, centrifuges and driers, are similar to those used by other mills and refineries in the sugar industry worldwide. For more information regarding our mHling and refining processes, see Section 7.8 of this Prospectus. Through continuous improvements and upgrades of equipment and machinery that use the latest technologies, the refining process at the MSM Facility has become largely automated such that the various components of the facility’s operations could be controlled from a centralised location. The production process is generally controlled by a central process control system that directly links to most of the equipment and machinery in the facility and allows our plant operators to control as well as monitor the various stages of the production process through computer terminals located in the central control room. While our operations at the KGFP Facility are not fully automated, we plan to improve and upgrade our equipment to take advantage of updated technologies and enable automation of our milling and refinery processes at the KGFP Facility by 2015. Trademarks We use a number of trademarks and trade names, inclUding the “MSM” name and the following: Product Brand NamefTrademark Owner Fine and coarse granulated  Gula Prai  MSM  sugar; icing sugar; soft brown  sugar; caster sugar  Fine and coarse granulated  Gula Perlis  KGFP  sugar  Fine granulated sugar  Gula Pasir Halus Prai  MSM  Coarse granulated sugar  Gula Pasir Kasar Prai  MSM  Icing sugar  Gula Icing Prai  MSM  Soft brown sugar  Gula Merah Lembut Prai  MSM  .Caster sugar  Gula Kastor Prai  MSM
We own all of the trademarks we use, and all of these marks are registered in Malaysia. Patents and Other Intellectual Property We are not dependent on any patents or other intellectual property rights for our business operations. 7. BUSINESS OF OUR GROUP (Cont’d) 7.21 DEPENDENCY ON COMMERCIAL CONTRACTS The following contracts and arrangements, being contracts and arrangements within the ordinary course of business, are those which our Group is highly dependent on and are material to our Group’s business or profitability:

 

7.21.1 MSM (i) Agreement dated 6 February 2009 for the supply of raw sugar between the Government of Malaysia, as represented by MITI, MSM, GPT, KGFP and Queensland Sugar Limited, whereby Queensland Sugar Limited has agreed to supply the specified amounts of raw sugar to MSM, GPT and KGFP, and MSM, GPT, and KGFP have agreed to purchase the raw sugar at the stated consideration. The agreement is valid for a period of three (3) years commencing from 1 January 2009 to 31 December 2011, unless otherwise terminated in accordance with the terms thereof.
(ii) Agreement dated 12 March 2009 for the supply of raw sugar between the Government of Malaysia, as represented by MITI, MSM, CSR, GPT, KGFP and Noble Resources SA, whereby Noble Resources SA has agreed to supply the specified amounts of raw sugar to MSM, CSR, GPT, and KGFP, and MSM, CSR, GPT, and KGFP have agreed to purchase the raw sugar at the stated consideration. The agreement is valid for a period of three (3) years commencing from 1 January 2009 to 31 December 2011, unless otherwise terminated in accordance with the terms thereof.

(iii) Agreement dated 16 March 2009 for the supply of raw sugar between the Government of Malaysia, as represented by MITI, MSM and Sucres Et Denrees, whereby Sucres Et Denrees has agreed to supply the specified amount of raw sugar to MSM and MSM has agreed to purchase the raw sugar at the stated consideration. The agreement is valid for a period of three (3) years commencing from 1 January 2009 to 31 December 2011, unless otherwise terminated in accordance with the terms thereof. (iv) Agreement dated 8 April 2009 for the supply of raw sugar between the Government of Malaysia, as represented by MITI, MSM, CSR and Cargill International SA, whereby Cargill International SA has agreed to supply the specified amounts of raw sugar to MSM and CSR, and MSM and CSR have agreed to purchase the raw sugar at the stated consideration. The agreement is valid for a period of three (3) years commencing from 1 January 2009 to 31 December 2011, unless otherwise terminated in accordance with the terms thereof.
(v) Undertaking letter dated 8 April 2011 from PAK to MSM, whereby PAK has agreed to grant MSM a lease over the plots of land bearing title details HSD 28162, Lot 286, Bandar Prai, Daerah Seberang Perai Tengah (specifically, Plots A, B, C and D of Lot 286) and HSD 28137, Lot 287, Bandar Prai, Daerah Seberang Perai Tengah respectively for a lease period of 30 years commencing from 1 December 1994 to 30 November 2024 at the agreed rental rate of RMO.18 per sq ft for the period between 1 December 1994 to 30 November 2009 and the agreed rental rate of RMO.27 per sq ft for the period between 1 December 2009 to 30 November 2024, and an additional lease period of 30 years commencing from 1 December 2024 to 30 November 2054 SUbject to a rental rate based on the valuation made by the Valuation and Property Services Department. The new lease agreement is to be agreed upon and executed by PAK and MSM within a period of six (6) months commencing from the date of the decision of the Malaysian government on 1 April 2011 approving the lease granted to MSM.

-134­7. BUSINESS OF OUR GROUP (Cont’d) 7.21.2  KGFP  (i)  Agreement dated 6 February 2009 for the supply of raw sugar between the  Government of Malaysia, as represented by MITI, MSM, GPT, KGFP and  Queensland Sugar Limited as referred to in Section 7.21.1 (i) above.  (ii)  Agreement dated 12 March 2009 for the supply of raw sugar between the  Government of Malaysia, as represented by MITI, MSM, CSR, GPT, KGFP  and Noble Resources SA as referred to in Section 7.21.1 (ii) above.  (The rest of this page has been intentionally left blank)

Comments are closed